AGREEMENT
This Agreement, which shall be effective as of December 31, 1997, is
between OrthoLogic Corp. And Chrysalis BioTechnology, Inc. Based on the mutual
consideration between the parties recited below, the parties agree as follows:
I. BACKGROUND AND PARTIES
1.1 Chrysalis. Chrysalis BioTechnology, Inc. ("Chrysalis") is a Texas
corporation, having a principal place of business at 0000 Xxxxxx, Xxxxx 000,
Xxxxxxxxx, XX 00000.
1.2 OrthoLogic. OrthoLogic Corp. ("OrthoLogic") is a Delaware
corporation, having a principal place of business at 0000 Xxxxx 00xx Xxxxxx,
Xxxxxxx XX 00000.
1.3 The Technology. Chrysalis owns or holds comprehensive license
rights relating to a technology known as the "Chrysalis Technology," as defined
below.
1.4 Options and Licenses. OrthoLogic desires to acquire from Chrysalis
and Chrysalis desires to grant to OrthoLogic options to license the Chrysalis
Technology and related patents which are owned by or licensed to Chrysalis for
end-product development, manufacture, and sales of products for "Orthopaedic
Applications," as defined below, under the terms and conditions contained in
this Agreement.
1.5 The LOI. Chrysalis and OrthoLogic are parties to a Letter of Intent
(the "LOI") dated December 3, 1997 which addresses the transactions contemplated
by this Agreement. This Agreement is the "Definitive Agreement" contemplated by
the LOI, and replaces and supersedes the LOI for all purposes.
II. ADDITIONAL DEFINITIONS
2.1 "Affiliate" means any corporation or other business entity owned or
controlled by or under common ownership with OrthoLogic. For this purpose,
"controlled by" means direct or indirect beneficial ownership of at least 50% of
the voting stock or ownership interest in the income of such corporation or
other business entity.
2.2 "Chrysalis Technology" means the core technologies related to the
Patents, including the TP508 Peptide.
2.3 "Chrysalis Product" means TP508 or any related peptides, or any
other materials or products manufactured by or for Chrysalis and sold to
OrthoLogic for research, treatment of patients or resale.
2.4 "Commercialization" shall refer to the date of FDA market approval
for the first product application in any specific Orthopaedic Application..
2.5 "Licensed Products" means devices or materials, including but not
limited to TP508 and related peptides, all products using any of such materials,
Chrysalis Technology or any of the Technology Rights, and all other products
which, in the course of their manufacture, use, or sale would, in the absence of
this license, infringe one or more claims of any of the Patent Rights which have
not been finally adjudicated to be invalid by a court of competent jurisdiction.
2.6 "Net Sales" means gross sales, royalties or fees invoiced to
customers less only: returns and allowances actually granted, packing,
insurance, freight out, taxes or excise duties imposed on the transactions,
wholesale and cash discounts actually granted, and charges or portions of
charges disallowed by third party payors or care managers.
2.7 "Orthopaedic Applications" shall include, and be limited to, the
use of the Technology Rights in connection with: Treatment of fractures,
osteoarthritis or osteoporosis, treatment of damage to meniscus, ligament,
cartilage or tendon, preparation or application of segmental bone filling,
coating or preparation of bone or joint implants, and spinal fusion (bone
related).
2.8 "Patent Rights" means the ownership of or comprehensive license
rights to the Patents.
2.9 "Patents" means U.S. patents Number 5,352,664 and 5,500,412, all
related foreign patents, including patents issued in Europe, Canada and Japan,
and any divisional, continuation, and continuation-in-part applications and
patents based thereon, any reissues or extensions thereof, and any corresponding
or additional United States and foreign patent applications.
2.10 "Technology Rights" means the Patent Rights, plus the Chrysalis
Technology, and all related know-how, trade secrets and trademarks.
III. SHARE PURCHASE AND EVALUATION PERIOD
3.1 Preferred Stock. At the time this Agreement is executed, OrthoLogic
shall pay to Chrysalis, via direct wire transfer of funds into an account
specified by Chrysalis, $750,000 for 136,364 shares of the Series B Convertible
Preferred Stock of Chrysalis, at a purchase price of $5.50 per share, which will
constitute approximately 7.0% of the equity of Chrysalis upon the completion of
the current Series B Preferred offering. The rights of these shares are defined
in the Series B Private Placement Memorandum dated August 1997.
3.2 Evaluation Period. Beginning on the date of this Agreement,
OrthoLogic shall have a nine-month exclusive evaluation period for the Chrysalis
Technology with respect to all Orthopaedic Applications including pre-clinical
trials, FDA discussions and clinical trial planning.
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IV. OPTION GRANTS AND PAYMENTS
Chrysalis hereby grants to OrthoLogic a series of options to acquire
exclusive United States and worldwide licenses, as set forth below, to make or
have made, use, sell and sublicense Licensed Products under the Technology
Rights for Orthopaedic Applications of the type described. Each such license
shall run for the lives of all Patents and other patents owned by or licensed to
Chrysalis, and related to any Licensed Product, which are appropriate for the
territory licensed. In exchange, OrthoLogic shall make the payments described in
this Article IV. Such payments shall not be credited against royalties due
pursuant to Article V. Promptly after OrthoLogic gives Chrysalis notice of its
determination to proceed and exercise its option to secure any license described
below, the parties shall complete and execute a Patent License Agreement
containing all provisions contemplated by this Agreement and which otherwise is
in a form that is commercially reasonable for similar licenses. All payments
described herein shall be payable via wire transfer into an account specified by
Chrysalis.
a. At or before September 30, 1998, if OrthoLogic determines to
proceed, it shall pay an additional $750,000 to secure the exclusive United
States license for fracture applications.
b. On or before December 31, 1998, if OrthoLogic determines to proceed,
it shall pay an additional $250,000 to continue its option to expand its
exclusive United States license for fracture applications into an exclusive
worldwide license and to continue its option to license all other Orthopaedic
Applications.
c. On or before June 30, 1999, if OrthoLogic determines to proceed, it
shall pay an additional $500,000 to secure the exclusive United States license
for all Orthopaedic Applications (except for fracture applications, which would
already have been licensed).
d. On or before June 30, 1999, if OrthoLogic determines to proceed, it
shall pay an additional $1,000,000 to secure the exclusive worldwide license for
all Orthopaedic Applications, including fracture applications. The parties agree
to negotiate in good faith with respect to reasonable additional payments that
will be based on commercialization of TP508 outside the United States.
e. OrthoLogic shall pursue the following milestones on a best efforts
basis and make the following additional payments to Chrysalis upon the
occurrence of the events or at the required time noted in item (v), so long as
OrthoLogic, one of its Affiliates, or a sublicensing partner, is still
proceeding with the license or licenses contemplated by each such payment:
(i) $500,000 upon FDA approval of the IDE or IND to
initiate a fracture healing clinical trial.
(ii) $500,000 upon submission to the FDA of a PMA, NDA, or
equivalent application for the fracture healing
indication.
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(iii) $3,500,000 upon FDA approval for the fracture healing
indication.
(iv) $500,000 upon initiation of an FDA-approved clinical
trial for each new orthopaedic indication.
(v) If an FDA-approved clinical trial for the first
additional Orthopedic application has not been made
by June 30, 2000, the $500,000 payment will be made
in advance for the FDA approved clinical trial for
the first additional Orthopedic application.
(vi) $2,000,000 upon FDA approval of each new orthopaedic
indication.
f. If OrthoLogic fails to meet the milestones or does not use
reasonable efforts to commercialize Chrysalis Products in the United States,
provided that the conditions described in (h) below are met, (i) at any time,
Chrysalis shall have the option to convert the United States license to a
non-exclusive license, or (ii) at any time after June 30, 1999, Chrysalis shall
have the option to terminate the United States license completely.
g. If OrthoLogic exercises its right to secure the exclusive worldwide
license for all Orthopaedic Applications, and if OrthoLogic fails to meet the
milestones or does not use reasonable efforts to commercialize Chrysalis
Products internationally, provided that the conditions described in (h) below
are met, (i) at any time, Chrysalis shall have the option to convert the
worldwide license to a non-exclusive license, or (ii) at any time after June 30,
2000, Chrysalis shall have the option to terminate the worldwide license
completely.
h. In order to exercise the options described in (f) and (g) above,
Chrysalis shall give OrthoLogic 75 days written notice of the proposed
conversion or termination, provided that, in either case, the termination or
conversion shall not become effective if within the 75 days following the
effective date of the notice, OrthoLogic provides written evidence that it has
commercialized or is actively attempting to commercialize a Licensed Product
within the US or internationally as appropriate. Evidence provided by OrthoLogic
that it has an ongoing and active research, development, regulatory compliance,
manufacturing, marketing or licensing program as appropriate, directed toward
production and sale of Licensed Products within the US or internationally as
appropriate shall be deemed satisfactory evidence of using best efforts.
i. In the event that either the US or the World-wide license for a
specific application is forfeited by OrthoLogic, Chrysalis will have access to
all data collected specifically related to that application.
V. ROYALTIES
5.1 Percentages. After the parties have executed the first patent
license contemplated by this Agreement, OrthoLogic shall pay to Chrysalis for
such license and all other the licenses to the Technology Rights subsequently
granted hereunder, royalties for sales of Licensed Products calculated pursuant
to the table which follows this paragraph. For purposes of these calculations
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all sales under all licenses granted pursuant to this Agreement shall be
cumulated and treated as a single amount.
Incremental Sales Royalty Rate
First $20 million 8.0%
Next $30 million 6.0%
Next $50 million 5.0%
Next $100 million 4.0%
Over $200 million 2.5%
5.2 Minimums. For each year after Commercialization, regardless of
actual sales, OrthoLogic shall pay (for all licenses to all technology or patent
rights licensed from Chrysalis pursuant to this Agreement), during the first 12
months after Commercialization of at least $250,000, royalties of at least
$500,000 during the second 12 months after Commercialization, and royalties of
at least $750,000 during the third 12 months after Commercialization. In that
regard, OrthoLogic shall pay to Chrysalis a sufficient amount in its last
quarterly payment for each calendar year to reach the minimum annual royalty.
VI. PAYMENTS AND REPORTS
6.1 Reports. OrthoLogic shall provide to Chrysalis, on a quarterly
basis, a written report of all sales of Licensed Products for which a royalty is
due or payable under this Agreement. Such report shall be due within 45 days at
the end of each calendar quarter, whether or not royalties are due, and shall be
accompanied by a remittance from OrthoLogic to Chrysalis of all earned royalties
specified by Sections 5.1 and 5.2.
6.2 Records. OrthoLogic shall keep suitable books of records of all
manufacture, use, or sale of Licensed Products for which a royalty is due
hereunder for at least three years, unless in dispute, in which event they shall
be kept until such dispute is settled, and shall make such records available for
inspection by Chrysalis, or its designee, upon reasonable notice and during
normal hours of operation of OrthoLogic.
6.3 Third Party Contest. If a third party contests the validity of any
of the Patent Rights granted hereunder, OrthoLogic shall continue to pay
royalties with respect to that patent as if such contest were not underway until
the patent is adjudicated invalid or unenforceable by a court of last resort.
VII. TRANSFERS AND SUBLICENSES
OrthoLogic may transfer any Licensed Products to any Affiliates or
sublicensees without any such transfers being considered as sales of the
Licensed Products. OrthoLogic may also sublicense any of the license rights
granted hereunder provided that: (1) each Affiliate or sublicensee to which
OrthoLogic sublicenses agrees in writing to honor the terms of this
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Agreement and (2) OrthoLogic agrees to pay to Chrysalis milestone payments
described in Article IV and the earned royalty due under Section 4.2 for all Net
Sales of Licensed Products by any Affiliate or sublicensee just as if such Net
Sales were made directly by OrthoLogic.
VIII. PURCHASES OF CHRYSALIS PRODUCTS
8.1 Chrysalis to Manufacture. Except as provided in Article IX,
Chrysalis will retain all exclusive rights to manufacture TP508 or related
peptides to be used in Licensed Products, and in product development, for
Orthopaedic Applications, and OrthoLogic agrees to purchase such peptides
exclusively from Chrysalis for all preclinical studies, clinical trials, and
final end-product sales.
8.2 Materials Transfer Agreement. Promptly after the execution of this
Agreement, the parties will prepare and execute a materials transfer agreement,
with commercially reasonable terms, whereby, until the expiration of all patent
license agreements contemplated by this Agreement, Chrysalis will agree to
provide TP508 or related peptides for preclinical studies (GLP or equivalent,
lot verified) in 1 milligram vials (not sterile) for $150 per milligram or in 5
milligram vials (not sterilized) for $80 per milligram ($400 per vial). During
the term of any patent license agreement contemplated by this Agreement,
Chrysalis will also supply TP508 or related peptides for end-product manufacture
and commercial use, as follows: Small quantity vials (up to 3 micrograms per
vial), sterile, delivered, $15.00 each; and 5-10 gram bulk, non-sterile,
delivered $3.00 per microgram.
8.3 Payment. The purchase price for each Chrysalis Product purchased by
OrthoLogic shall be due and payable 30 days after the date of receipt by
OrthoLogic
8.4 Forecasts. During the first 90 days of 1998, with respect to 1998,
and no later than 30 days prior to the start of the year with respect to 1999
and later years, OrthoLogic and Chrysalis will agree to a reasonable forecast of
the number of Chrysalis Products, by type, that will be purchased from Chrysalis
by OrthoLogic during the appropriate calendar year and during each quarter
thereof. OrthoLogic will be required to purchase at least 100% of the quarterly
amounts as forecasted. However, OrthoLogic may revise each quarterly forecast
plus or minus 50% of the original forecasted amount, provided that changes to
the forecast for a quarter must be made no later than the first day of the
preceding quarter.
8.5 Shipment and Risk. Chrysalis will ship to OrthoLogic, at
Chrysalis's expense, the Chrysalis Products that are actually ordered as
specified in the appropriate binding purchase order. Title and risk of loss
shall pass to OrthoLogic when the Chrysalis Product is delivered to OrthoLogic.
8.6 Chrysalis' Obligation. To the extent that the amount of Chrysalis
Products ordered by OrthoLogic with respect to any quarter does not exceed 125%
of the higher of (i) the forecast made pursuant to Section 8.4, or (ii) the
average amount ordered during the prior three months, Chrysalis agrees to use
its best efforts to manufacture and ship the Chrysalis Products ordered by
OrthoLogic within 30 days after receipt of the appropriate purchase order.
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IX. ORTHOLOGIC'S RIGHT TO MANUFACTURE
9.1 OrthoLogic Right. OrthoLogic shall have the right to manufacture
Chrysalis Products for exclusive use in areas granted to OrthoLogic by Chrysalis
if Chrysalis fails to deliver Chrysalis Products as specified in Section 9.2, or
upon the occurrence of any of the events described in Section 9.3. In any such
event, the contents of the escrow described in Section 9.4 shall be delivered to
OrthoLogic promptly. If the contents of the escrow are delivered to OrthoLogic,
OrthoLogic shall take reasonable steps to protect the confidentiality of the
escrowed materials.
9.2 Grace Period. Chrysalis shall have a minimum of four months
following any applicable date for the delivery of Chrysalis Products in which to
deliver at least 90% of the Chrysalis Products due on such date, as contemplated
by Section 8.6.
9.3 Other Events. OrthoLogic shall also have the right to manufacture
Chrysalis Products upon the occurrence of any of the following events:
a. Chrysalis has ceased its on-going business operations, or the sale,
licensing, proper maintenance or other reasonable support of the Technology
Rights; or either cannot manufacture or elects to discontinue the manufacture of
Chrysalis Products.
b. Chrysalis has availed itself of, or been subjected by a third party
to, a proceeding in bankruptcy in which Chrysalis is the named debtor; there is
an assignment by Chrysalis for the benefit of its creditors the appointment of a
receiver for Chrysalis or any other proceeding involving the insolvency of
Chrysalis or the protection of or from its creditors, and the same has not been
discharged or terminated without any prejudice to OrthoLogic's rights or
interests under this License Agreement within 60 days (unless reasonable
alternative provisions have been made to protect the rights of OrthoLogic).
c. Any other event or circumstance occurs which demonstrates with
reasonable certainty the inability or unwillingness of Chrysalis to fulfill its
obligations to OrthoLogic, including, without limitation, the maintenance of and
the correction of defects in the Chrysalis Products.
9.4 Escrow. Chrysalis agrees that it will enter into an escrow
agreement with a third party acceptable to Chrysalis and OrthoLogic and will
deposit with the escrow agent all formulae and specifications relating to the
Chrysalis Products and their production, including all relevant commentary,
explanations and other documentation, as well as instructions sufficient for the
production of such products, and will name OrthoLogic as the beneficiary of the
escrow agreement. The cost of the escrow agent's services pertaining to this
Agreement will be split equally between OrthoLogic and Chrysalis.
9.5 Expiration of OrthoLogic Limited Manufacturing Right. Chrysalis can
regain the right to manufacture products for OrthoLogic (thereby ending
OrthoLogic's Limited Right to Manufacture) if it can provide satisfactory
written evidence that it can meet OrthoLogic's supply
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needs for a period of at least one year. Sufficient evidence shall include
having a sufficient inventory of Chrysalis Products for OrthoLogic to meet
OrthoLogic's needs, or other written documentation that demonstrates Chrysalis'
ability to provide products to OrthoLogic in a timely matter as described in
this Agreement. OrthoLogic will still retain the right to regain manufacturing
rights whenever Chrysalis fails to perform as described in Section 9.1.
X. PRODUCT CHANGES
10.1 Improvements. From time to time, OrthoLogic or Chrysalis may
identify possible improvements or change opportunities with respect to Chrysalis
Products for Orthopedic Applications. Chrysalis and OrthoLogic agree to work
together to determine whether appropriate and cost-effective changes can be
engineered and cleared through applicable regulatory agencies.
10.2 Pricing. After the occurrence of a situation of the type described
in paragraph 10.1, Chrysalis will work with OrthoLogic to design an orderly plan
for the introduction and pricing of such modifications, with particular concern
for the prior pricing structure, the benefits to the treatment of patients using
or potentially using the Chrysalis Products and the efficient and profitable
operation of the businesses of Chrysalis and OrthoLogic.
XI. TERM
11.1 The term of this agreement shall extend from the effective date of
execution until the expiration of the last to expire of any licensed Patent
Rights granted hereunder.
11.2 During the term of this agreement OrthoLogic agrees not to contest
the validity of any patent or the technology rights of Chrysalis relative to any
Chrysalis Technology.
XII. WARRANTY AND INDEMNITY
12.1 Patent Warranty. Chrysalis warrants (i) that it owns or holds
comprehensive license rights to all of the Patents and to the Chrysalis
Technology, (ii) that it has the power to enter into this Agreement with respect
to the Patents and Chrysalis Technology, (iii) that no other party is or shall
be entitled to use technology licensed exclusively to OrthoLogic hereunder by
virtue of invention or funding claims or otherwise for the Orthopedic
Applications granted to OrthoLogic, except for limited rights granted to the
National Institutes of Health to use Chrysalis Products for research purposes,
(iv) that Chrysalis is and shall remain in good standing and in full compliance
under its Patent License Agreement dated November 10, 1995, with the Board of
Regents of the University of Texas System, and (v) that it shall maintain all of
the Patents.
12.2 Standard Warranty. Chrysalis' standard warranty will be provided
prior to the commencement of clinical trials conducted by OrthoLogic. This
warranty shall apply to all Chrysalis Products, and shall run to OrthoLogic, the
ultimate user and any intermediate owners of the Chrysalis Products. Such
warranty shall include, at least, warranty of title and assurances that the
Chrysalis Products are free from defects in workmanship or materials.
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12.3 Approvals. All applicable filings, consents and expirations of
waiting periods required by law, regulatory authorities, existing licenses or
contracts with respect to the execution of this Agreement have been obtained, or
expired.
12.4 Limitation of Liability. Neither party shall be liable to the
other party or any third party for any special or consequential damages
whatsoever, however arising, in connection with the performance or breach of
this Agreement.
12.5 Patents, Trademarks, Marketing and Products Liability. Chrysalis
agrees, to defend, indemnify and hold harmless OrthoLogic and its affiliates,
and their officers, directors, shareholders, employees, agents, successors,
assigns and customers, from and against all actions, proceedings, judgments,
claims, liabilities, losses or expenses whatsoever (including reasonable
attorneys' fees) in connection with: (i) allegations that any Licensed Product
or Chrysalis Product sold infringes any intellectual property, contract or
license rights, or any U.S. or foreign patents, patents pending, or trademarks;
(ii) allegations that any advertising or marketing conducted by Chrysalis
violates any state or federal law or regulation; (iii) allegations of any
liability, loss, cost or damage arising from an alleged defect in or breach of
warranty with respect to any Chrysalis Product; and (iv) allegations of any
liability, loss, cost or damages arising from any safety claim with any respect
to any Chrysalis Product.
12.6 Insurance. Chrysalis will add OrthoLogic, and OrthoLogic's
Affiliates (if requested), as additional insureds with Chrysalis's insurance
carrier for liability limited to claims made due to deficiencies of Chrysalis
Products, and a certificate of insurance shall be provided to OrthoLogic upon
its request. The amount of insurance and the carrier will be of an amount,
quality and rating reasonably acceptable to OrthoLogic. Likewise, OrthoLogic
will add Chrysalis as additional insureds with OrthoLogic's insurance carrier
limited to claims made as a result of modifications made to Chrysalis Products,
conduct of clinical trials, and marketing of Chrysalis Products.
12.7 FDA Recalls. Chrysalis shall be responsible for all costs and
replacements directly resulting from the recall of any Chrysalis Products as
required by the FDA or any successor agency or by Chrysalis, so long as the
recall is not a result of modifications or further manufacturing of Chrysalis
Products conducted by OrthoLogic.
XIII. REPRESENTATIONS AND WARRANTIES
OF ORTHOLOGIC
13.1 Duly Organized. OrthoLogic is duly organized, validly existing and
in good standing under the laws of the State of Delaware.
13.2 Power and Authority. OrthoLogic has full power and authority to
own its properties and assets and to carry on its business as now being
conducted.
13.3 Fully Authorized. OrthoLogic is fully authorized and permitted to
enter into this Agreement, to execute any and all documentation required herein
and to perform the terms of this
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Agreement. This Agreement and each of the other documents contemplated herein
are valid and binding legal obligations of OrthoLogic and each is enforceable in
accordance with its terms.
13.4 No Breach or Default. The execution, delivery and performance by
OrthoLogic of this Agreement and any other documents contemplated hereby will
not conflict with or result in a default under: (i) any provision of the
organizational documents of OrthoLogic, (ii) any law or regulation applicable to
OrthoLogic, or (iii) the terms, conditions or provisions of any agreement,
license or other instrument to which OrthoLogic is a party or, by which it is
bound. OrthoLogic is not in default in the performance or observance of any
covenants, conditions or provisions of any such agreement license or instrument.
13.5 No Adverse Proceedings. No actions, suits or proceedings are
pending or threatened against OrthoLogic that could result in a Material
OrthoLogic Adverse Effect. OrthoLogic is not in default with respect to any
order, writ, injunction or decree, of any court, governmental department,
commission, board, agency or official, which default could result in a Material
OrthoLogic Adverse Effect. "Material OrthoLogic Adverse Effect" as used in this
Agreement shall mean any event or condition, in the reasonable business judgment
of Chrysalis that either (i) would have a material adverse effect upon the
validity, performance or enforceability of this Agreement, or any document
contemplated hereby, (ii) is material and adverse to the properties, financial
condition, credit, business operations or prospects of OrthoLogic, (iii) would
impair the ability of OrthoLogic to fulfill its obligations under this
Agreement, or any other document contemplated hereby, or (iv) causes a breach of
this Agreement or an event or condition that with notice or lapse of time or
both, would become a breach of this Agreement.
13.6 Financial Statements Correct. All financial statements, profit and
loss statements, statements as to ownership and other statements or reports
previously or hereafter given to Chrysalis by or on behalf of OrthoLogic are and
shall be true, complete and correct as of the date thereof. There has been no
change since the latest financial statements of OrthoLogic given to Chrysalis
that could have a Material OrthoLogic Adverse Effect.
XIV. REPRESENTATIONS AND WARRANTIES
OF CHRYSALIS
14.1 Duly Organized. Chrysalis is duly organized, validly existing and
in good standing under the laws of the State of Texas.
14.2 Power and Authority. Chrysalis has full power and authority to own
its properties and assets and to carry on its business as now being conducted.
14.3 Fully Authorized. Chrysalis is fully authorized and permitted to
enter into this Agreement, to execute any and all documentation required herein
and to perform the terms of this Agreement. This Agreement and each of the other
documents contemplated herein are valid and binding legal obligations of
Chrysalis and each is enforceable in accordance with its terms.
14.4 No Breach or Default. The execution, delivery and performance by
Chrysalis of this Agreement and any other documents contemplated hereby will not
conflict with or result in a
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default under: (i) any provision of the organizational documents of Chrysalis,
(ii) any law or regulation applicable to Chrysalis, or (iii) the terms,
conditions or provisions of any agreement, license or other instrument to which
Chrysalis is a party or, by which it is bound. Chrysalis is not in default in
the performance or observance of any covenants, conditions or provisions of any
such agreement license or instrument.
14.5 No Adverse Proceedings. No actions, suits or proceedings are
pending or threatened against Chrysalis that could result in a Material
Chrysalis Adverse Effect. Chrysalis is not in default with respect to any order,
writ, injunction or decree, of any court, governmental department, commission,
board, agency or official, which default could result in a Material Chrysalis
Adverse Effect. "Material Chrysalis Adverse Effect" as used in this Agreement
shall mean any event or condition, in the reasonable business judgment of
OrthoLogic, that either (i) would have a material adverse effect upon the
validity, performance or enforceability of this Agreement, or any document
contemplated hereby, (ii) is material and adverse to the properties, financial
condition, credit, business operations or prospects of Chrysalis, (iii) would
impair the ability of Chrysalis to fulfill its obligations under this Agreement,
or any other document contemplated hereby, or (iv) causes a breach of this
Agreement or an event or condition that with notice or lapse of time or both,
would become a breach of this Agreement.
14.6 Financial Statements Correct. All financial statements, profit and
loss statements, statements as to ownership and other statements or reports
previously or hereafter given to OrthoLogic by or on behalf of Chrysalis are and
shall be true, complete and correct as of the date thereof. There has been no
change since the latest financial statements of Chrysalis given to OrthoLogic
that could have a Material Chrysalis Adverse Effect.
XV. AFFIRMATIVE COVENANTS
So long as OrthoLogic has an option or license hereunder:
15.1 Maintain Contracts and Licenses. Chrysalis shall maintain in full
force and effect all agreements, rights and licenses necessary for OrthoLogic to
market and sell Licensed Products, without any costs, royalties, fees or burdens
except those stated in this Agreement or resulting from OrthoLogic's operations
in the ordinary course of business.
15.2 Comply With Laws. Chrysalis will comply in all material respects
with all applicable laws.
15.3 Maintain Insurance. Chrysalis and OrthoLogic shall maintain in
full force and effect at all times all insurance required by this Agreement.
15.4 Statements and Reports. Chrysalis shall maintain a standard,
modern system of accounting that reflects the application of generally accepted
accounting principles, consistently applied, and Chrysalis shall furnish to
OrthoLogic, all in a form acceptable to OrthoLogic, the following:
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15.4.1 Within 90 days after the end of each fiscal year of
Chrysalis, financial statements of Chrysalis for that fiscal year signed by an
officer, including without limitation, a balance sheet, profit and loss
statement and statement of cash flows.
15.4.2 Within 15 days after the end of each calendar quarter,
internally prepared financial statements of Chrysalis, prepared on a basis
consistent with Chrysalis's year-end financial statements, certified as true and
correct by the president or principal financial officer of Chrysalis.
15.4.3 A statement of litigation matters involving Chrysalis
that could cause a Material Chrysalis Adverse Effect, such statement to be
furnished within five days after date of service of such litigation or the
occurrence of any significant change.
15.4.4 Promptly, from time to time, such other information
regarding the operations, business affairs and financial condition of Chrysalis
as OrthoLogic may reasonably request.
15.5 Records. Chrysalis shall maintain, in a safe place, proper and
accurate books, ledgers, correspondence and other records relating to its
operations and business affairs. OrthoLogic shall have the right from time to
time to examine and audit and to make abstracts from and photocopies of
Chrysalis's books, ledgers, correspondence and other records relevant to the
subject matter of this Agreement. OrthoLogic shall maintain, in a safe place,
proper and accurate books, ledgers, correspondence and other records relating to
its operations and business affairs. Chrysalis shall have the right from time to
time to examine and audit and to make abstracts from and photocopies of
OrthoLogic's books, ledgers, correspondence and other records relative to the
subject matter of this Agreement.
15.6 Further Assurances. Chrysalis shall execute and deliver such
additional documents and do such other acts as OrthoLogic may reasonably require
in connection with this Agreement.
XVI. GENERAL
16.1 Attachments. All Exhibits, schedules or other attachments to this
Agreement are incorporated herein by this reference as though fully set forth
herein. In the event of any conflict, contradiction or ambiguity between the
terms and conditions in this Agreement and any of its Exhibits, schedules or
attachments, the terms of this Agreement shall prevail.
16.2 Attorneys Fees. If any litigation or arbitration is commenced
between the parties hereto or their successors in interest, concerning any
provisions of this Agreement, or the rights and duties of any person in relation
thereto, the party prevailing in such litigation or arbitration shall be
entitled, in addition to such other relief as may be granted, to a reasonable
sum for its attorney's fees and litigation costs as determined by the court or
arbitrator, and not by a jury, or in a separate action brought for that purpose.
16.3 Authorization and Signatures. By signing below, each party
represents that this Agreement has been duly authorized by its Board of
Directors and constitutes an agreement by which it is bound.
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16.4 Binding Effect; Benefits. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
successors, executors, administrators and assigns. Notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
16.5 Construction. The language in all parts of this Agreement shall in
all cases be construed as a whole according to its fair meaning and not strictly
for or against either party. The Article and Section headings contained in this
Agreement are for reference purposes only and will not affect the meaning or
interpretation of this Agreement in any way. All terms used in one number or
gender shall be construed to include any other number or gender as the context
may require. The parties agree that each party has reviewed this Agreement and
has had the opportunity to have counsel review the same and that any rule of
construction to the effect that ambiguities are to be resolved against the
drafting party shall not apply in the interpretation of this Agreement or any
amendment or any exhibits thereto. Except in the definition of "Orthopaedic
Application," whenever the words "include," "includes," or "including" are used
in the Agreement, they shall be deemed to be followed by the words "without
limitation."
16.6 Legal and Brokerage Fees. Each party shall pay and be responsible
for its legal fees, accounting fees, and related expense incurred in connection
with the preparation and execution of this Agreement. Chrysalis shall be solely
responsible for any fee payable to any broker of finder claiming as a result of
an agreement with Chrysalis or because of Chrysalis' actions. OrthoLogic shall
be solely responsible for any fee payable to any broker or finder claiming as a
result of an agreement with OrthoLogic or because of OrthoLogic's actions.
16.7. Publicity. Each of the parties agrees that it will not make any
public statements regarding this Agreement without first consulting the other
party hereto in order that such public statement shall be jointly issued by the
parties, except to the extent required by law, provided that in any such
situation, the party seeking to make the disclosure agrees to use its best
efforts to provide the other party with advance notice of any such request for
disclosure as promptly as feasible in order that the other party may seek a
protective order or such other appropriate remedy as the other party deems
necessary.
16.8 Continuing Cooperation. Each party to this Agreement shall be
obligated hereunder to perform such other and further acts, including without
limitation the execution of any documents or instruments, which are reasonable
and may be necessary or convenient in carrying out the purpose and intent of
this Agreement.
16.9 Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same agreement.
16.10 Entire Agreement. This Agreement, plus the Confidentiality
Agreement executed by the parties in December 1997 constitute the final written
expression of all of the agreements
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between the parties with respect to the Chrysalin Technology and the Technology
Rights and are a complete and exclusive statement of those terms. They supersede
all understandings and negotiations concerning the matters specified herein, and
shall take precedence over all inconsistent provisions in any purchase orders or
any other documents unless agreed to in writing by both parties. Any oral
representations, promises, warranties or statements made by either party that
relate to the license granted hereunder and differ in any way from the terms of
this written Agreement and the Confidentiality Agreement shall be given no force
or effect. The parties specifically represent, each to the other, that there are
no additional or supplemental agreements between them related in any way to the
Chrysalin Technology or the Technology Rights unless specifically included or
referred to herein. No addition to or modification of any provision of this
Agreement shall be binding upon any party unless made in writing and signed by
all parties.
16.11 Force Majeure. Neither party shall be in default hereunder by
reason of its delay in the performance of or failure to perform any of its
obligations hereunder, if such delay or failure is caused by strikes, acts of
God or a public enemy, riots, fire, interference by civil or military
authorities, compliance with governmental laws, rules, regulations or orders,
delays in transit or delivery, inability to secure necessary governmental
priorities or materials, or any fault beyond its control or without its fault or
negligence.
16.12 Indemnification and Attorney's Fees. Each of OrthoLogic and
Chrysalis shall defend, indemnify and hold harmless the other and its
affiliates, employees, officers, directors and agents from and against all
fines, suits, proceedings, claims, demands, debts, obligations, liabilities and
actions of any kind by anyone (including reasonable attorney's fees and costs)
allegedly arising from or connected with (i) violations by the indemnifying
party of any law, ordinance, rule or regulation of the United States or any
state or city or other international or domestic governmental body, (ii) the
indemnifying party's actions or omissions in furtherance of this Agreement,
(iii) any breach of a representation or warranty by or any breach or default in
the performance of any obligation of the indemnifying party, or (v) any other
activities or operations of the indemnifying party, its employees, officers,
directors or agents.
16.13 Notice. All notices, demands, instructions, or requests relating
to this Agreement shall be in writing and, except as otherwise provided herein,
shall be deemed to have been given for all purposes (i) upon personal delivery,
(ii) one day after being sent, when sent by professional overnight courier
service from and to locations within the continental United States, (iii) five
days after posting when sent by United States registered or certified mail, with
postage paid, or (iv) on the date of transmission when sent by facsimile with
evidence of transmission and hard copy mailed, if directed to the person or
entity to which notice is to be given at his or its address set forth in this
Agreement or at any other address such person or entity has designated by
notice.
16.14 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule or law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby are not affected in any manner materially
adverse to either party. Upon such determination that any term or other
provisions is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a
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mutually acceptable manner in order that the transactions be consummated as
originally contemplated to the fullest extent possible.
16.15 Survival. The rights and obligations of those Sections of this
Agreement that by their nature survive and continue after any expiration or
termination of this Agreement, shall bind the parties and their legal
representatives, successors, heirs and assigns after expiration or termination.
16.16 Waiver. The failure of either party to insist on strict
performance of any term or condition hereof or to exercise any option contained
herein, shall not be construed as a waiver of that party's right to enforce that
term of condition in the future or any other term or condition to this Agreement
in any other instance.
16.17 Independent Entities. Chrysalis and OrthoLogic each have separate
and independent rights and obligations under this Agreement. Nothing contained
herein shall be construed as creating, forming or constituting any partnership,
joint venture, merger or consolidation of Chrysalis and OrthoLogic for any
purpose or in any respect.
16.18 Signature. This Definitive Agreement may be executed by facsimile
or manual signatures.
IN WITNESS WHEREOF, OrthoLogic and Chrysalis have executed this
Agreement as of the day and year first written above.
CHRYSALIS BIOTECHNOLOGY, INC.
By /s/ Xxxxxxx X. Xxxxxx, Ph.D.
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Xxxxxxx X. Xxxxxx, Ph.D.
President
ORTHOLOGIC CORP.
By /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
President