Document:

Exhibit 10.13

 

LICENSE AGREEMENT

 

This Agreement is made and entered into as of
the 13th day of February 2002, by and between the
UNIVERSITY OF PITTSBURGH - OF THE COMMONWEALTH SYSTEM OF HIGHER EDUCATION, a
non- profit corporation, organized and existing under the laws of the
Commonwealth of Pennsylvania, having its principal office at 4200 Fifth Avenue,
Pittsburgh, Pennsylvania 15260 (UNIVERSITY), and MEDQUEST PRODUCTS, INC having
its principal office at 825 North 300 West, Suite NE 107, Salt Lake City, UT
84103 (LICENSEE),

 

WHEREAS, UNIVERSITY, Magnetic Moments, LLC (“MM”)
and the National Aeronautics and Space Administration (“NASA” are the owners of
certain PATENT RIGHTS, entitled “Magnetically Suspended Miniature Fluid Pump
and Method of Making the Same” developed by Dr. James F. Antaki and Gregory
Burgreen of the UNIVERSITY faculty, Bradley Paden of MM and Nelson Groom of
NASA, and the UNIVERSITY has the right to grant licenses under such PATENT
RIGHTS;

 

WHEREAS, UNIVERSITY and NASA have entered into
an Agreement Concerning Licensing of the Jointly Owned Invention “Magnetically
Suspended Miniature Fluid Pump and Method of Making the Same,” dated July 20,
1998 (“NASA Agreement”), pursuant to which NASA granted UNIVERSITY the right to
negotiate licenses to the PATENT RIGHTS on NASA’s behalf, subject to certain
conditions;

 

WHEREAS, UNIVERSITY and Bradley Paden and MM
have entered into an Agreement dated April 24, 1998, assigning all of Bradley
Paden’s and MM’s interest in the PATENT RIGHTS to UNIVERSITY;

 

WHEREAS, UNIVERSITY has a non-exclusive
license to certain technology, entitled “Speed Control System for Implanted
Blood Pumps,” US. Patent No. 5,888,242 (filed November 1, 1996), and US. Patent
No. 6,066,086 Speed control system for implanted blood pumps (filed March 4,
1998), including the right to sublicense such technology (“LICENSE RIGHTS”), as
more fully described below;

 

WHEREAS, UNIVERSITY desires to have the PATENT
RIGHTS and LICENSE RIGHTS (collectively “TECHNOLOGY”) utilized in the public
interest;

 

WHEREAS, LICENSEE or its principals are
experienced in the development, production, manufacture, marketing and sale of
PRODUCTS as defined below, and/or the use of technology similar to the
TECHNOLOGY and that LICENSEE shall commit itself to a thorough, vigorous and
diligent program of exploiting the TECHNOLOGY primarily through the development
and commercialization of PRODUCTS so that public utilization results therefrom;

 

WHEREAS, LICENSEE has obtained other licenses
and has entered into agreements, such agreements being separate and distinct
from this agreement, which give it exclusive ownership of, claims on, and/or
rights to license related technology from other third parties, including
LICENSEE’S AFFILIATES as defined below, including those that have had or
continue to have separate relationships and agreements with the UNIVERSITY;

 

and

 

WHEREAS, LICENSEE desires to obtain a license
to the TECHNOLOGY upon the terms and conditions hereinafter set forth.

 

ARTICLE
1 - DEFINITIONS

 

For purposes of this Agreement, the following
words and phrases shall have the following meanings:

 

1.1           AFFILIATE shall mean, with respect
to UNIVERSITY, any clinical or research entity in Pittsburgh which is operated
or managed as a facility under the UPMC Health System, whether or not owned by
UNIVERSITY.

 

1.2           LICENSEE shall mean MEDQUEST
PRODUCTS, INC. and all entities at least fifty percent (50%) owned or
controlled by MEDQUEST PRODUCTS, INC.

 

 

1.3           AFFILIATE shall mean, with respect
to LICENSEE, any third party that is directly or indirectly under the control
of MedQuest, that is under common control with MedQuest, or that controls
MedQuest. As used herein, the term “control” shall mean possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of an entity, whether through the ownership of voting securities, by
contract, or otherwise, and the term “entity” shall include without limitation
an individual, corporation, or other organization.

 

1.4           LICENSE RIGHTS shall mean the technology
entitled “Speed Control System for Implanted Blood Pumps,” U.S. Patent No.
5,888,242 (filed November 1, 1996), and U.S. Patent No. 6,066,086 Speed control
system for implanted blood pumps (filed March 4, 1998) that are the subject of
the Assignment of PATENT LICENSE AGREEMENT between UNIVERSITY and Argonaut
Medical, Inc., dated August 20, 1998, plus any divisionals, continuations,
continuations-in-part, re-examinations, re-issues, renewals or extensions of
these patents.

 

1.5           PATENT RIGHTS shall mean UNIVERSITY
intellectual property described below:

 

(a)           The United States and foreign
patents and/or patent applications listed in Exhibit A;

 

(b)           United States and foreign patents
issued from the applications listed in Exhibit A and from divisionals, continuations,
continuations-in-part, re-examinations, re-Issues, renewals or extensions of
these applications issued from such applications;

 

(c)           Claims of U.S. and foreign
continuation-in-part applications, and of the resulting patents, which are
directed to subject matter specifically described in the U.S. and foreign
applications listed in Exhibit A; and

 

(d)           Claims of all foreign patent
applications, and of the resulting patents, which are directed to subject
matter specifically described in the United States patents and/or patent
applications described in (a), (b) or (c) above

 

1.6           PRODUCT OR PRODUCTS shall mean an
implantable blood pump using rotation means to pump blood and its supporting
components.

 

1.7           NET SALES shall mean LICENSEE’s and
any sublicensee’s invoice price for products or processes included in
TECHNOLOGY and produced hereunder less the sum of the following:

 

(a)           Actual cost of freight charges or
freight absorption, separately stated in such invoice;

 

(b)           Actual trade, quantity or cash discounts
allowed, if any;

 

(c)           Sales taxes, tariff duties, excise
taxes, and/or use taxes separately stated on each invoice;

 

(d)           Allowances, credits, and write-offs
for rejections or returns.

 

1.8           FIELD shall mean implantable blood
pumps.

 

ARTICLE
2 - GRANT

 

2.1           UNIVERSITY hereby grants to
LICENSEE, to the extent it may lawfully do so, the right and worldwide
exclusive license to make, have made, use, sell, offer for sale or import
PRODUCTS in the FIELD under the PATENT RIGHTS to the end of the term for which
the PATENT RIGHTS are granted, and the worldwide nonexclusive sublicense to
make, have made, use, sell, offer for sale or import PRODUCTS under the LICENSE
RIGHTS, to the end of the term for which the LICENSE RIGHTS are granted, in
each case unless this Agreement is terminated sooner as provided herein. The
license granted hereby is subject to the rights of the United States
government, if any, as set forth in 35 U.S.C. Section 200, et seq.

 

2.2           Rights to AFFILIATES. The rights licensed to LICENSEE hereunder
shall extend to its AFFILIATES designated in writing by LICENSEE, provided each
such AFFILIATE agrees in writing to be bound by the terms and conditions of
this Agreement except that AFFILIATE will only have any right to make and/or
sell the TECHNOLOGY to 

 

 

serve the development and
commercialization milestones of MedQuest, which right can be withdrawn by
MedQuest. MedQuest agrees to be fully responsible for the performance of such
authorized AFFILIATES hereunder.

 

2.3           UNIVERSITY shall not grant any
other license to the PATENT and/or LICENSE RIGHTS.

 

2.4           UNIVERSITY and NASA reserve the
royalty-free, non-exclusive right to practice under the PATENT RIGHTS and to
use the TECHNOLOGY for their own non-commercial education and research
purposes. UNIVERSITY reserves the royalty-free, non-exclusive right to practice
under the LICENSE RIGHTS for its own non-commercial education and research
purposes.

 

2.5           The license granted hereunder shall
not be construed to confer any rights upon LICENSEE by implication, estoppel or
otherwise as to any technology not specifically set forth in Exhibit A hereof.

 

2.6           Sublicensing. LICENSEE shall have the exclusive
right under PATENT RIGHTS and the nonexclusive right under LICENSE RIGHTS to
grant sublicenses to third parties other than AFFILIATES (“Sublicensees”) in
its discretion. Any such sublicenses shall incorporate all of the terms and
conditions of this Agreement. Termination of this Agreement or the License
shall act to terminate any such sublicenses; except that any Sublicensee whose
sublicense is in good standing with MedQuest may elect to maintain its
sublicense by advising UNIVERSITY, within sixty (60) days of such Sublicensee’s
receipt of written notice from LICENSEE or UNIVERSITY of such termination, of
its election and agreement to assume with respect to UNIVERSITY all the
obligations contained in its sublicense with LICENSEE.

 

ARTICLE
3 - DUE DILIGENCE

 

3.1           LICENSEE shall use its best efforts
to bring PRODUCTS to market through a thorough, vigorous and diligent program
for exploitation of the PATENT RIGHTS and LICENSE RIGHTS throughout the
pendency of this Agreement.

 

3.2           In addition, LICENSEE shall adhere
to each of the following milestones:

 

(a)           Finalization of first PRODUCT
design by no later than December 31,2003;

 

(b)           Commence a human clinical trial
with first PRODUCT by no later than December 31, 2004;

 

(c)           Obtain regulatory approval for
commercial sale of first PRODUCT by no later than December 31, 2006.

 

3.3           LICENSEE’s failure to perform in
accordance with Section 3.1 or to fulfill on a timely basis any one of the
milestones set forth in Section 3.2 hereof shall be grounds for UNIVERSITY to
terminate this Agreement, pursuant to Article 11, and upon termination all
rights and interest to the TECHNOLOGY, PATENT RIGHTS, and LICENSE RIGHTS shall
revert to UNIVERSITY.

 

ARTICLE
4 - ROYALTIES AND OTHER LICENSE CONSIDERATION

 

4.1           In consideration of the rights,
privileges and license granted by UNIVERSITY hereunder, LICENSEE shall pay
royalties and other monetary consideration as follows:

 

(a)           Initial license fees,
non-refundable and non-creditable against royalties, of Fifty Thousand Dollars
($50,000) due as follows:

 

(i)            $10,000 immediately upon execution
of this Agreement;

 

(ii)           $20,000 on or before June 1, 2002;
and

 

(iii)          $20,000 on or before December 1,
2002.

 

(b)           Royalties in an amount equal to
one-tenth of one percent (0.1%) of NET SALES of PRODUCTS utilizing or
incorporating TECHNOLOGY, payable per calendar quarter; and

 

 

(c)           Annual maintenance fees, non-refundable
and non-creditable against royalties, will paid as follows:

 

(i)            $15,000 on or before May 1,2003;

 

(ii)           $20,000 on or before May 1, 2004;

 

(iii)          $40,000 on or before May 1,2005;

 

(iv)          $50,000 on or before May 1, 2006;
and

 

(v)           $75,000 on or before May 1, 2007,
and annually thereafter, until gross sales of PRODUCTS utilizing or
incorporating TECHNOLOGY during the preceding twelve (12) month period is
greater than Five Hundred Thousand Dollars ($500,000).

 

4.2           Ninety percent (90%) of all
payments due hereunder shall be paid to UNIVERSITY in United States dollars and
ten percent (10%) of such royalty payments shall be paid to NASA, to the extent
NASA has rights in the TECHNOLOGY, and directed to the addresses set forth in
Section 12 hereof. Royalty payments, pursuant to Section 4.1(b), shall be paid
within thirty (30) days after each March 31, June 30, September 30 and December
31. The maintenance payments, pursuant to Section 4.1(c) above, shall be paid
in like manner by the respective dates set forth in Section 4.1(c) above.

 

4.3           Payments pursuant to this
Agreement, which are overdue shall bear interest calculated from the due date
until payment is received at the rate of eight percent (8%) per annum.

 

4.4           Licensee shall sell PRODUCTS and/or
process resulting from TECHNOLOGY to UNIVERSITY and is AFFILIATES upon request
at such price(s) and on such terms and conditions as such PRODUCTS and/or
proceses are made available to LICENSEE’s most favored customer.

 

ARTICLE
5 – REPORTS

 

5.1           Within (3) days after each march
31, June 30, September 30 and December 31 of each year during the term of this
agreement and starting with the calendar year in which NET SALES first occur,
LICENSEE shall deliver to UNIVERSITY and to NASA true, accurate and detailed
reports of the following information in a form acceptable to UNIVERSITY:

 

(a)           Number of PRODUCTS utilizing or
incorporating TECHNOLOGY manufactured and sold by LICENSEE and all
sublicensees;

 

(b)           Total billings for all such
products;

 

(c)           Accounting for all TECHNOLOGY
processes used or sold by LICENSEE and all sublicensees;

 

(d)           Deductions set forth in Section
1.5;

 

(e)           Total royalties due; and

 

(f)            Name and addresses of sublicensees.

 

5.2           If no royalties shall be due
hereunder once NET SALES occur, LICENSEE shall so advise UNIVERSITY and NASA in
writing within thirty (30) days after the end of any calendar quarter for which
no royalties are due

 

5.3           LICENSEE shall keep full, true and
accurate books of account, in accordance with generally accepted accounting
principles, containing all information that may be necessary for the purpose of
showing the amounts payable to UNIVERSITY and NASA hereunder. Such books of
account shall be kept at LICENSEE’s principal place of business. 

 

 

Such books and the supporting
data related thereto shall be open from time to time, at reasonable intervals,
during normal business hours, and upon reasonable notice for three (3) years
following the end of the calendar year to which they pertain to inspection by
tile UNIVERSITY or its agents for tile purpose of verifying LICENSEE’s royalty
statement or compliance in other respects with this Agreement. The fees and
expenses of UNIVERSITY’s representatives shall be borne by UNIVERSITY; however,
if an error of more than five percent (5%) of the total payments due or owing
for any year is discovered then LICENSEE shall bear the fees and expenses of
UNIVERSITY’s representatives.

 

ARTICLE
6 - PATENT PROSECUTION

 

6.1           UNIVERSITY has or shall apply for,
seek prompt issuance of and maintain during the term of this Agreement the
PATENT RIGHTS in the United States and in such foreign countries as may be
designated by LICENSEE in a written notice to UNIVERSITY within a reasonable
time in advance of the required foreign filing dates. LICENSEE shall have the opportunity
to advise and cooperate with UNIVERSITY in the prosecution, filing and
maintenance of such patents.

 

6.2           All fees and costs, including
attorneys’ fees, relating to the filing, prosecution and maintenance of the
PATENT RIGHTS incurred prior to the date of this Agreement shall be the
responsibility of LICENSEE. LICENSEE shall reimburse the UNIVERSITY for these
costs as follows:

 

(a)           $5,000 immediately upon execution
of this Agreement;

 

(b)           $30,000 on or before June 1, 2002;

 

(c)           $30,000 on or before December
1,2002;

 

(d)           $30,000 on or before May 1,2003;

 

(e)           $30,000 on or before November
1,2003; and

 

(f)            $7,387 on or before May 1, 2004.

 

6.3           All fees and costs incurred after
the date of this Agreement, including attorneys’ fees, relating to the filing,
prosecution and maintenance of the PATENT RIGHTS shall be the responsibility of
LICENSEE. Prior approval of LICENSEE must be obtained prior to UNIVERSITY
incurring fees to be paid by LICENSEE. UNIVERSITY shall consult with LICENSEE
in the selection of patent counsel for performing such prosecution and
maintenance. Approved fees and costs incurred after the date of this Agreement
shall be paid by LICENSEE within thirty (30) days after receipt of UNIVERSITY’s
invoice. Payments pursuant to Sections 6.2 and 6.3 are nonrefundable and
non-creditable against royalties.

 

6.4           The UNIVERSITY Office of Technology
Management warrants that it has no knowledge of any pending litigation related
to the PATENT RIGHTS or LICENSE RIGHTS.

 

ARTICLE
7 - INFRINGEMENT ACTIONS

 

7.1           LICENSEE shall inform UNIVERSITY
promptly in writing of any alleged infringement of the PATENT RIGHTS by a third
party and of any available evidence thereof.

 

7.2           During the term of this Agreement,
LICENSEE shall have the right, but shall not be obligated, to prosecute at its
own expense all infringements of the PATENT RIGHTS if LICENSEE has notified
UNIVERSITY in writing of its intent to prosecute; provided, however, that such
right to bring such an infringement action shall remain in effect only for so long
as the license granted herein remains exclusive. In furtherance of such right,
UNIVERSITY hereby agrees that LICENSEE may include UNIVERSITY as a party
plaintiff in any such suit, without expense to UNIVERSITY. The total cost of
any such infringement action commenced or defended solely by LICENSEE shall be
borne by LICENSEE and UNIVERSITY shall receive a percentage of any recovery or
damages for past infringement derived therefrom which is equal to the
percentage royalty due UNIVERSITY under Article 4. LICENSEE shall indemnify
UNIVERSITY against any order for costs that may be made against UNIVERSITY in
such proceedings.

 

 

7.3           If within six (6) months after
having been notified of any alleged infringement, LICENSEE shall have been
unsuccessful in persuading the alleged infringer to desist and shall not have
brought and shall not be diligently prosecuting an infringement action, or if
LICENSEE shall notify UNIVERSITY at any time prior thereto of its intention not
to bring suit against any alleged infringer, then, and in those events only,
UNIVERSITY shall have the right, but shall not be obligated, to prosecute at
its own expense any infringement of the PATENT RIGHTS, and UNIVERSITY may, for
such purposes, use the name of LICENSEE as party plaintiff. UNIVERSITY shall
bear all costs and expenses of any such suit. In any settlement or other
conclusion, by litigation or otherwise, UNIVERSITY shall keep any recovery or
damages for past infringement derived therefrom.

 

7.4           In the event that a declaratory
judgment action alleging invalidity or infringement of any of the PATENT RIGHTS
shall be brought against UNIVERSITY, LICENSEE, at its option, shall have the
right, within thirty (30) days after commencement of such action, to intervene
and take over the sole defense of the action at its own expense.

 

7.5           In any infringement suit either
party may institute to enforce the PATENT RIGHTS pursuant to this Agreement,
the other party shall, at the request and expense of the party initiating such
suit, cooperate in all respects and, to the extent possible, have its employees
testify when requested and make available relevant records, papers,
information, samples, specimens, and the like.

 

ARTICLE
8 - INDEMNIFICATION/INSURANCE/LIMITATION OF LIABILITY

 

8.1           LICENSEE shall at all times during
the term of this Agreement and thereafter indemnify, defend and hold
UNIVERSITY, its trustees, officers, employees and AFFILIATES and shall
indemnify but not defend NASA harmless against all claims and expenses,
including legal expenses and reasonable attorneys’ fees, arising out of the
death of or injury to any person or persons or out of any damage to property or
the environment, and against any other claim, proceeding, demand, expense and
liability of any kind whatsoever resulting from the production, manufacture,
sale, use, lease, consumption or advertisement of the TECHNOLOGY or arising
from any obligation of LICENSEE hereunder. LICENSEE shall at all times during
the term of this Agreement and thereafter indemnify and hold the U.S. Government
and its officers, agents, and employees harmless against all claims and
expenses, including costs and reasonable attorneys’ fees, arising out of the
death of or injury to any person or persons or out of any damage to property or
the environment, and against any other claim, proceeding, demand, expense and
liability of any kind whatsoever resulting from the production, manufacture,
sale, use, lease, consumption or advertisement of the TECHNOLOGY or arising
from any obligation of LICENSEE hereunder.

 

8.2           LICENSEE shall obtain and carry in
full force and effect liability insurance which shall protect LICENSEE in
regard to events covered by Section 8.1 above, as provided below: 

 

	
  COVERAGE

  	
   

  	
  LIMITS 

  
	
   

  	
   

  	
   

  
	
  a. Workers’
  Compensation

  	
   

  	
  Statutory

  
	
   

  	
   

  	
   

  
	
  b. Employer’s
  Liability

  	
   

  	
  $100,000

  

 

8.3           LICENSEE shall obtain and carry in
f1111 force and effect liability insurance which shall protect both LICENSEE
and UNIVERSITY in regard to events covered by Section 8.1 above, as provided
below: 

 

	
  COVERAGE

  	
   

  	
  LIMITS 

  
	
   

  	
   

  	
   

  
	
  a. Commercial General Liability, including,
  but not limited to, Contractual, Fire Legal, and Bodily Injury

  	
   

  	
  $1,000,000
  Combined Single Limits for Bodily Injury and Property Damage

  
	
   

  	
   

  	
   

  
	
  b. Umbrella and Products Liability

  	
   

  	
  $3,000,000*

  

 

*LICENSEE shall not be required to purchase
this insurance until it commences its first clinical trial.

 

 

The University of Pittsburgh is to be named as
an additional insured with respect to insurance policies identified in Sections
8.3(a) and 8.3(b) above.

 

Certificates of insurance evidencing the
coverage required above shall be filed with the University’s Office of Risk
Management, 1817 Cathedral of Learning, Pittsburgh, P A 15260, no later than
fifteen (15) days after execution of this Agreement and annually thereafter.
Such certificates shall provide that the insurer will give the University not
less than thirty (30) days advance written notice of any material changes in or
cancellation of coverage.

 

8.4           EXCEPT AS OTHERWISE EXPRESSLY SET
FORTH IN THIS AGREEMENT, UNIVERSITY AND NASA MAKE NO REPRESENTATIONS AND EXTEND
NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED
TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND
VALIDITY OF PATENT RIGHTS CLAIMS, ISSUED OR PENDING. NOTHING IN THIS AGREEMENT
SHALL BE CONSTRUED AS A REPRESENTATION OR WARRANTY GIVEN BY UNIVERSITY AND NASA
THAT THE PRACTICE BY LICENSEE OF THE LICENSE GRANTED HEREUNDER SHALL NOT
INFRINGE THE PATENT RIGHTS OF ANY THIRD PARTY.

 

ARTICLE
9 - ASSIGNMENT

 

9.1           This Agreement is not assignable
without the prior written consent of UNIVERSITY and LICENSEE, and any attempt
to do so shall be null and void.

 

ARTICLE
10 - ARBITRATION

 

10.1         Except as to issues relating to the
validity, enforceability or final determination of infringement of any patent
contained in the PATENT RIGHTS or LICENSE RIGHTS licensed hereunder, any and
all claims, disputes or controversies arising under, out of, or in connection
with this License Agreement, which have not been resolved in good faith negotiations
between the parties, shall be resolved by a board of three (3) arbitrators in
Pittsburgh, Pennsylvania, in accordance with the rules, then in effect, of the
American Arbitration Association. Such independent board shall be composed of
three (3) panelists of sufficient education, scientific experience and national
reputation to address such issues. The board shall be composed of one
arbitrator selected by UNIVERSITY, one selected by LICENSEE and one selected by
LICENSEE and UNIVERSITY. If LICENSEE and UNIVERSITY cannot agree upon the third
arbitrator within fourteen (14) days after the notice of arbitration, the third
arbitrator shall be selected by the American Arbitration Association in
accordance with its rules. The decision of such panel shall be final and
binding upon the parties and enforceable in any court of competent
jurisdiction.

 

ARTICLE
11- TERMINATION

 

11.1         UNIVERSITY shall have the right to
terminate this Agreement if:

 

(a)           LICENSEE shall default in the
performance of any of the obligations herein contained and such default has not
been cured within sixty (60) days after receiving written notice thereof from
UNIVERSITY; or

 

(b)           LICENSEE shall cease to carry out
its business, become bankrupt or insolvent, apply for or consent to the appointment
of a trustee, receiver or liquidator of its assets or seek relief under any law
for the aid of debtors.

 

11.2         LICENSEE may terminate this
Agreement upon SIX (6) months prior written notice to UNIVERSITY and upon
payment of all amounts due UNIVERSITY through the effective date of
termination.

 

11.3         Upon termination of this Agreement,
neither party shall be released from any obligation that matured prior to the
effective date of such termination. LICENSEE and any sublicensee may, however,
after the effective date of such termination, sell all products under the
TECHNOLOGY which LICENSEE produced prior to the effective date of such
termination, provided that LICENSEE shall pay to UNIVERSITY and NASA the
royalties thereon as required by Article 4 hereof and submit the reports
required by Article 5 hereof.

 

 

ARTICLE
12 - NOTICES

 

12.1         Any notice or communication
pursuant to this Agreement shall be sufficiently made or given if sent by
certified or registered mail, postage prepaid, or by overnight courier, with
proof of delivery by receipt, addressed to the address below or as either party
shall designate by written notice to the other party.

 

In the case of UNIVERSITY:

 

Director

Office of Technology Management

University of Pittsburgh

200 Gardner Steel Conference Center

Thackeray & O’Hara Streets

Pittsburgh, PA 15260

 

In the case of LICENSEE:

 

Mr. Pratap Khanwilkar,

President and Chairman

Medquest Products, Inc.

North 300 West, Suite NE 107

Salt Lake City, UT 84103

 

In the case of NASA:

 

Patent Counsel Office

NASA Langley Research Center

Mail Stop 212

Hampton, VA 23681

 

ARTICLE
13 - AMENDMENT, MODIFICATION

 

13.1         This Agreement may not be amended
or modified except by the execution of a written instrument signed by the
parties hereto.

 

ARTICLE
14 - MISCELLANEOUS

 

14.1         The parties acknowledge that this
Agreement sets forth the entire understanding and intentions of the parties
hereto as to the subject matter hereof and supersedes all previous
understandings between the parties, written or oral, regarding such subject
matter.

 

14.2         Nothing contained in this Agreement
shall be construed as conferring upon either party any right to use in
advertising, publicity or other promotional activities any name, trade name,
trademark, or other designation of the other party, including any contraction,
abbreviation, or simulation of any of the foregoing. Without the express
written approval of the other party, neither party shall use any designation of
the other party in any promotional activity associated with this Agreement or
the TECHNOLOGY. Neither party shall issue any press release or make any public
statement in regard to this Agreement without the prior written approval of the
other party. LICENSEE may state in its fund-raising documents, including
business plans and related presentations, that it is licensed by UNIVERSITY
under one or more of the patents and/or applications comprising the TECHNOLOGY,
and LICENSEE may disclose to its potential funders and legal counsel, this
Agreement and its relevant terms as requested or desired by such entities.

 

14.3         If one or more of the provisions of
this Agreement shall be held invalid, illegal or unenforceable, the remaining
provisions shall not in any way be affected or impaired thereby. In the event
any provision is held illegal or unenforceable, the parties shall use
reasonable efforts to substitute a valid, legal and enforceable provision
which, insofar as is practical, implements purposes of the provision held
invalid, illegal or unenforceable.

 

14.4         Failure at any time to require
performance of any of the provisions herein shall not waive or diminish a party’s
right thereafter to demand compliance therewith or with any other provision.
Waiver of any default shall not waive 

 

 

any other default. A party
shall not be deemed to have waived any rights hereunder unless such waiver is
in writing and signed by a duly authorized officer of the party making such
waiver.

 

14.5         LICENSEE acknowledges that
UNIVERSITY is free to publish the results of the research activities of its
faculty, staff and students, even though such publication may involve the
PATENT RIGHTS or LICENSE RIGHTS. UNIVERSITY agrees to submit to LICENSEE any
proposed publication or presentation regarding the subject matter specifically
described in the PATENT RIGHTS for prior review by LICENSEE at least sixty (60)
days before its submittal for publication or its presentation. LICENSEE may,
within thirty (30) days after receipt of such proposed publication, request
that such proposed publication be delayed not more than ninety (90) days in
order to allow for protection of intellectual property rights.

 

IN WITNESS WHEREOF, the parties have set their
hands and seals as of the date set forth on the first page hereof.

 

 

	
   

  	
  UNIVERSITY OF PITTSBURGH - OF THE 

  COMMONWEALTH SYSTEM OF HIGHER

  EDUCATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  “Jerome Cochran”

  	
   

  
	
   

  	
   

  	
  Jerome Cochran

  	
   

  
	
   

  	
   

  	
  Executive Vice Chancellor

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MEDQUEST PRODUCTS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  “Pratap Khanwilkar”

  	
   

  
	
   

  	
   

  	
  Pratap Khanwilkar

  	
   

  
	
   

  	
   

  	
  President

  	
   

  

 

 

EXHIBIT A TO LICENSE AGREEMENT BETWEEN

MEDQUEST PRODUCTS, INC.

AND UNIVERSITY OF PITTSBURGH

 

Patent Rights 

 

1.             Magnetically Suspended Fluid Pump and Method of Making Same. U.S. Patent
No. 6,015,272 issued January 18, 2001.

 

2.             Magnetically Suspended Miniature Fluid Pump and Method of Designing
Same. U.S. Patent Application no. 09/398,878 filed September 20, 1999. Allowed.
Issue fee paid.

 

3.             An Improved Blood Pump Having a Magnetically Suspended Rotor. U.S.
Patent Application No. 60/142,354 filed July 1, 1999.

 

4.             Blood Pump Having a Magnetically Suspended Rotor. U. S. Patent No.
6,244,835 issued June 25, 2001.

 

5.             Blood Pump Having a Magnetically Suspend Rotor. U.S. Patent Application
09/841,223 filed April 24, 2001.

 

6.             Patent Cooperation Treaty and Foreign Filings corresponding to Items 1
through 5 above.

 

License Rights 

 

1.             “Speed Control System for Implanted Blood Pumps,” U.S. Patent No.
5,888,242 (filed November 1, 1996)

 

2.             U.S. Patent No. 6,066,086 Speed control system for implanted blood pumps
(filed March 4, 1998),

 

 

Lead Time Pmis
For Pump Build

 

	
   

  	
   

  	
   

  	
   

  	
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  90Exhibit 10.14

 

OPERATING AGREEMENT

 

OF

 

HEART LUNG INSTITUTE, LLC

 

This Operating Agreement (this “Agreement”)
of The Heart Lung Institute, LLC (the “Company”) is entered into this 13th day
of October 1998, by and between The Heart and Lung Research Foundation, a
Utah nonprofit corporation (“Foundation”), and MedQuest Products, Inc., a
Utah corporation, (“MedQuest”), The parties to this Agreement shall also be
referred to individually as a “Member” and collectively as “Members.”

 

The Members hereby set forth the operating
agreement of the Company upon the terms, and subject to the conditions,
contained herein.

 

ARTICLE 1

 

DEFINITIONS

 

As used in this Agreement, the following terms set forth in this Article I
shall have the following meanings:

 

“AAA” means the American Arbitration
Association.

 

“Act” means the Utah Limited Liability
Company Act.

 

“Affiliate” means any per directly or
indirectly controlling, controlled by or under common control with another
person. For the purposes of this definition only, the term (i) “control”
(including the terms “controlled by” and “under common control with”) means the
possession. direct or indirect, of the power to director cause the direction of
the management and policies of a person, whether through the ownership of voting
securities, by contact or otherwise and (ii) “person” means any natural
person, partnership, corporation, limited liability company, association, trust
or other legal entity.

 

“Agreement” means this Operating
Agreement of Heart Lung Institute, LLC.

 

“Assignee” means an entity in which a
transfer of any Unit or Units which (i) with respect to the transferee of
such Unit has not been substituted as a Member in accordance with Section 7.3
hereof and (ii) shall have only such rights with respect to such Unit or
Units as are set forth in Section 7.4 hereof.

 

“Business” shall
have the meaning given such term in Section 2.4.

 

“Capital Account”
shall have the meaning provided in Section 6.1 hereof.

 

“Code” means the
Internal Revenue Code of 1986, as amended from time to time or the
corresponding provisions of any successor statute and, to the extent
applicable, the Treasury Regulations.

 

“Company” means Heart Lung Institute,
LLC a Utah limited liability company.

 

“Company Minimum Gain”
shall have the ‘leaning ascribed to the term “Partnership Minimum Gain” in
Treasury Regulation Section 1.704-2(d).

 

 

“Confidential Information” shall have
the meaning given such term in Section 2.7 (a).

 

“Excluded Activities” mean those
business activities and opportunities of each Member that are not subject to
the restrictions or the noncompetition provision set forth in Section 2.6
hereof, as set forth on Exhibit B hereto (with respect to Foundation) and Exhibit C
hereto (with respect to MedQuest), as such Exhibits may be amended from time to
time.

 

“Exclusive License Agreement” or “Master
License” shall mean the agreement that transfers the
technologies from MedQuest to the Company in exchange for Company Units.

 

“Exclusive Sublicense Agreement” shall
mean the agreement that transfers the exclusive license to the technologies to
MedQuest for the research, development and commercialization of the
technologies in exchange for a royalty payment to the Company.

 

“Foundation” means The Heart and Lung
Research Foundation, a Utah nonprofit corporation.

 

“Foundation Manager”
shall have the meaning given such term in Section 3.4(a).

 

“Included Activities”
means those activities that the Company intends to engage in, which is the
funding of the research, development, and commercialization of a magnetically
suspended ventricular assist device and artificial heart, as described in
patent applications numbered 08/850.156 Electromagnetically Suspended and
Rotated Centrifugal Pumping Apparatus and Method and 08/850.598 Hybrid
Magnetically Suspended and Rotated Centrifugal Pumping Apparatus and Method
and enhancements thereof which specifically utilize magnetically suspended
impellers.

 

“Member Nonrecourse Debt”
shall have the meaning ascribed to the term “Partner Nonrecourse Debt’ in Section 6.3(b).

 

“Member Nonrecourse Deductions”
shall have the meaning given to such term in Section 6.3(d)

 

“MedQuest” means
MedQuest Products, Inc., a Utah corporation.

 

“MedQuest Manager” shall
have the meaning given such term in 3.4(a).

 

“Member or Members”
shall have the meaning given such term in the preamble.

 

“Net Profits” and “Net Losses”
mean the income, gain, loss, deductions, and credits of the Company in the
aggregate or separately stated, as appropriate, determined in accordance with
the method of accounting at the close of each fiscal year employed an the
Company’s information tax return filed for federal income tax purposes.

 

“Notice of Purchase”
shall have the meaning given such term in Section 8.2

 

“Research Contract”
shall mean the annual approved agreement between the Company and MedQuest for
the funding of the research, development and commercialization of the Included
Technology. The procedure for submitting, reviewing, and approving the Research
Contract shall be set forth in Licensing and Sublicensing Agreements executed
simultaneously with this Operating Agreement.

 

 

“Securities Act” in
the Securities Act of 1933, as amended.

 

“Tax Matter Partner” shall
have the meaning given such term in Section 11.5

 

“Terminating Event”
shall have the meaning given such term in Section 8.

 

“Terminating Member”
shall have the meaning given such term in Section 8.1(c).

 

“Transfer” means any voluntary or
involuntary sale, assignment, transfer, exchange, lease, mortgage, charge,
hypothecation, pledge or other conveyance or encumbrance, including any
transfer by operation of law or otherwise. “Transfer” of a Unit does not
entitle the transferee of such Unit to become a Member until the requirements
set forth in Section 7.3 hereof are satisfied.

 

“Treasury Regulations”  means the final or temporary regulations that
have been issued by the U.S. Department of Treasury pursuant to its authority
under the Code and any Successor regulations.

 

“Unit” shall have
the meaning provided in Section 4.1 hereof.

 

ARTICLE 2

 

ORGANIZATION

 

Section 2.1. Formation The
Members hereby agree to the formation of the Company as a limited liability
company pursuant to the Act, as is currently in effect and as may be amended
from time to time. If there is a conflict between the provisions hereof and the
Act, the provisions hereof shall control, unless the effect would be to expose
any Member or Manager to a liability of any kind or nature.

 

Section 2.2 Name. The Company
shall operate under the name “Heart Lung Institute, LLC” or such other name as
the Board of Managers from time to time may determine.

 

Section 2.3. Principal Place of
Business. The principal place or business of the Company shall be located
at LDS Hospital, 8th Avenue & C Street, Salt Lake City, Utah 84143, or
such other place of business as the Board of Managers from time to time may
determine.

 

Section 2.4. Purposes. The
Business of the Company shall be to:

 

(a) engage in the solicitation and
consummation of securing the funds required to complete the research
development, and commercialization associated with the Included Activities in Article 1;

 

(b) contract to complete the research,
development, and commercialization associated with the Included Activities as
defined in Article 1 (the parties understand and agree that such commercialization
shall be performed by MedQuest);

 

(c) engage in other business activities
approved by the unanimous vote of the Board of Managers; and

 

(d) do any and all other acts and things
incidental to those described in clauses (a) and (b) of Section 2.4.

 

 

Section 2.5 Term  The
Company shall commence as of the effective date of this Agreement and shall
continue on into perpetuity, unless sooner terminated as set forth in Section 10.1
hereof.

 

Section 2.6. Covenant not to Compete.   The
Members shall not, during the term of this Agreement, directly or indirectly
(including by or through any entity that is an Affiliate of a Member), in any
manner, invest in, or participate in the ownership, management, operation or
control of, any entity engaged in an activity as described in the Included
Activities contained in Article I; provided, however, that nothing
in this Section 2.6 shall be construed to limit in any way the ability of
the Foundation or MedQuest or any Affiliates thereof to continue to engage in
Excluded Activities or the ability to raise additional funding for Included
Activities applicable to such Member or such Affiliate. To the extent that any
provision of this Section 2.6 shall be deemed by a court of competent
jurisdiction to exceed time or geographic limits or other limitations imposed
by applicable law, then such provision shall be deemed reformed to the maximum
time or geographic or other (as the case may be) scope permitted by applicable
law without affecting or rendering invalid or unenforceable the remaining terms
and provisions of this Section 2.6.

 

Section 2.7. Confidential Information.

 

(a) Each Member recognizes that it will
have access to information of a proprietary nature relating to the included
Activities, including without limitation, documents, computer programs (whether
or not completed or in use), operating manuals and similar materials that
constitute nonmedical systems policies, procedures and methods of doing
business developed thereby, administrative, advertising and marketing
techniques, and other proprietary information (including information relating
to financial matters) utilized thereby, all such information being referred to
herein as Confidential Information. Each Member acknowledges and agrees that
each Member has a proprietary interest in its own Confidential Information and
that all such Confidential Information constitutes confidential and proprietary
or trade secret property.

 

(b) Each Member agrees to hold
Confidential Information in strictest confidence and to not disclose such
Confidential Information or allow such Confidential Information to be
disclosed, directly or indirectly, during and after the term of this Agreement
to any person or entity other than to such Member’s own employees agents,
consultants and Affiliates on a “need to know” basis except as:

 

(i) required in government filings or
judicial, administrative or arbitration proceedings; or

 

(ii) otherwise required by law
(including, without limitation, in response to a subpoena from a court or authorized
governmental agency); or

 

(iii) needed to obtain additional
funding to complete the research, development. and commercialization activities

 

(c) No Member shall use any Confidential
Information of any other Member other than in connection with the Business of
the Company.

 

 

(d) Confidential Information shall not
include the information which at the time of disclosure or thereafter becomes
part of the public domain through no act or omission of a Member.

 

Section 2.8. Expenses of the Company.   The
responsibility for all expenses incurred to operate this company shall be
determined by the Board of Managers.

 

ARTICLE 3

 

MANAGEMENT

 

Section 3.1. Management of Company
Affairs.  Pursuant to the Act, the
Company shall be managed by Managers, who shall perform their duties and
responsibilities under the Act thereunder and who shall exercise the power
delegated to them solely through their representation on the Board of Managers.
No individual Manager shall, unless so directed by the Board of Managers, have
authority, rights or responsibilities hereunder. Subject to the provisions of
the Act and any limitations in this Agreement relating to actions required to
be approved by the Members, all powers of the Company shall be exercised by or
under authority of, and the Company’s property and affairs shall be controlled
by the Board of Managers. The primary functions of the Board of Managers shall
be to:

 

(a) establish policies for the direction
and guidance of any committees established by the Board of Managers and any
officers appointed by the Board of Managers; and

 

(b) to formulate the basic rules and
regulations governing the operation and management of the Company. Nothing in
this Agreement is intended to preclude Managers from acting in any other
capacity outside of the Company, so long as acting in such other capacities
does not constitute a Conflict of Interest with the Company.

 

The Managers shall devote such attention and
business capacity to the affairs of the Company as may be reasonably necessary
to fully perform their duties on the Board of Managers.

 

Section 3.2. Adoption of Annual
Business Plans. Subject to the unanimous approval of the Board of Managers,
any officers appointed by the Board of Managers shall be responsible during
each year for the preparation of an annual business plan. This business plan
shall be the guidelines for the activities of the Company during the Company’s
next fiscal year.

 

Section 3.3 Member Actions

 

(a)           Annual
Meetings.  An annual meeting of the
Members shall be held at the date, time and place determined by the Board of
Managers to review the prior years operations, to discuss operations for the
coming year and to take up such other matters as may be properly raised at the
meeting. Annual meetings of the Members may be held by conference telephone or
similar communications equipment, so long as all members participating in such
meeting can hear one another.

 

 

(b)           Special
Meetings.  Special meetings of the
Members may be called by any member. The Chairperson of the Board of Managers
may designate any place within or outside of Utah for any special meeting.
Written or proper notice stating the place, day and hour of each special
meeting and the purpose or purposes for which such meeting is called, shall be
delivered to each Member not less than five (5) days nor more than 60 days
prior to the meeting, in accordance with Section 12.5 hereof. Only those
matters specified in such notice shall be discussed at such special
meeting.  Special meetings of the Members
may be held by conference telephone or similar communications equipment, so
long as all Members participating in such meeting can hear one another.

 

(c)           Action
at Member Meetings.  Unless otherwise
provided by law or this Agreement, the affirmative vote of Members (owning at
least a majority of the Units) shall constitute the act of the Member at any
meeting of the Members. At all meetings of members, a member may vote by proxy
executed in writing by the Member or by the Members duly authorized agent in
fact. Such proxy shall be filed with the Secretary of the Company before or at
the time of the meeting. No proxy shall be valid after eleven months from the
date of its execution, unless otherwise provided in the proxy. Each Unit shall
be entitled to one vote upon any matter submitted to a vote at a meeting of
Members. The presiding officer or any Member may demand that voting be by
secret ballot.

 

(d)           Written
Consent of Members .  Any act may be
taken without a meeting if a consent in writing, setting forth the action so taken,
is signed by all of the Members.

 

Section 3.4. Appointment of Board of Managers.

 

(a)           Number
of Managers. The authorized number of Managers shall be five and can only
be altered by unanimous consent of all Members. So long as Foundation shall be
a Member, the Foundation shall be entitled to appoint three Managers to the
Board of Managers (each such Manager being referred o herein as a “Foundation
Manager”). So long as MedQuest shall be a Member, MedQuest shall be entitled to
appoint two Managers to the Board of Managers (each such Manager being referred
to herein as a “MedQuest Manager”).

 

(b)           Appointment
and Removal of Managers.  Managers
shall be appointed by written notice to the Board of Managers, by the Member
entitled to appoint such Manager, to hold office for an indefinite term. Any
Manager nay be removed at any time, with or without cause, from the Board of
Managers by the Member that appointed such Manager.

 

(c) Vacancies

 

(i)            Any
vacancy in the Board of Managers shall be filled as directed by the Member who
appointed the Manager whose vacancy is being filled. A vacancy or vacancies in
the Board of Managers shall be deemed to exist:

 

(a) in the event or the death
resignation or removal of a Manager, or

 

(b) if the Board of Managers by
resolution declares vacant the office of a Manager who has been declared of
unsound mind by an order of court or convicted of a felony or

 

 

(c) if the authorized number of Managers
shall be increased.

 

(ii)           Any
Manager may resign effective upon giving written notice to all of the Managers
(unless the notice specifies a later time for such resignation to become
effective). The Board of Managers shall provide a copy of such notice to all
Members. If the resignation of a Manager is to be effective at a time subsequent
to the receipt of such notice, a successor may be appointed prior to the
effective date of the notice, to take office upon the effective date of such
notice. Resignation as a Manager shall also constitute resignation as a member
of all committees, if any, appointed by the Board of Managers.

 

Section 3.5. Meetings of the Board of Managers.

 

(a)           General.
   Regular meetings of the Board of Managers may be held at any
place in Salt Lake City (or at such other place as may be agreed to by all the
Managers) as is designated in the notice thereof (or, if not so designated in
such notice or there is no such notice, as designated by prior resolution of
the Board of Managers). In the absence of such a designation, such regular
meetings shall be held at the principal executive office of the Company.
Special meetings of the Board of Managers shall be held at any place in the
Salt Lake City (or at such other place as may be agreed to by all the Managers)
as is designated in the notice thereof (or, if not so designated in such
notice, at the principal executive office of the Company).  Any meeting, regular or special, may be held
by conference telephone or similar communications equipment, so long as all
Managers participating in such meeting can hear one another, and all such
Managers shall be deemed to be present in person at such meeting for all
purposes (including determining whether a quorum exists).

 

(b)           Regular
Meetings.    Regular meetings of the Board of Managers shall
be held at such times as set forth in the notice thereof (or, if not so stated
in such notice or there is no such notice, as designated by prior resolution of
the Board of Managers).

 

(c)           Special
Meetings.   Special meetings of the Board of Managers for
any purpose or purposes may be called at any time by any Manager. Notice of
(the time and place and purpose of each special meeting of the Board of
Managers shall be provided to each Manager not less than five (5) days nor
more than 60 days prior to such meeting, in accordance with section 12.5
hereof.

 

(d)           Quorum.   The
presence at a meeting of the Board of Managers of at least one Foundation
Manager and one MedQuest Manager shall be necessary for a quorum to transact
business at such meeting.  Every action
taken or decision made by a majority of the Managers present at a meeting of
the Board of Managers duly held and at which such a quorum is present shall be
regarded as the act of the Board of Managers. Each Manager shall have the right
to authorize another Manager to act for such Manager at a meeting of the Board
of Managers by a written proxy signed by such Manager and filed with the
secretary prior to such meeting. A meeting of the Board of Managers at which a
quorum is initially present may not continue to transact business in the event
that the withdrawal of one or more Managers from such meeting results in a
quorum no longer existing as described in this Section 3.5 (d).

 

(e)           Waiver of Notice.    Notice of a meeting of the Board
of Managers need not be given to any Manager who;

 

 

(i) signs a waiver of such notice or a
written consent to the holding of such meeting or an approval of the minutes
thereof (whether prior to or after such meeting) or

 

(ii) attends such meeting without
protesting, prior to or at the commencement of such meeting, the lack of notice
to such Manager, or

 

(iii) If a protest occurs, then the
proposed meeting of the Board of Managers shall be rescheduled per notice as
described in Section 3.5 (c).  All
such waivers, consents and approvals shall be filed with the Company’s records
or made a part of the minutes of such meeting.

 

(f)            Adjournment.   A
majority of the Managers present, whether or not a quorum is present, may
adjourn any meeting of the Board of Managers to another time and place. Notice
of the time and place of holding an adjourned meeting need not be given to
absent Managers if such time and place are fixed at such meeting adjourned; provided,
however, that if such meeting is adjourned for more than 24 hours, notice
of any adjournment to another time or place shall be given prior to the time of
the adjourned meeting to the Managers who were not present at the time of such
adjournment.

 

(g)           Action
Without Meeting.   Any action required or permitted to be
taken by the Board of Managers may be taken without a meeting, if all Managers
to the Board of Managers consent in writing to such action. Such action by
unanimous written consent shall have the same force and effect as a unanimous
vote of the Board of Managers. Any such written consent or consents shall be
filed with the minutes of the proceedings of the Board of Managers.

 

(h)           Fees
and Compensation.   Managers and members of committees of
the Board of Managers shall not receive compensation of their services from the
Company. If Board of Managers calls a meeting outside of Salt Lake City and
attendance to that meeting is mandatory, each Manager will be reimbursed for
reasonable travel expenses to attend said meeting. Managers may receive fair
and reasonable compensation for services rendered in a capacity other than as a
Manager to the Board of Managers or a member of a committee thereof.

 

(i)            Unanimous
Vote Required.   Notwithstanding any other provision
contained herein, no action shall be taken, sum expended or obligation incurred
by the Company, or by the Board of Managers on behalf of the Company, with
respect to any of the following matters, unless such action shall have been
approved by the unanimous vote of the Board of Managers

 

(i) The admission of additional Members
and matters relating to additional Members arising under this Agreement, except
for the conditions that may apply in Section 10.3 in which additional
Member may be added by majority vote

 

(ii) Any voluntary transfer of a direct
interest in the Company

 

(iii) Any guaranty by the Company (or
obligation that in economic effect, is substantially equivalent to a guaranty).

 

(iv) pledging, mortgaging, or granting
security interest in the property or assets of the Company:

 

 

(v) The appointment of the Company to
perform such duties and carry out such responsibilities as the Board of
Managers shall determine:

 

(vi) Liquidation or dissolution of the
Company as provided in Article 10 hereof;

 

(vii) Merger, consolidation or
combination of the Company with another entity;

 

(viii) Sale, assignment, exchange lease,
pledge or otherwise transfer or dispose of all or substantially all of the
Company’s assets;

 

(ix) A Member withdrawal or resignation
from the Company prior to the dissolution and liquidation of the Company.

 

Section 3.6. Officers.  The Board of Managers may delegate their
management responsibility but not their Board of Managers voting rights, to
Company officers as follows:

 

(a)           Officers
of the Company.   The Board of Managers shall have the
right, but not the obligation to appoint executive officers of the Company
including but not limited to a President, a Treasurer, and/or a Secretary. The
Board of Managers may appoint such other officers as it deems necessary, who
shall have such authority and shall perform such duties as from time to time
may be prescribed by the Board of Managers.

 

(b)           Elections
and Term of Office.   Each officer shall be appointed by the
Board of Managers. Each officer shall hold office until a successor shall have
been elected or until death or until such officer shall resign or shall have
been removed in the manner hereinafter provided.

 

(c)           Removal.   Any
officer or agent of the Company nay be removed by the Board of Managers
whenever in its judgment the best interests of the Company would be served
thereby.

 

(d)           Vacancies.   A
vacancy in any office because of death, resignation, removal, disqualification
or otherwise, may be filled by the Board of Managers.

 

(e)           Officers
Compensation.   Officers compensation, if any, must be
approved by the Board of Managers.

 

ARTICLE 4

 

ADMISSIONS AND CAPITAL
CONTRIBUTIONS

 

Section 4.1 Capital.     The capital of the Company
shall be divided into units (referred to herein individually as a “Unit” and
collectively as “Units”) which shall not be evidenced by certificates issued by
the Company. The total equity ownership interest in the Company shall consist
of 100 Units, ninety-nine (99) Units of which shall be issued to the Foundation
and One (1) Unit which shall be issued to MedQuest.

 

Section 4.2. Contributions.

 

(a) Foundation Contributions.   Prior
to August 1, 1998, the Foundation has made monetary contributions in the
amount of $942,053, of which $830,153 has been paid to MedQuest and $111,900
has been paid directly to the University of Virginia gift account.  It is the intent of the Foundation to
contribute up to an additional $2,057,947 to 

 

 

the Company.  It is intended that
a portion of the funding will be allocated to the Utah Artificial Heart Program
under a separate agreement subject to approval by the Board of Managers.  The Foundation also agrees to use reasonable
efforts to raise additional funds to contribute to the Company. MedQuest is not
obligated to accept any contributions. It is intended that any such additional
contributions shall be made according to the Proposed Budget Estimate shown in Exhibit D,
Table I. The Foundation shall have the right, but not the obligation, to
contribute additional amounts to the Company, but only with the consent of all
of the Board of Managers.

 

(b)           In
the event the purposes of this Agreement as stated in Section 2.4 and in Section 4.2
are impossible for the Foundation to achieve, the Members agree to unwind this
Operating Agreement according to Subsections 4.4 below. The Members also agree
to unwind this Operating Agreement according to Subsections 4.4 below if it is
determined by the IRS, or it is the opinion or nationally recognized tax
counsel, that this Operating Agreement or its continuation would, more likely
than not, constitute a potential threat to the tax-exempt status of the
Foundation.

 

(c)           MedQuest
Contribution.   Simultaneously with the formation of the
Company, MedQuest shall transfer and contribute to the Company the intellectual
properly rights described in the “Exclusive License Agreement”, a copy of which
is attached as Exhibit A. 
Simultaneously with the execution of the Exclusive License Agreement,
the Company shall execute an “Exclusive Sublicense Agreement” for the transfer
of research, development and commercialization rights to MedQuest, a copy of
which is attached to the Exclusive License Agreement.

 

Section 4.3. Transfer of Technology.  It is the understanding of the parties that
the commercialization of the technologies will require additional investor
funds, it may be required by the investors to have technology ownership reside
in the commercialization entity, MedQuest. If the conditions of the investment
require this technology transfer of ownership, the Board of Managers will not
unreasonably withhold the approval of such transfer to consummate the
investment, provided that such proposed transfer would not be consummated if it
is determined by the IRS or it is the opinion of nationally-recognized tax
counsel that the terms and conditions of the proposed technology transfer would
jeopardize the tax-exempt status of the Foundation or compromise the intent of
this Operating Agreement.

 

Section 4.4 Impossibility of Purpose

 

(a)           Upon
the determination by majority vote of the Board of Managers that the purposes
of the Company as specified in Section 2.4, Section 4.2 and/or Section 10.1
cannot be achieved or are the desire of the Board, the following shall occur:

 

(i) The Company shall return to MedQuest
the technologies identified in the Exclusive License Agreements as set faith in
Exhibit A hereto and shall relinquish all claims to the Licensed
Technology as defined in the Exclusive License Agreement and Exclusive
Sublicense Agreement in Exhibit A. Then the Exclusive License and
Sublicense Agreements shall be null and void.

 

(ii) MedQuest shall return to Foundation
its Unit ownership in the Company.

 

 

(iii) Upon the completion of items (a)(i) and
(a)(ii) of Section 4.4 the royalty payments as described in the
Exclusive Sublicense Agreement shall be paid by MedQuest directly to the
Foundation per the Table in the Exclusive Sublicense Agreement.

 

(iv) The Company shall then be
liquidated under Section 10.

 

ARTICLE 5

 

DISTRIBUTIONS

 

Subject to applicable law and any limitations
contained elsewhere in this Agreement, the Company from time to time may make
distributions as the Board of Managers shall determine. Distributions shall be
made among the Members in proportion to such Member Units.

 

ARTICLE 6

 

ALLOCATIONS

 

Section 6.1. Capital Accounts.   The
Company shall establish an individual monetary capital account (“Capital
Account”) for each Member. The Company shall determine and maintain each
Capital Account in accordance with Treasury Regulations Section 1.704-I
(b)(2)(iv).

 

Section 6.2. Allocations of Net
Profit and Net Loss.

 

(a) Net Loss. Net Loss shall
be allocated to the Members in proportion to the respective number of Units
held by each Member.

 

(b) Net Profit. Net Profit shall
be allocated to the Members in proportion to the respective number of Units
held by each Member.

 

Section 6.3 Special Allocations.   Notwithstanding
Section 6.2,

 

(a)           Minimum
Gain Chargeback. If there is a net decrease in Company Minimum Gain during
any fiscal year, each Member shall be specially allocated items of Company
income and gain for such fiscal year (and if necessary, in subsequent fiscal
years) in an amount equal to the portion of such Members share of the net
decrease in Company Minimum Gain that is allocable to decrease shall be
determined in accordance with Treasury Regulations Section 1.704-2(g)(2).  Allocations pursuant to this Section 6.3
(a) shall be made in proportion to the amounts required to be allocated to
each Member under this Section 6.3 (a). 
The items to be so allocated shall be determined in accordance with
Treasury Regulations Section 1.704-2(f). 
This Section 6.3 (a) is intended to comply with the minimum
gain chargeback requirement contained in Treasury Regulations Section 1.704-2
(f) and shall be interpreted consistently therewith.

 

(b) Chargeback of Minimum Gain
Attributable to Member Nonrecourse Debt.   If there is a net
decrease in Company Minimum Gain attributable to a Member’s Nonrecourse Debt,
during any fiscal year, each member who has a share of the Company Minimum Gain
attributable to such Member Nonrecourse Debt (which share shall be determined
in accordance with Treasury Regulations Section 1.704-2(i)(5) shall
be 

 

 

specially allocated items of Company income and gain for such fiscal
year (and, if necessary, in subsequent fiscal years) in an amount equal to that
portion of such Member’s share of the net decrease in Company Minimum Gain
attributable to such Member Nonrecourse Debt that is allocable to the
disposition of Company property subject to such Member Nonrecourse Debt (which
share of such net decrease shall be determined in accordance with Treasury
Regulations Section 1.704-2(i)(5). 
Allocations pursuant to this Section 6.3 (b) shall be made in
proportion to the amounts required to be allocated to each Member under this Section 6.3
(a). The items to be so allocated shall be determined in accordance with Treasury
Regulations Section 1.704-2(i)(4). 
This Section 6.3 (b) is intended to comply with the minimum
gain chargeback requirement contained in treasury Regulation Section 1 .704-2(i)(4) and
shall be interpreted consistently therewith.

 

(c)           Nonrecourse
Deductions.   Any nonrecourse deductions (as defined in
Treasury Regulations Section 1.704-2(b)(l) for any fiscal year or other
period shall be specifically allocated to the Members in proportion, to the
number of Units held by each Member.

 

(d)           Member
Nonrecourse Deductions.   Those items of Company loss,
deduction or Code Section 705(a)(2)(B) expenditures which are
attributable to Member Nonrecourse Debt for any fiscal year or other period
shall be specially allocated to the Member who bears the economic risk of loss
with respect to the Member Nonrecourse Debt to which such items are
attributable in accordance with Treasury Regulations Section 1.704-2(I).

 

(e)           Qualified
Income Offset.   If a Member unexpectedly receives any
adjustments, allocations, or distributions described in Treasury Regulation Section 1.704-l(b)(2)(ii)(d)(4),
(5) or (6), or any other event creates a deficit balance in such Members
Capital Account in excess of such Members share of Company Minimum Gain, items
of Company income and gain shall be specially allocated to such Member in an
amount and manner sufficient to eliminate such excess deficit balance as
quickly as possible. Any special allocations of items of income and gain
pursuant to this Section 6.3 (e) shall be taken into account in computing
subsequent allocations of income and gain pursuant to this Article 6 so
that the net amount of any item so allocated and the income, gain, and losses
allocated to each Member pursuant to this Section 6.3 (e), to the extent
possible, shall be equal to the net amount that would have been allocated to
each such Member pursuant to the provisions of this Article 6 if such
unexpected adjustments, allocations, or distributions had not occurred.

 

Section 6.4. Code Section 704 (c) Allocations.   Notwithstanding
any other provision in this - Article 6, in accordance with Code Section 704
(c) and the Treasury Regulations promulgated thereunder, income, gain,
loss, and deduction with respect to any property contributed to the capital of
the Company shall, solely for tax purposes, be allocated among the Members so
as to take account of any variation between the adjusted basis of such property
of the Company for federal income tax purposes and its fair market value on the
date of contribution. Allocations pursuant to this Section 6.4 are solely
for purposes of federal, state and local taxes. As such, they shall not affect,
or in any way be taken into account in computing, a Members Capital Account or
share of profits, losses, or other items of distributions pursuant to any
provision of this Agreement.

 

 

ARTICLE 7

 

TRANSFERS OF MEMBERSHIP
INTERESTS

 

Section 7.1 Restrictions on Transfer.  Subject to the terms and conditions of Section 7.4
no Member may transfer any of its Units or enter into any agreement as a result
of which all Assignee may obtain Units held by such Member unless the transfer
or assignment of Units in the Company meets the terms and conditions of this
Agreement.

 

Section 7.2. Limitations on Rights of
Assignees.   The Transfer of Units in the Company shall be,
and Assignee shall acquire any Transferred Units in the Company, subject to all
of the terms and conditions of this Agreement. A Transfer of any Unit in the
Company shall not relieve the Transferring Member of its duties and obligations
to the Company unless all the Members agree in writing to release the
Transferring Member therefrom.

 

Section 7.3. Admission of Transferees
as Members.   In the case of any Transfer of a Unit other
than to another Member, the transferee of such Unit shall be admitted as a
Member only upon

 

(a) the unanimous consent of the Board
of Managers, and

 

(i) by the Member with an amendment to
this Agreement,

 

(ii) by the Company and such transferee
in a transfer Agreement, that will be completed by an officer or member of the
Board of Managers.

 

(iii) the execution of and delivery by
such transferee of all such assumption, guarantee and other agreements as may
be necessary or appropriate in the judgment of the Board of Managers to put
such transferee in the same position (pro rata, in accordance with the number
of Units held thereby) with respect to the Company as the existing Members
(other than as otherwise specifically contemplated by this Agreement). Such
transferee shall be treated as the owner of any such Transferred Unit, for the
purpose of allocating income, gains, deductions, credits and losses of the
Company, on the date upon which the conditions precedent to admission as a
Member of the Company, set forth in this Section 7.3, have been satisfied.

 

Section 7.4. Rights of Assignees.   An
Assignee shall not be entitled to participate in or interfere with the
management of the Company’s affairs (including by means of voting), receive any
information relating to transactions effected by the Company or inspect Company’s
books or records. Such Assignee shall merely be entitled to receive, in
accordance with the terms of the Transfer of Units to such Assignee, the
distributions to which the Transferring Member otherwise would have been
entitled in respect to such Units. The original transferring Member retains
voting rights unless changed by the unanimous vote of the Board of Managers.

 

Section 7.5. Securities Law Transfer
Restrictions.   All Members acknowledge that the Units have
not been registered under the Securities Act of 1933, as amended (the “Securities
Act”), in reliance on certain exemptions afforded thereunder. Notwithstanding
anything contained herein to the contrary, the Members hereby agree that Units
shall be not transferable and nonassignable, except in compliance with the
registration provisions of the Securities Act or pursuant to an exemption or
exemptions therefrom and in compliance with applicable state securities laws
and rules and regulations promulgated 

 

 

thereunder, and that any attempted or purported Transfer or assignment
in contravention thereof shall be void and of no effect. Accordingly, as a
condition precedent to any Transfer of Units, the Board of Managers may require
the Transferring Member to obtain and provide to the Board of Managers an opinion
of counsel, reasonably satisfactory to the Board of Managers, that such
assignment or Transfer will be made in compliance with the registration
provisions of the Securities Act or exemption therefrom, and in compliance with
applicable state securities laws and rules and regulations promulgated
thereunder.

 

Section 7.6. Resignation of Member   No
Member can resign without the approval of all Manager.

 

ARTICLE 8

 

PURCHASE OF UNITS ON THE
OCCURRENCE OF CERTAIN EVENTS; RIGHT OF FIRST REFUSAL

 

Section 8.1. Grant of Option. Each
Member hereby grants to the other Member the option to purchase, on the terms
and conditions set forth in this Article 8, all of the Units held by such
Member upon:

 

(a) The Bankruptcy of such Member;

 

(b) The violation by such Member or any
shareholders, members or partners of such Member of Sections 2.6 or 2.7 hereof;
or

 

(c) The gift, distribution, dividend,
transferor other assignment of (in its by such Member in contravention of this
Agreement. (Each of the events referred to in clauses (a) through (c) of
this Section 3.1 shall hereinafter be referred to as a “Terminating Event”
and any such Member to which any of such clauses apply is referred to herein as
a “Terminating Member”.)

 

Section 8.2. Exercise of Option.   Exercise
of the option granted in Section 8.1 hereof shall be effected by written
notice (referred to herein as the “Article 8 Notice of Purchase”) to the
Terminating Member or the Terminating Members authorized Manager or successor.
In order to exercise such option, the Board of Managers must exercise such
option within 60 days after receipt thereby or by its designee of actual notice
of the Terminating Event.

 

Section 8.3. Purchase Price. At
the purchasing Member’s option, the purchase price for the Terminating Member’s
Units shall equal either:

 

(a) the amount by which ((1) exceeds
(2), where (1) equals the distribution such Terminating Member would have
received under Article 8 hereof, had all of the Company’s property been
sold at such property’s book value by the Company on the last day of the month
in which the Terminating Event occurred, and where (2) equals the
Terminating Members pro rata share of the debts and liabilities (including,
without limitation, reasonable reserves for contingent liabilities) of the Company
existing as of such date; or

 

(b) the most recent unit sales price or
a prior transaction if one has occurred.

 

 

Section 8.4. Payment of Option Price.
Within 60 days after providing an Article 8 Notice of Purchase under Section 8.2
hereof (or such later date as may be agreed upon by the Board of Managers and
the Terminating Member), the Board of Managers shall allow to be paid the
amount owed to the Terminating Member either in:

 

(a) cash in an amount equal to the total
purchase price to be paid for all of the Terminating Members Units or

 

(b) cash equal to an amount representing
not less than 10 percent of the total purchase price to be paid or all of the
Terminating Member’s Units, together with a promissory note for the balance of
such purchase price,

 

(i) providing for at least equal annual
payments of principal over a period not to exceed five years from the date of
delivery thereof and

 

(ii) bearing interest at a rate equal to
the lesser of the prime ending rate of First Security Bank or any successor
entity plus two percent or the maximum rate permitted by law, compounded
annually, and payable annually together with one-fifth of the principal amount.

 

Section 8.5. Right of First Refusal.   If
a Member receives a bona fide written offer from a third party to purchase its
Units and the Member is willing to sell its Units on the terms of such offer,
the selling Member must give notice of such offer and allow any other Member
the First Right of Refusal to purchase the Units to be transferred on the exact
terms and conditions set forth in the third party written offer. The notice
must specify the price and payment terms and indicate a closing date within 60
days after the date the notice is delivered. The selling Member cannot sell its
interest to the potential third party buyer or to any other buyer on terms that
differ in any way from the exact terms that were offered to the non-selling
Member.

 

(a) The purchasing Member must exercise its
right to purchase the Units by giving written notice to the selling Member or
the selling Member’s successor in interest (the Seller”) within 30 days of the
date of the receipt of notice.

 

(b) The price of the Units to be sold
shall be an amount equal to the price offered for such Units by the third
party. The Board of Managers must approve the transaction price.

 

(c) Payment Terms.   The
purchasing Member shall pay the purchase price in cash at the closing.  If the purchase price is payable on a
deferred basis, the purchasing Member shall execute a promissory note in the
principal amount of the purchase price having the same payment terms as set
forth in the selling Member’s notice.  If
the purchase price is payable other than in cash, then, unless the parties
otherwise agree, the cash value of the purchase price shall be determined by
arbitration and such cash value shall be paid to the selling Member at the
closing.

 

8.6 Only One Remaining Member.   If,
as a result of the exercise of the option granted in Section 8.1 hereof,
there remains only one Member then, after the payment of the purchase price as
provided in Section 8.4 hereof, the remaining Member will determine
whether the Company will continue in operation or will be Liquidated in
accordance with Article 10 hereof.

 

 

ARTICLE 9

 

LIABILITY OF MEMBERS; INDEMNIFICATION

 

Section 9.1. Liability of Members.   The
Members are not liable for any obligation of the Company (whether arising in
contract, tort or otherwise) solely by reason of being a Member of the Company.

 

Section: 9.2. Indemnification.

 

(a) Any person or entity who was or is
threatened to be made a party to any threatened, pending or completed action,
suitor proceeding whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Company) solely by reason of the
fact that such person or entity is or was a Manager, Member, officer, employee
or agent of the Company, or is or was serving at the request of the Company as
a manager, member, director, officer, employee or agent of another corporation,
company, joint venture, trust or other enterprise (sometimes referred to herein
as an “Indemnified Party”), shall be indemnified by the Company against
expenses (including attorneys fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such Indemnified Party in
connection with such action, suitor proceeding if such Indemnified Party acted
in good faith and in a manner such Indemnified Party reasonably believed to be
in or not opposed to the best interests of the Company, and with respect to any
criminal action or proceeding. had reasonable cause to believe such Indemnified
Party acted in good faith and in a manner such Indemnified Party reasonably
believed to be in or not opposed to the best interests of the Company, and,
with respect to any criminal action or proceeding. had no reasonable cause to
believe such Indemnified Party’s conduct was unlawful; provided, however
that

 

(i) the term nation of any action, suit
or proceeding by judgment, order, settlement or conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that such Indemnified Party did not act in good faith and
in a manner which such Indemnified Party) reasonably believed to be in or not
opposed to the best interests of the Company or, with respect to any criminal
action or proceeding, that such Indemnified Party had reasonable cause to
believe that such Indemnified Party conduct was unlawful and

 

(ii) no such indemnification shall be
made ill respect of any claim, issue or matter as to which such Indemnified
Party shall have been adjudged to be liable for negligence or misconduct in the
performance of such Indemnified Party’s duty to the Company unless, and only to
the extent that, the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such Indemnified Party is fairly and
reasonably entitled to such indemnification.

 

(b) Any indemnification under clause (a) of
this Section 9.2 (unless ordered by court) shall be made by the Company
only as authorized in the specific case upon a determination that
indemnification if an Indemnified Party is proper under the circumstances,
based on the applicable standard of conduct set forth in such clause (a). Such
determination shall be made by the majority vote of the Board of Managers.

 

(c) Expenses incurred by any Indemnified
Party in defending a civil or criminal action, suitor proceeding may be paid by
the Company in advance of the final disposition of such action, suit or
proceeding as authorized by the Members in the 

 

 

specific case upon receipt of an undertaking by or on behalf of such
Indemnified Party to repay the amount of any such expenses so advanced unless
it shall ultimately be determined that such Indemnified Party is entitled to be
indemnified by the Company as authorized in this Section 9.2.

 

(d) The indemnification pursuant to this
Section 9.2 shall not be deemed exclusive of any other rights to which
persons or entities seeking indemnification may be entitled under any other
agreement or otherwise.

 

ARTICLE 10

 

DISSOLUTION AND LIQUIDATION

 

Section 10.1 Dissolution.   The Company
shall be dissolved upon the unanimous agreement of the Board of Managers

 

Section 10.2. Liquidation.   In
the event of the dissolution of the company, the Board of Managers shall
commence to wind down the affairs of the Company. The assets of the Company
shall be liquidated and the proceeds thereof shall be paid (to the extent
permitted by applicable law) in the following order:

 

(a) Transfer and return of technologies
as provided in Article 4.4

 

(b) Payment of any debts or obligations
to third parties or the creation of any related reserves as may be necessary.

 

(c) Payment of any debts or obligations
to any Members,

 

(d) Distribution to Members as provided
in Article 5

 

Section 10.3 Research, Development
and Commercialization Responsibility. It is the intent of this Agreement to
have MedQuest complete the research, development and commercialization of the
Included Activities in Article 1 except under the following conditions

 

(a) MedQuest files Chapter 7 bankruptcy,

 

(b) MedQuest violates any of the terms
of section 2.6 and 2.7 of this Agreement.

 

(c) The Principal Investigator, specifically,
Dr. James Long, and/or principals of the project whose leaving could
adversely affect the project viability, leave the project and MedQuest is
unable to find, in a timely manner, a qualified replacement that meets the
standards approved by the Board of Managers. Any replacement for Dr. Long,
and/or other principals must have majority approval of the Board of Managers.

 

(d) MedQuest has persistent failures in
reaching the goals and milestones established in the annual Research Contract
and MedQuest’s performance fails to meet standards established by the Board of
Managers as donned in the development of each year’s annual plan, which shall
be consistent with industry standards. If the Company can no longer participate
in the funding agreed upon in the annual Research Contract, they must give
MedQuest six (6) months notice so that MedQuest can obtain other funding
to complete the Research Contract.

 

 

(i) Failure to meet goals and
milestones, as defined in the annual plan(s), would not constitute a failure
under (d) above, if such failure were caused by such things as;

 

a) Acts of God,

 

b) Conditions of war,

 

c) Unanticipated regulatory changes

 

d) Failure of the Company to raise the funds
required to accomplish the performance expected as approved in the annual
Research Contract,

 

(e) MedQuest fails to remedy specific
deficiencies noted by the Board of Managers in a timely and reasonable manner
that are consistent with industry standards.

 

(f) In the event that either (a), (b), (c) (d) or
(e) above occur, then the Board of Managers by majority approval may
select another party to complete the research, development, and/or
commercialization of the Included Activities in Article 1 under the
following terms:

 

(i) MedQuest shall return to the Company
its ownership Units;

 

(ii) The Company will retain technology
license rights; and

 

(iii) The Company in return will pay
MedQuest a royalty rate equal to the greater of two percent (2%) or the average
of the obligations of MedQuest to the University of Utah and the University of
Virginia, not to exceed three percent (3%). In addition, the Company shall pay
to MedQuest a royalty rate equal to the royalty payments due from MedQuest to
the University of Utah and the University of Virginia, which MedQuest shall
promptly pay to the University of Utah and the University of Virginia and shall
require those institutions to verify receipt of the same to the Company.

 

ARTICLE 11

 

BOOKS AND RECORDS, ACCOUNTING

 

Section 11.1 Records The
President or other designee of the Board of Managers shall keep at the Company’s
principal place of business the following Company documents:

 

(a) A current list of the full name and
last known business or address of each member of the Board of Managers, of each
officer and of each Member together with the contribution and the number of
Units of each Member;

 

(b) A copy of the Articles of
Organization, Board of Manager minutes, amendments, and resolutions of the
Company and all certificates of amendment thereto, together with executed
copies of any powers of attorney pursuant to which any such certificate has
been executed;

 

(c) Copies of the Company’s federal,
state and local income tax information returns and reports (if any) or the six
most recent tax years of the Company (or such lesser number of years as the
Company shall have been in existence);

 

(d) Copies of the original of this
Agreement and all exhibits and all amendments thereto;

 

 

(e) Financial statements of the Company
for the six most recent fiscal years of the Company (or such lesser number of
years as the Company shall have been in existence); and

 

(f) The Company’s books and records as
they relate to the internal affairs of the Company for at least the current and
past three fiscal years (or such lesser number of years as the Company shall
have been in existence).

 

Section 11.2 Inspection – Financial
Reports

 

(a)           Upon
the request of a Member, the President s promptly deliver to the requesting
Member, at the expense of he Company, a copy of the information required to be
maintained by Sections 11.1, hereof.

 

(b)           Each
Member has the right, upon reasonable request to obtain at the Company’s
expense, from the President, promptly upon availability, a copy of the Company’s
federal, state and local income tax or information returns for each year.

 

(c)           The
President, at the Company’s expense, shall promptly furnish to a Member a copy
of any amendment to this Agreement executed by the Members, Board of Managers
or an officer of the Company.

 

(d)           The
President, at the Company’s expense, shall send to each Member within 60 days
after the end of each taxable year the information necessary for the Member to
complete that Member’s federal and state income tax or information returns, and
there shall be included with such information a copy of the Company’s federal,
state and local income tax or information returns for the year.

 

Section 11.3 Federal Income Tax
Elections.   All elections required or permitted to be made
by the Company under the Code shall be made by the Board of Managers with the
approval of the members.

 

Section 11.4 Election to Adjust Basis.   In
the event of a distribution of property to a Member or the transfer of an
interest in the Company by sale, exchange or disposition, the Board of Managers
may, in its sole discretion, cause the Company to file an election under Section 754
of the Code in accordance with the regulations issued thereunder to adjust the
basis of Company property in the manner provided for in Sections 734 and 743w
of the Code.

 

Section 11.5 Tax Matters Partner.   The
Foundation is hereby designated as the “Tax Matters Partner” (as defined in
Code Section 6231) to represent the Company (at the Company’s expense) in
connection with all examinations of the Company’s affairs by tax authorities
and to expend Company funds for professional services and costs associated
therewith.

 

Article 12

 

MISCELLANEOUS PROVISIONS

 

Section 12.1 Mediation and
Arbitration.

 

(a) Mediation.       In the event a dispute arises out of or
relates to this Agreement, the parties hereto agree first to try in good faith
to settle such dispute through non-binding mediation under the commercial
Mediation Rules of American Arbitration 

 

 

Association (the “AAA”). The parties will jointly assign a mutually
acceptable mediator, seeking assistance in such regard from AAA if they have
been unable to agree upon such appointment within 20 days from the conclusion
of informal negotiations with respect to such dispute. The parties agree to
participate in such mediation for a period of 30 days. The cost of such mediation,
including fees and expenses, shall be borne by the parties.

 

(b) Arbitration. If there remains
any unresolved dispute arising out of or relating to this Agreement after the
parties hereto shall have participated in mediation as provided in clause (a) of
this Section 12.1, such remaining controversy or claims shall be submitted
to a disinterested third party arbitrator which shall be:

 

(i) selected by mutual agreement of the
Members or

 

(ii) in the event the Members do not
reach such an agreement regarding the selection of such arbitrator after a 60-day
period for good-faith negotiations has expired, then the AAA will appoint one
within 30 days of such expired period. The arbitrator thus selected or
appointed shall conduct the arbitration pursuant to the then current rules of
the AAA.  The arbitrator shall be
governed by the provisions of this Agreement. The decision of the arbitrator
shall be shared equally between the Members, and each Member shall bear its own
costs and attorney’s fees in any arbitration proceeding. The award of the
arbitrator shall be final and may be enforced in a court having jurisdiction
thereover.

 

(c) Waiver of Partition.   Each
Member hereby waives and renounces any right to seek a court decree of
dissolution or partition or to seek the appointment by a court of a liquidator
for the Company. Dissolution and liquidation are described in Article 10
this Agreement.

 

(d) Right to Distribution in Kind.   The
Members shall have no right to demand or receive any part property upon dissolution
and liquidation of the Company pursuant to Article 10 hereof or to demand
the return of their capital contributions to the Company. The Property to be
received by any Member upon such dissolution and/or liquidation of the Company
shall be determined by the Board of Managers except as otherwise presented in
this Agreement or the Exclusive License or Exclusive Sublicense Agreements.

 

Section 12.2 Integrated Agreement.   This
Agreement constitutes the entire agreement of the parties with respect to the subject
matter hereof and replaces and supersedes all prior agreements, understandings
and negotiations of the parties, whether written or oral.

 

Section 12.3. Binding Agreement.   This
Agreement shall be binding upon the executors, administrators, estates, heirs
and legal successors of the parties hereto.

 

Section 12.4. Governing Law.   Except
as otherwise specifically provided, this agreement and all questions arising
hereunder shall be determined in accordance with the laws of the State of Utah.

 

Section 12. 5. Notices.   All
notices, offers and acceptances and other communications hereunder shall be in
writing and shall be delivered in person, by telecopy (with confirmation) or by
overnight delivery service (with receipt), or shall be 

 

 

deposited in the United States mail (postage prepaid) by certified or
registered mail (return receipt requested) to

 

(a) in the case of any such
communication to a Member, the address for such Member set forth in Exhibit E
attached or at such other place as such Member may designate by written notice
to the Company and the other Member or Members or

 

(b) in the case or any such
communication to a Manager, the address of such Manager appearing on the books
of the Company or provided by such Manager to the Company for the purpose of
receipt of notices.

 

A notice shall be deemed received:

 

(i) if by personal delivery, on the date
delivered, 

 

(ii) if by telecopy. on the date
confirmed,

 

(iii) if by overnight delivery service,
on the date delivered and

 

(iv) if by mail, three days after
mailing.

 

Section 12.6. Counterparts This
Agreement may be executed in multiple counterparts.

 

ARTICLE 13

 

AMENDMENTS

 

This Agreement may be amended by unanimous
approval by the Members from time to time by a written instrument signed by the
Company and all of the Members. The President shall amend Schedule F
attached hereto to reflect admissions and withdrawals of Members, Transfers of
Units, capital contributions (including tax basis and agreed-upon value) and
any repurchase by the Company of Units.

 

Each of the Members has caused this Agreement
to be executed as of the date first written above.

 

	
  THE HEART AND LUNG RESEARCH FOUNDATION

  	
  MEDQUEST PRODUCTS, INC.

  
	
   

  	
   

  	
   

  
	
  BY: 

  	
  Johan Crawford

  	
   

  	
  By: 

  	
  Pratap Khanwilkar

  	
   

  
	
   

  	
   

  
	
  Name: Johan Crawford

  	
  Name: Pratap Khanwilkar

  
	
   

  	
   

  	
   

  
	
  Title: President of
  Chairman of Board

  	
  Title: President

  
							

 

 

Exhibit A

 

EXCLUSIVE LICENSE AND EXCLUSIVE
SUBLICENSE AGREEMENTS

 

EXCLUSIVE LICENSE AGREEMENT

 

Between

 

MedQuest as Licensor and the
Heart Lung Institute as Licensee

 

This Exclusive License Agreement (Agreement)
made and entered into this              day
of October, 1998, is by and between MedQuest Products, Inc. (hereinafter “MedQuest”),
having a principal place of business at 825 North 300, Suite #107, Salt
Lake City, Utah 84103 and The Heart Lung Institute (LLC) (hereinafter ‘Licensee’)
having a principal place of business at 8th Avenue and C Street, Salt Lake
City, Utah 84143.

 

Recitals

 

A.            MedQuest
is the owner of certain technology and patent rights, as described below; and

 

B.            MedQuest
is willing to grant to Licensee an exclusive, worldwide right and license to
use such technology and patent rights subject to the terms and conditions set
forth herein; and

 

C.            Licensee
desires to obtain such license to use technology and patent rights upon such
term and conditions.

 

NOW THEREFORE, for and in consideration of
the foregoing premises, the mutual covenants and agreements set forth below,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby expressly agree as follows:

 

Agreement
Terms

 

1.             Definitions

 

1.1           The
term “Licensed Technology” shall mean all technology, technical - data, trade
secrets, inventions (whether patentable or not), designs, devices, models,
know-how and other confidential and proprietary information relating to
magnetically suspended ventricular assist device (VADs) and the artificial
heart (TAH), including all rights arising under patent, copyright, trademark,
trade secret, and contract laws relating thereto during the term of this
Agreement.

 

1.2           The
term “Patent Rights” shall mean any rights in applications for -United States
patents, applications for foreign patents, any patents granted on United States
or foreign applications, and any continuations, continuations-in-part,
divisions, or reissues relating to the Licensed Technology, including patent
application number 08/850,156 entitled “Electromagnetically Suspended and
Rotated Centrifugal Pumping Apparatus and Method” and patent application number
08/850,598 entitled “Hybrid Magnetically Suspended and Rotated Centrifugal
Pumping Apparatus and Method”, and enhancements thereof which specifically
relate to magnetically suspended impellers.

 

 

1.3           The
term “Field” shall mean the use of magnetically suspended impeller VADs and TAH
technologies directed toward treatment of heart disease.

 

1.4           The
term “Master License” shall mean this Exclusive License Agreement which
transfers the technologies from MedQuest to the Licensee in exchange for
Licensee Units.

 

1.5           The
term “Research Contract” shall mean the annual approved agreement between the
Licensee and MedQuest for the funding of the research, development and
commercialization of the products incorporating Licensed Technology.

 

2.             Grant of License

 

MedQuest hereby grants to Licensee, and
Licensee hereby accepts from MedQuest, upon the terms and conditions set forth
in this Agreement, an exclusive right and license with the right to sublicense,
make, use, sell, offer to sell, import, and export, the Licensed Technology and
Patent Rights and to provide funding to further the research, development and
commercialization of the Licensed Technology and the Patent Rights in the
Field.

 

3.             Licensee Funding
Obligation and Engagement of MedQuest to Perform R&D

 

3.1           A
proposed Research Contract will be submitted by MedQuest to the Licensee by June 1st
of each year that it is applicable and the Licensee will review for approval
said Research Contract by June 15th of that year to allow for disbursement
of funds to begin by January 1st of the next calendar year. For the year
1998, the Research Contract for the next fifteen month period will be submitted
by MedQuest to HLI by October 22, 1998 for review. Upon HLI’s approval of
Research Contract, HLI will allow for the disbursement of funds for the fourth
quarter (4th) by November 5, 1998.

 

3.2           Licensee
intends to make available a minimum of $3,000,000 and intends to fund further
research, development, and commercialization of the Licensed Technology and
shall engage MedQuest to provide such research and development activities,
pursuant to the terms of a Sponsored Research Contract which will be prepared
by MedQuest and subject to the approval annually by the Licensee. Pursuant to
the terms of the Research Contract, Licensee intends to provide to MedQuest the
designated funds already raised and any additional funds raised for this
purpose up to a maximum contemplated amount of $56,000,000 to fund the
research, development, and commercialization activities contemplated on
Licensed Technology. MedQuest is not obligated to accept any additional contributions
above the funds already paid to MedQuest.

 

3.3           The
Licensee is not obligated to fund the entire fifty-six million dollars.

 

3.4           In
consideration for such payments, MedQuest will provide such specific technology
research, development, commercialization, management, marketing and sales
activities described in the Research Contract or otherwise agreed upon by the
parties.

 

3.5           The
results of the research and development activities pursuant to the Research
Contract including inventions and innovations applicable to the exploitation of
the Licensed Technology in the Field, shall be owned by MedQuest, and any
associated 

 

 

entity that participates in the development, and Licensed to Licensee
pursuant to the terms of this Agreement.

 

3.6           The
proposed budget for the funding advances to be made from Licensee to MedQuest
and the nature of the services associated with such payments are presented in
the Table 1 below, and will be detailed annually in the Research Contract. It
is understood and agreed that Licensee may fund the budget only to the extent
of the funds it actually raises for this purpose, and only as agreed to in the
approved Research Contract.

 

3.7           Funding
amounts will be advanced or disbursed to MedQuest in increments on a quarterly
basis or as needed and requested by MedQuest for project work completed or to
be performed by MedQuest and its associates pursuant to the terms of the
Research Contract and consistent with the annual budgets submitted by MedQuest.
MedQuest will submit quarterly reports to Licensee by the 20th of the following
month after the end of each calendar quarter during the term of the Agreement.
It is currently anticipated and estimated that advances will be made in the
amounts and for the purposes referenced in Table 1 below.

 

3.8           Disbursements
from Licensee to MedQuest will be made by the first day of the first month of
each quarter or if that falls on a weekend or holiday; then the preceding
business day.

 

Table 1 Proposed Budget Schedule of Estimated Funding Required for
Commercialization

 

	
  YEAR

  	
   

  	
  VAD

  BUDGET

  	
   

  	
  VAD

  STATUS

  	
   

  	
  TAH

  BUDGET

  	
   

  	
  TAH

  STATUS

  	
   

  	
  COMBINED

  BUDGETS

  	
   

  	
  CUMULATIVE

  BUDGETS

  	
   

  
	
  1997

  	
   

  	
  400,000

  	
   

  	
  R&D

  	
   

  	
  0

  	
   

  	
   

  	
   

  	
  $

  	
  400,000

  	
   

  	
  $

  	
  400,000

  	
   

  
	
  1998

  	
   

  	
  $

  	
  3,290,144

  	
   

  	
  R&D

  	
   

  	
  0

  	
   

  	
   

  	
   

  	
  $

  	
  3,290,144

  	
   

  	
  $

  	
  3,690,144

  	
   

  
	
  1999

  	
   

  	
  $

  	
  4,412,229

  	
   

  	
  R&D

  	
   

  	
  $

  	
  591,559

  	
   

  	
  R&D

  	
   

  	
  $

  	
  5,003,788

  	
   

  	
  $

  	
  8,693,932

  	
   

  
	
  2000

  	
   

  	
  $

  	
  5,859,605

  	
   

  	
  R&D

  	
   

  	
  $

  	
  1,460,042

  	
   

  	
  R&D

  	
   

  	
  $

  	
  7,319,647

  	
   

  	
  $

  	
  16,013,579

  	
   

  
	
  2001

  	
   

  	
  $

  	
  5,510,998

  	
   

  	
  IDE

  	
   

  	
  $

  	
  3,180,287

  	
   

  	
  R&D

  	
   

  	
  $

  	
  8,691,265

  	
   

  	
  $

  	
  24,704,844

  	
   

  
	
  2002

  	
   

  	
  $

  	
  6,352,544

  	
   

  	
  IDE

  	
   

  	
  $

  	
  3,349,120

  	
   

  	
  IDE

  	
   

  	
  $

  	
  9,701,664

  	
   

  	
  $

  	
  34,406,508

  	
   

  
	
  2003

  	
   

  	
  $

  	
  6,921,721

  	
   

  	
  PMA

  	
   

  	
  $

  	
  3,572,982

  	
   

  	
  IDE

  	
   

  	
  $

  	
  10,494,703

  	
   

  	
  $

  	
  44,901,211

  	
   

  
	
  2004

  	
   

  	
  $

  	
  7,508,744

  	
   

  	
  PMA

  	
   

  	
  $

  	
  3,563,306

  	
   

  	
  PMA

  	
   

  	
  $

  	
  11,072,050

  	
   

  	
  $

  	
  55,973,261

  	
   

  
	
  TOTAL

  	
   

  	
  $

  	
  40,255,985

  	
   

  	
   

  	
   

  	
  $

  	
  15,717,276

  	
   

  	
   

  	
   

  	
  $

  	
  55,973,261

  	
   

  	
  $

  	
  55,973,261

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

R&D
means research and development

IDE means Investigational Device Exemption for limited clinical trials as
permitted by the FDA

PMA means the Premarket Approval for nationwide sales for clinical use as
granted by the FDA

 

4.             Consideration to
MedQuest

 

4.1           In
consideration for the license granted to Licensee pursuant to Section 2 of
this Agreement:

 

(a) Following the signing of this
agreement, Licensee shall review MedQuest’s Research Contract within 15 days of
receipt of said Research Contract. The

 

 

Research Contract will cover the next 15 month period (October 1,
1998 through December 31, 1999) or that period following approval of the
Research Contract through December 31, 1999, whichever is less). The
Research Contract will include information and milestones for establishing
performance criteria.

 

(b) Licensee intends to provide MedQuest
with the funding it receives for the purpose to complete the research,
development and commercialization of the Licensed Technology, in accordance
with the terms of this Agreement and the Research Contract.

 

(c) Licensee will grant an exclusive,
worldwide right and sublicense to use, research, develop, and exploit the
Licensed Technology in the Field, in the Exclusive Sublicense Agreement
attached in Exhibit A.

 

(d) MedQuest will be granted a one unit
interest in the LLC.

 

5.             Representations
and Warranties of MedQuest

 

5.1           MedQuest
represents and warrants that it has obtained and/or will obtain all necessary
assignments, licenses and rights associated with the designated patent
applications included within the definition of Patent Rights herein, from the
various inventors and Universities holding rights thereto to carryout the
purposes of this Agreement and of the Operating Agreement entered into by the
parties, with the agreement that such inventors and rights holders will
cooperate in MedQuest’s acquisition and enforcement of the intellectual
property rights related thereto. MedQuest will assign interest in the Patent
Rights and Licensed Technology to the Licensee prior to entering into the
Research Contract.

 

5.2           MedQuest
warrants that it owns, has control, and authority to grant Licensed Technology
and Patent Rights set forth in Sections 1.1 and 1.2 respectively.

 

5.3           MedQuest
warrants that it will diligently proceed to protect all Patent Rights and
Licensed Technology Rights throughout the world.

 

5.4           Licensee
hereby represents to MedQuest and MedQuest hereby represents and warrants to
Licensee as follows:

 

(a) it is a corporation duly organized,
validly existing, and in good standing under the laws of its respective
jurisdiction of incorporation;

 

(b) it has the power and authority to
own, lease, and operate its assets and to carry on its activities as it is now
being conducted and has the full power and authority to enter into this
Agreement and to performing its obligations hereunder;

 

(c) the execution and delivery of this
Agreement and the performance by it of its obligations under this Agreement
have been duly and validly authorized and approved by all requisite action, and
no other acts or proceedings on its part are necessary to authorize the
execution, delivery, and performance by it of this Agreement or the
transactions contemplated hereby;

 

(d) this Agreement constitutes its
legal, valid, and binding obligation and is enforceable against it in
accordance with its terms, except to the extent that - enforcement may be
limited by general principles of equity, regardless of whether considered-in a
proceeding at law or in equity;

 

 

(e) no consent, approval, nondisapproval,
authorization, ruling, order of, notice to, or registration with any
governmental authority or any person, partnership, corporation, firm, trust, or
other entity is required on its part in connection with the execution and
delivery of this Agreement or the consummation by it of the transactions
contemplated hereby; and

 

(f) the delivery and performance of this
Agreement by it are not restricted by or in violation of any applicable law to
which it is subject or by any agreement, commitment, order, ruling, or
proceeding to which it is a party or to which it or any of its assets are
subject.

 

5.5           MedQuest
hereby represents and warrants to Licensee as follows:

 

(a) MedQuest knows of no third-party
rights in or claims to the Licensed Technology or the Patent Rights, other than
the University of Utah and the University of Virginia, nor is MedQuest aware of
any challenge to the validity of its rights to the Licensed Technology or the
Patent Rights;

 

(b) MedQuest has executed no other
Agreement in conflict with this Agreement;

 

(c) MedQuest is not aware of any
challenge to its co-ownership of the Patent Rights or any right in the Licensed
Technology;

 

(d) the execution and performance of
this Agreement and the license contained herein will not violate, conflict
with, or result in any breach of any of the provisions of, or constitute a
default under, any other agreement, instrument, document, or other obligation
to which MedQuest is a party, or by which it is bound, or any decree, law,
judgment, order, statute, rule or regulation applicable to MedQuest;

 

(e) MedQuest is not aware of any third
party claims, asserted or threatened, that the development of products
utilizing the Licensed Technology will infringe upon the rights of said third
party; and

 

(f) To the best of MedQuest’s knowledge,
the Licensed Technology and Patent Rights are not publicly or generally known
or available and have been, and will continue to be maintained and safeguarded
as trade secrets until, in the case of Patent Rights or trademarks applied for
at, issued by, or published by, the U.S. Patent and Trademark Office or a
foreign patent or trademark office.

 

5.6           MedQuest
shall indemnify and hold Licensee harmless, against any claim that the issued
Patent Rights infringe a valid patent or in the event of a misrepresentation
made in Section 5.5, above.

 

The Parties agree that any breach of any of
the representations and warranties set forth in any of Section 5.1 to 5.6
shall be considered a material breach of this Agreement.

 

6.             Patents and
Infringement

 

6.1           Included
within the Research Contract will be the details of the costs and expenses
related to the filing, prosecution and maintenance of United Slates and foreign
patent applications with respect to the Licensed Technology and such responsibility
to pay for these costs will not be transferred to MedQuest hereunder. MedQuest
reserves the 

 

 

right to complete such protection mechanisms for the Licensed
Technology as it may determine to be appropriate to protect the intellectual
property rights of the Licensed Technology.

 

6.2           If
it is believed in good faith that the Patent Rights or other intellectual
property rights relating to the Licensed Technology are being infringed by a
third party, the party to this Agreement first having knowledge of such
infringement shall promptly notify the other in writing, which notice shall set
forth the facts of such infringement in reasonable detail. Licensee shall have
the right, but not the obligation, to institute and prosecute at its own
expense any such infringement of the Patent Rights or other intellectual
property tights. If Licensee fails to bring such action or proceedings within a
period of three (3) months, after receiving written notice or otherwise
having knowledge of such infringement, then MedQuest shall have the right, but
not the obligation, to institute and prosecute at its own expense any such
infringement of the Patent Rights or other intellectual property rights.
Recovery of damages and costs in such suit shall be apportioned as follows: The
party bringing the suit shall first recover an amount equal to two (2) times
the cost and expense incurred by such party directly related to the prosecution
of such action and the remainder shall be divided equally between MedQuest and
Licensee.

 

7              Termination

 

7.1           Unless
earlier terminated as provided herein, with respect to the Patent Rights, this
License Agreement shall extend for the life of the last to expire patent issued
on the Patent Rights and shall then expire automatically. With respect to the
Licensed Technology other than the Patent Rights, this Agreement shall continue
in full force and effect for a period of twenty (20) years from the date of
this Agreement. Not withstanding this clause, the royalty payments associated
with the Exclusive Sublicense Agreement will continue as long as products
incorporating the Licensed Technology are being commercialized.

 

7.2           In
the event of the default or failure by either party to perform any of the
terms, covenants or provisions of this License Agreement, the non-performing
party shall have sixty (60) days after the giving of written notice by the
other party of such default within which to correct such default. If such
default is not corrected within the said 60- day period after notice, the
performing party shall have the right at its option to cancel and terminate
this Agreement. Either party shall have the right at its option to cancel and
terminate this Agreement in the event that the other party shall become
involved in insolvency, dissolution, Chapter 7 bankruptcy or receivership
proceedings affecting the operation of its business or in the event that the
other party shall discontinue its business for any reason. In the event of
termination of this License Agreement except pursuant to Paragraph 7.1, all
rights licensed herein will be vested in the performing party.

 

7.3           This
Agreement shall automatically terminate in the event of a liquidation or
winding up of Licensee.

 

8.             Assignability

 

This Agreement shall be binding upon and inure to the benefit of
MedQuest and its assignees and successors in interest and shall be binding upon
and inure to the benefit of 

 

 

Licensee and any successor to its entire business but shall not
otherwise be assignable or assigned by either party without prior approval of
the other party being first obtained in writing, which approval shall not be
unreasonably withheld.

 

9.             Governing Law

 

This Agreement shall be construed according to the laws of the State of
Utah and any and all disputes hereunder shall be resolved in the appropriate
state or federal courts sitting in the State of Utah. The parties hereto agree
to the jurisdiction of, and to venue in, such courts.

 

10.           Additional
Provisions

 

10.1         The
parties hereto agree that neither will use the names of the other on any logo
type or symbol associated with any publication, research, promotion, marketing
sale or advertisement in connection with the Licensed Technology without the
prior written consent of the other.

 

10.2         The
parties agree that the Licensed Technology to which this Agreement relates is
confidential and each party agrees to use reasonable efforts to maintain the
confidentiality of non-public information and to maintain the subject
technology in confidence and to use the same only in accordance with this Agreement.
Such obligations of confidentiality shall not apply to information which either
party can demonstrate: (i) was at the time of disclosure in the public
domain; (ii) has come into the public domain after disclosure through no
fault of such party; (iii) was known to such party prior to disclosure
thereof by the other party; or (iv) was lawfully disclosed without
obligation of confidence by a third party which was under no obligation of
confidence.

 

The foregoing obligations of confidentiality shall survive termination
of this Agreement.

 

10.3         Licensee
and its personnel shall have the right to publish and present data and findings
related to the research and development with respect to any Licensed Technology
that are not deemed trade secret, confidential, proprietary information and/or
Know-How, whether or not patentable subject to the approval of the Board of
Managers.

 

10.4         Neither
party to this Agreement shall be deemed to be the agent or fiduciary of the
other. Each party shall notify the other of any claim, lawsuit or other
proceeding relating to the Licensed Technology. MedQuest shall indemnify and
hold harmless Licensee and each of its employees, officers, trustees and agents
(the indemnified parties), from and against any and all claims, causes of
action, lawsuits or other proceedings filed or otherwise instituted against the
indemnified parties by third parties related directly or indirectly to or
arising out of the Licensed Technology.

 

10.5         The
failure of either party to enforce at any time any of the provisions of this
Agreement or any rights in respect hereto or to exercise any election herein
provided shall in no way be considered to be a waiver of such provisions,
rights or elections or in any way to affect the validity of this Agreement.

 

10.6         If
any provision of this Agreement is judicially or in an arbitration proceeding
determined to be void or unenforceable, such provision shall be deemed to be
severable from the other provisions of this Agreement which shall remain in
full force 

 

 

and effect. Either party may request that a provision otherwise void or
unenforceable be reformed so as to be valid and enforceable to the maximum
extent permitted by law.

 

10.7         No
liability herein shall result to a party by reason of delay in performance caused
by force majeure, i.e., circumstances beyond the reasonable control of that
party, including without limitation, acts of God, fire, flood, war, civil
unrest or labor unrest.

 

10.8         The
terms and conditions hereof and in the Licensee Operating Agreement and the
Exclusive Sublicense Agreement constitute the entire agreement between the
parties with respect to the subject matter hereof and shall supersede all
previous agreements, whether oral or written, between the parties hereto with
respect to the subject matter hereof. No agreement or understanding bearing on
this Agreement shall be binding upon either party hereto unless it shall be in
writing and signed by the duly authorized officer or representative of each of
the parties and shall expressly refer to this Agreement.

 

This Exclusive License Agreement shall be effective as of the date and
year first written above.

 

	
   

  	
   

  	
  LICENSEE

  	
   

  
	
   

  	
   

  	
  By: 

  	
  Johan Crawford

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Johan Crawford

  	
   

  
	
   

  	
   

  	
  Title: President of Chairman of

  	
   

  
	
   

  	
   

  	
  Board

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MEDQUEST PRODUCTS, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  Pratap Khanwilkar

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Pratap Khanwilkar

  	
   

  
	
   

  	
   

  	
  Title: President

  	
   

  
							

 

 

EXCLUSIVE SUBLICENSE AGREEMENT

 

Between

 

Heart Lung Institute as
Sublicensor and MedQuest as Sublicensee

 

This Exclusive Sublicense Agreement (the Agreement) is made and entered
into this              
day of October, 1998, by and between the Heart Lung Institute, LLC (HLI) having
a principal place of business at 8th Avenue and C Street, Salt Lake City, Utah
84143 and between MedQuest Products, Inc. (hereinafter “Sublicensee’),
having a principal place of business at 825 North 300 Suite #107, Salt
Lake City, Utah 84103.

 

Recitals

 

A.            HLI
is the Licensee of certain Licensed Technology, as defined below, pursuant to
the terms of the Exclusive License Agreement(Maser License
Agreement) entered into between MedQuest and HLI concurrently with
the execution of this Agreement;

 

B.            HLI
is willing to grant to Sublicensee an exclusive, worldwide right and license,
in the nature of a sublicense, of rights granted to HLI pursuant to the terms
of the Master License, to utilize the Licensed Tecimology subject to the terms
and conditions of this Agreement; and

 

C.            Sublicensee
desires to obtain such sublicense to use the Licensed Technology upon such term
and conditions.

 

NOW THEREFORE, for and in consideration of
the foregoing premises, the mutual covenants and agreements set forth below,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby expressly agree as follows:

 

Agreement
Terms

 

1.             Definitions

 

1.1           The
term “Licensed Technology” shall mean all technology, technical data, trade
secrets, inventions (whether patentable or not), designs, devices, models,
know-how and other confidential and proprietary information relating to
magnetically suspended ventricular assist device (VADs) and the artificial
heart (TAH), including all rights arising under patent, copyright, trademark,
trade secret, and contract laws relating thereto during the term of this
Agreement.

 

1.2           The
term “Patent Rights” shall mean any rights in applications for United States
patents applications for foreign patents, any patents granted on United States
or foreign applications, and any continuations, continuations-in-part,
divisions, or reissues relating to the Licensed Technology, including patent
application number 08/850,156 entitled “Electromagnetically Suspended and
Rotated Centrifugal Pumping Apparatus and Method” and patent application number
08/850,598 entitled “Hybrid Magnetically Suspended and Rotated Centrifugal
Pumping Apparatus and Method”, and enhancements thereof which specifically
relate to magnetically suspended impellers.

 

 

1.3           The
term “Field” shall mean the use of magnetically suspended impeller VADs and TAH
technologies directed toward treatment of heart disease.

 

1.4           The
term “Net Sales” shall mean the gross amount of monies or cash equivalent or
other consideration which is paid by unrelated third panics to Sublicensee or
its affiliates for the purchase of Licensed Technology by sale or other mode of
transfer, less all trade, quantity and cash discounts actually allowed, R&D
sales, credits and allowances actually granted on account or rejections,
returns or billing errors, duties, transportation and insurance, taxes and
other governmental charges actually paid. The term “Net Sales” in the case of
non-cash sales, shall mean all equivalent consideration received by Sublicensee
for Licensed Technology.

 

1.5           The
term “Sublicensing Revenue” shall mean the sublicensing fees, royalties and
other payments and the cash equivalent or other consideration paid to
Sublicensee by sublicenses arising out of the sublicensing of the right to
make, have made, use or sell Licensed Technology in the field.

 

1.6           The
term “Affiliates” shall mean any corporation, partnership, joint venture or
other entity of which the common stock or equity ownership thereof is 10
percent or more owned by Sublicensee.

 

1.7 The tem “Exclusive License Agreement” or “Master
License” shall mean the agreement that transfers the technologies from MedQuest
to the HLI in exchange for HLI Units.

 

1.8           The
term “Research Contract” shall mean the annual approved agreement between the
HLI and MedQuest for the funding of the research, development, and
commercialization of the products incorporating Licensed Technology.

 

2.             Grant of
Licenses

 

HLI hereby grants to Sublicensee, and
Sublicensee accepts from the HLI, upon the terms and conditions, set forth in
this agreement, an exclusive right and license with the right to sublicense,
make, use, sell, offer to sell, import, and export the Licensed Technology and
Patent Rights to further research, development and commercialization of the
Licensed Technology and the Patent Rights which may include product
development, management, marketing and sales activities, (research, development
and commercialization) of the Licensed Technology and Patent Rights in the
Field with the right, upon majority approval of the HLI Board of Managers, to
sublicense, throughout the United States and the world subject to the
conditions described in the HLI, LLC Operating Agreement Section 10.3.
Sublicensee is not assuming by means of this Agreement, and HLI shall remain
obligated to perform its obligations to Sublicensee arising under Sections 3,
4, 6 and in the Master License Agreement.

 

3              Sublicence
Obligation

 

3.1           A
proposed Research Contract will be submitted by MedQuest to the HL by June 1st
of each year that it is applicable and the HLI will review for approval said
Research Contract by June 15th of that year to allow for disbursement of
funds to begin by January 1st of the next calendar year. For the year
1998, the Research Contract for the next fifteen month period will be submitted
by MedQuest to HLI by October 22, 1998 for 

 

 

review. Upon HLI’s approval of Research Contract, HLI will allow for
the disbursement of funds for the fourth quarter (4th) by November 5,
1998.

 

3.2           Sublicensee
is obligated to complete the research, development, and commercialization of
the Licensed Technology in the field and to make, have made, use, sell, lease
or otherwise market or dispose of Licensed Technology in the Field within a
reasonable period of time. The license granted hereby represents a sublicense
of HLI’s entire rights and interests arising under the Master License Agreement
with respect to the Licensed Technology and HLI retains no rights to exploit
the Licensed Technology except as specifically provided for herein.

 

4.             Consideration to
HLI

 

4.1           In
consideration of the license granted herein, and as long as products incorporating
Licensed Technology are commercialized by Sublicensee or its assignee,
Sublicensee agrees to pay a quarterly royalty payment, in an amount as
determined as set forth below, based on the amount of Funding (as defined in
the Master License - Agreement) provided by HLI to Sublicensee, as of the
commencement of the calendar quarter, to conduct the research, development and
commercialization of Licensed Technology. If the full three million dollars
committed by IHC is not contributed to the Licensee, then the first step
royalty amount will be adjusted proportionally to the amount actually
transferred. The royalty shall be equal to a percentage of the Net Sales
actually received by Sublicensee during each calendar quarter during the term
of this Agreement as follows:

 

Table 1: Royalty Obligation Per
Funding Provided

 

	
  Amount of $ paid by HLI to Sublicensee for R&D 

  and commercialization

  	
   

  	
  Percent Royalty (%)

  
	
  $ 3,000,000

  	
   

  	
   

  	
  2.10

  
	
  $   3,000,001-$16,000,000

  	
   

  	
   

  	
  3.15

  
	
  $ 16,000,001-$26,000,000

  	
   

  	
   

  	
  4.20

  
	
  $ 26,000,001-$36,000,000

  	
   

  	
   

  	
  6.30

  
	
  $ 36,000,001-$46,000,000

  	
   

  	
   

  	
  8.40

  
	
  $ 46,000,001-$56,000,000

  	
   

  	
   

  	
  10.50

  

 

4.2           Sublicensee
will submit quarterly reports to the HL by the 20th of the month commencing
after the end of each quarter during the term of this Agreement, with such report
reflecting the Net Sales amount received by Sublicensee during such calendar
quarter.

 

5.             Representations
of HLI

 

5.1           Sublicensee
hereby represents to Licensee and Licensee hereby represents to Sublicensee:

 

(a) it is a corporation (or, in the case
of Licensee, shall take steps to become) duly organized, validly existing, and
in good standing under the laws of its respective jurisdiction of
incorporation;

 

 

(b) it has the power and authority to
own, lease, and operate its assets and to carry on its activities as it is now
being conducted and has the full power and authority to enter into this
Agreement and to perform its obligations hereunder;

 

(c) the execution and delivery of this
Agreement and the performance by it of its obligations under this Agreement
have been duly and validly authorized and approved by all requisite action, and
no other acts or proceedings on its part are necessary to authorize the
execution, delivery, and performance by it of this Agreement or the
transactions contemplated hereby;

 

(d) this Agreement constitutes its
legal, valid, and binding obligation and is enforceable against it in
accordance with its terms, except to the extent that enforcement may be limited
by general principles of equity, regardless of whether considered in a
proceeding at law or in equity;

 

(e) no consent, approval,
nondisapproval, authorization, ruling, order of, notice to, or registration
with any governmental authority or any person, partnership, corporation, firm,
trust, or other entity is required on its part in connection with the execution
and delivery of this Agreement or the consummation by it of the transactions
contemplated hereby; and

 

(f) the delivery and performance of this
Agreement by it are not restricted by or in violation of any applicable law to
which it is subject or by any agreement, commitment, order, ruling, or
proceeding to which it is a party or to which it or any of its assets are
subject.

 

6.             Details of
Payments

 

The royalty obligations described in Section 4 of this Agreement will
be administered in the following manner.

 

6.1           Royalty
payments will be due and payable within sixty (60) days from the calendar
quarter to which they relate. The payment will be delivered or mailed to the
office of the HL to the address noted in Exhibit F of the “Operating
Agreement”.

 

6.2           Royalty
payments shall be paid in United States dollars consistent with the laws and
regulations controlling in the United States and/or any foreign country. If any
currency conversion shall be required in connection with the payment of
royalties hereunder, such conversion shall be made by using the exchange rate
prevailing at the Chase Manhattan Bank (NA.) on the last business day of the
calendar quarterly reporting period to which such royalty payments relate.

 

6.3           If
the royalty payments set forth in this Agreement and amounts due under this
Agreement are not paid when due, then such overdue amounts will accrue interest
commencing thirty (30) days after the due date, and continuing until payment is
made, at a per annum rate of two percent (2%) above the prime rate in effect at
the Chase Manhattan Bank (N.A.) on the due date.

 

7.             Patents and
Infringement

 

7.1           Included
within the Research Contract referred to in the Master License will be the
details of the costs and expenses related to the filing, prosecution and
maintenance of United States and foreign patent applications with respect to
the Licensed 

 

 

Technology and such responsibility to pay for these costs will not be
transferred to Sublicensee hereunder. Sublicensee reserves the right to
complete such protection mechanisms for the Licensed Technology as it may
determine to be appropriate to protect the intellectual property rights of the
Licensed Technology.

 

7.2           If
it is believed in good faith that the Patent Rights or other intellectual
property rights relating to the Licensed Technology are being infringed by a
third party, the party to this Agreement first having knowledge of such
infringement shall promptly notify the other in writing, which notice shall set
forth the facts of such infringement in reasonable detail. Licensee shall have
the right, but not the obligation, to institute and prosecute at its own
expense any such infringement of the Patent Rights or other intellectual
property rights. If Licensee fails to bring such action or proceedings within a
period of three (3) months, after receiving written notice or otherwise
having knowledge of such infringement, then Sublicensee shall have the right,
but not the obligation, to institute and prosecute at its own expense any such
infringement of the Patent Rights or other intellectual property rights.
Recovery of damages and costs in such suit shall be apportioned as follows: The
party bringing the suit shall first recover an amount equal to two (2) times
the cost and expense incurred by such party directly related to the prosecution
of such action and the remainder shall be divided equally between MedQuest and
HLI.

 

8.             Termination

 

8.1           Unless
earlier terminated as provided herein, with respect to the Patent Rights, this
Sublicense Agreement shall extend for the life of the last to expire patent
issued on the Patent Rights and shall then expire automatically. With respect
to the Licensed Technology other than the Patent Rights this Agreement shall
continue in full force and effect for a period of twenty (20) years from the
date of this Agreement. Notwithstanding this clause, the royalty payments
associated with the Exclusive Sublicense Agreement will continue as long as
products incorporating Licensed Technology are being commercialized.

 

8.2           In
the event of the default or failure by either party to perform any of the
terms, covenants or provisions of this License Agreement, the non-performing
patty shall have sixty (60) days after the giving of written notice by the
other party of such default within which to correct such default. If such
default is not corrected within the said 60- day period after notice, the
performing party shall have the right at its option to cancel and terminate
this License Agreement in the event that the other party shall become involved
in insolvency, dissolution, Chapter 7 bankruptcy or receivership proceedings
affecting the operation of its business or in the event that the other party
shall discontinue its business for any reason. In the event of termination of
this License Agreement except pursuant to paragraph 7.1, all rights licensed
herein will be vested in the performing party.

 

8.3           This
Agreement shall automatically terminate in the event of a liquidation or
winding up of Sublicensee.

 

 

9.             Assignability

 

This Sublicense Agreement shall be binding upon and inure to the
benefit of HLI, L.L.C. and its assignees and successors in interest and shall
be binding upon and inure to the benefit of Sublicensee and any successor to
its entire business but shall not otherwise be assignable or assigned by either
party without prior approval of the other party being first obtained in
writing, which approval shall not be unreasonably withheld.

 

10.           Governing Law

 

This Agreement shall be construed according to the laws of the State of
Utah and any and all disputes hereunder shall be resolved in the appropriate
state or federal courts sitting in the State of Utah. The parties hereto agree
to the jurisdiction of, and to venue in, such courts.

 

11.           Additional
Provisions

 

11.1         The
parties hereto agree that neither will use the names of the other on any logo
type or symbol associated with any publication, research, promotion, marketing
sale or advertisement in connection with the Licensed Technology without the
prior written consent of the other.

 

11.2         The
parties agree that the Licensed Technology to which this Agreement relates is
confidential and each party agrees to use reasonable efforts to maintain the
confidentiality of non-public information and to maintain the subject
technology i confidence and to use the same only in accordance with this
Agreement. Such obligations of confidentiality shall not apply to information
which either party can demonstrate: (i) was at the time of disclosure in
the public domain; (ii) has come into the public domain after disclosure
through no fault of such party; (iii) was known to such party prior to
disclosure thereof by the other party; or (iv) was lawfully disclosed
without obligation of confidence by a third party which was under no obligation
of confidence. The foregoing obligations of confidentiality shall survive
termination of this Agreement.

 

11.3         Sublicensee
and its personnel shall have the right to publish and present data and findings
related to the research and development with respect to any Licensed Technology
that are not deemed trade secret, confidential, proprietary information and/or
Know-How, whether or not patentable.

 

11.4         Neither
party to this Agreement shall be deemed to be the agent or fiduciary of the
other. Each party shall notify the other of any claim, lawsuit or other
proceeding relating to the Licensed Technology. Sublicensee shall indemnify and
hold harmless HLI and each of its employees, officers, trustees and agents (the
indemnified parties), from and against any and all claims, causes of action,
lawsuits or other proceedings filed or otherwise instituted against the
indemnified parties by third parties related directly or indirectly to or
arising out of the securing of the funds to complete the research, development
and commercialization as described herein or any other embodiment of the
subject technology by Sublicensee even though such claims, causes of action,
lawsuits or other proceedings and the costs (including attorneys fees) related
thereto in whole or in part from the conducts of any of the indemnified
parties.

 

11.5         The
failure of either party to enforce at any time any of the provisions of this
License Agreement or any rights in respect thereto or to exercise any election
herein 

 

 

provided shall in no way be considered to be a waiver of such
provisions, rights or elections or in any way to affect the validity of this
License Agreement.

 

11.6         If
any provision of this Exclusive Sublicense Agreement is judicially or in an
arbitration proceeding determined to be void or unenforceable, such provision
shall be deemed to be severable from the other provisions of this License
Agreement which shall remain in full force and effect. Either party may request
that a provision otherwise void or unenforceable be reformed so as to be valid
and enforceable to the maximum extent permitted by law.

 

11.7         No
liability herein shall result to a party by reason of delay in performance
caused by force majeure, i.e., circumstances beyond the reasonable control of
that party, including without limitation, acts of God, fire, flood, war, civil
unrest or labor unrest.

 

11.8         The
terms and conditions hereof and as referenced to the HLI “Operating Agreement”
and the “Exclusive License Agreement” between MedQuest and the HLI constitute
the entire agreement between the parties and shall supersede all previous
agreements, whether oral or written, between the parties hereto with respect to
the subject matter hereof No agreement or understanding bearing on this Agreement
shall be binding upon either party hereto unless it shall be n writing and
signed by the duly authorized officer or representative of each of the parties
and shall expressly refer to this Agreement.

 

This Exclusive Sublicense Agreement shall be effective as of the date
and year first written above.

 

 

	
   

  	
   

  	
  HLI

  	
   

  
	
   

  	
   

  	
  By: 

  	
  Johan Crawford

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Johan Crawford

  	
   

  
	
   

  	
   

  	
  Title: President of Chairman of

  	
   

  
	
   

  	
   

  	
  Board

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MEDQUEST PRODUCTS, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  Pratap Khanwilkar

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Pratap Khanwilkar

  	
   

  
	
   

  	
   

  	
  Title: President

  	
   

  
							

 

 

Exhibit B

 

“Excluded Activities” mean those
business activities and opportunities of each Member that are not subject to
the restrictions of the noncompetition provision set forth in Section 2.6
hereof as pertaining to Foundation.

 

Exhibit C

 

“Excluded Activities”
mean those business activities and opportunities of each Member that are not
subject to the restrictions of the noncompetition provision set forth in Section 2.6
hereof as pertaining to MedQuest Products, Inc.

 

A.            All
other products, services and technologies currently or that may be included in
the future in MedQuest Products Inc. excluding the Included Activities in Article 1.

 

(i) Coating technology for example as
disclosed in U.S. patent application number 08/846,268 entitled “Electrosurgical
Knife with Nonstick Coating” and PCT application number PCT/US97/09506 with the
same title and U.S. patent application number 09/071,371 entitled “Method and
Apparatus For Providing a Conductive Amorphous Non-Stick Coating” and any
continuations, continuations-in-part, divisions, or reissues relating to the
above listed patents are not included in the term Licensed Technology. However,
if patent rights relating to this patent are incorporated into any product
incorporating the Licensed Technology in the Field, MedQuest shall license such
rights in the said patent to the Company as set forth in Exhibit F,
attached hereto and by this reference made a part hereof.

 

B.            Any
products or services that MQP has contracted with NIH, MicroMed Technologies
Inc., Apex Medical, and other customers in the future that may be in the
medical products field.

 

C.            Ventricular
Assist devices and/or total artificial heart that specifically do not use
Magnetically suspended impellers.

 

 

Exhibit D

 

Prior to August 1, 1998, the Foundation has made monetary
contributions in the amount of $942,053, or which $830,153 has been paid to
MedQuest and $111,900 has been paid directly to the University of Virginia gift
account. It is the intent of the Foundation to contribute up to an additional
$2,051,947 to the Company. It is intended that a portion of the funding will be
allocated to the Utah Artificial Heart Program under a separate agreement
subject to approval by the Board of Managers. The Foundation also agrees to use
reasonable efforts to raise additional funds to contribute to the Company.
MedQuest is not obligated to accept any contributions, it is intended that any
such additional contributions shall be made according to the Proposed Budget
Estimate shown in Exhibit D, Table 1. The Foundation shall have the right,
but not the obligation, to contribute additional amounts to the Company but
only with the consent of all of the Board of Managers.

 

Table I Proposed Schedule of Estimated Funding Required for
Commercialization

 

	
  YEAR

  	
   

  	
  VAD

  BUDGET

  	
   

  	
  VAD

  STATUS

  	
   

  	
  TAH

  BUDGET

  	
   

  	
  TAH

  STATUS

  	
   

  	
  COMBINED

  BUDGETS

  	
   

  	
  CUMULATIVE

  BUDGETS

  	
   

  
	
  1997

  	
   

  	
  400,000

  	
   

  	
  R&D

  	
   

  	
  0

  	
   

  	
   

  	
   

  	
  $

  	
  400,000

  	
   

  	
  $

  	
  400,000

  	
   

  
	
  1998

  	
   

  	
  $

  	
  3,290,144

  	
   

  	
  R&D

  	
   

  	
  0

  	
   

  	
   

  	
   

  	
  $

  	
  3,290,144

  	
   

  	
  $

  	
  3,690,144

  	
   

  
	
  1999

  	
   

  	
  $

  	
  4,412,229

  	
   

  	
  R&D

  	
   

  	
  $

  	
  591,559

  	
   

  	
  R&D

  	
   

  	
  $

  	
  5,003,788

  	
   

  	
  $

  	
  8,693,932

  	
   

  
	
  2000

  	
   

  	
  $

  	
  5,859,605

  	
   

  	
  R&D

  	
   

  	
  $

  	
  1,460,042

  	
   

  	
  R&D

  	
   

  	
  $

  	
  7,319,647

  	
   

  	
  $

  	
  16,013,579

  	
   

  
	
  2001

  	
   

  	
  $

  	
  5,510,998

  	
   

  	
  IDE

  	
   

  	
  $

  	
  3,180,287

  	
   

  	
  R&D

  	
   

  	
  $

  	
  8,691,265

  	
   

  	
  $

  	
  24,704,844

  	
   

  
	
  2002

  	
   

  	
  $

  	
  6,352,544

  	
   

  	
  IDE

  	
   

  	
  $

  	
  3,349,120

  	
   

  	
  IDE

  	
   

  	
  $

  	
  9,701,664

  	
   

  	
  $

  	
  34,406,508

  	
   

  
	
  2003

  	
   

  	
  $

  	
  6,921,721

  	
   

  	
  PMA

  	
   

  	
  $

  	
  3,572,982

  	
   

  	
  IDE

  	
   

  	
  $

  	
  10,494,703

  	
   

  	
  $

  	
  44,901,211

  	
   

  
	
  2004

  	
   

  	
  $

  	
  7,508,744

  	
   

  	
  PMA

  	
   

  	
  $

  	
  3,563,306

  	
   

  	
  PMA

  	
   

  	
  $

  	
  11,072,050

  	
   

  	
  $

  	
  55,973,261

  	
   

  
	
  TOTAL

  	
   

  	
  $

  	
  40,255,985

  	
   

  	
   

  	
   

  	
  $

  	
  15,717,276

  	
   

  	
   

  	
   

  	
  $

  	
  55,973,261

  	
   

  	
  $

  	
  55,973,261

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

R&D
means research and development

IDE means Investigational Device Exemption for limited clinical trials as
permitted by the FDA

PMA means the Premarket Approval for nationwide sales for clinical use as
granted by the FDA

 

 

Exhibit E 

Member Addresses

 

MedQuest Products, Inc.

825 North 300 West Suite 107

Salt Lake City. UT 84103

 

The Heart & Lung Research Foundation

LDS Hospital

8 Ave & C Street

Salt Lake City, UT 84143

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