Exhibit 10.1
TECHNOLOGY LICENSE AGREEMENT
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This Technology License Agreement is entered into this 22nd day of
September, 1995 between MERCK & CO., INC, a New Jersey corporation, having
a place of business at Xxx Xxxxx Xxxxx, Xxxxxxxxxx Xxxxxxx, Xxx Xxxxxx
00000-0000 ("Merck") and COMPUMED, INC., a Delaware corporation, having a
place of business at 0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx Xxxxx,
Xxxxxxxxxx 00000 ("CompuMed").
WHEREAS CompuMed is in the business of, among other things, performing RA
(as hereafter defined) using the Proprietary Technology (as hereafter
defined) and the Acquired Assets (as hereafter defined); and
WHEREAS, Merck desires to license the Proprietary Technology and to
purchase the Acquired Assets and from CompuMed for the purpose of
performing RA and other activities in the Field (as hereafter defined), and
CompuMed is willing to license the Proprietary Technology and to sell the
Acquired Assets and to Merck for such purpose on the terms provided in this
Agreement.
NOW THEREFORE, in consideration of the mutual promises and undertakings set
forth herein, the parties agree as follows:
SECTION 1: DEFINITIONS
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1.1 For the purposes of this Agreement, the following definitions shall
apply:
(a) "Acquired Assets" shall mean the assets set forth on Schedule 1.
(b) "Affiliate" shall mean (i) any entity, fifty percent (50%) or
more of the voting equity interests of which are owned or
controlled, directly or indirectly, by Merck or CompuMed, (ii)
any entity which owns or controls, directly or indirectly, fifty
(50%) or more of the voting equity interests in Merck or
CompuMed, or (iii) any entity under the direct or indirect
control of an entity described in (i) or (ii).
(c) "Agreement" shall mean this Technology License Agreement between
Merck and CompuMed, including all Exhibits and Schedules hereto.
(d) "Ancillary Agreements" shall mean, collectively, Sublease (if
executed by Merck as provided in Section 10.5), the Trademark
Assignment, the Copyright Assignment, the Technology License
Acknowledgement, the Xxxx of Sale, the Assignment and Assumption
Agreement and the Transition Operating Agreement.
(e) "Assignment and Assumption Agreement" shall mean the Assignment
and Assumption Agreement to be executed and delivered by
CompuMed and Merck at the Closing in the form attached as
Exhibit A.
(f) "Xxxx of Sale" shall mean the Xxxx of Sale to be executed and
delivered by CompuMed to Merck at the Closing in the form
attached as Exhibit B.
(g) "BuIk Sale Law" shall mean the provisions or Article 6 of the
Uniform Commercial Code as they apply to the sale of the
Acquired Assets hereunder.
(h) "Closing" shall mean the time and place for (i) the execution and
delivery of the Ancillary Agreements and the Guaranties and (ii)
the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements.
(i) "Commercial Software" shall mean the software identified on
Schedule 2 in the form commercially available, and as the same
may hereafter be modified from time to time by the commercial
licensor thereof.
(j) "Copyright Assignment" shall mean the Assignment of Copyright to
be executed and delivered by CompuMed to Merck at the Closing in
the form attached as Exhibit C.
(k) "Documentation" shall mean all flow charts, logic diagrams,
program listings, operating instructions, user manuals and all
other related materials (to the extent they now exist and in
whatever form), for use in connection with the Proprietary
Technology.
(l) "FDA" shall mean the United States Food and Drug Administration.
(m) "FDC Act" shall mean the Federal Food, Drug and Cosmetic Act, as
amended, 21 U.S.C. 301 et seq.
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(n) "Field" shall mean the screening for or assessment of
pathological conditions in human bones as it relates to
osteoporosis and rheumatology.
(o) [deleted].
(p) [deleted].
(q) "Hardware" shall mean the personal computers, servers, scanners
and other items set forth on Schedule 4, as the same may
hereafter be modified or replaced from time to time.
(r) "Key Employees" shall mean those employees or consultants of
CompuMed identified on Schedule 5.
(s) "Law" shall mean any statute, law, ordinance, regulation, rule,
order, judgment or decree of any federal, state, local or other
governmental authority, whether legislative, executive, judicial,
administrative or otherwise.
(t) "License Payment" is defined in Section 2.3 of this Agreement.
(u) "Liens" shall mean any mortgage, lien, pledge, charge, security
interest or other encumbrance of any kind.
(v) "Proprietary Technology" shall mean all technology, computer
software and related databases and algorithms used in connection
with the performance of RA and related customer billing and order
tracking by CompuMed, any and all software object code, software
source code and updates thereto, and any and all drawings,
specifications, designs, operating and manufacturing information
and other materials or things relating thereto, as the same may
hereafter be modified from time to time, including but not
limited to the trade secrets identified on Schedule 13, but
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excluding the Commercial Software. Proprietary Technology does
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not include Major Enhancements (as defined in Section 3.4(f))
unless acquired or licensed to Merck pursuant to Section 3.4.
(w) "Purchase Price" is defined in Section 2.4 of this Agreement.
(x) "Quarter" shall mean each three calendar month period occurring
during a Year and ending March 31, June 30, September 30 and
December 31, as the case may be.
(y) "RA" shall me.an the analysis of photodensitometry measurements
using radiographic absorptiometry.
(z) "Royalty" is defined in Section 4.1
(aa) "Sublease" shall mean the sublease to be executed and delivered
by CompuMed and consented to by Xxxxxx Aircraft Company, a
Delaware corporation, and USAA Income Properties III Limited
Partnership, a Delaware limited partnership, at or prior to the
Closing, in the form attached as Exhibit E, and as to which Merck
shall have the option expressed in Section 10.5.
(bb) "System" shall mean the Proprietary Technology and Commercial
Software used in conjunction with the Hardware.
(cc) "Technology License" is defined in Section 3.1.
(dd) "Technology License Acknowledgment" shall mean the Technology
License Acknowledgment to be executed and delivered by CompuMed
and Merck at the Closing in the form attached as Exhibit F.
(ee) "Test" shall mean the performance by Merck or its Affiliates of
RA using the System to determine bone mineral density
measurements for one individual person and with respect to which
an amount payable is due or payment has been received.
(ff) "Trademark Assignment" shall mean the Trademark Assignment to be
executed and delivered by CompuMed at the Closing in the form
attached as Exhibit G.
(gg) "Transition Operating Agreement" shall mean the Transition
Operating Agreement to be executed and delivered by CompuMed and
Merck at the Closing in the form attached as Exhibit H.
(hh) "Use", when used in connection with the Proprietary Technology
and Documentation, shall mean the following:
(i) operation and/or utilization of the Proprietary Technology
and Documentation in performing RA or otherwise in the
Field;
(ii) copying or otherwise making available the Proprietary
Technology and Documentation for (A) use by Merck and its
Affiliates in accordance with Section 1.1 (hh)(i); (B)
distribution to sublicensees or assignees of Merck as
permitted by Section 16 for use in accordance with Section
1.1 (hh)(i); (C) backup or archival requirements; and (D)
maintenance, improvement and trouble shooting with respect
to the Proprietary Technology, the Documentation and/or the
System;
(iii) escrowing or otherwise making available software source
code to regulatory authorities for the purposes of
complying with Laws;
(iv) modification of or preparation of derivative works from
the Proprietary Technology or the Documentation for use in
the Field, which modifications or derivative works may be
made by Merck or its Affiliates, CompuMed, or any of their
respective employees, contractors, consultants or agents;
and
(v) such other purposes as are set forth in this Agreement or
any modification or amendment thereto.
(ii) "Wedge" shall mean the aluminum alloy wedge used by CompuMed in
the performance of RA using the System, having the
characteristics and specifications described on Schedule 6.
(jj) "Year" shall mean each one (1) year period beginning on January 1
and ending on December 31, with the first Year beginning on
January 1, 1996.
SECTION 2: SIGNING PAYMENT; LICENSE FEE, PURCHASE PRICE AND CLOSING
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2.1 Subject to the terms and conditions hereinafter set forth, at the
Closing CompuMed shall (i) license to Merck the Proprietary Technology
and Documentation, free and clear of Liens and other rights of third
parties, and (ii) sell, assign, transfer and deliver to Merck, free
and clear of Liens and other rights of third parties, all of the
Acquired Assets.
2.2 The license fee to be paid by Merck to CompuMed for the Technology
License shall consist of (a) a one time payment of $250,000, to be
paid by Merck at Closing by wire transfer of immediately available
funds (the "License Payment") and (b) a royalty to be paid as provided
in Section 4.1 (the "Royalty").
2.3 The purchase price to be paid by Merck to CompuMed for the Acquired
Assets shall be the book value of the Acquired Assets at the Closing,
as reflected on CompuMed's books and records used in the preparation
of CompuMed's financial statements, up to a maximum of $175,000 (the
"Purchase Price"). CompuMed's preliminary determination of the
current book value of the Acquired Assets is set forth on Schedule 1.
At the Closing, CompuMed shall deliver its calculation of the Purchase
Price, itemized to Merck's satisfaction, which calculation shall be
certified by CompuMed's Chief Financial Officer as having been
calculated in accordance with this Section. Payment of the Purchase
Price shall be made by Merck at Closing by wire transfer of
immediately available funds.
2.4 The Closing shall occur on September 22, 1995 at the offices of Merck
at Summneytown Pike, West Point, Pennsylvania, or at such other time
and place as the parties may mutually agree in writing. At the
Closing, each party shall make all the deliveries and take all of the
actions required of it under Section 13 of this Agreement.
2.5. Merck shall have the right, for a period of sixty (60) days after the
Closing, to review CompuMed's books and records used in the
calculation of the Purchase Price. In the event that Merck shall
dispute such calculation, Merck shall notify CompuMed and the parties
shall meet to attempt to resolve such dispute. In the event that the
parties are unable to resolve the dispute, the matter shall be
submitted to KPMG Peat Marwick for resolution. The costs and expenses
of KPMG Peat Marwick shall be paid equally by the parties. CompuMed
shall immediately remit to Merck any excess between the purchase price
paid by Merck at Closing and the correct Purchase Price, as ultimately
determined in accordance with this Section.
SECTION 3: GRANT OF LICENSE
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3.1 At the Closing, CompuMed shall grant Merck and its Affiliates an
exclusive world wide perpetual license to Use the Proprietary
Technology and Documentation, subject to the terms and conditions
hereof and the qualification in Section 3.4 regarding Major
Enhancements (the "Technology License").
3.2 Merck shall have the right to independently develop or have developed
and use software and technology which interfaces with or connects to
the Proprietary Technology. Such independently developed software and
technology shall remain Merck personal and proprietary property.
3.3 Any new releases, versions or other updates to the Proprietary
Technology or Documentation made, in whole or in part, by CompuMed or
its Affiliates and which are funded, in whole or in part by Merck or
its Affiliates, shall be deemed licensed to Merck and its Affiliates
hereunder and will be provided to Merck subject to the terms and
conditions of this Agreement.
3.4 (a) Notwithstanding anything to the contrary contained in this
Agreement, CompuMed shall retain the right to perform developmental
work on the System for the performance of RA in the Field, at its sole
cost and expense. If, in the course of its development work, CompuMed
develops a prototype of a technology that CompuMed believes has the
potential of constituting a Major Enhancement (as defined below),
CompuMed shall provide Merck, on a confidential basis, with (i) a
notice of such development (the "Prototype Notice"), (ii) a brief
description of the Major Enhancement that the prototype is intended to
exemplify, and (iii) an opportunity to evaluate the prototype.
(b) Merck shall have 45 days from receipt of the Prototype Notice to
evaluate the prototype and notify CompuMed as to whether Merck wishes
to fund the remaining development thereof (the "Development Project").
If Merck is interested in funding the Development Project, Merck and
CompuMed shall negotiate with each other, on an exclusive basis, for a
period not to exceed 60 days, the terms under which Merck shall fund
the Development Project. If Merck and CompuMed reach agreement
regarding the terms of Merck's funding such Development Project, the
results of the Development Project shall (to the extent actually
funded by Merck) be owned by Merck. In the event that Merck and
CompuMed are unable to reach agreement on such terms within such 60
day period, or Merck shall fail to indicate its interest in funding
the Development Project within 45 days after receipt of the Prototype
Notice, CompuMed shall be entitled to proceed with the Development
Project, subject to the remaining provisions of this Section 3.4.
(c) If CompuMed completes the Development Project (the "Completed
Project") and believes that the Completed Project is a Major
Enhancement, CompuMed shall provide Merck, on a confidential basis,
with (i) a notice of such completion (the "Completion Notice"), (ii) a
brief description of the Completed Project, and (iii) an opportunity
to evaluate the Completed Project.
(d) Merck shall have 45 days from receipt of the Completion Notice to
(i) test such Completed Project, (ii) notify CompuMed whether Merck
agrees that the Completed Project is a Major Enhancement, and (iii) if
Merck agrees that the Completed Project is a Major Enhancement, to
indicate whether Merck is interested in acquiring a license to the
Major Enhancement. If Merck does not agree that the Completed Project
is a Major Enhancement, then the parties shall resolve such dispute as
provided in Section 3.4(f). If Merck agrees that the Completed
Project is a Major Enhancement and Merck indicates that it is
interested in licensing such Major Enhancement within such 45 day
period, Merck and CompuMed shall negotiate with each other, on an
exclusive basis for a period not to exceed an additional 60 days, the
terms under which Merck shall acquire an exclusive license to the
Major Enhancement. As to any dispute regarding whether a Completed
Project is a Major Enhancement that is submitted for resolution
pursuant to Section 3.4(f) and the result of which is a determination
that the Completed Project does constitute a Major Enhancement, Merck
shall have an additional 5 days from the date of such determination to
indicate whether Merck is interested in acquiring the Major
Enhancement, and if Merck so indicates, Merck and CompuMed shall
negotiate with each other, on an exclusive basis for a period not to
exceed an additional 30 days, the terms under which Merck shall
acquire an exclusive license to the Major Enhancement. In the event
that Merck and CompuMed are unable to reach agreement on the terms
under which Merck shall acquire an exclusive license to such Major
Enhancement within such 60 or 30 day period, as applicable, or Merck
shall fail to indicate its interest in acquiring an exclusive license
to the Major Enhancement within the 45 day period following receipt of
the Completion Notice or the 5 day period following a determination
under Section 3.4(f) that a Development Project is a Major
Enhancement, as applicable, CompuMed shall be entitled to use the
Licensed Technology and the System, as modified by the Major
Enhancement (the "Enhanced System") to perform RA in the Field without
the need for any further authorization from Merck. In no event,
however, shall CompuMed be entitled to commercialize, or grant any
rights to a third party to commercialize, any Completed Development
that fails to constitute a Major Enhancement.
(e) In no event shall CompuMed offer to transfer its rights to
commercialize the Enhanced System for the performance of RA in the
Field to any third party unless CompuMed shall first set forth the
terms on which such offer shall be made in writing to Merck (the
"Offer Notice"). The sending of the Offer Notice shall constitute an
offer by CompuMed to transfer the Enhanced System to Merck on the
terms set forth therein. Merck shall have 45 days from receipt of the
Offer Notice to accept the transfer of the Enhanced System on the
terms set forth in the Offer Notice if Merck fails to accept the terms
set forth in the Offer Notice within such 45 day period, CompuMed
shall be free to offer the Enhanced System to third parties on terms
not less favorable to CompuMed than those specified in the Offer
Notice. CompuMed shall not change in any material respect the offer
made to any third party from that specified in the Offer Notice or
accept any counter offer from a third party which contains terms
different in any material respect from that contained in the Offer
Notice (other than such changes which, in the aggregate, are not less
favorable to CompuMed than those set forth in the Offer Notice),
without complying again with the terms of this Section 3.4(e) by
sending a new Offer Notice to Merck which reflect such different
terms. Upon compliance by CompuMed with all of the applicable terms
of this Section 3.4 and the failure by Merck to acquire or license the
Major Enhancement pursuant to this Section 3.4, CompuMed may license
or sublicense the Enhanced System to a third party, including such
portion of the Proprietary Technology and the intellectual property
rights relating thereto as may reasonably be required to use the
Enhanced System for performing RA in the Field without the need for
any further authorization, excluding however (i) trademarks and
tradenames constituting a part of the Acquired Assets and (ii)
intellectual property rights developed after the date hereof and owned
by or licensed to Merck.
(f) For the purposes of this Section 3.4, the term "Major
Enhancement" shall mean an improvement to the System that creates
substantial additional value or improved clinical performance for RA
in the Field, over and above the value or performance inherent in the
System as it is then being commercialized by Merck. Major
Enhancements do not include (i) debugging or maintenance of the
System, or (ii) updates or enhancements that derive their added value
or improved performance principally from (A) new releases or versions
of Commercial Software or (B) new versions of commercially available
hardware. Merck and CompuMed shall attempt in good faith to agree
upon whether any development constitutes a Major Enhancement. If the
parties are unable to agree, then the matter shall be submitted to
binding confidential arbitration pursuant to the Federal Arbitration
Act, 9 U.S.C. 1 et seq. The arbitration shall be conducted before a
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panel of three arbitrators, one selected by Merck, one selected by
CompuMed and the third selected by the two arbitrators chosen by the
parties. All arbitrators must be experts in the field of bone
densitometry. Each of the parties shall select its arbitrator within
45 days of being served with a notice of arbitration hereunder, and
the third arbitrator shall be selected within 90 days of such notice
of arbitration. In the event that any arbitrator shall fail to be
selected within the prescribed time period, either party may apply to
the American Arbitration Association for the appointment of such
arbitrator. The arbitration shall be held in New York, New York and
shall be conducted in accordance with the Commercial Arbitration Rules
of the American Arbitration Association. The arbitration award shall
be final and binding and it may be confirmed and enforced in any court
of competent jurisdiction. Each party shall pay for all attorney fees
and costs it incurs in connection with the arbitration. Each party
shall share equally in the costs of the arbitration.
(g) Notwithstanding anything to the contrary contained in this
Section 3.4 and in addition the representation contained in Section
7.6, CompuMed agrees that it will not conduct such work on developing
a potential Major Enhancement as would require the sending of a
Completion Notice prior to the expiration of the first Year.
SECTION 4: ROYALTY
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4.1 As part of the license fee payable by Merck to CompuMed pursuant to
Section 2.3, and subject to the limitations contained in this Section
4.1, Merck shall pay CompuMed a Royalty during the first five Years as
follows:
Year 1 Year 2 Year 3 Year 4 Year 5
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Royalty
Payment
per Test
in Year $2.00 $2.50 $3.00 $3.50* $4.00*
*Notwithstanding the above, the maximum Royalty payment, (i) for Year 4,
shall not exceed the lesser of (a) $3,000,000 or (b) 10% of Total Collected
Revenues for such Year, and (ii) for Year 5, shall not exceed the lesser of
(a) $4,000,000 or (b) 10% of Total Collected Revenues for such Year,
provided however that the limitations contained in clauses (i)(b) and
(ii)(b) shall not apply unless the Average Collected Revenue per Test in
such Year is less than $35, and further provided that if the cost of
performing Tests has substantially decreased (i.e. decreased by at least
33%) in Year 4 or Year 5 from that in effect for Year 1, after taking into
account all expenses incurred by Merck in achieving such cost savings, then
Merck and CompuMed shall equitably adjust the $35 Average Collected Revenue
per Test figure to reflect such cost savings for such of Years 4 or 5 (or
portions thereof) that such savings are in effect For the purposes of the
foregoing, Total Collected Revenues shall equal all amounts collected by
Merck for the performance of Tests, less returns, refunds, rebates,
retroactive price reductions, and taxes paid directly in respect of such
Tests, and Average Collected Revenues shall equal Total Collected Revenues
divided by the total number of all Test performed which gave rise to such
Total Collected Revenues. At the end of the first five Years, no further
Royalties shall be earned and the license to the Licensed Technology shall
be fully paid. Further, no Royalties shall be earned for Tests completed
prior to the beginning of the first Year.
4.2 Merck shall make a partial payment of the royalties due under this
Section 4 within 60 days after the end of each Quarter. This partial
payment shall be calculated by accumulating the Tests run from the
beginning of the Year to the end of the relevant Quarter and
subtracting any payment made for previous Quarters in such Year. If
at the time of calculating the royalty due for any Quarter of a Year,
the Quarterly royalty payments previously made exceed the royalty
payable for such Year, the deficit shall be applied as a credit
against the next Quarterly royalty payment due hereunder from Merck
and shall not (subject to the next sentence) result in a return of
royalties previously paid by Merck. Notwithstanding the foregoing, for
the fifth Year, Merck shall make no partial royalty payment for the
third Quarter, and if, at the end of the fourth Quarter of such Year,
the Quarterly royalty payments previously made (a) exceed the royalty
payable for such Year, the excess shall be immediately repaid by
CompuMed and (b) are less than the royalty payable for such Year, the
deficit shall be paid by Merck within 60 day after the end of such
Year.
4.3 Merck shall have the right (but not the obligation) to recover by way
of set off against royalties and other amounts payable to CompuMed
under this Section 4(a) any indemnity to be provided by CompuMed under
this Agreement or (b) any other payment due from CompuMed under this
Agreement, the Ancillary Agreements or any other agreement between
Merck and CompuMed. Notwithstanding the foregoing, Merck shall give
CompuMed 21 days notice and opportunity to discuss and cure the
occurrence of any event which gives rise to a right of set off under
this Section 4.3, provided that if such event remains uncured after
the passage of such 21 day period, Merck shall be entitled to exercise
its right of set off under this Section 4.3 without further notice to
CompuMed.
4.4 Merck and CompuMed acknowledge that certain royalties are payable to
CompuMed under the contract specified in item 4 on Schedule 12 of this
Agreement (the "Mexico Agreement") and that CompuMed's rights to and
obligations under the Mexico Agreement are being assigned to and
assumed by Merck in accordance with the Assignment and Assumption
Agreement and the terms of this Agreement. From and after the
Closing, CompuMed acknowledges that all royalties due under the Mexico
Agreement shall be paid directly to Merck, and Merck agrees that Merck
shall pay to CompuMed the lesser of (i) the royalty amount received
under the Mexico Agreement for each test performed thereunder
(specifically excluded are any backup processing charges or other
non-royalty charges under the Mexico Agreement), or (ii) the royalty
per Test provided under this Agreement for each test performed under
the Mexico Agreement, as if such tests under the Mexico Agreement had
been performed under this Agreement. Payments for tests under the
Mexico Agreement pursuant to this Section 4.4 shall be paid at the
same time as Royalties under this Agreement; however, any amounts due
under this Section 4.4 arising out of tests performed under the Mexico
Agreement prior to December 31, 1995 shall, for the purposes of clause
(ii) above, be calculated at the first Year rate and shall be payable
concurrently with the first royalty payment due under this Agreement.
4.5 Within 60 days of the end of each Quarter, Merck shall furnish
CompuMed with a written report, signed by the treasurer or an
assistant treasurer of Merck, showing:
(a) the number of Tests performed during the preceding Quarter,
broken out by processing center and by sublicensee;
(b) if relevant to calculation of Royalties for Year 4 or 5, Total
Collected Revenue and Average Collected Revenue per Test received by
Merck from such Tests;
(c) the Royalty payments earned by CompuMed in connection with such
Tests;
(d) an itemized listing of any offsets applied by Merck against such
Royalty payments, identifying the basis for such offsets; and
(e) the resulting amount payable to CompuMed for such Quarter.
Such report shall accompany the Royalty payment to be made pursuant to
Section 4.2.
4.6 Merck shall keep adequate and complete records that include all
information necessary to verify the total amount and computation of
Royalties due hereunder. Such records shall be open to inspection on
behalf of CompuMed upon reasonable notice during regular business
hours to the extent necessary to verify the amount thereof. Such
inspection may be made not more often than once each Quarter and at
the expense of CompuMed by a certified public accountant appointed by
CompuMed and to whom Merck has no reasonable objection. Merck shall
not be required to retain such records for more than three (3) years
after the close of the applicable Quarter. If any Royalty payment
made by Merck is established to be more than 5% lower than the correct
Royalty amount due hereunder for such Quarter, then Merck shall
reimburse CompuMed for the reasonable cost of such audit, provided
that the foregoing reimbursement obligation shall not apply to any
miscalculation resulting from the application of the $35 Average
Collected Revenue per Test qualification in Section 4.1
4.7 CompuMed agrees that Merck may perform RA using the System for
determination of bone density without charge for such clinical,
regulatory and promotional purposes as Merck deems desirable in
connection with the exploitation of the Technology License, and that
such activities shall not constitute Tests hereunder or entitle
CompuMed to Royalties; however, Merck acknowledges that the general
commercial exploitation of the Licensed Technology is intended to
generate Royalties for CompuMed on the terms specified in this
Agreement, and that if, for any reason, such general commercial
exploitation shall not result in amounts payable being due within the
definition of "Tests" in Section 1.1 (ee) and therefore deprive
CompuMed from Royalties payable hereunder, Merck agrees that "Test"
shall be redefined a manner so that such general commercial
exploitation shall result in Royalties on the terms specified in this
Agreement, while still preserving Merck's right to perform clinical,
regulatory and promotional activities without payment of Royalties as
specified in this Section 4.7.
SECTION 5: TERM AND TERMINATION OF TECHNOLOGY LICENSE
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5.1 The Technology License shall be perpetual, and shall be subject to
termination only in accordance with the termination provisions of this
Agreement.
5.2 CompuMed may terminate the Technology License by written notice in
the event that Merck breaches any of the provisions of Section 4 or
12, and such breach shall not be remedied within sixty (60) calendar
days after Merck is notified in writing thereof.
5.3 Merck may terminate the Technology License at any time and without
penalty by delivering a written notice of termination to CompuMed.
5.4 Upon a rightful termination of the Technology License, Merck shall (a)
cease its Use of the Proprietary Technology and Documentation (b)
reconvey to CompuMed all of Merck's right, title and interest in and
to the intellectual property associated with the Proprietary
Technology, (other than that Merck has not taken any action which has
caused the title to the property being reconveyed to be less sound
than the title to such property as it was conveyed by CompuMed to
Merck) and (c) at CompuMed's option, destroy or return to CompuMed all
copies of the Proprietary Technology and Documentation. If requested
by CompuMed, Merck shall certify to CompuMed, in writing, that the
foregoing steps have been taken.
5.5 Termination of the Technology License under this Section 5 shall not
limit either party's right to any equitable or legal relief for any
material breach of this Agreement. In the event of any termination of
this Agreement by Merck under Section 5.3, Merck shall have no
obligation to make any further Royalty payments, other than those
earned through the date of termination, and as to those payments,
Merck shall retain its rights under Section 4.3 and 14.5.
SECTION 6: SPECIAL BANKRUPTCY PROVISION
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6.1 CompuMed agrees that the Technology License constitutes a license to
"intellectual property", as defined in Section 101(56) of the United
States Bankruptcy Code, 11 U.S.C. 1 et. seq. (the "Bankruptcy Code").
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Consequently, CompuMed acknowledges that if CompuMed as a debtor in
possession (or a trustee for CompuMed) in a case under the Bankruptcy
Code, rejects the Technology License, Merck may elect to retain its
rights under this Agreement to the Technology License as provided in
Section 365(n) of the Bankruptcy Code.
SECTION 7: COMPUMED REPRESENTATIONS AND WARRANTIES
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CompuMed represents and warrants to Merck as follows:
7.1 CompuMed is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
7.2 The execution, delivery and performance of this Agreement by CompuMed
and the consummation of the transactions contemplated hereby is within
CompuMed's corporate power, has been duly authorized by all necessary
corporate actions and does not contravene or constitute a breach of or
default under (i) any provision of the certificate of incorporation or
by-laws of CompuMed, (ii) any contract, agreement, license, franchise,
permit, approval, covenant or obligation binding upon or relating to
CompuMed, the Acquired Assets, the Proprietary Technology or the
Documentation except for such contravention, breach or default as may
arise under the Liens specified in Schedule 10, all of which Liens
shall be discharged on or prior to the Closing as provided in Section
13.1(d) such that the rights or obligations of the parties under this
Agreement are not affected, or (iii) any Law to which CompuMed, the
Acquired Assets, the Proprietary Technology or the Documentation is
subject or bound. This Agreement is the legal, valid and binding
obligation of CompuMed, enforceable in accordance with its terms.
7.3 Except as provided on Schedule 7, the execution, delivery and
performance of this Agreement by CompuMed and the consummation of the
transactions contemplated hereby does not require any action, consent
or approval by any third party. Except as provided on Schedule 7, no
approval of or filing with any governmental authority is necessary in
connection with the execution and delivery of this Agreement by
CompuMed or the consummation of the transactions contemplated hereby.
7.4 CompuMed has the unrestricted right to license the Proprietary
Technology and Documentation to Merck on the terms provided herein.
The Proprietary Technology and Documentation are not subject to any
Liens or other rights of third parties except for such Liens as are
specified in Schedule 10, all of which shall be discharged on or
prior to the Closing as provided in Section 13.1(d) such that the
rights or obligations of the parties under this Agreement are not
affected.
7.5 Neither CompuMed nor any of its predecessors-in-interest with respect
to the Proprietary Technology or Documentation have previously granted
any rights with respect to the Proprietary Technology or Documentation
which would include performance of RA or other activities in the Field
except as provided in items 2-6 of Schedule 12; item 2 of Schedule 12
shall be terminated on or prior to the Closing as provided in Section
13.1(f) such that the rights and obligation of the parties under this
Agreement are not affected, and CompuMed's rights under items 3-6 of
Schedule 12 shall be assigned to Merck on or prior to the Closing
pursuant to the Assignment and Assumption Agreement as provided in
Section 13.1(a)(vi).
7.6 The Proprietary Technology, when operated on the Hardware and with the
Commercial Software, will perform RA in accordance with the
specifications set forth in Schedule 8 in all material respects. The
version of the Proprietary Technology and Documentation to be
delivered to Merck at Closing pursuant to Section 13.1(a)(x)-(xiii) is
the most current version of the Proprietary Technology and
Documentation, and CompuMed is not in the process of developing any
modifications, fixes, workarounds, new versions, new releases or other
upgrades thereto which are excluded from the Proprietary Technology
and Documentation to be delivered at Closing to Merck pursuant to
Section 13.1(a)(x)-(xiii).
7.7 The Proprietary Technology does not contain any software modules which
will disable the software portion of the Proprietary Technology, the
Commercial Software or the System, or any other software or any
hardware, encrypt data, corrupt memory, or in any way hinder Merck's
full use of the Proprietary Technology, the Commercial Software and
the System.
7.8 Set forth in Schedule 9 is a complete description of all Hardware,
Proprietary Technology and Commercial Software configuration required
to perform RA as currently performed by CompuMed. Except for the
licenses to Commercial Software specified in Schedule 2, no additional
licenses of any software are required in order for Merck to Use the
Proprietary Technology to perform RA in accordance with this
Agreement.
7.9 CompuMed owns good and marketable title to all of the Acquired Assets,
free and clear of Liens or other rights of third parties, except for
such Liens as are disclosed on Schedule 10. Subject to the removal of
the Liens disclosed on Schedule 10, CompuMed has the unrestricted
right to sell the Acquired Assets as provided by this Agreement, and
this Agreement, together with the Ancillary Agreements (when executed
at Closing) are and shall be in appropriate form and sufficient to
convey, transfer and assign to Merck (i) good and marketable title to
the Acquired Assets as provided herein, (ii) a good and marketable
license to the Proprietary Technology as provided herein, (iii) a
valid sublease of the Subleased Premises under the Sublease,
enforceable in accordance with its terms (subject to Amrck's exercise
of its option under Section 10.5 with respect to the Sublease and
execution thereof) and (iv) all of CompuMed's rights and obligations
under the agreements referred to in the Assignment and Assumption
Agreement. The Acquired Assets, together with the Proprietary
Technology, the Documentation and the Commercial Software, constitute
all of the assets used by CompuMed to perform RA in accordance with
current practice. All of the Acquired Assets are in good operating
condition and suitable for their intended use.
7.10 There is no pending or threatened claim or litigation against CompuMed
which in any way relates to or affects the Acquired Assets, the
Proprietary Technology, the Documentation, the performance of RA using
the System or the transactions contemplated hereby nor, to the best of
CompuMed's knowledge, is their any basis for any such claim. There
are no judgments, decrees or orders of any court or governmental
authority binding on CompuMed that in any way relate to or affect the
Acquired Assets, the Proprietary Technology, the Documentation, the
performance of RA using the System or the transactions contemplated
hereby.
7.11 CompuMed is in compliance with all Laws applicable to the Acquired
Assets, the Proprietary Technology, the Documentation and the
performance of RA using the System. CompuMed is not under
investigation with respect to any alleged non-compliance or violation
of any Laws applicable to the Acquired Assets, the Proprietary
Technology the Documentation or the performance of RA using the System
and, to the best of CompuMed's knowledge, there is no basis for such
investigation except as is referred to in Schedule 11.
7.12 CompuMed has all required permits, licenses, orders and approvals from
all governmental authorities as are required to market, commercialize
and perform RA using the Acquired Assets, the Proprietary Technology,
the Documentation and the System. A copy of all such permits,
licenses, orders, and approvals is attached as Schedule 11. Also
attached as Schedule 11 is a copy of all notices, reports, warnings,
correspondence or other communications between the FDA or any other
regulatory authority and CompuMed (or to the best of CompuMed's
knowledge, its predecessors-in-interest) which relate to the
marketing, commercialization and performance of RA using the Acquired
Assets, the Proprietary Technology, the Documentation or the System.
7.13 Except as set forth on Schedule 12, there are no leases, contracts or
agreements to which CompuMed is a party or by which CompuMed is bound
which relate to or affect the Acquired Assets, the Proprietary
Technology, the Documentation, the performance of RA using the System
or the performance of the transactions contemplated hereby. All
leases, contracts and agreements referred to on Schedule 12 are in
full force and effect, and neither CompuMed nor any other party
thereto is in breach of its obligations thereunder. A true and
complete copy of each lease, contract or agreement referred to on
Schedule 12 is attached thereto. All equipment, Wedges and other
deliverables to be provided by CompuMed under the agreements referred
to in items 3-5 of Schedule 12 have been provided, and CompuMed has
not received any warranty claims or claims for services under such
agreements. The agreement between Universal Medical Records Services,
Ltd. and CompuMed dated December 7, 1993 has been terminated, and
neither party, not its successors or assigns, has any rights or
liabilities thereunder.
7.14 Set forth on Schedule 13 is a list of all United States and foreign
patents, trademarks, service marks, tradenames and copyrights (and any
registrations and applications therefor), used by CompuMed in
connection with the Acquired Assets, the Proprietary Technology, the
Documentation or the performance of RA using the System. CompuMed
owns all of the patents, trademarks, service marks, tradenames,
copyrights, and trade secrets set forth on Schedule 13 as well as all
other intellectual property rights used by CompuMed in connection with
the Acquired Assets, the Proprietary Technology, the Documentation and
the performance of RA using the System. CompuMed's use of the
Acquired Assets, the Proprietary Technology, the Documentation and
performance of RA using the System is not in violation of any patents,
trademarks, service marks, tradenames, copyrights, trade secrets or
other intellectual property rights of others, and CompuMed is not
aware of any assertion that such use so infringes the intellectual
property rights of others. No third party is infringing upon the
patents, trademarks, service marks, tradenames, copyrights or trade
secrets set forth on Schedule 13 or any other intellectual property
rights used by CompuMed in connection with the Acquired Assets, the
Proprietary Technology, the Documentation or the performance of RA
using the System.
7.15 The specifications for the Wedge set forth in Schedule 6 are accurate
and constitute all of the specifications required to manufacture
Wedges (a) in conformity with all regulatory requirements and (b)
suitable for performance of RA using the Acquired Assets, the
Proprietary Technology, the Documentation and the System. All Wedges
constituting a part of the Acquired Assets comply with all regulatory
requirements and all of the specifications contained in Schedule 6. A
list of all currently approved vendors of Wedges to CompuMed is set
forth on Schedule 6. To the best of CompuMed's knowledge, such
vendors are in compliance with all Laws and have obtained and are in
compliance with all permits, licenses and approvals required from any
governmental authorities applicable to the manufacture and sale of
Wedges. Neither CompuMed nor any such vendor is in breach of any of
its obligations relating to the supply of Wedges to CompuMed.
7.16 This Agreement does not contain any untrue statement of a material
fact made by CompuMed, or omit to state a material fact required to be
stated in order to make the statements made herein by CompuMed not
misleading.
SECTION 8: MERCK REPRESENTATIONS AND WARRANTIES
-----------------------------------------------
Merck represents and warrants to CompuMed as follows:
8.1 Merck is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey.
8.2 The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby is within Merck's
corporate power, has been duly authorized by all necessary corporate
actions and does not contravene or constitute a breach of or default
under (i) any provision of the certificate of incorporation or by-laws
of Merck (ii) any contract, license, franchise, permit, approval,
covenant or obligation binding upon or relating to Merck, or (iii) any
Law to which Merck is subject or bound. This Agreement is the legal,
valid and binding obligation of Merck, enforceable in accordance with
its terms.
8.3 The execution, delivery and performance of this Agreement by Merck and
the consummation of the transactions contemplated hereby do not
require any action, consent or approval by any third party. No
approval of or filing with any governmental authority is necessary in
connection with the execution and delivery of this Agreement by Merck
or the consummation of the transactions contemplated hereby.
8.4 This Agreement does not contain any untrue statement of a material
fact made by Merck, or omit to state a material fact required to be
stated in order to make the statements made herein by Merck not
misleading.
SECTION 9: COVENANT NOT TO COMPETE
----------------------------------
9.1 CompuMed agrees that, for a period of five (5) years after the
Closing, CompuMed and its Affiliates shall not, directly or indirectly
(a) engage in the business of performing RA in the Field anywhere in
the world, except pursuant to the provisions of Section 3.4, or (b)
solicit, entice persuade or induce any of the Key Personnel, or any
other personnel of Merck or its Affiliates involved in performing RA
using the Proprietary Technology, to terminate their employment with
Merck or its Affiliates or to become employed by CompuMed or its
Affiliates.
9.2 In the event that CompuMed commits a breach or threatens to commit a
breach of any of the provisions of this Section 9, Merck shall have
the right to have the provisions of this Section 9 specifically
enforced by a court of competent jurisdiction, it being acknowledged
by CompuMed that any such breach or threatened breach would cause
irreparable injury to Merck in the area of performing RA services and
that monetary damages would not provide an adequate remedy. CompuMed
further agrees that it will account for and pay over to Merck all
compensation, profits and other remuneration received as a result of
the breach by CompuMed of any of the provisions of this Section 9.
9.3 CompuMed and Merck agree that if any of the provisions in this
Section 9 are held unenforceable as written because of the duration,
scope or geographic area or the nature of the business covered, the
court making such determination shall have the power to reduce such
provision and in its reduced form, such provision shall then be
enforceable.
SECTION 10: ADDITIONAL COVENANTS
--------------------------------
10.1 CompuMed agrees that it will, as of the Closing, deliver all unfilled
orders for RA services in the Field to Merck, together will all files,
work in process and other materials related thereto. From and after
the Closing, CompuMed shall promptly forward to Merck all requests,
inquiries and orders relating to RA services in the Field and shall
otherwise assist in facilitating the transfer to Merck of CompuMed's
RA customer base relating thereto in such manner as Merck may
reasonably request.
10.2 Section 3.4 specifies certain agreements relating to System
enhancements which may potentially be initiated by CompuMed, and such
potential enhancements shall be governed by that Section. Subject to
the foregoing, CompuMed agrees that it will, both before and after the
Closing and at Merck's expense, take all actions required by Merck in
connection with (a) making any enhancements, upgrades, improvements or
modifications to the Proprietary Technology, the Documentation or the
System which Merck deems necessary or desirable to enhance the
precision or performance of the System, and (b) performing any
clinical studies or regulatory compliance work which Merck deems
necessary or desirable in connection with the preparation for use or
the use of the Proprietary Technology, the Documentation or the System
for the purposes contemplated by this Agreement. Merck agrees that,
subject to the accuracy of the representations and warranties of
CompuMed under Section 7 and CompuMed's obligations under Section
14.1, Merck shall be responsible, at its expense, to make any filings
and to take any actions with the FDA as may be required in order to
use the Proprietary Technology, the Documentation and the System for
the purposes contemplated by this Agreement. Merck agrees to expend
approximately $750,000 (including those expenditures made to date) in
connection with enhancements, upgrades, improvements, modifications,
clinical studies and regulatory compliance work regarding the
Proprietary Technology, the Documentation and the System within 3
years from the Closing date; provided however that (i) none of such
expenditures need be made with CompuMed and (ii) if Merck fails to
expend such amount, CompuMed shall notify Merck, and Merck shall
satisfy such requirement within 1 year of CompuMed's notice, failing
which CompuMed's remedy shall be limited to termination of the
Technology License under Section 5.2. CompuMed agrees that all
decisions regarding the making of any such enhancements, upgrades,
improvements, modifications, clinical studies or regulatory work, the
amounts to be expended in connection therewith, the scope thereof, and
otherwise shall be controlled by Merck at its sole discretion. Merck
shall be entitled, at its sole discretion, to engage third parties to
perform or assist in the performance of any such enhancements,
upgrades, improvements, modifications, clinical studies or regulatory
work, but always subject to the terms of Section 12 below. The
timing, performance parameters, compensation and other terms of any
engagement of CompuMed by Merck for the performance of such
enhancements, upgrades, improvements, modifications, clinical studies
or regulatory work shall be as agreed by the parties, provided that
the compensation payable to CompuMed shall, during the period which
CompuMed is receiving Royalties under this Agreement, be limited to
payment for labor and services of CompuMed employees or consultants at
CompuMed's actual cost plus 15% and reimbursement of actual out of
pocket costs incurred in performing services; notwithstanding the
foregoing, CompuMed agrees that nothing contained in this Section 10.2
shall be deemed to relieve CompuMed of any of its warranty obligations
under Section 10.7, which shall be provided free of charge. All work
product of CompuMed funded by Merck shall be owned by Merck, and
CompuMed shall supply to Merck all copies of any source code,
specifications, data or other physical embodiment of such work
product. CompuMed shall execute and deliver all documentation as may
reasonably be required to further reflect or effectuate such
ownership.
10.3 CompuMed agrees that it will, both before and after the Closing and to
the extent necessary in connection with any matter relating to the
Acquired Assets, the Proprietary Technology, the Documentation, the
System or the performance of RA services, permit Merck or its agents
to inspect the books and records of CompuMed during CompuMed's regular
business hours.
10.4 CompuMed agrees that it will, from and after the execution of this
Agreement and until the Closing (a) continue to operate its business
in the ordinary course, consistent with past practice, (b) preserve
CompuMed's existing customer base for RA services and CompuMed's
business relationship with vendors, and (c) maintain all Acquired
Assets, the Licensed Technology and the Documentation in its current
condition. CompuMed shall not engage in any activities or
transactions which would, in any manner, adversely affect the Acquired
Assets, the Proprietary Technology, the Documentation or the
performance of RA using the System. In addition, CompuMed shall (at
Merck's expense) cooperate with Merck in any efforts Merck may
undertake to exploit and expand upon CompuMed's existing customer base
for RA services in the Field or to otherwise promote, commercialize
and use the Acquired Assets, the Proprietary Technology, the
Documentation and the System.
10.5 CompuMed agrees that it will execute and deliver the Sublease and
obtain the consent of Xxxxxx Aircraft Company, a Delaware corporation,
and USAA Income Properties III Limited Partnership, a Delaware limited
partnership, to such Sublease on or prior to the Closing. Merck shall
have the option, at its sole discretion, to execute the Sublease at or
prior to the Closing. Prior to the Closing, CompuMed shall maintain
the lease referred to as item 1 on Schedule 12 in full force and
effect, and will not breach, or suffer or permit to exist any breach
of such lease; if Merck shall execute the Sublease, CompuMed shall
continue to maintain the lease referred to as item 1 on Schedule 12 in
full force and effect and will not breach, or suffer or permit to
exist any breach of such lease for so long as the Sublease is in
effect.
10.6 [deleted].
10.7 In the event of any breach by CompuMed of its representations and
warranties contained in Section 7.6 or 7.7 of this Agreement, Merck
shall have the right to require CompuMed to provide warranty services,
free of charge, to rectify such breach of warranty. CompuMed shall
commence and continue to perform such warranty services at the
priority specified in Schedule 14. If any of the Key Employees or
other Merck employees or consultants are assigned to perform such
warranty work, CompuMed shall reimburse Merck for the cost of same.
10.8 CompuMed shall insure that the Proprietary Technology, when delivered
at the Closing, shall include all software elements and files (other
than as are specifically included in the Commercial Software) for
effective installation, use and maintenance thereof by Merck as
contemplated by this Agreement.
10.9 CompuMed agrees that it will pay to Merck the sum of $250,000 for the
first Year of this Agreement as a contribution toward Merck's costs
and expenses incurred in marketing and marketing support relating to
the performance of RA using the Acquired Assets, the Proprietary
Technology, the Documentation and the System. Such amounts shall be
paid in quarterly installments of $62,500, payable in advance at the
beginning of each Quarter during the first Year of this Agreement.
SECTION 11: COMPLIANCE WITH BULK TRANSFER LAW
---------------------------------------------
11.1 Merck and CompuMed agree that they do not intend to comply, and each
of them waives compliance by the other, with the Bulk Transfer Law in
connection with the transactions contemplated by this Agreement (if
applicable); provided however the CompuMed agrees to indemnify Merck
and its Affiliates for any claim, damage, loss, liability, cost or
expense (including reasonable attorneys fees) arising out of or
relating to such non-compliance as provided in Section 14.
SECTION 12: CONFIDENTIALITY
---------------------------
12.1 For the purposes of this Section 12, Confidential Information shall
mean (a) the Proprietary Technology and all information contained in
the Documentation, and (b) all non-public information disclosed by one
party to the other under this Agreement or in connection with the
transactions contemplated hereby. Notwithstanding the foregoing,
Section 12.1(b) shall not include:
(a) information possessed by the receiving party prior to disclosure
by the disclosing party, other than through prior disclosure by
the disclosing party;
(b) information published or available to the general public
otherwise than through a breach of this Agreement;
(c) information obtained by the receiving party from a third party
with a valid right to make such disclosure; and
(d) information which is independently developed by employees or
agents of the receiving party, without reference to information
provided by the disclosing party.
Further Section 12.1(a) shall not include information published or
available to the general public otherwise than through a breach of
this Agreement.
12.2 Each party agrees to keep secret and confidential any and all
Confidential Information, and not to disclose such Confidential
Information to any third party other than (a) to any governmental
regulatory authority as may be required to obtain any permits,
registrations, licenses or approvals for use by Merck of the
Proprietary Technology, the Documentation and the System for
performing RA or otherwise in the Field, (b) as may be required by Law
or permitted by this Agreement, and (c) as may be required by Merck in
the promotion, commercialization and use of the Acquired Assets, the
Proprietary Technology, the Documentation or the System in the
performance of RA or otherwise in the Field. In the event that a party
shall be required by judicial or administrative process to disclose
Confidential Information, such party shall notify the other party as
soon as possible.
12.3 Neither party shall not use Confidential Information for any purpose
other than (a) for the performance of its obligations under this
Agreement and the transactions contemplated hereby, (b) as expressly
permitted by the terms of this Agreement, or (c) as may be required by
Merck in the promotion, commercialization and use of the Acquired
Assets, the Proprietary Technology, the Documentation or the System in
the performance of RA or otherwise in the Field.
12.4 The obligations of the parties under this Section 12 shall survive for
fifteen years from the date of first disclosure of such Confidential
Information.
SECTION 13: CONDITIONS AND DELIVERIES FOR CLOSING
-------------------------------------------------
13.1 The obligation of Merck to license the Proprietary Technology and the
Documentation from CompuMed, to purchase and accept the transfer and
delivery of the Acquired Assets from CompuMed and to make payment of
the Purchase Price, the License Payment and Royalties to CompuMed, is
subject to the following conditions:
(a) There has been delivered to Merck, at or before the Closing, the
following:
(i) The Xxxx of Sale executed by CompuMed;
(ii) The Technology License Acknowledgment executed by
CompuMed;
(iii) The Copyright Assignment executed by CompuMed;
(iv) The Trademark Assignment executed by CompuMed;
(v) The Sublease executed by CompuMed and consented to by
Xxxxxx Aircraft Company, a Delaware corporation and USAA Income
Properties III Limited Partnership, a Delaware limited
partnership;
(vi) The Assignment and Assumption Agreement executed by
CompuMed;
(vii) CompuMed's calculation of the Purchase Price, certified
by CompuMed's Chief Financial Officer as provided in Section
2.3;
(viii) [deleted].
(ix) The Transition Operating Agreement executed by
CompuMed;
(x) 2 copies of the software portion of the Proprietary
Technology in object code format;
(xi) 2 copies of the source code for the software portion of
the Proprietary Technology in hard copy and disc format;
(xii) 2 copies of the Documentation in hard copy and disc
format;
(xiii) 2 copies of any tangible embodiment of the Proprietary
Technology (other than as provided pursuant to Sections
12.1(a)(x), (xi) or (xii));
(xiv) An opinion of CompuMed's counsel dated as of the
Closing and in form and substance reasonably satisfactory to
Merck as to the matters referred to in (A) Sections 7.1 and 7.2
of this Agreement, (B) Section 1(a) of the Technology License
Acknowledgement, (C) Section 1(a) of the Xxxx of Sale, (D)
Section 9.2 of the Sublease (if Merck shall have exercised its
option with respect thereto pursuant to Section 10.5), (E)
Section 1 (a) of the Assignment and Assumption Agreement and (F)
Section 7(a) of the Transition Operation Agreement;
(xv) The written consent of every entity set forth in
Schedule 7, in form and substance reasonably satisfactory to
Merck;
(xvi) A certificate in form an substance reasonably
satisfactory to Merck from the President of CompuMed to the
effect that all of the representations and warranties of CompuMed
under this Agreement are correct and complete at the Closing and
all covenants and agreements of CompuMed which are required to
have been performed by the Closing have been performed;
(xvii) Any other document or instrument required by this
Agreement or the Ancillary Agreements to be delivered on or
before the Closing by CompuMed, or otherwise reasonably requested
by Merck to effect (A) the Technology License as provided herein,
(B) a complete transfer of the Acquired Assets to Merck as
provided herein, (C) the complete assignment of the agreements
referred to in the Assignment and Assumption Agreement, and (D)
to consummate the transactions contemplated by this Agreement.
(b) Each of the Key Employees shall have agreed in writing to become
employees of, leased employees of, or consultants to, Merck or
its designated Affiliate, on terms reasonably satisfactory to
Merck.
(c) All filings and approvals referred to on Schedule 7 shall have
been made and received, in form and substance reasonably
satisfactory to Merck.
(d) The Liens referred to on Schedule 10 shall have been discharged.
(e) The permits referred to on Schedule 11 shall have been
transferred to or obtained by Merck.
(f) The agreement between Xxxxx-Xxxxxxx Xxxxx Pharmaceuticals and
CompuMed dated September 26, 1992, as amended by an amendment
dated June 10, 1993, shall have been terminated, and neither
party, nor its successors or assigns, shall have any rights or
liabilities thereunder.
(g) All of the representations and warranties of CompuMed under this
Agreement shall be correct and complete at the Closing.
(h) All covenants and agreements of CompuMed which are required to
have been performed by the Closing under this Agreement shall
have been performed, to Merck's reasonable satisfaction.
(i) All actions, proceedings, instruments and documents required to
carry out the transactions contemplated by this Agreement or
incidental hereto and all other related legal matters shall have
been carried out to the reasonable satisfaction of Merck.
13.2 The obligation of CompuMed to license the Proprietary Technology and
the Documentation to Merck, to sell, transfer and deliver the Acquired
Assets to Merck and to accept payment of Purchase Price, the License
Payment and Royalties from Merck, is subject to the following
conditions:
(a) There has been delivered to CompuMed, at or before the Closing,
the following:
(i) The Technology License Acknowledgment executed by
Merck;
(ii) The Sublease executed by Merck, but only if Merck shall
have exercised its option with respect thereto as provided in
Section 10.5;
(iii) The Assignment and Assumption Agreement executed by
Merck;
(iv) The payment of the Purchase Price and the License
Payment;
(v) The Transition Operating Agreement executed by Merck;
(vi) An opinion of Merck's counsel dated as of the Closing
and in form and substance reasonably satisfactory to CompuMed as
to the matters referred to in (A) Sections 8.1 and 8.2 of this
Agreement, (B) Section 2(a) of the Technology License
Acknowledgment, (C) Section 8.2 of the Sublease (if Merck shall
have exercised its option with respect thereto pursuant to
Section 10.5), (D) Section 2(a) of the Assignment and Assumption
Agreement, and (E) Section 8(a) of the Transition Operation
Agreement; and
(vii) A certificate in form an substance reasonably
satisfactory to CompuMed from a Director or more senior officer
of Merck to the effect that all of the representations and
warranties of Merck under this Agreement are correct and complete
at the Closing and all covenants and agreements of Merck which
are required to have been performed by the Closing have been
performed.
(b) All of the representations and warranties of Merck under this
Agreement shall be correct and complete at the Closing.
(c) All covenants and agreements of Merck which are required to have
been performed by the Closing under this Agreement shall have
been performed, to CompuMed's reasonable satisfaction.
(d) All actions, proceedings, instruments and documents required to
carry out the transactions contemplated by this Agreement or
incidental hereto and all other related legal matters shall have
been carried out to the reasonable satisfaction of CompuMed.
SECTION 14: INDEMNIFICATION
---------------------------
14.1 CompuMed agrees to indemnify, defend and hold harmless Merck and its
Affiliates, and their respective directors, officers, employees and
agents, from and against all claims, actions, damages, losses,
liabilities, costs and expenses (including, without limitation,
reasonable expenses of investigation and attorneys fees) arising out
of (a) any breach by CompuMed of a representation or warranty made by
it in this Agreement or the Ancillary Agreements; (b) any failure by
CompuMed to perform or observe any covenant or agreement to be
observed or performed by it under this Agreement or the Ancillary
Agreements; (c) the promotion, commercialization or use of the
Acquired Assets, the Proprietary Technology, the Documentation or the
System by CompuMed, or otherwise relating to the performance of RA by
CompuMed; (d) the noncompliance by CompuMed and Merck with the Bulk
Transfer Laws; (e) any remedial action undertaken by Merck or its
Affiliates as a result of the matters referred to in Section
14.1(a),(b),(c) or (d); and (f) the enforcement by Merck of its rights
under this Agreement, or the Ancillary Agreements.
14.2 Merck agrees to indemnify, defend and hold harmless CompuMed and its
Affiliates, and their respective directors, officers, employees and
agents, from and against all claims, actions, damages, losses,
liabilities, costs and expenses (including, without limitation,
reasonable expenses of investigation and attorneys fees) arising out
of (a) any breach by Merck of a representation or warranty made by it
in this Agreement or the Ancillary Agreements; (b) any failure by
Merck to perform or observe any covenant or agreement to be observed
or performed by it under this Agreement or the Ancillary Agreements;
(c) the promotion, commercialization or use of the Acquired Assets,
the Proprietary Technology, the Documentation or the System by Merck,
or otherwise relating to the performance of RA by Merck, excluding
---------
however any claims, actions, damages, losses, liabilities, costs and
-------
expenses which arise out or relate to a matter for which Merck is
entitled to indemnification from CompuMed under Section 14.1; (d) any
remedial action undertaken by CompuMed or its Affiliates as a result
of the matters referred to in Section 14.2(a), (b) or (c); and (e) the
enforcement by CompuMed of its rights under this Agreement or the
Ancillary Agreements.
14.3 A party seeking indemnification pursuant to Section 14.1 or 14.2 (an
"Indemnified Party") shall give promptly written notice to the other
party (an "Indemnifying Party") of the assertion of any claim, or the
commencement of any action or proceeding, in respect of which
indemnity may be sought hereunder. The Indemnifying Party shall have
the right to, and shall at the request of the Indemnified Party,
assume the defense (with counsel reasonably satisfactory to the
Indemnified Party), of any such suit, action or proceeding, at the
Indemnifying Party's expense. The Indemnifying Party shall not be
liable under Section 14.1 or 14.2 for any settlement effected without
its consent, which consent shall not unreasonably be withheld. The
Indemnified Party shall have the right to participate in any suit,
action or proceeding being defended by the Indemnifying Party, at the
Indemnified Party's expense. The Indemnified Party shall, prior to
making any expenditures subject to indemnification under Section
14.1(d) or 14.2 (d), notify the Indemnifying Party and, if requested
and feasible, consult with the Indemnifying Party as to the actions
proposed to be taken. The Indemnified Party shall make available
during normal business hours, all employees and records with relevant
information as the Indemnifying Party may reasonably request in
connection with the defense or investigation of any matter subject to
indemnification hereunder.
14.4 [deleted].
14.5 Merck shall have the right (but not the obligation) to recover any
indemnity to be provided by CompuMed under Section 14.1 or the
Ancillary Agreements by way of set-off against (a) Royalties and other
amounts payable to CompuMed under Section 4 or (b) any other amounts
payable to CompuMed under this Agreement, the Ancillary Agreements or
any other agreement between Merck and CompuMed.
SECTION 15: SURVIVAL
--------------------
15.1 The representations, warranties, covenants and agreements of the
parties contained in this Agreement and the Ancillary Agreements shall
survive the Closing for a period of 3 years.
SECTION 16: ASSIGNMENT AND SUBLICENSING; BINDING EFFECT
-------------------------------------------------------
16.1 CompuMed may assign its rights under this Agreement, but may not
delegate any or all of its obligations hereunder without the prior
consent of Merck. Notwithstanding the foregoing, CompuMed shall
deliver to Merck an acknowledgment from any assignee of CompuMed's
rights to payments hereunder to the effect that such payment rights
are subject to Merck's rights under Section 14.5. Merck may assign or
sublicense any or all of its rights and obligations (including, but
not limited to, its rights and obligations under the Technology
License) to (i) an Affiliate or (ii) any third party which is not then
(a) significantly involved in developing or marketing technologies in
the Field or (b) actively planning to become significantly involved in
developing or marketing technologies in the Field (other than by
virtue of an assignment or sublicense of this Agreement), in either
case without the prior consent of CompuMed, provided that Merck
guaranties the performance of all delegated obligations or, without
the necessity of such guaranty, if the assignee has a net worth, at
the time of assignment and delegation and determined in accordance
with generally accepted accounting principles consistently applied, of
at least $50,000,000. Any other assignment of Merck's rights or
obligations under this Agreement shall require CompuMed's prior
consent. Notwithstanding the foregoing, the restrictions on Merck's
ability to assign or sublicense any or all of it rights or obligations
hereunder shall lapse at the expiration of Year 5.
16.2 This Agreement shall be binding upon the successors, legal
representatives and permitted assigns of the parties.
SECTION 17: TAXES AND EXPENSES
------------------------------
17.1 To the extend that the sale of the Acquired Assets or the license of
the Proprietary Technology or Documentation is subject to any sales,
use, rental, personal property or other taxes (other than taxes on
Merck's income), payment of such taxes shall be CompuMed's
responsibility. CompuMed shall be liable for any and all taxes on any
and all payments it receives from Merck under this Agreement or the
Ancillary Agreements.
17.2 Each party shall pay all its own costs and expenses incidental to the
negotiation and preparation of this Agreement and the Ancillary
Agreements and the entering into and carrying out of the transactions
contemplated hereby or thereby.
SECTION 18: GOVERNING LAW; CONSENT TO JURISDICTION; SERVICE OF PROCESS
----------------------------------------------------------------------
18.1 This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to the provisions
thereof relating to conflict of laws.
18.2 Merck and CompuMed irrevocably submit to the jurisdiction of the
courts of the State of New York and to the jurisdiction of the United
States District Court for the District of New York for the purposes of
any suit or other proceeding arising out of this Agreement or the
Ancillary Agreements or seeking to enforce the terms thereof. Merck
and CompuMed consent that service of process may be made against each
of them in the same manner as applies to the sending of notices under
Section 21. Merck and CompuMed waive any objection to service of
process in accordance with this Section or to the location of such
courts, including, without limitation, any objection to venue or based
on the grounds of forum non conveniens.
SECTION 19: SEVERABILITY
------------------------
19.1 In addition to the provisions of Section 9.3, if any provision of this
Agreement is found invalid or unenforceable by a court of competent
jurisdiction, the remainder of this Agreement shall continue in full
force and effect, and the court making such determination shall have
the power to reduce such provision, and in its reduced form, such
provision shall then be enforceable.
SECTION 20: RESERVATION OF RIGHTS; REMEDIES CUMULATIVE
------------------------------------------------------
20.1 Neither party's delay or failure in enforcing any of right or remedy
afforded hereunder or by law shall prejudice or operate to waive that
right or remedy or any other right or remedy which it shall have
available; nor shall any such failure or delay operate to waive either
party's rights to any remedies due to a future breach of this
Agreement, whether of a like or different character.
20.2 No remedy referred to in this Agreement is intended to be exclusive,
but each such remedy shall be cumulative and in addition to all other
remedies (a) referred to herein, (b) available at law, or (c)
available under the Ancillary Agreements.
SECTION 21: ENTIRE AGREEMENT
----------------------------
21.1 This Agreement, together with the Ancillary Agreements, constitutes
the entire agreement between the parties hereto with respect to the
subject matter hereof, and supersedes any previous agreements or
understandings whether oral or written.
21.2 No modification or waiver of the provisions of this Agreement shall be
valid or binding on either party unless in writing and signed by the
party to be bound thereby.
SECTION 22: NOTICES
-------------------
22.1 Any notice required or permitted to be given hereunder shall be in
writing and shall be given either by personal delivery against
delivery receipt, by overnight courier service which provides a
delivery receipt, by U.S. certified mail, return receipt requested or
by confirmed facsimile transmission, and shall be addressed as
follows:
If to Merck
-----------
Merck & Co., Inc.
X.X. Xxx 0
Xxxxxxxxxx Xxxx, XX 00000
ATTN: Mr. Xxxxxx Xxxxxx
Sr. V.P. Marketing
WP 39-405
Fax: (000) 000-0000
with a copy to:
---------------
Merck & Co., Inc.
X.X. Xxx 0
Xxxxxxxxxx Xxxx, XX 00000
ATTN: Xxxxxxx Xxxxxxxxxxx
Assistant General Counsel
WP 53C-316
Fax (000) 000-0000
If to ComPuMed
--------------
Xxx Xxxxxxxxx, President
CompuMed, Inc.
0000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
with a copy to
--------------
Xxxxxx X. Xxxxx, Esq.
Xxxxxxxx & Sunstein
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax (000) 000-0000
22.2 Any notice shall be deemed given (a) if delivered by hand, when
received, (b) if sent by overnight courier service, one (1) day after
sending, (c) if delivered by U.S. certified mail, seven (7) days after
postmark, and (d) if sent by facsimile during normal business hours, 2
hours after confirmed transmission. Either party may at any time
change its address for notices under this Section 22 by giving of
written notice in accordance with the terms hereof.
SECTION 23: PUBLICITY
---------------------
23.1 No press release, public announcement, confirmation or other public
disclosure of information regarding this Agreement, the Ancillary
Agreements or any related matter shall be made by either party without
the prior written consent of the other party. This commitment does
not apply to (a) correspondence, documents or other communications
which are for distribution within the internal organization of either
party, (b) disclosures required by Law, including but not limited to,
disclosures required by the Securities Exchange Act of 1934 or any
rules or regulations promulgated thereunder or (c) disclosures made
after the Closing by Merck, its Affiliates, or their agents of
information pertaining to this Agreement, the Ancillary Agreements or
any related matter as is necessary or desirable in connection with the
promotion, commercialization and use of the Acquired Assets, the
Proprietary Technology, the Documentation, or the performance of RA
using the System or otherwise in the Field.
SECTION 24: COMPETING TECHNOLOGIES
----------------------------------
24.1 CompuMed acknowledges that Merck and its Affiliates may now or
hereafter own, invest in, support, promote, or otherwise be associated
with, technologies which are or may be competitive with the Licensed
Technology. CompuMed waives any conflict of interest which may now or
hereafter exist because of such activities of Merck or its Affiliates,
and agrees that Merck shall be entitled to engage in such activities,
without prior notice to or consent of CompuMed.
SECTION 25: HEADINGS
--------------------
25.1 The heading contained in this Agreement are inserted for convenience
of reference only and shall not be used in construing this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year
first written above.
MERCK & CO., INC. COMPUMED, INC.
BY: /s/ Xxxxxx Xxxxxx BY: /s/ Xxx X. Xxxxxxxxx
---------------------- ----------------------
TITLE: Sr. V.P. Marketing TITLE: President
------------------- -------------------
DATE: September 22, 1995 DATE: September 22, 1995
-------------------- -------------------
