-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UQK0aMv0R1gTZ/TSz8fMn13hVoEifG129IV829oG2sa4p+Osy+ockw5bxXMVAlXg jZcIUSMtXPDgXkcBMH26Ww== 0001000096-08-000158.txt : 20080616 0001000096-08-000158.hdr.sgml : 20080616 20080616170830 ACCESSION NUMBER: 0001000096-08-000158 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20080430 FILED AS OF DATE: 20080616 DATE AS OF CHANGE: 20080616 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACCELR8 TECHNOLOGY CORP CENTRAL INDEX KEY: 0000727207 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [3826] IRS NUMBER: 841072256 STATE OF INCORPORATION: CO FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-31822 FILM NUMBER: 08901165 BUSINESS ADDRESS: STREET 1: 303 E 17TH AVE STREET 2: SUITE 108 CITY: DENVER STATE: CO ZIP: 80203 BUSINESS PHONE: 3038638088 MAIL ADDRESS: STREET 1: 303 E 17TH ST STREET 2: SUITE 108 CITY: DENVER STATE: CO ZIP: 80203 FORMER COMPANY: FORMER CONFORMED NAME: HYDRO SEEK INC DATE OF NAME CHANGE: 19880802 10QSB 1 accelr84302008.txt FORM 10-QSB (4/30/2008) FORM 10-QSB [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 30, 2008 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from ___________ to ____________ Commission file number 0-11485 ACCELR8 TECHNOLOGY CORPORATION --------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) COLORADO 84-1072256 -------- ---------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 7000 Broadway, Bldg., 3-307. Denver, CO 80221 --------------------------------------------- (Address of principal executive office) (303) 863-8088 ------------------------- (Issuer's telephone number) (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [ X ] No Number of shares outstanding of the issuer's Common Stock: Class Outstanding at June 13, 2008 ----- ---------------------------- Common Stock, no par value 10,171,210 Transititional small business disclosure format [ ] yes [ X ] no Accelr8 Technology Corporation 1 10-QSB 4/30/08 INDEX ----- Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Balance Sheets 3 April 30, 2008 (unaudited) and July 31, 2007 Condensed Statements of Operations 4 for the three and nine months ended April 30, 2008 and 2007 (unaudited) Condensed Statements of Cash Flows 5 for the nine months ended April 30, 2008 and 2007 (unaudited) Notes to Unaudited Condensed Financial Statements 6 Item 2. Management's Discussion and Analysis of 12 Financial Condition and Results of Operations Item 3. Controls and Procedures 14 PART II. OTHER INFORMATION Item 1. Legal Proceedings 14 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 14 Item 3. Defaults Upon Senior Securities 14 Item 4. Submission of Matters to a Vote of Security Holders 15 Item 5. Other Information 15 Item 6. Exhibits 15 SIGNATURES 15 CERTIFICATION OF OFFICERS Accelr8 Technology Corporation 2 10-QSB 4/30/08
PART I. FINANCIAL INFORMATION Item 1. Financial Statements Accelr8 Technology Corporation Condensed Balance Sheets ASSETS April 30, 2008 July 31, 2007 -------------- ------------- (Unaudited) Current assets: Cash and cash equivalents $ 1,276,760 $ 1,393,669 Accounts receivable 0 5,625 Inventory 98,860 107,855 Prepaid expenses and other current assets 34,747 24,466 ------------ ------------ Total current assets 1,410,367 1,531,615 Property and equipment, net 49,434 106,819 Investments, net 1,092,970 1,027,550 Intellectual property, net (Note 3) 3,370,975 3,472,103 ------------ ------------ Total assets $ 5,923,746 $ 6,138,087 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 77,599 $ 64,599 Accrued compensation and other liabilities 16,598 32,386 Deferred revenue 128,177 58,346 ------------ ------------ Total current liabilities 222,374 155,331 Long-term liabilities: Deferred compensation 1,151,961 1,102,549 ------------ ------------ Total liabilities 1,374,335 1,257,880 ------------ ------------ Commitments and Contingencies Shareholders' equity Common stock, no par value; 14,000,000 shares authorized; 10,171,210 and 9,971,210 shares respectively issued and outstanding 13,678,020 12,878,020 Contributed capital 702,615 635,280 Accumulated (deficit) (9,557,624) (8,359,493) Shares held for employee benefit (1,129,110 shares at cost) (273,600) (273,600) ------------ ------------ Total shareholders' equity 4,549,411 4,880,207 ------------ ------------ Total liabilities and shareholders' equity $ 5,923,746 $ 6,138,087 ============ ============ Accelr8 Technology Corporation 3 10-QSB 4/30/08 Accelr8 Technology Corporation Condensed Statements of Operations For the three and nine months ended April 30, 2008 and 2007 (Unaudited) 3 Months Ended April 30 9 Months Ended April 30 2008 2007 2008 2007 ---- ---- ---- ---- Revenues: OptiChem revenues $ 0 $ 22,687 $ 53,642 $ 77,805 Technical consulting revenue 0 0 0 22,000 Royalties 6,352 0 6,352 0 Option fees 54,545 -- 100,000 14,250 License fees 0 -- 100,000 50,000 ------------ ------------ ------------ ------------ Total revenues 60,897 22,687 259,994 164,055 ------------ ------------ ------------ ------------ Costs and expenses: Research and development 153,722 247,524 674,897 813,864 General and administrative 201,704 211,007 609,989 730,179 Amortization 60,404 60,046 182,141 180,137 Marketing and sales 1,356 2,190 10,499 5,788 Depreciation 12,036 18,382 39,146 55,146 Cost of sales 0 4,035 9,032 14,761 ------------ ------------ ------------ ------------ Total costs and expenses 429,222 543,184 1,525,704 1,799,875 ------------ ------------ ------------ ------------ Loss from operations (368,325) (520,497) (1,265,710) (1,635,820) ------------ ------------ ------------ ------------ Other income: Interest and dividend income 16,720 26,130 52,999 89,750 Unrealized Gain (Loss) on (19,163) 15,788 (37,181) 71,802 investments Gain (Loss) on sale of equipment 0 0 51,761 0 ------------ ------------ ------------ ------------ Other Income 0 2,042 0 2,042 ------------ ------------ ------------ ------------ Total other income (2,443) 43,960 67,579 163,594 ------------ ------------ ------------ ------------ Net Loss $ (370,768) $ (476,537) $ (1,198,131) $ (1,472,226) ============ ============ ============ ============ Net loss per share: Basic and diluted net loss $ (.04) $ (0.05) $ (0.12) $ (0.15) per share ============ ============= ============ ============ Weighted average shares 10,096,586 9,971,210 10,012,736 9,971,210 outstanding ============ ============ ============ ============ Accelr8 Technology Corporation 4 10-QSB 4/30/08 Accelr8 Technology Corporation Condensed Statements Of Cash Flows For the Nine months Ended April 30, 2008 and 2007 (Unaudited) 2008 2007 ---- ---- Cash flows from operating activities: Net loss $(1,198,131) $(1,472,226) Adjustments to reconcile net (loss) to net cash (used in) operating activities: Depreciation 39,146 55,146 Amortization 182,141 180,137 Fair value of stock options granted for services 67,335 28,540 Unrealized holding (gain) loss on investments 37,181 (71,802) Realized (Gain) on sale of investments, interest and dividend (27,601) (12,109) reinvestment (Gain) on sale of fixed assets (51,761) 0 (Increase) decrease in assets: Accounts receivable 5,625 (6,153) Inventory 8,995 (3,243) Prepaid expense and other (10,281) 7,721 Increase (decrease) in liabilities: Accounts payable 13,000 (2,535) Accrued liabilities (15,788) 22,217 Deferred revenue 69,831 6,059 Deferred compensation 49,412 140,161 ----------- ----------- Net cash (used in) operating activities (830,896) (1,128,087) Cash flows from investing activities: Sales Proceeds - Fixed Assets 70,000 0 Purchases of equipment and patent costs (81,013) 0 Contribution to deferred compensation trust (75,000) (75,000) ----------- ----------- Net cash (used in) investing activities (86,013) (75,000) ----------- ----------- Cash flows from financing activities: Sale of Common Stock & Warrants 800,000 0 ----------- ----------- Net cash provided by financing activities 800,000 0 ----------- ----------- Decrease in cash and cash equivalents (116,909) (1,203,087) Beginning balance 1,393,669 3,004,336 ----------- ----------- Ending balance $ 1,276,760 $ 1,801,249 =========== =========== Accelr8 Technology Corporation 5 10-QSB 4/30/08
Note 1. Basis of Presentation The financial statements included herein have been prepared by Accelr8 Technology Corporation (the "Company") without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted as allowed by such rules and regulations. The Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with our annual audited financial statements dated July 31, 2007 included in our annual report on Form 10-KSB as filed with the SEC. Management believes that the accompanying unaudited financial statements are prepared in conformity with generally accepted accounting principles, which require the use of management estimates, and contain all adjustments (including normal recurring adjustments) necessary to present fairly the operations and cash flows for the periods presented. The results of operations for the three months and nine months ended April 30, 2008 may not be indicative of the results of operations for the year ended July 31, 2008. Note 2. Summary of Significant Accounting Policies Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Concentration of credit risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash equivalents, accounts receivable, and notes receivable, including receivables from major customers. The Company grants credit to domestic and international clients in various industries. Exposure to losses on accounts receivable is principally dependent on each client's financial position. The Company performs ongoing credit evaluations of its clients' financial condition. Estimated Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, investments and other long-term liabilities approximates fair value at April 30, 2008 and 2007. The carrying value of all other financial instruments potentially subject to valuation risk, principally consisting of accounts receivable and accounts payable, also approximate fair value. Income Taxes The Company adopted the provisions of Financial Accounting Standards Board ("FASB") Interpretation No. 48 ("FIN 48") "Accounting for Uncertainty in Income Taxes," on August 1, 2007. The adoption of FIN 48 resulted in no adjustment to opening retained earnings. The Company has no unrecognized tax benefits and does not anticipate any increase in unrecognized benefits during the year ending July 31, 2008 relative to any tax positions taken prior to August 1, 2007. Should the Company determine that any penalty and interest be accrued as a result of current or future tax positions taken on its returns, such penalties and interest will be accrued in its financial statements as other non-interest expense and as interest expense during the period in which such determination is made. 6 The Company files federal and state income tax returns. These returns are subject to examination by taxing authorities for all tax years after 2001. Note 3. Recently Issued Accounting Pronouncements In February 2007, the FASB issued FASB SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, to expand the use of fair value measurement by permitting entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. SFAS 159 is effective beginning the first fiscal year that begins after November 15, 2007. The Company is currently evaluating the impact of adopting SFAS 159 on its financial statements. In December 2007, the FASB issued FAS 160 which changes the accounting and reporting for minority interests. Minority interests will be recharacterized as noncontrolling interests and will be reported as a component of equity separate from the parent's equity, and purchases or sales of equity interests that do not result in a change in control will be accounted for as equity transactions. In addition, net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement and, upon a loss of control, the interest sold, as well as any interest retained, will be recorded at fair value with any gain or loss recognized in earnings. FAS 160 is effective for annual periods beginning on or after December 15, 2008. The Company does not expect the adoption of FAS 160 to have an effect on its financial statements. In December 2007, the FASB issued SFAS 141(revised 2007), Business Combinations ("SFAS 141R"). SFAS 141R will significantly change the accounting for business combinations in a number of areas including the treatment of contingent consideration, contingencies, acquisition costs, intellectual property research & development and restructuring costs. In addition, under SFAS 141R, changes in deferred tax asset valuation allowances and acquired income tax uncertainties in a business combination after the measurement period will impact income tax expense. SFAS 141R is effective for fiscal years beginning after December 15, 2008. The Company has not yet determined the impact, if any, of SFAS 141R on its financial statements. Note 4. Intellectual Property Intellectual property consisted of the following: April 30, 2008 July 31, 2007 -------------- ------------- OptiChem(R) Technologies $ 4,454,538 $ 4,454,538 Patents 375,004 293,991 Trademarks 49,019 49,019 ----------- ----------- Total intellectual property 4,878,561 4,797,548 Accumulated amortization (1,507,586) (1,325,445) ----------- ----------- Net intellectual property $ 3,370,975 $ 3,472,103 =========== =========== Intellectual properties are recorded at cost and are being amortized on a straight-line basis over their estimated useful lives of 20 years, which approximates the patent and patent application life of the OptiChem(R) technologies. Amortization expense was $182,141 and $180,137, respectively, for the nine months ended April 30, 2008 and 2007. Accelr8 Technology Corporation 7 10-QSB 4/30/08 The Company routinely evaluates the recoverability of its long-lived assets based upon estimated future cash flows from or estimated fair value of such long-lived assets. If in management's judgment, the anticipated undiscounted cash flows or estimated fair value are insufficient to recover the carrying amount of the long-lived asset, the Company will determine the amount of the impairment, and the value of the asset will be written down. Management believes that the fair value of the technology exceeds the carrying value. However, it is possible that future impairment testing may result in intangible asset write-offs, which could adversely affect the Company's financial condition and results of operations. Note 5. License and Supply Agreements On November 24, 2007 the Company extended the non-exclusive Slide H license for three more years, to expire on November 23, 2010. Terms of the extended license are similar to those of the original license, which is $100,000, $50,000 for a prepaid license and $50,000 in prepaid royalties. The Company granted another royalty-bearing license to Schott Jenaer Glas GmbH for Streptavidin slides (Slide HS) for two years that expires on December 31, 2008. The terms were $100,000, $50,000 for a prepaid license and $50,000 in prepaid royalties. The Company entered into an exclusive seven-year license with NanoString Technologies Inc. on October 5, 2007. The license grants to NanoString the right to apply OptiChem(R) coatings to NanoString's proprietary molecular detection products. Pursuant to the license agreement, NanoString paid the Company a non-refundable fee of $100,000 of which $50,000 was credited against future royalties. Under the royalty-bearing license, NanoString is to pay the Company a royalty at the rate of eight percent (8%) of net sales for sales up to $500,000 of NanoString licensed products. The royalty rate on the second $500,000 of net sales is six percent (6%), and the royalty thereafter is four percent (4%). Note 6. Employee Stock Based Compensation On April 30, 2008, there were 1,187,500 common stock options outstanding at prices ranging from $1.45 to $4.50 with expiration dates between January 18, 2008 and December 11, 2017. For the nine months ended April 30, 2008 and 2007, stock options exercisable into 1,087,500 and 987,500 shares of common stock, respectively, were not included in the computation of diluted earnings per share because their effect was antidilutive. For the quarters ended April 30, 2008 and 2007, the company accounted for stock based compensation to employees and directors using SFAS No. 123 (revised 2004), "Share-Based Payment" (SFAS 123R), which replaces SFAS 123 and supersedes APB Opinion No. 25. SFAS 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The pro forma disclosures previously permitted under SFAS 123 are no longer an alternative to financial statement recognition. Under the modified prospective application method, we apply the standard to new awards, and to awards modified, repurchased, or cancelled. Additionally, compensation cost for the unvested portion of awards are recognized as compensation expense as the requisite service is rendered. The fair value of options granted under the stock option agreements and stock-based compensation plans discussed above is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants for the nine months ended April 30, 2008 and 2007: no dividend yield; risk free interest rate of 4% to 5%; expected life of 3-10 years; and expected volatility of 66% to 51%. The weighted average remaining contractual life of options outstanding at April 30, 2008 and 2007 was 4.11 and 4.46 years, respectively. As of April 30, 2008, the total unrecognized share-based compensation cost related to unvested stock options was approximately $294,144. For the nine month period ended April 30, 2008 and 2007 the Company recognized $67,335 and $28,540, respectively in stock based compensation costs related to the issuance of stock options to employees. This cost was calculated in accordance with SFAS No. 123R and is reflected in the Company's operating expenses. Accelr8 Technology Corporation 8 10-QSB 4/30/08 Note 7. Sale of Securities On March 6, 2008, the Company held a closing on the sale of an aggregate of 200,000 shares of the Company's no par value Common Stock sold at $4.00 per share (the "Common Stock") and warrants to purchase 100,000 shares of Common Stock at a purchase price of $5.50 per share that expire 30 months from the date of issuance (the "Warrants")(the "Common Stock and the Warrants are referred to herein as the "Securities"). Pursuant to the Stock Purchase Agreements, if during the period commencing on March 6, 2008 and ending on March 6, 2009, the Company issues additional shares (the "Additional Shares") of Common Stock or Common Stock Equivalents (as defined in the Stock Purchase Agreement) at a purchase, exercise or conversion price less than $4.00 per share (subject to certain adjustments for splits, recapitalizations and reorganizations), then the Company will issue additional shares of Common Stock to the investors so that the effective purchase price per share will be the same per share purchase, exercise or conversion price of the Additional Shares (subject to certain exceptions set forth in the Stock Purchase Agreement). Notwithstanding the foregoing, the effective price per share will not be adjusted below $3.00 per share. The Warrants have customary weighted-average anti-dilution rights with respect to any subsequent issuance of common stock or common stock equivalents at a price less than $5.50 per share (subject to adjustment), and otherwise in connection with forward or reverse stock splits, stock dividends, recapitalizations, and the like. The anti-dilution provisions are not applicable to employee stock options and shares issued in connection with certain mergers and acquisitions. The Company received $800,000 in proceeds from the sale of the Securities. The Company paid no commissions in connection with the Offering. Note 8. Subsequent Events Subsequent to April 30, 2008, the Company and Becton, Dickinson and Company ("BD") entered into a Research and Option Agreement (the "Agreement"). The Agreement provides for the establishment of a research program from the date of the Agreement until October 31, 2009 whereby BD will fund certain research work by the Company relating to the Company's BACcel(TM) rapid pathogen diagnostics platform (the "BACcel(TM) Platform"). The research program includes mutually agreed upon milestones to support BD's product development planning. Under the terms of the Agreement, in connection with the research program, the Company will receive certain periodic payments from BD between the date of the Agreement and July 1, 2009. The Agreement also grants BD an option to acquire for an upfront payment an exclusive license (the "Exclusive License") from the Company for certain know-how and patent rights relating to the BACcel(TM) Platform. The Exclusive License also provides for the Company to receive royalty payments on worldwide sales. The Exclusive License contains certain diligence requirements for BD to develop and commercialize such products. If BD exercises the option but fails to meet certain terms of the Exclusive License, the Company has the option to convert the Exclusive License to a non-exclusive license. If BD does not exercise the Exclusive License, Accelr8 will receive a non-exclusive license from BD for certain intellectual property. Pursuant to the Agreement, from the date of the Agreement until October 31, 2009, the Company agreed not to engage in or participate in any discussions or negotiations with parties other than BD for the joint development of, licensing of or intellectual property relating to the BACcel(TM) Platform. Unless earlier terminated pursuant to the terms of the Agreement, the Agreement shall terminate upon the Exclusive License Agreement or the non-exclusive license from BD to the Company coming into effect. Accelr8 Technology Corporation 9 10-QSB 4/30/08 Item 2. Management's Discussion and Analysis of Financial Condition and Result of Operations Forward Looking Information This Quarterly Report on Form 10-QSB contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Company, intends that such forward-looking statements be subject to the safe harbors created thereby. These forward-looking statements, which can be identified by the use of words such as "may," "will," "expect," "anticipate," "estimate," or "continue," or variations thereon or comparable terminology, include the plans and objectives of management for future operations, including plans and objectives relating to the products and future economic performance of the Company. In addition, all statements other than statements of historical facts that address activities, events, or developments the Company expects, believes, or anticipates will or may occur in the future, and other such matters, are forward-looking statements. The forward-looking statements included herein are based on current expectations that involve a number of risks and uncertainties. These forward-looking statements are based on assumptions that the Company will retain key management personnel, the Company will be successful in the development of the BACcel(TM) system, the Company will have sufficient capital to complete the development of the BACcel(TM) system, the Company will be able to protect its intellectual property, the Company's ability to respond to technological change, that the Company will accurately anticipate market demand for the Company's products and that there will be no material adverse change in the Company's operations or business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in forward-looking statements will be realized. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The following discussion should be read in conjunction with the Company's unaudited condensed financial statements and related notes included elsewhere herein. The Company's future operating results may be affected by various trends and factors which are beyond the Company's control. These include, among other factors, general public perception of issues and solutions, and other uncertain business conditions that may affect the Company's business. The Company cautions the reader that a number of important factors discussed herein, and in other reports, filed with the Securities and Exchange Commission including the risks in the section entitled "Risk Factors" its 10-KSB for the year ended July 31, 2007, could affect the Company's actual results and cause actual results to differ materially from those discussed in forward-looking statements. Overview Our vision is to develop and commercialize an innovative diagnostic system for use with critically ill patients for rapid identification of bacteria and specific strains based on the presence of major antibiotic resistance mechanisms. Our business strategy is to demonstrate the value of our technology in the broad market for biomedical products with the intent of licensing our proprietary technology to established market leaders. We are developing the BACcel(TM) system, a rapid bacterial diagnostic platform, by integrating our proprietary technologies into an automated system. Proprietary technologies include OptiChem(R) surface coatings, and various innovative assay processing methods. We have received patents or we have patent applications pending for the major technology components, methods, and systems. Accelr8 Technology Corporation 10 10-QSB 4/30/08 The BACcel(TM) system development project began with a number of innovative analytical biological concepts that had no direct precedent, but which adapted well-accepted microbiological testing principles for automated analysis. Until now, these testing principles have only been applied to cultures that contain hundreds of millions of bacteria descended from single organisms, hand-selected as cultured colonies grown from a patient specimen. The BACcel(TM) system is based on simple transformations of standard methods, using advanced automation technology to achieve substantially better performance than is possible with current testing methods. We believed that speed and precision should be possible by analyzing, as individuals, many thousands of cells extracted directly from the patient specimen. This contrasts with standard culturing in which the descendants of fewer than ten cells are presumed to represent the entire infectious bacterial population in a specimen, and with which many hours of repeated growth are required to perform analyses. Typically, initial testing requires 2-3 days, which is too late to help guide the physician to make treatment decisions for critically ill patients who often become infected with drug-resistant bacteria. As a result, initial therapy typically proves inadequate in 20% to 40% of such cases, causing high mortality, serious medical complications, and extended length of stay. Published studies on ICU patients consistently show that a hospital-acquired infection doubles the risk of mortality and complications. Infection with a multi-resistant organism quadruples risks relative to comparable un-infected patients. The most important reason for elevated risk is inadequate initial therapy, caused by widespread and complex mechanisms of drug resistance. We intend the BACcel(TM) system to report bacterial quantitation and identification within 2 hours of patient specimen processing. We plan to augment the first reported identification with additional identification of major antibiotic resistance mechanisms. We believe that resistance mechanism identification will require no more than 4 additional hours of testing, with some results becoming available more quickly than others. The purpose of this strategy is to narrow the drug choices for initial therapy by identifying major resistance mechanisms that are likely to cause drugs to fail. If successful, this approach would help the physician to subtract ineffective drugs from the list of available drugs, leaving those that are most likely to control the infection as initial therapy. For example, the first report might state that a significant number of common "Staph" is present in a patient specimen, likely causing a patient's infection. The second report might then state that all of the organisms fall into a major antibiotic resistance group known as "MRSA" (methicillin resistant Staphylococcus aureus, often referred to as "superbugs" in news reports because of their multiple drug resistance). This identification eliminates from consideration the most important drugs otherwise preferred for treating Staph infections. The second report would include the identification of additional important resistance mechanisms that might similarly rule out the next most important drugs. In this way, we believe that the BACcel(TM) system will systematically test for the most significant resistance mechanisms. This would leave the physician with specific drug choices that are most likely to prove effective. From these, the physician would then be able to hold in reserve those drugs considered "salvage" or "last choice" drugs. This approach of reserving drugs helps to delay the emergence of resistance for the few drugs still available to treat highly resistant strains. Without specific guidance, the physician now has no choice but to use these reserved drugs to assure initial infection control but accelerating their loss of effectiveness over time. Popular news media have reported widely about MRSA as a multi-resistant "superbug." However, organizations such as the CDC (US Centers for Disease Control and Prevention) and IDSA (Infectious Diseases Society of America) have also identified other multi-drug resistant organisms as presenting even greater threats. They include Pseudomonas, Acinetobacter, E. coli, and Klebsiella. In the hospital ICU, MRSA typically causes no more than about 30% of mortality from acquired infections. The other organisms just listed account for a much higher percentage. Accelr8 Technology Corporation 11 10-QSB 4/30/08 To the best of management's knowledge, based on outside opinions and direct market research, the Company is the only organization in the world to be developing a rapid diagnostic solution, and one that includes these organisms and strain types. To date, we have established the functional requirements of the BACcel(TM) platform. We have begun testing the specific analyses required in the BACcel(TM) system and published the results at major scientific and clinical conferences. We have been guided by leading medical experts in our development strategy and product design. During the next twelve months, the Company intends to expand its experimental data to characterize and validate test performance to be used in future versions of the BACcel(TM) system. In addition, we expect to further define requirements for a commercial research product in advance of clinical product development. In parallel to the BACcel(TM) system development, we have developed and independently licensed OptiChem(R) surface coatings to other companies for use in microarraying and other molecular detection products. We have granted Schott Jenaer Glas GmbH, a global leader in high-quality glass manufacturing, a non-exclusive license to manufacture and market microarraying slides using OptiChem(R) coatings. We have also licensed NanoString Technologies Inc. to use OptiChem(R) in their innovative molecular bar-coding systems for high-sensitivity gene expression analysis. During the nine months ended April 30, 2008, we placed two development systems in outside academic research facilities. One system is in the Denver Health Medical Center. The other is in Barnes-Jewish Hospital, St. Louis. The outside investigators are using the systems for technical validation of the analytical methods. We intend to give three presentations at the American Society for Microbiology meeting to be held in June 2008. The presentations describe the results of studies on rapid antibiotic resistance mechanism identification, rapid testing for Acinetobacter identification, and detection and enumeration of bacteria extracted directly from human respiratory specimens. During the quarter ended April 30, 2008, we continued the scale-up of our proprietary antibody development methods. The first antibodies were raised against Acinetobacter, for which no commercial antibodies are available. We believe that the scale-up will provide material for BACcel(TM) system development, outside research support, and additional test development. We also advanced the development of antibodies required for additional organisms, and initiated other types of testing used for identification of bacteria. Effective May 16, 2008, we entered into a Research and Option Agreement with Becton, Dickinson and Company. Pursuant to the Research and Option Agreement, BD will fund certain research work by the Company relating to the Company's BACcel(TM) system. The immediate funding relieves Accelr8 of the need to independently raise funds to support BACcel(TM) technical milestone achievement set forth in the Research and Option Agreement through September 2009. If BD exercises the licensing option, Management believes that the agreement would then further relieve Accelr8 of the need to raise the large amount of funding required for BACcel(TM) product development, protect shareholders from the potentially significant dilution and mitigate the risks associated with BACcel (TM) commercialization. The agreement also enables Accelr8 to seek additional commercial applications for its proprietary technology. Management believes that this expands the opportunity horizon for shareholders. Accelr8 Technology Corporation 12 10-QSB 4/30/08 Recently Issued Accounting Pronouncements In February 2007, the FASB issued FASB SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, to expand the use of fair value measurement by permitting entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. SFAS 159 is effective beginning the first fiscal year that begins after November 15, 2007. The Company is currently evaluating the impact of adopting SFAS 159 on its financial statements. In December 2007, the FASB issued FAS 160 which changes the accounting and reporting for minority interests. Minority interests will be recharacterized as noncontrolling interests and will be reported as a component of equity separate from the parent's equity, and purchases or sales of equity interests that do not result in a change in control will be accounted for as equity transactions. In addition, net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement and, upon a loss of control, the interest sold, as well as any interest retained, will be recorded at fair value with any gain or loss recognized in earnings. FAS 160 is effective for annual periods beginning on or after December 15, 2008. The Company does not expect the adoption of FAS 160 to have an effect on its financial statements. In December 2007, the FASB issued SFAS 141(revised 2007), Business Combinations ("SFAS 141R"). SFAS 141R will significantly change the accounting for business combinations in a number of areas including the treatment of contingent consideration, contingencies, acquisition costs, intellectual property, research & development and restructuring costs. In addition, under SFAS 141R, changes in deferred tax asset valuation allowances and acquired income tax uncertainties in a business combination after the measurement period will impact income tax expense. SFAS 141R is effective for fiscal years beginning after December 15, 2008. The Company has not yet determined the impact, if any, of SFAS 141R on its financial statements. Changes in Results of Operations: three months ended April 30, 2008 compared to three months ended April 30, 2007. During the three months ended April 30, 2008, OptiChem(R) revenues were $0 as compared to $22,687 during the three month period ended April 30, 2007, a decrease of $22,687 or 100% due to sales of custom coated slides to NanoString now reverting to being reported under royalty income, as a result of the sales of a OptiChem(R) license in October, 2007. There were option fees of $54,545 during the three months ended April 30, 2008 compared to $0 during the three months ended April 30, 2007. The option fee for the three months ended April 30, 2008 consisted of the earned portion of an option from Becton Dickinson & Company. Research and development expenses for the three months ended April 30, 2008 were $153,722 as compared to $247,524 during the three months ended April 30, 2007, a decrease of $93,802 or 38%. The decrease was primarily the result of a reduction in the use of outside engineering firms related to the development of the BACcel(TM) system and decreased salaries paid due to attrition. During the three months ended April 30, 2008, general and administrative expenses were $201,704 as compared to $211,007 during the three months ended April 30, 2007, a decrease of $9,303 or 4.4%. The decrease was primarily due to decreases in salaries, related taxes and benefits of $57,345. The increase in amortization was negligible for the three months ended April 30, 2008 as compared to the three month period ended April 30, 2007. Accelr8 Technology Corporation 13 10-QSB 4/30/08 Marketing and sales expenses for the three months ended April 30, 2008 were $1,356 as compared to $2,190 during the three months ended April 30, 2007, a decrease of $834. The decrease was primarily due reduced expenses relating to presentations at scientific conferences. Depreciation for the three months ended April 30, 2008 was $12,036 as compared to $18,382 during the three months ended April, 2007, a decrease of $6,346 or 34.5%. This decrease resulted from the increased age of assets and related depreciation as well as sale of equipment, in previous quarters, no longer being used. Costs of goods sold during the three months ended April 30, 2008 were $0 as compared to $4,035 during the three months ended April 30, 2007, a decrease of $4,035 or 100%. The decrease in costs of goods sold was primarily the result of no sales of custom coated slides to NanoString, which now owns a license to OptiChem(R). As a result of the above factors, loss from operations for the three months ended April 30, 2008 was $368,325 as compared to a loss of $520,497 during the three months ended April 30, 2007, a decrease loss of $152,172 or 29.2%. Interest and dividend income during the three months ended April 30, 2008 was $16,720 as compared to $26,130 during the three months ended April 30, 2007, a decrease of $9,410 or 36.0%. Interest income decreased as a result of decreased interest rates and reduced amounts of cash held by the Company. An unrealized holding loss on investments held in the deferred compensation trust for the three months ended April 30, 2008 was $19,163 as compared to an unrealized gain of $15,788 during the three months ended April 30, 2007, a decrease of $34,951. The change was a result of decreased value of the underlying securities. As a result of these factors, net loss for the three months ended April 30, 2008 was $370,768 as compared to $476,537 during the three months ended April 30, 2007, a decreased loss of $105,769 or 22.2%. Accelr8 Technology Corporation 14 10-QSB 4/30/08 Changes in Results of Operations: Nine months ended April 30, 2008 compared to nine months ended April 30, 2007. During the nine months ended April 30, 2008, OptiChem(R) revenues were $53,642 as compared to $77,805 during the nine month period ended April 30, 2007, a decrease of $24,163 or 31.1%. The decrease was a result of licensing of OptiChem(R) to NanoString and receiving royalty income during the nine months ended April 30, 2008 as compared to sales revenue nine months ended April 30, 2007. Consulting fees during the nine-month period ended April 30, 2008 were $0 as compared to $22,000 during the nine-month period ended April 30, 2007, a decrease of $22,000 or 100%. The $22,000 in consulting fees related to a Feasibility Testing Agreement that was completed during the nine-month period ended April 30, 2007. No technical consulting fees were billed or received during the nine months end April 30, 2008. Option fees during the nine months ended April 30, 2008 were $100,000 as compared to $14,250 during the nine months ended April 30, 2007, an increase of $85,750. The option fee for the nine months ended April 30, 2008 consisted of an option from Becton Dickinson & Company. License fees during the nine months ended April 30, 2008 were $100,000 as compared to $50,000 during the nine months ended April 30, 2007, an increase of $50,000 or 100%. The license fees during the nine months ended April 30, 2008 were the result of a License Agreement entered into with Schott Jenaer Glas GmbH to produce and sell the Company's technology on coated OptiChem(R) Slide H and an exclusive license with NanoString. Research and development expenses for the nine months ended April 30, 2008 were $674,897 as compared to $813,864 during the nine months ended April 30, 2007, a decrease of $138,967 or 17.1%. The decrease was primarily the result of decreased supplies, a reduction in the use of outside engineering firms related to the development of the BACcel(TM) system and decreased salaries. During the nine months ended April 30, 2008, general and administrative expenses were $609,989 as compared to $730,179 during the nine month period ended April 30, 2007, a decrease of $120,190 or 16.5%. The decrease was primarily due to reductions in salaries and related taxes and benefits. The increase in amortization was negligible for the nine months ended April 30, 2008 as compared to the nine month period ended April 30, 2007. Marketing and sales expenses for the nine months ended April 30, 2008 were $10,499 as compared to $5,788 during the nine months ended April 30, 2007, an increase of $4,711 or 81.3%. The increase was primarily due to expenses in connection with scientific conference attendance. Depreciation for the nine months ended April 30, 2008 was $39,146 as compared to $55,146 during the nine months ended April 30, 2007, a decrease of $16,000 or 29.0%. The decreased depreciation was the result of the increased age of assets and certain disposals of equipment no longer being used. Cost of goods sold during the nine months ended April 30, 2008 were $9,032 as compared to $14,761 during the nine months ended April 30, 2007, a decrease of $5,729 or 38.8%. The decrease in cost of goods sold was primarily the result of products being produced by others under licensing agreements as compared to the Company producing the products. As a result of the above factors, loss from operations for the nine months ended April 30, 2008 was $1,265,710 as compared to a loss of $1,635,820 during the nine months ended April 30, 2007, a decrease in losses of $370,110 or 22.6%. Accelr8 Technology Corporation 15 10-QSB 4/30/08 Investment and dividend income during the nine months ended April 30, 2008 was $52,999 as compared to $89,750 during the nine months ended April 30, 2007 a decrease of $36,751 or 41%. Interest income decreased as a result of decreased interest rates and reduced amounts of cash held by the Company. An unrealized holding losses on investments held in the deferred compensation trust for the nine months ended April 30, 2008 was $37,181 as compared to a gain of $71,802 for the nine months ended April 30, 2007, a difference of $108,983. The change was a result of decreased value of the underlying securities. Gain on the sale of equipment was $51,761 during the nine months ended April 30, 2008 as compared to $0 during the nine months ended April 30, 2007. The gain on the sale of equipment was the result of the sale of microarray printers. As a result of these factors, net loss for the nine months ended April 30, 2008 was $1,198,131 as compared to $1,472,226 during the nine months ended April 30, 2007, a decreased loss of $274,095 or 18.6%. Capital Resources and Liquidity During the nine months ended April 30, 2008 and April 30, 2007, we did not generate positive cash flows from operating activities. The Company has historically funded its operations generally through its existing cash balances, cash flow generated from operations and sales of equity securities. Our primary use of capital has been for the research and development of the BACcel(TM) system. Notwithstanding our investments in research and development, there can be no assurance that the BACcel(TM) system or any of our other products will be successful, or even if they are successful, will provide sufficient revenues to continue our current operations. Our working capital requirements are expected to increase in line with the growth of our business. We have no lines of credit or other bank or off balance sheet financing arrangements. We believe our capital requirements will continue to be met with our existing cash balance, additional issuance of equity or debt securities and/or a capital infusion from potential partners in the development of the BACcel(TM) system. If we are unable to realize any revenues from our products, we will require additional funds from other sources to continue operations. Further, if capital requirements vary materially from those currently planned, we may require additional capital sooner than expected. At April 30, 2008, as compared to July 31, 2007, cash and cash equivalents decreased by $116,909 from $1,393,669 to $ 1,276,760, or approximately 8.4 % and the Company's working capital decreased $188,291 or 13.7% from $1,376,284 to $1,187,993. During the same period, shareholders' equity decreased from $4,880,207 to $4,549,411 as a result of losses incurred, charges related to stock options and the additional $800,000 of equity raised during the year. Our working capital requirements are expected to increase in line with the growth of our business. The net cash used in operating activities was $830,896 during the nine months ended April 30, 2008 compared to cash used in operating activities of $1,128,087 during the nine months ended April 30, 2007. The principal elements that gave rise to the decrease of cash used in operating activities were a result of lower net losses for the period and lower outside consultant fees. Cash provided by financing activities during the nine months ended April 30, 2008 was $800,000. The cash provided by financing activities was the result of the sale of shares of our common stock to accredited investors of an aggregate of $800,000. As a result of the cash raised in the Offering, management believes that current cash balances plus cash flow from operations will be sufficient to fund our capital and liquidity needs for the next eighteen months. Accelr8 Technology Corporation 16 10-QSB 4/30/08 Thereafter, the Company may have to seek capital resources from other sources to meet its obligations in the future. There can be no assurance that such capital will be available in sufficient amounts or on terms acceptable to us, if at all. Additional issuances of equity or convertible debt securities, if any, will result in dilution to our current common stockholders. Item 3. Controls and Procedures An evaluation was conducted under the supervision and with the participation of the Company's management, including Thomas V. Geimer, the Company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of April 30, 2008. Based on that evaluation, Mr. Geimer concluded that the Company's disclosure controls and procedures were effective as of such date to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Mr. Geimer also confirmed that there was no change in the Company's internal control over financial reporting during the quarter ended April 30, 2008. PART II. OTHER INFORMATION Item 1. Legal Proceedings - ------------------------- Not Applicable. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds - ------------------------------------------------------------------- Not Applicable. Item 3. Defaults upon Senior Securities - --------------------------------------- Not applicable. Item 4. Submission of Matters to a Vote of Security Holders - ----------------------------------------------------------- Not applicable. Item 5. Other Information - ------------------------- None Accelr8 Technology Corporation 17 10-QSB 4/30/08 Item 6. Exhibits - ---------------- Exhibit No. Description - ----------- ----------- 10.1* Research and Option Agreement between Accelr8 Technology Corporation and Becton, Dickinson and Company effective May 16, 2008 31.1 Certification of Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act 0f 2002. * Portions of this exhibit have been omitted and filed separately with the Office of the Secretary of the Securities and Exchange Commission pursuant to a confidential treatment request. Accelr8 Technology Corporation 18 10-QSB 4/30/08 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: June 16, 2008 ACCELR8 TECHNOLOGY CORPORATION /s/ Thomas V. Geimer ---------------------------- Thomas V. Geimer, Secretary, Chief Executive Officer and Chief Financial Officer /s/ Bruce H. McDonald ---------------------------- Bruce H. McDonald, Principal Accounting Officer Accelr8 Technology Corporation 19 10-QSB 4/30/08 EX-10.1 2 accelr84302008exh101.txt RESEARCH AND OPTION AGREEMENT Confidential CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO RULE 24B-2 AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THIS EXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. Exhibit 10.1 RESEARCH AND OPTION AGREEMENT This Research and Option Agreement ("Agreement") is effective as of May 16, 2008 (the "Effective Date") by and between Accelr8 Technology Corporation, having a place of business at 7000 North Broadway, Building 3-307, Denver, Colorado 80221 ("Accelr8"), and Becton, Dickinson and Company, a corporation organized under the laws of the State of New Jersey, having a place of business at 1 Becton Drive, Franklin Lakes, New Jersey 07417, for itself ("BD"). BD and Accelr8 are together hereinafter collectively referred to as the "Parties" and individually referred to as a "Party". WHEREAS, Accelr8 has a technology platform directed to, among other things, infectious disease identification and antimicrobial susceptibility or resistance testing; WHEREAS, BD makes and sells products for diagnostic purposes, including, among other things, infectious disease identification and antimicrobial susceptibility or resistance testing; and WHEREAS, BD is interested in funding research work by Accelr8 in order to assess the capabilities of Accelr8's technology platform, and assess BD's interest in licensing Accelr8's technology (such assessments collectively the "Stated Purpose"). NOW, THEREFORE, in consideration of the mutual promises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows: 1 DEFINITIONS A. "Accelr8 Background IP" shall mean, collectively, the Accelr8 Background Know-How and the Accelr8 Background Patent Rights B. "Accelr8 Background Know-How" shall mean any and all technical and other information, in existence as of October 31, 2009 which is not in the public domain and which is not embodied in a patent, (i) relating to the BACcel Platform or (ii) which is reasonably necessary to enable BD and its Affiliates to commercially exploit the rights granted to BD and its Affiliates by Accelr8. Accelr8 Background Know-How does not include Program IP. C. "Accelr8 Background Patent Rights" shall mean and collectively include (a) the patents and patent applications in Appendix D; (b) any other patents or patent applications now or in the future owned or Controlled by Page 1 [***] Confidential Treatment Requested Confidential Accelr8 directed to the BACcel Platform and applicable in the Field, other than Program IP; (c) all U.S., foreign, and international patent applications that claim priority to, are entitled to claim priority to, rely for priority on, or to which priority is claimed by, the foregoing patents or patent applications; (d) any reissues, reexaminations, extensions, substitutions, divisions, continuations and continuations-in-part of the foregoing; and (e) all patents that issue from any of the foregoing, and any reissues, reexaminations and extensions thereof. D. "Affiliates" shall mean any corporation or other business entity which controls, is controlled by, or is under common control with, a Party. For purposes of this Article 1D, "control" means direct or indirect ownership of (i) at least fifty percent (50%) of the outstanding stock or of the other voting rights entitled to elect directors, or (ii) in any country where the local law shall not permit foreign equity participation of at least fifty percent 50%, then the maximum percentage of such outstanding stock or voting rights permitted by local law. E. "BACcel Platform" shall mean the technology embodied in Accelr8's BACcel(TM) system as of the Effective Date, or technology for processes or systems (or components thereof) directed to one or more of the following: i) concentration of live bacteria onto a surface, ii) immobilization of such bacteria on such surface, iii) mapping individual bacterium locations on the surface, iv) identifying such immobilized bacteria, v) testing antimicrobial susceptibility or antimicrobial resistance testing of such immobilized bacteria, vi) testing other characteristics or properties of such immobilized bacteria, and vii) use of microscopy and/or image analysis to perform the mapping, identifying and/or testing steps. F. "BD Background IP" shall mean any intellectual property, including patents, patent applications, inventions, innovations, techniques, trade secrets, discoveries, technologies, software or know-how made, developed, owned, licensed or acquired by BD and its Affiliates before the Effective Date of this Agreement or during the term of the Agreement. G. "Confidential Information" shall mean and include all proprietary information, including, without limitation, Accelr8 Background IP, BD Background IP and the results of the Research Program, that is disclosed by one Party or its Affiliate to the other Party or its Affiliate in connection with this Agreement and the Research Program, the Exclusive License Agreement or the Non-Exclusive License Agreement, which is designated in writing whether by letter or by the use of an appropriate stamp or legend such as "confidential," "proprietary," or "sensitive" by the disclosing Party prior to or at the time of disclosure, which is orally or visually disclosed and indicated to be proprietary at the time of disclosure, or which is of a nature such that the receiving party would reasonably treat such information as proprietary. The terms of this Agreement and any related agreements between the Parties shall also be considered Confidential Information. Page 2 [***] Confidential Treatment Requested Confidential H. "Control" or "Controlled" shall mean with respect to a particular item of intellectual property, the ability to grant access to or a license or sublicense under such item as set forth for herein, without violating the terms of any agreement or other arrangement with, or the right of, any third party. I. "Exclusive License Agreement" shall mean the license agreement attached hereto as Appendix B. J. "Field" shall mean products or processes for Infectious Disease Diagnostics. K. "Infectious Disease Diagnostics" shall mean activities directed to the presence or absence of diseases in humans that are caused by one or more infectious agents, non-infectious carriers or bioproducts of agents or carriers, such activities including but not limited to, screening, monitoring, detecting, identifying, diagnosing and/or prognosing such diseases, as well as performing epidemiological analyses of such diseases. By way of example, Infectious Disease Diagnostics shall include but not be limited to: (a) measuring or monitoring one or more markers associated with an infectious agent, (b) measuring or monitoring one or more surrogate markers (including host response markers) indicative of the presence of an infectious agent or of a disease caused by an infectious agent, (c) identification of an infectious agent, (d) identification of antimicrobial resistance mechanisms or antimicrobial resistance markers of an infectious agent, and (e) identification of antimicrobial susceptibility of an infectious agent. L. "Non-Exclusive License Agreement" shall mean the license agreement attached hereto as Appendix C. M. "Option Date" shall mean the later of October 31, 2009 or thirty (30) days after completion of the Research Program.. N. "Program IP" shall mean any intellectual property, including patents, patent applications, inventions, innovations, techniques, trade secrets, discoveries, technologies, software or know-how conceived or reduced to practice solely by employees of Accelr8 or jointly by employees of BD or a BD Affiliate and Accelr8 in the course of performing the Research Program, including improvements or modifications to Accelr8 Background IP. O. "Research Program" shall mean the research and development program set forth in Appendix A attached hereto and hereby incorporated by reference. Page 3 [***] Confidential Treatment Requested Confidential 2 RESEARCH PROGRAM A. The Parties shall perform their respective obligations under the Research Program. In case of any dispute over whether the Research Program has been completed, the Party's disagreement shall be submitted to binding arbitration in New York City. The arbitration shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association ("AAA"), except as set forth in this Section. Each Party shall bear its own costs. The arbitration shall be governed by the substantive laws of the State of New Jersey, without regard to conflicts-of-law rules, and by the arbitration law of the Federal Arbitration Act (Title 9, U.S. Code). Judgment upon the award rendered may be entered in any court having jurisdiction. Should arbitration result in a judgment that the Research Program had been completed, the Option Date shall be thirty (30) days after the date of such judgment. B. The Research Program shall be under the joint supervision of an individual to be named by BD and an individual to be named by Accelr8 ("Principal Collaborators"). C. The Research Program described in Appendix A can only be changed or extended by written agreement between the Parties. D. BD shall make payments to Accelr8 under this Agreement, upon receipt of an invoice from Accelr8, as follows: o $[***] upon execution of this Agreement o $[***] on July 1, 2008 o $[***] on October 1, 2008 o $[***] on January 1, 2009 o $[***] on April 2, 2009 o $[***] on July 1, 2009 E. The Parties shall keep each other fully informed of the progress of the Research Program through regular meetings, telephone conferences and/or electronic mail, or as otherwise set forth in the Research Program or as otherwise requested by either Party. F. Subject to the exclusivity provisions of Article 3 and subject to Article 4B, each Party acknowledges that the other Party may at its sole discretion conduct research outside of the Research Program, and that such research is not subject to this Agreement. G. Provided Accelr8 has made good faith efforts to complete the Research Program, BD's and BD Affiliate's sole remedy and Accelr8's exclusive liability for any breach of Accelr8's failure to complete the Research Program shall be re-performance of the relevant tasks. THE RESEARCH PROGRAM IS PERFORMED ON AN AS-IS BASIS, AND ACCELR8 DISCLAIMS ALL WARRANTIES, Page 4 [***] Confidential Treatment Requested Confidential INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT WILL ACCELR8 BE LIABLE FOR ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES RESULTING FROM PERFORMANCE UNDER THIS AGREEMENT. Page 5 [***] Confidential Treatment Requested Confidential 3 EXCLUSIVITY A. From the Effective Date of the Agreement until the earlier of the Option Date or the date of early termination if any, Accelr8 shall not, directly or indirectly, solicit, initiate, facilitate, encourage or participate in any discussions or negotiations with parties other than BD or BD Affiliates, directed to (i) joint development or other collaborative activity with such third party relating to the BACcel Platform in the Field, with the exception of contracted research with non-commercial laboratories or submission for grants from non-commercial institutions or agencies, provided such work does not in any way interfere with the rights granted in the Agreement, the ELA or the NELA, as applicable; or (ii) licensing of Accelr8 Background IP, or other intellectual property relating to the BACcel Platform, in the Field, or (iii) any other activity that might affect BD's rights as set forth in this Agreement, and Accelr8 further represents that it is not currently involved in any of the activities set forth in (i) through (iii) as of the Effective Date of the Agreement. 4 CONFIDENTIALITY A. In the performance of the Research Program, it may be necessary for the Parties to disclose Confidential Information to each other. B. Confidential Information shall be maintained by the receiving Party as confidential, using the same care and discretion that the receiving Party uses with its own Confidential Information, but, in any event, no less than a reasonable degree of care. Subject to Article 6, Confidential Information: (a) shall remain the exclusive property of the disclosing Party, (b) will be used by the receiving Party solely for the Stated Purpose; and (c) will not be disclosed by the receiving Party to any other persons or entities, except its employees on a need-to-know basis, unless written permission is obtained in advance from the disclosing Party. C. Notwithstanding the foregoing, or any other provision contained herein to the contrary, the receiving Party's obligations under Article 4B shall not apply to the extent that the receiving Party can prove by written evidence that the respective Confidential Information: (i) was known by a Party at or prior to the Effective Date of this Agreement, except to the extent unlawfully appropriated by a Party; or (ii) is or becomes generally known in the trade or business pertaining to such information or otherwise becomes publicly known at or after the time of disclosure by the disclosing Party, through no wrongful act of the receiving Party; or Page 6 [***] Confidential Treatment Requested Confidential (iii) is rightfully received by a Party from a third party without restriction and without breach of this Agreement; or (iv) is developed by a Party independent of any Confidential Information of the other Party, such independent development being performed solely by persons not having access whatsoever to the other Party's Confidential Information; or (v) is required to be disclosed by a court or judicial or governmental authority of competent jurisdiction, and in such event, only after the Party required to disclose the other Party's Confidential Information provides prompt written notice to that Party so as to enable that Party to resist any such required disclosure and/or to obtain suitable protection regarding such required disclosure. D. The foregoing provisions and obligations of this Article 4 shall remain in effect and survive for five (5) years after termination or expiration of this Agreement, except that trade secrets designating in writing as such by the disclosing party shall remain secret subject to Article 4C and applicable laws. 5 PUBLICATION A. Accelr8, BD, and BD Affiliates shall not have the right to publish or publicly present any of the research and development activities in connection with and/or results of the Research Program without the written approval of the other Party ("the second Party") with the exception of collaborations with non-commercial laboratories that have agreements in place as of the Effective Date, where such agreements contain provisions allowing publications, provided such publication does not in any way interfere with the rights and obligations set forth in the Agreement, the Exclusive License Agreement or the Non-Exclusive License Agreement, as applicable. Page 7 [***] Confidential Treatment Requested Confidential 6 OPTION AND INTELLECTUAL PROPERTY A. From the Effective Date through the date that is the earlier of: the Option Date or the date at which BD exercises the Option pursuant to Article 6D, intellectual property rights and ownership shall be as follows: i) Program IP shall be jointly owned by the Parties, but neither party may use such Program IP other than for purposes of this Agreement in the Field. Program IP conceived or reduced to practice solely by employees of Accelr8 shall be assigned to Accelr8, which shall then assign an undivided half-interest in such Program IP to BD, subject to the terms of this Agreement. Program IP conceived or reduced to practice by employees of Accelr8 and employees of BD or BD Affiliates shall be jointly assigned. ii) Accelr8 Background IP shall remain the property of Accelr8, and BD or BD Affiliates shall have no rights thereunder. iii) BD Background IP shall remain the property of BD and/or BD Affiliates, and Accelr8 shall have no rights thereunder. iv) The Parties agree to cooperate in identifying Program IP. The Parties shall share the costs and expenses 50/50 in preparing, filing, prosecuting, maintaining and extending patents and patent applications directed to Program IP using counsel reasonably agreeable to both parties. v) The Parties agree to cooperate fully in providing information and executing all documents needed to prepare, file and prosecute any patent application hereunder. B. Accelr8 hereby grants BD an option ("Option") to take an exclusive license to Accelr8 Background IP in the Field. i) The Option shall exist from the Effective Date up to and including the Option Date. BD shall have the right to exercise the Option upon written notice to Accelr8. ii) If BD exercises the Option: (a) BD shall make a single, lump sum payment of [***] dollars ($[***]) to Accelr8 within thirty (30) days of the written notice, which shall not be creditable against running royalties due under the Exclusive License Agreement; and (b) The Exclusive License Agreement attached hereto as Appendix B shall immediately come into effect upon (i) Accelr8's receipt of the payment under Article 6B(ii)(a), and (ii) Accelr8's receipt of cumulative payments of [***] Dollars ($[***]) under Article 2D. Page 8 [***] Confidential Treatment Requested Confidential iii) If BD does not exercise the Option: (a) No additional payment to Accelr8 is required, beyond those set forth in Article 2 of this Agreement; and (b) The Non-Exclusive License Agreement attached hereto as Appendix C shall immediately come into effect the day after the Option Date, and the Exclusive License Agreement attached hereto as Appendix B shall become null and void. iv) If Accelr8 has not completed the Research Program, by October 31, 2009, then at any time after October 31, 2009, BD shall have the right to decline the Option upon written notice to Accelr8. Should BD decline the Option: (a) No additional payment to Accelr8 is required, beyond those set forth in Article 2 of this Agreement; and (b) The Non-Exclusive License Agreement attached hereto as Appendix C shall immediately come into effect upon receipt of the written notice by Accelr8, and the Exclusive License Agreement attached hereto at Appendix B shall become null and void. 7 TERM and TERMINATION A. This Agreement shall become effective as of the Effective Date and shall terminate upon the Exclusive License Agreement or the Non-Exclusive License Agreement coming into effect pursuant to Article 6, unless terminated earlier under this Article 7. B. This Agreement shall be terminable upon the material breach or default of either Party. In the event of a material breach or default by a Party ("Defaulting Party"), the other Party ("non-Defaulting Party") shall give the Defaulting Party written notice of the default and its election to terminate this Agreement effective at the expiration of a period of sixty (60) days from the date of the notice. If the Defaulting Party fails to resolve the default in the probation period by (i) curing the default, (ii) providing a written explanation satisfactory to the Non-Defaulting Party that a default has not occurred, or (iii) entering into a written agreement with the Non-Defaulting Party for the cure or other resolution of the default, then this Agreement shall terminate upon the expiration of such sixty (60) day period. All termination rights shall be in addition to and not in substitution for any other remedies that may be available to the Non-Defaulting Party. Termination pursuant to this Article shall not relieve the Defaulting Party from liability and damages to the Non-Defaulting Party for default. Page 9 [***] Confidential Treatment Requested Confidential i) Upon termination by BD for Accelr8's material breach, the Option shall remain in effect for thirty (30) days after termination of the Agreement, and either the Exclusive License Agreement or Non-Exclusive License Agreement shall then come into force and effect, as applicable. ii) Upon termination by Accelr8 for BD's material breach, the Option shall terminate upon termination of the Agreement, and the Non-Exclusive License Agreement shall then come into force and effect. C. Any termination of this Agreement for any reason does not relieve either Party of any obligation or liability accrued prior to the termination or rescind anything done by either Party and the termination does not affect in any manner any rights of either Party arising under this Agreement prior to the termination. D. The terms and conditions of the following provisions shall survive termination or expiration of this Agreement for as long as necessary to permit their full discharge: Articles 4 (CONFIDENTIALITY), 5 (PUBLICATION), 6 (OPTION AND INTELLECTUAL PROPERTY), 8 (USE OF NAMES), 9 (NOTICES), 11 (RIGHTS NOT GRANTED), 13 (GOVERNING LAW) and 15 (MISCELLANEOUS). 8 USE OF NAMES A. Neither Party shall use the name of the other Party or any adaptation thereof in any publication, advertising, promotion, sales literature or packaging without the prior written consent of the other Party. Any press release, public announcement or similar publicity by the Parties with respect to this Agreement shall be subject to the prior consent of the other Party, which consent shall not be unreasonably withheld, unless such communication is required to be made by law or pursuant to the rules and regulations of the Securities and Exchange Commission or the New York Stock Exchange listing requirements or an equivalent agency and after consultation and coordination between the Parties. Such press release, public announcement or similar publicity shall be limited to the existence of the Agreement and shall not disclose the terms thereof. In the case of required communication to agencies such as listed above, the terms of the Agreement shall be redacted unless prohibited by applicable laws or rules. Page 10 [***] Confidential Treatment Requested Confidential 9 NOTICES A. Any notices required to be given or which shall be given under this Agreement shall be in writing delivered by certified return-receipt requested first-class mail or overnight courier with tracking or facsimile addressed to the Parties as follows: For BD: Becton, Dickinson and Company 7 Loveton Circle Sparks, Maryland 21152 Fax: 410-316-4081 Attention: Director / Strategic Planning and Business Development with a copy to : Becton, Dickinson and Company 1 Becton Drive MC089 Franklin Lakes, NJ 07417 Fax: (201) 848-9228 Attention: Vice President, Chief Intellectual Property Counsel For Accelr8: Accelr8 Technology Corporation 7000 North Broadway Bldg. 3-307 Denver, Colorado 80221 Fax: 303-863-1218 Attention: Thomas V. Geimer, Chairman and CEO 10 INDEPENDENT PARTIES A. For purposes of this Agreement the Parties hereto shall be independent contractors and neither shall at any time be considered an agent or an employee of the other. No joint venture, partnership or like relationship is created between the Parties by this Agreement. 11 RIGHTS NOT GRANTED A. Except as explicitly set forth herein, no other rights or licenses in or to the BD Background IP, Accelr8 Background IP or Program IP are granted by this Agreement. Page 11 [***] Confidential Treatment Requested Confidential 12 ASSIGNMENT A. Any assignment by either Party without prior written consent of the other Party shall be void. B. The provisions of the Agreement shall be binding upon and inure to the benefit of the Parties and the respective successors and assigns of each of the Parties. To the extent permitted by law, if any Party hereto ("Bankrupt Party") shall become insolvent, or shall suspend business or shall file a voluntary petition or answer admitting the jurisdiction of the Court or the material allegations of a petition, or shall consent to an involuntary petition pursuant to or purporting to be pursuant to any reorganization or insolvency law of any jurisdiction, or shall make an assignment for the benefit of creditors, or shall apply for or consent to the appointment of a receiver or trustee of a substantial part of its property ("Bankruptcy Event"), then it is the Parties' intent that this Agreement and the rights granted to BD hereunder by the Bankrupt Party must be adopted by any bankruptcy trustee or relevant third Party charged with the disposition of same, and cannot be rejected. The Parties acknowledge that this Agreement contemplates the manner in which the Parties may retain the rights granted to them hereunder by the Bankrupt Party, if they choose to do so in accordance with Section 365(n) of the Bankruptcy Code. It is the Parties' intent that, upon the occurrence of any Bankruptcy Event, BD shall be entitled to retain the rights granted to them hereunder by the Bankrupt Party in all items delivered or required to be delivered under this Agreement. 13 GOVERNING LAW A. This Agreement shall be interpreted and construed in accordance with the laws of the State of New Jersey, without reference to choice of law doctrine. 14 FORCE MAJEURE A. Except as provided below, no failure or omission by a Party (the "Affected Party") in the performance of any obligation of this Agreement shall be deemed a breach of this Agreement nor create any liability to the other Party (the "Unaffected Party") if such failure or omission shall arise from any cause or causes beyond the reasonable control of the Affected Party; including, without limitation, the following: acts of God; fire; storm; flood; earthquake; war; sabotage; quarantine restrictions; government action; labor strike or freight embargo (hereinafter "Force Majeure"). In the event of any delay or inability to perform arising Page 12 [***] Confidential Treatment Requested Confidential pursuant to Force Majeure, the Affected Party's performance shall be postponed by such length of time (the "Suspension Period") as may be reasonably necessary to compensate for said delay or inability to perform, and the Unaffected Party's performance shall likewise be postponed by a length of time equal to the Suspension Period. In the event a Force Majeure shall suspend the Affected Party's obligations hereunder for more than ninety (90) days, the Unaffected Party shall have the right to terminate this Agreement, with no further payments due under Articles 2D. Upon such termination, the Non-Exclusive License Agreement shall come into force and effect. 15 MISCELLANEOUS A. The Parties agree that the terms of this Agreement are binding upon them as well as any of their respective employees who may assist in the Research Program. B. The Parties represent and warrant that they are not under obligation to any third party that would interfere with the rendering of services to the other Party or which would be inconsistent with any responsibilities or obligations (including rights granted) under this Agreement. C. The provisions of this Agreement shall not be extended, varied, changed, modified or supplemented other than by agreement in writing signed by the Parties hereto. D. The headings used herein are for ease of reference only and are not to be used in the interpretation or construction of this Agreement. E. If and to the extent any court of competent jurisdiction shall hold any provision (or any part thereof) of this Agreement to be invalid or unenforceable, such holding shall in no way affect the validity of the remainder of this Agreement. F. Except as otherwise provided herein, the failure of a Party hereto to enforce any of the provisions of this Agreement or any rights with respect thereto or to exercise any election provided for herein, shall in no way be considered a waiver of such provisions, rights or elections or in any way affect the validity of this Agreement. No term or provision hereof shall be deemed waived and no breach excused, unless such waiver or consent shall be in writing and signed by the Party claimed to have so waived or consented. G. In case of a conflict between the terms of this Agreement and either the Exclusive License Agreement or the Non-Exclusive License Agreement, the applicable License Agreement shall govern. Page 13 [***] Confidential Treatment Requested Confidential IN WITNESS WHEREOF, the persons executing this Agreement in duplicate originals, on behalf of the Parties hereto, represent and warrant, that they are duly authorized officers and representatives and have authority to execute such Agreement on behalf on their respective Party. ACCELR8 TECHNOLOGY CORPORATION BECTON, DICKINSON AND COMPANY By: _________________________ By: _________________________________ Thomas V. Geimer Philippe Jacon Chairman and CEO President - Microbiology Systems BD Diagnostics Date: Date: Page 14 [***] Confidential Treatment Requested Confidential Appendix A - Research Program [***][1 page total] Page 15 Confidential CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO RULE 24B-2 AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THIS EXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. Appendix B ---------- EXCLUSIVE LICENSE AGREEMENT This Exclusive License Agreement ("ELA") is made and entered into effective pursuant to Article 6 of the Agreement ("ELA Effective Date"), by and between Accelr8 Technology Corporation, having a place of business at 7000 North Broadway, Building 3-307, Denver, Colorado 80221, ("Accelr8") and Becton, Dickinson and Company, a corporation duly organized under the laws of the State of New Jersey and having its principal office in 1 Becton Drive Franklin Lakes, NJ 07417 for itself and its Affiliates ("BD"), (each a "Party" and collectively the "Parties"). WITNESSETH ---------- WHEREAS, the Parties entered into a Research and Option Agreement ("Agreement") effective May 16, 2008 to which this ELA is attached; WHEREAS, Article 6 of the Agreement provided BD with the Option for an exclusive license to certain Accelr8 intellectual property; and WHEREAS, the Parties agreed that upon exercise of the Option, this ELA would immediately come into force and effect; NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the Parties hereto agree as follows: ARTICLE 1 - DEFINITIONS ----------------------- Capitalized terms not defined herein shall have the meaning set forth in the Agreement. For the purposes of this ELA, the following words and phrases shall have the following meanings: 1.1 "Commercial Sales" shall mean any sale of a Licensed Product in any country in the world, excluding sales for purposes of testing, validation studies, marketing evaluations or clinical trials, or provided as marketing samples. 1.2 "Development Costs" shall mean direct research and product development expenditure incurred by BD in the research and product development of a BACcel Platform product. Development Costs shall not include any overhead expenses, and shall be pro-rated with respect to expenditures applicable both to the BACcel Platform and to other BD activities. In addition, Development Costs does not include any amounts paid under the Agreement or any royalties due under this ELA. 1.3 "Kit" shall mean a combination product offered or sold by BD that includes a Licensed Product in combination with identifiable products having a separate use or purpose not licensed hereunder. 1.4 "Licensed Product" shall mean collectively any process or product, the making, using, offering for sale, selling, importing or practice of which would, but for this ELA, infringe or contribute to infringement of a Valid Claim of an issued patent within Accelr8 Background Patent Rights, in the country where such activity takes place. Page 1 [***] Confidential Treatment Requested Confidential 1.5 "Net Sales" shall mean the sum of all amounts invoiced by BD for the sale, lease, rental or other mode of transfer, whether permanent or temporary, of a Licensed Product to third parties, less, to the extent not already reflected in the invoiced amount: 1.5.1 reasonable cash discounts to purchasers allowed and taken; 1.5.2 amounts for transportation or shipping charges from the place of manufacture to the customer's location actually paid by BD; 1.5.3 taxes and duties imposed on the sale of Licensed Product, levied and actually paid; 1.5.4 refunds, rebates, or allowances; 1.5.5 transfers for non-commercial testing, validation studies, marketing evaluations and clinical trials; and/or 1.5.6 free distribution (not in exchange for services or payments) of Licensed Product used solely as marketing samples to develop or promote the Licensed Product. In the case of sale or other transfer of the Licensed Product as part of a Kit, the Net Sales shall be determined as follows: If the Licensed Product is also sold separately from the Kit, the Net Sales on which the royalty rate is applied shall be an amount equal to the Net Sales of the Licensed Product if sold separately in a similar transaction involving similar volumes of Licensed Product at about the same time as the transaction involving such Kit. If the Licensed Product or the identifiable products are not sold separately from the Kit, the applicable Net Sales for royalty purposes shall be determined by multiplying the Net Sales of the Kit by the fraction A/(A+B) where A equals the standard fully absorbed cost to BD of the Licensed Product and B equals the fully absorbed cost to BD of the remaining products in the Kit, such costs determined by using BD standard accounting principles in accordance with generally accepted accounting practice. In the case where an instrument is placed pursuant to a reagent rental agreement or an analogous agreement in which a purchaser is provided an instrument for use in conjunction with Licensed Products, including but not limited to a service contract in conjunction with the instrument, and the costs associated with the placement and use of the instrument are not separately billed but instead represent some portion of the purchase price of the Licensed Products, then BD shall be entitled to reduce the Net Sales of such Licensed Products to allow for deduction of instrument-related charges such as interest for the financing of the instrument supplied, training, warranty and post-warranty cost of instrument service, using BD standard accounting principles in accordance with generally accepted accounting practice. The term Net Sales in the case of non-cash sales, shall mean the fair market value of all equivalent or other consideration received by BD. If such fair market value of the non-cash consideration is not readily and undisputably ascertainable, the Parties shall discuss in good faith the cash value of such non-cash consideration, and payment to Accelr8 shall be based on such cash value. Where the Licensed Product is part of a Research Use Only system that incorporates a BD instrument capable of use in other systems, such as a Page 2 [***] Confidential Treatment Requested Confidential multi-purpose imaging instrument, the applicable Net Sales for such system shall be only the Net Sales of any consumables sold with or for such system. 1.6 "Research Purposes" shall mean any and all activities directed to technology or product research but excluding actual commercial manufacture or commercial sale of a product. 1.7 "Valid Claim" shall mean an issued claim of an unexpired patent which shall not have been withdrawn, canceled or disclaimed or held invalid or unenforceable in an unappealed or unappealable decision. ARTICLE 2 - GRANT ----------------- 2.1 Accelr8 hereby grants to BD and BD Affiliates a world-wide, paid-up, exclusive license, including the right to grant sublicenses, under Accelr8's rights and interest in Program IP, to make, have made, use, practice, offer for sale, sell, import and otherwise dispose of Licensed Products, and to otherwise practice Program IP in the Field. 2.2 Accelr8 hereby grants to BD and BD Affiliates a world-wide, exclusive license, including the right to grant sublicenses, under Accelr8 Background IP, to make, have made, use, practice, offer for sale, sell, import and otherwise dispose of Licensed Products, and to otherwise practice Accelr8 Background IP, in the Field. The license shall be royalty-bearing with respect to Accelr8 Background Patent Rights pursuant to Article 3.1, and shall be royalty-free with respect to Accelr8 Background Know-How. 2.3 Accelr8 further grants to BD and BD Affiliates a world-wide, paid-up, non-exclusive license under Accelr8 Background IP, for Research Purposes. For purposes of this Article 2.3 only, "commercially exploit" as used in the definition of Accelr8 Background Know-How shall include research and development activities directed toward commercial exploitation. For avoidance of doubt, this Article 2.3 does not provide BD with any rights to commercialize Licensed Products outside the Field. 2.4 If BD has not spent at least [***] dollars ($[***]) in Development Costs ("Minimum Development Cost Commitment") by the date that is three (3) years from the ELA Effective Date, Accelr8 shall be entitled, upon ninety (90) days written notice, to convert BD's license grant under Article 2.2 to a non-exclusive license, unless BD meets the Minimum Development Cost Commitment during such ninety (90) day period. Upon such conversion: (i) the royalty rate set forth in Article 3.1 shall be reduced to [***] percent ([***]%), (ii) the stacking provisions of Article 3.5 shall continue to apply, with the minimum royalty thereunder reduced to [***] percent ([***]%), and (iii) BD's rights under Articles 5.6 and 5.7 with respect to Accelr8 Background IP shall cease (BD's rights under Articles 5.6 and 5.7 with respect to Program IP shall continue). For avoidance of doubt, monies paid under Article 2D of the Agreement shall not be credited toward the Minimum Development Cost Commitment. As of the date of a commercial launch by BD of a BACcel Platform product, Accelr8 shall no longer have a right to convert the license grant to a non-exclusive license under this Article 2.4. 2.5 If BD (i) has not spent at least the Minimum Development Cost Commitment by the date that is five (5) years from the ELA Effective Date, or (ii) does not spend at least [***] dollars ($[***]) in annual Development Costs thereafter until such time as BD enters clinical trials and regulatory review for a BACcel Platform product (to be pro-rated in the year in which BD enters such clinical trials and regulatory review), Accelr8 shall be entitled, in its sole discretion, to terminate this ELA upon ninety (90) days written notice, unless BD meets the Minimum Development Cost Commitment during such ninety (90) day period. For avoidance of doubt, monies paid under Article 2D of the Page 3 [***] Confidential Treatment Requested Confidential Agreement shall not be credited toward the Minimum Development Cost Commitment. As of the date of a commercial launch by BD of a BACcel Platform product, Accelr8 shall no longer have a right to terminate this license under this Article 2.5. 2.6 BD shall inform Accelr8 upon creation of an active material item number for a BACcel Platform product, which enables commercial sales to customers other than internal BD businesses or Affiliates. Should BD not create an active material item number for a BACcel Platform product or no longer maintain an active material item number for a BACcel Platform product, then Accelr8 shall be entitled to terminate the ELA upon ninety (90) days written notice unless BD cures within that ninety (90) day period. 2.7 Within thirty (30) days of the ELA Effective Date, Accelr8 shall initiate a transfer to BD of copies of all Accelr8 Background Know-How requested by BD. BD may thereafter request additional items within Accelr8 Background Know-How from time-to-time, and Accelr8 shall provide the requested items in a reasonable manner. In addition, Accelr8 shall provide reasonable technical assistance to BD in product development activities utilizing the Accelr8 Background Know-How. BD shall reimburse Accelr8 for reasonable documented out-of-pocket expenses for providing such Accelr8 Background Know-How and reasonable technical assistance. Use of the Accelr8 Background Know-How shall be subject to the provisions of this ELA. 2.8 No rights to Accelr8 under any BD Background IP or BD's interest in Program IP are granted hereunder. ARTICLE 3 - PAYMENTS -------------------- 3.1 In consideration for the rights and licenses granted herein, BD or its Affiliate shall make payments to Accelr8 as follows: On Commercial Sales, BD or its Affiliate shall pay Accelr8 a running royalty in an amount equal to [***] percent ([***]%) of Net Sales of Licensed Products. 3.2 With respect to sublicenses, BD or its Affiliate shall pay an amount equal to thirty percent (30%) of all payments, royalties and the fair market value of all goods, services and other remuneration received by BD from sublicensees in consideration for a sublicense under Accelr8 Background Patent Rights. BD shall not, however, be required to pass on any monies received by BD from a sublicensee as payment for research or trials. Where BD receives from a sublicensee anything of value in lieu of cash payments in consideration for the sublicense, the cash value of such consideration shall be determined by negotiation in good faith between the Parties. 3.3 BD or its Affiliate shall make the payments to Accelr8 after deducting withholding taxes, levies and other governmental charges only if required by applicable law. BD agrees that it shall use reasonable efforts to minimize any such required withholding taxes, levies or other governmental charges. Accelr8 shall cooperate with BD and take all reasonable steps necessary to allow BD to lawfully reduce or avoid such withholding taxes, levies or other governmental charges, such cooperation to include the timely completion and filing of any relevant forms and/or other documents. BD agrees that it shall take all reasonable steps necessary to assist Accelr8 in obtaining a refund for any amounts withheld. 3.4 No multiple royalties shall be payable because any Licensed Product, its manufacture, use, lease or sale are or shall be covered by more than one patent or more than one claim of a patent in the Accelr8 Background Patent Rights. Page 4 [***] Confidential Treatment Requested Confidential 3.5 In the event that BD or its Affiliate is obligated to pay a royalty to one or more third parties for a Licensed Product and the aggregate total royalty rate on such Licensed Product exceeds [***] percent ([***]%)in the absence of any applicable royalty stacking adjustments, then the running royalty under this ELA shall be reduced by an amount equal to: fifty percent (50%) of the difference between the aggregate royalty rate and [***] percent ([***]%). However, in no event shall the running royalty drop below [***] percent ([***]%). (For example, [***].) 3.6 The payments by BD to Accelr8 hereunder, the provisions of Articles 2.4, 2.5 and 2.6 are considered to be complete satisfaction of any duty imposed upon BD to commercially exploit the Accelr8 Background IP. ARTICLE 4 - REPORTS AND RECORDS ------------------------------- 4.1 After the first Commercial Sale of a Licensed Product, within sixty (60) days after the last business day of each calendar quarter of each license year of this ELA, BD shall submit to Accelr8 a written report with respect to the preceding calendar quarter (the "Payment Report") stating: (a) the quantities of Licensed Products sold by BD, and the monetary amount of all sales and all deductions therefrom used to calculate Net Sales with respect to sales of Licensed Products during the reporting period and the royalties due therefrom, and (b) royalty-bearing sublicensing revenue and the sources thereof. 4.6 Simultaneously with the submission of each Payment Report, BD shall make payments to Accelr8 of the amounts due for the calendar quarter covered by the Payment Report. Payment shall be by check payable to Accler8 and sent to the address for Accelr8 set forth in Article 10, or to such other address as Accelr8 may specify by notice hereunder, or, if requested by Accelr8, by wire transfer of immediately available funds to a bank and account identified by notice to BD by Accelr8. 4.7 Within sixty (60) days after the date of termination or expiration of this ELA, BD shall pay Accelr8 any and all amounts that are due pursuant to this ELA as of the date of such termination or expiration, together with a Payment Report for such payment, except that such Payment Report shall cover the period from the end of the last calendar quarter prior to termination or expiration to the date of termination or expiration. 4.8 With respect to revenues obtained by BD in foreign countries, BD shall make royalty payments to Accelr8 in United States Dollars. Royalty payments for transactions outside the United States shall first be determined in the currency of the country in which they are earned, and then converted to United States dollars using the buying rates of exchange quoted by Citibank, N.A. (or its successor) in New York, New York for the last business day of the calendar quarter in which the royalties were earned. 4.9 BD shall maintain usual books of account and records showing Net Sales of Licensed Products in sufficient detail to allow the royalties payable by BD to be accurately determined. Upon reasonable notice, no more than once per year, such books and records shall be open to inspection, during usual business hours, by an independent certified public accountant (bound by an obligation of confidentiality to BD) to whom BD has no reasonable objection, for two (2) years after the calendar quarter to which they pertain, solely for purposes of verifying the accuracy of the amounts paid by BD under this ELA. The cost of any such inspection shall be borne by Accelr8. In the event that such review reasonably shows that BD has underpaid royalties by more than five percent (5%), with respect to any calendar quarter, BD shall pay, within thirty (30) days after demand by Accelr8, the costs and expenses of such review, as well as all unpaid royalties. If the inspection shows an overpayment, Accelr8 shall provide BD with a credit against future royalties in an amount equal to such overpayment. All information learned by Accelr8 in connection with any such audit shall be treated by Accelr8 as BD's Confidential Information hereunder. Page 5 [***] Confidential Treatment Requested Confidential ARTICLE 5 - PATENT MATTERS AND LITIGATION ----------------------------------------- 5.1 Accelr8 shall diligently prepare, apply for, prosecute, obtain and maintain ("Prosecute" or "Prosecution") Accelr8 Background Patent Rights using counsel to which BD has no reasonable objection. BD shall be provided with copies of all documents relating to the Prosecution of Accelr8 Background Patent Rights that are within or relevant to the Field, in sufficient time to review such documents and comment thereon, if desired by BD, prior to filing, provided that, if BD has not commented on such documents prior to the deadline for filing a response to the relevant government patent office, Accelr8 will be free to respond without consideration of BD's comments. Accelr8 agrees to pay due consideration to BD's comments and use reasonable efforts to implement BD's reasonable requests consistent with its commercial goals and interests. Prosecution costs shall be borne equally between the Parties, unless BD's license grant is converted to a non-exclusive license under Article 2.4, in which case Prosecution costs shall then be borne fully by Accelr8. 5.2 If Accelr8 elects not to Prosecute any patents or patent applications within Accelr8 Background Patent Rights relevant in the Field in any country(ies) or region(s) in the world, Accelr8 shall promptly notify BD in writing in sufficient time, but not less than sixty (60) days, for BD to take action, and BD shall thereafter have the right, but not any obligation, to Prosecute such patent rights in such country(ies) or region(s) at its own cost, and in its own name ("Surrendered Patent"). If BD elects to take over the Prosecution of any such Surrendered Patent, Accelr8 agrees to assign, and does hereby assign, to BD all right, title and interest in and to such Surrendered Patent. 5.3 BD shall have responsibility for Prosecuting patents or applications within Program IP, at its sole expense, using BD internal counsel or using external counsel to which Accelr8 has no reasonable objection. Accelr8 shall be provided with copies of all documents relating to the Prosecution of Program IP that are relevant outside the Field, in sufficient time to review such documents and comment thereon. .BD agrees to pay due consideration to Accelr8's comments and use reasonable efforts to implement Accelr8's reasonable requests consistent with BD's commercial goals and interests. If Accelr8 has not commented on such documents prior to the deadline for filing a response to the relevant government patent office, BD will be free to respond without consideration of Accelr8's comments. 5.4 If a dispute arises with respect to Prosecution, Accelr8 and BD shall first attempt to resolve the dispute through good faith discussions. If no resolution is reached, to accommodate a relevant patent office deadline, either Party may, at its sole expense, refer the dispute to an independent patent attorney, to which the other Party has no reasonable objection, whose decision shall be final and binding. 5.5 In the event that either BD or Accelr8 become aware of any potential infringement or misuse of Accelr8 Background IP or Program IP in the Field by a third party ("Infringing Party"), such Party shall notify the other Party in writing and provide a summary of the relevant facts and circumstances. 5.6 Accelr8 shall not notify a third party of the potential infringement of Accelr8 Background IP, (i) in the Field, without first obtaining the consent of BD, or (ii) outside the Field, without providing advance written notice to BD including a summary of the relevant non-confidential facts supporting such potential infringement. Accelr8 hereby grants to BD all rights to sue and recover damages or obtain injunctive relief for past and future infringement, misappropriation, violation or breach of Accelr8 Background IP or Program IP, in the Field. During the term of this Agreement, BD shall have the first right, but no obligation, to assert, enforce and defend Accelr8 Background IP or Program IP in the Field ("Litigate" or "Litigation") and its rights pursuant to this Agreement, at its own expense, and to recover any damages, awards or settlements resulting therefrom. Accelr8 hereby agrees that BD may join it as a necessary party plaintiff in any such suit, without expense to Accelr8. BD shall hold harmless and indemnify Accelr8 from and against any order Page 6 [***] Confidential Treatment Requested Confidential for costs arising without fault or negligence of Accelr8 that may be made against them by reason of being named a party plaintiff in such proceedings. BD shall have sole control of any Litigation and all negotiations for its settlement or compromise, and shall have the sole right, in accordance with the terms and conditions herein, to sublicense solely in the Field any alleged infringer under Accelr8 Background IP or Program IP. The total cost of any Litigation commenced or defended solely by BD shall be borne by BD. All recoveries from any such action shall be first applied to reimburse BD its cost and expenses including, without limitation, attorney's fees and court costs. Any excess amounts shall be deemed to be Net Sales. Notwithstanding the foregoing, BD shall have no right to litigate or compromise issues with respect to the rights retained by Accelr8 under this Agreement or which may adversely affect Accelr8 Background IP without the prior written consent of Accelr8, not to be unreasonably withheld, conditioned or delayed. 5.7 If BD decides that it shall not bring suit against, or enter into negotiations with, an Infringing Party as provided in Article 5.6, then BD shall so notify Accelr8 and, in that event only, Accelr8 shall have the right, but shall not be obligated, to Litigate the relevant action and to recover, for its own account, any damages, awards or settlements resulting therefrom. BD hereby agrees that Accelr8 may join BD as a necessary party plaintiff in any such suit, without expense to BD. Accelr8 shall hold harmless and indemnify BD from and against any order for costs arising without fault or negligence of BD that may be made against BD by reason of being named a party plaintiff in such proceedings. Accelr8 shall have sole control of any such suit and all negotiations for its settlement or compromise, provided that Accelr8 shall not settle or compromise any such suit or enter into any consent order for the settlement or compromise thereof that adversely affects the licenses or rights of BD hereunder without the prior written consent of BD, and provided further that BD shall have the sole right in accordance with the terms and conditions hereof to sublicense any alleged infringer under Accelr8 Background IP or Program IP in the Field. The total cost of any such Litigation commenced or defended solely by Accelr8 shall be borne by Accelr8. 5.8 In the event that any action, suit or proceeding is brought against, or written notice or threat thereof is provided to, BD alleging infringement of any third party patent or unauthorized use or misappropriation of any third party technology or know-how arising out of or in connection with BD's manufacture, use, offer for sale, sale or importation of the Licensed Products, BD shall have the right to defend at its own expense such action, suit or proceeding and, in furtherance of such rights, Accelr8 hereby agrees that BD may join it as a party in such suit, without expense to Accelr8. BD shall hold harmless and indemnify Accelr8 from and against any order for costs and all damages and settlements arising without fault of Accelr8 that may be made against Accelr8 in such proceedings, unless such order arises out of or relates to facts and circumstances involving a breach of any representation, warranty or covenant by Accelr8. 5.9 If a party undertakes Litigation and/or Prosecution of the Accelr8 Background IP or Program IP by legal or patent office proceedings pursuant to this Agreement, the other party shall, at the request and expense of the party undertaking such Litigation and/or Prosecution, cooperate in all reasonable respects, and to the extent possible, have its employees testify when requested and make available relevant records, papers, information, samples and the like. ARTICLE 6 - REPRESENTATIONS --------------------------- 6.1 Accelr8 represents and warrants to BD that, to the best of Accelr8's knowledge as of the Effective Date, (a) Accelr8 owns all right, title and interest in and to Accelr8 Background IP; (b) Accelr8 Background Patent Rights have been duly prepared, filed, prosecuted, obtained and maintained in accordance with all applicable laws, rules and regulations; (c) Accelr8 is not aware of any third party whose intellectual property rights would be infringed or misappropriated by the practice of Accelr8 Background IP nor of any third party who is infringing or misappropriating Accelr8 Background IP; (d) Accelr8 does not own or control any patents or patent applications other than Accelr8 Background Patent Rights that currently, or when issued, would be infringed by Page 7 [***] Confidential Treatment Requested Confidential the making, using, offering for sale, selling or importing of any Licensed Product; (e) no open source or public library software, including any version of any software licensed pursuant to any GNU public license, is, in whole or in part, embodied or incorporated into any software within Accelr8 Background IP, and (f) Accelr8 has the lawful right to enter into the ELA and to grant the licenses hereunder without the consent or approval of another person or entity. 6.2 BD represents and warrants to Accelr8 that it has the lawful right and authority to enter into this ELA without the consent or approval of another person or entity. Accelr8 represents and warrants to BD that it has the lawful right and authority to enter into this ELA without the consent or approval of another person or entity. ARTICLE 7 - INDEMNIFICATION --------------------------- 7.1 During the term of this ELA, BD shall indemnify, hold harmless and defend Accelr8, and its officers, employees and agents (the "Indemnitees") against any and all claims (including but not limited to claims of products liability), suits, losses, damage, costs, fees, and expenses (including but not limited to reasonable attorneys' fees and other legal costs) resulting from or arising out of BD's exercise of the license granted to it hereunder. However, BD need not indemnify Indemnitees to the extent that a claim, suit, loss, damage, cost, fee or expense arises out of the gross negligence or intentional misconduct of an Indemnitee. 7.1.1 BD shall have the exclusive right to control the defense of any such action, including the right to select counsel to defend any Indemnitee, and to settle any claim. 7.1.2 The obligations of BD stated in Article 7 shall apply only if the relevant Indemnitee notifies BD in writing within fifteen (15) days following receipt of written notice of any claim or suit brought against Indemnitee in respect of which Indemnitee intends to invoke the provisions of this Article 7. BD shall keep the Indemnitee informed on a current basis of its defense of any claims pursuant to this Article 7. 7.2 IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES (INCLUDING BUT NOT LIMITED TO LOST PROFITS OR BUSINESS OPPORTUNITIES) IN CONNECTION WITH THE ELA OR RESULTING FROM EXERCISE OF THIS LICENSE OR THE USE OF LICENSED PRODUCTS, EVEN IF A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE AND NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY REMEDY SET FORTH IN THIS AGREEMENT. 7.3 ACCELR8'S TOTAL LIABILITY ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT, REGARDLESS OF THE FORM OF ACTION, SHALL BE LIMITED TO THE TOTAL PAYMENTS RECEIVED FROM BD UNDER THIS ELA AND UNDER THE AGREEMENT. ARTICLE 8 - ASSIGNMENT ----------------------- 8.1 This ELA is not assignable and any attempt to do so shall be void, without the express written approval of the other Party, which shall not be unreasonably withheld. The provisions of the ELA shall be binding upon and inure to the benefit of the Parties and the respective successors and assigns of each of the Parties. Page 8 [***] Confidential Treatment Requested Confidential ARTICLE 9 - TERMINATION ----------------------- 9.1 Unless otherwise terminated by operation of law or by acts of the Parties in accordance with the terms of this ELA, this ELA shall terminate upon expiration of the last to expire patent within Accelr8 Background Patent Rights. 9.2 This ELA, in whole or in part, shall be terminable by BD at any time, and for any or no reason, upon sixty (60) days written notice to Accelr8. Upon such termination by BD, the Non-Exclusive License Agreement shall come into force and effect. 9.3 This ELA shall be terminable upon the material breach or default of either Party. In the event of a material breach or default by a Party ("Defaulting Party"), the other Party ("non-Defaulting Party") shall give the Defaulting Party written notice of the default and its election to terminate this ELA effective at the expiration of a period of sixty (60) days from the date of the notice. If the Defaulting Party fails to resolve the default in the probation period by (i) curing the default, (ii) providing a written explanation satisfactory to the Non-Defaulting Party that a default has not occurred, or (iii) entering into a written agreement with the Non-Defaulting Party for the cure or other resolution of the default, then this ELA shall terminate upon the expiration of such sixty (60) day period. All termination rights shall be in addition to and not in substitution for any other remedies that may be available to the Non-Defaulting Party. Termination pursuant to this Article shall not relieve the Defaulting Party from liability and damages to the Non-Defaulting Party for default. Failure to meet the expenditure milestones under Article 2.4 shall not be considered a material breach hereunder. 9.4 If this ELA is terminated by Accelr8 due to BD's material breach, or pursuant to Article 2.5 or 2.6, the Non-Exclusive License Agreement shall come into force and effect. 9.5 Any termination of this ELA for any reason does not relieve either Party of any obligation or liability accrued prior to the termination or rescind anything done by either Party and the termination does not affect in any manner any rights of either Party arising under this ELA prior to the termination, including, but not limited to, the right of Accelr8 to receive royalties under Article 4.2. 9.6 To the extent permitted by law, if any Party hereto ("Bankrupt Party") shall become insolvent, or shall suspend business or shall file a voluntary petition or answer admitting the jurisdiction of the Court or the material allegations of a petition, or shall consent to an involuntary petition pursuant to or purporting to be pursuant to any reorganization or insolvency law of any jurisdiction, or shall make an assignment for the benefit of creditors, or shall apply for or consent to the appointment of a receiver or trustee of a substantial part of its property ("Bankruptcy Event"), then it is the Parties' intent that this ELA and the rights and licenses granted to BD hereunder by the Bankrupt Party must be adopted by any bankruptcy trustee or relevant third Party charged with the disposition of same, and cannot be rejected. The Parties acknowledge that this ELA contemplates the manner in which the Parties may retain the rights granted to them hereunder by the Bankrupt Party, if they choose to do so in accordance with Section 365(n) of the Bankruptcy Code. It is the Parties' intent that, upon the occurrence of any Bankruptcy Event, BD shall be entitled to retain the rights granted to them hereunder by the Bankrupt Party in all items delivered or required to be delivered under this ELA. 9.7 The terms and conditions of the following provisions shall survive termination or expiration of this ELA for as long as necessary to permit their full discharge: Articles 4.5 (REPORTS AND RECORDS), 5.5 and 5.6 (PATENT MATTERS AND LITIGATION), 6 (REPRESENTATIONS), 7 (INDEMNIFICATION), 11 (CONFIDENTIALITY) and 12 (MISCELLANEOUS). Upon a lawful termination by Accelr8 under Article 9.3 or by BD under Article 9.2 hereof, BD shall have no further rights to the Licensed Products, except that BD may sell or otherwise dispose of all Licensed Page 9 [***] Confidential Treatment Requested Confidential Products that have been manufactured prior to the effective date of such termination, or are in the process of being manufactured on such date, and shall make payments to Accelr8 required under Article 3.2, and Accelr8 shall have no further right to payment of any other license fees. 9.8 Notwithstanding Article 9.3 herein, if BD terminates this ELA for material breach or default of Accelr8, BD's rights and licenses hereunder shall continue, but any and all obligations of BD shall terminate. ARTICLE 10 - PAYMENTS, NOTICES AND OTHER COMMUNICATIONS ------------------------------------------------------- Any payment, notice or other communication pursuant to this ELA shall be sufficiently made or given on the date of mailing if sent to such Party by certified first class mail, postage prepaid or in the case of a notice or communication faxed with return receipt confirmation of complete delivery and followed up by a written copy delivered by first class mail, addressed to it at its address below or as it shall designate by written notice given to the other Party: In the case of Accelr8: 7000 North Broadway Bldg. 3-307 Denver, Colorado 80221 Fax: 303-863-1218 Attention: Thomas V. Geimer, Chairman and CEO In the case of BD: For BD: Becton, Dickinson and Company 7 Loveton Circle Sparks, Maryland 21152 Fax: 410-316-4081 Attention: Director / Strategic Planning and Business Development with a copy to : Becton, Dickinson and Company 1 Becton Drive MC089 Franklin Lakes, NJ 07417 Fax: (201) 848-9228 Attention: Vice President, Chief Intellectual Property Counsel ARTICLE 11 - CONFIDENTIALITY ----------------------------- 11.1 With regard to Confidential Information, the receiving Party agrees: 11.1.1 not to use the Confidential Information except for the purposes of this ELA ; 11.1.2 to safeguard Confidential Information against disclosure to others with the same degree of care as it exercises with its own Confidential Information of a similar nature, but in no event less than a reasonable degree of care; Page 10 [***] Confidential Treatment Requested Confidential 11.1.3 not to disclose Confidential Information to others (except to its employees, agents or consultants who are bound by a like obligation of confidentiality) without the express prior written permission of the disclosing Party, 11.1.4 except that the receiving Party shall not be prevented from using or disclosing any of the Confidential Information: (a) which the receiving Party can demonstrate by pre-existing, competent written records was previously known to it; or (b) which is now, or becomes in the future, public knowledge other than through acts or omissions of the receiving Party; or (c) which is lawfully obtained by the receiving Party from sources independent of the disclosing Party; and (d) which are required by law to be disclosed, only to the extent so required. 11.2 The secrecy obligations of the Parties with respect to Confidential Information shall continue for a period ending five (5) years from the termination date of this ELA. 11.3 Notwithstanding Article 11.1, the Parties shall have the right to disclose Confidential Information (i) as necessary in the course of seeking or enforcing patent rights, or obtaining regulatory approval to manufacture or market Licensed Products, and (ii) as reasonably required in the course of any actual or potential financing, business or sublicensing arrangement; provided, however, that any disclosure under (ii) shall be pursuant to a confidentiality agreement between the respective Party and such third party which preserves the rights of the Parties hereunder. ARTICLE 12 - MISCELLANEOUS PROVISIONS -------------------------------------- 12.1 Upon request, BD will consider in good faith its ability to manufacture BACcel Platform products for Accelr8's sale or distribution, for applications outside the Field. 12.2 This ELA shall be construed, governed, interpreted and applied in accordance with the laws of the State of New Jersey, without reference to choice or law doctrine, except that questions affecting the construction and effect of any patent shall be determined by the law of the country in which the patent was granted. Any controversy arising hereunder, except as otherwise explicitly stated, shall be subject to the exclusive jurisdiction of the courts located in New Jersey and each Party hereby submits itself for the sole purpose of this ELA and any controversy arising hereunder to the jurisdiction of the courts located in the District of New Jersey and any courts of appeal therefrom, and waives any objection on the grounds of lack of jurisdiction (forum non conveniens or otherwise) to the exercise of such jurisdiction over it by any such courts. 12.3 The Parties acknowledge that this ELA sets forth the entire agreement and understanding of the Parties as to the subject matter hereof, and shall not be subject to any change or modification except by the execution of a written instrument subscribed to by the Parties hereto. 12.4 The provisions of this ELA are severable, and in the event that any provisions of this ELA shall be determined to be invalid or unenforceable under any controlling body of the law, such invalidity or unenforceability shall not in any way affect the validity or enforceability of the remaining provisions hereof. Page 11 [***] Confidential Treatment Requested Confidential 12.5 The failure of either Party to assert a right hereunder or to insist upon compliance with any term or condition of this ELA shall not constitute a waiver of that right or excuse a similar subsequent failure to perform any such term or condition by the other Party. No waiver of any term or condition of this ELA shall be effective unless in writing and signed by the Party granting such waiver. 12.6 Neither BD nor Accelr8 shall be responsible for and the terms of this ELA shall be inapplicable to any default or delays which are due to cause beyond such Party's control, including but without limitation acts of God or of the public enemy, acts or any order of a government, fires, floods, or other natural disasters, embargoes, accidents, explosions, strikes, or other labor disturbances (regardless of the reasonableness of the demands of labor), shortages of fuel, power or raw materials, inability to obtain or delays of transportation facilities, incidents of war, or other events causing the inability of a Party acting in good faith with due diligence, to perform its obligations under this ELA. 12.7 Neither Party shall use the name of the other Party or any adaptation thereof in any publication, advertising, promotion, sales literature or packaging without the prior written consent of the other Party. Any press release, public announcement or Any press release, public announcement or similar publicity by the Parties with respect to this ELA shall be subject to the prior consent of the other Party, which consent shall not be unreasonably withheld, unless such communication is required to be made by law or pursuant to the rules and regulations of the Securities and Exchange Commission or the New York Stock Exchange listing requirements or an equivalent agency and after consultation and coordination between the Parties. Such press release, public announcement or similar publicity shall be limited to the existence of the ELA and shall not disclose the terms thereof. In the case of required communication to agencies such as listed above, the terms of the ELA shall be redacted unless prohibited by applicable laws or rules. 12.8 Nothing herein contained shall be construed to place the Parties in the relationship of partners or joint venturers or principal and agent or create any entity or association, and neither Party shall have the power to obligate or bind the other in any manner whatsoever. IN WITNESS WHEREOF, the persons executing this Agreement in duplicate originals, on behalf of the Parties hereto, represent and warrant, that they are duly authorized officers and representatives and have authority to execute such Agreement on behalf on their respective Party. ACCELR8 TECHNOLOGY CORPORATION BECTON, DICKINSON AND COMPANY By: ________________________ By: __________________________________ Thomas V. Geimer Philippe Jacon Chairman and CEO President - Microbiology Systems BD Diagnostics Date: Date: Page 12 [***] Confidential Treatment Requested Confidential CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO RULE 24B-2 AND ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST. COPIES OF THIS EXHIBIT CONTAINING THE OMITTED INFORMATION HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED WITH A [***]. Appendix C ---------- NON-EXCLUSIVE LICENSE AGREEMENT ------------------------------- This Non-Exclusive License Agreement ("NELA") is made and entered into effective pursuant to Article 6 of the Agreement or Article 9 of the Exclusive License Agreement ("NELA Effective Date"), by and between Accelr8 Technology Corporation, having a place of business at 7000 North Broadway, Building 3-307, Denver, Colorado 80221, ("Accelr8") and Becton, Dickinson and Company, a corporation duly organized under the laws of the State of New Jersey and having its principal office in 1 Becton Drive Franklin Lakes, NJ 07417 for itself and its Affiliates ("BD"), (each a "Party" and collectively the "Parties"). WITNESSETH WHEREAS, the Parties entered into a Research and Option Agreement ("Agreement") effective May 16, 2008 to which this NELA is attached; WHEREAS, Article 6 of the Agreement provided BD with the Option for an exclusive license to certain Accelr8 intellectual property; and WHEREAS, the Parties agreed that if BD chose not to exercise the Option, or if BD exercised the Option but such exclusive license was subsequently terminated, this NELA would come into force and effect; NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the Parties hereto agree as follows: ARTICLE 1 - DEFINITIONS ----------------------- Capitalized terms not defined herein shall have the meaning set forth in the Agreement. For the purposes of this NELA, the following words and phrases shall have the following meanings: 1.1 "BD Background Licensed Product" shall mean collectively any process or product used in or directed to use in Field, (i) that uses BD Background IP or (ii) that is covered by a Valid Claim of an issued patent within BD Background IP. 1.2 "Commercial Sales" shall mean any sale of a Licensed Product in any country in the world, excluding sales for purposes of testing, validation studies, marketing evaluations or clinical trials, or provided as marketing samples. 1.3 "Kit" shall mean a combination product offered or sold by Accelr8 that includes a Licensed Product in combination with identifiable products having a separate use or purpose not licensed hereunder. 1.4 "Licensed Product" shall mean BD Background Licensed Product and/or Program IP Licensed Product, as the context indicates. Page 1 [***] Confidential Treatment Requested Confidential 1.5 "Net Sales" shall mean the sum of all amounts invoiced by Accelr8 for the sale, lease, rental or other mode of transfer, whether permanent or temporary, of Licensed Product to third parties, less, to the extent not already reflected in the invoiced amount: 1.5.1 reasonable cash discounts to purchasers allowed and taken; 15.2 amounts for transportation or shipping charges from the place of manufacture to the customer's location actually paid by Accelr8; 1.5.3 taxes and duties imposed on the sale of Licensed Product, levied and actually paid; 1.5.4 refunds, rebates, or allowances; 1.5.5 transfers for non-commercial testing, validation studies, marketing evaluations and clinical trials; and/or 1.5.6 free distribution (not in exchange for services or payments) of Licensed Product used solely as marketing samples to develop or promote the Licensed Product. In the case of sale or other transfer of the Licensed Product as part of a Kit, the Net Sales shall be determined as follows: If the Licensed Product is also sold separately from the Kit, the Net Sales on which the royalty rate is applied shall be an amount equal to the Net Sales of the Licensed Product if sold separately in a similar transaction involving similar volumes of Licensed Product at about the same time as the transaction involving such Kit. If the Licensed Product or the identifiable products are not sold separately from the Kit, the applicable Net Sales for royalty purposes shall be determined by multiplying the Net Sales of the Kit by the fraction A/(A+B) where A equals the standard fully absorbed cost to BD of the Licensed Product and B equals the fully absorbed cost to BD of the remaining products in the Kit, such costs determined by using BD standard accounting principles in accordance with generally accepted accounting practice. In the case where an instrument is placed pursuant to a reagent rental agreement or an analogous agreement in which a purchaser is provided an instrument for use in conjunction with Licensed Products, including but not limited to or a service contract in conjunction with the instrument, and the costs associated with the placement and use of the instrument are not separately billed but instead represent some portion of the purchase price of the Licensed Products, then BD shall be entitled to reduce the Net Sales of such Licensed Products to allow for deduction of instrument-related charges such as interest for the financing of the instrument supplied, training, warranty and post-warranty cost of instrument service, using BD standard accounting principles in accordance with generally accepted accounting practice. The term Net Sales in the case of non-cash sales, shall mean the fair market value of all equivalent or other consideration received by Accelr8. If such fair market value of the non-cash consideration is not readily and undisputably ascertainable, the Parties shall discuss in good faith the cash value of such non-cash consideration, and payment to BD shall be based on such cash value. 1.6 "Program IP Licensed Product" shall mean collectively any process or product used in or directed to use in Field, (i) that uses Program IP or (ii) that is covered by a Valid Claim of an issued patent within Program IP. Page 2 [***] Confidential Treatment Requested 1.7 "Valid Claim" shall mean an issued claim of an unexpired patent which shall not have been withdrawn, canceled or disclaimed or held invalid or unenforceable in an unappealed or unappealable decision. Page 3 [***] Confidential Treatment Requested Confidential ARTICLE 2 - INTELLECTUAL PROPERTY RIGHTS ---------------------------------------- 2.1 Program IP shall be jointly owned by BD and Accelr8, and either Party may use the Program IP for any purpose, subject to any obligations set forth in this NELA. 2.2 BD shall grant Accelr8 a limited, non-exclusive, royalty-bearing license, with no right to sublicense, to BD Background IP which (i) was developed during the term of the Agreement, (ii) was developed as part of BD's assessment of the BACcel Platform technology, and (iii) is necessary for Accelr8 to make, sell, use or have made a BACcel Platform product. 2.3 Except as explicitly set forth herein, no rights under any other intellectual property of the Parties are granted hereunder. ARTICLE 3 - PAYMENTS -------------------- 3.1 In consideration for the rights granted herein, and the rights and payments provided in the Agreement, Accelr8 shall make payments to BD as follows: 3.1.1 On Commercial Sales, Accelr8 shall pay BD a running royalty in an amount equal to [***] percent ([***]%)of Net Sales of Program IP Licensed Products, up to the total amount paid by BD to Accelr8 under Article 2D of the Research and Option Agreement, not to exceed a maximum of [***] dollars ($[***]). 3.2.2 On Commercial Sales, Accelr8 shall pay BD a running royalty in an amount equal to [***] percent ([***]%) of Net Sales of BD Background Licensed Products, with no maximum. 3.2 With respect to sublicenses of Program IP, Accelr8 shall pay an amount equal to thirty percent (30%) of all payments, royalties and the fair market value of all goods, services and other remuneration received by Accelr8 from sublicensees in consideration for a sublicense directed to Program IP Licensed Products in whole or in part. Accelr8 shall not, however, be required to pass on any monies received by Accelr8 from a sublicencee as payment for research or trials. Where Accelr8 receives from a sublicensee anything of value in lieu of cash payments in consideration for the sublicense, the cash value of such consideration shall be determined by negotiation in good faith between the Parties. 3.3 Accelr8 shall make the payments to BD after deducting withholding taxes, levies and other governmental charges only if required by applicable law. Accelr8 agrees that it shall use reasonable efforts to minimize any such required withholding taxes, levies or other governmental charges. BD shall cooperate with Accelr8 and take all reasonable steps necessary to allow Accelr8 to lawfully reduce or avoid such withholding taxes, levies or other governmental charges, such cooperation to include the timely completion and filing of any relevant forms and/or other documents. Accelr8 agrees that it shall take all reasonable steps necessary to assist BD in obtaining a refund for any amounts withheld. 3.4 No multiple royalties shall be payable because any Licensed Product, its manufacture, use, lease or sale are or shall be covered by more than one patent or more than one claim of a patent. ARTICLE 4 - REPORTS AND RECORDS ------------------------------- 4.1 After the first Commercial Sale of a Licensed Product, within sixty (60) days after the last business day of each calendar quarter of each license year of this NELA, Accelr8 shall submit to BD a written report with respect to the preceding calendar quarter (the "Payment Report") stating: a) the quantities of Licensed Products sold by Accelr8, and the monetary amount of all sales and all deductions therefrom used to calculate Net Sales with respect to sales of Licensed Products during the reporting period and the royalties due therefrom, and (b) royalty-bearing sublicensing revenue and the sources thereof. Page 4 [***] Confidential Treatment Requested Confidential 4.2 Simultaneously with the submission of each Payment Report, Accelr8 shall make payments to BD of the amounts due for the calendar quarter covered by the Payment Report. Payment shall be by check payable to BD and sent to the address for BD set forth in Article 10, or to such other address as BD may specify by notice hereunder, or, if requested by BD, by wire transfer of immediately available funds to a bank and account identified by notice to Accelr8 by BD. 4.3 Within sixty (60) days after the date of termination or expiration of this NELA, Accelr8 shall pay BD any and all amounts that are due pursuant to this NELA as of the date of such termination or expiration, together with a Payment Report for such payment, except that such Payment Report shall cover the period from the end of the last calendar quarter prior to termination or expiration to the date of termination or expiration. 4.4 With respect to revenues obtained by Accelr8 in foreign countries, Accelr8 shall make royalty payments to BD in United States Dollars. Royalty payments for transactions outside the United States shall first be determined in the currency of the country in which they are earned, and then converted to United States dollars using the buying rates of exchange quoted by Citibank, N.A. (or its successor) in New York, New York for the last business day of the calendar quarter in which the royalties were earned. 4.5 Accelr8 shall maintain usual books of account and records showing Net Sales of Licensed Products in sufficient detail to allow the royalties payable by Accelr8 to be accurately determined. Upon reasonable notice, no more than once per year, such books and records shall be open to inspection, during usual business hours, by an independent certified public accountant (bound by an obligation of confidentiality to Accelr8) to whom Accelr8 has no reasonable objection, for two (2) years after the calendar quarter to which they pertain, solely for purposes of verifying the accuracy of the amounts paid by Accelr8 under this NELA. The cost of any such inspection shall be borne by BD. In the event that such review reasonably shows that Accelr8 has underpaid royalties by more than five percent (5%), with respect to any calendar quarter, Accelr8 shall pay, within thirty (30) days after demand by BD, the costs and expenses of such review. If the inspection shows an overpayment, BD shall provide Accelr8 with a credit against future royalties in an amount equal to such overpayment. All information learned by BD in connection with any such audit shall be treated by BD as Accelr8's Confidential Information hereunder. ARTICLE 5 - PATENT MAINTENANCE ------------------------------ 5.1 During the term of this Agreement, BD and Accelr8 shall jointly prepare, apply for, prosecute, obtain and maintain ("Prosecute") patents and applications for Program IP, using counsel to be chosen by mutual agreement. Either party may, upon good cause, dismiss such counsel, whereupon the parties shall mutually agree upon the selection of other counsel. Costs for Prosecution of Program IP shall be shared equally by the Parties. 5.2 If one Party ("First Party") no longer wishes to support Prosecution of a particular patent or application, it shall notify the other Party ("Second Party") in writing. The Second Party shall have the right to take over Prosecution thereof, in which case the First Party agrees to assign, and does hereby assign, all right, title and interest in and to such patent or application to the Second Party. Page 5 [***] Confidential Treatment Requested Confidential 5.3 If a dispute arises with respect to Prosecution, BD and Accelr8 shall first attempt to resolve the dispute through good faith discussions. If no resolution is reached, to accommodate a relevant patent office deadline, either party may, at its sole expense, refer the dispute to a patent attorney, to which the other party has no reasonable objection, whose decision they shall agree to and adopt. 5.4 In the event that either Accelr8 or BD become aware of any potential infringement or misuse of Program IP, such Party shall notify the other Party of the potential infringement or misuse in writing and provide a summary of the relevant facts and circumstances. The Parties shall discuss appropriate action with respect to such potential infringement or misuse. ARTICLE 6 - REPRESENTATIONS ---------------------------- 6.1 Accelr8 represents and warrants to BD that it has the lawful right and authority to enter into this NELA without the consent or approval of another person or entity. BD represents and warrants to Accelr8 that it has the lawful right and authority to enter into this NELA without the consent or approval of another person or entity. ARTICLE 7 - INDEMNIFICATION --------------------------- 7,1 During the term of this NELA, each Party (the "Indemnitor") shall indemnify, hold harmless and defend the other Party, and its officers, employees and agents (the "Indemnitees") against any and all claims, suits, losses, damage, costs, fees, and expenses resulting from or arising out of the Indemnitor's exercise of the license granted to it hereunder. However, the Indemnitor need not indemnify Indemnitees to the extent that a claim, suit, loss, damage, cost, fee or expense arises out of the gross negligence or intentional misconduct of an Indemnitee 7.1.1 The Indemnitor shall have the exclusive right to control the defense of any such action, including the right to select counsel to defend any Indemnitee, and to settle any claim. 7.1.2 The obligations of the Indemnitor stated in Article 7 shall apply only if the relevant Indemnitee notifies the Indemnitor in writing within fifteen (15) days following receipt of written notice of any claim or suit brought against Indemnitee in respect of which Indemnitee intends to invoke the provisions of this Article 7. The Indemnitor shall keep the Indemnitee informed on a current basis of its defense of any claims pursuant to this Article 7. 7.2 IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES RESULTING FROM EXERCISE OF THIS LICENSE OR THE USE OF LICENSED PRODUCTS. ARTICLE 8 - ASSIGNMENT ---------------------- 8.1 This NELA is not assignable and any attempt to do so shall be void, without the express written approval of the other Party, which shall not be unreasonably withheld, except in the case of the sale or transfer by a Party of substantially the entire business to which the NELA pertains, in which case no approval is needed. The rights and obligations of this NELA shall be binding upon and inure to the benefit of the Parties and the respective successors and assigns. Page 6 [***] Confidential Treatment Requested Confidential ARTICLE 9 - TERMINATION ----------------------- 9.1 Unless otherwise terminated by operation of law or by acts of the Parties in accordance with the terms of this NELA, this NELA shall terminate upon the later of: twenty (20) years from the NELA Effective Date or expiration of the last to expire patent within Program IP. 9.2 This NELA shall be terminable upon the material breach or default of either Party. In the event of a material breach or default by a Party ("Defaulting Party"), the other Party ("non-Defaulting Party") shall give the Defaulting Party written notice of the default and its election to terminate this NELA effective at the expiration of a period of sixty (60) days from the date of the notice. If the Defaulting Party fails to resolve the default in the probation period by (i) curing the default, (ii) providing a written explanation satisfactory to the Non-Defaulting Party that a default has not occurred, or (iii) entering into a written agreement with the Non-Defaulting Party for the cure or other resolution of the default, then this NELA shall terminate upon the expiration of such sixty (60) day period. All termination rights shall be in addition to and not in substitution for any other remedies that may be available to the Non-Defaulting Party. Termination pursuant to this Article shall not relieve the Defaulting Party from liability and damages to the Non-Defaulting Party for default. 9.3 Any termination of this NELA for any reason does not relieve either Party of any obligation or liability accrued prior to the termination or rescind anything done by either Party and the termination does not affect in any manner any rights of either Party arising under this NELA prior to the termination, including, but not limited to, the right of BD to receive royalties under Article 4.2. 9.4 The terms and conditions of the following provisions shall survive termination or expiration of this NELA for as long as necessary to permit their full discharge: Articles 4.5 (REPORTS AND RECORDS), 6 (REPRESENTATIONS), 7 (INDEMNIFICATION), 11 (CONFIDENTIALITY) and 12 (MISCELLANEOUS). ARTICLE 10 - PAYMENTS, NOTICES AND OTHER COMMUNICATIONS ------------------------------------------------------- Any payment, notice or other communication pursuant to this NELA shall be sufficiently made or given on the date of mailing if sent to such Party by certified first class mail, postage prepaid or in the case of a notice or communication faxed with return receipt confirmation of complete delivery and followed up by a written copy delivered by first class mail, addressed to it at its address below or as it shall designate by written notice given to the other Party: In the case of Accelr8: 7000 North Broadway Bldg. 3-307 Denver, Colorado 80221 Fax: 303-863-1218 Attention: Thomas V. Geimer, Chairman and CEO In the case of BD: Becton, Dickinson and Company 7 Loveton Circle Sparks, Maryland 21152 Fax: 410-316-4081 Attention: Director / Strategic Planning and Business Development Page 7 [***] Confidential Treatment Requested Confidential with a copy to : Becton, Dickinson and Company 1 Becton Drive MC089 Franklin Lakes, NJ 07417 Fax: (201) 848-9228 Attention: Vice President, Chief Intellectual Property Counsel ARTICLE 11 - CONFIDENTIALITY ---------------------------- 11.1 With regard to Confidential Information, the receiving Party agrees: 11.1.1 not to use the Confidential Information except for purposes of this NELA ; 11.1.2 to safeguard Confidential Information against disclosure to others with the same degree of care as it exercises with its own Confidential Information of a similar nature, but in no event less than a reasonable degree of care; 11.1.3 not to disclose Confidential Information to others (except to its employees, agents or consultants who are bound by a like obligation of confidentiality) without the express prior written permission of the disclosing Party, 11..4 except that the receiving Party shall not be prevented from using or disclosing any of the Confidential Information: (a) which the receiving Party can demonstrate by pre-existing, competent written records was previously known to it; or (b) which is now, or becomes in the future, public knowledge other than through acts or omissions of the receiving Party; or (c) which is lawfully obtained by the receiving Party from sources independent of the disclosing Party; and (d) which are required by law to be disclosed, only to the extent so required. 11.2 The secrecy obligations of the Parties with respect to Confidential Information shall continue for a period ending five (5) years from the termination date of this NELA. 11.3 Notwithstanding Article 11.1, the Parties shall have the right to disclose Confidential Information (i) as necessary in the course of seeking or enforcing patent rights, or obtaining regulatory approval to manufacture or market Licensed Products, and (ii) as reasonably required in the course of any actual or potential financing, business or sublicensing arrangement; provided, however, that any disclosure under (ii) shall be pursuant to a confidentiality agreement between the respective Party and such Third Party which preserves the rights of the Parties hereunder. Page 8 [***] Confidential Treatment Requested Confidential ARTICLE 12 - MISCELLANEOUS PROVISIONS ------------------------------------- 12.1 This NELA shall be construed, governed, interpreted and applied in accordance with the laws of the State of New Jersey, without reference to choice or law doctrine, except that questions affecting the construction and effect of any patent shall be determined by the law of the country in which the patent was granted. Any controversy arising hereunder, except as otherwise explicitly stated, shall be subject to the exclusive jurisdiction of the courts located in New Jersey and each Party hereby submits itself for the sole purpose of this NELA and any controversy arising hereunder to the jurisdiction of the courts located in the District of New Jersey and any courts of appeal therefrom, and waives any objection on the grounds of lack of jurisdiction (forum non conveniens or otherwise) to the exercise of such jurisdiction over it by any such courts. 12.2 The Parties acknowledge that this NELA sets forth the entire agreement and understanding of the Parties as to the subject matter hereof, and shall not be subject to any change or modification except by the execution of a written instrument subscribed to by the Parties hereto. 12.3 The provisions of this NELA are severable, and in the event that any provisions of this NELA shall be determined to be invalid or unenforceable under any controlling body of the law, such invalidity or unenforceability shall not in any way affect the validity or enforceability of the remaining provisions hereof. 12.4 The failure of either Party to assert a right hereunder or to insist upon compliance with any term or condition of this NELA shall not constitute a waiver of that right or excuse a similar subsequent failure to perform any such term or condition by the other Party. No waiver of any term or condition of this NELA shall be effective unless in writing and signed by the Party granting such waiver. 12.5 Neither Accelr8 nor BD shall be responsible for and the terms of this NELA shall be inapplicable to any default or delays which are due to cause beyond such Party's control, including but without limitation acts of God or of the public enemy, acts or any order of a government, fires, floods, or other natural disasters, embargoes, accidents, explosions, strikes, or other labor disturbances (regardless of the reasonableness of the demands of labor), shortages of fuel, power or raw materials, inability to obtain or delays of transportation facilities, incidents of war, or other events causing the inability of a Party acting in good faith with due diligence, to perform its obligations under this NELA. 12.6 Neither Party shall use the name of the other Party or any adaptation thereof in any publication, advertising, promotion, sales literature or packaging without the prior written consent of the other Party. Any press release, public announcement or Any press release, public announcement or similar publicity by the Parties with respect to this NELA shall be subject to the prior consent of the other Party, which consent shall not be unreasonably withheld, unless such communication is required to be made by law or pursuant to the rules and regulations of the Securities and Exchange Commission or the New York Stock Exchange listing requirements or an equivalent agency and after consultation and coordination between the Parties. Such press release, public announcement or similar publicity shall be limited to the existence of the NELA and shall not disclose the terms thereof. In the case of required communication to agencies such as listed above, the terms of the NELA shall be redacted unless prohibited by applicable laws or rules. 12.7 Nothing herein contained shall be construed to place the Parties in the relationship of partners or joint venturers or principal and agent or create any entity or association, and neither Party shall have the power to obligate or bind the other in any manner whatsoever. Page 9 [***] Confidential Treatment Requested IN WITNESS WHEREOF, the persons executing this Agreement in duplicate originals, on behalf of the Parties hereto, represent and warrant, that they are duly authorized officers and representatives and have authority to execute such Agreement on behalf on their respective Party. ACCELR8 TECHNOLOGY CORPORATION BECTON, DICKINSON AND COMPANY By: ________________________ By: __________________________________ Thomas V. Geimer Philippe Jacon Chairman and CEO President - Microbiology Systems BD Diagnostics Date: Date: Page 10 [***] Confidential Treatment Requested Appendix D [***][4 pages in total] Page 11 [***] Confidential Treatment Requested EX-31.1 3 accelr843008exh311.txt RULE 13A-14(A)/15D-14(A) CERTIFICATIONS EXHIBIT 31.1 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the accompanying Quarterly Report on Form 10-QSB of Accelr8 Technology Corporation (the "Company") for the quarter ended April 30, 2008, as filed with the Securities and Exchange Commission on the date hereof, the undersigned, in the capacity and date indicated below, hereby certifies that: 1. I have reviewed this quarterly report on Form 10-QSB of Accelr8 Technology Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this quarterly report; 4. The Company's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Company and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an quarterly report) that has materially affected or is reasonably likely to materially affect, the Company's internal control over financial reporting; and 5. The Company's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of Company's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting. Dated: June 16, 2008 /s/ Thomas V. Geimer - --------------------- Thomas V. Geimer, Chief Executive Officer and Chief Financial Officer EX-31.2 4 accelr843008exh312.txt RULE 13A-14(A)/15D-14(A) CERTIFICATIONS EXHIBIT 31.2 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the accompanying Quarterly Report on Form 10-QSB of Accelr8 Technology Corporation (the "Company") for the quarter ended April 30, 2008, as filed with the Securities and Exchange Commission on the date hereof, the undersigned, in the capacity and date indicated below, hereby certifies that: 1. I have reviewed this quarterly report on Form 10-QSB of Accelr8 Technology Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this quarterly report; 4. The Company's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Company and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an quarterly report) that has materially affected or is reasonably likely to materially affect, the Company's internal control over financial reporting; and 5. The Company's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of Company's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting. Dated: June 16, 2008 /s/ Bruce H. McDonald - ---------------------- Bruce H. McDonald, Principal Accounting Officer EX-32.1 5 accelr843008exh321.txt SECTION 1350 CERTIFICATIONS EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code, each of the undersigned officer(s) of Accelr8 Technology Corporation, a Colorado corporation (the "Corporation"), does hereby certify, to such officer's knowledge, that: The Quarterly Report on Form 10-QSB for the quarter ended April 30, 2008 (the "Form 10-QSB") of the Corporation fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and information contained in the Form 10-QSB fairly presents, in all material respects, the financial condition and results of operations of the Corporation. Dated: June 16, 2008 /s/ Thomas V. Geimer - --------------------- Thomas V. Geimer, Chief Executive Officer and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----