LICENSE AGREEMENT

Exhibit 10.7

LICENSE AGREEMENT

         THIS AGREEMENT is effective as of the                        day of                        , 2003 (the " Effective Date "), between CALIFORNIA INSTITUTE OF TECHNOLOGY , 1200 East California Boulevard, Pasadena, CA 91125 (" Caltech ") and Helicos BioSciences Corp. (" Licensee "), a corporation having a place of business at 150 CambridgePark Drive, Cambridge, MA 02140.

         WHEREAS, Licensee is desirous of obtaining, and Caltech wishes to grant to Licensee, an exclusive license to certain Exclusively Licensed Patent Rights and to the Improvement Patent Rights, and a nonexclusive license under the Technology, all relating to the aforementioned research and as further defined below;

         NOW, THEREFORE, the parties agree as follows:

ARTICLE 1
DEFINITIONS

        1.1    "Affiliate" means any corporation, limited liability company or other legal entity which directly or indirectly controls, is controlled by, or is under common control with Licensee. For the purpose of this Agreement, "control" shall mean the direct or indirect ownership of at least fifty-one percent (51%) of the outstanding shares on a fully diluted basis or other voting rights of the subject entity to elect directors, or if not meeting the preceding, any entity owned or controlled by or owning or controlling at the maximum control or ownership right permitted in the country where such entity exists. In addition, a party's status as an Affiliate of License shall terminate if and when such control ceases to exist.

        1.2    "Technology" means any Technology, meeting any of the following criteria: (a) such Technology is specifically listed in Exhibit B; (b) such Technology is directed to and specifically useful for the development of Licensed Products or Services; and (c) such Technology, in at least some implementations, is not covered by any claim of the Exclusively Licensed Patent Rights. Technology includes all proprietary information, know-how, procedures, methods, prototypes, designs existing as of the Effective Date or thereafter developed for a period of three (3) years from the Effective Date of the Agreement, unless otherwise extended by agreement of the Parties.

        1.3    "Caltech Technology" means the Exclusively Licensed Patent Rights, Improvement Patent Rights, and the Technology.

        1.4    "Deductible Expenses" means the following expenses incurred in connection with sales or licensing of Licensed Products to the extent actually paid by Licensee or an Affiliate in accordance with generally recognized principles of accounting: (a) sales, use or turnover taxes; (b) excise, value added or other, taxes or custom duties; (c) transportation, freight, and handling charges, and insurance on shipments to customers; (d) trade, cash or quantity discounts or rebates to the extent actually granted; (e) agent fees or commissions; and (f) rebates, refunds, and credits for any rejected or returned Licensed Products or because of retroactive price reductions, rebates or chargebacks.

        1.5    "Effective Date" has the meaning set forth in the preamble.

        1.6    "Exclusively Licensed Patent Rights" means Caltech's rights under: (a) all patents and patent applications listed in Exhibit A attached hereto and Improvement Patent Rights thereof; (b) any patents issuing therefrom; and (c) any patents or patent applications claiming a right of priority thereto (including reissues, reexaminations, renewals, extensions, divisionals, continuations, continued prosecution applications, continuations-in-part and foreign counterparts of any of the foregoing).

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        1.7    "Field" means all fields.

        1.8    "Improvement Patent Rights" means Caltech's rights under: (a) all patents and patent applications with claims directed to Improvements; (b) any patents issuing therefrom; and (c) any patents or patent applications claiming a right of priority thereto (including reissues, reexaminations, renewals, extensions, divisionals, continuations, continued prosecution applications, continuations-in-part and foreign counterparts of any of the foregoing).

        1.9    "Improvements" means any future invention conceived and reduced to practice or otherwise developed in the laboratory of Profs. Stephen Quake or Brian Stoltz at Caltech, either solely or jointly with Licensee in the Field, for a period of three (3) years from the Effective Date (the "Improvements Period") and which are dominated by a Valid Claimor which embody the Caltech Technology. The parties agree to negotiate in good faith, at the request of the Licensee, prior to the expiration of the Improvements Period to extend the Improvements Period to no less than five (5) years from the Effective Date.

        1.10  " Internal Projects " means internal research and development projects utilizing Licensed Products for the purpose of generating licensable intellectual property such as biological data and content, targets, biomarkers, mechanisms of disease and the like.

        1.11  "Licensed Product" means any physical product or device, in the Field, that is covered by, or is made by a process covered by, any Valid Claim of the Exclusively Licensed Patent Rights or a Valid Claim of Improvement Patent Rights or that utilizes Technology in material part.

        1.12  "Service" means any service other than maintenance and repair services, technical application development, field support or the like, in the Field that is covered by, or is made by a process covered by, any Valid Claim of the Exclusively Licensed Patent Rights or a Valid Claim of Improvement Patent Rights or that utilizes Technology in material part.

        1.13  "Net Product Revenues" means all amounts received by Licensee and/or its Affiliates from the sale, licensing, or other distribution (whether commercial or not) to other parties of Licensed Products, less Deductible Expenses. Net Product Revenues shall exclude (i) sales to the United States Government, (ii) Licensed Products used by Licensee in connection with Internal Projects and the performance of Services, and (iii) purchases of Licensed Products from third-parties for re-distribution or use by Licensee or a Product Sublicensee.

        1.14  "Other Developments" means any invention conceived and reduced to practice or otherwise developed in the laboratory of Profs. Stephen Quake or Brian Stoltz at Caltech, either solely or jointly with Licensee in the Field (including, but not limited to, related proprietary information, patent rights, know-how, procedures, methods, prototypes and designs), but which are not included in Exclusively Licensed Patent Rights or Improvement Patent Rights, to the extent such inventions are owned and controlled by Caltech.

        1.15  "Product Liability Claims" has the meaning set forth in Section 13.1

        1.16  "Valid Claim" means: (a) a claim of an issued patent within the Exclusively Licensed Patent Rights that has not (i) expired or been canceled, (ii) been finally adjudicated to be invalid or unenforceable by a decision of a court or other appropriate body of competent jurisdiction (and from which no appeal is or can be taken), (iii) been admitted to be invalid or unenforceable through reissue, disclaimer or otherwise, or (iv) been abandoned in accordance with or as permitted by the terms of this Agreement or by mutual written agreement; or (b) a claim included in a pending patent application within the Exclusively Licensed Patent Rights which claim is being actively prosecuted in accordance with this Agreement and which has not been (i) canceled, (ii) withdrawn from consideration, (iii) finally determined to be unallowable by the applicable governmental authority (and from which no appeal is or can be taken), or (iv) abandoned in accordance with or as permitted by the terms of this Agreement

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or by mutual written agreement. Pending claims of the Exclusively Licensed Patent Rights shall be considered Valid Claims for five (5) years from the date of this Agreement.

ARTICLE 2
LICENSE GRANT

        2.1     Grant of Rights.     Caltech hereby grants to Licensee the following licenses:

•         (a)   an exclusive, royalty-bearing license under the Exclusively Licensed Patent Rights and Improvements under the Improvement Patent Rights to make, have made, import, use, distribute, have used, sell, have sold, and offer or have offered for sale Licensed Products and Services in the Field throughout the world; and

          (b)   a nonexclusive, perpetual, royalty-bearing license under the Technology to make, have made, import, use, sell, offer for sale, reproduce, distribute, display, perform, create derivative works of, and otherwise exploit Licensed Products and Services in the Field throughout the world.

        These licenses are personal to and nontransferable by Licensee, except as provided in Section 2.3 and 14.9.

        2.2     Reservation of Rights; Government Rights.     These licenses are subject to any existing right of the U.S. Government under Title 35, United States Code, Section 200 et seq. and under 37 Code of Federal Regulations, Section 401 et seq., including but not limited to the grant to the U.S. Government of a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced any invention conceived or first actually reduced to practice in the performance of work for or on behalf of the U.S. Government throughout the world.

        Licensee agrees that all Licensed Products covered by an Exclusively Licensed Patent Right, and to be sold, licensed, distributed or used by or on behalf of Licensee or its Affiliates in the United States, shall be manufactured substantially in the United States to the extent (if at all) required by 35 U.S.C. Section 204.

        Rights not explicitly granted herein are reserved by Licensor.

        2.3     Sublicensing.     Licensee shall have the right to grant sublicenses to third parties to enable such third parties to make, have made, import, use have used, sell have sold, and offer or have offered for sale Licensed Products (a "Product Sublicense", a licensee thereof being called a "Product Licensee.")

        Such sublicenses may be of no greater scope than the licenses under Sections 2.1 and 2.2. A holder of a Product Sublicense may transfer or further sublicense its sublicense in connection with the sale of Licensed Products, provided the value of such transfer or further sublicense shall be included in the determination of Net Revenue.

        Licensee shall include all its sublicensing income in Licensee's reports to Caltech, as provided in Paragraph 5.11, and Licensee shall pay royalties thereon pursuant to Article 5.

        Licensee shall not receive, or agree to receive, anything of value in lieu of cash or equity as Net Product Revenues from a third party under a sublicense granted pursuant to this Paragraph 2.3, without Caltech's express prior written permission which shall not be unreasonably withheld. In such case, the non-cash Net Revenue received will be determined based on the fair market value or a value mutually agreed upon.

        Licensee shall make available a true and complete copy of each sublicense and any changes or additions thereto upon the reasonable request of Caltech not more frequently than once per year.

        Any sublicenses granted by Licensee shall survive termination of the licenses granted in Section 2.1, or of this Agreement, provided that the written agreement between Licensee and

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sublicensee pursuant to which the sublicense was granted (i) obligates the sublicensee to thereafter render to Caltech such royalties as would otherwise be due to Caltech by Licensee, (ii) names Caltech as a third party beneficiary, and (iii) affirms that Licensee shall remain responsible for all obligations to sublicensee (other than those requiring Licensee to hold a license under the Exclusively Licensed Patent Rights or Technology, unless Caltech (at its discretion) elects to assume such obligations.

        2.4     No Other Rights Granted.     The parties agree that neither this Agreement, nor any action of the parties related hereto, may be interpreted as conferring by implication, estoppel or otherwise, any license or rights under any intellectual property rights of Caltech other than as expressly and specifically set forth in this Agreement, regardless of whether such other intellectual property rights are dominant or subordinate to the Exclusively Licensed Patent Rights.

        2.5     Preferential Purchaser Status.     Caltech shall be entitled to purchase Licensed Products and Services from Licensee for educational, research or other noncommercial purposes on pricing terms that are at least as favorable as any commercial pricing made available by Licensee to any third party. Caltech shall accept other terms of such sales.

ARTICLE 3
DISCLOSURE AND DELIVERY

        3.1     Exclusively Licensed Patent Rights.     On or before the one month anniversary of the Effective Date, Caltech shall promptly disclose and deliver to Licensee copies of all patent applications and/or issued patents within the Exclusively Licensed Patent Rights, including all patent office correspondence related thereto.

        3.2     Tangible Embodiments.     On or before the one month anniversary of the Effective Date, Caltech shall promptly disclose and deliver to Licensee any tangible embodiments as of the Effective Date of: (a) the inventions covered by the Exclusively Licensed Patent Rights; and (b) the Technology. Such disclosure and delivery may occur in writing, orally, and/or in other tangible or intangible form, as appropriate to the subject matter thereof.

        3.3     Improvements.     Caltech will make good faith efforts to convey to Licensee all disclosures relating to Improvements within thirty (30) days of receipt of disclosure by Caltech.

        3.4     Other Developments.     To provide Licensee with the opportunity to seek further licenses if so desired, Caltech will, for five (5) years from the Effective Date of this Agreement, convey to Licensee disclosures relating to Other Developments, and will grant Licensee a three month non-exclusive option to negotiate a license under patent applications claiming such inventions. Caltech will make good faith efforts to convey disclosures to Licensee within thirty (30) days of receipt of disclosure by Caltech. To prevent misunderstanding, the provision of such disclosures does not constitute an automatic or guaranteed license to practice such inventions, and such disclosures shall be considered confidential information of Caltech.

        3.5     Technology.     Caltech will enable Licensee to review the ongoing research and development being conducted in the laboratory of Profs. Stephen Quake and Brian Stoltz at Caltech. The parties shall conduct periodic meetings, no less frequently than once per year, to review and discuss the Caltech Technology.

ARTICLE 4
PROSECUTION OF PATENT APPLICATIONS AND
PAYMENT OF PATENT COSTS

        4.1     Prosecution by Licensee.     Licensee shall be responsible for the preparation, filing, prosecution and maintenance of any and all patent applications and patents included in Exclusively Licensed Patent Rights. Licensee shall use reasonable efforts, consistent with its normal practices, to: (a) prosecute any

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and all patent application(s) in connection with the Exclusively Licensed Patent Rights; and (b) file and prosecute patent claims covering Improvements licensed hereunder for which Licensee or Caltech deems it beneficial to obtain additional coverage. Licensee shall consult with Caltech as to the preparation, filing, prosecution and maintenance of such patent applications and patents and shall furnish to Caltech, or to counsel of Caltech's choice, copies of documents relevant to any such preparation, filing, prosecution or maintenance as further set forth in Section 4.2 below. Licensee may determine which countries in which to file or maintain patent applications. With respect to filings pursuant to Paragraph (b) herein above, Caltech shall promptly disclose such Improvements to Licensee and Licensee shall elect within ninety (90) days whether such Improvements shall be included within the Exclusively Licensed Patent Rights. Licensee will have no obligation to prosecute patent applications that may constitute Improvements that are not elected by Licensee. Upon written election by Licensee, the parties will amend Exhibit A hereto to include inventions within the Exclusively Licensed Patent Rights, in a timely manner.

        4.2     Cooperation.     Caltech and Licensee shall cooperate fully in the preparation, filing, prosecution and maintenance of the Exclusively Licensed Patent Rights, including, but not limited to executing all papers and instruments or requiring members of Caltech to execute such papers and instruments so as to enable Licensee to apply for, to prosecute and to maintain patent applications and patents in Caltech's name in any country. Each party shall provide to the other prompt notice as to all matters which come to its attention and which may affect the preparation, filing, prosecution or maintenance of any such patent applications or patents. With respect to the drafting of patent applications, Licensee shall provide draft patent applications to Caltech (or at the direction of Caltech, Caltech's counsel) at least ten (10) days before filing or within one-third of the time span between disclosure of an invention to Licensee and the date of intended filing, whichever is less. With respect to documents relating to the prosecution of patent applications, Licensee shall promptly provide Caltech (or at the direction of Caltech, Caltech's counsel) with copies of patent office correspondence, and shall provide Caltech (or at the direction of Caltech, Caltech's counsel) with drafts of responses to patent office correspondence at least seven (7) days before transmission of such responses to the relevant patent office. Caltech or Caltech's counsel shall provide any comments on such applications or responses promptly and in sufficient time to allow Licensee to meet applicable filing requirements.

        4.3     Prosecution by Caltech.     If Licensee declines to file, prosecute or maintain any patent application or patent referred to in Section 4.1, then the right to file, prosecute or maintain any such patent application or patent shall revert back to Caltech at its sole cost.

        4.4     Patent Costs.     Except as otherwise set forth in this Section 4.4, Licensee shall bear the cost of preparation, filing, prosecution and maintenance of any and all patent applications and patents included in Exclusively Licensed Patent Rights. Licensee shall reimburse Caltech for all reasonable expenses (including attorneys' fees) incurred by Caltech prior to the Effective Date of this Agreement, for the filing, prosecution and maintenance, interference and/or reexamination proceedings, of the Exclusively Licensed Patent Rights. Such payment shall be due thirty (30) days following the closing of the Licensee's preferred stock financing of at least $5 million provided that Licensee has received from Caltech an invoice covering such fees (including copies of invoices for legal fees describing the legal services performed in reasonable detail); provided further, however, that to the extent that such costs were in connection with foreign patent costs, such amounts shall be creditable against earned royalties due Caltech in the respective territory covered by the patent or patents that are foreign filed. To the extent that Licensee incurs costs in connection with foreign patent filings after the Effective Date of this Agreement, such amounts shall be creditable against earned royalties due Caltech in the respective territory covered by the patent or patents that are foreign filed.

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ARTICLE 5
ROYALTIES

        5.1     Timing and Computation.     All domestic royalties hereunder shall be computed on a semi annual calendar year basis. Domestic royalties for each calendar year end payment shall be due and payable within one hundred twenty (120) days after the end of such calendar year. Domestic royalties for each mid-year period shall be due and payable within sixty (60) days after the end of the mid-year period.

        All foreign royalties hereunder shall be computed on an annual calendar year basis. Foreign royalties for each calendar year shall be due and payable within one hundred twenty (120) days after the end of such calendar year.

        5.2     Valid Claims.     For any country in which the Exclusively Licensed Patent Rights includes a Valid Claim, Licensee shall pay Caltech a royalty of (i) [***] of Net Product Revenues attributable to each Licensed Product made, sold, licensed, distributed or used, by Licensee or its Affiliates, in such country and (ii) the lesser of (A) [***] of Net Product Revenues attributable to each Licensed Product made, sold, licensed, distributed or used, pursuant to a Product Sublicense, in such country or (B) [***] of the amount received by Licensee from the holder of a Product Sublicense relating to the sale by the holder of the Product Sublicense of Licensed Products.

        5.3     Technology.     For any country in which the Exclusively Licensed Patent Rights do not include a Valid Claim, Licensee shall pay Caltech a royalty of (i) [***] of Net Product Revenues for each Licensed Product made, sold, licensed, distributed or used, by or on behalf of Licensee or its Affiliates and (ii) the lesser of (A) [***] of Net Product Revenues attributable to each Licensed Product made, sold, licensed, distributed or used, pursuant to a Product Sublicense or (B) [***] of the amount received by Licensee from the holder of a Product Sublicense relating to the sale by the holder of the Product Sublicense of Licensed Products. Notwithstanding the forgoing, no royalties shall be due under this Section 5.3 three years after the first commercial sale in any such country.

        5.4     Bundled Products.     In the event that Licensed Products are sold, licensed, distributed or used in combination with one or more other products or services which are not Licensed Products or Services, and the value of the Licensed Products is not discreetly identified as a separate component of the total consideration, then the Net Product Revenues for such combination products will be calculated on a country-by-country basis as follows:

        By multiplying actual net sales (calculated on the basis as if they were Net Product Revenues) of such combination products by the fraction A/(A+B) where A is the average invoice price, during the relevant period, of the Licensed Product when sold or licensed separately by Licensee or a Affiliate, and B is the average invoice price during such period of any other product(s) or services in the combination when sold or licensed separately by Licensee or an Affiliate. If the products or services in such combination that are not Licensed Products have not been sold or licensed separately by Licensee or a Affiliate in the relevant period, Net Product Revenues shall be calculated by multiplying actual net sales (calculated on a basis as if they were Net Product Revenues) of such combination products by the fraction A/C where A is the average invoice price, during the last period, of the Licensed Product when sold or licensed separately and C is the average invoice price of the combination product during such period. If the Licensed Product has not been sold or licensed separately by Licensee or a Affiliate in the last period, regardless whether the combination product without the Licensed Product is sold or licensed separately, Net Product Revenues shall be calculated as in the immediately preceding sentence except that A shall be the total manufacturing cost of Licensed Product and C shall be the total manufacturing cost of the combination.

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT; [***] DENOTES OMISSIONS.

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        5.5     Non-Product Royalties.     Licensee shall pay Caltech [***] of the amount received by Licensee in connection with the provision of Services and the sale or lic