Exhibit 10(a)(5)
PARTIALLY EXCLUSIVE LICENSE
Between
LIFE POINT, INC.
And
UNITED STATES OF AMERICA
As Represented By
THE SECRETARY OF THE NAVY
NRL-LIC-99-5-066
INDEX
Page
Preamble............................................... 3
Article I Definitions............................ 6
Article II LICENSE Grant.......................... 9
Article III LICENSEE's Performance................. 10
Article IV Royalties.............................. 11
Article V Sublicensing........................... 14
Article VI Patent Marking and Nonendorsement...... 15
Article VII Reservation of Rights.................. 15
Article VIII Representation and Warranties ......... 16
Article IX Reports ............................... 17
Article X Modification and Termination........... 17
Article XI Litigation............................. 20
Article XII Notice................................. 21
Schedule List of Foreign Countries .................... 23
PREAMBLE
This partially exclusive license (hereinafter called "LICENSE") is made
and entered into by and between the United States of America as represented
by the Secretary of the Navy (hereinafter called "LICENSOR") and Life Point,
Inc., a corporation organized and existing under the laws of the State of
Delaware (hereinafter called "LICENSEE") having an address at 10400 Trademark
Street, Rancho Cucamonga, CA 91730.
WITNESSETH:
WHEREAS Title 35 of the United States Code, Section 207, authorizes
Federal agencies to license their patents; and
WHEREAS Title 37 of the Code of Federal Regulations, Chapter IV, Part
404 entitled "Licensing of Government Owned Inventions" sets forth the terms
and conditions under which licenses may be granted; and
WHEREAS the above-cited authorities provide that licensing of Government
inventions will best serve the interests of the Federal Government and the
public when utilization of such inventions is promoted and such inventions
are brought to practical application; and
WHEREAS LICENSOR has an assignment of title to the invention disclosed
and claimed in U.S. Patent Application Serial No. 07/486,024 filed February 23,
1990, and issued on February 2, 1993, as U.S. Patent No. 5,183,740 for "Flow
Immunosensor Method and Apparatus"; and to the corresponding foreign patent
applications in the attached Schedule; and
WHEREAS LICENSOR has published in the Federal Register of September 19,
1991, the availability of a license under U.S. Patent Application Serial No.
07/486,024; and
WHEREAS LICENSEE has supplied LICENSOR with plans for development and
marketing of this invention and has expressed its intention to carry out this
plan upon the granting of this LICENSE; and
WHEREAS LICENSEE has agreed that any products embodying this invention
or produced through the use of this invention for use or sale in the United
States will be manufactured substantially in the United States, its territories
or possessions, the District of Columbia or the Commonwealth of Puerto Rico;
and
WHEREAS LICENSOR has published in the Federal Register of November 7,
1991, December 9, 1993, and of January 2, 1998, notice of its intention to
grant this LICENSE under U.S. Patent Application Serial No. 07/486,024 and
under U.S. Patent No. 5,183,740, and corresponding foreign patent applications
to LICENSEE and has provided the public with an opportunity for filing written
objections; and
WHEREAS a partially exclusive license (the original License) was signed
on January 24, 1992, between U.S. Alcohol Testing of America, Inc. (USAT), and
the United States of America as represented by the Secretary of the Navy.
WHEREAS USAT and U.S. Drug Testing, Inc. (USD), a wholly owned
subsidiary of USAT, signed and the Navy consented to a sublicense on September
23, 1993, in which USD assumed all rights and undertook all obligations of USAT
under the January 24, 1992 License.
WHEREAS USAT became known as Substance Abuse Technologies, Inc. (SAT).
WHEREAS SAT filed for Chapter 11 bankruptcy. (United States Bankruptcy
Court, Southern District of Florida, Ft. Lauderdale Division, Case No.
97-25669-BKC-RBR).
WHEREAS SAT assigned, and the U.S. Navy consented, the original License
to USD.
WHEREAS USD became known as Life Point, Inc., in 1998.
WHEREAS LICENSOR has determined that:
(A) The interest of the Federal Government and the public will best be
served by the proposed license, in view of the LICENSEE's intentions, plans,
and ability to bring the invention described and claimed in U.S. Patent
Application Serial No. 07/486,024 (now U.S. Patent No. 5,183,740) to practical
application or otherwise promote the invention's utilization by the public;
(B) The desired practical application has not been achieved, or is
not likely expeditiously to be achieved, under any nonexclusive license which
has been granted, or which may be granted, on the invention;
(C) Exclusive licensing is a reasonable and necessary incentive to
call forth the investment of risk capital and expenditures to bring the
invention to practical application or otherwise promote the invention's
utilization by the public;
(D) The proposed terms and scope of exclusivity are not greater
than reasonably necessary to provide the incentive for bringing the invention
to practical application or otherwise promote the invention's utilization by
the public; and
WHEREAS LICENSOR has not determined that the grant of this LICENSE will
tend substantially to lessen competition or result in undue concentration in
any section of the country in any line of commerce to which the technology to
be licensed relates or to create or maintain other situations inconsistent with
the antitrust laws; and
WHEREAS LICENSOR has considered the capabilities of LICENSEE to bring
the invention to practical application and has found that the LICENSEE is a
responsible party for negotiating this LICENSE on terms and conditions most
favorable to the public interest and that to grant this exclusive LICENSE
would be in the public interest; and
WHEREAS LICENSOR has considered that the interests of the Federal
Government or United States industry in foreign commerce will be enhanced;
NOW, THEREFORE, in accordance with and to the extent provided by the
aforementioned authorities and in consideration of the foregoing premises and
of the covenants and obligations hereinafter set forth to be well and truly
performed, and other good and valuable consideration, the parties hereto agree
to the foregoing and as follows:
ARTICLE I
Definitions
The parties to this LICENSE agree that the following definitions shall
apply to the defined words where such words are used in this LICENSE:
a. The "licensed patent" means U.S. Patent Application Serial No.
07/486,024 entitled "Flow Immunosensor Method and Apparatus" filed February 23,
1990, and issued on February 2, 1993, as U.S. Patent No. 5,183,740 to Frances S.
Ligler, Bruce P. Gaber, Anne W. Kusterbeck, and Gregory A. Wemhoff, and any
reissues, continuation or division thereof (to the extent that the inventions
are claimed in the patent application on the effective date of this (LICENSE)
and any corresponding foreign patent applications filed in the licensed
territory or foreign patents issued in the licensed territory;
b. The "licensed invention" means an invention described and
claimed in U.S. Patent Application Serial No. 07/486,024 (now U.S. Patent No.
5,183,740) entitled "Flow Immunosensor Method and Apparatus" filed February 23,
1990, by Frances S. Ligler, Bruce P. Gaber, Anne W. Kusterbeck and Gregory A.
Wemhoff; and the corresponding foreign patent applications identified in the
attached Schedule and all divisions and continuations of such patent
applications (licensed patent applications), and all patents granted on such
patent applications and all reissues, renewals and extensions of such patents
(licensed patents);
c. To "practice the licensed invention" means to make, use and
sell by or on behalf of LICENSEE or otherwise dispose of according to law any
machine, article of manufacture or composition of matter physically embodying
a licensed invention or perform any process claimed in or made according to a
licensed invention;
d. "Practical application" means to manufacture in the case of a
composition or product, to practice in the case of a process or method, or to
operate in the case of a machine or system, and, in each case under such
conditions as to establish that this licensed invention is being utilized and
that its benefits are to the extent permitted by law and Government regulations
available to the public on reasonable terms;
e. A "royalty-bearing product" means any product defined by any
claim of the licensed patent or made by a method claimed in the licensed patent,
applications or licensed patents or any product used to perform any method
claimed in a licensed patent application or a licensed patent;
f. The "net selling price" shall mean the invoice price of a
royalty-bearing product sold and paid for and not returned less customary
discounts, allowances, freight, duties, taxes, and returns, but it only
includes such deductions up to fifteen percent (15%) of the invoice price.
A royalty-bearing product will be considered to be sold when shipped or
delivered to a customer. When a royalty-bearing product is not sold, but is
made, used or transferred for consideration other than money, the net sales
price of the product for purposes of computing royalties shall be the selling
price of a comparable product that is sold in comparable quantities in an arms
length transaction or the fair market price if no sale of a comparable product
has been made. This specifically excludes instrument placements at no charge
providing that a sales charge is added to the cassettes sold for these
instruments;
g. "United States" means the United States of America, its
territories and possessions, the District of Columbia, and the Commonwealth of
Puerto Rico;
h. The "licensed territory" shall mean those countries listed in
the attached Schedule and in which a licensed patent subsists;
i. "Drugs of abuse" means cocaine, opiates (heroin, morphine and
codeine), amphetamines, phencyclidine hydrochloride (PCP), and
tetrahydrocannabinols (THC, marijuana) and any other drugs that might be added
to the National Institute of Drug Abuse (NIDA) list of Drugs of Abuse;
j. A "grace period" is the period after October 1 of a calendar
year and before January 1 of the following calendar year.
ARTICLE II
LICENSE Grant
LICENSOR agrees to and does hereby grant to LICENSEE an exclusive right
and license to practice the licensed invention throughout the United States and
in the licensed territory in the field of saliva based human diagnostics and
urine based testing for drugs of abuse and urine based testing for Methadone,
Benzodiazapines Barbituates, Propoxyphene, Tricyclic Antidepressants and
Anabolic Steroids commencing on the date of execution of this LICENSE by
LICENSOR, which shall become the effective date of the LICENSE, and continuing
until the expiration of U.S. Patent No. 5,183,740, and any reissues,
continuation or division thereof (to the extent that the inventions are claimed
in the patent application on the effective date of this LICENSE) and any
corresponding foreign patent applications filed in the licensed territory or
foreign patents issued in the licensed territory, unless the LICENSE is sooner
modified or terminated in whole or in part.
This LICENSE is nonassignable without written approval of LICENSOR
except to the successor of that part of LICENSEE's business to which this
licensed invention pertains.
ARTICLE III
LICENSEE's Performance
LICENSEE agrees to carry out the plan for development and marketing of
a licensed invention submitted with LICENSEE's Application for License dated
September 9, 1991, as amended by LICENSEE's letter dated October 15, 1991, and
LICENSEE's Application for License dated October 13, 1997, as amended by
LICENSEE's letter dated November 4, 1998, to bring this licensed invention to
practical application within twenty (20) months after execution of this LICENSE,
and LICENSEE will, thereafter, continue to make the benefits of this licensed
invention reasonably accessible to the public for the remainder of the period
of this LICENSE.
LICENSEE agrees that during the period of this LICENSE any products
embodying this licensed invention or produced through the use of a licensed
invention for use or sale by LICENSEE or its sublicensees in the United States
or in the licensed territory will be manufactured substantially in the United
States.
LICENSEE agrees to pay to LICENSOR one-third of any licensing fee
collected from any sublicensee. Payment will be made in the manner prescribed
in Article IV.
LICENSEE agrees to report promptly to LICENSOR any changes in mailing
address, name or company affiliation during the period of this LICENSE and to
report promptly discontinuance of LICENSEE's making the benefits of this
licensed invention reasonably accessible to the United States public.
ARTICLE IV
Royalties
LICENSEE shall pay a royalty to LICENSOR in accordance with the Royalty
Schedule shown below for each royalty-bearing product made, used, or sold by
LICENSEE or its sublicensees in the United States or in the licensed territory.
Notwithstanding the Royalty Schedule, the royalty paid by the LICENSEE to the
LICENSOR will not exceed twenty five percent (25%) of the LICENSEE's net profit
after taxes paid on an annual basis.
Net profit after taxes paid for each royalty-bearing product will be
defined as net income excluding one time extraordinary charges and royalty
payments, and will be a subject of audit by Life Point's independent public
accountants and conducted in accordance with generally accepted auditing
standards.
Royalty Schedule
Item Royalty
Cassette panel used for Three percent (3%) of the first
saliva anaylsis one hundred million dollars
($100,000,000) of net sales in
any year and one and a half percent
(1-1/2%) of net sales in excess of
one hundred million dollars
($100,000,000) in any year. Royalty
rate shall be prorated for the number
of immunoassay channels as a percent
of the total number of test channels
in any cassette.
Cassette panel used Five percent (5%) of the first one
for urine analysis hundred million dollars
($100,000,000) of net sales in any
year and two and a half percent
(2-1/2%) of net sales in excess of
one hundred million dollars
($100,000,000) in any year. Royalty
rate shall be prorated for the number
of immunoassay channels as a percent
of the total number of test channels
in any cassette.
Instruments for managing the One percent (1%) of net sales of
analytical functions using the instrument, instrument leases minus
saliva and urine cassette panels financing charges, and instrument
portion of cassette sales
Royalties will not be paid on items sold directly to agencies of the U.S.
Government or for known U.S. Government end use.
Notwithstanding the provisions of the preceding paragraphs in this
Article IV, LICENSEE agrees to pay at least a minimum annual royalty of fifty
thousand dollars ($50,000) for calendar year 2001, and one hundred thousand
dollars ($100,000) each year thereafter throughout the period of the LICENSE.
The minimum annual royalty for each calendar year shall be due and payable in
advance on or before October 1 of the preceding year and will be credited as
advance payment of royalties to accrue during the calendar year following
payment. The minimum annual royalty payments will not be refunded in whole or
in part.
LICENSEE shall send to LICENSOR all royalties which accrue between
January 1 and December 31 of each year by March 1 of the following year. A
royalty report shall be included with each payment setting forth the quantity
and net selling price of each royalty-bearing product sold during the period
covered by the report, to whom sold and the date of such sale, and the total
amount of royalties being paid for that year. Royalty reports shall break out
separately by country the royalties accrued by sales of royalty bearing
products in each country. Royalty reports are due each calendar year. The last
royalty report is due sixty (60) days after the expiration of this LICENSE. If
these reports are marked as company proprietary, they will be treated as
commercial and financial information obtained from a person and privileged and
confidential and not subject to disclosure under Section 552 of Title 5 of the
United States Code as provided in 37 CFR Ch. IV, Section 404.14.
All payments due LICENSOR under this LICENSE shall be made payable to
the "DFAS-CH DSSN 8347" and mailed to:
Deputy Counsel (Intellectual Property)
Office of Naval Research
Code OOCCIP, Room 207
800 North Quincy Street
Arlington, VA 22217-5660
LICENSEE agrees to make and keep full, accurate and complete books and
records as are necessary to establish its compliance with this Article IV.
LICENSEE agrees that LICENSOR may, if LICENSOR so desires at a future
time or times, have a duly authorized agent or representative in LICENSOR's
behalf inspect, check or verify all such books and records either at LICENSEE's
business premises or at a place mutually agreed upon by LICENSEE and LICENSOR.
ARTICLE V
Sublicensing
LICENSEE may grant, subject to the approval of LICENSOR, sublicenses
under this LICENSE in the field of saliva based human diagnostics and urine
based testing for drugs of abuse and urine based testing for Methadone,
Benzodiazapines Barbituates, Propoxyphene, Tricyclic Antidepressants and
Anabolic Steroids upon terms and conditions that LICENSEE may arrange provided
that:
a. Each sublicense shall be subject to the terms and conditions
of this LICENSE and shall be in writing and make reference to this LICENSE
including the rights retained by LICENSOR under this LICENSE; and
b. Each sublicense shall specify that it is granted pursuant to
this LICENSE, that no provision shall be in derogation of or diminish any
rights in this LICENSE and include the condition that the sublicense shall
automatically be modified or terminated in whole or in part upon the
modification or termination in whole or in part of this LICENSE; and
c. Before any sublicense is granted by LICENSEE, the written
approval of LICENSOR shall first be obtained for each sublicense; and
d. Within thirty (30) days after the issuance or modification of
any sublicense hereunder, LICENSEE shall furnish LICENSOR with a true and
complete copy of the sublicense or any modification thereof; and
e. The granting of any sublicense by LICENSEE shall in no way
relieve LICENSEE from any of the requirements of this LICENSE. Any sublicense
granted by LICENSEE that does not comply with the requirements of this
Article V is void.
ARTICLE VI
Patent Marking and Nonendorsement
LICENSEE hereby agrees to mark each product manufactured or sold under
this LICENSE (or when the character of the product precludes marking, the
package containing any such product) with the notation "Licensed from U.S.
Navy under U.S. Patent No. 5,183,740", and foreign patent applications and
foreign patents, as appropriate. LICENSEE agrees not to create the appearance
that LICENSOR endorses LICENSEE's business or products.
ARTICLE VII
Reservation of Rights
LICENSOR reserves the right to require LICENSEE to and LICENSEE agrees
to grant promptly sublicenses to responsible applicants on reasonable terms
when necessary to fulfill health and safety needs of the public to the extent
such needs are not being reasonably satisfied by LICENSEE and its sublicensees.
This LICENSE is subject to the irrevocable, royalty-free right of the
Government of the United States to practice and have practiced this licensed
invention throughout the world by or on behalf of the United States and by or
on behalf of any foreign government or intergovernmental or international
organization pursuant to any existing or future treaty or agreement with the
Government of the United States.
This LICENSE is subject to any licenses in force at the time of the
grant of this LICENSE.
ARTICLE VIII
Representation and Warranties
LICENSOR makes no representation or warranty as to the patentability or
validity of U.S. Patent No. 5,183,740 or of the scope of any of the claims
contained therein or that the exercise of this LICENSE will not result in the
infringement of other patent(s). Neither LICENSOR nor its employees assume any
liability whatsoever resulting from the exercise of this LICENSE.
Nothing relating to the grant of this LICENSE, nor the grant itself,
shall be construed to confer upon LICENSEE or any sublicensee hereunder or any
other person any immunity from or defenses under the antitrust laws or from a
charge of patent misuse, and the acquisition and use of rights pursuant to
this LICENSE shall not be immunized from the operation of State or Federal law
by reason of the source of the grant.
Nothing contained in this LICENSE shall be interpreted to grant to
LICENSEE any rights with respect to any inventions other than the licensed
invention.
ARTICLE IX
Reports
LICENSEE agrees to submit periodic reports on its efforts to achieve
practical application of the licensed invention within the first twenty (20)
months of this LICENSE with particular reference to LICENSEE's plan for
development and marketing of the licensed invention submitted with LICENSEE's
application for license. These reports shall contain information within
LICENSEE's knowledge, or which it may acquire under normal business practices,
pertaining to the commercial use being made of this licensed invention and
other information which LICENSOR may determine is pertinent to Government
licensing activities.
LICENSEE agrees to submit such reports to LICENSOR semiannually until
such time that the invention has been brought to the point of practical
application.
ARTICLE X
Modification and Termination
This LICENSE may be terminated in whole or in part by LICENSOR, if:
(1) LICENSOR determines that LICENSEE is not executing the plans
submitted with the requests for license dated September 9, 1991, as amended by
LICENSEE's letter dated October 15, 1991, and LICENSEE's Application for
License dated October 13, 1997, as amended by LICENSEE's letter dated November
4, 1998, and LICENSEE cannot otherwise demonstrate to the satisfaction of
LICENSOR that it has taken or can be expected to take within a reasonable
time effective steps to achieve practical application of the licensed invention;
(2) LICENSOR determines that such action is necessary to meet
requirements for public use specified by Federal regulations issued after the
date of this LICENSE and such requirements are not reasonably satisfied by
LICENSEE;
(3) LICENSEE willfully made a false statement of or willfully
omitted a material fact in its application for license or in any report
required by this LICENSE; or
(4) LICENSEE commits a substantial breach of a covenant or
agreement herein contained.
This LICENSE may be modified or terminated in whole or in part
consistent with the law and applicable regulations upon mutual agreement of
LICENSOR and LICENSEE evidenced in writing and signed by both parties.
LICENSOR may terminate in whole or in part this LICENSE if LICENSEE
becomes insolvent, or makes any assignment for the benefit of creditors, or if
LICENSEE is adjudged bankrupt, or if a receiver or trustee of LICENSEE's
property shall be appointed.
This LICENSE may be restricted to the fields of use or geographic
areas, or both, in which the LICENSEE has brought the invention to practical
application and continues to make the benefits of the invention reasonably
accessible to the public. However, such restriction may be made only after
the expiration of eight (8) years following the effective date of this LICENSE.
LICENSEE may request modification of this LICENSE in writing sent to
LICENSOR and stating the reasons therefor.
Before modifying or terminating in whole or in part this LICENSE for
any cause other than by mutual agreement, LICENSOR shall furnish LICENSEE and
each sublicensee of record a written notice of intention to modify or terminate
in whole or in part this LICENSE, and LICENSEE and any sublicensee shall be
allowed thirty (30) days after such notice or other agreed-upon time period,
whichever is greater, to remedy any breach of any covenant or agreement set
forth in this LICENSE or to show cause why this LICENSE should not be modified
or terminated in whole or in part.
LICENSEE has a right to appeal, in accordance with procedures
prescribed by the Chief of Naval Research, any decision or determination
concerning the interpretation, modification, termination in whole or in part
of this LICENSE.
Notwithstanding the provisions of Article II, LICENSEE and LICENSOR
agree that this LICENSE shall automatically terminate on September 30 of any
year if the minimum annual royalty due for the following calendar year, as
expressed in Article IV of this LICENSE, is not timely paid. If, however, the
minimum annual royalty payment together with a surcharge of one hundred fifty
dollars ($150) is paid during the grace period before the following calendar
year, then this LICENSE shall be considered as not having automatically
terminated.
ARTICLE XI
Litigation
LICENSOR does not by entering into this LICENSE transfer the property
rights in the licensed invention, provided however, that during the period that
this LICENSE is partially exclusive, LICENSEE has the right of enforcement of
the licensed patents in the field of saliva based human diagnostics and urine
based testing for drugs of abuse and urine based testing for Methadone,
Benzodiazapines Barbituates, Propoxyphene, Tricyclic Antidepressants and
Anabolic Steroids at no cost to the Government, pursuant to the provisions of
Chapter 29 of Title 35, United States Code, or other statutes. The Navy will
provide advice and assistance as may be reasonably requested and permitted under
Federal and agency regulations. LICENSEE shall pay LICENSOR the lesser of
(i) an amount equal to the royalty that would have been payable by LICENSEE in
accordance with this LICENSE had the unlicensed entity been licensed by
LICENSEE, or (ii) one-half of the actual recovery after deduction of LICENSEE's
litigation costs and expenses.
If a third party brings a suit in a court of competent jurisdiction
against the LICENSEE alleging that the LICENSEE is infringing a patent or
patents assigned to the third party by practicing the licensed invention, the
LICENSEE shall provide the LICENSOR with sufficient information and supporting
documentation on the suit to permit the LICENSOR to establish a reasonable
belief of infringement. If the third party and the LICENSEE are unable to
reach an out of court settlement of the suit within six (6) months after
notification of the LICENSOR by the LICENSEE, LICENSEE may place all royalties
and minimum annual payments in an escrow account in the United States of
America until the suit is settled or judgment is rendered in a court of
competent jurisdiction. At settlement or legal judgment of the suit, LICENSEE
shall release all monies in the escrow account to LICENSOR, after deducting
litigation costs and expenses. All costs and fees associated with the escrow
account shall be paid by LICENSEE. If the judgment in the suit is unfavorable
to the LICENSEE, LICENSEE may terminate the license agreement under Article X.
ARTICLE XII
Notice
All communications and notices required under this LICENSE shall be
considered duly given if timely mailed by U.S. Postal Service, first class,
postage prepaid and addressed as follows:
(a) if to LICENSOR:
Deputy Counsel (Intellectual Property)
Office of Naval Research (Code OOCCIP)
800 North Quincy Street
Arlington, VA 22217-5660
(b) if to LICENSEE:
Life Point, Inc.
10400 Trademark Street
Rancho Cucamonga, CA 91730
or such mailing address as either party may from time to time specify in
writing.
Signed: /s/ B.W. Buckley Dated: April 7, 1999
B.W. Buckley
Captain, US Navy
Commanding Officer
Signed: /s/ Linda H. Masterson Dated: April 7, 1999
Linda H. Masterson
President and Chief Executive Officer
LifePoint, Inc.
Schedule
U.S. Patent No.5,183,740
Patent protection is being sought in the following countries based on a
priority date of February 23, 1990:
Country
Germany
Denmark
France
United Kingdom
Italy
Netherlands
Sweden
Canada
Japan
Korea