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EXHIBIT 10.26
LICENSE AGREEMENT
Effective as of 3-1-93 THE BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR
UNIVERSITY, a body having corporate powers under the laws of the State of
California (STANFORD), and CALYPTE BIOMEDICAL CORPORATION a California
corporation having a principal place of business at 1440 Fourth Street,
Berkeley, CA 94710 (LICENSEE) agree as follows
1. BACKGROUND
1.1--In the course of fundamental research programs at the University of
California and STANFORD (Universities), inventions were conceived jointly which
relate to engineering biologically functional replicons possessing desired
genetic properties of parent DNA molecules. These research programs were
supported by the National Science Foundation, the American Cancer Society, and
the National Institutes of Health of the Department of Health, Education and
Welfare, now Health and Human Services (HHS). These agencies and the
Universities agreed that the intellectual property rights resulting from these
inventions (and licensed through this Agreement) would be administered pursuant
and subject to the terms of STANFORD's Institutional Patent Agreement (IPA)
with HHS.
1.2--The Universities have agreed that Stanford will manage the securing of
patent rights and licensing in the public interest, and that any net income
arising therefrom will be shared between the Universities, and designated to be
used for educational and research purposes.
1.3--By assignment of the inventions from the inventors, STANFORD is the
owner of certain U.S. Patent rights and desires to grant licenses under those
rights to licensees for development of products and processes for public use
and benefit.
1.4--LICENSEE desire to develop processes and methods and marketable
products for public use and benefit by using Licensed Patent Rights, and it
will follow good safety practices in such development work.
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2. DEFINITIONS
2.1--Licensed Patent Rights means U.S. Patent No. 4,237,224, issued December
2, 1980, U.S. Patent No. 4,468,464, issued August 28, 1984, and U.S. Patent No.
4,740,470, issued April 26, 1988 and any reissues or extensions thereof.
2.2--Ultimate Consumer means that person or entity whose use of the product
results in its destruction or loss of activity and/or loss of value.
2.3--Licensed Product(s) means materials (including organisms) which, in the
course of manufacture, use, or sale would, in the absence of this license,
infringe one or more claims of Licensed Patent Rights which have not been held
invalid by a court from which no appeal may be taken.
Four categories of Licensed Products are designated:
End Products (Paragraph 2.4)
Basic Genetic Products (Paragraph 2.5)
Process Improvement Products (Paragraph 2.6)
Bulk Products (Paragraph 2.7)
2.4--End Products means marketable goods having at least one component
coming within Licensed Products, or produced by a Licensed Product, which goods
are sold in a form for utilization by the Ultimate Consumer, and are not
intended or marketed for further information, processing, or chemical
transformation, illustrative End Products include:
(a) health care products, sold for patient care and use or
dispensation by medical professionals (for example, dosage
forms of hormones, vaccines, and biosynthesized drugs, films,
fibers or dressings; and reagents or devices used for
diagnostic purposes, incorporating biochemical agents such as
antibodies, enzymes, specific binding proteins or
polysaccharides);
(b) products sold in a form ready for application to seeds, for
addition to feed or crop treating agents, for administration
to animals or for treatment of cells being cultured in order
to improve agriculture, animal production, forestry or
landscaping (such as fertilizers, vaccines, and nitrogen
fixing or pesticidal microorganisms);
(c) microorganisms and/or their products which are suitable for
use as animal or human food, for degrading substances in an
environment, or for increasing the production of desired
substances (such as concentrating minerals, generating gas or
useful compost from low value substrates);
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(d) reagents for research, such as enzymes or antibodies.
2.5--Basic Genetic Products means materials having at least on component
coming within Licensed Products which are sold or used primarily for further
processing or genetic manipulation and/or are neither End Products, Process
Improvement Products or Bulk Products. Illustrative Basic Genetic Products
include plasmids, transformants, and nucleic acid segments such as expression
regulators and structural gene sequences. Also, Basic Genetic Products include
services using Licensed Products and which services are provided by LICENSEE to
customers on a contract basis.
2.6--Process Improvement Products means materials having at least one
component coming within Licensed Products, which are developed by or for the
LICENSEE, as opposed to being purchased by the LICENSEE, and are used by the
LICENSEE in its manufacturing processes to enhance production efficiency and
where the resulting product is essentially identical to a product manufactured
by the previous process. Illustrative Process Improvement Products include
microorganisms for production of chemical intermediates, amino acids, or
pharmaceuticals; enzymes for chemical manufacturing; antibodies for separation
processes; and nitrogen-fixing microorganisms used by an agricultural company
to reduce fertilizer consumption.
2.7--Bulk Products means materials having at least one component coming
within Licensed Products, or produced by a Licensed Product, which material is
intended for further formulation processing or chemical transformation by a
manufacturer formulator or the like (as distinguished from a distributor,
retailer or Ultimate Consumer). Illustrative Bulk Products include an antibody
or a hormone sold to a chemical company for conversion into functional
chemicals.
2.8.--Net Sales means the gross sales, royalties or fees received by
Licensee, whether invoiced or not, less returns and allowances actually
granted, packing, insurance, freight out, taxes or excise duties imposed on the
transaction (if separately invoiced); wholesaler discounts and cash discounts.
2.9--First Commercial Sale means the initial transfer by LICENSEE of
Licensed Products in exchange for cash or some equivalent to which value can be
assigned for the purpose of determining Net Sales.
2.10--LICENSEE is understood to include all of its Affiliates. An Affiliate
of LICENSEE shall mean any corporation or other business entity controlled by
controlling or under common control, with LICENSEE. For this purpose,
"control" means direct or indirect beneficial ownership of at least fifty
percent (50%) of the voting stock or at least fifth percent (50%) interest in
the income of such corporation of other business.
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3. GRANT
3.1--STANFORD grants to LICENSEE a non-exclusive, non-transferable right and
license to make, have made, use and sell Licensed Products under Licensed
Patent Rights.
4. COMPLIANCE WITH LAWS, REGULATIONS AND STANDARDS
4.1--LICENSEE agrees to comply with all governmental laws and regulations
applicable to the use, production and/or sale of Licensed Products.
4.2--With respect to operations by the LICENSEE in the United States, its
territories and possessions, LICENSEE specifically expresses its intent to
comply with the physical and biological containment standards set forth in the
NIH Guidelines for Research Involving Recombinant DNA Molecules, dated 21
November 1980 or any subsequent amended version of U.S. Government guidelines
or regulations pertaining to such activities in effect during the term of this
Agreement LICENSEE further agrees to cooperate with government agency(ies)
authorized to monitor compliance with such containment standards.
5. GOVERNMENT TERMS
5.1--This Agreement is subject to the terms and conditions of the HHS, IP
with STANFORD dated April 5, 1972.
6. ROYALTIES
6.1--In consideration of the rights granted herein, LICENSEE shall pay to
STANFORD upon execution of this agreement . Thereafter, LICENSEE shall
pay a minimum annual advance on earned royalties of on or before the
first day of February for each calendar year following execution of this
agreement. Said payments are nonrefundable except that they can be credited
against earned royalties to the extent provided in paragraph 6.3.
6.2--All sales or use of Licensed Products by LICENSEE, excepting sales
under paragraph 10.1 to an Affiliate or another licensee of STANFORD or sales
to the United States Government shall be subject to royalty payment as provided
in paragraphs 6.3 to 6.7 inclusive.
6.3--Earned royalty payments due under Article 8 in excess of the annual
minimum may be reduced up to 50% in any one year by a credit. This
credit is equal to the unreimbursed cumulative excess of the advance royalties
paid in accordance with paragraph 6.1 over the total of the earned royalties
due under paragraph 6.4 to 6.6 inclusive. This reduction in earned royalty
payments may continue so long as is necessary to fully amortize the credit.
6.4--LICENSEE shall pay earned royalties for use of Licensed Patent Rights
for production and sale of End Products based on the total royalty bearing Net
Sales of End
Confidential portion has been omitted and filed separately with the Commission
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Products by LICENSEE. The earned royalty rate for End Products sold in the
U.S. is in each calendar year.
6.5--LICENSEE shall pay earned royalties for use of Licensed Patent Rights
to produce in the United States End Products and Bulk Products for sale outside
of the United States of of Net Sales of End Products and of Net Sales
of Bulk Products in each calendar year.
* SEE ATTACHED ADDENDUM TO PARAGRAPHS 6.4 and 6.5.
6.6--LICENSEE also shall pay earned royalties for use of Licensed Patent
Rights for production and sale of Licensed Products that are not End Products
as follows:
6.6.1--The earned royalty rate of Basic Genetic Products sold in the
U.S. shall be of Net Sales.
6.6.2--The earned royalty rate for Bulk Products sold in the U.S. is
in each calendar year.
6.6.3--The earned royalty rate for Process Improvement Products shall
be of cost savings and economic benefits enjoyed by LICENSEE in each
calendar year.
6.6.4--If LICENSEE can demonstrate that the royalty payments for a
product falling under Basic Genetic Products (paragraph 6.6.1), Bulk
Products (paragraphs 6.6.2) or Process Improvement Products (paragraph
6.6.3) are greater than the royalties that would result if calculated on
the End Product (for sales in the U.S. and other territories) made from or
with such product, it may request negotiation of a lower royalty comparable
to the End Product royalty. such negotiation will be initiated by notice
in writing from LICENSEE to STANFORD giving the nature of the product(s) to
be marketed by LICENSEE and expected use of the product(s).
6.7--If the parties cannot agree after negotiation upon equitable royalty
terms for the use of Licensed Patent Rights under subparagraph 6.6.4, then
either party may submit the matter for decision by arbitration in accordance
with paragraph 14.4. Fees for arbitration shall be borne by the LICENSEE, but
may be credited per paragraph 8.3 against royalties payable to LICENSEE under
the agreement established by means of the arbitration, until such arbitration
fees are fully recovered.
6.7.1--In arriving at a decision, the negotiators and arbitrator(s)
shall consider such factors as the size of the potential market for the
Licensed Product(s) involved the anticipated profit margin, the royalty
rates for End Products, the royalty that would be paid on the End Products
most likely to be prepared for the Ultimate Consumer from the Licensed
Product(s) in question and prevailing royalty rates in the industry to
which the Licensed Product(s) pertain.
Confidential portion has been omitted and filed separately with the Commission
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7. MORE FAVORED TERMS
7.1--STANFORD intends that the terms of all licenses under Licensed Patent
Rights are to be essentially similar to the terms of this license. STANFORD
will advise LICENSEE as to those terms which are different in such other
license agreements, unless said terms are consequent to the operation of any
provision of paragraphs 6.6.4, 6.7 and 6.7.1, whereupon LICENSEE may determine
whether such terms are more favorable that those granted herein. LICENSEE
shall, at its election, be entitled upon written notice to STANFORD to have
this Agreement amended to substitute all terms of such more favorable license
for all terms of this Agreement as of the date upon which such more favorable
license shall have become effective. Such amendment shall, as to royalty,
apply only to prospective royalties.
7.2--In the event LICENSEE chooses to exercise its option under paragraph
7.1. LICENSEE agrees that it shall also accept and be bound by the same terms
and conditions for the benefit of STANFORD as those which are a part of or
shall accompany such other license granted by STANFORD to a third party.
LICENSEE further agrees that in determining whether the royalty rate for a
particular product or process accorded the third party licensee is more
favorable STANFORD may assign a reasonable value to any patent rights or other
consideration it has or will receive in return for the grant of such other
license.
7.3--STANFORD has entered into prior license agreements for Licensed Patent
Rights. This Article 7 does not apply with respect to these prior license
agreements.
8. PAYMENTS AND REPORTS
8.1--LICENSEE agrees to notify STANFORD promptly in writing, of the date of
the First Commercial Sale of a Licensed Product and date of first transaction
under paragraph 10.1
8.2--Beginning with date of First Commercial Sale, royalties from LICENSEE
HEREUNDER (less the credits allowed by paragraphs 6.3 and 6.7 and less the
minimum annual royalty paid in advance for that calendar year) shall be paid to
STANFORD within ninety (90) days after the close of each subsequent calendar
quarter.
8.3--Total credits allowable by operation of paragraphs 6.3 and 6.7 shall in
no case exceed 50% of the excess of current earned royalties over the minimum
royalty due in any given year. Any amount so credited shall be credited only
once against earned royalties payable hereunder.
8.4--LICENSEE shall provide with each earned royalty payment of paragraph
8.2 statement of Net Sales and the applicable royalties in accordance with
Article 6 and a report of each transaction under paragraph 10.1. All such
reports shall be held in
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confidence by STANFORD. Such statements and reports shall be submitted whether
or not a payment in excess of the minimum is due.
8.5--STANFORD is a nonprofit institution. Any taxes, fees, or other charges
imposed by governmental authorities upon payments due STANFORD shall be paid by
LICENSEE. The amounts remitted shall be pursuant to payment terms of the
agreement.
8.6--To facilitate STANFORD's conformance with its Institutional Patent
Agreement, LICENSEE agrees to make an annual report to STANFORD each March 1
covering its progress during the previous calendar year toward
commercialization. Such report: may be general in nature and shall not
include company proprietary information.
8.7--LICENSEE also agrees to make a written report to STANFORD within ninety
(90) days after the date of termination of this License Agreement, stating in
such report the royalty payable hereunder which was not previously reported to
STANFORD LICENSEE shall also continue to make annual reports pursuant to the
provisions of this Article 8 covering Net Sales and the applicable royalties in
accordance with Article 6 received from sale of Licensed Products after
termination of this License Agreement until such time as all such sales shall
have terminated. Continuation of this License Agreement until such time as all
such sales shall have terminated. Concurrent with the submittal of each post-
termination report LICENSEE shall pay STANFORD all applicable royalties.
9. RECORDS
9.1--LICENSEE shall keep complete, true and accurate books of account and
records for the purpose of showing the derivation of all amounts payable to
STANFORD under this License Agreement. Said books and records shall be kept at
LICENSEE's principal place of business for at least three (3) years following
the end of the calendar year to which they pertain and shall be open at all
reasonable times for inspection by a representative of STANFORD for the purpose
of verifying LICENSEE's royalty statements or LICENSEE's compliance in other
respects to this License Agreement. This representative is obliged to treat as
confidential all relevant matters and should be acceptable to LICENSEE.
LICENSEE may specify that this representative be an independent Certified
Public Accountant.
10. OTHER TRANSFERS OF LICENSED PRODUCTS
10.1--It is anticipated that LICENSEE may supply Licensed Products to
Affiliate (as defined in paragraph 2.10) or to another licensee of STANFORD for
further processing and/or sale by the Affiliate or other licensee under
Licensed Patent Rights. No earned royalty shall be payable by LICENSEE with
respect to such Licensed Products, so long as the Affiliate or second licensee
shall be obligated to pay STANFORD royalty under Licensed Patent Rights on its
use or sales thereof. However, reports made by LICENSEE as provided in
paragraph 8.4 shall list each such transaction as a non-royalty bearing sale
and identify such Affiliate or other licensee.
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10.2--If an earned royalty payment has been made to STANFORD for a Licensed
Product used by LICENSEE to make another Licensed Product, that payment may be
deducted by LICENSEE from the earned royalty payment for such resulting
Licensed Product.
11. TERM AND TERMINATION
11.1 The term of this Agreement shall extend from the above effective date
until expiration of the last to expire of Licensed Patent Rights.
11.2 Upon any breach of or default under this License Agreement by
LICENSEE, STANFORD may terminate this License Agreement by ninety (90) days
written notice to LICENSEE. Said notice shall become effective at the end of
such period unless during said period LICENSEE cure such defect or default.
11.3 LICENSEE shall have the right to terminate this Agreement at any time
upon ninety (90) days written notice to STANFORD.
12. ASSIGNABILITY
12.1--This Agreement shall not be assigned except (a) with the advance
written consent of STANFORD or (b) as part of a sale or transfer of
substantially the entire business of LICENSEE relating to operations pursuant
to this license.
13. NEGATION OF WARRANTIES AND INDEMNITY
13.1--Nothing in this Agreement shall be construed as:
(a) a warranty or representation by STANFORD as to the validity or scope
of any Licensed Patent Rights; or
(b) a warranty or representation that anything made, used, sold or
otherwise disposed of under any license granted in this Agreement is
or will be free from infringement of patents of third parties; or
(c) an obligation to bring or prosecute actions or suits against third
parties for infringement; or
(d) conferring the right to use in advertising, publicity or otherwise
any trademark, tradename, or names, or any contraction, abbreviation,
simulation or adaptation thereof, of STANFORD other than Licensed
Patent Rights, regardless of whether such patents are dominant or
subordinate to Licensed Patent Rights (however
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STANFORD is not aware of any STANFORD patent or application dominant
to Licensed Patent Rights); or
(e) conferring by implication, estoppel or otherwise any license or
rights under any patents of STANFORD other than Licensed Patent
Rights, regardless of whether such patents are dominant or
subordinate to Licensed Patent Rights (however STANFORD is not aware
of any STANFORD patent or application dominant to Licensed Patent
Rights); or
(f) an obligation to furnish any know-how not provided in Licensed Patent
Rights.
13.2--STANFORD makes no representations other than those specified in
Article 1. STANFORD MAKES NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE.
13.3--LICENSEE shall defend indemnify and hold STANFORD harmless from and
against all liability, demands, damages, expenses and losses for death,
personal injury, illness or property damage (claims and damages) arising (a)
out of the use by LICENSEE of any method under Licensed Patent Rights, or (b)
out of any use, sale or other disposition of Licensed Products by LICENSEE or
its transferees. As used in this Section, STANFORD includes its trustees,
officers, agents and employees, and LICENSEE includes its Affiliates described
in paragraph 2.10. LICENSEE acknowledges that the technology licensed hereby
as experimental and agrees to take all reasonable precautions to prevent death,
personal injury, illness and property damage.
14. GENERAL
14.1--Neither party may waive or release any of its rights or interests in
this Agreement except in Writing. Failure to assert any right arising from
this Agreement shall not be deemed or construed to be a waiver of such right.
14.2--This License Agreement constitutes the entire agreement between the
parties relating to the subject matter thereof and all prior negotiations,
representations, agreements and understandings are merged into, extinguished
by, and completely expressed by it.
14.3--This Agreement and its effects are subject to and shall be construed
and enforced in accordance with the laws of the State of California.
14.4--Any dispute or controversy arising out of or relating to this License
Agreement its construction or its actual or alleged breaches shall be finally
decided by arbitration conducted in San Francisco, California, by and in
accordance with the Licensing Agreement Arbitration Rules of the American
Arbitration Association. Judgment upon the award rendered may be entered in
the highest court or forum, state or federal having jurisdiction, provided,
however, that the provisions of this Article 14 shall not apply to
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decision of the validity of patent claims or to any dispute or controversy as
to which any treaty or law prohibits such arbitration.
14.5--All notices required or permitted to be given by the terms of this
Agreement shall be given by prepaid registered or certified mail properly
addressed to the other party at the address designated below or to such other
address as may be designated in writing by such other party and shall be
effective as of the date of the postmark of such mail notice.
LICENSEE
Attention:
STANFORD
Office of Technology Licensing
Stanford University
857 Serra Street, 2nd Floor
Stanford, CA 94305-6225
U.S.A.
Attention: Director
This Agreement is effective as of the date first given above.
LICENSEE CALYPTE BIOMEDICAL CORPORATION
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By /s/ DAVID ROBISON
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Title President/CEO
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Date April 2, 1993
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THE BOARD OF TRUSTEES OF THE
LELAND STANFORD JUNIOR UNIVERSITY
By /s/ KATHERINE KU
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Title Director, Technology Licensing
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Date April 5, 1993
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STANFORD UNIVERSITY
OFFICE OF TECHNOLOGY LICENSING # 900 WELCH ROAD # SUITE 350
PALO ALTO, CA 94304-1850
(415) 723-0651 # FAX (415) 725-7295
ADDENDUM TO PARAGRAPHS 6.4 AND 6.5
The earned royalty rate for End Products comprising HIV diagnostic test kits
incorporating the recombinant technology covered by the Stanford patents sold
in the United States shall equal of Net sales derived from the sales of
such kits. The sale of such kits produced in the United States and sold
outside the United States shall bear an earned royalty rate of of their
Net Sales.
/s/ DAVID ROBINSON April 2, 1993
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Calypte Biomedical Approval Date
/s/ KATHERINE KU April 5, 1993
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Stanford University OTL Approval Date
Confidential portion has been omitted and filed separately with the Commission
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