Master Alliance Provisions Guide (MAPGuide)

Boston University Startup Exclusive License Template

  • Business model | Payment Structures

Definitions

Minimum Royalty Amount” means for: (a) any year identified in the Principal Terms & Milestones List under the phrase “Minimum Royalty Amount”, the dollar amount appearing opposite the designation of such year; and (b) any year thereafter during the Exclusive Period, an amount equal to the highest Minimum Royalty Amount for any previous year; and (c) any year after the termination of the Exclusive Period, zero.

Net Sales” means all gross amounts billed to any person or Entity at the earliest of the date of invoice, shipment or payment in respect of the making, having made, use, lease, sale, offer for sale and/or importation of Licensed Products and/or practice of Licensed Processes and/or use, reproduction, performance, display, and/or distribution of Software [Remove if no COPYRIGHT], without regard to whether the intended use is testing, including, without limitation, all amounts for a Combination Product, less the sum of the following amounts: 

(a) sales and use taxes, tariffs, duties and the like imposed directly and with reference to particular sales or leases; plus
(b) outbound shipping, packaging and/or cost of insurance prepaid or actually allowed; plus
(c) amounts allowed on credits or returns; plus
(d) discounts allowed in amounts customary in the trade; plus
(e) [if for a healthcare technology: sales to Public Sector entities in Non-Suit Countries for end use in Non-Suit Countries;] 

provided that: (i) no deductions will be made in respect of: (A) commissions paid to salespersons or sales agencies (without regard to whether employed by Licensee or a Permitted Sublicensee, or engaged as an independent contractor); or (B) the cost of collections. In the case of transfer of License Products among Licensee and any Affiliate and/or Permitted Sublicensee for which there is to be a subsequent sale to a third party End User, Net Sales will be calculated based on the invoice amount when subsequently sold to a third party. For the avoidance of any doubt, if Licensee or a Permitted Sublicensee consumes a Licensed Product or practices a Licensed Process in activity associated with performing a service for a third party (including any testing), Net Sales will be calculated on all gross amounts billed to said third party at the earliest of the date of invoice, shipment or payment for all activity associated with the performance of said service.

For the avoidance of any doubt, if a Licensed Product is sold as part of a Combination Product, Net Sales will be calculated in accordance with the terms of Section 4.01(F) (and Section 10.05 if applicable). 

Patent-Based Royalty Percentage” has the meaning set forth in the Principal Terms & Milestones List. 

Running Royalty Amount” means, for activity of Licensee in respect of any Calendar Quarter during the Term, the sum of:

(a) The product of Net Sales of Patent-Based Products and/or Patent-Based Processes by Licensee for such quarter, only in each country of the Territory in which the applicable making, having made, use, lease, sale, offer for sale, importation or other transfer would infringe a Claim but for the license granted in Section 2.01, multiplied by the Patent-Based Royalty Percentage (expressed as a decimal); plus 

(b) [DELETE IF NO COPYRIGHT] The product of Net Sales of Software-Based Products and/or Software-Based Processes by Licensee for such quarter, only in each country of the Territory in which the applicable possession, reproduction, use, modification, display, distribution or other license or transfer would infringe a valid and enforceable copyright in the absence of the license granted in Section 2.01, multiplied by the Software-Based Royalty Percentage (expressed as a decimal); 

provided, that: (i) no portion of any Net Sales will be included in the calculations under both clauses (a) and (b) hereof; and (ii) if any portion of any Net Sales could be so double-counted, such portion will be included only in the calculation under clause (a) hereof.

Sublicensee Royalty Revenue Percentage” has the meaning set forth in the Principal Terms & Milestones List. 

Sublicensee Running Royalty Amount” means, in respect of any Calendar Quarter during the Term, the amount of cash payments received by Licensee from a Permitted Sublicensee for any running royalties paid pursuant to a Sublicense for:

(a) The Net Sales of Patent-Based Products and/or Patent-Based Processes bu said Permitted Sublicensee in each country of the Territory in which the applicable making, having made, use, lease, sale, offer for sale, importation or other transfer would infringe a Claim in the absence of the license in Section 2.01; and 

(b) [DELETE IF NO COPYRIGHT] Net Sales of Software-Based Products and/or Software-Based Processes said Permitted Sublicensee in each country of the Territory in which the applicable possession, reproduction, use, modification, display, distribution or other license or transfer would infringe a valid and enforceable copyright in the absence of the license granted in Section 2.01.

Sublicensing Revenue” means any consideration actually received by Licensee or a Permitted Sublicensee from a third party as consideration for the sublicense of any of the rights granted under Section 2.01, including without limitation any royalties (other than running royalties), any technology access fees, upfront fees, license issue fees, license maintenance fees, purchases of equity between parties to a Sublicense to the extent the amount received in respect of any such equity purchase exceeds the then Current Market Value of such equity, assumed debt obligations in lieu of payments, and milestone payments, payment(s) of royalties for past infringement, or other such payments or fees, including the fair market value of any non-cash consideration (only as permitted by University in writing after consultation – See also Section 2.03(C)) but net of any tax or similar withholding obligations imposed by any tax or other government authority(ies) that are not reasonably recoverable by Licensee. For the avoidance of doubt, Sublicensing Revenue will not include: (i) Sublicensee Running Royalty Amount; or (ii) fair market value payments made in connection with research and development agreements, joint ventures, partnerships or collaboration agreements where Licensee, or an Affiliate, is obligated to perform research and development of any Licensed Product(s), Licensed Processes or Software[DELETE IF NO COPYRIGHT].

4. Royalties & Payments

4.01 Royalties. In consideration for the license and rights granted under this Agreement, Licensee will: 1) execute and deliver to University all documents (as appropriate); and 2) promptly pay all of the following royalties (collectively, the “Royalties”) and/or fees to the University:

(A) Equity as an Issue Fee. In consideration of the license granted to Licensee, Licensee will: (i) issue equity shares of Licensee to the University in the amounts and upon the terms set forth in the Principal Terms & Milestones List; and (ii) execute and deliver an Equity Agreement in a form acceptable to University. Additionally, Licensee will, concurrent with its execution and delivery of this Agreement to University, deliver to University a complete and accurate copy of Licensee’s capitalization table, reflecting the above referenced issuance of shares to University. Execution of the Equity Agreement and delivery of the shares required to be delivered to University in accordance therewith is a condition precedent to the validity and enforceability of the license granted pursuant to ARTICLE II of this Agreement and Licensee’s failure to both issue the equity shares and to execute and deliver to University an Equity Agreement will render this Agreement null and void ab initio.

(B) Milestone Payments. Within thirty (30) days after the occurrence of each Milestone, Licensee will pay to the University an amount equal to the Milestone Payment for each respective Milestone event.

(C) Minimum Royalty Amounts. During the Exclusive Period, on or before each January 1 following the Effective Date, Licensee will pay to the University the Minimum Royalty Amount as specified in the Principal Terms & Milestones List for the indicated MRA Year, wherein MRA Year 0 begins on the January 1 following the Effective Date, MRA Year 1 begins on the second January 1 following the Effective Date, etc.

(D) Running Royalties. Within forty-five (45) days after the end of each Calendar Quarter during the Term, Licensee will pay to the University an amount equal to:

a. Net Sales by Licensee. The Running Royalty Amount for such Calendar Quarter (if any); plus

b. Net Sales By Permitted Sublicensee. An amount equal to the product of the Sublicensee Royalty Revenue Percentage (expressed as a decimal) multiplied by the Sublicensee Running Royalty Amount for such Calendar Quarter that Licensee received from a Permitted Sublicensee at any time during the just completed Calendar Quarter (if any) (collectively, 4.01D (a) and (b) refer to the “Running Royalties”);

provided that amounts payable under 4.01(D)(a-b) with respect to any Calendar Year are fully creditable against the Minimum Royalty Amount paid by Licensee to University in said Calendar Year such that Licensee need only make payments to University when the cumulative amount payable under this Section 4.01(D)(a- b) exceeds the Minimum Royalty Amount and further provided that any available credit not taken against the Minimum Royalty Amount in any Calendar Year will be forfeited and thus not available as an offset in any subsequent Calendar Year.

(E) Sublicense Lump Sums. With respect to any payment Licensee receives from a Permitted Sublicensee under any Permitted Sublicense that constitutes Sublicensing Revenue, Licensee will, within forty-five (45) days after the end of each Calendar Quarter during the Term, pay to University an amount equal to: the product of the Sublicense Lump Sum Percentage (expressed as a decimal) multiplied by the applicable amount of Sublicensing Revenue (the “Lump Sum Amount”).

(F) Combination Product.

a. If a Licensed Product is sold as part of a Combination Product, Net Sales will be calculated by multiplying Net Sales for such Combination Product by the fraction A/(A+B), where A is the average sale price of the Licensed Product when sold separately and B is the average sale price of the other Independent Subproduct(s) included in the price of the other Independent Subproduct(s) included in the Combination Product when sold separately. For purposes of this calculation, the average sale price will be calculated using sales in the same country during the applicable royalty reporting period or, if sales of both the Licensed Product and the other Independent Subproduct(s) did not occur in such period, then in the most recent royalty reporting period in which sales of both occurred.

b. If such average sale price cannot be determined according to Section 4.01(F)(a), for both the Licensed Product, on the one hand, and the other Independent Subproduct(s), on the other hand, Net Sales will be calculated by multiplying Net Sales for such Combination Product sold by the fraction C/(C+D), where C is the fair market value of the Licensed Product and D is the fair market value of all other Independent Subproduct(s) included in the Combination Product in the same country during the applicable royalty reporting period. Prior to First Commercial Sale of a Combination Product, Licensee shall in good faith make a determination of the respective fair market values of the Licensed Product and the other Independent Subproduct(s) included in the Combination Product, and shall notify the University of such determination and provide the University with data to support such determination. The University shall have the right to review and approve such calculation, such approval not to be unreasonably withheld. If the University does not agree with such determination, the University shall inform Licensee within 30 days of receiving Licensee’s determination and data, and the parties shall meet to discuss the basis of the calculations. If the University and Licensee are still unable to agree as to such respective fair market values within sixty (60) days after the end of the thirty (30) day period, then the parties shall resolve the dispute in accordance with Section 10.05. A similar adjustment mechanism shall apply with respect to Sublicensing Revenue and Sublicensing Royalty Revenue arising from Combination Products.

(G) Royalty Stacking. Except as set forth in Schedule 2 (Scheduled Fees), Licensee knows of no third party to whom license fees must be paid to produce any Licensed Product or to practice any Licensed Process. In the event that Licensee is required to pay Third Party Royalties, then Licensee may deduct an amount equal to fifty percent (50%) of any Third Party Royalties from any Running Royalties due University hereunder (See: Section 4.01(D)) if and only if: (a) the third party is not an Affiliate of Licensee or any Permitted Sublicensee; and (b) the application for the third party patent upon which such claim is based has a priority filing date no more than eighteen (18) months prior to the Effective Date. Notwithstanding the foregoing, Running Royalties otherwise due University may never be less than fifty percent (50%) of the Running Royalties that would be payable to University absent the effects of this Section 4.01(G). For clarify, a deduction for particular Third Party Royalties may only be taken for such Third Party Royalties that are applicable and payable to the third party during the applicable Calendar Quarter (i.e. Licensee may not deduct any accrued Third Party Royalties from prior periods). In the event that it is determined after the Effective Date that University does not own all right, title, and interest in the Patent Rights and/or Copyright [DELETE IF NO COPYRIGHT], and Licensee obtains, by license(s), assignment(s), or otherwise, rights to any third party(ies’) interest(s) in the Patent Rights and/or Copyright [DELETE IF NO COPYRIGHT], any amounts paid by Licensee to such third party(ies) to obtain any rights in any third party interest(s) in such Patent Rights and/or Copyright [DELETE IF NO COPYRIGHT] will be treated as Third Party Royalties.