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EXHIBIT 10.16
AGREEMENT
Effective as of October 1, 1993 ("Effective Date"), THE BOARD OF TRUSTEES OF THE
XXXXXX XXXXXXXX JUNIOR UNIVERSITY, a body having corporate powers under the laws
of the State of California ("STANFORD"), and Genelabs Technologies, Inc. and its
Affiliates, a California corporation having a principal place of business at 000
Xxxxxxxxx Xxxxx, Xxxxxxx Xxxx, Xxxxxxxxxx 00000 ("LICENSEE"), agree as follows:
1. BACKGROUND
1.1 STANFORD has an assignment of "Use of Dehydroepiandrosterone (DHEA) in
the Medical Treatment of Systemic Lupus Erythematosus (SLE)" from the
laboratory of Xx. Xxxxx X. XxXxxxx ("Invention[s]"), as described in
Stanford Docket S92-148, and any Licensed Patent(s), as hereinafter
defined, which may issue to such Invention(s).
1.2 STANFORD has certain technical data and information as herein defined
("Technology") pertaining to Invention(s).
1.3 STANFORD desires to have the Technology and Invention(s) perfected and
marketed at the earliest possible time in order that products resulting
therefrom may be available for public use and benefit.
1.4 LICENSEE desires a license under said Technology, Invention(s), and
Licensed Patent(s) to develop, manufacture, use, and sell Licensed
Product(s) in the field of use of treatment of SLE in humans.
2. DEFINITIONS
2.1 "Licensed Patent(s)" means any Letters Patent issued upon STANFORD's
U.S. Patent Application, Serial Number 07/958,911 filed October 9,
1992, and/or any divisions, continuations, continuations-in-part or
reissues thereof, and/or any foreign patents corresponding thereto.
2.2 "Technology" means (a) existing technical data and information,
including but not limited to the information contained in the Patent
Application, pertaining to the Invention(s) and provided to the
LICENSEE whether or not it is of a confidential nature, and (b)
existing preclinical and clinical data relating to the Invention(s),
and provided to the LICENSEE.
2.3 "Licensed Product(s)" means any product or part thereof in the Licensed
Field of Use, the manufacture, use, or sale of which:
(a) Is covered by a valid claim of an issued, unexpired Licensed
Patent(s) directed to the Invention(s). A claim of an issued,
unexpired Licensed Patent(s) shall be presumed to be valid
unless and until it has been held to be invalid by a final
judgment of a court of competent jurisdiction from which no
appeal can be or is taken;
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(b) Is covered by any claim being prosecuted in a pending
application directed to the Invention(s); or
(c) Incorporates any of the Technology.
2.4 "Net Sales" means the gross revenue derived by LICENSEE and/or
sublicensee(s) from Licensed Product(s), less the following items but
only insofar as they actually pertain to the disposition of such
Licensed Product(s) by LICENSEE or sublicensee(s), are included in such
gross revenue, and are actually credited or granted to customers:
(a) Import, export, excise and sales taxes, and custom duties;
(b) Credit for returns, allowances, or trades, and
(c) Discounts and rebates
2.5 "Licensed Field of Use" means therapeutic use for treatment of Systemic
Lupus Erythematosus.
2.6 "Licensed Territory" means the entire world.
2.7 "Exclusive" means that, subject to Article 4, STANFORD shall not grant
further licenses in the Licensed Territory in the Licensed Field of
Use.
2.8 "Date of FDA Approval" means the date of final written notification by
the U.S. Food and Drug Administration ("FDA") of its approval of the
Licensed Product(s) (including the labeling therefor) that authorizes
marketing thereof for the treatment of SLE.
2.9 "Affiliates" means any corporation, firm, partnership or other entity,
whether de jure or de facto, which directly or indirectly owns, is
owned by or is under common ownership with a party to this Agreement to
the extent of at least fifty percent (50%) of the equity (or such
lesser percentage which is the maximum allowed to be owned by a foreign
corporation in a particular jurisdiction) having the power to vote on
or direct the affairs of the entity and any person, firm partnership,
corporation or other entity actually controlled by, controlling or
under common control with a party to this Agreement.
3. GRANT
3.1 STANFORD hereby grants and LICENSEE hereby accepts a license in the
Licensed Field of Use to make, use, and sell Licensed Product(s) in the
Licensed Territory.
3.2 Said license is Exclusive, including the right to sublicense pursuant
to Article 13, in the Licensed Field of Use for a term commencing as of
Effective Date and ending, in each country, 7 years from the date of
first commercial sale of a Licensed Product(s) by LICENSEE or
sublicensee(s) in such country; LICENSEE agrees to promptly inform
STANFORD in writing of the date of first commercial sale. Thereafter,
said license shall be nonexclusive until
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expiration of the last to expire of Licensed Patent(s). Within one year
prior to the end of the Exclusive period STANFORD agrees to consider
extending the Exclusive term herein defined upon request by LICENSEE,
and if such extension is not in conflict with STANFORD policy or
regulations.
4. GOVERNMENT RIGHTS
This Agreement may be subject to all of the terms and conditions of Xxxxx 00
Xxxxxx Xxxxxx Code Sections 200 through 204, including an obligation that
Licensed Product(s) sold or produced in the United States be "manufactured
substantially in the United States," and LICENSEE agrees to take all reasonable
action necessary on its part as licensee to enable STANFORD to satisfy its
obligation thereunder, if any, relating to Invention(s).
5. DILIGENCE
5.1 As an inducement to STANFORD to enter into this Agreement, LICENSEE
agrees to use all reasonable efforts and diligence to proceed with the
development, manufacture, and sale or lease of Licensed Product(s) and
to diligently develop markets for the Licensed Product(s). Unless
LICENSEE has initiated Phase II clinical trials by January 1, 1996,
STANFORD may terminate this Agreement if LICENSEE or a sublicensee has
not sold Licensed Product(s) for a period of one (1) year commencing as
of the Date of FDA Approval of a Licensed Product.
5.2 Progress Report -- Commencing September 1, 1994, on or before September
1 of each year until LICENSEE markets a Licensed Product(s), LICENSEE
shall make a written annual report to STANFORD covering the preceding
year ending June 30, regarding the progress of LICENSEE toward
commercial use of Licensed Product(s). Such report shall include, as a
minimum, information sufficient to enable STANFORD to satisfy any
reporting requirements of the U.S. Government and for STANFORD to
ascertain progress by LICENSEE toward meeting the diligence
requirements of this Article 5.
6. ROYALTIES
6.1 LICENSEE agrees to pay to STANFORD a noncreditable, nonrefundable
license issue royalty of Twenty Thousand Dollars ($ 20,000) upon
signing this Agreement.
6.2 Beginning September 1, 1994 and each September 1 thereafter, LICENSEE
also shall pay to STANFORD a yearly royalty of Five Thousand Dollars
($5,000). Said yearly royalty payments are nonrefundable but they are
creditable against earned royalties to the extent provided in Paragraph
6.5.
6.3 (A) LICENSEE shall pay STANFORD earned royalties of [ * ] on Net Sales
in countries where a Licensed Patent(s) has issued and LICENSEE (or a
sublicensee), by its activities would, but for the license granted
herein, infringe a valid claim of an unexpired Licensed Patent(s) of
STANFORD covering said activity.
(B) LICENSEE shall pay STANFORD earned royalties of [ * ] on Net Sales
in countries where a Licensed Patent(s) has not issued and its
activities (or those of any sublicensees) do not infringe a valid claim
of an unexpired Licensed Patent(s), provided,
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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however, that such royalties shall be reduced to [ * ] with
respect to Net Sales in any country where a third party (other than a
sublicensee) is selling a DHEA-containing product and the product is
being used for the treatment of SLE.
6.4 LICENSEE shall pay STANFORD milestone payments according to the
following schedule:
Issuance of Licensed Patent $ 20,000
Initiation of Phase III clinical trials $ 50,000
or January 1, 1998, whichever occurs first
Date of FDA Approval $100,000
6.5 Creditable payments under this Agreement shall be an offset to LICENSEE
against up to fifty percent (50%) of each earned royalty payment which
LICENSEE would be required to pay pursuant to Paragraph 6.3 until the
entire credit is exhausted.
6.6 (A) If this Agreement is not terminated in accordance with other
provisions hereof, LICENSEE's obligation to pay royalties under
Subsection 6.3 (A) in a country of the Licensed Territory shall
continue for so long as LICENSEE, by its activities in such country
would, but for the license granted herein, infringe a valid claim of an
unexpired Licensed Patent(s) of STANFORD covering said activity.
(B) If this Agreement is not terminated in accordance with other
provisions hereof, LICENSEE's obligation to pay royalties under
Subsection 6.3 (B) shall continue during the Exclusive period set
forth in Section 3.2.
6.7 The royalty on sales in currencies other than U.S. Dollars shall be
calculated using the appropriate foreign exchange rate for such
currency quoted by the Bank of America (San Francisco) foreign exchange
desk, on the close of business on the last banking day of each calendar
quarter. Royalty payments to STANFORD shall be in U.S. Dollars. All
non-U.S. taxes related to royalty payments shall be paid by LICENSEE
and are not deductible from the payments due STANFORD.
6.8 Within thirty (30) days after receipt of a statement from STANFORD,
LICENSEE shall reimburse STANFORD for all costs incurred by STANFORD
during the Exclusive period and including those costs incurred prior to
the Effective Date, in connection with the preparation, filing and
prosecution of all patent applications and maintenance of patents
corresponding to the Invention(s).
6.9 If LICENSEE makes payment to one or more third parties under
patent(s)/patent applications and/or know-how which LICENSEE reasonably
believes cover a particular Licensed Product as defined in Paragraph
2.3 hereunder (and which do not cover apparatus used to manufacture the
Licensed Product), the royalty rate specified in Paragraph 6.3 above
shall be subject to reduction. [ * ]. [ * ] [ * ] . The obligations of
STANFORD to reduce its royalties under this paragraph shall be subject
to receipt by STANFORD from LICENSEE of adequate evidence of the
payment obligation of such royalties by LICENSEE to such unaffiliated
third parties, including the identity of such parties.
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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7. ROYALTY REPORTS, PAYMENTS, AND ACCOUNTING
7.1 Quarterly Earned Royalty Payment and Report -- Beginning with the first
sale of a Licensed Product, LICENSEE shall make written reports (even
if there are no sales) and earned royalty payments to STANFORD within
thirty (30) days after the end of each calendar quarter. This report
shall state the number, description, and aggregate Net Sales of
Licensed Product(s) during such completed calendar quarter, and
resulting calculation pursuant to Paragraph 6.3 of earned royalty
payment due STANFORD for such completed calendar quarter. Concurrent
with the making of each such report, LICENSEE shall include payment due
STANFORD of royalties for the calendar quarter covered by such report.
7.2 Accounting -- LICENSEE agrees to keep and maintain records for a period
of three (3) years showing the manufacture, sale, use, and other
disposition of products sold or otherwise disposed of under the license
herein granted. Such records will include general ledger records
showing cash receipts and expenses, and records which include
production records, customers, serial numbers and related information
in sufficient detail to enable the royalties payable hereunder by
LICENSEE to be determined. LICENSEE further agrees to permit its books
and records to be examined by STANFORD from time to time to the extent
necessary to verify reports provided for in Paragraph 7.1. Such
examination is to be made by STANFORD or its designee (acceptable to
LICENSEE), at the expense of STANFORD, except in the event that the
results of the audit reveal an underreporting of royalties due STANFORD
of five percent (5%) or more, then the audit costs shall be paid by
LICENSEE.
8. NEGATION OF WARRANTIES
8.1 Nothing in this Agreement is or shall be construed as:
(a) A warranty or representation by STANFORD as to the validity or
scope of any Licensed Patent(s);
(b) A warranty or representation that anything made, used, sold,
or otherwise disposed of under any license granted in this
Agreement is or will be free from infringement of patents,
copyrights, and other rights of third parties;
(c) An obligation to bring or prosecute actions or suits against
third parties for infringement, except to the extent and in
the circumstances described in Article 12;
(d) Granting by implication, estoppel, or otherwise any licenses
or rights under patents or other rights of STANFORD or other
persons other than Licensed Patent(s), regardless of whether
such patents or other rights are dominant or subordinate to
any Licensed Patent(s); or
(e) An obligation to furnish any technology or technological
information other than the Technology.
8.2 Except as expressly set forth in this Agreement, STANFORD MAKES NO
REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS
OR IMPLIED. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE
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USE OF THE LICENSED PRODUCT(S) WILL NOT INFRINGE ANY PATENT,
COPYRIGHT, TRADEMARK, OR OTHER RIGHTS OR ANY OTHER EXPRESS OR IMPLIED
WARRANTIES.
8.3 LICENSEE agrees that nothing in this Agreement grants LICENSEE any
express or implied license or right under or to:
(a) U.S. Patent No. 4,237,224, "Process for Producing Biologically
Functional Molecular Chimeras," U.S. Patent No. 4,468,464 and
U.S. Patent No. 4,740,470, both entitled, "Biologically
Functional Molecular Chimeras" (collectively known as the
Xxxxx/Xxxxx patents) or reissues thereof; or
(b) U.S. Patent 4,656,134 "Amplification of Eucaryotic Genes" or
any patent application corresponding thereto.
9. INDEMNITY
9.1 LICENSEE agrees to indemnify, hold harmless, and defend STANFORD and
Stanford University Hospital and their respective trustees, officers,
employees, students, and agents against any and all claims for death,
illness, personal injury, property damage, and improper business
practices arising out of the manufacture, use, sale, or other
disposition of Invention(s), Licensed Patent(s), Licensed Product(s),
or Technology by LICENSEE or sublicensee(s), or their customers.
9.2 STANFORD shall not be liable for any indirect, special, consequential,
or other damages whatsoever, whether grounded in tort (including
negligence), strict liability, contract or otherwise. STANFORD shall
not have any responsibilities or liabilities whatsoever with respect to
Licensed Products(s).
9.3 LICENSEE shall at all times comply, through insurance or
self-insurance, with all statutory workers' compensation and employers'
liability requirements covering any and all employees with respect to
activities performed under this Agreement.
9.4 In addition to the foregoing, LICENSEE shall maintain, during the term
of this Agreement, Comprehensive General Liability Insurance, including
Products Liability Insurance, with reputable and financially secure
insurance carrier(s) to cover the activities of LICENSEE and its
sublicensee(s). During Phase I through Phase III clinical trials such
insurance shall provide minimum limits of liability of Two Million
Dollars ($2,000,000), and during marketing of Licensed Product(s) to
the public such insurance shall provide minimum limits of liability of
Five Million Dollars ($5,000,000) and shall include STANFORD, Stanford
University Hospital, their trustees, directors, officers, employees,
students, and agents as additional insureds. Such insurance shall be
written to cover claims incurred, discovered, manifested, or made
during or after the expiration of this Agreement. At STANFORD's
request, LICENSEE shall furnish a Certificate of Insurance evidencing
primary coverage and requiring thirty (30) days prior written notice of
cancellation or material change to STANFORD. LICENSEE shall advise
STANFORD, in writing, that it maintains excess liability coverage
(following form) over primary insurance for at least the minimum limits
set forth above. All such insurance of LICENSEE shall be primary
coverage; insurance of STANFORD or Stanford University Hospital shall
be excess and noncontributory.
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10. MARKING
Prior to the issuance of patents on the Invention(s), LICENSEE agrees to xxxx
Licensed Product(s) (or their containers or labels) made, sold, or otherwise
disposed of by it under the license granted in this Agreement with the words
"Patent Pending," and following the issuance of one or more patents, with the
numbers of the Licensed Patent(s).
11. STANFORD NAMES AND MARKS
LICENSEE agrees not to identify STANFORD in any promotional advertising or other
promotional materials to be disseminated to the public or any portion thereof or
to use the name of any STANFORD faculty member, employee, or student or any
trademark, service xxxx, trade name, or symbol of STANFORD or the Stanford
University Hospital, or that is associated with either of them, without
STANFORD's prior written consent.
12. INFRINGEMENT BY OTHERS: PROTECTION OF PATENTS
12.1 LICENSEE shall promptly notify STANFORD ("Notice of Infringement") of
any suspected infringement of any Licensed Patent(s) by a third party.
During the Exclusive period of this Agreement, STANFORD and LICENSEE
each shall have the right to institute an action for infringement of
the Licensed Patent(s) against such third party in accordance with the
following:
(a) If STANFORD and LICENSEE agree to institute suit jointly, the
suit shall be brought in both their names, the out-of-pocket
costs thereof shall be borne equally, and any recovery or
settlement shall be shared equally. LICENSEE and STANFORD
shall agree to the manner in which they shall exercise control
over such action. STANFORD may, if it so desires, also be
represented by separate counsel of its own selection, the fees
for which counsel shall be paid by STANFORD;
(b) In the absence of agreement to institute a suit jointly,
STANFORD may institute suit, and, at its option, join LICENSEE
as a plaintiff. If STANFORD decides to institute suit, then it
shall notify LICENSEE in writing. LICENSEE's failure to notify
STANFORD in writing, within thirty (30) days after the date of
the notice, that it will join in enforcing the patent pursuant
to the provisions hereof, shall be deemed conclusively to be
LICENSEE's assignment to STANFORD of all rights, causes of
action, and damages resulting from any such alleged
infringement. STANFORD shall bear the entire cost of such
litigation and shall be entitled to retain the entire amount
of any recovery or settlement;
(c) In the absence of agreement to institute a suit jointly and if
STANFORD notifies LICENSEE that it has decided not to join in
or institute a suit, as provided in (a) or (b) above, STANFORD
shall notify LICENSEE of such decision no later than sixty
(60) days after LICENSEE's Notice of Infringement and LICENSEE
may institute suit and, at its option, join STANFORD as a
plaintiff. If LICENSEE decides to institute suit, then it
shall notify STANFORD in writing. LICENSEE shall bear the
entire cost of such litigation and shall be entitled to retain
the entire amount of any recovery or settlement, provided,
however, that one-half (1/2) of any recovery in excess of
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litigation costs (including, without limitation, attorneys'
fees and court costs) shall be deemed to be Net Sales, and
LICENSEE shall pay STANFORD royalties thereon at the rates
specified herein.
12.2 Should either STANFORD or LICENSEE commence a suit under the provisions
of Paragraph 12.1 and thereafter elect to abandon the same, it shall
give timely notice to the other party who may, if it so desires,
continue prosecution of such suit, provided, however, that the sharing
of expenses and any recovery in such suit shall be as agreed upon
between STANFORD and LICENSEE.
13. SUBLICENSE(S)
13.1 LICENSEE may grant sublicense(s) during the Exclusive period.
13.2 If LICENSEE is unable or unwilling to serve or develop a potential
market or market territory for which there is a willing sublicensee(s),
LICENSEE will, at STANFORD's request, negotiate in good faith a
sublicense(s) hereunder.
13.3 Any sublicense(s) granted by LICENSEE under this Agreement shall be
subject and subordinate to terms and conditions of this Agreement,
except:
(a) Sublicense terms and conditions shall reflect that any
sublicensee(s) shall not further sublicense; and
(b) The earned royalty rate specified in the sublicense(s) may be
at higher rates than the rates in this Agreement. Any such
sublicense(s) also shall expressly include the provisions of
Articles 7, 8, and 9 for the benefit of STANFORD and provide
for the transfer of all obligations, including the payment of
royalties specified in such sublicense(s), to STANFORD or its
designee, in the event that this Agreement is terminated.
13.4 LICENSEE agrees to provide STANFORD a copy of any sublicense(s) granted
pursuant to this Article 13.
13.5 LICENSEE shall pay STANFORD [ * ] of all non-equity
license issue and milestone payments received by LICENSEE from its
sublicensee(s). In addition, LICENSEE shall pay to STANFORD earned
royalties on the Net Sales of its sublicensees in accordance with the
terms set forth in Article 6.
14. TERMINATION
14.1 LICENSEE may terminate this Agreement by giving STANFORD notice in
writing at least thirty (30) days in advance of the effective date of
termination selected by LICENSEE.
14.2 STANFORD may terminate this Agreement if LICENSEE:
(a) Is in default in payment of royalty or providing of reports;
(b) Is in breach of any provision hereof; or
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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(c) Provides any false report;
and LICENSEE fails to remedy any such default, breach, or false report
within sixty (60) days after written notice thereof by STANFORD.
14.3 Surviving any termination are:
(a) LICENSEE's obligation to pay royalties accrued or accruable;
(b) Any cause of action or claim of LICENSEE or STANFORD, accrued
or to accrue, because of any breach or default by the other
party; and
(c) The provisions of Articles 7, 8, and 9.
15. ASSIGNMENT
This Agreement may not be assigned, except that in the event of a sale,
consolidation, reorganization, merger or other transfer involving all or
substantially all of LICENSEE's business or assets, this Agreement and the
rights granted herein shall inure to the benefit of the successor of LICENSEE.
16. ARBITRATION
16.1 Any controversy arising under or related to this Agreement, and any
disputed claim by either party against the other under this Agreement
excluding any dispute relating to patent validity or infringement
arising under this Agreement, shall be settled by arbitration in
accordance with the Licensing Agreement Arbitration Rules of the
American Arbitration Association.
16.2 Upon request by either party, arbitration will be by a third party
arbitrator mutually agreed upon in writing by LICENSEE and STANFORD
within thirty (30) days of such arbitration request. Judgment upon the
award rendered by the arbitrator shall be final and nonappealable and
may be entered in any court having jurisdiction thereof.
16.3 The parties shall be entitled to discovery in like manner as if the
arbitration were a civil suit in the California Superior Court. The
Arbitrator may limit the scope, time and/or issues involved in
discovery.
16.4 Any arbitration shall be held at Stanford, California, unless the
parties hereto mutually agree in writing to another place.
17. NOTICES
All notices under this Agreement shall be deemed to have been fully given when
done in writing and deposited in the United States mail, registered or
certified, and addressed as follows:
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To STANFORD: Office of Technology Licensing
Stanford University
000 Xxxxx Xxxx, Xxxxx 000
Xxxx Xxxx, XX 00000-0000
Attention: Director
To LICENSEE: Genelabs Technologies, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxx, XX 00000
Attention: Senior Vice President
Corporate Development
Either party may change its address upon written notice to the other party.
18. WAIVER
None of the terms of this Agreement can be waived except by the written consent
of the party waiving compliance.
19. APPLICABLE LAW
This Agreement shall be governed by the laws of the State of California
applicable to agreements negotiated, executed and performed wholly within
California.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in duplicate
originals by their duly authorized officers or representatives.
THE BOARD OF TRUSTEES OF THE GENELABS TECHNOLOGIES, INC.
XXXXXX XXXXXXXX JUNIOR UNIVERSITY
Signature: /s/ Xxxxxxxxx Xx Signature: /s/ Xxxx X. Xxxxxxx
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Name: Xxxxxxxxx Xx Name: Xxxx X. Xxxxxxx
Title: Director, Technology Licensing Title: Sr. VP, Corporate Development
Date: September 28, 1993 Date: October 8, 1993
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