**Exhibit 10.11**

 

**LICENSE AGREEMENT**

 

**Dated March 31, 1999**

 

**Between**

 

**MEDQUEST PRODUCTS, INC.**

 

**and**

 

**UNIVERSITY OF UTAH RESEARCHFOUNDATION**

 

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TABLEOF CONTENTS

 
| **Article No** | ** **                              | ** ** |
|---------------------|-----------------------------------------|------------|
|                |                                    |       |
| 1.                  | DEFINITIONS                             | 2          |
| 2.                  | LICENSE  GRANT                          | 4          |
| 3.                  | EXCLUSIVE  PERIOD AND TERM OF AGREEMENT | 5          |
| 4.                  | SUBLICENSE                              | 5          |
| 5.                  | LUMP SUM  PAYMENT                       | 5          |
| 6.                  | VALIDITY                                | 6          |
| 7.                  | DUE  DILIGENCE                          | 6          |
| 8.                  | CONFIDENTIALITY                         | 8          |
| 9.                  | ANNUAL  REPORTS                         | 8          |
| 10                  | PATENT  PROSECUTION                     | 9          |
| 11.                 | PATENT  MARKING                         | 9          |
| 12.                 | BOOKS AND  RECORDS                      | 10         |
| 13.                 | TERMINATION  BY LICENSOR                | 10         |
| 14.                 | TERMINATION  BY LICENSEE                | 10         |
| 15.                 | WARRANTY BY  LICENSOR                   | 11         |
| 16.                 | INFRINGEMENT                            | 11         |
| 17.                 | WAIVER                                  | 12         |
| 18.                 | ASSIGNABILITY                           | 12         |
| 19.                 | INDEMNIFICATION                         | 12         |
| 20.                 | LIABILITY                               | 12         |
| 21.                 | NOTICES                                 | 12         |
| 22.                 | FOREIGN LAWS                            | 13         |
| 23.                 | GOVERNING  LAW                          | 13         |
| 24.                 | RELATIONSHIP  OF PARTIES                | 13         |
| 25.                 | NON-USE OF  NAMES                       | 13         |
| 26.                 | DISPUTE  RESOLUTION                     | 14         |
| 27.                 | GENERAL  PROVISIONS                     | 14         |
|                | Exhibit “A                         | 17         |
|                | Exhibit “B                         | 18         |
|                | Exhibit “C                         | 19         |
|                | Exhibit “D                         | 20         |

 

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LICENSE AGREEMENT

 

THIS LICENSE AGREEMENT (“AGREEMENT”) is made and is effective as ofMarch 31, 1999 (hereinafter “EFFECTIVE DATE”) by and between the UNIVERSITY OFUTAH RESEARCH FOUNDATION, a Utah non-profit corporation, having its principalplace of business at 421 Wakara Way, Suite 170, Salt Lake City, UT 84108,hereinafter referred to as “LICENSOR,” and MEDQUEST PRODUCTS, INC., a Utahcorporation, having its principal place of business at 825 North 300 West,Suite 107, Salt Lake City, UT 84103, hereinafter referred to as “LICENSEE.”

 

WITNESSETH

 

WHEREAS, certain inventions, generally characterized as anELECTROMAGNETICALLY SUSPENDED AND ROTATED CENTRIFUGAL PUMPING APPARATUS ANDMETHOD, U.S. Serial No. 08/850,156, assigned University of Utah identificationnumber U-2377, an IMPLANTABLE CENTRIFUGAL BLOOD PUMP WITH HYBRID MAGNETICBEARINGS, U.S. Serial No. 09/064,352, assigned University of Utah identificationnumber U-2376, and a HYBRID MAGNETICALLY SUSPENDED AND ROTATED CENTRIFUGALPUMPING APPARATUS AND METHOD U.S. Serial No. 08/850,598, assigned University ofUtah identification number U-2376, as covered by LICENSOR’S PATENT RIGHTS (asdefined herein), hereinafter collectively referred to as “the INVENTIONS”, havebeen made in the course of research at the University of Utah, the Universityof Virginia and MedQuest Products, Inc. conducted by Paul Allaire, GillBearnson, Ron Flack, James Long, Eric Maslen, Don Olsen, Pratap Khanwilkar,Ajit Kumar and Mary Sinnott and are covered by LICENSOR’S PATENT RIGHTS;

 

WHEREAS, LICENSOR and LICENSEE desire that the INVENTIONS, the LICENSOR’SPATENT RIGHTS and LICENSEE’S patent rights be developed and utilized to thefullest extent so that their benefits can be enjoyed by the general public;

 

WHEREAS, LICENSEE wishes to obtain from LICENSOR an exclusive licenseunder certain rights for the commercial development, production, manufacture,use and sale of the LICENSOR’S PATENT RIGHTS, and LICENSOR is willing to grantsuch a license upon the terms and conditions hereinafter set forth;

 

WHEREAS, the LICENSOR’S PATENT RIGHTS and LICENSEE’S patent rights weredeveloped in the course of research sponsored in part by the U.S. Government,and as a consequence are subject to overriding obligations of LICENSOR to theU.S. Government;

 

NOW, THEREFORE, for and in consideration of the covenants, conditionsand undertakings hereinafter set forth, the parties hereby agree as follows:

 

ARTICLE 1. DEFINITIONS

 

Section 1.1             “LICENSOR’S PATENT RIGHTS” means all rights of LICENSOR to anysubject matter claimed in or covered by: (a) any patent application listed onExhibit “A” attached hereto, which is incorporated herein by this reference;(b) any U.S. or foreign patent issuing on one or more of such applications; (c)any continuing, divisional, continuation-in-part, or reissue applications 

 

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thereof; and (d) any U.S. or foreign patent issuing on such continuing,divisional, continuation-in-part or reissue applications.

 

Section 1.2             “LICENSED PRODUCT” means the implantable blood pump or any otherproduct or component part, the manufacture, use or sale of which is covered byany claim or claims included within LICENSOR’S PATENT RIGHTS. LICENSED PRODUCTexcludes third party products; for example, a power source licensed orpurchased from a third party which when combined with the LICENSED PRODUCT willmake up a system, which may be sold by LICENSEE

 

Section 1.3             “LICENSED METHOD” means any method, procedure, process or othersubject matter, the manufacture, use, or sale of which is covered by any claimor claims included within

 

LICENSOR’S PATENT RIGHTS.

 

Section 1.4             “. . . covered by... “means (in the appropriate context) a LICENSEDPRODUCT that, when made, used or sold, or a LICENSED METHOD that, whenpracticed, would constitute, but for the license granted to LICENSEE pursuantto this AGREEMENT, an infringement of any claim or claims included withinLICENSOR’S PATENT RIGHTS, but for the LICENSEE’S joint ownership of said patentrights.

 

Section 1.5             “NET SALES” means billings by LICENSEE or its SUBLICENSEES (asdefined herein), for any LICENSED PRODUCTS or LICENSED METHOD sold or leased orservices performed for commercial purposes, in all cases, net of the sum of thefollowing items (where applicable): (1) services performed by LICENSEE fordevelopment or testing of the LICENSED PRODUCTS or sale of LICENSED PRODUCTSdeveloped at cost or no cost for clinical trials or evaluation by potentialpartners or SUBLICENSEES; (2) cash, trade or quantity discounts actuallyallowed; (3) sales, use, tariff, customs duties or other excise taxes directlyimposed upon particular sales; (4) outbound transportation charges prepaid orallowed; and (5) allowances or credits to third parties for rejections orreturns or bad debts. A LICENSED PRODUCT and services performed using aLICENSED PRODUCT or LICENSED METHOD shall be considered sold when billed out orinvoiced or, if not invoiced, when delivered or performed. There shall be nodeductions from NET SALES for costs of commissions or collections. NET SALESshall not include billings for LICENSED PRODUCTS sold or services performed byLICENSEE to any AFFILIATE unless such AFFILIATE is an end-user of any LICENSEDPRODUCT or service performed using any LICENSED PRODUCT or LICENSED METHOD.

 

Section 1.6             “AFFILIATE” means any person or entity that controls, is controlledby, or is under common control with LICENSEE, directly or indirectly. Forpurposes of this definition, “control” and its various inflected forms meansthe possession, directly or indirectly, of the power to direct or cause thedirection of the management and policies of such person or entity, whetherthrough ownership of voting securities, by contract or otherwise.

 

Section 1.7             “FIELD OF USE” shall mean all fields of use.

 

Section 1.8             “TERRITORY” shall mean the world.

 

Section 1.9             “CF3” is defined as a prototype pump intended for use in ex vivoanimal experiments. The rotor in the CF3 is electromagnetically suspended (nohybrid magnetic bearings) 

 

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and is covered by a U.S. patent application entitled “ElectromagneticallySuspended and Rotated Centrifugal Pumping Apparatus and Method” as set forth onExhibit “A”. CF3 uses discrete rotor position sensors as part of the magneticbearing system. CF3 has been reduced to practice and extensively tested invitro as of the date of this agreement.

 

Section 1.10           CFVAD is defined as a centrifugal ventricular assist device.

 

Section 1. 11          “CF4” is defined as the most recent (as of the EFFECTIVE DATE) majordesign iteration of the CFVAD implantable blood pump before use in clinicaltrials begins. The rotor is magnetically suspended using hybrid magneticbearings and is covered by U.S. patent applications entitled “ImplantableCentrifugal Blood Pump with Hybrid Magnetic Bearings” and “Hybrid MagneticallySuspended and Rotated Centrifugal Pumping Apparatus and Method” as set forth onExhibit “A”. CF4 uses “self sensing” of rotor position using measurementsobtained from the magnetic bearing actuators. There are no discrete positionsensors in the system. Other aspects of this design are similar to the CF3, butwith some modifications to accommodate the magnetic bearing design changes andto reduce the size of the system.

 

ARTICLE 2. LICENSE GRANT

 

Section 2.1             Subject to the terms and conditions set forth herein, LICENSORhereby grants to LICENSEE an exclusive license to the LICENSOR’S PATENT RIGHTSin the FIELDS OF USE to make, have made, use, sell, offer to sell, import andexport any LICENSED PRODUCT and to practice any LICENSED METHOD throughout theTERRITORY where LICENSOR may lawfully grant such a license.

 

Section 2.2             The license granted in Section 2.1 hereof is expressly made subjectto a non exclusive, irrevocable, royalty-free license heretofore granted to theU.S. Government, a copy of which is attached hereto as Exhibit “B” andincorporated herein by reference.

 

Section 2.3             The license granted in Section 2.1 hereof is expressly made subjectto LICENSOR’S reservation of the right to practice under LICENSOR’S PATENTRIGHTS for educational and research purposes at the University of Utah.

 

Section 2.4             LICENSOR agrees that with respect to any United States or foreignpatent which, on the EFFECTIVE DATE of this AGREEMENT, it owns or under whichit has the right to grant licenses, or with respect to any United States orforeign patent which may later issue on a pending application for patent which,on the EFFECTIVE DATE of this AGREEMENT, it owns or under which it has theright to grant licenses, it shall not assert against LICENSEE or its vendees,transferees, or SUBLICENSEES any claims for infringement based on the manufacture,use, sale, offer for sale, importation or exportation of any apparatus made orsold by LICENSEE, its vendees, transferees, or SUBLICENSEES under the licensegranted in this AGREEMENT, or based on the practice by LICENSEE, its vendees,transferees, or SUBLICENSEES of any method, process, or procedure under thelicense granted in this AGREEMENT; except that LICENSOR may assert any suchclaim of infringement if required by a legal duty to a third party, or mayadvise a third party of such claim of infringement if required by a legal dutyto such third party. This agreement of non- assertion shall not be construed asa license from LICENSOR to LICENSEE, and it shall only apply to patents and toclaims of patents that relate specifically to inventions in the technical fieldof heart 

 

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pumps, which field shall not include coatings as applied to heartpumps, which coatings are covered and permitted by a license to LICENSEE fromLICENSOR under a separate agreement dated December 18, 1998.

 

ARTICLE 3. EXCLUSIVE PERIOD AND TERM OFAGREEMENT

 

Section 3.1             This AGREEMENT shall be in full force and effect from the EFFECTIVEDATE until the end of the term of the last-to-expire of LICENSOR’S PATENTRIGHTS licensed under this AGREEMENT, unless otherwise terminated by operationof law or by acts of the parties pursuant to the terms of this AGREEMENT.

 

Section 3.2             The license granted under Section 2.1 and subject to Section 2.1 isexclusive and LICENSOR hereby agrees that it shall not grant any other licenseto make, have made, use, sell, offer to sell, import or export LICENSEDPRODUCTS or to utilize LICENSED METHODS in the TERRITORY for the FIELD OF USEduring the period of time commencing with the EFFECTIVE DATE and terminatingwith the last-to-expire of LICENSOR’S PATENT RIGHTS (hereinafter the “EXCLUSIVEPERIOD”).

 

ARTICLE 4. SUBLICENSE

 

Section 4.1             LICENSOR hereby grants to LICENSEE the right to sublicense LICENSEE’Srights and license under this AGREEMENT and to enter into exclusive andnon-exclusive sublicensing agreements with third parties (hereinafter referredto as “SUBLICENSEES”) to make, have made, sell, offer to sell, import andexport any LICENSED PRODUCT and to practice any LICENSED METHOD, provided thatLICENSEE has current exclusive rights thereto under this AGREEMENT in theterritory being sublicensed. LICENSEE may only enter into sublicensingagreements to LICENSOR’S PATENT RIGHTS during the EXCLUSIVE PERIOD of thisAGREEMENT. Such sublicense may extend past the expiration date of the EXCLUSIVEPERIOD of this AGREEMENT, but any potential exclusivity of such sublicenseshall end upon the expiration of the EXCLUSIVE PERIOD. Upon any termination ofthis AGREEMENT, any SUBLICENSEES whose sublicense is in good standing withLICENSEE shall automatically become direct licensees of LICENSOR under theterms and conditions of their sublicenses, and LICENSOR agrees to offer andexecute license agreements with such SUBLICENSEES under the terms andconditions of their sublicenses.

 

Section 4.2             Any sublicense to LICENSOR’S PATENT RIGHTS granted by LICENSEE to aSUBLICENSEE shall incorporate all of the terms and conditions of thisAGREEMENT, which shall be binding upon each SUBLICENSEE as if such SUBLICENSEEwere a party to this AGREEMENT.

 

Section 4.3             LICENSEE shall promptly provide LICENSOR with a copy of eachsublicense for the LICENSED PRODUCT or the LICENSED METHOD granted by LICENSEEhereunder and any amendments thereto or terminations thereof.

 

ARTICLE 5. LUMP SUM PAYMENT

 

In full consideration for the license granted in this AGREEMENT,LICENSEE shall pay to LICENSOR, a lump sum payment of One Hundred ThousandDollars ($100,000) in two installment 

 

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payments of Fifty Thousand Dollars ($50,000.00) each, which is paymentfor a fully- paid-up exclusive license to the LICENSED PRODUCTS and LICENSEDMETHODS. The first installment shall be due and payable within ten (10) days ofthe execution of both this AGREEMENT and an agreement between LICENSEE and theUniversity of Virginia Patent Foundation (hereinafter, “UVPF”), for anexclusive license to UVPF’s jointly owned rights to the INVENTIONS, whicheveroccurs later. The second installment shall be due and payable within ninety(90) days of the execution of the said agreement between LICENSEE and UVPF.Failure to make either installment payment by the due date shall result inimmediate termination.

 

ARTICLE 6. VALIDITY

 

Section 6.1             If, in any proceeding in which the validity or priority of any claimof any patent included within LICENSOR’S PATENT RIGHTS is in issue, a judgmentor decree is entered that becomes irrevocable through the exhaustion of allpermissible applications for rehearing or review by a superior tribunal, or throughthe expiration of the time permitted for such applications, the constructionplaced on any such claim by such irrevocable judgment or decree shallthereafter be applicable to this AGREEMENT with regard to any acts occurringthereafter, and if any such irrevocable judgment or decree holds any such claiminvalid, LICENSEE’S obligations toward LICENSOR under this AGREEMENT based onsuch claim or any claim patentably indistinct therefrom, including LICENSEE’Sobligations to pay fees to LICENSOR based on such claim or any claim patentablyindistinct therefrom, shall cease as of the date such judgment or decreebecomes irrevocable.

 

ARTICLE 7. DUE DILIGENCE

 

Section 7.1             LICENSEE warrants that it has completed the following due diligencemilestones:

 

A.           Three patent applications, as listed in Exhibit “A”, have beenauthorized and filed by LICENSEE;

 

B.             LICENSEE has done the system design, conception and reduction topractice of the CF3 and anatomic fit and implant site specifications, andestablished the initial requirements for the subsystems: magnetic bearing, pumpand motor;

 

C.             LICENSEE has performed in vitro, performance, and bloodcompatibility testing of the CF3;

 

D.            LICENSEE has prepared, submitted, and obtained one Phase I SmallBusiness Innovation Research Grant from the National Heart, Lung and BloodInstitute, Bethesda, MD to design and develop the INVENTIONS;

 

E.              LICENSEE has submitted a Phase II SBIR application as of 4/15/98,and plans to submit other funding proposals to further develop and commercializethe INVENTIONS;

 

F.              LICENSEE signed an AGREEMENT on October 13, 1998 for funding ofthree (3) million dollars to partially fund this project from the Heart andLung Research Foundation and has received approximately half of the funds as ofFebruary 8, 1999;

 

G.             LICENSEE, along with the University of Utah, helped organize theInternational Congress of the International Society of Rotary Blood Pumps inJuly 1998 to enhance the CFVAD project team’s reputation as a world leader inthis field; and

 

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H.            LICENSEE has delivered to LICENSOR a business plan showing theamount of money, number and kind of personnel and time budgeted and planned foreach phase of development of the LICENSED PRODUCTS and LICENSED METHODS.

 

Section 7.2             Upon execution of this AGREEMENT, LICENSEE shall diligently proceedwith the development, manufacture, sale and use of LICENSED PRODUCTS and/orLICENSED METHODS in order to make them readily available to the general publicas soon as possible on commercially reasonable terms. LICENSEE shall continueactive, diligent, commercially reasonable, marketing efforts for one or moreLICENSED PRODUCT(S) and/or LICENSED METHOD(S) throughout the term of thisAGREEMENT.

 

Section 7.3             LICENSEE shall perform the following obligations as part of its duediligence activities hereunder:

 

A.           LICENSEE shall deliver promptly to LICENSOR a copy of each updatedbusiness plan developed that shows the amount of money, number and kind ofpersonnel and time budgeted and planned for each phase of development of theLICENSED PRODUCTS and LICENSED METHODS

 

B.             The period between submission of an updated business plan toLICENSOR by LICENSEE shall not exceed two (2) years;

 

C.    Upon one week’s notice,LICENSEE shall permit an in-plant inspection by LICENSOR at any time subsequentto one year from the EFFECTIVE DATE of this AGREEMENT and thereafter permitin-plant inspections by LICENSOR at regular intervals with at least twelve (12)months between each such inspection;

 

D.    LICENSEE shall spend atleast Six Hundred Thousand Dollars ($600,000.00) on research, development andcommercialization of LICENSED PRODUCTS and/or LICENSED METHODS during the two-year period following the EFFECTIVE DATE of this AGREEMENT;

 

E.     CF4 design will becompleted by January 1, 2000. System level mechanical and electrical drawingsincluding dimensions, and a functional description of operation of the device(getting device to the stage of building a prototype system);

 

F.     CF4 Prototype completed bySeptember 30, 2001. This is the prototype of the device that will be usedclinically. The deliverables for this milestone will be a demonstration of fullmagnetic suspension of the impeller, and pump performance in a loop circuitpumping water at nominal pumping conditions (6 liters per minute of flow atl00mmHg of pressure);

 

G.    One-week animal trialcompleted by January 1, 2003. Survival of an animal for at least a week withthe CFVAD in operation as a ventricular assist device. (Protocol approved byanimal care committee not the FDA);

 

H.    Obtain Development Partnerby January 1, 2004. When LICENSEE has received a binding legal commitment offunds for development or commercialization of the INVENTIONS from a third partysponsor (not including any funds derived from any debt instrument or securitiesissued by LICENSEE) totaling at least Five Million Dollars ($5,000,000) to bereceived by LICENSEE over a period of time not exceeding two (2) years,LICENSEE shall pay to LICENSOR a milestone payment of Two Hundred FiftyThousand Dollars ($250,000) within ninety (90) days of actual receipt of atleast two 

 

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hundred and fifty thousand dollars ($250,000) from the above mentioneddevelopment partner.

 

I.                 Start pre clinical durability tests 1/1/05. This includes regulatoryagency approval of the reliability test protocol to be done before clinicaltrials, building the number of CFVAD systems specified in protocol, andstarting reliability tests;

 

J.     Start pre clinical animaltests 1/1/07. Deliverables are: approval by regulatory agency of protocol to becompleted before clinical trials, and beginning the long-term animal tests;

 

K.    Start human clinical trials1/1/08. Regulatory agency approval of the clinical trial application andperformance of the first human implant;

 

L.     Submission of regulatorymarketing application by 1/1/10. Obtain all data needed for the regulatorymarketing approval application from clinical trials and submit the applicationfor approval; and

 

M.   Obtain regulatory approval7/1/11. Obtain regulatory agency approval for the device to be marketed inselected markets.

 

Section 7.4             Commencing on January 2, 1999 and on each January 2 thereafter,until the first occurrence of NET SALES, LICENSEE shall submit to LICENSOR awritten report covering LICENSEE’S progress in (a) development and testing ofLICENSED PRODUCTS and LICENSED METHODS; (b) achieving the due diligencemilestones specified herein; and (c) preparing, filing, and obtaining of anyapprovals necessary for marketing the LICENSED PRODUCTS and LICENSED METHODS.Each report shall be in substantially similar form and contain at least theinformation required by Exhibit “D” attached hereto and incorporated herein.

 

ARTICLE 8. CONFIDENTIALITY

 

Section 8.1             LICENSEE and LICENSOR acknowledge that either party may providecertain information to the other about the INVENTIONS and LICENSOR’S PATENTRIGHTS that is considered to be confidential. LICENSEE and LICENSOR shall takereasonable precautions to protect such confidential information. Suchprecautions shall involve at least the same degree of care and precaution thatLICENSEE customarily uses to protect its own confidential information.

 

Section 8.2             LICENSEE acknowledges that LICENSOR is subject to the UtahGovernmental Records Access and Management Act (“GRAMA”), Section 63-2-101 et.seq.,Utah Code Ann. (1953), as amended. LICENSOR shall keep confidential anyinformation provided to LICENSOR by LICENSEE that LICENSEE considersconfidential, to the extent allowable under GRAMA and as provided in Section 5313-16-301 et. seq., Utah Code Ann. In order to be eligible for such protectionunder GRAMA, confidential information of LICENSEE disclosed to LICENSOR must bein written or other tangible form, marked as proprietary, and accompanied by awritten claim by LICENSEE stating the reasons that such information must bekept confidential.

 

ARTICLE 9. ANNUAL REPORTS

 

Section 9.1             Within forty-five (45) days after the calendar year in which NETSALES first occur, LICENSEE shall provide LICENSOR with a written reportdetailing all sales and uses, if any, made of LICENSED PRODUCTS during thepreceding calendar year, and detailing the amount of NET SALES made during suchyear. Each report shall include at least the following:

 

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A              Number of LICENSED PRODUCTS manufactured, leased and sold by and/orfor LICENSEE and all SUBLICENSEES;

 

B                Accounting for all LICENSED METHODS used or sold by and/or forLICENSEE and all SUBLICENSEES;

 

C                Accounting for NET SALES by LICENSEE and SUBLICENSEES;

 

D               Names and addresses of all SUBLICENSEES of LICENSEE;

 

E                 The amount spent on product development;

 

F                 The number of full time equivalent employees working on the LICENSEDPRODUCTS and/or LICENSED METHODS;

 

G                The date of first occurrence of NET SALES in each country; and

 

H               A summary and copies of each report due to LICENSEE fromSUBLICENSEES.

 

Section 9.2             Each report shall be in substantially similar form as Exhibit “C”attached hereto. Each such report shall be signed by an officer of LICENSEE (orthe officer’s designee).

 

ARTICLE 10. PATENT PROSECUTION ANDMAINTENANCE

 

Section 10.1           LICENSOR and LICENSEE shall diligently prosecute and maintainLICENSOR’S PATENT RIGHTS. LICENSOR and LICENSEE shall provide the other withcopies of all relevant documentation and keep the other informed and apprizedof the continuing prosecution. LICENSEE and LICENSOR shall keep any suchdocumentation and information confidential. Each parties’ inventors shall beprovided adequate opportunity to comment.

 

Section 10.2           If either LICENSEE or LICENSOR chooses not to seek, continue toseek, or maintain patent prosecution in any given instance, such party will sonotify the other not less than forty-five (45) days before each deadlinethereof, and the other shall have the right to do so using counsel of its ownchoice and at its own expense. To the extent that LICENSEE chooses not topursue patent prosecution in such instance, as confirmed by LICENSEE inwriting, LICENSEE’S license shall be reduced to a non-exclusive license in thatcountry or that instance.

 

Section 10.3           LICENSEE shall pay all costs and legal fees incurred by LICENSOR inthe “preparation”, “prosecution”, and “maintenance”, as these terms are interpretedunder U.S. patent law, of LICENSOR’S PATENT RIGHTS, including withoutlimitation, any taxes on such patent rights.

 

ARTICLE 11. PATENT MARKING

 

LICENSEE shall mark all LICENSED PRODUCTS made, used or sold under theterms of this AGREEMENT, or their containers, in accordance with all applicablepatent- marking laws.

 

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ARTICLE 12. BOOKS AND RECORDS

 

LICENSEE shall keep true and complete books and records containing anaccurate accounting of all data necessary for proper identification of NETSALES and verification of performance of due diligence milestones and forreporting purposes. Upon one weeks notice, LICENSOR shall have the right toinspect the income statements and balance sheets that were used to calculatefederal reporting to the IRS each year, and any additional records necessary toverify NET SALES and performance of due diligence milestones, at LICENSOR’Sexpense, upon notice to LICENSEE.

 

ARTICLE 13. TERMINATION BY LICENSOR 

 

Section 13.1           Subject to the provisions of Section 13.2, if LICENSEE fails todeliver to LICENSOR any statement or report required hereunder when due,violates or fails to perform any covenant, condition, or undertaking of thisAGREEMENT to be performed by it hereunder, files a bankruptcy action, has abankruptcy action filed against it, becomes insolvent, enters into adissolution agreement with creditors, or has a receiver appointed for it,LICENSOR may give written notice to LICENSEE of its intent to terminate, IfLICENSEE cures within ninety (90) days of such notice, the rights, privileges,and license granted hereunder shall remain in full force; otherwise, therights, privileges, and license granted hereunder shall terminate.

 

Section 13.2           Notwithstanding any provision of Section 13.1, if LICENSEE fails toperform any due diligence obligation under Article 7 by the date on which suchperformance is due, LICENSOR may give written notice to LICENSEE of its intentto convert LICENSEE’S license to a non-exclusive license, if LICENSEE cureswithin 365 days of such notice, the license granted hereunder shall remainexclusive; otherwise, the license shall become non-exclusive.

 

Section 13.3           If LICENSEE should cease to carry on its business with respect tothe rights granted in this AGREEMENT, this AGREEMENT shall terminate uponninety (90) days written notice by LICENSOR to LICENSEE, except that ifLICENSEE resumes carrying on such business within such ninety (90) days, thisAGREEMENT shall not terminate. Any termination pursuant to Article 13 shall notimpair any accrued right of LICENSOR, and LICENSEE shall pay all attorney’sfees and costs incurred by LICENSOR in enforcing any obligation of LICENSEE oraccrued right of LICENSOR. Articles 8 and 20 shall survive any termination ofthis AGREEMENT.

 

ARTICLE 14. TERMINATION BY LICENSEE

 

Section 14.1           LICENSEE may terminate this AGREEMENT at any time and from time totime without cause, by giving written notice thereof to LICENSOR. Suchtermination shall be effective ninety (90) days after such notice, and allLICENSEE’S rights associated therewith shall cease as of that date.

 

Section 14.2           Any termination pursuant to Section 14.1 shall not relieve LICENSEEof any obligation or liability accrued to LICENSOR hereunder prior to suchtermination, or rescind or give rise to any right to rescind any payments madeor other consideration given to LICENSOR hereunder prior to the time suchtermination becomes effective. Such termination shall not affect in any mannerany rights of LICENSOR arising under this AGREEMENT prior to the date of suchtermination.

 

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ARTICLE 15. WARRANTY BY LICENSOR

 

Section 15.1           LICENSOR warrants that it has the lawful right to grant the licenseset forth in this

 

AGREEMENT.

 

Section 15.2           EXCEPT AS EXPRESSLY PROVIDED IN SECTION 15.1, THE PARTIESACKNOWLEDGE AND AGREE THAT LICENSOR HAS MADE NO REPRESENTATIONS OR WARRANTIES,EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITYOR FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL LICENSOR BE HELDRESPONSIBLE FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES ARISING OUT OFTHE USE OF LICENSOR’S PATENT RIGHTS, EVEN IF LICENSOR IS ADVISED IN ADVANCE OFTHE POSSIBILITY OF SUCH DAMAGES.

 

Section 15.3           Nothing in this AGREEMENT shall be construed as: A. a warranty orrepresentation by LICENSOR as to the “validity” or “scope”, as these terms areinterpreted under U.S. patent law, of any of LICENSOR’S PATENT RIGHTS. B. awarranty or representation by LICENSOR that anything made, used, sold orotherwise disposed of pursuant to any license granted under this AGREEMENT isor will be free from infringement of patents of third parties. C. an obligationby LICENSOR to bring or prosecute actions or suits against third parties forpatent infringement, except as expressly provided in Article 16 hereof. D.conferring by implication, estoppel or otherwise any license or rights underany patents of LICENSOR, other than LICENSOR’S PATENT RIGHTS.

 

ARTICLE 16. INFRINGEMENT

 

Section 16.1           If either party learns of a claim of infringement of or by any ofLICENSOR’S PATENT RIGHTS licensed under this AGREEMENT, that party shall givewritten notice of such claim to the other party. LICENSEE may bring suit forpatent infringement, naming LICENSOR as nominal party plaintiff. No settlement,consent judgment or other voluntary final disposition of the suit may beentered into without the consent of LICENSOR, which consent shall not beunreasonably withheld, conditioned, or delayed.

 

Section 16.2           Any such legal action shall be at the expense of the party by whomsuit is filed hereinafter referred to as the “Litigating Party”. Any damages orcosts recovered by the Litigating Party in connection with a legal action filedby it hereunder, and remaining after the Litigating Party is reimbursed for itscosts and expenses reasonably incurred in the lawsuit, shall be apportioned onethird to LICENSOR and two thirds divided between LICENSEE and University ofVirginia Patent Foundation.

 

Section 16.3           LICENSEE and LICENSOR shall cooperate with each other in litigationproceedings instituted hereunder, provided that such cooperation shall be atthe expense of the Litigating Party, and such litigation shall be controlled bythe Litigating Party.

 

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ARTICLE 17. WAIVER

 

No waiver by either party hereto of any breach or default of any of thecovenants or agreements herein set forth shall be deemed a waiver as to anysubsequent and/or similar breach or default.

 

ARTICLE 18. ASSIGNABILITY

 

This AGREEMENT is binding upon and shall inure to the benefit of theparties, their successors and assigns. Subject to LICENSEE’S rights tosublicense, as set forth in Article 4 hereof, LICENSEE and LICENSOR may assignthis AGREEMENT only with the written consent of the other, which consent shallnot be unreasonably withheld, conditioned or delayed.

 

ARTICLE 19. INDEMNIFICATION

 

LICENSEE shall indemnify, hold harmless and defend LICENSOR, theUniversity of Utah, and their respective officers, employees and agents,against any and all claims, suits, losses, damage, costs, fees and expenses(including reasonable -fees of attorneys) resulting from or arising out ofexercise of any license granted under this AGREEMENT.

 

ARTICLE 20. LIABILITY

 

The LICENSOR is a governmental entity and is subject to the UtahGovernmental Immunity Act, Section 63-30-1 et seq., Utah Code Ann. (1953), asamended (the “Act”). Section 63-30-34 of the Act expressly limits judgmentsagainst the LICENSOR, its officers and employees to $250,000 per person forpersonal injury and $500,000 per occurrence for bodily injury and death and to$ 100,000 per occurrence for property damage. Section 63-30-5 of the Actexpressly waives immunity as to any contractual obligation. Subject to theprovisions of the Act, LICENSOR shall indemnify, defend and hold harmlessLICENSEE, its officers, agents, and employees against any actions, suits,proceedings, liabilities and damages that may result solely from the negligentacts or omissions of LICENSOR, its officers, agents or employees in connectionwith this AGREEMENT. Nothing in this AGREEMENT shall be construed as a waiverof any rights or defenses applicable to LICENSOR under the Act, includingwithout limitation, the provisions of Section 63-30-34 regarding limitation ofjudgment for personal injury and property damage. LICENSOR shall give LICENSEEtimely notice of any claim or suit instituted of which it has knowledge that inany way, directly or indirectly, affects or might affect LICENSEE, and LICENSEEshall have the right at its own expense to participate in the defense of thesame. Without limiting the foregoing, if LICENSOR breaches any representation,warranty or covenant of this AGREEMENT, LICENSOR agrees to return to LICENSEEthe $100,000 lump sum payment set forth in Article 5, together with the$250,000 milestone payment set forth in Section 7.3, if any, in fullsatisfaction of any and all liability or obligations of LICENSOR to LICENSEEresulting from or related to such breach.

 

ARTICLE 21. NOTICES

 

Any payment, notice or other communication required or permitted to begiven to either party hereto shall be in writing and shall be deemed to havebeen properly given and effective: (a) on the date of delivery if delivered inperson during recipient’s normal business hours; or (b) on the date of deliveryif delivered by courier, express mail service or first-class mail, registeredor certified. Such 

 

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notice shall be sent or delivered to the respective addresses givenbelow, or to such other address as either party shall designate by writtennotice given to the other party as follows:

 

In the case of LICENSEE:

 

MEDQUEST PRODUCTS, INC.

825 North 300 West, Suite 107

Salt Lake City, UT 84103

 

In the case of LICENSOR:

 

UNIVERSITY OF UTAH RESEARCH FOUNDATION

Technology Transfer Office

421 Wakara Way, Suite 170

Salt Lake City, UT 84108

 

With a copy to:

 

OFFICE OF GENERAL COUNSEL

University of Utah

309 Park Building

Salt Lake City, Utah 84112

 

ARTICLE 22. FOREIGN LAWS

 

Section 22.1 When required bylocal/national law, LICENSEE shall register this AGREEMENT, pay all costs andlegal fees connected therewith, and otherwise insure that the local/nationallaws affecting this AGREEMENT are fully satisfied.

 

Section 22.2 LICENSEE shall complywith all applicable U.S. laws dealing with the export of technology ortechnical information.

 

ARTICLE 23. GOVERNING LAW

 

This AGREEMENT shall be interpreted and construed in accordance withthe laws of the State of Utah, without application of any principles of choiceof laws.

 

ARTICLE 24. RELATIONSHIP OF PARTIES

 

In assuming and performing the obligations of this AGREEMENT, LICENSEEand LICENSOR are each acting as independent parties and neither shall beconsidered or represent itself as a joint venturer, partner, agent or employeeof the other.

 

ARTICLE 25. NON-USE OF NAMES

 

LICENSEE shall not use the names or trademarks of the University ofUtah, nor any adaptation thereof, nor the names of any of its employees, in anyadvertising, promotional or sales literature without prior written consentobtained from LICENSOR, or said employee, in each case, except that 

 

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LICENSEE may state that it is licensed by LICENSOR under one or more ofthe patents and/or applications comprising the LICENSOR’S PATENT RIGHTS.

 

ARTICLE 26. DISPUTE RESOLUTION

 

Except for the right of either party to apply to a court of competentjurisdiction for a temporary restraining order, a preliminary injunction, orother equitable relief to preserve the status quo or prevent irreparable harm,any and all claims, disputes or controversies arising under, out of, or inconnection with the AGREEMENT, including any dispute relating to patentvalidity or infringement, which the parties shall be unable to resolve withinsixty (60) days shall be mediated in good faith. The party raising such disputeshall promptly advise the other party of such dispute. By no later than five(5) business days after the recipient has received such notice of dispute, eachparty shall have selected for itself a representative who shall have theauthority to bind such party, and shall additionally have advised the otherparty in writing of the name and title of such representative. By no later thanten (10) days after the date of such notice of dispute, the party against whomthe dispute shall be raised shall select a mediator in the Salt Lake City areaand such representative shall schedule a date with such mediator for a hearing.The parties shall enter into good faith mediation and shall share the costsequally. If the representatives of the parties have not been able to resolvethe dispute within fifteen (15) business days after such mediation hearing,then any and all claims, disputes or controversies arising under, out of, or inconnection with this AGREEMENT, including any dispute relating to patentvalidity or infringement, shall be resolved by final and binding compulsoryarbitration in Salt Lake City, Utah, pursuant to Title 78, Chapter 3 1 a, UtahCode Ann. (1953), as amended, and shall be determined in accordance with theCommercial Arbitration Rules of the American Arbitration Association to theextent such rules are not in conflict with such law. The arbitrators shall haveno power to add to, subtract from or modify any of the terms or conditions ofthis AGREEMENT, nor to award punitive damages. Any award rendered in sucharbitration may be enforced by either party in either the courts of the Stateof Utah or in the United States District Court for the District of Utah, towhose jurisdiction for such purposes LICENSEE and LICENSOR each herebyirrevocably consents and submits. All costs and expenses, including reasonableattorneys’ fees, of the prevailing party in connection with arbitration of suchcontroversy or claim shall be borne by the other party.

 

ARTICLE 27. GENERAL PROVISIONS

 

Section 27.1 The headings of theseveral articles and sections are inserted for convenience of reference onlyand are not intended to be a part of or to affect the meaning or interpretationof this AGREEMENT.

 

Section 27.2           This AGREEMENT shall not be binding upon the parties until it hasbeen signed herein below by or on behalf of each party, in which event it shallbe effective as of the date first above written.

 

Section 27.3           No amendment or modification of this AGREEMENT shall be valid orbinding upon the parties unless made in writing and signed by both parties.

 

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Section 27.4           This AGREEMENT embodies the entire understanding of the parties andsupersedes all previous communications, representations or understandings,either oral or written, between the parties relating to the subject matterhereof.

 

Section 27.5           The parties agree to execute and deliver all documents, provide allinformation and take or forbear from taking all such action as may be necessaryor appropriate to achieve the purposes of this AGREEMENT.

 

Section 27.6           The provisions of this AGREEMENT are severable, and in the eventthat any provision of this AGREEMENT shall be determined to be invalid orunenforceable under any controlling body of the law, such invalidity orunenforceability shall not in any way affect the validity or enforceability ofthe remaining provisions hereof.

 

Section 27.7           This AGREEMENT may be signed in counterparts, each of which whentaken together shall constitute one fully executed document. Each individualexecuting this AGREEMENT on behalf of a legal entity does hereby represent andwarrant to each other person so signing that he or she has been duly authorizedto execute this AGREEMENT on behalf of such entity.

 

IN WITNESS WHEREOF, LICENSOR and LICENSEE have executed this AGREEMENTby their respective officers hereunto duly authorized, on the day and yearhereinafter written.

 

 
| “LICENSEE”   |                                     | “LICENSEE” |
|------------------------|------------------------------------------|----------------------|
| MEDQUEST PRODUCTS INC. | UNIVERSITY OF UTAH RESEARCH   FOUNDATION |
|                   |                                     |                 |
|                   |                                     |                 |
| By                     | “Pratap Khanwilkar”            |                 | By | “John K. Morris” |   |
|                   | (Signature)                              |                 |   | (Signature) |   |
|                   |                                     |
| Name                   | Pratap Khanwilkar                        |                 | Name | John K. Morris |   |
|                   | (Please Print)                           |                 |   | (Please Print) |   |
|                   |                                     |                 |
| Title                  | President                                |                 | Title | General Counsel |   |
|                   |                                     |                 |
| Date:                  | 3/31/99                                  |                 | Date: | 4/7/99 |   |
|                        |                                          |                      |  |  |  |  |  |  |  |  |  |

 

Before me this 31 day of March 1999, Pratap Khanwilkar, personallyappeared whose identity was verified by official documentation and who executedthe above instrument, and who executed the above instrument, and acknowledgedto me that they executed the same of their own free will for the purposetherein set forth.

 

          “Joy A.Peterson”                        Notary Public, Residing at: Salt Lake City, Utah

 

My Commission Expires: August 10, 2002

 

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Before me this 9 day of April 1999, John K. Morris, personally appearedwhose identity was verified by official documentation and who executed theabove instrument, and who executed the above instrument, and acknowledged to methat they executed the same of their own free will for the purpose therein setforth.

 

           “SusanA. Dean”                          Notary Public, Residing at: Salt Lake City, Utah

 

My Commission Expires: 7-2-2000

 

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EXHIBIT “A”

 

INVENTIONS

 
| U-2376 |       |                                                                                                                                                                                                 |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |       |                                                                                                                                                                                                 |
|   | TITLE      | “Hybrid Magnetically Suspended and Rotated Centrifugal Pumping  Apparatus and Method”                                                                                                      |
|   | INVENTORS  | Paul Allaire and * Eric Maslen of the University of Virginia, Don  Olsen and Gill Bearnson of the University of Utah, and Pratap Khanwilkar and  James Long of MedQuest.                             |
|   | USSN       | 08/850,598, filed on May 2, 1997                                                                                                                                                                     |
|   | PATENT#    | Application                                                                                                                                                                                          |
|   | STATUS     | Patent Pending                                                                                                                                                                                       |
|   |       |                                                                                                                                                                                                 |
| U-2376 |       |                                                                                                                                                                                                 |
|   |       |                                                                                                                                                                                                 |
|   | TITLE      | “Implantable Centrifugal Blood Pump with Hybrid Magnetic Bearings”                                                                                                                         |
|   | INVENTORS  | Paul E. Allaire and Ron Flack of the University of Virginia, Gill  Bearnson and Don Olsen of the University of Utah, and Pratap Khanwilkar, B.  Ajit Kumar, Mary Sinnot, and James Long of MedQuest. |
|   | USSN (CIP) | 09/064,352, filed on April 22, 1998                                                                                                                                                                  |
|   | PATENT#    | Application                                                                                                                                                                                          |
|   | STATUS     | Patent Pending                                                                                                                                                                                       |
|   |       |                                                                                                                                                                                                 |
| U-2377 |       |                                                                                                                                                                                                 |
|   |       |                                                                                                                                                                                                 |
|   | TiTLE      | “Electromagnetically Suspended and Rotated Centrifugal Pumping  Apparatus and Method”                                                                                                      |
|   | INVENTORS  | Paul Allaire’ and Eric Maslen of the University of Virginia, Don  Olsen and Gill Beamson of the University of Utah, and Pratap Khanwilkar and  James Long of MedQuest.                          |
|   | USSN       | 08/850,156, filed on May 2,1997                                                                                                                                                                      |
|   | PATENT#    | Application                                                                                                                                                                                          |
|   | STATUS     | Patent Pending                                                                                                                                                                                       |

 

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EXHIBIT “B”

 

LICENSE TO THE UNITED STATES GOVERNMENT

 

WHEREAS,                                         of                                has/haveinvented

and filed a patent application thereon in the USA bearing Serial No.                             filingdate and

 

WHEREAS, the invention was made in the course of research supported by

and

 

WHEREAS, the United States Government is entitled to certain rights inand to said invention and application by reason of the terms of such support;and

 

WHEREAS, the UNIVERSITY OF UTAH, hereinafter called the “LICENSOR”, hasacquired by assignment from the inventor the entire right, title and interestof the inventor to such invention;

 

NOW, THEREFORE

 

1. The LICENSOR, in consideration of the premises and other good andvaluable consideration, hereby grants and conveys to the United StatesGovernment a royalty-free, non-exclusive and irrevocable license forgovernmental purposes and on behalf of any foreign government pursuant to anyexisting or future treaty or agreement with the United States under theaforesaid patent application, and any and all divisions or continuations, andin any and all patents or reissues which may be granted thereon during the fullterm or terms thereof. As used herein, “governmental purpose’ means the rightof the Government of the United States, including any agency thereof, topractice and have practiced (made or have made, used or have used, sold or havesold) in connection with programs funded in whole or in part by the FederalGovernment throughout the world by or on behalf of the Government of the UnitedStates.

 

2. The LICENSOR covenants and warrants that he has the right to grantthe foregoing license, and that any assignment which he may make of theinvention or said patent applications or patents thereon, shall expressly bemade subject to this license.

 

3. The LICENSOR agrees that the Government shall not be estopped at anytime to contest the enforceability, validity, scope of, or title to any patentor patent application herein licensed.

 

UNIVERSITY OF UTAH

 

 

Richard K. Koehn

Vice President for Research

 

(Date)

 

I,                                                           ,certify that I am the                                                     ofthe Institution named as LICENSOR herein; that Richard K. Koehn, who signedthis License on behalf of the Institution is the Vice President for Research ofsaid Institution; and that said License was duly signed for and in behalf ofsaid Institution by authority of its governing body, and is within the scope ofits corporate powers.

 

 

[Signature and Date]

 

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EXHIBIT “C”

 

Annual NET SALES Report for Medquestcovering: ELECTROMAGNETICALLY SUSPENDED AND ROTATED CENTRIFUGAL PUMPINGAPPARATUS AND METHOD, and THE IMPLANTABLE CENTRIFUGAL BLOOD PUMP WITH HYBRIDMAGNETIC BEARINGS, and HYBRID MAGNETICALLY SUSPENDED AND ROTATED CENTRIFUGALPUMPING APPARATUSEach of which is covered under U-2376, U-2377

 

Date:

 

Period Covered:

 

**NET SALES**

 

A.            Numberof Units Sold:

 

B.            Costper Unit:

 

C.            Grosssales amount (A x B):

 

D.            Deductions:

 

Discounts allowed (case, trade, quantity)

Taxes imposed on sales (sales, use, etc.)

Transportation charges (outbound or prepaid)

Allowances (rejections and returns)

 

Total Deductions

 

E.             NetSales (C - D):

 

On Separate Document please also provide:

F.             Namesand addresses of all current SUBLICENSEES;

G.            Totalamount spent on product development;

The number offull time equivalent employees working on the LICENSED PRODUCTS and/or LICENSEDMETHODS;

I.              Thedate of first occurrence of NET SALES in each country;

J.             Asummary and copies of each report due to Medquest from SUBLICENSEES.

 

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EXHIBIT “D”

 

Due Diligence Report forMedQuest for the Blood Pump Technology

 

Date:

 

Period Covering:

 

Progress Regarding Specific Due Diligence Milestones:

 

Projected Date of First Sale:

 

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**ASSIGNMENT,ASSUMPTION AND AMENDMENT AGREEMENT**

 

THIS ASSIGNMENT, ASSUMPTION AND AMENDMENTAGREEMENT (the “Agreement”) is made this 8th day of June, 2005, by and amongMEDQUEST PRODUCTS, INC. (“Assignor”), WORLD HEART CORPORATION (“Assignee”), andUNIVERSITY OF UTAH RESEARCH FOUNDATION (“University”).

 

RECITALS

 

A.            Pursuant to that certain AssetPurchase Agreement dated as of January 31, 2005 (the “Asset Purchase Agreement”),Assignor has agreed to sell to Assignee, upon the terms, provisions andconditions set forth therein, certain assets, licenses and other property, allas more particularly described in the Asset Purchase Agreement (the “Assets”).

 

B.            In connection with the sale andpurchase of the Assets, Assignor desires to assign to Assignee all of Assignor’sright, title and interest in and to that certain License Agreement dated March31, 1999, by and between Assignor and University, a copy of which is attachedhereto and incorporated herein as Exhibit A together with all amendments,extensions, renewals and other modifications thereto (the “License Agreement”),and Assignee desires to accept said assignment and assume the obligations ofAssignor under the License Agreement upon the terms and conditions set forth inthis Agreement.

 

C.            In connection with the assignment ofthe License Agreement, Assignor and University desire to amend the LicenseAgreement upon the terms and conditions set forth in this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, upon these premises and forgood and valuable consideration, the receipt and sufficiency of which arehereby acknowledged, the parties hereto agree as follows:

 

1.             Assignment. Subject to and effective uponthe Closing Date, as defined in the Asset Purchase Agreement (the “Closing”),Assignor hereby assigns, transfers, sells, conveys, grants, delivers and setsover unto Assignee, and Assignee accepts, all of Assignor’s right, title andinterest in and to the License Agreement. Assignor represents and warrants thatAssignor has full right and title to assign the License Agreement and Assignor’sinterest therein to Assignee pursuant to the provisions of this Agreement.

 

2.             Assumption. Subject to and effective uponthe Closing, Assignee hereby accepts said assignment and assumes allobligations on the part of the Assignor under the License Agreement to beperformed on or after the Closing. Assignor shall remain liable to theUniversity for any and all obligations that arise prior to Closing.

 

3.             Amendments.

 

(a)           Section 7.3.A. of the License Agreement is hereby amended and restatedin its entirety as follows:

 

A.            LICENSEE shall deliver promptly toLICENSOR a copy of an updated business plan developed with respect to theLICENSED PRODUCT and LICENSED METHODS that shows the amount of money, numberand kind of personnel, and time budgeted and 

 

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planned for each phase of development of theLICENSED PRODUCTS and LICENSED METHODS.

 

(b)           Section 7.3.D. of the License Agreement is hereby amended and restatedin its entirety as follows:

 

D.            [INTENTIONALLY OMITTED]

 

(c)           Section 7.3.E. of the License Agreement is hereby amended and restatedin its entirety as follows:

 

E.             [INTENTIONALLY OMITTED]

 

(d)           Section 7.3.F. of the License Agreement is hereby amended and restatedin its entirety as follows:

 

F.             [INTENTIONALLY OMITTED]

 

(e)           Section 7.3.G. of the License Agreement is hereby amended and restatedin its entirety as follows:

 

G.            [INTENTIONALLY OMITTED]

 

(f)            Section 7.3 .H. of the License Agreement is hereby amended and restatedin its entirety as follows:

 

H.            Subject to and effective upon theClosing of the Asset Purchase Agreement (the “APA”), LICENSEE shall pay toLICENSOR Two Hundred Fifty Thousand Dollars (US$250,000) in two equalinstallments: the first payment shall be made within thirty (30) days of theAPA Closing Date, and the second payment shall be made within seven months fromthe APA Closing Date.

 

(g)           Section 7.3.I. of the License Agreement is hereby amended and restatedin its entirety as follows:

 

I.              Start pre clinical durability testby January 1, 2007.

 

(h) Section 7.3..J. of the License Agreement is hereby amended and restated in its entirety asfollows:

 

J.             Start pre clinical animal tests byJanuary 1, 2007.

 

(i) Section 7.3..K. of the License Agreement is hereby amended and restated in its entirety asfollows:

 

K.            Start human clinical trials byJanuary 1, 2008.

 

(j)            Section 7.3.L. of the License Agreement is hereby amended and restatedin its entirety as follows:

 

L.             Submit Regulatory marketingapplication by January 1, 2010.

 

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(k)           Section 7.3.M. of the License Agreement is hereby deleted in itsentirety.

 

(1)           Article 9 of the License Agreement is hereby amended and restated inits entirety as follows:

 

ARTICLE 9. ANNUALREPORTS

 

LICENSEE shall provideLICENSOR a copy of LICENSEE’s Annual Report as filed with the SEC within ten(10) days of such filing. In addition, within forty five (45) days after theend of each calendar year, LICENSEE will provide written documentationregarding the status of the Due Diligence milestones outlined in ARTICLE 7 ofthe License Agreement.

 

(m)          Exhibit C is deleted in its entirety

 

(n)           Article 21 of the License Agreement is hereby amended and restated inits entirety as follows:

 

ARTICLE 21.NOTICES

 

Any payment, notice or othercommunication required to permitted to be given to either party hereto shall bein writing and shall be deemed to have been properly given and effective: (a)on the date of delivery if delivered in person during recipient’s normal businesshours; or (b) on the date of delivery if delivered by courier, express mailservice or first-class mail, registered or certified. Such notice shall be sentor delivered to the respective addresses given below, or to such other addressas either party shall designate by written notice given to the other party asfollows:

 

In the case of LICENSEE:

 
|                                        | With a copy to:                 |
|---------------------------------------------|---------------------------------|
| WORLD HEART CORPORATION                     |                            |
| Attn: Jal Jassawalla                        | MCCARTHY TETRAULT LLP           |
| President & CEO                         | Attn: Virginia Schweitzer       |
| 7799 Pardee Lane                            | 40 Elgin Street, Suite 1400     |
| Oakland, CA 94621                           | Ottawa, Ontario, Canada K1P 5K6 |
|                                        |                            |
| and                                         |                            |
|                                        |                            |
| WORLD HEART CORPORATION                     |                            |
| Attn: Pratap Khanwilkar                     |                            |
| VP, Rotary Systems and Business Development |                            |
| 4750 Wiley Post Way, Suite 120              |                            |
| Salt Lake City, UT 84116                    |                            |

 

In the case ofLICENSOR:

 
|                                | With a copy to:           |
|-------------------------------------|---------------------------|
| UNIV. OF UTAH RESEARCH              | OFFICE OF GENERAL COUNSEL |
| FOUNDATION                          | University of Utah        |
| Technology Commercialization Office | 309 Park Building         |
| 615 Arapeen Drive, Suite 310        | Salt Lake City, UT 84112  |
| Salt Lake City, UT 84108            |                      |

 

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4.             Ratification. Acknowledgment and Consent Except as specifically modified by thisAgreement, the License Agreement is hereby affirmed and ratified in allrespects and shall continue in full force and effect, subject to its terms. Theparties acknowledge there are no outstanding or uncured breaches or defaults byany party thereunder. University hereby consents and agrees to assignment ofthe License Agreement from Assignor to Assignee, subject to the provisions hereof.

 

5.             Miscellaneous.

 

(a)           Binding Effect. This Agreement shall bebinding upon and inure to the benefit of the parties hereto and theirrespective successors and assigns.

 

(b)           Further Assurances. The parties agree toexecute, acknowledge and deliver all such additional instruments, notices andother documents and to do all such further acts and things as may be necessaryor useful to effect more fully the intents of this Agreement.

 

(c)           Governing Law. This Agreement shall begoverned by and interpreted in accordance with the laws of Utah, without regardto any conflicts of law rule that would direct application of the laws ofanother jurisdiction.

 

(d)           Counterparts. This Agreement may beexecuted in one or more counterparts, each of which shall be deemed anoriginal, but all of which together shall constitute one and the sameinstrument.

 

IN WITNESS WHEREOF, intending to be legally bound, the parties havecaused this Agreement to be executed by their duly authorized representativeson the day and year first above written.

 
| ASSIGNOR:                              | ASSIGNOR:                     |   |
|----------------------------------------|-------------------------------|--------|
|                                   |                          |   |
| MEDQUEST PRODUCTS, iNC.                |                          |   |
|                                   |                          |   |
| BY:                               | ”Pratap Khanwilkar” |   | BY: | ”Jal S. Jassawalah” |   |
|                                   |                          |   |   |
| PRINT NAME:                       | Pratap Khanwilkar             |   | PRINT NAME: | Jal S. Jassawalla |   |
|                                   |                          |   |   |
| TITLE:                                 | President/CEO                 |   | TITLE: | President & CEO |   |
|                                   |                          |   |
| UNIVERSITY:                            |                          |   |
|                                   |                          |   |
| UNIVERSITY OF UTAH RESEARCH FOUNDATION |                          |   |
|                                   |                          |   |
| BY:                                    | ”R.E. Gesteland”    |   |   |   |
|                                   |                          |   |   |
| PRINT NAME:                            | Raymond F. Gesteland          |   |   |   |
|                                   |                          |   |   |
| TITLE:                                 | President                     |   |   |   |
|                                        |                               |        |  |  |  |  |  |  |  |  |  |

 

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