LICENSE AGREEMENT
This
license agreement ("Agreement") specifies the terms and
conditions upon which Phlebotics, Inc., a Delaware corporation
having an address of 111 Lorene Place, West Lafayette, IN
47906 ("Licensee"), agrees to license from Bioanalytical
Systems, Inc. ("BASi"), an Indiana corporation having an
address of 2701 Kent Avenue, West Lafayette, IN 47906, certain
patent rights and other rights owned by BASi. This Agreement
shall be effective on this 28th day of September, 2007 (the
"Effective Date").
1.
DEFINITIONS As
used in this Agreement, the following terms shall have the meaning
stated in this
Section 1 :
a.
"Field" shall mean all human applications.
b.
"Improvements" shall mean any and all developments, modifications,
discoveries, inventions, or improvements to the Licensed
IP.
c.
"Know-How" shall mean the trade secrets, know-how, manufacturing
processes, clinical strategies, product specifications, software
modules, scientific data, clinical trial data, market analyses,
formulae, designs (including circuits and subassembly designs),
training manuals, and other non-public information existing as of
the Effective Date of this Agreement, that are in the possession of
BASi, and that relate to the design, development, and manufacture
of the Licensed IP.
d.
"Licensed IP" shall mean the Licensed Patents and
Know-How.
e.
"Licensed Patents" shall mean any patent, divisional, continuation,
continuation-in-part, and registration, including any foreign
counterparts, issuing from: (1) U.S. Application Serial No.
10/914,733, filed August 9. 2004, entitled "Portable Sampling or
Testing Device and Method for Pharmacokinetics and Physiology
Studies", having a priority date of August 9, 2004, and published
on May 18, 2006; and (2) U.S. Application Serial No. 10/612,484,
filed July 2, 2003, entitled "Device and Method for Drug Delivery
to Animals", having a priority date of July 3, 2002, and published
on March 18, 2004.
f.
"Licensed Product(s)" shall mean any and all products (i) covered
by any Valid Claim of the Licensed Patents and/or (ii)
incorporating any of the Know-How.
g.
"Territory" shall mean worldwide.
h.
"Valid Claim" shall mean a claim in any issued and unexpired
Licensed Patent which has not been held unenforceable, unpatentable
or invalid by a decision of a court or other governmental agency of
competent jurisdiction, unappealable or unappealed within the time
allowed for appeal, and which has not been abandoned, disclaimed or
admitted to be invalid or unenforceable through reissue, disclaimer
or otherwise.
2.
LICENSE AND SUBLICENSE RIGHTS; IMPROVEMENTS
a.
Subject to the terms and conditions hereof, BASi hereby grants to
Licensee an exclusive license under the Licensed IP to develop,
make, have made, use, sell and offer for sale the Licensed
Product(s) in the Territory for use in the Field. For purposes of
clarification, Licensee is granted no rights under the Licensed IP
outside of the Field; provided, however, that Licensee shall be
permitted to use the Licensed IP with animals solely in connection
with pre-clinical trials conducted for the purpose of obtaining
regulatory approvals for the Licensed Products. For purposes of
clarification, Licensee does not receive any other intellectual
property of BASi, including but not limited trademarks of BASi,
such as the CULEX, EMPIS, EMPIS (and Design), and FLEABOT
trademarks.
b.
Licensee shall
have the right to sublicense the rights granted under
Section 2a. above
to any of its affiliates and/or any third parties; provided,
however, that Licensee shall give BASi at least 30 days' prior
written notice of the proposed terms of any sublicense and shall
discuss in good faith any concerns that BASi may have with such
sublicense. Licensee shall remain liable for royalty payments
resulting from Net Sales by any sublicensee pursuant to
Section 4 .
Each sublicense shall have confidentiality provisions at least as
restrictive as those contained in this Agreement, and shall specify
that BASi has no liability under the sublicense agreement. Licensee
shall provide BASi with complete copies of all sublicense
agreements promptly following execution thereof. Licensee shall be
responsible for the acts and omissions of the sublicensee, and
shall indemnify, defend, and hold harmless BASI and its affiliates,
and their respective directors, officers, employees, and agents
from and against all damages, losses, liabilities, costs, expenses,
claims, demands, suits, penalties and judgments as well as
administrative and judicial orders, including reasonable counsel
fees and expenses incurred, assessed or sustained by or against the
same with respect to, resulting from or arising out of the
sublicense between Licensee and the sublicensee.
c.
Any Improvements that are conceived or developed by a party after
the Effective Date shall be owned exclusively by such party. BASi
shall have a right of first negotiation with respect to Licensee's
patented Improvements pursuant to
Section 8c. herein.
Effective upon the date of the expiration or termination of this
Agreement, Licensee hereby grants to BASi a royalty-free,
worldwide, non-exclusive license (with the right to sublicense)
under any Improvements owned by Licensee that are not covered under
any issued patent as of such date for use outside of the
Field.
3.
PATENT PROSECUTION
a.
BASi shall be responsible for and control the prosecution and
maintenance of all U.S. and foreign patents and patent applications
included in the Licensed IP.
b.
Licensee shall reimburse BASi for fifty percent (50%) of BASi's
reasonable costs and fees (including all attorneys' fees and costs,
patent office fees, fees and costs incurred by foreign attorneys at
the request of BASi) incurred by BASi after the Effective Date in
fulfilling its obligations under
Section 3.a hereof.
c.
BASi will promptly notify Licensee in the event of a decision to
abandon any U.S. or foreign patent or patent application included
in the Licensed IP, and, if BASi is notified in writing by Licensee
within thirty (30) days of such notice by BASi that Licensee wishes
to continue such prosecution or maintenance, BASi shall assign such
patent or patent application to Licensee and Licensee may proceed
to control the prosecution and/or maintenance of such patent or
patent application.
d.
Licensee shall, at no cost to BASi, cooperate with BASi in the
prosecution of the License Patents, including but not limited to
causing any employee of Licensee who may be an inventor of the
Licensed Patents to be available to BASi in support of such
prosecution.
e.
Licensee shall provide BASi with prompt written notice of the
development of any patented Improvements to the Licensed
IP.
4.
ROYALTY PAYMENTS
a.
Licensee shall
pay to BASi a royalty on the sales of Licensed Products by Licensee
or by any sublicensee as follows:
(i)
With
respect to any Licensed Product covered by one or more Valid
Claims under a Licensed Patent, Licensee shall pay to BASi a
royalty equal to five percent (5%) of Net Sales of such
Licensed Product. Licensee's obligation to pay royalties under
this Section 4a.i. with respect to any Licensed Product in any
given country shall expire upon the expiration in such country
of the last-to-expire Licensed Patent with a Valid
Claim.
(ii)
With
respect to any Licensed Product that incorporates Know-How but
is not covered by a Valid Claim, Licensee shall pay to BASi a
royalty equal to five (5%) of Net Sales of such Licensed
Product. Licensee's obligation to pay royalties under this
Section 4a.ii. shall expire seven (7) years from the first
commercial sale of any Licensed Product in the United
States.
b.
As used herein, "Net Sales" shall mean the total gross revenues
received by Licensee, or the sublicensee, as applicable, for the
sale of Licensed Products, less any deductions (to the extent and
only to the extent that such deductions are separately and
customarily stated on the invoice) for cash or credit discounts,
credits or allowances for product returns, refunds, rebates,
commissions paid to sales personnel, taxes or shipping or
transportation charges.
c.
Royalties shall be payable on a quarterly basis contemporaneously
with the delivery of the reports required under
Section 6a. below.
d.
If a Licensed Product is sold by a sublicensee to Licensee, no
periodic payment shall be required until the Licensed Product is
sold by Licensee, and at that time the periodic payment shall be
computed according to
Sections 4a.i. or 4b.ii. herein.
e.
In the event Licensee enters into a royalty-bearing license
agreement with a third party (or third parties) as permitted
hereunder (1) due to an infringement claim by such third party with
respect to a Licensed Product, or (2) based on the good faith
opinion of Licensee that an infringement against a third party's
patents may occur without such a license, then the royalty payable
to BASi pursuant to
Section 4a. shall
be reduced by fifty percent (50%).
5.
MAINTENANCE FEES; SUBLICENSE FEES
a.
Licensee shall pay to BASi a license maintenance fee equal to
$20,000 per year beginning on January 1, 2010, and on each
subsequent anniversary thereof during the term of this
Agreement.
b.
In the event that Licensee receives from any sublicensee up front
or milestone fees or payments in consideration for a sublicense
under the Licensed Patents or Know-How ("Sublicense Fees"), and
such Sublicense Fees are non-refundable and are not credited
against future royalty obligations under such sublicense (e.g.
pre-paid royalties), then Licensee shall pay to BASi an amount
determined as follows:
|
Date
Sublicense Fees
Are
Received by Licensee
|
Amount
of Payment to BASi
|
|
Effective
Date - October 1, 2010
|
50%
of the Sublicense Fees
|
|
October
2, 2010 - October 1, 2012
|
25%
of the Sublicense Fees
|
|
After
October 1, 2012
|
10%
of the Sublicense Fees
|
6.
REPORTS AND PAYMENT OF ROYALTY PAYMENTS
a.
Within thirty (30) days following the end of each calendar quarter,
commencing with the calendar quarter during which Licensee or any
sublicensee makes the first commercial sale of a Licensed Product,
Licensee shall send to BASi a report of the Licensed Product(s)
sold by Licensee or its sublicensees in the preceding calendar
quarter, showing the respective descriptions, quantities, net
sales, and calculations of royalty payments as required by
Section 4 above.
Any payment required under this paragraph shall be in the form of a
check made payable to BASi and shall be sent to BASi 's address
specified above, or to such other address as may be designated by
BASi, or by electronic transfer to accounts specified by
BASi.
b.
Licensee shall maintain complete and accurate records of Licensed
Product sold, showing the respective descriptions, quantities, Net
Sales, and calculations of royalty payments due and payable
thereon, for the three (3) year period after the sale of such
Licensed Product. BASi or its agent may, not more than once per
year, inspect and copy Licensee's records during reasonable
business hours for purposes of verifying the completeness and
accuracy of all reports to BASi. BASi shall provide fifteen (15)
days advance notice of such inspection. If any inspection indicates
that a payment has been underpaid by more than five percent (5%),
Licensee shall upon BASi's request reimburse BASi for BASi's
reasonable cost of the inspection.
c.
Any and all amounts not timely paid to Licensee hereunder shall
bear interest at the rate of eight percent (8%) per annum, or the
maximum amount permitted by law, whichever is less.
7.
TECHNOLOGY TRANSFER Within
thirty (30) days of the Effective Date, BASi will provide to
Licensee copies of all documents and records that comprise
Know-How. In addition, during the first sixty (60) days of the term
of this Agreement, Licensee may schedule with BASi, through BASi's
Executive Vice President or his designee, meetings to permit for
oral communications between BASi personnel having knowledge of the
Know-How and no more than two (2) representatives of Licensee.
Licensee shall reimburse BASi at a reasonable hourly rate for time
spent by BASi participants in excess of twenty (20) hours in the
meetings required under this
Section 7 .
8.
LICENSEE'S OBLIGATIONS AND WARRANTIES
a.
Licensee shall in good faith diligently use its commercially
reasonable efforts to develop, obtain government approvals for, and
promote the sale of the Licensed Products.
b.
Except as expressly permitted in
Section 2a. ,
Licensee represents and warrants that it shall not make, have made,
use, sell, or offer for sale any product that embodies any of the
Licensed IP for use outside the Field.
c.
Licensee shall provide BASi with prompt written notice of any
patented Improvements owned by Licensee. Such notice will also
include an offer to BASi to license the Improvements for uses
outside the Field. BASi will have sixty (60) days to consider and
negotiate such a license. Licensee agrees that it will
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