Exhibit 10.1
[CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION.]
LICENSE AGREEMENT ("Agreement") by and between NANOGEN, INC. a Delaware
corporation, having a place of business at 00000 Xxxxxxx Xxxxxx Xxxxx, Xxx
Xxxxx, Xxxxxxxxxx 00000 ("Nanogen" as that term is further defined in
Paragraph 1.7 hereof) and XXXXXXX XXXXXXX, INC., a Delaware corporation,
having a place of business at 0000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxxxxxx,
Xxxxxxxxxx 00000 ("BCI").
R E C I T A L S
1. BCI, formerly known as Xxxxxxx Instruments, Inc., is the owner of a
license from Massachusetts Institute of Technology under United States
Letters Patent No. 5,653,939 and its foreign counterparts (the '939 Patent)
and has the right, pursuant to such license, to grant sublicenses
thereunder.
II. Nanogen desires to acquire a sublicense under the '939 Patent.
NOW THEREFORE, in consideration of the mutual undertakings contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties, intending to be legally bound,
agree as follows:
ARTICLE 1.0 DEFINITIONS
The following terms, when they appear in this Agreement with an initial
capital letter and without regard to whether they appear in the singular,
plural or possessive form, shall have the meaning defined below:
1.1 "AFFILIATE" shall mean any corporation or other form of limited
liability legal person, partnership, or other form of business entity
controlled by, controlling or under common control with a party hereto.
As used herein, the word and root "control" in the context of a
corporation shall mean the ownership, directly or indirectly, of fifty
percent (50%)
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or more of the voting shares or other equity interests entitled to vote
in the election of Directors to the Board of Directors of the
corporation; and, in the context of any other form of business entity,
the right to receive fifty percent (50%) or more of the net profits of
such entity plus the right to at least a fifty percent (50%) interest
in the management and control of such entity; provided that, if the
country of incorporation of such limited liability legal person or the
country of domicile of the other form of business entity requires that
foreign ownership be less than fifty percent (50%), the maximum
permitted percentage of foreign ownership shall be substituted in this
Paragraph 1.1 for fifty percent (50%).
1.2 "DISPOSABLE LICENSED PRODUCT" shall mean any probe array, substrate,
reagent, kit or component or combination thereof in the Field, the
manufacture, use or sale of which, but for the licenses granted under
this Agreement, would infringe a claim in the Patent Rights.
1.3 "FIELD" shall mean systems for detecting hybridization of target
DNA/RNA to known DNA/RNA, PNA or other nucleic acid probes. The system
will be used only for high and/or low resolution sequence determination
and will consist of a micro-fabricated semiconductor device designed to
be used with an array of probes attached to a solid support, means for
exposing the array of probes to target DNA/RNA (the sample), means for
detecting whether or not (and where) hybridization has occurred and
means for reporting the results. The solid support can be the
semiconductor device itself or a separate support. High and/or low
resolution sequence determinations include all reverse dot blot
applications.
1.4 "INSTRUMENT LICENSED PRODUCT" shall mean any instrument, system or
component or part thereof in the Field, the manufacture, use or sale
of which, but for the licenses and rights granted under this Agreement,
would infringe a claim in the Patent Rights.
1.5 "EFFECTIVE DATE" shall mean the last date in time adjacent the
signature of the authorized representatives of the parties on the last
page of this Agreement.
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1.6 "LICENSED PROCESS" shall mean any process, procedure or method, the
practice or use of which in the Field, but for the licenses and rights
granted under this Agreement, would infringe a claim in the Patent
Rights.
1.7 "NANOGEN" shall mean Nanogen Inc. and its subsidiaries and Affiliates.
1.8 "NET SALES" shall mean the [***]
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1.9 "PATENT RIGHTS" shall mean United States Letters Patent No. 5,653,939
and (a) any and all continuations, divisions and continuations-in-part
of application Serial No. 794,036 filed November 19, 1991 or Serial
No. 872,582 filed April 23, 1992, the patents which issue therefrom and
any reissues or reexaminations of any of the foregoing, and (b) any
foreign patent applications and the patents which issue therefrom which
claim priority from either of the foregoing U.S. applications.
ARTICLE 2.0 REPRESENTATIONS AND WARRANTIES
BCI represents and warrants that (a) it is the recipient of a license
under the Patent Rights from Massachusetts Institute of Technology ("MIT"),
(b) the agreement between BCI and MIT contains a representation and warranty,
which provides in relevant part, that MIT is the exclusive owner of the entire
right and title in and to the inventions included in the Patent Rights or that
it has acquired the right to grant licenses to the Patent Rights of the scope
granted to BCI, and (c) BCI has the rights and licenses in the Field provided
for in this Agreement.
ARTICLE 3.0 LICENSE GRANT
3.1 GRANT -- BCI, subject to the terms and conditions of this Agreement,
hereby grants to Nanogen and Nanogen accepts a non-exclusive,
royalty-bearing, world-wide, non-transferable license in the Field
under the Patent Rights to make, have made, import, use, offer to sell
and sell Disposable Licensed Products and Instrument Licensed Products,
to practice Licensed Processes and to pass on to Nanogen's direct and
indirect purchasers of Disposable Licensed Products and Instrument
Licensed Products the right to practice Licensed Processes in the Field.
For the avoidance of doubt, the foregoing grant of a license to Nanogen
includes an equal grant to third
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parties who purchase both Disposable Licensed Products and Instrument
Licensed Products from Nanogen for their own use and for resale of
both such Products to others.
3.2 SUBLICENSING -- The license granted to Nanogen under Paragraph 3.1
does not include the right to grant sublicenses. Notwithstanding the
foregoing, BCI agrees to enter into good faith discussions with third
parties identified by Nanogen as potential sublicensees under the Patent
Rights with the objective of granting such third parties licenses under
the Patent Rights in the Field under reasonable terms and conditions.
BCI further agrees that it shall, within forty-five (45) days after being
notified of the identity of such third party, communicate to Nanogen in
writing whether BCI will as a condition of a sublicense to such third
party, require the grant to BCI of options or rights to such third
party's technology or patents. BCI shall use reasonable commercial
efforts to complete its negotiations with the third parties promptly and
in any event consistent with the negotiation efforts and promptness of
the third party.
3.3 U.S. MANUFACTURE -- Nanogen agrees that it shall manufacture the
Disposable Licensed Products in the United States.
3.4 PATENT MARKING -- Nanogen shall attach a label or product insert on
each Disposable Licensed Product and Instrument Licensed Product
reflecting that such Product is licensed under U.S. Patent NO. 5,653,939.
3.5 NO OTHER LICENSES -- Subject to the next sentence hereof, the license
granted hereunder is limited to the Patent Rights and nothing in this
Agreement or the course of dealings between the parties or usage or
custom in the industry or trade shall be construed to confer any other
rights or licenses upon Nanogen by implication, estoppel or otherwise.
Notwithstanding the preceding sentence, (a) BCI is not aware of any
other patents or patent applications it presently owns or under which
it has the present right to grant sublicenses which would be infringed
by the practice of the claims of the Patent Rights in the Field, and
(b) BCI agrees to and shall grant Nanogen
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a license under any patent or patent application now or hereafter owned
by BCI or licensed to BCI with a right to grant sublicenses which has
claims which would be infringed by the manufacture, use or sale of a
Disposable Licensed Product or Instrument Licensed Product or the
practice of a Licensed Process in the Field. The license from BCI to
Nanogen shall be under commercially reasonable terms and conditions to
be hereafter negotiated by the parties.
3.6 TERM OF LICENSE -- Subject to Nanogen's adherence to all of the terms
and conditions of this Agreement, the license of Paragraph 3.1 shall
commence on the Effective Date and end on the earlier of (a) the
expiration of the Patent Rights, or (b) a final declaration by a court
of competent jurisdiction from which no appeal has or can be taken
that all of the claims of the Patent Rights are invalid.
ARTICLE 4.0 PAYMENTS TO BCI
4.1 LICENSE FEE -- Nanogen shall pay to BCI as an initial license fee the
non-refundable sum of [***]. The initial license fee shall be
non-refundable and shall not be a credit or advance against future
Nanogen royalty obligations.
4.2 ROYALTIES -- Nanogen shall pay the following royalties to BCI:
(a) The greater of: (i) [***] ($[***]) or (ii) [***] percent ([***]%)
of the Net Sales for each Instrument Licensed Product sold, leased,
rented or otherwise provided to a third party by Nanogen and each
Instrument Licensed Product used by Nanogen, plus,
(b) Running royalties equal to [***] percent ([***]%) of: (a) Net
Sales of Disposable Licensed Products and (b) the Net Sales received
from the practice of Licensed Processes.
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4.3 TAXES AND DEDUCTIONS - All payments due hereunder shall be paid in
full, without deduction of taxes or other fees which may be imposed
by any government or paid by Nanogen. All such taxes and deductions
shall be the sole responsibility of Nanogen.
4.4 PAYMENTS - All payments due under this Article 4.0 shall be made in
United States Dollars. Royalties shall be paid to BCI at the address
in Article 11.0 not later than [***] days after the close of each
calendar quarter. Any amounts due under this Agreement from Nanogen to
BCI shall, if overdue, bear interest until payment at the lesser of a per
annum rate of [***]. The payment of such interest shall not foreclose
BCI from exercising any other rights it may have as a consequence of
the lateness of any payment. If any currency conversion shall be required
in connection with the payment of royalties hereunder, such conversion
shall be made using the exchange rate shown in the Wall Street Journal on
the last business day of the calendar quarter to which such royalty
payments relate.
ARTICLE 5.0 ROYALTY REPORTS AND BOOKS
5.1 ROYALTY REPORTS - Nanogen shall, commencing with the calendar quarter
which includes its first sale of a Disposable Licensed Product or
Instrument Licensed Product or the practice of a Licensed Process, and
each calendar quarter thereafter during the term of this Agreement, not
later than thirty (30) days after the close of such calendar quarter,
provide to BCI an accounting report which, at a minimum, shall show:
(a) the number and type of each Disposable Licensed Product and
Instrument Licensed Product sold or used, (b) the gross sales of
each Disposable Licensed Product and Instrument Licensed Product and
the gross amount received from the third parties for the practice of
Licensed Processes, the type and amount of each deduction made from such
gross sales and receipts and the resultant Net Sales of each Disposable
Licensed Product sold or used and each Instrument Licensed Product sold,
leased or rented and each Licensed Process practiced, (c) the royalties,
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in U.S. Dollars, payable for such sales, lease, rental or uses, and
(d) the exchange rate used.
5.2 BOOKS AND RECORDS - Nanogen shall keep or cause to be kept true and
accurate books, records and accounts in accordance with generally
accepted accounting principles consistently applied covering Nanogen's
activities hereunder and containing all information necessary for the
true and accurate determination of the amounts earned and paid hereunder.
Nanogen shall, not more than once per year and upon prior reasonable
written notice from BCI, permit a certified public accountant appointed
and paid for by BCI (the "Auditor") and reasonably acceptable to Nanogen
to inspect each Nanogen facility manufacturing Disposable Licensed
Products, and/or Instrument Licensed Products or practicing Licensed
Processes and to review the previous three (3) years books, records and
accounts to verify the amounts earned by BCI and paid by Nanogen
hereunder. The Auditor shall furnish to both parties reports stating only
its findings during such inspection as to the accuracy, or the nature and
extent of any inaccuracy of such books, records, accounts and payments.
If such Auditor determines an amount earned by BCI which exceeds
Nanogen's determination by greater than [***] percent [***] then if
Nanogen disagrees with such Auditor's report, BCI and Nanogen shall
jointly select and appoint a second independent auditor to issue a
report verifying the amounts earned by BCI and paid by Nanogen
hereunder. The fees and expenses of the second independent auditor
shall be paid by Nanogen. The second independent auditor's report
shall be considered as final and conclusive and not subject to review
or dispute.
5.2.1 Any deficiency identified by the Auditor and, if requested
by Nanogen, confirmed by the second auditor, between the
amounts actually earned by BCI under this Agreement and the
amounts reported to be earned and paid on by Nanogen shall be
paid to BCI within [***] days of receipt by Nanogen of the
Auditor's (or second auditor's) report. Nanogen shall also
pay interest each month on such amount at the lesser of: [***].
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If the deficiency between the amount actually due to BCI as
reported by the Auditor and, if requested by Nanogen,
confirmed by the second auditor and the amount actually paid
to BCI by Nanogen is greater than [***] in BCI's favor then
Nanogen shall reimburse BCI for the actual and reasonable
charges, fees and expenses of the Auditor.
ARTICLE 6.0 TERMINATION
6.1 TERMINATION BY BCI - If Nanogen shall at any time be in material
breach of this Agreement, including but not limited to, default on any
payment hereunder, or of the making of any report hereunder, or shall
make any materially false report and should fail to remedy such material
breach within thirty (30) days after written notice thereof by BCI,
the latter may, at its option, terminate this Agreement by notice to
such effect, provided that such termination shall not release Nanogen
from its obligation to pay BCI royalties or other sums due and accrued
prior to the date of such termination.
6.2 TERMINATION BY NANOGEN - Nanogen shall have the right upon three (3)
months prior written notice to BCI to terminate this Agreement in its
entirety, such surrender being operative to relieve Nanogen, as of the
effective date of said notice, of all obligation to pay royalties which
would otherwise have accrued therafter pursuant to this Agreement. Such
termination or surrender shall not relieve Nanogen of its obligation to
pay royalties or other sums due and accrued prior to the effective date
of such notice.
6.3 FAILURE TO ASSERT RIGHTS - The failure by one of the parties under
this Agreement to assert its rights for any breach of this Agreement
shall not be deemed a waiver of such rights. The rights and remedies
specified herein, except those specified as exclusive, are in addition
to and shall not restrict any right or remedy either party may have at
law or in equity for any breach of this Agreement.
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ARTICLE 7.0 ASSIGNMENT
Nanogen may not assign this Agreement in whole or in part without
obtaining the prior written approval of BCI, except that Nanogen shall have
the right to assign this Agreement without the consent of BCI to any
Affiliate or to any purchaser of Nanogen's entire business or of
substantially all of Nanogen's assets relating to the sale of Licensed
Products.
ARTICLE 8.0 PRODUCT LIABILITY
HOLD HARMLESS - Nanogen agrees to and shall defend, indemnify and hold BCI
and its officers, directors and employees harmless from and against any
claim, liability, suit or damage (including attorney's fees to consider,
advise and defend and any damages and penalties awarded by a court of
competent jurisdiction or settlement voluntarily paid) based on a claim which
arises out of or is alleged to arise out of injury to persons, including
death, or property resulting from or alleged to have resulted from the
manufacture, use, sale, lease, consumption or advertisement of a Disposable
Licensed Product or Instrument Licensed Product or the practice of Licensed
Processes.
ARTICLE 9.0
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ARTICLE 10.0 ROYALTY STACKING
If, at any time, Nanogen discovers that any Disposable Licensed Product
or Instrument Licensed Product or the use thereof in the Field or the
practice of any Licensed Process infringes claims of an unexpired patent or
patents other than those in the Patent Rights, Nanogen may, if it has not
already done so, negotiate with the owner of such patents for a license on
such terms as Nanogen deems appropriate. Should the license with the owner of
such patents require the payment of royalties or other consideration to such
owner then the royalties otherwise payable under this Agreement shall be
reduced by the dollar amount of the royalties or consideration paid to the
owners of such patents; provided that the maximum amount of such reduction
shall not exceed [***] percent [***] of the Net Sales. For the avoidance of
doubt, if the royalty to be paid by Nanogen to such third party exceeds [***]
percent [***] of the Net Sales the royalty to be paid by Nanogen to BCI under
this Agreement shall be reduced from [***] percent [***] to [***] percent
[***]of Net Sales and in no event shall the royalty payable under this
Agreement be less than [***] percent [***] of Net Sales.
ARTICLE 11.0 NOTICES
All notice and payments required or permitted to be given hereunder
shall be in writing and addressed to the respective parties as follows:
If to Nanogen: Nanogen, Inc.
00000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
With a copy to: Nanogen, Inc.
00000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
If to BCI: Xxxxxxx Xxxxxxx, Inc.
0000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: President
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With a copy to: Xxxxxxx Xxxxxxx, Inc.
0000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: General Counsel
or such other addresses as may be designated by the respective parties in
writing. A notice shall be deemed given the earlier of the date when actually
received if sent by messenger or facsimile (with notice of receipt in good
order requested and received) or three (3) days after deposit in the United
States registered or certified mail, postage prepaid, and properly addressed.
ARTICLE 12.0 SECTION HEADINGS
Section headings are for convenience only and shall not be construed to
limit or extend the meaning of any portion of this Agreement.
ARTICLE 13.0 LAW GOVERNING AND CONSTRUCTIONS
13.1 APPLICABLE LAW - This Agreement shall be governed by and construed
in accordance with the laws of the State of California as if it has
been delivered in California, and all acts performed or required to
be performed hereunder have been performed entirely within such
state, not including, however any conflicts of law rule of
California which may direct or refer such determination to the laws
of any other state or country.
13.2 MUTUALITY - This Agreement is the result of negotiation and
compromise between the parties and neither party shall be prejudiced
as having been the drafter of the Agreement.
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ARTICLE 14.0 MISCELLANEOUS
14.1 Nothing in this Agreement shall be construed as conferring any right
to use advertising, publicity, or other promotional activities any
name, trade name, trademark or other designation of either party
hereto without the express written approval of the other party.
14.2 BCI makes no warranties as to the validity or scope of the Patent
Rights, or that any manufacture, sale, use, or other disposition of
the products and processes licensed hereunder will be free from
infringement of patents, utility models, and/or design patents of
third parties. Nothing in this Agreement shall be considered as
conferring any warranty or representation as to the usefulness,
marketability, or merchantability of any products or processes
within the scope of the licenses hereunder.
14.3 The Parties will retain the terms of this Agreement in strict
confidence, except as may be required by regulatory agencies or
courts, and will then use all reasonable precautions to maintain the
terms of this Agreement confidential.
14.4 In the event that any provision of this Agreement is held invalid or
unenforceable for any reason, such enforceability shall not affect
the enforceability of the remaining provisions of this Agreement,
and all provisions of this Agreement shall be construed so as to
preserve the enforceability hereof.
14.5 This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
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ARTICLE 15.0 ENTIRE AGREEMENT
15.1 This instrument contains the entire and only agreement between the
parties relative to the subject matter hereof and supersedes all
previous negotiations, representations, undertakings and agreements
both written and oral heretofore made between the parties as to the
subject matter. Any representation, promise or condition in
connection herewith not specifically incorporated herein shall not
be binding upon either party.
15.2 No modification, renewal, extension, waiver, cancellation or
termination of this Agreement or of any of the provisions herein
contained shall be valid until and unless made in writing and signed
on behalf of the respective parties by duly authorized officers
thereof.
IN WITNESS WHEREOF, the parties have respectively caused this
Agreement to be executed on the dates hereinafter indicated.
XXXXXXX XXXXXXX, INC. NANOGEN, INC.
BY: /s/ XXXX X. XXXXXXX BY: /s/ XXXXXX X. XXXXXXXX
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Title: CHIEF EXECUTIVE OFFICER Title: CHIEF EXECUTIVE OFFICER
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Date: 5-19-00 Date: 5-19-00
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