UNIVERSITY OF UTAH RESEARCH
FOUNDATION
and
NUTRISCAN, INC.
AMENDED AND RESTATED
PATENT LICENSE AGREEMENT
(EXCLUSIVE)
TABLE OF
CONTENTS
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WITNESSETH
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1
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1 -
DEFINITIONS
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2
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2 -
GRANT
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5
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3 -
DILIGENCE
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7
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4 -
ROYALTIES
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9
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5 - REPORTS AND
RECORDS
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12
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6 - PATENT
PROSECUTION
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14
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7 -
CONFIDENTIALITY
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15
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8 -
INFRINGEMENT
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16
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9 - PRODUCT
LIABILITY
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18
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10 - EXPORT
CONTROLS
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19
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11 - NON-USE OF
NAMES
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20
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12 -
ASSIGNMENT
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20
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13 - DISPUTE
RESOLUTION
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20
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14 -
TERMINATION
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21
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15 - PAYMENTS,
NOTICES AND OTHER COMMUNICATIONS
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23
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16 -
MISCELLANEOUS PROVISIONS
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23
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APPENDIX
A
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25
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APPENDIX
B
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26
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UNIVERSITY OF UTAH RESEARCH
FOUNDATION
and
NUTRISCAN, INC.
AMENDED AND RESTATED
PATENT LICENSE AGREEMENT
This
Amended and Restated Agreement is made and entered into effective
as of the 7th day of March, 2002, (the “EFFECTIVE
DATE”) by and between the UNIVERSITY OF UTAH RESEARCH
FOUNDATION, having its principal office at 615 Arapeen Dr., Suite
110, Salt Lake City, UT 84108 (hereinafter referred to as
“LICENSOR”), and Nutriscan, Inc., a corporation duly
organized under the laws of Utah, and having its principal office
at 75 West Center Street, Provo, Utah 84601 (hereinafter referred
to as “LICENSEE”).
WITNESSETH
WHEREAS,
LICENSOR is the owner of certain LICENSED TECHNOLOGY (as later
defined herein) relating to University of Utah Case No. U-2612,
entitled NONINVASIVE DETECTION AND MAPPING OF CHEMICAL SUBSTANCES
IN THE SKIN AND SKIN-RELATED MALIGNANCIES by Werner Gellermann,
Robert W. McClane , Nikita B. Katz and Paul S. Bernstein and has
the right to grant licenses under said LICENSED
TECHNOLOGY;
WHEREAS,
LICENSOR desires to have the LICENSED TECHNOLOGY developed and
commercialized to benefit the public and is willing to grant a
license thereunder;
WHEREAS,
University of Utah inventors of the PATENT RIGHTS, were also
original inventors/equity participants in the company, the Conflict
Avoidance Statements of Paul S. Bernstein, Werner Gellermann and
Robert W. McClane, are Appendix C hereto; the Waivers of Royalty of
Paul
1
S. Bernstein, Werner Gellermann
and Robert W. McClane, inventors/equity participants in company are
Appendix D;
WHEREAS,
the LICENSOR originally granted a license to the LICENSEE pursuant
to that certain License Agreement dated June, 29, 2000 pursuant to
which the LICENSOR accepted an equity interest in LICENSEE in
partial consideration for the license grant;
WHEREAS,
LICENSOR and the other original investors in LICENSEE have elected
to sell all of their interest in LICENSEE to Worldwide Nutritional
Sciences, Inc.; and
WHEREAS,
in connection with such sale, LICENSEE and LICENSOR desire to amend
and restate in its entirety the LICENSE AGREEMENT . NOW, THEREFORE,
in consideration of the premises and the mutual covenants contained
herein, the parties hereto agree as follows:
1 - DEFINITIONS
For
the purposes of this Agreement, the following words and phrases
shall have the following meanings:
1.1
"AFFILIATE" means any person or entity that controls, is controlled
by, or is under common control with LICENSEE, directly or
indirectly. For purposes of this definition, "control" and its
various inflected forms means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of such person or entity, whether through
ownership of voting securities, by contract or
otherwise.
1.2
"PATENT RIGHTS" shall mean all of the following LICENSOR
intellectual property:
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a.
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the
United States patents listed in Appendix A;
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b.
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the United
States patent applications listed in Appendix A, and divisionals,
continuations and claims of continuation-in-part applications which
shall be directed to subject matter specifically described in such
patent applications, and the resulting patents;
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c.
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any patents
resulting from reissues or reexaminations of the United States
patents described in a. and b. above;
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d.
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the Foreign
patents listed in Appendix A;
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e.
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the Foreign
patent applications listed in Appendix A, and divisionals,
continuations and claims of continuation-in-part applications which
shall be directed to subject matter specifically described in such
Foreign patent applications, and the resulting patents;
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f.
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Foreign patent applications filed
after the EFFECTIVE DATE, including those applications filed in at
least the countries listed in Appendix B and divisionals,
continuations and claims of continuation_in_part applications which
shall be directed to subject matter specifically described in such
patent applications, and the resulting patents; and
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g.
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any Foreign patents, resulting
from equivalent Foreign procedures to United States reissues and
reexaminations, of the Foreign patents described in d., e. and f.
above.
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1.3
“LICENSED TECHNOLOGY” means and includes the PATENT
RIGHTS and other technology and intellectual property, including
inventions, whether patentable or unpatentable, technical data,
software, apparatus, know-how and trade secrets relating to
University of Utah Case No. U-2612 entitled NONINVASIVE DETECTION
AND MAPPING OF CHEMICAL SUBSTANCES IN THE SKIN AND SKIN-RELATED
MALIGNANCIES owned and known by LICENSOR upon the EFFECTIVE
DATE.
1.4
A “LICENSED PRODUCT” shall mean any product or part
thereof which:
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a.
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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; or
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b.
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is manufactured by using a
process or is employed to practice a process which 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 LICENSED
PROCESS is used or in which such product or part thereof is used or
sold; and
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c.
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is covered by or incorporates any
LICENSED TECHNOLOGY.
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1.5
A “LICENSED PROCESS” shall mean any process which is
covered in whole or in part by an issued, unexpired claim or a
pending claim contained in the PATENT RIGHTS or is covered by or
incorporates any LICENSED TECHNOLOGY.
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1.6
“NET SALES” shall mean LICENSEE’S, its
AFFILIATES’ (except as described below) and its
SUBLICENSEES’ billings for LICENSED PRODUCTS and LICENSED
PROCESSES less the sum of the following:
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a.
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discounts
allowed in amounts customary in the trade for quantity purchases,
cash payments, prompt payments, wholesalers and
distributors;
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b..
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sales, tariff
duties and/or use taxes directly imposed and with reference to
particular sales;
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c.
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outbound
transportation prepaid or allowed; and
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d.
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amounts allowed
or credited on returns.
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e.
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commissions
paid to independent sales representatives or agencies.
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No
deductions shall be made for commissions paid to individuals
regularly employed by LICENSEE, or for cost of collections. NET
SALES shall occur:
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(i) with
respect to NET SALES of LICENSED PRODUCTS and LICENSED PROCESSES in
the United States, when a LICENSED PRODUCT or LICENSED PROCESS
shall be invoiced by LICENSEE, or an AFFILIATE of LICENSEE, or a
SUBLICENSEE, to a third party that is not an AFFILIATE, or if not
invoiced, when delivered to or performed for a third party that is
not an AFFILIATE (and no royalty shall be payable on intercompany
billings to AFFILIATES);
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(ii) with
respect to NET SALES of LICENSED PRODUCTS outside of the United
States through AFFILIATES, the date that is six months following
the receipt of the LICENSED PRODUCT by an AFFILIATE and the royalty
on such NET SALES shall be based on the published U.S. retail price
rather than the transfer price invoiced to such AFFILIATES (and no
royalty shall be payable on billings by the AFFILIATE for the
LICENSED PRODUCTS);
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(iii) with
respect to NET SALES of LICENSED PROCESSES outside of the United
States, when such LICENSED PROCESS shall be invoiced by LICENSEE, a
SUBLICENSEE, or an AFFILIATE of LICENSEE to a third party that is
not an AFFILIATE;
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(iv) with
respect to NET SALES of LICENSED PRODUCTS by LICENSEE or
SUBLICENSEE to persons or entities outside of the UNITED STATES
that are not
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AFFILIATES, the
date the LICENSED PRODUCT shall be invoiced by LICENSEE to such
third party, or if not invoiced, when delivered to such third
party.
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In the event a Licensed Product
is leased, licensed or sold on an installment basis the royalties
due hereunder shall be calculated and paid on the amount of each
installment as it is invoiced.
1.7
“OTHER REVENUE” shall mean LICENSEE’S gross
revenues from the sale of services (e.g. fees for consulting,
research and development, and training) in connection
with:
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a.
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the
sublicensing of the LICENSED TECHNOLOGY; and/or
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b.
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the use or
sale, lease or other transfer of LICENSED PRODUCTS or LICENSED
PROCESSES. 1.8 “TERRITORY” shall mean
worldwide.
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1.9
“FIELD OF USE” shall mean the use of the LICENSED
TECHNOLOGY for the non-invasive measurement of carotenoids and
similar or relatedcompounds, and anti-oxidant status and other
compounds in human skin for the promotion and sale of nutritional
supplements and other carotenoid-containing products, but
specifically excluding marketing the LICENSED TECHNOLOGY to the
professional medical community (e.g., pharmaceuticals, medical
doctors, medical clinics, medical research centers, medical schools
and hospitals).
2-GRANT
2.1
LICENSOR hereby grants to LICENSEE the right and license in the
TERRITORY for the FIELD OF USE to practice under the LICENSED
TECHNOLOGY and, to the extent not prohibited by other patents, to
make, have made, use, lease, license, sell and export LICENSED
PRODUCTS and to practice the LICENSED PROCESSES, until the
expiration of the last to expire of any of LICENSOR’S rights
in the LICENSED TECHNOLOGY, unless this Agreement shall be sooner
terminated according to the terms hereof.
LICENSEE
shall have the right to enter into sublicensing agreements for the
rights, privileges and licenses granted hereunder only during the
EXCLUSIVE PERIOD (defined below) of this Agreement. Upon any
termination of this Agreement, SUBLICENSEES’ rights shall
also terminate, subject to Section 14.6 hereof.
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2.2
In order to establish a period of exclusivity for LICENSEE,
LICENSOR hereby agrees that it shall not grant any other license to
make, have made, use, lease, sell and import LICENSED PRODUCTS or
to utilize LICENSED PROCESSES, in the TERRITORY for the FIELD OF
USE or the promotion and sale of nutritional supplements during the
period of time commencing with the EFFECTIVE DATE and terminating
upon the last to expire of the PATENT RIGHTS (hereinafter the
“EXCLUSIVE PERIOD”).
2.3
The University of Utah reserves the right to practice under the
LICENSED TECHNOLOGY for noncommercial internal research
purposes.
2.4
LICENSEE agrees to incorporate terms and conditions substantively
similar to Articles 2, 5, 8.1-6, 9, 10, 11, 12, 13, and 16 of this
Agreement into its sublicense agreements, so that these Articles
shall be binding upon such SUBLICENSEES as if they were parties to
this Agreement.
2.5
LICENSEE agrees to forward to LICENSOR a copy of any and all
sublicense agreements promptly upon execution by the
parties.
2.6
LICENSEE shall not receive from SUBLICENSEES anything of value in
lieu of cash payments or publicly traded securities in
consideration for any sublicense under this Agreement, without the
express prior written permission of LICENSOR, which prior written
permission shall not be unreasonably withheld.
2.9
Nothing in this Agreement shall be construed to confer any rights
upon LICENSEE by implication, estoppel or otherwise as to any
technology or patent rights of LICENSOR or any other entity other
than the LICENSED TECHNOLOGY, regardless of whether such rights
shall be dominant or subordinate to any LICENSED
TECHNOLOGY.
3 - DILIGENCE
3.1
LICENSEE shall use its commercially reasonable best efforts to
bring one or more LICENSED PRODUCTS or LICENSED PROCESSES to market
and to continue active, diligent marketing efforts for one or more
LICENSED PRODUCTS or LICENSED PROCESSES throughout the life of this
Agreement.
3.2
In addition, LICENSEE shall adhere to the following
milestones:
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(i)
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deliver to LICENSOR within 90
days of the execution of this agreement, a business plan relating
to the commercialization of the LICENSED TECHNOLOGY in the FIELD OF
USE; and
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(ii)
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provide similar reports to
LICENSOR on January 31 of each year.
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b.
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LICENSEE shall make a first
commercial sale, lease, or license of a LICENSED PRODUCT or
LICENSED PROCESS on or before September 30, 2003.
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3.3
LICENSEE’S failure to perform in accordance with either
Paragraph 3.1 or 3.2 above shall be grounds for LICENSOR to
terminate this Agreement pursuant to Paragraph 14.3 hereof.
Notwithstanding the foregoing, if there is a major unanticipated
research, development, marketing or regulatory problem, the parties
will meet to renegotiate revised due diligence
deadlines.
4 - ROYALTIES
4.1
For the rights, privileges and license granted hereunder, LICENSEE
shall pay royalties to LICENSOR in the manner hereinafter provided
to the end of the term of the PATENT RIGHTS or until this Agreement
shall be otherwise terminated, which ever first occurs:
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a.
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License Issue Fee of Twenty-Five
Thousand Dollars ($25,000), receipt of Twenty Thousand Dollars
($20,000) is hereby acknowledged and confirmed. An additional
payment of Five Thousand Dollars ($5,000) shall be made on or
before June, 29, 2002.
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b.
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An ownership interest in the new
company formed by LICENSEE equal to Five Percent (5%) of the total
ownership interest of the LICENSEE on the EFFECTIVE DATE. LICENSOR
acknowledge receipt of such five percent ownership, which it has
elected to sell pursuant to that certain Reconstituted Stock
Purchase Agreement dated March__, 2002. Following such sale,
LICENSOR shall have no further ownership interest in LICENSEE and
shall
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have no further right to any
ownership interest in LICENSEE or any entity formed by
LICENSEE.
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c.
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License Maintenance Fees of Five
Thousand Dollars ($5,000) for the year in which the first NET SALES
occurs, Ten Thousand Dollars ($10,000) the second year, Twenty-five
Thousand Dollars ($25,000) the third year and Fifty Thousand
Dollars ($50,000) each year thereafter; provided, however, License
Maintenance Fees may be credited to Running Royalties subsequently
due on NET SALES or OTHER REVENUE for each said year, if any.
License Maintenance Fees paid in excess of Running Royalties shall
not be creditable to Running Royalties for future years.
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d.
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Running Royalties in an amount
equal to Three and a half Percent ( 3.5 %) of NET SALES of
the LICENSED PRODUCTS and LICENSED PROCESSES used, leased or sold
by and/or for LICENSEE and/or its SUBLICENSEES. Should LICENSEE
assign its right and obligations under this License Agreement to a
party other than an AFFILIATE, the Running Royalty shall be Four
and a half Percent (4.5%) for NET SALES made by the Assignee and
its SUBLICENSEES.
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e.
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LICENSOR hereby grants to
LICENSEE the right to enter into sublicensing agreements with third
parties (hereinafter referred to as “SUBLICENSEES”) to
the extent of LICENSEE’S rights under the grant provided in
Section 2.1 and provided that LICENSEE has current exclusive rights
thereto in the TERRITORY being sublicensed pursuant to Section 3.3.
LICENSEE may only enter into sublicensing agreements during the
EXCLUSIVE PERIOD of this AGREEMENT. Upon any termination of this
AGREEMENT, SUBLICENSEES’ rights shall also
terminate.
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f.
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Any sublicense granted by
LICENSEE to a SUBLICENSEE shall incorporate all of the terms and
conditions of this AGREEMENT, which shall be binding upon each
SUBLICENSEE as if such SUBLICENSEE were a party to this
AGREEMENT.
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g.
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LICENSEE shall pay to LICENSOR
Thirty-five Percent (35% ) of any lump-sum fee or advance payment
received by LICENSEE from any SUBLICENSEE. However, that amount may
be reduced by an amount equal to the portion of the lump-sum fee or
advance payment re-invested by LICENSEE in further research and
development of the LICENSED TECHNOLOGY, but in no event shall
LICENSEE pay LICENSOR less than Fifteen Percent (15%) of any
lump-sum fee or advance payment. LICENSEE shall not receive from
SUBLICENSEES anything of value in lieu of cash payments in
consideration for any sublicense under this AGREEMENT, without the
express prior written permission of LICENSOR. In addition, LICENSEE
shall pay to LICENSOR a royalty on NET SALES under any sublicense
which royalty rate shall be the greater of: (a) Fifty Percent
(50.0%) of the royalty rate charged by LICENSEE on NET SALES by
such SUBLICENSEE, or; (b) the same rate that would be due to
LICENSOR from NET SALES by LICENSEE.
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h.
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LICENSEE shall promptly (a)
provide LICENSOR with a copy of each sublicense granted by LICENSEE
hereunder and any amendments thereto or terminations thereof; (b)
collect and guarantee payment of all royalties due LICENSOR from
SUBLICENSEES; and (c) summarize and deliver copies of all reports
due to LICENSEE from SUBLICENSEES.
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4.2
All payments due hereunder shall be paid in full, without deduction
of taxes or other fees which may be imposed by any government,
except as otherwise provided in Paragraph 1.6(b).
4.3
No multiple royalties shall be payable because any LICENSED
PRODUCT, its manufacture, use, lease or sale are or shall be
covered by more than one LICENSED TECHNOLOGY, PATENT RIGHTS patent
application or PATENT RIGHTS patent licensed under this
Agreement.
4.4
Royalty payments shall be paid in United States dollars in Salt
Lake City, Utah, or at such other place as LICENSOR may reasonably
designate consistent with the laws and regulations controlling in
any foreign country. If any currency conversion shall be required
in connection with the payment of royalties hereunder, such
conversion shall be made by using the exchange rate prevailing at
the Chase Manhattan Bank (N.A.) or its successor on the last
business day of the calendar quarterly reporting period to which
such royalty payments relate.
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5 - REPORTS AND
RECORDS
5.1
LICENSEE shall keep full, true and accurate books of account
containing all particulars that may be necessary for the purpose of
showing the amounts payable to LICENSOR hereunder. Said books of
account shall be kept at LICENSEE’S principal place of
business or the principal place of business of the appropriate
division of LICENSEE to which this Agreement relates. Said books
and the supporting data shall be open at all reasonable times for
five (5) years following the end of the calendar year to which they
pertain, to the inspection of LICENSOR or its agents for the
purpose of verifying LICENSEE’S royalty statement
