EXHIBIT 10.5
TECHNOLOGY PURCHASE AGREEMENT
This Technology Purchase Agreement ("Agreement") is entered into on
December 18, 2001, by and between Xxxxxx Xxxx, M.D. ("Seller"), and National
Quality Care, Inc., a Delaware corporation, with its principal office located at
0000 Xxxxx Xx Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx 00000
("Buyer"), (each a "Party" and collectively the "Parties").
RECITALS
WHEREAS, Seller is the Chairman of the Board of Directors, the
President and Chief Executive Officer and the principal shareholder of Buyer;
WHERAS, Seller desires to sell to Buyer and Buyer desires to purchase
from Seller certain patent applications with respect to a Wearable Peritoneal
Dialysis System and a Wearable Continuous Renal Replacement Therapy Device
invented and owned by Seller, and the related technology and proprietary rights
thereto in accordance with the terms and conditions of this Agreement and the
other agreements referenced herein;
NOW, THEREFORE, in consideration of the mutual provisions contained
herein, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 ASSIGNMENT OF INVENTIONS AND PATENTS. The term "Assignment of
Inventions and Patents" means that certain Assignment of Inventions and Patents
executed by Seller, of even date herewith and attached as Exhibit A.
1.2 CLOSING. The term "Closing" means the date of the consummation of
the transactions contemplated under this Agreement.
1.3 CLOSING DATE. The term "Closing Date" means the date of the closing
of the transactions contemplated under this Agreement.
1.4 COMMON STOCK. The term "Common Stock" means the common stock, par
value $0.001 of the Buyer.
1.5 CONFIDENTIAL INFORMATION. The term "Confidential Information" means
any confidential information of a Party relating to any designs, know-how,
inventions, technical data, ideas, uses, processes, methods, formulae, research
and development activities, work in process, or any scientific, engineering,
manufacturing, marketing, business plan, financial or personnel matter relating
to the disclosing Party, its present or future products, sales, suppliers,
customers, employees, investors or business, whether in oral, written, graphic
or electronic form (which is marked confidential or acknowledged as being
confidential prior to disclosure). If the Confidential Information is disclosed
orally or visually, it shall be identified as such at the time of disclosure and
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confirmed in writing by the disclosing Party within thirty (30) days of
disclosure. Confidential Information shall also include any other information in
oral, written, graphic or electronic form which, given the circumstances
surrounding such disclosure, would be considered confidential. However,
Confidential Information does not include information which: (a) was in the
receiving party's possession before receipt from the other party; or (b) is or
becomes a matter of public knowledge through no fault of the receiving party; or
(c) is rightfully received by the receiving party from a third party without a
duty of protection; or (d) is independently developed by the receiving party
without reference to Confidential Information.
1.7 INTELLECTUAL PROPERTY RIGHTS. The term "Intellectual Property
Rights" means all United States and worldwide trademarks, service marks, trade
names, trade dress, logos, copyrights, rights of authorship, inventions, mask
work rights, moral rights, patents, rights of inventorship, all applications,
registrations and renewals in connection with any of the above, database rights,
know-how, trade secrets, rights of publicity, privacy and/or defamation, rights
under unfair competition and unfair trade practices laws, and all other
intellectual and industrial property rights related thereto.
1.8 PERITONEAL PATENT. The term "Peritoneal Patent" means that certain
U.S. Patent Application listing Xxxxxx Xxxx, M.D. as inventor filed on December
13, 2001, and entitled "Wearable Peritoneal Dialysis System."
1.9 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. The term
"Proprietary Information and Inventions Agreement" means that certain
Proprietary Information and Inventions Agreement, of even date, entered into
between Buyer and Seller and attached as Exhibit B hereto.
1.10 RENAL REPLACEMENT PATENT. The term "Renal Replacement Patent"
means that certain U.S. Patent Application listing Xxxxxx Xxxx, M.D. as inventor
filed on November 16, 2001 and entitled "Wearable Continuous Renal Replacement
Therapy Device."
1.11 SECURED PROMISSORY NOTE. The term "Secured Promissory Note" means
that certain Secured Promissory Note, executed by Buyer, of even date herewith
and attached as Exhibit C hereto.
1.12 SECURITY AGREEMENT. The term "Security Agreement" means that
certain Security Agreement, of even date herewith, entered into between Buyer
and Seller and attached as Exhibit D hereto.
1.13 STOCK OPTION AGREEMENT. The term "Stock Option Agreement" means
that certain Non-Qualified Stock Option Agreement entered into between Buyer and
Seller and attached as Exhibit E hereto.
1.14 TRANSACTION DOCUMENTS. The term "Transaction Documents" means the
Assignment of Invention and Patents, the Proprietary Information and Inventions
Agreement, the Secured Promissory Note, the Security Agreement and the Stock
Option Agreement.
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ARTICLE 2
SALE AND PURCHASE OF TECHNOLOGY
2.1 PERITONEAL TECHNOLOGY. At the Closing, Seller hereby sells,
transfers and assigns to Buyer all of the worldwide right, title and interest in
and to the Peritoneal Patent and all inventions described and claimed therein,
and the following specific assets:
(a) All specifications, schematics, diagrams, drawings,
hardware interface designs, board layouts, integrated circuits, mask works,
boards and any other materials relating to the hardware incorporated and used in
any proof of concept prototypes embodying any claim under the Peritoneal Patent;
(b) All computer source code (fully documented and commented
source code), object code, algorithms, software tools, compilers, software
specifications and requirements, firmware, any translated versions of computer
source code and object code, all versions and modules of computer source code
and object code, and all technical data relating to any software used in any
proof of concept prototypes embodying any claim under the Peritoneal Patent;
(c) All lab notebooks, research materials, operation and
installation manuals, instructional and support materials and any other
documentation regarding the Peritoneal Patent;
(d) The patent file wrapper for the Peritoneal Patent
including without limitation all results of prior art searches and any
correspondence with any patent and trademark office(s); and
(e) All modifications, improvements, enhancements and/or
derivative works of the Peritoneal Patent.
All of the assets listed above in this Section 1.1 are collectively
referred to as the "Peritoneal Technology."
2.2 RENAL REPLACEMENT TECHNOLOGY. At the Closing, Seller hereby sells,
transfers and assigns to Buyer all of the worldwide right, title and interest in
and to the Renal Replacement Patent and all inventions described and claimed
therein, and the following specific assets:
(a) All specifications, schematics, diagrams, drawings,
hardware interface designs, board layouts, integrated circuits, mask works,
boards and any other materials relating to the hardware incorporated and used in
any proof of concept prototypes embodying any claim under the Renal Replacement
Patent;
(b) All computer source code (fully documented and commented
source code), object code, algorithms, software tools, compilers, software
specifications and requirements, firmware, any translated versions of computer
source code and object code, all versions and modules of computer source code
and object code, and all technical data relating to any software used in any
proof of concept prototypes embodying any claim under the Renal Replacement
Patent;
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(c) All lab notebooks, research materials, operation and
installation manuals, instructional and support materials and any other
documentation regarding the Renal Replacement Patent;
(d) The patent file wrapper for the Renal Replacement Patent
including without limitation all results of prior art searches and any
correspondence with any patent and trademark office(s); and
(e) All modifications, improvements, enhancements and/or
derivative works of the Renal Replacement Patent.
All of the assets listed above in this Section 2.2 are collectively
referred to as the "Renal Replacement Technology".
2.3 PROPRIETARY RIGHTS. In conjunction with the transfer of the
Peritoneal Technology and Renal Replacement Technology to Buyer, at the Closing,
Seller also hereby sells, transfers and assigns to Buyer all of its worldwide
right, title and interest in and to the following:
(a) All inventions, ideas, processes, techniques, formulas,
know-how, trade secrets, compilations, assemblies, code, designs, algorithms,
theories of operation, user interfaces, and other written, graphic and machine
readable materials, whether or not patentable or copyrighted, made or conceived
or reduced to practice, and/or learned or developed by Seller, or together with
others that are incorporated into and/or arise from the Peritoneal Technology,
the Renal Replacement Technology and/or Seller's actual research and development
regarding the Peritoneal Technology and/or the Renal Replacement Technology and
demonstrably anticipated research and development regarding the Peritoneal
Technology and/or the Renal Replacement Technology, and to all modifications,
enhancements and/or derivative works related thereto (collectively "IP
Materials");
(b) All United States and other worldwide patent applications
and resulting Letters Patent that may be filed, issued on or related to the
Peritoneal Patent or the Renal Replacement Patent, and all continuations,
continuations-in-part, divisions, renewals, substitutes, extensions or reissues
thereof, all foreign or international counterpart applications thereof, all
reexaminations or reissuances thereof, the subject matter of all claims which
may be obtained in every such patent, the scope of the specifications described
in any of the foregoing, to the end of the term or terms for which such patents
are or may be granted, reissued or reexamined, and to all trade secrets and
other intellectual and industrial property rights related thereto that in any
way related to the Peritoneal Technology, the Renal Replacement Technology
and/or the IP Materials, and all other Intellectual Property Rights related
thereto (collectively "IP Rights"); and
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(c) All rights to profits, damages and other remedies for any
past, present and future infringement of the Peritoneal Technology, the Renal
Replacement Technology, the IP Materials, and/or the IP Rights, and the right to
xxx and collect the same for Buyer's own use and benefit and the benefit of
Buyer's successors, assigns or other legal representatives.
All of the assets listed above in this Section 2.3 shall be hereafter
collectively referred to as "Proprietary Rights".
2.4 DELIVERY OF ASSETS. At the Closing, Seller shall immediately
deliver to Buyer all of the assets comprising the Peritoneal Technology, the
Renal Replacement Technology and the Proprietary Rights.
2.5 ASSIGNMENT. At the Closing, Seller shall execute and deliver the
Assignment of Inventions and Patents.
2.6 COOPERATION. Following the Closing Date, upon Buyer's request,
Seller shall execute such assignments, applications and other documents, and
perform such acts as Buyer deems reasonably necessary to obtain trademark,
copyright, patent, mask work and/or other intellectual or industrial property
right protection in any country in order to protect Buyer's exclusive ownership
of the Peritoneal Technology, the Renal Replacement Technology and the
Proprietary Rights.
ARTICLE 3
FINANCIAL ARRANGEMENTS
3.1 PURCHASE PRICE. The purchase price ("Purchase Price") for the
Peritoneal Technology, the Renal Replacement Technology and the Proprietary
Rights is payable as set forth below:
(a) At the Closing, Buyer shall issue to Seller the Secured
Promissory Note in the principal amount of Xxx Xxxxxxx Xxxxxxxx Xxxxxx Xxxxxx
Dollars (U.S. $100,000), which shall be secured in accordance with the terms and
conditions of the Security Agreement, which shall be executed by the Buyer and
Seller at the Closing; and
(b) At the Closing, Buyer shall grant to Seller a
non-qualified stock option to purchase up to 5,000,000 shares of Common Stock,
at an exercise price of $1.25 per share, pursuant to the terms and conditions of
the Stock Option Agreement.
3.2 TAXES. Seller shall be solely liable for the payment of all sales,
use, value added tax, income and any other taxes, duties, assessments and levies
that may be imposed upon the sale of the Peritoneal Technology, the Renal
Replacement Technology and the Proprietary Rights to Buyer.
3.3 NO ASSUMPTION OF LIABILITIES. Except for future patent maintenance
and prosecution costs and expenses, Buyer shall not and does not assume and
shall not be responsible for any liabilities or other obligations of Seller
and/or that relate in any way to the Peritoneal Technology, the Renal
Replacement Technology and/or the Proprietary Rights, regardless of the amount,
character or description, whether accrued, contingent or otherwise. [?]
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ARTICLE 4
SELLER WARRANTIES
Seller represents and warrants to Buyer as follows:
4.1 ORGANIZATION AND AUTHORITY. Seller has full legal right, power and
authority to enter into and carry out the terms of this Agreement and to bind
Seller to all the provisions of this Agreement. The execution and performance of
this Agreement shall not result in the breach, termination or acceleration of
any provision, or constitute a default under any agreement to which Seller is a
party or is bound.
4.2 TITLE. Seller has not assigned, transferred, pledged, hypothicated,
encumbered or otherwise disposed of any of the Peritoneal Technology, Renal
Replacement Technology and/or Proprietary Rights, or parts thereof. Seller has
good and marketable title to all of the assets comprising the Peritoneal
Technology, the Renal Replacement Technology and the Proprietary Rights sold to
Buyer, free and clear of any liens, restrictions, pledges, security interests,
encumbrances or any other claims of third parties.
4.3 CONTRACTS. There are no oral or written contracts, agreements,
licenses or any other authorizations with any other party or entity that grant
or convey any rights to incorporate, modify, disclose or otherwise use any of
the Peritoneal Technology, Renal Replacement Technology and/or Proprietary
Rights.
4.4 LITIGATION. As of the execution date of this Agreement, Seller is
not, and at the Closing, Seller shall not be, aware of any litigation, pending
litigation or threatened litigation against Seller, that relates in any way to
the Peritoneal Technology, the Renal Replacement Technology, the Proprietary
Rights, and/or any other transactions contemplated by this Agreement, and as of
the execution date of this Agreement, Seller is not, and at the Closing, Seller
shall not be, aware of any facts that could lead to such matters.
4.5 INTELLECTUAL PROPERTY.
(a) OWNERSHIP. Seller is the exclusive owner of all of the
Peritoneal Technology, Renal Replacement Technology and Proprietary Rights.
Seller solely conceived, developed and reduced to practice, without the
assistance of any other person, all of the inventions and technologies described
in the Peritoneal Technology, Renal Replacement Technology and Proprietary
Rights, and any modifications and derivative works related to such inventions
and technologies conceived, developed or reduced to practice after the filing of
such patent applications. All of the Peritoneal Technology, Renal Replacement
Technology and Proprietary Rights were designed, developed and created by
Seller, and no other independent contractors or other third parties were
involved in the development of any of the Peritoneal Technology, Renal
Replacement Technology and/or Proprietary Rights. To the extent that Seller has
individually developed any portion of the Peritoneal Technology, the Renal
Replacement Technology and/or the Proprietary Rights, Seller warrants that
Seller has irrevocably assigned to Seller all of his worldwide right, title and
interest in and to the Peritoneal Technology, the Renal Replacement Technology
and the Proprietary Rights. Seller is not a party to any licenses or other
agreements under which any rights to the Peritoneal Technology and/or the Renal
Replacement Technology are granted.
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(b) PROTECTION. Seller has taken commercially reasonable steps
to maintain the secrecy of the Peritoneal Technology and the Renal Replacement
Technology and the Proprietary Rights such that all such Peritoneal Technology,
Renal Replacement Technology and the Proprietary Rights (a) have at all times
been maintained in strict confidence, (b) have been disclosed only to employees
of Seller or contractors of Seller having a specific "need to know" the contents
thereof solely in connection with the performance of their written and implied
duties to Seller, and with respect to any contractors expressly with the
understanding and agreement between the contractors and Seller that the Seller
shall solely own all work and Intellectual Property Rights created or developed
by such contractors, and (c) have not been disclosed to any person or entity
except under appropriate written non-disclosure agreements. Seller has taken all
necessary actions to protect the confidentiality of the trade secrets embodied
in the Peritoneal Technology and the Renal Replacement Technology, and to
protect and enforce the Proprietary Rights (except that Seller has not protected
the Peritoneal Technology, the Renal Replacement Technology and/or the
Proprietary Rights by filing any patent or similar applications). Seller further
warrants that it has not disclosed or otherwise revealed any of the specific
assets or components comprising the Peritoneal Technology, the Renal Replacement
Technology and/or the Proprietary Rights to any third party, and has not taken
any other action that to the best of Seller's knowledge would have an adverse
effect upon the protection of the Peritoneal Technology, the Renal Replacement
Technology, the Proprietary Rights and/or Buyer's exclusive ownership and/or use
thereof.
(c) INFRINGEMENT. After diligent prior art searching, to the
best of Seller's, knowledge, the Peritoneal Technology, the Renal Replacement
Technology and the Proprietary Rights do not infringe or misappropriate any
Intellectual Property Rights of any third party or entity and/or constitute an
act of unfair competition. No claim has been made or threatened that Seller, the
Peritoneal Technology, the Renal Replacement Technology and/or the Proprietary
Rights have infringed, misappropriated or violated any third party's
Intellectual Property Rights.
(d) NO PRIOR CLAIMS. Seller is not aware of any prior art
related to the inventions and technologies described in the Peritoneal Patent or
the Renal Replacement Patent that may materially impact the prosecution of the
Peritoneal Patent and/or the Renal Replacement Patent other than the prior art
specifically cited in such patent applications.
(e) OTHER RIGHTS. There are no rights with respect to any
tools not already obtained by Seller regarding the development of the Peritoneal
Technology, the Renal Replacement Technology and/or the Proprietary Rights.
Seller has obtained and fully paid for all licenses to use such tools, if any,
and nothing contemplated by this Agreement will violate any rights of, or
agreement with, any tool vendor. In addition, in entering into this Agreement
and performing its obligations hereunder, Seller has not and will not violate
any legal or equitable duties owed to any of Seller's current or previous
customers or other business or consulting relationships, including without
limitation duties relating to confidential information or competitive
activities.
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(f) NO GOVERNMENT INTEREST. Neither the United States Federal
Government or any laboratory or entity affiliated with the Federal Government
has any property interest in any of the Peritoneal Technology, the Renal
Replacement Technology and the Proprietary Rights, and none of the foregoing is
subject to the Patent Secrecy Act, as codified under 35 USC ss. 181.
(g) VALIDITY. Seller is not aware of any information that is
material to the patentability or validity of the patent applications filed as of
the Closing Date under the Peritoneal Technology or the Renal Replacement
Technology other than that disclosed to the Buyer. To the best of each of
Seller's knowledge the patent applications filed as of the Closing Date under
the Peritoneal Technology or the Renal Replacement Technology disclose new,
useful, non-obvious and innovative claims not otherwise described or anticipated
in their respective prior art.
4.6 INFORMATION SUPPLIED. All written and oral information that Seller
provides to Buyer regarding Seller, the Peritoneal Technology, the Renal
Replacement Technology and the Proprietary Rights is true and accurate and
Seller is aware of no information that would affect the patentability or the
enforceability of the Peritoneal Technology and the Renal Replacement Technology
that was not disclosed to Buyer.
4.7 BROKERS. Seller has not engaged or dealt with any broker, sales
person, agent, finder or any other person or entity in connection with this
transaction, and no commission or payment is due to any such third party.
4.8 WARRANTY DISCLAIMER. EXCEPT AS SET FORTH IN THIS AGREEMENT, SELLER
DOES NOT MAKE ANY REPRESENTATION, EXTEND ANY WARRANTY OF ANY KIND, EITHER
EXPRESS OF IMPLIED, OR ASSUME ANY RESPONSIBILITY WHATEVER WITH RESPECT TO THE
COMMERCIAL SUCCESS, USE, SALE, LEASE OR OTHER DISPOSITION BY OR FOR ANY OTHER
PARTY (OR ITS SUBSIDIARIES OR AFFILIATES) OR THEIR VENDORS OR TRANSFEREES OF
PRODUCTS INCORPORATING OR MADE BY THE USE THE TECHNOLOGY ASSIGNED HEREIN. EXCEPT
AS SET FORTH IN THIS AGREEMENT, SELLER HEREBY DISCLAIMS ALL IMPLIED WARRANTIES,
INCLUDING THE WARRANTY OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE
WITH RESPECT TO THE PERITONEAL TECHNOLOGY AND THE RENAL REPLACEMENT TECHNOLOGY.
4.9 SURVIVAL. All of the representations and warranties in this Article
4 shall survive any investigation of the Parties, Buyer's purchase of the
Peritoneal Technology, the Renal Replacement Technology and the Proprietary
Rights, the consummation of the transactions contemplated by this Agreement
and/or the termination of this Agreement.
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ARTICLE 5
BUYER'S WARRANTIES
Buyer represents and warrants to Seller as follows:
5.1 ORGANIZATION AND AUTHORITY. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Buyer has full legal right, power and authority to enter into and carry out the
terms of this Agreement and to bind Buyer to all of the provisions of this
Agreement.
5.2 BROKERS. Buyer has not engaged or dealt with any broker, sales
person, agent, finder or any other person or entity in connection with this
transaction, and no commission or payment is due to any such third party.
5.3 COMPLIANCE WITH APPLICABLE LAWS. Buyer will comply with all
applicable United States and foreign laws with respect to the use, transfer,
storage, and other implementations of the Peritoneal Technology and the Renal
Replacement Technology, specifically including any and all United States export
control laws.
5.4 SURVIVAL. All of the representations and warranties in this Article
5 shall survive any investigation of the Parties, Buyer's purchase of the
Peritoneal Technology, the Renal Replacement Technology and the Proprietary
Rights, the Closing and/or the termination of this Agreement.
ARTICLE 6
ADDITIONAL COVENANTS
6.1 CONFIDENTIALITY. Seller shall keep strictly confidential all of the
trade secrets in the Peritoneal Technology, the Renal Replacement Technology and
the Proprietary Rights, and all Confidential Information it may receive from
Buyer. Seller shall not in any way disclose, communicate, copy, modify,
distribute or otherwise transfer Buyer's Confidential Information, or any part
thereof, to any other person or entity at any time. Seller further agrees not to
incorporate or in any way use any of the Peritoneal Technology, the Renal
Replacement Technology, the Proprietary Rights, any subsequent development and
modifications thereof under any consulting agreements with Buyer, and/or Buyer's
Confidential Information (disclosed separately or embodied in any of Buyer's
products) in its or any other party's products or businesses at any time.
All Parties acknowledge that the provisions of this Section 6.1 are
necessary to protect Buyer's ownership of the Peritoneal Technology, the Renal
Replacement Technology, the Proprietary Rights and the Confidential Information,
and the goodwill of Buyer's business and its competitive position in the
marketplace. After the Closing Date, upon Buyer's request, Seller shall return
to Buyer the originals and all copies of Buyer's Confidential Information within
five (5) days of Buyer's request.
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6.2 CONDITIONS PRECEDENT. Buyer's obligation to purchase the Peritoneal
Technology, the Renal Replacement Technology and the Proprietary Rights, and to
pay the Purchase Price is expressly subject to the satisfaction of each of the
following conditions:
(a) Buyer's receipt and acceptance of all of the assets
comprising the Peritoneal Technology, the Renal Replacement Technology and the
Proprietary Rights;
(b) Buyer's receipt and acceptance of the Assignment of
Inventions and Patents;
(c) Buyer's execution and delivery of this Agreement, the
Proprietary Information And Inventions Agreement the Security Agreement and the
Stock Option Agreement and the; and
(d) Seller's warranties as contained herein are true, accurate
and complete as of the date when all of the assets comprising the Peritoneal
Technology, the Renal Replacement Technology and the Proprietary Rights are
delivered to Buyer. If any of the above conditions are not fully satisfied, then
Buyer has the right to rescind this Agreement and Seller shall immediately
return to Buyer any payments of the Purchase Price previously paid by Buyer to
Seller.
6.3 ADDITIONAL DEVELOPMENT. The Parties agree that Seller may perform
additional development work for Buyer relating to the Peritoneal Technology
and/or the Renal Replacement Technology, and that any such development work
shall be conducted pursuant to Seller's Employment Agreement with the Buyer,
dated as of April 12, 1996, and as amended to date, and the Proprietary
Information and Inventions Agreement.
6.4 COVENANT NOT TO COMPETE. Effective upon the Closing, the Parties
agree that Seller is not retaining any residual rights in the Peritoneal
Technology, the Renal Replacement Technology or the Proprietary Rights, and
shall have no further right to use the same except as specifically permitted by
Section 6.3 of this Agreement and the provisions of a development agreement
which may be entered into between the Parties. For a period of five (5) years
after the date of this Agreement, Seller shall not directly or indirectly own
(in whole or in part), manage, advise, consult or otherwise participate in or
work for any business or company that develops, licenses, markets or distributes
any technology, products or services that are similar to the Peritoneal
Technology, the Renal Replacement Technology and/or the Proprietary Rights.
During this five (5) year period, Seller also agrees not to directly or
indirectly produce, through itself or third parties, develop or create any
technology, product or service that could in any way compete with the Peritoneal
Technology, the Renal Replacement Technology and/or the Proprietary Rights.
In order for Buyer to realize the benefits of purchasing the Peritoneal
Technology, the Renal Replacement Technology and the Proprietary Rights, the
Parties acknowledge that Buyer intends to incorporate the Peritoneal Technology,
the Renal Replacement Technology and/or the Proprietary Rights in several of its
products that are sold and distributed throughout the entire world. Accordingly,
the restriction in this Section 6.4 shall apply in each state of the United
States and in all countries of the world. This restriction shall be deemed to
consist of a series of separate covenants, one for each line of business and/or
each category of technology developed by Seller regarding the Peritoneal
Technology, the Renal Replacement Technology and the Proprietary Rights and one
for each region included within the geographic area described above.
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Seller agrees that this restriction is reasonable and necessary to
protect Buyer's competitive position in the marketplace and to enable Buyer to
realize the benefits of purchasing the Peritoneal Technology, the Renal
Replacement Technology and the Proprietary Rights, and that such restriction
will not prevent Seller from conducting their respective business or earning a
sufficient livelihood. If a court decides that the character, duration or scope
of this Section 6.4 is unreasonable, then Seller agrees that this Section 6.4
shall be construed so as to impose only those restrictions on their conduct that
are necessary to ensure Buyer receives the full benefits of this Agreement. If a
court refuses to enforce all of the separate covenants deemed included herein,
Seller agrees that certain covenants, which if eliminated would permit the
remaining separate covenants to be enforced, will be deemed eliminated from this
Section 6.4 for purposes of that enforcement.
6.5 ENFORCEMENT. The Parties agree that a Party will be irreparably
harmed and money damages would be inadequate compensation to the Party in the
event that the other Party breaches any applicable provision of this Article 6.
Accordingly, all the provisions of this Article 6 shall be specifically
enforceable, and the non-breaching Party shall be entitled to injunctive relief
against the breaching Party, in addition to other available remedies, for the
breaching Party's breach of any provision of this Article 6.
6.6 PROSECUTION. After the Closing Date, Buyer shall have the sole
responsibility for prosecuting the Peritoneal Technology and the Renal
Replacement Technology.
6.7 SURVIVAL. All the provisions of Sections 6.1, 6.3, 6.4, 6.5, 6.6
and 6.7 shall survive any investigation of the Parties, Buyer's purchase of the
Peritoneal Technology, Renal Replacement Technology and Proprietary Rights, the
Closing and/or the termination of this Agreement occurring after the Closing
Date.
ARTICLE 7
INDEMNITY
7.1 GENERAL INDEMNITY. Seller shall indemnify, defend and hold harmless
Buyer, and its licensees, and their respective officers, directors,
shareholders, employees, agents and representatives (collectively "Buyer
Indemnitees") against all damages, claims, liabilities, losses and other
expenses, including without limitation reasonable attorneys' fees and costs,
whether or not a lawsuit or other proceeding is filed, that arise out of or
relate to: (a) the breach of any warranty and/or other provision of this
Agreement by Seller; (b) any failure to perform duly and punctually any
covenant, agreement or undertaking on the part of Seller contained in this
Agreement, specifically including payment of all taxes and other liabilities
referenced in Section 3.2 of this Agreement; (c) any limitation or restriction
on Buyer's use and enjoyment of the Peritoneal Technology, Renal Replacement
Technology, and/or Proprietary Rights caused by classification pursuant to 35
USC ss. 181, and/or (f) any willful or negligent acts or omissions of Seller.
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Seller's obligations under this Section 7.1 are expressly contingent upon the
following conditions: (a) Buyer shall promptly notify Seller in writing after it
becomes aware of any such claims; (b) Buyer shall make no admissions or damaging
representations to anyone; (c) Seller shall have exclusive control over the
settlement or defense of such claims or actions; and (d) Buyer shall give
Seller, at Seller's expense, all information and assistance reasonably requested
by Seller to settle or defend such claims or actions. Seller shall be entitled
to retain all monetary proceeds, attorneys' fees, costs and other rewards it
receives as a result of defending or settling such claims. In the event Seller
fails to promptly indemnify and defend such claims and/or pay Buyer's expenses,
as provided above, Buyer shall have the right to defend itself and shall have
the right to withhold any further payments due to Seller under this Agreement,
and in that case, Seller shall reimburse Buyer Indemnitees for all of its
reasonable attorneys' fees, costs and damages incurred in settling or defending
such claims within thirty (30) days of each of Buyer's written requests,
provided that any settlement shall only be with Seller's prior written approval.
7.2 INTELLECTUAL PROPERTY INDEMNITY. Seller shall indemnify, defend and
hold harmless Buyer, and its licensees, and their respective officers,
directors, shareholders, employees, agents and representatives (collectively
"Buyer Indemnitees") against all damages, claims, liabilities, losses and other
expenses, including without limitation reasonable attorneys' fees and costs,
whether or not a lawsuit or other proceeding is filed, (i) that arise out of or
relate to any dispute or claim that the Peritoneal Patent, the Renal Replacement
Patent and/or Seller's improvements related thereto, or any part thereof,
infringe or violate any third party's known Intellectual Property Rights; and
(ii) that arise out of or relate to any dispute or claim, occurring with respect
to the Peritoneal Patent prior to the United States patent issue date for such
patent and with respect to the Renal Replacement Patent prior to the United
States patent issue date for such patent, that the Peritoneal Patent, the Renal
Replacement Patent and/or Seller's improvements related thereto, or any part
thereof, infringe or violate any third party's unknown Intellectual Property
Rights. Seller's obligations under this Section 7.2 are expressly contingent
upon the following conditions: (a) Buyer shall promptly notify Seller in writing
after it becomes aware of any such claims; (b) Buyer shall make no admissions or
damaging representations to anyone; (c) Seller shall have exclusive control over
the settlement or defense of such claims or actions; and (d) Buyer shall give
Seller, at Seller's expense, all information and assistance reasonably requested
by Seller to settle or defend such claims or actions. Seller shall be entitled
to retain all monetary proceeds, attorneys' fees, costs and other rewards it
receives as a result of defending or settling such claims. In the event Seller
fails to promptly indemnify and defend such claims and/or pay Buyer's expenses,
as provided above, Buyer shall have the right to defend itself and shall have
the right to withhold any further payments due to Seller under this Agreement,
and in that case, Seller shall reimburse Buyer Indemnitees for all of its
reasonable attorneys' fees, costs and damages incurred in settling or defending
such claims within thirty (30) days of each of Buyer's written requests,
provided that any settlement shall only be with Seller's prior written approval.
Should the Peritoneal Patent, the Renal Replacement Patent and/or
Seller's improvements related thereto, or any part thereof, become or be likely
to become the subject of any infringement claim for which Seller is obligated to
indemnify Buyer pursuant to 7.2(i) and (ii) above, then in addition to its
indemnity obligations herein, Seller shall also, without additional cost to
Buyer, (a) procure for Buyer the right to continue using the Peritoneal Patent,
the Renal Replacement Patent and/or Seller's improvements related thereto
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without liability of any kind; (b) modify the Peritoneal Patent, the Renal
Replacement Patent and/or Seller's improvements related thereto so they are not
infringing without loss of functionality or increased costs of use, operation or
maintenance and to otherwise permit Buyer to fully enjoy the rights purchased
hereunder at the levels enjoyed by Buyer, including any economic benefit, prior
to such injunction or restriction; and/or (c) replace the infringing portions of
the Peritoneal Patent, the Renal Replacement Patent and/or Seller's improvements
related thereto with non-infringing substitutes without loss of functionality or
increased costs of use, operation or maintenance and to otherwise permit Buyer
to fully enjoy the rights purchased hereunder at the levels enjoyed by Buyer,
including any economic benefit, prior to such injunction or restriction. In the
event a temporary restraining order, preliminary injunction or similar order or
judgment is entered in litigation or arbitration, and Seller is unable to
promptly effect a remedy as provided in the preceding sentence, Buyer shall have
the right to modify the Peritoneal Patent, the Renal Replacement Patent and/or
Seller's improvements related thereto and/or defend or settle the infringement
claims on its own behalf. In such case, Seller shall pay all of Buyer's
reengineering fees, development and modification costs, attorney's fees, costs
and damages within thirty (30) days of each of Buyer's written requests. In
addition, upon the commencement of any litigation or other proceeding regarding
such infringement or violation of Intellectual Property Rights, Buyer shall be
entitled to withhold all further payments due to Seller under this Agreement and
such payments will only resume when Buyer's use is restored to the level enjoyed
by Buyer prior to the injunction or restriction and following full recoupment
from amounts of any Buyer Indemnitees' costs and damages under this Section.
7.4 LIMITATION OF LIABILITY. EXCEPT AS PROVIDED IN SECTION 7.1, IN NO
EVENT SHALL SELLER HAVE ANY LIABILITY FOR ANY INDIRECT, INCIDENTAL, SPECIAL
CONSEQUENTIAL OR RELIANCE DAMAGES (INCLUDING ANY LIABILITY TO BUYER FOR LOST
PROFITS OR BUSINESS OPPORTUNITIES) HOWEVER, CAUSED AND ON ANY THEORY OF
LIABILITY (INCLUDING NEGLIGENCE), ARISING OUT OF THIS AGREEMENT, INCLUDING (BUT
NOT LIMITED TO ) LOSS OF ANTICIPATED PROFITS, EVEN IF SELLER HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES AND EVEN IN THE EVENT OF THE FAILURE OF AN
EXCLUSIVE REMEDY. FURTHER, IN NO EVENT SHALL SELLER'S LIABILITY EXCEED THE SUM
OF THE INSTALLMENT PAYMENTS RECEIVED BY SELLER UNDER SECTION 3.1.
7.5 SURVIVAL. All the provisions of this Article 7 shall survive any
investigation of the Parties, Buyer's purchase of the Peritoneal Technology,
Renal Replacement Technology and Proprietary Rights, the Closing and/or the
termination of this Agreement occurring after the Closing Date.
ARTICLE 8
GENERAL PROVISIONS
8.1 RELATIONSHIP OF PARTIES. The Parties are independent contractors
notwithstanding any joint activities set forth in this Agreement. None of the
Parties is the agent or legal representative of any of the other Parties, and
none of the Parties has the right or authority to bind any other Party in any
way. This Agreement creates no relationship as partners or a joint venture, and
creates no pooling arrangement.
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8.2 GOVERNING LAW AND VENUE. This Agreement shall be governed by and
construed and interpreted in accordance with the substantive laws of the State
of California, without giving effect to any conflicts of law rule or principle
that might require the application of the laws of another jurisdiction. Each
party hereto hereby irrevocably submits to the exclusive jurisdiction of the
United States District Court for the Central District of California or any court
of the State of California located in the City of Los Angeles in any such
action, suit or proceeding, and agrees that any such action, suit or proceeding
shall be brought only in such court (and waives any objection based on forum non
conveniens or any other objection to venue therein); provided, however, that
such consent to jurisdiction is solely for the purpose referred to in this
Section 8.2 and shall not be deemed to be a general submission to the
jurisdiction of said courts or in the State of California other than for such
purpose.
8.3 ASSIGNMENT. None of the Parties shall have any right to assign,
delegate, transfer or otherwise encumber this Agreement or any portion thereof
without the other Parties' prior written consent.
8.4 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument. The parties hereto, and their
respective successors and assigns, are hereby authorized to rely upon the
signature of each person and entity on this letter, which are delivered by
facsimile, as constituting a duly authorized, irrevocable, actual, current
delivery of this letter with original ink signatures of each such person and
entity.
8.5 WAIVER. The failure of any Party to enforce any of its rights
hereunder or at law shall not be deemed a waiver or a continuing waiver of any
of its rights or remedies against the other Parties, unless such waiver is in
writing and signed by the Party to be charged.
8.6 SEVERABILITY. If any provision of this Agreement, or part thereof,
is declared by a court of competent jurisdiction to be invalid, void or
unenforceable, each and every other provision, or part thereof, shall
nevertheless continue in full force and effect.
8.7 ATTORNEY'S FEES. If attorneys' fees or other costs are incurred to
secure performance of any obligations hereunder, or to establish damages for the
breach thereof or to obtain any other appropriate relief, whether by way of
prosecution or defense, the prevailing party will be entitled to recover
reasonable attorneys' fees and costs incurred in connection therewith, including
on appeal therefrom.
8.8 NOTICE. All notices, requests or other communications under this
Agreement shall be in writing, and shall be sent to the Parties at their mailing
addresses listed in the first page of this Agreement, and shall be deemed to
have been duly given on the date of service if sent by facsimile (provided a
hard copy is sent in one of the manners specified below), or on the day
following service if sent by overnight air courier service with next day
delivery with written confirmation of delivery, or five (5) days after mailing
if sent by first class, registered or certified mail, return receipt requested.
Each Party is required to notify the other Parties in the above manner of any
change of address.
Page 14
8.9 FURTHER ASSURANCES. The Parties agree to execute such additional
documents and perform such acts as are reasonably necessary to effectuate the
intent of this Agreement.
8.10 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the Parties regarding the subject matter hereof, and supersedes all
prior or contemporaneous understandings or agreements, whether oral or written.
This Agreement shall be modified or amended only by a writing signed by the
Parties.
8.11 AUTHORITY/ VOIDABLE AGREEMENT.
(a) The natural persons executing this Agreement on behalf of
Seller and Buyer represent and warrant that they have the authority from their
respective governing bodies to enter into this Agreement and to bind their
respective companies to all the terms and conditions of this Agreement.
(b) If Seller is not then in breach of any of the terms or
conditions set forth in the Transaction Documents and the Closing does not occur
in accordance with the terms of this Agreement, then this Agreement shall
immediately terminate and be of no further force and effect. If of Seller, is
then in breach of any of the terms or conditions set forth in the Transaction
Documents and the Closing does not occur in accordance with the terms of this
Agreement, then the provisions set forth in Articles 5, 7 and 8 shall survive
the termination this Agreement and the other provisions of this Agreement shall
immediately terminate and be of no further force and effect. The provisions of
this Section 8.11(b) shall survive any termination of this Agreement.
8.12 CAPTIONS. The captions of the Articles and Sections in this
Agreement are for convenience only and shall not be used to interpret the
provisions of this Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the
date first written above.
SELLER: BUYER:
Xxxxxx Xxxx, M.D. National Quality Care, Inc.
By: /s/ Xxxxxx Xxxx, M.D By: /s/ Xxxxxx Xxxx, M.D.
------------------------- --------------------------
Name: Xxxxxx Xxxx, M.D. Name: Xxxxxx X. Xxxx
Its: Secretary
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