EXHIBIT 10.9
TECHNOLOGY TRANSFER AND LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the "Agreement") is effective as of April 6, 1998 (the
"Effective Date"), and is by and between:
(i) ATL Ultrasound, Inc., a corporation of the State of Washington doing
business as Advanced Technology Laboratories, having a place of business at
00000 Xxxxxxx-Xxxxxxx Xxxxxxx, Xxxxxxx, Xxxxxxxxxx 00000-0000 ("ATL"), and
(ii) SONO, Inc., a corporation of the State of Washington, having a
place of business at Xxxxx Xxxxx Xxxxxxx, Xxxxxxx, Xxxxxxxxxx 00000
("SONO").
WHEREAS, ATL has certain Handheld Technology (as defined below), and desires to
transfer its rights to the Handheld Technology to SONO, and to grant to
SONO a license to use ATL Technology (as defined below) in connection with
the development, manufacture, sale, and maintenance of Handheld Ultrasound
Devices (as defined below).
WHEREAS, SONO desires to acquire the Handheld Technology, and to grant to
ATL a license to use the Handheld Technology and the SONO Technology (as
defined below) in ultrasound systems which are not Handheld Ultrasound Devices.
NOW, THEREFORE, in consideration of the terms and conditions in this Agreement,
the parties agree as follows:
I. DEFINITIONS
1.0. Definitions. As used in this Agreement, the following terms shall have
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the following meanings:
(a) "Handheld Technology" shall mean:
(i) any inventions (whether patentable or not), discoveries, trade
secrets, technology, know-how, technical drawings, and other proprietary
information and literature within the patent disclosure documents listed in
Attachment A, including any and all patent rights and rights to patents derived
therefrom in any jurisdiction; and
(ii) the patents and patent applications listed in Attachment A, and
any divisions, continuations, continuations in part, and renewal applications
thereof, and any renewals, extensions, or revisions thereof, or supplementary
patent certificates derived therefrom in any jurisdiction; and
SONO License 1 April 2, 1998
(iii) any inventions (whether patentable or not), discoveries, trade
secrets, technology, know-how, technical drawings, and other proprietary
information and literature produced by ATL for SONO under a Service
Agreement between ATL and SONO and fully paid for by SONO as specified
in such Service Agreement.
(b) "ATL Technology" shall mean any inventions (whether patentable or not),
discoveries, trade secrets, technology, know-how, technical drawings, and other
proprietary information and literature owned by ATL or by its subsidiaries on
the Effective Date, or developed by ATL during the three year period following
the Effective Date. For the purpose of this Agreement, ATL Technology shall
exclude Handheld Technology, and any inventions (whether patentable or not),
discoveries, trade secrets, technology, know-how, technical drawings, and other
proprietary information and literature licensed to ATL by a third party
(collectively, "ATL Third Party Technology"), except where the terms of the
third party license with ATL permit ATL the right to sublicense the ATL Third
Party Technology to others. For illustrative purposes only, the ATL Technology
may include scanhead and transducer technology, ASIC technology, software,
signal processing techniques, and other proprietary and confidential information
of ATL. Except as otherwise provided in this Agreement, ATL Technology shall
not include any trademarks, trade names, service marks, logos, slogans, or trade
dress owned or used by ATL.
(c) "SONO Technology" shall mean any inventions (whether patentable or
not), discoveries, trade secrets, technology, know-how, technical drawings, and
other proprietary information and literature developed by SONO during the
three year period following the Effective Date including, but not limited to,
any modifications, improvements, additions, or enhancements made to the Handheld
Technology by SONO or by its agents, and any modifications, improvements,
additions, or enhancements made to the ATL Technology by SONO. For the
purpose of this Agreement, SONO Technology shall exclude any inventions
(whether patentable or not), discoveries, trade secrets, technology, know-how,
technical drawings, and other proprietary information and literature licensed to
SONO by a third party (collectively, "SONO Third Party Technology"),
except where the terms of the third party license with SONO permit
SONO the right to sublicense the SONO Third Party Technology to
others. Unless otherwise agreed, SONO Technology shall not include any
trademarks, trade names, service marks, logos, slogans, or trade dress owned or
used by SONO.
(d) "Handheld Ultrasound Devices" shall mean an ultrasound system including
a scanhead, a display device (or a video signal transmitter in lieu of a display
device), and all intermediate components, together with all housings, controls,
power sources, and output interfaces connected thereto, which do not weigh in
the aggregate more than ten pounds. Handheld Ultrasound Devices
SONO License 2 April 2, 1998
shall include additional or substitute components intended for use with such an
ultrasound system which, together with such system, meet the ten pound
limitation. The weights of any peripheral devices which may be connectable to
such an ultrasound system, such as printers, VCRs, auxiliary monitors, and
battery chargers, shall not be included in such weight computation. Handheld
Ultrasound Devices do not include any ultrasound system or component designed
for or intended to be used in a cart-borne configuration.
(e) "Highly Portable Ultrasound Device" shall mean any ultrasound system or
component meeting the requirements of the definition of Handheld Ultrasound
Device except for the weight limitation which, for a Highly Portable Ultrasound
Device, is in the aggregate more than ten pounds and not more than fifteen
pounds. The weight of a lithotripter sold with and providing power to a Handheld
Ultrasound Device as an integrated component of such a lithotripter, with a
Handheld Ultrasound Device as its imaging component, shall not be included in
the weight computation of a Highly Portable Ultrasound Device.
II. TRANSFER OF TECHNOLOGY AND LICENSES
2.0. Transfer of Handheld Technology. Effective as at the Effective Date, ATL
transfers, assigns, and conveys to SONO, and SONO accepts the
transfer, assignment, and conveyance from ATL of all of ATL's right, title, and
interest in and to the Handheld Technology. SONO understands that the
United States Government has reserved or acquired certain rights to the Handheld
Technology under ATL's agreement with the United States Office of Naval
Research, and that ATL is transferring, assigning, and conveying the Handheld
Technology to SONO subject to the rights reserved or acquired by the United
States Government. Any training or other support required by SONO either to
understand or to implement the Handheld Technology is beyond the scope of this
Agreement, and may be provided by ATL to SONO under the terms and
conditions of a separate service agreement.
2.1. License to Handheld and SONO Technology. Effective as at the
Effective Date, SONO grants to ATL a world-wide and royalty-free license to
use the Handheld Technology and the SONO Technology in ultrasound systems
which are not Handheld Ultrasound Devices. The license granted to ATL set forth
in this Section shall be an exclusive license for a period of five years from
the Effective Date as to products which are neither Handheld nor Highly Portable
Ultrasound Devices, and nonexclusive as to products which are Highly Portable
Ultrasound Devices. Thereafter, the license granted to ATL set forth in this
Section shall become a non-exclusive license in its entirety.
The license to use the Handheld Technology and the SONO Technology set
forth in this Section shall include the right to sublicense third parties to use
the Handheld Technology and the SONO Technology to manufacture ultrasound
SONO License 3 April 2, 1998
systems that are not Handheld Ultrasound Devices for ATL or for the third party
under the third party's marks, and the right to grant third parties the right to
import, make, sell or use ultrasound systems that are not Handheld Ultrasound
Devices containing the Handheld Technology or the SONO Technology. The parties
shall share in any royalties received from third parties due to sublicensing by
ATL of such Handheld and SONO Technology in proportions agreed to by the
parties. In the event of failure of the parties to agree upon such proportions,
the parties shall share such royalties equally. Prior to any sublicense of
Handheld or SONO Technology, ATL shall notify SONO of the sublicense and obtain
the written agreement of the third party to protect the Technology in accordance
with the applicable provisions in this Agreement.
If ATL desires to obtain the right to use the SONO Third Party Technology,
any royalties, fees, or other payments required to be paid to SONO's third
party licensor in connection with ATL's right to use any SONO Third Party
Technology shall be paid by ATL; however, nothing in this Section shall obligate
ATL to obtain the right to use the SONO Third Party Technology.
The license to use the Handheld Technology and the SONO Technology shall
terminate in the event ATL is in material default of any term or condition in
this Agreement, and does not correct the default to the reasonable satisfaction
of SONO within thirty days following receipt of notice from SONO
specifying the default. Any dispute between the parties concerning default or
termination shall be resolved in accordance with the "DISPUTE RESOLUTION"
provisions of Article 6 herein. Upon the termination of the license to use the
Handheld Technology and the SONO Technology as set forth above, ATL
immediately shall return to SONO any and all material given to ATL by
SONO embodying all or any portion of the Handheld Technology and SONO
Technology, and any and all copies of the material in ATL's possession or under
ATL's control.
2.2. License to ATL Technology. Effective as at the Effective Date, and
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subject to the terms and conditions in this Agreement, ATL grants to SONO a
non-exclusive, non-transferable (except as set forth below), and world-wide
right to use the ATL Technology in Handheld Ultrasound Devices and Highly
Portable Ultrasound Devices. At the end of five years from the Effective Date,
the license granted to SONO set forth in this Section shall extend to
include the right to use the ATL Technology in ultrasound systems which are not
Handheld Ultrasound Devices; EXCEPT THAT such extension does not include any
license to use any patent of ATL or any copyrighted software of ATL in any
product or application that is not a Handheld Ultrasound Device or a Highly
Portable Ultrasound Device.
Except as otherwise set forth in this Agreement, the license to use the ATL
Technology may not be sublicensed, assigned, or otherwise transferred by
SONO. SONO shall have the right to sublicense the ATL Technology to
third
SONO License 4 April 2, 1998
parties to import, make, sell or use Handheld and Highly Portable Ultrasound
Devices as SONO labeled and trade dressed devices or as third party labeled
Handheld or Highly Portable Ultrasound Devices, provided, however, that if a
seller or distributor of such third party labeled Devices also sells or
distributes ultrasound devices which are not Handheld or Highly Portable
Ultrasound Devices, then ATL shall have the same rights to import, make, sell or
use Handheld Ultrasound Devices on terms and conditions no less favorable than
those enjoyed by the third party. Prior to any sublicense of ATL Technology
permitted by the provisions of this Section, SONO shall notify ATL of the
sublicense and obtain the written agreement of the third party to protect the
ATL Technology in accordance with the applicable provisions in this Agreement.
If SONO desires to obtain the right to use the ATL Third Party Technology,
any royalties, fees, or other payments required to be paid to ATL's third party
licensor in connection with SONO's right to use any ATL Third Party
Technology shall be paid by SONO; however, nothing in this Section shall
obligate SONO to obtain the right to use the ATL Third Party Technology.
SONO shall have the right to use the ATL logo and the xxxx "Advanced
Technology Laboratories" or the xxxx "ATL Ultrasound" on Handheld and Highly
Portable Ultrasound Devices bearing the trademarks of SONO only in
connection with a legend stating that the technology contained within the Device
is licensed to SONO by ATL. The ATL logo and the ATL xxxx shall not be
greater in size than one-half of the size of the type or script used to identify
the Device as a SONO product. SONO shall provide ATL with a sample of
each of its intended uses of ATL's logo and marks.
The license to use the ATL Technology, logo, and marks shall terminate in the
event SONO is in material default of any term or condition in this
Agreement and does not correct the default to the reasonable satisfaction of ATL
within thirty days following receipt of notice from ATL specifying the default.
Any dispute between the parties concerning default or termination shall be
resolved in accordance with the "DISPUTE RESOLUTION" provisions of Article 6
herein. Upon the termination of the license to use the ATL Technology as set
forth above or at the conclusion of a dispute resolution proceeding, SONO
immediately shall return to ATL any and all material given to SONO by ATL
embodying all or any portion of the ATL Technology, and any and all copies of
the material in SONO's possession or under SONO's control.
2.3. Fully Paid License. In order to compensate ATL for use of the ATL
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Technology under direction or control of a third party, SONO shall make a
one-time payment to ATL to obtain a fully paid license to use the ATL Technology
in accordance with and subject to the terms and conditions in this Agreement in
the event of either of the following:
SONO License 5 April 2, 1998
(a) a license fee of One Hundred Fifty Million Dollars is due and payable
if, during the first five years following the Effective Date, fifty percent or
more of the securities entitled to vote for the election of directors of
SONO are acquired directly or indirectly by a single person or entity, or
by a combination of persons or entities under the control of a single person or
entity, or a majority of the SONO board of directors is controlled by a
single person or entity; or
(b) a license fee of Seventy-five Million Dollars is due and payable if,
during the sixth, seventh, or eighth year following the Effective Date, fifty
percent or more of the securities entitled to vote for the election of directors
of SONO are acquired directly or indirectly by a single person or entity,
or by a combination of persons or entities under the control of a single person
or entity, or a majority of the SONO board of directors is controlled by a
single person or entity, which person(s) or entity(s) is engaged in the medical
diagnostic imaging business other than by manufacture or sale of SONO
Handheld or Highly Portable Ultrasound Devices.
No payment shall be made to ATL if any of the events described in Section 2.3.
occur at any time after the end of the eighth year following the Effective Date.
In the event SONO does not make the one-time payment to ATL as described
above following demand from ATL, the license to use the ATL Technology set forth
in this Agreement shall terminate immediately and with no further action on the
part of ATL. In that event, SONO immediately shall return to ATL any and
all material given to SONO by ATL embodying all or any portion of the ATL
Technology, and any and all copies of the material in SONO's possession or
under SONO's control.
SONO acknowledges that the ATL Technology has been created and developed by
ATL over a substantial period of time, at a considerable expense, and gives ATL
a significant commercial advantage. SONO further acknowledges that a third
party who acquired the ATL Technology would gain a considerable commercial
advantage without making an investment similar in scope to that made by ATL, and
that such gain would cause ATL significant commercial damage. SONO agrees
that the occurrence of any of the events described above would represent either
a direct or indirect acquisition of the ATL Technology by a third party.
SONO and ATL agree that the damage to ATL can not be calculated by the
parties at the Effective Date without considerable difficulty, and that the one-
time payment as described in this Section is a fair, reasonable, and just
estimate of the damage caused to ATL for the commercial advantage obtained by
the third party resulting from its acquisition of the ATL Technology.
During the first eight years following the Effective Date, in order to
compensate SONO for use of the SONO Technology under direction or
control of a third
SONO License 6 April 2, 1998
party, a third party controlling the securities or directors of ATL as defined
in paragraph 2.3(a), shall have no rights to use the SONO Technology for uses
beyond that of ATL immediately prior to the third party gaining control unless
the third party agrees in writing to pay SONO royalties of 3% and 1 1/2% for
uses beyond that of ATL immediately prior to the third party gaining control on
the same basis and during the same eight year time period as SONO is paying
royalties under Section III of this Agreement, and to otherwise be bound by the
terms and conditions of the Agreement.
2.5. Disclosure of Technology. At reasonable intervals during the three year
period following the Effective Date, the parties shall meet to disclose
technology developed by the parties which is included within the scope of the
license each party granted to the other party under the terms of this Agreement.
Any technology which is disclosed, including any material and information
disclosed during the meetings, shall be subject to the provisions in this
Agreement.
III. ROYALTY PAYMENTS
3.0. Royalty Payments. For the right to use the ATL Technology as set forth in
this Agreement, SONO shall pay to ATL a royalty based upon the worldwide
net revenues reported by SONO and its distributors, licensees and agents
from the sale of any and all Handheld Ultrasound Devices and Highly Portable
Ultrasound Devices sold by SONO (or its distributors, licensees and agents)
which were manufactured using all or any portion of the ATL Technology, or which
incorporate all or any portion of the ATL Technology. The royalty shall be:
(a) three percent of the worldwide net revenues resulting from the sale of
Handheld Ultrasound Devices and four percent of the worldwide net revenues
resulting from the sale of Highly Portable Ultrasound Devices during the first
five year period commencing on the First Sale Date (as defined below); and
(b) one and one-half percent of the worldwide net revenues resulting from
the sale of Handheld Ultrasound Devices and two percent of the worldwide net
revenues resulting from the sale of Highly Portable Ultrasound Devices during
the sixth year, the seventh year, and the eighth year following the First Sale
Date.
No royalty shall be payable to ATL commencing on the ninth year following the
First Sale Date.
3.1. Defined Terms. For the purposes of this Article III, the term "First Sale
Date" shall mean the date on which a Handheld Ultrasound Device or a Highly
SONO License 7 April 2, 1998
Portable Ultrasound Device is sold or otherwise transferred for monetary
consideration by SONO, its subsidiaries, licensees or its agents and delivered
to any party unrelated to any of them.
For the purposes of this Section the term "net revenues" shall mean the revenues
from the sale and/or maintenance of Handheld Ultrasound Devices or Highly
Portable Ultrasound Devices, less any taxes (except income taxes) on the
devices, credits for returned Devices, quantity discounts actually given by
SONO, freight allowances, cash discounts actually given by SONO, and
any agent's commissions actually paid by SONO.
For the purposes of the calculation of the payments required to be made to ATL,
the net revenues from the sale of devices sold to a related or affiliated entity
of SONO for subsequent resale by the entity shall not be used to calculate
the payment due to ATL. In that instance, the payment due to ATL shall be
calculated based upon the net revenues of the related or affiliated entity from
end customers, less any taxes (except income taxes) on the devices, credits for
returned Devices, quantity discounts actually given by the entity, freight
allowances, cash discounts actually given by the entity, and any agent's
commissions actually paid by the entity.
With respect to revenues in a currency other than United States Dollars, for the
purposes of the calculation and the determination of the payment due to ATL, the
amount payable to ATL shall be the net revenue converted into United States
Dollars using the average of (a) the 4:00 P.M. New York foreign exchange selling
rates in effect on the last business day of the calendar quarter, and (b) the
4:00 P.M. New York foreign exchange selling rates in effect on the first
business day of the calendar quarter, as reported in the Currency Trading
section of The Wall Street Journal, or by converting the net revenue into United
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States Dollars using another international foreign exchange index acceptable to
ATL in effect on the applicable date.
3.2. Taxes. The royalty payments payable to ATL set forth in this Agreement
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shall be net of any taxes or withholdings of any kind. In the event any taxes
are due as a result of the royalty payments to ATL (excluding taxes based upon
the net income or gross receipts of ATL) including, but not limited to sales,
use, value added, gross receipts, registration, transfer, conveyance, excise,
recording, license, and other similar taxes and fees, such taxes shall be paid
by SONO.
3.3. Time of Payment. Unless otherwise set forth in this Agreement, all
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royalty payments shall be paid to ATL within thirty days following the end of
each calendar quarter by wire transfer to an account notified to SONO by
ATL, and shall apply to all devices sold during the previous calendar quarter.
SONO License 8 April 2, 1998
3.4 Books and Records. SONO shall maintain complete and accurate books
and records with respect to the products (including the Handheld Ultrasound
Devices and Highly Portable Ultrasound Devices) sold by SONO containing the
ATL Technology. With each payment submitted to ATL, SONO shall provide to
ATL a written report containing sufficient information to allow the
determination of the payment due. Upon reasonable notice to SONO, and at
reasonable times, SONO shall permit ATL (at ATL's expense) to inspect the
books and records of SONO to verify the payments set forth above.
IV. WARRANTY, INDEMNITY, LIABILITY
4.0. Warranty. ATL represents that it has the right to transfer to SONO
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its rights to the Handheld Technology as set forth in this Agreement, and the
right to grant to SONO the right to use the ATL Technology under the terms
and conditions in this Agreement.
ATL MAKES NO OTHER REPRESENTATION OR WARRANTY CONCERNING THE HANDHELD TECHNOLOGY
OR THE ATL TECHNOLOGY, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. ATL MAKES NO WARRANTY
CONCERNING SONO'S ABILITY TO MAKE ANY DEVICES OR PRODUCTS INCLUDING
HANDHELD ULTRASOUND DEVICES USING THE HANDHELD TECHNOLOGY OR THE ATL TECHNOLOGY,
INCLUDING ANY WARRANTY THAT THE HANDHELD TECHNOLOGY OR THE ATL TECHNOLOGY IS
ERROR FREE OR THAT THE HANDHELD TECHNOLOGY OR THE ATL TECHNOLOGY WILL NOT
INFRINGE ANY PATENT, COPYRIGHT, TRADE SECRET, OR OTHER RIGHTS OF ANY THIRD
PARTY.
SONO represents that it has the right to grant to ATL the right to use the
Handheld Technology and the SONO Technology under the terms and conditions
in this Agreement.
SONO MAKES NO OTHER REPRESENTATION OR WARRANTY CONCERNING THE HANDHELD
TECHNOLOGY OR THE SONO TECHNOLOGY, EXPRESS OR IMPLIED, INCLUDING THE
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. SONO
MAKES NO WARRANTY CONCERNING ATL'S ABILITY TO MAKE ANY PRODUCTS USING THE
HANDHELD TECHNOLOGY OR THE SONO TECHNOLOGY, INCLUDING ANY WARRANTY THAT THE
HANDHELD TECHNOLOGY OR THE SONO TECHNOLOGY IS ERROR FREE OR THAT THE
HANDHELD TECHNOLOGY OR THE SONO TECHNOLOGY WILL NOT INFRINGE ANY PATENT,
COPYRIGHT, TRADE SECRET, OR OTHER RIGHTS OF ANY THIRD PARTY.
SONO License 9 April 2, 1998
4.1. ATL Indemnity. ATL shall indemnify, and hold harmless SONO, its
subsidiaries, and each of their respective officers, directors, and employees
from any and all liability resulting from or in any way connected with the non-
Handheld Ultrasound Devices manufactured or sold by or under license from ATL
using or incorporating the SONO Technology or the Handheld Technology.
4.2. SONO Indemnity. SONO shall indemnify, and hold harmless ATL,
its subsidiaries, and each of their respective officers, directors, and
employees from any and all liability resulting from or in any way connected with
the products manufactured or sold by or under license from SONO using or
incorporating the Handheld Technology, the SONO Technology, or the ATL
Technology.
4.3. Definition of Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER PARTY FOR ANY INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES INCLUDING,
WITHOUT LIMITATION, LOST PROFITS, IRRESPECTIVE OF THE WAY IN WHICH SUCH DAMAGES
MAY ARISE, EVEN IF THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.
V. CONFIDENTIALITY AND FIELD OF USE OF TECHNOLOGY
5.0. Confidentiality. Any information disclosed by one party to the other
party in connection with the performance of this Agreement, and any other
information designated in writing by the disclosing party as confidential
(collectively, the "Confidential Information") shall be received and maintained
confidential by the receiving party using the same standard of care that the
receiving party uses to protect its own confidential information, but not less
than reasonable care. The Confidential Information may be used by the receiving
party only to perform its obligations under this Agreement, and shall not be
disclosed to a third party without the prior written consent of the disclosing
party. The disclosure of Confidential Information shall be restricted only to
the minimum number of employees of each party requiring access to the
Confidential Information to perform its obligations under this Agreement.
The provisions of this Section shall not apply to Confidential Information which
is: (a) already known to the receiving party without an obligation of
confidentiality (it being understood that information of either party in the
possession of the other party prior to the Effective Date shall not be covered
by this exception); (b) publicly known or becomes publicly known through no
unauthorized act of the receiving party; (c) rightfully received by the
receiving party from a third party; (d) disclosed to a third party by the
disclosing party without similar restrictions; (e) approved for disclosure by
the disclosing party; or, (f) required to be disclosed pursuant to a requirement
of a governmental agency or by law as long as the receiving party provides to
the disclosing party notice of the requirement prior to any disclosure.
SONO License 10 April 2, 1998
Upon the termination of this Agreement for any reason, each party shall return
to the other party all Confidential Information of the other party, and cease
any further use of the Confidential Information.
5.1. Field of Use of Technology. For five years following the Effective Date,
ATL shall not engage directly or indirectly in the development, manufacture, or
sale of Handheld Ultrasound Devices using Handheld Technology or the SONO
Technology. Thereafter, ATL shall have the right to develop, manufacture, and
sell Handheld Ultrasound Devices using any technology, including unpatented
Handheld Technology or unpatented SONO Technology; however, ATL's right to
develop, manufacture, and sell Handheld Ultrasound Devices shall not extend to
Handheld Ultrasound Devices infringing any valid and enforceable claim in any
patent owned or controlled by SONO, or infringing any valid and enforceable
copyright rights owned by SONO.
For five years following the Effective Date, SONO shall not engage directly
or indirectly in the development, manufacture, or sale of ultrasound systems
using ATL Technology which are not Handheld Ultrasound Devices or Highly
Portable Ultrasound Devices. Thereafter, SONO shall have the right to
develop, manufacture, and sell ultrasound systems using any technology,
including unpatented ATL Technology; however, SONO's right to develop,
manufacture, and sell ultrasound systems shall not extend to the sale of
ultrasound systems which are not Handheld Ultrasound Devices or Highly Portable
Ultrasound Devices and which infringe any valid and enforceable claim in any
patent owned or controlled by ATL or its subsidiaries, or infringe any valid and
enforceable copyright rights owned by ATL or its subsidiaries.
VI. DISPUTE RESOLUTION
6.0. Negotiation and Binding Arbitration. Any dispute, controversy, or claim
(collectively, a "Dispute") between the parties arising out of this Agreement or
relating to the subject matter of this Agreement shall be settled using the
following procedures as the sole means to resolve the Dispute.
A party seeking to resolve the Dispute shall give notice to the other party
briefly describing the nature of the Dispute. A meeting will be held between
the parties within ten days after the receipt of the notice. The meeting will
be attended by individuals with decision making authority regarding the Dispute.
If the parties have not resolved the Dispute to the mutual satisfaction of the
parties at the meeting, the parties shall submit the Dispute to binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association by a sole arbitrator selected by the parties. The
arbitration will be held in Bothell, Washington within 30 days of submission of
the Dispute to
SONO License 11 April 2, 1998
arbitration. Judgment upon the award rendered by the arbitrator may be entered
by any court having jurisdiction. The cost of the arbitrator will be shared
equally by the parties. At the conclusion of the arbitration, the arbitrator
shall indicate a prevailing party. The prevailing party shall be entitled to its
attorney's fees and other costs in connection with the arbitration. To the
extent this Agreement limits the remedies of any party, the arbitrator shall not
have the authority to grant any remedy to any party in excess of the limitations
provided in this Agreement.
If the arbitrator's decision has the effect of terminating a party's license
under this Agreement, such license shall not terminate if the party whose
license is being terminated provides the prevailing party, within 30 days of the
arbitrator's decision, with a written statement by the arbitrator certifying
that any breach of this Agreement by the party being terminated has been cured,
and that the party being terminated has taken any other actions specified in the
arbitration's decision.
VII. MISCELLANEOUS
7.0. Entire Agreement. This Agreement including the attachments shall
constitute the full, complete, and entire understanding and agreement by and
between the parties with respect to the subject matter in this Agreement, and
supersedes all previous negotiations, commitments, and writings with respect to
the subject matter of this Agreement. Counsel for both parties have participated
in the preparation of the Agreement and it shall not be construed against either
party as the drafter.
7.1. Governing Law. This Agreement shall be governed by, construed, and
enforced in accordance with the laws of the State of Washington.
7.2. Notices. All notices, requests, demands, and other communications under
this Agreement shall be in writing, and shall be deemed to have been duly given
(a) on the date of service if served personally on the party to whom notice is
given; (b) on the day of transmission if sent by facsimile transmission to the
facsimile number given below; (c) on the business day after delivery to an
overnight courier service, or the express mail service maintained by the United
States Postal Service; or (d) on the third day after mailing if mailed to the
party to whom notice is to be given, by registered or certified mail, postage
prepaid, properly addressed, and return-receipt requested to the party as
follows:
If to ATL:
Advanced Technology Laboratories
00000 Xxxxxxx-Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Vice President, General Counsel
SONO License 12 April 2, 1998
Facsimile No.: (000) 000-0000
If to SONO:
SONO, Inc.
Xxxxx Xxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: President
Facsimile No.: (425) ___-____
Any party may change its address or facsimile number by giving the other party
notice of the new information in the manner set forth above.
7.3. Modification of Agreement. No modification, amendment, or waiver of any
provision of this Agreement shall be effective unless the same shall be in
writing and signed by each of the parties. The modification, amendment, or
waiver shall be effective only in the specific instance and for the purpose for
which given.
7.4. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and permitted
assigns. This Agreement, and any of the rights, interests, or obligations under
this Agreement shall not be assigned by either party without the prior written
consent of the other party which consent shall not be withheld unreasonably.
7.5. No Third Party Beneficiaries. This Agreement is solely for the benefit of
the parties, and is not intended to confer upon any other person any rights or
remedies.
7.6. Titles and Headings. The Section and Article headings in this Agreement
are inserted for convenience of reference only, and are not intended to
constitute a part of or to affect the meaning or interpretation of this
Agreement.
7.7. Attachments. The attachments to this Agreement shall be construed with
and as an integral part of this Agreement to the same extent as if they had been
set forth in full in this Agreement.
7.8. Severability. In case any one or more of the provisions contained in this
Agreement should be invalid, illegal, or unenforceable, the enforceability of
the remaining provisions shall not in any way be affected or impaired. It is
the intention of the parties that they would have executed the remaining terms,
provisions, covenants, and restrictions without including any invalid, void, or
unenforceable provisions. In the event that any term, provision, covenant, or
restriction is held to be invalid, void, or unenforceable, the parties agree to
use their best efforts to find and employ an alternate means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant, or restriction.
SONO License 13 April 2, 1998
7.9. No Waiver. The failure by either party at any time to enforce any of the
terms or conditions of this Agreement shall not constitute or be construed as a
waiver of the terms and conditions. Each party expressly reserves the right to
enforce the terms and conditions of this Agreement at any time.
7.10. Counterparts. This Agreement may be executed in one or more counterparts
each of which shall be considered one and the same agreement, and shall become a
binding agreement when one or more counterparts have been signed by each party
and delivered to the other party.
7.11. Force Majeure. No party shall be liable to the other party for any
failure to perform any obligation under this Agreement where such failure is due
to causes beyond the reasonable control of the party. Such causes include, but
are not limited to acts of war, government export controls, other governmental
acts, industrial dispute, lock-out, accident, fire, explosion, transport delays,
acts of a third party, or loss or damage to any equipment. Each party shall use
its best efforts to comply with its respective obligations under this Agreement
despite the intervention or occurrence of any such cause, and to resume
compliance with those obligations as soon as any such cause ceases to affect the
performance of its obligations under this Agreement.
ATL Ultrasound, Inc. SONO, Inc.
By: /s/ Xxxxxx X. Fill By: /s/ Xxxxx X. Xxxxxxx
--------------------------- ------------------------------
Title: CEO Title: President, CEO
------------------------ ---------------------------
Date: May 4, 1998 Date: April 3, 1998
------------------------ ---------------------------
SONO License 14 April 2, 1998
ATTACHMENT A
Handheld Technology
Patent Disclosures
------------------
"ULTRASONIC SIGNAL PROCESSOR FOR A HAND HELD ULTRASONIC DIAGNOSTIC
INSTRUMENT" by XX Xxxxx, Xxx Xxxxxxxx, and Xxxxxx Xxxxxxxxx.
Patent Applications and Patents
-------------------------------
U.S. Xxx. 5,722,412 (Xxxxxxxxx et al.)
"ULTRASONIC ARRAY TRANSDUCER TRANSCEIVER FOR A HAND HELD ULTRASONIC
DIAGNOSTIC INSTRUMENT" by Blake Little, XX Xxxxx, and Xxxxxx Xxxxxxxxx, U.S.
Appl. SN 08/826,543, filed April 3, 1997.
"HAND HELD ULTRASONIC DIAGNOSTIC INSTRUMENT WITH DIGITAL BEAMFORMER" by
Xxxx Xxxx, Xxxxx Xxxxxxx, Xxxxx Xxxxxx, Xxxx Xxxxxxxx, Xxxxx Xxxxxxxxx, and
Xxxxxx Xxxxxxxxx, U.S. Appl. SN 08/863,936, filed May 27, 1997.
SONO License 15 April 2, 1998
FIRST AMENDMENT TO
TECHNOLOGY TRANSFER AND LICENSE AGREEMENT
THIS FIRST AMENDMENT to the TECHNOLOGY TRANSFER AND LICENSE AGREEMENT of
April 2, 1998 (the "License Agreement") by and between ATL Ultrasound, Inc.
("ATL") and SONO, Inc. ("SONO") is effective as of August 21, 1998;
WHEREAS, ATL and SONO are parties to the License Agreement which provides
for the allocation of certain rights to technology as between ATL and SONO; and
WHEREAS, ATL and SONO desire to amend the License Agreement to provide
further definition of the rights of the parties in the handheld ultrasound
market and to the technology of the parties;
NOW, THEREFORE, in consideration of the terms and conditions provided
below, the parties hereto agree to amend the License Agreement as follows:
2.1 License to Handheld and SONO Technology. The first and second
---------------------------------------
paragraphs of Section 2.1 of the License Agreement are deleted in their
entirety and replaced with the following:
Effective as at the Effective Date, SONO grants to ATL a world-wide and
royalty-free license to use the Handheld Technology and the SONO Technology
in ultrasound systems which are neither Handheld Ultrasound Devices nor
Highly Portable Ultrasound Devices. The license granted to ATL set forth in
this Section shall be an exclusive license for a period of five years from
the Effective Date as to products which are neither Handheld nor Highly
Portable Ultrasound Devices. Thereafter, the license granted to ATL set
forth in this Section shall become a non-exclusive license in its entirety.
Amend # 1
Page 2
The license to use the Handheld Technology and the SONO Technology set
forth in this Section shall include the right to sublicense third
parties to use the Handheld Technology and the SONO Technology to
manufacture ultrasound systems that are neither Handheld Ultrasound
Devices nor Highly Portable Ultrasound Devices for ATL. Prior to any
sublicense of Handheld Technology or SONO Technology permitted by the
provisions of this Section, ATL shall notify SONO of the sublicense and
obtain the written agreement of the third party to protect the Handheld
Technology and the SONO Technology in accordance with the applicable
provisions in this Agreement.
All other paragraphs of Section 2.1 are unchanged and in full force and effect.
2.2 License to ATL Technology. A new paragraph is added between the first
-------------------------
and second paragraphs of Section 2.2 as follows:
During the five year period commencing with the Effective Date, ATL
shall grant no license to any third party which will enable the third
party to use ATL Technology in Handheld Ultrasound Devices or Highly
Portable Ultrasound Devices during such five year period.
5.1 Field of Use of Technology. The first paragraph of Section 5.1 of the
--------------------------
License Agreement is deleted in its entirety and replaced with the following:
For five years following the Effective Date, ATL shall not engage
directly or indirectly in the development, manufacture, or sale of
Handheld Ultrasound Devices or Highly Portable Ultrasound Devices.
Thereafter, ATL shall have the right to develop, manufacture, and sell
Handheld Ultrasound Devices and Highly Portable Ultrasound Devices using
any technology, including unpatented Handheld Technology or unpatented
SONO Technology; however, ATL's right to develop, manufacture, and sell
Handheld Ultrasound Devices and Highly Portable Ultrasound Devices shall
not extend to Handheld Ultrasound Devices and Highly Portable Ultrasound
Devices infringing any valid and enforceable claim in any
Amend #1
Page 3
patent owned or controlled by SONO, or infringing any valid and enforceable
copyright rights owned by SONO.
The other paragraph of Section 5.1 is unchanged and in full force and effect.
All other provisions of the License Agreement are unchanged and continue in
full force and effect.
IN WITNESS WHEREOF the parties hereto have set their hands and seals as of
the date last indicated below.
ATL Ultrasound, Inc. SONO, Inc.
/s/ XXXXXX X. FILL /s/ XXXXX X. XXXXXXX
By:_________________________________ By:_________________________________
CEO CEO
Title:______________________________ Title:______________________________
August 17, 1998 August 17, 1998
Date:_______________________________ Date:_______________________________
SECOND AMENDMENT TO
TECHNOLOGY TRANSFER AND LICENSE AGREEMENT
THIS SECOND AMENDMENT to the TECHNOLOGY TRANSFER AND LICENSE AGREEMENT of
April 2, 1998 (the "License Agreement") by and between ATL Ultrasound, Inc.
("ATL") and SONO, Inc. ("SONO") is effective as of October 1, 1998;
WHEREAS, ATL and SONO are parties to the License Agreement as amended by
the First Amendment which provides for the allocation of certain rights to
technology as between ATL and SONO; and
WHEREAS, ATL and SONO desire to amend the License Agreement as amended by
the First Amendment to provide further definition of the rights of the parties
in the handheld ultrasound market and to the technology of the parties;
NOW, THEREFORE, in consideration of the terms and conditions provided
below, the parties hereto agree to amend the License Agreement as follows:
1.0 Definitions. Paragraphs (d) and (e) of Section 1.0 are deleted in their
-----------
entirety and replaced with the following paragraphs (d), (e) and (f):
(d) "Handheld Ultrasound Devices" shall mean an ultrasound system
including a scanhead, a display device (or a data transmitter in lieu of a
display device), and all intermediate components, together with all
housings, controls, power sources, and output interfaces connected thereto,
which do not weigh in the aggregate more than ten pounds. Handheld
Ultrasound Devices shall include additional or substitute components
intended for use with such an ultrasound system which, together with such
system, meet the ten pound limitation. The weights of any peripheral
devices which may be connectable to such an ultrasound system, such as
printers, VCRs, auxiliary monitors, battery chargers, and support
structures such as brackets, and mobile or immobile stands (so long as the
Handheld Ultrasound Device is not designed solely for use in conjunction
with such support structures) shall not be included in such weight
computation. Handheld Ultrasound Devices may be used with a cart which has
no ultrasound signal path between the Handheld Ultrasound Device and the
cart and its
Amend #2
Page 2
components except for a video output. This definition does not operate to
prevent ATL from using wireless ultrasound probes with its over-15-pound
ultrasound systems.
(e) "Highly Portable Ultrasound Device" shall mean any ultrasound
system or component meeting the requirements of the definition of Handheld
Ultrasound Device except for the weight limitation which, for a Highly
Portable Ultrasound Device, is in the aggregate more than ten pounds and
not more than fifteen pounds.
(f) "Embedded Ultrasound Device" shall mean any Handheld Ultrasound
Device or Highly Portable Ultrasound Device which is integrated with a non-
ultrasound medical device to provide an ultrasonic imaging capability for
such medical device.
All other paragraphs of Section 1.0 are unchanged and in full force and effect.
2.1 License to Handheld and SONO Technology. The first and second paragraphs
---------------------------------------
of Section 2.1 of the License Agreement, as amended by the First Amendment, are
deleted in their entirety and replaced with the following:
Effective as at the Effective Date, SONO grants to ATL a world-wide and
royalty-free license to use the Handheld Technology and the SONO Technology
in Embedded Ultrasound Devices, and in ultrasound systems which are neither
Handheld Ultrasound Devices nor Highly Portable Ultrasound Devices. The
license granted to ATL set forth in this Section shall be an exclusive
license for a period of five years from the Effective Date as to products
which are neither Handheld nor Highly Portable Ultrasound Devices, and
nonexclusive as to Embedded Ultrasound Devices. Thereafter, the license
granted to ATL set forth in this Section shall become a non-exclusive
license in its entirety.
The license to use the Handheld Technology and the SONO Technology set
forth in this Section shall include the right to sublicense third parties
to use the Handheld Technology and the SONO Technology to manufacture
Embedded Ultrasound Devices, and to manufacture ultrasound systems that are
neither Handheld Ultrasound Devices nor Highly Portable Ultrasound Devices
for ATL. Prior to any sublicense of Handheld Technology or SONO Technology
permitted by the provisions of this Section, ATL shall notify SONO of the
sublicense and obtain the written agreement of the third party to protect
the Handheld Technology and the SONO Technology in accordance with the
applicable provisions in this Agreement.
All other paragraphs of Section 2.1 are unchanged and in full force and effect.
Amend #2
Page 3
2.2 License to ATL Technology. The first, second, third, and fifth paragraphs
-------------------------
of Section 2.2 of the License Agreement, as amended by the First Amendment, are
deleted in their entirety and replaced with the following:
Effective as at the Effective Date, and subject to the terms and conditions
in this Agreement, ATL grants to SONO a non-exclusive, non-transferable
(except as set forth below), and world-wide right to use the ATL Technology
in Embedded Ultrasound Devices, Handheld Ultrasound Devices and Highly
Portable Ultrasound Devices. At the end of five years from the Effective
Date, the license granted to SONO set forth in this Section shall extend to
include the right to use the ATL Technology in ultrasound systems which are
not Handheld Ultrasound Devices; EXCEPT THAT such extension does not
include any license to use any patent of ATL or any copyrighted software of
ATL in any product or application that is not an Embedded Ultrasound
Device, a Handheld Ultrasound Device or a Highly Portable Ultrasound
Device.
During the five year period commencing with the Effective Date, ATL shall
grant no license to any third party which will enable the third party to
use ATL Technology in Handheld Ultrasound Devices or Highly Portable
Ultrasound Devices during such five year period.
Except as otherwise set forth in this Agreement, the license to use the ATL
Technology may not be sublicensed, assigned, or otherwise transferred by
SONO. SONO shall have the right to sublicense the ATL Technology to third
parties to import, make, sell or use Embedded Ultrasound Devices, Handheld
Ultrasound Devices, and/or Highly Portable Ultrasound Devices as SONO
labeled and trade dressed devices or as third party labeled Embedded
Ultrasound Devices, Handheld Ultrasound Devices, or Highly Portable
Ultrasound Devices, provided, however, that if a seller or distributor of
such third party labeled Devices also sells or distributes ultrasound
devices which are not Handheld or Highly Portable Ultrasound Devices, then
ATL shall have the same rights to import, make, sell or use Handheld
Ultrasound Devices on terms and conditions no less favorable than those
enjoyed by the third party. Prior to any sublicense of ATL Technology
permitted by the provisions of this Section, SONO shall notify ATL of the
sublicense and obtain the written agreement of third party to protect the
ATL Technology in accordance with the applicable provisions in this
Agreement.
SONO shall have the right to use the ATL logo and the xxxx "Advanced
Technology Laboratories" or the xxxx "ATL Ultrasound" on Handheld and
Highly Portable Ultrasound Devices bearing the trademarks of SONO only in
connection with a legend stating that the technology contained within the
Device is licensed to SONO by ATL. The ATL logo and the ATL xxxx shall not
be greater in size than one-half of the size of the type or script used to
identify the Device as a SONO product. SONO shall also have the right to
use the ATL logo and the xxxx "Advanced Technology Laboratories" or the
xxxx "ATL Ultrasound" on the
Amend #2
Page 4
packaging, labelling, and promotional materials for Handheld and Highly
Portable Ultrasound Devices bearing the trademarks of SONO in connection
with a legend stating that the technology contained within the Device is
licensed to SONO by ATL. SONO shall provide ATL with a sample of each of
its intended uses of ATL's logo and marks.
All other paragraphs of Section 2.2 are unchanged and in full force and effect.
III ROYALTY PAYMENTS. Sections 3.0, 3.1, and 3.4 of Article III are deleted
-----------------
in their entirety and replaced with the following:
3.0. Royalty Payments. For the right to use the ATL Technology as set
----------------
forth in this Agreement, SONO shall pay to ATL a royalty based upon the
worldwide net revenues reported by SONO and its distributors, licensee
and agents from the sale of any and all Embedded Ultrasound Devices,
Handheld Ultrasound Devices and Highly Portable Ultrasound Devices sold
by SONO (or its distributors, licensees and agents) which were
manufactured using all or any portion of the ATL Technology, or which
incorporate all or any portion of the ATL Technology. The royalty shall
be:
(a) three percent of the worldwide net revenues resulting from the
sale of Embedded Ultrasound Devices and Handheld Ultrasound Devices, and
four percent of the worldwide net revenues resulting from the sale of
Highly Portable Ultrasound Devices during the first five year period
commencing on the First Sale Date (as defined below); and
(b) one and one-half percent of the worldwide net revenues
resulting from the sale of Embedded Ultrasound Devices and Handheld
Ultrasound Devices, and two percent of the worldwide net revenues
resulting from the sale of Highly Portable Ultrasound Devices during the
sixth year, the seventh year, and the eighth year following the First
Sale Date.
No royalty shall be payable to ATL commencing on the ninth year following
the First Sale Date.
3.1. Defined Terms. For the purposes of this Article III, the term
-------------
"First Sale Date" shall mean the date on which an Embedded Ultrasound
Device, a Handheld Ultrasound Device or a Highly Portable Ultrasound
Device is sold or otherwise transferred for monetary consideration by
SONO, its subsidiaries, licensees or its agents and delivered to any
party unrelated to any of them.
For the purposes of this Section the term "net revenues" shall mean the
revenues from the sale and/or maintenance of Embedded Ultrasound Devices,
Handheld Ultrasound Devices or Highly Portable Ultrasound Devices, less
any taxes (except
income taxes) on the devices, credits for returned Devices, quantity
discounts actually given by SONO, freight allowances, cash discounts
actually given by SONO, and any agent's commissions actually paid by SONO.
For the purposes of the calculation of the payments required to be made to
ATL, the net revenues from the sale of devices sold to a related or
affiliated entity of SONO for subsequent resale by the entity shall not be
used to calculate the payment due to ATL. In that instance, the payment
due to ATL shall be calculated based upon the net revenues of the related
or affiliated entity from end customers, less any taxes (except income
taxes) on the Devices, credits for returned Devices, quantity discounts
actually given by the entity, freight allowances, cash discounts actually
given by the entity, and any agent's commissions actually paid by the
entity.
With respect to revenues in a currency other than United States Dollars,
for the purposes of the calculation and the determination of the payment
due to ATL, the amount payable to ATL shall be net revenue converted into
United States Dollars using the average of (a) the 4:00 P.M. New York
foreign exchange selling rates in effect on the last business day of the
calendar quarter, and (b) the 4:00 P.M. New York foreign exchange selling
rates in effect on the first business day of the calendar quarter, as
reported in the Currency Trading section of The Wall Street Journal, or by
-----------------------
converting the net revenue into United States Dollars using another
international foreign exchange index acceptable to ATL in effect on the
applicable date.
3.4 Books and Records. SONO shall maintain complete and accurate books
-----------------
and records with respect to the products (including Embedded Ultrasound
Devices, Handheld Ultrasound Devices and Highly Portable Ultrasound
Devices) sold by SONO containing the ATL Technology. With each payment
submitted to ATL, SONO shall provide to ATL a written report containing
sufficient information to allow the determination of the payment due. Upon
reasonable notice to SONO, and at reasonable times, SONO shall permit ATL
(at ATL's expense) to inspect the books and records of SONO to verify the
payments set forth above.
A new Section 3.5 is added to Article III as follows:
3.5 Royalty Payments by ATL for Embedded Ultrasound Device Sales. ATL
------------------------------------------------------------
shall pay to SONO a royalty during the periods specified below for its
sales of Embedded Ultrasound Devices which meet the following three
criteria: a) are embedded in medical devices which are not ATL or Philips
branded products; b) are Embedded Ultrasound Devices weighing less than 15
pounds; and c) use two or more different types of SONO-developed I.C.s.
Such sales by ATL shall bear a three percent royalty of worldwide net
revenues of such Embedded Ultrasound Devices during the same five year
period as SONO is paying ATL royalties under
Amend #2
Page 6
Section 3.0(a); and such sales by ATL shall bear a one and one-half
percent royalty of worldwide net revenues of such Embedded Ultrasound
Devices during the same three year period as SONO is paying ATL royalties
under Section 3.0(b). All other provisions of Article III which apply to
the reporting and payment of royalties by SONO shall apply in equal
measure to the reporting and payment of royalties by ATL under this
Section 3.5.
All other sections of Article III are unchanged and in full force and effect.
5.1 Field of Use of Technology. A new paragraph is added following the second
--------------------------
paragraph of Section 5.1 as follows:
Both SONO and ATL may participate in markets for Embedded Ultrasound
Devices, provided that any use of Embedded Ultrasound Devices of the rights
granted in this Agreement is consistent with the terms of this Agreement.
All other paragraphs of Section 5.1 are unchanged and in full force and effect.
All other provisions of the License Agreement and the First Amendment are
unchanged and continue in full force and effect.
IN WITNESS WHEREOF the parties hereto have set their hands and seals as of
the date last indicated below.
ATL Ultrasound, Inc. SONO, Inc.
By: /s/ Xxxxxx X. Fill By: /s/ Xxxxx X. Xxxxxxx
------------------- ---------------------
Title: President Title: CEO
--------------- -----------------
Date: 10/15/98 Date: 10/12/98
--------------- -----------------
