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Exhibit
10.3
EXCLUSIVE LICENSE AGREEMENT
For Licensing Patent Rights
THIS
AGREEMENT is made and entered into this _____ of
November, 2007, by and between the Regents Of The University
Of Colorado, a body corporate, having its principal office at
1800 Grant Street, 8th Floor, Denver, CO 80203 (hereinafter
“University”) and V-Clip Pharmaceuticals,
Inc.(“V-Clip”), a California corporation having
its principal office at 1321 Mountain View Circle, Azusa,
California 91702, and Viral Genetics, Inc, a Delaware
corporation having its principal office at 1321 Mountain View
Circle, Azusa, California 91702 (“Viral
Genetics”).
WITNESSETH
WHEREAS ,
University is the owner of certain Patent Rights (as later
defined herein) developed by inventor Dr. Karen Newell
(“Dr. Newell”), et al., and has the right to
grant licenses under said Patent Rights, and;
WHEREAS , V-Clip and Viral Genetics are
interested in licensing and further developing the Patent Rights
for commercial applications, and;
WHEREAS , University desires to have the Patent Rights
developed and commercialized to benefit the public and is willing
to grant a license hereunder;
NOW, THEREFORE , in consideration of the premises and the
mutual covenants contained herein, the parties hereto agree as
follows:
ARTICLE 1 DEFINITIONS
1.01 “Licensee”
shall mean V-Clip, but in the event of, and upon, merger of
V-Clip entirely into Viral Genetics, Inc., then licensee shall
mean Viral Genetics, Inc.
1.02 “Affiliate(s)”
shall mean every corporation, or entity, which, directly or
indirectly, or through one or more intermediaries, controls,
is controlled by, or is under common control with
Licensee. For the purposes of this definition, the
term “control” means (a) beneficial ownership of
at least fifty percent (50%) of the voting securities of a
business organization with voting securities, or (b) a fifty
percent (50%) or greater interest in the net assets or profits
of a partnership or business organization without voting
securities.
1.03 “Effective
Date” shall mean the date of the last signature on this
Agreement.
1.04 “Fields
of Use” shall mean the fields of use identified in
Appendix B .
1.05 “Know-How”
shall mean, and be limited to: (a) University's proprietary
information that has been created, developed, or fixed in any
tangible medium of expression prior to or as of the Effective
Date and which is directly related to the use of, or desirable
for the practice of, the licensed Patent Rights; and (b)
University's proprietary information that is directly related
to the use of, or desirable for the practice of, the licensed
Patent Rights developed by Dr. Newell after the
Effective Date while Dr. Newell remains an employee of
University and is an active participant in Licensee as an
employee, board member or consultant.
1.06
“Licensed Process(es)” shall mean any process,
art, or method that is covered in whole or in part by an
issued, unexpired claim or a pending claim contained in the
Patent Rights.
1.07
“Licensed Product(s)” shall mean any:
(a) product
or part thereof that is covered in whole or in part by an
issued, unexpired claim or a pending claim contained in the
Patent Rights in the country in which any such product or part
thereof is made, used or sold; and
(b) product,
apparatus, or part thereof that is manufactured by using a
process covered in whole or in part by an issued, unexpired
claim or a pending claim contained in the Patent Rights in the
country in which any Licensed Processes is used.
1.08 “Net
Sales” shall mean the total gross receipts for sales of
Licensed Products or practice of Licensed Processes by or on
behalf of Licensee or its Affiliates, and from leasing,
renting, or otherwise making Licensed Products available to
others without sale or other dispositions, whether invoiced or
not, less returns and allowances, packing costs, insurance
costs, freight out, taxes or excise duties imposed on the
transaction (if separately invoiced and paid), and wholesaler
and cash discounts in amounts customary in the trade to the
extent actually granted. No deductions shall be
made for commissions, or for the costs of
collections. Net Sales shall also include the fair
market value of any non-cash consideration received by
Licensee or its Affiliates for the sale, lease, or transfer of
Licensed Products or Licensed Processes.
1.09 “Patent
Rights” shall mean all of the following University
intellectual property:
(a) the
United States and foreign patents and/or patent
applications, provisional patent applications, and
invention disclosures listed in Appendix
A ;
(b) United
States and foreign patents issued from the applications listed
in Appendix A and from divisionals and
continuations of these applications;
(c) claims
of U.S. and foreign continuation-in-part applications, and of
the resulting patents, that are directed to subject matter
specifically described in the U.S. and foreign applications
listed in Appendix A ;
(d) claims
of all foreign patent applications, and of the resulting
patents, that are directed to subject matter specifically
described in the United States patents and/or patent
applications described in (a), (b) or (c) above;
and
(e) any
reissues of United States patents described in (a), (b) or (c)
above.
1.10
“Territory” shall be as stated in
Appendix B .
ARTICLE 2 GRANT OF RIGHTS
AND ACCEPTANCE
2.01 University
hereby grants and Licensee accepts, during the term and
subject to the terms and conditions of this Agreement, and
further subject to University's right to do so without
incurring liability to third parties,
(a) an
exclusive license to use the Know-How in the Territory and in
the Field of Use; and
(b) an
exclusive license of University’s Patent Rights in the
Territory to make , use, sell, offer to sell, and import any
Licensed Product(s) in the Field of Use and to practice any
Licensed Process(es) in the Field of Use.
2.02 This
Agreement confers no license or rights by implication,
estoppel, or otherwise under any patent applications or
patents of University other than licensed Patent
Rights.
2.03 This
Agreement shall be subject to the mandatory public laws in any
country where this Agreement will produce an
effect.
ARTICLE 3 FUTURE IMPROVEMENTS
AND ADDITIONS
3.01
Improvements . Provided that Dr. Newell is
at the time obligated to assign intellectual property to
University and is involved as an employee, board member, or
consultant to Licensee, and in the event that Dr. Newell, or
anybody working in a laboratory under the supervision or
direction of Dr. Newell develops any patentable invention the
practice of which would also require the practice of an
invention claimed in or covered by the Licensed Patent Rights
and which is a modification of, or addition to, the invention
claimed in or covered by the Licensed Patent Rights in
(“Improvement”), then University shall disclose
each such Improvement to Licensee in reasonable written
detail. All Improvements made in the Field of Use as a
result of the sponsored research of Article 8 (“SRA
Improvements”) will be considered part of this Agreement
at no additional cost to Licensee, and all Improvements in the
Field of Use not resulting from such sponsored research
(“Non-SRA Improvements”) shall be considered part
of this Agreement provided that Licensee makes a one time up
front payment of twenty thousand dollars ($20,000) to
University for each such Non-SRA Improvement within sixty (60)
days of the disclosure of each such Non-SRA Improvement to
Licensee; provided, however that all such payments shall be
waived the until execution of the Sponsored Research Agreement
referred to in Article 8.
3.02
Independent Inventions . Provided that Dr.
Newell is at the time obligated to assign intellectual
property to University and is involved as an employee, board
member, or consultant to Licensee, University hereby grants to
Licensee an exclusive option (“Option”) to obtain
the exclusive, worldwide, commercial rights to each
Independent Invention on terms and conditions to be negotiated
by the parties following the exercise by Licensee of the
Option. Licensee shall have [REDACTED]from the date
of disclosure by University to exercise the
Option. An Independent Invention shall be an
invention that:
(a) Is
made by Dr. Newell, or anybody working in a laboratory under
the supervision or direction of Dr. Newell; and
(b) Is
in the Field of Use, the practice of which would not require
the practice of an invention claimed in or covered by the
Licensed Patent Rights and
(c)
Is not subject to any prior contractual or legal
obligations.
3.03
Field of Use Expansion . University shall
disclose to Licensee in reasonable written detail, after the
University’s Technology Transfer Office
(“TTO”) receives notification from the inventor(s)
of such invention, each invention that has been made that
would be an Improvement or an Independent Invention that would
involve applications outside the Field of Use, and Licensee
shall have a [REDACTED] exclusive right of first negotiation
to expand the Field of Use hereunder (provided there are no
conflicts with pre-existing University obligations) to include
such invention in one or more additional fields for Licensed
Product or Licensed Process (for example, and by way of
example only, in the diagnosis or treatment of bacterial or
other viral diseases not already included in The Fields of
Use), on terms and conditions to be negotiated by the parties
based on industry economic and diligence standards; provided,
however, that said right of first negotiation shall not extend
to the fields of autoimmune diseases or energy
metabolism.
3.04 University
shall disclose each Independent Invention to Licensee in
reasonable written detail after the TTO receives notification
from the inventor(s) that such Independent Invention has been
made, and Licensee shall have [REDACTED] days (the
“Option Period”) following receipt of such
invention disclosure to exercise the Option with respect to
such Independent Invention by delivering to University written
notice indicating that Licensee desires to exercise the
Option. Upon such notice, the parties shall
negotiate in good faith for a period of up to sixty (60) days
commercially reasonable terms and conditions for a license
under the intellectual property rights relating to such
Independent Invention;
3.05 Notwithstanding
any other provision in this Agreement to the contrary, and
whether or not such work is in the Field or Field of Use
Expansion, University shall not own or have (and nothing in
this Agreement shall constitute a grant of) any rights in, to
or under any patents, inventions, technology, know how, or
other intellectual property:
(a) That
may be created or developed at any time by Licensee, or by
Karen Newell working or consulting at Licensee independent of
her work performed or contemplated under funded research or
employment agreement at the University, using Licensee’s
own facilities, for Licensee’s own account and benefit;
or
(b) That
may be created or developed at any time by Licensee, using its
own facilities, or under a contract with, or under a grant
from, a Third Person
ARTICLE
4 SUBLICENSING
4.01
Upon prior written approval by University, such approval
not to be unreasonably withheld, Licensee and or its
Affiliates may sublicense to one or more third parties the
rights granted in Article 2 subject to the following
limitations:
(a) Licensee
agrees that any sublicenses granted by it shall impose
restrictions and conditions upon sublicensees at least
equivalent in scope to those imposed upon
Licensee;
(b) Licensee
agrees that, in the event University terminates this Agreement
pursuant to §12.03, any sublicenses granted, in
University's sole discretion, shall be directly enforceable by
University; and
(c) Licensee
agrees that any sublicenses granted shall adequately protect
University's security and property interest in University's
Know-How and Patent Rights.
4.02 Licenses
transferred to Affiliates shall not be considered sublicenses
for purposes herein unless such Affiliates are involved in the
use of the Licensed Process or Patent.
4.03 Any
sublicenses granted by Licensee shall provide only for cash
consideration from sublicensees unless University has
expressly consented otherwise in writing in advance, which
consent shall not be unreasonably withheld.
4.04 Licensee
agrees to forward to University a copy of each fully executed
sublicense agreement postmarked within thirty (30) days of the
execution of such agreement.
ARTICLE 5 GOVERNMENT AND
UNIVERSITY RIGHTS
5.01 Notwithstanding
any use of descriptive terms within this Agreement such as
“exclusive”, this Agreement is subject to all of
the terms and conditions of Title 35 U.S.C. §§ 200
et al (“Bayh-Dole Act”) and 37 C.F.R. 401, as such
may be amended. Further, Licensee agrees to take
all reasonable action necessary to enable University to
satisfy its obligations under the Bayh-Dole Act.
5.02 University
shall have the non-transferable right to practice the Patent
Rights and Know-How for its own research and education,
including sponsored research, provided that the sponsor, other
than a government agency under Bayh-Dole, has no right in the
results of such sponsored research.
5.03 University
shall have the right to publish any information included in
the Patent Rights and the Know-How provided that University
provides Licensee with a copy of the proposed publication at
least thirty (30) days prior to publication, and takes
reasonable steps to avoid the loss of any patent rights as a
result of University exercising its rights under this Article
5.
ARTICLE
6 ROYALTIES
6.01 Licensee
agrees to pay University a nonrefundable and non-creditable
license issue fee as set forth in Appendix C
.
6.02 Licensee
agrees to pay to University an annual, nonrefundable minimum
royalty as set forth in Appendix C
. The minimum annual royalty is due and payable on
first business day of each calendar year and may be credited
against any Earned Royalties, including Eearned Sublicense
Royalties, due for net sales made that year.
6.03 Licensee
agrees to pay University the Earned Royalty set forth in
Appendix C .
In the event that the Patent Rights are dominated
by an issued patent that is owned or controlled by a third
party (the "Dominant Patent") and Licensee enters into a
license with said third party with respect to the Dominant
Patent, whether before or after the Effective Date, and agrees
to pay a royalty thereunder in order to make, use, or sell the
Licensed Products or Licensed Processes, the royalty specified
in Appendix C shall be adjusted for
stacking in accordance with Article 6.06.
6.04 Licensee
agrees to pay University benchmark royalties as set forth in
Appendix C .
6.05 Licensee
agrees to pay University sublicensing royalties, in the
percentages as set forth in Appendix C, of
all consideration in any form received by Licensee or
Affiliates in connection with
a grant to any third party of a sublicense of the rights
granted in Article 2 (“Sublicense
Revenue”). Sublicense Revenue shall include
without limitation up front fees, maintenance fees, royalties
on net sales by sublicensees, milestone payments, the unearned
portion of any minimum royalties, equity, and research and
development funding in excess of the costs of performing such
research and development. Royalty for sublicenses
shall not in any event include any amount paid to Licensee by
any sublicensee or other person, (a) as fair consideration for
research and/or development services, (b) as an investment or
loan to Licensee, or (c) as consideration for any other
property, rights or services that have been or are expected to
be furnished by Licensee to such sublicensee or
person.
6.06 In
the event that the Licensee must enter into a license with a
third party and agrees to pay a royalty thereunder in order to
make, use, or sell a Licensed Product(s), the Earned Royalty
shall be reduced by fifty percent (50%) of the
royalty paid to said third party during a given reporting
period. However, in no event shall the Earned Royalty paid to
University be less one half the specified
royalty.
6.07 No
multiple royalties shall be payable because any Licensed
Products or Licensed Processes are covered by more than one of
the Patent Rights.
6.08 On
sales of Licensed Products by Licensee to sublicensees or on
sales made in other than arm’s-length transactions, the
value of the Net Sales attributed under this Article 6 to such
a transaction shall be that which would have been received in
an arm’s-length transaction, based on a like transaction
at that time.
6.09 Unless
otherwise provided herein, all payments required under this
Agreement shall be due within thirty (30) days of written
notice from University. Payments past due shall
bear interest at the rate of one and on-half percent (1.5%)
per month compounded, or the maximum interest rate allowed by
applicable law, whichever is less.
ARTICLE 7 REPORTS, RECORDS AND
AUDITS
7.01 Starting
with the first sale of Licensed Product or Practice of
Licensed Process for which Net Sales has been received by
Licensee, or for which a sublicensing Royalty has been
received, Licensee shall, without request by University, and
within forty-five (45) days of the respective period, render
to University written accounts for each calendar quarter of
the Net Sales of Licensed Products and/or Licensed Processes
subject to royalty hereunder made during the prior three (3)
month period and shall simultaneously pay to University the
royalties due on such Net Sales, if any, in United States
Dollars. Minimum annual royalties, if any, that are
due University for any calendar year, shall be paid by
Licensee along with the written report due under this
Agreement. The written report shall be in the form
of the report of Appendix D
.
7.02 Licensee
shall keep accurate records in sufficient detail to reflect its
operations under this Agreement and to enable the royalties accrued
and payable under this Agreement to be determined. Such
records shall be retained for at least three (3) years after the
close of the period to which they pertain, or for such longer time
as may be required to finally resolve any question or discrepancy
raised by University.
7.03 Upon
the request of University, with reasonable notice, but not
more frequently than once a year, Licensee shall permit an
independent public accountant selected and paid by University
to have access during regular business hours to such records
as may be necessary to verify the accuracy of royalty payments
made or payable hereunder. Said accountant shall
disclose information acquired to University only to the extent
that it should properly have been contained in the royalty
reports required under this Agreement. If an inspection shows
an underreporting or underpayment in excess of five percent
(5%) for any twelve (12) month period, then Licensee shall
reimburse University for the cost of the inspection and pay
the amount of the underpayment including any interest as
required by this Agreement.
7.04 Licensee
acknowledges that University is subject to the Colorado Public
Records Act (C.R.S. §§ 24-72-201 et
seq.). All plans an
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