Technology License Agreement - Somnus Medical Technologies Inc. and Conway Stuart Medical Inc.
TECHNOLOGY LICENSE AGREEMENT
THIS TECHNOLOGY LICENSE AGREEMENT (the "Agreement"), effective as of the
Effective Date, is entered into by and between Somnus Medical Technologies,
Inc., a Delaware Corporation having a principal place of business located at 285
N. Wolfe Road, Sunnyvale, California 94086, ("Somnus") and Conway Stuart
Medical, Inc., a Delaware Corporation having a principal place of business
located at 735 Palomar Avenue, Sunnyvale, California 94086 ("Conway Stuart").
RECITALS
WHEREAS, Somnus owns certain patents, patent applications and know-how
covering certain inventions, discoveries and information, developed by Somnus at
Somnus's expense, relating to Somnus's Model S2 two channel radio frequency
("RF") generator with capability to be expanded to six channels; and
WHEREAS, Conway Stuart wishes to develop an RF generator based on Somnus's
Model S2 RF generator with up to six channels for use by Conway Stuart in the
Licensed Field; and
WHEREAS, Conway Stuart wishes to obtain from Somnus, and Somnus is willing
to grant to Conway Stuart, a right and license under the Licensed Subject Matter
(as defined hereinafter below) to develop such an RF generator; and
WHEREAS, Conway Stuart desires to obtain from Somnus, and Somnus is willing
to grant to Conway Stuart, a right and license under the Licensed Subject Matter
to manufacture, use and sell RF generators based on the licensed technology in
the Licensed Field.
NOW, THEREFORE, Somnus and Conway Stuart agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
indicated:
1.1 "Licensed Field" shall mean the field of RF ablation for treatment of
gastroesophageal reflux and other medical disorders or conditions of the
stomach, esophagus, intestine, anus and all other structures, organs or tissues
of the digestive tract; provided, however, that the Licensed Field shall
specifically exclude treatment of any body structure located above the upper
esophageal sphincter. Notwithstanding anything to the contrary, the term
"Licensed Field" shall not include any structures, organs or tissues other than
structures, organs or tissues of the digestive tract. Notwithstanding anything
to the contrary, the term "Licensed Field" shall not include any structures,
organs or tissues other than structures, organs or tissues of the digestive
tract.
1.2 "Licensed Subject Matter" shall mean the Intellectual Property Rights
and the Technology Rights.
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
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1.3 "Intellectual Property Rights" shall mean all rights owned or
otherwise held by Somnus in, to or under patents and patent applications,
whether domestic or foreign, and all divisions, continuations and continuations-
in-part of any patent applications, and all patents which may issue from any
patent applications, and all reissues, reexaminations and extensions of patents,
relating to Somnus's Model S2 RF generator.
1.4 "Technology Rights" shall mean all rights owned or otherwise
controlled by Somnus in, to or under technical information, know-how, process,
procedure, composition, device, method, formula, protocol, technique, software,
design, drawing or data relating to Somnus's Model S2 RF generator which are not
covered by Intellectual Property Rights, but which are necessary for the
practice and full utilization of inventions at any time disclosed or claimed
under the Intellectual Property Rights.
1.5 "Technology" shall mean all tangible and intangible results and items
arising out of, developed in connection with or constituting the results of
Conway Stuart's development, including all ideas, inventions, discoveries,
designs, know-how, notes, memoranda, documentation, and copyrighted materials,
and all intellectual property rights constituting, embodied in, or pertaining to
any of the foregoing.
1.6 "Affiliate" shall mean (a) any entity controlled, controlling or under
common control with, directly or indirectly, at least fifty percent (50%) of the
stock normally entitled to vote for election of directors of a party; or (b) any
entity at least fifty percent (50%) of whose stock normally entitled to vote for
election of directors is controlled, controlling or under common control with,
directly or indirectly, a party, or, if such level exceeds that which is
otherwise permissible in the country of residence of such entity, the maximum
level permitted in such country.
1.7 "Effective Date" shall mean the date of transfer by Conway Stuart to
Somnus of the Conway Stuart Medical, Inc. Series A Preferred Stock, as further
set forth in Section 3.1 of this Agreement.
1.8 Rules of Construction. As used in this Agreement, all terms defined in
the singular shall include the plural, and vice versa, as the context may
require. The words "hereof," "herein," and "hereunder" and other words of
similar import refer to this Agreement as a whole. The word "including" when
used herein is intended to be exclusive and is not intended to mean "including,
without limitation." The headings of the several sections of this Agreement are
intended for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement. This Agreement has
been negotiated and drafted by the parties with assistance by counsel and shall
be fairly interpreted in accordance with its terms and without any rules of
construction relating to which party drafted the Agreement being applied in
favor or against either party.
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2. LICENSE
2.1 Grant. Subject to the terms and conditions stated herein, Somnus
hereby grants to Conway Stuart an irrevocable, non-exclusive, worldwide right
and license under Licensed Subject Matter to manufacture, have manufactured,
use, offer to sell, sell and import RF generators in the Licensed Field.
2.2 Ownership. Conway Stuart acknowledges and agrees that Somnus is and
shall remain the sole and exclusive owner of the Licensed Subject Matter.
2.3 No Other Rights. Except as expressly provided herein, no right, title,
or interest is granted by Somnus to Conway Stuart in, to or under the Licensed
Subject Matter.
2.4 No Sublicense. Conway Stuart shall have no right to sublicense the
technology licensed under this Agreement. Any attempt to sublicense this
Agreement by Conway Stuart shall result in an immediate termination of this
Agreement.
3. PAYMENT
3.1 Equity in Conway Stuart. In consideration for the rights and licenses
granted hereunder subject to approval by the Board of Directors of Conway
Stuart, Conway Stuart shall deliver to Somnus [*] of Conway Stuart Medical, Inc.
Series A Preferred Stock. In the event of a reverse stock split, Conway Stuart
shall transfer stock to Somnus in order to make Somnus whole.
3.2 Technology License Payment. Subject to the terms set forth below in
this Section 3.2, Conway Stuart shall pay Somnus a nonrefundable total
technology license fee equal to [*] Such fee shall be paid in two nonrefundable
installments. The first installment equal to [*] shall be paid on the Effective
Date. The second and final installment equal to [*] shall be paid on February 1,
1999.
3.3 Document Payment. Conway Stuart shall pay to Somnus nonrefundable fees
equal to [*] upon receipt of the design documents and [*] upon receipt of the
manufacturing documents listed below. Somnus shall have no obligation to provide
to Conway Stuart any documents that do not already exist at Somnus' facility as
of the Effective Date. Additionally, Somnus shall have no obligation to provide
to Conway Stuart any copies of Somnus' filings with UL, TUV, and FDA.
(a) Design Documents. Somnus shall deliver copies of documents
relating to hardware and software for Somnus's Model S2 RF generator, including
without limitation the following documents, to be provided according to the
indicated schedule:
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(i) Somnus shall provide to Conway Stuart the following
materials within ten (10) days of the Effective Date of this Agreement:
mechanical drawings for Conway Stuart's enclosure development project.
(ii) Somnus shall provide to Conway Stuart the following
materials within sixty (60) working days of the Effective Date of this
Agreement: bill of materials, mechanical drawings for electronics, schematics,
PCB layouts in hard copy format, and letters of reference to UL, TUV and FDA for
these agencies to refer to Somnus' filed documents.
(b) Manufacturing Documents. Somnus shall deliver copies of documents
relating to the manufacture of Somnus' Model S2 RF generator, limited to the
following: documents of materials, suppliers, all phases of manufacturing, and
all manufacturing, quality assurance test procedures and source code for all
software related to Somnus' Model S2 generator.
3.4 Royalty. For the life of this Agreement, Conway Stuart shall pay to
Somnus a royalty equal to [*] of Conway Stuart's average selling price of RF
generators which, absent the right and license granted by Somnus to Conway
Stuart under Section 2.1, would infringe Somnus' rights under the Licensed
Subject Matter. For purposes of this Section 3.4, the term "average selling
price" shall mean the average of net revenue actually received by Conway Stuart
from end users on sales of such RF generators in each calendar quarter during
the term of this Agreement. As used in the previous sentence, "net revenue"
shall equal the total gross revenue, less credits or allowances on account of
rejections of RF generators previously sold upon which a royalty has already
been made to Somnus. In the event that Conway Stuart places such RF generators
with end users at no cost, Conway Stuart shall pay Somnus a royalty based on the
average selling price of [*] per unit.
3.5 Records, Reports and Payment of Royalties. During the term of this
Agreement and for five (5) years thereafter, Conway Stuart shall keep complete
and accurate records of the sale of RF generators which, absent the right and
license granted by Somnus to Conway Stuart under Section 2.1, would infringe
Somnus' rights under the Licensed Subject Matter in sufficient detail to enable
the royalties payable to Somnus under Section 3.4 of this Agreement to be
determined. Within sixty (60) days after the end of each calendar quarter
during which units using the technology licensed under this Agreement have been
sold, Conway Stuart shall furnish to Somnus a written report setting forth the
number of such RF generators sold in such just-ended calendar quarter, together
with royalties payable to Somnus pursuant to Section 3.4.
3.6 Audit Rights. Conway Stuart shall permit Somnus, or representatives of
Somnus which are reasonably acceptable to Conway Stuart, at Somnus's expense, to
periodically examine Conway Stuart's books, ledgers, and records during regular
business hours for the sole purpose of, and only to the extent necessary, to
verify reports furnished to Somnus pursuant to Section 3.5; provided that Somnus
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delivers to Conway Stuart a written notice of Somnus's intention to conduct an
inspection not less than ten
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THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
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(10) business days before the intended date of such inspection; and provided
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further that only one (1) such inspection may be conducted during any calendar
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six (6) month period. In the event that amounts due Somnus are determined to
have been underpaid by an amount greater than ten percent (10%) of the amount
actually due, Conway Stuart shall pay the cost of such examination. Any royalty
payment not paid on or before the date corresponding to forty five (45) days
after the end of the calendar quarter for which such royalties are due and
payable hereunder shall accrue interest at a rate equal to one percent (1%) per
calendar month or, if less, the maximum rate permitted under applicable law.
Notwithstanding the above, each report delivered by Conway Stuart to Somnus
pursuant to Section 3.5, shall be deemed correct and accurate, and Somnus shall
have no right to inspection records relating thereto, or otherwise challenge the
accuracy of either such report or the records relating thereto, after the third
anniversary of the date of delivery of such report to Somnus.
4. DEVELOPMENT PROGRAM
4.1 Kits. Somnus shall provide Conway Stuart with up to twenty (20) RF
Generator kits, including one (1) extra RF board per kit, at a price of [*] per
kit, payable upon request of a kit by Conway Stuart to Somnus. The twenty (20)
kits shall be consumed by Conway Stuart in, at most, two (2) separate orders.
Ten (10) kits shall include Somnus' Model S2 generator enclosure, the remaining
ten (10) kits shall not include the enclosure. A kit shall be composed of the
components necessary to build Somnus' Model S2 RF generator. Conway Stuart shall
have ten (10) days to inspect the kits upon receipt from Somnus. Conway Stuart
shall have no claim against Somnus for defective kits, or components therein,
after the ten (10) day inspection period has expired or after the kit has been
assembled, whichever event occurs first.
4.2 Use of Resources. Conway Stuart is expressly prohibited from using any
resources belonging to Somnus, including but not limited to engineering
resources, equipment and Somnus's employees and consultants, without first
obtaining express written permission from Somnus. Such permission shall be
requested and obtained from Somnus's Chief Executive Officer and Chief Financial
Officer, and such officers of Somnus shall have the authority to grant such
permission. Payment for Conway Stuart's use of Somnus's resources shall be
determined by Somnus' Chief Executive Officer and Chief Financial Officer, shall
be made by Conway Stuart to Somnus and, in the case of Somnus's employees, shall
not exceed two times such employee's hourly rate.
4.3 Solicitation of Employees. Except as provided in this Section 4.3
below, Conway Stuart is expressly prohibited from soliciting any employee or
consultant of Somnus involved with the development of Somnus's Model S2 RF
generator. For purposes of clarification, Bruno Strul, Ph.D., is not an employee
or a consultant of Somnus.
4.3.1 Use of George Schils. Upon execution of this Agreement, Conway
Stuart shall reimburse Somnus in an amount equal to Twenty Four Thousand Dollars
($24,000) for consulting services performed by George Schils on behalf of
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THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
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Conway Stuart that were paid by Somnus through December 31, 1998. Upon execution
of this Agreement, Conway Stuart shall pay George Schils directly for use of his
services after December 31, 1998.
4.3.2 Use of Robin Bek. Commencing on December 1, 1998, Conway Stuart
shall pay Somnus an amount equal to fifty percent (50%) of Robin Bek's burdened
salary to reimburse Somnus for the time that Mr. Bek spends on RF generator
development for Conway Stuart. Such payments shall be made by Conway Stuart to
Somnus on the fifteenth (15th) of every month until the development of Conway
Stuart's generator is completed. Conway Stuart shall be limited to fifty percent
(50%) of Mr. Bek's working time.
4.4 Transfer of Technology. Conway Stuart agrees that copies of all
information and descriptions of technology, including but not limited to, all
ideas, inventions, discoveries, specifications, designs, know-how, notes,
memoranda, documentation, test fixtures, calibration equipment, all copyrighted
materials, and all intellectual property rights constituting, embodied in, or
pertaining to any of the foregoing, developed by Conway Stuart as a result of
this Technology License Agreement shall be transferred by Conway Stuart to
Somnus. Somnus hereby grants to Conway Stuart an irrevocable, non-exclusive,
worldwide, fully-paid, royalty-free right and license under intellectual
property covering such information and technology to use and otherwise exploit
such information and technology.
4.5 No Conflicts. Conway Stuart agrees not to conduct any work for its own
behalf or seek out any services from any party which relates to development of
an RF generator or RF generator technology for use in treatment of any body
structure located above the upper esophageal sphincter. Somnus agrees not to
conduct any work for its own behalf or seek out any services from any party
which relates to development of an RF generator or RF generator technology for
use in the Licensed Field.
4.6 Documentation. Conway Stuart agrees that copies of all documentation,
test results and test protocols, verifications and validations, lists of
components different from Somnus's Model S2 RF generator, and proof of
regulatory approvals shall be delivered by Conway Stuart to Somnus in a timely
fashion.
4.7 Ownership and Rights in Technology. Somnus shall own all right, title
and interest in Technology developed, made or otherwise created solely by
employees and consultants of Somnus. Conway Stuart shall own all right, title
and interest in Technology developed, made or otherwise created solely by
employees and consultants of Conway Stuart. Somnus and Conway Stuart jointly
shall own all right, title and interest in Technology developed, made or
otherwise created jointly by employees and consultants of Somnus and Conway
Stuart. Somnus and Conway Stuart each agrees to deliver to the other party
hereto (i) a written description of any Technology developed, made or otherwise
created by its employees and consultants as a result of this Technology License
Agreement, and (ii) an example of tangible embodiments of such Technology, where
applicable. Conway Stuart shall require each of its employees and consultants to
enter into confidentiality and proprietary rights agreements, in a form
acceptable to
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Somnus, irrevocably assigning any and all right, title and interest such
employees and consultants might have in, to and under such Technology to Conway
Stuart. Somnus shall require each of its employees and consultants to enter into
confidentiality and proprietary rights agreements, in a form acceptable to
Conway Stuart, irrevocably assigning any and all right, title and interest such
employees and consultants might have in, to and under such Technology to Somnus.
All Technology shall be deemed to be Confidential Information of the party (or
parties) whose employee(s) and consultant(s) developed, made or otherwise
created such Technology and shall be subject to the restrictions set forth in
Article 6 below. Application and registration for intellectual property
protection of Technology shall be the exclusive right of the party owning such
Technology and such party shall bear the cost of such application and
registration; provided, however, that the parties shall determine which of the
parties hereto shall apply and register for intellectual property protection of
Technology jointly owned by the parties and the parties shall bear the cost and
expense of such application and registration equally. Each party agrees to
execute such documents, render such assistance, and take such other action
reasonably requested by the other party in connection with application,
registration, perfection, enforcement and defense of intellectual property
rights relating to Technology developed, made or otherwise created. Conway
Stuart agrees to grant, and hereby grants, to Somnus an irrevocable, non-
exclusive, worldwide, fully-paid, royalty-free right and license, together with
the right to grant and authorize sublicenses, under intellectual property
covering Technology developed as a result of this Technology License Agreement
and owned by Conway Stuart to make, have made, import, use, offer for sale, sell
and otherwise distribute tangible embodiments of such Technology in all fields
other than the Licensed Field. Somnus agrees to grant, and hereby grants, to
Conway Stuart an irrevocable, non-exclusive, worldwide, fully-paid, royalty-free
right and license, under intellectual property covering Technology developed as
a result of this Technology License Agreement and owned by Somnus to make, have
made, import, use, offer for sale, sell and otherwise distribute tangible
embodiments of such Technology in the Licensed Field, and to use such Technology
in development projects.
4.8 Use of Third Party Developers. Due to the confidential nature of the
Licensed Subject Matter, in the event Conway Stuart uses a third party developer
or manufacturer, Conway Stuart shall require such third party developer or
manufacturer to execute confidentiality agreements in a form acceptable to
Somnus. Conway Stuart shall provide copies of all such confidentiality
agreements to Somnus.
4.9 Control Use Algorithm. Conway Stuart is expressly prohibited from
incorporating into the RF generators to be developed as a result of this
Technology License Agreement Somnus' proprietary algorithm preventing reuse of a
disposable medical device. If Conway Stuart elects to incorporate into such RF
generators an algorithm to prevent reuse of a disposable medical device that is
based upon the intellectual property that Somnus licensed from Medtronic, Conway
Stuart must obtain an independent license from Medtronic prior to incorporating
this feature.
4.10 Conway Stuart Generator Appearance. Conway Stuart shall develop an
icon user interface, enclosure and connector for use in the RF generators to be
developed as a result of this Technology License Agreement which are separate
and
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distinct from the icon user interface, enclosure and connector used by Somnus as
of the Effective Date. For the avoidance of doubt, in the event that any
question exists as to whether such icon user interface, enclosure and connector
developed by Conway Stuart is not separate and distinct from the icon user
interface, enclosure and connector used by Somnus as of the Effective Date,
Conway Stuart shall obtain written approval from Somnus prior to implementation
of such icon user interface, enclosure and connector into the RF generators to
be developed as a result of this Technology License Agreement.
4.11 Regulatory Approvals and Testing. Conway Stuart shall be responsible
for obtaining necessary regulatory approvals and authorizations for the RF
generators to be developed as a result of this Technology License Agreement,
development of all test procedures and all test fixtures. Conway Stuart shall be
responsible for developing all verification and validation protocols and
performing such verification and validation protocols to determine whether each
unit using the technology licensed under this Agreement meets the specification
requirements for such RF generators.
4.12 Software and Hardware Changes. Conway Stuart shall be solely
responsible for development of a proprietary enclosure for RF generators to be
developed as a result of this Technology License Agreement.
4.13 Right of Access. Representatives of Somnus shall have the right to
visit Conway Stuart's facilities and the facilities of Conway Stuart's
contractors and subcontractors during normal business hours to observe, discuss
progress with representatives of Conway Stuart and Conway Stuart's contractors,
consultants, and subcontractors, and inspect all relevant documents; provided
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that, with respect to any visit or inspection of documents, Somnus shall notify
Conway Stuart of its intention to visit or inspect documents at least five (5)
business days in advance; and provided further that copies of any documents
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shall be provided to Somnus only after consent by Conway Stuart, such consent
not to be unreasonably withheld; and provided further that any and all
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information obtained by Somnus as a result of actions permitted under this
Section 4.13, including without limitation any and all copies of documents,
shall be deemed Confidential Information of Conway Stuart and shall be subject
to the restrictions set forth in Article 6 below.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS
5.1 Representations, Warranties and Covenants of Somnus. Somnus
represents, warrants and covenants that: (i) Somnus is the sole and exclusive
owner of all right, title and interest in the Licensed Subject Matter; (ii) the
Licensed Subject Matter is free and clear of any lien, encumbrance, security
interest and restriction on license; (iii) Somnus has not previously granted,
and will not grant during the term of this Agreement, any right, license or
interest in, to or under the Licensed Subject Matter, or any portion thereof,
which is inconsistent with the rights and licenses granted to Conway Stuart
herein; (iv) to the best of Somnus' knowledge as of the Effective Date, the
Licensed Subject Matter does not infringe any intellectual property right of any
third party; (v) there are no actions, suits, investigations, claims or
proceedings pending or threatened in any way relating to the Licensed Subject
Matter; (vi) during the term of this Agreement,
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Somnus will not conduct any work for its own behalf or seek out any services
from any party which relates to development of an RF generator, or RF generator
technology, for use in the Licensed Field, (vii) Somnus is a corporation, duly
organized validly existing and in good standing under the laws of the State of
Delaware; and (viii) the execution, delivery and performance of this Agreement
have been duly authorized by all necessary corporate action on the part of
Somnus.
5.2 Representations, Warranties and Covenants of Conway Stuart. Conway
Stuart represents, warrants and covenants that: (i) during the term of this
Agreement, Conway Stuart will not conduct any work for its own behalf or seek
out any services from any party which relates to development of an RF generator,
or RF generator technology, for use in treatment of any body structure located
above the upper esophageal sphincter; (ii) Conway Stuart is a corporation, duly
organized validly existing and in good standing under the laws of the State of
Delaware; and (iii) the execution, delivery and performance of this Agreement
have been duly authorized by all necessary corporate action on the part of
Conway Stuart.
5.3 Effect of Representations, Warranties and Covenants. It is understood
that if the representations and warranties made by a party under this Article 5
are not true and accurate, or if the covenants made by a party under this
Article 5 are not upheld and complied with, and the other party incurs damages,
liabilities, costs or other expenses as a result of such falsity or non-
compliance, the party making such representations, warranties and covenants
shall indemnify and hold the other party harmless from and against any such
damages, liabilities, costs or other expenses incurred as a result of such
falsity or such non-compliance.
6. CONFIDENTIAL INFORMATION
6.1 General. Somnus and Conway Stuart each agree that all information
contained in documents marked "confidential" which are received by one party
from the other party, and all information indicated to be Confidential
Information in Sections 4.7 and 4.13 (collectively, "Confidential Information")
shall be received in strict confidence, used only for the express purposes set
forth in this Agreement, and not disclosed by the recipient party (except as
required by law or court order), its agents or employees without the prior
written consent of the other party, unless such Confidential Information (i) was
in the public domain at the time of disclosure, (ii) later became part of the
public domain through no act or omission of the recipient party, its employees,
agents, or permitted successors or assigns, (iii) was lawfully disclosed to the
recipient party by a third party having no obligation to the disclosing party,
(iv) was already known by the recipient party at the time of disclosure, (v) was
independently developed by the recipient without use of or access to such
Confidential Information or (vi) is required to be disclosed to a government
agency.
6.2 Protection of Confidential Information. Each party's obligations of
confidentiality, non-use and nondisclosure set forth in Section 6.1 shall be
fulfilled by using at least the same degree of care with the other party's
Confidential Information as it uses to protect its own confidential information.
This obligation shall continue in full
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force and effect during the term of this Agreement and thereafter for a period
of three (3) years.
7. INFRINGEMENT BY THIRD PARTIES
7.1 General. Conway Stuart shall notify Somnus if it learns of any
possible infringement by any third party of the Intellectual Property Rights. In
the event that Somnus does not file suit against a substantial infringer of such
patents or other rights granted herein within six (6) months after receipt of
such notification from Conway Stuart, Conway Stuart shall have a right, but no
obligation, to enforce any patent licensed hereunder on behalf of itself and
Somnus. Somnus shall provide all reasonable assistance requested by Conway
Stuart in connection with any action taken by Conway Stuart to enforce the
Intellectual Property Rights consistent with its obligations pursuant to Section
7.2, including without limitation joining legal action initiated by Conway
Stuart as a party. In the event that Conway Stuart takes action to enforce the
Intellectual Property Rights, Conway Stuart shall retain for its own benefit all
recoveries obtained from such action.
7.2 Cooperation. In any suit or dispute involving an infringer, the
parties shall cooperate fully, and upon the request and at the expense of the
party bringing suit, the other party shall make available to the party bringing
suit, at reasonable times and under appropriate conditions all relevant
personnel, records, papers, information, samples, specimens, and the like in its
possession.
8. INDEMNIFICATION
8.1 General. Conway Stuart shall hold harmless and indemnify Somnus, its
officers, employees and agents from and against any claims, demands or causes of
action whatsoever, including without limitation those arising on account of any
injury or death of persons or damage to property caused by, or arising out of,
or resulting from, the exercise or practice of the rights and licenses granted
hereunder by Conway Stuart, its Affiliates or their officers, employees, agents
or representatives, except to the extent that any such claims, demands or causes
of action arise as a result of Somnus' negligence or misconduct.
9. TERM AND TERMINATION
9.1 Term. The term of this Agreement shall commence on the Effective Date
and continue in full force and effect until the earlier of either (i) the
expiration of the term of the last patent within the Licensed Subject Matter or,
if sooner, determination by a court or administrative agency of competent
jurisdiction that the last patent within the Licensed Subject Matter is invalid
or unenforceable, or (ii) fifteen (15) years if no patents within the Licensed
Subject Matter issue.
9.2 Termination for Cause. Either party may, without penalty, terminate
this Agreement, effective upon written notice to the other party in the event of
one of the following events:
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9.2.1 The other party materially breaches this Agreement, and such breach
remains uncured for thirty (30) days following written notice of breach by the
non-breaching party, unless such breach is incurable, in which event termination
shall be immediate upon receive of written notice;
9.2.2 To the extent permitted by applicable, a petition for relief under
any bankruptcy statute is filed by or against the other party, or the other
party makes an assignment for creditors, or a receiver is appointed for all or a
substantial party of the party's assets, and such petition, assignment or
appointment is not dismissed or vacated within sixty (60) days.
9.3 Licenses.
9.3.1 Upon expiration of this Agreement pursuant to the terms of
Section 9.1, Conway Stuart shall have a paid-up, irrevocable, non-exclusive,
worldwide right and license under the Technology Rights to manufacture, have
manufactured, use, offer to sell, sell and import RF generators in the Licensed
Field.
9.3.2 Upon termination of this Agreement by Somnus pursuant to Section
9.2, all rights and licenses granted herein by Somnus to Conway Stuart under
Licensed Subject Matter shall terminate. Upon termination of this Agreement by
Conway Stuart pursuant to Section 9.2, or upon expiration of this Agreement, all
rights and licenses granted herein by Somnus to Conway Stuart under Licensed
Subject Matter shall survive.
9.4 Return of Confidential Information. Upon termination of this Agreement
by Somnus pursuant to Section 9.2, but not upon expiration or termination of
this Agreement by Conway Stuart pursuant to Section 9.2, Conway Stuart shall
promptly return to Somnus any Confidential Information of Somnus received from
Somnus prior to such termination, and Conway Stuart shall be no longer be
entitled to use any such Confidential Information for any purpose.
9.5 Accrued Rights. Expiration or termination of this Agreement shall not
release either party from any obligation theretofore accrued.
9.6 Survival. Articles 5, 6, and 10, and Sections 9.3, 9.4, 9.5 and 9.6,
of this Agreement shall survive expiration or termination of this Agreement for
any reason.
10. MISCELLANEOUS
10.1 Governing Law. This Agreement shall be governed by, and construed and
interpreted, in accordance with the laws of the State of California without
reference to principles of conflicts of laws.
10.2 Compliance with Laws. Each party shall perform this Agreement in
compliance with all applicable federal, national, state and local laws, rules
and regulations and shall indemnify the other party and its customers for loss
or damage sustained because of such party's noncompliance with any such law,
rule or regulation.
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Each party shall furnish to the other party any information requested or
required by that party during the term of this Agreement or any extensions
hereof to enable that party to comply with the requirements of any U.S. or
foreign federal, state, and/or governmental agency.
10.3 Limitation of Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR
INCIDENTAL, CONSEQUENTIAL, INDIRECT, OR SPECIAL DAMAGES OF THE OTHER PARTY
ARISING OUT OF THIS AGREEMENT, UNDER ANY THEORY OF LIABILITY.
10.4 Force Majeure. Neither party shall be held responsible for any delay
or failure in performance hereunder caused by strikes, embargoes, unexpected
government requirements, civil or military authorities, acts of God, earthquake,
or by the public enemy or other causes reasonably beyond such party's control
and without such party's fault or negligence.
10.5 Independent Contractors. The relationship of Somnus and Conway Stuart
established by this Agreement is that of independent contractors. Nothing in
this Agreement shall be constructed to create any other relationship between
Somnus and Conway Stuart. Neither party shall have any right, power or authority
to assume, create or incur any expense, liability or obligation, express or
implied, on behalf of the other.
10.6 Confidentiality of Agreement. Except as required by law, neither
party to this Agreement shall disclose the contents or any term of this
Agreement to any person or entity without the prior written consent of the non-
disclosing party.
10.7 Assignment. The parties agree that their rights and obligations under
this Agreement may not be transferred or assigned to a third party without the
prior written consent of the other party hereto. Notwithstanding the foregoing,
a party may transfer or assign its rights and obligations under this Agreement
to a successor to all or substantially all of its business or assets relating to
this Agreement whether by sale, merger, operation of law or otherwise.
10.8 No Use of Names. Neither party will use the name of the other in its
advertising or promotional materials without the prior written consent of such
other party.
10.9 Notices. Any required notices hereunder shall be given in writing by
certified mail or overnight express delivery service (such as FedEx) at the
address of each party below, or to such other address or as either party may
substitute by written notice. Notice shall be deemed served when delivered or,
if delivery is not accomplished by reason or some fault of the addressee, when
tendered.
If to Somnus: Somnus Medical Technologies, Inc.
285 N. Wolfe Road
Sunnyvale, California 94086
Attn: Chief Executive Officer
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If to Conway Stuart: Conway Stuart Medical, Inc.
735 Palomar Avenue
Sunnyvale, California 94086
Attn: Chief Executive Officer
10.10 Modification; Waiver. This Agreement may not be altered, amended or
modified in any way except by a writing signed by both parties. The failure of
a party to enforce any provision of the Agreement shall not be construed to be a
waiver of the right of such party to thereafter enforce that provision or any
other provision or right.
10.11 Severability. If any provision of any provision of this Agreement
shall be found by a court to be void, invalid or unenforceable, the same shall
be reformed to comply with applicable law or stricken if not so conformable, so
as not to affect the validity or enforceability of this Agreement.
10.12 Entire Agreement. The parties hereto acknowledge that this Agreement
sets forth the entire Agreement and understanding of the parties hereto as to
the subject matter hereof, and supersedes all prior discussions, agreements, and
writings in respect hereto.
10.13 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and which together shall
constitute one instrument.
IN WITNESS WHEREOF, Somnus and Conway Stuart have executed this Agreement
by their respective duly authorized representatives.
SOMNUS MEDICAL CONWAY STUART MEDICAL, INC.
TECHNOLOGIES, INC. ("Conway Stuart")
("Somnus")
By: /s/ John Schulte By: /s/ Stuart D. Edwards
-------------------------- --------------------------
Print: John Schulte Print: Stuart D. Edwards
Title: Chief Executive Officer Title: Chief Executive Officer
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