Confidential treatment requested for portions of this document,
portions for which confidential treatment is requested are noted.
SUBLICENSE AGREEMENT
This is an AGREEMENT effective as of the 24th day of May, 1996 between CIBA
CORNING DIAGNOSTICS CORP., a Delaware corporation with offices at 00 Xxxxx
Xxxxxx, Xxxxxxxx, XX 00000 ("CCD") and VYSIS INC., a corporation with offices at
0000 Xxxxxxxxx Xxxxx, Xxxxxxx Xxxxx, XX 00000 ("Vysis").
WHEREAS CCD possesses an exclusive license (with rights to sublicense) to
certain patents from The Regents of the University of California ("Licensor");
WHEREAS Vysis is interested in obtaining a sublicense from CCD to enable
Vysis to manufacture and commercialize in-vitro diagnostic tests under the
patents licensed by CCD from Licensor;
WHEREAS CCD is willing to grant the aforementioned sublicense to Vysis
under the terms and conditions specified herein;
NOW THEREFORE, in consideration of the respective agreements hereinafter
set forth, the parties hereto agree as follows:
1. DEFINITIONS
1.1 "Basic License Agreement", as used herein, shall mean the License
Agreement between CCD and Licensor.
1.2 "Effective Date", as used herein, shall mean the date first above
written.
1.3 "Patent Rights", as used herein, shall mean patent rights to any
subject matter claimed in or covered by either or both of the
following:
(a) U.S. Patent Application Serial No. 421,096 entitled "Methods and
Compositions for Detecting Human Tumors" which is assigned to the
Licensor and was filed by Drs. Xxxxxx Xxxxxx and Xxxxxx Xxxxx on
October 12, 1989 (UC Case No. 82-215-R), which is a reissue
application of U.S. Patent Number 4,699,877 entitled "Methods and
Compositions for Detecting Human Tumors", assigned to the
Licensor and filed by Drs. Xxxxxx Xxxxxx and Xxxxxx Xxxxx on
November 20, 1984 (UC Case No. 82-215-3) which is a
continuation-in-part application of U.S. Patent Application No.
496,027, filed on May 19, 1983 (82-215-2) (abandoned), which is
a continuation-in-part application of U.S. Patent Application No.
439,252, filed on November 4, 1982 (UC Case No. 82-215-1)
(abandoned);
(b) U.S. Patent 4,968,603 entitled "Determination of Status In
Neoplastic Disease" which is assigned jointly to the
Licensor, the University of Texas at San Antonio and
Genentech, Inc. and was filed by Drs. Xxxxxx Xxxxxx, Xxxxxxx
XxXxxxx and Xxxx Xxxxxxx (respectively) on December 31, 1986
(UC Case No. 86-243) and any reissues, reexaminations and
corrections thereof, to the extent that such patent rights
are owned by the Licensor as at least a co-assignee;
and continuing applications and continuations-in-part applications
thereof, including divisions, substitutions, any patents or reissues
issuing on said patents, applications, continuing applications and
continuations-in-part, and any corresponding foreign applications or
patents and any reissue, reexamination or corrections of any of the
foregoing.
1.4 "Field of Use", as used herein, shall mean for use as nucleic acid
probe, protein or antibodies, or a combination thereof for research or
diagnostic purposes.
1.5 "Licensed Product", as used herein, shall mean any kit, composition of
matter, or material either covered by the Patent Rights or produced by
the Licensed Method, the use of which would constitute, but for the
license granted to Vysis pursuant to this Agreement, an infringement
of any pending or issued claim within the Patent Rights.
1.6 "Licensed Method", as used herein, shall mean any process or method
that is covered by the Patent Rights, the use of which would
constitute, but for the license granted to Vysis pursuant to this
Agreement, an infringement of any claim within the Patent Rights.
1.7 "Net Sales", as used herein, shall mean the amount billed by Vysis or
its Affiliates to third parties for the sale of Licensed Products,
less the following: (a) cash discounts and/or quantity discounts
allowed, credits for customers' returns and allowances; and (b) sales
and use taxes incurred, as determined in accordance with generally
accepted accounting practices. Royalties shall accrue only once in
respect to a particular Licensed Product.
1.8 "Affiliate", as used herein, shall mean any corporation or other
business entity in which Vysis owns or controls, directly or
indirectly, at least fifty percent (50%) of the outstanding stock or
other voting rights entitled to elect directors; provided, however,
that in any country where the local law shall not permit foreign
equity participation of at least 50%, then an "Affiliate" shall
include any company in which Vysis shall own or control, directly or
indirectly, the maximum percentage of such outstanding stock or voting
rights permitted by local law.
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2. SUBLICENSE GRANT
2.1 Subject to the terms and conditions herein set forth, CCD hereby
grants Vysis a non-exclusive, non-transferable, worldwide, right and
license to make, use, and sell the Licensed Products and to practice
the Licensed Method for the Field of Use for the term of this
Agreement. This license shall not include the right to sell the
Licensed Product if such Licensed Product is used in conjunction with
a third parties' automated instrument. Notwithstanding the above,
Vysis may contract with a third party to manufacture an automated
instrument for Vysis' exclusive use in conjunction with the sale of
Licensed Product.
2.2 Vysis shall have no right to grant further sublicenses of its rights
hereunder. Vysis, and its Affiliates, however, shall have the right,
upon request from its customers, to state that such customers shall
not be sued by Vysis' licensor (CCD) under the applicable Licensed
Patents for use of the quantity of Licensed Products purchased from
Vysis or its Affiliates.
2.3 The sublicense granted hereunder shall be subject to all the
applicable provisions of the license to the United States
government executed by The Regents of the University of California
and to the ownership of the other parties set forth in Paragraph
1.3(b).
3. LICENSE FEE AND ROYALTY PAYMENTS
In consideration for the rights granted hereunder, Vysis shall pay to CCD
the following amounts:
3.1 Vysis shall pay to CCD a non-refundable, non-creditable fee of
$* U.S. dollars within thirty (30) days of execution of this
Agreement.
3.2 In addition to the fee described in Section 3.1 above, Vysis shall pay
to CCD a royalty of *% of Net Sales utilizing technology claimed in
the patent described in Section 1.3(b) (Slamon and XxXxxxx) and a
royalty payment of *% of Net Sales utilizing technology claimed in
the patent described in Section 1.3(a) (Slamon and Xxxxx). If a
product utilizes technology claimed in both of the above-described
patents, then the royalty rate shall be *% of Net Sales. Such
royalties shall be payable within thirty (30) days of the end of
each calendar quarter with respect to sales made during such calendar
quarter.
3.3 Minimum royalty payments shall commence in the year Vysis receives
clearance for marketing in the United States from the U.S. Food and
Drug
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* Confidential treatment requested, material omitted has been filed
separately with the Securities and Exchange Commission.
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Administration (FDA) for any Licensed Product. Those minimum royalty
payments are described below:
Year One $30,000
Year Two $*
Year Three to Sublicense $*
Agreement Termination
(For example, if Vysis receives clearance for a Licensed Product on
March 15, 1997, then 1997 shall be Year One.)
3.4 Within thirty (30) days after a Licensed Product has received
clearance from the FDA to sell in the U.S., Vysis shall pay to CCD, in
addition to the fee set forth in Section 3.1, a fee of $*
U.S. dollars. One half of this fee shall be creditable against future
minimum annual royalty payments, described in Section 3.3 above, but
only up to one half of such minimum royalty payment. For example, in
the first year of FDA approval (Year One), Vysis will receive a
credit in the amount of one half of its minimum royalty obligation.
Thus, Vysis' actual minimum royalty obligation shall be reduced from
$30,000 to $15,000. These credits will continue until Vysis has
exhausted one half of its $* FDA clearance fee ($*).
3.5 Paragraphs 1.3, 1.5, and 1.6 define Patent Rights, Licensed Products
and Licensed Methods so that royalties shall be payable on products
and methods covered by both pending patent applications and issued
patents. Earned royalties shall accrue in each country for sales
made in that country and shall be payable to CCD when Licensed
Products are invoiced, or if not invoiced, when delivered to a third
party.
3.6 Earned royalties accruing to CCD shall be paid to CCD quarterly on or
before the following dates of each calendar year: February 28, May 31,
August 31, and November 30. Each payment will be for earned royalties
which accrued within Vysis' most recently completed calendar quarter.
3.7 All monies due CCD shall be payable in United States currency. When
Licensed Products are sold for monies other than United States
dollars, the earned royalties will first be determined in the
foreign currency of the country in which Licensed Products were sold
and then converted into equivalent United States funds. The exchange
rate will be that rate quoted in the WALL STREET JOURNAL on the last
business day of the reporting period.
3.8 Royalties earned with respect to sales occurring in any country
outside the United States shall not be reduced by any taxes, fees, or
other charges
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* Confidential treatment requested, material omitted has been filed
separately with the Securities and Exchange Commission.
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imposed on the remittance of royalty income by the government of such
country. Vysis shall also be responsible for all bank transfer
charges.
3.9 If at any time legal restrictions prevent the prompt remittance of
part or all royalties by Vysis with respect to any country where a
Licensed Product is sold, Vysis shall pay CCD such royalties directly
from its U.S. source of funds.
3.10 In the event that any patent or any claim thereof included within the
Patent Rights shall be held invalid in a final decision by a court of
competent jurisdiction and last resort and from which no appeal has or
can be taken, all obligation to pay royalties based on such patent or
claim or any claim patentably indistinct therefrom shall cease as of
the date of such final decision. Vysis shall not, however, be
relieved from paying any royalties that accrued before such
decision or that are based on another patent or claim not involved in
such decision.
4. DUE DILIGENCE
Vysis shall use commercially diligent efforts to develop and bring to
market all Licensed Products. In addition, Vysis shall use commercially
diligent efforts to receive clearance for marketing in the United States
from the FDA for any such Licensed Product.
5. WARRANTY
5.1 CCD warrants and represents that it has the full power and authority
to enter into this Agreement to grant Vysis rights under Patent
Rights and to carry out its obligations hereunder.
5.2 Except as set forth in Section 5.1 above, this Sublicense is
provided WITHOUT WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED. CCD
MAKES NO REPRESENTATION OR WARRANTY THAT THE LICENSED PRODUCTS OR
LICENSED METHODS WILL NOT INFRINGE ANY PATENT OR OTHER PROPRIETARY
RIGHT.
5.3 IN NO EVENT WILL CCD BE LIABLE FOR ANY INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES RESULTING FROM EXERCISE OF THIS SUBLICENSE OR
THE USE OF THE LICENSED METHODS OR LICENSED PRODUCTS.
5.4 Nothing in this Agreement shall be construed as:
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5.4.1 a warranty or representation by CCD as to the validity,
enforceability, or scope of the Patent Rights; or
5.4.2 a warranty or representation that anything made, used, sold
or otherwise disposed of under any sublicense granted in this
Agreement is or will be free from infringement of patents of
third parties; or
5.4.3 an obligation to bring or prosecute actions or suits against
third parties for patent infringement; or
5.4.4 conferring by implication, estoppel or otherwise any license
or rights under any patents of CCD other than the Patent
Rights as defined herein, regardless of whether such patents
are dominant or subordinate to the Patent Rights; or
5.4.5 an obligation to furnish any know-how not provided in the
Patent Rights.
6. INDEMNIFICATION
6.1 Vysis agrees to indemnify, hold harmless and defend CCD, its officers,
employees, and agents against any and all claims, suits, losses,
damage, costs, fees and expenses resulting from or arising out of
exercise of this Sublicense. This indemnification will include, but
will not be limited to, any product liability.
6.2 Vysis, at its sole cost and expense, shall insure its activities in
connection with the work under this Agreement and obtain, keep in
force and maintain insurance as follows, or an equivalent program of
self insurance:
Comprehensive or Commercial Form General Liability Insurance
(contractual liability included) with limits as follows:
Each Occurrence: $1,000,000
Products/Completed Operations Aggregate: $5,000,000
Personal and Advertising Injury: $1,000,000
General Aggregate (commercial form only): $5,000,000
It should be expressly understood, however, that the coverage and
limits referred to under the above shall not in any way limit the
liability of Vysis. Vysis shall furnish CCD with certificates of
insurance evidencing compliance with all requirements. Such
certificates shall:
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provide for thirty (30) day advance written notice to CCD of any
modification;
indicate that CCD has been endorsed as an additional insured
under the coverage referred to under the above.
6.3 CCD shall promptly notify Vysis in writing of any claim or suit
brought against CCD in respect of which CCD intends to invoke the
provisions of this Article. Vysis will keep CCD informed on a current
basis of its defense of any claims pursuant to this Article.
6.4 This Article 5 shall survive expiration or termination of this
Agreement.
7. BOOKS, RECORDS AND REPORTS
7.1 Vysis shall keep books and records accurately showing all Licensed
Products manufactured, used, and/or sold under the terms of this
Agreement. Books and records shall be preserved for at least five (5)
years from the date of the royalty payment to which they pertain and
shall be open to inspection by auditors or accounting firms employed
by or representing CCD at reasonable times for the purpose of
verifying quarterly reports and royalties due, provided that such
inspections shall not take place more than once a year and that such
auditors or accounting firm shall report to CCD only as to the
accuracy of the quarterly reports and royalties due.
7.2 The fees and expenses of CCD's representatives performing such an
examination shall be borne by CCD. However, if an error in royalties
of more than five percent (5%) of the total royalties due for any
year is discovered, then the fees and expenses of these
representatives shall be borne by Vysis.
7.3 Vysis will make quarterly royalty reports to CCD on or before each
February 28, May 31, August 31 and November 30 of each year. Royalty
reports will cover Vysis' most recently completed calendar quarter
and will show (a) the gross sales and Net Sales of Licensed Products
sold by Vysis during the most recently completed calendar quarter;
(b) the number of each type of Licensed Product sold; (c) the
royalties, in U.S. dollars, payable hereunder with respect to sales;
(d) the method used to calculate the royalty; and (e) the exchange
rates used.
7.4 If no sales of Licensed Products have been made during any reporting
period, a statement to this effect is required.
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8. USE OF NAMES AND TRADENAMES
Nothing contained in this Agreement shall be construed as conferring any
right upon Vysis to use in advertising, publicity, or other promotional
activities any name, trade name, trademark, or other designation of The
Regents of the University of California (including contraction,
abbreviation or simulation of any of the foregoing). Unless required by
law, the use by Vysis of the name "The Regents of the University of
California" or any abbreviation or version thereof is expressly prohibited.
In addition, Vysis shall not use the name "Ciba Corning Diagnostics Corp."
(including contraction, abbreviation, or simulation of any of the
foregoing) in the name of any Licensed Product. However, Vysis may state
that the Licensed Products are licensed under the applicable patent
numbers.
9. PREFERENCE FOR UNITED STATES INDUSTRY
Vysis agrees that, to the extent reasonably feasible to Vysis, any products
embodying the Patent Rights or produced through the use thereof will be
manufactured substantially in the United States.
1O. COLLABORATION
Vysis and CCD may collaborate during the term of this Agreement in the
areas of research and development and/or market development to enhance each
party's knowledge of the measurement and importance of c-erbB-2 in the
disease process.
11. LATE PAYMENTS
In the event royalty payments or fees are not received by CCD when due,
Vysis shall pay to CCD interest charges at a rate of ten percent (10%)
simple interest per annum. Such interest shall be calculated from the date
payment was due until actually received by CCD.
12. CONFIDENTIALITY
CCD and Vysis shall not disclose the terms and conditions of this Agreement
to any third party except for the limited purpose of obtaining financing or
in conjunction with a public offering, and then only by (1) entering into a
satisfactory confidentiality agreement with the third party and (2)
receiving the other party's prior written consent. Such consent shall not
be unreasonably withheld.
13. TERM AND TERMINATION
13.1 Unless otherwise terminated by operation of law or by acts of the
parties in accordance with the terms of this Agreement, this Agreement
shall be in
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force from the effective date and shall remain in effect for the life
of the last to expire patent under this Agreement.
13.2 If Vysis shall violate or fail to perform any term or covenant of this
Agreement, then CCD may give written notice of default ("Notice of
Default") to Vysis. If Vysis should fail to repair the default within
ninety (90) days of the effective date of notice, then CCD shall have
the right to terminate this Agreement by a second written notice
("Notice of Termination") to Vysis. If a Notice of Termination is sent
to Vysis, this Agreement shall automatically terminate on the
effective date of notice. Termination shall not relieve Vysis of its
obligation to pay any royalty or license fees due at the time of
termination and shall not impair any accrued right to CCD.
13.3 This sublicense is subordinate to the Basic License Agreement.
Accordingly, if the Basic License Agreement is terminated, this
sublicense may, at the discretion of the Licensor, also terminate.
13.4 Any termination of this Agreement shall not effect the rights and
obligations set forth in the following sections: Section 6,
Indemnification, Section 7, Books, Records and Reports, Section 8, Use
of Names and Tradenames, Section 12, Confidentiality and Section 14,
Disposition of Licensed Products On Hand Upon Termination.
14. DISPOSITION OF LICENSED PRODUCTS ON HAND UPON TERMINATION
Upon termination of this Agreement, Vysis shall have the right to dispose
of all previously made or partially made Licensed Products within a period
of one hundred eighty (180) days, provided, however, that the sale of such
Licensed Products shall be subject to the terms of this Agreement,
including, but not limited to, the payment of royalties at the rate and at
the time provided herein and the rendering of reports thereon.
15. INFRINGEMENT
If at any time any third party shall infringe any Licensed Patents
hereunder in a particular country(s) to such an extent that Vysis is placed
at a substantial commercial disadvantage ("substantial commercial
disadvantage" shall be deemed to have occurred in a country if Vysis incurs
a fifteen percent (15%) reduction in sales in such country in a three-month
period, which reduction continues for a cumulative period of six months,
due to such third party infringement) with respect to its operations under
its license in such country(s) and Vysis so notifies CCD in writing,
furnishing adequate evidence of the infringement and CCD does not within
one (1) year after receipt of said notice (1) obtain a discontinuance of
such infringing operations, or (2) bring suit against at least one
infringer, Vysis may reduce its royalty payments by fifty percent (50%) in
the country(s) where
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such infringement occurred to Vysis' substantial commercial disadvantage.
Notwithstanding the above, Vysis' royalty payments shall not be reduced
below a rate where, based on sales for a given country, Vysis' royalty
payments to CCD are less than CCD's royalty payment obligations to
Licensor. Should CCD bring suit against at least one infringer, Vysis shall
execute such legal papers necessary for the prosecution of such suit as may
be reasonably requested by CCD and CCD shall be liable for all costs and
expenses of such litigation and shall be entitled to receive and retain all
recoveries therefrom. If such infringement stops, full royalties shall
forthwith become payable.
16. ASSIGNABILITY
This Sublicense Agreement shall be personal to Vysis and non-assignable by
Vysis. Notwithstanding the above, Vysis may assign this Sublicense
Agreement with CCD's written consent.
17. NOTICES
Any payment, notice, or other communication required or permitted to be
given to either party hereto shall be deemed to have been properly given
and to be effective on the date of delivery if delivered (a) in person, (b)
by first-class, certified mail, postage prepaid, return receipt requested,
or (c) by confirmed telecopy, in each case to the respective address or
telecopy number given below or to such other address or telecopy number as
it shall designate by written notice given to the other party in accordance
with this Section 12, as follows:
In the case of Vysis:
Vysis Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Vice President, Technology and Business Development
Telecopy: (000)000-0000
In the case of CCD:
Ciba Corning Diagnostics Corp.
00 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Vice President, Licensing and Acquisitions
Telecopy: (000) 000-0000
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With a copy to:
Ciba Corning Diagnostics Corp.
00 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: General Counsel
Telecopy: (000)000-0000
18. GOVERNING LAW
This Agreement shall be construed, interpreted, and applied in
accordance with the laws of the Commonwealth of Massachusetts, without
regard to its principles of conflicts of laws.
19. MISCELLANEOUS
19.1 The headings of the several sections are inserted for convenience of
reference only and are not intended to be a part of or to affect the
meaning or interpretation of this Agreement.
19.2 This Agreement will not be binding upon the parties until it has been
signed on behalf of each party, in which event, it shall be effective
as of the Effective Date.
19.3 No amendment or modification hereof shall be valid or binding upon the
parties unless made in writing and signed by an authorized
representative of each party.
19.4 It is agreed that no waiver by either party hereto of any breach or
default of any of the covenants or agreements herein set forth shall
be deemed a waiver as to any subsequent and/or similar breach or
default.
19.5 This Agreement embodies the entire understanding of the parties
relating to the subject matter hereof and except as noted herein shall
supersede all previous communications, representations, or
understandings, either oral or written, between the parties relating
to the subject matter hereof.
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IN WITNESS WHEREOF both CCD and Vysis have executed this Agreement, in
duplicate originals, by their respective duly authorized representatives, on the
day and year first above written.
VYSIS, INC. CIBA CORNING DIAGNOSTICS CORP.
By: /s/ Xxxx X. Xxxxxx By: /s/ Xx. Xxxxxx Xxxxx
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Xxxx X. Xxxxxx Xx. Xxxxxx Xxxxx
Title: President Title: Vice President
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