LICENSE AGREEMENT
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THIS AGREEMENT is made as of August 13, 2002 (the "Effective Date") by and
among XXXXX UNIVERSITY RESEARCH FOUNDATION, a Rhode Island corporation ("BURF"),
the MASSACHUSETTS INSTITUTE OF TECHNOLOGY, a Massachusetts corporation
("M.I.T."), and CYBERKINETICS, INC., a Delaware corporation ("Licensee").
RECITALS
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BURF and M.I.T. have certain rights to the Licensed Technology, as defined
below.
BURF and M.I.T. desire to have the Licensed Technology developed and
commercialized to benefit the public and are willing to grant licenses
thereunder.
M.I.T.'s Vice President for Research has approved that M.I.T. is accepting
equity as partial consideration for the rights and licenses granted under this
Agreement.
Licensee wishes to obtain licenses under the Licensed Technology on the
terms and conditions of this Agreement.
Each of BURF and M.I.T. wishes to grant licenses under the Licensed
Technology to Licensee on the terms and conditions of this Agreement.
BURF, M.I.T. and Licensee therefore agree as follows:
1. DEFINITIONS
The following terms shall have the meanings indicated in this Agreement:
1.1. AGENT or LICENSORS' AGENT. Agent or Licensors' Agent shall mean
BURF in its capacity as agent for the Licensors hereunder, acting pursuant to
the provisions of Section 10.
1.2. AGREEMENT. Agreement shall mean this Agreement, including all
schedules, exhibits and attachments hereto.
1.3. AFFILIATE. Affiliate shall mean, with respect to any Person, any
other Person controlled by, controlling, or under common control with such
Person. A Person shall be regarded as in control of another Person if it has
direct or indirect beneficial ownership of at least fifty percent (50%) interest
in the voting stock (or the equivalent) of such corporation or other entity, has
the right to direct, appoint or remove a majority or more of the members of its
board of directors (or their equivalent), or has the power to control the
general management of such corporation or other entity, by contract, law or
otherwise.
1.4. XXXXX LICENSED PATENTS. Brown Licensed Patents shall mean those
Licensed Patents designated on Schedule 1.14 as Xxxxx Licensed Patents.
1.5. XXXXX LIMITED FIELD PATENTS. Xxxxx Limited Field Patents shall
mean those Xxxxx Licensed Patents designated on Schedule 1.14 as Xxxxx Limited
Field Patents.
1.6. XXXXX - M.I.T. AGREEMENT. Xxxxx - M.I.T. Agreement shall mean the
Agreement dated as of June 12, 2001 between Xxxxx University and M.I.T., a copy
of which is attached hereto as EXHIBIT A, which authorizes BURF to act in
certain capacities on behalf of M.I.T., Xxxxx University and itself, including
without limitation the receipt of payments to be made hereunder, and provides
for the allocation of such payments.
1.7. CONFIDENTIAL INFORMATION. Confidential Information shall mean,
with respect to each Party, (a) non-public proprietary data or information which
belongs in whole or in part to such Party, its Affiliates or sublicensees and
(b) information expressly designated in this Agreement as Confidential
Information of such Party.
1.8. COVERED SUBLICENSE. Covered Sublicense shall mean a sublicense to
the Licensed Patents or Licensed Data outside of the field of prosthetic devices
or any other additional field in which Licensee will continue to be actively
engaged in developing or commercializing Licensed Products after the grant of
such sublicense.
1.9 EFFECTIVE DATE. Effective Date is defined in the preamble.
1.10. FEDERAL PATENT POLICY. Federal Patent Policy shall mean 35 U.S.C.
ss. 200 et seq. and all regulations promulgated thereunder, as amended, and any
successor statutes or regulations.
1.11. FDA. FDA shall mean the United States Food and Drug
Administration.
1.12. LICENSED DATA. Licensed Data shall mean the data and research
materials described in Schedule 1.12. Notwithstanding the foregoing, in no event
shall M.I.T.'s interest in any data or research materials described in Schedule
1.12 be considered Licensed Data.
1.13. LICENSED FIELD. Licensed Field shall mean all fields, except as
follows:
(a) * * *
(b) * * *
1.14. LICENSED PATENTS. Licensed Patents shall mean those patents and
patent applications described on Schedule 1.14.
1.15. LICENSED PRODUCT. Licensed Product shall mean any product the
manufacture, use or sale of which would, absent the licenses granted by the
Licensors to Licensees herein, infringe any Valid Claim included in any Licensed
Patent.
1.16. LICENSED TECHNOLOGY. Licensed Technology shall mean the Licensed
Patents and the Licensed Data.
1.17. LICENSED TERRITORY. Licensed Territory shall mean worldwide.
1.18. LICENSOR. Licensor shall mean each of BURF and M.I.T.
1.19. MAJOR MARKET COUNTRY. Major Market Country shall mean each of the
following countries: * * *.
1.20. M.I.T. COLLABORATION LICENSED PATENTS. M.I.T. Collaboration
Licensed Patents shall mean those Licensed Patents designated on Schedule 1.14
as M.I.T. Collaboration Licensed Patents.
1.21. NET SALES. Net Sales shall mean gross amounts invoiced for sales
of a Licensed Product by Licensee, its Affiliates or its Sublicensees, as
appropriate, to non-Affiliate Third Parties (other than Licensee's Sublicensees
hereunder), less the sum of (i) trade, quantity and cash discounts actually
allowed or paid, (ii) refunds, rebates, chargebacks, retroactive price
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unredacted version of this exhibit has been filed separately with the
Commission.
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adjustments (including Medicaid, managed care and similar types of rebates),
service allowances and broker's or agent's commissions actually allowed or paid,
(iii) credits or allowances given or made for rejections or returns of
previously sold products or for wastage replacement actually taken or allowed,
(iv) taxes, duties or other governmental charges levied on or measured by the
billing amount, as adjusted for rebates and refunds, and (v) charges for
shipping, freight and insurance directly related to the distribution of the
Licensed Product (excluding amounts reimbursed by Third Party customers). Sales
of a Licensed Product by and between a Party and its Affiliates and Sublicensees
are not sales to Third Parties and shall be excluded from Net Sales calculations
for all purposes. Sales of a Licensed Product for use in conducting clinical
trials of such Licensed Product in a country of the Licensed Territory in order
to obtain regulatory approval of such Licensed Product in such country shall be
excluded from Net Sales calculations for all purposes.
If a Licensed Product (a) consists of both (i) components causing such
product to be a Licensed Product and (ii) other components or (b) is sold
together with one or more other products for a single invoiced price (e.g.,
where a product is a medical device comprised of one component that is Licensed
Product and other components that are not Licensed Products, or where a medical
device that is a Licensed Product is packaged for sale with a second medical
device that is not a Licensed Product) (each, a "Combination Sale"), the Net
Sales for such Licensed Product shall be the portion of such Combination Sale
properly allocable to such Licensed Product, determined as follows.
Except as provided below, the Net Sales for a Licensed Product sold in such
a Combination Sale shall equal the gross amount invoiced for sale of the
Licensed Product and any and all other products or components, as the case may
be, included in such Combination Sale reduced by the adjustments specified above
in the definition of Net Sales (the "Net Combination Sale Amount"), multiplied
by the fraction A/(A+B), where:
* * *
In the event that Licensee, its Affiliate or Sublicensee, as applicable,
separately sells the Licensed Product included in a Combination Sale in a
country, but does not separately sell all of the other products or components,
as the case may be, included in such Combination Sale in such country, the
calculation of "Net Sale" resulting from such Combination Sale shall be
determined by multiplying the Net Combination Sale Amount by the fraction A/C
where:
* * *
In the event that Licensee, its Affiliate or Sublicensee, as applicable,
does not separately sell the Licensed Product contained in a Combination Sale in
the country where such Combination Sale occurs, but does separately sell all of
the other products or components, as the case may be, included in the
Combination Sale in such country, the calculation of Net Sales resulting from
such Combination Sale shall be determined by multiplying the Net Combination
Sale Amount by the fraction (C-D)/C, where:
* * *
Where the calculation of Net Sales resulting from a Combination Sale in a
country cannot be determined by any of the foregoing methods, the calculation of
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.
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Net Sales for such Combination Sale shall be that portion of the Net Combination
Sale Amount reasonably determined in good faith mutually by the Parties which
properly reflects the value of the Licensed Product included in the Combination
Sale.
1.22 PARTY. Party shall mean each party to this Agreement and their
respective successors and permitted assigns.
1.23. PERSON. Person shall mean any natural person or legal entity.
1.24. SUBLICENSEE. Sublicensee shall mean any Person to whom Licensee
grants a sublicense of some or all of the rights granted to Licensee under this
Agreement.
1.25. SUBLICENSING FEES. Sublicensing Fees shall mean any payments
received by Licensee (other than royalty payments or reimbursement of research
or development expenses) as consideration for the granting of a Covered
Sublicense, net of the value of any rights, interests or other consideration
(including, without limitation, equity interests in Licensee) provided by
Licensee to Sublicensee other than the sublicense to the Licensed Patents or
Licensed Data.
1.26. THIRD PART(Y/IES). Third Part(y/ies) shall mean any person(s) or
entit(y/ies) other than BURF, M.I.T., Licensee or their respective Affiliates.
1.27. VALID CLAIM. Valid Claim shall mean: (a) in the case of an issued
and unexpired patent, a claim that has not been held permanently revoked,
unenforceable or invalid by a decision of a court or other governmental agency
of competent jurisdiction, unappealed or unappealable within the time allowed
for appeal, and that has not been admitted to be invalid or unenforceable
through reissue, disclaimer or otherwise; or (b) in the case of a pending patent
application, a pending claim that (i) was filed and is being prosecuted in good
faith and (ii) has not been cancelled, withdrawn, abandoned or finally
disallowed without the possibility of appeal or refilling of such application.
2. LICENSE
2.1. GRANT OF LICENSES. Subject to the terms and conditions of this
Agreement: (x) BURF hereby grants to Licensee an exclusive, royalty-bearing
license, including the right to grant sublicenses, under BURF's interest in the
Xxxxx Licensed Patents, the M.I.T. Collaboration Licensed Patents and the
Licensed Data, to make, have made, use, offer to sell, sell, have sold,
distribute, have distributed, import and export Licensed Products in the
Licensed Territory in the Licensed Field; and (y) M.I.T. hereby grants to
Licensee an exclusive, royalty-bearing license, including the right to grant
sublicenses, under M.I.T.'s interest in the M.I.T. Collaboration Licensed
Patents, to make, have made, use, offer to sell, sell, have sold, distribute,
have distributed, import and export Licensed Products in the Licensed Territory
in the Licensed Field. In addition, Licensee shall have the right to use the
inventions and technology covered by the M.I.T. Collaboration Licensed Patents
in animal implants (and related systems, devices and components) for the
purposes of researching, developing and testing Licensed Products for human use.
The licenses granted to Licensee under this Section 2.1 are subject to the
following terms and conditions:
(a) FEDERAL PATENT POLICY. To the extent that any invention included
within the Licensed Technology has been partially funded by the United
States Government, the United States Government retains certain rights in
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.
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such invention as set forth in the Federal Patent Policy. As a condition of
the licenses granted hereby, Licensee shall comply with all aspects of the
Federal Patent Policy applicable to the Licensed Patents in the Licensed
Territory in the Licensed Field. Nothing contained in this Agreement
obligates or shall obligate any Licensor to take any action that would
conflict in any respect with its past, current or future obligations to the
United States Government under the Federal Patent Policy with respect to
the Licensed Patents in regard to work already performed or to be performed
by such Licensor. Each Licensor shall use reasonable efforts to reserve for
Licensee the exclusive rights granted by each of them hereunder to the
extent permitted under the Federal Patent Policy.
(b) [Reserved.]
(c) M.I.T. COLLABORATION LICENSED PATENTS. M.I.T. retains the right
for M.I.T. to use the M.I.T. Collaboration Licensed Patents for research,
teaching and educational purposes.
(d) XXXXX LICENSED PATENTS. BURF retains the right for BURF and its
Affiliate, Xxxxx University, to use the Xxxxx Licensed Patents and the
M.I.T. Collaboration Licensed Patents in the Licensed Field solely for the
internal, non-commercial research, teaching and other non-commercial
scientific and academic purposes of BURF and its Affiliate, Xxxxx
University.
(e) LICENSED DATA. BURF retains certain rights to use the Licensed
Data, as more fully described in and subject to the terms and conditions
set forth in Section 2.3(b).
2.2. SUBLICENSING. Licensee shall have the right to grant one or more
sublicenses to any Person of the rights granted to it under Section 2.1 at any
time, consistent with the terms and conditions of this Agreement.
2.3. OPTION TO ACQUIRE LICENSE TO ADDITIONAL INVENTIONS; ACCESS TO
LICENSED DATA.
(a) OPTION TO ACQUIRE LICENSE. BURF hereby grants Licensee an
exclusive first option (the "Option") to acquire an exclusive license to
any BURF interest in any invention (each, an "Additional Invention") (x)
that is made after the Effective Date in the course of the performance of
research funded in whole or in part under any grant listed on Schedule 2.3
(each, an "Ongoing Grant"), or (y) that constitutes an improvement to an
invention or technology covered by a Licensed Patent and that results from
the exercise of those retained rights (the "Retained Rights") described in
Section 2.1(d). For purposes of this Agreement, "Additional Invention"
shall not include any ownership interest of M.I.T. in any such invention.
Further, "improvement to an invention or technology" shall mean any
invention that constitutes a modification of, variation of, revision to or
new use of such invention or technology and that is dominated, in whole or
in part, by any Valid Claim in any Licensed Patent. The Option shall apply
to all Additional Inventions made during the term of this Agreement, and
Licensee's exercise or failure to exercise the Option with respect to a
particular Additional Invention shall not affect Licensee's rights with
respect to future Additional Inventions. Notwithstanding the foregoing,
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unredacted version of this exhibit has been filed separately with the
Commission.
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nothing in this Agreement shall apply or be deemed to apply to M.I.T.'s
interest, if any, in any Additional Invention nor to obligate M.I.T. in any
way to grant a license, under M.I.T.'s interest in any Additional
Invention, to any Additional Invention.
As additional consideration for the grant of the Option, upon execution of
this Agreement, Licensee shall grant to BURF an option (the "BURF "Stock
Option") to purchase 48,430 shares of Licensee's common stock, par value $.001
per share ("Common Stock"), subject to vesting terms and other terms and
conditions set forth in the option grant certificate dated as of the date hereof
and attached to this Agreement as EXHIBIT B (the "BURF Stock Option
Certificate").
BURF shall be free to grant a license to an Additional Invention to any Third
Party if Licensee does not exercise the Option with respect to such Additional
Invention, subject to the terms and conditions set forth in this Section 2.3(a).
With respect to each Additional Invention, Licensee may exercise the Option on
the following terms and conditions:
(i) ADDITIONAL INVENTION NOTICE. BURF shall take reasonable actions
to assure that those researchers exercising the Retained Rights promptly
make invention disclosures to BURF regarding any Additional Inventions and
delay publication of information regarding such Additional Inventions to
the extent necessary to allow time for the preparation and filing of patent
applications. BURF shall give written notice (the "Additional Invention
Notice") to Licensee of any Additional Invention within 15 days of the
receipt by BURF of an invention disclosure relating to any Additional
Invention. The Additional Invention Notice shall describe the Additional
Invention in reasonable detail. BURF shall promptly make available to
Licensee, upon reasonable request, all available additional information
regarding such Additional Invention. All such information shall be deemed
to be BURF's Confidential Information subject to the provisions of Section
4.2.
(ii) OPTION EXERCISE NOTICE. If Licensee elects, in its sole
discretion, to exercise the Option with respect to the Additional
Invention, Licensee shall give written notice (the "Option Exercise
Notice") to BURF of its election to exercise within 90 days after receipt
of the Additional Invention Notice.
(iii) EFFECTIVE DATE OF EXERCISE. Effective as of the date 30 days
after the date BURF receives the Option Exercise Notice (unless BURF
requests negotiation of the license terms pursuant to Section 2.3(a)(iv),
in which event the terms of Section 2.3(a)(iv) shall govern):
(A) Any patents and patent applications covering such Additional
Invention shall be deemed for all purposes of this Agreement to
be included within the Xxxxx Licensed Patents (subject to any
additional terms imposed by a sponsored research agreement
between BURF and any non-commercial sponsor of the research that
resulted in the Additional Invention, but only to the extent that
such terms are consistent with the terms generally imposed by
non-commercial sponsors for similar research);
(B) The Parties shall amend Schedule 1.14 to add a description
of the patents and patent applications covering such Additional
Invention to the list of Xxxxx Licensed Patents;
(C) Licensee shall reimburse BURF for all patent expenses
related to such Additional Invention reasonably incurred by BURF
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.
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prior to exercise of the Option, subject to BURF providing
reasonable documentation of such expenses;
(D) Licensee shall pay BURF * * *, and
(E) Pursuant to the terms of the BURF Stock Option Certificate,
the BURF Stock Option shall become exercisable with respect to an
additional * * * of the shares of Common Stock subject to the
BURF Stock Option (subject to the maximum number of shares for
which the BURF Stock Option is exercisable and the other terms
set forth in the BURF Stock Option Certificate).
(iv) BURF RIGHT TO REQUEST NEGOTIATION. If BURF reasonably determines
that the compensation terms of this Agreement would not reflect fair market
value consideration for an exclusive license of the Additional Invention,
BURF shall so notify Licensee within 20 days after receipt of the Option
Exercise Notice that it requests negotiation of the terms of such license
(a "Negotiation Request"). Promptly after Licensee receives the Negotiation
Request, BURF and Licensee will enter into good faith negotiations with
each other for 90 days (or such longer period as mutually agreed by BURF
and Licensee) in an effort to reach agreement on mutually satisfactory
terms for the licensing of such Additional Invention.
If BURF and Licensee do not agree on such terms within such time period,
BURF shall thereafter be free to license such Additional Invention to a
Third Party or Third Parties, subject to Licensee's right to submit the
matter to mediation, as provided below in clause (A) below, and Licensee's
Right of First Refusal, as provided below in clause (B) below.
(A) Licensee may at its option require the matter to be
submitted to mediation pursuant to the terms of Section 9, with
Licensee having the option to accept or reject the recommendation
of the mediator(s). If Licensee rejects such proposed terms, BURF
shall be free to license such Additional Invention to a Third
Party or Third Parties at any time and the Right of First Refusal
provided for in clause (B) below shall not apply to such
Additional Invention.
(B) If Licensee does not require the matter to be submitted to
mediation pursuant to clause (A) above, Licensee shall have a
right of first refusal with respect to the Additional Invention
(the "Right of First Refusal") on the terms and conditions set
forth in this clause (B). Prior to granting any license to the
Additional Invention to any Third Party, BURF shall give written
notice (the "Offer Notice") to Licensee of the name and address
of the Third Party to whom the license is to be granted and the
material terms and conditions of such proposed license and shall
offer Licensee the opportunity to license the Additional
Invention on the same terms and conditions; PROVIDED, HOWEVER,
that if BURF is not permitted, under the terms of an agreement
with the Third Party, to disclose the Third Party's name and
address, BURF shall not be required to do so but shall provide
Licensee with a general description of the Third Party's
organizational type (e.g., public or private entity, for-profit
or non-profit, newly organized entity or established entity,
etc.) and industry (e.g., medical devices, telecommunications,
etc.). If Licensee elects to license the Additional Invention on
such terms and conditions, Licensee shall so notify BURY within
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.
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30 days of receipt of the Offer Notice; if such election is made,
Licensee and BURF shall promptly amend this Agreement or enter
into a separate license agreement on such terms and conditions.
If Licensee does not respond within such 30-day period, or if
Licensee notifies BURF that it does not elect to license the
Additional Invention on such terms and conditions, BURF shall be
free to license such Additional Invention to the Third Party
named in the Offer Notice on the terms and conditions set forth
in the Offer Notice; provided, however, that if a license with
the Third Party on the same terms and conditions is not entered
into by BURF within 90 days, the Additional Invention shall again
be subject to the Right of First Refusal requirements set forth
in this clause (B).
(v) THIRD PARTY LICENSES. Except as otherwise provided in Section
2.3(a)(iv), BURF shall not grant a license to the Additional Invention to
any Third Party, (or enter into negotiations or discussions with, or
solicit interest from, any Third Party regarding a license to the
Additional Invention), unless and until: (i) Licensee notifies BURF that it
declines the opportunity to exercise the Option with respect to the
Additional Invention or (ii) Licensee does not respond to BURF within 90
days after receipt of the Additional Invention Notice.
(b) ACCESS TO LICENSED DATA. BURF retains the right to grant access
to Xxxxx University faculty researchers and faculty researchers at other
academic institutions to use the Licensed Data for non-commercial research
purposes; PROVIDED, HOWEVER, that any researcher granted access to the
Licensed Data shall be required to enter a Material Transfer Agreement
substantially in the form of EXHIBIT C with BURF (with such changes as BURF
and Licensee may mutually agree to make). Pursuant to the terms of the
applicable Material Transfer Agreement, any data developed or generated
using such Licensed Data and any invention made using such Licensed Data
shall be deemed to be an Additional Invention for purposes of this
Agreement and subject to Licensee's Option to license such data or
invention pursuant to the provisions of Section 2.3(a). Notwithstanding the
foregoing, neither M.I.T. nor any M.I.T. researcher shall be required to
enter into a Material Transfer Agreement to use the Licensed Data in
connection with the research being performed under the Subaward between
Xxxxx and M.I.T. (a copy of which is attached hereto as EXHIBIT A).
3. CONSIDERATION, RECORD-KEEPING AND PAYMENTS
3.1. PAYMENTS AND OTHER CONSIDERATION.
(a) INITIAL PAYMENT. Licensee shall pay to Licensors' Agent on the Effective
Date of this Agreement an amount equal to * * *, which includes reimbursement in
full for reasonable out-of-pocket patent expenses incurred with respect to the
Licensed Patents prior to the Effective Date.
(b) LICENSE MAINTENANCE FEES. Subject to the limitations set forth in Section
3.1(f), Licensee shall pay * * * to the Licensors' Agent on the third
anniversary of the Effective Date and each anniversary date thereafter.
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.
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(c) RUNNING ROYALTIES. Licensee shall pay or cause to be paid to the Licensors'
Agent running royalties equal to the Applicable Percentage (as defined below) of
Net Sales of Licensed Products by Licensee, its Affiliates and Sublicensees,
subject to the following terms and conditions:
(i) APPLICABLE PERCENTAGE. The "Applicable Percentage" shall equal *
* * for the first * * * of aggregate Net Sales of Licensed Products by
Licensee, its Affiliates and Sublicensees. The "Applicable Percentage"
shall equal * * * for aggregate Net Sales of Licensed Products by Licensee,
its Affiliates and Sublicensees in excess of * * *. The Applicable
Percentage is subject to adjustment pursuant to the provisions of clause
(iii) below.
(ii) ROYALTY REPORTS AND PAYMENTS. Within 60 days after March 31, June
30, September 30 and December 31 of each year, Licensee shall deliver to
the Licensors' Agent a true and accurate report, giving such particulars of
the business conducted by Licensee and any Sublicensees during the
preceding three calendar months under this Agreement as are pertinent to an
accounting for any running royalty payments hereunder. If no payments are
due, it shall be so reported. No such reports shall be due before the first
commercial sale of a Licensed Product. The total royalty due for the sale
of Licensed Products during such calendar quarter shall be remitted at the
time such report is made.
(iii) ROYALTY ADJUSTMENT. "Required Royalties" shall mean royalties
payable by Licensee, its Affiliates or Sublicensees to any Third Party with
respect to any intellectual property that Licensee is required to license
in order to practice the Licensed Patents. The Applicable Percentage with
respect to any Net Sales shall be reduced by * * * of any Required
Royalties payable with respect to such Net Sales; PROVIDED, HOWEVER, that
the Applicable Percentage shall in no event be reduced by more than * * *
solely as a result of this provision.
(iv) CUMULATIVE ROYALTIES. The obligation to pay royalties shall be
imposed only once with respect to a single unit of a Licensed Product
regardless of how many Valid Claims included within the Licensed Patents
would, but for this Agreement, be infringed by the manufacture, use,
import, offer for sale or sale of such Licensed Product in the country(ies)
of such manufacture, use or sale.
(v) TERMINATION OF ROYALTY OBLIGATION. Licensee's obligation to pay a
running royalty on Net Sales of a Licensed Product shall terminate on a
country-by-country basis upon the date on which the last Valid Claim
included within the Licensed Patents, which Valid Claim would be infringed
by the manufacture, use or sale of such Licensed Product in such country,
ceases to be a Valid Claim (e.g., upon expiration, lapse, disclaimer,
holding that such claim is invalid or unenforceable, etc.). After
termination of Licensee's obligation to pay a running royalty on Net Sales
of a Licensed Product in a country, no further royalties shall be payable
in respect of sales of such Licensed Product in such country and,
thereafter, the licenses granted to Licensee under Section 2.1 with respect
to such Licensed Product in such country shall be fully paid-up, perpetual,
exclusive, irrevocable, royalty-free licenses.
(d) EQUITY. Licensee shall, simultaneously with the execution and delivery of
this Agreement, issue to XXXX and M.I.T. * * * shares of Licensee's Common Stock
(80% of which shall be issued to BURF and 20% of which shall be issued to
M.I.T.) pursuant to Stock Subscription Agreements executed by each of BURF and
M.I.T. dated as of the date hereof and attached to this Agreement as EXHIBIT D.
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.
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Such shares of Common Stock, when issued to BURF and M.I.T., shall be fully-paid
and non-assessable. Simultaneously with the delivery of such shares of Common
Stock, each of BURF and M.I.T. shall execute the Stockholders' Rights Agreement
substantially in the form attached hereto as EXHIBIT E.
(e) SUBLICENSING FEES. Subject to the limitations set forth in Section 3.1(f),
in the event Licensee receives any Sublicensing Fees in connection with the
grant to any Third Party(ies) of a Covered Sublicense, Licensee shall pay to the
Licensors' Agent the amount equal to: (i) * * * of such Sublicensing Fees if
such Sublicensing Fees are received by Licensee within * * * after the Effective
Date of this Agreement, or (ii) * * * of such Sublicensing Fees if such
Sublicensing Fees are received by Licensee * * * of the Effective Date of this
Agreement. Any such payment to the Licensors' Agent shall be made within thirty
(30) days of Licensee's receipt of such Sublicensing Fees.
(f) MAXIMUM AMOUNT OF LICENSE MAINTENANCE FEES AND SUBLICENSING FEES. The
aggregate amount payable by Licensee pursuant to Section 3.1(b) (License
Maintenance Fees) and Section 3.1(e) (Sublicensing Fees) shall not exceed * * *,
reduced by * * * of the aggregate amounts previously expended by Licensee in
connection with the development of Licensed Products, in no event to be reduced
below * * *. Licensee shall have no further obligation to pay the Licensors'
Agent pursuant to Section 3.1(b) or Section 3.1(e) after Licensee has paid the
aggregate amount described in the prior sentence.
3.2. RECORDS. During the term of this Agreement and for three years thereafter,
Licensee shall keep complete and accurate records of Licensee's, any Affiliate's
and any Sublicensee's sales of Licensed Products and such other matters as may
affect the determination of any amount payable to the Licensors hereunder in
sufficient detail to enable the Licensors' Agent or its authorized
representatives to determine any amounts payable under this Agreement. Licensee
shall permit the Licensors' Agent or its authorized representatives, at Agent's
expense (except as provided below), to examine periodically (but no more
frequently than once per year) its books, ledgers, and records during regular
business hours for the purpose of and to the extent necessary to verify any
report required under this Agreement or the accuracy of any amount payable
hereunder. Licensee shall also permit the Licensors' Agent or its authorized
representatives to examine periodically (but no more frequently than once per
year) any documents relating to its sublicensing of the Licensed Patents during
regular business hours. Should any examination conducted by the Licensors' Agent
or its authorized representatives pursuant to the provisions of this Section 3.2
result in a determination of an underpayment of more than * * * of any payment
due from Licensee hereunder, Licensee shall be obligated to pay any reasonable
out-of-pocket expenses incurred by the Licensors' Agent with respect to such
examination.
3.3. FORM OF PAYMENT; TAXES AND WITHHOLDING. All amounts payable and
calculations hereunder shall be in United States dollars. All payments under
this Agreement will be made without any deduction or withholding for or on
account of any tax unless such deduction or withholding is required by
applicable laws or regulations of any country in the Licensed Territory. If
Licensee is so required to deduct or withhold, Licensee will (i) promptly notify
the Licensors' Agent of such requirement, (ii) pay to the relevant authorities
the full amount required to be deducted or withheld promptly upon the earlier of
determining that such deduction or withholding is required or receiving notice
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.
10
that such amount has been assessed against any Licensor, and (iii) promptly
forward to the Licensors' Agent an official receipt (or certified copy) or other
documentation reasonably acceptable to the Licensors' Agent evidencing such
payment to such authorities.
3.4. INTEREST. In the event that any payment due hereunder is not made when
due, the payment shall accrue interest beginning on the first day following the
calendar quarter to which such payment relates calculated at the annual rate of
the sum of (a) two percent (2%) plus (b) the prime interest rate quoted by THE
WALL STREET JOURNAL on the date such payment is due, provided that in no event
shall such annual rate exceed the maximum interest rate permitted by law in
regard to such payments. Such royalty payments when made shall be accompanied by
all interest so accrued. Payment and acceptance of interest shall not negate or
waive the right of the Licensors to any other remedy, legal or equitable, to
which they may be entitled because of the delinquency of the payments
4. PROTECTION OF INTELLECTUAL PROPERTY RIGHTS
4.1. PATENT PROSECUTION; PATENT COSTS.
(a) Licensee shall be responsible for preparing, filing, prosecuting,
maintaining and defending all Licensed Patents other than the Xxxxx Limited
Field Patents. Licensee shall seek and use best efforts to maintain the
strongest and broadest patent claims practicable in the best interests of
M.I.T. with respect to the M.I.T. Collaboration Licensed Patents. Licensee
shall provide the Licensors' Agent with copies of all filings and relevant
documentation and a reasonable opportunity in advance to comment on such
filings. Licensee will not abandon any patent application in the Licensed
Patents (other than the Xxxxx Limited Field Patents), or make
prosecution-related decisions that would affect the strength or breadth of
any claims in such patent applications, without giving the Licensors' Agent
a reasonable opportunity to comment on such action or decision.
(b) BURF shall be responsible for preparing, filing, prosecuting,
maintaining and defending the Xxxxx Limited Field Patents. BURF shall
provide Licensee with copies of all filings and relevant documentation and
a reasonable opportunity in advance to comment on such filings. BURF will
not abandon any patent application in the Xxxxx Limited Field Patents, or
make prosecution-related decisions that would have a material impact on the
nature or scope of any claims in such patent applications, without giving
Licensee a reasonable opportunity to comment on such action or decision.
(c) Licensee shall bear all costs in connection with the preparation,
filing, prosecution, maintenance and defense of the Licensed Patents and,
except as provided in Section 4.1(e), shall reimburse BURF for all
reasonable costs incurred by BURF in connection with the preparation,
filing, prosecution, maintenance and defense of the Xxxxx Limited Field
Patents. In the event that BURF enters into one or more licenses with Third
Parties of BURF'S interest in the Xxxxx Limited Field Patents outside the
Licensed Field, the amount Licensee is obligated to reimburse BURF for
patent costs under the prior sentence shall be reduced to a pro rata share
of such costs based on the number of licensees.
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.
11
(d) In the event that Licensee determines to abandon prosecution of,
or to cease to maintain, any Licensed Patent (other than the Xxxxx Limited
Field Patents) in any country, Licensee shall so notify the Licensors'
Agent and shall permit the Agent, in its sole discretion, at the Agent's
expense, to continue to prosecute or maintain such Licensed Patent in such
jurisdiction, and Licensee shall cooperate with the Agent in regard
thereto. If such country is a Major Market Country and the Agent does so
prosecute, the licenses granted to Licensee under Section 2.1 shall
terminate in such country with respect to any Licensed Patents issuing in
such country as a result of such prosecution
(e) On a country-by-country basis, Licensee may elect not to
reimburse BURF for the preparation, filing, prosecution and maintenance of
the Xxxxx Limited Field Patents in such country by giving written notice to
BURF. In the event that Licensee elects not to, or fails to, reimburse BURF
for such costs in any country, BURF, in its sole discretion, may continue
to prosecute or maintain such Xxxxx Limited Field Patents in such country
at BURF's expense. If such country is a Major Market Country and BURF does
so prosecute the Xxxxx Limited Field Patents, the licenses granted to
Licensee under Section 2.1 shall terminate in such country with respect to
any Xxxxx Limited Field Patents issuing in such country as a result of such
prosecution.
(f) Each Party shall, and shall cause its Affiliates, employees,
attorneys and agents to, cooperate fully with the other Parties and provide
all information and data and execute any documents reasonably required or
requested in order to allow the other Party(ies) to prepare, prosecute,
file, and maintain patents and patent applications pursuant to this Section
4.1 for no additional compensation.
(g) Reimbursement to be made to BURF by Licensee pursuant to this
Section 4.1 will be made pursuant to invoices submitted by BURF to Licensee
no more often than once per calendar quarter. Payment shall be due within
30 days after Licensee receives such an invoice from BURF. Each invoice
must be accompanied by supporting documentation sufficiently demonstrating
the expense so incurred.
4.2. CONFIDENTIAL INFORMATION. Except to the extent expressly
authorized by this Agreement or otherwise agreed in writing, the Parties agree
that, for the term of this Agreement and for five years thereafter, each Party
(the "Receiving Party") receiving any Confidential Information of any other
Party hereunder (the "Disclosing Party") that is disclosed in writing and marked
as "Confidential ," "Proprietary" or the substantial equivalent thereof shall
keep such Confidential Information confidential and shall not publish or
otherwise disclose or use such Confidential Information for any purpose other
than as provided for in this Agreement, except for Confidential Information that
the Receiving Party can establish:
(a) was already known by the Receiving Party (other than under an
obligation of confidentiality) at the time of disclosure by the Disclosing
Party and the Receiving Party has documentary evidence to that effect;
(b) was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the Receiving Party;
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.
12
(c) became generally available to the public or otherwise part of the
public domain after its disclosure or development, as the case may be,
other than through any act or omission of the Receiving Party or any of its
Affiliates;
(d) was disclosed to the Receiving Party, other than under an
obligation of confidentiality, by a Third Party who had no obligation to
the Disclosing Party not to disclose such information to others; or
(e) was independently discovered or developed by or on behalf of the
Receiving Party without the use of any Confidential Information belonging
to the Disclosing Party and the Receiving Party has documentary evidence to
that effect.
Notwithstanding the foregoing, each Party may disclose Confidential Information
belonging to another Party to the extent such disclosure is reasonably necessary
to file or prosecute patent applications as contemplated by this Agreement, to
prosecute or defend litigation, to exercise its rights hereunder, and to comply
with applicable governmental laws and regulations. In the event a Party shall
deem it reasonably necessary to disclose Confidential Information belonging to
another Party pursuant to this Section 4.2, the Disclosing Party shall to the
extent possible give reasonable advance written notice of such disclosure to the
other Party and take reasonable measures to ensure confidential treatment of
such information.
4.3. ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS.
(a) If any Party becomes aware of any infringement, anywhere in the
world, of any issued patent within the Licensed Patents, such Party will
notify the other Parties in writing to that effect.
(b) If a Third Party is infringing or appears to be infringing any of
the Licensed Patents in the Licensed Field, Licensee shall have the initial
right, at its own expense, to take action to obtain a discontinuance of
infringement or bring suit against such Third Party infringer and to join
each Licensor as a party plaintiff (to the extent such Licensor holds
rights in such Licensed Patents); PROVIDED that if required by law, M.I.T.
shall permit any action under this Section to be brought in its name,
including being joined as a party-plaintiff, and FURTHER PROVIDED that
Licensee shall hold M.I.T. harmless from, and indemnify M.I.T. against, any
costs, expenses, or liability that M.I.T. incurs in connection with such
action. Prior to commencing any such action relating to infringement of the
M.I.T. Collaboration Licensed Patents, Licensee shall consult with M.I.T.
and shall consider the views of M.I.T. regarding the advisability of the
proposed action and its effect on the public interest. Licensee shall not
enter into any settlement, consent judgment, or other voluntary FINAL
disposition of any infringement action relating to infringement of the
M.I.T. Collaboration Licensed Patents under this Section without the prior
written consent of M.I.T. Such right of Licensee shall remain in effect
until 90 days after the date notice is given under Section 4.31(a). If,
after the expiration of the 90-day period, Licensee has not obtained a
discontinuance of infringement of the Licensed Patents, filed suit against
any such Third Party infringer of the Licensed Patents, or provided the
Licensors' Agent with information and arguments demonstrating to the
Agent's reasonable satisfaction that there is insufficient basis for the
allegation of such infringement of the Licensed Patents, then the Agent
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.
13
shall have the right, but not the obligation, to bring suit against such
Third Party infringer of the Licensed Patents, provided that the Agent
shall bear all the expenses of such suit.
If a Third Party is infringing or appears to be infringing any of the
Licensed Patents outside of the Licensed Field, the Licensors' Agent
retains the initial right to take action to obtain a discontinuance of
infringement or bring suit against such Third Party infringer. If the Agent
fails to take such action or bring such suit within 90 days after the date
notice is given under Section 4.3(a), Licensee shall have the right, but
not the obligation, to take such action or bring such suit (subject to the
same terms and conditions as apply to other actions and suits initiated by
Licensee under this Section 4.3(b)) if the alleged infringement could have
an adverse effect on Licensee's rights under this Agreement or the
development or commercialization of Licensed Products.
(c) Licensee shall not consent to the entry of any judgment or enter
into any settlement with respect to such proceedings without the prior
written consent of the Licensors' Agent (which consent shall not
unreasonably be withheld or delayed). Neither Licensors' Agent nor any
Licensor shall consent to the entry of any judgment or enter into any
settlement with respect to such proceedings without the prior written
consent of Licensee (which consent shall not unreasonably be withheld or
delayed).
(d) The Party initiating any suit or action for infringement of the
Licensed Patents against a Third Party in accordance with this Section 4.3
(the "Initiating Party") shall have sole control of such proceedings;
PROVIDED, HOWEVER, that each Party shall have the right to consult with the
Initiating Party and to participate in and be represented by independent
counsel in such litigation at its own expense. Each Party shall cooperate
with the Initiating Party in any such suit or action (including by
executing any documents required to enable the Initiating Party to initiate
such litigation). The Initiating Party shall bear the reasonable expenses
(excluding legal fees and expenses) incurred by the other Parties in
providing assistance and cooperation as is requested by the Initiating
Party; PROVIDED, HOWEVER, that Licensee may set-off against any royalty
payment or payments owed under this Agreement its reasonable out-of-pocket
expenses, including reasonable legal fees and expenses, incurred in
connection with any such proceeding that Licensee initiates; PROVIDED,
FURTHER, however that no such royalty payment shall be reduced by more than
* * * by any such offset.
(e) The Initiating Party shall incur no liability to the other
Parties as a consequence of any unfavorable decision resulting from any
action or suit initiated pursuant to this Section 4.3, including any
decision holding any of the Licensed Patents invalid or unenforceable.
(f) Any recovery obtained by any Party as a result of any such
proceeding against a Third Party infringer shall be applied as follows: (i)
first to reimbursement of the unreimbursed legal fees and expenses incurred
by the Initiating Party; (ii) second to the reimbursement of the
unreimbursed legal fees and expenses incurred by the other Parties; (iii)
third to the payment to the Licensors' Agent of any amounts that were
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.
14
set-off against royalty payments pursuant to Section 4.3(d); and (iv) then
the remainder shall be divided by Licensors and Licensee as follows:
(i) If the remaining amount awarded is calculated with respect
to lost profits, Licensee shall receive an amount equal to the
damages which it has been determined that Licensee has suffered
as a result of the infringement, less the amount of any royalties
or other payments that would have been due to Licensors had
Licensee made the Net Sales that would have resulted in such
profits, and the Licensors' Agent shall receive an amount equal
to such deducted royalties or other payments; and
(ii) If the remaining amount awarded is calculated other than
with respect to lost profits, sixty-seven percent (67%) of such
amount shall be awarded to the Initiating Party and thirty-three
percent (33%) to the other Party(ies) (Licensee or the Licensors'
Agent (on behalf of the Licensors), as the case may be).
5. OPERATIONS UNDER THE LICENSE
5.1. DUE DILIGENCE.
(a) OBLIGATION WITH RESPECT TO XXXXX LICENSED PATENTS. Licensee
shall use commercially reasonable efforts to commercialize the Xxxxx
Licensed Patents. If BURF believes that Licensee has failed to comply with
its due diligence obligations under this Section 5.1(a), Licensee shall (i)
within 60 days of Licensee's receipt of written notice of such failure,
provide to BURF a commercially reasonable plan to remedy such failure and
(ii) cure such failure in accordance with such plan within the time
provided for under such plan.
(b) OBLIGATION WITH RESPECT TO M.I.T. COLLABORATION LICENSED
PATENTS. Licensee shall use commercially reasonable efforts to
commercialize the M.I.T. Collaboration Licensed Patents. If M.I.T. believes
that Licensee has failed to comply with its due diligence obligations under
the first sentence of this Section 5.1(b), Licensee shall (i) within 60
days of Licensee's receipt of written notice of such failure, provide to
M.I.T. a commercially reasonable plan to remedy such failure and (ii) cure
such failure in accordance with such plan within the time provided for
under such plan. In addition:
(i) If Licensee (or its Affiliate or Sublicensee, as the
case may be) fails to develop a working prototype using
technology covered by the M.I.T. Collaboration Licensed Patents
before December 31, 2004, M.I.T. may, on or after such date,
terminate the license granted by M.I.T. pursuant to Section
2.1(y) and the license to BURF's interest in the M.I.T.
Collaboration Licensed Patents granted by BURF pursuant to
Section 2.1(x) by giving written notice to Licensee, such
termination to be effective as of the date of Licensee's receipt
of such notice.
(ii) If the first commercial sale of a Licensed Product
using technology covered by the M.I.T. Collaboration Licensed
Patents does not occur before * * *, M.I.T. may, on or after such
date, terminate the license granted by M.I.T. pursuant to Section
2.1(y) and the license to BURF's interest in the M.I.T.
Collaboration Licensed Patents granted by BURF pursuant to
Section 2.1(x) by giving written notice to Licensee, such
termination to be effective as of the date of Licensee's receipt
of such notice; PROVIDED, HOWEVER, that M.I.T. shall extend this
deadline to * * * upon Licensee documenting to M.I.T. that
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.
15
Licensee (or its Affiliate or Sublicensee(s), as the case may be)
will commit the equivalent of two employees to work full time in
an attempt to achieve such goal by * * *; PROVIDED, FURTHER,
HOWEVER, that in the event that the deadline is extended and the
first commercial sale of a Licensed Product using technology
covered by the M.I.T. Collaboration Licensed Patents does not
occur before the extended deadline of * * *, but Licensee can
show that it has been commercially diligent in attempting to
achieve such goal before the extended deadline, M.I.T. shall
enter into good faith negotiations with Licensee to extend the
deadline further, provided that any such further extension shall
be solely at M.I.T.'s discretion
(iii) If (A) the amount of Net Sales of Licensed Products
using technology covered by the M.I.T. Collaboration Licensed
Patents does not equal or exceed * * * in the calendar year * * *
or (B) the amount of Net Sales of Licensed Products using
technology covered by the M.I.T. Collaboration Licensed Patents
does not equal or exceed * * * in any calendar year thereafter,
M.I.T. may, on or after such date, terminate the license granted
by M.I.T. pursuant to Section 2.1(y) and the license to BURF's
interest in the M.I.T. Collaboration Licensed Patents granted by
BURF pursuant to Section 2.1(x) by giving written notice to
Licensee, such termination to be effective as of December 31 of
the year in which such notice is given; PROVIDED, HOWEVER, that
M.I.T. shall extend the deadline for satisfaction of the goal set
forth in clause (A), from calendar year * * *to calendar year * *
*, upon Licensee documenting to M.I.T. that Licensee (or its
Affiliates or Sublicensees, as the case may be) will commit the
equivalent of two employees to work full time in an attempt to
achieve such goal during calendar year * * *; PROVIDED, FURTHER,
HOWEVER, that in the event that the deadline is extended and such
goal is not satisfied in the calendar year * * *, but Licensee
can show that it has been commercially diligent in attempting to
achieve such goal before the extended deadline, M.I.T. shall
enter into good faith negotiations with Licensee to extend the
deadline further, provided that any such further extension shall
be solely at M.I.T.'s discretion.
(c) REPORTS. Licensee shall provide to BURF and M.I.T. at least once
per year a written report of its activities and efforts toward
commercialization of the applicable Licensed Patents in sufficient detail
to allow the Licensors to monitor Licensee's compliance with the provisions
of this Section 5.1. Licensee shall also provide written notice to BURF and
M.I.T., as soon as practicable after each of the deadlines set forth in
Section 5.1(b), stating whether or not the applicable goal set forth in
Section 5.1(b) has been satisfied by such deadline, together with
reasonable supporting documentation.
5.2. COMPLIANCE WITH LAW. Licensee shall comply with and shall insure
that any Sublicensee complies with all government statutes and regulations that
relate to Licensed Products, including, but not limited to, FDA statutes and
regulations and the Export Administration Act of 1979 (50 App. U.S.C. ss.2401
et. seq.), as amended, and the regulations promulgated thereunder, and any
applicable similar laws and regulations of any other country. Without limiting
the generality of the foregoing, Licensee agrees that all Licensed Products used
or sold in the United States shall be manufactured substantially in the United
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.
16
States to the extent required by and in compliance with the Federal Patent
Policy.
5.3. MARKING. Licensee shall cause all Licensed Products sold in the
United States to be marked with all applicable U.S. Patent Numbers, to the full
extent required by United States law. Licensee shall similarly cause all
Licensed Products shipped to or sold in any other country to be marked in such a
manner as to conform with the patent laws and practice of such country.
6. REPRESENTATIONS AND WARRANTIES; WARRANTY DISCLAIMER
6.1. REPRESENTATIONS AND WARRANTIES.
(a) Licensee hereby represents and warrants to BURF and M.I.T. as follows:
(i) Licensee is a corporation duly organized and validly existing
under the laws of the State of Delaware.
(ii) Licensee has the corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder, and
the execution, delivery and performance of this Agreement by Licensee
has been duly authorized by all requisite corporate action on the part
of Licensee.
(b) BURF hereby represents and warrants to Licensee as follows:
(i) BURF has the corporate power and authority to execute and deliver
this Agreement, to grant the licenses granted by it hereunder to
Licensee and to perform its other obligations hereunder, and the
execution, delivery and performance of this Agreement by BURF has been
duly authorized by all requisite corporate action on the part of BURF.
(ii) As of the Effective Date, BURF is the sole owner of the Xxxxx
Licensed Patents and is the joint owner, with M.I.T., of the M.I.T.
Collaboration Licensed Patents. As of the Effective Date, BURF has not
granted licenses or other rights under BURF's interests to practice
any of the Xxxxx Licensed Patents, the M.I.T. Collaboration Licensed
Patents or the Licensed Data to any other Person.
(iii) As of the Effective Date, BURF has received no notice of
infringement or notice of any pending claim with respect to any of the
Xxxxx Licensed Patents, the M.I.T. Collaboration Licensed Patents or
the Licensed Data.
(c) M.I.T. hereby represents and warrants to Licensee as follows:
(i) As of the Effective Date, the M.I.T. Technology Licensing Office
has not granted a license to any other Person under M.I.T.'s interests
in the patent application known as M.I.T. case number * * *.
6.2. WARRANTY DISCLAIMERS
(a) EXCEPT AS MAY OTHERWISE BE EXPRESSLY SET FORTH IN THIS AGREEMENT, BURF AND
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.
17
M.I.T. MAKE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND CONCERNING THE LICENSED
PATENTS OR LICENSED DATA, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NONINFRINGEMENT, VALIDITY OF LICENSED PATENT CLAIMS, WHETHER ISSUED OR PENDING,
AND THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE.
Specifically, and not to limit the foregoing, BURF and M.I.T. make no warranty
or representation (i) regarding the validity or scope of the Licensed Patents,
or (ii) that the exploitation of the Licensed Patents or Licensed Data or any
Licensed Product will not infringe any patents or other intellectual property
rights of a Third Party. IN NO EVENT SHALL M.I.T., BURF, THEIR TRUSTEES,
DIRECTORS, OFFICERS, EMPLOYEES OR AFFILIATES BE LIABLE FOR INCIDENTAL OR
CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING ECONOMIC DAMAGES OR INJURY TO
PROPERTY AND LOST PROFITS, REGARDLESS OF WHETHER M.I.T. OR BURF SHALL BE
ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT SHALL KNOW OF THE
POSSIBILITY OF THE FOREGOING.
(b) BURF acknowledges and agrees that nothing in this Agreement shall be
construed as representing an estimate or projection of either (a) the number of
Licensed Products that will or may be successfully developed or commercialized
or (b) anticipated sales or the actual value of any Licensed Product and that
the figures set forth in this Agreement or that have otherwise been discussed by
the Parties are merely intended to define Licensee's royalty obligations to the
Licensors in the event such sales performance is achieved. LICENSEE MAKES NO
REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, THAT IT WILL BE ABLE TO
SUCCESSFULLY DEVELOP OR COMMERCIALIZE ANY LICENSED PRODUCT OR, IF
COMMERCIALIZED, THAT IT WILL ACHIEVE ANY PARTICULAR SALES LEVEL OF SUCH LICENSED
PRODUCT(S). Notwithstanding the foregoing, M.I.T. shall be entitled to terminate
this Agreement pursuant to Section 8.2.
7. INDEMNIFICATION; INSURANCE
7.1 INDEMNIFICATION.
(a) INDEMNITY. Licensee shall indemnify, defend, and hold harmless M.I.T.,
BURF and their trustees, directors, officers, faculty, students, employees,
and agents and their respective successors, heirs and assigns (the
"Indemnitees"), against any liability, damage, loss, or expense (including
reasonable attorneys fees and expenses) incurred by or imposed upon any of
the Indemnitees in connection with any claims, suits, actions, demands or
judgments arising out of any theory of liability (including without
limitation actions in the form of tort, warranty, or strict liability and
regardless of whether such action has any factual basis) concerning any
product, process, or service that is made, used, sold, imported, or
performed pursuant to any right or license granted to Licensee under this
Agreement.
(b) PROCEDURES. M.I.T. and BURF shall provide Licensee with prompt written
notice of any claim, suit, action, demand, or judgment for which
indemnification is sought under this Agreement. Licensee agrees, at its own
expense, to provide attorneys reasonably acceptable to M.I.T. and BURF to
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.
18
defend against any such claim. The Indemnitees shall cooperate fully with
Licensee in such defense and will permit Licensee to conduct and control
such defense and the disposition of such claim, suit, or action (including
all decisions relative to litigation, appeal, and settlement); PROVIDED,
HOWEVER, that any Indemnitee shall have the right to retain its own
counsel, at the expense of Licensee, if the named parties to such
proceeding (including any impleaded parties) include both Licensee and the
Indemnitee and representation of such Indemnitee by the counsel retained by
Licensee would be inappropriate because of actual or potential differences
in the interests of such Indemnitee and Licensee. Licensee agrees to keep
M.I.T. and BURF informed of the progress in the defense and disposition of
such claim and to consult with M.I.T. and BURF with regard to any proposed
settlement.
7.2. INSURANCE. On and after the date on which the first clinical trial of
a Licensed Product commences, Licensee shall obtain and carry in full force and
effect commercial general liability insurance, including product liability and
errors and omissions insurance, which shall protect Licensee and Indemnitees
with respect to events described in Section 7.1(a). Such insurance (i) shall
list M.I.T. and BURF as additional insureds thereunder, (ii) shall be endorsed
to include product liability coverage, and (iii) shall require thirty (30) days
written notice to be given to M.I.T. and BURF prior to any cancellation or
material change thereof. The limits of such insurance shall be reasonably
consistent with industry practice. In the alternative, Licensee may self-insure
subject to prior approval of the Licensors' Agent. Licensee shall provide the
Agent with Certificates of Insurance evidencing compliance with this Section
7.2. Licensee shall continue to maintain such insurance or self-insurance after
the expiration or termination of this Agreement during any period in which
Licensee or any Affiliate or Sublicensee continues to make, use, or sell a
product that was a Licensed Product under this Agreement and thereafter for a
period of five years.
8. TERM AND TERMINATION
8.1. TERM. The term of this Agreement shall commence on the Effective Date
and shall extend until Licensee has no further obligation under Section 3
of this Agreement to make or cause to be made any royalty or other payment
to the Licensors, unless earlier terminated in accordance with the
provisions of this Agreement.
8.2. TERMINATION BY LICENSORS.
(a) NONPAYMENT. In the event Licensee fails to pay any amounts due and
payable to Licensor hereunder, and fails to make such payments within 30
days after receiving written notice of such failure, the Licensors' Agent
(on behalf of the Licensors) may terminate this Agreement immediately upon
written notice to Licensee.
(b) DUE DILIGENCE. In the event Licensee fails to comply with its due
diligence obligations under Section 5.1(a) or Section 5.1(b) and fails to
cure such failure as provided in Section 5.1, the Licensors' Agent (on
behalf of the Licensors) may terminate this Agreement immediately upon
written notice to Licensee.
(c) MATERIAL BREACH. In the event Licensee commits a material breach of
its obligations under this Agreement, except for a breach described in
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.
19
Section 8.2(a) or 8.2(b), and fails to cure that breach within 60 days
after receiving written notice thereof, the Licensors' Agent (on behalf of
the Licensors) may terminate this Agreement immediately upon written notice
to Licensee.
8.3. TERMINATION BY LICENSEE. Licensee shall have the right to terminate
this Agreement at any time by giving written notice to the Licensors' Agent.
8.4. EFFECT OF TERMINATION.
(a) Upon termination of this Agreement for any reason, nothing herein
shall be construed to release any Party from any obligation that matured
prior to the effective date of such termination.
(b) The provisions of Sections 1 (Definitions), 3.1(c)(ii) (Royalty
Reports and Payments, with respect to final report and payment), 3.2
(Records), 4.2 (Confidential Information), 5.2 (Compliance with Law), 6.2
(Warranty Disclaimer), 7.1 (Indemnification), 7.2 (Insurance), 8.4 (Effect
of Termination), 9 (Dispute Resolution), 3.1(d) (Equity), 10 (Licensors'
Agent), 11.4 (Governing Law) and 11.9 (Limitation of Liability) shall
survive termination or expiration of this Agreement.
(c) Licensee and its Sublicensees may, after termination of this
Agreement, sell all Licensed Products that are in inventory at the time of
termination and complete and sell Licensed Products that Licensee can
demonstrate were in the process of manufacture at the time of such
termination; PROVIDED, HOWEVER, that Licensee shall pay to the Licensors'
Agent any running royalties due on the sale of such Licensed Products and
shall submit reports in accordance with the terms of this Agreement.
(d) Upon reasonable request, BURF shall confirm the terms of any
sublicenses granted by Licensee to Third Parties pursuant to the terms of
this Agreement; PROVIDED, HOWEVER, that (i) BURF shall have no obligation
to agree to perform any obligations of or satisfy any liabilities of
Licensee under such sublicenses; and (ii) each such Sublicensee shall enter
into an agreement directly with BURF on substantially the same terms and
conditions as this Agreement with respect to the sublicensed rights (other
than the M.I.T. Collaboration Licensed Patents), including without
limitation substantially the same terms with respect to payment of
royalties on the Net Sales of Licensed Products.
9. DISPUTE RESOLUTION
9.1. MEDIATION. In the event any dispute arising out of or relating to
this Agreement remains unresolved within 60 days from the date the affected
Party informed the other Parties of such dispute, any Party may initiate
mediation upon written notice to the other Parties ("Mediation Notice Date"),
whereupon all Parties shall be obligated to engage in a mediation proceeding
under the then-current Center for Public Resources ("CPR") Mediation Procedure
for Business Disputes (available at xxxx://xxx.xxxxxx.xxx), except that specific
provisions of this Section shall override any inconsistent provisions of the CPR
Mediation Procedure. The mediator will be selected from the CPR Panels of
Neutrals. If the Parties cannot agree upon the selection of a mediator within 15
business days after the Mediation Notice Date, then, upon the request of any
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.
20
Party, the CPR shall appoint the mediator. The Parties shall attempt to resolve
the dispute through mediation until the first of the following occurs: (i) the
Parties reach a written settlement; (ii) the mediator notifies the Parties in
writing that they have reached an impasse; (iii) the Parties agree in writing
that they have reached an impasse; or (iv) the Parties have not reached a
settlement within 60 days after the Mediation Notice Date. Nothing in this
Section 9.1 shall prevent any Party from seeking a preaward attachment of assets
or preliminary relief to enforce intellectual property rights or confidentiality
obligations under this Agreement in a court of competent jurisdiction prior to
resolution of the dispute through mediation.
9.2. TRIAL WITHOUT JURY. If the Parties fail to resolve the dispute through
mediation, or if no Party elects to initiate mediation, each Party shall have
the right to pursue any other remedies legally available to resolve the dispute;
PROVIDED, HOWEVER, that the parties expressly waive any right to a jury trial in
any legal proceeding under this Section.
10. LICENSORS' AGENT
10.1. [Reserved.]
10.2. LICENSEE TO PAY AGENT. Licensee shall be fully protected in
making all payments due under this Agreement to BURF. All royalty payments
and other payments or consideration made or delivered by Licensee pursuant
to this Agreement shall, as a matter of convenience, be made by Licensee to
BURF. BURF shall be responsible for the allocation and payment or delivery
of such amounts to each Licensor, pursuant to terms of the Xxxxx - M.I.T.
Agreement. Licensee shall have no obligation or liability with respect to
the allocation of royalty payments or other payments or consideration
between M.I.T. and BURF or with respect to any other obligations or
liabilities of either M.I.T. or BURF to the other Licensor, whether arising
under this Agreement or any other separate agreement between BURF and
M.I.T.
10.3. AMENDMENTS, CONSENTS, WAIVERS. Except as otherwise set forth
herein, the Agent may take or refrain from taking any action under this
Agreement, including giving its written consent to any modification of or
amendment to and waiving in writing compliance with any covenant or
condition in this Agreement or any breach, all of which actions shall be
binding upon each of the Licensors; PROVIDED, HOWEVER, that, without the
written consent of M.I.T.:
(a) No reduction shall be made in the amounts payable pursuant to
Section 3.1.
(b) No amendment to or modification of, or waiver with respect to,
Section 5.1(b) (relating to obligations with respect to M.I.T.
Collaboration Licensed Patents) shall be made.
(c) No amendment to or modification of Schedule 1.14 with respect to
M.I.T. Collaboration Licensed Patents shall be made.
(d) No amendment to or modification of this Section 10.3 shall be
made.
11. GENERAL
11.1. ASSIGNMENT. This Agreement shall be binding upon and shall inure
to the benefit of each Party and each Party's respective transferees, successors
and assigns, PROVIDED, HOWEVER, that no Party shall have the right to assign
this Agreement or its rights and obligations hereunder to any other Person
without the prior written consent of the other Parties, except as expressly
provided in this Section. Each Party may assign or otherwise transfer this
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.
21
Agreement and the licenses granted hereby and the rights acquired by it
hereunder without such consent in connection with a sale or other transfer of
such Party's entire business or that part of such Party's business to which the
licenses granted hereby relates, provided, in all such cases, that any such
assignee or transferee has agreed in writing to be bound by the terms and
provisions of this Agreement or is so bound by operation of law. Any purported
assignment in violation of the provisions of this paragraph shall be null and
void.
11.2. ENTIRE AGREEMENT; AMENDMENTS. This Agreement, together with all
schedules, exhibits and attachments hereto, constitute the entire understanding
of the parties with respect to the subject matter hereof and supersede all prior
and contemporaneous understandings and agreements, whether written or oral. All
schedules, exhibits and attachments hereto are hereby incorporated into this
Agreement by reference. No amendment, modification or supplement of any
provision of this Agreement shall be valid or effective unless made in writing
and signed by each Party.
11.3. NOTICES. Any notice, communication or payment required or
permitted to be given or made hereunder shall be in writing and, except as
otherwise expressly provided in this agreement, shall be deemed given or made
and effective (i) when delivered personally; or (ii) when delivered by telex or
telecopy (if not a payment); or (iii) when received if sent by overnight express
or mailed by certified, registered or regular mail, postage prepaid, addressed
to parties at their address stated below, or to such other address as such party
may designate by written notice in accordance with the provisions of this
Section 11.3.
If to BURF or to Licensors (through Licensors' Agent):
Xxxxx University Research Foundation
Box 1949 or 00 Xxxxxxxxxxxx Xx.
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attn: President.
If to M.I.T., all matters relating to the license:
Technology Xxxxxxxxx Xxxxxx, Xxxx XX00-000
Xxxxxxxxxxxxx Institute of Technology
00 Xxxxxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Director
Tel: 000-000-0000
Fax: 000-000-0000
If to M.I.T., relating to
any equity action after the initial issuance of shares:
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.
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Massachusetts Institute of Technology
Treasurer's Xxxxxx
000 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx
Tel: 000-000-0000
Fax: 000-000-0000
Licensee: Cyberkinetics, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attn: President
With a copy to: Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxx, Esq.
Telecopier: 000-000-0000
11.4. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the domestic substantive laws of the State of Rhode Island
without regard to any choice or conflict of laws rule or principle that would
result in the application of the domestic substantive law of any other
jurisdiction other than (i) United States federal law, to the extent applicable
and (ii) in regard to any question affecting the construction or effect of any
patent, the law of the jurisdiction under which such patent is granted.
11.5. HEADINGS. Headings included herein are for convenience only, and
shall not be used to construe this Agreement.
11.6. INDEPENDENT CONTRACTORS. For the purposes of this Agreement and
all services to be provided hereunder, each shall be, and shall be deemed to be,
an independent contractor and not an agent, partner, joint venturer or employee
of the other party. No Party shall have authority to make any statements,
representations or commitments of any kind, or to take any action which shall be
binding on any other Party, except as may be explicitly provided for herein or
authorized in writing.
11.7. SEVERABILITY. If any provision of this Agreement shall be found
by a court of competent jurisdiction to be void, invalid or unenforceable, the
same shall either be reformed to comply with applicable law or stricken if not
so conformable, so as not to affect the validity or enforceability of this
Agreement.
11.8. NO WAIVER. No provision of the Agreement shall be waived by any
act, omission or knowledge of a Party or its agents or employees except by an
instrument in writing expressly waiving such provision and signed by the waiving
Party.
11.9. [Reserved.]
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.
23
11.10. FORCE MAJEURE. No Party shall be liable to the other Parties for
delay or failure in the performance of the obligations on its part contained in
this Agreement if and to the extent that such failure or delay is due to
circumstances beyond its control that it could not have avoided by the exercise
of reasonable diligence. It shall notify the other Parties promptly in the event
such circumstances arise, giving an indication of the likely extent and duration
thereof, and shall use all commercially reasonable efforts to resume performance
of its obligations as soon as practicable; provided, however, that no Party
shall be required to settle any labor dispute or disturbance.
11.11. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original document, but all of
which shall constitute the same agreement.
[Signature pages follow.]
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the date first set forth above.
XXXXX UNIVERSITY CYBERKINETICS, INC.
RESEARCH FOUNDATION
By: By:
------------------------------- ----------------------------------
Name: Name:
---------------------------- --------------------------------
Title: Title:
--------------------------- -------------------------------
MASSACHUSETTS INSTITUTE OF TECHNOLOGY
By:
-------------------------------
Name:
----------------------------
Title:
---------------------------
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission.
