Exhibit 10(m)
Portions of this document indicated by an ++ have been omitted and filed
separately with the Securities and Exchange Commission pursuant to
a request for confidential treatment of such information
LICENSE AGREEMENT
This License Agreement, dated February 18, 2003, ("Agreement") is entered into
by and between Scanis, Inc., a corporation organized and existing under the laws
of the State of California, having an office and place of business at 0000
Xxxxxx Xxxxx, Xxxxx 000, Xxxxxx Xxxx, XX 00000 (hereinafter referred to as
"SCANIS") and iCAD, Inc., a corporation organized and existing under the laws of
the State of Delaware, having an office and place of business at 0 Xxxxxxxx
Xxxx, Xxxxx 00, Xxxxxx, XX 00000 (hereinafter referred to as "ICAD").
STATEMENT
SCANIS is the owner of all right, title and interest in and to U.S. Patent
No. 5,212,637 of May 18, 1993, entitled "Method Of Investigating Mammograms For
Masses And Calcifications, And Apparatus For Practicing Such Method", Canadian
Patent No. 2,069,429 and Japanese Patent No. 3,121,008. SCANIS desires to grant
and ICAD desires to receive a license under such patents and any related patents
to manufacture, market, and sell products incorporating the invention claimed in
such patents and any related patents.
ICAD and its Subsidiaries also develop, manufacture and sell medical film
digitizers suitable for use in medical imaging and analysis, and uniquely
applicable to SCANIS' business and business objectives. Prior to this Agreement,
ICAD retained the right to limit or deny SCANIS access to such current and
prospective digitizer products, actions by ICAD that would substantially enhance
ICAD's competitive position with respect to SCANIS in SCANIS' key markets.
Failure of SCANIS to acquire such digitizer products from ICAD is deemed likely
by SCANIS to materially and adversely affect SCANIS business plan, operations
and financial performance.
By a concurrent Original Equipment Manufacturing Supply Agreement, dated the
same date as this Agreement, (the "OEM Agreement") between SCANIS and Howtek
Devices Corporation, a wholly-owned subsidiary of ICAD ("HOWTEK"), ICAD makes
such digitizer products available to SCANIS, substantially enhancing SCANIS'
competitive position with respect to ICAD in ICAD's key markets. The parties
acknowledge that making ICAD digitizers available to SCANIS is expected to
materially increase sales of computer aided detection systems by SCANIS and
materially decrease sales of computer aided detection systems by ICAD, and
therefore represents a significant, material and continuing element of
consideration herein.
Additionally, in bargaining herein, the parties have agreed to certain credits
to be granted by ICAD to SCANIS with respect to the purchase of HOWTEK
digitizers over the term of this Agreement.
Now, therefore, in consideration of the mutual promises herein contained, the
parties agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall
have the meaning indicated below:
a. "Licensed Patents" shall mean those patents identified in
Exhibit 1 to this Agreement.
b. "Licensed Patent Rights" shall mean the rights which are held
or which come to be held by SCANIS and its successors and
assigns by virtue of its ownership of the Licensed Patents.
c. "Licensed Products" shall include scanners, digitizers, and
other equipment, software, firmware and methods for medical
imaging and/or analysis, whether those products presently
exist or are developed in the future, that contain, reduce to
practice or otherwise incorporate some or all inventions that
are subject to the Licensed Patent Rights.
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d. "Subsidiary" shall mean any business entities (1) of which, as
of the Effective Date of this Agreement, ICAD owns more than
50% of the voting ownership interests or has the ability to
elect a majority of the members of the governing body of such
business entity; and (2) which may be organized by iCAD,
subsequent to the Effective Date of this Agreement, for bone
fide organizational, manufacturing, legal, liability
management or tax management purposes, or to comply with
foreign laws, regulations or market requirements.
e. "Effective Date" shall mean the date on which the last party
to this Agreement executes this Agreement or the date upon
which all of the parties to the OEM Agreement have executed
that agreement, whichever is the last to occur.
2. WARRANTIES.
a. SCANIS warrants and represents as follows:
i. that it is the sole and exclusive owner of the entire
right, title, and interest in and to the Licensed Patent
Rights and to the invention disclosed and claimed
therein;
ii. that it has the right to enter into this Agreement with
ICAD;
iii. that there are no liens, conveyances, mortgages,
assignments, encumbrances or other agreements which
would prevent or impair the full and complete exercise
by ICAD and its Subsidiaries of all rights and licenses
granted by SCANIS in this Agreement;
iv. that it has not entered into, and shall not enter into,
any agreements which would interfere with the rights and
licenses granted pursuant to this License Agreement for
the full term of this Agreement;
v. that as of the date of this Agreement, it does not own
or control any other patent or patent application
relating to scanners or digitizers or related software
or methods for medical imaging;
vi. that as of the Effective Date of this License Agreement,
it has not received an assertion from any third party,
nor an opinion from its counsel, that the Licensed
Patent Rights are invalid or unenforceable for any
reason.
b. ICAD warrants and represents as follows:
i. that it has the right to enter into this Agreement with
SCANIS and that HOWTEK has the right to enter into the
OEM Agreement with SCANIS;
ii. that ICAD's entry into this Agreement and the
performance of ICAD's obligations under this Agreement
will not constitute a breach of or default under of any
agreement to which it is bound or a violation of any
court or administrative order or decree to which it is
subject;
iii. that HOWTEK's entry into the OEM Agreement and the
performance of HOWTEK's obligations under that agreement
will not constitute a breach of or default under of any
agreement to which it is bound or a violation of any
court or administrative judgment or order to which it is
subject;
iv. except with respect to that patent litigation commenced
by R2 Technologies, et al, against iCAD, that neither
ICAD nor HOWTEK is the subject of any pending or
threatened suit or administrative action nor, to the
knowledge of ICAD, any investigation which may result in
a judgment or order that would reasonably be expected to
prohibit or limit ICAD or HOWTEK from performing their
respective obligations under this Agreement or the OEM
Agreement;
v. that Exhibit 2 to this Agreement sets forth a complete
list of all business entities that are Subsidiaries of
ICAD as of the Effective Date.
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3. LICENSE, RELEASE AND COVENANT.
a. SCANIS, on behalf of itself and its successors and assigns in
the Licensed Patent Rights, hereby grants to ICAD and its
Subsidiaries a non-exclusive, world-wide, right and license to
make, have made, use, sell, offer for sale, lease, import,
export, or otherwise dispose of Licensed Products throughout
the world.
b. SCANIS hereby releases and discharges ICAD as well as any end
users, distributors, customers, dealers, licensees and
suppliers of ICAD throughout the world, whether direct or
indirect, immediate or remote, from any and all claims for
infringement of the Licensed Patent Rights which SCANIS had at
any time prior to the Effective Date or may have in the future
based on acts before the Effective Date under the Licensed
Patents Rights arising out of the manufacture, use, license,
sale, offer for sale, lease, import, export, or other
disposition of Licensed Products manufactured, sold, offered
for sale, leased, imported, exported or otherwise disposed of
by or on behalf of ICAD or its Subsidiaries.
c. SCANIS further agrees for itself and its successors and
assigns that, except in the event of termination of this
License Agreement by SCANIS for cause, it will not at any time
or in any capacity assert any claim or commence or prosecute
any action, suit, or proceeding against ICAD or against any
end user, distributor, customer, dealer, licensee or supplier
of ICAD, whether direct or indirect, immediate or remote,
based on infringement of the Licensed Patent Rights by the
direct and/or contributory infringement or by inducement
arising out of the manufacture, use, sale, offer for sale,
lease, import, export, or other disposition of scanners and
digitizers made, used, sold, offered for sale, leased,
imported, exported, or otherwise disposed of by or on behalf
of ICAD or its Subsidiaries.
d. Except as set forth in section 1.(d)(2), if any business
entity which is not a Subsidiary as of the Effective Date of
this Agreement becomes a Subsidiary (a "New Subsidiary"), that
New Subsidiary shall not have the license pertaining to the
Licensed Patent Rights set forth in this Agreement unless
SCANIS agrees in writing to the extension of this license to
that New Subsidiary. Nothing in this Agreement shall place any
obligation on SCANIS to agree to such an extension of the
license to a New Subsidiary.
e. Products manufactured by ICAD's licensees, OEM and
private-label customers incorporating ICAD's Licensed Products
receive, as to such products, the same license release and
non-assertion granted in this Agreement, to the extent that
such products infringe the Licensed Patents as a result of the
normal and intended use of such Licensed Products.
4. CONSIDERATION. In consideration of the license granted under this
Agreement, SCANIS shall be entitled to receive the following
consideration:
a. ICAD agrees to make certain digitizer products available to
SCANIS, as set forth in the OEM Agreement, notwithstanding the
fact that such products will be used by SCANIS to compete with
ICAD in certain markets;
b. SCANIS shall receive the following reduction in the per unit
purchase price of digitizers SCANIS purchases from HOWTEK (the
"Credits") pursuant to the OEM Agreement:
i. As to ICAD and its Subsidiaries' MultiRAD Film Digitizer
(as further defined in the OEM Agreement), the Credit
shall be ++ per unit purchased.
ii. As to ICAD and its Subsidiaries' Fulcrum Film Digitizer
(as further defined in the OEM Agreement), the Credit
shall be ++ per unit purchased.
c. The Credits set forth herein shall be taken within a period of
five years from the Effective Date of this Agreement, and
credits not taken within such period shall expire.
d. The per-unit credit granted pursuant to this paragraph shall,
in any case, be limited so as not to reduce HOWTEK's gross
margin after application of the credit to less than ++ as
defined by generally accepted accounting standards.
e. The maximum aggregate Credits SCANIS will be eligible to
receive under this Agreement shall be ++.
[++ represents confidential treatment request]
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f. A Credit for any unit of a product will be deemed received by
SCANIS when SCANIS becomes obligated to pay for that product.
If a SCANIS returns a product that does not comply with the
warranties set forth in the OEM Agreement and receives a
refund of the purchase price or does not receive a replacement
product that comply with those warranties, the amount of the
Credit attributed to the purchase of that product will be
subtracted from the aggregate Credits SCANIS will be deemed to
have received.
g. The Credits shall be applicable only to purchases by or on
behalf of Scanis for use with Scanis' Computer-aided detection
system, by Scanis, its subsidiaries, distributors and
licensees. In the event of the acquisition of Scanis by any
third party, the Credits shall be thereafter be applicable to
purchases with respect to Scanis' scale and volume of overall
computer-aided detection business at the time of such
acquisition, plus annual increases equal to the greater of (1)
Scanis' growth rate prior to acquisition, and (2) overall
market growth), and shall not otherwise be assignable,
acquirable or assumable.
h. The rights and licenses granted to ICAD herein shall survive
termination of the Original Equipment Manufacturer Supply
Agreement.
5. TERM.
a. Except as provided below, the term of the licenses and
non-assertions granted herein shall exist from and including
the Effective Date to and including the expiration date of the
last to expire of the Licensed Patent Rights and at least
until all claims for alleged infringement of all such patents
are barred by U.S. laws and the U.S. patent statute, and by
the laws and statutes of any foreign country in which any one
of the Licensed Patent Rights are in force and effect.
b. Paragraph 5a notwithstanding, the license granted under
paragraphs 3a and 3c of this Agreement shall immediately
terminate upon the occurrence of either of the following
events:
i. The license will terminate upon notice to ICAD if ICAD
or any it's Subsidiaries commits a material breach of
this Agreement, and ICAD and/or the Subsidiary in breach
does not cure that breach within thirty (30) days of
receiving notice of that breach from SCANIS.
ii. The license will terminate upon notice to ICAD if it
files a petition for dissolution or ceases active
operation as a corporation.
iii. The license granted to any Subsidiary of ICAD will
terminate with respect to that Subsidiary upon notice to
ICAD if the Subsidiary files a petition for dissolution
or ceases active operation as a corporation.
iv. The termination of the license as provided in paragraph
6b shall not constitute a termination of any provisions
of this Agreement other than paragraphs 3a and 3c.
6. PATENT MARKING. ICAD agrees that pursuant to a request by SCANIS, it
will xxxx Licensed Products or the packaging therefor with
appropriate patent notices as may be appropriate under the Patent
Laws of the United States and the laws of any other jurisdictions in
which SCANIS obtains patents with respect to the inventions subject
to the Licensed Patent Rights. Such notices shall clearly identify
SCANIS as the owner of the Licensed Patent Rights. At SCANIS's
request, ICAD shall provide specimens of Licensed Products and
packaging showing patent notices to be placed upon such products and
packaging.
7. PATENT ENFORCEMENT.
a. If ICAD becomes aware that any third party is infringing or
may be infringing upon the Licensed Patent Rights, ICAD agrees
that it will provide SCANIS with notice of such infringement.
ICAD agrees that it will provide SCANIS with such a notice of
infringement promptly, but in any event by no later than ten
(10) days after it becomes aware of such infringement.
4
b. SCANIS shall have the sole right to enforce and perfect the
Licensed Patent Rights. In this regard, SCANIS shall have the
sole right to take any action in response to actual or
possible infringement of the Licensed Patent Rights, including
but not limited to the right to make, in its sole discretion,
all decisions as to: (i) whether to commence litigation
against any infringer of these rights; (ii) the manner in
which it conducts this litigation; (iii) whether to resolve
such litigation through settlement; and (iv) the terms under
which it may settle such litigation. SCANIS reserves the
right, in its sole discretion, to resolve any threatened or
pending legal action pertaining to the Licensed Patent Rights
by granting a license to such third party on terms SCANIS
deems to be acceptable. The foregoing notwithstanding, SCANIS
agrees that it shall not enter into any settlement of such
litigation that would terminate or modify the license ICAD and
its Subsidiaries have received under paragraph 3 of this
Agreement without ICAD's prior written consent.
8. NO CHALLENGE TO RIGHTS - AKNOWLEDGEMENT OF OWNERSHIP.
a. ICAD, on behalf of itself and the Subsidiaries (but not on
behalf of any acquirer, successor or New Subsidiary of iCAD
which is, by the terms of this Agreement, denied the rights
granted to iCAD under paragraph 3, hereof), agrees that it
shall not, nor allow its Subsidiaries to: (i) challenge the
validity the Licensed Patent Rights or SCANIS's ownership of
those Licensed Patent Rights; or (ii) assert any ownership
interest or other interest in the Licensed Patent Rights or
any invention described therein other than the license granted
in paragraph 3 of this Agreement.
b. No later than two (2) weeks following the date of this
Agreement, ICAD shall issue a public statement announcing that
is has entered into this Agreement and has received a
non-exclusive license from SCANIS with respect to the Licensed
Patent Rights. The announcement shall further state that
SCANIS is the owner of the Licensed Patent Rights. ICAD agrees
that it will provide a copy of the proposed public
announcement no later than seventy-two (72) hours prior to its
scheduled release.
9. RELATIONSHIP OF THE PARTIES.
a. Nothing contained in this Agreement shall be deemed to (i)
make either party or any employee of such party the agent,
employee, joint venture or partner of the other party; (ii)
provide either party or any employee of such party with the
power or authority to act on behalf of the other party or to
bind the other party to any contract, agreement or arrangement
with any other person.
b. All personnel employed or otherwise engaged by either party
shall be the agents, servants, and employees of such party
only, and the other party shall incur no obligations or
liabilities, express or implied, by reason of the conduct of
such personnel.
10. WAIVER. Waiver by either party hereto of any breach or default by
the other party of any of the terms and conditions of this Agreement
shall not operate as a waiver of any other breach or default,
whether similar to or different from the breach or default waived. A
party may only be deemed to have waived any breach or default by the
other party if that waiver is in writing and is signed by that
party.
11. COSTS AND EXPENSES. Except as otherwise provided in this Agreement,
each party hereto shall be responsible for its own expenses incurred
in connection with the performance of its obligations under this
Agreement.
12. ENTIRE AGREEMENT. This Agreement represents the entire understanding
and agreement between the parties hereto with respect to the subject
matter of this Agreement and supersedes all prior negotiations,
representations, and agreements made by and between the parties
concerning that subject matter. No alteration, amendment or
modification of any of the terms or provisions of this Agreement
shall be valid unless made pursuant to an instrument in writing
signed by each of the parties hereto; provided, however, that the
waiver by either party hereto of compliance by the other party with
any provision hereof or of any breach or default of such other party
need be signed only by the party waiving such provision, breach or
default. The foregoing notwithstanding, nothing in this Agreement
shall constitute the termination or amendment of any agreement
between SCANIS and HOWTEK.
13. GOVERNING LAW. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of New York, excluding that
state's conflict of laws principles.
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14. NON-ASSIGNMENT.
a. Except as expressly provided herein, ICAD and its Subsidiaries
may not assign their rights under this Agreement to any other
person or entity, whether by operation of law or otherwise,
without the prior written consent of SCANIS, which may be
withheld in SCANIS' sole discretion. Any assignment or
purported assignment by ICAD or any Subsidiaries in violation
of this paragraph shall be null and void.
b. Notwithstanding the above, in the event of the acquisition of
iCAD by another party, the licenses granted under paragraph 3
shall remain effective with respect to Licensed Products
equivalent in annual sales value to the annual sales value of
Licensed Products by iCAD and its Subsidiaries as of the time
of such acquisition, plus annual increases equal to the
greater of (1) iCAD's and its Subsidiairies' growth rate prior
to acquisition, and (2) overall market growth.
c. Subject to paragraph 4(g), SCANIS may assign its rights under
this Agreement, and this Agreement shall be binding upon and
inure to the benefit of SCANIS's assignees and successors.
15. NOTICES. All notices provided for in this Agreement shall be
effective when they are served either by personal delivery, or sent
by letter by overnight courier service with acknowledgment of
receipt required and simultaneously sent by facsimile to the
receiving party at the following address:
If to ICAD:
Chief Executive Officer
iCAD, Inc.
0 Xxxxxxxx Xxxx, Xxxxx 00, Xxxxxx, XX 00000
Fax: (000) 000-0000
If to SCANIS:
Chief Executive Officer
SCANIS, INC.
0000 Xxxxxx Xxxxx, Xxxxx 000, Xxxxxx Xxxx, XX 00000
Fax: (000) 000-0000
With a copy to:
Xxxxxxxxx X. Xxxxxx
Xxxxx & Lardner
Xxx Xxxxxxxx Xxxxx, Xxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
or such other addresses either party shall hereinafter designate in
writing to the other party.
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16. INVALIDITY OF PROVISIONS. If a court of competent jurisdiction
determines that any provision of this Agreement is unenforceable, it
is agreed that such unenforceability shall not invalidate the whole
agreement, but this Agreement shall be construed as if it did not
contain such provisions, insofar as such construction does not
materially affect the overall benefit of the bargain evidenced in
this Agreement, and the rights and obligations of the parties hereto
shall be construed and enforced accordingly. If deletion of the
unenforceable provision would materially affect the overall benefit
of the bargain of the parties, this Agreement shall immediately
terminate.
17. BANKRUPTCY. The parties understand that all rights and licenses
granted hereunder are licenses to rights to intellectual property
under Section 365(n) of the Bankruptcy Act and, therefore, if SCANIS
becomes subject to bankruptcy proceedings, ICAD and the Subsidiaries
shall retain and may fully exercise all of their rights and
elections under the Bankruptcy Code as licensees of that
intellectual property.
18. ATTORNEYS' FEES. If any action is commenced to enforce or construe
this Agreement, the Party who substantially prevails in that action
shall be entitled to recover all costs and expenses that Party
incurs in the prosecution or defense of that action, including but
not limited to reasonable attorneys' fees, in addition to any other
relief to which that Party is entitled.
19. LATE PAYMENTS. Amounts owing under this Agreement that are not made
when due shall accrue interest at a rate of one percent (1.0%) per
month or the maximum amount of interest allowed under applicable law
(whichever is less) until such amounts are paid in full.
20. TITLES. All titles used in this Agreement herein are for the
convenience of reference only and shall not affect the construction
of this Agreement.
21. DUPLICATE ORIGINALS. This Agreement shall be executed in duplicate
originals and may first be delivered by facsimile. Execution of this
Agreement by the parties and delivery thereof by facsimile shall be
valid and binding as of the Effective Date, which will be inserted
in the preamble. This Agreement may be executed separately by each
of the parties and exchanged by facsimile to establish the Effective
Date. Within thirty (30) days of facsimile execution, the parties
shall deliver and exchange fully executed originals of the
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, in duplicate, by their duly authorized officers or representatives.
SCANIS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Its. Chief Executive Officer
Witness: /s/ Xxxxxxxxx X. Xxxxx
----------------------
iCAD, Inc.
By: /s/ W. Xxxxx Xxxx
------------------------------
W. Xxxxx Xxxx
Its. President and Chief Executive Officer
-------------------------------------
Witness: /s/ Xxxxxxx Xxxxxxxx
--------------------
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EXHIBIT 1 - Licensed Patents
"Licensed Patents" shall mean:
1. U.S. Patent No. 5,212,637 of May 18, 1993 ("the `637 Patent") and
any and all parents, divisions, continuations,
continuations-in-part, reissues or reexaminations of that patent, as
well as any and all foreign patents or foreign patent applications
(including utility models) corresponding to said U.S. patent, along
with any and all parents, divisions, continuations,
continuations-in-part, substitutions or additions to any of the
foregoing foreign patents.
2. Canadian Patent No. 2,069,429 and any and all parents, divisions,
continuations, continuations-in-part, reissues or reexaminations of
that patent.
3. Japanese Patent No. 3,121,008 and any and all parents, divisions,
continuations, continuations-in-part, reissues or reexaminations of
that patent.
4. Patent to be issued pursuant to European Patent Application No.
90917158.9, claims for which were approved on January 14, 2003 and
any and all parents, divisions, continuations,
continuations-in-part, reissues or reexaminations of that patent.
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EXHIBIT 2 - Current Subsidiaries
1. Howtek Devices Corporation
2. ISSI Acquisition Corporation
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