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Certain portions of this exhibit have been omitted based upon a request for
confidential treatment. Omitted portions have been separately filed with the
Commission.
EXHIBIT 10.21
ZEUS DEVELOPMENT AGREEMENT
This ZEUS DEVELOPMENT AGREEMENT (hereinafter the "Agreement") is made
as of this 3rd day of July, 1997, by and between COMPUTER MOTION, INC., a
California corporation, having its principal place of business at 000-X Xxxxxxx
Xxxxx, Xxxxxx, Xxxxxxxxxx, 00000, (hereinafter referred to as "CMI"), and XXXXX
HEALTHCARE, INC., a Delaware corporation, having its principal place of business
at Xxx Xxxx Xxxxx, Xxxxxxxxx Xxxxxxxxx 00000-0000 and its subsidiaries and
affiliates (hereinafter referred to as "Columbia").
R E C I T A L S :
A. CMI has developed or acquired substantial expertise, know-how and
technical information relating to the design, development, manufacture and
testing of hardware and software for a robotic microsurgery system (hereinafter
referred to collectively as "Proprietary Information");
B. CMI is in the process of developing and refining its Zeus
Microsurgery Robotic System (the "Product");
C. CMI has developed or acquired rights to valuable hardware and
software incorporated in the Product (hereinafter referred to collectively as
"Technology") and holds patent, copyright, trade secret, trade identity and
other proprietary rights which exist in and to the Product, Proprietary
Information and Technology;
D. Columbia shall underwrite the purchase of the Product on behalf of
Medical City of Dallas Hospital ("Hospital"). The Product will reside at the
Hospital, which is owned by Columbia; and
E. CMI desires to have Columbia assist in the development and
refinement of the Product and is willing to provide Columbia a prototype Product
and certain support services in connection with Columbia's use thereof on such
terms and conditions as are provided herein.
A G R E E M E N T :
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, CMI and Columbia, intending to be
legally bound, have agreed and do hereby agree as follows:
1. LOCATION OF DEFINITIONS
(a) "CMI" and "Columbia" shall be defined as set forth in the opening
paragraph of this Agreement.
(b) "Deliverable Items" shall be defined as set forth in Paragraph
2(a) and Exhibit A.
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(c) "Hospital" shall be defined as set forth in Recital D.
(d) "Improvement" shall be defined as set forth in Paragraph 4(b).
(e) "Product" shall be defined as set forth in Recital B.
(f) "Proprietary Information" shall be defined as set forth in Recital
A and Paragraph 6(a).
(g) "Technology" shall be defined as set forth in Recital C.
(h) "Work" shall be defined as set forth in Paragraph 4(a).
2. AGREEMENTS OF CMI
(a) CMI shall deliver the "Deliverable Items" as listed on Exhibit A on
the schedule specified on Exhibit B.
(b) For eighteen months following the date of delivery of Product, CMI
shall place a Clinical Engineer, to be primarily stationed at the Hospital, with
principle responsibility for the day-to-day operations and activities relating
to the Product. The responsibilities of the Clinical Engineer shall include, but
not be limited to the following:
(i) The coordination of quarterly engineering meetings the
location of which shall alternate between Santa Xxxxxxx and
the various development partners, including the Hospital;
(ii) Arranging conference calls no less than monthly between CMI
engineering personnel and the clinical staff of the
Hospital;
(iii) Make hardware retrofit and software upgrades directly
related to the Product;
(iv) Training of Columbia staff relating to modifications and
improvements to hardware and software incorporated into the
Product; and
(v) General ongoing support of Columbia clinical studies and
research relating to the Product and the Work.
(vi) Perform Product maintenance to maintain Product in proper
working condition.
(c) CMI shall furnish Columbia with all available information relating
to the Product and such other materials as may be reasonably requested in
writing by Columbia. In addition, CMI management and engineering personnel shall
be available to answer questions and provide telephone consultation to
Hospital's medical and clinical personnel, such availability to be coordinated
by the Clinical Engineer at no additional cost. Clinical Engineer will use good
faith efforts to abide by the same policies as Columbia employees working at the
Hospital.
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3. AGREEMENTS OF COLUMBIA
(a) Columbia agrees to pay CMI the amounts set forth at the times
specified on Exhibit B, such payments to be effected by bank draft into an
account designated by CMI.
(b) Columbia acknowledges that the Product has not been approved by the
United States Food and Drug Administration, or any other governmental agency for
use on humans. Columbia agrees that it shall not use, nor permit the use of, the
Product on humans until such time as CMI has confirmed in writing to Columbia
that the Product, in the form then existing at Hospital, has been so approved.
After receipt of such confirmation, Columbia shall use the Product only in the
manner and for the procedures so approved by the applicable governmental
authorities. Columbia acknowledges that such approval may not be obtained for
several years, if at all, and that the Product, as the existing at the Hospital,
may require substantial modification to conform to the Products as approved by
the applicable governmental authorities. If and when approval is obtained, CMI
shall furnish Columbia with a copy of the FDA approval documentation.
4. OWNERSHIP OF THE WORK
(a) The results of the efforts by Columbia and its personnel under this
Agreement (the "Work"), and all revisions, amendments, modifications and
enhancements and sequels thereto produced by Columbia, a third party acting on
behalf of Columbia or CMI, including but not limited to reports, memoranda,
studies, drawings, computer programs and appurtenant object code and source
code, documentation, molds, copyrights, prototypes and models, shall be the
exclusive property of CMI.
(b) In the event that Columbia shall make any modification, improvement
or enhancement (an "Improvement") to the Product or the Technology which shall
be sufficiently original and distinct so as not to constitute a derivative work
thereof or otherwise infringe on the rights of CMI or others, Columbia and CMI
shall enter into good faith negotiations with respect to the amount and form of
compensation to which Columbia shall be entitled with respect thereto either in
the form of a one-time fee or a royalty. In order to allow an evaluation of the
modification, improvement or enhancement, Columbia will submit a confidential
written report describing in reasonable detail the nature of the Improvements
which may be compensable under the terms of this Paragraph 4(b) and identifying
the inventors therefore. Such report shall be presented to CMI not more than
forty-five (45) days after the origination of the idea or concept relating to
the Product or the Technology. CMI shall have sole and exclusive right to
assignment of, and to prosecute and maintain any and all patents arising from
the activities contemplated by this Agreement, including any Improvement. If no
agreement on compensation can be reached between CMI and Columbia, both parties
agree to submit this issue to binding arbitration.
(c) Columbia acknowledges that no such title to any such enhancements,
modifications, improvements, updates or derivative works made by Columbia to the
Technology, and related documentation, is granted by CMI to Columbia under this
Agreement, and that no such assertion shall be made by Columbia. Notwithstanding
anything to the contrary in this Paragraph 4(c), Columbia shall not assign or
sublicense its right to develop, modify and enhance the Technology to any entity
(other than a subsidiary of Columbia or any entity into which Columbia merges or
which acquires substantially all of the stock or assets of Columbia) without the
prior written consent of CMI, which shall not be unreasonably withheld.
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(d) Other than disposable products used in the performance of the
Product, Columbia may use the Product without payment of any additional fees,
royalties or other charges for usage or intellectual property rights.
5. EXPENSES
Each party shall pay its own expenses incurred by such party while
engaged in the performance of their respective duties under this Agreement.
6. CONFIDENTIALITY
(a) Each party acknowledges and agrees that certain information which
it may receive from the other party will be proprietary information to the
disclosing party. Such information includes but is not limited to:
(i) the fact that the disclosing party intends to develop or has
developed the Product;
(ii) any information concerning the Product and its intended
marketing;
(iii) any information concerning the existence, terms and
conditions of this Agreement; except that CMI or Columbia
may disclose such terms and conditions as may be required by
law;
(iv) nonpublic information concerning the business or finances of
the disclosing party; and
(v) any other information which if disclosed to a third party
could adversely affect a competitive advantage of the
disclosing party, including expertise, know-how and
technical information relating to the design, development,
manufacture and testing of Technology integrated or to be
integrated into the Product.
All of (i) through (v) shall be collectively referred to herein as
"Proprietary Information".
(b) Each party agrees, to hold in confidence all Proprietary
Information of the other party and to use at least the same degree of care to
prevent the unauthorized copying, use and/or disclosure of the other party's
Proprietary Information that it uses to protect its own confidential information
of like importance. Further, each party agrees to have each of its, consultants,
and subcontractors having access to Proprietary Information of CMI sign an
agreement to protect such confidential information. Columbia and its employees
agree that no papers, presentations or other public disclosure of the
Proprietary Information will be made without CMI's prior written approval.
(c) Each party agrees that the other party shall have the right to
approve in advance the content, time, place and manner of any announcement or
other such statement pertaining to this Agreement and the subject matter hereof,
which approval shall not be unreasonably withheld. Information which CMI will
not approve for public disclosure thereof includes, without limitation, the
financial arrangements, development and delivery schedules.
5
(d) Each party's respective obligation to hold the other party's
Proprietary Information in strict confidence shall not apply to any information
that:
(i) becomes known to the general public without breach of the
non-disclosure obligations of this Agreement;
(ii) is disclosed by the owner of the Proprietary Information to
others without restriction on disclosure;
(iii) is obtained from a third party without breach of a legal,
contractual or fiduciary obligation to CMI; or
(iv) is required to be disclosed in connection with any suit,
action or other dispute related to this Agreement.
(e) Each party agrees that the unauthorized use or disclosure of the
other party's Proprietary Information may cause irreparable injury to the party
concerned. Both parties further agree that all confidentiality commitments
hereunder shall reasonably survive this Agreement.
7. PROTECTION OF PROPRIETARY RIGHTS
Columbia covenants and agrees that it shall take all reasonable actions
necessary or prudent for the protection of CMI's proprietary rights in and to
the Technology and the Work.
8. COLUMBIA'S WARRANTIES AND INDEMNIFICATIONS
(a) Columbia represents and warrants to CMI as follows:
(i) Columbia possesses full power and authority to enter into
this Agreement, and to carry out its obligations hereunder.
(ii) The performance of the terms of this Agreement and the
performance of Columbia's duties hereunder will not breach
any separate agreement by which Columbia is bound. Columbia
shall not commit any act or enter into any agreement or
understanding with any third party which is inconsistent or
in conflict with this Agreement.
(iii) There is presently no litigation or other claim, pending or
threatened, nor a fact which may be the basis of any claim,
against Columbia which would restrict or prohibit the
transactions contemplated by this Agreement. Columbia has
not taken any action or failed to take any action which
would interfere with the rights of CMI under this Agreement.
(b) Hospital agrees to indemnify and hold CMI and its officers,
directors, agents and employees harmless from and against any and all claims,
losses, liabilities, damages, expenses and costs (including reasonable attorneys
and expert witness fees) (collectively "Claims") which result from Hospital's
negligence or misuse of the Product; or any breach of any of the representations
or
6
or warranties of Hospital contained in this Agreement; including Claims incurred
in the settlement or avoidance as a result of any of the foregoing; provided,
however, that CMI shall give prompt written notice to Hospital of the assertion
of any such Claim and provided further that Hospital shall have the right to
select counsel and control the defense and settlement thereof, subject to the
right of CMI to participate in any such action or to proceed at its own expense
with counsel of its own choosing.
(c) The representations, warranties and indemnification rights set
forth in this Agreement shall survive execution of this Agreement and the
performance of the obligation of Columbia hereunder.
9. CMI'S WARRANTIES AND INDEMNIFICATIONS
(a) CMI represents and warrants to Columbia as follows:
(i) CMI possesses full power and authority to enter into this
Agreement, and to carry out its obligations hereunder.
(ii) With respect to any intellectual property to be developed by
CMI which CMI will disclose to Columbia in performance of
this Agreement, CMI warrants, to the best of its knowledge,
that it has the right to make use and disclose without
liability to any third party.
(iii) The performance of the terms of this Agreement, the use of
the Product by Columbia and the performance of CMI's duties
hereunder will not breach any separate agreement by which
CMI is bound or violate or infringe any rights of any third
party, including third party intellectual property rights.
CMI shall not commit any act or enter into any agreement or
understanding with any third party which is inconsistent or
in conflict with this Agreement.
(iv) There is presently no litigation or other claim, pending or
threatened, nor a fact which may be the basis of any claim,
against CMI which would restrict or prohibit the
transactions contemplated by this Agreement or Columbia's
use of the Product. CMI has not taken any action or failed
to take any action which would interfere with the rights of
Columbia under this Agreement.
(v) The Product will substantially perform in accordance with
the representations stated in this Agreement and the
documentation and materials supplied by CMI.
(b) CMI agrees to indemnify and hold Hospital and its officers,
directors, agents and employees harmless from and against (i) any Claims of
third parties to the extent caused by defects in the design and/or manufacture
of the Product and (ii) any and all Claims which arise from the Product, the
Technology, or the use thereof, including any Claims arising from alleged
infringement of patent or other intellectual property rights of others. If such
a Claim is made or appears possible, Hospital agrees to allow CMI to modify or
replace the allegedly infringing
7
component. CMI has no obligation under this Section 9 for any Claim to the
extent based on Hospital's modification of the Product or the Technology or its
combination, operation, or use with any other product, data or apparatus not
specified or provided by CMI.
(c) The representations, warranties and indemnification rights set
forth in this Agreement shall survive execution of this Agreement and the
performance of the obligation of CMI hereunder.
10. GENERAL
(a) Any notice required or permitted to be sent hereunder shall be
effective upon receipt, in writing, and shall be sent by registered or certified
mail, return receipt requested, or overnight delivery with proof of delivery, to
the appropriate party at the addresses set forth below, or to such other
addresses as such party shall have designated by notice hereunder.
Columbia
Xxx Xxxx Xxxxx
Xxxxxxxxx Xxxxxxxxx 00000-0000
Attn: Xxxx Xxxxxxxxx, Xx.
cc. General Counsel
Columbia
Xxx Xxxx Xxxxx
Xxxxxxxxx Xxxxxxxxx 00000-0000
Computer Motion, Inc.
000-X Xxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxxxxxx
(b) This Agreement shall be governed and interpreted in accordance with
the internal laws of the State of Tennessee. In the event of any legal
proceeding between the parties arising from this Agreement, the prevailing party
shall be entitled to recover, in addition to any other relief awarded or
granted, its costs and expenses (including reasonable attorneys' and expert
witness' fees) incurred in any such proceeding.
(c ) This Agreement does not constitute Columbia as the agent
or legal representative of CMI, or CMI as the agent or legal representative of
Columbia for any purpose whatsoever. Neither party is granted any express or
implied right or authority by the other party to assume or to create any
obligation or responsibility in behalf of or in the name of the other party, or
to bind the other party in any manner or thing whatsoever.
(d) Columbia shall be responsible for any withholding taxes,
payroll taxes, disability insurance payments, workmens' compensation,
unemployment taxes, and other similar taxes or charges on the wages and payments
received by its agents or employees and CMI shall be responsible for any
withholding taxes, payroll taxes, disability insurance payments, unemployment
taxes, and other similar taxes or charges on the wages and payments received by
the Clinical Engineer. CMI shall be responsible for the actions of the Clinical
Engineer as it would any of its employees.
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(e) Neither party shall be deemed in default of this Agreement to the
extent that performance of their obligations or attempts to cure any breach are
delayed or prevented by reason of any act of God, fire, natural disaster,
accident, act of government, shortages of materials or supplies, or any other
cause beyond the control of such party ("force majeure") provided that such
party gives the other party written notice thereof promptly and, in any event,
within fifteen (15) days of discovery thereof and uses its best efforts to cure
any such breach. In the event of any such force majeure, the time for
performance or cure shall be extended for a period equal to the duration of the
force majeure but not in excess of three (3) months.
(f) This Agreement shall be binding upon and inure to the benefit of
the successors and assigns of the parties.
(g) Should any provision of this Agreement be held to be void, invalid,
or inoperative, the remaining provisions hereof shall not be affected and shall
continue in effect as though such unenforceable provision(s) had not been
included herein. The name of this Agreement and the headings of the sections of
this Agreement are inserted for convenience of reference only and shall not be
used or relied upon in or in connection with the construction or interpretation
of this Agreement.
(h) No failure or delay by either party in exercising any right, power,
or remedy hereunder shall operate as a waiver of any such right, power, or
remedy. It is agreed that any remedies provided for in this Agreement shall be
cumulative and shall not be exclusive of any other remedies available hereunder,
or at law or in equity. No waiver or modification of any provision of this
Agreement shall be effective unless in writing and signed by the party against
whom such waiver or modification is sought to be enforced.
(i) This Agreement, including the Exhibits hereto, sets forth the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior negotiations, understandings and agreements between the
parties hereto concerning the subject matter hereof.
(j) This Agreement may be executed in counterparts, but shall not be
binding upon the parties until it has been signed by both parties.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first written above.
XXXXX HEALTHCARE, INC. COMPUTER MOTION, INC.
By: _____________________________ By: _________________________________
Name: ___________________________ Name: _______________________________
Title: __________________________ Title: ______________________________
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EXHIBIT A
Deliverable Items
1. Fully executed copy of this Agreement.
2. One (1) fully operational prototype of the Product.
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EXHIBIT B
Schedule of Payments and Deliverable Items
Description of Payment or Milestone Delivery Date Payment
----------------------------------- ------------- -------
Upon signing of this agreement by CMI and Columbia Date hereof [*]
Delivery of prototype Product Within 90 days of the date hereof [*]
Post-delivery payment due Within 30 days after delivery and [*]
acceptance of prototype Product
