License Agreement - Bio-Metric Systems Inc. and Abbott Laboratories
AMENDED LICENSE AGREEMENT
THIS AGREEMENT shall be effective on the last date of execution hereof, by
and between Bio-Metric Systems, Inc. ("BSI"), a corporation of the State of
Minnesota, having a principal place of business at 9924 West Seventy-Fourth
Street, Eden Prairie, Minnesota 55344, and Abbott Laboratories ("ABBOTT"), a
corporation of the State of Illinois, having a principal place of business at
Abbott Park, Illinois 60064-3500. This Agreement amends and supersede that
License Agreement between BSI and ABBOTT ("The Parties") dated May 30, 1989.
WHEREAS, BSI is engaged in biological, chemical and technical research, has
developed a body of proprietary technology useful in reagents, processes and
devices related thereto, and possesses certain intellectual property including
patents, patent applications, trade secrets, know-how and other information
related to such proprietary technology;
WHEREAS, ABBOTT has expertise in developing and marketing diagnostic
products and intends to develop and market diagnostic products that utilize, in
whole or in part, such proprietary technology of BSI;
WHEREAS, ABBOTT desires to receive an exclusive license under such
proprietary technology of BSI;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein, the parties agree as follows:
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ARTICLE 1
DEFINITIONS
1.01 "PROPRIETARY RIGHTS" shall mean the rights under:
(a) all foreign and United States Patent applications related in whole
or in part to BSI's United States Patent Applications Serial No. 467,229 (filed
February 23, 1983) and Serial No. 356,459 (filed March 9, 1982);
(b) all continuation, continuation-in-part, divisional, reissue and
reexamination applications and any foreign or United States equivalent of such
applications described above;
(c) all patents that issue on the applications defined in (a) and (b)
above; and
(d) related trade secrets and know-how of BSI and which are based in
whole or in part upon BSI's technology exemplified in such applications
described above.
1.02 "DIAGNOSTIC APPLICATIONS" shall mean the four following fields of
application of PROPRIETARY RIGHTS: HUMAN DIAGNOSTICS, VETERINARY DIAGNOSTICS,
FOOD/AGRICULTURAL DIAGNOSTICS and ENVIRONMENTAL DIAGNOSTICS.
1.03 "HUMAN DIAGNOSTICS" shall mean the detection and measurement of
substances in human source materials.
1.04 "VETERINARY DIAGNOSTICS" shall mean the detection and measurement
of substances in non-human animal source materials.
1.05 "FOOD/AGRICULTURAL DIAGNOSTICS" shall mean the detection and
measurement of substances in human or animal feedstuffs, including but not
limited to toxins, nutrients, contaminants and the like.
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1.06 "ENVIRONMENTAL DIAGNOSTICS" shall mean the detection and
measurement of substances in materials not included in the other three fields of
DIAGNOSTIC APPLICATIONS as defined in Paragraphs 1.03, 1.04 and 1.05.
1.07 "LICENSED PRODUCT(S)" shall mean an apparatus sold by ABBOTT or an
ABBOTT AFFILIATE which but for the license granted herein:
(a) for each country where a patent(s) exist the manufacture, use or
sale of such apparatus in such country would infringe a valid and enforceable
claim of an unexpired patent included in PROPRIETARY RIGHTS; or
(b) utilizes trade secrets or know-how included in PROPRIETARY RIGHTS.
As used herein a "valid and enforceable claim" is a claim that has
not been held invalid or unenforceable by order of a court of competent
jurisdiction from which no appeal is taken.
1.08 "AFFILIATE" shall mean any corporation or other business entity
controlled by, controlling, or under common control with the affected party,
wherein control means direct or indirect ownership of at least thirty percent
(30%) of the voting stock, or at least thirty percent (30%) interest in the
equity, of such corporation or other business entity, or in either case the
maximum amount allowed by law.
1.09 "NET SALES" shall mean the total invoiced price for sales by
ABBOTT, an ABBOTT AFFILIATE or an ABBOTT sublicensee of LICENSED PRODUCTS less:
(a) actual credited allowances to customers for spoiled, damaged,
outdated or returned LICENSED PRODUCTS;
(b) any taxes or other governmental charges levied or measured or both
by sales and included in the billing price; and
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(c) amounts for transportation, insurance, handling or shipping charges
to purchasers.
In the event that a LICENSED PRODUCT is increased in price to
include an amount to cover instrument system recovery 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 LICENSED PRODUCT sold under
a RAP shall be reduced as follows: Total instrument depreciation and service
charges (determined according to generally accepted accounting principles and
not primarily for the purpose of avoiding royalties under this Agreement)
applicable to both licensed and unlicensed products sold under a RAP shall be
divided by total sales under a RAP on a quarterly basis to determine an overall
RAP factor percentage. The RAP factor percentage shall then be multiplied by
quarterly Net Sales of Licensed Products sold under RAP to determine the amount
by which Net Sales shall be reduced under this paragraph. The depreciation rate
for the instruments shall be calculated by generally accepted accounting
principles, an in any event, such instruments shall not be depreciated over a
period less than three (3) years. In no event shall the NET SALES for a
LICENSED PRODUCT under a RAP plan be less than the invoiced price, less the
above-identified credits under (a) through (c) of this Paragraph 1.09, of
LICENSED PRODUCTS sold in other than RAP sales.,
1.10 "FIRST COMMERCIAL SALE" shall mean the earlier of the first sale by
ABBOTT, an ABBOTT AFFILIATE or an ABBOTT sublicensee for monetary or other
valuable consideration of a LICENSED PRODUCT to (a) a customer, who is not an
AFFILIATE, or (b) to an AFFILIATE for consumption by the AFFILIATE.
1.11 "REAGENTS" shall mean substances, used in LICENSED PRODUCTS for
detecting the presence or quantity of analyte in a sample, which have physical
properties that are applicable to such detection or which, because of their
chemical or biological activity,
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produce reactions that are applicable to such detection; or substances which
improve the stability or efficacy of such substances used in LICENSED PRODUCTS.
ARTICLE 2
LICENSE TO ABBOTT
2.01 BSI hereby grants to ABBOTT a worldwide, exclusive license, with
the right to grant sublicenses with BSI's prior written approval, under
PROPRIETARY RIGHTS to make, have made, use and sell LICENSED PRODUCTS for
DIAGNOSTIC APPLICATIONS. Such exclusive license, with respect to patents
included within PROPRIETARY RIGHTS, shall continue until the expiration of the
last to expire of such patents, and with respect to unpatented aspects of
PROPRIETARY RIGHTS, shall be perpetual.
2.02 ABBOTT shall inform BSI in advance of ABBOTT's desire to grant
sublicenses hereunder, the identity of the proposed sublicensee and the terms of
the proposed sublicense. BSI approval of such proposed sublicenses shall NOT be
unreasonably withheld.
2.03 If, within four (4) years following May 30, 1989, ABBOTT or an
ABBOTT sublicensee have not, in each field of DIAGNOSTIC APPLICATIONS, either
(a) submitted an application for governmental regulatory approval required for
the sale of a LICENSED PRODUCT, or (b) made a FIRST COMMERCIAL SALE of a
LICENSED PRODUCT which does not require governmental regulatory approval, BSI
shall, after the expiration of said four (4) year period, have the option to
convert ABBOTT's exclusive license under Paragraph 2.01 to a non-exclusive
license for each field of DIAGNOSTIC APPLICATIONS in which neither (a) nor (b)
above has occurred, provided that BSI provides ABBOTT with ninety (90) days
written notice prior to exercise of such option for each such field. After such
four (4) year period has expired, for each field of DIAGNOSTIC APPLICATIONS in
which ABBOTT or a sublicensee
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has performed either (a) or (b) above, prior to notification by BSI to ABBOTT
that BSI is exercising the option under this Paragraph 2.03, BSI's option shall
terminate.
ARTICLE 3
LICENSE FEES, CONSIDERATION
3.01 As consideration for the license granted hereunder to ABBOTT,
ABBOTT has paid to BSI a QQ Indicates that material has been omitted pursuant to
a request for confidential treatment. Such material has been filed separately
with the SEC., in accordance with a certain Letter of Intent between ABBOTT and
BSI dated December 29, 1988, a copy of which is appended hereto as Exhibit A.
3.02 As further consideration for the license granted hereunder to
ABBOTT, ABBOTT shall pay to BSI during the term of this Agreement *. Such
annual license fee shall be payable until the minimum royalty payments under
Article 5 hereof commence or until ABBOTT's exclusive license hereunder with
respect to all DIAGNOSTIC APPLICATIONS has been converted to non-exclusive as
provided under Paragraph 2.03 hereof, whichever event occurs earlier. Each such
annual license fee payment shall be due within thirty (30) days of May 30th
beginning with May 30, 1990.*
3.03 ABBOTT shall mark LICENSED PRODUCTS made or sold in the United
States with the appropriate patent marking under 35 USC 287.
ARTICLE 4
ROYALTIES
4.01 As additional consideration for the license granted hereunder to
ABBOTT, ABBOTT shall pay to BSI a royalty of * of NET SALES, commencing upon the
FIRST COMMERCIAL SALE of LICENSED PRODUCT manufactured and sold in countries
which are not countries that have granted patents included within PROPRIETARY
RIGHTS, and continuing for so long as such LICENSED PRODUCT is so manufactured
or sold during the *, in accordance with a certain Letter of Intent between
ABBOTT and BSI dated December 29, 1988, a copy of which is appended hereto as
Exhibit A.
3.02 As further consideration for the license granted hereunder to
ABBOTT, ABBOTT shall pay to BSI during the term of this Agreement *. Such
annual license fee shall be payable until the minimum royalty payments under
Article 5 hereof commence or until ABBOTT's exclusive license hereunder with
respect to all DIAGNOSTIC APPLICATIONS has been converted to non-exclusive as
provided under Paragraph 2.03 hereof, whichever event occurs earlier. Each such
annual license fee payment shall be due within thirty (30) days of May 30th
beginning with May 30, 1990.*
3.03 ABBOTT shall mark LICENSED PRODUCTS made or sold in the United
States with the appropriate patent marking under 35 USC 287.
ARTICLE 4
ROYALTIES
4.01 As additional consideration for the license granted hereunder to
ABBOTT, ABBOTT shall pay to BSI a royalty of * of NET SALES, commencing upon the
FIRST COMMERCIAL SALE of LICENSED PRODUCT manufactured and sold in countries
which
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*Indicates that material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
SEC.
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are not countries that have granted patents included within PROPRIETARY RIGHTS,
and continuing for so long as such LICENSED PRODUCT is so manufactured or sold
during the * period following the Effective Date of this Agreement, with the
exception that no such royalty obligation shall apply to ABBOTT products having
only one analyte measuring zone unless such products utilize trade secrets or
know-how included in PROPRIETARY RIGHTS. After the expiration of such * period,
the royalty obligation under this Paragraph 4.01 shall cease.
4.02 In lieu of payments of royalty due under Paragraph 4.01 hereof, if
the manufacture, use or sale of a LICENSED PRODUCT would infringe, in the
absence of this Agreement, any claims of a patent included within PROPRIETARY
RIGHTS, ABBOTT shall pay to BSI * of NET SALES for the full term set out in
Paragraph 8.0 4 (a).
4.03 ABBOTT shall pay to BSI, in addition to any royalty payable under
Paragraphs 4.01 or 4.02 hereof, a royalty of * of NET SALES of LICENSED PRODUCTS
that incorporate REAGENTS developed by BSI for said LICENSED PRODUCTS.
4.04 In the event that a license from a third party is necessary in
order to manufacture, use or sell any LICENSED PRODUCT, solely because of the
incorporation in such LICENSED PRODUCT of technology included in PROPRIETARY
RIGHTS, any royalty payments or other monetary consideration paid by ABBOTT to
such third party for such license shall be credited * of the royalty due BSI for
that LICENSED PRODUCT in any one year, on a year-by-year basis until fully
credited.
4.05 In any one year, the sum of the amounts creditable, under
Paragraphs 3.02 and 4.04, against royalties due BSI shall not exceed * of the
royalty due BSI in such year.
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*Indicates that material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
SEC.
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4.06 Only one royalty shall be due BSI on NET SALES of any specific
LICENSED PRODUCT hereunder irrespective of the number of covering patents,
patent claims, trade secrets or know-how included in PROPRIETARY RIGHTS which
may be embodied in or utilized by such LICENSED PRODUCT.
4.07 LICENSED PRODUCT shall be considered as sold when invoiced to a
customer by ABBOTT, an ABBOTT AFFILIATE or an ABBOTT sublicensee. Royalty shall
be due for sales to an ABBOTT AFFILIATE only if LICENSED PRODUCT is consumed by
such AFFILIATE, in which case, royalty shall be calculated from the invoiced
price to such AFFILIATE or a reasonable arms-length invoice price if such
AFFILIATE is treated on a more favorable basis than the general trade.
Otherwise, royalty shall be due when sold by such AFFILIATE to a third party and
NET SALES calculated based on the invoiced price to such third party.
4.08 If during the term hereof, for all DIAGNOSTIC APPLICATIONS for
which BSI converts the exclusive license granted to ABBOTT to non-exclusive as
provided in Paragraph 2.03 hereof, BSI grants a license to a third party other
than an AFFILIATE of BSI to make, have made, use or sell LICENSED PRODUCT with a
more favorable royalty to such licensee than that set forth in Paragraphs 4.01,
4.02 and 4.03 above, BSI shall so notify ABBOTT in writing and the royalty set
forth in Paragraphs 4.01, 4.02 and 4.03 above shall thereupon become the same as
the royalty to such third party licensee.
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ARTICLE 5
MINIMUM ROYALTIES
5.01 ABBOTT shall pay to BSI a first minimum royalty of * six (6) months
after the date of the FIRST COMMERCIAL SALE.
5.02 ABBOTT shall pay to BSI a second minimum royalty of * eighteen (18)
months after the date of the FIRST COMMERCIAL SALE.
5.03 ABBOTT shall pay to BSI a third minimum royalty of * thirty (30)
months after the date of the FIRST COMMERCIAL SALE, and further minimum royalty
payments of * each twelve (12) months thereafter for the term of this Agreement.
5.04 Each minimum royalty payment under Paragraphs 5.01, 5.02 and 5.03
above shall be one-hundred percent (100%) credited against royalties that become
due hereunder as a result of the sale of LICENSED PRODUCTS during the twelve
(12) month period that follows each minimum royalty payment.
5.05 Minimum royalty payments hereunder shall be due within thirty (30)
days of the dates specified in Paragraphs 5.01, 5.02 and 5.03 above.
5.06 In the event that the exclusive licenses for all DIAGNOSTIC
APPLICATIONS have been converted under Paragraph 2.03 herein to non-exclusive
licenses, * royalty payments shall be due.
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*Indicates that material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
SEC.
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ARTICLE 6
ROYALTY PAYMENTS, REPORTS, RECORDS
6.01 ABBOTT, ABBOTT AFFILIATES and ABBOTT sublicensees shall keep
complete and accurate records containing all information required for the
computation and verification of the royalties to be paid hereunder.
6.02 On or before sixty (60) days following each consecutive three (3)
month period beginning on the date of FIRST COMMERCIAL SALE and continuing
through the remainder of the term of this Agreement, ABBOTT shall deliver to BSI
a written statement of account of NET SALES of LICENSED PRODUCT of such three
(3) month period and a calculation of the royalty due thereon to BSI. Such
statement shall show the gross sales of LICENSED PRODUCT and shall itemize the
deductions allowed in calculating NET SALES as defined in Paragraph 1.09 hereof.
6.03 Payment of royalties shall accompany the statements to be submitted
in accordance with Paragraph 6.02 above.
6.04 If royalties are not paid when due, interest shall be accrued on
the unpaid royalties from the date due until paid, at a rate per annum which
shall be the lesser of either the prime rate of the Citibank, N.A., New York,
then in force for short-term borrowing, or the maximum legal rate then permitted
under the laws of the State of Minnesota.
6.05 All royalties due hereunder shall be payable in United States
Dollars. All royalties due for sales in countries foreign to the United States
shall be converted (for the purposes of calculation only) into equivalent United
States funds at the exchange rate published by the Wall Street Journal on the
last business day of the reporting period.
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6.06 Payment of royalties on sales of LICENSED PRODUCT shall be subject
to any restrictions imposed by the local government. If foreign exchange is not
freely available, BSI shall have the option to accept payment in the currency of
the country from which royalties are due. In the event that local law restricts
such royalty payment, the royalty due shall be paid to the extent permitted by
local law. In the event that a withholding or other tax is imposed on a royalty
payment due hereunder, the amount of royalty payable shall be the amount due
less the amount of such tax actually paid.
6.07 ABBOTT shall, upon written request of BSI, permit an independent
public accountant selected by BSI and acceptable to ABBOTT to have access during
ordinary business hours to examine such records referred to in paragraph 6.01 as
may be necessary to determine either the accuracy of any report or the
sufficiency of any royalty payment made under this Agreement. ABBOTT shall only
be obligated to permit access once each year during the term of this Agreement
and to such of its records which directly relate to such royalty payments which
accrued or occurred within three (3) years prior to such request.
ARTICLE 7
CONFIDENTIALITY
7.01 Information and materials exchanged between the parties in
performing hereunder shall be deemed Confidential Matter as provided below.
7.02 Confidential Matter received by a party from the other shall not be
disclosed by such receiving party to any third party, or used by such receiving
party for its own benefit, or for the benefit of a third party, except as
expressly provided herein.
7.03 To be accorded treatment as Confidential Matter, however, such
Matter:
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(a) must be first disclosed to the receiving party in writing and
plainly marked "Confidential" or words to the same effect; or
(b) if first disclosed orally, must be summarized in writing by the
disclosing party and plainly marked "Confidential", or words to the same effect,
and delivered to the receiving party within thirty (30) days of its first oral
disclosure to the receiving party; or
(c) if a physical thing, must be marked "Confidential", or words to the
same effect, or be accompanied by a writing specifically identifying such thing
as "Confidential".
Information and material provided by one party to the other hereunder which is
not identified as "Confidential" as provided above shall be considered as given
and received without any obligation of confidentiality or nonuse and the
receiving party shall be free to use such information in any way it sees fit,
subject only to any rights that the disclosing party may have under applicable
United States or foreign Patent Laws.
7.04 Subject to Paragraph 15.01 (a) and (b), the specific terms of this
Agreement and the identity of the parties shall be considered Confidential
Matter.
7.05 Further, the obligations of confidentiality and nonuse of this
Article 7 shall not apply to information or material:
(a) which is known by the receiving party prior to receipt from the
disclosing party as evidenced by documents in the possession of the receiving
party at the time of disclosure,
(b) which, after receipt from the disclosing party, is disclosed to
the receiving party by a third party having the legal right to do so,
(c) which is available to the public at the time of receipt from the
disclosing party,
(d) which becomes available to the public after receipt from the
disclosing party through no fault of the receiving party,
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(e) which is independently developed by employees of the receiving
party not having access to Confidential Matter of the disclosing party,
(f) which is required, in the opinion of legal counsel of the receiving
party, to be disclosed for securing approval of governmental regulatory
agencies, including but not limited to the U.S. Food and Drug Administration, to
market LICENSED PRODUCTS, provided that the receiving party shall use its
reasonable efforts to seek to obtain from such agencies such protection for such
information against public disclosure as may be legally available,
(g) which is required, in the opinion of legal counsel of the receiving
party, to be disclosed for the filing of patent applications by the receiving
party, provided that the disclosing party is timely advised of the receiving
party's intention to include such information in a patent application of the
receiving party and the disclosing party does not notify the receiving party
within thirty (30) days of its objection to such disclosure, or
(h) which is reasonably necessary to be disclosed by the receiving
party to its individual agents or third parties who require knowledge thereof in
order to perform their normal duties or services, such as legal counsel,
certified public accountants, and the like, provided that such agents and third
parties are advised of and acknowledge the confidential nature of such
disclosure and agree in writing to maintain the confidential nature of the
disclosed information under terms no less rigid than those imposed upon the
parties to this Agreement.
7.06 Each party shall use the same level of care in complying with the
obligations hereof respecting Confidential Matter as it does with respect to its
own information of similar nature. The parties mutually represent and warrant
that each and every employee who will have access to the other party's
Confidential Matter hereunder shall be under contractual obligation not to
disclose or use such Confidential Matter except as directed by such other party.
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ARTICLE 8
TERM AND TERMINATION
8.01 Either party may terminate this Agreement at any time if the other
party fails to perform any material obligation, covenant, condition, or
limitation herein, provided such other party shall not have remedied its failure
within ninety (90) days after receipt of written notice of such failure.
8.02 If performance of this Agreement or any part hereof by either party
shall be rendered unenforceable or impossible under, or in conflict with any
law, regulation, or official action by any government agency having jurisdiction
over such party, then such party shall not be considered in default by reason of
failure to perform and the validity of all remaining provisions hereof shall not
be affected by such result.
8.03 Abbott may terminate this Agreement beginning three (3) years after
May 30th, 1989, upon ninety (90) days prior written notice. Such termination
shall not relieve ABBOTT of the obligation to pay royalties or make any other
payments owed to BSI which accrues prior to the termination date.
8.04 Unless earlier terminated as provided in Paragraphs 8.01 and 8.03
above, this Agreement shall continue: (a) with respect to issued patents under
PROPRIETARY RIGHTS, until the expiration of the last to expire patent included
within PROPRIETARY RIGHTS, and (b) with respect to unpatented aspects of
PROPRIETARY RIGHTS, perpetually.
8.05 Upon expiration or earlier termination of this Agreement, the
obligations under Article 7 hereof shall survive and continue in effect for the
longer of three (3) years following such expiration or termination, or seven (7)
years from the effective date of this Agreement.
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8.06 Neither party shall be liable in damages for, nor shall this
Agreement be terminable or cancellable by reason of, any delay or default in any
such party's performance hereunder if such default or delay is caused by events
beyond such party's reasonable control including, but not limited to, acts of
God, regulation or law or other action of any government or agency thereof, war
or insurrection, civil commotion, destruction of production facilities or
materials by earthquake, fire, flood or storm, labor disturbances, epidemic, or
failure of suppliers, public utilities or common carriers. Each party agrees to
endeavor to resume its performance hereunder if such performance is delayed or
interrupted by reason of such forces majeure as listed above.
ARTICLE 9
WARRANTIES
9.01 BSI warrants that BSI has good, clear title to the PROPRIETARY
RIGHTS.
9.02 Each party warrants and represents that it has the full and
unrestricted right to enter into this Agreement, and that the terms of this
Agreement are not inconsistent with any other contractual arrangement it may
have.
9.03 Nothing in this Agreement shall be construed as:
(a) A warranty or representation by BSI as to the scope or validity of
any claim or patent in PROPRIETARY RIGHTS;
(b) A warranty or representation by BSI that any product made, used, or
sold by ABBOTT under any license granted hereunder is or will be free from
infringement of patents of any third parties;
(c) An obligation to furnish any manufacturing or technical information
not encompassed within PROPRIETARY RIGHTS;
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(d) Conferring any right to use in advertising, publicity or otherwise
any trademark or trade name of BSI;
(e) Granting by implication, estoppel or otherwise any licenses or
rights under patents or other proprietary information of BSI other than those
included within PROPRIETARY RIGHTS; or
(f) A representation, a warranty or assumption of responsibility with
respect to use, sale or other disposition by ABBOTT, ABBOTT's AFFILIATES,
sublicensees, vendees or transferees of LICENSED PRODUCT.
9.04 BSI shall promptly notify ABBOTT if at any time BSI learns of any
matter which does or might materially and adversely affect or differ from the
representations and warranties made pursuant to this Article 9.
ARTICLE 10
PATENT INFRINGEMENT, INTERFERENCE & PROSECUTION
10.01 In the event that a party becomes aware of an infringement or
potential infringement of any patent included in PROPRIETARY RIGHTS, that party
shall inform the other in writing of all details available.
10.02 In the event of infringement by any third party of any patent
included in PROPRIETARY RIGHTS, BSI shall have the right, at BSI's own expense,
to enforce by appropriate legal proceedings or otherwise, such patent against
such third party infringer. All recoveries by way of costs, royalties, damages,
lost profits, royalties or settlements shall be retained by BSI. ABBOTT may, at
ABBOTT's own expense, be represented by ABBOTT's counsel, acting in an advisory
but not controlling capacity.
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10.03 In the event of infringement by any third party as described in
Paragraph 10.02, if BSI fails to proceed against such infringer within ninety
(90) days after receipt of a written request by ABBOTT to do so, or if BSI does
not exercise due diligence in legal proceedings instituted pursuant to Paragraph
10.02, then ABBOTT, at ABBOTT's own discretion, during the term of exclusivity
of any patent licensed under this Agreement, shall have the right but not the
obligation to prosecute the infringer by appropriate legal proceedings in the
name of BSI at ABBOTT's own expense, and may collect and retain, for ABBOTT's
own use, any and all recoveries by way of costs, damages, lost profits,
royalties or settlements. BSI, at BSI's own expense, may be represented in such
proceedings by BSI's own counsel, acting in an advisory but not controlling
capacity. BSI shall complete all acts and execute all documents as may be
necessary in order to permit ABBOTT to exercise ABBOTT's right pursuant to this
clause.
10.04 At ABBOTT's expense, ABBOTT shall prepare, file and prosecute, or
have prepared, filed and prosecuted by a patent lawyer in independent practice
who shall be nominated by ABBOTT and approved by BSI, any foreign or United
States patent application related to United States Patent Applications Serial
No. 467,220 (filed February 23, 1983) and Serial No. 356,459 (filed March 9,
1982), including without limitation any and all continuation, continuation-in
part, divisional, reissue and reexamination applications or the equivalent
thereof, and such expense shall include BSI's reasonable expense, having
ABBOTT's prior written approval, for BSI's attorney's review of such
applications and prosecution documents.
(a) Any patent which issues from such patent applications shall be
assigned to BSI, shall be included in PROPRIETARY RIGHTS and shall be subject to
the terms and conditions of this Agreement.
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(b) BSI shall disclose to ABBOTT, and the patent lawyer referred to
above, all information in BSI's possession pertaining to PROPRIETARY RIGHTS
which may be necessary for the preparation, filing and prosecution of such
patent applications.
(c) BSI and ABBOTT shall consult in the preparation, filing and
prosecution of such applications, and BSI shall cooperate with ABBOTT in
executing such documents and taking such other reasonable actions necessary or
appropriate to obtain patents issuing from such applications, provided that:
i) Each party shall promptly transmit to the other all official
communications sent to or received from any patent office, court or
opposing party,
ii) Each party shall submit to the other for consideration and advice
all applications and responses to official communications before
filing such applications and responses in sufficient time to enable
the receiving party to appropriately review the applications or
responses before such are filed,
iii) Each party shall file only those applications and responses approve
the other, which approval shall not be unreasonably withheld,
iv) ABBOTT shall reimburse BSI for its employee's time, its
out-of-pocket expenses (including reasonable travel and lodging
expenses) for efforts made under Article 10(b) and (c), including
any actions required by court order relating to any of such patents
or patent applications. For the time spent by BSI's technical
employees under 10(b), ABBOTT will reimburse BSI at a reasonable
rate (the rate on the
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date of execution being * per employee hour). ABBOTT will make
such reimbursements within sixty (60) days of receipt of BSI's
invoice,
v) BSI and ABBOTT shall pursue the broadest possible patent claims and
shall continue the prosecution of such applications as long as this
action is in the best interest of both parties, and
vi) ABBOTT shall do nothing to inhibit the issuance of the patent or
patents drawn to the originally claimed multi-zone invention of
Patent Application Serial No. 467,220 as amended or refiled.
(d) If at any time during the life of this Agreement, ABBOTT intends to
allow any such application or patent issuing therefrom to lapse or become
abandoned or forfeited without having first filed a substitute, ABBOTT shall
notify BSI of such intention at least sixty (60) days before the date on which
the application is due to lapse or to become abandoned or forfeited.
(e) If a patent claim is allowed for a single zone test strip device or
a method of using same, royalties due under Article 4.02 shall begin accruing no
later than forty-five (45) days following Notice of Allowability of such claims.
10.05 In consideration of ABBOTT's payments to BSI under this Agreement,
and the financial and other support provided by ABBOTT with respect to the
patent applications set forth in Paragraph 10.04, BSI shall make no claims
against and hereby waives any claim BSI may have or acquire against ABBOTT,
ABBOTT's employees or agents for injury, loss or damage resulting from acts or
omissions by ABBOTT, ABBOTT's employees or agents in
------------------
*Indicates that material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
SEC.
19
<PAGE>
connection with such patent applications prepared, filed or prosecuted in
accordance with the provisions set forth in Paragraph 10.04.
ARTICLE 11
NOTICES
11.01 Any notice required or permitted by this Agreement shall be in
writing. A notice shall be considered served when deposited in the national
postal system in a sealed envelope with sufficient postage affixed and addressed
to the party to whom such notice is directed at the post office address given
below:
If to BSI: Bio-Metric Systems, Inc.
9924 West 74th Street
Eden Prairie, MN 55344
If to ABBOTT: Director, Technology Assessment and Acquisition
Abbott Diagnostics Division
One Abbott Park Road
Abbott Park, IL 60064-3500
copy to: Office of General Counsel
Abbott Laboratories
One Abbott Park Road
Abbott Park, IL 60064-3500
11.02 Either party shall have the right to change the person and/or
address to which notices hereunder shall be given, by notice to the other party
in the manner set out in Paragraph 11.01.
ARTICLE 12
INTERPRETATION
12.01 This Agreement shall be construed and the rights of the parties
hereunder shall be determined in the State of Minnesota in accordance with the
laws thereof.
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12.02 All section captions or titles are inserted herein for reference
only and are without contractual significance or effect.
ARTICLE 13
ASSIGNMENT
13.01 Except where the assignee is a successor to substantially the
entire business to which this license pertains, a party hereto must have the
prior written consent from the other party in order to assign this Agreement in
whole or in part.
ARTICLE 14
ENTIRE AGREEMENT; MISCELLANEOUS
14.01 This writing constitutes the entire agreement between the parties
relating to the subject matter hereof. There are no other understandings,
representations, or warranties of any kind except as expressly set forth herein.
14.02 This Agreement may not be waived, altered, extended, or modified
except by written agreement of the parties.
14.03 Any waiver of any term or condition of this Agreement by either
party shall not operate as a waiver of any other term or condition, nor shall
any failure to enforce a provision hereof operate as a waiver of such provision
or of any other provision hereof.
14.04 Should any provision of this Agreement, or the application thereof,
to any extent be held invalid or unenforceable, the remainder of this Agreement
and the application thereof other than such invalid or unenforceable provisions
shall not be effected thereby and shall continue valid and enforceable to the
fullest extent permitted by law or equity.
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ARTICLE 15
PUBLIC DISCLOSURE OF AGREEMENT
15.01 No public disclosure of this Agreement shall be made by either
party without prior review and consent of the other party, which consent shall
not be unreasonably withheld. Notwithstanding the foregoing:
(a) Either party may disclose the existence and nature of this
Agreement to its shareholders, but only to the extent necessary to comply with
applicable securities laws:
(b) BSI may disclose any or all of the following information, but not
in greater detail than that which follows:
Minneapolis, Minnesota - October 17, 1990 - Bio-Metric
Systems, Inc. (BSI) announced it has entered into an agreement with
Abbott Laboratories, Abbott Park, Illinois, relating to diagnostic
products developed by BSI.
Bio-Metric Systems, Inc. of Minneapolis, Minnesota is a
privately-held company, developing advanced biological coatings and
diagnostic formats.
Abbott Laboratories is a world leader in diagnostics and
offers a broad and diversified line of human health care products and
services.
15.02 Neither party shall use the name of the other party in connection
with any commercial activity, advertising or sales promotion without the prior
written consent of the other party.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their respective duly authorized officers or representatives on the
respective dates indicated below.
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ABBOTT LABORATORIES BIO-METRIC SYSTEMS, INC.
By: /s/David V. Milligan By: /s/Dale R. Olseth
-------------------------- ---------------------------
David V. Milligan, Ph.D. Dale Olseth
Corporate Vice President President and
Diagnostic Products Chief Executive Officer
Research and Development
Date: 11-12-90 Date: 11-20-90
------------------------- ----------------------------
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June 11, 1992
Dale Olseth
President and Chief Executive officer
Bio-Metric Systems, Inc.
9924 West Seventy-Fourth Street
Eden Prairie, MN 55344
Dear Mr. Olseth,
The Amended License Agreement between Abbott Laboratories and Bio-Metric
Systems, Inc., executed November 11th, 1990 and November 20th 1990 respectively,
contains a typographical error. Article 1.01 (a) should read, "all foreign and
United States applications related in whole or in part to BSI's United States
Patent Applications Serial No. 467,229 (filed February 23, 1983) an Serial No.
356,459 (filed March 9, 1982)."
Your signature will confirm your acknowledgment of the error and your acceptance
of the change to our Amended License Agreement.
Please return one signed copy to my attention. If you have any questions,
please give me a call at 708-937-5437.
ABBOTT LABORATORIES BIO-METRIC SYSTEMS, INC.
By: /s/Brian B. Spear By: /s/Dale R. Olseth
-------------------------- ---------------------------
Brian B. Spear, Ph.D. Dale Olseth
Director, Technology President and
Assessment and Acquisitions Chief Executive Officer
Diagnostic Division
Date: June 25, 1992 Date: June 29, 1992
-------------------------- ---------------------------
<PAGE>
AMENDMENT TO THE BSI-ABBOTT
LICENSE AGREEMENT
The License Agreement between Bio-Metric Systems, Inc. (now known as BSI
Corporation) and Abbott Laboratories dated May 30, 1989, as amended November 20,
1990, is further amended as follows:
Delete Articles 4.04 and 4.05.
Add the following new Article 4.09:
4.09 ABBOTT shall have the right prospectively to credit against
royalties otherwise payable to BSI under Articles 4.01-4.03, inclusive, but only
against such royalties,* per calendar quarter or * of such royalties otherwise
due for such quarter, whichever is less, beginning with royalties for sales for
the calendar quarter beginning July 1, 1994, up to a maximum credit of *. The
right granted to ABBOTT in this Article 4.09 is accepted by ABBOTT as a final
settlement of all royalties payable to BSI for sales made through March 31, 1994
and as final settlement of all credits and offsets against such royalties for
sales made through March 31, 1994 that were taken or that could have been taken
by ABBOTT. In no event will BSI have any obligation to repay any of the
royalties received as of July 1, 1994.
Article 10.02 is replaced with the following new Article 10.02:
------------------
*Indicates that material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
SEC.
<PAGE>
10.02
a. In the event ABBOTT believes any third party is infringing any
patent included in PROPRIETARY RIGHTS, ABBOTT shall have the right, but not the
obligation, to prosecute the infringer by diligent and appropriate legal
proceedings, (including the Abbott Laboratories v. Biosite Diagnostics, Inc.,
currently pending in the United States District Court, N.D. IL), at ABBOTT's own
expense and in ABBOTT's own name, provided, however, that ABBOTT shall first
fully appraise BSI of the infringing product.
b. In the event that ABBOTT prosecutes such a proceeding and BSI
becomes a party, ABBOTT shall select counsel to represent BSI and shall
indemnify and hold harmless BSI from any damages, liabilities (excluding lost
royalties), cost and expense resulting from any such proceeding. ABBOTT will
provide BSI with copies of all pleadings and BSI may be represented by BSI's own
counsel, acting in an advisory but not controlling capacity. ABBOTT shall
promptly reimburse BSI for its costs of retaining outside counsel, as determined
under Article 10.02(d), in such proceedings. ABBOTT will retain the
decision-making power on behalf of ABBOTT and BSI in pursuit or settlement of
such a proceeding. All recoveries by way of cost, judgment, damages, lost
profits or settlements shall be retained by ABBOTT. Notwithstanding the
foregoing, ABBOTT will not indemnify BSI in the event such damages, liabilities,
cost and expense is the result of any proceeding (i) brought by BSI against
ABBOTT, or (ii) brought by the third party against BSI which is not related to
the subject matter of this License Agreement.
c. In the event that ABBOTT prosecutes such a proceeding and BSI does
not become a party, ABBOTT will provide BSI with copies of all pleadings and BSI
may be represented by BSI's own counsel, acting in an advisory but not
controlling capacity. ABBOTT shall promptly reimburse BSI for its costs of
retaining outside counsel, as determined under
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Article 10.02(d), in such proceedings. BSI's outside counsel's duties are
expected to be directed primarily to assist ABBOTT in the areas of document
discovery, witness preparation, attendance at depositions of BSI employees, and
preparing answers to interrogatories. BSI may request attendance of BSI counsel
at hearings and trial, however, reimbursement for such attendance shall require
the consent of ABBOTT, which consent shall not be unreasonably withheld.
d. The parties contemplate that BSI's outside counsel fees in any one
proceeding under Article 10.02(b) or 10.02(c) will not exceed * and *,
respectively. In the event that BSI's outside counsel fees in any one
proceeding under Article 10.02(b) or 10.02(c) exceed such amounts, BSI shall
bear the expense of fifty percent (50%) of such fees in excess of such amount.
e. For any proceeding brought under Article 10.02, ABBOTT shall have
the right to settle such litigation, but only upon the advance written
permission of BSI, which shall not be unreasonably withheld. Settlement by way
of sublicense from ABBOTT which provides BSI with at least a * prospective
royalty based on sales by the sublicensee or its designees shall not require
BSI's advance written permission. For any other settlement terms, ABBOTT and
BSI shall meet in good faith to determine mutually acceptable terms. In the
event of settlement by way of a sublicense, ABBOTT shall have the right to
recover the amount reimbursed to BSI under Articles 10.02(b), 10.02(c) and
10.02(d) for its outside counsel fees by reducing by * the royalty payments due
BSI resulting from said sublicense until such reimbursed amount has been fully
recovered by ABBOTT.
Article 10.03 is replaced with the following new Article 10.03.
------------------
*Indicates that material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
SEC.
3
<PAGE>
10.03 In the event of infringement by any third party as described in
Article 10.02, if ABBOTT fails to proceed against such infringer within one
hundred eighty (180) days after receipt of a written request by BSI to do so, or
if ABBOTT does not exercise due diligence in legal proceedings instituted
pursuant to Article 10.02 within sixty days (60) days after receipt of a written
request by BSI to do so, then BSI at its own discretion shall have the right but
not the obligation to prosecute the infringer by appropriate legal proceedings
in the name of BSI at BSI's own expense, and BSI may collect and retain for its
own use any and all recoveries by way of costs, damages, lost profits, past
royalties or settlements relating to the foregoing. ABBOTT, at ABBOTT's own
expense, may be represented in such proceedings by ABBOTT's own counsel, acting
in an advisory but not controlling capacity. ABBOTT shall complete all acts and
execute all documents as may be necessary in order to permit BSI to exercise
BSI's right pursuant to this clause.
IN WITNESS WHEREOF, the parties have caused this instrument to be executed
by their duly authorized officers or representatives on the dates indicated
below.
ABBOTT LABORATORIES BIO-METRIC SYSTEMS, INC.
By: /s/James Koziarz By: /s/Dale R. Olseth
-------------------------- ---------------------------
James Koziarz, Ph.D. Dale Olseth
Corporate Vice President President and
Diagnostic Products Chief Executive Officer
Research & Development
Date: 11/10/94 Date: 11/23/94
-------------------------- ---------------------------
4
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SECOND AMENDMENT TO
AMENDED LICENSE AGREEMENT
THIS SECOND AMENDMENT TO AMENDED LICENSE ("Second Amendment") shall be
effective April 19, 1996 ("Effective Date") and is entered into by and between
Abbott Laboratories, an Illinois corporation having principal place of business
at 100 Abbott Park Road, Abbott Park, Illinois 60064-3500 ("Abbott"), and BSI
Corporation, a Minnesota corporation having a principal place of business at
9924 West Seventy-Fourth Street, Eden Prairie, Minnesota 55344 ("BSI").
WHEREAS, BSI and Abbott entered into a License Agreement dated May 30, 1989
("License Agreement") pursuant to which Abbott acquired an exclusive license
under Proprietary Rights to make, have made, use and sell Licensed Products for
Diagnostic Applications;
WHEREAS, BSI and Abbott entered into an Amended License dated November 20,
1990 ("Amended License") which amended and superseded the License Agreement and
pursuant to which Abbott made a First Commercial Sale of a Licensed Product in
the Field of Human Diagnostics thereby eliminating the field of Human
Diagnostics from BSI's option under Paragraph 2.03 of the Amended License;
WHEREAS, BSI and Abbott entered into an Amendment to the BSI-Abbott License
Agreement dated November 23, 1994 ("First Amendment") which addressed certain
royalty and infringement issues; and
WHEREAS, BSI and Abbott desire to further amend the Amended License to
extend the term of Abbott's exclusivity under the license grant.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, the parties hereto agree as follows:
1. DEFINITIONS. The capitalized terms used herein shall have the same
meanings ascribed to them in the Amended License.
2. LICENSE TO ABBOTT. For a period of four (4) years following the
Effective Date of this Second Amendment, BSI shall not have the option to
convert Abbott's exclusive license under Paragraph 2.01 of the Amended
License to a non-exclusive license for the fields of Veterinary
Diagnostics, Food/Agricultural Diagnostics and Environmental Diagnostics.
Thereafter, BSI shall have such option under the same terms and conditions
set forth in Paragraph 2.03 of the Amended License.
3. LICENSE FEE. Not withstanding any other provisions of the Amended
License or the First Amendment, as consideration for extending the term of
exclusivity for the fields of Veterinary Diagnostics, Food/Agricultural
Diagnostics and Environmental
1
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Diagnostics, Abbott shall pay BSI a non-refundable, non-creditable license
fee of * within 30 days of execution this Amendment.
4. PREVIOUS AGREEMENT. Except as otherwise provided herein, all other
terms and conditions of the Amended License and the First Amendment shall
remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
Amended License to be executed by their duly authorized representatives as of
the later date written below.
ABBOTT LABORATORIES BIO-METRIC SYSTEMS, INC.
By: /s/James Koziarz By: /s/Andrew B. Summerville
-------------------------- ---------------------------
James Koziarz, Ph.D. Andrew B. Summerville
Corporate Vice President Vice President
Diagnostic Products
Research & Development
Date: 4/18/96 Date: Apr. 11, 1996
-------------------------- ---------------------------
*Indicates that material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
SEC.
2