Document:

Exhibit 10.1

 

T2 BIOSYSTEMS, INC.

 

AMENDED AND RESTATED
 2006 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK PLAN

 

(as amended March 22, 2013)

 

1.                                      DEFINITIONS.

 

Unless otherwise specified or unless the context otherwise requires, the following terms, as used in this T2 Biosystems, Inc. Amended and Restated 2006 Employee, Director and Consultant Stock Plan, have the following meanings:

 

Administrator means the Board of Directors, unless it has delegated power to act on its behalf to the Committee, in which case the Administrator means the Committee.

 

Affiliate means a corporation which, for purposes of Section 424 of the Code, is a parent or subsidiary of the Company, direct or indirect.

 

Agreement means an agreement between the Company and a Participant delivered pursuant to the Plan, in such form as the Administrator shall approve.

 

Board of Directors means the Board of Directors of the Company.

 

Change of Control means the occurrence of any of the following events:

 

(i)                                     Ownership.  Any “Person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes the “Beneficial Owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities (excluding for this purpose the Company or its Affiliates or any employee benefit plan of the Company) pursuant to a transaction or a series of related transactions which the Board of Directors does not approve; or

 

(ii)                                  Merger/Sale of Assets.  A merger or consolidation of the Company’ whether or not approved by the Board of Directors, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or the parent of such corporation) at least 50% of the total voting power represented by the voting securities of the Company or such surviving entity or parent of such corporation outstanding immediately after such merger or consolidation, or the 

 

 

shareholders of the Company approve an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets.

 

Code means the United States Internal Revenue Code of 1986, as amended.

 

Committee means the committee of the Board of Directors to which the Board of Directors has delegated power to act under or pursuant to the provisions of the Plan.

 

Common Stock means shares of the Company’s common stock, $0.001 par value per share.

 

Company means T2 Biosystems, Inc., a Delaware corporation.

 

Disability or Disabled means permanent and total disability as defined in Section 22(e)(3) of the Code.

 

Employee means any employee of the Company or of an Affiliate (including, without limitation, an employee who is also serving as an officer or director of the Company or of an Affiliate), designated by the Administrator to be eligible to be granted one or more Stock Rights under the Plan.

 

Fair Market Value of a Share of Common Stock means:

 

(i)                                     If the Common Stock is listed on a national securities exchange or traded in the over-the-counter market and sales prices are regularly reported for the Common Stock, the closing or last price of the Common Stock on the composite tape or other comparable reporting system for the trading day immediately preceding the applicable date;

 

(ii)                                  If the Common Stock is not traded on a national securities exchange but is traded on the over-the-counter market, if sales prices are not regularly reported for the Common Stock for the trading day referred to in clause (i), and if bid and asked prices for the Common Stock are regularly reported, the mean between the bid and the asked price for the Common Stock at the close of trading in the over-the-counter market for the trading day on which Common Stock was traded immediately preceding the applicable date; and

 

(iii)                               If the Common Stock is neither listed on a national securities exchange nor traded in the over-the-counter market, such value as the Administrator, in good faith, shall determine.

 

ISO means an option meant to qualify as an incentive stock option under Section 422 of the Code.

 

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Non-Qualified Option means an option which is not intended to qualify as an ISO.

 

Option means an ISO or Non-Qualified Option granted under the Plan.

 

Participant means an Employee, director or consultant of the Company or an Affiliate to whom one or more Stock Rights are granted under the Plan.  As used herein, “Participant” shall include “Participant’s Survivors” where the context requires.

 

Plan means this T2 Biosystems, Inc. Amended and Restated 2006 Employee, Director and Consultant Stock Plan.

 

Shares means shares of the Common Stock as to which Stock Rights have been or may be granted under the Plan or any shares of capital stock into which the Shares are changed or for which they are exchanged within the provisions of Paragraph 3 of the Plan.  The Shares issued under the Plan may be authorized and unissued shares or shares held by the Company in its treasury, or both.

 

Stock-Based Award means a grant by the Company under the Plan of an equity award or an equity based award which is not an Option or a Stock Grant.

 

Stock Grant means a grant by the Company of Shares under the Plan.

 

Stock Right means a right to Shares or the value of Shares of the Company granted pursuant to the Plan - an ISO, a Non-Qualified Option, a Stock Grant or a Stock-Based Award.

 

Survivor means a deceased Participant’s legal representatives and/or any person or persons who acquired the Participant’s rights to a Stock Right by will or by the laws of descent and distribution.

 

2.                                      PURPOSES OF THE PLAN.

 

The Plan is intended to encourage ownership of Shares by Employees and directors of and certain consultants to the Company in order to attract and retain such people, to induce them to work for the benefit of the Company or of an Affiliate and to provide additional incentive for them to promote the success of the Company or of an Affiliate.  The Plan provides for the granting of ISOs, Non-Qualified Options, Stock Grants and Stock-Based Awards.

 

3.                                      SHARES SUBJECT TO THE PLAN.

 

(a)                                 The number of Shares which may be issued from time to time pursuant to this Plan shall be Four Million, Seven Hundred Six Thousand, Eight Hundred Ninety (4,706,890), or the equivalent of such number of Shares after the Administrator, in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction in accordance with Paragraph 24 of the Plan.

 

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(b)                                 If an Option ceases to be “outstanding,” in whole or in part (other than by exercise), or if the Company shall reacquire (at not more than its original issuance price) any Shares issued pursuant to a Stock Grant or Stock-Based Award, or if any Stock Right expires or is forfeited, cancelled, or otherwise terminated or results in any Shares not being issued, the unissued Shares which were subject to such Stock Right shall again be available for issuance from time to time pursuant to this Plan.

 

4.                                      ADMINISTRATION OF THE PLAN.

 

The Administrator of the Plan will be the Board of Directors, except to the extent the Board of Directors delegates its authority to the Committee, in which case the Committee shall be the Administrator.  Subject to the provisions of the Plan, the Administrator is authorized to:

 

(a)                                 Interpret the provisions of the Plan and all Stock Rights and to make all rules and determinations which it deems necessary or advisable for the administration of the Plan;

 

(b)                                 determine the number of Shares for which a Stock Right or Stock Rights shall be granted;

 

(c)                                  Determine which Employees, directors and consultants shall be granted Stock Rights;

 

(d)                                 Specify the terms and conditions upon which a Stock Right or Stock Rights may be granted; and

 

(e)                                  Make changes to any outstanding Stock Right, including, without limitation, to reduce or increase the exercise price or purchase price, accelerate the vesting schedule or extend the expiration date, provided that no such change shall impair the rights of a Participant under any grant previously made without such Participant’s consent;

 

(f)                                   Buy out for a payment in cash or Shares, a Stock Right previously granted and/or cancel any such Stock Right and grant in substitution therefor other Stock Rights, covering the same or a different number of Shares and having an exercise price or purchase price per share which may be lower or higher than the exercise price or purchase price of the cancelled Stock Right, based on such terms and conditions as the Administrator shall establish and the Participant shall accept; and

 

(g)                                  Adopt any sub-plans applicable to residents of any specified jurisdiction as it deems necessary or appropriate in order to comply with or take advantage of any tax or other laws applicable to the Company or to Plan Participants or to otherwise facilitate the administration of the Plan, which sub-plans may include additional restrictions or conditions applicable to Stock Rights or Shares issuable pursuant to a Stock Right.

 

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provided, however, that all such interpretations, rules, determinations, terms and conditions shall be made and prescribed in the context of preserving the tax status under Section 422 of the Code of those Options which are designated as ISOs.  Subject to the foregoing, the interpretation and construction by the Administrator of any provisions of the Plan or of any Stock Right granted under it shall be final, unless otherwise determined by the Board of Directors, if the Administrator is the Committee.  In addition, if the Administrator is the Committee, the Board of Directors may take any action under the Plan that would otherwise be the responsibility of the Committee.

 

To the extent permitted under applicable law, the Board of Directors or the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any portion of its responsibilities and powers to any other person selected by it.  The Board of Directors or the Committee may revoke any such allocation or delegation at any time.

 

5.                                      ELIGIBILITY FOR PARTICIPATION.

 

The Administrator will, in its sole discretion, name the Participants in the Plan, provided, however, that each Participant must be an Employee, director or consultant of the Company or of an Affiliate at the time a Stock Right is granted.  Notwithstanding the foregoing, the Administrator may authorize the grant of a Stock Right to a person not then an Employee, director or consultant of the Company or of an Affiliate; provided, however, that the actual grant of such Stock Right shall be conditioned upon such person becoming eligible to become a Participant at or prior to the time of the execution of the Agreement evidencing such Stock Right.  ISOs may be granted only to Employees.  Non-Qualified Options, Stock Grants and Stock-Based Awards may be granted to any Employee, director or consultant of the Company or an Affiliate.  The granting of any Stock Right to any individual shall neither entitle that individual to, nor disqualify him or her from, participation in any other grant of Stock Rights.

 

6.                                      TERMS AND CONDITIONS OF OPTIONS.

 

Each Option shall be set forth in writing in an Option Agreement, duly executed by the Company and, to the extent required by law or requested by the Company, by the Participant.  The Administrator may provide that Options be granted subject to such terms and conditions, consistent with the terms and conditions specifically required under this Plan, as the Administrator may deem appropriate including, without limitation, subsequent approval by the shareholders of the Company of this Plan or any amendments thereto.  The Option Agreements shall be subject to at least the following terms and conditions:

 

(a)                                 Non-Qualified Options.  Each Option intended to be a Non-Qualified Option shall be subject to the terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company, subject to the following minimum standards for any such Non-Qualified Option:

 

(i)                                     Option Price.  Each Option Agreement shall state the option price (per share) of the Shares covered by each Option, which option price shall be 

 

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determined by the Administrator but shall not be less than the Fair Market Value per share of Common Stock.

 

(ii)                                  Number of Shares.  Each Option Agreement shall state the number of Shares to which it pertains.

 

(iii)                               Option Periods.  Each Option Agreement shall state the date or dates on which it first is exercisable and the date after which it may no longer be exercised, and may provide that the Option rights accrue or become exercisable in installments over a period of months or years, or upon the occurrence of certain conditions or the attainment of stated goals or events.

 

(iv)                              Option Conditions.  Exercise of any Option may be conditioned upon the Participant’s execution of a Share purchase agreement in form satisfactory to the Administrator providing for certain protections for the Company and its other shareholders, including requirements that:

 

(A)                               The Participant’s or the Participant’s Survivors’ right to sell or transfer the Shares may be restricted; and

 

(B)                               The Participant or the Participant’s Survivors may be required to execute letters of investment intent and must also acknowledge that the Shares will bear legends noting any applicable restrictions.

 

(b)                                 ISOs.  Each Option intended to be an ISO shall be issued only to an Employee and be subject to the following terms and conditions, with such additional restrictions or changes as the Administrator determines are appropriate but not in conflict with Section 422 of the Code and relevant regulations and rulings of the Internal Revenue Service:

 

(i)                                     Minimum standards.  The ISO shall meet the minimum standards required of Non-Qualified Options, as described in Paragraph 6(a) above, except clause (i) thereunder.

 

(ii)                                  Option Price.  Immediately before the ISO is granted, if the Participant owns, directly or by reason of the applicable attribution rules in Section 424(d) of the Code:

 

(A)                               10% or less of the total combined voting power of all classes of stock of the Company or an Affiliate, the Option price per share of the Shares covered by each ISO shall not be less than 100% of the Fair Market Value per share of the Shares on the date of the grant of the Option; or

 

(B)                               More than 10% of the total combined voting power of all classes of stock of the Company or an Affiliate, the Option price per share of 

 

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the Shares covered by each ISO shall not be less than 110% of the Fair Market Value on the date of grant.

 

(iii)                               Term of Option.  For Participants who own:

 

(A)                               10% or less of the total combined voting power of all classes of stock of the Company or an Affiliate, each ISO shall terminate not more than ten years from the date of the grant or at such earlier time as the Option Agreement may provide; or

 

(B)                               More than 10% of the total combined voting power of all classes of stock of the Company or an Affiliate, each ISO shall terminate not more than five years from the date of the grant or at such earlier time as the Option Agreement may provide.

 

(iv)                              Limitation on Yearly Exercise.  The Option Agreements shall restrict the amount of ISOs which may become exercisable in any calendar year (under this or any other ISO plan of the Company or an Affiliate) so that the aggregate Fair Market Value (determined at the time each ISO is granted) of the stock with respect to which ISOs are exercisable for the first time by the Participant in any calendar year does not exceed $100,000.

 

7.                                      TERMS AND CONDITIONS OF STOCK GRANTS.

 

Each offer of a Stock Grant to a Participant shall state the date prior to which the Stock Grant must be accepted by the Participant, and the principal terms of each Stock Grant shall be set forth in an Agreement, duly executed by the Company and, to the extent required by law or requested by the Company, by the Participant.  The Agreement shall be in a form approved by the Administrator and shall contain terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company, subject to the following minimum standards:

 

(a)                                 Each Agreement shall state the purchase price (per share), if any, of the Shares covered by each Stock Grant, which purchase price shall be determined by the Administrator but shall not be less than the minimum consideration required by the Delaware General Corporation Law on the date of the grant of the Stock Grant;

 

(b)                                 Each Agreement shall state the number of Shares to which the Stock Grant pertains; and

 

(c)                                  Each Agreement shall include the terms of any right of the Company to restrict or reacquire the Shares subject to the Stock Grant, including the time and events upon which such rights shall accrue and the purchase price therefor, if any.

 

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8.                                      TERMS AND CONDITIONS OF OTHER STOCK-BASED AWARDS.

 

The Board shall have the right to grant other Stock-Based Awards based upon the Common Stock having such terms and conditions as the Board may determine, including, without limitation, the grant of Shares based upon certain conditions, the grant of securities convertible into Shares and the grant of stock appreciation rights, phantom stock awards or stock units.  The principal terms of each Stock-Based Award shall be set forth in an Agreement, duly executed by the Company and, to the extent required by law or requested by the Company, by the Participant.  The Agreement shall be in a form approved by the Administrator and shall contain terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company.

 

9.                                      EXERCISE OF OPTIONS AND ISSUE OF SHARES.

 

An Option (or any part or installment thereof) shall be exercised by giving written notice to the Company or its designee, together with provision for payment of the full purchase price in accordance with this Paragraph for the Shares as to which the Option is being exercised, and upon compliance with any other condition(s) set forth in the Option Agreement.  Such notice shall be signed by the person exercising the Option, shall state the number of Shares with respect to which the Option is being exercised and shall contain any representation required by the Plan or the Option Agreement.  Payment of the purchase price for the Shares as to which such Option is being exercised shall be made (a) in United States dollars in cash or by check, or (b) at the discretion of the Administrator, through delivery of shares of Common Stock having a Fair Market Value equal as of the date of the exercise to the cash exercise price of the Option and held for at least six months, or (c) at the discretion of the Administrator, by having the Company retain from the shares otherwise issuable upon exercise of the Option, a number of shares having a Fair Market Value equal as of the date of exercise to the exercise price of the Option, or (d) at the discretion of the Administrator, by delivery of the grantee’s personal recourse note bearing interest payable not less than annually at no less than 100% of the applicable Federal rate, as defined in Section 1274(d) of the Code, or (e) at the discretion of the Administrator, in accordance with a cashless exercise program established with a securities brokerage firm, and approved by the Administrator, or (f) at the discretion of the Administrator, by any combination of (a), (b), (c), (d) and (e) above or (g) at the discretion of the Administrator, payment of such other lawful consideration as the Administrator may determine.  Notwithstanding the foregoing, the Administrator shall accept only such payment on exercise of an ISO as is permitted by Section 422 of the Code.

 

The Company shall then reasonably promptly deliver the Shares as to which such Option was exercised to the Participant (or to the Participant’s Survivors, as the case may be).  In determining what constitutes “reasonably promptly,” it is expressly understood that the issuance and delivery of the Shares may be delayed by the Company in order to comply with any law or regulation (including, without limitation, state securities or “blue sky” laws) which requires the Company to take any action with respect to the Shares prior to their issuance.  The Shares shall, upon delivery, be fully paid, non-assessable Shares.

 

The Administrator shall have the right to accelerate the date of exercise of any installment of any Option; provided that the Administrator shall not accelerate the exercise date of any installment of any Option granted to an Employee as an ISO (and not previously converted into a Non-Qualified Option pursuant to Paragraph 27) if such acceleration would 

 

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violate the annual vesting limitation contained in Section 422(d) of the Code, as described in Paragraph 6(b)(ii).

 

The Administrator may, in its discretion, amend any term or condition of an outstanding Option provided (i) such term or condition as amended is permitted by the Plan, (ii) any such amendment shall be made only with the consent of the Participant to whom the Option was granted, or in the event of the death of the Participant, the Participant’s Survivors, if the amendment is adverse to the Participant, and (iii) any such amendment of any Option shall be made only after the Administrator determines whether such amendment would constitute a “modification” of any Option which is an ISO (as that term is defined in Section 424(h) of the Code) or would cause any adverse tax consequences for the holder of such Option.

 

10.                               ACCEPTANCE OF STOCK GRANTS AND STOCK-BASED AWARDS AND ISSUE OF SHARES.

 

A Stock Grant or Stock-Based Award (or any part or installment thereof) shall be accepted by executing the applicable Agreement and delivering it to the Company or its designee, together with provision for payment of the full purchase price, if any, in accordance with this Paragraph for the Shares as to which such Stock Grant or Stock-Based Award is being accepted, and upon compliance with any other conditions set forth in the applicable Agreement.  Payment of the purchase price for the Shares as to which such Stock Grant or Stock-Based Award is being accepted shall be made (a) in United States dollars in cash or by check, or (b) at the discretion of the Administrator, through delivery of shares of Common Stock held for at least six months and having a Fair Market Value equal as of the date of acceptance of the Stock Grant or Stock Based-A ward to the purchase price of the Stock Grant or Stock-Based Award, or (c) at the discretion of the Administrator, by delivery of the grantee’s personal recourse note bearing interest payable not less than annually at no less than 100% of the applicable Federal rate, as defined in Section 1274(d) of the Code, or (d) at the discretion of the Administrator, by any combination of (a), (b) and (c) above; or (e) at the discretion of the Administrator, payment of such other lawful consideration as the Administrator may determine.

 

The Company shall then, if required by the applicable Agreement, reasonably promptly deliver the Shares as to which such Stock Grant or Stock-Based Award was accepted to the Participant (or to the Participant’s Survivors, as the case may be), subject to any escrow provision set forth in the applicable Agreement.  In determining what constitutes “reasonably promptly,” it is expressly understood that the issuance and delivery of the Shares may be delayed by the Company in order to comply with any law or regulation (including, without limitation, state securities or “blue sky” laws) which requires the Company to take any action with respect to the Shares prior to their issuance.

 

The Administrator may, in its discretion, amend any term or condition of an outstanding Stock Grant, Stock-Based Award or applicable Agreement provided (i) such term or condition as amended is permitted by the Plan, and (ii) any such amendment shall be made only with the consent of the Participant to whom the Stock Grant or Stock-Based Award was made, if the amendment is adverse to the Participant.

 

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11.                               RIGHTS AS A SHAREHOLDER.

 

No Participant to whom a Stock Right has been granted shall have rights as a shareholder with respect to any Shares covered by such Stock Right, except after due exercise of the Option or acceptance of the Stock Grant or as set forth in any Agreement, and tender of the full purchase price, if any, for the Shares being purchased pursuant to such exercise or acceptance and registration of the Shares in the Company’s share register in the name of the Participant.

 

12.                               ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS.

 

By its terms, a Stock Right granted to a Participant shall not be transferable by the Participant other than (i) by will or by the laws of descent and distribution, or (ii) as approved by the Administrator in its discretion and set forth in the applicable Agreement.  Notwithstanding the foregoing, an ISO transferred except in compliance with clause (i) above shall no longer qualify as an ISO.  The designation of a beneficiary of a Stock Right by a Participant, with the prior approval of the Administrator and in such form as the Administrator shall prescribe, shall not be deemed a transfer prohibited by this Paragraph.  Except as provided above, a Stock Right shall only be exercisable or may only be accepted, during the Participant’s lifetime, by such Participant (or by his or her legal representative) and shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process.  Any attempted transfer, assignment, pledge, hypothecation or other disposition of any Stock Right or of any rights granted thereunder contrary to the provisions of this Plan, or the levy of any attachment or similar process upon a Stock Right, shall be null and void.

 

13.                               EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN “FOR CAUSE” OR DEATH OR DISABILITY.

 

Except as otherwise provided in a Participant’s Option Agreement, in the event of a termination of service (whether as an employee, director or consultant) with the Company or an Affiliate before the Participant has exercised an Option, the following rules apply:

 

(a)                                 A Participant who ceases to be an employee, director or consultant of the Company or of an Affiliate (for any reason other than termination “for cause,” Disability, or death for which events there are special rules in Paragraphs 14, 15, and 16, respectively), may exercise any Option granted to him or her to the extent that the Option is exercisable on the date of such termination of service, but only within such term as the Administrator has designated in a Participant’s Option Agreement.

 

(b)                                 Except as provided in Subparagraph (c) below, or Paragraph 15 or 16, in no event may an Option intended to be an ISO, be exercised later than three months after the Participant’s termination of employment.

 

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(c)                                  The provisions of this Paragraph, and not the provisions of Paragraph 15 or 16, shall apply to a Participant who subsequently becomes Disabled or dies after the termination of employment, director status or consultancy; provided, however, in the case of a Participant’s Disability or death within three months after the termination of employment, director status or consultancy, the Participant or the Participant’s Survivors may exercise the Option within one year after the date of the Participant’s termination of service, but in no event after the date of expiration of the term of the Option.

 

(d)                                 Notwithstanding anything herein to the contrary, if subsequent to a Participant’s termination of employment, termination of director status or termination of consultancy, but prior to the exercise of an Option, the Board of Directors determines that, either prior or subsequent to the Participant’s termination, the Participant engaged in conduct which would constitute “cause,” then such Participant shall forthwith cease to have any right to exercise any Option.

 

(e)                                  A Participant to whom an Option has been granted under the Plan who is absent from the Company or an Affiliate because of temporary disability (any disability other than a Disability as defined in Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not, during the period of any such absence, be deemed, by virtue of such absence alone, to have terminated such Participant’s employment, director status or consultancy with the Company or with an Affiliate, except as the Administrator may otherwise expressly provide.

 

(f)                                   Except as required by law or as set forth in a Participant’s Option Agreement, Options granted under the Plan shall not be affected by any change of a Participant’s status within or among the Company and any Affiliates, so long as the Participant continues to be an employee, director or consultant of the Company or any Affiliate.

 

14.                               EFFECT ON OPTIONS OF TERMINATION OF SERVICE “FOR CAUSE”.

 

Except as otherwise provided in a Participant’s Option Agreement, the following rules apply if the Participant’s service (whether as an employee, director or consultant) with the Company or an Affiliate is terminated “for cause” prior to the time that all his or her outstanding Options have been exercised:

 

(a)                                 All outstanding and unexercised Options as of the time the Participant is notified his or her service is terminated “for cause” will immediately be forfeited.

 

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(b)                                 For purposes of this Plan, “cause” shall include (and is not limited to) dishonesty with respect to the Company or any Affiliate, insubordination, substantial malfeasance or non-feasance of duty, unauthorized disclosure of confidential information, breach by the Participant of any provision of any employment, consulting, advisory, nondisclosure, non-competition or similar agreement between the Participant and the Company, and conduct substantially prejudicial to the business of the Company or any Affiliate.  The determination of the Administrator as to the existence of “cause” will be conclusive on the Participant and the Company.

 

(c)                                  “Cause” is not limited to events which have occurred prior to a Participant’s termination of service, nor is it necessary that the Administrator’s finding of “cause” occur prior to termination.  If the Administrator determines, subsequent to a Participant’s termination of service but prior to the exercise of an Option, that either prior or subsequent to the Participant’s termination the Participant engaged in conduct which would constitute “cause,” then the right to exercise any Option is forfeited.

 

(d)                                 Any provision in an agreement between the Participant and the Company or an Affiliate, which contains a conflicting definition of “cause” for termination and which is in effect at the time of such termination, shall supersede the definition in this Plan with respect to that Participant.

 

15.                               EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY.

 

Except as otherwise provided in a Participant’s Option Agreement:

 

(a)                                 A Participant who ceases to be an employee, director or consultant of the Company or of an Affiliate by reason of Disability may exercise any Option granted to such Participant:

 

(i)                                     To the extent that the Option has become exercisable but has not been exercised on the date of Disability; and

 

(ii)                                  In the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of Disability of any additional vesting rights that would have accrued on the next vesting date had the Participant not become Disabled.  The proration shall be based upon the number of days accrued in the current vesting period prior to the date of Disability.

 

(b)                                 A Disabled Participant may exercise such rights only within the period ending one year after the date of the Participant’s Disability, notwithstanding that the Participant might have been able to exercise the Option as to some or all of the Shares on a later date if the Participant had not become Disabled and had continued to be an employee, director or consultant or, if earlier, within the originally prescribed term of the Option.

 

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(c)                                  The Administrator shall make the determination both of whether Disability has occurred and the date of its occurrence (unless a procedure for such determination is set forth in another agreement between the Company and such Participant, in which case such procedure shall be used for such determination).  If requested, the Participant shall be examined by a physician selected or approved by the Administrator, the cost of which examination shall be paid for by the Company.

 

16.                               EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.

 

Except as otherwise provided in a Participant’s Option Agreement:

 

(a)                                 In the event of the death of a Participant while the Participant is an employee, director or consultant of the Company or of an Affiliate, such Option may be exercised by the Participant’s Survivors:

 

(i)                                     To the extent that the Option has become exercisable but has not been exercised on the date of death; and

 

(ii)                                  In the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of death of any additional vesting rights that would have accrued on the next vesting date had the Participant not died.  The proration shall be based upon the number of days accrued in the current vesting period prior to the Participant’s date of death.

 

(b)                                 If the Participant’s Survivors wish to exercise the Option, they must take all necessary steps to exercise the Option within one year after the date of death of such Participant, notwithstanding that the decedent might have been able to exercise the Option as to some or all of the Shares on a later date if he or she had not died and had continued to be an employee, director or consultant or, if earlier, within the originally prescribed term of the Option.

 

17.                               EFFECT OF TERMINATION OF SERVICE ON UNACCEPTED STOCK GRANTS.

 

In the event of a termination of service (whether as an employee, director or consultant) with the Company or an Affiliate for any reason before the Participant has accepted a Stock Grant, such offer shall terminate.

 

For purposes of this Paragraph 17 and Paragraph 18 below, a Participant to whom a Stock Grant has been offered and accepted under the Plan who is absent from work with the Company or with an Affiliate because of temporary disability (any disability other than a Disability as defined in Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not, during the period of any such absence, be deemed, by virtue of such absence alone, to have terminated such Participant’s employment, director status or consultancy with the Company or with an Affiliate, except as the Administrator may otherwise expressly provide.

 

In addition, for purposes of this Paragraph 17 and Paragraph 18 below, any change of employment or other service within or among the Company and any Affiliates shall not be

 

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treated as a termination of employment, director status or consultancy so long as the Participant continues to be an employee, director or consultant of the Company or any Affiliate.

 

18.                               EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE OTHER THAN “FOR CAUSE” OR DEATH OR DISABILITY.

 

Except as otherwise provided in a Participant’s Stock Grant Agreement, in the event of a termination of service (whether as an employee, director or consultant), other than termination “for cause,” Disability, or death for which events there are special rules in Paragraphs 19, 20, and 21, respectively, before all Company rights of repurchase shall have lapsed, then the Company shall have the right to repurchase that number of Shares subject to a Stock Grant as to which the Company’s repurchase rights have not lapsed.

 

19.                               EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE “FOR CAUSE”.

 

Except as otherwise provided in a Participant’s Stock Grant Agreement, the following rules apply if the Participant’s service (whether as an employee, director or consultant) with the Company or an Affiliate is terminated “for cause”:

 

(a)                                 All Shares subject to any Stock Grant shall be immediately subject to repurchase by the Company at $.01 per share.

 

(b)                                 For purposes of this Plan, “cause” shall include (and is not limited to) dishonesty with respect to the employer, insubordination, substantial malfeasance or non-feasance of duty, unauthorized disclosure of confidential information, breach by the Participant of any provision of any employment, consulting, advisory, nondisclosure, non-competition or similar agreement between the Participant and the Company, and conduct substantially prejudicial to the business of the Company or any Affiliate.  The determination of the Administrator as to the existence of “cause” will be conclusive on the Participant and the Company.

 

(c)                                  “Cause” is not limited to events which have occurred prior to a Participant’s termination of service, nor is it necessary that the Administrator’s finding of “cause” occur prior to termination.  If the Administrator determines, subsequent to a Participant’s termination of service, that either prior or subsequent to the Participant’s termination the Participant engaged in conduct which would constitute “cause,” then the Company’s right to repurchase all of such Participant’s Shares shall apply.

 

(d)                                 Any provision in an agreement between the Participant and the Company or an Affiliate, which contains a conflicting definition of “cause” for termination and which is in effect at the time of such termination, shall supersede the definition in this Plan with respect to that Participant.

 

14

 

20.                              EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE FOR DISABILITY.

 

Except as otherwise provided in a Participant’s Stock Grant Agreement, the following rules apply if a Participant ceases to be an employee, director or consultant of the Company or of an Affiliate by reason of Disability: to the extent the Company’s rights of repurchase have not lapsed on the date of Disability, they shall be exercisable; provided, however, that in the event such rights of repurchase lapse periodically, such rights shall lapse to the extent of a pro rata portion of the Shares subject to such Stock Grant through the date of Disability as would have lapsed had the Participant not become Disabled.  The proration shall be based upon the number of days accrued prior to the date of Disability.

 

The Administrator shall make the determination both of whether Disability has occurred and the date of its occurrence (unless a procedure for such determination is set forth in another agreement between the Company and such Participant, in which case such procedure shall be used for such determination).  If requested, the Participant shall be examined by a physician selected or approved by the Administrator, the cost of which examination shall be paid for by the Company.

 

21.                               EFFECT ON STOCK GRANTS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.

 

Except as otherwise provided in a Participant’s Stock Grant Agreement, the following rules apply in the event of the death of a Participant while the Participant is an employee, director or consultant of the Company or of an Affiliate: to the extent the Company’s rights of repurchase have not lapsed on the date of death, they shall be exercisable; provided, however, that in the event such rights of repurchase lapse periodically, such rights shall lapse to the extent of a pro rata portion of the Shares subject to such Stock Grant through the date of death as would have lapsed had the Participant not died.  The proration shall be based upon the number of days accrued prior to the Participant’s death.

 

22.                               PURCHASE FOR INVESTMENT.

 

Unless the offering and sale of the Shares to be issued upon the particular exercise or acceptance of a Stock Right shall have been effectively registered under the Securities Act of 1933, as now in force or hereafter amended (the “1933 Act”), the Company shall be under no obligation to issue the Shares covered by such exercise unless and until the following conditions have been fulfilled:

 

(a)                                 The person(s) who exercise(s) or accept(s) such Stock Right shall warrant to the Company, prior to the receipt of such Shares, that such person(s) are acquiring such Shares for their own respective accounts, for investment, and not with a view to, or for sale in connection with, the distribution of any such Shares, in which event the person(s) acquiring such Shares shall be bound by the provisions of the following legend which shall be endorsed upon the certificate(s) evidencing their Shares issued pursuant to such exercise or such grant:

 

“The shares represented by this certificate have been taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a Registration

 

15

 

Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or (b) the Company shall have received an opinion of counsel satisfactory to it that an exemption from registration under such Act is then available, and (2) there shall have been compliance with all applicable state securities laws.”

 

(b)                                 At the discretion of the Administrator, the Company shall have received an opinion of its counsel that the Shares may be issued upon such particular exercise or acceptance in compliance with the 1933 Act without registration thereunder.

 

23.                               DISSOLUTION OR LIQUIDATION OF THE COMPANY.

 

Upon the dissolution or liquidation of the Company, all Options granted under this Plan which as of such date shall not have been exercised and all Stock Grants and Stock-Based Awards which have not been accepted will terminate and become null and void; provided, however, that if the rights of a Participant or a Participant’s Survivors have not otherwise terminated and expired, the Participant or the Participant’s Survivors will have the right immediately prior to such dissolution or liquidation to exercise or accept any Stock Right to the extent that the Stock Right is exercisable or subject to acceptance as of the date immediately prior to such dissolution or liquidation.  Upon the dissolution or liquidation of the Company, any outstanding Stock-Based Awards shall immediately terminate unless otherwise determined by the Administrator or specifically provided in the applicable Agreement.

 

24.                               ADJUSTMENTS.

 

Upon the occurrence of any of the following events, a Participant’s rights with respect to any Stock Right granted to him or her hereunder shall be adjusted as hereinafter provided, unless otherwise specifically provided in a Participant’s Agreement:

 

(a)                                 Stock Dividends and Stock Splits.  If (i) the shares of Common Stock shall be subdivided or combined into a greater or smaller number of shares or if the Company shall issue any shares of Common Stock as a stock dividend on its outstanding Common Stock, or

 

(i)                                     additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Common Stock, the number of shares of Common Stock deliverable upon the exercise of an Option or acceptance of a Stock Grant may be appropriately increased or decreased proportionately, and appropriate adjustments may be made including, in the purchase price per share, to reflect such events.

 

(b)                                 Corporate Transactions.  If the Company is to be consolidated with or acquired by another entity in a merger, sale of all or substantially all of the Company’s assets other than a transaction to merely change the state of incorporation (a “Corporate Transaction”), the Administrator or the board of directors of any entity assuming the obligations of the Company hereunder (the “Successor Board”), shall, as to

 

16

 

outstanding Options, either (i) make appropriate provision for the continuation of such Options by substituting on an equitable basis for the Shares then subject to such Options either the consideration payable with respect to the outstanding shares of Common Stock in connection with the Corporate Transaction or securities of any successor or acquiring entity; or (ii) upon written notice to the Participants, provide that all Options must be exercised (either (A) to the extent then exercisable or, (B) at the discretion of the Administrator, all Options being made fully exercisable for purposes of this Subparagraph), within a specified number of days of the date of such notice, at the end of which period the Options shall terminate; or (iii) terminate all Options in exchange for a cash payment equal to the excess of the Fair Market Value of the Shares subject to such Options (either (A) to the extent then exercisable or, (B) at the discretion of the Administrator, all Options being made fully exercisable for purposes of this Subparagraph) over the exercise price thereof.

 

With respect to outstanding Stock Grants, the Administrator or the Successor Board, shall either (i) make appropriate provisions for the continuation of such Stock Grants on the same terms and conditions by substituting on an equitable basis for the Shares then subject to such Stock Grants either the consideration payable with respect to the outstanding Shares of Common Stock in connection with the Corporate Transaction or securities of any successor or acquiring entity; or (ii) terminate all Stock Grants in exchange for a cash payment equal to the excess of the Fair Market Value of the Shares subject to such Stock Grants over the purchase price thereof, if any.  In addition, in the event of a Corporate Transaction, the Administrator may waive any or all Company repurchase rights with respect to outstanding Stock Grants.

 

(c)                                  Recapitalization or Reorganization.  In the event of a recapitalization or reorganization of the Company other than a Corporate Transaction pursuant to which securities of the Company or of another corporation are issued with respect to the outstanding shares of Common Stock, a Participant upon exercising an Option or accepting a Stock Grant after the recapitalization or reorganization shall be entitled to receive for the purchase price paid upon such exercise or acceptance of the number of replacement securities which would have been received if such Option had been exercised or Stock Grant accepted prior to such recapitalization or reorganization.

 

(d)                                 Adjustments to Stock-Based Awards.  Upon the happening of any of the events described in Subparagraphs A, B or C above, any outstanding Stock-Based Award shall be appropriately adjusted to reflect the events described in such Subparagraphs.  The Administrator or the Successor Board shall determine the specific adjustments to be made under this Paragraph 24, including, but not limited to the effect if any, of a Change in Control and, subject to Paragraph 4, its determination shall be conclusive.

 

17

 

(e)                                  Modification of ISOs.  Notwithstanding the foregoing, any adjustments made pursuant to Subparagraph a, b or c above with respect to ISOs shall be made only after the Administrator determines whether such adjustments would constitute a “modification” of such ISOs (as that term is defined in Section 424(h) of the Code) or would cause any adverse tax consequences for the holders of such ISOs.  If the Administrator determines that such adjustments made with respect to ISOs would constitute a modification of such ISOs, it may refrain from making such adjustments, unless the holder of an ISO specifically requests in writing that such adjustment be made and such writing indicates that the holder has full knowledge of the consequences of such “modification” on his or her income tax treatment with respect to the ISO.

 

25.                               ISSUANCES OF SECURITIES.

 

Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares subject to Stock Rights.  Except as expressly provided herein, no adjustments shall be made for dividends paid in cash or in property (including without limitation, securities) of the Company prior to any issuance of Shares pursuant to a Stock Right.

 

26.                               FRACTIONAL SHARES.

 

No fractional shares shall be issued under the Plan and the person exercising a Stock Right shall receive from the Company cash in lieu of such fractional shares equal to the Fair Market Value thereof.

 

27.                               CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs.

 

The Administrator, at the written request of any Participant, may in its discretion take such actions as may be necessary to convert such Participant’s ISOs (or any portions thereof) that have not been exercised on the date of conversion into Non-Qualified Options at any time prior to the expiration of such ISOs, regardless of whether the Participant is an employee of the Company or an Affiliate at the time of such conversion.  At the time of such conversion, the Administrator (with the consent of the Participant) may impose such conditions on the exercise of the resulting Non-Qualified Options as the Administrator in its discretion may determine, provided that such conditions shall not be inconsistent with this Plan.  Nothing in the Plan shall be deemed to give any Participant the right to have such Participant’s ISOs converted into Non-Qualified Options, and no such conversion shall occur until and unless the Administrator takes appropriate action.  The Administrator, with the consent of the Participant, may also terminate any portion of any ISO that has not been exercised at the time of such conversion.

 

28.                               WITHHOLDING.

 

In the event that any federal, state, or local income taxes, employment taxes, Federal Insurance Contributions Act (“F.I.C.A.”) withholdings or other amounts are required by applicable law or governmental regulation to be withheld from the Participant’s salary, wages or

 

18

 

other remuneration in connection with the exercise or acceptance of a Stock Right or in connection with a Disqualifying Disposition (as defined in Paragraph 29) or upon the lapsing of any right of repurchase, the Company may withhold from the Participant’s compensation, if any, or may require that the Participant advance in cash to the Company, or to any Affiliate of the Company which employs or employed the Participant, the statutory minimum amount of such withholdings unless a different withholding arrangement, including the use of shares of the Company’s Common Stock or a promissory note, is authorized by the Administrator (and permitted by law).  For purposes hereof, the fair market value of the shares withheld for purposes of payroll withholding shall be determined in the manner provided in Paragraph 1 above, as of the most recent practicable date prior to the date of exercise.  If the fair market value of the shares withheld is less than the amount of payroll withholdings required, the Participant may be required to advance the difference in cash to the Company or the Affiliate employer.  The Administrator in its discretion may condition the exercise of an Option for less than the then Fair Market Value on the Participant’s payment of such additional withholding.

 

29.                               NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.

 

Each Employee who receives an ISO must agree to notify the Company in writing immediately after the Employee makes a Disqualifying Disposition of any shares acquired pursuant to the exercise of an ISO.  A Disqualifying Disposition is defined in Section 424(c) of the Code and includes any disposition (including any sale or gift) of such shares before the later of (a) two years after the date the Employee was granted the ISO, or (b) one year after the date the Employee acquired Shares by exercising the ISO, except as otherwise provided in Section 424(c) of the Code.  If the Employee has died before such stock is sold, these holding period requirements do not apply and no Disqualifying Disposition can occur thereafter.

 

30.                               TERMINATION OF THE PLAN.

 

The Plan will terminate on July 20, 2016, the date which is ten years from the earlier of the date of its adoption by the Board of Directors and the date of its approval by the shareholders of the Company.  The Plan may be terminated at an earlier date by vote of the shareholders or the Board of Directors of the Company; provided, however, that any such earlier termination shall not affect any Agreements executed prior to the effective date of such termination.

 

31.                               AMENDMENT OF THE PLAN AND AGREEMENTS.

 

The Plan may be amended by the shareholders of the Company.  The Plan may also be amended by the Administrator, including, without limitation, to the extent necessary to qualify any or all outstanding Stock Rights granted under the Plan or Stock Rights to be granted under the Plan for favorable federal income tax treatment (including deferral of taxation upon exercise) as may be afforded incentive stock options under Section 422 of the Code, and to the extent necessary to qualify the shares issuable upon exercise or acceptance of any outstanding Stock Rights granted, or Stock Rights to be granted, under the Plan for listing on any national securities exchange or quotation in any national automated quotation system of securities dealers.  Any amendment approved by the Administrator which the Administrator determines is of a scope that requires shareholder approval shall be subject to obtaining such shareholder approval.  Any modification or amendment of the Plan shall not, without the consent of a Participant, adversely

 

19

 

affect his or her rights under a Stock Right previously granted to him or her.  With the consent of the Participant affected, the Administrator may amend outstanding Agreements in a manner which may be adverse to the Participant but which is not inconsistent with the Plan.  In the discretion of the Administrator, outstanding Agreements may be amended by the Administrator in a manner which is not adverse to the Participant.

 

32.                               EMPLOYMENT OR OTHER RELATIONSHIP.

 

Nothing in this Plan or any Agreement shall be deemed to prevent the Company or an Affiliate from terminating the employment, consultancy or director status of a Participant, nor to prevent a Participant from terminating his or her own employment, consultancy or director status or to give any Participant a right to be retained in employment or other service by the Company or any Affiliate for any period of time.

 

33.                               GOVERNING LAW.

 

This Plan shall be construed and enforced in accordance with the law of the State of Delaware.

 

	
Approved by the Board:
    	
March 22,   2013
    
	
 
    	
 
    
	
Approved by the Shareholders:
    	
March 21,   2013
    

 

20Exhibit 10.13

 

THE GENERAL HOSPITAL CORPORATION

EXCLUSIVE LICENSE AGREEMENT

 

MGH Agreement No.: 2006A21314

MGH Case Nos.: 1864 and 2745

 

This License Agreement (“AGREEMENT”) is made as of the 7th day of November, 2006 (“EFFECTIVE DATE”), between Bioplex Systems, Inc., a Delaware corporation, having a principal place of business at One Memorial Drive, Cambridge, Massachusetts 02142 (“COMPANY”) and The General Hospital Corporation, d/b/a Massachusetts General Hospital, a not-for-profit Massachusetts corporation, with a principal place of business at Fruit Street, Boston, Massachusetts 02114 (“HOSPITAL”), each referred to herein individually as a “PARTY” and collectively as the “PARTIES”.

 

RECITALS

 

HOSPITAL, as a center for patient care, research and education, is the owner of certain PATENT RIGHTS (defined below) and desires to grant a license of those PATENT RIGHTS to COMPANY in order to benefit the public by disseminating the results of its research via the commercial development, manufacture, distribution and use of products and processes.

 

COMPANY has the capability to commercially develop, manufacture, distribute and use PRODUCTS and PROCESSES (defined below) for public use and benefit and desires to license such PATENT RIGHTS.

 

For good and valuable consideration, the sufficiency of which is hereby acknowledged, the PARTIES hereto agree as follows:

 

1.                                      CERTAIN DEFINITIONS

 

The following terms shall have the following meanings as used herein, unless the context requires otherwise.

 

1.1                               “[***] PATENT RIGHTS” shall mean HOSPITAL’s rights in the [***]; or the equivalent of such applications including any division, continuation, continuation-in-part to the extent the claims are entitled to the priority filing date of the aforesaid mentioned application and are directed to subject matter specifically described in and reasonably supported by the aforesaid patent application, or any foreign patent application or Letters Patent or the equivalent thereof issuing thereon or reissue, reexamination or extension thereof.

 

1.2                               “[***] PATENT RIGHTS” shall mean HOSPITAL’s rights in the [***]; or the equivalent of such applications including any division, continuation, continuation-in-part to the extent the claims are entitled to the priority filing date of the aforesaid mentioned application and are directed to subject matter specifically described in and reasonably supported by the aforesaid patent application or any foreign patent application or Letters Patent or the equivalent thereof issuing thereon or reissue, reexamination or extension thereof.

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

1.3                               “AFFILIATE” with respect to either PARTY shall mean any corporation or other legal entity other than that PARTY in whatever country organized, controlling, controlled by or under common control with that PARTY.  The term “control” shall mean (a) in the case of COMPANY, direct or indirect ownership of at least fifty percent (50%) of the voting securities having the right to elect directors, and (b) in the case of HOSPITAL, the power, direct or indirect, to elect or appoint more than fifty percent (50%) of the directors or trustees, or to cause direction of management and policies, whether through the ownership of voting securities, by contract or otherwise.

 

1.4                               “ANALYTE” shall mean any material or substance, including but not limited to chemical or biological substances, peptides, nucleic acids, proteins, drugs, lipids, lipoproteins, or steroids.

 

1.5                               “CLAIM” shall mean any pending or issued claim of any PATENT RIGHT that has not been permanently revoked, nor held unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction that is unappealable or unappealed in the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise.  For the purpose of this Section 1.5, a claim shall be considered “pending” if it has been pending without being granted, allowed or issued for less than [***], or its equivalent in non-U.S. jurisdictions, for each application in its specific country or region.

 

1.6                               “COMMERCIAL SALE” shall mean any TRANSFER of a PRODUCT or PROCESS by COMPANY, an AFFILIATE or SUBLICENSEE (which may include a TRANSFER to an AFFILIATE or SUBLICENSEE), for value, in the form of cash or otherwise.

 

1.7                               “DIAGNOSTIC PROCESS” shall mean any process, method or service for the monitoring of the presence or absence of or measuring the concentration or level(s) of an ANALYTE(S) in a human subject, the use or performance of which, in whole or in part, absent the licenses granted hereunder would infringe, or is covered by, one or more CLAIMS of PATENT RIGHTS.

 

1.8                               “DIAGNOSTIC PRODUCT” shall mean any article, device or composition for the monitoring of the presence or absence of or measuring the concentration or level(s) of an ANALYTE(S) in a human subject, the manufacture, use, or sale of which, in whole or in part, absent the licenses granted hereunder would infringe, or is covered by, one or more CLAIMS of PATENT RIGHTS.

 

1.9                               “GROSS SALES” shall mean the greatest of the gross amount billed, invoiced or received by COMPANY, its AFFILIATES and SUBLICENSEES for TRANSFER of PRODUCTS and PROCESSES by COMPANY, AFFILIATES and its SUBLICENSEES, but excluding (i) any amounts billed, invoiced or received resulting from any TRANSFER of any PRODUCT or PROCESS between or among COMPANY, an AFFILIATE or any SUBLICENSEE, unless the transferee is the final purchaser of such PRODUCT or PROCESS; and (ii) any royalty or similar payment by SUBLICENSEE to AFFILIATE or COMPANY, or by AFFILIATE to COMPANY, on account of a TRANSFER of any PRODUCT or PROCESS by a SUBLICENSEE or AFFILIATE, as the case may be, to a third party.

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

1.10                        “INDUSTRIAL PROCESS” shall mean process, method or service, (a) for the monitoring of the presence or absence of or measuring the concentration or level(s) of an ANALYTE(S) in a sample, substance or liquid, where such sample, substance, or liquid comes from a non-human or is derived from a non-human sample, and (b) which is not a RESEARCH PROCESS or DIAGNOSTIC PROCESS, the use or performance of which, in whole or in part, absent the licenses granted hereunder would infringe, or is covered by, one or more CLAIMS of PATENT RIGHTS.

 

1.11                        “INDUSTRIAL PRODUCT” shall mean any article, device or composition, (a) for the monitoring of the presence or absence of or measuring the concentration or level(s) of an ANALYTE(S) in a sample, substance, or liquid, where such sample, substance, or liquid comes from a non-human or is derived from a non-human sample, and (b) which is not a RESEARCH PRODUCT or DIAGNOSTIC PRODUCT, the manufacture, use, or sale of which, in whole or in part, absent the licenses granted hereunder would infringe, or is covered by, one or more CLAIMS of PATENT RIGHTS.

 

1.12                        “LICENSE TERRITORY” shall mean worldwide.

 

1.13                        “NET SALES” shall mean:

 

(a)                                 (i) for TRANSFERS by COMPANY, its AFFILIATES, and SUBLICENSEES, (for the purposes of this Section 1.13, each a “SELLER”), GROSS SALES less (to the extent appropriately documented) the following amounts actually paid or otherwise incurred by a SELLER in effecting such TRANSFER:

 

(1)                                 credits and allowances by reason of rejection or return;

 

(2)                                 reasonable and customary rebates, discounts and chargebacks;

 

(3)                                 amounts for outbound transportation, insurance, handling and shipping, to the extent separately invoiced; and

 

(4)                                 taxes, customs duties and other governmental charges levied on or measured by COMMERCIAL SALES, to the extent separately invoiced, whether paid by or on behalf of COMPANY so long as COMPANY’s price is reduced thereby, but not franchise or income taxes of any kind whatsoever; and

 

(ii)                                  for TRANSFERS which occur in an arm’s length, standalone transaction by a SELLER to a DISTRIBUTOR, GROSS SALES less the deductions permitted by clauses (a)(i)(l) through (a)(i)(4) and any other income, including but not limited to payments for distribution rights, received by said SELLER from said DISTRIBUTOR based on sales of PRODUCTS and PROCESSES.  “DISTRIBUTOR” shall mean any bona fide third party distributor with no other rights except for the right to distribute or sell PRODUCTS and PROCESSES on behalf of a SELLER, and which is not an AFFILIATE or SUBLICENSEE.

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

(b)                                 No deductions shall be made for commissions paid to individuals whether they be with independent sales agencies or employed by a SELLER or otherwise, or for any cost of collections.

 

(c)                                  NET SALES shall occur on the earlier of the date of billing or invoicing for TRANSFER of a PRODUCT or PROCESS.  For a PRODUCT or PROCESS for which SELLER does not bill or invoice, NET SALES shall occur on the date on which payment is due or made to the SELLER, whichever is earlier.  If the date on which such payment is due or made cannot be ascertained, NET SALES shall be deemed to have occurred on the date the PRODUCT or PROCESS was TRANSFERRED.

 

(d)                                 If a SELLER TRANSFERS any PRODUCT or PROCESS at a discounted price with a discount that is greater than the discount permitted by clause (a)(i)(2), or for non-cash consideration (whether or not at a discount), NET SALES shall be calculated based on the average cash amount charged to independent third parties for the PRODUCT or PROCESS during the same REPORTING PERIOD, or, in the absence of such transaction, on the fair market value of the non-cash consideration.

 

(e)                                  In the case of a TRANSFER of a PRODUCT within COMPANY or between or among COMPANY, any AFFILIATE or SUBLICENSEE, solely for further TRANSFER by such transferee, NET SALES shall be based on the further TRANSFER of such PRODUCT by such transferee.

 

1.14                        “PATENT RIGHTS” shall mean [***] PATENT RIGHTS and/or [***] PATENT RIGHTS.

 

1.15                        “PROCESS” shall mean any DIAGNOSTIC PROCESS, INDUSTRIAL PROCESS, or RESEARCH PROCESS.

 

1.16                        “PRODUCT” shall mean any DIAGNOSTIC PRODUCT, INDUSTRIAL PRODUCT, or RESEARCH PRODUCT.

 

1.17                        “RESEARCH PROCESS” shall mean any process, method or service for research and development applications, excluding any DIAGNOSTIC PROCESS or INDUSTRIAL PROCESS, the use or performance of which, in whole or in part, absent the licenses granted hereunder would infringe, or is covered by, one or more CLAIMS of PATENT RIGHTS.

 

1.18                        “RESEARCH PRODUCT” shall mean any article, device or composition for research and development applications, excluding any DIAGNOSTIC PRODUCT or INDUSTRIAL PRODUCT, the manufacture, use, or sale of which, in whole or in part, absent the licenses granted hereunder would infringe, or is covered by, one or more CLAIMS of PATENT RIGHTS.

 

1.19                        “REPORTING PERIOD” shall mean each three (3) month period ending March 31, June 30, September 30 and December 31.

 

1.20                        “SUBLICENSEE” shall mean (a) any third party sublicensee of the rights granted by COMPANY under Section 2.1(a)(ii) and (b) any further sublicensee of such party in the foregoing Section 1.20(a).

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

1.21                        “TRANSFER” shall mean to sell or have sold, to lease or have leased, to export or have exported, to distribute or have distributed, or otherwise to transfer or have transferred, for value in the form of cash or otherwise, a PRODUCT or PROCESS, and further in the case of a PROCESS to use or perform such PROCESS for the benefit of a third party.

 

2.                                      LICENSE

 

2.1                               Grant of License.

 

(a)                                 Subject to the terms of this AGREEMENT, HOSPITAL hereby grants to COMPANY in the LICENSE TERRITORY:

 

(i)                                     an exclusive, royalty-bearing license under PATENT RIGHTS to make, have made, use, have used, import or have imported and TRANSFER PRODUCTS and to use, have used and TRANSFER PROCESSES;

 

(ii)                                  the right to grant sublicenses under the rights granted in Section 2.1(a)(i) to SUBLICENSEES, provided that in each case COMPANY shall be responsible for the performance of any obligations of SUBLICENSEES relevant to this AGREEMENT as if such performance were carried out by COMPANY itself, including, without limitation, the payment of any royalties or other payments provided for hereunder, regardless of whether the terms of any sublicense provide for such amounts to be paid by the SUBLICENSEE directly to HOSPITAL.

 

(b)                                 The licenses granted in Section 2.1(a) above include the right to grant to the purchaser of PRODUCTS from COMPANY, AFFILIATES and SUBLICENSEES the right to use such purchased PRODUCTS in a method coming within the scope of PATENT RIGHTS, including, without limitation, in any PROCESS.

 

(c)                                  The foregoing license grants shall include the grant of said license to any AFFILIATE of COMPANY, provided that such AFFILIATE shall assume the same obligations as those of COMPANY and be subject to the same terms and conditions hereunder and further provided that COMPANY shall be responsible for the performance by said AFFILIATE of said obligations and for compliance by said AFFILIATE with said terms and conditions.  COMPANY shall provide to HOSPITAL a fully signed, non-redacted copy of each agreement with each AFFILIATE that assumes the aforesaid obligations, including all exhibits, attachments and related documents and any amendments, within thirty (30) days of request by HOSPITAL.

 

2.2                               Sublicenses.  All sublicenses granted hereunder shall be consistent with the terms of this AGREEMENT, shall incorporate terms and conditions sufficient to enable COMPANY to comply with this AGREEMENT COMPANY shall provide to HOSPITAL a fully signed non-redacted (except for running royalties and confidential information of the sublicensee) copy of all sublicense agreements, including, but not limited to, sublicense agreements between direct SUBLICENSEES of COMPANY and further sublicensees of SUBLICENSEES, and amendments thereto, including all exhibits, attachments and related documents, within thirty (30) days of executing the same.  HOSPITAL shall hold such sublicense agreements and amendments in confidence.  In the event HOSPITAL requires redacted information in the sublicense agreements for auditing purposes, upon HOSPITAL’s request, COMPANY shall provide such

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

information to HOSPITAL, which HOSPITAL shall hold in confidence.  Upon termination of this AGREEMENT or any licenses granted hereunder for any reason, any sublicenses shall be addressed in accordance with Section 10.6.

 

2.3                               Retained Rights; Requirements.  Any and all licenses granted hereunder are subject to:

 

(a)                                 HOSPITAL’s and HOSPITAL’s AFFILIATES’ right to make and to use the subject matter described and/or claimed in the PATENT RIGHTS and to permit others at academic, government and not-for-profit institutions to make and use the subject matter described and/or claimed in PATENT RIGHTS for research and educational purposes; and

 

(b)                                 for PATENT RIGHTS supported by federal funding, the rights, conditions and limitations imposed by U.S. law (see 35 U.S.C. § 202 et seq. and regulations pertaining thereto), including without limitation:

 

(i)                                     the royalty-free non-exclusive license granted to the U.S. government; and

 

(ii)                                  the requirement that any PRODUCTS used or sold in the United States shall be manufactured substantially in the United States, provided that, at the request of COMPANY, HOSPITAL shall use reasonable efforts to assist COMPANY in seeking a waiver of such requirement.

 

2.4                               No Additional Rights.  It is understood that nothing in this AGREEMENT shall be construed to grant COMPANY a license express or implied under any patent owned solely or jointly by HOSPITAL other than the PATENT RIGHTS expressly licensed hereunder.

 

3.                                      DUE DILIGENCE OBLIGATIONS

 

3.1                               Diligence Requirements.  COMPANY shall itself use, or shall cause its AFFILIATES or SUBLICENSEES, as applicable, to use, reasonable commercial efforts to develop and make available to the public PRODUCTS and PROCESSES throughout the LICENSE TERRITORY.  Such efforts shall include achieving the following objectives within the time periods designated below following the EFFECTIVE DATE:

 

(a)                                 Pre-Sales Requirements.

 

(i)                                     within [***].

 

(ii)                                  within [***].

 

(iii)                               within [***].

 

(iv)                              within [***], establish a management team, including but not limited to a full time (i) Chief Executive Officer or President, (ii) Chief Financial Officer, Controller or other financial officer, and (iii) Vice President of Research and Development.

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

(v)                                 within [***] for use with a PRODUCT or PROCESS, unless COMPANY determines that [***].

 

(vi)                              within [***], which shall be made part of this Section 3 and shall be subject to the obligations contained in this Agreement.

 

(b)                                 Pre-sales Requirements for DIAGNOSTIC PRODUCTS and/or DIAGNOSTIC PROCESSES.

 

(i)                                     within [***].

 

(ii)                                  within [***] DIAGNOSTIC PRODUCT and/or DIAGNOSTIC PROCESS.

 

(iii)                               within [***] DIAGNOSTIC PRODUCT and/or DIAGNOSTIC PROCESS.

 

(iv)                              within [***] DIAGNOSTIC PRODUCT and/or DIAGNOSTIC PROCESS.  [***], which shall be made part of this Section 3 and shall be subject to the obligations contained in this Agreement.

 

(v)                                 within [***] DIAGNOSTIC PRODUCT and/or DIAGNOSTIC PROCESS [***].

 

(c)                                  Post-Sales Requirements.

 

(i)                                     Continued Sales.

 

(1)                                 Following the first COMMERCIAL SALE of a DIAGNOSTIC PRODUCT or DIAGNOSTIC PROCESS, [***], COMPANY shall itself or through its AFFILIATES and/or SUBLICENSEES use commercially reasonable efforts, to [***] DIAGNOSTIC PRODUCTS and DIAGNOSTIC PROCESSES [***].

 

(2)                                 Following the first COMMERCIAL SALE of an INDUSTRIAL PRODUCT or INDUSTRIAL PROCESS, [***], COMPANY shall itself or through its AFFILIATES and/or SUBLICENSEES use commercially reasonable efforts, to [***] INDUSTRIAL PRODUCTS and INDUSTRIAL PROCESSES [***].

 

(3)                                 Following the first COMMERCIAL SALE of a RESEARCH PRODUCT or RESEARCH PROCESS, [***], COMPANY shall itself or through its AFFILIATES and/or SUBLICENSEES use commercially reasonable efforts, to [***].

 

Achievement of the foregoing objectives shall be deemed to satisfy COMPANY’S obligations to use commercially reasonable efforts under this Section 3.1.

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

3.2                               Diligence Failures.  If COMPANY believes it is unable to achieve the foregoing despite commercially reasonable efforts to do so, or [***], COMPANY must notify HOSPITAL and inform HOSPITAL in writing of the reasons that the foregoing will not be achieved or that [***] at least [***] in advance of the above milestone(s) being due (hereinafter “DILIGENCE DELAY NOTICE”).  Such DILIGENCE DELAY NOTICE shall be accompanied with a [***].  HOSPITAL shall [***].  If HOSPITAL determines that COMPANY has failed to fulfill any of its obligations under Section 3.1, COMPANY and HOSPITAL shall meet promptly, but no less than [***] after such milestone event was due, to discuss the matter and consider any request by COMPANY to remedy the failure.  Neither party shall be obligated to agree to any such plan to remedy the failure.  If no plan is agreed upon and entered into in writing, or if a plan is agreed upon and COMPANY fails to comply with the agreed plan, then HOSPITAL may treat such failure as a default and may terminate, in accordance with Section 10.4, this AGREEMENT and/or the licenses granted hereunder with respect to the specific PRODUCT type which COMPANY has failed to diligently [***].  Notwithstanding the foregoing, in the event COMPANY does not provide the [***] as provided under Sections 3.1(a)(vi) and 3.1(b)(iv) or fails to achieve their respective obligations in the amended Section 3, HOSPITAL shall have the right to terminate in accordance with Section 10.4 the licenses granted for the specific regions and/or PRODUCT and PROCESS types in default.  The right to terminate as set forth herein shall be HOSPITAL’s sole remedy in the event that COMPANY has failed to fulfill any of its obligations under Section 3.1.

 

3.3                               Diligence Reports.  COMPANY shall provide all reports with respect to its obligations under Section 3.1 as set forth in Article 5.

 

4.                                      PAYMENTS AND ROYALTIES

 

4.1                               License Issue Fee.  COMPANY shall pay HOSPITAL a non-refundable license issue fee in the sum of [***] Dollars ($[***]) upon execution of this AGREEMENT.

 

4.2                               Patent Cost Reimbursement.  COMPANY shall reimburse HOSPITAL for all out of pocket costs associated with the preparation, filing, prosecution and maintenance of all PATENT RIGHTS (“PATENT COSTS”).  As of the EFFECTIVE DATE, HOSPITAL has incurred approximately [***] Dollars ($[***]) in PATENT COSTS, which amount COMPANY shall pay to HOSPITAL in two installments as follows: (i) [***] Dollars ($[***]) shall be due upon execution of this AGREEMENT and (ii) [***] Dollars ($[***]) shall be due on the earlier of [***] after the EFFECTIVE DATE or when COMPANY has raised a total of [***] Dollars ($[***]).  COMPANY shall pay to HOSPITAL, or at HOSPITAL’s request directly to patent counsel, all other PATENT COSTS within [***] days of COMPANY’s receipt of an invoice for such PATENT COSTS either from HOSPITAL or HOSPITAL’s patent counsel.  COMPANY agrees to indemnify, defend and hold HOSPITAL harmless from and against any and all liabilities, damages, costs and expenses arising from the failure of Company to timely pay such invoices and PATENT COSTS.  HOSPITAL shall instruct patent counsel to provide copies to HOSPITAL for HOSPITAL’s administrative files of all invoices detailing PATENT COSTS which are sent directly to COMPANY.

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

4.3                               Annual License Fee.  COMPANY shall pay to HOSPITAL the following amounts as an annual license fee within [***] days after [***] in which each of the following anniversaries of the EFFECTIVE DATE occurs:

 

(a)                                 the [***] of the EFFECTIVE DATE:  [***] Dollars ($[***]);

 

(b)                                 the [***] of the EFFECTIVE DATE:  [***] Dollars ($[***]);

 

(c)                                  the [***] of the EFFECTIVE DATE:  [***] Dollars ($[***]); and

 

(d)                                 the [***] of the EFFECTIVE DATE thereafter:  [***] Dollars ($[***]).

 

The annual license fee is nonrefundable; provided however, it shall be credited against royalties subsequently due on NET SALES made during the [***] REPORTING PERIODS following the REPORTING PERIOD in which the anniversary occurs, if any, but shall not be credited against royalties due on NET SALES made in any other year.

 

4.4                               Milestone Payments.  In addition to the payments set forth in Sections 4.1 through 4.3 above, COMPANY shall pay HOSPITAL milestone payments as follows:

 

(a)                                 [***].

 

4.5                               Royalties.

 

(a)                                 In consideration of the licenses granted to COMPANY under this AGREEMENT and of the long development timeline for commercializing PRODUCTS and PROCESSES, COMPANY shall pay HOSPITAL certain compensation, including but not limited to certain deferred compensation, as follows.

 

(i)                                     RESEARCH PRODUCTS and RESEARCH PROCESSES.  Beginning with the first COMMERCIAL SALE of the first RESEARCH PRODUCT or RESEARCH PROCESS, COMPANY shall pay HOSPITAL a royalty on the NET SALES of all RESEARCH PRODUCTS and RESEARCH PROCESSES until the later of (1) the expiration or abandonment of the PATENT RIGHTS or (2) ten years from first COMMERCIAL SALE of the first RESEARCH PRODUCT or RESEARCH PROCESS as follows:

 

(1)                                 For any RESEARCH PRODUCT or RESEARCH PROCESS covered only by a CLAIM under the [***] PATENT RIGHTS and not covered by a claim under the [***] PATENT RIGHTS, a royalty of [***].

 

(2)                                 For any RESEARCH PRODUCT or RESEARCH PROCESS covered only by a CLAIM under the [***] PATENT RIGHTS and not covered by a claim under the [***] PATENT RIGHTS, a royalty of [***] of NET SALES of RESEARCH PRODUCTS or RESEARCH PROCESSES [***] for a given calendar year.

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

(3)                                 For any RESEARCH PRODUCT or RESEARCH PROCESS covered by a CLAIM under the [***] PATENT RIGHTS and a CLAIM under the [***] PATENT RIGHTS, a royalty of [***].

 

(ii)                                  INDUSTRIAL PRODUCTS or INDUSTRIAL PROCESSES.  Beginning with the first COMMERCIAL SALE of the first INDUSTRIAL PRODUCT or INDUSTRIAL PROCESS, COMPANY shall pay HOSPITAL a royalty on the NET SALES of all INDUSTRIAL PRODUCTS and INDUSTRIAL PROCESSES until the later of (1) the expiration or abandonment of the PATENT RIGHTS or (2) ten years from first COMMERCIAL SALE of the first INDUSTRIAL PRODUCT or INDUSTRIAL PROCESS as follows:

 

(1)                                 For any INDUSTRIAL PRODUCT or INDUSTRIAL PROCESS covered only by a CLAIM under the [***] PATENT RIGHTS and not covered by a claim under the [***] PATENT RIGHTS, a royalty of [***].

 

(2)                                 For any INDUSTRIAL PRODUCT or INDUSTRIAL PROCESS covered only by a CLAIM under the [***] PATENT RIGHTS and not covered by a claim under the [***] PATENT RIGHTS, a royalty of [***] of NET SALES of INDUSTRIAL PRODUCTS or INDUSTRIAL PROCESSES [***] for a given calendar year.

 

(3)                                 For any INDUSTRIAL PRODUCT or INDUSTRIAL PROCESS covered by a CLAIM under the [***] PATENT RIGHTS and a CLAIM under the [***] PATENT RIGHTS, a royalty of [***].

 

(iii)                               DIAGNOSTIC PRODUCTS or DIAGNOSTIC PROCESSES.  Beginning with the first COMMERCIAL SALE of the first DIAGNOSTIC PRODUCT or DIAGNOSTIC PROCESS, COMPANY shall pay HOSPITAL a royalty on the NET SALES of all DIAGNOSTIC PRODUCT or DIAGNOSTIC PROCESS until the later of (1) the expiration or abandonment of the PATENT RIGHTS or (2) ten years from first COMMERCIAL SALE of the first DIAGNOSTIC PRODUCT or DIAGNOSTIC PROCESS as follows:

 

(1)                                 For any DIAGNOSTIC PRODUCT or DIAGNOSTIC PROCESS covered only by a CLAIM under the [***] PATENT RIGHTS and not covered by a claim under the [***] PATENT RIGHTS, a royalty of [***].

 

(2)                                 For any DIAGNOSTIC PRODUCT or DIAGNOSTIC PROCESS covered only by a CLAIM under the [***] PATENT RIGHTS and not covered by a claim under the [***] PATENT RIGHTS, a royalty of [***] of NET SALES of DIAGNOSTIC PRODUCTS or DIAGNOSTIC PROCESSES [***] for a given calendar year.

 

(3)                                 For any DIAGNOSTIC PRODUCT or DIAGNOSTIC PROCESS covered by a CLAIM under the [***] PATENT RIGHTS, a royalty of [***].

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

(b)                                 Royalty Stacking.

 

(i)                                     [***] PATENT RIGHTS [***].  In the event that COMPANY is required to make [***] payments to one or more third parties in order to practice the [***] PATENT RIGHTS for any PRODUCT or PROCESS covered only by a CLAIM under the [***] PATENT RIGHTS and not covered by a claim under the [***] PATENT RIGHTS, COMPANY shall [***].

 

(ii)                                  [***] PATENT RIGHTS [***].  In the event that COMPANY is required to make [***] payments to one or more third parties in order to practice the [***] PATENT RIGHTS for any PRODUCT or PROCESS covered only by a CLAIM under the [***] PATENT RIGHTS and not covered by a claim under the [***] PATENT RIGHTS, COMPANY may offset a total of [***] of such third party [***] payments against any [***] payments that are due under Section 4.5(a) to HOSPITAL [***], provided that in no event shall the royalty payments in a REPORTING PERIOD under Section 4.5(a), when aggregated with any other offsets and credits allowed under this AGREEMENT, be reduced by more than [***] with respect to royalties due to HOSPITAL on PRODUCTS at a rate of [***] or more than [***] with respect to royalties due to HOSPITAL on PRODUCT at a rate of [***].

 

(iii)                               [***] and [***] PATENT RIGHTS.  In the event that COMPANY is required to make [***] payments to one or more third parties in order to practice the PATENT RIGHTS for any PRODUCT or PROCESS covered by a CLAIM under the [***] PATENT RIGHTS, COMPANY may offset [***] of such third party [***] payments that are due under Section 4.5(a) to HOSPITAL [***], provided that in no event shall the royalty in a REPORTING PERIOD under Section 4.5(a), when aggregated with any other offsets and credits allowed under this AGREEMENT, be less than [***] of NET SALES of such PRODUCT or PROCESS.

 

(c)                                  All payments due to HOSPITAL under this Section 4.5 shall be due and payable by COMPANY within [***] after the end of each REPORTING PERIOD, and shall be accompanied by a report as set forth in Article 5.4.

 

4.6                               Non-Royalty Sublicensing Income.  COMPANY shall pay HOSPITAL within thirty (30) days of receipt thereof a percentage of any and all non-royalty income paid to COMPANY or an AFFILIATE in consideration for the sublicensing of any license granted hereunder, including but not limited to [***]) (“NON-ROYALTY INCOME PERCENTAGE”).  Said NON-ROYALTY INCOME PERCENTAGE shall depend upon the time at which COMPANY or an AFFILIATE executes the agreement with a third party providing for such non-royalty income (“THIRD PARTY AGREEMENT”) as follows.

 

In the event the THIRD PARTY AGREEMENT is executed:

 

(a)                                 upon or less than [***] from the EFFECTIVE DATE, the NON-ROYALTY INCOME PERCENTAGE shall be [***];

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

(b)                                 more than [***] from the EFFECTIVE DATE, but upon or less than [***] from the EFFECTIVE DATE, the NON-ROYALTY INCOME PERCENTAGE shall be [***]; or

 

(c)                                  more than [***] from the EFFECTIVE DATE, the NON-ROYALTY INCOME PERCENTAGE shall be [***].

 

4.7                               Form of Payment.  All payments due under this AGREEMENT shall be drawn on a United States bank and shall be payable in United States dollars.  Each payment shall reference this AGREEMENT and identify the obligation under this AGREEMENT that the payment satisfies.  Conversion of foreign currency to U.S. dollars shall be made at the conversion rate existing in the United States for the purchase of U.S. Dollars with the applicable currency, as reported in The Wall Street Journal, on the last working day of the applicable REPORTING PERIOD.  Such payments shall be without deduction of exchange, collection or other charges, and, specifically, without deduction of withholding or similar taxes or other government imposed fees or taxes, except as permitted in the definition of NET SALES.  Checks for all payments due to the HOSPITAL under this AGREEMENT shall be made payable to HOSPITAL and addressed as set forth in Section 12.2.  Payments via wire transfer should be made as follows:

 

[***]

 

4.8                               Overdue Payments.  The payments due under this AGREEMENT shall, if overdue, bear interest beginning on the first day following the REPORTING PERIOD to which such payment was incurred and until payment thereof at a per annum rate equal to [***] in effect on the due date as reported by The Wall Street Journal, such interest rate being compounded on the last day of each REPORTING PERIOD, not to exceed the maximum permitted by law.  Any such overdue payments when made shall be accompanied by all interest so accrued.  Said interest and the payment and acceptance thereof shall not preclude HOSPITAL from exercising any other rights it may have as a consequence of the lateness of any payment.

 

4.9                               Equity.  Upon execution of this AGREEMENT, and in additional consideration for the licenses granted hereunder, COMPANY shall issue to HOSPITAL (or its nominee) equity as follows.

 

(a)                                 Initial Grant.

 

(i)                                     COMPANY shall issue a total of [***], $.00l par value per share (the “SHARES”), in the name of HOSPITAL [***], and [***].

 

(ii)                                  COMPANY represents to HOSPITAL that, as of the EFFECTIVE DATE, the aggregate number of Shares equals [***] of COMPANY’s issued and outstanding Common Stock calculated on a [***]. For purposes of this Section, [***] shall mean that the total number of issued and outstanding shares of the COMPANY’s Common Stock shall be [***], and shall assume the [***].

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

(b)                                 Anti-Dilution Protection.  COMPANY shall issue additional shares of Common Stock to HOSPITAL [***], as calculated after giving effect to [***].  Such issuances shall continue until and including (i) the date upon which [***], or (ii) the issuance [***] as a result of which a cumulative total of [***] shall be received by COMPANY.  For clarity if the [***] results in [***] being received by the COMPANY, only [***] shall be subject to this section.  Thereafter, [***] pursuant to this section.

 

(c)                                  Participation in Future Equity Offerings.  After the date of the [***] shall have the right to purchase additional shares of COMPANY’s capital stock in any private offering by the COMPANY of its equity securities in exchange for cash, [***], which purchase shall be pursuant to the terms and conditions at least as favorable as those granted to the other offerees.  All rights granted to HOSPITAL and HOSPITAL HOLDERS pursuant to this Section 4.9(c) shall (i) be subject to the same exceptions, limitations and termination conditions as are applicable to other participants in the offering and (ii) terminate immediately prior to a firm commitment underwritten public offering of the COMPANY’s common stock.  For the purpose of this Section 4.9(c), the term HOSPITAL shall include HOSPITAL AFFILIATES.

 

(d)                                 [***].  With respect to shares issued pursuant to Section 4.9(a) and (b), HOSPITAL, HOSPITAL AFFILIATES (if applicable)[***] shall be entitled to [***] on such terms and conditions as are applicable to the rights granted to [***].  For shares issued pursuant to Section 4.9(c), [***] shall be governed by Section 4.9(c).

 

(e)                                  Joinder in Agreement.  At the request of COMPANY, HOSPITAL and HOSPITAL AFFILIATES (if applicable)[***] may join in any agreement(s) acceptable to HOSPITAL and/or HOSPITAL AFFILIATES between COMPANY and the investors stock issuance covering the rights set forth in Sections 4.9(c) and 4.9(d).  Upon the execution of such agreement(s), such agreement(s) shall govern such rights and sections 4.9(c) and 4.9(d) shall cease to be applicable.

 

5.                                      REPORTS AND RECORDS

 

5.1                               Diligence Reports.  Within sixty (60) days after the end of each calendar year, COMPANY shall report in writing to HOSPITAL on progress made toward the objectives set forth in Section 3.1 during such preceding 12 month period, including, without limitation, progress on research and development, status of applications for regulatory approvals, manufacturing, sublicensing and the number of sublicenses entered into and marketing.

 

5.2                               Milestone Achievement Notification.  COMPANY shall report to HOSPITAL the dates on which it achieves the milestones set forth in Section 4.4 within sixty (60) days of each such occurrence.

 

5.3                               Non-Royalty Sublicensing Income Reports.  COMPANY shall, along with delivering payment as set forth in Section 4.6, report to HOSPITAL within thirty (30) days of receipt the amount of all non-royalty sublicensing income received by COMPANY, and COMPANY’S calculation of the amount due and paid to HOSPITAL from such income, including an itemized listing of the source of income comprising such consideration, and the name and address of each entity making such payments.

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

5.4                               COMMERCIAL SALES Reports.  COMPANY shall report to HOSPITAL the date on which it achieves the first COMMERCIAL SALE in each country of the LICENSE TERRITORY within thirty (30) days of each such occurrence.  Following the first COMMERCIAL SALE, COMPANY shall deliver reports to HOSPITAL within thirty (30) days after the end of each REPORTING PERIOD.  Each report under this Section 5.4 shall have substantially the format outlined in Appendix A, shall be certified as correct on behalf of COMPANY by an officer of COMPANY and shall contain at least the following information as may be pertinent to a royalty accounting hereunder for the immediately preceding REPORTING PERIOD:

 

(a)                                 the number of PRODUCTS and PROCESSES TRANSFERRED by COMPANY, its AFFILIATES and SUBLICENSEES by continent;

 

(b)                                 the gross amount billed, due and paid by COMPANY, its AFFILIATES and SUBLICENSEES for each PRODUCT and PROCESS by continent;

 

(c)                                  calculation of NET SALES for the applicable REPORTING PERIOD each continent, including an itemized listing of offsets and permitted deductions;

 

(d)                                 total royalties payable on NET SALES in U.S. dollars, together with the exchange rates used for conversion; and

 

(e)                                  any other payments due to HOSPITAL under this AGREEMENT.

 

If no amounts are due to HOSPITAL for any REPORTING PERIOD, the report shall so state.

 

5.5                               Audit Rights.  COMPANY shall maintain, and shall cause each of its AFFILIATES and SUBLICENSEES to maintain, complete and accurate records relating to the rights and obligations under this AGREEMENT and any amounts payable to HOSPITAL in relation to this AGREEMENT, which records shall contain sufficient information to permit HOSPITAL and its representatives to confirm the accuracy of any payments and reports delivered to HOSPITAL and compliance in all other respects with this AGREEMENT.  COMPANY shall retain and make available, and shall cause each of its AFFILIATES and SUBLICENSEES to retain and make available, such records for at least [***] following the end of the calendar year to which they pertain, to independent certified public accountants designated by HOSPITAL and acceptable to COMPANY or the relevant AFFILIATE or SUBLICENSEE in its reasonable judgment, or to representatives of the HOSPITAL who are certified public accountants at HOSPITAL’s expense and upon at least fifteen (15) days’ advance written notice, for inspection during normal business hours, to verify any reports and payments made and/or compliance in other respects under this AGREEMENT.  The accountants shall present a draft of their report to COMPANY prior to delivery to HOSPITAL and shall consider in good faith any proposed modifications or corrections proposed by COMPANY in rendering their final report.  If the final report of any examination conducted by the independent certified public accountants pursuant to the provisions of this Section shows an underreporting or underpayment of five percent (5%) or more in any payment due to HOSPITAL hereunder, COMPANY shall bear the full cost of such audit and shall remit any amounts due to HOSPITAL (including interest due in accordance with Section 4.8) within thirty (30) days of receiving notice thereof from HOSPITAL, provided that if

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

the audit was conducted by a representative of the HOSPITAL, and such report is contested in good faith by COMPANY, payment will be made with five (5) days after the matter is resolved.  Unless the parties otherwise agree, the matter will be resolved by independent certified public accountants designed by HOSPITAL and acceptable to COMPANY or the relevant Affiliate or SUBLICENSEE in its reasonable judgment.

 

5.6                               Information Rights.  For the longer of (i) [***] from the EFFECTIVE DATE or (ii) such time as COMPANY has [***], HOSPITAL shall have the right to [***] receive an update on development of PRODUCTS AND PROCESSES.

 

5.7                               HOSPITAL’S Notice of New Inventions.  Unless prevented by obligations to other third parties or sponsors of research including the United States Government, HOSPITAL will exercise reasonable efforts to provide COMPANY, in confidence, notification of any additional inventions on which [***] are inventors which (i) are [***] and (ii) are disclosed to HOSPITAL’s Office of Corporate Sponsored Research and Licensing within [***] of the EFFECTIVE DATE.  HOSPITAL will provide COMPANY the opportunity to request a license to such inventions.  HOSPITAL will [***].

 

6.                                      PATENT PROSECUTION AND MAINTENANCE

 

6.1                               Prosecution.  HOSPITAL shall be responsible for the preparation, filing, prosecution and maintenance of all patent applications and patents included in PATENT RIGHTS.  COMPANY shall reimburse HOSPITAL for PATENT COSTS incurred by HOSPITAL relating thereto in accordance with Section 4.2.

 

6.2                               Copies of Documents.  With respect to any PATENT RIGHT, HOSPITAL shall instruct the patent counsel prosecuting such PATENT RIGHT to copy COMPANY on patent prosecution documents that are received from or filed with the United States Patent and Trademark Office sufficiently in advance of any required date to allow COMPANY to comment thereon.  HOSPITAL shall consider in good faith all comments from COMPANY, but HOSPITAL shall have no obligation to act on such comments.

 

6.3                               COMPANY’s Election Not to Proceed.  COMPANY may elect to surrender its license to any patent or patent application in PATENT RIGHTS in any country upon sixty (60) days advance written notice to HOSPITAL.  Such notice shall relieve COMPANY from the obligation to pay for future PATENT COSTS but shall not relieve COMPANY from responsibility to pay PATENT COSTS incurred prior to the expiration of the sixty (60) day notice period.  Such U.S. or foreign patent application or patent shall thereupon cease to be a PATENT RIGHT hereunder, COMPANY shall have no further rights therein and HOSPITAL shall be free to license its rights to that particular U.S. or foreign patent application or patent to any other party on any terms.

 

7.                                      INFRINGEMENT

 

7.1                               HOSPITAL Right to Prosecute.  HOSPITAL will protect its PATENT RIGHTS from infringement and prosecute infringers when, in its sole judgment, such action may be reasonably necessary, proper and justified.  If COMPANY shall have supplied HOSPITAL with written evidence demonstrating to HOSPITAL’s reasonable satisfaction prima facie infringement of a claim of a PATENT RIGHT by a third party which poses a material threat to COMPANY’S

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

rights under this AGREEMENT, COMPANY may by notice request HOSPITAL to take steps to protect the PATENT RIGHT.  HOSPITAL shall notify COMPANY within sixty (60) days of the receipt of such notice whether HOSPITAL intends to prosecute the alleged infringement.  If HOSPITAL notifies COMPANY that it intends to so prosecute, HOSPITAL shall, within three (3) months of its notice to COMPANY either (i) cause such infringement to terminate, or (ii) initiate legal proceedings against the infringer.

 

7.2                               COMPANY Right to Prosecute.  In the event HOSPITAL (i) notifies COMPANY that HOSPITAL does not intend to prosecute infringement identified under Section 7.1, (ii) does not respond to a notice from COMPANY under Section 7.1 within sixty (60) days, or (iii) does not cause said infringement to terminate or initiate legal procedures against the infringer within three (3) months of giving notice to COMPANY under Section 7.1, COMPANY may, upon notice to HOSPITAL, initiate legal proceedings against the infringer at COMPANY’s expense.  Before commencing such action, COMPANY and, as applicable, any AFFILIATE, shall consult with HOSPITAL and shall give careful consideration to the views of HOSPITAL regarding the advisability of the proposed action and its potential effects on the public interest.  COMPANY shall indemnify and hold HOSPITAL harmless from all costs, expenses and liabilities that HOSPITAL incurs in connection with such action, regardless of whether HOSPITAL is a party-plaintiff, except for the expense of any independent counsel retained by HOSPITAL in accordance with Section 7.5 below.

 

7.3                               Assignment of PATENT RIGHT.  If COMPANY elects to commence an action as described in Section 7.2 above, HOSPITAL shall have, in its sole discretion, the option to permit such action to be brought in its name and to be joined as a party-plaintiff if so required by law, or to assign to COMPANY all of HOSPITAL’s right, title and interest in and to the PATENT RIGHT which is the subject of such action (subject to all of HOSPITAL’s obligations to the government under law and any other rights that others may have in such PATENT RIGHT).  If HOSPITAL makes such an assignment, such assignment shall be irrevocable, and such action by COMPANY shall thereafter be brought or continued without HOSPITAL as a party, if HOSPITAL is no longer an indispensable party; provided, however, that COMPANY shall continue to meet all of its obligations under this AGREEMENT as if the assigned PATENT RIGHT were still licensed to COMPANY.

 

7.4                               Settlement.  COMPANY shall not enter into any settlement, consent judgment or other voluntary final disposition of any infringement action without the prior written consent of HOSPITAL.

 

7.5                               Cooperation.  Each PARTY agrees to cooperate reasonably in any action under this Article 7 which is controlled by the other PARTY, provided that the controlling party reimburses the cooperating party for any costs and expenses incurred by the cooperating party in connection with providing such assistance, except for the expense of any independent counsel retained by HOSPITAL in accordance with this Section 7.5.  Such controlling party shall keep the cooperating party informed of the progress of such proceedings and shall make its counsel available to the cooperating party.  The cooperating party shall also be entitled to independent counsel in such proceedings but at its own expense, said expense to be offset against any damages received by the PARTY bringing suit in accordance with Section 7.6.

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

7.6                               Recovery.  Any award paid by third parties as the result of such proceedings (whether by way of settlement or otherwise) shall first be applied to reimbursement of the unreimbursed third party legal fees and expenses incurred by either PARTY and then the remainder shall be divided between the PARTIES as follows:

 

(a)                                 (i)                                     [***]; and

 

(ii)                                  [***]; and

 

(b)                                 awards other than those [***] shall be shared by the parties as follows: [***] to the party bringing the suit and [***] to the other party.

 

8.                                      INDEMNIFICATION AND INSURANCE

 

8.1                               Indemnification.

 

(a)                                 COMPANY shall indemnify, defend and hold harmless HOSPITAL and its AFFILIATES and their respective trustees, directors, officers, medical and professional staff, employees, and agents and their respective successors, heirs and assigns (the “INDEMNITEES”), against any liability, damage, loss or expense (including reasonable attorney’s fees and expenses of litigation) incurred by or imposed upon the INDEMNITEES or any one of them in connection with any claims, suits, actions, demands or judgments arising out of any theory of product liability (including, but not limited to, actions in the form of tort, warranty, or strict liability) concerning any product, process or service made, used or sold pursuant to any right or license granted under this AGREEMENT.

 

(b)                                 COMPANY agrees, at its own expense, to provide attorneys reasonably acceptable to the HOSPITAL to defend against any actions brought or filed against any party indemnified hereunder with respect to the subject of indemnity contained herein, whether or not such actions are rightfully brought; provided, however, that any INDEMNITEE shall have the right to retain its own counsel, at the expense of COMPANY, if representation of such INDEMNITEE by counsel retained by COMPANY would be inappropriate because of actual or potential differences in the interests of such INDEMNITEE and any other party represented by such counsel.  COMPANY agrees to keep HOSPITAL informed of the progress in the defense and disposition of such claim and to consult with HOSPITAL prior to any proposed settlement.

 

(c)                                  This section 8.1 shall survive expiration or termination of this AGREEMENT.

 

8.2                               Insurance.

 

(a)                                 Beginning at such time as any such product, process or service is being commercially distributed, sold, leased or otherwise transferred, or performed or used (other than for the purpose of obtaining regulatory approvals), by COMPANY, an AFFILIATE or SUBLICENSEE, COMPANY shall, at its sole cost and expense, procure and maintain commercial general liability insurance in amounts not less than [***] per incident and [***] annual aggregate and naming the INDEMNITEES as additional insureds.  Such commercial general liability insurance shall provide (i) product liability coverage and (ii) broad form contractual liability coverage for COMPANY’s indemnification under Section 8.1 of this

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

AGREEMENT.  If COMPANY elects to self-insure all or part of the limits described above (including deductibles or retentions which are in excess of [***] annual aggregate) such self-insurance program must be acceptable to the HOSPITAL and the Risk Management Foundation.  The minimum amounts of insurance coverage required under this Section 8.2 shall not be construed to create a limit of COMPANY’s liability with respect to its indemnification under Section 8.1 of this AGREEMENT.

 

(b)                                 COMPANY shall provide HOSPITAL with written evidence of such insurance upon request of HOSPITAL.  COMPANY shall provide HOSPITAL with written notice at least fifteen (15) days prior to the cancellation, non-renewal or material change in such insurance; if COMPANY does not obtain replacement insurance providing comparable coverage prior to the expiration of such fifteen (15) day period, HOSPITAL shall have the right to terminate this AGREEMENT effective at the end of such fifteen (15) day period without notice or any additional waiting periods.

 

(c)                                  COMPANY shall maintain such commercial general liability insurance beyond the expiration or termination of this AGREEMENT during (i) the period that any such product, process, or service is being commercially distributed, sold, leased or otherwise transferred, or performed or used (other than for the purpose of obtaining regulatory approvals), by COMPANY or by a licensee, affiliate or agent of COMPANY and (ii) a reasonable period after the period referred to in (c) (i) above which in no event shall be less than fifteen (15) years.

 

(d)                                 This section 8.2 shall survive expiration of termination of this AGREEMENT.

 

9.                                      WARRANTIES AND DISCLAIMER

 

9.1                               Title to PATENT RIGHTS.  To the best knowledge of HOSPITAL’s Office of Corporate Sponsored Research and Licensing, HOSPITAL is the owner by assignment of the PATENT RIGHTS and has the authority to enter into this agreement and license the PATENT RIGHTS to COMPANY hereunder.

 

9.2                               No Warranties.  EXCEPT AS MAY BE EXPRESSLY SET FORTH HEREIN, HOSPITAL MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND CONCERNING THE PATENT RIGHTS AND THE RIGHTS GRANTED HEREUNDER, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, VALIDITY OF PATENT RIGHTS CLAIMS, WHETHER ISSUED OR PENDING, AND THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AND HEREBY DISCLAIMS THE SAME.  SPECIFICALLY, AND NOT TO LIMIT THE FOREGOING, HOSPITAL MAKES NO WARRANTY OR REPRESENTATION (i) REGARDING THE VALIDITY OR SCOPE OF ANY OF THE CLAIM(S), WHETHER ISSUED OR PENDING, OF ANY OF THE PATENT RIGHTS, AND (ii) THAT THE EXPLOITATION OF THE PATENT RIGHTS OR ANY PRODUCT WILL NOT INFRINGE ANY PATENTS OR OTHER INTELLECTUAL PROPERTY RIGHTS OF HOSPITAL OR OF ANY THIRD PARTY.

 

9.3                               Disclaimer.  IN NO EVENT SHALL HOSPITAL OR ANY OF ITS AFFILIATES OR ANY OF THEIR RESPECTIVE TRUSTEES, DIRECTORS, OFFICERS, MEDICAL AND

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

PROFESSIONAL STAFF, EMPLOYEES AND AGENTS BE LIABLE TO LICENSEE OR ANY OF ITS AFFILIATES, SUBLICENSEES OR DISTRIBUTORS FOR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND ARISING IN ANY WAY OUT OF THIS AGREEMENT OR THE LICENSE RIGHTS GRANTED HEREUNDER, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, INCLUDING WITHOUT LIMITATION ECONOMIC DAMAGES OR INJURY TO PROPERTY OR LOST PROFITS, REGARDLESS OF WHETHER HOSPITAL SHALL BE ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT SHALL KNOW OF THE POSSIBILITY OF THE FOREGOING.

 

10.                               TERM AND TERMINATION

 

10.1                        Term.  The term of this AGREEMENT shall commence on the EFFECTIVE DATE and shall remain in effect until the later of (i) the date on which all issued patents and filed patent applications within the PATENT RIGHTS have expired or been abandoned or (ii) all COMPANY obligations herein have expired, including but not limited to obligations under Sections 4.5(a), unless this AGREEMENT is terminated earlier in accordance with the provisions of this Article 10.

 

10.2                        Termination for Failure to Pay.  If COMPANY fails to make any payment due hereunder, HOSPITAL shall have the right to terminate this AGREEMENT upon fifteen (15) business days written notice, unless COMPANY makes such payments plus any interest due, as set forth in Section 4.8, within said twenty (20) day notice period.  If payments are not made, HOSPITAL may immediately terminate this AGREEMENT at the end of said fifteen (15) day period.

 

10.3                        Termination for Insurance and Insolvency.  HOSPITAL shall terminate this AGREEMENT immediately upon written notice with no further notice obligation or opportunity to cure if COMPANY fails to maintain the insurance required by Section 8.2 or if COMPANY, shall make an assignment for the benefit of creditors, or COMPANY shall file a petition in bankruptcy, provided that in any case in which a bankruptcy if filed against COMPANY, COMPANY shall have ninety (90) days in which to have the action dismissed and HOSPITAL shall not be permitted to terminate this Agreement in the event COMPANY causes such proceeding to be dismissed within such time period.

 

10.4                        Termination for Non-Financial Default.  If COMPANY, its AFFILIATES or SUBLICENSEES shall default in the performance of any of its obligations under this AGREEMENT, including but not limited to its obligations under Section 3.1(b)(i) or 3.1(b)(ii), and if such default has not been cured within sixty (60) days after notice by HOSPITAL in writing of such default, HOSPITAL may immediately terminate any licenses granted hereunder with respect to the country or countries in which such default has occurred at the end of said sixty (60) day cure period.

 

10.5                        Termination by Company.  COMPANY shall have the right to terminate this AGREEMENT by giving ninety (90) days advance written notice to HOSPITAL and upon such termination shall immediately cease all use and TRANSFER of PRODUCTS and PROCESSES.

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

10.6                        Effect of Termination on Sublicenses.  Any sublicenses granted by COMPANY or a SUBLICENSEE (to a sub-sublicensee) under this AGREEMENT shall provide for assignment to HOSPITAL of COMPANY’s or the granting SUBLICENSEE’s interest therein, upon termination of this AGREEMENT or upon termination of any license hereunder under which such sublicense has been granted, provided that the SUBLICENSEE under the sublicense is not in default thereunder.  Such assignment shall impose no obligations on HOSPITAL other than the continuation of the sublicense under PATENT RIGHTS granted to the SUBLICENSEE and may be conditioned on the execution of an amendment to such sublicense as HOSPITAL determines in its sole discretion is necessary to make such sublicense consistent with the terms of this AGREEMENT, as required by Section 2.2 hereof.  In the event that such necessary amendment, as determined by HOSPITAL, is not executed by the SUBLICENSEE, HOSPITAL shall be under no obligation to accept assignment of such sublicense and such sublicense and any rights granted therein under this Agreement, shall thereafter automatically terminate.

 

10.7                        Effects of Termination of AGREEMENT.  Upon termination of this AGREEMENT or any of the licenses hereunder for any reason, final reports in accordance with Article 5 shall be submitted to HOSPITAL and all royalties and other payments, including without limitation any unreimbursed PATENT COSTS, accrued or due to HOSPITAL as of the termination date shall become immediately payable.  COMPANY shall cease, and shall cause its AFFILIATES and SUBLICENSEES under any terminated sublicense to cease under any sublicense granted by COMPANY, all TRANSFERS and uses of PRODUCTS and PROCESSES upon such termination.  The termination or expiration of this AGREEMENT or any licenses granted hereunder shall not relieve COMPANY, its AFFILIATES or SUBLICENSEES of obligations arising before such termination or expiration.

 

11.                               COMPLIANCE WITH LAW

 

11.1                        Compliance.  COMPANY shall have the sole obligation for compliance with, and shall ensure that any AFFILIATES and SUBLICENSEES comply with, all government statutes and regulations that relate to PRODUCTS and PROCESSES, including, but not limited to, FDA statutes and regulations and the Export Administration Act of 1997, as amended, and the regulations promulgated thereunder, and any applicable similar laws and regulations of any other country in the LICENSE TERRITORY.

 

11.2                        Patent Numbers.  COMPANY shall cause all PRODUCTS sold in the United States to be marked with all applicable U.S. Patent Numbers, to the full extent required by United States law.  COMPANY shall similarly cause all PRODUCTS shipped to or sold in any other country to be marked in such a manner as to conform with the patent laws and practices of such country.

 

12.                               MISCELLANEOUS

 

12.1                        Entire Agreement.  This AGREEMENT constitutes the entire understanding between the PARTIES with respect to the subject matter hereof.

 

12.2                        Notices.  Any written notices, reports, waivers, correspondences or other communications required under or pertaining to this AGREEMENT, and including all payments required hereunder, shall be given by prepaid registered or certified mail or by an express/overnight

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

delivery service provided by a commercial carrier providing evidence of delivery, properly addressed to the other PARTY, which for HOSPITAL shall be as follows:

 

For MGH

Director, Corporate Sponsored Research and Licensing

Massachusetts General Hospital

Building 149, 13th Street, Suite 5036

Charlestown, MA 02129

 

For Company

Bioplex Systems, Inc.

c/o Flagship Ventures

One Memorial Drive

Cambridge, MA 02142

Attention: President

 

Notices and payments shall be considered timely if such notices are received on or before the established deadline date or sent on or before the deadline date as verifiable by legibly dated U.S. Postal Service postmark or dated receipt from a commercial carrier.

 

12.3                        Amendment; Waiver.  This AGREEMENT may be amended and any of its terms or conditions may be waived only by a written instrument executed by an authorized signatory of the PARTIES or, in the case of a waiver, by the PARTY waiving compliance.  The failure of either PARTY at any time or times to require performance of any provision hereof shall in no manner affect its rights at a later time to enforce the same.  No waiver by either PARTY of any condition or term shall be deemed as a further or continuing waiver of such condition or term or of any other condition or term.

 

12.4                        Binding Effect.  This AGREEMENT shall be binding upon and inure to the benefit of and be enforceable by the PARTIES hereto and their respective permitted successors and assigns.

 

12.5                        Assignment.  Except as set forth in this Section 12.5, COMPANY shall not assign any of its rights or obligations under this AGREEMENT without the prior written consent of HOSPITAL.  Provided COMPANY is not in breach of its diligence obligations as set forth in Article 3, no such consent will be required to assign this AGREEMENT to a successor by merger or consolidation of the COMPANY’s business to which this AGREEMENT pertains or to a purchaser of substantially all of the COMPANY’s assets related to this AGREEMENT, so long as such successor or purchaser shall agree in writing to be bound by the terms and conditions hereof prior to such assignment, including without limitation the diligence obligations set forth in Article 3.  COMPANY shall notify HOSPITAL in writing of any such assignment and provide a copy of all assignment documents and related agreements to HOSPITAL within thirty (30) days of such assignment.  Failure of an assignee to agree to be bound by the terms hereof or failure of COMPANY to notify hospital and provide copies of assignment documentation shall be grounds for termination of this AGREEMENT for default.

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

12.6                        Force Majeure.  Neither PARTY shall be responsible for delays resulting from causes beyond the reasonable control of such PARTY, including without limitation fire, explosion, flood, war, sabotage, strike or riot, provided that the nonperforming PARTY uses commercially reasonable efforts to avoid or remove such causes of nonperformance and continues performance under this AGREEMENT with reasonable dispatch whenever such causes are removed.

 

12.7                        Use of Name.  Neither PARTY shall use the name of the other PARTY or of any trustee, director, officer, staff member, employee, student or agent of the other PARTY or any adaptation thereof in any advertising, promotional or sales literature, publicity or in any document employed to obtain funds or financing without the prior written approval of the PARTY or individual whose name is to be used.  For HOSPITAL, such approval shall be obtained from HOSPITAL’s Chief Public Affairs Officer.

 

12.8                        Governing Law.  This AGREEMENT shall be governed by and construed and interpreted in accordance with the laws of the Commonwealth of Massachusetts, except that questions affecting the construction and effect of any patent shall be determined by the law of the country in which the patent shall have been granted.  Each PARTY agrees to submit to the exclusive jurisdiction of the Superior Court for Suffolk County, Massachusetts, and the United States District Court for the District of Massachusetts with respect to any claim, suit or action in law or equity arising in any way out of this AGREEMENT or the subject matter hereof.

 

12.9                        Hospital Policies.  COMPANY acknowledges that HOSPITAL’s employees and medical and professional staff members and the employees and staff members of HOSPITAL’s AFFILIATES are subject to the applicable policies of HOSPITAL and such AFFILIATES, including, without limitation, policies regarding conflicts of interest, intellectual property and other matters.  COMPANY shall provide HOSPITAL with any written agreement it proposes to enter into with any employee or staff member of HOSPITAL or any of HOSPITAL’s AFFILIATES for HOSPITAL’s prior review and shall not enter into any written or oral agreement with such employee or staff member which conflicts with any such policy.  HOSPITAL shall provide COMPANY, at COMPANY’s request, with copies of any such policies applicable to any such employee or staff member.

 

12.10                 Severability.  If any provision(s) of this AGREEMENT are or become invalid, are ruled illegal by any court of competent jurisdiction or are deemed unenforceable under then current applicable law from time to time in effect during the term hereof, it is the intention of the parties that the remainder of this agreement shall not be effected thereby.  It is further the intention of the parties that in lieu of each such provision which is invalid, illegal or unenforceable, there be substituted or added as part of this AGREEMENT a provision which shall be as similar as possible in economic and business objectives as intended by the parties to such invalid, illegal or enforceable provision, but shall be valid, legal and enforceable.

 

12.11                 Survival.  In addition to any specific survival references in this AGREEMENT, Sections 1, 2.4, 5.5, 8.1, 8.2, 9.2, 9.3, 10.6, 10.7, 12.2, 12.7, 12.8, 12.9, 12.10, 12.11, 12.12 and 12.13 shall survive termination or expiration of this AGREEMENT.

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

12.12                 Interpretation.  The parties hereto are sophisticated, have had the opportunity to consult legal counsel with respect to this transaction and hereby waive any presumptions of any statutory or common law rule relating to the interpretation of contracts against the drafter.

 

12.13                 Headings.  All headings are for convenience only and shall not affect the meaning of any provision of this AGREEMENT.

 

[Remainder of page intentionally left blank.]

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

IN WITNESS WHEREOF, the PARTIES have caused this AGREEMENT to be executed by their duly authorized representatives as of the date first written above.

 

 

	
BIOPLEX SYSTEMS, INC.
    	
THE GENERAL HOSPITAL CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
By: 
    	
/s/  
    	
 
    	
By: 
    	
/s/ Frances Toneguzzo  
    
	
 
    	
Name:
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    
	
 
    	
 
    
	
TITLE: CEO, Bioplex Systems
    	
TITLE: Director, CSRL
    
	
 
    	
 
    
	
DATE: 11-9-06
    	
DATE: 11-7-06
    

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

First Amendment

to the License Agreement between

THE GENERAL HOSPITAL CORPORATION and T2 BIOSYSTEMS, INC.

(“FIRST AMENDMENT”)

 

This amendment, effective December 2, 2008 (“FIRST AMENDMENT EFFECTIVE DATE”) is by and between The General Hospital Corporation, a not-for-profit corporation doing business as Massachusetts General Hospital (“HOSPITAL”), having its principal place of business at 55 Fruit Street, Boston, Massachusetts, 02114, and T2 Biosystems, Inc., a Delaware corporation formerly known as Bioplex Systems, Inc., having its principal place of business at 286 Cardinal Medeiros Avenue, Cambridge, MA 02141(“COMPANY”).

 

WHEREAS, HOSPITAL and COMPANY have entered into an exclusive license agreement (MGH reference #2006A21314) with an effective date of November 7, 2006 (“LICENSE AGREEMENT”) for the [***] PATENT RIGHTS and [***] PATENT RIGHTS;

 

WHEREAS, under research programs funded by the HOSPITAL and the U.S. Government, the HOSPITAL, through research conducted by [***], has developed an invention pertaining to [***];

 

WHEREAS, HOSPITAL has filed patent applications covering the [***] and all the inventors’ rights, title and interest in said applications have been assigned to HOSPITAL; and

 

WHEREAS, HOSPITAL and COMPANY desire to modify the LICENSE AGREEMENT to include the [***];

 

NOW THEREFORE, in consideration of the premises and of the faithful performance of the covenants herein contained, HOSPITAL and COMPANY agree to the following:

 

Section 1.22 shall be added as follows:

 

1.22                        “[***] PATENT RIGHTS” shall mean HOSPITAL’s rights in the [***]; or the equivalent of such applications including any division, continuation, continuation-in-part to the extent the claims are entitled to the priority filing date of the aforesaid mentioned application and are directed to subject matter specifically described in and reasonably supported by the aforesaid patent applications or any foreign patent application or Letters Patent or the equivalent thereof issuing thereon or reissue, reexamination or extension thereof.

 

The entirety of Section 1.14 shall be deleted and replaced with the following:

 

1.14                        “PATENTS RIGHTS” shall mean [***] PATENT RIGHTS, [***] PATENT RIGHTS and/or [***] PATENT RIGHTS.

 

The entirety of Section 4.5 shall be deleted and replaced with:

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

4.5                               Royalties.

 

(a)                                 In consideration of the licenses granted to COMPANY under this AGREEMENT and of the long development timeline for commercializing PRODUCTS and PROCESSES, COMPANY shall pay HOSPITAL certain compensation, including but not limited to certain deferred compensation, as follows.

 

(i)                                     RESEARCH PRODUCTS and RESEARCH PROCESSES.  Beginning with the first COMMERCIAL SALE of the first RESEARCH PRODUCT or RESEARCH PROCESS, COMPANY shall pay HOSPITAL a royalty on the NET SALES of all RESEARCH PRODUCTS and RESEARCH PROCESSES until the later of (1) the expiration or abandonment of the PATENT RIGHTS or (2) ten years from first COMMERCIAL SALE of the first RESEARCH PRODUCT or RESEARCH PROCESS as follows:

 

(1)                                 For any RESEARCH PRODUCT or RESEARCH PROCESS covered only by a CLAIM under the [***] PATENT RIGHTS, and not covered by a claim under the [***] PATENT RIGHTS, a royalty of [***].

 

(2)                                 For any RESEARCH PRODUCT or RESEARCH PROCESS covered only by a CLAIM under the [***] PATENT RIGHTS, and not covered by a claim under the [***] PATENT RIGHTS, a royalty of [***].

 

(3)                                 For any RESEARCH PRODUCT or RESEARCH PROCESS covered by a CLAIM under the [***] PATENT RIGHTS, and not covered by a claim under the [***] PATENT RIGHTS, a royalty of [***].

 

(4)                                 For any RESEARCH PRODUCT or RESEARCH PROCESS covered only by a CLAIM under the [***] PATENT RIGHTS, and not covered by a claim under the [***] PATENT RIGHTS, a royalty of [***] of NET SALES of RESEARCH PRODUCTS or RESEARCH PROCESSES [***] for a given calendar year.

 

(5)                                 For any RESEARCH PRODUCT or RESEARCH PROCESS covered by a CLAIM under the [***] PATENT RIGHTS, and not covered by a claim under the [***] PATENT RIGHTS, a royalty of [***].

 

(6)                                 For any RESEARCH PRODUCT or RESEARCH PROCESS covered by a CLAIM under the [***] PATENT RIGHTS, and not covered by a claim under the [***] PATENT RIGHTS, a royalty of [***].

 

(7)                                 For any RESEARCH PRODUCT or RESEARCH PROCESS covered by a CLAIM under the [***] PATENT RIGHTS, a royalty of [***].

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

(ii)                                  INDUSTRIAL PRODUCTS or INDUSTRIAL PROCESSES.  Beginning with the first COMMERCIAL SALE of the first INDUSTRIAL PRODUCT or INDUSTRIAL PROCESS, COMPANY shall pay HOSPITAL a royalty on the NET SALES of all INDUSTRIAL PRODUCTS and INDUSTRIAL PROCESSES until the later of (1) the expiration or abandonment of the PATENT RIGHTS or (2) ten years from first COMMERCIAL SALE of the first INDUSTRIAL PRODUCT or INDUSTRIAL PROCESS as follows:

 

(1)                                 For any INDUSTRIAL PRODUCT or INDUSTRIAL PROCESS covered only by a CLAIM under the [***] PATENT RIGHTS, and not covered by a claim under the [***] PATENT RIGHTS, a royalty of [***].

 

(2)                                 For any INDUSTRIAL PRODUCT or INDUSTRIAL PROCESS covered only by a CLAIM under the [***] PATENT RIGHTS, and not covered by a claim under the [***] PATENT RIGHTS, a royalty of [***].

 

(3)                                 For any INDUSTRIAL PRODUCT or INDUSTRIAL PROCESS covered by a CLAIM under the [***] PATENT RIGHTS, and not covered by a claim under the [***] PATENT RIGHTS, a royalty of [***].

 

(4)                                 For any INDUSTRIAL PRODUCT or INDUSTRIAL PROCESS covered only by a CLAIM under the [***] PATENT RIGHTS, and not covered by a claim under the [***] PATENT RIGHTS, a royalty of [***] of NET SALES of INDUSTRIAL PRODUCTS or INDUSTRIAL PROCESSES [***] for a given calendar year.

 

(5)                                 For any INDUSTRIAL PRODUCT or INDUSTRIAL PROCESS covered by a CLAIM under the [***] PATENT RIGHTS, and not covered by a claim under the [***] PATENT RIGHTS, a royalty of [***].

 

(6)                                 For any INDUSTRIAL PRODUCT or INDUSTRIAL PROCESS covered by a CLAIM under the [***] PATENT RIGHTS, and not covered by a claim under the [***] PATENT RIGHTS, a royalty of [***].

 

(7)                                 For any INDUSTRIAL PRODUCT or INDUSTRIAL PROCESS covered by a CLAIM under the [***] PATENT RIGHTS, a royalty of [***].

 

(iii)                               DIAGNOSTIC PRODUCTS or DIAGNOSTIC PROCESSES.  Beginning with the first COMMERCIAL SALE of the first DIAGNOSTIC PRODUCT or DIAGNOSTIC PROCESS, COMPANY shall pay HOSPITAL a royalty on the NET SALES of all DIAGNOSTIC PRODUCT or DIAGNOSTIC PROCESS until the later of (1) the expiration or abandonment of the PATENT RIGHTS or (2) ten years from first COMMERCIAL SALE of the first DIAGNOSTIC PRODUCT or DIAGNOSTIC PROCESS as follows:

 

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

(1)                                 For any DIAGNOSTIC PRODUCT or DIAGNOSTIC PROCESS covered only by a CLAIM under the [***] PATENT RIGHTS, and not covered by a claim under the [***] PATENT RIGHTS, a royalty of [***].

 

(2)                                 For any DIAGNOSTIC PRODUCT or DIAGNOSTIC PROCESS covered only by a CLAIM under the [***] PATENT RIGHTS, and not covered by a claim under the [***] PATENT RIGHTS, a royalty of [***].

 

(3)                                 For any DIAGNOSTIC PRODUCT or DIAGNOSTIC PROCESS covered by a CLAIM under the [***] PATENT RIGHTS, and not covered by a claim under the [***] PATENT RIGHTS, a royalty of [***].

 

(4)                                 For any DIAGNOSTIC PRODUCT or DIAGNOSTIC PROCESS covered only by a CLAIM under the [***] PATENT RIGHTS, and not covered by a claim under the [***] PATENT RIGHTS, a royalty of [***] of NET SALES of DIAGNOSTIC PRODUCTS or DIAGNOSTIC PROCESSES [***] for a given calendar year.

 

(5)                                 For any DIAGNOSTIC PRODUCT or DIAGNOSTIC PROCESS covered by a CLAIM under the [***] PATENT RIGHTS, and not covered by a claim under the [***] PATENT RIGHTS, a royalty of [***].

 

(6)                                 For any DIAGNOSTIC PRODUCT or DIAGNOSTIC PROCESS covered by a CLAIM under the [***] PATENT RIGHTS, and not covered by a claim under the [***] PATENT RIGHTS, a royalty of [***].

 

(7)                                 For any DIAGNOSTIC PRODUCT or DIAGNOSTIC PROCESS covered by a CLAIM under the [***] PATENT RIGHTS, a royalty of [***].

 

(b)                                 Royalty Stacking.

 

(i)                                     [***] PATENT RIGHTS and/or [***] PATENT RIGHTS.  In the event that COMPANY is required to make [***] payments to one or more third parties in order to practice the [***] PATENT RIGHTS and/or the [***] PATENT RIGHTS for any PRODUCT or PROCESS covered by a CLAIM under the [***] PATENT RIGHTS and not covered by a claim under the [***] PATENT RIGHTS, COMPANY shall [***].

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

(ii)                                  [***] PATENT RIGHTS [***].  In the event that COMPANY is required to make [***] payments to one or more third parties in order to practice the [***] PATENT RIGHTS for any PRODUCT or PROCESS covered only by a CLAIM under the [***] PATENT RIGHTS and not covered by a claim under the [***] PATENT RIGHTS, COMPANY may offset a total of [***] of such third party [***] payments against any [***] payments that are due under Section 4.5(a) to HOSPITAL in [***], provided that in no event shall the royalty payments in a REPORTING PERIOD under Section 4.5(a), when aggregated with any other offsets and credits allowed under this AGREEMENT, be reduced by more than [***] with respect to royalties due to HOSPITAL on PRODUCTS at a rate of [***] or more than [***] with respect to royalties due to HOSPITAL on PRODUCT at a rate of more than [***].

 

(iii)                               [***] PATENT RIGHTS.  In the event that COMPANY is required to make [***] payments to one or more third parties in order to practice the PATENT RIGHTS for any PRODUCT or PROCESS covered by a CLAIM under the [***] PATENT RIGHTS, COMPANY may offset [***] of such third party [***] payments that are due under Section 4.5(a) to HOSPITAL [***], provided that in no event shall the royalty in a REPORTING PERIOD under Section 4.5(a), when aggregated with any other offsets and credits allowed under this AGREEMENT, be less than [***] of NET SALES of such PRODUCT or PROCESS.

 

(iv)                              [***] PATENT RIGHTS.  In the event that COMPANY is required to make [***] payments to one or more third parties in order to practice the PATENT RIGHTS for any PRODUCT or PROCESS covered by a CLAIM under the [***] PATENT RIGHTS, COMPANY may [***] of such third party [***] payments that are due under Section 4.5(a) to HOSPITAL in [***], provided that in no event shall the royalty in a REPORTING PERIOD under Section 4.5(a), when aggregated with any other offsets and credits allowed under this AGREEMENT, be less than [***] of NET SALES of such PRODUCT or PROCESS.

 

(c)                                  All payments due to HOSPITAL under this Section 4.5 shall be due and payable by COMPANY within [***] after the end of each REPORTING PERIOD, and shall be accompanied by a report as set forth in Article 5.4.

 

The entirety of Section 12.2 shall be deleted and replaced with the following:

 

12.2                        Notices.  Any written notices, reports, waivers, correspondences or other communications required under or pertaining to this AGREEMENT, and including all payments required hereunder, shall be given by prepaid registered or certified mail or by an express/overnight delivery service provided by a commercial carrier providing evidence of delivery, properly addressed to the other PARTY, which shall be as follows:

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

For HOSPITAL

 

Director, Corporate Sponsored Research and Licensing

Massachusetts General Hospital

101 Huntington Avenue, 4th Floor

Boston, MA  02199

 

For COMPANY

T2 Biosystems, Inc.

286 Cardinal Medeiros Avenue

Cambridge, MA 02141

Attention:  President and CEO

 

Notices and payments shall be considered timely if such notices are received on or before the established deadline date or sent on or before the deadline date as verifiable by legibly dated U.S. Postal Service postmark or dated receipt from a commercial carrier.

 

All other provisions of the LICENSE AGREEMENT shall remain unchanged.

 

IN WITNESS WHEREOF, COMPANY and HOSPITAL hereto have duly executed this FIRST AMENDMENT.

 

	
T2 BIOSYSTEMS, INC.
    	
THE GENERAL HOSPITAL CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
BY:
    	
/s/ John McDonough
    	
 
    	
BY:
    	
/s/  
    
	
 
    	
Name:
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
TITLE: 
    	
CEO
    	
 
    	
TITLE: 
    	
Licensing Manager
    
	
 
    	
 
    	
 
    	
 
    
	
DATE:
    	
12/10/2008
    	
 
    	
DATE: 
    	
12/09/08
    

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

Second Amendment

To the Exclusive License Agreement between

THE GENERAL HOSPITAL CORPORATION and T2 BIOSYSTEMS, INC.

(“SECOND AMENDMENT”)

 

This SECOND AMENDMENT, effective February 21, 2011, (“SECOND AMENDMENT EFFECTIVE DATE”) is by and between the General Hospital Corporation, a not-for-profit corporation doing business as Massachusetts General Hospital (“HOSPITAL”), having its principal place of business at 55 Fruit Street, Boston, Massachusetts 02114, and T2 Biosystems, Inc., a Delaware corporation formerly known as Bioplex Systems, Inc., having its principal place of business at 101 Hartwell Avenue, Lexington, 02421 (“COMPANY”).

 

WHEREAS HOSPITAL and COMPANY have entered into an exclusive license agreement (MGH agreement no.: 2006A21314) with an effective date of November 7, 2006 and a First Amendment effective December 2, 2008, (collectively the “AGREEMENT”), for the [***] PATENT RIGHTS, [***] PATENT RIGHTS and [***] PATENT RIGHTS, as defined in Section 1 of the AGREEMENT;

 

WHEREAS COMPANY has expended an unanticipated amount of additional time and effort to develop and commercial DIAGNOSTIC PRODUCTS, DIAGNOSTIC PROCESSES, RESEARCH PRODUCTS, RESEARCH PROCESSES, INDUSTRIAL PRODUCTS, and INDUSTRIAL PROCESSES;

 

WHEREAS, GENERAL and COMPANY desire to modify the due diligence terms of the AGREEMENT for DIAGNOSTIC PRODUCTS, DIAGNOSTIC PROCESSES, RESEARCH PRODUCTS, RESEARCH PROCESSES, INDUSTRIAL PRODUCTS, and INDUSTRIAL PROCESSES; and

 

WHEREAS, in lieu of an upfront milestone extension fee and taking into consideration the need for COMPANY to conserve its resources for investment in product development and regulatory planning, HOSPITAL and COMPANY have agreed for COMPANY to pay HOSPITAL a royalty on OUTSIDE PRODUCTS and OUTSIDE PROCESSES (as defined below);

 

NOW THEREFORE, in consideration of the premises and of the faithful performance of the covenants herein contained, HOSPITAL and COMPANY agree to the following:

 

1.                                      The entirety of Section 1.15 in the AGREEMENT shall be deleted and replaced with the following:

 

“Section 1.15 “PROCESS” shall mean any DIAGNOSTIC PROCESS, INDUSTRIAL PROCESS, RESEARCH PROCESS or OUTSIDE PROCESS.”

 

2.                                      The entirety of Section 1.16 in the AGREEMENT shall be deleted and replaced with the following:

 

“Section 1.16 “PRODUCT shall mean any DIAGNOSTIC PRODUCT, INDUSTRIAL PRODUCT, RESEARCH PRODUCT or OUTSIDE PRODUCT.”

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

3.                                      A Section 1.23 shall be added in the AGREEMENT as follows:

 

“Section 1.23 “OUTSIDE PRODUCT” shall mean [***].”

 

4.                                      A Section 1.24 shall be added in the AGREEMENT as follows:

 

“Section 1.24 “OUTSIDE PROCESS” shall mean [***].”

 

5.                                      At the end of Section 3.1(a)(iv)(ii) in the AGREEMENT add “, provided such Chief Financial Officer or other financial officer may be part-time”.

 

6.                                      The entirety of Section 3.1(a)(vi) in the AGREEMENT shall be deleted.

 

7.                                      The entirety of Section 3.1(b) and (c) in the AGREEMENT shall be deleted and replaced with the following, and the following new subsection (d) shall be added:

 

“(b)                           Pre-sales Requirements for OUTSIDE PRODUCTS or OUTSIDE PROCESSES.

 

(i)                                within [***] OUTSIDE PRODUCT [***].

 

(ii)                             within [***] OUTSIDE PRODUCT or OUTSIDE PROCESS.

 

(iii)                          on or before [***] OUTSIDE PRODUCT or OUTSIDE PROCESS.

 

(c)                                  Pre-Sales Requirements for DIAGNOSTIC PRODUCTS, DIAGNOSTIC PROCESSES, RESEARCH PRODUCTS, RESEARCH PROCESSES, INDUSTRIAL PRODUCTS, and INDUSTRIAL PROCESSES.  For purposes of this subsection 3.1(c) DIAGNOSTIC PRODUCTS and DIAGNOSTICS PROCESSES shall comprise the “DIAGNOSTIC FIELD;” RESEARCH PRODUCTS and RESEARCH PROCESSES shall comprise the “RESEARCH FIELD;” INDUSTRIAL PRODUCTS and INDUSTRIAL PROCESSES shall comprise the “INDUSTRIAL FIELD; and the DIAGNOSTIC FIELD, RESEARCH FIELD and INDUSTRIAL FIELD shall collectively, comprise the “DUE DILIGENCE FIELDS.”

 

(i)                                use commercially reasonable efforts to [***] DIAGNOSTIC PRODUCTS, DIAGNOSTIC PROCESSES, RESEARCH PRODUCTS, RESEARCH PROCESSES, INDUSTRIAL PRODUCTS, and/or INDUSTRIAL PROCESSES.

 

(ii)                             [***] DIAGNOSTIC PRODUCTS, DIAGNOSTIC PROCESSES, RESEARCH PRODUCTS, RESEARCH PROCESSES, INDUSTRIAL PRODUCTS, and/or INDUSTRIAL PROCESSES.

 

(iii)                          on or before the [***], either (A) [***] PRODUCT or PROCESS in [***] or (B) [***] aimed at the [***] PRODUCT or PROCESS [***] (the PRODUCT or PROCESS that satisfies this condition shall hereinafter be referred to as the SUBSECTION (iii) PRODUCT or PROCESS, and the DUE DILIGENCE FIELD into which the SUBSECTION (iii) PRODUCT or PROCESS falls shall hereinafter be referred to as the SUBSECTION (iii) FIELD).

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

(iv)                         on or before the [***] of the SECOND AMENDMENT EFFECTIVE DATE:

 

(A)                               either (I) [***] SUBSECTION (iii) PRODUCT or PROCESS, or (II) if COMPANY has [***] to HOSPITAL for the [***] of the SUBSECTION (iii) PRODUCT or PROCESS, which shall be made part of this Section 3 and shall be subject to the obligations contained in this Agreement; and,

 

(B)                               either (I) [***] PRODUCT or PROCESS [***] or (II) [***] aimed at the [***] PRODUCT or PROCESS in [***] (the PRODUCT or PROCESS that satisfies this condition shall hereinafter be referred to as the SUBSECTION (iv) PRODUCT or PROCESS, and the field in which the SUBSECTION (iv) PRODUCT or PROCESS falls shall hereinafter be referred to as the SUBSECTION (iv) FIELD).

 

(v)                            on or before the [***] of the SECOND AMENDMENT EFFECTIVE DATE:

 

(A)                               either (I) [***] of the SUBSECTION (iv) PRODUCT or PROCESS, or (II) if COMPANY has [***] of the SUBSECTION (iv) PRODUCT or PROCESS, which shall be made part of this Section 3 and shall be subject to the obligations contained in this Agreement; and,

 

(B)                               either (I) [***] PRODUCT or PROCESS [***] or (II) [***] aimed at the [***] PRODUCT or PROCESS [***] (the PRODUCT or PROCESS that satisfies this condition shall hereinafter be referred to as the SUBSECTION (v) PRODUCT or PROCESS).

 

(vi)                         on or before the [***] of the SECOND AMENDMENT EFFECTIVE DATE, either (a) [***] of the SUBSECTION (v) PRODUCT or PROCESS, or (II) if COMPANY has [***] of the SUBSECTION (v) PRODUCT or PROCESS, which shall be made part of this Section 3 and shall be subject to the obligations contained in this Agreement;.

 

(vii)                      on or before the [***] of the SECOND AMENDMENT EFFECTIVE DATE, [***] PRODUCT or PROCESS in the [***].

 

Achievement of the foregoing objective for any PRODUCT or PROCESS in the DUE DILIGENCE FIELD (i.e., not for each of DIAGNOSTIC PRODUCT, DIAGNOSTIC PROCESS, RESEARCH PRODUCT, RESEARCH PROCESS, INDUSTRIAL PRODUCT, and INDUSTRIAL PROCESS), shall be deemed to satisfy COMPANY’s obligations to use commercially reasonable efforts under this Section 3.1(c)(vii).

 

(d)                                 Post-Sales Requirements

 

(i)                                     Continued Sales.

 

Following the first COMMERCIAL SALE of a PRODUCT or PROCESS, [***], COMPANY shall itself or through its AFFILIATES and/or SUBLICENSEES use commercially reasonable efforts, [***].”

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

8.                                      The entirety of Section 3.2 in the AGREEMENT shall be deleted and replaced with the following:

 

“If COMPANY believes it is unable to achieve the foregoing despite commercially reasonable efforts to do so, COMPANY must notify HOSPITAL and inform HOSPITAL in writing of the reason that the foregoing will not be achieved at least [***] in advance of the above milestone(s) being due (hereinafter DILIGENCE DELAY NOTICE”).  Such DILIGENCE DELAY NOTICE shall be accompanied with a [***].  HOSPITAL shall [***].  If HOSPITAL determines that COMPANY has failed to fulfill any of its obligations under Section 3.1, COMPANY and HOSPITAL shall meet promptly, but no less than thirty (30) days after such milestone event was due, to discuss the matter and consider any request by COMPANY to remedy the failure.  Neither party shall be obligated to agree to any such plan to remedy the failure.  If no plan is agreed upon and entered into in writing, or if a plan is agreed upon and COMPANY fails to comply with the agreed plan, then HOSPITAL may treat such failure as a default and may terminate, in accordance with Section 10.4, any licenses granted hereunder with respect to the particular type of PRODUCT or PROCESS which COMPANY has failed to diligently [***].  Notwithstanding the foregoing, in the event COMPANY fails to achieve its obligations in the amended Section 3.1(d), HOSPITAL shall have the right to terminate in accordance with Section 10.4 the license granted for the specific country in default.  The right to terminate as set forth herein shall be HOSPITAL’s sole remedy in the event that COMPANY has failed to fulfill any of its obligations under Section 3.1.

 

9.                                      The entirety of Section 4.4 in the AGREEMENT shall be deleted and shall be replaced with the following:

 

4.4                               Milestone Payments.  In addition to the payments set forth in Sections 4.1 through 4.3 above, COMPANY shall pay HOSPITAL milestone payments as following:

 

(a)                                 [***].”

 

10.                               The following new Section 4.5(a)(iv) shall be added in the AGREEMENT:

 

“Section 4.5(a)(iv):  OUTSIDE PRODUCTS.  Beginning with the first COMMERCIAL SALE of the first OUTSIDE PRODUCT AND/or OUTSIDE PROCESS, COMPANY shall pay HOSPITAL a royalty of [***] on the NET SALES of all OUTSIDE PRODUCTS and/or OUTSIDE PROCESSES until the earlier of (i) twelve (12) years from the first COMMERCIAL SALE of the first OUTSIDE PRODUCT and/or OUTSIDE PROCESS, or (ii) HOSPITAL’s exercise of its right of termination set forth in Article 10 of the AGREEMENT such that COMPANY’s license grant under the PATENT RIGHTS for each of DIAGNOSTIC PRODUCTS, DIAGNOSTIC PROCESSES, RESEARCH PRODUCTS, RESEARCH PROCESSES, INDUSTRIAL PRODUCTS, or INDUSTRIAL PROCESSES is terminated.

 

11.                               The entirety of Section 4.6(a) through (c) in the AGREEMENT shall be deleted and replaced with the following:

 

“(a)                           For DIAGNOSTIC PRODUCT, DIAGNOSTIC PROCESS, RESEARCH PRODUCT, RESEARCH PROCESS, INDUSTRIAL PRODUCT, or

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

INDUSTRIAL PROCESS related non-royalty sublicensing income, the NON-ROYALTY INCOME PERCENTAGE shall be [***].

 

(b)                                 For OUTSIDE PRODUCT or OUTSIDE PROCESS related non-royalty sublicensing income, the NON-ROYALTY INCOME PERCENTAGE shall be [***].”

 

12.                               Section 5.1 in the AGREEMENT shall be modified by the addition of the words “COMPANY’s then-current business plan for any PRODUCTS OR PROCESSES” between “development” and “status”.

 

13.                               The entirety of Section 10.4 in the AGREEMENT shall be deleted and replaced with:

 

“10.4.  Termination for Non-Financial Default.  If COMPANY, its AFFILIATES or SUBLICENSEES shall default in the performance of any of its obligations under this AGREEMENT, including but not limited to it obligations under Sections 3.1(b) or 3.1(c), and if such default has not been cured within sixty (60) days after notice by HOSPITAL in writing of such default, HOSPITAL may immediately terminate any licenses granted hereunder with respect to the particular type of PRODUCT or PROCESS with respect to which such default has occurred at the end said sixty (60) day cure period.  Additionally, if the default arises from a failure to meet the Post Sales Requirement set forth in Section 3.1(d) in a particular country, then the HOSPITAL’s right to terminate after the sixty (60) day cure period shall be limited to termination in the country where the default has occurred for the particular PRODUCT or PROCESS with respect to which such default has occurred.

 

14.                               Section 12.2 in the AGREEMENT shall be modified by replacing HOSPITAL’s and COMPANY’s with:

 

“For HOSPITAL

Executive Director, Research Ventures and Licensing

Massachusetts General Hospital

101 Huntington Avenue, 4th Floor

Boston, MA 02199”

 

“For Company

T2 Biosystems, Inc.

101 Hartwell Avenue

Lexington, Massachusetts 02421

Attention: President and CEO”

 

15.                               The PARTIES previously agreed to delay COMPANY’S submission of its 2009 annual diligence report required by Section 5.1 until resolution of this SECOND AMENDMENT.  Within thirty (30) days from the parties’ execution of this SECOND AMENDMENT, COMPANY shall submit such report to HOSPITAL. It is expressly agreed that all diligence requirements to date shall be deemed to have been satisfied.

 

16.                               All other provisions of the AGREEMENT shall remain unchanged

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

IN WITNESS WHEREOF, COMPANY and HOSPITAL hereto have duly executed this SECOND AMENDMENT.

 

	
T2 BIOSYSTEMS, INC.
    	
THE GENERAL HOSPITAL CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
BY:
    	
/s/ John McDonough  
    	
 
    	
BY:
    	
/s/ Frances Toneguzzo  
    
	
 
    	
Print Name     John McDonough
    	
 
    	
Print Name     Frances Toneguzzo
    
	
 
    	
 
    	
 
    	
 
    
	
TITLE: 
    	
CEO
    	
 
    	
TITLE: 
    	
Executive Director, Research Ventures &   Licensing
    
	
 
    	
 
    	
 
    	
 
    
	
DATE:
    	
2/25/2011
    	
 
    	
DATE: 
    	
2/22/11
    

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

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