EXCLUSIVE LICENSE AGREEMENT
---------------------------
This Agreement, effective as of May 1, 1996 (the "Effective
Date"), is between the University of Massachusetts
("University"), a public institution of higher education of the
Commonwealth of Massachusetts, and CompuMed, Inc. ("Company"), a
Delaware corporation.
R E C I T A L S
----------------
WHEREAS, University is the owner by assignment of certain
issued United States patents claiming an invention in the field
of quantitative radiographic imaging which was developed by Xx.
Xxxxxx Xxxxxxxx, a faculty member at the University;
WHEREAS, Company desires to obtain a license under this
invention, together with up to two additional licensees; and
WHEREAS, University is willing to grant such a license on
the terms and conditions set forth in this Agreement.
NOW, THEREFORE, University and Company hereby agree as
follows:
1. Definitions.
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1.1 "Affiliate" shall mean any legal entity (such as a
---------
corporation, partnership, or limited liability company) that is
controlled by Company. For the purposes of this definition, the
term "control" means (i) beneficial ownership of at least fifty
percent (50%) of the voting securities of a corporation or other
business organization with voting securities or (ii) a fifty
percent (50%) or greater interest in the net assets or profits of
a partnership or other business organization without voting
securities.
1.2 "Confidential Information" shall mean any confidential
------------------------
or proprietary information furnished by one party (the
"Disclosing Party") to the other party (the "Receiving Party") in
connection with this Agreement, provided that such information is
specifically designated as confidential. Such Confidential
Information shall include, without limitation, any diligence
reports furnished to University under Section 3.1. and royalty
reports furnished to University under Section 5.2.
1.3 "Field" shall mean the area of bone densitometry.
-----
1.4 "Licensed Product" shall mean the osteosystems device
----------------
component of any product, but only if such component cannot be
developed, manufactured, used, or sold without infringing one or
more Valid Claims under the Patent Rights.
1.5 "Licensed Service" shall mean any service that cannot
----------------
be developed or performed without using at least one process that
infringes one or more Valid Claims under the Patent Rights.
1.6 "Net Sales" shall mean the gross amount billed or
---------
invoiced on sales by Company and its Affiliates and Sublicensees
of Licensed Products and Licensed Services, less the following:
(i) customary trade, quantity, or cash discounts and commissions
to non-affiliated brokers or agents to the extent actually
allowed and taken; (ii) amounts repaid or credited by reason of
rejection or return, recalls, or retroactive price reductions for
any amounts not collected; (iii) any taxes or other governmental
charges levied on the production, sale, transportation, delivery,
or use of a Licensed Product or Licensed Service which is paid by
or on behalf of Company; and (iv) outbound transportation costs
prepaid or allowed and costs of insurance in transit.
In any transfers of Licensed Products between Company and an
Affiliate or Sublicensee, Net Sales shall be calculated based on
the final sale of the Licensed Product to an independent third
party. In the event that Company or an Affiliate or Sublicensee
receives non-monetary consideration for any Licensed Products or
Licensed Services, Net Sales shall be calculated based on the
fair market value of such consideration. In the event that
Company or its Affiliates or Sublicensees use or dispose of a
Licensed Product in the provision of a commercial service other
than a Licensed Service, the Licensed Product shall be considered
sold and the Net Sales shall be calculated based on the sales
price of the Licensed Product to an independent third party
during the same Royalty Period or, in the absence of such sales,
on the fair market value of the Licensed Product as determined by
the parties in good faith.
1.7 "Patent Rights" shall mean the U.S. patent applications
-------------
listed on Exhibit A, and any divisional, continuation, or
---------
continuation-in-part of such patent applications to the extent
the claims are directed to subject matter specifically described
therein, as well as any patent issued thereon and any reissue or
extension of such patent, and any foreign counterparts to such
patents and patent applications. Exhibit A shall be periodically
---------
amended to include any additional Patent Rights that may arise.
1.8 "Royalty Period" shall mean the partial calendar
--------------
quarter commencing on the date on which the first Licensed
Product is sold or used or the first Licensed Service is
performed and every complete or partial calendar quarter
thereafter during which either (i) this Agreement remains in
effect or (ii) Company has the right to complete and sell
work-in-progress and inventory of Licensed Products pursuant to
Section 8.5.
1.9 "Sublicensee" shall mean any permitted sublicensee of
-----------
the rights granted Company under this Agreement, as further
described in Section 2.2.
1.10 "Term" shall mean the term of this Agreement as further
----
defined in Section 8.1. below.
1.11 "Sponsored Research Agreement" shall mean the Sponsored
----------------------------
Research Agreement dated the date hereof between Company and
University.
1.12 "Technical Information" shall mean University's
---------------------
proprietary, technical information pertinent to the manufacture,
use or sale of Licensed Products under Patent Rights including
trade secrets, know-how, techniques, specifications and
procedures now in existence.
1.13 "Valid Claim" shall mean any claim that has not been
-----------
held invalid or unenforceable by a court of competent
jurisdiction.
2. Grant of Rights.
---------------
2.1 License Grant.
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(a) Tri-Exclusive License. Subject to the terms of
---------------------
this Agreement, University hereby grants to Company and its
Affiliates a worldwide, royalty-bearing license (with the right
to sublicense) under its rights in the Patent Rights to develop,
make, have made, use, and sell Licensed Products and to develop
and perform Licensed Services in the Field. University shall
have the right at any time within sixty (60) days of the
Effective Date, to grant licenses under the Patent Rights to two
(2) additional companies University shall notify Company of the
grant of such licenses and shall identify the licensees, but
shall not be required to disclose any terms of such licenses.
Subject only to the possible grant of license rights to two
additional companies hereunder, the license granted hereunder is
and shall remain exclusive.
(b) Exclusive License. In the event that University
-----------------
fails to grant any additional licenses under the Patent Rights
within sixty (60) days after the Effective Date, the license
grant set forth in this Section 2.1. shall be exclusive to
Company, and certain terms of this Agreement shall be modified as
follows: (i) the license initiation fee set forth in Section
4.1. below shall be increased to sixty thousand dollars ($60,000)
and (ii) the royalty rate set forth in Section 4.4. below shall
be increased to six percent (6%) of Net Sales.
(c) Non-Exclusive License Option. University hereby
----------------------------
grants Company a right to negotiate a worldwide, royalty-bearing,
non-exclusive license (without the right to sublicense) under the
Patent Rights to develop, make, have made, use, and sell products
and services for applications with tissues other than bone (the
"Negotiation Right"). The Negotiation Right shall expire if not
exercised within five (5) years after the Effective Date. If
Company elects to exercise the Negotiation Right, University and
Company shall negotiate in good faith a license agreement
containing commercially reasonable terms and conditions. If
University and Company are unable to reach agreement within six
(6) months after Company exercised the Negotiation Right,
University shall have no further obligation under this Section
2.1(c).
2.2 Sublicenses. Company shall have the right to grant
-----------
sublicenses of its rights under Section 2.1. with the consent of
University, which consent shall not be unreasonably withheld or
delayed. All sublicense agreements executed by Company pursuant
to this Article 2 shall expressly bind the Sublicensee to the
terms of this Agreement and shall provide for the automatic
assignment of such agreement to University if this Agreement is
terminated as described in Article 8 below. Company shall
promptly furnish University with a fully executed copy of any
such sublicense agreement.
2.3 Retained Rights.
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(a) University. University retains the right to make
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and use Licensed Products and to perform Licensed Services for
academic research and patient care, without payment of
compensation to Company. University may license its retained
rights under this Section to research collaborators of University
faculty members, post-doctoral fellows, and students.
(b) Federal Government. To the extent that any
------------------
invention claimed in the Patent Rights has been partially funded
by the federal government, this Agreement and the grant of any
rights in such Patent Rights are subject to and governed by
federal law as set forth in 35 U.S.C. Sections 201-211, and the
regulations promulgated thereunder, as amended, or any successor
statutes or regulations. Company acknowledges that these
statutes and regulations reserve to the federal government a
royalty-free, non-exclusive, nontransferable license to practice
any government-funded invention claimed in any Patent Rights. If
any term of this Agreement fails to conform with such laws and
regulations, the relevant term shall be deemed an invalid
provision and modified in accordance with Section 10.10.
3. Obligations Relating to Commercialization.
-----------------------------------------
3.1 Diligence Requirements. Company shall use diligent
----------------------
efforts, or shall cause its Affiliates or Sublicensees to use
diligent efforts, to develop Licensed Products or Licensed
Services and to introduce Licensed Products or Licensed Services
into the commercial market; thereafter, Company or its Affiliates
or Sublicensees shall make Licensed Products or Licensed Services
reasonably available to the public. Company shall have
conclusively satisfied its obligations under this Section 3.1. if
Company or an Affiliate or Sublicensee fulfills the following
obligations:
(1) Within six (6) months after the Effective Date,
Company shall furnish University with a written research and
development plan under which Company intends to develop
Licensed Products or Licensed Services.
(2) Within sixty (60) days after each anniversary of
the Effective Date, Company shall furnish University with a
written report on the progress of its efforts during the
prior year to develop and commercialize Licensed Products or
Licensed Services, including without limitation research and
development efforts, efforts to obtain regulatory approval,
marketing efforts, and sales figures. Once a beta prototype
has been produced, the report shall also contain a
discussion of intended efforts and sales projections for the
current year.
(3) Develop prototype bone density system and
demonstrate feasibility by December 31, 1997.
(4) File a 510(k) application for a Licensed Product
with the United States FDA by December 31, 1998.
In the event that University determines that Company (or an
Affiliate or Sublicensee) has not fulfilled its obligations under
this Section 3.1., University shall furnish Company with written
notice of such determination. Within sixty (60) days after
receipt of such notice, Company shall either (i) fulfill the
relevant obligation, (ii) in the case of an obligation that is
not susceptible of prompt fulfillment, commence and continuously
prosecute such fulfillment, or (iii) negotiate with University a
mutually acceptable schedule of revised diligence obligations,
failing which University shall have the right, immediately upon
written notice to Company, to terminate this Agreement or to
render non-exclusive the license granted under this Agreement.
3.2 Indemnification.
---------------
(a) Indemnity. Company shall indemnify, defend, and
---------
hold harmless University and its trustees, 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 of litigation) incurred by or imposed upon any of
the Indemnitees in connection with any claims, suits, actions,
demands or judgments arising out of any negligence, willful
misconduct, or sale of a defective product or service by the
University under 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, or sold pursuant to any right or license granted under this
Agreement; provided, however, that such indemnification shall not
apply to any liability, damage, loss, or expense to the extent
directly attributable to (i) the negligent activities or
intentional misconduct of the Indemnitees or (ii) the settlement
of a claim, suit, action, or demand by Indemnitees without the
prior written approval of Company.
(b) Procedures. The Indemnitees agree to provide
----------
Company with prompt written notice of any claim, suit, action,
demand, or judgment for which indemnification is sought under
this Agreement. Company agrees, at its own expense, to provide
attorneys reasonably acceptable to University to defend against
any such claim. The Indemnitees shall cooperate fully with
Company in such defense and will permit Indemnitor 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
Company, if representation of such Indemnitee by the counsel
retained by Company would be inappropriate because of actual or
potential differences in the interests of such Indemnitee and any
other party represented by such counsel. Company agrees to keep
University informed of the progress in the defense and
disposition of such claim and to consult with University with
regard to any proposed settlement.
(c) Insurance. Company shall, from and after the
---------
first sale of a Licensed Product or a Licensed Service, maintain
insurance or self-insurance that is reasonably adequate to
fulfill any potential obligation to the Indemnitees, but in any
event not less than one million dollars ($1,000,000) for injuries
to any one person arising out of a single occurrence and three
million dollars ($3,000,000) for injuries to all persons arising
out of a single occurrence. Company shall provide University,
upon request, with written evidence of such insurance or
self-insurance. Company shall continue to maintain such
insurance or self-insurance after the expiration or termination
of this Agreement during any period in which Company or any
Affiliate or Sublicensee continues (i) to make, use, or sell a
product that was a Licensed Product under this Agreement or (ii)
to perform a service that was a Licensed Service under this
Agreement, and thereafter for a period of five (5) years.
3.3 Use of University Name. In accordance with Section
----------------------
7.3., Company and its Affiliates and Sublicensees shall not use
the name "University of Massachusetts" or any variation of that
name in connection with the marketing or sale of any Licensed
Products or Licensed Services.
3.4 Marking of Licensed Products. To the extent
----------------------------
commercially feasible and consistent with prevailing business
practices, Company shall xxxx, and shall cause its Affiliates and
Sublicensees to xxxx, all Licensed Products that are manufactured
or sold under this Agreement with the number of each issued
patent under the Patent Rights that applies to such Licensed
Product.
3.5 Compliance with Law. Company shall comply with, and
-------------------
shall ensure that its Affiliates and Sublicensees comply with,
all local, state, federal, and international laws and regulations
relating to the development, manufacture, use, and sale of
Licensed Products and Licensed Services. Company expressly
agrees to comply with the following:
(i) Company or its Affiliates or Sublicensees shall
obtain all necessary approvals from the United States Food &
Drug Administration and any similar governmental authorities
of any foreign jurisdiction in which Company or an Affiliate
or Sublicensee intends to make, use, or sell Licensed
Products or to perform Licensed Services.
(ii) Company and its Affiliates and Sublicensees shall
comply with all United States laws and regulations
controlling the export of certain commodities and technical
data, including without limitation all Export Administration
Regulations of the United States Department of Commerce.
Among other things, these laws and regulations prohibit, or
require a license for, the export of certain types of
commodities and technical data to specified countries.
Company hereby gives written assurance that it will comply
with, and will cause its Affiliates and Sublicensees to
comply with, all United States export control laws and
regulations, that it bears sole responsibility for any
violation of such laws and regulations by itself or its
Affiliates or Sublicensees, and that it will indemnify,
defend, and hold University harmless (in accordance with
Section 3.2.) for the consequences of any such violation.
(iii) To the extent that any invention claimed in
the Patent Rights has been partially funded by the United
States government, and only to the extent required by
applicable laws and regulations, Company agrees that any
Licensed Products used or sold in the United States will be
manufactured substantially in the United States or its
territories. Current law provides that if domestic
manufacture is not commercially feasible under the
circumstances, University may seek a waiver of this
requirement from the relevant federal agency on behalf of
Company.
3.6 Cooperation. University shall provide reasonable
-----------
technical cooperation in assisting Company in its
commercialization efforts, including without limitation by making
its Technical Information available to Company from time to time
upon Company's request.
4. Consideration for Grant of Rights.
---------------------------------
4.1 License Fee. In partial consideration of the rights
-----------
granted Company under this Agreement, Company shall pay to
University, within thirty (30) days after the Effective Date, the
following license fee payments: (i) a license initiation fee of
twenty-five thousand dollars ($25,000) and (ii) a payment
reimbursing University for patent-related expenses incurred as of
the Effective Date, which amount shall be pro-rated among each
licensee of the Patent Rights. These license fee payments are
nonrefundable and are not creditable against any other payments
due to University under this Agreement.
4.2 License Maintenance Fee. Company shall pay to
-----------------------
University an annual license maintenance fee in the amount of ten
thousand dollars ($10,000) on the second, third, fourth, and
fifth anniversaries of the Effective Date. This annual license
maintenance fee is nonrefundable and is not creditable against
any other payments due to University under this Agreement.
4.3 Milestone Payments. Company shall pay University the
------------------
following milestone payments within thirty (30) days after the
occurrence of each event:
$75,000 installation of a beta test site
$100,000 first commercial sale of FDA-approved product
These milestone payments are nonrefundable and are not creditable
against any other payments due to University under this
Agreement.
4.4 Royalties.
----------
(a) Base Royalty. In partial consideration of the
------------
rights granted Company under this Agreement, Company shall pay to
University a royalty of five percent (5%) of Net Sales of
Licensed Products and Licensed Services by Company and its
Affiliates and Sublicensees. In the event that Company is
legally required to make royalty payments to one or more third
parties in order to make, use, or sell Licensed Products or to
perform Licensed Services, the royalty rate set forth above shall
be reduced to three percent (3%) on Net Sales of such Licensed
Products and Licensed Services.
(b) No Multiple Royalties. No multiple royalties
---------------------
shall be payable because a particular Licensed Product or its
manufacture, use, or sale are or shall be covered by more than
one patent application or patent included within the Patent
Rights; however, a separate royalty shall be payable on the
performance of a Licensed Service and on the sale of a Licensed
Product which is used to perform that Licensed Service.
4.5 Minimum Royalty. In each calendar year during the
---------------
Term, commencing with the fourth anniversary of the Effective
Date, University shall receive a minimum royalty payment in the
amount of fifteen thousand dollars ($15,000) per year. If the
actual royalty payments to University in any calendar year are
less than the minimum royalty payment required for that year,
Company shall have the right to pay University the difference
between the actual royalty payment and the minimum royalty
payment in full satisfaction of its obligations under this
Section, and shall pay this amount to University within sixty
(60) days after the conclusion of the calendar year. Waiver of
any minimum royalty payment by University shall not be construed
as a waiver of any subsequent minimum royalty payment. If
Company fails to make any minimum royalty payment within the
sixty-day period, such failure shall constitute a material breach
of its obligations under this Agreement, and University shall
have the right to terminate this Agreement in accordance with
Section 8.3.
5. Royalty Reports; Payments; Records.
----------------------------------
5.1 First Sale. Company shall report to University the
----------
date of first commercial sale of each Licensed Product and the
date of first commercial performance of each Licensed Service
within thirty (30) days of occurrence in each country.
5.2 Reports and Payments. Within sixty (60) days after the
--------------------
conclusion of each Royalty Period, Company shall deliver to
University a report containing the following information:
(i) the number of Licensed Products sold to
independent third parties in each country, and the number of
Licensed Products used by Company and its Affiliates and
Subleases in the provision of Licensed Services and other
services in each country;
(ii) the number of Licensed Services provided by
Company and its Affiliates and Sublicensees in each country;
(iii) the gross sales price for each Licensed
Product and the gross charge for each Licensed Service by
Company and its Affiliates and Sublicensees during the
applicable Royalty Period in each country;
(iv) calculation of Net Sales for the applicable
Royalty Period in each country, including a listing of
applicable deductions;
(v) total royalty payable on Net Sales in U.S.
dollars, together with the exchange rates used for
conversion; and
(vi) withholding taxes, if any, required by law to be
deducted as a payment by University in respect of such Net
Sales.
All such reports shall be considered Company Confidential
Information. If no royalties are due to University for any
Royalty Period, the report shall so state. Concurrent with this
report, Company shall remit to University any payment due for the
applicable Royalty Period. University shall instruct Company as
to the method of payment.
5.3 Payments in U.S. Dollars. Except as otherwise provided
------------------------
in section 5.4, all payments due under this Agreement shall be
payable in United States dollars. Conversion of foreign currency
to U.S. dollars shall be made at the conversion rate existing in
the United States (as reported in the Wall Street Journal) on the
-------------------
last working day of the calendar quarter preceding the applicable
Royalty Period. Such payments shall be without deduction of
exchange, collection, or other charges.
5.4 Payments in Other Currencies. If by law, regulation,
----------------------------
or fiscal policy of a particular country, conversion into United
States dollars or transfer of funds of a convertible currency to
the United States is restricted or forbidden, Company shall give
University prompt written notice of such restriction, which
notice shall satisfy the sixty-day payment deadline described in
Section 5.2. Company shall pay any amounts due University
through whatever lawful methods University reasonably designates;
provided, however, that if University fails to designate such
payment method within thirty (30) days after University is
notified of the restriction, Company may deposit such payment in
local currency to the credit of University in a recognized
banking institution selected by Company and identified by written
notice to University, and such deposit shall fulfill all
obligations of Company to University with respect to such
payment.
5.5 Records. Company shall maintain, and shall cause its
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Affiliates and Sublicensees to maintain, complete and accurate
records of Licensed Products and Licensed Services that are made,
used, sold, or performed under this Agreement and any amounts
payable to University in relation to such Licensed Products and
Licensed Services, which records shall contain sufficient
information to permit University to confirm the accuracy of any
reports delivered to University under Section 2. The relevant
party shall retain such records relating to a given Royalty
Period for at least three (3) years after the conclusion of that
Royalty Period, during which time University shall have the
right, at its expense, to cause its internal accountants or an
independent, certified public accountant to inspect such records
during normal business hours for the sole purpose of verifying
any reports and payments delivered under this Agreement. Such
accountant shall not disclose to University any information other
than information relating to accuracy of reports and payments
delivered under this Agreement. The parties shall reconcile any
underpayment or overpayment within thirty (30) days after the
accountant delivers the results of the audit. In the event that
any audit performed under this Section reveals an underpayment in
excess of ten percent (10%) in any Royalty Period, Company shall
bear the full cost of such audit. University may exercise its
rights under this Section only once every year and only with
reasonable prior notice to Company.
5.6 Late Payments. Any payments by Company that are not
-------------
paid on or before the date such payments are due under this
Agreement shall bear interest, to the extent permitted by law, at
two percentage points above the Prime Rate of interest as
reported in the Wall Street Journal on the date payment is due,
---- --------------
with interest calculated based on the number of days that payment
is delinquent.
6. Patents and Infringement.
------------------------
6.1 Responsibility for Patent Rights. University shall
--------------------------------
have primary responsibility for the preparation, filing,
prosecution, and maintenance of all Patent Rights, using patent
counsel reasonably acceptable to Company. University shall
consult with Company as to the preparation, filing, prosecution,
and maintenance of all such Patent Rights reasonably prior to any
deadline or action with the U.S. Patent & Trademark Office or any
foreign patent office and shall furnish Company with copies of
all relevant documents reasonably in advance of such
consultation.
6.2 Payment of Expenses. Within thirty (30) days after
-------------------
University invoices Company, Company shall reimburse University
for its pro-rata share (determined by the number of licenses of
the Patent Rights) of all reasonable patent-related expenses
incurred by University pursuant to Section 6.1. Company may
credit any such patent-related expenses in excess of twenty-five
thousand dollars ($25,000) per calendar year against royalties
due to University under Section 4.4., provided that in no event
shall the effective royalty rate set forth in Section 4.4. be
reduced below three percent (3%). Unused credits may be carried
over for use in future Royalty Periods. Company may elect, upon
sixty (60) days' written notice to University, to cease payment
of the expenses associated with obtaining or maintaining patent
protection for one or more Patent Rights in one or more
countries. In such event, Company shall lose all rights under
this Agreement with respect to such Patent Rights in such
countries.
6.3 Abandonment. In the event that University desires to
-----------
abandon any patent or patent application within the Patent
Rights, University shall provide each licensee of the relevant
Patents Right with reasonable prior written notice of such
intended abandonment, and such licensees shall have the right, as
they mutually agree and at their own expense, to prepare, file,
prosecute, and maintain the relevant Patent Right.
6.4 Infringement.
------------
(a) Notification of Infringement. Each party agrees
----------------------------
to provide written notice to the other party promptly after
becoming aware of any infringement of the Patent Rights.
(b) Company Right to Prosecute. Company shall have
--------------------------
the right, together with other licensees of the Patent Rights, as
they mutually agree and at their own expense, to prosecute any
third party infringement of the Patent Rights or to defend the
Patent Rights in any declaratory judgment action brought by a
third party which alleges invalidity, unenforceability, or
non-infringement of the Patent Rights. Prior to commencing any
such action, Company shall consult with University and shall
consider the views of University regarding the advisability of
the proposed action and its effect on the public interest.
Company shall not enter into any settlement, consent judgment, or
other voluntary final disposition of any infringement action
under this Subsection without the prior written consent of
University, which consent shall not be unreasonably withheld,
conditioned or delayed. Any recovery obtained in an action under
this Subsection shall be distributed as follows: (i) each party
shall be reimbursed for any expenses incurred in the action, (ii)
as to ordinary damages, Company shall receive an amount equal to
its lost profits or a reasonable royalty on the infringing sales
(whichever measure of damages the court shall have applied), less
a reasonable approximation of the royalties that Company would
have paid to University if Company had sold the infringing
products and services rather than the infringer, and (iii) as to
special or punitive damages, the parties shall share equally in
any award.
(c) University as Indispensable Party. University
---------------------------------
shall permit any action under this Section to be brought in its
name if required by law, provided that Company shall hold
University harmless from, and if necessary indemnify University
against, any costs, expenses, or liability that University may
incur in connection with such action.
(d) University Right to Prosecute. In the event that
-----------------------------
Company fails to initiate an infringement action within a
reasonable time after it first becomes aware of the basis for
such action, or to answer a declaratory judgment action within a
reasonable time after such action is filed, University shall have
the right to prosecute such infringement or answer such
declaratory judgment action, under its sole control and at its
sole expense, and any recovery obtained shall be given to
University.
(e) Cooperation. Each party agrees to cooperate fully
-----------
in any action under this Section 6.4. which is controlled by the
other party, provided that the controlling party reimburses the
cooperating party promptly for any costs and expenses incurred by
the cooperating party in connection with providing such
assistance.
7. Confidential Information; Publications; Publicity.
-------------------------------------------------
7.1 Confidential Information.
------------------------
(a) Destination. Confidential Information that is
-----------
disclosed in writing shall be marked with a legend indicating its
confidential status (such as "Confidential" or "Proprietary").
Confidential Information that is disclosed orally or visually
shall be documented in a written notice prepared by the
Disclosing Party and delivered to the Receiving Party within
thirty (30) days of the date of disclosure; such notice shall
summarize the Confidential Information disclosed to the Receiving
Party and reference the time and place of disclosure.
(b) Obligations. For a period of five (5) years after
-----------
disclosure of any portion of Confidential Information, the
Receiving Party shall (i) maintain such Confidential Information
in strict confidence, except that the Receiving Party may
disclose or permit the disclosure of any Confidential Information
to its directors, officers, employees, consultants, and advisors
who are obligated to maintain the confidential nature of such
Confidential Information and who need to know such Confidential
Information for the purposes of this Agreement; (ii) use such
Confidential Information solely for the purposes of this
Agreement; and (iii) allow its trustees or directors, officers,
employees, consultants, and advisors to reproduce the
Confidential Information only to the extent necessary for the
purposes of this Agreement, with all such reproductions being
considered Confidential Information.
(c) Exceptions. The obligations of the Receiving
----------
Party under Subsection 7.1.(b) above shall not apply to the
extent that the Receiving Party can demonstrate that certain
Confidential Information (i) was in the public domain prior to
the time of its disclosure under this Agreement; (ii) entered the
public domain after the time of its disclosure under this
Agreement through means other than an unauthorized disclosure
resulting from an act or omission by the Receiving Party; (iii)
was independently developed or discovered by the Receiving Party
without use of the Confidential Information; (iv) is or was
disclosed to the Receiving Party at any time, whether prior to or
after the time of its disclosure under this Agreement, by a third
party having no fiduciary relationship with the Disclosing Party
and having no obligation of confidentiality with respect to such
Confidential Information; or (v) is required to be disclosed to
comply with applicable laws or regulations, or with a court or
administrative order, provided that the Disclosing Party receives
reasonable prior written notice of such disclosure.
(d) Ownership and Return. The Receiving Party
--------------------
acknowledges that the Disclosing Party (or any third party
entrusting its own information to the Disclosing Party) claims
ownership of its Confidential Information in the possession of
the Receiving Party. Upon the expiration or termination of this
Agreement, and at the request of the Disclosing Party, the
Receiving Party shall retum to the Disclosing Party all
originals, copies, and summaries of documents, materials, and
other tangible manifestations of Confidential Information in the
possession or control of the Receiving Party, except that the
Receiving Party may retain one copy of the Confidential
Information in the possession of its legal counsel solely for the
purpose of monitoring its obligations under this Agreement
7.2 Publications. University and its employees will be
------------
free to publicly disclose (through journals, lectures, or
otherwise) the results of any research relating to the subject
matter of the Patent Rights, except as otherwise provided by
written agreement between University and Company (such as in a
separate sponsored research agreement).
7.3 Publicity Restrictions. Company shall not use the name
----------------------
of University or any of its trustees, officers, faculty,
students, employees, or agents, or any adaptation of such names,
or any terms of this Agreement, in any promotional material or
other public announcement or disclosure without the prior written
consent of University. The foregoing notwithstanding, Company
shall have the right to disclose such information without the
consent of University (i) in any prospectus, offering memorandum,
or other document or filing required by applicable securities
laws or other applicable law or regulation, provided that Company
shall have given University at least ten (10) days' prior written
notice of the proposed text for the purpose of giving University
the opportunity to comment on such text, and (ii) to potential
investors under a non-disclosure obligation. To the extent
permitted by applicable law, University will not publicly
disclose the terms of this Agreement without the prior written
consent of Company.
8. Term and Termination.
--------------------
8.1 Term. This Agreement shall commence on the Effective
----
Date and shall remain in effect until the expiration of all
issued patents within the Patent Rights, unless earlier
terminated in accordance with the provisions of this Agreement.
8.2 Voluntary Termination by Company. Company shall have
--------------------------------
the right to terminate this Agreement, for any reason, upon
ninety (90) days' prior written notice to University.
8.3 Termination for Default. In the event that either
-----------------------
party commits a material breach of its obligations under this
Agreement and fails to cure that breach within sixty (60) days
after receiving written notice thereof, the other party may
terminate this Agreement immediately upon written notice to the
party in breach. If an alleged breach involves nonpayment of any
amounts due Institution under this Agreement, the sixty-day
notice period shall be reduced to a fifteen-day notice period
after the first such breach.
8.4 Force Majeure. Neither party will be responsible for
-------------
delays resulting from causes beyond the reasonable control of
such party, including without limitation fire, explosion, flood,
war, strike, or riot, provided that the nonperforming party uses
commercially reasonable efforts to avoid or remove such causes of
nonperformance and continues performance under this Agreement
with reasonable dispatch whenever such causes are removed.
8.5 Effect of Termination. The following provisions shall
---------------------
survive the expiration or termination of this Agreement: Articles
1 and 9; Sections 3.2., 3.5., 5.2. (obligation to provide final
report and payment), 5.3., 5.4., 5.5., 5.6., 6.2. (solely with
respect to expenses incurred prior to the expiration or
termination of this Agreement), 7.1., 7.2., 7.3., 8.5., 10.8.,
and 10.9. Upon the early termination of this Agreement, Company
and its Affiliates and Sublicensees may complete and sell any
work-in-progress and inventory of Licensed Products that exist as
of the effective date of termination, provided that (i) Company
is current in payment of all amounts due University under this
Agreement, (ii) Company pays University the applicable royalty on
such sales of Licensed Products in accordance with the terms and
conditions of this Agreement, and (iii) Company and its
Affiliates and Sublicensees shall complete and sell all
work-in-progress and inventory of Licensed Products within twelve
(12) months after the effective date of termination.
9. Dispute Resolution.
------------------
9.1 Procedures Mandatory. The parties agree that any
--------------------
dispute arising out of or relating to this Agreement shall be
resolved solely by means of the procedures set forth in this
Article, and that such procedures constitute legally binding
obligations that are an essential provision of this Agreement;
provided, however, that all procedures and deadlines specified in
this Article may be modified by written agreement of the parties.
If either party fails to observe the procedures of this Article,
as modified by their written agreement, the other party may bring
an action for specific performance in any court of competent
jurisdiction
9.2 Dispute Resolution Procedures.
-----------------------------
(a) Negotiation. In the event of any dispute arising
-----------
out of or relating to this Agreement, the affected party shall
notify the other party, and the parties shall attempt in good
faith to resolve the matter within ten (10) days after the date
of such notice (the "Notice Date"). Any disputes not resolved by
good faith discussions shall be referred to senior executives of
each party, who shall meet at a mutually acceptable time and
location within thirty (30) days after the Notice Date and
attempt to negotiate a settlement.
(b) Mediation. If the matter remains unresolved
---------
within sixty (60) days after the Notice Date, or if the senior
executives fail to meet within thirty (30) days after the Notice
Date, either party may initiate mediation upon written notice to
the other party, whereupon both parties shall be obligated to
engage in a mediation proceeding under the then current Center
for Public Resources ("CPR") Model Procedure for Mediation of
Business Disputes, except that specific provisions of this
Section shall override inconsistent provisions of the CPR Model
Procedure. The mediator will be selected from the CPR Panels of
Neutrals. If the parties cannot agree upon the selection of a
mediator within ninety (90) days after the Notice Date, then upon
the request of either party, the CPR shall appoint the mediator.
The parties shall attempt to resolve the dispute through
mediation until one 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 one hundred
and twenty (120) days after the Notice Date.
(c) Trial Without Jury. If the parties fail to
------------------
resolve the dispute through mediation, or if neither 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.
9.3 Preservation of Rights Pending Resolution.
-----------------------------------------
(a) Performance to Continue. Each party shall
-----------------------
continue to perform its obligations under this Agreement pending
final resolution of any dispute arising out of or relating to
this Agreement; provided, however, that a party may suspend
performance of its obligations during any period in which the
other party fails or refuses to perform its obligations.
(b) Provisional Remedies. Although the procedures
--------------------
specified in this Article are the sole and exclusive procedures
for the resolution of disputes arising out of or relating to this
Agreement, either party may seek a preliminary injunction or
other provisional equitable relief if, in its reasonable
judgment, such action is necessary to avoid irreparable harm to
itself or to preserve its rights under this Agreement.
(c) Statute of Limitations. The parties agree that
----------------------
all applicable statutes of limitation and time-based defenses
(such as estoppel and laches) shall be tolled while the
procedures set forth in Subsections 9.2.(a) and 9.2(b) are
pending. The parties shall take any actions necessary to
effectuate this result.
10. Miscellaneous.
-------------
10.1 Representations and Warranties of University.
--------------------------------------------
University hereby represents and warrants as follows:
(i) It has the full legal power, authority and right
to grant the license under the Patent Rights contained in
this Agreement and to perform its obligations under this
Agreement and upon execution and delivery by Company, this
Agreement will constitute valid and binding agreements of
University enforceable against it in accordance with its
terms.
(ii) It is the sole owner by assignment of all right,
title and interest in and to the Patent Rights.
(iii) Except for the two other licenses referred to
elsewhere herein, no other person or organization presently
has any assignment, option, or license under the Patent
Rights with respect to the manufacture, use or sale of
Licensed Products or Licensed Services in the Field in the
U.S. or anywhere in the world.
(iv) Execution, delivery and consummation of this
Agreement will not result in the breach of or give rise to
cause for termination of any agreement or contract to which
University may be a party. After the date hereof,
University shall not enter into any agreement or take or
fail to take any action which shall restrict its legal night
to grant to Company the rights and benefits contemplated
under this Agreement. UNIVERSITY MAKES NO OTHER WARRANTIES
CONCERNING THE PATENT RIGHTS, INCLUDING WITHOUT LIMITATION
ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE. Specifically, University
makes no warranty or representation (i) regarding the
validity or scope of the Patent Rights, (ii) that the
exportation of the Patent Rights or any Licensed product or
Licensed Service will not infringe any patents or other
intellectual property rights of a third party, and (iii)
that any third party is not currently infringing or will not
infringe the Patent Rights.
10.2 Representations and Warranties of Company. Company
-----------------------------------------
hereby represents and warrants as follows:
(i) It has the full legal power, authority and right
to grant the upon to license contained in this Agreement and
to perform its obligations under this Agreement and upon
execution and delivery by University, this Agreement will
constitute valid and binding agreements of Company
enforceable against it in accordance with its terms.
(ii) Execution, delivery and consummation of this
Agreement will not result in the breach of or give rise to
cause for termination of any agreement or contract to which
Company or its Affiliates may be a party. Neither Company
nor any of its Affiliates after the date hereof shall enter
into any agreement or take or fail to take any action which
shall restrict its legal right to grant to Institution the
rights and benefits contemplated under this Agreement.
10.3 Tax-exempt Status. Company acknowledges that
-----------------
University, as a public institution of the Commonwealth of
Massachusetts, holds the status of an exempt organization under
the United States Internal Revenue Code. Company also
acknowledges that certain facilities in which the licensed
inventions were developed may have been financed through
offerings of tax exempt bonds. If the Internal Revenue Service
determines, or if counsel to University reasonably determines,
that any term of this Agreement jeopardizes the tax-exempt status
of University or the bonds used to finance University facilities,
the relevant term shall be deemed an invalid provision and
modified in accordance with Section 10.10.
10.4 Counterparts. This Agreement may be executed in one or
------------
more counterparts, each of which shall be deemed an original, and
all of which together shall be deemed to be one and the same
instrument.
10.5 Headings. All headings are for convenience only and
--------
shall not affect the meaning of any provision of this Agreement.
10.6 Binding Effect. This Agreement shall be binding upon
--------------
and inure to the benefit of the parties and their respective
permitted successors and assigns.
10.7 Assignment. This Agreement may not be assigned by
----------
either party without the prior written consent of the other
party, except that Company may assign this Agreement to an
affiliate or to a successor in connection with the merger,
consolidation, or sale of all or substantially all of its assets
or that portion of its business to which this Agreement relates.
10.8 Amendment and Waiver. This Agreement may be amended,
--------------------
supplemented, or otherwise modified only by means of a written
instrument signed by both parties. Any waiver of any rights or
failure to act in a specific instance shall relate only to such
instance and shall not be construed as an agreement to waive any
nights or fail to act in any other instance, whether or not
similar.
10.9 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the Commonwealth of
Massachusetts irrespective of any conflicts of law principles.
10.10 Notice. Any notices required or permitted under
------
this Agreement shall be in writing, shall specifically refer to
this Agreement, and shall be sent by hand, recognized national
overnight courier, confirmed facsimile transmission, confirmed
electronic mail, or registered or certified mail, postage
prepaid, return receipt requested, to the following addresses or
facsimile numbers of the companies:
If to University:
Office of Commercial Ventures and Intellectual Property
University of Massachusetts
00 Xxxx Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx F.X. XxXxxxx
Executive Director
Tel: (000) 000-0000
Fax: (000) 000-0000
If to Company:
CompuMed Inc.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx Xxxxx, XX 00000
Attention: President
Tel: (000) 000-0000
Fax: (000) 000-0000
All notices under this Agreement shall be deemed effective upon
receipt. A party may change its contact information immediately
upon written notice to the other party in the manner provided in
this Section.
10.11 Severability. In the event that any provision of
------------
this Agreement shall be held invalid or unenforceable for any
reason, such invalidity or unenforceability shall not affect any
other provision of this Agreement, and the parties shall
negotiate in good faith to modify the Agreement to preserve (to
the extent possible) their original intent. If the parties fail
to reach a modified agreement within sixty (60) days after the
relevant provision is held invalid or unenforceable, then the
dispute shall be resolved in accordance with the procedures set
forth in Article 9. While the dispute is pending resolution,
this Agreement shall be construed as if such provision were
deleted by agreement of the parties.
10.12 Entire Agreement. This Agreement constitutes the
----------------
entire agreement between the parties with respect to its subject
matter and supersedes all prior agreements or understandings
between the parties relating to its subject matter.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed by their duly authorized representatives as of the
date first written above.
UNIVERSITY OF MASSACHUSETTS COMPUMED, INC.
By:/s/ Xxxxxx F.X. XxXxxxx By: /s/ Xxx X. Xxxxxxxxx
------------------------- ----------------------------
Xxxxxx F.X. XxXxxxx Xxx X. Xxxxxxxxx
Executive Director, CVIP President and Chief
Executive Officer
EXHIBIT A
List of Patent Rights
---------------------
Patent Rights
-------------
U.S. Patents No. 5,465,284 and 5,150,394 entitled "System for
Quantitative Radiographic Imaging"
