EXHIBIT 10.5
LICENSE AGREEMENT
THIS AGREEMENT is made as of August 13, 2002 (the "Effective Date") by and
among XXXXX UNIVERSITY RESEARCH FOUNDATION, a Rhode Island corporation ("BURF"),
the MASSACHUSETTS INSTITUTE OF TECHNOLOGY, a Massachusetts corporation
("M.I.T."), and CYBERKINETICS, INC., a Delaware corporation ("Licensee").
Recitals
BURF and M.I.T. have certain rights to the Licensed Technology, as defined
below.
BURF and M.I.T. desire to have the Licensed Technology developed and
commercialized to benefit the public and are willing to grant licenses
thereunder.
M.I.T.'s Vice President for Research has approved that M.I.T. is accepting
equity as partial consideration for the rights and licenses granted under this
Agreement.
Licensee wishes to obtain licenses under the Licensed Technology on the
terms and conditions of this Agreement.
Each of BURF and M.I.T. wishes to grant licenses under the Licensed
Technology to Licensee on the terms and conditions of this Agreement.
BURF, M.I.T. and Licensee therefore agree as follows:
1. DEFINITIONS
The following terms shall have the meanings indicated in this Agreement:
1.1. Agent or Licensors' Agent. Agent or Licensors' Agent shall mean BURF
in its capacity as agent for the Licensors hereunder, acting pursuant to the
provisions of Section 10.
1.2. Agreement. Agreement shall mean this Agreement, including all
schedules, exhibits and attachments hereto.
1.3. Affiliate. Affiliate shall mean, with respect to any Person, any
other Person controlled by, controlling, or under common control with such
Person. A Person shall be regarded as in control of another Person if it has
direct or indirect beneficial ownership of at least fifty percent (50%) interest
in the voting stock (or the equivalent) of such corporation or other entity, has
the right to direct, appoint or remove a majority or more of the members of its
board of directors (or their equivalent), or has the power to control the
general management of such corporation or other entity, by contract, law or
otherwise.
1.4. Xxxxx Licensed Patents. Brown Licensed Patents shall mean those
Licensed Patents designated on Schedule 1.14 as Xxxxx Licensed Patents.
1.5. Xxxxx Limited Field Patents. Xxxxx Limited Field Patents shall mean
those Xxxxx Licensed Patents designated on Schedule 1.14 as Xxxxx Limited Field
Patents.
1.6. Xxxxx - M.I.T. Agreement. Xxxxx - M.I.T. Agreement shall mean the
Agreement dated as of June 12, 2001 between Xxxxx University and M.I.T., a copy
of which is attached hereto as Exhibit A, which authorizes BURF to act in
certain capacities on behalf of M.I.T., Xxxxx
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University and itself, including without limitation the receipt of payments to
be made hereunder, and provides for the allocation of such payments.
1.7. Confidential Information. Confidential Information shall mean, with
respect to each Party, (a) non-public proprietary data or information which
belongs in whole or in part to such Party, its Affiliates or sublicensees and
(b) information expressly designated in this Agreement as Confidential
Information of such Party.
1.8. Covered Sublicense. Covered Sublicense shall mean a sublicense to
the Licensed Patents or Licensed Data outside of the field of prosthetic devices
or any other additional field in which Licensee will continue to be actively
engaged in developing or commercializing Licensed Products after the grant of
such sublicense.
1.9 Effective Date. Effective Date is defined in the preamble.
1.10. Federal Patent Policy. Federal Patent Policy shall mean 35 U.S.C.
Section 200 et seq. and all regulations promulgated thereunder, as amended, and
any successor statutes or regulations.
1.11. FDA. FDA shall mean the United States Food and Drug Administration.
1.12. Licensed Data. Licensed Data shall mean the data and research
materials described in Schedule 1.12. Notwithstanding the foregoing, in no event
shall M.I.T.'s interest in any data or research materials described in Schedule
1.12 be considered Licensed Data.
1.13. Licensed Field. Licensed Field shall mean all fields, except as
follows:
(a) * * *
(b) * * *
1.14. Licensed Patents. Licensed Patents shall mean those patents and
patent applications described on Schedule 1.14.
1.15. Licensed Product. Licensed Product shall mean any product the
manufacture, use or sale of which would, absent the licenses granted by the
Licensors to Licensees herein, infringe any Valid Claim included in any Licensed
Patent.
1.16. Licensed Technology. Licensed Technology shall mean the Licensed
Patents and the Licensed Data.
1.17. Licensed Territory. Licensed Territory shall mean worldwide.
1.18. Licensor. Licensor shall mean each of BURF and M.I.T.
1.19. Major Market Country. Major Market Country shall mean each of the
following countries: * * *.
1.20. M.I.T. Collaboration Licensed Patents. M.I.T. Collaboration Licensed
Patents shall mean those Licensed Patents designated on Schedule 1.14 as M.I.T.
Collaboration Licensed Patents.
1.21. Net Sales. Net Sales shall mean gross amounts invoiced for sales of
a Licensed Product by Licensee, its Affiliates or its Sublicensees, as
appropriate, to non-Affiliate Third
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Parties (other than Licensee's Sublicensees hereunder), less the sum of (i)
trade, quantity and cash discounts actually allowed or paid, (ii) refunds,
rebates, chargebacks, retroactive price adjustments (including Medicaid, managed
care and similar types of rebates), service allowances and broker's or agent's
commissions actually allowed or paid, (iii) credits or allowances given or made
for rejections or returns of previously sold products or for wastage replacement
actually taken or allowed, (iv) taxes, duties or other governmental charges
levied on or measured by the billing amount, as adjusted for rebates and
refunds, and (v) charges for shipping, freight and insurance directly related to
the distribution of the Licensed Product (excluding amounts reimbursed by Third
Party customers). Sales of a Licensed Product by and between a Party and its
Affiliates and Sublicensees are not sales to Third Parties and shall be excluded
from Net Sales calculations for all purposes. Sales of a Licensed Product for
use in conducting clinical trials of such Licensed Product in a country of the
Licensed Territory in order to obtain regulatory approval of such Licensed
Product in such country shall be excluded from Net Sales calculations for all
purposes.
If a Licensed Product (a) consists of both (i) components causing such
product to be a Licensed Product and (ii) other components or (b) is sold
together with one or more other products for a single invoiced price (e.g.,
where a product is a medical device comprised of one component that is Licensed
Product and other components that are not Licensed Products, or where a medical
device that is a Licensed Product is packaged for sale with a second medical
device that is not a Licensed Product) (each, a "Combination Sale"), the Net
Sales for such Licensed Product shall be the portion of such Combination Sale
properly allocable to such Licensed Product, determined as follows.
Except as provided below, the Net Sales for a Licensed Product sold in
such a Combination Sale shall equal the gross amount invoiced for sale of the
Licensed Product and any and all other products or components, as the case may
be, included in such Combination Sale reduced by the adjustments specified above
in the definition of Net Sales (the "Net Combination Sale Amount"), multiplied
by the fraction A/(A+B), where:
* * *
In the event that Licensee, its Affiliate or Sublicensee, as applicable,
separately sells the Licensed Product included in a Combination Sale in a
country, but does not separately sell all of the other products or components,
as the case may be, included in such Combination Sale in such country, the
calculation of "Net Sale" resulting from such Combination Sale shall be
determined by multiplying the Net Combination Sale Amount by the fraction A/C
where:
* * *
In the event that Licensee, its Affiliate or Sublicensee, as applicable,
does not separately sell the Licensed Product contained in a Combination Sale in
the country where such Combination Sale occurs, but does separately sell all of
the other products or components, as the case may be, included in the
Combination Sale in such country, the calculation of Net Sales resulting from
such Combination Sale shall be determined by multiplying the Net Combination
Sale Amount by the fraction (C-D)/C, where:
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* * *
Where the calculation of Net Sales resulting from a Combination Sale in a
country cannot be determined by any of the foregoing methods, the calculation of
Net Sales for such Combination Sale shall be that portion of the Net Combination
Sale Amount reasonably determined in good faith mutually by the Parties which
properly reflects the value of the Licensed Product included in the Combination
Sale.
1.22 Party. Party shall mean each party to this Agreement and their
respective successors and permitted assigns.
1.23. Person. Person shall mean any natural person or legal entity.
1.24. Sublicensee. Sublicensee shall mean any Person to whom Licensee
grants a sublicense of some or all of the rights granted to Licensee under this
Agreement.
1.25. Sublicensing Fees. Sublicensing Fees shall mean any payments
received by Licensee (other than royalty payments or reimbursement of research
or development expenses) as consideration for the granting of a Covered
Sublicense, net of the value of any rights, interests or other consideration
(including, without limitation, equity interests in Licensee) provided by
Licensee to Sublicensee other than the sublicense to the Licensed Patents or
Licensed Data.
1.26. Third Part(y/ies). Third Part(y/ies) shall mean any person(s) or
entit(y/ies) other than BURF, M.I.T., Licensee or their respective Affiliates.
1.27. Valid Claim. Valid Claim shall mean: (a) in the case of an issued
and unexpired patent, a claim that has not been held permanently revoked,
unenforceable or invalid by a decision of a court or other governmental agency
of competent jurisdiction, unappealed or unappealable within the time allowed
for appeal, and that has not been admitted to be invalid or unenforceable
through reissue, disclaimer or otherwise; or (b) in the case of a pending patent
application, a pending claim that (i) was filed and is being prosecuted in good
faith and (ii) has not been cancelled, withdrawn, abandoned or finally
disallowed without the possibility of appeal or refilling of such application.
2. LICENSE
2.1. Grant of Licenses. Subject to the terms and conditions of this
Agreement: (x) BURF hereby grants to Licensee an exclusive, royalty-bearing
license, including the right to grant sublicenses, under BURF's interest in the
Xxxxx Licensed Patents, the M.I.T. Collaboration Licensed Patents and the
Licensed Data, to make, have made, use, offer to sell, sell, have sold,
distribute, have distributed, import and export Licensed Products in the
Licensed Territory in the Licensed Field; and (y) M.I.T. hereby grants to
Licensee an exclusive, royalty-bearing license, including the right to grant
sublicenses, under M.I.T.'s interest in the M.I.T. Collaboration Licensed
Patents, to make, have made, use, offer to sell, sell, have sold, distribute,
have distributed, import and export Licensed Products in the Licensed Territory
in the Licensed Field. In addition, Licensee shall have the right to use the
inventions and technology covered by the M.I.T. Collaboration Licensed Patents
in animal implants (and related systems, devices and components) for the
purposes of researching, developing and testing Licensed Products for human use.
The licenses granted to Licensee under this Section 2.1 are subject to the
following terms and conditions:
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(a) Federal Patent Policy. To the extent that any invention included
within the Licensed Technology has been partially funded by the United
States Government, the United States Government retains certain rights in
such invention as set forth in the Federal Patent Policy. As a condition
of the licenses granted hereby, Licensee shall comply with all aspects of
the Federal Patent Policy applicable to the Licensed Patents in the
Licensed Territory in the Licensed Field. Nothing contained in this
Agreement obligates or shall obligate any Licensor to take any action that
would conflict in any respect with its past, current or future obligations
to the United States Government under the Federal Patent Policy with
respect to the Licensed Patents in regard to work already performed or to
be performed by such Licensor. Each Licensor shall use reasonable efforts
to reserve for Licensee the exclusive rights granted by each of them
hereunder to the extent permitted under the Federal Patent Policy.
(b) [Reserved.]
(c) M.I.T. Collaboration Licensed Patents. M.I.T. retains the right for
M.I.T. to use the M.I.T. Collaboration Licensed Patents for research,
teaching and educational purposes.
(d) Xxxxx Licensed Patents. BURF retains the right for BURF and its
Affiliate, Xxxxx University, to use the Xxxxx Licensed Patents and the
M.I.T. Collaboration Licensed Patents in the Licensed Field solely for the
internal, non-commercial research, teaching and other non-commercial
scientific and academic purposes of BURF and its Affiliate, Xxxxx
University.
(e) Licensed Data. BURF retains certain rights to use the Licensed Data,
as more fully described in and subject to the terms and conditions set
forth in Section 2.3(b).
2.2. Sublicensing. Licensee shall have the right to grant one or more
sublicenses to any Person of the rights granted to it under Section 2.1 at any
time, consistent with the terms and conditions of this Agreement.
2.3. Option to Acquire License to Additional Inventions; Access to
Licensed Data.
(a) Option to Acquire License. BURF hereby grants Licensee an exclusive
first option (the "Option") to acquire an exclusive license to any BURF
interest in any invention (each, an "Additional Invention") (x) that is
made after the Effective Date in the course of the performance of research
funded in whole or in part under any grant listed on Schedule 2.3 (each,
an "Ongoing Grant"), or (y) that constitutes an improvement to an
invention or technology covered by a Licensed Patent and that results from
the exercise of those retained rights (the "Retained Rights") described in
Section 2.1(d). For purposes of this Agreement, "Additional Invention"
shall not include any ownership interest of M.I.T. in any such invention.
Further, "improvement to an invention or technology" shall mean any
invention that constitutes a modification of, variation of, revision to or
new use of such invention or technology and that is dominated, in whole or
in part, by any Valid Claim in any Licensed Patent. The Option shall apply
to all Additional Inventions made during the term of this Agreement, and
Licensee's exercise or failure to exercise the Option with
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respect to a particular Additional Invention shall not affect Licensee's
rights with respect to future Additional Inventions. Notwithstanding the
foregoing, nothing in this Agreement shall apply or be deemed to apply to
M.I.T.'s interest, if any, in any Additional Invention nor to obligate
M.I.T. in any way to grant a license, under M.I.T.'s interest in any
Additional Invention, to any Additional Invention.
As additional consideration for the grant of the Option, upon execution of
this Agreement, Licensee shall grant to BURF an option (the "BURF "Stock
Option") to purchase * * * shares of Licensee's common stock, par value $.001
per share ("Common Stock"), subject to vesting terms and other terms and
conditions set forth in the option grant certificate dated as of the date hereof
and attached to this Agreement as Exhibit B (the "BURF Stock Option
Certificate").
BURF shall be free to grant a license to an Additional Invention to any Third
Party if Licensee does not exercise the Option with respect to such Additional
Invention, subject to the terms and conditions set forth in this Section 2.3(a).
With respect to each Additional Invention, Licensee may exercise the Option on
the following terms and conditions:
(i) Additional Invention Notice. BURF shall take reasonable actions to
assure that those researchers exercising the Retained Rights promptly make
invention disclosures to BURF regarding any Additional Inventions and
delay publication of information regarding such Additional Inventions to
the extent necessary to allow time for the preparation and filing of
patent applications. BURF shall give written notice (the "Additional
Invention Notice") to Licensee of any Additional Invention within 15 days
of the receipt by BURF of an invention disclosure relating to any
Additional Invention. The Additional Invention Notice shall describe the
Additional Invention in reasonable detail. BURF shall promptly make
available to Licensee, upon reasonable request, all available additional
information regarding such Additional Invention. All such information
shall be deemed to be BURF's Confidential Information subject to the
provisions of Section 4.2.
(ii) Option Exercise Notice. If Licensee elects, in its sole discretion,
to exercise the Option with respect to the Additional Invention, Licensee
shall give written notice (the "Option Exercise Notice") to BURF of its
election to exercise within 90 days after receipt of the Additional
Invention Notice.
(iii) Effective Date of Exercise. Effective as of the date 30 days after
the date BURF receives the Option Exercise Notice (unless BURF requests
negotiation of the license terms pursuant to Section 2.3(a)(iv), in which
event the terms of Section 2.3(a)(iv) shall govern):
(A) Any patents and patent applications covering such Additional
Invention shall be deemed for all purposes of this Agreement to be
included within the Xxxxx Licensed Patents (subject to any
additional terms imposed by a sponsored research agreement between
BURF and any non-commercial sponsor of the research that resulted in
the Additional Invention, but only to the extent that such terms are
consistent with the terms generally imposed by non-commercial
sponsors for similar research);
(B) The Parties shall amend Schedule 1.14 to add a description of
the patents and patent applications covering such Additional
Invention to the list of Xxxxx Licensed Patents;
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(C) Licensee shall reimburse BURF for all patent expenses related
to such Additional Invention reasonably incurred by BURF prior to
exercise of the Option, subject to BURF providing reasonable
documentation of such expenses;
(D) Licensee shall pay BURF * * *, and
(E) Pursuant to the terms of the BURF Stock Option Certificate,
the BURF Stock Option shall become exercisable with respect to an
additional * * * of the shares of Common Stock subject to the BURF
Stock Option (subject to the maximum number of shares for which the
BURF Stock Option is exercisable and the other terms set forth in
the BURF Stock Option Certificate).
(iv) BURF Right to Request Negotiation. If BURF reasonably determines
that the compensation terms of this Agreement would not reflect fair
market value consideration for an exclusive license of the Additional
Invention, BURF shall so notify Licensee within 20 days after receipt of
the Option Exercise Notice that it requests negotiation of the terms of
such license (a "Negotiation Request"). Promptly after Licensee receives
the Negotiation Request, BURF and Licensee will enter into good faith
negotiations with each other for 90 days (or such longer period as
mutually agreed by BURF and Licensee) in an effort to reach agreement on
mutually satisfactory terms for the licensing of such Additional
Invention.
If BURF and Licensee do not agree on such terms within such time period,
BURF shall thereafter be free to license such Additional Invention to a
Third Party or Third Parties, subject to Licensee's right to submit the
matter to mediation, as provided below in clause (A) below, and Licensee's
Right of First Refusal, as provided below in clause (B) below.
(A) Licensee may at its option require the matter to be submitted
to mediation pursuant to the terms of Section 9, with Licensee
having the option to accept or reject the recommendation of the
mediator(s). If Licensee rejects such proposed terms, BURF shall be
free to license such Additional Invention to a Third Party or Third
Parties at any time and the Right of First Refusal provided for in
clause (B) below shall not apply to such Additional Invention.
(B) If Licensee does not require the matter to be submitted to
mediation pursuant to clause (A) above, Licensee shall have a right
of first refusal with respect to the Additional Invention (the
"Right of First Refusal") on the terms and conditions set forth in
this clause (B). Prior to granting any license to the Additional
Invention to any Third Party, BURF shall give written notice (the
"Offer Notice") to Licensee of the name and address of the Third
Party to whom the license is to be granted and the material terms
and conditions of such proposed license and shall offer Licensee the
opportunity to license the Additional Invention on the same terms
and conditions; provided, however, that if BURF is not permitted,
under the terms of an agreement with the Third Party, to disclose
the Third Party's name and address, BURF shall not be required to do
so but shall provide Licensee with a general description of the
Third Party's organizational type (e.g., public or private entity,
for-profit or non-profit, newly organized entity or established
entity, etc.) and industry (e.g., medical devices,
telecommunications, etc.). If Licensee elects
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to license the Additional Invention on such terms and conditions,
Licensee shall so notify BURY within 30 days of receipt of the Offer
Notice; if such election is made, Licensee and BURF shall promptly
amend this Agreement or enter into a separate license agreement on
such terms and conditions. If Licensee does not respond within such
30-day period, or if Licensee notifies BURF that it does not elect
to license the Additional Invention on such terms and conditions,
BURF shall be free to license such Additional Invention to the Third
Party named in the Offer Notice on the terms and conditions set
forth in the Offer Notice; provided, however, that if a license with
the Third Party on the same terms and conditions is not entered into
by BURF within 90 days, the Additional Invention shall again be
subject to the Right of First Refusal requirements set forth in this
clause (B).
(v) Third Party Licenses. Except as otherwise provided in Section
2.3(a)(iv), BURF shall not grant a license to the Additional Invention to
any Third Party, (or enter into negotiations or discussions with, or
solicit interest from, any Third Party regarding a license to the
Additional Invention), unless and until: (i) Licensee notifies BURF that
it declines the opportunity to exercise the Option with respect to the
Additional Invention or (ii) Licensee does not respond to BURF within 90
days after receipt of the Additional Invention Notice.
(b) Access to Licensed Data. BURF retains the right to grant access to Xxxxx
University faculty researchers and faculty researchers at other academic
institutions to use the Licensed Data for non-commercial research purposes;
provided, however, that any researcher granted access to the Licensed Data shall
be required to enter a Material Transfer Agreement substantially in the form of
Exhibit C with BURF (with such changes as BURF and Licensee may mutually agree
to make). Pursuant to the terms of the applicable Material Transfer Agreement,
any data developed or generated using such Licensed Data and any invention made
using such Licensed Data shall be deemed to be an Additional Invention for
purposes of this Agreement and subject to Licensee's Option to license such data
or invention pursuant to the provisions of Section 2.3(a). Notwithstanding the
foregoing, neither M.I.T. nor any M.I.T. researcher shall be required to enter
into a Material Transfer Agreement to use the Licensed Data in connection with
the research being performed under the Subaward between Xxxxx and M.I.T. (a copy
of which is attached hereto as Exhibit A).
3. CONSIDERATION, RECORD-KEEPING AND PAYMENTS
3.1. Payments and Other Consideration.
(a) Initial Payment. Licensee shall pay to Licensors' Agent on the Effective
Date of this Agreement an amount equal to * * *, which includes reimbursement in
full for reasonable out-of-pocket patent expenses incurred with respect to the
Licensed Patents prior to the Effective Date.
(b) License Maintenance Fees. Subject to the limitations set forth in Section
3.1(f), Licensee shall pay * * * to the Licensors' Agent on * * *.
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(c) Running Royalties. Licensee shall pay or cause to be paid to the
Licensors' Agent running royalties equal to the Applicable Percentage (as
defined below) of Net Sales of Licensed Products by Licensee, its Affiliates and
Sublicensees, subject to the following terms and conditions:
(i) Applicable Percentage. The "Applicable Percentage" shall equal * * *
for the first * * * of aggregate Net Sales of Licensed Products by
Licensee, its Affiliates and Sublicensees. The "Applicable Percentage"
shall equal * * * for aggregate Net Sales of Licensed Products by
Licensee, its Affiliates and Sublicensees in excess of * * *. The
Applicable Percentage is subject to adjustment pursuant to the provisions
of clause (iii) below.
(ii) Royalty Reports and Payments. Within 60 days after March 31, June
30, September 30 and December 31 of each year, Licensee shall deliver to
the Licensors' Agent a true and accurate report, giving such particulars
of the business conducted by Licensee and any Sublicensees during the
preceding three calendar months under this Agreement as are pertinent to
an accounting for any running royalty payments hereunder. If no payments
are due, it shall be so reported. No such reports shall be due before the
first commercial sale of a Licensed Product. The total royalty due for the
sale of Licensed Products during such calendar quarter shall be remitted
at the time such report is made.
(iii) Royalty Adjustment. "Required Royalties" shall mean royalties
payable by Licensee, its Affiliates or Sublicensees to any Third Party
with respect to any intellectual property that Licensee is required to
license in order to practice the Licensed Patents. The Applicable
Percentage with respect to any Net Sales shall be reduced by * * * of any
Required Royalties payable with respect to such Net Sales; provided,
however, that the Applicable Percentage shall in no event be reduced by
more than * * * solely as a result of this provision.
(iv Cumulative Royalties. The obligation to pay royalties shall be
imposed only once with respect to a single unit of a Licensed Product regardless
of how many Valid Claims included within the Licensed Patents would, but for
this Agreement, be infringed by the manufacture, use, import, offer for sale or
sale of such Licensed Product in the country(ies) of such manufacture, use or
sale.
(v) Termination of Royalty Obligation. Licensee's obligation to pay a
running royalty on Net Sales of a Licensed Product shall terminate * * *. After
termination of Licensee's obligation to pay a running royalty on Net Sales of a
Licensed Product in a country, no further royalties shall be payable in respect
of sales of such Licensed Product in such country and, thereafter, the licenses
granted to Licensee under Section 2.1 with respect to such Licensed Product in
such country shall be fully paid-up, perpetual, exclusive, irrevocable,
royalty-free licenses.
(d) Equity. Licensee shall, simultaneously with the execution and delivery of
this Agreement, issue to XXXX and M.I.T. * * * shares of Licensee's Common Stock
(80% of which shall be issued to BURF and 20% of which shall be issued to
M.I.T.) pursuant to Stock Subscription Agreements executed by each of BURF and
M.I.T. dated as of the date hereof and attached to this Agreement as Exhibit D.
Such shares of Common Stock, when issued to BURF and M.I.T., shall be fully-paid
and non-assessable. Simultaneously with the delivery of such shares of Common
Stock, each of BURF and M.I.T. shall execute the Stockholders' Rights Agreement
substantially in the form attached hereto as Exhibit E.
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(e) Sublicensing Fees. Subject to the limitations set forth in Section 3.1(f),
in the event Licensee receives any Sublicensing Fees in connection with the
grant to any Third Party(ies) of a Covered Sublicense, Licensee shall pay to the
Licensors' Agent the amount equal to: (i) * * * of such Sublicensing Fees if
such Sublicensing Fees are received by Licensee within * * * after the Effective
Date of this Agreement, or (ii) * * * of such Sublicensing Fees if such
Sublicensing Fees are received by Licensee * * * of the Effective Date of this
Agreement. Any such payment to the Licensors' Agent shall be made within thirty
(30) days of Licensee's receipt of such Sublicensing Fees.
(f) Maximum Amount of License Maintenance Fees and Sublicensing Fees. The
aggregate amount payable by Licensee pursuant to Section 3.1(b) (License
Maintenance Fees) and Section 3.1(e) (Sublicensing Fees) shall not exceed * * *,
reduced by * * * of the aggregate amounts previously expended by Licensee in
connection with the development of Licensed Products, in no event to be reduced
below * * *. Licensee shall have no further obligation to pay the Licensors'
Agent pursuant to Section 3.1(b) or Section 3.1(e) after Licensee has paid the
aggregate amount described in the prior sentence.
3.2. Records. During the term of this Agreement and for three years thereafter,
Licensee shall keep complete and accurate records of Licensee's, any Affiliate's
and any Sublicensee's sales of Licensed Products and such other matters as may
affect the determination of any amount payable to the Licensors hereunder in
sufficient detail to enable the Licensors' Agent or its authorized
representatives to determine any amounts payable under this Agreement. Licensee
shall permit the Licensors' Agent or its authorized representatives, at Agent's
expense (except as provided below), to examine periodically (but no more
frequently than once per year) its books, ledgers, and records during regular
business hours for the purpose of and to the extent necessary to verify any
report required under this Agreement or the accuracy of any amount payable
hereunder. Licensee shall also permit the Licensors' Agent or its authorized
representatives to examine periodically (but no more frequently than once per
year) any documents relating to its sublicensing of the Licensed Patents during
regular business hours. Should any examination conducted by the Licensors' Agent
or its authorized representatives pursuant to the provisions of this Section 3.2
result in a determination of an underpayment of more than * * * of any payment
due from Licensee hereunder, Licensee shall be obligated to pay any reasonable
out-of-pocket expenses incurred by the Licensors' Agent with respect to such
examination.
3.3. Form of Payment; Taxes and Withholding. All amounts payable and
calculations hereunder shall be in United States dollars. All payments under
this Agreement will be made without any deduction or withholding for or on
account of any tax unless such deduction or withholding is required by
applicable laws or regulations of any country in the Licensed Territory. If
Licensee is so required to deduct or withhold, Licensee will (i) promptly notify
the Licensors' Agent of such requirement, (ii) pay to the relevant authorities
the full amount required to be deducted or withheld promptly upon the earlier of
determining that such deduction or withholding is required or receiving notice
that such amount has been assessed against any Licensor, and (iii) promptly
forward to the Licensors' Agent an official receipt (or certified copy) or other
documentation reasonably acceptable to the Licensors' Agent evidencing such
payment to such authorities.
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission
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3.4. Interest. In the event that any payment due hereunder is not made
when due, the payment shall accrue interest beginning on the first day following
the calendar quarter to which such payment relates calculated at the annual rate
of the sum of (a) two percent (2%) plus (b) the prime interest rate quoted by
The Wall Street Journal on the date such payment is due, provided that in no
event shall such annual rate exceed the maximum interest rate permitted by law
in regard to such payments. Such royalty payments when made shall be accompanied
by all interest so accrued. Payment and acceptance of interest shall not negate
or waive the right of the Licensors to any other remedy, legal or equitable, to
which they may be entitled because of the delinquency of the payments
4. PROTECTION OF INTELLECTUAL PROPERTY RIGHTS
4.1. Patent Prosecution; Patent Costs.
(a) Licensee shall be responsible for preparing, filing, prosecuting,
maintaining and defending all Licensed Patents other than the Xxxxx
Limited Field Patents. Licensee shall seek and use best efforts to
maintain the strongest and broadest patent claims practicable in the best
interests of M.I.T. with respect to the M.I.T. Collaboration Licensed
Patents. Licensee shall provide the Licensors' Agent with copies of all
filings and relevant documentation and a reasonable opportunity in advance
to comment on such filings. Licensee will not abandon any patent
application in the Licensed Patents (other than the Xxxxx Limited Field
Patents), or make prosecution-related decisions that would affect the
strength or breadth of any claims in such patent applications, without
giving the Licensors' Agent a reasonable opportunity to comment on such
action or decision.
(b) BURF shall be responsible for preparing, filing, prosecuting,
maintaining and defending the Xxxxx Limited Field Patents. BURF shall
provide Licensee with copies of all filings and relevant documentation and
a reasonable opportunity in advance to comment on such filings. BURF will
not abandon any patent application in the Xxxxx Limited Field Patents, or
make prosecution-related decisions that would have a material impact on
the nature or scope of any claims in such patent applications, without
giving Licensee a reasonable opportunity to comment on such action or
decision.
(c) Licensee shall bear all costs in connection with the preparation,
filing, prosecution, maintenance and defense of the Licensed Patents and,
except as provided in Section 4.1(e), shall reimburse BURF for all
reasonable costs incurred by BURF in connection with the preparation,
filing, prosecution, maintenance and defense of the Xxxxx Limited Field
Patents. In the event that BURF enters into one or more licenses with
Third Parties of BURF'S interest in the Xxxxx Limited Field Patents
outside the Licensed Field, the amount Licensee is obligated to reimburse
BURF for patent costs under the prior sentence shall be reduced to a pro
rata share of such costs based on the number of licensees.
(d) In the event that Licensee determines to abandon prosecution of, or
to cease to maintain, any Licensed Patent (other than the Xxxxx Limited
Field Patents) in any country, Licensee shall so notify the Licensors'
Agent and shall permit the Agent, in its sole discretion, at the Agent's
expense, to continue to prosecute or maintain such Licensed Patent in such
jurisdiction, and Licensee shall cooperate with the Agent in regard
thereto. If
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission
11
such country is a Major Market Country and the Agent does so
prosecute, the licenses granted to Licensee under Section 2.1 shall
terminate in such country with respect to any Licensed Patents issuing in
such country as a result of such prosecution
(e) On a country-by-country basis, Licensee may elect not to reimburse
BURF for the preparation, filing, prosecution and maintenance of the Xxxxx
Limited Field Patents in such country by giving written notice to BURF. In
the event that Licensee elects not to, or fails to, reimburse BURF for
such costs in any country, BURF, in its sole discretion, may continue to
prosecute or maintain such Xxxxx Limited Field Patents in such country at
BURF's expense. If such country is a Major Market Country and BURF does so
prosecute the Xxxxx Limited Field Patents, the licenses granted to
Licensee under Section 2.1 shall terminate in such country with respect to
any Xxxxx Limited Field Patents issuing in such country as a result of
such prosecution.
(f) Each Party shall, and shall cause its Affiliates, employees,
attorneys and agents to, cooperate fully with the other Parties and
provide all information and data and execute any documents reasonably
required or requested in order to allow the other Party(ies) to prepare,
prosecute, file, and maintain patents and patent applications pursuant to
this Section 4.1 for no additional compensation.
(g) Reimbursement to be made to BURF by Licensee pursuant to this
Section 4.1 will be made pursuant to invoices submitted by BURF to
Licensee no more often than once per calendar quarter. Payment shall be
due within 30 days after Licensee receives such an invoice from BURF. Each
invoice must be accompanied by supporting documentation sufficiently
demonstrating the expense so incurred.
4.2. Confidential Information. Except to the extent expressly authorized
by this Agreement or otherwise agreed in writing, the Parties agree that, for
the term of this Agreement and for five years thereafter, each Party (the
"Receiving Party") receiving any Confidential Information of any other Party
hereunder (the "Disclosing Party") that is disclosed in writing and marked as
"Confidential ," "Proprietary" or the substantial equivalent thereof shall keep
such Confidential Information confidential and shall not publish or otherwise
disclose or use such Confidential Information for any purpose other than as
provided for in this Agreement, except for Confidential Information that the
Receiving Party can establish:
(a) was already known by the Receiving Party (other than under an
obligation of confidentiality) at the time of disclosure by the Disclosing
Party and the Receiving Party has documentary evidence to that effect;
(b) was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the Receiving Party;
(c) became generally available to the public or otherwise part of the
public domain after its disclosure or development, as the case may be,
other than through any act or omission of the Receiving Party or any of
its Affiliates;
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission
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(d) was disclosed to the Receiving Party, other than under an obligation
of confidentiality, by a Third Party who had no obligation to the
Disclosing Party not to disclose such information to others; or
(e) was independently discovered or developed by or on behalf of the
Receiving Party without the use of any Confidential Information belonging
to the Disclosing Party and the Receiving Party has documentary evidence
to that effect.
Notwithstanding the foregoing, each Party may disclose Confidential Information
belonging to another Party to the extent such disclosure is reasonably necessary
to file or prosecute patent applications as contemplated by this Agreement, to
prosecute or defend litigation, to exercise its rights hereunder, and to comply
with applicable governmental laws and regulations. In the event a Party shall
deem it reasonably necessary to disclose Confidential Information belonging to
another Party pursuant to this Section 4.2, the Disclosing Party shall to the
extent possible give reasonable advance written notice of such disclosure to the
other Party and take reasonable measures to ensure confidential treatment of
such information.
4.3. Enforcement of Intellectual Property Rights.
(a) If any Party becomes aware of any infringement, anywhere in the
world, of any issued patent within the Licensed Patents, such Party will
notify the other Parties in writing to that effect.
(b) If a Third Party is infringing or appears to be infringing any of
the Licensed Patents in the Licensed Field, Licensee shall have the
initial right, at its own expense, to take action to obtain a
discontinuance of infringement or bring suit against such Third Party
infringer and to join each Licensor as a party plaintiff (to the extent
such Licensor holds rights in such Licensed Patents); provided that if
required by law, M.I.T. shall permit any action under this Section to be
brought in its name, including being joined as a party-plaintiff, and
further provided that Licensee shall hold M.I.T. harmless from, and
indemnify M.I.T. against, any costs, expenses, or liability that M.I.T.
incurs in connection with such action. Prior to commencing any such action
relating to infringement of the M.I.T. Collaboration Licensed Patents,
Licensee shall consult with M.I.T. and shall consider the views of M.I.T.
regarding the advisability of the proposed action and its effect on the
public interest. Licensee shall not enter into any settlement, consent
judgment, or other voluntary final disposition of any infringement action
relating to infringement of the M.I.T. Collaboration Licensed Patents
under this Section without the prior written consent of M.I.T. Such right
of Licensee shall remain in effect until 90 days after the date notice is
given under Section 4.31(a). If, after the expiration of the 90-day
period, Licensee has not obtained a discontinuance of infringement of the
Licensed Patents, filed suit against any such Third Party infringer of the
Licensed Patents, or provided the Licensors' Agent with information and
arguments demonstrating to the Agent's reasonable satisfaction that there
is insufficient basis for the allegation of such infringement of the
Licensed Patents, then the Agent shall have the right, but not the
obligation, to bring suit against such Third Party infringer of the
Licensed Patents, provided that the Agent shall bear all the expenses of
such suit.
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission
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If a Third Party is infringing or appears to be infringing any of the
Licensed Patents outside of the Licensed Field, the Licensors' Agent
retains the initial right to take action to obtain a discontinuance of
infringement or bring suit against such Third Party infringer. If the
Agent fails to take such action or bring such suit within 90 days after
the date notice is given under Section 4.3(a), Licensee shall have the
right, but not the obligation, to take such action or bring such suit
(subject to the same terms and conditions as apply to other actions and
suits initiated by Licensee under this Section 4.3(b)) if the alleged
infringement could have an adverse effect on Licensee's rights under this
Agreement or the development or commercialization of Licensed Products.
(c) Licensee shall not consent to the entry of any judgment or enter
into any settlement with respect to such proceedings without the prior
written consent of the Licensors' Agent (which consent shall not
unreasonably be withheld or delayed). Neither Licensors' Agent nor any
Licensor shall consent to the entry of any judgment or enter into any
settlement with respect to such proceedings without the prior written
consent of Licensee (which consent shall not unreasonably be withheld or
delayed).
(d) The Party initiating any suit or action for infringement of the
Licensed Patents against a Third Party in accordance with this Section 4.3
(the "Initiating Party") shall have sole control of such proceedings;
provided, however, that each Party shall have the right to consult with
the Initiating Party and to participate in and be represented by
independent counsel in such litigation at its own expense. Each Party
shall cooperate with the Initiating Party in any such suit or action
(including by executing any documents required to enable the Initiating
Party to initiate such litigation). The Initiating Party shall bear the
reasonable expenses (excluding legal fees and expenses) incurred by the
other Parties in providing assistance and cooperation as is requested by
the Initiating Party; provided, however, that Licensee may set-off against
any royalty payment or payments owed under this Agreement its reasonable
out-of-pocket expenses, including reasonable legal fees and expenses,
incurred in connection with any such proceeding that Licensee initiates;
provided, further, however that no such royalty payment shall be reduced
by more than * * * by any such offset.
(e) The Initiating Party shall incur no liability to the other Parties
as a consequence of any unfavorable decision resulting from any action or
suit initiated pursuant to this Section 4.3, including any decision
holding any of the Licensed Patents invalid or unenforceable.
(f) Any recovery obtained by any Party as a result of any such
proceeding against a Third Party infringer shall be applied as follows:
(i) first to reimbursement of the unreimbursed legal fees and expenses
incurred by the Initiating Party; (ii) second to the reimbursement of the
unreimbursed legal fees and expenses incurred by the other Parties; (iii)
third to the payment to the Licensors' Agent of any amounts that were
set-off against royalty payments pursuant to Section 4.3(d); and (iv) then
the remainder shall be divided by Licensors and Licensee as follows:
(i) If the remaining amount awarded is calculated with respect to
lost profits, Licensee shall receive an amount equal to the damages
which it has been determined that
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unredacted version of this exhibit has been filed separately with the
Commission
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Licensee has suffered as a result of the infringement, less the
amount of any royalties or other payments that would have been due
to Licensors had Licensee made the Net Sales that would have
resulted in such profits, and the Licensors' Agent shall receive an
amount equal to such deducted royalties or other payments; and
(ii) If the remaining amount awarded is calculated other than with
respect to lost profits, sixty-seven percent (67%) of such amount
shall be awarded to the Initiating Party and thirty-three percent
(33%) to the other Party(ies) (Licensee or the Licensors' Agent (on
behalf of the Licensors), as the case may be).
5. OPERATIONS UNDER THE LICENSE
5.1. Due Diligence.
(a) Obligation with Respect to Xxxxx Licensed Patents. Licensee shall
use commercially reasonable efforts to commercialize the Xxxxx Licensed
Patents. If BURF believes that Licensee has failed to comply with its due
diligence obligations under this Section 5.1(a), Licensee shall (i) within
60 days of Licensee's receipt of written notice of such failure, provide
to BURF a commercially reasonable plan to remedy such failure and (ii)
cure such failure in accordance with such plan within the time provided
for under such plan.
(b) Obligation with Respect to M.I.T. Collaboration Licensed Patents.
Licensee shall use commercially reasonable efforts to commercialize the
M.I.T. Collaboration Licensed Patents. If M.I.T. believes that Licensee
has failed to comply with its due diligence obligations under the first
sentence of this Section 5.1(b), Licensee shall (i) within 60 days of
Licensee's receipt of written notice of such failure, provide to M.I.T. a
commercially reasonable plan to remedy such failure and (ii) cure such
failure in accordance with such plan within the time provided for under
such plan. In addition:
(i) If Licensee (or its Affiliate or Sublicensee, as the case may
be) fails to develop a working prototype using technology covered by
the M.I.T. Collaboration Licensed Patents before December 31, 2004,
M.I.T. may, on or after such date, terminate the license granted by
M.I.T. pursuant to Section 2.1(y) and the license to BURF's interest
in the M.I.T. Collaboration Licensed Patents granted by BURF
pursuant to Section 2.1(x) by giving written notice to Licensee,
such termination to be effective as of the date of Licensee's
receipt of such notice.
(ii) If the first commercial sale of a Licensed Product using
technology covered by the M.I.T. Collaboration Licensed Patents does
not occur before * * *, M.I.T. may, on or after such date, terminate
the license granted by M.I.T. pursuant to Section 2.1(y) and the
license to BURF's interest in the M.I.T. Collaboration Licensed
Patents granted by BURF pursuant to Section 2.1(x) by giving written
notice to Licensee, such termination to be effective as of the date
of Licensee's receipt of such notice; provided, however, that M.I.T.
shall extend this deadline to * * * upon Licensee documenting to
M.I.T. that Licensee (or its Affiliate or Sublicensee(s), as the
case may be) will commit the equivalent of two employees to work
full time in an attempt to achieve such goal by * * *; provided,
further, however, that in the event that the deadline is extended
and the first commercial sale of a Licensed Product using technology
covered by the M.I.T. Collaboration
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unredacted version of this exhibit has been filed separately with the
Commission
15
Licensed Patents does not occur before the extended deadline of * *
*, but Licensee can show that it has been commercially diligent in
attempting to achieve such goal before the extended deadline, M.I.T.
shall enter into good faith negotiations with Licensee to extend the
deadline further, provided that any such further extension shall be
solely at M.I.T.'s discretion
(iii) If (A) the amount of Net Sales of Licensed Products using
technology covered by the M.I.T. Collaboration Licensed Patents does
not equal or exceed * * * in the calendar year * * * or (B) the
amount of Net Sales of Licensed Products using technology covered by
the M.I.T. Collaboration Licensed Patents does not equal or exceed *
* * in any calendar year thereafter, M.I.T. may, on or after such
date, terminate the license granted by M.I.T. pursuant to Section
2.1(y) and the license to BURF's interest in the M.I.T.
Collaboration Licensed Patents granted by BURF pursuant to Section
2.1(x) by giving written notice to Licensee, such termination to be
effective as of December 31 of the year in which such notice is
given; provided, however, that M.I.T. shall extend the deadline for
satisfaction of the goal set forth in clause (A), from calendar year
* * *to calendar year * * *, upon Licensee documenting to M.I.T.
that Licensee (or its Affiliates or Sublicensees, as the case may
be) will commit the equivalent of two employees to work full time in
an attempt to achieve such goal during calendar year * * *;
provided, further, however, that in the event that the deadline is
extended and such goal is not satisfied in the calendar year * * *,
but Licensee can show that it has been commercially diligent in
attempting to achieve such goal before the extended deadline, M.I.T.
shall enter into good faith negotiations with Licensee to extend the
deadline further, provided that any such further extension shall be
solely at M.I.T.'s discretion.
(c) Reports. Licensee shall provide to BURF and M.I.T. at least once per
year a written report of its activities and efforts toward
commercialization of the applicable Licensed Patents in sufficient detail
to allow the Licensors to monitor Licensee's compliance with the
provisions of this Section 5.1. Licensee shall also provide written notice
to BURF and M.I.T., as soon as practicable after each of the deadlines set
forth in Section 5.1(b), stating whether or not the applicable goal set
forth in Section 5.1(b) has been satisfied by such deadline, together with
reasonable supporting documentation.
5.2. Compliance with Law. Licensee shall comply with and shall insure
that any Sublicensee complies with all government statutes and regulations that
relate to Licensed Products, including, but not limited to, FDA statutes and
regulations and the Export Administration Act of 1979 (50 App. U.S.C. Section
2401 et. seq.), as amended, and the regulations promulgated thereunder, and any
applicable similar laws and regulations of any other country. Without limiting
the generality of the foregoing, Licensee agrees that all Licensed Products used
or sold in the United States shall be manufactured substantially in the United
States to the extent required by and in compliance with the Federal Patent
Policy.
5.3. Marking. Licensee shall cause all Licensed Products sold in the
United States to be marked with all applicable U.S. Patent Numbers, to the full
extent required by United States law.
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unredacted version of this exhibit has been filed separately with the
Commission
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Licensee shall similarly cause all Licensed Products shipped to or sold in any
other country to be marked in such a manner as to conform with the patent laws
and practice of such country.
6. REPRESENTATIONS AND WARRANTIES; WARRANTY DISCLAIMER
6.1. Representations and Warranties.
(a) Licensee hereby represents and warrants to BURF and M.I.T. as
follows:
(i) Licensee is a corporation duly organized and validly existing
under the laws of the State of Delaware.
(ii) Licensee has the corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder, and
the execution, delivery and performance of this Agreement by
Licensee has been duly authorized by all requisite corporate action
on the part of Licensee.
(b) BURF hereby represents and warrants to Licensee as follows:
(i) BURF has the corporate power and authority to execute and
deliver this Agreement, to grant the licenses granted by it
hereunder to Licensee and to perform its other obligations
hereunder, and the execution, delivery and performance of this
Agreement by BURF has been duly authorized by all requisite
corporate action on the part of BURF.
(ii) As of the Effective Date, BURF is the sole owner of the Xxxxx
Licensed Patents and is the joint owner, with M.I.T., of the M.I.T.
Collaboration Licensed Patents. As of the Effective Date, BURF has
not granted licenses or other rights under BURF's interests to
practice any of the Xxxxx Licensed Patents, the M.I.T. Collaboration
Licensed Patents or the Licensed Data to any other Person.
(iii) As of the Effective Date, BURF has received no notice of
infringement or notice of any pending claim with respect to any of
the Xxxxx Licensed Patents, the M.I.T. Collaboration Licensed
Patents or the Licensed Data.
(c) M.I.T. hereby represents and warrants to Licensee as follows:
(i) As of the Effective Date, the M.I.T. Technology Licensing
Office has not granted a license to any other Person under M.I.T.'s
interests in the patent application known as M.I.T. case number * *
*.
6.2. Warranty Disclaimers
(a) EXCEPT AS MAY OTHERWISE BE EXPRESSLY SET FORTH IN THIS AGREEMENT, BURF AND
M.I.T. MAKE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND CONCERNING THE LICENSED
PATENTS OR LICENSED DATA, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NONINFRINGEMENT,
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission
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VALIDITY OF LICENSED PATENT CLAIMS, WHETHER ISSUED OR PENDING, AND THE ABSENCE
OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE. Specifically, and not
to limit the foregoing, BURF and M.I.T. make no warranty or representation (i)
regarding the validity or scope of the Licensed Patents, or (ii) that the
exploitation of the Licensed Patents or Licensed Data or any Licensed Product
will not infringe any patents or other intellectual property rights of a Third
Party. IN NO EVENT SHALL M.I.T., BURF, THEIR TRUSTEES, DIRECTORS, OFFICERS,
EMPLOYEES OR AFFILIATES BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY
KIND, INCLUDING ECONOMIC DAMAGES OR INJURY TO PROPERTY AND LOST PROFITS,
REGARDLESS OF WHETHER M.I.T. OR BURF SHALL BE ADVISED, SHALL HAVE OTHER REASON
TO KNOW, OR IN FACT SHALL KNOW OF THE POSSIBILITY OF THE FOREGOING.
(b) BURF acknowledges and agrees that nothing in this Agreement shall be
construed as representing an estimate or projection of either (a) the number of
Licensed Products that will or may be successfully developed or commercialized
or (b) anticipated sales or the actual value of any Licensed Product and that
the figures set forth in this Agreement or that have otherwise been discussed by
the Parties are merely intended to define Licensee's royalty obligations to the
Licensors in the event such sales performance is achieved. LICENSEE MAKES NO
REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, THAT IT WILL BE ABLE TO
SUCCESSFULLY DEVELOP OR COMMERCIALIZE ANY LICENSED PRODUCT OR, IF
COMMERCIALIZED, THAT IT WILL ACHIEVE ANY PARTICULAR SALES LEVEL OF SUCH LICENSED
PRODUCT(S). Notwithstanding the foregoing, M.I.T. shall be entitled to terminate
this Agreement pursuant to Section 8.2.
7. INDEMNIFICATION; INSURANCE
7.1 Indemnification.
(a) Indemnity. Licensee shall indemnify, defend, and hold harmless
M.I.T., BURF and their trustees, directors, officers, faculty, students,
employees, and agents and their respective successors, heirs and assigns
(the "Indemnitees"), against any liability, damage, loss, or expense
(including reasonable attorneys fees and expenses) incurred by or imposed
upon any of the Indemnitees in connection with any claims, suits, actions,
demands or judgments arising out of any theory of liability (including
without limitation actions in the form of tort, warranty, or strict
liability and regardless of whether such action has any factual basis)
concerning any product, process, or service that is made, used, sold,
imported, or performed pursuant to any right or license granted to
Licensee under this Agreement.
(b) Procedures. M.I.T. and BURF shall provide Licensee with prompt
written notice of any claim, suit, action, demand, or judgment for which
indemnification is sought under this Agreement. Licensee agrees, at its
own expense, to provide attorneys reasonably acceptable to M.I.T. and BURF
to defend against any such claim. The Indemnitees shall cooperate fully
with Licensee in such defense and will permit Licensee to conduct and
control such defense and the disposition of such claim, suit, or action
(including all decisions relative to litigation, appeal, and settlement);
provided, however, that any Indemnitee shall
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unredacted version of this exhibit has been filed separately with the
Commission
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have the right to retain its own counsel, at the expense of Licensee, if
the named parties to such proceeding (including any impleaded parties)
include both Licensee and the Indemnitee and representation of such
Indemnitee by the counsel retained by Licensee would be inappropriate
because of actual or potential differences in the interests of such
Indemnitee and Licensee. Licensee agrees to keep M.I.T. and BURF informed
of the progress in the defense and disposition of such claim and to
consult with M.I.T. and BURF with regard to any proposed settlement.
7.2. Insurance. On and after the date on which the first clinical trial
of a Licensed Product commences, Licensee shall obtain and carry in full force
and effect commercial general liability insurance, including product liability
and errors and omissions insurance, which shall protect Licensee and Indemnitees
with respect to events described in Section 7.1(a). Such insurance (i) shall
list M.I.T. and BURF as additional insureds thereunder, (ii) shall be endorsed
to include product liability coverage, and (iii) shall require thirty (30) days
written notice to be given to M.I.T. and BURF prior to any cancellation or
material change thereof. The limits of such insurance shall be reasonably
consistent with industry practice. In the alternative, Licensee may self-insure
subject to prior approval of the Licensors' Agent. Licensee shall provide the
Agent with Certificates of Insurance evidencing compliance with this Section
7.2. Licensee shall continue to maintain such insurance or self-insurance after
the expiration or termination of this Agreement during any period in which
Licensee or any Affiliate or Sublicensee continues to make, use, or sell a
product that was a Licensed Product under this Agreement and thereafter for a
period of five years.
8. TERM AND TERMINATION
8.1. Term. The term of this Agreement shall commence on the Effective
Date and shall extend until * * *.
8.2. Termination by Licensors.
(a) Nonpayment. In the event Licensee fails to pay any amounts due and
payable to Licensor hereunder, and fails to make such payments within 30
days after receiving written notice of such failure, the Licensors' Agent
(on behalf of the Licensors) may terminate this Agreement immediately upon
written notice to Licensee.
(b) Due Diligence. In the event Licensee fails to comply with its due
diligence obligations under Section 5.1(a) or Section 5.1(b) and fails to
cure such failure as provided in Section 5.1, the Licensors' Agent (on
behalf of the Licensors) may terminate this Agreement immediately upon
written notice to Licensee.
(c) Material Breach. In the event Licensee commits a material breach of
its obligations under this Agreement, except for a breach described in
Section 8.2(a) or 8.2(b), and fails to cure that breach within 60 days
after receiving written notice thereof, the Licensors' Agent (on behalf of
the Licensors) may terminate this Agreement immediately upon written
notice to Licensee.
8.3. Termination by Licensee. Licensee shall have the right to terminate
this Agreement at any time by giving written notice to the Licensors' Agent.
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission
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8.4. Effect of Termination.
(a) Upon termination of this Agreement for any reason, nothing herein
shall be construed to release any Party from any obligation that matured
prior to the effective date of such termination.
(b) The provisions of Sections 1 (Definitions), 3.1(c)(ii) (Royalty
Reports and Payments, with respect to final report and payment), 3.2
(Records), 4.2 (Confidential Information), 5.2 (Compliance with Law), 6.2
(Warranty Disclaimer), 7.1 (Indemnification), 7.2 (Insurance), 8.4 (Effect
of Termination), 9 (Dispute Resolution), 3.1(d) (Equity), 10 (Licensors'
Agent), 11.4 (Governing Law) and 11.9 (Limitation of Liability) shall
survive termination or expiration of this Agreement.
(c) Licensee and its Sublicensees may, after termination of this
Agreement, sell all Licensed Products that are in inventory at the time of
termination and complete and sell Licensed Products that Licensee can
demonstrate were in the process of manufacture at the time of such
termination; provided, however, that Licensee shall pay to the Licensors'
Agent any running royalties due on the sale of such Licensed Products and
shall submit reports in accordance with the terms of this Agreement.
(d) Upon reasonable request, BURF shall confirm the terms of any
sublicenses granted by Licensee to Third Parties pursuant to the terms of
this Agreement; provided, however, that (i) BURF shall have no obligation
to agree to perform any obligations of or satisfy any liabilities of
Licensee under such sublicenses; and (ii) each such Sublicensee shall
enter into an agreement directly with BURF on substantially the same terms
and conditions as this Agreement with respect to the sublicensed rights
(other than the M.I.T. Collaboration Licensed Patents), including without
limitation substantially the same terms with respect to payment of
royalties on the Net Sales of Licensed Products.
9. DISPUTE RESOLUTION
9.1. Mediation. In the event any dispute arising out of or relating to
this Agreement remains unresolved within 60 days from the date the affected
Party informed the other Parties of such dispute, any Party may initiate
mediation upon written notice to the other Parties ("Mediation Notice Date"),
whereupon all Parties shall be obligated to engage in a mediation proceeding
under the then-current Center for Public Resources ("CPR") Mediation Procedure
for Business Disputes (available at xxxx://xxx.xxxxxx.xxx), except that specific
provisions of this Section shall override any inconsistent provisions of the CPR
Mediation Procedure. The mediator will be selected from the CPR Panels of
Neutrals. If the Parties cannot agree upon the selection of a mediator within 15
business days after the Mediation Notice Date, then, upon the request of any
Party, the CPR shall appoint the mediator. The Parties shall attempt to resolve
the dispute through mediation until the first of the following occurs: (i) the
Parties reach a written settlement; (ii) the mediator notifies the Parties in
writing that they have reached an impasse; (iii) the Parties agree in writing
that they have reached an impasse; or (iv) the Parties have not reached a
settlement within 60 days after the Mediation Notice Date. Nothing in this
Section 9.1 shall prevent any Party from seeking a preaward attachment of assets
or preliminary relief to enforce intellectual property
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rights or confidentiality obligations under this Agreement in a court of
competent jurisdiction prior to resolution of the dispute through mediation.
9.2. Trial Without Jury. If the Parties fail to resolve the dispute
through mediation, or if no Party elects to initiate mediation, each Party shall
have the right to pursue any other remedies legally available to resolve the
dispute; provided, however, that the parties expressly waive any right to a jury
trial in any legal proceeding under this Section.
10. LICENSORS' AGENT
10.1. [Reserved.]
10.2. Licensee to Pay Agent. Licensee shall be fully protected in making
all payments due under this Agreement to BURF. All royalty payments and other
payments or consideration made or delivered by Licensee pursuant to this
Agreement shall, as a matter of convenience, be made by Licensee to BURF. BURF
shall be responsible for the allocation and payment or delivery of such amounts
to each Licensor, pursuant to terms of the Xxxxx - M.I.T. Agreement. Licensee
shall have no obligation or liability with respect to the allocation of royalty
payments or other payments or consideration between M.I.T. and BURF or with
respect to any other obligations or liabilities of either M.I.T. or BURF to the
other Licensor, whether arising under this Agreement or any other separate
agreement between BURF and M.I.T.
10.3. Amendments, Consents, Waivers. Except as otherwise set forth herein,
the Agent may take or refrain from taking any action under this Agreement,
including giving its written consent to any modification of or amendment to and
waiving in writing compliance with any covenant or condition in this Agreement
or any breach, all of which actions shall be binding upon each of the Licensors;
provided, however, that, without the written consent of M.I.T.:
(a) No reduction shall be made in the amounts payable pursuant to
Section 3.1.
(b) No amendment to or modification of, or waiver with respect to,
Section 5.1(b) (relating to obligations with respect to M.I.T.
Collaboration Licensed Patents) shall be made.
(c) No amendment to or modification of Schedule 1.14 with respect to
M.I.T. Collaboration Licensed Patents shall be made.
(d) No amendment to or modification of this Section 10.3 shall be made.
11. GENERAL
11.1. Assignment. This Agreement shall be binding upon and shall inure to
the benefit of each Party and each Party's respective transferees, successors
and assigns, provided, however, that no Party shall have the right to assign
this Agreement or its rights and obligations hereunder to any other Person
without the prior written consent of the other Parties, except as expressly
provided in this Section. Each Party may assign or otherwise transfer this
Agreement and the licenses granted hereby and the rights acquired by it
hereunder without such consent in connection with a sale or other transfer of
such Party's entire business or that part of such Party's business to which the
licenses granted hereby relates, provided, in all such cases, that any such
assignee or transferee has agreed in writing to be bound by the terms and
provisions of this Agreement or is so bound by operation of law. Any purported
assignment in violation of the provisions of this paragraph
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shall be null and void.
11.2. Entire Agreement; Amendments. This Agreement, together with all
schedules, exhibits and attachments hereto, constitute the entire understanding
of the parties with respect to the subject matter hereof and supersede all prior
and contemporaneous understandings and agreements, whether written or oral. All
schedules, exhibits and attachments hereto are hereby incorporated into this
Agreement by reference. No amendment, modification or supplement of any
provision of this Agreement shall be valid or effective unless made in writing
and signed by each Party.
11.3. Notices. Any notice, communication or payment required or permitted
to be given or made hereunder shall be in writing and, except as otherwise
expressly provided in this agreement, shall be deemed given or made and
effective (i) when delivered personally; or (ii) when delivered by telex or
telecopy (if not a payment); or (iii) when received if sent by overnight express
or mailed by certified, registered or regular mail, postage prepaid, addressed
to parties at their address stated below, or to such other address as such party
may designate by written notice in accordance with the provisions of this
Section 11.3.
If to BURF or to Licensors (through Licensors' Agent):
Xxxxx University Research Foundation
Box 1949 or 00 Xxxxxxxxxxxx Xx.
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attn: President.
If to M.I.T., all matters relating to the license:
Technology Xxxxxxxxx Xxxxxx, Xxxx XX00-000
Xxxxxxxxxxxxx Institute of Technology
00 Xxxxxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Director
Tel: 000-000-0000
Fax: 000-000-0000
If to M.I.T., relating to
any equity action after the initial issuance of shares:
Massachusetts Institute of Technology
Treasurer's Xxxxxx
000 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx
Tel: 000-000-0000
Fax: 000-000-0000
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unredacted version of this exhibit has been filed separately with the
Commission
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Licensee: Cyberkinetics, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attn: President
With a copy to: Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxx, Esq.
Telecopier: 000-000-0000
11.4. Governing Law. This Agreement shall be construed and enforced in
accordance with the domestic substantive laws of the State of Rhode Island
without regard to any choice or conflict of laws rule or principle that would
result in the application of the domestic substantive law of any other
jurisdiction other than (i) United States federal law, to the extent applicable
and (ii) in regard to any question affecting the construction or effect of any
patent, the law of the jurisdiction under which such patent is granted.
11.5. Headings. Headings included herein are for convenience only, and
shall not be used to construe this Agreement.
11.6. Independent Contractors. For the purposes of this Agreement and all
services to be provided hereunder, each shall be, and shall be deemed to be, an
independent contractor and not an agent, partner, joint venturer or employee of
the other party. No Party shall have authority to make any statements,
representations or commitments of any kind, or to take any action which shall be
binding on any other Party, except as may be explicitly provided for herein or
authorized in writing.
11.7. Severability. If any provision of this Agreement shall be found by a
court of competent jurisdiction to be void, invalid or unenforceable, the same
shall either be reformed to comply with applicable law or stricken if not so
conformable, so as not to affect the validity or enforceability of this
Agreement.
11.8. No Waiver. No provision of the Agreement shall be waived by any act,
omission or knowledge of a Party or its agents or employees except by an
instrument in writing expressly waiving such provision and signed by the waiving
Party.
11.9. [Reserved.]
11.10. Force Majeure. No Party shall be liable to the other Parties for
delay or failure in the performance of the obligations on its part contained in
this Agreement if and to the extent that such failure or delay is due to
circumstances beyond its control that it could not have avoided by the exercise
of reasonable diligence. It shall notify the other Parties promptly in the event
such circumstances arise, giving an indication of the likely extent and duration
thereof, and shall use all commercially reasonable efforts to resume performance
of its obligations as soon as practicable; provided, however, that no Party
shall be required to settle any labor dispute or disturbance.
11.11. Counterparts. This Agreement may be executed in any number of
counterparts,
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each of which shall constitute an original document, but all of which shall
constitute the same agreement.
[Signature pages follow.]
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unredacted version of this exhibit has been filed separately with the
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the date first set forth above.
XXXXX UNIVERSITY CYBERKINETICS, INC.
RESEARCH FOUNDATION
By:_______________________________ By:___________________________________
Name:_____________________________ Name:_________________________________
Title:____________________________ Title:________________________________
MASSACHUSETTS INSTITUTE OF TECHNOLOGY
By:___________________________________
Name:_________________________________
Title:________________________________
*** Information redacted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed separately with the
Commission
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