Research & License Agreement

EXHIBIT 10.9


Portions of this exhibit were omitted and filed separately with the Secretary of the Commission pursuant to an application for confidential treatment filed with the Commission pursuant to Rule 406 under the Securities Act of 1933Financial Printing GroupFinancial Printing GroupPortions of this exhibit were omitted and filed separately with the Secretary of the Commission pursuant to an application for confidential treatment filed with the Commission pursuant to Rule 406 under the Securities Act of 1933. Such portions are marked by a series of asterisks.


RESEARCH AND LICENSE AGREEMENT
------------------------------


This Research and License Agreement, dated April 26, 1995 (the "Agreement"), is entered into among SRI International, a California nonprofit public benefit corporation ("SRI"), having a place of business located at 333 Ravenswood Avenue, Menlo Park, California 94025-3493, the David Sarnoff Research Center (a wholly owned subsidiary of SRI), a Delaware corporation ("Sarnoff"), having a place of business located at 201 Washington Road, Princeton, New Jersey 08540 and SolarCare Technologies Corporation, a Delaware corporation ("STC"), having a place of business located at 1745 Eaton Avenue, Bethlehem, Pennsylvania 18018.


W I T N E S S E T H :


Whereas, SRI and Sarnoff own or have rights in certain patent rights and know-how relating to Up-converting phosphor reporters (Labels), Probes and instrumentation for use in Diagnostics applications.


Whereas, STC has licensed certain patent rights and know-how relating to Up-converting phosphor reporters for use in diagnostics applications.


Whereas, STC desires to financially support certain research by SRI and Sarnoff regarding Up-converting phosphor reporters (Labels), Probes and instrumentation, on the terms and subject to the conditions of the Agreement.


Whereas, SRI and Sarnoff are willing to grant a license to STC under SRI's and Sarnoff's rights in such patent rights and know-how, together with the inventions and other results of such research, to Up-converting phosphor reporters (Labels), Probes and instrumentation, on the terms and subject to the conditions of the Agreement.


Now, Therefore, in consideration of the foregoing premises and the mutual covenants herein contained, the parties hereto, agreeing to be legally bound hereby, agree as follows:


For purposes of the Agreement, the terms defined in this article shall have the respective meanings set forth below:


1.1. "Affiliate" shall mean, with respect to any Person, any other Person which directly or indirectly controls, is controlled by, or is under common control with, such Person. A Person shall be regarded as in control of another Person if it owns, or directly or indirectly controls, at least fifty percent (50%) of the voting stock or other ownership interest of the other Person, or if it directly or indirectly possesses the power to direct or cause the direction of the management and policies of the other Person by any means whatsoever. For purposes of this Agreement, Sarnoff shall not be deemed to be an Affiliate of SRI.


1.2. "Blocking Patent" shall mean any patent rights owned or controlled by a Third Party, which are claimed to be infringed by the exercise of the rights granted hereunder to practice any process or method, or to make, use or sell any composition or apparatus under the Licensed Patents or Licensor Improvements.


1.3. "Commercial Sale" shall mean, with respect to any Product, the sale for use or consumption by the general public of such Product, provided, however, that sales of Product for research, development, investigation, clinical trials and or evaluation shall not be deemed sales for use or consumption by the general public, unless the price for such Product is in excess of Cost plus twenty percent (20%).


1.4. "Cost" shall mean the full value of all direct and indirect expenses relating to the manufacture of a Product, plus thirty percent (30%) allocation (based on sale price) for overhead expenses.


1.5. "Development Period" shall mean the period commencing on the Effective Date and expiring on the ****************** of the Effective Date, unless extended pursuant to Section 3.4 or terminated sooner pursuant to Sections 13.3 and 13.6.


1.6. "Development Program" shall mean the research and development program described generally in Article 3 and defined, in particular, in the Task Orders attached hereto as Exhibit A, as amended from time to time in accordance with this Agreement.


1.7. "Diagnostic(s)" shall mean the detection of soluble, suspended or particulate substances, cells, biological macromolecules and/or other analytes, including but not limited to proteins, carbohydrates, pharmaceuticals, nucleic acids, bacteria, viruses and eukaryotic cells.


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1.8. "Effective Date" shall mean the date of this Agreement, as first written above.


1.9. "FDA" shall mean the United States Food and Drug Administration, or the successor thereto.


1.10. "Field" shall mean any and all Diagnostic applications that involve the use of Up-converting phosphor reporter (Label), Probe and/or Labelled Probe compositions, materials, combinations, methods and/or processes and the development, manufacture and sale of apparatus and compositions for use in such Diagnostic applications.


1.11. "First Commercial Sale" shall mean the first Commercial Sale by STC, its Affiliates or licensees.


1.12. "Government Program(s)" shall mean grants, contracts and/or other arrangements sought from or awarded directly or indirectly by various departments, agencies or instrumentalities of the United States Government or the several states in connection with Diagnostics applications within the Field.


1.13. "Improvements" shall mean any and all inventions, discoveries, ideas, processes, methods, compositions, formulae, techniques, information and data, whether or not patentable, conceived, developed or reduced to practice during the term of this Agreement that beneficially change or enhance the economic and/or technical attributes of the Products, the use of the Products and/or the manufacture of the Products arising out of or in connection with (a) the Development Program, (b) any activity otherwise funded by STC under this Agreement, (c) any activity in connection with the use of the STC Patent Rights or STC Know-How, (d) any activity in connection with the use of the Licentec Rights and/or (e) as set forth in Section 5.1, any activity in connection with any Government Program.


1.14. "Instrument Product" shall mean a light emitting apparatus for use in the Field, which if made, used or sold would infringe one or more Valid Patent Claims of a Licensed Patent, but for the license granted by this Agreement, or which otherwise uses or incorporates Licensed Know-How.


1.15. "Label" shall mean any chemical substituent that produces, under appropriate excitation conditions, a detectable optical signal.


1.16. "Labelled Probe" shall mean a combination comprising one or more Labels attached to a Probe or one or more Probes attached to a Label.


1.17. "Licensed Know-How" shall mean the SRI Know-How and the Phosphor Know-How.


1.18. "Licensed Patents" shall mean the SRI Patents and the Phosphor Patent.


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1.19. "Licensors" shall mean Sarnoff and SRI, jointly and severally.


1.20. "Licensor Improvements" shall mean any and all Improvements either (i) conceived or reduced to practice by employees or others acting by or on behalf of SRI and/or Sarnoff, either alone or jointly with others or (ii) acquired by SRI and/or Sarnoff by acquisition, license or otherwise.


1.21. "Licentec Rights" shall mean the rights granted to STC pursuant to that certain Research and License Agreement being entered into contemporaneously herewith, among STC, TPM Europe Holding B.V. ("TPM") and Rijksuniversiteit Leiden ("Leiden") to practice certain processes or methods, and to make, have made, use or sell certain compositions.


1.22. "Materials" shall mean phosphor particles and compositions, biological reagents and other matter, laser diodes and other electronic and optical devices to be supplied by SRI or Sarnoff to STC under this Agreement.


1.23. "Net Sales" shall mean, with respect to any Product, the proceeds received by STC from the Commercial Sales of Product to independent customers who are not Affiliates, less (a) credits, allowances, discounts and rebates to, and chargebacks from the account of, such independent customers for spoiled, damaged, out-dated, rejected or returned Product; (b) actual freight and insurance costs incurred in transporting such Product in final form to such customers; (c) cash, quantity and trade discounts; and (d) sales, use, value- added and other taxes or governmental charges incurred in connection with the exportation or importation of such Product in final form.


1.24. "Person" shall mean an individual, corporation, partnership, trust, business trust, association, joint stock company, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, government, governmental agency, authority or instrumentality, or any other form of entity not specifically listed herein.


1.25. "Phosphor Know-How" shall mean all technology, information and data, which is not generally known, including but not limited to discoveries, formulae, procedures, protocols, techniques, methods and results of experimentation and testing, which are necessary or useful for STC (i) to make use or sell in the Field, any composition, which is described in or related to the Phosphor Patent, in which Sarnoff or SRI has an ownership or licensed interest as of the date or during the term of this Agreement or (ii) to practice any process related to any such compositions which are described in or related to the Phosphor Patent.


1.26. "Phosphor Patent" shall mean (a) pending ******************** ****************************************************************************** *************************************, and all corresponding foreign patent applications heretofore or hereafter filed or having legal force in any country owned by or licensed to Sarnoff, (b) all patent applications that claim any Improvement heretofore or hereafter filed or having legal force in any country owned by or licensed to Sarnoff, (c) all patents that have issued or in


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the future issue from the patent applications described in clauses (a) and (b) above, including utility, model and design patents and certificates of invention, and (d) all divisionals, continuations, continuations-in-part, reissues, renewals, extensions or additions to any such patent applications and patents; all to the extent and only to the extent that Sarnoff has the right to grant licenses, immunities or other rights thereunder as of the date or during the term of the Agreement.


1.27. "Probe" shall mean a binding component which binds preferentially to one or more targets with an affinity sufficient to permit discrimination of Labelled Probe bound to a target from non-specifically bound Labelled Probe (i.e., background).


1.28. "Product(s)" shall mean the Instrument Product and the Test Product.


1.29. "Royalty Term" shall mean, with respect to each Product in each country, the period of time equal to the longer of (a) ************** from the date of the First Commercial Sale of such Product in such country or (b) the term that one or more Valid Patent Claims of a Licensed Patent would infringe the manufacture, use or sale of a Product, but for the license granted by this Agreement.


1.30. "SRI Know-How" shall mean all technology, information and data, which is not generally known, including but not limited to discoveries, formulae, procedures, protocols, techniques, methods and results of experimentation and testing, which are necessary or useful for STC to practice in the Field any process or method, or to make use or sell in the Field, any composition, which is described in or related to (i) the SRI Patents or (ii) ******************************************************************************* ******************************************************************************* *****************, in all cases, in which Sarnoff or SRI has an ownership or licensed interest as of the date or during the term of this Agreement.


1.31. "SRI Patents" shall mean (a) pending ************************** ******************************************************************************** ***********************************************************************, and all corresponding foreign patent applications heretofore or hereafter filed or having legal force in any country owned by or licensed to SRI or Sarnoff, (b) all patent applications that claim any Improvement heretofore or hereafter filed or having legal force in any country owned by or licensed to SRI or Sarnoff, (c) all patents that have issued or in the future issue from the patent applications described in clauses (a) and (b) above, including utility, model and design patents and certificates of invention, and (d) all divisionals, continuations, continuations-in-part, reissues, renewals, extensions or additions to any such patent applications and patents; all to the extent and only to the extent that SRI or Sarnoff has the right to grant licenses, immunities or other rights thereunder as of the date or during the term of the Agreement.


1.32. "STC Know-How" shall mean all technology, information and data, which is not generally known, including, but not limited to, formulae, procedures, protocols, techniques


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and results of experimentation and testing, which constitute an Improvement conceived and reduced to practice during the term of this Agreement by employees or others acting on behalf of STC, either alone or jointly with others (but not including Improvements conceived by employees or others acting on behalf of Licensors, either alone or jointly with others), in which STC has an ownership or licensed interest, but shall not include any Licentec Rights.


1.33. "STC Patent Rights" shall mean (a) all patent applications that claim any Improvement filed or having legal force in any country during the term of this Agreement, owned by or licensed to STC, (b) all patents that have issued or in the future issue therefrom, including utility, model and design patents and certificates of invention and (c) all divisionals, continuations, continuations-in-part, reissues, renewals, extensions or additions to any such patent applications and patents; all to the extent and only to the extent that STC has the right to grant licenses, immunities or other rights thereunder as of the date or during the term of the Agreement, but shall not include any Licentec Rights.


1.34. "Territory" shall mean world-wide.


1.35. "Test Product" shall mean a composition for use in the Field, which if made, used or sold would infringe one or more Valid Patent Claims of a Licensed Patent, but for the license granted by this Agreement, or which otherwise uses or incorporates Licensed Know-How.


1.36. "Third Party" shall mean any Person other than SRI, Sarnoff, STC, TPM, Leiden, GIB (as such term is defined in Section 17.5) and their respective Affiliates and employees.


1.37. "Up-converting" shall mean the excitation of any phosphor particle by light, which produces emission resulting light having a shorter wavelength than the wavelength of the excitation light.


1.38. "Valid Patent Claim" shall mean a claim of an issued and unexpired patent, which has not been held revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, or which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise.


ARTICLE 2


REPRESENTATIONS AND WARRANTIES
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2.1. Licensors represent and warrant to STC, as follows:


2.1.1. Licensors own and hold good, marketable and legal title to the Licensed Patents and Licensed Know-How.


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2.1.2. Licensors have not previously granted any rights (and are not bound by any agreement to grant any rights) in the Licensed Patents or Licensed that conflict with the rights granted to STC hereunder.


2.1.3. Each of Licensors is a corporation, duly organized, validly existing and in good standing under the laws of its state of incorporation, with the power and authority to own the Licensed Patents and the Licensed Know-How and to sign, deliver and perform all of its obligations under this Agreement.


2.1.4. Each of Licensors has taken all necessary actions on its part to authorize the execution, delivery and performance of the obligations undertaken in this Agreement. This Agreement has been duly, executed and delivered by and on behalf of each of Licensors and constitutes the legal, valid and binding obligations of Licensors, enforceable against them in accordance with its terms.


2.1.5. All consents, approvals, licenses and authorizations of United States government agencies and other persons required to be obtained in connection with this Agreement have been properly obtained and are in full force and effect.


2.1.6. The execution, delivery and performance of this Agreement (A) does not, in any material respect, conflict with or violate any applicable statute, law, rule or regulation (B) does not conflict with or violate any organizational, charter or internal governance document of each of Licensors and (C) does not conflict with or constitute a default under any contract, agreement or obligation of each of Licensors.


2.1.7. As of the Effective Date, there is no litigation, other legal action or claim pending, threatened or reported contesting the validity of or right to use the Licensed Patents and/or Licensed Know-How and there has been no notice of any infringement upon or conflict with any asserted rights of Third Parties.


2.1.8. To the best knowledge of Sarnoff and SRI, each of Licensors has delivered to STC all information and documents in their possession or under their control prior to December 31, 1994 relating to the Licensed Patents and Licensed Know-How.


2.2. STC represents and warrants to Licensors, as follows:


2.2.1. STC has the legal right to use and sublicense the Licentec Rights, in accordance with the terms of this Agreement.


2.2.2. STC is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware, with the power and authority to sign, deliver and perform all of its obligations under this Agreement.


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2.2.3. STC has taken all necessary actions on its part to authorize the execution, delivery and performance of the obligations undertaken in this Agreement. This Agreement has been duly executed and delivered by and on behalf of STC and constitutes legal, valid and binding obligations enforceable against STC in accordance with its terms.


2.2.4. All consents, approvals, licenses and authorizations of United States governmental agencies and other persons required to be obtained in connection with this Agreement have been properly obtained and are in full force and effect.


2.2.5. The execution, delivery and performance of this Agreement (A) does not, in any material respect, conflict with or violate any applicable statute, law, rule or regulation, (B) does not conflict with or violate any organizational, charter or internal governance document of STC and (C) does not conflict with or constitute a default under any contract, agreement or obligation of STC.


ARTICLE 3


DEVELOPMENT PROGRAM
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3.1. Conduct of Research. The Development Program to be performed by
------------------- Licensors shall be administered through Sarnoff and during the Development Period, each of Sarnoff and SRI shall use their commercially reasonable efforts to conduct the Development Program in accordance with the tasks set forth on Exhibit A (each, a "Task" and, collectively, the "Tasks"), as such Exhibit may be amended, in writing, from time to time by Task Orders (as such term is hereinafter defined). Each Task shall describe in reasonably sufficient detail (a) the research activities to be conducted and the objectives thereof, (b) the responsibilities of the parties, the principal researchers (if any) and any specific resources required to conduct the research activities, (c) the total funding and the payment schedule therefor and (d) an estimated schedule for such activities. Sarnoff and SRI shall conduct the Development Program in good scientific manner, and in compliance in all material respects with all requirements of applicable laws, rules and regulations. Because the research services to be performed are of an advisory or experimental nature, Sarnoff and SRI do not warrant that the Development Program, in whole or in part, will be successful or achieve the objectives set forth on Exhibit A.


3.1.1. From time to time during the term of the Development Period, (i) STC and Sarnoff may mutually agree on the scope of new Tasks to be conducted by Sarnoff to be included in the Development Program and (ii) STC and SRI may mutually agree on the scope of new Tasks to be conducted by SRI to be included in the Development Program.


3.1.2. Each new Task shall be in writing ("Task Order") and shall reference the Agreement and describe in reasonably sufficient detail (a) the research activities to be conducted and the objectives thereof, (b) the responsibilities of the parties, the principal researchers (if any) and any specific resources required to conduct the research activities, (c) the total funding and the payment schedule therefor and (d) an estimated schedule for such activities.


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3.1.3. STC and SRI or Sarnoff, as the case may be, shall execute a copy of each mutually acceptable Task Order which thereafter shall be incorporated in and made a part of this Agreement.


3.1.4. Upon Sarnoff's receipt of a fully-executed copy of the Task Order and any initial research payment required for such Task, Sarnoff and/or SRI shall initiate each new Task under the Development Program.


3.1.5. Licensors shall ensure that all of their respective employees and independent contractors have executed and delivered binding agreements agreeing to assign all intellectual property rights to Sarnoff or SRI, as the case may be, and to promptly report the conception and reduction to practice of all discoveries and inventions to the Sarnoff or SRI Intellectual Property Office, as the case may be.


3.2. Funding. In consideration of the participation of Sarnoff and
------- SRI in the Development Program, STC agrees to pay to Sarnoff a research fee of two hundred thousand dollars ($200,000) for the work to be performed during the first year of this Agreement (the "Year 1 Fee"). The Year 1 Fee shall be paid to Sarnoff, as set forth below. Sarnoff shall not incur expenses in conducting the Development Program in excess of such total amount, and STC shall have no obligation to reimburse Sarnoff for expenses incurred in excess of such total amount, unless otherwise expressly agreed to in writing by both parties. If it appears to Sarnoff that the Development Program to be conducted during the first year of this Agreement cannot be completed without incurring expenses in excess of such total amount, Sarnoff shall notify STC, and STC shall determine whether (a) to discontinue the Development Program when such total amount has been spent, (b) to authorize Sarnoff to spend additional amounts, or (c) to revise the scope of the Development Program, as appropriate. Such Year 1 Fees are non- refundable and non-creditable against future royalties, and following an initial payment by STC to Sarnoff of one hundred thousand dollars ($100,000) within 7 days of the Effective Date, Sarnoff and SRI shall initiate work on the Development Program. Such initial payment shall be applied to the Tasks in accordance with Exhibit A and subsequent Task Orders. Thereafter, all future payments by STC will be based on the Task Order schedule for payment terms as called for under Section 3.1.2 (c) above.


3.3. Second Year Funding. Not less than sixty (60) days prior to the
------------------- expiration of the first year of the Development Period, Sarnoff shall present a written development proposal in the form of proposed Task Orders, for the second year effort. STC shall commit to a research fee of three hundred thousand dollars ($300,000) for the work to be performed during the second year (the "Year 2 Fee") to maintain the license granted herein, except in the event that the Development Program is terminated or modified by STC pursuant to Sections 13.3 and 13.6 or the second following sentence. The Year 2 Fee shall be paid in accordance with the last sentence of this Section 3.3. Notwithstanding the commitment of the Year 2 Fee and, in addition to the rights of STC set forth in the second sentence of this Section 3.3, STC may request that the Year 2 Fee be reduced to an amount less than three hundred thousand dollars ($300,000) in the event that Sarnoff and SRI have failed to substantially perform the Development Program during the first year of the Development


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Program. In such case, a new Development Program for the second year may be entered into by written consent of the Parties. The Year 2 Fee is non-refundable and non-creditable against future royalties. The payment by STC of the Year 2 Fee will be in accordance with the terms of the Task Orders for the second year of the Development Program.


3.4. Renewal. By mutual written agreement and consent of the
------- Parties, the Development Program may be extended beyond the Development Period for additional periods of one (1) year each. If STC desires to renew the Development Program, STC shall give Sarnoff written notice of such election not less than sixty (60) days prior to the expiration of the then current Development Period, as applicable. Sarnoff shall have thirty (30) days to present a written development proposal in the form of proposed Task Orders for the renewal year.


3.5. Records. Sarnoff, on behalf of the Licensors, shall maintain
------- records, in sufficient detail and in good scientific manner, which shall reflect all work done and results achieved in the performance of each Task included in the Development Program (including all data in the form required under all applicable laws and regulations).


3.6. Meetings and Progress Reports. During the term of the
----------------------------- Development Program, Sarnoff and SRI shall keep STC generally informed of the progress under each Task, including telephonic conferences or other communications at STC's request and meetings at Sarnoff, SRI or STC, at STC's request. The parties will meet approximately four times a year, but in no case shall there be (i) more than four (4) months between meetings or a delay of more than one (1) month from the date of completion of a Task, except as mutually agreed in writing. The first ...