EXHIBIT 10.22
AGREEMENT
THIS AGREEMENT is made as of this 3rd day of October, 1996, by and between
APPLIED IMAGING CORP. ("Applied"), a corporation, with its principal place of
business located at 0000 Xxxxx Xxxxxx, Xxxxxxxx X, Xxxxx Xxxxx, Xxxxxxxxxx
00000, and XXXXXXXX X. XXXXXX, M.D. ("Golbus"), an individual with a mailing
address at 00 Xxx Xxx Xxxxxxxx, Xxxxxxx, Xxxxxxxxxx 00000.
W I T N E S S E T H:
WHEREAS, Golbus owns certain intellectual property and trade secret rights
in the concept and techniques of using anti-embryonic hemoglobin antibodies in
the process of identifying fetal cells in the maternal blood, and
WHEREAS, Applied desires to acquire Golbus' intellectual property and trade
secret rights in such concept and techniques and any patents which may be issued
with respect thereto.
NOW, THEREFORE, it is hereby agreed as follows:
1. Effective Date. This Agreement shall be effective as of the date first
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above written.
2. Definitions. In this Agreement the following words and expressions
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shall be construed as follows:
a. "Invention" shall mean the concept and techniques of using
anti-embryonic hemoglobin antibodies, directed against either or both of the
epsilon or zeta chains, in the process of identifying fetal cells in the
maternal blood.
b. "Net Sales" shall mean the gross revenues received by Applied from
the sale of Products for prenatal and other genetic testing which utilize the
Invention or which are produced by a method covered by the Invention, less sales
and/or use taxes actually paid and amounts allowed or credited due to returns
(not to exceed the original billing or invoice amount).
c. "Patent Rights" shall mean the patent applications to be filed in
the United States and other jurisdictions which are based upon the Invention and
all United States and foreign patents resulting from such patent applications
including any division, continuation, continuation-in-part, or reissue thereof,
or substitute therefor.
d. "Product" shall mean a test or product for identifying fetal cells
in the maternal blood which utilizes the Invention. The term "Product" shall
include a combination
1.
product or test which utilizes the Invention and also utilizes Applied's
enrichment technology. However, the term "Product" shall not include Applied's
instrumentation technology related to the fetal cells or maternal blood and, to
the extent sold separately, shall not include (i) Applied's tests or products
relating to nucleic acid probes for identification of fetal nucleic acids, and
(ii) Applied's enrichment technology to be used on cells other than fetal cells.
e. "Trade Secret Rights" shall mean any and all information relating
to the Invention that derives independent economic value, actual or potential,
from not being generally known to persons who can obtain economic value from its
disclosure or use, whether patentable or not, and shall include all of the
information and documentation relating to the Invention which has been or will
be disclosed or made available by Golbus to Applied.
3. Assignment.
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x. Xxxxxx hereby agrees to assign all of his Trade Secret Rights and
Patent Rights in the Invention to Applied in exchange for the considerations set
forth below.
x. Xxxxxx agrees to assist Applied in prosecuting patent applications
for the Invention and agrees to provide general technical assistance relating to
the Invention. Except as otherwise specifically provided herein, Golbus shall be
reimbursed for reasonable out-of-pocket costs associated with assisting Applied
in prosecuting patent applications. Golbus shall not be obligated to provide any
services to Applied under the terms of this Agreement other than as set forth
in the first sentence of this subsection.
4. Application for U.S. Patent.
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a. At Applied's cost and using Applied's patent counsel Golbus shall
in his own name apply for a United States patent for the Invention including, if
possible, the production of specific anti-embryonic hemoglobin antibodies. Upon
30 days' prior written notice given by Applied after Applied has expended not
less than $10,000, Applied may advise Golbus that it will no longer finance
future costs associated with the prosecution of the patent application in which
case Golbus shall have the right to either continue to prosecute the patent
application at his own expense or abandon the prosecution of the patent
application. Applied's decision not to continue to finance the cost of
prosecuting the patent application shall not affect Applied's remaining rights
and obligations under the terms of this Agreement, including Applied's
obligations to pay royalties under the provisions of Section 6(b) hereof. In the
event that Golbus elects to continue to prosecute the patent application at his
own
2.
expense, Golbus shall have the right to continue to use Applied's patent
counsel in such prosecution and unless at that time there is a bona fide
dispute between Golbus and Applied in connection with this Agreement, Applied
agrees to waive any claim that it may have that Golbus's use of Applied's
patent counsel solely for such purpose will result in a conflict of interest
by such patent counsel.
b. In the event that Applied has advised Golbus that it will no
longer finance future costs associated with the prosecution of the United
States patent application, if Golbus elects to continue the patent application
prosecution at his own expense it is agreed that if a United States patent is
ultimately issued, that the patent shall, upon issuance, be assigned by Golbus
to Applied in exchange for the considerations set forth below (including
Golbus's right to exercise the non-qualified stock option as set forth in
Section 5(d)) and Applied reimbursing Golbus for all reasonable expenses
incurred by Golbus in connection with his continued prosection of the patent
application.
5. Applied Obligations.
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a. Applied will use reasonable business efforts to develop a test
for fetal cells in the maternal circulation utilizing, among other concepts
already patented by Applied, the Invention.
b. Applied shall have the right, but not the obligation, to apply for
foreign patents on the Invention. All patents obtained with respect to the
Invention shall be the sole and exclusive property of Applied, subject to the
provisions of this subsection and the obligations of Applied to pay royalties to
Golbus under the terms of this Agreement. Except as set forth above, all costs
relating to the filing, prosecuting and maintaining of such patents shall be the
obligation of Applied. Applied will keep Golbus apprised of the status of all
patent applications and will immediately advise Golbus if and when the first
patent related to the Invention is issued. If Applied elects not to apply for
foreign patents on the Invention, Golbus shall have the right to apply for such
patents and, if any patents are issued in connection with such applications,
Applied shall have the right to have such patents assigned to Applied. In the
event Applied exercises its right to have one or more of such foreign patents
assigned to Applied, Applied shall be obligated to reimburse Golbus for all
reasonable expenses incurred by Golbus in connection with his prosecution of
such foreign patent applications.
c. If Golbus or Applied is successful in obtaining one or more
patents on the Invention, Applied shall use reasonable business judgment to
exploit the Invention, either
3.
through the manufacture and sale of Products or the licensing of the patents.
d. Applied hereby grants to Golbus a five year non-qualified stock
option to purchase 40,000 shares of Applied common stock, which will become
exercisable beginning on the date that Golbus or Applied obtains a United
States patent regarding the Invention. The share price for the option will be
at 10% below the share price of the next private or public sale of Applied
stock if such sale occurs within six months from the date of this agreement or
at $4.25 per share if there is no such sale. If a United States patent for
the Invention is not obtained within four years and nine months from the date
hereof, the option will not expire until 90 days after the date that Golbus or
Applied ultimately obtains a patent on the Invention, provided, however, that
notwithstanding the foregoing, the non-qualified stock option shall expire on
the date that Golbus and Applied abandon all United States patent applications
with respect to the Invention. In the event a patent is not issued, the
non-qualified stock option will become fully vested on the eighth anniversary
of Golbus' continued employment with Applied.
6. Royalties.
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a. For a period equal to the term of the first United States patent
obtained with respect to the Invention, if such a patent is ultimately issued,
Applied will pay a royalty to Golbus of $1 per individual Product for all
Products sold by Applied, covered by the patent claims. This shall include
not only direct sales but sales by agents or marketing partners of Applied.
However, royalties will not exceed 2% of Applied's Net Sales.
b. If no United States patent pertaining to the Invention is
obtained by Golbus or Applied, then for the period until any entity markets
and sells a competing product for identifying fetal cells in the maternal
blood which utilizes anti-embryonic hemoglobin antibodies, Applied will pay a
royalty to Golbus of $1 per individual Product for all Products sold by
Applied which utilize the Invention. This shall include not only direct sales
but sales by agents or marketing partners of Applied. However, royalties will
not exceed 2% of Applied's Net Sales.
c. In no event shall Golbus be entitled to more than one royalty on
the sale of the same individual Product.
d. For a period equal to the term of the patent described above, if
such a patent is issued, Applied will pay Golbus 33 1/3% of any royalties that
Applied receives from licensing the Invention or antibodies related to the
Invention, provided that if the royalty received by Applied is based upon the
number of individual Products sold by the licensee or its sublicensees, then
the royalty due Golbus shall not exceed $1 per Product sold. For purpose of
this subsection any amounts
4.
received by Applied from third parties for infringement of any of patents
issued to Applied in connection with the Invention shall be deemed royalties
that Applied receives from licensing the Invention or antibodies related to
the Invention, provided, however, that Applied shall be entitled to deduct
from the amounts received for infringement the reasonable costs which Applied
incurs in enforcing its patent rights against such third party.
e. If, in order to exploit the Invention, Applied must pay
royalties to a third party, the royalty payments to Golbus hereunder shall be
reduced by a mutually agreeable percentage. If the percentage can not be
agreed upon, the reduction shall be arbitrated in accordance with the
provisions of section 14.
7. Warranties and Representations.
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x. Xxxxxx warrants and represents that:
(1) To the best of his knowledge, he is the owner of the
Invention, Patent Rights, and Trade Secret Rights being transferred to Applied
under the terms of this Agreement, and has the right to apply for patents on
the Invention in his own name;
(2) Except as previously disclosed in writing to Applied,
Golbus knows of no fact which does or could materially adversely affect the
rights granted to Applied under this Agreement;
(3) The execution, delivery, and performance of this Agreement
do not conflict with, violate, or breach any agreement to which Golbus is a
party; and
(4) Golbus has not heretofore entered into any agreement with
any party other than Applied with respect to the Invention, Patent Rights, and
Trade Secret Rights of this Agreement and has the requisite authority to enter
into and perform the terms of this Agreement including the right to assign his
interests to Applied.
b. Applied warrants and represents that Applied has a bona fide
interest in obtaining a United States patent with respect to the Invention and
in commercializing the Invention.
c. THE PARTIES MAKE NO REPRESENTATIONS OR WARRANTIES OF COMMERCIAL
UTILITY, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, OR THAT THE
USE OF THE INVENTION, PATENT RIGHTS, OR TRADE SECRET RIGHTS WILL NOT INFRINGE
ANY PATENT OR OTHER PROPRIETARY RIGHTS OF OTHERS. THE PARTIES MAKE NO
REPRESENTATIONS OR WARRANTIES THAT THE INVENTION IS PATENTABLE.
5.
8. Publication. Applied recognizes that abstracts co-authored by Golbus
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describing work utilizing the Invention have been submitted for publication and
may be published as early as October 15, 1996.
9. Records.
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a. Applied shall keep true and detailed accounts and records of its
operations relating to the Invention and of the royalties due and payable to
Golbus under this Agreement. Applied shall deliver to Golbus a written
statement thereof within 60 days after the end of each fiscal quarter containing
such detail as Golbus may reasonably request and shall at the time of the
delivery of the statement pay the royalties shown to be due thereunder. Such
statement shall include at least (i) the quantities of Products that have been
sold, (ii) the xxxxxxxx thereon that constitute gross sales, (iii) the amounts
received in connection with the Invention from third party other than in
connection with sales by Applied, and (iv) the calculation of royalties due
Golbus hereunder.
b. Should Applied default in the payment of the royalties due Golbus,
then the amount due shall bear interest at the rate of 10% per annum from the
last day of the said period until payment of such amount is made to Golbus.
c. All amounts payable hereunder by Applied shall be payable in
United States dollars without deduction for taxes, assessment's fees, or charges
of any kind other than such amount (if any) as Applied is required to deduct or
withhold for Federal, state or local income tax purposes. If restrictions on the
transfer of currency exist in any country so as to prevent Applied from making
payment in United States dollars, Applied may make the relevant payments due for
such country in its local currency and deposit such payments in a local bank or
other depository designated by Golbus.
x. Xxxxxx shall have the right, at his own expense, during regular
business hours to examine or cause to be examined the books of Applied and its
licensees, if any, for the purpose of verifying royalty statements and earned
royalties. Golbus and his agents shall maintain all information received during
such examination in confidence. Applied shall promptly pay any underpayments
discovered by the audit, together with interest at the rate of 10% per annum. If
the audit discloses an underpayment of 5% or more, Applied shall pay the
reasonable costs of the audit and thereafter Applied shall, at its own expense,
obtain and provide Golbus annually a certificate by Applied's external auditors
certifying that the statements provided to Golbus under subsection (a) above are
a true account of Applied's sales and of the royalties due Golbus hereunder.
6.
10. Term and Termination.
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a. The term of this Agreement shall extend from the Effective Date to
the full end of the term for the last to expire patent. If no patents are
ultimately issued, this Agreement shall extend for a period from the Effective
Date to the date seven years from the date of the first sale of Products
utilizing the Invention and at the end of the seven year period, Applied shall
have a paid-up license and shall owe no further royalties to Golbus. In the
event of any material breach of this Agreement by either party, the other party
may terminate this Agreement by giving 60 days' prior written notice thereof
and/or pursue any other remedies and rights at law or in equity; provided,
however, that this Agreement will not terminate at the end of said 60 days'
notice period if the party in breach has cured the breach of which it has been
notified prior to the expiration of said 60 days. In the event of termination by
Golbus under this subsection because of a breach by Applied, Applied will
reassign all patents and all of the Patent Rights and Trade Secret Rights to
Golbus.
b. Upon 60 days' prior written notice to Golbus, Applied may
terminate this Agreement (i) at any time if a third party has obtained a patent
on the Invention, or (ii) after this Agreement has been in effect for three
years in all other cases. In the event that Applied obtains a patent in a
country other than the United States, Applied may terminate this Agreement as to
one or more countries where it has obtained such foreign Patent Rights without
terminating the remaining portion of this Agreement. In the event of
termination by Applied under this subsection, Applied will reassign all of the
applicable patents, Patent Rights and Traded Secret Rights to Golbus.
c. Upon termination of this Agreement, Applied shall have the right,
for six months following, to sell products completed or substantially completed
on the date of termination and to complete orders outstanding on the date of
termination. Applied will pay royalties on these sales.
11. Relationship of Parties. No provision of this Agreement shall be
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construed to constitute either party as the agent, servant, employee, partner or
joint venturer of the other party. The parties to this Agreement are and shall
remain independent of one another.
12. Indemnity of Golbus. Applied shall indemnify, defend, and hold Golbus
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harmless against all liabilities, losses, costs, damages, and expenses
(including, without limitation, reasonable attorneys' fees) associated with any
claim or action arising from injury or death of persons or damage to physical
property resulting from the use of the Invention or use of any of
7.
Applied's clinical analysis systems for prenatal and other genetic testing which
utilize the Invention.
13. Indemnity of Applied. Golbus shall indemnify, defend, and hold
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Applied harmless against all liabilities, losses, costs, damages, and expenses
(including, without limitation, reasonable attorneys' fees) to the extent that
(i) such liabilities, losses, costs, damages, and expenses arise from any breach
of the warranties and representations of Golbus set forth in section 7(a) of
this Agreement, and (ii) are associated with a claim which is proved to be valid
that such third party has ownership, title, or a legal right to, or associated
with, the Invention, Trade Secret Rights and/or Patent Rights. Golbus shall have
the right to participate in the defense of any action brought by a third party
in connection with ownership, title, or the legal rights to the Invention,
Trade Secret Rights and/or the Patent Rights and all negotiations for its
settlement or compromise. Applied shall not, without Golbus's prior written
consent, which consent shall not be unreasonably withheld, enter into any
compromise or settlement of any such matter if such compromise or settlement
would result in any obligation of Golbus to indemnify Applied under the terms of
this Agreement. The maximum amount to be owed by Golbus under this section shall
be (i) the total amount paid to Golbus by Applied during the term of this
Agreement, or (ii) $250,000, whichever is less.
14. Settlement of Disputes. Any controversy or claim arising out of or
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relating to this Agreement or the breach thereof shall be finally settled in San
Francisco, California by binding arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, and judgment upon the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof.
15. Notices and Other Communications. All notices, or other
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communications hereunder shall be in writing and shall be made by personal
delivery, or by legible facsimile or by registered or certified mail, postage
prepaid, or any express courier, at the address and telecopier numbers indicated
below:
a. For Applied:
Applied Imaging Corp.
Attention: X. X. Xxxxxx
0000 Xxxxx Xxxxxx, Xxxxxxxx X
Xxxxx Xxxxx, XX 00000
Telecopy: (000) 000-0000
8.
b. For Golbus:
Xxxxxxxx X. Xxxxxx, M.D.
00 Xxx Xxx Xxxxxxxx
Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
or such other address or addresses as may have been furnished in writing one to
the other. Any notice or other communication given hereunder shall have been
duly given 5 business days after posting when enclosed in a properly sealed
envelope addressed as aforesaid, registered or certified, and deposited postage
prepaid in a post office in the United States, or if by legible facsimile, by
express courier or in person, when received.
16. Governing Law. The validity of this Agreement, the construction and
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enforcement of its terms, and the interpretation of the rights and duties of the
parties shall be governed by the laws of the State of California without regard
to conflicts of laws principles.
17. Binding Effect. This Agreement shall be binding upon and shall inure
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to the benefit of Applied and its legal successors and assigns. This Agreement
shall be binding upon and inure to the benefit of Golbus, his heirs, successors,
representatives and assigns.
18. Severability. In the event any one or more of the provisions of this
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Agreement shall for any reason be held to be invalid, illegal or unenforceable,
the remaining provisions of this Agreement shall be unimpaired, and the invalid,
illegal or unenforceable provision shall be replaced by a mutually acceptable
provision, which being valid, legal and enforceable, comes closest to the
intention of the parties underlying the invalid, illegal or unenforceable
provision.
19. Modification, Amendment, Supplement and Waiver.
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a. This Agreement constitutes the entire agreement and understanding
of the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings, whether oral or written including, without
limitation, the term sheet dated September 12, 1996. No modification, amendment,
supplement to or waiver of this Agreement or any of its provisions shall be
binding upon the parties hereto unless made in writing and duly signed by both
parties.
b. A failure or delay of either party to this Agreement to enforce at any
time any of the provisions of this Agreement, or to exercise any option which
is herein provided, or to require at any time performance of any of the
provisions
9.
hereof, shall in no way be construed to be a waiver of such provision of this
Agreement.
20. Headings. The headings used in Agreement are for reference purposes
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only and shall not constitute a part hereof or affect the meaning or
interpretation of this Agreement. Whenever the context so requires, the use of
the singular shall be deemed to include the plural and vice versa.
21. Counterparts. This Agreement may be executed in counterparts. Each
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executed counterpart may be delivered to the other party by facsimile and copies
bearing the facsimile signature of a party will constitute a valid and binding
execution and delivery of this Agreement.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed in a manner legally binding upon them by causing their authorized
representatives to sign this Agreement.
APPLIED IMAGING CORP.
By: /s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxxxx X. Xxxxxx
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(Signature) (Signature)
Name: Xxxxxxx X. Xxxxxx Name: Xxxxxxxx X. Xxxxxx
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(Print or Type) (Print or Type)
Title: Chief Executive Officer
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10.