4.2.Ownership of Intellectual Property.
(i)Pro-Dex may incorporate, develop, discover or create certain confidential or proprietary processes, techniques or know-how, including modifications or improvements to such processes, techniques or know-how, in the course of development, engineering and manufacturing of the Products (such proprietary processes, techniques or know-how, and modifications and improvements thereto, being referred to herein as the “Pro-Dex Technology”). Pro-Dex Technology includes proprietary materials, control and other types of software, bills of material, information, assembly procedures, test procedures and results, technical data, formulas, reformulations, documents and publications that are used, acquired, created, purchased, compiled, presented, possessed or otherwise developed by Pro-Dex (both prior to and during the performance hereunder and the Development Agreement or the Supply Agreement) in connection with the development, engineering and manufacturing of the Products. Pro-Dex Technology is the sole and exclusive property of Pro-Dex and, except for the license granted under Section 4.2(ii), nothing herein or under the Development Agreement or the Supply Agreement shall be interpreted to provide for the license, transfer or assignment by Pro-Dex to Monogram of any Pro-Dex Technology. For avoidance of doubt, Pro-Dex Technology does not include any Monogram IP.
(ii)Pro-Dex hereby grants to Monogram a limited, non-exclusive, irrevocable, perpetual, nontransferable, worldwide license to the Pro-Dex Technology (a) as necessary and for the sole purpose of promoting, selling or otherwise distributing the Products manufactured by Pro-Dex hereunder or under the Development Agreement or Supply Agreement and (b) solely to the extent that the manufacture of any Product by a third party is expressly permitted under this Agreement or under the Development Agreement or Supply Agreement, as necessary and for the sole purpose of a third party manufacturing such Products.
(iii)Any intellectual property (including, without limitation, internal technology disclosures by Monogram to Monogram’s counsel, provisional patent filings, patent applications and issued patents) related to the Products of which Monogram employees are the sole inventors shall be owned by Monogram (“Monogram IP”).
5.Supply Agreement. Until the Parties enter into the Supply Agreement, the Parties agree to the following terms, which terms, to the extent applicable, shall be included in the Supply Agreement:
5.1.Pro-Dex will be Monogram’s exclusive manufacturer and supplier for all of the Products. Before providing any manufacturing and supply services to Monogram, Pro-Dex will provide in writing to Monogram:
(i)the reference data (from simulated use studies) used to inform the warranty period;
(ii)the framework for validating processes for receiving contaminated field units for repairs and servicing;
(iii)the price per Product, which, subject to Section 5.3, if Monogram does not agree to, shall be determined by Monogram soliciting bids for that same Product from at least three manufacturing companies that are (a) mutually agreed upon by Monogram and Pro-Dex, (b) ISO 13485 qualified, (c) registered with the FDA, and (d) in compliance with the FDA’s Quality System Regulation (the “Qualified Manufacturers”). The higher of (x) the average of the bids provided by the Qualified Manufacturers and (y) the median of the bids shall be the “Qualified Manufacturer Bid”. After obtaining the Qualified Manufacturer Bid, Pro-Dex will have the right to manufacture and supply that Product at the lesser of (i) one hundred and fifty percent (150%) of the Qualified Manufacturer Bid or (ii) the original bid submitted by Pro-Dex. If Pro-Dex does not elect to manufacture and supply that Product on such terms, Monogram may outsource the manufacturing and supply of that Product to a Qualified Manufacturer selected by Monogram and subject to Pro-Dex’s approval (not to be unreasonably withheld); and