Exhibit 10.150
SUBLICENSE AGREEMENT
This Sublicense Agreement (the "Agreement") is entered into and made
effective this 28 day of _June___________, 2004, (the "EFFECTIVE DATE") between,
Calypte Biomedical Corporation, a Delaware corporation, whose principal place of
business is at 0000 Xxxxxx Xxx Xxxxxxx, Xxxxxxx, Xxxxxxxxxx 00000 (hereinafter
referred to as "CALYPTE") and Xxxxxx Laboratories, an Illinois corporation,
whose principal place of business is at 000 Xxxxxx Xxxx Xxxx, Xxxxxx Xxxx,
Xxxxxxxx 00000-0000 (hereinafter referred to as "ABBOTT").
For and in consideration of the mutual promises and covenants set
forth below, CALYPTE and ABBOTT agree as follows:
1.0 DEFINITIONS.
1.1 "AFFILIATE" shall mean any corporation or other business entity
controlled by, controlling or under common control with the recited entity. For
this purpose "control" shall mean direct or indirect beneficial ownership of
more than fifty percent (50%) of the voting stock of, or more than fifty percent
(50%) interest in the income of such corporation or other business entity and
the ability to direct the conduct of its business affairs on a regular basis.
1.2 "AUTHORIZED RETAILER" shall mean any person or entity which is not
an AFFILIATE who sells only to a CONSUMER.
1.3 "CONSUMER" shall mean a final purchaser of a PRODUCT who purchases
for the purpose of diagnosis of themselves or their friends or family.
1.4 "EXCLUDED ENTITY" shall mean, Inverness Medical, OraSure
Technologies, Bayer, Xxxxxxx Xxxxxxx or their Affiliates, successors or assigns.
1.5 "FIELD" shall mean human in vitro diagnostics.
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1.6 "LICENSED PATENT(S)" shall mean United States Patent Nos.
5,073,484, 5,654,162 and 6,020,147; any patents resulting from a reexamination
or reissue from any of the foregoing patents; and any patents, whether issued in
the United States or any other country, which result from an application,
whether a continuation, continuation-in-part, division, foreign equivalent or
any other type, claiming priority from US Application Serial Nos. 356,459;
467,229; 607,794; 891,932; 574,607; and/or 891,864 to Xxxxxxx, et al. and/or
Xxxxx, et al., including but not limited to the patent applications set forth in
Appendix A.
1.7 "PRODUCT(S)" shall mean any product, device, instrument, kit, or
component thereof, the making, using, importing, or selling of which would, in
the absence of the sublicense granted hereunder, infringe, contribute to the
infringement of, or induce the infringement of any claim of a LICENSED PATENT.
1.8 (a) "NET SALES" shall equal an amount calculated, unless otherwise
specified in this Section 1.8, using, as elected by CALYPTE, one of the
following alternative methods: (i) the amount charged by an AUTHORIZED RETAILER
for the sale to a CONSUMER of the PRODUCT sold by CALYPTE or one of its
AFFILIATES in the United States of America, or (ii) an amount equal to 1.67
times the amount charged by CALYPTE or one of its AFFILIATES to an unaffiliated
party for the sale of the PRODUCT to a CONSUMER in the United States of America;
provided, however, when a PRODUCT is sold by CALYPTE or one of its AFFILIATES in
the same geographic market to both AUTHORIZED RETAILERS and WHOLESALERS the
amount charged to the AUTHORIZED RETAILERS shall be used as the amount charged
to both AUTHORIZED RETAILERS and WHOLESALERS in calculating this Section
1.8(a)(ii) the NET SALES for such sales. CALYPTE shall have the right to
subtract from the NET SALES of a PRODUCT, each of the following, to the extent
they are applicable to the sale of the PRODUCT, an amount equal to: (1)
discounts to in (i) above Consumers and in (ii) above the unaffiliated party
allowed and taken in connection with the sale of the PRODUCT, (2) transportation
or shipping charges included in (i) above in the amount charged to the Consumers
and in (ii) above in the amount charged to the unaffiliated party, (3) amounts
repaid, credited or rebated by CALYPTE or one of its AFFILIATES in (i) above to
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Consumers and in (ii) above to the unaffiliated party due to a rejection or
return of the PRODUCT, and (4) taxes and duties included in the amount charged
in (i) above to Consumers and in (ii) above to the unaffiliated party. (The
foregoing are hereinafter collectively referred to as the "Deductions".) Samples
of PRODUCTS provided free of charge and PRODUCTS used for research and
development programs, or government or regulatory purposes, or preclinical,
clinical and field trials, shall also be excluded in determining NET SALES.
(b) When a PRODUCT is sold by CALYPTE or one of its AFFILIATES
to a purchaser with which the seller does not deal at arms length, the NET SALES
for that PRODUCT shall equal an average of the NET SALES, as calculated by
CALYPTE using Section 1.8(a) above, for similar PRODUCTS sold, within the same
calendar quarter as the PRODUCT, to unaffiliated purchasers in arms length
transactions who are in the same geographic market and class of purchasers as
the non-arms length purchaser.
(c) When a PRODUCT is not sold, and is not a free replacement
or sample, but is OTHERWISE DISPOSED OF (as defined in Section 1.10 below), the
NET SALES of that PRODUCT shall equal an average of the NET SALES, as calculated
by CALYPTE using Section 1.8(a) above, for similar PRODUCTS sold, within the
same calendar quarter as the PRODUCT that is OTHERWISE DISPOSED OF, to
unaffiliated purchasers in arms length transactions who are in the same
geographic market in which the PRODUCT was OTHERWISE DISPOSED and the same class
of purchasers to whom the PRODUCT was OTHERWISE DISPOSED.
(d) (i) When packaged with other products or assays which have
commercial utility other than in combination with the PRODUCT (a "Packaged
Product"), and the PRODUCT is not separately priced, the NET SALES of that
PRODUCT shall equal an amount calculated by multiplying the amount charged by
CALYPTE or one of its AFFILIATES for the sale of the Packaged Product less the
applicable Deductions times a fraction, the numerator of which shall be the
average of the NET SALES, as calculated by CALYPTE using Section 1.8(a) above or
Section 1.8(g) below, whichever is appropriate, for similar PRODUCTS sold,
without such other products or assays, within the same calendar quarter as the
sale of the Packaged Product, to unaffiliated third parties located in the same
geographic market in which the Packaged Product was sold, and the denominator of
which shall be the average of the amounts charged, within the same calendar
quarter as the sale of the Packaged Product, to unaffiliated third parties
located the same geographic market in which the Packaged Product was sold less
the applicable Deductions. In the event that there is no established NET SALES
for the PRODUCT when sold without such other products or assays then the
fraction shall be a number whose numerator shall be the average of the fully
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burdened costs, as established by the cost accounting records of CALYPTE, to
manufacture all non packaged PRODUCTS, similar to the PRODUCT that was included
in the Packaged Product, that were manufactured in the same calendar quarter in
which the Packaged Product was sold and whose denominator shall be the average
of the fully burdened costs to manufacture all Packaged Products similar to the
Packaged Product that were manufactured in the same calendar quarter in which
the Packaged Product was sold.
(ii) In the event the Packaged Product is sold by
CALYPTE or one of its AFFLIATES to an AUTHORIZED RETAILER or WHOLESALER and the
NET SALES is calculated using Section 1.8(d)(i), it shall be multiplied by 1.67;
provided, however, when a Packaged Product is sold by CALYPTE or one of its
AFFILIATES in the same geographic market to both AUTHORIZED RETAILERS and
WHOLESALERS the amount charged to the AUTHORIZED RETAILERS shall be used in
calculating the Section 1.8(d)(i) the NET SALES for the sale of the Packaged
Product to WHOLESALERS.
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(e) In the event that a PRODUCT is incorporated into a total
package in which said PRODUCT contributes only a small proportion of the value
of the total package, but the adjustment set forth hereinabove in Section 1.8(d)
is impractical, the parties shall negotiate in good faith to establish an
equitable adjustment to the NET SALES for such PRODUCT to fairly reflect the
proportion of the value of the total package contributed by the PRODUCT.
However, in no case will the value be attributed to the PRODUCT which exceeds
that obtained by using a factor, the numerator of which shall be the number of
results obtained from the PRODUCT and the denominator of which shall be the
total number of results provided by the total package.
(f) In the instance in which PRODUCT is increased in price to
include an amount to cover amortized cost of an instrument system and/or other
equipment and the cost of supplying maintenance for such system and/or equipment
under a Reagent Agreement Plan, Reagent Rental Plan, or other successor or
similar plan (collectively referred to herein as "RAP"), the NET SALES for such
PRODUCT sold under RAP shall be determined by reducing the total NET SALES of
such PRODUCT (including the total of sale of PRODUCT and instrument system RAP)
by the amount of the price increase attributable to RAP, in accordance with
standard CALYPTE accounting procedures actually used by CALYPTE in its usual
course of business to assess the results of its operations concerning the
PRODUCT which procedures shall be in accordance with generally accepted
accounting principles, provided that the amount attributable to the NET SALES of
the PRODUCT shall be no less than the average of the NET SALES, as calculated by
CALYPTE using Section 1.8(a) above, for similar PRODUCTS sold, within the same
calendar quarter as the sale of the PRODUCT sold under the RAP, to unaffiliated
non-RAP customers located in the same geographic market in which the PRODUCT
under the RAP was sold.
(g) With respect to sales of any PRODUCT whose intended user
by virtue of labelling or marketing is other than a CONSUMER in the United
States of America (e.g., other than an OTC PRODUCT in the USA), the NET SALES of
the PRODUCT shall equal the amount charged for the PRODUCT by CALYPTE or its
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AFFILIATES to a non-affiliated third party, less (i) discounts allowed and taken
by the non-affiliated third party, (ii) amounts for transportation or shipping
included in the amount charged to the non-affiliated third party purchasers,
(iii) amounts repaid, credited or rebated to the non-affiliated third party by
reason of a rejection or return of the PRODUCT, and (iv) taxes and duties
included in the amount charged to the non-affiliated third party for PRODUCTS.
Samples of PRODUCTS provided free of charge and PRODUCTS used for research and
development programs, or government or regulatory purposes, or preclinical and
clinical trials and field trials shall also be excluded in determining NET
SALES.
1.9 "OTC PRODUCT" shall mean a human in vitro diagnostics product
labeled for sale or marketed to a CONSUMER.
1.10 "OTHERWISE DISPOSED OF" shall mean and include:
(a) the delivery of any amount of PRODUCT, other than free
replacements, nominal quantities of free samples or PRODUCTS used for research
and development programs, or government or regulatory purposes, or preclinical,
clinical and field trials, by CALYPTE to others in any transaction other than a
sale, regardless of the basis of consideration, if any; or
(b) the placing into use of any PRODUCT by CALYPTE for any
purpose, other than its internal routine testing or as provided in Section
1.10(a) above, provided that the scrapping or destruction of any PRODUCT shall
not fall within the definition of "OTHERWISE DISPOSED OF" and no value in
respect thereof shall be included in calculating the NET SALES of the PRODUCT. A
PRODUCT shall be considered OTHERWISE DISPOSED OF when used or shipped by, or on
behalf of, CALYPTE.
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1.11 "CALENDAR QUARTER" shall mean any period of three consecutive
calendar months beginning January 1, April 1, July 1, and October 1, occurring
during the term of this Agreement.
1.12 "WHOLESALER" shall mean any person or entity to which CALYPTE
sells PRODUCT for resale to an AUTHORIZED RETAILER.
2.0 LICENSE GRANT AND RELEASE.
2.1 Subject to the terms and conditions herein, ABBOTT hereby grants to
CALYPTE and its AFFILIATES, who accepts the same, a non-exclusive,
non-transferable, right and sublicense under the LICENSED PATENTS, to make, have
made for its own use and sale, use, offer to sell, sell and import PRODUCT
within the FIELD, with the exception that CALYPTE shall be prohibited from
selling or making OTC PRODUCT for an EXCLUDED ENTITY, and to practice the
methods claimed in the LICENSED PATENTS in connection with such PRODUCT, and to
extend to its customers purchasing PRODUCT the right to use and sell the PRODUCT
purchased and to practice the methods claimed in the LICENSED PATENTS in
connection with such PRODUCT in the FIELD. For clarification, the license
granted in this Section 2.1 shall include rights to make and sell PRODUCTS
through an Original Equipment Manufacturer ("OEM") and under label other than
CALYPTE's or its AFFILIATE's, with the exception that CALYPTE shall be
prohibited from making and selling OEM products and products under labels of an
EXCLUDED ENTITY.
2.2 ABBOTT further hereby releases CALYPTE and its AFFILIATES, and its
and their customers from any liability for any infringement of the LICENSED
PATENTS arising from activities which occurred prior to the EFFECTIVE DATE.
3.0 TERM.
3.1 This Agreement shall become effective as of the EFFECTIVE DATE
hereof and shall continue in effect until the last to expire of the LICENSED
PATENTS.
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4.0 PAYMENT.
4.1 In consideration for the sublicense and release granted hereunder,
CALYPTE shall pay or cause to be paid to ABBOTT:
(a) A non-refundable fee of two hundred thousand dollars
($200,000.00) in two installments, the first installment of fifty thousand
dollars ($50,000.00) shall be due within thirty (30) days of the EFFECTIVE DATE,
and the second installment of one hundred fifty thousand dollars ($150,000.00)
shall be due upon the earlier of (i) within thirty (30) days of the first
commercial sale of PRODUCT, or (ii) on or before December 31, 2005;
(b) A royalty at the rate of six percent (6.0%) of the NET
SALES of each OTC PRODUCT sold or OTHERWISE DISPOSED OF on or subsequent to the
EFFECTIVE DATE in the United States of America;
(c) A royalty at the rate of six percent (6.0%) of the NET
SALES of each PRODUCT sold or OTHERWISE DISPOSED OF on or subsequent to the
EFFECTIVE DATE, other than the OTC PRODUCTS accounted for in Section 4.1(b); and
(d) An annual minimum royalty of twenty thousand dollars
($20,000.00) per calendar year beginning January 1, 2004.
4.2 It is expressly understood that more than one (1) LICENSED PATENT
may issue in a country. However, in no event shall the total royalty for any
PRODUCT made, used, or sold after the EFFECTIVE DATE exceed the amounts stated
in Section 4.1(b) hereinabove, regardless of where such PRODUCT is made, used,
or sold.
4.3 CALYPTE's obligation to pay royalties under Section 4.1 on PRODUCT
shall only extend to PRODUCT whose manufacture, sales or use at the time of its
manufacture or sale is subject to an enforceable claim of a LICENSED PATENT.
Thus, this obligation shall terminate with regard to activities undertaken by
CALYPTE in a given country after the expiration or lapse of the LICENSED PATENTS
with claims covering this activity in that country. If all the claims of
LICENSED PATENTS covering the activities of CALYPTE in a given country shall be
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held unenforceable or invalid by the competent authorities in that country, then
CALYPTE shall have no obligation with regard to such activities unless a
decision not subject to appeal becomes final which reverses this determination
with regard to at least one claim covering such activities during the period in
which the patents were held invalid or unenforceable. If at least one (1) claim
covering such activities is decided valid and enforceable, CALYPTE will pay the
appropriate royalties for such activities within sixty (60) days after ABBOTT
notifies CALYPTE that such decision has become final.
Upon the written request of CALYPTE, ABBOTT shall promptly
inform CALYPTE when any claim of a LICENSED PATENT expires, lapses or becomes
subject to a final decision of invalidity or unenforceability.
4.4 No royalty shall accrue or become due more than once for a PRODUCT.
4.5 For all sales and royalty-bearing transfers and uses occurring on
or subsequent to the EFFECTIVE DATE, CALYPTE shall provide written reports to
ABBOTT within sixty (60) days after the end of each CALENDAR QUARTER, stating in
each report for each different type of PRODUCT sold, OTHERWISE DISPOSED OF or
given away as free samples or replacements during such CALENDAR QUARTER: (i) the
number of PRODUCTS sold, (ii) the number of PRODUCTS OTHERWISE DISPOSED OF,
(iii) the number of PRODUCTS given away as free samples or replacements, (iv)
the name or names of the analytes for which the PRODUCT is testing, and (v) the
total of the NET SALES of PRODUCT sold.
4.6 (a) Concurrently with the making of each report CALYPTE shall pay
to ABBOTT all royalties due, in the amount specified in Section 4.1(b) and (c),
on the PRODUCTS included in the report.
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(b) Any late payment shall bear interest at the rate of one
percent (1%) per month.
4.7 All payments shall be made hereunder in United States Dollars;
provided, however, that if the proceeds of the sales upon which such royalty
payments are based are received by CALYPTE in a foreign currency or other form
that is not convertible or exportable in United States Dollars, CALYPTE shall
pay such royalties in the currency of the country in which such sales were made
by depositing such royalties in XXXXXX'x name in a bank designated by ABBOTT in
such country. Royalties in United States Dollars shall be computed by converting
the royalty in the currency of the country in which the sales were made in
accordance with the procedures ordinarily used by CALYPTE in converting foreign
currency sales in its normal business operations, which procedures shall be in
accordance with generally accepted accounting principles.
4.8 In the event that any taxes, withholding or otherwise, are levied
by any taxing authority in connection with accrual or payment of any royalties
payable to ABBOTT under this agreement, CALYPTE shall have the right to pay such
taxes to the local tax authorities on behalf of ABBOTT and the payment to ABBOTT
of the net amount due, after reduction by the amount of such taxes, shall fully
satisfy CALYPTE's royalty obligations under this Agreement, provided that
appropriate documentation of such tax payment, including evidence of payment and
receipt or any other appropriate documentation, is provided to ABBOTT.
4.9 All payments made hereunder shall be made to ABBOTT at the address
set forth in Article 6.0 of this Agreement or at such changed address as ABBOTT
shall specify by written notice.
4.10 CALYPTE shall keep records sufficient in accordance with generally
accepted accounting principles to permit verification of the reports and
payments made to ABBOTT hereunder regarding all PRODUCT sold or OTHERWISE
DISPOSED OF. Records relating to the NET SALES of a PRODUCT sold in any CALENDAR
QUARTER after the EFFECTIVE DATE shall be available for inspection for two (2)
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years after the close of that CALENDAR QUARTER. At XXXXXX'x expense and request
and upon reasonable notice, CALYPTE shall permit such records to be examined by
independent public accountants designated by ABBOTT and reasonably acceptable to
CALYPTE. Such accountants shall report only the amount by which royalties have
been overpaid or underpaid and shall make such report simultaneously to CALYPTE
and ABBOTT. All information acquired in the course of such audits and
inspections, except the amount of royalties due ABBOTT, shall be deemed
confidential information of CALYPTE and shall not be disclosed to ABBOTT, and
the accountants shall execute a written undertaking with respect to such
confidentiality prior to the commencement of any inspection. Such examination
shall take place not more than once each year.
4.11 In the event that an examination by ABBOTT of CALYPTE's records
reveals an underpayment to ABBOTT, CALYPTE shall pay ABBOTT the deficiency, plus
interest at a rate of one percent (1%) per month from the date the underpayment
occurred, within sixty (60) days of receiving the report of said accountants. In
the event that such underpayment amounts to ten percent (10%) or more of the
total amount payable for the period examined, CALYPTE shall also reimburse
ABBOTT for all reasonable out-of-pocket expenses of the examination.
5.0 TRANSFERABILITY OF RIGHTS AND OBLIGATIONS.
5.1 This Agreement and the sublicense granted under it may not be
assigned or sold, wholly or in part, by CALYPTE without the express written
consent of ABBOTT, except that CALYPTE may assign its rights and obligations
hereunder in connection with any merger, reorganization, or consolidation with
or into another entity, or any sale or transfer of any of its assets or business
or to any other person or entity or a "change of control", as that term is
defined in Section 1.1 of this Agreement with the prior written consent of
ABBOTT. If CALYPTE desires to assign or sell this Agreement in an event that
requires XXXXXX'x express written consent and ABBOTT denies such consent,
CALYPTE may, in its sole discretion, purchase the right from ABBOTT to make such
assignment or sale for the sum of (a) one million dollars ($1,000,000.00) if the
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acquiring company is an EXCLUDED COMPANY or ARMKEL or CHURCH & XXXXXX
CORPORATION; or, (b) five hundred thousand dollars ($500,000.00) if the company
is not an EXCLUDED COMPANY or ARMKEL or CHURCH & XXXXXX CORPORATION.
Notwithstanding the foregoing, CALYPTE shall, however, have the right to
transfer its rights granted hereunder without the need for prior written consent
from ABBOTT to any of its current shareholders or a private equity fund or an
institutional investment fund or other such investor or investor group which may
purchase an equity ownership position in CALYPTE such that a "change in control"
as defined in Section 1.1 of this Agreement occurs. Such transfer of rights by
CALYPTE to current shareholders or a private equity fund or an institutional
investment fund or other such investor or investor group shall be at no cost to
CALYPTE and XXXXXX'x consent shall not be required.
5.2 ABBOTT may freely assign this Agreement in whole or in part and any
or all of the rights to LICENSED PATENTS.
5.3 This Agreement and each and every one of the terms and conditions
thereof, shall inure to the benefit of and be binding upon the permitted
successors and assignees of both parties.
6.0 NOTICE.
6.1 Any notice, payment, report, or other correspondence (hereinafter
collectively referred to as "correspondence") required or permitted to be given
hereunder shall be mailed by certified mail or delivery by hand or overnight
courier to the party to whom such correspondence is required or permitted to be
given hereunder. If mailed, any such notice shall be deemed to have been given
when received by the party to whom such correspondence is given, as evidenced by
written and dated receipt of the receiving party.
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6.2 Alternatively, any correspondence provided for this Agreement shall
be deemed sufficiently given by the party sending the correspondence when sent
by facsimile to the party to whom the correspondence is addressed. A
confirmation copy of the correspondence will be sent by Certified or Registered
Mail. The date of the facsimile transmission will constitute the date of receipt
of the correspondence if an acknowledgment of the receipt of the proper number
of pages is obtained from the receiving instrument.
All correspondence to ABBOTT shall be addressed as follows:
XXXXXX LABORATORIES
Director, Global Licensing
Dept. 9RK, Bldg. AP6C
Diagnostics Division
000 Xxxxxx Xxxx Xxxx
Xxxxxx Xxxx, Xxxxxxxx 00000-0000
Fax No.: 000-000-0000
with a copy to:
XXXXXX LABORATORIES
Vice President, Domestic Xxxxx
Xxxx. 000, Xxxx. XX0X
000 Xxxxxx Xxxx Xxxx
Xxxxxx Xxxx, Xxxxxxxx 00000-0000
Fax No.: 000-000-0000
All correspondence to CALYPTE shall be addressed as follows:
CALYPTE BIOMEDICAL CORPORATION
0000 Xxxxxxx xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Fax No.: 000-000-0000
Either party may change the address to which correspondence to
it is to be addressed by written notification as provided for herein.
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7.0 TERMINATION.
7.1 ABBOTT shall have the right to terminate this Agreement if CALYPTE
has materially defaulted in the performance of any of its royalty payment
obligations herein contained, and such default has not been cured within thirty
(30) days after written notice from ABBOTT affirming its intention to terminate.
For clarification purposes, a breach of any representation or warranty contained
in Article 9 shall be considered a material breach for the purposes of this
Section 7.1. CALYPTE shall have the right to complete the manufacture and
distribution of PRODUCTS that have been partially manufactured as of the date of
termination.
7.2 In the event that CALYPTE shall be adjudicated bankrupt, go into
liquidation, receivership or trusteeship, make a composition with its creditors
or enter into any similar proceeding of the same nature, and such status or
proceeding is not vacated or terminated within sixty (60) days after its
commencement or institution, then ABBOTT shall have the right without liability
therefor to terminate this Agreement forthwith by notice in writing to CALYPTE.
7.3 CALYPTE shall have the right to terminate its sublicense by giving
thirty (30) days advance written notice. CALYPTE shall be obligated for royalty
payments under Section 4.1 for any PRODUCT sold or OTHERWISE DISPOSED OF during
such thirty (30) day notice period.
7.4 ABBOTT shall have the right to terminate this Agreement, on a
country-by-country basis, if CALYPTE, after the Effective Date, institutes a
suit, nullity action, opposition to grant, or other legal action seeking to
invalidate the claims of a LICENSED PATENT in that country, or actively
participates (other than by legal compulsion) in any of the foregoing. CALYPTE's
payment obligations under Section 4.1(a) shall survive any termination of this
Agreement by CALYPTE on or prior to December 31, 2005 and the cumulative total
of any remaining installments shall become due within thirty (30) days of the
effective date of such early termination.
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7.5 If there is a potential change of control of CALYPTE to any third
party except an entity that has been an Affiliate of CALYPTE since the Effective
Date, then CALYPTE shall promptly notify ABBOTT of such potential change of
control, including the identity of the third party. For the purposes of this
Agreement, a "change of control" shall mean as that term is defined in Section
1.1 of this Agreement.
8.0 GOVERNING LAW.
8.1 This Agreement shall be governed by, interpreted in accordance with
and enforced under the laws of the State of Illinois, U.S.A. (regardless of its
or any other jurisdiction's choice of law principles), or, as necessary, the
laws of the United States of America or the laws of the appropriate foreign
country if the issue is the scope or validity of the patent rights granted by
that country.
9.0 REPRESENTATIONS WARRANTIES AND LIMITATIONS.
9.1 Nothing in this Agreement shall be construed as:
(a) A warranty or representation by ABBOTT as to the validity
or enforceability of any LICENSED PATENTS; or
(b) A warranty or representation by ABBOTT that anything made,
used, sold or OTHERWISE DISPOSED OF under the sublicense granted in this
Agreement, is or will be free from infringement of patents or other rights of
third parties; or
(c) A requirement that ABBOTT shall file any patent
application or secure any patent; or
(d) An obligation of either party to bring or prosecute
actions or suits against third parties for infringement of any patents; or
(e) Conferring a right to use in advertising, publicity, or
the like any name, tradename, or trademark of CALYPTE or ABBOTT; or
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(f) Granting by implication, estoppel or otherwise any
licenses or rights under any letters patents and applications for letters
patents other than under the LICENSED PATENTS; or
(g) An obligation by ABBOTT to furnish know-how or any other
technical information not disclosed in the LICENSED PATENTS.
9.2 ABBOTT represents to CALYPTE that ABBOTT is the exclusive licensee
of the LICENSED PATENTS and has the right to grant the sublicense hereunder. 9.3
Each party represents and warrants that it has full authority to enter into and
become bound by the terms and conditions of this Agreement and that its
execution of this Agreement will not violate, contravene or be in conflict with
any law, rule, by-law, article of incorporation, order, regulation or other
agreement.
9.4 CALYPTE represents and warrants that its cumulative historical
sales of the PRODUCTS are less than or equal to one million dollars
($1,000,000.00) prior to the EFFECTIVE DATE.
10.0 DISCLAIMER AND HOLD HARMLESS PROVISION.
10.1 It is understood and agreed by and between the parties hereto that
nothing contained in this Agreement shall constitute or be construed to
constitute any undertaking, representation, suggestion, inducement, warranty,
assurance or guarantee whatsoever by either party regarding the safety, quality,
yield, production, cost, profit, saleability, licenseability, demand, utility,
performance, availability of raw materials, or potential of accident or injury
to person or property of PRODUCTS or any assay, product, material, service,
process or apparatus related to PRODUCTS.
10.2 CALYPTE expressly indemnifies and holds ABBOTT, its AFFILIATES,
successors, and assigns and its officers, directors and employees harmless from
and against any and all claims, liabilities, damages, costs, expenses, and/or
actions of any kind whatsoever which arise from or are connected with the
manufacture, use, lease, sale, or other disposition of PRODUCTS by CALYPTE or
its AFFILIATES under the LICENSED PATENTS.
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10.3 Neither of the parties hereto shall be liable in damages or have
the right to cancel for any delay or default in performing hereunder (other than
delay or default in the payment of money) if such delay or default is caused by
conditions beyond its control, including but not limited to Acts of God,
governmental restrictions, continuing domestic or international problems such as
war or insurrections, strikes, fires, flood, work stoppages, embargoes and/or
other casualty or cause; provided, however, that any party hereto shall have the
right to terminate this Agreement upon thirty (30) days prior written notice if
the other party is unable to fulfill its obligations under this Agreement due to
any of the above-mentioned causes and such inability continues for a period of
six (6) months.
11.0 CAPTIONS.
11.1 The captions and paragraph headings of this Agreement are solely
for the convenience of reference and shall not affect its interpretation.
12.0 SEVERABILITY.
12.1 Should any part or provision of this Agreement be held
unenforceable or in conflict with the applicable laws or regulations of any
jurisdiction, the invalid or unenforceable part or provision shall be replaced
with a provision which accomplishes, to the extent possible, the original
business purpose of such part or provision in a valid and enforceable manner,
and the remainder of this Agreement shall remain binding upon the parties
hereto.
13.0 WAIVER.
13.1 No failure or delay on the part of a party in exercising any right
hereunder shall operate as a waiver of, or impair, any such right. No single or
partial exercise of any such right shall preclude any other or further exercise
thereof or the exercise of any other right. No waiver of any such right shall be
deemed a waiver of any other right hereunder.
17
14.0 SURVIVAL.
14.1 The provisions of Articles 4, 8, 9 and 10 shall survive the
termination or expiration of this Agreement and shall remain in full force and
effect. Specifically, termination or expiration shall not affect, inter alia;
(a) CALYPTE's obligation to pay royalties and supply reports
for PRODUCT sold or OTHERWISE DISPOSED OF up to such termination or expiration
as specified in Article 4 of this Agreement;
(b) XXXXXX'x right to receive or recover and CALYPTE's
obligation to pay royalties accrued or accruable for payment at the time of any
termination;
(c) CALYPTE's obligation to maintain records pertaining to the
NET SALES of PRODUCT sold or OTHERWISE DISPOSED OF prior to such termination or
expiration and XXXXXX'x right to conduct a final examination of records in
accordance with Section 4.10 of this Agreement within two (2) years of such
termination or expiration; and
(d) Licenses and releases running in favor of customers or
transferees of either party in respect to PRODUCT sold or OTHERWISE DISPOSED OF
prior to termination of this Agreement.
14.2 The provisions of this Agreement which do not survive termination
or expiration hereof (as the case may be) shall, nonetheless, be controlling on,
and shall be used in construing and interpreting, the rights and obligations of
the parties hereto with regard to any dispute, controversy or claim which may
arise under, out of, in connection with, or relating to this Agreement.
14.3 Notwithstanding the above, Article 18 (Confidentiality) shall
survive and remain in full force and effect for a period of five (5) years from
the effective date of termination.
18
15.0 UNLICENSED COMPETITION.
15.1 At the written request of CALYPTE, ABBOTT shall consider the
enforcement of any LICENSED PATENT against a third party identified by CALYPTE
as a potential infringing third party within the TERRITORY. ABBOTT shall take
the steps that it deems reasonable in its sole commercial judgement to protect
the LICENSED PATENTS. Nothing in this Agreement shall be construed as an
obligation upon ABBOTT to enforce any LICENSED PATENT against any third party
within the TERRITORY.
16.0 ENTIRE AGREEMENT.
16.1 This Agreement constitutes the entire agreement between the
parties hereto respecting the subject matter hereof, and supersedes and
terminates all prior agreements respecting the subject matter hereof, whether
written or oral, and may be amended only by an instrument in writing executed by
both parties hereto.
17.0 DISPUTE RESOLUTION.
17.1 The parties recognize that from time to time a dispute may arise
relating to either party's rights or obligations under this Agreement. The
parties agree that any such dispute shall be resolved by the Alternative Dispute
Resolution ("ADR") provisions set forth in this Exhibit, the result of which
shall be binding upon the parties.
To begin the ADR process, a party first must send written
notice of the dispute to the other party for attempted resolution by good faith
negotiations between their respective presidents (or their designees) of the
affected subsidiaries, divisions, or business units within twenty-eight (28)
days after such notice is received (all references to "days" in this ADR
provision are to calendar days). If the matter has not been resolved within
twenty-eight (28) days of the notice of dispute, or if the parties fail to meet
within such twenty-eight (28) days, either party may initiate an ADR proceeding
as provided herein. The parties shall have the right to be represented by
counsel in such a proceeding.
19
17.2 To begin an ADR proceeding, a party shall provide written notice
to the other party of the issues to be resolved by ADR. Within fourteen (14)
days after its receipt of such notice, the other party may, by written notice to
the party initiating the ADR, add additional issues to be resolved within the
same ADR.
17.3 Within twenty-one (21) days following receipt of the original ADR
notice, the parties shall select a mutually acceptable neutral to preside in the
resolution of any disputes in this ADR proceeding. If the parties are unable to
agree on a mutually acceptable neutral within such period, either party may
request the President of the CPR Institute for Dispute Resolution ("CPR"), 000
Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, to select a neutral
pursuant to the following procedures:
(a) The CPR shall submit to the parties a list of not less
than five (5) candidates within fourteen (14) days after receipt of the request,
along with a Curriculum Vitae for each candidate. No candidate shall be an
employee, director, or shareholder of either party or any of their subsidiaries
or affiliates.
(b) Such list shall include a statement of disclosure by each
candidate of any circumstances likely to affect his or her impartiality.
(c) Each party shall number the candidates in order of
preference (with the number one (1) signifying the greatest preference) and
shall deliver the list to the CPR within seven (7) days following receipt of the
list of candidates. If a party believes a conflict of interest exists regarding
any of the candidates, that party shall provide a written explanation of the
conflict to the CPR along with its list showing its order of preference for the
candidates. Any party failing to return a list of preferences on time shall be
deemed to have no order of preference.
(d) If the parties collectively have identified fewer than
three (3) candidates deemed to have conflicts, the CPR immediately shall
designate as the neutral the candidate for whom the parties collectively have
indicated the greatest preference. If a tie should result between two
candidates, the CPR may designate either candidate. If the parties collectively
20
have identified three (3) or more candidates deemed to have conflicts, the CPR
shall review the explanations regarding conflicts and, in its sole discretion,
may either (i) immediately designate as the neutral the candidate for whom the
parties collectively have indicated the greatest preference, or (ii) issue a new
list of not less than five (5) candidates, in which case the procedures set
forth in Sections 17.3(a) - 17.3(d) shall be repeated.
17.4 No earlier than twenty-eight (28) days or later than fifty-six
(56) days after selection, the neutral shall hold a hearing to resolve each of
the issues identified by the parties. The ADR proceeding shall take place at a
location agreed upon by the parties [provided that if ABBOTT initiates the ADR
then the venue shall be in SUBLICENSEE's country/state and if SUBLICENSEE
initiates the ADR then the venue shall be in the Illinois/USA]. If the parties
cannot agree, the neutral shall designate a location other than the principal
place of business of either party or any of their subsidiaries or affiliates.
17.5 At least seven (7) days prior to the hearing, each party shall
submit the following to the other party and the neutral:
(a) a copy of all exhibits on which such party intends to rely
in any oral or written presentation to the neutral;
(b) a list of any witnesses such party intends to call at the
hearing, and a short summary of the anticipated testimony of each witness;
(c) a proposed ruling on each issue to be resolved, together
with a request for a specific damage award or other remedy for each issue. The
proposed rulings and remedies shall not contain any recitation of the facts or
any legal arguments and shall not exceed one (1) page per issue;
(d) a brief in support of such party's proposed rulings and
remedies, provided that the brief shall not exceed twenty (20) pages. This page
limitation shall apply regardless of the number of issues raised in the ADR
proceeding.
21
Except as expressly set forth in Sections 17.5(a) - 17.5(d),
no discovery shall be required or permitted by any means, including depositions,
interrogatories, requests for admissions, or production of documents.
17.6 The hearing shall be conducted on two (2) consecutive days and
shall be governed by the following rules:
(a) Each party shall be entitled to five (5) hours of hearing
time to present its case. The neutral shall determine whether each party has had
the five (5) hours to which it is entitled.
(b) Each party shall be entitled, but not required, to make an
opening statement, to present regular and rebuttal testimony, documents or other
evidence, to cross-examine witnesses, and to make a closing argument.
Cross-examination of witnesses shall occur immediately after their direct
testimony, and cross-examination time shall be charged against the party
conducting the cross-examination.
(c) The party initiating the ADR shall begin the hearing and,
if it chooses to make an opening statement, shall address not only issues it
raised but also any issues raised by the responding party. The responding party,
if it chooses to make an opening statement, also shall address all issues raised
in the ADR. Thereafter, the presentation of regular and rebuttal testimony and
documents, other evidence, and closing arguments shall proceed in the same
sequence.
(d) Except when testifying, witnesses shall be excluded from
the hearing until closing arguments.
(e) Settlement negotiations, including any statements made
therein, shall not be admissible under any circumstances. Affidavits prepared
for purposes of the ADR hearing also shall not be admissible. As to all other
matters, the neutral shall have sole discretion regarding the admissibility of
any evidence.
17.7 Within seven (7) days following completion of the hearing, each
party may submit to the other party and the neutral a post-hearing brief in
support of its proposed rulings and remedies, provided that such brief shall not
22
contain or discuss any new evidence and shall not exceed ten (10) pages. This
page limitation shall apply regardless of the number of issues raised in the ADR
proceeding.
17.8 The neutral shall rule on each disputed issue within fourteen (14)
days following completion of the hearing. Such ruling shall adopt in its
entirety the proposed ruling and remedy of one of the parties on each disputed
issue but may adopt one party's proposed rulings and remedies on some issues and
the other party's proposed rulings and remedies on other issues. The neutral
shall not issue any written opinion or otherwise explain the basis of the
ruling.
17.9 The neutral shall be paid a reasonable fee plus expenses. These
fees and expenses, along with the reasonable legal fees and expenses of the
prevailing party (including all expert witness fees and expenses), the fees and
expenses of a court reporter, and any expenses for a hearing room, shall be paid
as follows:
(a) If the neutral rules in favor of one party on all disputed
issues in the ADR, the losing party shall pay 100% of such fees and expenses.
(b) If the neutral rules in favor of one party on some issues
and the other party on other issues, the neutral shall issue with the rulings a
written determination as to how such fees and expenses shall be allocated
between the parties. The neutral shall allocate fees and expenses in a way that
bears a reasonable relationship to the outcome of the ADR, with the party
prevailing on more issues, or on issues of greater value or gravity, recovering
a relatively larger share of its legal fees and expenses.
17.10 The rulings of the neutral and the allocation of fees and
expenses shall be binding, non-reviewable, and non-appealable, and may be
entered as a final judgment in any court having jurisdiction.
23
17.11 Except as provided in Article 17 or as required by law, the
existence of the dispute, any settlement negotiations, the ADR hearing, any
submissions (including exhibits, testimony, proposed rulings, and briefs), and
the rulings shall be deemed Confidential Information. The neutral shall have the
authority to impose sanctions for unauthorized disclosure of Confidential
Information.
17.12 The ADR proceedings shall be conducted in the English language.
17.13 Notwithstanding any of the above, this Article 17 shall not apply
to, and no ADR proceeding shall deal with, disputes relating to the issues of
the validity and/or enforceability of any of the LICENSED PATENTS.
18.0 CONFIDENTIALITY.
18.1 This Agreement, its terms, and any information provided by a
party hereto pursuant to this Agreement, shall be kept in strictest confidence
by the parties hereto except that the parties hereto may disclose the terms of
the Agreement as required by law, to prospective purchasers of the business
relating to PRODUCTS; provided that any such persons to whom disclosure is
permitted have agreed to keep such terms confidential. Except as provided above,
no party hereto shall provide this Agreement or any of its terms to any person
or entity not a party hereto. Notwithstanding any of the above, the parties
hereto may disclose publicly that ABBOTT has granted and SUBLICENSEE has
accepted a non-exclusive right and sublicense under the LICENSED PATENTS and
such other terms of the Agreement as that party deems necessary to comply with
SEC and applicable stock exchange disclosure rules.
18.2 Notwithstanding Section 18.1, if either of the parties hereto is
required (by deposition, questions, interrogatories, requests for information or
documents as required by or in any legal proceedings, subpoenas, civil
investigative demands, or any other similar compulsory Processes) to disclose
any of the terms of this Agreement, each party so required shall provide the
other party with prompt written notice of any such request or requirement so
that such other party may seek a protective order or other appropriate remedy or
waive compliance with the provisions of Section 18.1 of this Agreement.
24
18.3 Notwithstanding the foregoing, neither of the parties shall be
prohibited from disclosing the terms of this Agreement in a Quarterly Report on
Form 10-Q or Annual Report on Form 10-K, if upon the advice of legal counsel,
such disclosure is required by the rules and regulations of the Securities and
Exchange Commission, including but not limited to Regulations S-K and S-X.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized to be effective as of the
EFFECTIVE DATE.
Calypte Biomedical Corporation
By: /s/ Xxxxxxx X. Xxxxxxxxxx
---------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
-------------------------------------------
Title: EVP & CFO
------------------------------------------
Date: 6/28/04
-------------------------------------------
XXXXXX LABORATORIES
By: /s/ Xxxxxx X. Xxxxxxx Xx.
---------------------------------------------
Xxxxxx X. Xxxxxxx Xx.
Sr. Vice President, Diagnostic Operations
President, Abbott Diagnostics Division
Date: 6/21/04
-------------------------------------------
25
APPENDIX A
U.S. Patent No. 5,073,484 -- Issued December 17, 1991 U.S. Patent No. 5,654,162
-- Issued August 5, 1997 U.S. Patent No. 6,020,147 -- Issued February 1, 2000
Foreign counterparts:
Country Xxx./Appln. No. Issue/Filing Date
------- --------------- -----------------
Australia 121983 03/09/83
Belgium 88636 03/09/83
Germany 88636 03/09/83
France 88636 03/09/83
United Kingdom 88636 03/09/83
Israel 68082 04/01/87
Italy 88636 03/09/83
Japan 1952845 07/28/95
Japan 2139664 12/25/98
Japan 2913281 04/16/99
Luxembourg 88636 03/09/83
South Africa 831617 03/28/84
26
