Document:

exv10w18

 

Exhibit 10.18

ARROYO SCIENCES

NONEXCLUSIVE

SOFTWARE LICENSE AGREEMENT

This is a license agreement and not an agreement for sale. This license agreement (Agreement) is
between Arroyo Sciences, Inc. a Delaware corporation, located at 2400 Lincoln Avenue, Altadena, CA
91001 (hereinafter called “LICENSEE”) and the California Institute of Technology, a not-for-profit
California corporation, located at 1200 E. California Blvd., Pasadena, CA 91125
(“CALTECH” or “LICENSOR”), and gives LICENSEE certain limited rights to use the proprietary
Software and its
Related Materials. All rights not specifically granted in this Agreement are reserved to CALTECH.

ARTICLE 1

CONFIDENTIALITY

1.1 Except as expressly provided herein, each party agrees not to disclose any terms of this
Agreement to any third party without the consent of the other party; provided, however, that
disclosures may be made as required by securities laws or other applicable laws, or to actual or
prospective investors or corporate partners, or to a party’s accountants, attorneys, and other
professional advisors.

ARTICLE 2

COPYRIGHT

2.1 The Software and/or Related Materials are owned by CALTECH and are protected by, inter
alia, United States copyright laws and applicable international treaties and/or conventions
(“Copyright
Rights”). The United States Government may have prior rights to use some or all of the Software
and/or Related Materials.

2.2 LICENSEE will mark, in at least one conspicuous location, a notice that the Software and
Related Materials are owned by CALTECH. All marking should include:

©(DATE] California Institute of Technology, Pasadena, California. ALL RIGHTS RESERVED. Based on
Government Sponsored Research NAS7-1407.

ARTICLE 3

OMITTED

ARTICLE 4

DEFINITIONS

As used herein, the following words, phrases, or terms in this Agreement shall have the following
meanings:

4.1 “Executable Code” means machine-readable code compiled by a high-level compiler.

4.2 “Source Code” means code written in human-readable format or in a high-level program
language.

 

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4.3 “Software” means the Copyright Rights to the suite of programs, scripts, manuals, and
procedures received from CALTECH, whether in the form of Executable Code, Source Code, or
otherwise, for the purpose of enabling (i) U’-Hunter (as disclosed, inter alia, in NPO
20808-CP, VHUNTER: NEW FRACTAL ENCODING FOR BURIED UNEXPLODED ORDNANCE
DETECTION USING ELECTROMAGNETIC AND MAGNETIC GEOPHYSICAL SENSORS); and (ii) MUDSS (as disclosed,
inter alia, in NPO 40484, MOBILE UNDERWATER DEBRIS SURVEY SYSTEM), and any updates and new releases
available during this license, inclusive of backups, updates, or merged copies permitted hereunder
or subsequently supplied by CALTECH, including file structures, programming instructions, user
interfaces and screen formats and sequences, as well as any related proprietary information,
know-how, procedures, methods, prototypes, designs, technical data and reports, whether protected
by patents, if any, or otherwise.

4.4 “Related Materials” means all of the printed materials, user documentation, training
documentation and confidential software activation code necessary for the operation of Software
supplied by CALTECH under this Agreement.

4.5 “Licensed Product” means any product, device, subassembly, or assembly which comprises,
incorporates, is made by, or uses the Software or Related Materials.

4.6 “Sublicensee” shall mean, with respect to a particular Licensed Product, a third party to whom
LICENSEE has granted a license or sublicense under the License Agreement to research, develop,
distribute, have distributed, make, have made, import, have imported, use, have used, sell, have
sold, offer for sale, have offered for sale, or otherwise exploit such Licensed Product.

4.7 “Effective Date” shall mean the date CALTECH signs this Agreement if CALTECH signs it last, or
on the date of receipt of Software and Related Materials by LICENSEE as determined by CALTECH
whichever occurs last.

4.8 “Net Revenue” shall mean gross revenue from the direct or indirect use of the Software or
Related Materials including, but not limited to, any sale, license, sublicense, lease, service,
maintenance, upgrade or support activities, or distribution minus Deductible Expenses.

4.9 “Deductible Expenses” means the following items incurred in connection with sales of Licensed
Products to the extent paid or allowed by LICENSEE and included in accordance with recognized
principles of accounting in the gross sales price billed: (i) sales, use or turnover taxes; (ii)
excise value added or other taxes, custom duties or consular fees; (iii) transportation, freight,
and handling charges, and insurance on shipments to customers; (iv) trade, cash or quantity
discounts or rebates to the extent actually granted; (v) agent fees or commissions; (vi) rebates,
refunds, and credits for any rejected or returned Software or because of retroactive price
reductions, rebates or chargebacks; and (vii) uncollected accounts receivable attributable to sales
of Software.

4.10 “Related Company” means any corporation, limited liability company or other legal entity
directly or indirectly controlled by LICENSEE or its successors or assigns, or any successor or
assign of such an entity. For the purpose of this Agreement, “control” shall mean the direct or
indirect ownership of at least fifty percent (50%) of the outstanding shares or other voting rights
of the subject entity to elect directors, or if not meeting the preceding, any entity owned or
controlled by or owning or controlling at the maximum control or ownership right permitted in the
country where such entity exists.

 

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ARTICLE 5

RESERVATION OF OWNERSIDP AND GRANT OF LICENSE

5.1 CALTECH hereby grants to LICENSEE a worldwide nonexclusive license, with the right to
sublicense, to Software to research, develop, distribute, have distributed, make, have made,
import, have imported, use, have used, sell, have sold, offer for sale, have offered for sale, and
otherwise exploit Licensed Products for all uses. CALTECH also hereby grants to LICENSEE a
worldwide nonexclusive license, with the right to sublicense, to Related Materials to research,
develop, distribute, have distributed, make, have made, import, have imported, use, have used,
sell, have sold, offer for sale, have offered for sale, and otherwise exploit Licensed Products for
all uses.

5.2 CALTECH retains exclusive ownership of any copyright rights to the Software and/or
Related Materials (as defined above), licensed under this Agreement and hereby grants to LICENSEE a
nonexclusive license (with the right to sublicense) to use the Software and/or Related Materials
throughout the world only pursuant to the terms and conditions of this Agreement.

5.3 LICENSEE agrees to grant CALTECH a fully paid-up, royalty-free nonexclusive license
for
educational and research purposes to any Derivative Works, as defined by U.S.C. 17 § 101, of Software that are owned in whole or in part by LICENSEE.

5.4 LICENSEE shall have the right to grant nonexclusive sublicenses hereunder, provided that:

(a) LICENSEE shall include all its sublicensing income in LICENSEE’s reports to CALTECH, as
provided in Paragraph 8.4, and LICENSEE shall pay royalties thereon to CALTECH pursuant
to Paragraph 8.3;

(b) LICENSEE shall furnish CALTECH within thirty (30) days of the
execution thereof, a true and complete copy of each sublicense and any changes or additions
thereto;

(c) LICENSEE may grant sublicenses of no greater scope than the licenses granted under
Paragraph 4. I; and

(d) Each sublicense granted by LICENSEE shall include provisions similar in all material
respects to those of Articles 2, 12, 14-24 and Paragraph 8.2.

ARTICLE 6

EQUITY

6.1 LICENSEE agrees to issue to CALTECH, in consideration of LICENSEE’s receipt of the
intangible property rights granted under this Agreement, an equity interest in LICENSEE equal to
twenty thousand (20,000) shares of common stock, pursuant to the terms of an agreed stock purchase
agreement.

6.2 CALTECH agrees that, in the event of any underwritten or public offering of securities of
LICENSEE or a related company, CALTECH shall comply with and agree to any reasonable restriction on
the transfer of equity interest, or any part thereof, imposed by an underwriter, and shall perform
all acts and sign all necessary documents required with respect thereto. The provisions of this
Paragraph 6.2 shall survive termination of this Agreement.

ARTICLE 7

USES NOT PERMITTED

7.1 LICENSEE may not remove or obscure any copyright, patent or trademark notices. The Software
and/or Related Materials shall not become subject to application for patent or copyright by
LICENSEE.

7.2 LICENSEE shall not assign this Agreement or LICENSEE’s rights hereunder without the prior
written consent of CALTECH except as provided in Paragraph 16.3. Any purported assignment without
such consent shall be null and void.

 

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ARTICLE 8

ROYALTIES

8.1 Beginning four (4) years from the Effective Date of this Agreement, LICENSEE, with its
Sublicensees, agrees to pay to CALTECH a minimum annual royalty often thousand dollars
($10,000.00) which will be paid continuously on each successive anniversary of the Effective Date
thereafter upon invoice by CALTECH. For the avoidance of doubt, payments made by LICENSEE under
Paragraphs 8.2 and 8.3 shall be credited against the minimum royalty.

8.2 LICENSEE agrees to pay to CALTECH two percent (2%) of Net Revenue from the sale of Licensed
Products. If Software is combined with other Software routines and sold as one package, then the
royalties paid to CALTECH shall be determined as though Software was sold separately and at arms
length. No royalty shall be payable to CALTECH with respect to any use of the Software and/or
Related Materials for sales of Licensed Products or Services to the United States Government or to
the State of California.

8.3 LICENSEE shall pay CALTECH: (a) twenty-five percent (25%) of the royalties or other
revenues (which include without limitation royalty payments for technical assistance and the like)
LICENSEE receives from Sublicensees other than Related Companies for the sale of Licensed Products
that are not substantially combined with non-CALTECH software and/or hardware; and (b) two percent
(2%) of all other royalties or other revenues (which include without limitation royalty payments
for technical assistance and the like) LICENSEE receives from Sublicensees other than Related
Companies for the sale of Licensed Products. Such royalties or other revenues specifically shall
not include payments made by a Sublicensee (i) in consideration of equity or debt securities of
LICENSEE; (ii) to support research or development activities to be undertaken by LICENSEE; (iii)
upon the achievement by LICENSEE or Sublicensee of specified milestones or benchmarks relating to
the development of Licensed Products; (iv) in connection with pilot studies; (v) with respect to
performance based milestones; (vi) in consideration for the license or sublicense of any
intellectual property other than CALTECH Technology; (vii) with respect to products other than
Licensed Products, or (viii) as reimbursement for patent or other expenses. Such royalties or other
revenues specifically shall not include payments made by a Sublicensee.

8.4 LICENSEE shall keep records and books of account in respect of all Licensed Products made and
sold by LICENSEE or Related Companies under this Agreement and of royalties or other revenues
LICENSEE receives from Sublicensees other than Related Companies for the sale of Licensed Products.
CALTECH shall have the right, during business hours, no more often than annually, to examine, or to
have its designated auditors examine, such records and books. LICENSEE shall keep the same for at
least three (3) years after it pays CALTECH the royalties due for such Licensed Products and
require Related Companies to do the same. CALTECH shall not disclose to any third party any
confidential information learned through an examination of such records and books, nor shall
CALTECH use any such information for any purpose other than determining and enforcing its rights
under this Agreement.

8.5 Following the first commercial sale of a Licensed Product, on or before the last day of each
February, May, August and November for so long as royalties are payable under this Agreement,
LICENSEE shall render to CALTECH a report in writing, setting forth Net Revenues and the number of
units of Licensed Products sold during the preceding calendar quarter by LICENSEE and Related
Companies, and the royalties or other revenues LICENSEE received from Sublicensees other than
Related Companies during the preceding calendar quarter for the sale of Licensed Products. Each
such report shall also set forth an explanation of the calculation of the royalties payable
hereunder and be accompanied by payment of the royalties shown by said report to be due CALTECH.
Notwithstanding the foregoing, if (i) CALTECH materially breaches
this Agreement, (ii) LICENSEE gives CALTECH written notice of the breach, and (iii) CALTECH
has not cured the breach by the time a payment is due under this Paragraph, then
LICENSEE may make the required payment into an interest bearing escrow account to be
released when the breach is cured, less any damages that may be payable to LICENSEE by
virtue of CALTECH’s breach.

 

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ARTICLE 9

DUE DILIGENCE

9.1 LICENSEE shall have discretion over the commercialization of Licensed Products. However,
LICENSEE agrees to use commercially reasonable efforts to introduce commercial Licensed Product(s)
in the United States as soon as practical, consistent with sound and reasonable business practices
and judgments. LICENSEE shall be deemed to have satisfied its obligations under this Paragraph if
LICENSEE has an ongoing and active research program or marketing program, as appropriate, directed
toward production and use of one or more Licensed Products. Any efforts of LICENSEE’s Sublicensees
shall be considered efforts of LICENSEE for the sole purpose of determining LICENSEE’s compliance
with its obligation under this Paragraph.

9.2 After the First Year from the Effective Date, CALTECH shall have the right, no more often than
twice each year, to require LICENSEE to report to CALTECH in writing on its progress in introducing
commercial Licensed Product(s) throughout the world.

ARTICLE 10

TERM

10.1 This Agreement shall commence on the Effective Date and shall automatically renew on an
annual basis except if terminated by mutual consent or by CALTECH under Paragraph 11.1.

ARTICLE 11

TERMINATION

11.1 CALTECH shall have the right to terminate this Agreement prior to the date it would
otherwise expire pursuant to this Paragraph 11.1 if LICENSEE fails to make any payment due
hereunder and LICENSEE continues to fail to make the payment, either to CALTECH directly or by
placing any disputed amount into an interest bearing escrow account to be released when the dispute
is resolved, for a period of sixty (60) days after receiving notice from CALTECH specifying
LICENSEE’s failure. Upon any such termination, (i) LICENSEE and Related Companies shall have six
(6) months to complete any pending licensing or sublicensing negotiations and/or to complete the
manufacture of any Licensed Products that then are work in progress and to sell their inventory of
Licensed Products,’ provided LICENSEE pays the applicable royalties in accordance with Paragraph
8.2 and (ii) CALTECH shall accept an assignment by LICENSEE of any sublicenses granted by LICENSEE
to entities other than Related Companies, and any sublicense so assigned shall remain in full force
and effect.

11.2 If either party materially breaches this Agreement, the other party may elect to
give the breaching party written notice describing the alleged breach. If the breaching
party has not cured such breach within sixty (60) days after receipt of such notice, the notifying
party will be entitled, in addition to any other rights it may have under this Agreement, to
terminate this Agreement effective immediately; provided, however, that if either party receives
notification from the other of a material breach and if the party alleged to be in default notifies
the other party in writing within thirty (30) days of receipt of such default notice that it
disputes the asserted default, the matter will be submitted to Arbitration as provided in Article
14 of this Agreement. In such event, the non-breaching party shall not have the right
to terminate this Agreement until it has been determined in such arbitration
proceeding that the other party materially breached this Agreement, and the breaching party fails
to cure such breach within ninety (90) days after the conclusion of such arbitration proceeding.

 

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11.3 Termination of this Agreement for any reason shall not release any party hereto from any
liability which, at the time of such termination, has already accrued to the other party or which
is attributable to a period prior to such termination, nor preclude either party from
pursuing any rights and remedies it may have hereunder or at law or in equity which accrued or are
based upon any event occurring prior to such termination.

11.4 Paragraph 11.2 and Articles 1, 14-26 of this Agreement shall survive termination of this
Agreement for any reason.

ARTICLE 12

AGENCY

12.1 CALTECH and LICENSEE are independent parties in this Agreement. Accordingly, there is no
agency, joint venture or partnership relationship between CALTECH and LICENSEE under this
Agreement.

ARTICLE 13

OMITTED

ARTICLE 14

PRODUCT LIABILITY

14.1 LICENSEE agrees that CALTECH shall have no liability to LICENSEE or to any purchasers
or users of Licensed Products made or sold by LICENSEE for any claims, demands, losses, costs, or
damages suffered by LICENSEE, or purchasers or users of such Licensed Products, or any other party,
which may result from personal injury, death, or property damage related to the manufacture, use,
or sale of such Licensed Products (“Claims”). LICENSEE agrees to defend, indemnify, and hold
harmless CALTECH, its trustees, officers, agents, and employees from any such Claims, provided that
(i) LICENSEE is notified promptly of any Claims, (ii) LICENSEE has the sole right to control and
defend or settle any litigation within the scope of this indemnity, and (iii) all indemnified
parties
cooperate to the extent necessary in the defense of any Claims.

14.2 At such time as LICENSEE begins to sell or distribute Licensed Products (other than for the
purpose of obtaining regulatory approvals), LICENSEE shall at its sole expense, procure and
maintain
policies of comprehensive general liability insurance in amounts not less than $1,000,000 per
incident
and $3,000,000 in annual aggregate and naming those indemnified under Paragraph 14.1 as additional
insureds. Such comprehensive general liability insurance shall provide (i) product liability
coverage and (ii) broad form contractual liability coverage for LICENSEE’s indemnification under
Paragraph
14.1. In the event the aforesaid product liability coverage does not provide for occurrence
liability, LICENSEE shall maintain such comprehensive general liability insurance for a reasonable
period of not less than five (5) years after it has ceased commercial distribution or use of any
Licensed Product.

14.3 LICENSEE shall provide CALTECH with written evidence of such insurance upon request of
CALTECH/JPL. LICENSEE shall provide CALTECH with notice at least fifteen (15) days prior to any
cancellation, non-renewal or material change in such insurance, to the extent LICENSEE receives
advance notice of such matters from its insurer. If LICENSEE does not obtain replacement insurance
providing comparable coverage within sixty (60) days following the date of such cancellation,
non-renewal or material change, CALTECH shall have the right to terminate this Agreement effective
at the end of such sixty (60) day period without any additional waiting period; provided that
if LICENSEE uses reasonable efforts but is unable to obtain the required insurance at
commercially
reasonable rates, CALTECH shall not have the right to terminate this Agreement, and
CALTECH instead shall cooperate with LICENSEE to either grant a waiver of LICENSEE’s
obligations under this Article or assist LICENSEE in identifying a carrier
to provide such insurance or in developing a program for self-insurance or other alterative
measures. This Article 14 shall survive the expiration or termination of this
Agreement.

 

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ARTICLE 15

DISCLAIMER OF SOFTWARE AND/OR RELATED MATERIALS

15.1 THE SOFTWARE IS EXPERIMENTAL IN NATURE AND IS BEING LICENSED “AS IS.” THE LICENSE
OF THE SOFTWARE DOES NOT INCLUDE ANY TECHNICAL SUPPORT. CALTECH MAKES NO WARRANTIES,
REPRESENTATION OR UNDERTAKING WITH RESPECT TO THE UTILITY, EFFICACY, SAFETY, OR
APPROPRIATENESS OF USING THE SOFTWARE. CALTECH REPRESENTS AND WARRANTS THAT IT HAS THE
RIGHT TO LICENSE THE SOFTWARE TO LICENSEE AND THAT SOFTWARE IS PROTECTED BY UNITED STATES
COPYRIGHT LAWS AND APPLICABLE INTERNATIONAL TREATIES AND/OR CONVENTIONS.

THE SOFTWARE AND/OR RELATED MATERIALS ARE PROVIDED “AS-IS” WITHOUT
WARRANTY OF ANY KIND INCLUDING ANY WARRANTIES OF PERFORMANCE OR
MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE (as set forth in UCC
3323212-2313) OR FOR ANY PURPOSE WHATSOEVER, FOR THE LICENSED PRODUCT,
HOWEVER USED.

IN NO EVENT SHALL CALTECH/JPL BE LIABLE FOR ANY DAMAGES AND/OR COSTS,
INCLUDING BUT NOT LIMITED TO INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING
ECONOMIC DAMAGE OR INJURY TO PROPERTY AND LOST PROFITS, REGARDLESS OF WHETHER
CALTECH/JPL SHALL BE ADVISED, HAVE REASON TO KNOW, OR IN FACT SHALL KNOW OF THE
POSSIBILITY.
LICENSEE BEARS ALL RISK RELATING TO QUALITY AND PERFORMANCE OF THE
SOFTWARE AND/OR RELATED MATERIALS. CALTECH SHALL NOT BE LIABLE FOR ANY USE OF THE
SOFTWARE OR RELATED KNOWHOW, AND LICENSEE HEREBY AGREES TO DEFEND, INDEMNIFY AND HOLD CALTECH AND
ITS EMPLOYES HARMLESS FROM ANY LOSS, CLAIM, DAMAGE OR LIABILITY, OR
WHATEVER KIND OF NATURE, WHICH MAY ARISE FROM THE AGREEMENT, OR THE USE BY
LICENSEE OF THE SOFTWARE OR RELATED KNOW-HOW HEREUNDER.

ARTICLE 16

MISCELLANEOUS

16.1 LICENSEE agrees that it shall not use the name of CALTECH, or California Institute of
Technology, in any advertising or publicity material, or make any form of representation or
statement which would constitute an express or implied endorsement by CALTECH of any Licensed
Product, and that it shall not authorize others to do so, without first having obtained written
approval from CALTECH, except as may be required by governmental law, rule or regulation.

16.2 This Agreement sets forth the complete agreement of the parties concerning the subject matter
hereof. No claimed oral agreement in respect thereto shall be considered as any part hereof. No
waiver of or change in any of the terms hereof subsequent to the execution hereof claimed to
have been made by any representative of either party shall have any force or effect unless in
writing, signed by duly authorized representatives of the parties.

 

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16.3 This Agreement shall be binding upon and inure to the benefit of any successor or assignee of
CALTECH. This Agreement is not assignable by LICENSEE without the prior written consent of CALTECH,
except that LICENSEE may assign this Agreement without the prior written consent of CALTECH, to any
Related Company, or any successor of, or purchaser of a substantial part of the assets of, the
business to which this Agreement pertains. Any permitted assignee shall succeed to all of the
rights and obligations of LICENSEE under this Agreement.

16.4 Any notice or communication required or permitted to be given or made under this Agreement
shall be addressed as follows:

	 	 	 
	CALTECH/JPL:

	 	Office of Technology Transfer
	 

	 	California Institute of Technology
	 

	 	1200 East California Boulevard (MC 210-85)
	 

	 	Pasadena, CA 91125
	 

	 	Fax No.: (626) 356-2486
	 
	 	 
	LICENSEE:

	 	Arroyo Sciences, Inc.
	 

	 	Attn: CEO
	 

	 	2400 Lincoln Avenue
	 

	 	Altadena, CA 91001
	 

	 	Fax No.: (626) 296-6458

Either party may notify the other in writing of a change of address or fax number, in which event
any subsequent communication relative to this Agreement shall be sent to the last said notified
address or number, provided, however, that the parties shall deliver all material notices under
this Agreement by registered mail or overnight delivery service. All notices and communications
relating to this Agreement shall be deemed to have been given when received.

16.5 In the event that any provisions of this Agreement are determined to be invalid or
unenforceable by a court of competent jurisdiction, the remainder of the Agreement shall remain in
full force and effect without said provision. The parties shall in good faith negotiate a
substitute clause for any provision declared invalid or unenforceable, which shall most nearly
approximate the intent of the parties in entering this Agreement.

16.6 This Agreement may be executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument.

16.7 The headings of the several Paragraphs are inserted for convenience of reference only and are
not intended to be a part of or to affect the meaning or interpretation of this Agreement.

16.8 Whenever provision is made in this Agreement for either party to secure the consent or
approval of the other, that consent or approval shall not unreasonably be withheld or delayed, and
whenever in this Agreement provisions are made for one party to object to or disapprove a matter,
such objection or disapproval shall not unreasonably be exercised.

 

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ARTICLE 17

FORCE MAJEURE

17.1 Neither party shall lose any rights hereunder or be liable to the other party for damages
or losses(except for payment obligations) on account of failure of performance by the defaulting
party if the failure is occasioned by war, strike, fire, Act of God, earthquake, flood,
lockout, embargo, governmental acts or orders or restrictions, failure of suppliers, or any other
reason where failure to perform is beyond the reasonable control and not caused by the negligence
or intentional conduct or misconduct of the nonperforming party, and such party has exerted all
reasonable efforts to avoid or remedy such force majeure; provided, however, that in no event shall
a party be required to settle any labor dispute or disturbance.

ARTICLE 18

EXPORT REGULATION

18.1 If at any time after LICENSEE has received the Software and/or Related Materials and has
reason to transfer the Software and/or Related Materials or Product incorporating the Software
and/or Related Materials to its subsidiary, associated or related company, either within or outside
of the United States, LICENSEE shall immediately notify CALTECH of such fact before executing the
delivery. When exporting CALTECH Software and/or Related Materials or Product incorporating such
Software to a foreign entity, LICENSEE shall comply with all federal export laws and statutes. In
the event an export license is required to execute the transfer, LICENSEE shall apply and obtain
approval for such license through the appropriate U.S. government agency. Warning: An
unsecured internet transfer (ftp) is an export for purposes of this Agreement,
even if the destination address is a domestic site.

ARTICLE 19

SUPPORT, MAINTENANCE AND UPGRADES

19.1 No Software or technical support, training or upgrades are provided by CALTECH as part of this
Agreement; provided, however, that CALTECH shall provide best efforts to transfer the Software to
LICENSEE.

ARTICLE 20

RESTRICTED RIGHTS LEGEND

20.1 Use, duplication, or disclosure by the Government is subject to the restrictions as set forth
in FAR 352.227-14 (JUN 1987) Alternate III (g)(3), FAR 352.227-19
(JUN 1987), DFARS 3252.211-7015 (MAY 1991) or DFARS 3252.227-7013 (c)(I)(ii) (OCT
1988), as applicable. Contractor/Manufacturer is California Institute of Technology, Pasadena,
California.

ARTICLE 21

SEVERABILITY

21.1 If any provision(s) of this Agreement shall be held to be invalid, illegal, or unenforceable
by a court or other tribunal of competent jurisdiction, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired thereby.

 

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ARTICLE 22

NO IMPLIED WAIVERS

22.1 No failure or delay by CALTECH/JPL in enforcing any right or remedy under this Agreement shall
be construed as a waiver of any future or other exercise of such right or remedy by CALTECH/JPL.

ARTICLE 23

TAXES

23.1 LICENSEE agrees to pay any and all taxes (if applicable) on any amounts of royalties and/or
fees paid by LICENSEE to LICENSOR hereunder.

ARTICLE 24

GOVERNING LAW

24.1 This Agreement, entered into in the County of Los Angeles, shall be construed and enforced in
accordance with and be governed by the laws of the State of California without reference to
conflict of laws principles. The parties hereby consent to the personal jurisdiction of the courts
within the State of California.

ARTICLE 25

ENTIRE AGREEMENT AND AMENDMENTS

25.1 This Agreement constitutes the sole and entire agreement of the parties as to the matter set
forth herein and supersedes any previous agreements, understandings, and arrangements between the
parties relating hereto.

SIGNATURES FOLLOW

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be effective, valid,
and binding upon the parties as of the date below as executed by their duly authorized
representatives.

	 	 	 	 	 	 	 
	Accepted and Agreed:	 	 	 	 
	Arroyo Science, Inc (LICENSEE)	 	California Institute of Technology (CALTECH)
	 
	 	 	 	 	 	 
	By:

	 	/s/ Carl Kukkonen
	 	By:
	 	/s/ Lawrence Gilbert
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Authorized Signature	 	Authorized Signature
	 
	 	 	 	 	 	 
	Printed Name: Carl Kukkonen	 	Printed Name: Lawrence Gilbert
	 
	 	 	 	 	 	 
	Title: CEO	 	Title: Director Tech Transfer
	 
	 	 	 	 	 	 
	Date: 6/19/03	 	Date: 6/19/03

 

11exv10w19

 

Exhibit 10.19

NONEXCLUSICE

SOFTWARE LICENSE AGREEMENT

This license agreement (“Agreement”) is effective as of the 28th day of September,
2004 (“Effective Date”) between Arroyo Sciences, Inc. a Delaware corporation located at 2400
Lincoln Avenue, Altadena, CA 91001 (hereinafter called “Licensee”) and the California Institute of
Technology, a not-for-profit California corporation, located at 1200 E. California Blvd., Pasadena,
CA 91125 (“Caltech’’) and its operating division, the Jet Propulsion Laboratory (“JPL”). All rights
not specifically granted in this Agreement are reserved to Caltech.

ARTICLE 1

DEFINITIONS

The following words, phrases, or terms in this Agreement shall have the following meanings:

1.1 “SHINE” means Executable Code and Source Code pertaining to Spacecraft Health Inference Engine
(SHINE) and associated programs and tools including: SHINE Development Environment software, SHINE
Delivery Environment (including, inter alia, SHINE cross-compiler) software.

1.2 “Executable Code” means computer software programs, not readily perceivable by humans, and
suitable for machine execution without the intervening steps of interpretation or compilation.

1.3 “Source Code” means computer software programs not in machine-readable format and Not suitable
for machine execution without the intervening steps of interpretation or compilation.

1.4 “Software” means copyright rights, as defined by United States copyright laws and applicable
international treaties and/or conventions, as well as any other legally recognized intellectual
property rights to the suite of programs, scripts, and manuals received from Caltech that
constitute SHINE.

1.5. “Derivative Works” means any work consisting of revisions, annotations, elaborations, or other
modifications to Software which, as a whole, represent an original work of authorship. Derivative
Works includes any updates and new releases developed during the term of this license, inclusive of
backups, updates, or merged copies permitted hereunder including the file structures, programming
instructions, user interfaces and screen formats and sequences.

1.6 “Licensed Product” means any product, device, service, which comprises, incorporates, is made
by, is enabled by, is designed by, or uses the Software.

1.7 “Sublicense” shall mean, with respect to a particular Licensed Product, an agreement with a
third party to whom Licensee has granted a right under this Agreement to make, have made, import,
have imported, use, have used, sell, have sold, offer for sale, have offered for sale, import, have
imported and otherwise exploit Licensed Products. Sublicenses shall not include Source Code, and
may be for Executable Code only. Sublicenses shall not permit the sublicensee to redistribute code
to additional parties.

1.8 “Net Revenue” shall mean gross revenue from the use of the Software including, but not limited
to, any sale, license, sublicense, lease, service, maintenance, upgrade or support activities, or
distribution less Deductible Expenses.

 

1

 

1.9 “Deductible Expenses” means the following items incurred in connection with sales of Licensed
Products to the extent paid or allowed by Licensee and included in accordance with recognized
principles of accounting in the gross sales price billed: (i) sales, use or turnover taxes; (ii)
excise value added or other taxes, custom duties or consular fees; (iii) transportation, freight,
and handling charges, and insurance on shipments to customers; (iv) trade, cash or quantity
discounts or rebates to the extent actually granted; (v) agent fees or commissions; (vi) rebates,
refunds, and credits for any rejected or returned Software or because of retroactive price
reductions, rebates or chargebacks; and (vii) uncollected accounts receivable attributable to sales
of Software.

1.10 “Related Company” means any corporation, Limited Liability Company or other legal entity
directly or indirectly controlled by Licensee or its successors or assigns, or any successor or
..assign of such an entity. For the purpose of this Agreement, “control” shall mean the direct or
indirect ownership of at least fifty percent (50%) of the outstanding shares or other voting rights
of the subject entity to elect directors, or if not meeting the preceding, any entity owned or
controlled by or owning or controlling at the maximum control or ownership right permitted in the
country where such entity exists.

ARTICLE 2

CONFIDENTIALITY

2.1 Except as expressly provided herein, each party agrees not to disclose any terms of this
Agreement to any third party without the consent of the other party; provided, however, that
disclosures may be made as required by securities laws or other applicable laws, or to actual or
prospective investors or corporate partners, or to a party’s accountants, attorneys, and or other
professional advisors.

ARTICLE 3

COPYRIGHT MARKING

3.1 Licensee will mark, in at least one conspicuous location, a notice that the Software and
Related Materials are owned by Caltech. All marking should include: © [2004] California
Institute of Technology, Pasadena, California. ALL RIGHTS RESERVED. Based on Government Sponsored
Research NAS7-03001.

ARTICLE 4

GRANT OF LICENSE

4.1 Caltech hereby grants to Licensee a nonexclusive nontransferable license to Software, with
the right to sublicense (in the form of a Sublicense), to make, have made, import, have imported,
use, have used, sell, have sold, offer for sale, have offered for sale, import, have imported and
otherwise exploit Licensed Products throughout the world. Caltech also hereby grants to Licensee a
nonexclusive license throughout the world, with the right to sublicense, to Related Materials to
make, have made, import, have imported, use, have used, sell, have sold, offer for sale, have
offered for sale, import, have imported and otherwise exploit Licensed Products,

4.2 Caltech retains ownership of any copyright rights to the Software (as defined above),
licensed under this Agreement.

4.3 Licensee agrees to grant Caltech a fully paid-up, royalty-free nonexclusive license for
educational and research purposes to any Derivative Works of Software that are owned in whole or in
part by Licensee and that are made available to the general public.

 

2

 

4.4 This Agreement is not assignable by Licensee to any party without the express written consent
of
Caltech, provided, however, that Licensee may assign this Agreement to a third party that acquires
substantially all of Licensee’s assets relating to this Agreement.

ARTICLE 5

USES NOT PERMITTED

5.1 Licensee may not remove or obscure any copyright or trademark notices.

5.2 The Software shall not become subject to application for patent or copyright by Licensee.

5.3 Licensee may install a reasonable number of copies of Software and shall use best efforts to
minimize the number of copies installed in order to prevent the unauthorized access or transfer of
Software. Licensee may not install any copies of Software on computers that are not owned or leased
by Licensee, its customers, sublicensees, or its Affiliates.

ARTICLE 6

ROYALTIES

6.1 Licensee agrees to pay to Caltech, on a quarterly basis, two and a half percent (2.5%) of
the Net Revenues received from the sale or licensing of Software or Licensed Products.

6.2 Licensee agrees to pay to Caltech, on a quarterly basis and in lieu of the royalties payable
under
Paragraph 6.1 hereunder, a reach through royalty of two and a half percent (2.5%) of the Net
Revenues received by sublicensees (pursuant to a Sublicense) for their sale or sublicensing of
Software or Licensed Products.

6.3 Licensee also agrees to pay minimum annual royalties, upon invoice by Caltech, and credited
against royalties payable under Paragraphs 6.1 and 6.2 for the next subsequent year, beginning on
the second anniversary of the Effective Date of this Agreement as follows:

(a) Ten thousand dollars ($10,000.00) due on the second anniversary of the Effective Date

(b) Ten thousand dollars ($10,000.00) due on the third anniversary of the Effective Date

(c) Twelve and a half thousand dollars ($12,500.00) due on the fourth anniversary of the Effective Date

(d) Fifteen thousand dollars ($15,000.00) due on the fifth anniversary of the Effective Date

(e) Seventeen and a half thousand dollars ($17,500.00) due on the sixth anniversary of the Effective Date

(I) Twenty thousand dollars ($20,000.00) due on the seventh anniversary of the Effective
Date and each anniversary thereafter prior to the end of the Term defined in Article 8 of this
Agreement.

ARTICLE 7

DUE DILIGENCE

7.1 Licensee shall have discretion over the commercialization of Licensed Products. However,

Licensee agrees to use commercially reasonable efforts to introduce commercial Licensed Product(s)
in the United States as soon as practical, consistent with sound and reasonable business practices
and judgments. Licensee shall be deemed to have satisfied its obligations under this
Paragraph if Licensee has an ongoing and active research program or marketing program, as
appropriate, directed toward production and use of one or more Licensed Products. Any efforts of
Licensee’s sublicensees (pursuant to a Sublicense) shall be considered efforts of Licensee for the
sole purpose of determining Licensee’s compliance with its obligation under this Paragraph.

 

3

 

7.2 After the First Year from the Effective Date, Caltech shall have the right, no more often than
twice each year, to require Licensee to report to Caltech in writing on its progress in introducing
commercial Licensed Product(s) throughout the world.

ARTICLE 8

TERM

8.1 This Agreement shall commence on the Effective Date and continue for a period of ten
(10)years (“Term”), unless otherwise extended by the mutual agreement of the parties in
writing, terminated by Licensee with thirty (30) days advanced written notice to
Caltech. Notwithstanding the preceding sentence, Licensee shall be entitled to extend
the term of this Agreement for an additional ten (10) year period and subject to the
terms and conditions herein, provided, however, that Licensee provides Caltech with
ninety (90) days advanced written notice prior to the expiration of the first ten (10) year period.
At the end of the Term, Licensee shall return all copies of Software or certify their destruction.

ARTICLE 9

TERMINATION

9.1 If either party materially breaches this Agreement, the other party may elect to give the
breaching party written notice describing the alleged breach. If the breaching party has not cured
such breach within sixty (60) days after receipt of such notice, the notifying party will be
entitled, in addition to any other rights it may have under this Agreement, to terminate this
Agreement effective immediately; provided, however, that if either party receives notification from
the other of a material breach and if the party alleged to be in default notifies the other party
in writing within thirty (30) days of receipt of such default notice.

9.2 Licensee shall have the right to terminate this Agreement either in its entirety or as to any
jurisdiction or any part of the Software upon sixty (60) days written notice.

9.3 Termination of this Agreement for any reason shall not release any party hereto from any
liability which, at the time of such termination, has already accrued to the other party or which
is attributable to a period prior to such termination, nor preclude either party from pursing any
rights and remedies it may have hereunder or at law or in equity which accrued or are based upon
any event occurring prior to such termination

9.4 Articles I, 11-22 of this Agreement shall survive termination of this Agreement for any reason.

ARTICLE 10

RELATIONSHIP OF THE PARTIES

10.1 Caltech and Licensee are independent parties in this Agreement. Accordingly, there is no
agency, joint venture or partnership relationship between Caltech and Licensee under this
Agreement.

 

4

 

ARTICLE 11

PRODUCT LIABILITY

11.1 Indemnification: Licensee agrees that Caltech (including its trustees, officers,
faculty and employees) shall have no liability to Licensee its affiliates, their customers or any
third party, for claims, demands, losses, costs, or other damages, which may result from personal
injury, death, or property damage related to the Licensed Products (“Product Liability Claims”).
Licensee agrees to defend,
indemnify, and hold harmless Caltech, its trustees, officers, agents, faculty and employees from
any such Product Liability Claims, provided that: (a) Licensee is notified promptly of any Product
Liability Claims, (b) Licensee has the sole right to control and defend or settle any
litigation within the scope of this indemnity, and (c) all indemnified parties cooperate to the
extent necessary in the defense of any Product Liability Claims.

11.2 Insurance: Prior to such time as Licensee begins to exploit Licensed Products as
provided by Paragraph 4. I hereunder, Licensee shall at its sole expense, procure and maintain
policies of comprehensive general liability insurance in amounts not less than $1,000,000 per
incident and $3,000,000 in annual aggregate and naming those indemnified under Paragraph 11.1 as
additional insureds. Such comprehensive general liability insurance shall provide (a) product
liability coverage and (b) broad form contractual liability coverage for Licensee’s
indemnification under Paragraph ILL In the event the aforesaid product liability coverage
does not provide for occurrence liability, Licensee shall maintain such comprehensive general
liability insurance for a reasonable period of not less than five (5) years after it has ceased
commercial distribution or use of any Licensed Product. Licensee shall provide Caltech with written
evidence of such insurance upon request of Caltech.

11.3 Loss of Coverage: Licensee shall provide Caltech with notice at least fifteen (15)
days prior to any cancellation, non-renewal or material change in such insurance, to the extent
Licensee receives advance notice of such matters from its insurer. If Licensee does not obtain
replacement insurance providing comparable coverage within sixty (60) days following the date of
such cancellation, non renewal or material change, Caltech shall have the right to terminate this
Agreement effective at the end of such sixty (60) day period without any additional waiting period;
provided that if Licensee credible written evidence that it has used reasonable efforts, but is
unable to obtain the required insurance, Caltech shall not have the right to terminate this
Agreement, and Caltech instead shall cooperate with Licensee to either (at Caltech’s discretion)
grant a limited waiver of Licensee’s obligations under this Article or assist Licensee in
identifying a carrier to provide such insurance or in developing a program for self-insurance or
other alternative measures.

 

5

 

ARTICLE 12

DISCLAIMER

12.1 THE SOFTWARE IS EXPERIMENTAL IN NATURE AND IS BEING LICENSED “AS IS.” THE LICENSE OF THE
SOFTWARE DOES NOT INCLUDE ANY TECHNICAL SUPPORT. CALTECH MAKES NO WARRANTIES, REPRESENTATION OR
UNDERTAKING WITH RESPECT TO THE UTILITY, EFFICACY, SAFETY, OR APPROPRIATENESS OF USING THE
SOFTWARE. CALTECH REPRESENTS AND WARRANTS THAT IT HAS THE RIGHT TO LICENSE THE SOFTWARE TO LICENSEE
AND THAT SOFTWARE IS PROTECTED BY UNITED STATES COPYRIGHT LAWS AND APPLICABLE INTERNATIONAL
TREATIES AND/OR CONVENTIONS.

THE SOFTWARE ARE PROVIDED “AS-IS” WITHOUT WARRANTY OF ANY KIND INCLUDING ANY WARRANTIES OF
PERFORMANCE OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE (as set forth in UCC
§§23212-2313) OR FOR ANY PURPOSE WHATSOEVER, FOR THE LICENSED PRODUCT, HOWEVER USED.

IN NO EVENT SHALL CALTECH BE LIABLE FOR ANY DAMAGES AND/OR COSTS, INCLUDING BUT NOT LIMITED TO
INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING ECONOMIC DAMAGE OR INJURY TO PROPERTY
AND LOST PROFITS, REGARDLESS OF WHETHER CALTECH SHALL BE ADVISED, HAVE REASON TO KNOW, OR IN FACT
SHALL KNOW OF THE POSSIBILITY.

LICENSEE BEARS ALL RISK RELATING TO QUALITY AND PERFORMANCE OF THE SOFTWARE.

CALTECH SHALL NOT BE LIABLE FOR ANY USE OF THE SOFTWARE OR RELATED KNOWHOW,
AND LICENSEE HEREBY AGREES TO DEFEND, INDEMNIFY AND HOLD CALTECH AND ITS EMPLOYES HARMLESS FROM ANY
LOSS, CLAIM, DAMAGE OR LIABILITY, OR WHATEVER KIND OF NATURE, WHICH MAY ARISE FROM THE AGREEMENT,
OR THE USE BY LICENSEE OF THE SOFTWARE OR RELATED KNOW-HOW HEREUNDER.

ARTICLE 13

MISCELLANEOUS

13.1 Licensee agrees that it shall not use the name of Caltech, California Institute of Technology,
Jet Propulsion Laboratory, or JPL in any advertising or publicity material, or make any form of
representation or statement which would constitute an express or implied endorsement by Caltech of
any Licensed Product, and that it shall not authorize others to do so, without first having
obtained written approval from Caltech, except as may be required by governmental law, rule or
regulation.

13.2 This Agreement shall be binding upon and inure to the benefit of any successor or assignee of
Caltech and Licensee.

13.3 Any notice or communication required or made under this Agreement shall be addressed as
follows:

	 	 	 	 	 
	 

	 	CALTECH:
	 	Director, Office of Technology Transfer
	 

	 	 	 	California Institute of Technology
	 

	 	 	 	1200 East California Boulevard (MC 210-85)
	 

	 	 	 	Pasadena, CA 91125 
	 

	 	 	 	Fax No.: (626) 356-2486 
	 
	 	 	 	 
	 

	 	LICENSEE:
	 	Arroyo Sciences, Inc.
	 

	 	 	 	Attn: CEO
	 

	 	 	 	2400 Lincoln Avenue
	 

	 	 	 	Altadena, CA 9100 I
	 

	 	 	 	Fax No.: (626) 296-6311 

 

6

 

Either party may notify the other in writing of a change of address or fax number, in which event
any subsequent communication relative to this Agreement shall be sent to the last said notified
address or number, provided, however, that the parties shall deliver all material notices under
this Agreement by registered mail or overnight delivery service. All notices and communications
relating to this Agreement shall be deemed to have been given when received.

13.5 In the event that any provisions of this Agreement are determined to be invalid or
unenforceable by a court of competent jurisdiction, the remainder of the Agreement shall remain in
full force and effect without said provision. The parties shall in good faith negotiate a
substitute clause for any provision declared invalid or unenforceable, which shall most nearly
approximate the intent of the parties in entering this Agreement.

13.6 This Agreement may be executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument.

13.7 The headings of the several Paragraphs are inserted for convenience of reference only and are
not intended to be a part of or to affect the meaning or interpretation of this Agreement.

13.8 Whenever provision is made in this Agreement for either party to secure the consent Or
approval of the other, that consent or approval shall not unreasonably be withheld or delayed, and
whenever in this
Agreement provisions are made for one party to object to or disapprove a matter, such objection or
disapproval shall not unreasonably be exercised.

ARTICLE 14

FORCE MAJEURE

14. Neither party shall lose any rights hereunder or be liable to the other party for damages or
losses (except for payment obligations) on account of failure of performance by the defaulting
party if the failure is occasioned by war, strike, fire, Act of God, earthquake, flood, lockout,
embargo, governmental acts or orders or restrictions, failure of suppliers, or any other reason
where failure to perform is beyond the reasonable control and not caused by the negligence or
intentional conduct or misconduct of the nonperforming party, and such party has exerted all
reasonable efforts to avoid or remedy such force majeure; provided, however, that in no event shall
a party be required to settle any labor dispute or disturbance.

 

7

 

ARTICLE 15

EXPORT REGULATION

15.1 If at any time after Licensee  has received the Software and has reason to transfer the
Software or Licensed Product incorporating the Software to its subsidiary, associated or related company,
either within or outside of the United States, Licensee shall immediately notify Caltech of such
fact before executing the delivery. When exporting Caltech Software or Licensed Product
incorporating such Software to a foreign entity, Licensee shall comply with all federal export laws
and statutes. In the event an export license is required to execute the transfer,
Licensee shall apply and obtain approval for such license through the appropriate U.S. government
agency. Warning: An unsecured internet transfer (ftp) is an export for purposes of this
Agreement, even if the destination address is a domestic site.

ARTICLE 16

SUPPORT, MAINTENANCE AND UPGRADES

16.1 No upgrades or support are provided under this Agreement.

ARTICLE 17

MISCELLANEOUS

17.1 If any provision(s) of this Agreement shall be held to be invalid, illegal, or
unenforceable by a court or other tribunal of competent jurisdiction, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

17.2 No failure or delay by Caltech in enforcing any right or remedy under this Agreement shall be
construed as a waiver of any future or other exercise of such right or remedy by Caltech.

17.3 Licensee agrees to pay any and all taxes (if applicable) on any amounts of royalties and/or
fees paid by Licensee to Caltech hereunder.

 

8

 

17.4 This Agreement, entered into in the County of Los Angeles, shall be construed and enforced in
accordance with and be governed by the laws of the State of California without reference to
conflict of laws principles, The parties hereby consent to the exclusive personal jurisdiction and
venue of the courts within the State of California,

17.5 This Agreement constitutes the sole and entire agreement of the parties as to the matter set
forth herein and supersedes any previous agreements, understandings, and arrangements, whether oral
or written, between the parties relating hereto. No waiver of or change in any of the terms hereof
subsequent to the execution hereof claimed to have been made by any representative of either party
shall have any force or effect unless in writing, signed by duly authorized representatives of the
parties.

SIGNATURES

IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be effective, valid, and
binding upon the parties as of the date below as executed by their
duly authorized representatives.

	 	 	 	 	 	 	 
	Arroyo Science, Inc.	 	California Institute of Technology
	(Licensee)	 	(Caltech)
	 
	 	 	 	 	 	 
	By:

	 	/s/ Carl Kukkonen
	 	By:
	 	/s/ Richmond Wolf
	 

	 	 
	 	 	 	 
	Authorized Signature	 	Authorized Signature
	 
	 	 	 	 	 	 
	Printed Name: Carl Kukkonen	 	Printed Name: Richmond Wolf
	Title: CEO	 	Title: Director
	Date: 9/28/04	 	Date: 9/10/04

 

9

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