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EXHIBIT 10.20
PATENT LICENSE AGREEMENT
THIS Sixteen (16) Page AGREEMENT ("AGREEMENT") is made by and between
the BOARD OF REGENTS ("BOARD") of THE UNIVERSITY OF TEXAS SYSTEM ("SYSTEM"), an
agency of the State of Texas, whose address is 201 West 7th Street, Austin Texas
78701, THE UNIVERSITY OF TEXAS M.D. ANDERSON CANCER CENTER ("MDA"), a component
Institution of the SYSTEM and SpectRx, a Norcross, Georgia corporation having a
principal place of business located at 6025 A Unity Drive, Norcross, GA 30071
("LICENSEE").
TABLE OF CONTENTS
RECITALS Page 2
I. EFFECTIVE DATE Page 2
II. DEFINITIONS Page 2
III. LICENSE Page 4
IV. CONSIDERATION, PAYMENTS, AND REPORTS Page 5
V. SPONSORED RESEARCH Page 8
VI. INFRINGEMENT BY THIRD PARTIES Page 9
VII. PATENT MARKING Page 9
VIII. INDEMNIFICATION Page 9
IX. USE OF BOARD AND COMPONENTS NAME Page 10
X. CONFIDENTIAL INFORMATION Page 10
XI. ASSIGNMENT Page 10
XII. TERMS AND TERMINATION Page 11
XIII. WARRANTY: SUPERIOR-RIGHTS Page 12
XIV. GENERAL Page 13
SIGNATURES Page 15
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RECITALS
A. BOARD owns certain PATENT RIGHTS related to LICENSED SUBJECT
MATTER, which were developed at MDA, a component institution
of SYSTEM.
B. BOARD desires to have the LICENSED SUBJECT MATTER developed in
the LICENSED FIELD and used for the benefit of LICENSEE, the
inventor, BOARD, and the public as outlined in the
Intellectual Property Policy promulgated by the BOARD.
C. LICENSEE wishes to obtain a license from BOARD to practice
LICENSED SUBJECT MATTER.
NOW, THEREFORE, in consideration of the mutual covenants and premises
herein contained, the parties hereto agree as follows:
I. EFFECTIVE DATE
1.1 This AGREEMENT shall be effective as of March 12, 1996 subject
to approval by BOARD ("EFFECTIVE DATE").
II. DEFINITIONS
As used in this AGREEMENT, the following terms shall have the meanings
indicated:
2.1 AFFILIATE shall mean any business entity more than 50% owned
by LICENSEE, any business entity which owns more than 50% of
LICENSEE, or any business entity that is more than 50% owned
by a business entity that owns more than 50% of LICENSEE.
2.2 LICENSED FIELD shall mean Optical Measurement of Bilirubin in
Human Tissue within the LICENSED SUBJECT MATTER.
2.3 LICENSED PRODUCTS shall mean any product or service SOLD by
LICENSEE comprising LICENSED SUBJECT MATTER pursuant to this
AGREEMENT.
2.4 LICENSED SUBJECT MATTER shall mean PATENT RIGHTS.
2.5 LICENSED TERRITORY shall mean the United States in which
LICENSED PRODUCTS are sold by LICENSEE.
2.6 NET SALES shall mean the gross revenues received by LICENSEE
from the SALE of LICENSED PRODUCTS less sales and/or use taxes
actually paid, import and/or
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export duties actually paid, outbound transportation prepaid
or allowed, and amounts allowed or credited due to returns
(not to exceed the original billing or invoice amount).
2.7 PATENT RIGHTS shall only mean any and all of BOARD'S rights
in information or discoveries claimed in U.S. Patent No.
5,353,790 issued and entitled "Methods and Apparatus for
Optical Measurement of Bilirubin in Tissue" and all
divisionals, continuations, continuations-in-part, reissues,
reexaminations or extensions thereof.
2.8 SALE or SOLD shall mean the transfer or disposition of a
LICENSED PRODUCT for value to a third party other than
LICENSEE or an AFFILIATE.
III. LICENSE
3.1 BOARD hereby grants to LICENSEE a royalty-bearing, exclusive
license under LICENSED SUBJECT MATTER to manufacture, have
manufactured, use and/or sell LICENSED PRODUCTS within
LICENSED TERRITORY for use within LICENSED FIELD and, subject
to Paragraph 4.5 herein, shall extend to BOARD's undivided
interest in any LICENSED SUBJECT MATTER developed during the
term of this AGREEMENT and jointly owned by BOARD and
LICENSEE. This grant shall be subject to Paragraph 14.2 and
14.3, hereinbelow, the payment by LICENSEE to BOARD of all
consideration as provided in Paragraph 4.2 of this AGREEMENT,
(as well as the timely payment of all amounts due under any
Sponsored Research Agreement between MDA and LICENSEE in
effect during the term of this AGREEMENT) and shall be further
subject to rights retained by BOARD and MDA to:
(a) Publish the general scientific findings from research
related to LICENSED SUBJECT MATTER. In the event that
MDA wishes to publish, MDA shall notify LICENSEE of
its desire to publish at least (30) days in advance
of publication and shall furnish to LICENSEE a
written description of the subject matter of the
publication in order to permit LICENSEE to review and
comment thereon; and
(b) Subject to the provisions of ARTICLE XI herein below,
use any information contained in LICENSED SUBJECT
MATTER for research, teaching, patient care, and
other educationally-related purposes.
3.2 LICENSEE shall have the right to extend the license granted
herein to any AFFILIATE provided that such AFFILIATE consents
to be bound by this AGREEMENT to the same extent as LICENSEE.
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3.3 Subject to the Paragraph 3.4 herein below, LICENSEE shall have
the right to grant sublicenses under LICENSED SUBJECT MATTER
consistent with the terms of this AGREEMENT provided that
LICENSEE shall be responsible for its sublicensees relevant to
this AGREEMENT, and for using its best reasonable efforts to
diligently collect all amounts due LICENSEE from subicensees.
In the event a sublicensee pursuant hereto becomes bankrupt,
insolvent or is placed in the hands of a receiver or trustee,
LICENSEE, to the extent allowed under applicable law and in a
timely manner, agrees to use its best reasonable efforts to
collect any and all consideration owed to LICENSEE and to have
the sublicense agreement confirmed or rejected by a court of
proper jurisdiction.
3.4 LICENSEE agrees to either.
(a) deliver to BOARD for BOARD'S approval a true and
correct copy of any sublicense granted by LICENSEE,
and any modification or termination thereof, within
thirty (30) days after execution, modification, or
termination; and upon termination of this AGREEMENT,
any and all sublicenses granted by LICENSEE and
approved by BOARD shall be assigned to BOARD; or
(b) deliver to BOARD for BOARD'S Information a true and
correct copy of each sublicense granted by LICENSEE,
and any modification or termination thereof, within
thirty (30) days after execution, modification, or
termination; and upon termination of this AGREEMENT,
any and all existing sublicenses granted by LICENSEE
and not approved by BOARD shall be terminated, unless
otherwise agreed to in writing by BOARD.
IV. CONSIDERATION, PAYMENTS AND REPORTS
4.1 In consideration of rights granted by BOARD to LICENSEE under
this AGREEMENT, LICENSEE agrees to pay MDA the following:
(a) [*] for all out-of-pocket expenses incurred by MDA
through [*] in filing, prosecuting, enforcing and
maintaining PATENT RIGHTS licensed hereunder. SPECTRX
will pay all future patent maintenance expenses for
so long as, and in such countries as, this AGREEMENT
remains in effect. One half of these total patent
expenses [*] will be due upon execution, and the
other half will be due at the time of the first FDA
510K filing. MDA will invoice LICENSEE upon approval
of this AGREEMENT by BOARD, and upon a
quarterly basis thereafter beginning [*] for
expenses incurred by MDA after [*] and the amounts
invoiced will be due and payable by LICENSEE within
thirty (30) days thereafter; and
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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(b) A non-refundable license documentation fee to be made
in staged payments in the total amount of $50,000.00,
which shall not reduce the amount of any other
payment provided for in this ARTICLE IV, and which
shall be due and payable within thirty (30) days when
invoiced by MDA as follows:
(i) [*] upon execution of this Agreement by
BOARD;
(ii) [*] upon the completion by LICENSEE of data
collection, analysis, and review of the
feasibility studies, but no later than sixty
(60) days following the entry of the last
patient in the clinical study;
(iii) [*] upon the first FDA 510K filing; and
(iv) [*] upon first FDA 510K approval.
(c) A running royalty equal to [*] of LICENSEE'S NET
SALES of LICENSED PRODUCTS in LICENSED TERRITORY and
[*] of LICENSEE'S NET SALES of LICENSED PRODUCTS
outside of LICENSED TERRITORY as long as there are no
competing products outside of LICENSED TERRITORY
(with minimum annual royalties of [*], and [*] of all
consideration other than Research and Development
("R&D") money received by LICENSEE from any
sublicensee pursuant to Paragraphs 3.3 and 3.4 herein
above, including but not limited to royalties,
up-front payments, marketing, distribution,
franchise, option, license, or documentation fees,
bonus and milestone payments and equity securities,
payable within thirty (30) days after March 31, June
30, September 30, and December 31, at which time
LICENSEE shall also deliver to BOARD and MDA a true
and accurate report, giving such particulars of the
business conducted by LICENSEE and its sublicensee,
if any exist, during the preceding three (3) calendar
months under this AGREEMENT as are pertinent to an
account for payments hereunder. Such report shall
include at least (a) the quantities of LICENSED
PRODUCTS that it has produced; (b) the total SALES,
(c) the calculation of royalties thereon; and (d) the
total royalties so computed and due BOARD. In the
event that there are competing products outside of
LICENSED TERRITORY, then no royalty will be due
related to that specific territory. Simultaneously
with the delivery of each such report, LICENSEE shall
pay to BOARD the amount, if any, due for the period
of such report. The requirement to pay minimum annual
royalties shall commence upon FDA final approval of
the LICENSED PRODUCTS. A pro rata portion of the
annual minimum royalties shall be payable in respect
of any partial period not constituting a full year.
Should LICENSEE be obligated to pay running royalties
to third parties to avoid infringing such third
parties' patent rights which dominate BOARD'S PATENT
RIGHTS, LICENSEE may reduce the running royalty due
MDA by such running royalties to such third parties,
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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provided, however, the running royalty due MDA shall
in no case be less than one-half the rates stated
herein above.
4.2 During the Term of this AGREEMENT and for one (1) year
thereafter, LICENSEE shall keep complete and accurate records
of its and its sublicensees' SALES and NET SALES of LICENSED
PRODUCTS to enable the royalties payable hereunder to be
determined. LICENSEE shall permit BOARD or its
representatives, at BOARD'S expense, to periodically examine
after reasonable written notice to LICENSEE its books,
ledgers, and records during regular business hours for the
purpose of and to the extent necessary to verify any report
required under this AGREEMENT. In the event that the amounts
due to BOARD are determined to have been underpaid in an
amount equal to or greater than five percent (5%) of the total
amount due during the period of time so examined, LICENSEE
shall pay the cost of such examination, and accrued interest
at prime rate plus 10% (ten percent).
4.3 Upon the request of BOARD or MDA but not more often than once
per calendar year, LICENSEE shall deliver to BOARD and MDA a
written report as to LICENSEE'S efforts and accomplishments
during the preceding year in commercializing LICENSED SUBJECT
MATTER in the LICENSED TERRITORY and LICENSEE'S
commercialization plans for the upcoming year. Such report
will be deemed for all purposes to be confidential information
governed by Article XI hereof.
4.4 All amounts payable hereunder by LICENSEE shall be payable in
United States funds without deductions for taxes, assessments,
fees, or charges of any kind. Checks shall be made payable to
The University of Texas M. D. Anderson Cancer Center and
mailed by U.S. Mail to Box 297402, Houston, Texas 77297
Attention: Manager, Sponsored Programs.
4.5 No payments due or royalty rates under this AGREEMENT shall be
reduced as the result of co-ownership of LICENSED SUBJECT
MATTER by BOARD and another party, including LICENSEE.
V. SPONSORED RESEARCH
If LICENSEE desires to fund sponsored research, within LICENSED SUBJECT
MATTER and particularly where LICENSEE receives money for sponsored research
payments pursuant to a sublicense, LICENSEE shall notify MDA in writing of all
opportunities to conduct such sponsored research (including clinical trials, if
applicable), shall solicit research and/or clinical proposals from MDA for such
purpose, and shall give good faith consideration to funding such proposals at
MDA.
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VI. INFRINGEMENT BY THIRD PARTIES
6.1 LICENSEE shall have the obligation of enforcing at its expense
any patent exclusively licensed hereunder against infringement
by third parties and shall be entitled to retain recovery from
such enforcement. LICENSEE shall pay MDA a royalty on any
monetary recovery, net of LICENSEE'S direct out-of-pocket
expenses from such enforcement not otherwise paid to third
parties, to the extent that such monetary recovery by LICENSEE
is held to be damages or a reasonable royalty in lieu thereof.
In the event that LICENSEE does not file suit against a
substantial infringer of such patents within six (6) months of
knowledge thereof, then BOARD shall have the right to enforce
any patent licensed hereunder on behalf of itself and LICENSEE
(MDA retaining all recoveries from such enforcement) and/or
reduce the license granted hereunder to non-exclusive.
6.2 In any suit or dispute involving a third party infringer, the
parties shall cooperate fully, and upon the request and at the
expense of the party bringing suit, the other party shall make
available to the party bringing suit at reasonable times and
under appropriate conditions all relevant personnel, records,
papers, information, samples, specimens, and the like which
are in its possession.
VII. PATENT MARKING
7.1 LICENSEE agrees that all packaging containing individual
LICENSED PRODUCT(S), and documentation therefor, sold by
LICENSEE, AFFILIATE, and sublicensees of LICENSEE will be
marked permanently and legibly with the number of the
applicable patent(s) licensed hereunder in accordance with
each country's patent laws, including Title 35, United States
Code.
VIII. INDEMNIFICATION
8.1 LICENSEE shall hold harmless and indemnify BOARD, SYSTEM, MDA,
its Regents, officers, employees, students, and agents from
and against any claims, demand, or causes of action
whatsoever, costs of suit and reasonable attorney's fees
including without limitation those costs arising on account of
any injury or death of persons or damage to property caused
by, or arising out of, or resulting from, the exercise or
practice of the license granted hereunder by LICENSEE or its
officers, employees, agents or representatives.
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IX. USE OF BOARD AND COMPONENTS NAME
9.1 LICENSEE shall not use the name of (or the name of any
employee of ) MDA, SYSTEM or BOARD without the advance,
express written consent of BOARD secured through:
The University of Texas
M. D. Anderson Cancer Center
Office of Public Affairs
1515 Holcombe Boulevard
Box 229
Houston, Texas 77030
ATTENTION: Stephen C. Stuyck
X. CONFIDENTIAL INFORMATION
10.1 BOARD and LICENSEE each agree that all information contained
in documents marked "confidential" which are forwarded to one
by the other shall be received in strict confidence, used only
for the purposes of this AGREEMENT, and not disclosed by the
recipient party (except as required by law or court order),
its agents or employees without the prior written consent of
the other party, unless such information (a) was in the public
domain at the time of disclosure, (b) later became part of the
public domain through no act or omission of the recipient
party, its employees, agents, successors or assigns, (c) was
lawfully disclosed to the recipient party by a third party
having the right to disclose it, (d) was already known by the
recipient party at the time of disclosure, (e) was
independently developed or (f) is required to be submitted to
a government agency pursuant to any preexisting obligation.
10.2 Each party's obligation of confidence hereunder shall be
fulfilled by using at least the same degree of care with the
other party's confidential information as it uses to protect
its own confidential information. This obligation shall exist
while this AGREEMENT is in force and for a period of three (3)
years thereafter.
XI. ASSIGNMENT
11.1 Except to effect the sale and transfer of all or substantially
all of LICENSEE'S assets to a third party, this AGREEMENT may
not be assigned by LICENSEE without the prior written consent
of BOARD.
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XII. TERMS AND TERMINATION
12.1 The term of this AGREEMENT shall extend from the Effective
Date set forth hereinabove to the full end of the term or
terms for which PATENT RIGHTS have not expired or been
declared invalid by a court of final jurisdiction.
12.2 BOARD shall have the right at any time after one (1) year from
the EFFECTIVE DATE of this AGREEMENT to terminate the license
granted herein if LICENSEE, within ninety days after written
notice from BOARD of such intended termination, fails to
provide written evidence satisfactory to BOARD that LICENSEE
has commercialized or is actively and effectively attempting
to commercialize an invention licensed hereunder within such
jurisdiction. Accurate, written evidence provided by LICENSEE
to BOARD within said ninety (90) day period that LICENSEE has
an effective, ongoing and active research, development,
manufacturing, marketing, sales and/or licensing program, as
appropriate, directed toward obtaining regulatory approval
and/or production and/or sale of LICENSED PRODUCTS
incorporating PATENT RIGHTS shall be deemed satisfactory
evidence.
12.3 Subject to any rights herein which survive termination, this
AGREEMENT will earlier terminate in its entirety:
(a) automatically if LICENSEE shall become bankrupt or
insolvent and/or if the business of LICENSEE shall be
placed in the hands of a receiver or trustee, whether
by voluntary act of LICENSEE or otherwise; or
(b) (i) upon thirty (30) days written notice by BOARD if
LICENSEE shall breach or default on the payment
obligations of ARTICLE IV, or use of name obligations
of ARTICLE X; or (ii) upon ninety (90) days written
notice by BOARD if LICENSEE shall breach or default
on any other obligation under this AGREEMENT;
provided, however, LICENSEE may avoid such
termination if before the end of such thirty (30) or
ninety (90) day period if LICENSEE provides notice
and accurate, written evidence satisfactory to BOARD
that such breach has been cured or that LICENSEE has
commenced all reasonable action to cure as soon as
possible and the manner of such cure; or
(c) at any time by mutual written agreement between
LICENSEE and BOARD, or without cause upon one hundred
eighty (180) days written notice by LICENSEE to
BOARD, subject to any rights herein which survive
termination.
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12.4 Upon termination of this AGREEMENT for any cause:
(a) nothing herein shall be construed to release either
party of any obligation matured prior to the
effective date of such termination.
(b) LICENSEE and the BOARD covenant and agree to be bound
by the provisions of ARTICLES IX, X AND XI of this
AGREEMENT.
(c) LICENSEE (and its SUBLICENSEES) may, after the
effective date of such termination, sell all LICENSED
PRODUCTS and parts therefore that it may have on hand
at the date of termination, provided that LICENSEE
pays the earned royalty thereon and any other amounts
due pursuant to ARTICLE IV of this AGREEMENT.
XIII. WARRANTY: SUPERIOR-RIGHTS
13.1 Except for the rights, if any, of the Government of the United
States as set forth herein below, BOARD represents and
warrants its belief that it is the owner of the entire right,
title, and interest in and to LICENSED SUBJECT MATTER, and
that it has the sole right to grant licenses thereunder, and
that it has not knowingly granted licenses thereunder to any
other entity that would restrict rights granted hereunder
except as stated herein.
13.2 LICENSEE understands that the LICENSED SUBJECT MATTER may have
been developed under a funding agreement with the Government
of the United States of America and, if so, that the
Government may have certain rights relative thereto. This
AGREEMENT is explicitly made subject to the Government's
rights under any such agreement and any applicable law or
regulation, including P.L. 96-517 as amended by P.L. 98-620.
To the extent that there is a conflict between any such
agreement, applicable law or regulation and this AGREEMENT,
the terms of such Government agreement, applicable law or
regulation shall prevail.
13.3 LICENSEE understands and agrees that BOARD, by this AGREEMENT,
makes no representation as to the operability or fitness for
any use, safety, efficacy, approvability by regulatory
authorities, time and cost of development, patentability,
and/or breadth of the LICENSED SUBJECT MATTER. BOARD, by this
AGREEMENT, makes no representation as to whether there are any
patents now held, or which will be held, by others or by BOARD
in the LICENSED FIELD, nor does BOARD make any representation
that the inventions contained in PATENT RIGHTS do not infringe
any other patents now held or that will be held by others or
by BOARD.
13.4 LICENSEE, by execution hereof, acknowledges, covenants and
agrees that LICENSEE has not been induced in anyway by BOARD,
SYSTEM, MDA or
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employees thereof to enter into this Agreement, and further
agrees that LICENSEE has conducted sufficient due diligence
with respect to all items and issues pertaining to Article XIV
herein and all other matters pertaining to this Agreement and
agrees to accept all risks inherent herein.
XIV. GENERAL
14.1 This AGREEMENT constitutes the entire and only AGREEMENT
between the parties for LICENSED SUBJECT MATTER and all other
prior negotiations, representations, agreements and
understandings are superseded hereby. No agreements altering
or supplementing the terms hereof may be made except by means
of a written document signed by the duly authorized
representatives of the parties.
14.2 Any notice required by this AGREEMENT shall be given by
prepaid, first class, certified mail, return receipt
requested, and addressed in the case of BOARD to:
BOARD OF REGENTS
The University of Texas System
201 West Seventh Street
Austin, Texas 78701
ATTENTION: Office of General
Counsel
with copy to: The University of Texas
M.D. Anderson Cancer Center
Office of Technology Development
1020 Holcombe Boulevard, Suite 1405
Houston, Texas 77030
ATTENTION: William J. Doty
or in the case of LICENSEE to: SPECTRX, INC.
6025 A Unity Drive
Norcross, Georgia 30071
ATTENTION: Mark A. Samuels
or such other address as may be given from time to time under the terms of this
notice provision.
14.3 Each party hereto covenants and agrees to comply with all
applicable federal, state and local laws and regulations in
connection with its activities pursuant to this AGREEMENT.
14.4 This AGREEMENT shall be construed and enforced in accordance
with the laws of the United States of America and of the State
of Texas.
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14.5 Failure of any party hereto to enforce a right under this
AGREEMENT shall not act as a waiver of that right or the
ability to later assert that right relative to the particular
situation involved.
14.6 Headings included herein are for convenience only and shall
not be used to construe this AGREEMENT.
14.7 If any provision of this AGREEMENT shall be found by a court
to be void, invalid or unenforceable, the same shall be
reformed to comply with applicable law or stricken if not so
conformable, so as not to affect the validity or
enforceability of this AGREEMENT.
14.8 Upon the request of LICENSEE, LICENSOR shall reasonably assist
LICENSEE in recording this Agreement in the records of the
U.S. Patent and Trademark Office at LICENSEE'S expense.
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IN WITNESS WHEREOF, parties hereto have caused their duly authorized
representatives to execute this AGREEMENT.
THE UNIVERSITY OF TEXAS BOARD OF REGENTS OF THE
M.D. ANDERSON CANCER CENTER UNIVERSITY OF TEXAS SYSTEM
By: /s/David J. Bachrach By: /s/Ray Farabee
------------------------------------- ----------------------------------
David J. Bachrach Ray Farabee
Executive Vice President Vice Chancellor and
for Administration and Finance General Counsel
APPROVED AS TO CONTENT: APPROVED AS TO FORM:
By: /s/William J. Doty By: /s/Dudley R. Dobie, Jr.
------------------------------------- ----------------------------------
William J. Doty Dudley R. Dobie, Jr.
Director, Technology Development Manager, Intellectual Property
SPECTRX, INC.
By: /s/Mark A. Samuels
-------------------------------------
Mark A. Samuels
President and CEO
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EXHIBIT 1
[*]
[*]
[*]
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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