EXHIBIT 10.1
LICENSE AGREEMENT
BETWEEN
TENSIODYNE CORPORATION
AND
THE TRUSTEES OF THE UNIVERSITY OF PENNSYLVANIA
(JULY ___, 1993)
TECHNOLOGY AREA: METAL FATIGUE MEASUREMENT
TABLE OF CONTENTS
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1 - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 - LICENSE GRANT. . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 3 - ROYALTIES, RECORDS AND ACCOUNTING. . . . . . . . . . . . . . 5
ARTICLE 4 - IMPROVEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 5 - CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 6 - TERM AND TERMINATION . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 7 - PATENT MAINTENANCE . . . . . . . . . . . . . . . . . . . .10
ARTICLE 8 - INFRINGEMENT AND LITIGATION. . . . . . . . . . . . . . . . .11
ARTICLE 9 - DISCLAIMER OF WARRANTIES; INDEMNIFICATION. . . . . . . . . .12
ARTICLE 10 - USE OF PENN'S NAME; INDEPENDENCE. . . . . . . . . . . . . .14
ARTICLE 11 - COMPLIANCE WITH LAWS; EXPORT CONTROL. . . . . . . . . . . .14
ARTICLE 12 - ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . .14
ARTICLE 13 - NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . .15
ARTICLE 14 - JURISDICTION; ENTIRE AGREEMENT - DISPUTE
RESOLUTION. . . . . . . . . . . . . . . . . . . . . . . .15
LICENSE AGREEMENT
BETWEEN
TENSIODYNE CORPORATION
AND
THE TRUSTEES OF THE UNIVERSITY OF PENNSYLVANIA
(JULY __, 1993)
This License Agreement ("AGREEMENT") is made by and between The Trustees
of the University of Pennsylvania, a Pennsylvania not for profit corporation,
having an office at 3700 Market Street, Suite 300, Philadelphia, Pennsylvania
19104-3147 ("PENN") and Tensiodyne Corporation having a place of business at
11835 West Olympic Boulevard, East Tower, Suite 705, Los Angeles, California
90064 ("LICENSEE").
This AGREEMENT is effective as of July __, 1993 ("EFFECTIVE DATE").
RECITALS
WHEREAS, PENN is the sole and exclusive owner and proprietor of certain
inventions and improvements together with technical information and proprietary
rights developed by Drs. Campbell Laird and Li Yuan-Feng relating to
electrochemical methods and devices to determine metal fatigue; and,
WHEREAS, PENN is the owner of application(s) for United States and foreign
letters patent(s) in Appendix 1 attached hereto relating to the foregoing
inventions and improvements of Drs. Laird and Yuan-Feng; and,
WHEREAS, PENN, through the continuing work of Dr. Laird or such other
PRINCIPAL INVESTIGATOR as may be designated by the parties in accordance with
the SPONSORED RESEARCH AGREEMENT between the parties of even date herewith, may
make additional inventions and improvements and may develop
additional technical information and proprietary rights relating to
electrochemical methods and devices to determine metal fatigue; and,
WHEREAS, LICENSEE desires to secure the exclusive right and license to use,
develop, manufacture, market and exploit any inventions and improvements of Dr.
Laird and/or any other PRINCIPAL INVESTIGATOR, owned by PENN as set forth in
Appendix 1 hereto and to use, develop, manufacture, market and exploit the
additional inventions, improvements, technical information and proprietary
rights relating to electrochemical methods and devices to determine metal
fatigue; and,
WHEREAS, PENN has determined that the exploitation of the inventions and
improvements of Drs. Laird and Yuan-Feng and/or any other PRINCIPAL
INVESTIGATOR is in the best interest of PENN and is consistent with its
educational and research missions and goals; and,
WHEREAS, PENN and LICENSEE have entered into a SPONSORED RESEARCH AGREEMENT
on even date herewith providing support for the continuing work of Dr. Laird
[together with a STOCK PURCHASE AGREEMENT providing for the issuance to PENN and
Drs. Laird and Yuan-Feng of shares of LICENSEE's Common Stock in partial
consideration of the exclusive license granted hereunder];
NOW, THEREFORE, in consideration of the premises and of the promises and
covenants contained herein and intending to be legally bound hereby, the parties
agree as follows:
ARTICLE - DEFINITIONS
1.1 AFFILIATE means, when used with reference to LICENSEE, any ENTITY
directly or indirectly controlling, controlled by or under common control with
LICENSEE. For purposes of this AGREEMENT, "control" means the direct or
indirect ownership of over 50% of the outstanding voting securities of an
ENTITY, or the right to receive over 50% of the profits or earnings of an
ENTITY, or the power to direct or cause the direction of the management and
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policies of an ENTITY, whether through the ownership of voting securities, by
contract, or otherwise.
1.2 BANKRUPTCY EVENT means the ENTITY in question becomes insolvent, or
voluntary or involuntary proceedings by or against such ENTITY are instituted in
bankruptcy or under such insolvency law, or a receiver or custodian is appointed
for such ENTITY, or proceedings are instituted by or against such ENTITY for
corporate reorganization or the dissolution of such ENTITY, which proceedings,
if voluntary, shall not have been dismissed within ninety (90) days after the
date of filing, or such ENTITY makes an assignment for the benefit of creditors,
or substantially all of the assets of such ENTITY are seized or attached and not
released within sixty (60) days thereafter.
1.3 CALENDAR QUARTER means each three-month period, or any portion
thereof, beginning on January 1, April 1, July 1 and October 1.
1.4 CALENDAR YEAR means a period of twelve (12) months beginning on
January 1 and ending on December 31.
1.5 ENTITY means a corporation, an association, a joint venture, a
partnership, a trust, a business, an individual, a government or political
subdivision thereof, including an agency, or any other organization which can
exercise independent legal standing.
1.6 FAIR MARKET VALUE means the gross sales price which LICENSEE would
realize from an unaffiliated, unrelated buyer in an arm's length sale of an
identical item sold in the same quantity and at the same time and place of the
transaction.
1.7 FIELD OF USE means the field of the use or application of PENN PATENT
RIGHTS or PENN TECHNICAL INFORMATION to obtain electrochemical data on metals to
determine the fatigue status of such metals.
1.8 LICENSEE shall include LICENSEE and its AFFILIATES together with any
other business ENTITY in which LICENSEE or any of its AFFILIATES own a
controlling interest or over which LICENSEE or any of its AFFILIATES
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possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of an ENTITY, whether through the ownership of
voting securities, by contract or otherwise.
1.9 NET SALES means gross revenues, whether or not invoiced, billed, or
received by LICENSEE from a third party, attributable to LICENSEE's use, SALE,
lease, or transfer of any PENN LICENSED PRODUCT(S) or SERVICES, less qualifying
costs directly attributable to such use, SALES, lease, or transfer and actually
allowed, identified on the invoice, and borne by LICENSEE.
1.9.1 Such qualifying costs shall be limited to costs of the
following:
1.9.1.1 Discounts, in amounts customary in the trade, for
quantity purchases, cash payments, prompt payments, wholesalers,
and distributors.
1.9.1.2 Credits or refunds, not exceeding the original or
customary billing or invoice amount, for claims or returns.
1.9.1.3 Prepaid transportation insurance premiums.
1.9.1.4 Prepaid outbound transportation expenses.
1.9.1.5 Sales and use taxes, separately billed or invoiced, and
borne by LICENSEE, imposed by a government agency an such use,
SALES, lease or transfer.
1.10 PENN LICENSED PRODUCT(S) means products which in the absence of this
AGREEMENT would infringe at least one claim of PENN PATENT RIGHTS or products
which are made using a process or machine covered by a claim of PENN PATENT
RIGHTS, or products made, at least in part, using PENN TECHNICAL INFORMATION.
1.11 PENN PATENT RIGHTS means those United States and foreign patent
applications listed in Appendix 1 hereto together with any and all patents
issuing thereupon, including continuation, divisional and re-issue applications
and
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continuation-in-part applications thereof based upon inventions and improvements
discovered by PENN through Dr. Campbell Laird, Dr. Li Yuan-Feng and/or any other
PRINCIPAL INVESTIGATOR as a result of the SPONSORED RESEARCH AGREEMENT between
the parties.
1.12 PENN TECHNICAL INFORMATION means research and development information,
unpatented inventions, know-how, trade secrets, and technical data in the
possession of PENN at the EFFECTIVE DATE of this AGREEMENT and/or becomes known
through the Sponsored Research Agreement, which are needed to produce to PENN
LICENSED PRODUCTS and/or SERVICES.
1.13 PRINCIPAL INVESTIGATOR(S) is as defined in the SPONSORED RESEARCH
AGREEMENT executed between the parties.
1.14 SALE means a transaction for which consideration is received or
expected by LICENSEE for the use or transfer of PENN LICENSED PRODUCT(S). A
SALE of PENN LICENSED PRODUCT(S) shall be deemed completed at the time LICENSEE
receives payment for such PENN LICENSED PRODUCT(S).
1.15 SERVICES means and includes services, testing, and evaluation of metal
fatigue performed by LICENSEE which includes or uses PENN TECHNICAL INFORMATION
or PENN LICENSED PRODUCTS, or which, without the benefit of this License
Agreement, would infringe a claim of the PENN PATENT RIGHTS.
1.16 SPONSORED RESEARCH AGREEMENT means the document appended as
Appendix 2.
ARTICLE 2 - LICENSE GRANT
2.1 PENN grants to LICENSEE for the term of this AGREEMENT an exclusive,
world-wide right and license, with the right to grant sublicenses, to
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make, have made, use and sell PENN LICENSED PRODUCT(S) in the FIELD OF USE. No
other rights or licenses are granted hereunder.
2.2 The license grant of this Article 2 is exclusive but for the reserved
right OF PENN to use and permit the use of by nonprofit organizations, the PENN
PATENT RIGHTS and the PENN TECHNICAL INFORMATION solely for educational and
research purposes on a non-commercial basis.
2.3 Any license granted to LICENSEE pursuant to Article 2 hereof shall be
subject to the rights of the United States government reserved under Public Laws
96-517, 97-256 and 98-620, codified at 35 U.S.C. 200-212, and any regulations
issued thereunder, to the extent funded, in whole or in part, by the United
States government.
2.4 The right to sublicense conferred upon LICENSEE under this AGREEMENT
is subject to the following conditions:
2.4.1 In each sublicense, the sublicensee shall be prohibited from
further sublicensing and shall be subject to the terms and conditions of the
license granted to LICENSEE under this AGREEMENT.
2.4.2 LICENSEE shall forward to PENN, within thirty (30) days of
execution, a complete and accurate copy written in the English language of each
sublicense granted hereunder. PENN's receipt of such sublicense shall not
constitute an approval of such sublicense or a waiver of any of PENN's rights or
LICENSEE's obligations hereunder.
2.4.3 If LICENSEE becomes subject to a BANKRUPTCY EVENT, all payments
then or thereafter due and owing to LICENSEE from its sublicensees shall upon
notice from PENN to any such sublicensee become payable directly to PENN for the
account of LICENSEE; provided however, that PENN shall remit to LICENSEE the
amount by which such payments exceed the amounts owed by LICENSEE to PENN.
2.4.4 Notwithstanding any such sublicense, LICENSEE shall remain
primarily liable to PENN for all of the LICENSEE'S duties and obligations
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contained in this AGREEMENT, and any act or omission of a sublicensee which
would be a breach of this AGREEMENT if performed by LICENSEE shall be deemed to
be a breach by LICENSEE of this AGREEMENT.
ARTICLE 3 - ROYALTIES, RECORDS AND ACCOUNTING
3.1 In partial consideration of the exclusive license granted herein and
in lieu of a license initiation fee, LICENSEE shall issue to PENN upon
execution of this AGREEMENT, a non-refundable of five percent (5%) of the
common stock of LICENSEE, to be distributed by LICENSEE as follows: (a)
approximately 2.5 percent (2.5%) of the common stock of LICENSEE directly to
Penn; and (b) approximately 1.25 percent (1.25%) of the common stock of
LICENSEE directly to Dr. Campbell Laird; and (c) approximately 1.25 percent
(1.25%) of the common stock of LICENSEE directly to Dr. Li Yuan-Feng. The
issuance of such stock shall be in accordance with a Stock Agreement which is
attached to this Agreement as Appendix 3.
3.2 In further consideration of the exclusive licenses grant herein,
LICENSEE shall pay to PENN a royalty of five percent (5%) of all NET SALES of
PENN LICENSED PRODUCTS and two-and-one-half percent (2.5%) royalty of NET SALES
of SERVICES made, made for, used or sold by LICENSEE taken together with all
sublicensees in any CALENDAR YEAR.
3.2.1 For sublicenses, LICENSEE shall pay to PENN the above scheduled
royalty on the NET SALES for such PENN LICENSED PRODUCTS and/or SERVICES sold by
such sublicensee. Any noncash consideration received by the LICENSEE from
sublicensees in lieu of a license fee or on account of sales of PENN LICENSED
PRODUCT and/or SERVICES shall be valued at its FAIR MARKET VALUE as of the date
of receipt.
3.2.2 NET SALES of any PENN LICENSED PRODUCT or SERVICES shall not be
subject to more than one assessment of the scheduled royalty due PENN.
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3.3 LICENSEE agrees to the following performance milestones:
3.3.1 LICENSEE shall make the first commercial sale of PENN LICENSED
PRODUCTS and/or SERVICES within twenty-four (24) months of completion of
commercial development of a PENN LICENSED PRODUCT.
3.3.2 LICENSEE shall pay to PENN annual minimum royalties of
$20,000.00 (twenty thousand dollars) due and payable on each anniversary of the
EFFECTIVE DATE of this AGREEMENT commencing one year after the first commercial
sale of PENN LICENSED PRODUCTS and/or SERVICES. If the LICENSEE sponsors
research in the FIELD OF USE at PENN during that year, the full amount of
research funding paid may be applied as a credit against license maintenance
fees due that year.
3.3.3 Minimum royalty payments due hereunder shall be paid on the due
date listed. Upon termination of this AGREEMENT, such amounts shall be applied
pro rata to any shorter period.
3.3.4 A minimum royalty payment paid under Section 3.3.2 herein shall
serve as an advanced payment against royalties due under Section 3.2 herein
solely for the CALENDAR YEAR for which such minimum royalty payment was paid.
3.4 LICENSEE shall deliver to PENN within sixty (60) days after the end of
each CALENDAR QUARTER a report, certified by the chief financial officer of
LICENSEE setting forth in reasonable detail the calculation of the royalties due
to PENN for such CALENDAR QUARTER, including, without limitation:
3.4.1 NET SALES amounts.
3.4.2 Royalties due, broken down by category, including earned,
pass-through, and minimum royalty categories.
3.4.3 Earned royalty amounts credited against minimum royalty
amounts.
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3.4.4 Gross consideration amounts, including sales price or fees,
revenues, or monies invoiced, billed, or received for all PENN
LICENSED PRODUCT(S) and/or SERVICES.
3.4.5 Qualifying costs, as defined in Section 1.13 by category of
cost, deducted from gross consideration to derive NET SALES.
3.4.6 Number of PENN LICENSED PRODUCT(S) and/or SERVICES used,
leased, or transferred in each country.
3.4.7 NET SALES broken down by country.
3.4.8 Date LICENSEE or an AFFILIATE used, leased, or otherwise
transfers each PENN LICENSED PRODUCT and/or SERVICE.
3.4.9 A profit and loss statement showing LICENSEE'S activity during
the reporting period.
3.5 Royalties payable under Section 3.2 hereof shall be paid within ninety
(90) days following the last day of the calendar quarter in which the royalties
accrue.
3.6 All dollar amounts referred to in this AGREEMENT are expressed in
United States dollars. All payments to PENN under this AGREEMENT shall be made
in United States dollars by check payable to "The Trustees of the University of
Pennsylvania."
3.6.1 If LICENSEE receives revenues from SALES of PENN LICENSED
PRODUCTS and/or SERVICES in currency other than United States dollars, royalties
shall be converted into United States dollars at the conversion rate for the
foreign currency as published in the eastern edition of THE WALL STREET JOURNAL
as of the last business day of the applicable CALENDAR QUARTER.
3.6.2 Amounts that are not paid when due shall accrue interest from
the due date until paid, at a rate equal to then prevailing United States prime
rate
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of interest as published in the eastern edition of THE WALL STREET JOURNAL plus
two percent (2%).
3.7 LICENSEE will maintain and cause its sublicensees to maintain,
complete and accurate books and records which enable the royalties payable
hereunder to be verified. The records for each CALENDAR QUARTER shall be
maintained for five years after the submission of each report under Article 3
hereof. Upon reasonable prior notice to LICENSEE, PENN and its accountants
shall have access to the books and records relating to the SALES of PENN
LICENSED PRODUCTS and SERVICES by LICENSEE and its sublicensees to conduct a
review or audit thereof. Such access shall be available not more than once each
CALENDAR YEAR, during normal business hours, and for each of three years after
the expiration or termination of this AGREEMENT. If PENN determines that
LICENSEE has underpaid royalties by 5% or more, LICENSEE will pay the costs and
expenses of PENN and its accountants in connection with its review or audit.
ARTICLE 4 - IMPROVEMENTS
4.1 Title to all intellectual property created or conceived by individuals
owing duty to assign to PENN, including PENN TECHNICAL INFORMATION, shall remain
in PENN.
4.2 Inventions made during the performance of the SPONSORED RESEARCH
AGREEMENT shall be governed by the provisions of the SPONSORED RESEARCH
AGREEMENT.
ARTICLE 5 - CONFIDENTIALITY
5.1 CONFIDENTIAL INFORMATION means any information or material in tangible
form that is marked as confidential or proprietary to PENN at the time it is
delivered to LICENSEE, and any other information that is furnished orally if
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PENN identifies such information as confidential or proprietary when it is
disclosed and confirms such designation in writing within thirty (30) days after
such disclosure.
5.2 CONFIDENTIALITY
5.2.1 LICENSEE agrees to maintain in confidence and not to disclose to
any third party any CONFIDENTIAL INFORMATION of PENN received pursuant to this
AGREEMENT. The foregoing obligation shall not apply to:
5.2.1.1 information that is known to LICENSEE or independently
developed by LICENSEE prior to the time of disclosure, in each case, to the
extent evidenced by written records promptly disclosed to PENN upon receipt of
the CONFIDENTIAL INFORMATION;
5.2.1.2 information disclosed to LICENSEE by a third party that
has a right to make such disclosure;
5.2.1.3 information that becomes patented, published or
otherwise part of the public domain as a result of acts by PENN or a third
person obtaining such information as a matter of right; or
5.2.1.4 information that is required to be disclosed by order
of the FDA or similar authority or a court of competent jurisdiction; provided
that the LICENSEE shall use its best efforts to obtain confidential treatment of
such information by the agency or court.
5.3 LICENSEE agrees to take all reasonable steps to protect the
CONFIDENTIAL INFORMATION of PENN with the same degree of care that LICENSEE uses
to protect its own confidential or proprietary information. Without limiting
the foregoing, LICENSEE agrees to ensure that all of its employees having access
to the CONFIDENTIAL INFORMATION are on need-to-know basis and are obligated (in
writing) to abide by LICENSEE's obligations hereunder.
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5.4 PENN shall not be obligated to accept any confidential information
from LICENSEE. PENN bears no institutional responsibility for maintaining the
confidentiality of any confidential information of LICENSEE.
5.5 LICENSEE agrees that it shall utilize all such CONFIDENTIAL
INFORMATION solely for furthering the objectives of this AGREEMENT and it will
not, either during the term of this AGREEMENT or at any time subsequent to the
termination of this AGREEMENT, otherwise use such information for its own
benefit or for the benefit of others; nor will LICENSEE publish or otherwise
disclose such CONFIDENTIAL INFORMATION to any other individual or entity. This
paragraph shall not restrict LICENSEE's disclosure to the extent required by all
pertinent securities laws, rules and regulations.
5.6 PENN's placement of a copyright notice on any portion of a document,
software, or CONFIDENTIAL INFORMATION shall not be construed to mean that such
portion has been published and will not release LICENSEE from its obligation of
confidence hereunder.
ARTICLE 6 - TERM AND TERMINATION
6.1 This AGREEMENT, unless sooner terminated as provided herein, shall
terminate upon the expiration of the last to expire or become abandoned of the
PENN PATENT RIGHTS, subject to the provisions of paragraph 6.3 hereof.
6.2 LICENSEE may, at its option, terminate this AGREEMENT at any time by
doing all of the following:
6.2.1 Cease making, having made, using and selling any PENN
LICENSED PRODUCT and SERVICES; and
6.2.2 Revokes all sublicenses causing all sublicensees to cease
making, having made, using and selling any PENN LICENSED PRODUCT and SERVICES;
and
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6.2.3 Gives sixty (60) days notice to PENN of such cessation and of
LICENSEE intent to terminate; and
6.2.4 Tenders payment of all accrued royalties.
6.3 PENN may terminate this AGREEMENT if any of the following occur:
6.3.1 LICENSEE becomes more than sixty days in arrears in payment of
royalties or expenses due pursuant to this AGREEMENT and LICENSEE does not
provide full payment immediately upon demand; or
6.3.2 LICENSEE becomes subject to a BANKRUPTCY EVENT; or
6.3.3 LICENSEE breaches this AGREEMENT and does not cure
within-sixty(60) days written notice thereof; or
6.3.4 LICENSEE has not made a commercial sale of PENN LICENSED PRODUCT
or SERVICE within twenty-four (24) months of the completion of commercial
development of a PENN LICENSED PRODUCT.
6.4 If LICENSEE becomes subject to a BANKRUPTCY EVENT, all duties of PENN
and all rights (but not duties) of LICENSEE under this AGREEMENT shall
immediately terminate without the necessity of any action being taken either by
PENN or by LICENSEE. In the event of entry by LICENSEE into bankruptcy or
reorganization, PENN shall be considered to be a preferred creditor and
lienholder against all stocks of PENN LICENSED PRODUCT. PENN is also granted a
security interest in and shall be considered to be a preferred creditor of
LICENSEE with respect to PENN TECHNICAL INFORMATION and PENN PATENT RIGHTS.
6.5 Upon termination of this AGREEMENT, LICENSEE shall, at PENN's request,
return to PENN all data, formulas, drawings, specifications, literature and
other technical information comprising PENN TECHNICAL
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INFORMATION fixed in any tangible medium of expression as well as any data
generated by LICENSEE during the term of this AGREEMENT which will facilitate
the development of the technology licensed hereunder.
6.6 LICENSEE's obligation to pay royalties accrued under Article 3 hereof
shall survive termination of this AGREEMENT. In addition, the provisions of
Sections 4.1 and 7.2 and Articles 5, 6, 9, 10, and 14 shall survive such
termination.
ARTICLE 7 - PATENT MAINTENANCE
7.1 PENN shall prosecute and maintain PENN PATENT RIGHTS as set forth in
Appendix 1 hereto as the same may be supplemented from time to time in
accordance with Article 4, provided however, that such prosecution, and
maintenance fees shall not exceed $10,000.00 as provided for in Section 7.2.
7.2 LICENSEE shall promptly reimburse PENN for all documented attorneys
fees, expenses, official fees and other charges incident to the preparation,
prosecution and maintenance of PENN PATENT RIGHTS, including patents and patent
applications in the United States and in countries foreign to the United States
on developments set forth in foregoing Sections 4.2. LICENSEE's obligation to
reimburse PENN's documented patent expenses, under this Section 7.2, shall not
exceed $10,000. PENN shall provide LICENSEE with itemized statements reflecting
these expenses and LICENSEE shall reimburse PENN for such expenses within thirty
(30) days after receipt of such statement.
7.2.1 LICENSEE may provide advice to PENN regarding preparation,
filing, and prosecution of any U.S. Patent Applications developed under this
Agreement and/or the Sponsored Research Agreement with Dr. Laird (see Attachment
B).
7.2.2 LICENSEE shall have the first option, for a period not to exceed
ten (10) months from the date of filing a U.S. patent application, to support
and pay for foreign applications of any U.S. Patent Application licensed under
this Agreement. If LICENSEE notifies PENN, in writing, of its desire to have
PENN
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file any particular U.S. Patent Application in foreign venues, then PENN will
diligently file and prosecute such applications after consultation with
LICENSEE. Such foreign patent preparation, filing, and prosecution fees and
expenses shall not be subject to the reimbursement limitations ($10,000 limit)
of LICENSEE set forth in Section 7.2. If LICENSEE does not advise PENN that it
will support the foreign filing of a particular U.S. Patent Application, then
PENN shall be free to pursue such foreign filings at PENN's own expense;
provided that PENN notifies LICENSEE of its intention to so file a foreign
application and LICENSEE does not itself file such application with sixty (60)
days of said notice. Such foreign filings which are made by PENN shall not be
included as part of this Agreement and PENN shall be free to license such
foreign patents to other third parties without further obligation to LICENSEE.
7.3 LICENSEE and its sublicensees shall comply with all Federal and
foreign jurisdiction laws in respect of patent marking, if any, but the
selection, location and particulars of such marking shall be at LICENSEE'S
discretion.
ARTICLE 8 - INFRINGEMENT AND LITIGATION
8.1 Both PENN and LICENSEE are responsible for notifying the other of any
infringement of PENN PATENT RIGHTS or JOINT PATENT RIGHTS which may come to
their attention. PENN and LICENSEE shall consult concerning any suspected
infringement in an effort to agree upon terms and conditions for instigation and
maintenance of litigation activities or forbearance from same.
8.2 To the extent litigation is mutually agreed upon, LICENSEE shall have
the right, but not the obligation to prosecute such infringement at its own
expense. In such event, PENN shall cooperate with LICENSEE, at LICENSEE'S
expense. LICENSEE shall not settle or compromise any such suit in a manner that
poses any obligations or restrictions on PENN or grants any rights to the PENN
TECHNICAL INFORMATION or the PENN PATENT RIGHTS, without PENN's written
permission.
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8.3 Financial recoveries from any such litigation will first be applied to
reimburse LICENSEE for its litigation expenditures with additional recoveries
being paid to LICENSEE, subject to a royalty due PENN based on the provisions of
Article 3 hereof.
8.4 Such rights of Section 8.2 shall be subject to the continuing right of
PENN to intervene at PENN's own expense and join LICENSEE in any claim or suit
for infringement of the PENN PATENT RIGHTS. Any consideration received by
LICENSEE in settlement of any claim or suit shall be shared between PENN and
LICENSEE in proportion with their share of the litigation expenses in such
infringement action. If counsel chosen by LICENSEE is reasonably acceptable to
PENN, for these purposes its litigation expenses should not be deemed to include
counsel fees.
8.5 In any infringement suit to enforce any of the PENN PATENT RIGHTS or
the JOINT PATENT RIGHTS, either party, at the request and expense of the other
party shall cooperate in all respects and, to the fullest extent reasonably
possible, shall have its employees testify when requested and shall make
available relevant records, papers, information, samples, specimens, and the
like. This provision shall not be construed to require either party to
undertake any activities, including legal discovery, at the request of any third
party except as may be required by lawful process of a court of competent
jurisdiction.
ARTICLE 9 - DISCLAIMER OF WARRANTIES; INDEMNIFICATION
9.1 THE LICENSED TECHNOLOGY IS PROVIDED ON AN "AS IS" BASIS AND PENN MAKES
NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PENN
TECHNICAL INFORMATION OR THE PENN LICENSED PRODUCTS. BY WAY OF EXAMPLE BUT NOT
OF LIMITATION, PENN MAKES NO REPRESENTATIONS OR WARRANTIES (i) OF COMMERCIAL
UTILITY, (ii) OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR (iii)
THAT THE USE OF THE PENN TECHNICAL INFORMATION WILL NOT INFRINGE ANY PATENT,
COPYRIGHT OR TRADEMARK OR OTHER PROPRIETARY RIGHT OR PROPERTY RIGHTS OF OTHERS.
PENN SHALL
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NOT BE LIABLE TO LICENSEE, LICENSEE'S SUCCESSORS OR ASSIGNS OR ANY THIRD PARTY
WITH RESPECT TO ANY CLAIM ON ACCOUNT OF, OR ARISING FROM, THE USE OF PENN
TECHNICAL INFORMATION IN CONNECTION WITH THE LICENSED TECHNOLOGY SUPPLIED
HEREUNDER OR THE MANUFACTURE, USE OR SALE OF PENN LICENSED PRODUCTS OR ANY OTHER
MATERIAL DERIVED THEREFROM. PENN SHALL NOT BE LIABLE TO LICENSEE OR ANY OTHER
PERSON FOR ANY LOSS OF PROFITS, LOSS OF BUSINESS OR INTERRUPTION OF BUSINESS, OR
FROM ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY KIND INCURRED BY
LICENSEE OR ANY OTHER PERSON WHETHER UNDER THIS AGREEMENT OR OTHERWISE, EVEN IF
PENN HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS.
9.2 LICENSEE will defend, indemnify and hold harmless PENN, its trustees,
officers, agents and employees (collectively, the "Indemnified Parties"), from
and against any and all liability, loss, damage, action, claim or expense
suffered or incurred by the Indemnified Parties (including attorney's fees)
(individually, a "Liability", and collectively, the "Liabilities") which results
from or arises out of: (a) the development, use, manufacture, promotion, sale or
other disposition, of any PENN LICENSED PRODUCTS and/or SERVICES by LICENSEE,
its AFFILIATES, assignees, sublicensees, vendors or other third parties; (b)
breach by LICENSEE of any covenant or agreement contained in this AGREEMENT; and
(c) the enforcement by an Indemnified Party of its rights under this Section.
The indemnification obligation under clause (a) shall apply regardless of any
contributory negligence of the Indemnified Party. Without limiting the
foregoing, LICENSEE will defend, indemnify and hold harmless the indemnified
Parties from and against any Liabilities resulting from:
9.2.1 any product liability or other claim of any kind related to the
use by a third party of a PENN LICENSED PRODUCT and/or SERVICE that was
manufactured, sold or otherwise disposed by LICENSEE, its AFFILIATES, assignees,
sublicensees, vendors or other third parties;
9.2.2 a claim by a third party that the PENN TECHNICAL INFORMATION or
the design, composition, manufacture, use, sale or other
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disposition of any PENN LICENSED PRODUCT and/or SERVICE infringes or violates
any patent, copyright, trademark or other intellectual property rights of such
third party; and
9.3 The Indemnified Party shall promptly notify LICENSEE of any claim or
action giving rise to Liabilities subject to the provisions of the foregoing
Section. LICENSEE shall have the right to defend any such claim or action, at
its cost and expense. LICENSEE shall not settle or compromise any such claim or
action in a manner that imposes any restrictions or obligations on the
University or grants any rights to the PENN TECHNICAL INFORMATION. If LICENSEE
fails or declines to assume the defense of any such claim or action within
thirty (30) days after notice thereof, PENN may assume the defense of such claim
or action for the account and at the risk of LICENSEE, and any Liabilities
related thereto shall be conclusively deemed a liability of LICENSEE. LICENSEE
shall pay promptly to the Indemnified Party any Liabilities to which the
foregoing indemnity relates, as incurred. The indemnification rights of PENN or
other Indemnified Party contained herein are in addition to all other rights
which such Indemnified Party may have at law or in equity or otherwise.
9.4 LICENSEE shall maintain general liability insurance, including
contractual liability, and, if commercially available at standard rates product
liability insurance in amounts not less than $2,000,000 per incident and
$2,000,000 in the aggregate, issued by an insurance company rated A or better
and naming PENN as an additional insured for ten (10) years after LICENSEE
ceases manufacturing and marketing the PENN LICENSED PRODUCTS and/or SERVICES.
The minimum insurance amounts specified herein shall not be deemed a limitation
on LICENSEE's indemnification liability under this AGREEMENT. LICENSEE shall
provide PENN with copies of the endorsements to such policies, upon request of
PENN. LICENSEE shall notify PENN at least thirty (30) days prior to
cancellation of any such coverage. PENN shall receive a royalty on any
insurance award constituting compensation to LICENSEE for lost profits on the
sale of PENN LICENSED PRODUCTS.
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ARTICLE 10 - USE OF PENN'S NAME; INDEPENDENCE
10.1 LICENSEE and its employees and agents shall not use and LICENSEE shall
not permit its sublicensees to use PENN's name, any adaptation thereof, any PENN
logotype, trademark, service mark or slogan or the name mark or logotype of any
PENN representative or organization in any way without the prior, written
consent of PENN, except as required by law. In this regard, PENN acknowledges
and agrees that the LICENSEE may use PENN's name in various documents used by
LICENSEE for capital raising and financing purposes, provided that PENN grants
prior written approval of such use, which approval shall not be unreasonably
withheld.
10.2 PENN and LICENSEE are independent entities and contractors and neither
is an agent of the other. LICENSEE shall take no action which would suggest to
a reasonable person that an agency relationship exists between LICENSEE and
PENN.
10.3 Neither party shall use directly or by implication the name of the
other or any staff member, faculty member, student or employee of the other in
connection with any products, publicity, promotion, financing or advertising
without the prior written permission of the other party, except as required by
law.
ARTICLE 11 - COMPLIANCE WITH LAWS; EXPORT CONTROL
11.1 LICENSEE shall comply with all prevailing laws, rules and regulations
pertaining to the development, testing, manufacture, marketing, sale, use,
import or export of products. Without limiting the foregoing, it is understood
that PENN is subject to United States laws and regulations controlling the
export of technical data, computer software, laboratory prototypes and other
commodities, articles and information, including the Arms Export Control Act as
amended in the Export Administration Act of 1979, and that its obligations
hereunder are contingent upon compliance with applicable United States export
laws and regulations. The transfer of certain technical data and commodities
may require
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a license from the cognizant agency of the United States Government and/or
written assurances by LICENSEE that LICENSEE shall not export data or
commodities to certain foreign countries without prior approval of such agency.
PENN neither represents that a license is not required nor that, if required, it
will issue.
ARTICLE 12 - ASSIGNMENT
12.1 This AGREEMENT and the rights and duties appertaining thereto may not
be assigned by either party other than to an Affiliate without first obtaining
the express written consent of the other party. Any such purported assignment,
without the written consent of the other party, shall be null and of no effect.
ARTICLE 13 - NOTICES
13.1 Notices, payments, statements, reports and other communications under
this AGREEMENT shall be in writing and shall be deemed as having been received
as of the date dispatched if sent by public courier (e.g. Federal Express)
or by express mail, receipt requested and addressed as follows:
If for PENN:
University of Pennsylvania
Center for Technology Transfer
3700 Market Street, Suite 300
Philadelphia, PA 19104
Attention: Director
with a copy to:
Office of General Counsel
University of Pennsylvania
221 College Hall
Philadelphia, PA 19104-6303
Attention: General Counsel
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If for LICENSEE:
Tensiodyne Corporation
11835 West Olympic Boulevard
East Tower, Suite 705
West Los Angeles, CA 90064
with a copy to:
Stephen M. Goodman, Esquire
Wolf, Block, Schorr and Solis-Cohen
12th Floor Packard Building
S.E. Corner 15th & Chestnut Streets
Philadelphia, PA 19102-2678
Either party may change its official address upon notice to the other party.
ARTICLE 14 - JURISDICTION; ENTIRE AGREEMENT - DISPUTE RESOLUTION
14.1 This AGREEMENT shall be interpreted in accordance with the laws of the
Commonwealth of Pennsylvania. Jurisdiction and venue shall be proper in the
Commonwealth of Pennsylvania.
14.2 This AGREEMENT and the SPONSORED RESEARCH AGREEMENT (Appendix 2
hereto) [and the STOCK PURCHASE AGREEMENT (Appendix 3 hereto)] are being entered
into simultaneously and each is related to the other in setting forth the entire
agreement of the parties. Any modification of this AGREEMENT shall be in
writing and signed by an authorized representative of each party.
14.3 In the event that a party to this AGREEMENT perceives the existence of
a dispute with the other party concerning any right or duty provided for herein,
the parties shall, as soon as practicable, confer in an attempt to resolve the
dispute. In the event that resolution of the dispute is not forthcoming, the
parties shall
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consult with a view toward submitting the dispute to mediation or arbitration
under mutually-acceptable terms. There is no enforceable obligation to enter
into mediation or arbitration conferred by this paragraph.
IN WITNESS WHEREOF the parties, intending to be legally bound, have caused
this AGREEMENT to be executed by their duly authorized representatives.
THE TRUSTEES OF THE UNIVERSITY OF PENNSYLVANIA
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DATE: August 26, 1993
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SIGNATURE: /s/ Stephen M. Sammut
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TYPED NAME: Stephen M. Sammut
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TITLE: Managing Director
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LICENSEE
DATE: 9/9/93
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SIGNATURE: /s/ Robert M. Bernstein
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TYPED NAME: Robert M. Bernstein
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TITLE: PRES.
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