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Exhibit 10.11
TECHNOLOGY LICENSE AGREEMENT
THIS TECHNOLOGY LICENSE AGREEMENT (this "License Agreement"), dated
this 17th day of August, 2000 ("Effective Date"), is made by and between ADLABS,
INC., a corporation organized under the laws of the State of California
("ADLABS"), and SUMMUS, LTD., a corporation organized under the laws of the
state of Delaware ("SUMMUS"). ADLABS and SUMMUS are sometimes individually
referred to as "Party" and collectively as "Parties".
R E C I T A L S
A. SUMMUS owns or possesses rights to proprietary wavelet technology,
software and documentation, that, among other things, enhances the degree of
compression of digital images without pixelization distortion and enables
pattern recognition; and
B. ADLABS is in the business of developing and marketing a broad range
of products and services for the medical industry, including the operation of
centralized regional anatomic pathology laboratories providing hospitals,
pathologists and other physicians with advanced digital imaging, database
systems and other technologies to enhance the process of tissue processing and
the diagnosing, tracking and treating of disease; and
C. SUMMUS has agreed to grant to ADLABS, on the terms and conditions
set forth in this License Agreement, certain rights and licenses to SUMMUS'
proprietary technology, software, documentation, improvements and marks,
including any related patents now or hereafter issued, and the right to grant
certain sublicenses; and
D. ADLABS desires to engage SUMMUS to perform services from time to
time to assist ADLABS in carrying out its business objectives in a series of
project phases. The Parties acknowledge that SUMMUS owns the Core Technology,
that ADLABS has requested that SUMMUS modify the Core Technology for ADLABS'
Business in the Field, that certain of such modifications (defined below as
"Core Technology Improvements") will improve the Core Technology generally,
while others (defined below as "ADLABS Improvements") will improve the Core
Technology specifically for performance in the Field, and that the Parties
intend for ADLABS to have exclusive rights to use the ADLABS Improvements.
NOW THEREFORE, in consideration of the foregoing and the mutual
premises set forth in this License Agreement, the Parties agree as follows:
1. DEFINITIONS.
1.1 "ADLABS Improvements" shall mean any and all changes or
modifications to the SUMMUS Code implementing Functional Specifications or
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Joint Functional Specifications, and including directly related Work Product,
but only to the extent such changes or modifications are specifically for
performance in the Field and are identified as ADLabs Improvements in the Work
Statements executed in connection with the Master Agreement.
1.2 "ADLABS Patents" means any patents now or hereafter issued,
assigned, licensed or sublicensed to ADLABS with respect to the ADLABS
Technology.
1.3 "ADLABS Technology" shall mean ADLABS' technologies described in
Exhibit "B" attached hereto together with (a) the Functional Specifications
and/or the Joint Functional Specifications, (b) any technology hereafter
acquired or developed by or for ADLABS relating to the Field and disclosed in
writing to SUMMUS or identified in a Work Statement, and (c) including directly
related Work Product, certain aspects of which may be covered by the patents now
or hereafter issued (United States or foreign) or in pending patent
applications.
1.4 "Affiliated Entity" means any corporation, partnership or other
entity that is in or under the direct or indirect control of ADLABS, and for
such purpose "control" shall exist whenever ADLABS, or the persons who own
ADLABS, owns voting securities or similar interests representing at least 80% of
the total of such interests of the pertinent entity then outstanding.
1.5 "Business" shall mean ADLABS' business in the Field as described in
the recitals above.
1.6 "Core Technology" shall mean SUMMUS' technologies described in
Exhibit "A" attached hereto, technologies identified as Core Technology in Work
Statements, and directly related Work Product, certain aspects of which may be
covered by the copyrights or patents now or hereafter issued (United States or
foreign) or in pending patent applications.
1.7 "Core Technology Improvements" shall mean any and all changes or
modifications to the SUMMUS Code implementing Functional Specifications or Joint
Functional Specifications, as the same may be identified in Work Statements, and
directly related Work Product, but only to the extent such changes or
modifications represent general improvements to the Core Technology rather than
ADLABS Improvements.
1.8 "Field" shall mean any and all aspects of the medical diagnosis of
disease at the cellular level in humans in the area of anatomic pathology.
1.9 "Final Royalty" shall mean an ongoing royalty payable after the
Phase II Acceptance Date equal to four percent (4%) of the gross revenue
generated
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through all sales of ADLABS' technical processing services and products
utilizing the SUMMUS Technology or the ADLABS Improvements, either by ADLABS or
by or through its Affiliated Entities, provided that from and after the date
that SUMMUS acquires the Phase II Warrant Shares (as defined in the Stock
Warrant Agreement) under the Stock Warrant Agreement, the Final Royalty shall be
two percent (2%) of the gross revenue generated through all sales of ADLABS'
technical processing services and products utilizing the SUMMUS Technology or
the ADLABS Improvements, either by ADLABS or by or through its Affiliated
Entities.
1.10 "Final Minimum Royalty" shall mean a minimum Final Royalty in
accordance with the Schedule of Final Minimum Royalties attached hereto as
Exhibit "D."
1.11 "Functional Specifications" shall mean those performance
requirements or modifications to the SUMMUS Technology identified by ADLABS and
specified by ADLABS as part of one or more requested Work Statements in
connection with the Master Agreement.
1.12 "Joint Functional Specifications" shall mean those performance
requirements or modifications to the SUMMUS Technology identified by SUMMUS, or
by SUMMUS and ADLABS jointly, that are specified by ADLABS as part of one or
more requested Work Statements in connection with the Master Agreement.
1.13 "Marks" shall mean the trade names, trademarks and service marks
used from time to time by a Party to identify the goods and services of such
Party.
1.14 "Master Agreement" shall mean that certain Master Consulting
Agreement of even date herewith entered by the Parties.
1.15 "Phase" shall mean that portion of a project undertaken as
expressly set forth in a Work Statement. The Master Agreement currently
anticipates three distinct Phases -- Phase I, Phase II and Phase Ill.
1.16 "Phase I Acceptance Date" shall mean the date of "Acceptance and
Final Delivery" (as defined in the Master Agreement") under the Phase I Work
Statement.
1.17 "Phase II Acceptance Date" shall mean the date of "Acceptance and
Final Delivery" (as defined in the Master Agreement") under the Phase II Work
Statement.
1.18 "Phase I Minimum Royalty" shall mean a minimum Phase I Royalty for
an applicable time period in accordance with the Schedule of Phase I Minimum
Royalties attached hereto as Exhibit "C."
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1.19 "Phase I Royalty" shall mean an ongoing royalty payable after the
Phase I Acceptance Date equal to one percent (1%) of the gross revenue through
all sales of ADLABS' technical processing services or products utilizing the
SUMMUS Technology or ADLABS Improvements, either by ADLABS or by or through its
Affiliated Entities.
1.20 "Stock Warrant Agreement" shall mean that certain Stock Warrant
Agreement of even date herewith entered into by the Parties pursuant to which
SUMMUS is granted certain warrants to acquire shares of ADLABS upon completion
by SUMMUS of its performance of each Phase under the Master Agreement.
1.21 "SUMMUS Code" shall mean any and all software code, including,
without limitation, software code that constitutes ADLABS Improvements, and
directly related Work Product, delivered to ADLABS by SUMMUS implementing
aspects of the SUMMUS Technology, any Functional Specifications or any Joint
Functional Specifications.
1.22 "SUMMUS Patents" means any patents (United States or foreign) now
or hereafter issued, assigned or licensed or sublicensed to SUMMUS with the
right to sublicense, relating to the SUMMUS Technology or any of the Core
Technology Improvements.
1.23 "SUMMUS Technology" shall mean the Core Technology, together with
the SUMMUS Code, any Core Technology Improvements, SUMMUS Third Party Technology
and to the extent usable in the Field, any other technology hereafter developed
by or for SUMMUS and identified in a Work Statement, and directly related Work
Product, certain aspects of which may be covered by copyrights or patents now or
hereafter issued (United States or foreign) or in pending patent applications.
1.24 "Summus Third Party Technology" shall mean any technology,
including without limitation patent rights and copyrights, hereafter acquired by
SUMMUS from a non-affiliated entity to the extent usable in the Field and to the
extent sublicenseable to ADLABS.
1.25 "Work Product" shall mean all physical embodiments of material to
the extent relating specifically to the item in question, whether or not
copyrightable or patentable, including, without limitation, all reports,
studies, memoranda, inventions, ideas, concepts, techniques, discoveries,
improvements, processes, developments, designs, data, formulas, implementation
drawings and all other original works of authorship.
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1.26 "Work Statement" shall mean any Work Statement from time to time
entered into by the Parties as described in the Master Agreement.
2. GRANT OF RIGHTS.
2.1 Non-Exclusive Rights. As of the Effective Date and subject to the
terms and conditions of this License Agreement, SUMMUS grants to ADLABS the
worldwide nonexclusive license to copy, display, perform and distribute the
SUMMUS Technology and the ADLABS Improvements for the purposes of making, having
made, using, selling and offering for sale products and services used in the
diagnosis of disease: (1) under the SUMMUS Patents or (2) incorporating the
SUMMUS Technology and/or the ADLABS Improvements. The foregoing license is not
assignable (except as set forth in Sections 2.3 and 14.2) and is not
sublicenseable (except as set forth in Section 2.3).
2.2 Exclusive Rights.
2.2.1 Grant. To the extent not assigned to ADLABS pursuant
to Paragraph 2.4 below, as of the Effective Date and
subject to the terms and conditions of this License
Agreement, SUMMUS grants to ADLABS an exclusive
royalty bearing (subject to the terms of Section 4
hereof) license in the United States of America (i)
to copy, display, distribute and perform: (a) the
ADLABS Improvements in the Field and (b) the object
or pattern recognition elements of the SUMMUS
Technology for use in the Field and (ii) to make,
have made, use, sell and offer for sale products and
services under the SUMMUS Patents in the Field, but
only to the extent such patents cover ADLABS
Improvements and/or object or pattern recognition
elements of the SUMMUS Technology. The foregoing
license is not assignable (except as set forth in
Sections 2.3, 2.5 and 14.2) and is not sublicenseable
(except as set forth in Section 2.3).
2.2.2 Exception. ADLABS agrees that SUMMUS shall not be in
breach of this exclusive license by reason of SUMMUS'
licensing of the SUMMUS Technology to hardware
manufacturers, resellers and Original Equipment
Manufacturers ("OEMs") or manufacturers, resellers
and OEMs of digital signal processors, application
specific integrated circuits and other embedded
environments, provided SUMMUS does not directly, or
by indirect means intended to circumvent this
restriction, grant rights in the
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Field to the ADLABS Improvements or to the object or
pattern recognition elements of the SUMMUS
Technology. In addition, ADLABS agrees that nothing
in this Agreement shall prohibit SUMMUS from
releasing or licensing to third parties a product
that contains object or pattern recognition elements
of the SUMMUS Technology, so long as: (a) such
product is licensed in object code only; and (b) such
product is not designed to, and does not have the
effect of, circumventing the exclusive license
granted to ADLABS in Section 2.2.1. Further, nothing
in this Agreement shall require SUMMUS to include in
license agreements for such products a prohibition
against using the product in the Field.
2.2.3 FDA Approval. The exclusive license herein granted to
the extent relating to any Phase shall become
non-exclusive for such Phase in the event ADLABS does
not obtain any approval from the United States Food
and Drug Administration that is necessary for the
public use of the systems to be operated by ADLABS in
the Business within eighteen (18) months after the
"Acceptance and Final Delivery" of such Phase.
2.3 Assignment of License Rights. Any and all license rights under this
Agreement or any Work Statement issued under the Master Agreement may be
assigned by ADLABS to a successor to its business, whether by merger, stock or
asset acquisition, without SUMMUS' consent, provided that (1) ADLABS provides
SUMMUS with thirty (30) days' prior written notice of such proposed assignment,
and (2) the proposed acquirer (i) is at least as financially stable as ADLABS,
in the judgment of SUMMUS, and (ii) is not a competitor of SUMMUS in the
judgment of Summus (such a successor being an "Approved Successor"). Any such
assignment shall constitute only a nonexclusive license and shall not, under any
circumstance, constitute an exclusive license to such acquirer without the prior
written consent of SUMMUS, except to the extent provided in Paragraph 2.5.
ADLABS may also sublicense the SUMMUS Technology to its Affiliated Entities
only; provided, however, that if ADLABS divests an Affiliated Entity, the
sublicense shall automatically terminate; provided that ADLABS may grant a
sublicense to the acquirer or the divested entity only with the prior written
consent of SUMMUS, which may be withheld by SUMMUS in its discretion. Any
assignment or sublicense by ADLABS under this paragraph shall be further
conditioned upon the assignee or sublicensee accepting, in writing, the
obligations of ADLABS as if such assignee or sublicensee were a party to this
Agreement. Any sublicense under this Section 2.3 shall not relieve ADLABS of its
obligations under this License Agreement.
2.4 Patents and Copyrights Registration.
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2.4.1 ADLABS Technology. SUMMUS agrees to assist ADLABS, or
its designee, in every proper way to vest and secure
ADLABS' rights in the ADLABS Technology, and any
copyrights or patents relating thereto, in any and
all countries, including the disclosure to ADLABS of
all pertinent information and data with respect
thereto, and the execution of all applications,
specifications, oaths, assignments and all other
instruments by SUMMUS and/or its employees as ADLABS
shall deem reasonably necessary in order to apply for
and obtain such rights and in order to assign and
convey to ADLABS, and its successors, assigns and
nominees, the sole and exclusive right, title and
interest in and to such ADLABS Technology, and any
copyrights or patents relating thereto. SUMMUS
further agrees that SUMMUS' obligation to execute or
cause to be executed, when it is in SUMMUS' power to
do so, any such instrument or papers shall continue
after the expiration of the term of the Master
Agreement. ADLABS will be responsible for all
expenses incurred for the preparation and prosecution
of all such applications or other documents, and will
reimburse SUMMUS for any reasonable costs incurred by
SUMMUS in providing the assistance described above.
2.4.2 SUMMUS Technology and ADLABS Improvements. ADLABS
agrees to assist SUMMUS, or its designee, in every
proper way to vest and secure SUMMUS' rights in the
SUMMUS Technology, the ADLABS Improvements and any
copyrights or patents relating thereto, in any and
all countries, including the disclosure to SUMMUS of
all pertinent information and data with respect
thereto, and the execution of all applications,
specifications, oaths, assignments and all other
instruments by ADLABS and/or its employees as SUMMUS
shall deem reasonably necessary in order to apply for
and obtain such rights and in order to assign and
convey to SUMMUS, and its successors, assigns and
nominees, the sole and exclusive right, title and
interest in and to such SUMMUS Technology, ADLABS
Improvements, and any copyrights or patents relating
thereto (subject to the licenses granted to ADLABS in
this Agreement). ADLABS further agrees that ADLABS'
obligation to execute or cause to be executed, when
it is in ADLABS' power to do so, any such instrument
or papers shall continue after the expiration of the
term of the Master Agreement. SUMMUS will be
responsible for all expenses incurred for the
preparation and prosecution of
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all such applications or other documents, and will
reimburse ADLABS for any reasonable costs incurred by
ADLABS in providing the assistance described above.
2.5 Alternative Assignment of Exclusive Rights. Notwithstanding any
provisions of this License Agreement to the contrary, ADLABS shall be entitled
without SUMMUS' consent to assign the exclusive license granted in Section 2.2
hereof, to an "Approved Successor" (as defined in paragraph 2.3) for a period of
months (the "Assigned Exclusive Period") determined by ADLABS provided SUMMUS
receives in connection with such assignment (directly or indirectly from the
proceeds of the transaction with the Approved Successor) an amount equal to no
less than the "Minimum Consideration". As used herein, the term "Minimum
Consideration" shall be an amount in cash or, with SUMMUS' consent, marketable
securities, computed as the product of (a) the number of months of the Assigned
Exclusive Period, times the greater of (1) $416,667, (2) the aggregate Phase I
Royalty and/or Phase II Royalty payable by ADLABS to SUMMUS for the month
preceding the month in which the assignment occurs, or (3) the average monthly
aggregate Phase I Royalty and/or Phase II Royalty payable by ADLABS to
SUMMUS for the six month period preceding the month in which the
assignment occurs. For example, if royalties payable to SUMMUS hereunder for the
six month period prior to an assignment of a 24 month exclusive were in order
$300,000, $350,000, $500,000, $600,000, $600,000 and $350,000, then the six
month average would be $450,000 and the Minimum Consideration would be
$10,800,000.
3. RESERVATION OF RIGHTS AND LICENSE RESTRICTIONS. Except as to the
rights and licenses granted to ADLABS in Section 2 of this License Agreement,
SUMMUS reserves all proprietary rights, title and interest, including all
ownership and proprietary rights, in and to the SUMMUS Technology, the ADLABS
Improvements and the SUMMUS Marks. ADLABS agrees to make no use of the SUMMUS
Technology, the ADLABS Improvements or the SUMMUS Marks, except as permitted by
this License Agreement. Except as specifically authorized in Section 2, ADLABS
shall not give, sell, rent, lease, pledge, encumber, hypothecate, timeshare,
disclose, publish, market, transfer or distribute any portion of the SUMMUS
Technology or the ADLABS Improvements to any third party, including, without
limitation, any Affiliated Entity, without SUMMUS' prior written consent. ADLABS
shall not derive or attempt to derive the source code or structure of all or any
portion of the SUMMUS Code by reverse engineering, disassembly, decompilation or
any other means without SUMMUS' prior written consent. ADLABS shall not publish
the results of any benchmark tests run on the SUMMUS Code without SUMMUS' prior
written consent. Except as specifically authorized in Section 2 or in a Work
Statement, ADLABS shall not modify, translate, patch, alter
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or otherwise change the Summus Technology, the ADLABS Improvements or any part
thereof without SUMMUS' prior written consent.
4. CONSIDERATION.
4.1 Royalties.
4.1.1 Commencing on the Phase I Acceptance Date and ending
on the Phase II Acceptance Date, ADLABS shall
thereafter pay to SUMMUS the Phase I Royalty. ADLABS
agrees that it will pay to SUMMUS the Phase I Minimum
Royalty. If the Phase I Royalties due to SUMMUS, for
any applicable twelve-month period, are less than the
Phase I Minimum Royalty, then SUMMUS shall give
written notice to ADLABS of such deficit and within
thirty (30) days after receipt of such notice ADLABS
shall give written notice to SUMMUS that either (i)
ADLABS relinquishes its exclusive license rights
under Section 2.2, or (ii) ADLABS shall:
(a) Pay any such deficit in cash to SUMMUS; or
(b) At SUMMUS' option and in lieu of such cash
payment, grant to SUMMUS shares of ADLABS "most
senior" (as defined in the Stock Warrant Agreement)
preferred stock in such quantity as to offset any
such deficit, such quantity or shares to be based on
the issue price of such "most senior" shares most
immediately preceding SUMMUS' notice.
ADLABS shall deliver to SUMMUS the cash payment in clause (a) above within
fifteen (15) days after ADLABS' written notice electing to make such payment. If
SUMMUS elects to receive stock pursuant to clause (b) above, ADLABS shall
deliver to SUMMUS certificates representing such shares of stock issued in its
name, along with a report providing detail of the calculation of the number of
shares of stock granted, within thirty (30) days of SUMMUS' election. In the
event that ADLABS notifies SUMMUS of its relinquishment of its exclusive license
rights hereunder, the license granted under Section 2.2 shall, from the date of
such notice, become a non-exclusive license.
4.1.2 Commencing on the Phase II Acceptance Date, ADLABS shall
thereafter pay to SUMMUS the Final Royalty. ADLABS agrees that it will pay to
SUMMUS the Final Minimum Royalty. If the Final Royalties due to SUMMUS, for any
applicable time period, are less than the Final Minimum Royalty, then SUMMUS
shall give written notice to ADLABS of such deficit and within thirty (30)
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days after receipt of such notice ADLABS shall give written notice to SUMMUS
that either (i) ADLABS relinquishes its exclusive license rights under Section
2.2 or (ii) at SUMMUS' option, ADLABS shall;
(a) Pay any such deficit in cash to; or
(b) At SUMMUS' option and in lieu of such cash payment, grant to SUMMUS
shares of ADLABS "most senior" (as defined in the Stock Warrant
Agreement) preferred stock in such quantity as to offset any such
deficit, such quantity or shares to be based on the most recent issue
price of such "most senior" shares most immediately preceding SUMMUS'
notice.
ADLABS shall deliver to SUMMUS the cash payment in clause (a) above within
fifteen (15) days of ADLABS' written election to make such payment. If SUMMUS
elects to receive stock pursuant to clause (b) above, ADLABS shall deliver to
SUMMUS certificates representing such shares of stock, along with a report
providing detail of the calculation of the number of shares of stock granted,
within thirty (30) days of SUMMUS' election. In the event that ADLABS notifies
Summus of its relinquishment of its exclusive license rights hereunder, the
license granted under Section 2.2 shall, from the date of such notice, become a
non-exclusive license.
4.2 Final Royalty. After completion of Phase II pursuant to the Master
Agreement, the Final Royalty shall be the only royalty payable by ADLABS, except
for any royalty required under Section 4.4 hereof, for any of the license rights
granted with respect to any SUMMUS Technology and ADLABS Improvements under this
License Agreement, including any SUMMUS Technology and ADLABS Improvements
completed after the Phase II Acceptance Date.
4.3 Equity. ADLABS shall provide SUMMUS the opportunity to acquire
shares of its stock pursuant to the terms and conditions of the Stock Warrant
Agreement. If, pursuant to the terms of the Stock Warrant Agreement, SUMMUS
obtains the Phase III Warrant Shares as a result of ADLABS exercising (1) its
rights to waive the Phase III Exercise Price for the Phase III Warrant Shares or
(2) its Significant Event Stock Issuance Right, then in either such case ADLABS
shall thereafter have no further obligation to pay the royalties described in
this paragraph 4.1 and the licenses and other rights under this Agreement shall
thereafter be considered fully paid up, and non-royalty bearing, except for
royalties that may be payable under paragraph 4.4. Notwithstanding anything to
the contrary herein, any assignment of the license rights granted under this
Agreement following the issuance of the Phase III Warrant Shares under this
Section shall continue to be subject to the provisions of Sections 2.3 and 2.5
of this Agreement.
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4.4 Royalties for SUMMUS Third Party Technology. Notwithstanding any
other provisions of this Agreement, in the event the SUMMUS Technology provided
to ADLABS by SUMMUS incorporates, with the written consent of ADLABS, any SUMMUS
Third Party Technology with respect to which other licensees or sublicensees of
SUMMUS are required to pay royalties directly or to SUMMUS on a pass through
basis, to the third party, ADLABS shall pay the lowest royalty rate payable by
any such licensee or sublicensees of SUMMUS for the SUMMUS Third Party
Technology, subject to the approval of the owner/licensor of such Third Party
Technology. Royalties under this paragraph 4.4 shall be in addition to other
royalties due under this Agreement.
4.5 Board of Advisors. In consideration of the licenses granted by
SUMMUS under this Agreement, ADLABS agrees and hereby extends an invitation to
Xx. Xxxxx Xxxxxxx to join and participate in the ADLABS Board of Advisors and
SUMMUS agrees that Xx. Xxxxxxx shall use reasonable efforts to participate on
the ADLABS Board of Advisors so long as such participation does not unreasonably
interfere with Xx. Xxxxxxx'x duties to SUMMUS. ADLABS agrees to reimburse Xx.
Xxxxxxx for his expenses related to participating in the Board of Advisors. In
addition to the Board of Advisors' seat, SUMMUS will also be allowed to have an
advisor attend all meetings of the ADLABS Board of Directors during the term of
this Agreement subject to the provisions of the corporate bylaws of ADLABS. This
provision shall be of no force or effect from and after the date that SUMMUS has
no rights remaining under the Stock Warrant Agreement to acquire shares in
ADLABS, but only if SUMMUS is not then a shareholder of ADLABS through the prior
exercise of rights under the Stock Warrant Agreement.
5. TERM. Unless earlier terminated as provided herein, this License
Agreement shall commence on the Effective Date and shall continue on a perpetual
basis provided that, with respect only to any SUMMUS Patents now or hereafter
issued, the licenses with respect to such patents shall expire on the expiration
of the last SUMMUS Patent covering any of the SUMMUS Technology to expire.
6. TERMINATION.
6.1 This License Agreement may be terminated by mutual written
agreement.
6.2 Notwithstanding anything herein to the contrary, SUMMUS may
terminate this License Agreement if any of the following occurs:
6.2.1 ADLABS' failure to timely make any payment as
required by this License Agreement and failure to
cure such default within fifteen (15) days of its
receipt of written notice of such default;
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6.2.2 ADLABS' breach of one or more of its material
obligations under this License Agreement, and ADLABS'
failure to cure such breach within thirty (30) days
of its receipt of written notice of such breach,
unless such breach is incapable of being cured within
30 days and ADLABS presents SUMMUS with its plan to
cure and is diligently executing such plan to cure
the breach; or
6.2.3 ADLABS' breach of one or more of its material
obligations under the Stock Warrant Agreement and
ADLABS' failure to cure such breach within the
applicable cure period set forth in the Stock Warrant
Agreement.
6.2.4 The sale, transfer or assignment of ADLABS' rights or
the delegation of its duties under this License
Agreement in violation of Sections 2.3, 2.5 or 14.2
of this License Agreement, and failure to cure such
default within thirty (30) days of ADLABS' receipt of
written notice of such default.
6.2.5 This Agreement shall terminate immediately in the
event of any affirmative act of insolvency by ADLABS,
upon the appointment of any receiver or trustee to
take possession of the properties of ADLABS, or upon
the dissolution and winding-up of ADLABS.
6.3 Termination by ADLABS. ADLABS may terminate this License Agreement
upon ninety (90) days' prior written notice to SUMMUS. Such termination shall
not relieve ADLABS of any its obligations under this License Agreement or the
Master Agreement accruing prior to the effective date of such termination.
7. EFFECT OF TERMINATION OR CANCELLATION.
7.1 Use of Technology. Upon termination or cancellation of this License
Agreement for any reason, all licenses granted to ADLABS hereunder shall
terminate, and ADLABS and its sublicensees shall cease to use the SUMMUS
Technology and ADLABS Improvements in ADLABS products, services, or otherwise,
and cease to use the SUMMUS Marks. Notwithstanding the foregoing, in the event
that SUMMUS rejects or terminates this Agreement in breach of the provisions
hereof, including as contemplated under Section 365 of the Bankruptcy Code, it
is acknowledged that this Agreement contemplates the manner in which ADLABS may
retain the rights granted it hereunder, if ADLABS chooses to do so in accordance
with Section 365(n) of the Bankruptcy Code. It is the Parties' intent that the
rights ADLABS shall be entitled to retain shall be of the scope provided in
Section 2 hereof in all items delivered or required to be delivered under this
Master Agreement and this Agreement. ADLABS retention of such rights following
such an
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election by SUMMUS to reject or terminate this Agreement, shall be subject to
(a) the confidentiality provisions contained in this Agreement, the Master
Agreement or any Work Statement, (b) the sublicense and assignment terms
required of ADLABS hereunder, and (c) the royalty provisions hereunder.
7.2 Return of Materials. Upon the termination or expiration of this
Agreement pursuant to paragraph 6.2, ADLABS shall as soon as reasonably possible
deliver to SUMMUS or destroy all copies of any SUMMUS Code and related
documentation delivered or provided by SUMMUS to ADLABS, and shall certify such
destruction. The only exception to the foregoing shall be one archival copy of
items deemed by ADLABS to be necessary in enforcement of ADLABS' rights.
7.3 Survival. After the termination or cancellation of this License
Agreement by its terms, operation of law or otherwise, all rights, privileges
and obligations arising from this License Agreement shall cease to exist;
provided, however, the obligations and limitations in Sections 1, 2.4, 7 and 11
to 14, inclusive, shall survive any such termination.
8. RELATIONSHIP OF THE PARTIES. The relationship of the Parties
established by this Agreement shall be that of independent contractors. Nothing
in this Agreement shall be construed to create an agency, partnership, joint
venture or employment relationship between ADLABS and SUMMUS, nor to make ADLABS
the agent of SUMMUS, or SUMMUS the agent of ADLABS, for any purpose. Neither
Party is granted authority by the other to undertake commitments, transact
business, create or assume any obligation (express or implied) or otherwise act
(or represent that it can act) in the other's name or on the other's behalf.
9. REPRESENTATIONS AND WARRANTIES.
9.1 Representations, Limited Warranties and Disclaimer. SUMMUS
warrants: that it has the full power and authority to grant the rights and
licenses under this License Agreement; that this License Agreement does not
contravene any other agreements to which SUMMUS is a party; that SUMMUS has full
power and authority to enter into this Agreement. SUMMUS makes no
representation, guarantee or warranty that any copyright, patent or trademark,
trade name or service xxxx claim being made by SUMMUS with respect to the SUMMUS
Technology or the Marks is valid. IN ADDITION, NOTHING IN THIS AGREEMENT SHALL
BE CONSTRUED AS A WARRANTY OR REPRESENTATION THAT ANYTHING MADE, USED, SOLD OR
OTHERWISE DISPOSED OF UNDER ANY LICENSE GRANTED IN THIS AGREEMENT IS OR WILL BE
FREE FROM INFRINGEMENT OF PATENTS, TRADEMARKS AND COPYRIGHTS OF THIRD PARTIES,
although as of the Effective Date hereof,
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SUMMUS knows of no such infringement. THE WARRANTIES SET FORTH IN THIS SECTION
9.1 ARE EXCLUSIVE, AND SUMMUS HEREBY DISCLAIMS ANY AND ALL OTHER WARRANTIES,
INCLUDING, WITHOUT LIMITATION, IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE.
9.2 Patent Claims Offset. In the event a claim for patent or copyright
infringement is made by a third party against ADLABS with respect to any parts
of the Core Technology or the Core Technology Improvements (an "Infringement
Claim"), ADLABS will notify SUMMUS thereof and SUMMUS will use reasonable
commercial efforts, at its option and expense, to (i) procure for ADLABS the
right to continue to use the alleged infringing item and exercise ADLABS' other
rights and licenses under this Agreement, or (ii) replace or modify the alleged
infringing item so that ADLABS may continue to use such item and exercise
ADLABS' other rights and licenses under this Agreement without infringing on the
claimant's rights. In the event SUMMUS does not give ADLABS notices, first
within sixty (60) days of notice of the Infringement Claim that SUMMUS will seek
to accomplish option (i) or (ii) and second within one hundred twenty (120) days
of the notice of the Infringement Claim that SUMMUS has accomplished option (i)
or (ii) or that SUMMUS agrees to indemnify and hold ADLABS harmless from costs
and damages relating to such Infringement Claim, then ADLABS shall be entitled,
to offset against royalty payments thereafter due hereunder, (a) the costs of
defending against the Infringement Claim, including attorneys fees, and (b) the
costs of settling the Infringement Claim, provided that ADLABS shall have no
right to settle any Infringement Claim without providing prior written notice to
SUMMUS. ADLABS agrees that such offset for defending such Infringement Claim
will not exceed the reasonable royalty demanded by the claimant.
10. USE OF MARKS.
10.1 ADLABS Marks. SUMMUS is hereby granted a worldwide, nonexclusive
right and license to use any ADLABS Marks in marketing products and/or services
that include the SUMMUS Technology, in SUMMUS' advertisements, and promotional
materials for the purpose of showing products or companies that incorporate the
SUMMUS Technology.
10.2 SUMMUS Marks. ADLABS is hereby granted a worldwide non-exclusive
license to use the SUMMUS Marks in, or in connection with, products or services
in the Field incorporating the SUMMUS Technology.
10.3 Ownership Of Marks. Each party acknowledges the other party's
ownership of its respective Marks licensed hereunder and each agrees that it
will do nothing inconsistent with such ownership, that all use of such Marks by
the licensed party shall inure to the benefit of and
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be on behalf of owner of such Marks. Each party agrees that nothing in
this Agreement shall give the licensed party any right, title or interest in the
licensing party's Marks other than the right to use such Marks in accordance
with this Agreement.
10.4 Quality Standards. The quality of any product or service upon
which, or in connection with which, any Xxxx licensed by either party hereto to
the other party is used (the "Licensed Products"), as well as the quality of all
promotional, advertising and packaging material which includes such Marks, shall
be at least as high as the quality of similar products and promotional,
advertising and packaging material presently shopped, distributed, sold and/or
used by the licensed party and shall be in full conformance with all applicable
laws and regulations. Each licensed party hereunder agrees that Licensed
Products and all promotional and packaging material shall contain appropriate
legends, markings and/or notices as required from time to time by the owner of
such Marks, to give appropriate notice to the consuming public of the owner's
right, title and interest thereto. The licensed party hereunder shall be solely
responsible for insuring that all Licensed Products are manufactured, labeled,
marketed, distributed, sold and advertised in compliance with all applicable
standards, laws and regulations established by governmental and private
authorities in the licensed territory.
11. ACCOUNTING.
11.1 Reports. ADLABS agrees to furnish SUMMUS, on or before the last
day of the month following the first calendar quarter in which royalties shall
be payable to SUMMUS, and on or before the last day the month following the end
of each calendar quarter thereafter in which royalties shall be payable to
SUMMUS, a written report setting forth royalties due. ADLABS' remittance for the
full amount of royalties due for such quarter shall accompany such reports.
11.2 Books and Records. ADLABS shall keep complete and accurate books
and records, in accordance with generally accepted accounting standards, of its
products and services upon which a royalty is payable hereunder, and such books
and records shall be available to be inspected or audited upon reasonable notice
during regular business hours by an independent certified public accountant,
chosen and paid by SUMMUS, who shall report to SUMMUS only the amount of royalty
bearing technical processing fees and the amount of royalty due; provided that
not more than two such inspections or audits shall be made in any calendar year.
ADLABS shall reimburse SUMMUS the cost of any audit if it is found that royalty
payments during the audited period were understated by an amount exceeding five
percent (5%) of the royalties due.
12. INDEMNIFICATION.
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12.1 Except as provided in Section 9, ADLABS will and hereby does
indemnify, agree to defend and hold SUMMUS, its shareholders, officers,
directors and employees, harmless from all liabilities, damage or remedial or
punitive awards of any kind, costs and fees of any kind (including costs of
defense and reasonable attorney fees), claims or causes of any kind (whether
pending or threatened) (collectively "Claims"), related to or arising from the
Business, except if the Claims arise from the gross negligence or willful
misconduct of SUMMUS or its shareholders, officers, directors, employees,
contractors, or agents. This Section 12 shall not apply to any damage, loss or
cost related to SUMMUS' exercise of rights to acquire or hold shares or other
interests in ADLABS.
12.2 Except as provided in Section 9, SUMMUS will and hereby does
indemnify, agree to defend and hold ADLABS, its shareholders, officers,
directors, employees, contractors, and agents, harmless from all Claims related
to or arising from the gross negligence or willful misconduct of SUMMUS or its
shareholders, officers, directors or employees.
13. CONFIDENTIALITY
13.1 Existing Confidentiality Agreement. ADLABS and SUMMUS have
executed and delivered a Confidentiality Agreement, dated February 16, 2000, a
copy of which is attached. hereto as Exhibit "E" and incorporated herein by this
reference (the "Confidentiality Agreement"), which remains in full force and
effect.
13.2 Maintenance of Confidential Information. The Parties acknowledge
that the terms of this License Agreement and its Exhibits are confidential
information, and that either Party may acquire Proprietary Information (as
defined in the Confidentiality Agreement) of the other Party. The Parties agree
to use such information only for the purposes authorized under this Agreement,
and, except as specifically provided for in this License Agreement, use their
best efforts not to release, disclose or otherwise permit access to such
confidential information or to use the information in such a way that other
parties can gain unauthorized access to such information. The Parties agree to
xxxx written materials as "Confidential" if they are to be treated as
confidential in nature. Oral communications that are confidential in nature will
be identified as such before, during or immediately after the communication.
Each Party shall take steps to ensure that all those individuals having access
to confidential information under this Agreement will observe and perform the
obligations in this Agreement with respect to confidential information.
14. GENERAL.
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14.1 Scone and Amendment of License Agreement. The Parties acknowledge
that each has read this License Agreement, understands it and agrees to be bound
by its terms. This License Agreement may be amended only by a subsequent writing
that specifically refers to this License Agreement and that is signed by both
Parties, and no other act, document, usage or custom shall be deemed to amend
this License Agreement.
14.2 Assignment. Except as provided in Sections 2.3 and 2.5, ADLABS
shall not assign or delegate any of its rights, duties or obligations under this
License Agreement in whole or in part without SUMMUS' prior written consent. Any
attempt by ADLABS to make such a prohibited assignment or delegation, without
SUMMUS' written consent, shall be void.
14.3 Source Code Escrow. As soon as reasonably possible following the
execution of this Agreement, but in no event later than ninety (90) days after
the execution of this Agreement by both parties, SUMMUS will deposit the source
code for the then-current version of the SUMMUS Code with Fort Xxxx Escrow
Services, Inc. ("Ft. Xxxx"), pursuant to a source code escrow agreement approved
and executed by and among SUMMUS, ADLABS and Ft. Xxxx (the "Escrow Agreement"),
such approval of the Escrow Agreement not to be unreasonably withheld. ADLABS
shall pay all expenses associated with the escrow. Upon the completion of
services by SUMMUS under each Work Statement that includes the delivery of
updates to the SUMMUS Code, and upon any other delivery of updates to the SUMMUS
Code to which ADLABS is entitled pursuant to this Agreement or the Master
Agreement, SUMMUS shall deposit the source code for such updates with Ft. Xxxx,
provided that ADLABS pays all fees and expenses associated with such deposit,
and such source code shall thereupon become subject to the terms of the Escrow
Agreement. Upon any release of the source code pursuant to the Escrow Agreement,
SUMMUS shall deliver to ADLABS all work in progress under all Work Statements,
including all source code related thereto (collectively, "Work in Progress").
Notwithstanding anything to the contrary in this Agreement, upon release of the
source code pursuant to the Escrow Agreement, ADLABS will be entitled to use,
modify, change, alter or improve the released source code and the Work in
Progress as reasonably necessary to exercise its rights under the licenses
granted in Section 2 of this Agreement and to correct and support the SUMMUS
Code. ADLABS shall maintain the confidentiality of the source code and the Work
in Progress pursuant to the terms of Section 13 of this Agreement. ADLABS shall
in no event give, sell, rent, lease, pledge, encumber, hypothecate, timeshare,
sublicense, publish, assign (except as allowed under Section 14.2), market,
transfer or distribute any portion of the source code or the Work in Progress
without the prior written consent of SUMMUS. Further, ADLABS shall
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not publish the results of any benchmark tests run on any of the source code or
the Work in Progress without the prior written consent of SUMMUS.
14.4 Notices. All notices under this License Agreement shall be in
writing and may be given by delivering the same by hand, or by sending the same
by an overnight courier that maintains verification of delivery, or by
facsimile, to the relevant person and address set out below or such other person
and address as either Party may notify to the other from time to time. Any such
notice given as set forth above shall be deemed to have been given or received
at the time of delivery (if delivered by hand) and upon verified receipt (if
sent by post, facsimile or overnight courier):
SUMMUS ADLABS
Summus, Ltd. ADLabs, Inc.
000 Xxxxxxxxxxxx Xxxxxx Xxxx, Xxxxx 000 0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000 Xxxxxxx Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxx Attn: Xxxxxxx X. Xxxxxx, CEO
VP Business Development Fax: (000) 000-0000
Fax: (000) 000-0000
With a copy to: With a copy to:
Xxxxxxxx X. Xxxxxxx, Esq. Xxxx X. Xxxxxxx, Esq.
Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx, PLLC Xxxxxx & Xxxxxxx
000 Xxxxxxxxxxxx Xxxxxx Xxxx, Xxxxx 0000 1155 Avenue of the Americas
Xxxxxxx, XX 00000 Xxx Xxxx, XX 00000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
Email: xxxxxxxxx@xxxx.xxx Email: xxxxxxxxx@xxxxxx.xxx
14.4 Binding Effect. Subject to Section 14.2, this License Agreement
shall be binding on and inure to the benefit of the respective successors and
permitted assigns of the Parties.
14.5 Authority. Each of the respective persons executing this License
Agreement hereby covenants and warrants that such person has full legal power,
right and authority to bind the entity on whose behalf such person is signing to
each and every term and provision herein.
14.6 Severability. If any provision of this License Agreement shall be
held illegal or invalid by any court, this License Agreement shall be construed
and enforced as if such illegal or invalid provision had not been contained
herein and this License Agreement shall be deemed an agreement of the Parties to
the full
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extent permitted by law. If any provision shall be declared invalid or
unenforceable because of its breadth, scope or duration, such provision shall be
deemed modified to the extent necessary to make it valid and enforceable and
shall remain in full force and effect as so modified, or if not so modified,
shall be severable from the rest of this License Agreement.
14.7 Headings. All headings are for reference only and shall not be
considered in construing this License Agreement.
14.8 Expenses of Litigation. In case of litigation arising out of or in
connection with this License Agreement, the prevailing Party shall be entitled
to recover its reasonable attorneys' fees, costs and expenses from the other
Party.
14.9 Waiver. The failure of either Party at any time to require
performance by the other Party of any provision hereof shall in no way affect
the full right to require such performance at any time thereafter. Nor shall the
waiver by either Party of a breach of any provision hereof be a waiver of any
succeeding breach of the same or any other such provisions or be a waiver of the
provision itself.
14.10 Construction of Agreement. This License Agreement has been
negotiated by the Parties and their respective attorneys and the language of
this License Agreement shall not be construed for or against either Party.
14.11 Exhibits. The following exhibits are a part of this License
Agreement:
Exhibit A -Description of the SUMMUS Technology
Exhibit B -Description of the ADLABS Technology
Exhibit C -Schedule of Phase I Minimum Royalties
Exhibit D -Schedule of Final Minimum Royalties
Exhibit E -Confidentiality Agreement
14.12 Entire Agreement. This License Agreement together with the Master
Agreement, the Confidentiality Agreement and the Stock Warrant Agreement, and
related documents executed in connection therewith, constitutes the entire
agreement of the Parties.
14.13 Independent Contractor Status. SUMMUS is an independent
contractor under this License Agreement, and nothing herein shall be construed
to create any partnership, joint venture, or agency relationship between the
Parties. Neither Party is granted authority under this License Agreement to
enter into agreements of any kind on behalf of the other Party, or to bind or
obligate the other Party in any manner to any third party.
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14.14 Force Majeure. Except for the obligation to make any payments
described in this License Agreement, neither party shall be in default if
failure to perform any obligation hereunder is caused by supervening conditions
beyond that party's reasonable control, including acts of God, civil commotion,
strikes, labor disputes, and governmental demands or requirements.
14.15 Press Releases and Public Announcements. Each party to this
Agreement shall have the right to issue press releases and/or make any public
announcements (including, without limitation, any press release or announcement
on any web site) relating to the subject matter of this Agreement; provided,
however, that the party making any such announcement shall provide to the other
party an advance copy of such announcement for review.
14.16 No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person, including any Affiliated Entity, other than
the Parties and their respective successors and permitted assigns.
14.17 Governing Law. The governing law of this License Agreement shall
be that of the State of Delaware, USA.
14.18 Mediation. If a dispute arises out of or relates to this License
Agreement or the breach thereof (a "Dispute"), and if the Dispute cannot be
settled through negotiation between the parties for a period not to exceed sixty
(60) days, the parties agree first to try in good faith to settle the Dispute by
mediation administered by the American Arbitration Association under its
Commercial Mediation Rules before resorting to arbitration, litigation, or some
other dispute resolution procedure.
Notwithstanding anything to the contrary contained in this Section, the parties
hereby preserve, without diminution, certain remedies that any of them may
employ or exercise freely, in connection with or during a Dispute. Each of the
parties shall have the right to proceed in any court of proper jurisdiction to
exercise or prosecute the following remedies, as applicable: (i) obtaining
provisional or ancillary remedies, including injunctive relief, garnishment,
attachment, appointment of a receiver and filing an involuntary bankruptcy
proceeding, and (ii) a judgment obtained by confession of judgment. Preservation
of these remedies does not limit the power of a mediator to grant similar
remedies that may be requested by a party in a Dispute.
14.19 Counterparts. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same Agreement.
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IN WITNESS WHEREOF, the Parties executed and delivered this License
Agreement as of the day and year first above written.
SUMMUS, LTD., ADLABS, Inc.,
a Delaware corporation a California corporation
By: /s/ Xxxxxxx X. Xxxx By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------ ------------------------------
Xxxxxxx X. Xxxx Xxxxxxx X. Xxxxxx
Vice President, Business Development President and CEO
By: /s/ W. Xxxxxxxx Xxxxxxxxxx By: /s/ Xxxxx X. Xxx
------------------------------------ ------------------------------
X. Xxxxxxxx Xxxxxxxxxx Xxxxx X. Xxx, Secretary
Chief Executive Officer
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