Exhibit 10.40
COOPERATION AND PROJECT FUNDING AGREEMENT
PREAMBLE
Agreement made this 21st day of January, 2001, by and
BETWEEN
The ISRAEL-UNITED STATES BINATIONAL INDUSTRIAL RESEARCH AND
DEVELOPMENT FOUNDATION, a legal entity created by Agreement between the
Government of the State of Israel and the Government of the United States of
America, and promulgated into law by the Israeli Knesset in 1978 under the title
of the Law of the BINATIONAL INDUSTRIAL RESEARCH AND DEVELOPMENT FOUNDATION,
effective May 18th, 1977, (hereinafter referred to as the "Foundation"),
AND
Medivision Medical Imaging Ltd.
AND
Ophthalmic Imaging Systems, Inc.
severally and jointly (hereinafter collectively referred to as the "Proposer"
and separately as the "Participants").
WHEREAS the Foundation has been established under an Agreement
between the Government of the State of Israel and the Government of the United
States of America to promote and support joint nondefense industrial research
and development activities of mutual benefit to Israel and the United States,
and
WHEREAS the Proposer has heretofore submitted to the
Foundation a proposal (hereinafter the "Proposal"), entitled "Computer Guided
Laser Therapy" and on the basis of said Proposal has applied to the Foundation
for certain funding assistance for the development of the products therein
described (and hereinafter referred to collectively as the "Innovation"), and
WHEREAS the Foundation has examined and duly approved the
Proposal and is willing to provide certain funding for the implementation of the
Proposal on the terms and conditions hereinafter set forth;
Now therefore the parties hereto agree as follows:
A. GENERAL
A.1. The preamble to this Agreement shall be deemed an integral
part hereof.
A.2. The Participants shall be bound and obliged jointly and
severally, as herein provided.
A.3. The Executive Director of the Foundation is empowered by its
Board of Governors to execute this Agreement and to perform
all acts under the terms hereof on behalf of the Foundation.
A.4. The following document is incorporated by reference and made a
part of this Agreement:
The Proposal, dated the 3rd day of November, 2000, as stamped
with the Foundation's approval of the 6th day of December,
2000. Nonetheless, should any provision of said Proposal be
inconsistent with any other provision of this Agreement, the
provisions otherwise set forth in this document shall control.
A.5 The following document is referenced, and is incorporated by
reference only as portions may be specifically referred to and
incorporated hereafter:
BIRD Foundation Procedures Handbook 1997.
B. PROJECT FINANCING
B.1. The Foundation hereby agrees to fund, by Conditional Grant,
the implementation of the Proposal in the maximum sum of
$800,000 or 50% of the actual expenditures on the project, as
contemplated in the Approved Project Budget set forth in Annex
A hereto, whichever is less, and at the times and as may
otherwise be set forth in Annex B hereto.
B.1.1 The percentage of the actual expenditures on the project which
the Foundation provides shall hereinafter be described as the
"Foundation's pro rata share".
8.2. The Proposer shall provide in timely fashion all budgetary
funds in excess of those provided hereunder by the Foundation.
B.3. Proposer shall make payments to the Foundation based on Gross
Sales derived from the sale, leasing or other marketing or
commercial exploitation of the Innovation, including service
or maintenance contracts, commencing with the first such
commercial transaction. Such payments shall be made on the
following basis: a) The Conditional Grant referred to in Sub.
Sec. B.1. above (plus any other sums actually awarded to the
Proposer by the Foundation in connection with the subject
matter of the Proposal ("Other Sums")) shall be repaid in U.S.
Dollars at the rate of 2.5% of the first year's Gross Sales,
and, in succeeding years, at the rate of
2
5% of the Gross Sales until 100% of the Conditional Grant and
Other Sums has been repaid, whereupon the repayment rate shall
decrease to 2.5% of the Gross Sales, such repayments to be in
equivalent dollars valued at time of repayment. The rate of
change of value shall be that designated in Annex C hereto. b)
When the Proposer shall have repaid the following maximum
percentages in equivalent dollars valued at the time of
repayment (Annex C) of the Conditional Grant and Other Sums in
any of the following years following the first commercial
transaction, no additional payments to the Foundation on
account of the Conditional Grant and Other Sums shall be
required.
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Years Following Termination Maximum Percentage of
of this Agreement Conditional Grantand Other
Sums to be Repaid
----------------------------- ------------------------------
----------------------------- ------------------------------
1 100
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2 113
----------------------------- ------------------------------
3 125
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4 138
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5 and more 150
----------------------------- ------------------------------
B.3.1. The term "Gross Sales" shall include all specific export
incentives or bonuses paid the Proposer on account of sale of
the Innovation for export, but shall not include sums paid for
commissions, brokerage, value added and sales taxes on the
sale of the finished product, or transportation and associated
insurance costs, if same have been included in the gross sales
price.
B.3.2. The Innovation shall be deemed to have been sold, marketed or
otherwise commercially exploited if the Innovation, or any
improvement, modification or extension of it is put to the
benefit of a third party, whether directly or indirectly, and
whether standing alone or incorporated into or cojoined with
other hardware or processes, and for which benefit the said
third party gives something of value. This provision shall not
apply to transactions between the Participants or between the
Participants and their parents or subsidiaries or affiliates.
An "affiliate" is herein defined as any entity under common
control, controlled by or controlling either of the
Participants. Should such parent or subsidiary or affiliate
resell the Innovation separately identified or incorporated in
a system, the sales price shall be the price to third parties
from the parent or subsidiary or affiliate making the sale,
such sales price being defined by the same criteria as sales
are defined for purposes of "Gross Sales" in Sub. Sec. B. 3.1.
above.
If the Innovation is a part of a product sold, marketed or
otherwise commercially exploited, the sales price for purposes
of payments according to Sub. Sec. B. 3. shall be the sales
price of that product
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multiplied by a factor whose numerator is the manufacturing
cost of the Innovation and whose denominator is the
manufacturing cost of the product. If there shall have been
established a market price for the Innovation, such price
shall be the basis for payments according to Sub. Sec. B. 3.,
notwithstanding the incorporation of the Innovation in another
product.
B.4. All payments due the Foundation shall be calculated on a
semiannual calendar basis, and statements, certified by the
companies' auditors, rendered with payment in and within 90
calendar days following the end of each semiannual period.
Payments to the Foundation per Sub. Sec. B. 3. shall commence
at the end of the semiannual period during which the first
sale was made.
All late payments shall bear interest at 1% more than the
average prime rate prevailing at the Chase Manhattan Bank,
N.Y.C. during the period from the date payment was due until
actually made.
B.5. Should any portion of the technology or Innovation developed
in whole or in part under this Agreement be sold outright to a
third party, one-half of all proceeds of the sale shall be
applied as received until there has been full repayment to the
Foundation of a sum equal to the percentage indicated in Sub.
Sec. B. 3. b hereto of the Conditional Grant and Other Sums
actually received by Proposer hereunder, in equivalent dollars
valued at time of repayment (Annex C). If any such sale is (i)
in exchange for a non-cash asset or (ii) part of the sale of a
group of assets and no separate value is assigned by the
parties to the portion of the technology or Innovation sold,
the Proposer and the Foundation shall seek to agree: as to
clause (i) the value of the asset received; and as to clause
(ii) the portion of the consideration reasonably allocable to
the sale. If no such agreement is reached within a reasonable
time, the matter shall be resolved pursuant to Sub. Sec. M. 4.
Payments due and not made following receipt of proceeds shall
bear interest at 1% more than the average prime rate
prevailing at Chase Manhattan Bank, N. Y. C.
B.6. License agreements involving patented invention(s) or
technology developed in whole or in part during this
Foundation-supported project shall be subject to Annex F.
C. CONDUCT OF THE PROJECT
C.1. The Proposer agrees to do the work set out in the Proposal in
accordance with good standards relevant to such undertakings,
and shall expend funds received hereunder only in accordance
with such Proposal and the requirements of this Agreement.
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C.2. The Proposer agrees to comply with the Program Plan for the
Innovation as set forth in Annex D hereto.
C.3. The Proposer hereby appoints Xxx Xxxxxx as Israel Project
Manager and Xxxxx Xxxxxxxxx as U. S. Project Manager for the
implementation of the project during the period of this
Agreement and in accordance with the Program Plan, Annex D.
C.4. The Proposer shall not make substantial transfers of funds
from one budget item to another, change key personnel or their
duties and responsibilities or diminish their time allocated
to the proposed work hereunder without prior written approval
by the Foundation, which approval shall not be unreasonably
withheld.
C.4.1 Should any key person be absent from his work or should such
absence be expected, for 90 days or more, or should there be
any significant reduction in the total personnel force
assigned the project under the Proposal, the Proposer shall
forthwith notify the Foundation.
D. REPORTING REQUIREMENTS
D.1. The Proposer shall submit to the Foundation, in writing, the
following reports:
a. Interim fiscal and technical reports within 30 days
following the expiration of the first 6-month period;
b. Interim fiscal and technical reports within 30 days
following the expiration of the second 6-month
period;
c. Interim fiscal and technical reports within 30 days
following the expiration of the third 6-month period;
d. final fiscal and technical reports within 60 days
following termination of this Agreement.
D.1.1. Such reports shall be in form and substance as provided in
Formats for Technical and Fiscal Reports, BIRD Foundation
Procedures Handbook 1997, Sections 1V.A. and B.
D.2. Proposer shall provide, at its expense, briefings on the
progress of the work hereunder within 45 days following
request by the Foundation. Such briefings shall accord with
the form and depth as the Foundation may reasonably request.
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E. PUBLICATIONS
E.1. In any publication in scientific or technical journals of data
or other information derived from the work hereunder, or any
publication related to the work, but not including product
literature or manuals, the support of the Foundation shall be
acknowledged.
E.2. To the extent so required to permit the Foundation free
dissemination of such publications or information which the
Foundation is privileged to disseminate subject to the
limitation of Sec. F. below, the Proposer shall be deemed
hereby to waive any claim with respect to such dissemination
for infringement of any Copyright it may have or may obtain.
E.3. The Proposer shall furnish to the Foundation two (2) copies of
all publications resulting from Foundation-supported work as
soon as possible after publication.
F. PROPRIETARY INFORMATION, INTELLECTUAL PROPERTY
F.1. Proprietary information, clearly identified as such, submitted
to the Foundation in the Proposal, in any report or verbally,
or obtained by Foundation personnel observation pursuant to
any request or briefing, shall be treated by the Foundation as
confidential. At the request of Proposer or either
Participant, a confidential disclosure agreement may
separately be entered into by the parties.
Nothing contained in the foregoing shall restrict the right of
the Foundation to make public the fact of the Foundation's
support for the project, and the identification of the
Participants therein. The details of any such publication,
however, shall be subject to approval by the Participants.
F.2. The Proposer represents and warrants that, to the best of its
knowledge, information and belief, the Proposer has good,
valid and enforceable title to all of the Intellectual
Property necessary for purposes of implementation of the
Proposal, free and clear of all third party interests, or
otherwise possesses adequate exclusive rights to use the
Intellectual Property, (subject to the fact that no patent may
have been obtained). To the best of the Proposer's knowledge,
information and belief, no Intellectual Property used or
Proposed to be used with respect to the Proposal infringes
upon any Intellectual Property rights of others, and the use
of such Intellectual Property with respect to the Proposal
does not constitute an infringement, misappropriation or
misuse of any intellectual property rights of any third party.
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G. PATENTS AND ROYALTIES
G.1. If Proposer or either of the Participants elects to apply for
letters patent on any or all inventions resulting in whole or
in part from performance of Foundation-supported activity,
such applicant shall, at his own expense, so apply in the
United States and in Israel, and in such other countries and
at such times as he may deem appropriate.
G.2. Unless Proposer or either Participant is making payments to
the Foundation under Sec. B or Annex F hereto, a Participant
who retains rights in an invention and who obtains a patent
thereon in accordance with Sub. Sec. G. l., shall pay to the
Foundation a royalty as set forth in Annex E hereto, on sales
of any product embodying the invention or any product made by
practicing the invention. The Foundation's rights hereunder
shall apply whenever such patents are obtained and shall
survive termination of this Agreement.
H. RIGHTS OF THE GOVERNMENTS OF ISRAEL AND THE UNITED STATES
H.1. Regardless of the patent rights acquired by Participants by
mutual agreement or pursuant to Sub. Sec. G. l., the
Governments of Israel and of the United States shall each have
a nonexclusive, irrevocable, royalty-free license to make or
have made, to use or have used, and to sell or have sold any
such invention specified, throughout the world for all
governmental purposes: provided, however, that in any
contracting situation involving an invention made under this
Agreement, the Government of Israel shall give preference to
the Participant retaining the entire right, title, and
interest in the invention in Israel, and provided that
"governmental purposes" shall not include manufacture of such
invention where it is commercially available at reasonable
prices. Notwithstanding the foregoing, except for military
purposes or in emergency situations, neither the Government of
Israel nor the Government of the United States, nor the
Foundation, shall have the right to sell or otherwise dispose
of in any third country any product incorporating an invention
or made by practicing an invention without the prior written
permission of the Participant which has acquired the entire
right and interest in the invention in third countries. Such
Participant shall not withhold permission where appropriate
royalties are paid by the Foundation or government(s)
concerned.
H2. In addition to the patent rights specified in Sub. Sec. H. l.,
the Foundation reserves for itself and the Governments of
Israel and the United States the right to use the Innovation,
technical information, data and know-how arising out of, or
developed under, this Agreement for any noncommercial purpose,
and without charge.
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H.3. In order that the rights of the Foundation and the Governments
of Israel and the United States described herein shall be
exercisable, the Participants agree that any component,
element or other part of the system described as the
"Innovation" in the Preamble to this Agreement, whose use is
necessary to the full enjoyment of the Innovation, will be
made available, at reasonable prices, by the Participants
either as a commercially purchasable item, or by special
arrangement, and will be sold to the Foundation and/or the
Government of Israel and/or the Government of the United
States, also at reasonable prices.
H.4. Notwithstanding the above provisions of this Sec. H., it is
understood and agreed that, so long as any software that
comprises part or all of the Innovation is marketed by
Proposer, by either Participant, or by others with the rights
to market such software, neither the Government of Israel nor
the Government of the United States shall have the right to
obtain a license to use such software unless the license fee
normally imposed in the ordinary course of business by either
the Participants or by others with the rights to market such
software is paid, and the standard license agreement is
executed.
I. REVOCATION OF AGREEMENT
I.1. The Foundation may revoke any award, in whole or in part, for
fundamental breach as defined in the laws of the State of
Israel.
I.2. Upon receipt of notice of revocation for fundamental breach,
the Proposer may cure the default in and within thirty
calendar days after the date of receipt of the notice.
I.3. Notwithstanding any other provision in this Agreement to the
contrary, the Foundation shall not be obliged to provide any
further funding after notice until and unless the said default
is cured and so demonstrated to the reasonable satisfaction of
the Foundation.
I.4. Should the Agreement terminate for reason of fundamental
breach, in addition to the Foundation's rights under Sub. Sec.
l.5., the Foundation and the Governments of Israel and the
United States shall be entitled to all its rights pursuant to
Sec. H. as may have vested on the date when all sums due the
Foundation under Sub. Sec. l.5. are fully paid.
I.5. If the Foundation shall revoke as aforesaid, all funds given
Proposer per Sub. Sec. B.1. above shall become due immediately
without need for demand. Such funds which do not, by terms of
this Agreement, bear interest, shall be repaid with interest
at 1% more than the average prime rate prevailing at Chase
Manhattan Bank, N.Y.C., from date of notice of revocation.
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I.6. The Proposer may not terminate this Agreement or abandon the
project without the prior written consent of the Foundation,
which consent shall not be unreasonably withheld.
I.7. If upon termination of this Agreement for any reason, the
entire budgeted sum has not been expended, the Proposer shall
forthwith return to the Foundation its pro rata share of such
unexpended portion. If not repaid forthwith, such sum shall
bear interest as per Sec. l.5.
J. SURVIVAL OF PROVISIONS
Notwithstanding revocation or other termination of this
Agreement, the following provisions shall survive termination
of this Agreement: Sections B., D., E., F., G., H., 1.4.,
l.5., 1.7., K., L., N., Annex C, Annex E and Annex F.
K. FINANCIAL RECORDS
K.1. The Proposer shall maintain business and financial records and
books of account for the work hereunder separate and apart
from other business records of the Proposer. Such books and
records shall be in usual and accepted form.
K.2. Books and records of the work hereunder shall show Proposer's
contribution. Upon request by the Foundation, the Proposer
shall provide evidence of his compliance hereunder.
K.3. The Foundation may examine, or cause to be examined, the
financial books, vouchers, records and any other documents of
the Proposer relating to this Agreement at reasonable times
and intervals during the term of this Agreement and for a
period of one (1) year following termination, or for so long
as payments per Sub. Sec. B.3., Sub. Sec. B.3., or Annex F, or
of patent royalties are due, or may become due the Foundation,
whichever shall be the later.
L. SUITS AGAINST THE FOUNDATION
L.1. The Proposer shall defend all suits brought against the
Foundation, its officers or personnel, indemnify them for all
liabilities and costs and otherwise hold them harmless on
account of any and all claims, actions, suits, proceedings and
the like arising out of, or connected with or resulting from
the performance of this Agreement by the Proposer, or from the
manufacture, sales, distribution or use by the Proposer of the
Innovation, whether brought by Proposer or its personnel or by
third parties.
L.2. The Proposer agrees that persons employed by it in connection
with the research project shall be deemed to be solely its own
employees and that
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no relationship of master and servant shall be created between
such employees and the Foundation, either for purposes of tort
liability, social benefits, or for any other purpose. The
Proposer shall indemnify the Foundation and hold it harmless
from court costs and legal fees, and for any payment which the
Foundation may be obliged to make on a cause of action based
upon an employee-employer relationship as aforesaid.
M. MISCELLANEOUS CONDITIONS
M.1. The Foundation makes no representation, by virtue of its
funding the work hereunder, or receiving any payments or
royalties as a result of this Agreement, as to the safety,
value or utility of the Innovation or the work undertaken, nor
shall the fact of participation of the Foundation, its funding
or exercise of its rights hereunder be deemed an endorsement
of the Innovation or of the Proposer, nor shall the name of
the Foundation be used for any commercial purpose or be
publicized in any way by the Proposer except within the strict
limits of this Agreement.
M.2. The Proposer may not assign this Agreement or any of the work
undertaken pursuant to it without the prior written consent of
the Foundation, which consent shall not be unreasonably
withheld.
M.3. This Agreement shall be construed under the laws of the State
of Israel. The forum for the resolution of any dispute arising
from this Agreement shall be the State of Israel or
Washington, D.C. in the U.S., as the moving party may elect.
Execution of this Agreement shall be taken as submission to
the forum selected pursuant to this Section.
M.4. Unless the parties to a dispute shall agree otherwise, the
dispute shall be referred to arbitration under rules of the
Israel Arbitration Law if the forum is Israel, and under the
rules of the American Arbitration Association if the forum is
the U.S.
M.5. Proposer undertakes to comply with all applicable laws, rules
and regulations of the State of Israel and the United States
of America, and will apply for and obtain all necessary
licenses and permits for the carrying out of its obligations
hereunder.
M.6. Under Israeli law, no stamp duty is required on BIRD
Foundation Cooperation and Project Funding Agreements.
M.7. Notices, communications and reports shall be hand-delivered or
mailed by prepaid first-class mail (airmail if transmitted
internationally) addressed to:
a. The Israel-U. S. Binational Industrial Research and
Development Foundation
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Office Address: Mailing Address:
-------------- ---------------
3 Xxxxxx Xx'xxxxx Xxxxxx X.X. Xxx 00000
Xxx Xxxx 00000 Xxx Xxxx 00000
Xxxxxx Xxxxxx
b. Medivision Medical Imaging Ltd.
Office Address: Mailing Address:
-------------- ---------------
Industrial Park X.X. Xxx 00
Xxxxxxx Xxxxx 00000 Yokneam Elite
Israel Israel
c. Ophthalmic Imaging Systems, Inc.
Office Address:
--------------
000 Xxxxxxx Xxx
Xxxxx X
Xxxxxxxxxx, XX 00000
U.S.A.
N. LIMITATION ON PAYMENTS
Notwithstanding any other interpretation of this Agreement or
the Annexes hereto to the contrary, Proposer's total
obligation hereunder for payments to the Foundation shall not
exceed the percentages indicated in Sub. Sec. B. 3. b) hereto
of the total funds actually provided by the Foundation
hereunder, in equivalent dollars valued at time of repayment
(Annex C).
O. EFFECTIVE DATE
The effective date of this Agreement shall be the 1st day of
November, 2000. Unless sooner terminated by the Foundation per
Sec. l., this Agreement shall terminate 24 months following
the effective date.
Signed the dat and date above first given
---------------------------------
Executive Director
(for the BIRD Foundation)
---------------------------------
Authorized Company Official
(for Medivision Medical Imaging Ltd.)
---------------------------------
Authorized Company Official
(for Ophthalmic Imaging Systems, Inc.
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