STRATEGIC ALLIANCE AGREEMENT
Agreement, dated as of February 27, 1995, between Pixsys, Inc., a
Colorado corporation ("Pixsys"), and Surgical Navigation Technologies, Inc., a
Delaware corporation ("SNT").
WHEREAS, Pixsys manufactures and sells 3-D optical digitizers which
are used in the image guided therapy ("IGT") market (the digitizer sold by
Pixsys is referred to herein as the "Pixsys Digitizer");
WHEREAS, SNT has developed and sells an integrated hardware/software
system using the Pixsys Digitizer that indicates the position of a surgical
probe within a human body on an image of that portion of the body (the "SNT
System");
WHEREAS, SNT has been granted the exclusive worldwide right and
license to make, use and sell systems utilizing U.S. Patent 5,383,454 ("U.S.
Patent") and related foreign and domestic patents which may issue, including
divisions, continuations and reissues thereof (collectively with the U.S.
Patent, the "SNT Patents"); and
WHEREAS, the parties hereto desire to enter into a strategic alliance
to more effectively pursue the opportunities in the IGT market.
NOW, THEREFORE, the parties hereto, in consideration of the foregoing
and their mutual undertakings hereinafter set forth, do hereby agree as follows:
1. PIXSYS DIGITIZER.
a. Pixsys agrees to supply the Pixsys Digitizer with any
necessary licenses to SNT and SNT agrees to purchase from Pixsys all its
requirements for 3-D optical digitizers for the IGT market; provided the Pixsys
Digitizer meets mutually agreed upon specifications and delivery schedules and
required industry quality standards.
b. In connection with the sale of the Pixsys Digitizer, Pixsys
will grant SNT any necessary licenses (at a reasonable royalty) to any patents
which are hereafter acquired by Pixsys in order for SNT to make, use and sell
systems incorporating the Pixsys Digitizer and other Pixsys products to the IGT
market (excluding the ENT Market as hereinafter defined). Included with the
Pixsys Digitizer will be (i) a nonexclusive, personal and nontransferable
license to use the Pixsys software which is part of the Pixsys Digitizer for the
purpose of incorporating the Pixsys software into SNT's product and (ii) a right
to sublicense the Pixsys software to SNT's customers for use with the Pixsys
Digitizer pursuant to Pixsys' standard sublicense agreement.
c. Pixsys will only sell the Pixsys Digitizer for IGT
applications (other than the ENT Market) to purchasers which, to Pixsys'
knowledge, will not use it to infringe any SNT patent. (If SNT disagrees with
Pixsys' position, SNT may submit the disagreement to a mutually acceptable
third-party arbitrator, knowledgeable as to patents, and if the arbitrator
agrees that
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the purchaser's use is infringing, Pixsys will no longer have the
right to sell the Pixsys Digitizer to that purchaser for that use). SNT agrees
to discuss a license with GE Medical Systems for the SNT Patents for use with GE
Medical Systems' "open" magnetic resonance products and, notwithstanding
anything herein to the contrary, Pixsys shall have the right to (i) continue to
sell the Pixsys Digitizer to GE Medical Systems during the period of such
discussions and for one year thereafter if no license is granted and (ii) to
continue to service any digitizer sold to GE Medical Systems, and any other
person, that was not sold in violation of this Agreement. Without any
implication that the SNT Patents cover applications outside of the IGT market,
Pixsys is hereby granted a non-exclusive, world-wide, royalty-free right to
make, use and sell its Digitizer (incorporated into systems or alone and with
the right to sublicense) in the nonmedical market.
2. SNT SYSTEM.
a. SNT hereby (i) agrees to supply Pixsys with its SNT System
for incorporation into a Pixsys product for sale in the ear, nose and throat
medical market ("ENT Market"), and (ii) grants Pixsys the exclusive worldwide
right to sell the SNT System to the ENT Market. The SNT System will be based
upon a PC platform with a software user interface that is specifically
customized for Pixsys in the ENT market and will meet mutually agreed upon
specifications and delivery schedules and required industry quality standards.
Pixsys and SNT will mutually agree upon further product differentiation for the
ENT Market vis-a-vis
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the Neuro and Spine markets. The localization/navigation method shall be
identified and referred to in all Pixsys marketing literature or journal
articles as the "Bucholz Free-Hand-TM-" method and all instruments which
are specifically designed by Dr. Bucholz shall be referred to and identified as
"Bucholz" instruments.
b. In connection with the sale of the SNT System, SNT hereby
grants Pixsys the exclusive worldwide right to make, use and sell products and
systems covered by the SNT Patents in the ENT Market, including, to the extent
necessary, the right to sublicense the SNT Patents to end users in the ENT
Market. SNT will also grant to Pixsys any necessary licenses (at a reasonable
royalty) to any patents other than the SNT Patents which are hereafter acquired
by SNT in order for Pixsys to make, use and sell products incorporating the SNT
System and other SNT products to the ENT Market. With the prior approval of
SNT, which shall not be unreasonably withheld, Pixsys shall have the right, but
not the obligation, to utilize legal and judicial proceedings to protect and
enforce the SNT Patents in the ENT Market. Included within SNT's System will be
(i) a nonexclusive, personal and nontransferable license to use SNT software
which is part of the SNT System for the purpose of incorporating the SNT System
into the Pixsys product being sold in the ENT Market and (ii) a right to
sublicense the SNT software to Pixsys' customers in the ENT Market for use with
the SNT System pursuant to SNT's standard sublicense agreement.
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c. SNT will not grant any other person or entity a right to
make, use or sell products covered by the SNT Patents in the ENT Market nor will
it itself make, use or sell products into the ENT Market that will alone, or
when combined with other products, be covered by the SNT Patents. SNT may
terminate the exclusive rights (in which case Pixsys will retain the
non-exclusive rights) granted to Pixsys pursuant to this paragraph 2 at any time
within sixty (60) days after the end of any calendar year in the event that
Pixsys fails to order the minimum quantity of SNT Systems set forth in Schedule
A attached hereto for such year, provided (i) Pixsys is given written notice of
termination for such failure from SNT during such sixty (60) day period and (ii)
such failure continues for 60 days after Pixsys receives such notice.
3. PATENT REPRESENTATION AND ABANDONMENT.
a. SNT represents and warrants that (i) it owns, and has been
granted by St. Louis University, the exclusive worldwide right to make, use, and
sell systems covered by the U.S. Patent and the SNT Patents, and (ii) it has
granted Sofamor Danek Group ("Danek") the exclusive right to sell the SNT System
in the Neuro and Spine markets and the right of first refusal for all other
medical fields of use except the ENT Market.
b. SNT and Pixsys agree to cause Schedule B attached hereto to
be executed by the appropriate parties.
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4. TERMS OF SALE.
a. Transfer price per unit to Pixsys for the SNT System
including any required licensing for the ENT Market is $43,000, plus cost of
hardware, subject to annual review by the parties.
b. Transfer price per unit to SNT for the Pixsys Digitizer
including any required licensing is $15,000 subject to annual review by the
parties.
c. Payment terms are net thirty days.
d. Each party hereto agrees to use its best efforts to deliver
according to purchase orders received from the other party.
e. Each party hereto shall provide to the other rolling monthly
forecasts of its anticipated order volume for the other's products for the
subsequent six (6) months.
5. CUSTOMER SERVICE AND SUPPORT.
a. SNT will provide technical support to each third party
purchaser of the Pixsys ENT system. The cost that SNT will charge Pixsys in the
United States for this technical support is (i) in the first year after
purchase, $9,300 which includes installation and (ii) in each subsequent year
after purchase, $5,500; a reasonable portion of both of which is to be paid to
Pixsys for digitizer support. The cost to Pixsys for the technical support
outside of the United States shall be mutually determined by Pixsys and SNT.
Pixsys and SNT agree to adjust these prices periodically as market conditions
require.
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b. Pixsys will provide technical support to each third party
purchaser of SNT systems that incorporate the Pixsys Digitizer. The cost that
Pixsys will charge SNT for this technical support shall be mutually determined
by Pixsys and SNT.
c. Subject to the foregoing and as part of the strategic
alliance between the two companies, the parties hereto agree to work out the
other necessary maintenance and support arrangements recognizing that their
respective products will be used in the clinical treatment of individuals.
6. FDA. The parties hereto agree to cooperate to obtain FDA
approval for their respective products, including, making available the FDA
applications and supporting data to each other prior to submission. Promptly
after the execution of this Agreement and in connection with their submissions
to the FDA, the parties agree to work out documentation, notification, response
procedures and other matters for their respective products for FDA regulatory
purposes.
7. DIGITIZER TECHNOLOGY. SNT will provide its present 3-D optical
digitizer technology ("SNT Digitizer Technology") to Pixsys for inclusion in the
Pixsys Digitizer. Pixsys and SNT will form a joint development team to further
improve the Pixsys Digitizer. SNT agrees that the processes, know-how, trade
secrets and other technology and the software in the Pixsys Digitizer, except
the SNT Digitizer Technology and the jointly developed technology, is and will
be proprietary in, and owned exclusively by, Pixsys and may not be used by SNT
except
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with the Pixsys Digitizer as permitted under the terms of this Agreement.
8. REVERSE ENGINEERING; COPIES. Each party agrees not to reverse
engineer, reverse compile or reverse assemble the other's products. Neither
party shall make any copies of the other's software except for the purposes of
the licenses granted pursuant to the Agreement, and all copies are the sole
property of the party whose software is copied and such copies shall not be made
available to any third parties.
9. CONFIDENTIALITY. Each party acknowledges that the other's
products (including software) contain trade secrets, processes, know-how and
other proprietary information belonging to the other and that this information
may be communicated or otherwise made available in connection with this
Agreement. Each party agrees to keep all such information received from the
other confidential, not to publish or disclose such information to others, not
to use such information except as permitted under the terms of this Agreement,
and to protect such information with the same degree of care used by it to
protect and safeguard and maintain its own trade secrets and confidential
information. Such safeguards shall include at least the precautions of
restricting access to only those persons in their employ and their consultants
who have a need to know, instructing those employees and consultants
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of their obligation to maintain the confidentiality and secret nature of the
information and having executed agreements in place with such employees and
consultants legally binding them to those obligations, providing reasonable
security precautions for areas and computers where software, trade secrets and
other proprietary information is being used or stored, and completely erasing or
deleting all software from any disk, tape, or other media being discarded,
disposed, or converted to different uses.
10. DIRECTORS. Paul Ray will be appointed a director of SNT and Marc
Buntaine will be appointed a director of Pixsys.
11. COMPLIANCE WITH LAWS. Each party agrees to obey all laws and
regulations of any country in which it sells any product of the other. Each
party further understands that it is subject to regulation by agencies of the
Unites States Government, including the United States Department of Commerce,
and warrants that it will not sell the other's product to any country not
approved under applicable United States laws and regulations.
12. TERM. This Agreement will remain in effect until the last to
expire of the SNT Patents, unless sooner terminated pursuant to the terms
hereof.
13. TERMINATION.
a. Either party may terminate this Agreement on sixty (60) days
written notice in the event of a material default by the other party of any of
its obligations hereunder, provided (i) the defaulting party receives written
notice of termination containing a reasonably complete description of the
default and (ii) the default continues for sixty (60) days after receiving
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such notice. On termination, all licenses and rights granted hereunder shall
expire, except such licenses and rights shall continue with products purchased
by any party from the other until such products are sold and except that, on
termination by Pixsys as a result of SNT's default, the obligations of SNT
pursuant to, and the exclusive rights granted to Pixsys by, paragraph 2 of this
Agreement shall continue unless Pixsys otherwise elects. The provisions of
paragraphs 3, 7, 8 and 9 and Schedule B shall survive termination of this
Agreement.
b. The rights and remedies granted under paragraph 13a. shall
not be exclusive of any other right or remedy, either at law or equity, that may
be available and the exercise of one right or remedy shall not be deemed a
waiver of any other right or remedy.
14. GOOD FAITH. This Agreement is intended to set forth the basic
terms of a strategic alliance between the parties. As the business relationship
between the parties develops, there will inevitably be issues that were not
considered at the time this Agreement was entered into and the parties hereto
agree to cooperate in good faith to work out mutually acceptable solutions to
these issues.
15. MISCELLANEOUS.
a. All notices in connection with this Agreement shall be in
writing and shall be sent to the addresses given below or to such other
addresses as the parties may hereafter specify, in person, by certified mail,
return receipt requested,
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or by telecopier. Such notice shall be deemed to be given (i) when personally
delivered to a party, (ii) three days after mailing by certified mail, return
receipt requested, or (iii) upon confirmation of receipt of facsimile
transmission:
IF TO PIXSYS: Pixsys, Inc.
5680-B Central Avenue
Boulder, CO 80301
Attn: President
and
IF TO SNT: Surgical Navigation Technologies,
Inc.
530 Compton Street
Broomfield, CO 80020
Attn: President
b. Neither party may assign this Agreement nor any of its
rights or obligations hereunder without the prior written consent of the other
party.
c. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado.
d. This Agreement shall be null and void and of no effect if
SNT does not sign its agreement with Danek by March 1, 1995. TIME IS OF THE
ESSENCE.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first stated above.
PIXSYS, INC.
By: /S/ JEFFREY J. HILLER
--------------------------------------
Title:V.P. CHIEF FINANCIAL OFFICER
-----------------------------------
SURGICAL NAVIGATION TECHNOLOGIES,
INC.
By: /S/ SIGNATURE
--------------------------------------
Title:CHIEF TECHNICAL OFFICER
-----------------------------------
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SCHEDULE A
Minimum No. of SNT Systems
Calendar Year No. of SNT Systems
------------- ------------------
1995 7
1996 14
1997 18
1998 24
1999 30
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SCHEDULE B
AGREEMENT
1. Pixsys, Inc. (Pixsys), a Colorado corporation, and Waldean A. Schulz (Dr.
Schulz), an individual, each:
a. agree to revoke all prior appointments of attorney(s) and to appoint any one
or more attorneys designated by St. Louis University with exclusive power of
attorney to represent Pixsys and Dr. Schulz before the United States Patent and
Trademark Office with respect to U.S. patent application serial number
08/052,042 filed April 22, 1993 (the U.S. `042 application) for the sole and
exclusive purpose of abandoning that application without refile of any kind;
b. agree to assign and do hereby assign to St. Louis University throughout the
world whatever rights, title and interest they may have in U.S. patent 5,383,454
(the U.S. `454 patent) and in so much of any divisions or continuations thereof
having the same effective filing date;
c. agree to abandon and do hereby abandon the U.S. `042 application and whatever
rights, title and interest they may have in the invention claimed in the U.S.
`454 patent;
d. warrant that:
I) Pixsys and/or Dr. Schulz and/or its (their) assignees have only two
pending patent applications in the world, a U.S. application which claims, or
will be amended or refiled to claim, priority from the U.S. `042 application,
and a PCT application partially corresponding thereto;
ii) this pending U.S. patent application is in the sole name of Dr.
Schulz, and it will not be amended or refiled to add the name of Dr. Bucholz as
a coinventor;
iii) this pending U.S. patent application does not claim, nor will it be
amended or refiled to claim, priority from the U.S. `454 patent;
iv) this pendinq U.S. patent application does not claim, nor will it be
amended or refiled to claim, subject matter disclosed or claimed in the U.S.
`454 patent;
v) Pixsys and/or Dr. Schulz and/or their assignees do (does) not have any
pending patent application, nor will they (it) file any patent application which
claim(s), or will be amended or refiled to claim, subject matter which
interferes with, or will interfere with, the U.S. `454 patent;
vi) in the event that any interference is declared between the claims of
the U.S. `454 patent and any patent
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application or patent naming Dr. Schulz as a patentee/applicant, and/or which is
owned or controlled by Pixsys, Pixsys and Dr. Schulz hereby specifically concede
priority in such interference; and
vii) except for the U.S. `042 application, no presently pending patent
application, which has at any time been, or at any time will be, assigned to
Pixsys, and/or names Dr. Schulz as a sole or coinventor, now claims an invention
which relies, or will in the future be claimed to rely, on an effective filing
date, which is:
A)earlier than its actual filing date, and
B) at least as early as the effective filing date of the U.S. `454
patent;
e. agree that neither Pixsys, nor Dr. Schulz, nor their respective assigns will
take any action inconsistent with this Agreement;
f. warrant that neither Pixsys, nor Dr. Schulz, nor their assigns has filed
and/or agree that neither will file any other patent applications, or take any
other action, challenging St. Louis University's ownership of the U.S. `454
patent;
g. agree to cooperate with SNT and St. Louis University by executing any
documents or taking any action, to confirm that throughout the world whatever
rights, title and interest they may have in the U.S. `454 patent and in so much
of any divisions and continuations thereof, which are entitled to the same
effective filing date, are owned by St. Louis University;
h. agree not to contest the designation of Dr. Bucholz as the sole
inventor/patentee of the U.S. `454 patent; and i. agree that SNT and/or St.
Louis University may enforce any provision of this Agreement by seeking an
injunction or court order in any court of competent jurisdiction and hereby
consent to the jurisdiction of such court; and
2. St. Louis University and Surgical Navigational Technologies, Inc. (SNT), a
Delaware corporation, each:
a. warrant that they will cause the intentional abandonment of the U.S.
`042 application to become effective simultaneously with the execution of this
agreement;
b. warrant that neither they nor their assigns will, upon the execution of
this agreement and/or thereafter, cause any patent application to be filed
anywhere in the world claiming priority in the U.S. `042 application; and
c. agree that Pixsys may enforce any provision of this Agreement by seeking
an injunction or court order in any
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court of competent jurisdiction and hereby consent to the jurisdiction of such
court.
5. This Agreement, which is Schedule B to the Pixsys/SNT agreement, shall be a
separate, distinct and independent agreement from the Pixsys/SNT agreement and
shall survive any termination or expiration of the Pixsys/SNT agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
latest date stated below:
PIXSYS, INC. (PIXSYS)
By: /S/ PAUL L. RAY
-----------------------------
NAME: Paul L. Ray
TITLE: President
DATE: 2-27-95
SURGICAL NAVIGATIONAL TECHNOLOGIES, INC. (SNT)
BY: /S/ KURT R. SMITH
-----------------------------
NAME: Kurt R. Smith
TITLE: Chief Technical Officer
DATE: 2-24-95
WALDEAN A. SCHULZ (DR. SCHULZ)
BY: /S/ WALDEAN A. SCHULZ
-----------------------------
NAME: Waldean A. Schulz
TITLE: Chief Technical Officer
DATE: 1995 Feb 27
ST. LOUIS UNIVERSITY
By: /S/ DR. ROBERT M. SWANSON
-----------------------------
NAME: Dr. Robert M. Swanson
TITLE: Associate Vice President, Health Services
DATE: February 28, 1995
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SURGICAL NAVIGATION
April 24, 1996
Mr. Paul Ray
Chairman
Image Guided Technologies, Inc.
Boulder, CO
Dear Paul:
As you may have heard, Mark Hunter has recently placed, and IGT has confirmed
acceptance of, an order for 20 more 5000's for delivery over the course of the
Spring/Summer. This is in response to our continuing demand for
StealthStations, and trying to stay slightly ahead of the curve. Things
continue to go well for us out in the field as well, with minimal recent
problems related to the 5000 performance.
The SNT Board of Directors recently met, at which time we again reviewed the
SNT/IGT history and your and my most recent correspondence. At a formal level,
I am now able to express SNT's full agreement with the Strategic Alliance
termination proposal contained in your letter to me dated November 29, 1995. My
Board has now agreed, the SNT/IGT Strategic Alliance Agreement is terminated and
no longer valid.
As I suggested to you earlier, I would like to begin discussions to explore an
OEM arrangement on digitizer supply from IGT for SNT. I will follow up with Bob
Silligman on this topic and hope to begin discussions with you sometime in May
when I am next in Colorado.
I look forward to talking with you again soon.
With best regards,
/S/ MARC BUNTAINE
Marc Buntaine
President and CEO
cc: Kurt Smith
Bob Silligman
Surgical Navigation Technologies, Inc., 337 Fiske Street, Holliston, MA 01746
508.429.6111 FAX 508.429.1767
November 29, 1995
TO: Marc Buntaine, SNT
FROM: Paul Ray, IGT
Dear Marc:
To confirm our conversation this morning, the Strategic Alliance Agreement
between Surgical Navigation Technologies and Image Guided Technologies was
terminated at our meeting in San Francisco in October and the subsequent actions
taken by our respective Boards. The only provisions of the Agreement surviving
termination are those noted in the last sentence of paragraph 13a of the
Agreement. In reliance on the termination, we withdrew from the business of
selling systems to the ENT Market and have returned the exclusive rights for
this market to SNT.
We would like you to consider a long-term OEM Agreement with us to address our
future commercial relationship. This will lock-in your access to our FP5000
digitizer or a more customized proprietary product and allow us to continue our
supplier relationship with a valued customer. Under the OEM Agreement, we would
of course grant you any necessary licenses (at a reasonable royalty) to any
patents which are hereafter acquired by us in order for you to make, use and
sell your system incorporating our digitizer.
Please get back to me on the OEM Agreement.
Best Regards,
/S/ PAUL RAY
Paul Ray
Chief Executive Officer