Document:

Exhibit 10.11

 

LICENSE AGREEMENT

 

Dated March 31, 1999

 

Between

 

MEDQUEST PRODUCTS, INC.

 

and

 

UNIVERSITY OF UTAH RESEARCH
FOUNDATION

 

 

TABLE
OF CONTENTS

 

	
  Article No

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  1.

  	
  DEFINITIONS

  	
  2

  
	
  2.

  	
  LICENSE
  GRANT

  	
  4

  
	
  3.

  	
  EXCLUSIVE
  PERIOD AND TERM OF AGREEMENT

  	
  5

  
	
  4.

  	
  SUBLICENSE

  	
  5

  
	
  5.

  	
  LUMP SUM
  PAYMENT

  	
  5

  
	
  6.

  	
  VALIDITY

  	
  6

  
	
  7.

  	
  DUE
  DILIGENCE

  	
  6

  
	
  8.

  	
  CONFIDENTIALITY

  	
  8

  
	
  9.

  	
  ANNUAL
  REPORTS

  	
  8

  
	
  10

  	
  PATENT
  PROSECUTION

  	
  9

  
	
  11.

  	
  PATENT
  MARKING

  	
  9

  
	
  12.

  	
  BOOKS AND
  RECORDS

  	
  10

  
	
  13.

  	
  TERMINATION
  BY LICENSOR

  	
  10

  
	
  14.

  	
  TERMINATION
  BY LICENSEE

  	
  10

  
	
  15.

  	
  WARRANTY BY
  LICENSOR

  	
  11

  
	
  16.

  	
  INFRINGEMENT

  	
  11

  
	
  17.

  	
  WAIVER

  	
  12

  
	
  18.

  	
  ASSIGNABILITY

  	
  12

  
	
  19.

  	
  INDEMNIFICATION

  	
  12

  
	
  20.

  	
  LIABILITY

  	
  12

  
	
  21.

  	
  NOTICES

  	
  12

  
	
  22.

  	
  FOREIGN LAWS

  	
  13

  
	
  23.

  	
  GOVERNING
  LAW

  	
  13

  
	
  24.

  	
  RELATIONSHIP
  OF PARTIES

  	
  13

  
	
  25.

  	
  NON-USE OF
  NAMES

  	
  13

  
	
  26.

  	
  DISPUTE
  RESOLUTION

  	
  14

  
	
  27.

  	
  GENERAL
  PROVISIONS

  	
  14

  
	
   

  	
  Exhibit “A

  	
  17

  
	
   

  	
  Exhibit “B

  	
  18

  
	
   

  	
  Exhibit “C

  	
  19

  
	
   

  	
  Exhibit “D

  	
  20

  

 

 

LICENSE AGREEMENT

 

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

 

WITNESSETH

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 1. DEFINITIONS

 

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

 

2

 

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

 

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

 

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

 

LICENSOR’S PATENT RIGHTS.

 

Section 1.4             “. . . covered by... “means (in the appropriate context) a LICENSED
PRODUCT that, when made, used or sold, or a LICENSED METHOD that, when
practiced, would constitute, but for the license granted to LICENSEE pursuant
to this AGREEMENT, an infringement of any claim or claims included within
LICENSOR’S PATENT RIGHTS, but for the LICENSEE’S joint ownership of said patent
rights.

 

Section 1.5             “NET SALES” means billings by LICENSEE or its SUBLICENSEES (as
defined herein), for any LICENSED PRODUCTS or LICENSED METHOD sold or leased or
services performed for commercial purposes, in all cases, net of the sum of the
following items (where applicable): (1) services performed by LICENSEE for
development or testing of the LICENSED PRODUCTS or sale of LICENSED PRODUCTS
developed at cost or no cost for clinical trials or evaluation by potential
partners or SUBLICENSEES; (2) cash, trade or quantity discounts actually
allowed; (3) sales, use, tariff, customs duties or other excise taxes directly
imposed upon particular sales; (4) outbound transportation charges prepaid or
allowed; and (5) allowances or credits to third parties for rejections or
returns or bad debts. A LICENSED PRODUCT and services performed using a
LICENSED PRODUCT or LICENSED METHOD shall be considered sold when billed out or
invoiced or, if not invoiced, when delivered or performed. There shall be no
deductions from NET SALES for costs of commissions or collections. NET SALES
shall not include billings for LICENSED PRODUCTS sold or services performed by
LICENSEE to any AFFILIATE unless such AFFILIATE is an end-user of any LICENSED
PRODUCT or service performed using any LICENSED PRODUCT or LICENSED METHOD.

 

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

 

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

 

Section 1.8             “TERRITORY” shall mean the world.

 

Section 1.9             “CF3” is defined as a prototype pump intended for use in ex vivo
animal experiments. The rotor in the CF3 is electromagnetically suspended (no
hybrid magnetic bearings) 

 

3

 

and is covered by a U.S. patent application entitled “Electromagnetically
Suspended and Rotated Centrifugal Pumping Apparatus and Method” as set forth on
Exhibit “A”. CF3 uses discrete rotor position sensors as part of the magnetic
bearing system. CF3 has been reduced to practice and extensively tested in
vitro as of the date of this agreement.

 

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

 

Section 1. 11          “CF4” is defined as the most recent (as of the EFFECTIVE DATE) major
design iteration of the CFVAD implantable blood pump before use in clinical
trials begins. The rotor is magnetically suspended using hybrid magnetic
bearings and is covered by U.S. patent applications entitled “Implantable
Centrifugal Blood Pump with Hybrid Magnetic Bearings” and “Hybrid Magnetically
Suspended and Rotated Centrifugal Pumping Apparatus and Method” as set forth on
Exhibit “A”. CF4 uses “self sensing” of rotor position using measurements
obtained from the magnetic bearing actuators. There are no discrete position
sensors in the system. Other aspects of this design are similar to the CF3, but
with some modifications to accommodate the magnetic bearing design changes and
to reduce the size of the system.

 

ARTICLE 2. LICENSE GRANT

 

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

 

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

 

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

 

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

 

4

 

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

 

ARTICLE 3. EXCLUSIVE PERIOD AND TERM OF
AGREEMENT

 

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

 

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

 

ARTICLE 4. SUBLICENSE

 

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

 

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

 

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

 

ARTICLE 5. LUMP SUM PAYMENT

 

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

 

5

 

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

 

ARTICLE 6. VALIDITY

 

Section 6.1             If, in any proceeding in which the validity or priority of any claim
of any patent included within LICENSOR’S PATENT RIGHTS is in issue, a judgment
or decree is entered that becomes irrevocable through the exhaustion of all
permissible applications for rehearing or review by a superior tribunal, or through
the expiration of the time permitted for such applications, the construction
placed on any such claim by such irrevocable judgment or decree shall
thereafter be applicable to this AGREEMENT with regard to any acts occurring
thereafter, and if any such irrevocable judgment or decree holds any such claim
invalid, LICENSEE’S obligations toward LICENSOR under this AGREEMENT based on
such claim or any claim patentably indistinct therefrom, including LICENSEE’S
obligations to pay fees to LICENSOR based on such claim or any claim patentably
indistinct therefrom, shall cease as of the date such judgment or decree
becomes irrevocable.

 

ARTICLE 7. DUE DILIGENCE

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

F.     CF4 Prototype completed by
September 30, 2001. This is the prototype of the device that will be used
clinically. The deliverables for this milestone will be a demonstration of full
magnetic suspension of the impeller, and pump performance in a loop circuit
pumping water at nominal pumping conditions (6 liters per minute of flow at
l00mmHg of pressure);

 

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

 

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

 

7

 

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

 

I.                 Start pre clinical durability tests 1/1/05. This includes regulatory
agency approval of the reliability test protocol to be done before clinical
trials, building the number of CFVAD systems specified in protocol, and
starting reliability tests;

 

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

 

K.    Start human clinical trials
1/1/08. Regulatory agency approval of the clinical trial application and
performance of the first human implant;

 

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

 

M.   Obtain regulatory approval
7/1/11. Obtain regulatory agency approval for the device to be marketed in
selected markets.

 

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

 

ARTICLE 8. CONFIDENTIALITY

 

Section 8.1             LICENSEE and LICENSOR acknowledge that either party may provide
certain information to the other about the INVENTIONS and LICENSOR’S PATENT
RIGHTS that is considered to be confidential. LICENSEE and LICENSOR shall take
reasonable precautions to protect such confidential information. Such
precautions shall involve at least the same degree of care and precaution that
LICENSEE customarily uses to protect its own confidential information.

 

Section 8.2             LICENSEE acknowledges that LICENSOR is subject to the Utah
Governmental Records Access and Management Act (“GRAMA”), Section 63-2-101 et.seq.,
Utah Code Ann. (1953), as amended. LICENSOR shall keep confidential any
information provided to LICENSOR by LICENSEE that LICENSEE considers
confidential, to the extent allowable under GRAMA and as provided in Section 53
13-16-301 et. seq., Utah Code Ann. In order to be eligible for such protection
under GRAMA, confidential information of LICENSEE disclosed to LICENSOR must be
in written or other tangible form, marked as proprietary, and accompanied by a
written claim by LICENSEE stating the reasons that such information must be
kept confidential.

 

ARTICLE 9. ANNUAL REPORTS

 

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

 

8

 

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

 

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

 

C                Accounting for NET SALES by LICENSEE and SUBLICENSEES;

 

D               Names and addresses of all SUBLICENSEES of LICENSEE;

 

E                 The amount spent on product development;

 

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

 

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

 

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

 

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

 

ARTICLE 10. PATENT PROSECUTION AND
MAINTENANCE

 

Section 10.1           LICENSOR and LICENSEE shall diligently prosecute and maintain
LICENSOR’S PATENT RIGHTS. LICENSOR and LICENSEE shall provide the other with
copies of all relevant documentation and keep the other informed and apprized
of the continuing prosecution. LICENSEE and LICENSOR shall keep any such
documentation and information confidential. Each parties’ inventors shall be
provided adequate opportunity to comment.

 

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

 

Section 10.3           LICENSEE shall pay all costs and legal fees incurred by LICENSOR in
the “preparation”, “prosecution”, and “maintenance”, as these terms are interpreted
under U.S. patent law, of LICENSOR’S PATENT RIGHTS, including without
limitation, any taxes on such patent rights.

 

ARTICLE 11. PATENT MARKING

 

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

 

9

 

ARTICLE 12. BOOKS AND RECORDS

 

LICENSEE shall keep true and complete books and records containing an
accurate accounting of all data necessary for proper identification of NET
SALES and verification of performance of due diligence milestones and for
reporting purposes. Upon one weeks notice, LICENSOR shall have the right to
inspect the income statements and balance sheets that were used to calculate
federal reporting to the IRS each year, and any additional records necessary to
verify NET SALES and performance of due diligence milestones, at LICENSOR’S
expense, upon notice to LICENSEE.

 

ARTICLE 13. TERMINATION BY LICENSOR 

 

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

 

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

 

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

 

ARTICLE 14. TERMINATION BY LICENSEE

 

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

 

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

 

10

 

ARTICLE 15. WARRANTY BY LICENSOR

 

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

 

AGREEMENT.

 

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

 

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

 

ARTICLE 16. INFRINGEMENT

 

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

 

Section 16.2           Any such legal action shall be at the expense of the party by whom
suit is filed hereinafter referred to as the “Litigating Party”. Any damages or
costs recovered by the Litigating Party in connection with a legal action filed
by it hereunder, and remaining after the Litigating Party is reimbursed for its
costs and expenses reasonably incurred in the lawsuit, shall be apportioned one
third to LICENSOR and two thirds divided between LICENSEE and University of
Virginia Patent Foundation.

 

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

 

11

 

ARTICLE 17. WAIVER

 

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

 

ARTICLE 18. ASSIGNABILITY

 

This AGREEMENT is binding upon and shall inure to the benefit of the
parties, their successors and assigns. Subject to LICENSEE’S rights to
sublicense, as set forth in Article 4 hereof, LICENSEE and LICENSOR may assign
this AGREEMENT only with the written consent of the other, which consent shall
not be unreasonably withheld, conditioned or delayed.

 

ARTICLE 19. INDEMNIFICATION

 

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

 

ARTICLE 20. LIABILITY

 

The LICENSOR is a governmental entity and is subject to the Utah
Governmental Immunity Act, Section 63-30-1 et seq., Utah Code Ann. (1953), as
amended (the “Act”). Section 63-30-34 of the Act expressly limits judgments
against the LICENSOR, its officers and employees to $250,000 per person for
personal injury and $500,000 per occurrence for bodily injury and death and to
$ 100,000 per occurrence for property damage. Section 63-30-5 of the Act
expressly waives immunity as to any contractual obligation. Subject to the
provisions of the Act, LICENSOR shall indemnify, defend and hold harmless
LICENSEE, its officers, agents, and employees against any actions, suits,
proceedings, liabilities and damages that may result solely from the negligent
acts or omissions of LICENSOR, its officers, agents or employees in connection
with this AGREEMENT. Nothing in this AGREEMENT shall be construed as a waiver
of any rights or defenses applicable to LICENSOR under the Act, including
without limitation, the provisions of Section 63-30-34 regarding limitation of
judgment for personal injury and property damage. LICENSOR shall give LICENSEE
timely notice of any claim or suit instituted of which it has knowledge that in
any way, directly or indirectly, affects or might affect LICENSEE, and LICENSEE
shall have the right at its own expense to participate in the defense of the
same. Without limiting the foregoing, if LICENSOR breaches any representation,
warranty or covenant of this AGREEMENT, LICENSOR agrees to return to LICENSEE
the $100,000 lump sum payment set forth in Article 5, together with the
$250,000 milestone payment set forth in Section 7.3, if any, in full
satisfaction of any and all liability or obligations of LICENSOR to LICENSEE
resulting from or related to such breach.

 

ARTICLE 21. NOTICES

 

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

 

12

 

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

 

In the case of LICENSEE:

 

MEDQUEST PRODUCTS, INC.

825 North 300 West, Suite 107

Salt Lake City, UT 84103

 

In the case of LICENSOR:

 

UNIVERSITY OF UTAH RESEARCH FOUNDATION

Technology Transfer Office

421 Wakara Way, Suite 170

Salt Lake City, UT 84108

 

With a copy to:

 

OFFICE OF GENERAL COUNSEL

University of Utah

309 Park Building

Salt Lake City, Utah 84112

 

ARTICLE 22. FOREIGN LAWS

 

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

 

Section 22.2 LICENSEE shall comply
with all applicable U.S. laws dealing with the export of technology or
technical information.

 

ARTICLE 23. GOVERNING LAW

 

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

 

ARTICLE 24. RELATIONSHIP OF PARTIES

 

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

 

ARTICLE 25. NON-USE OF NAMES

 

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

 

13

 

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

 

ARTICLE 26. DISPUTE RESOLUTION

 

Except for the right of either party to apply to a court of competent
jurisdiction for a temporary restraining order, a preliminary injunction, or
other equitable relief to preserve the status quo or prevent irreparable harm,
any and all claims, disputes or controversies arising under, out of, or in
connection with the AGREEMENT, including any dispute relating to patent
validity or infringement, which the parties shall be unable to resolve within
sixty (60) days shall be mediated in good faith. The party raising such dispute
shall promptly advise the other party of such dispute. By no later than five
(5) business days after the recipient has received such notice of dispute, each
party shall have selected for itself a representative who shall have the
authority to bind such party, and shall additionally have advised the other
party in writing of the name and title of such representative. By no later than
ten (10) days after the date of such notice of dispute, the party against whom
the dispute shall be raised shall select a mediator in the Salt Lake City area
and such representative shall schedule a date with such mediator for a hearing.
The parties shall enter into good faith mediation and shall share the costs
equally. If the representatives of the parties have not been able to resolve
the dispute within fifteen (15) business days after such mediation hearing,
then any and all claims, disputes or controversies arising under, out of, or in
connection with this AGREEMENT, including any dispute relating to patent
validity or infringement, shall be resolved by final and binding compulsory
arbitration in Salt Lake City, Utah, pursuant to Title 78, Chapter 3 1 a, Utah
Code Ann. (1953), as amended, and shall be determined in accordance with the
Commercial Arbitration Rules of the American Arbitration Association to the
extent such rules are not in conflict with such law. The arbitrators shall have
no power to add to, subtract from or modify any of the terms or conditions of
this AGREEMENT, nor to award punitive damages. Any award rendered in such
arbitration may be enforced by either party in either the courts of the State
of Utah or in the United States District Court for the District of Utah, to
whose jurisdiction for such purposes LICENSEE and LICENSOR each hereby
irrevocably consents and submits. All costs and expenses, including reasonable
attorneys’ fees, of the prevailing party in connection with arbitration of such
controversy or claim shall be borne by the other party.

 

ARTICLE 27. GENERAL PROVISIONS

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

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

 

IN WITNESS WHEREOF, LICENSOR and LICENSEE have executed this AGREEMENT
by their respective officers hereunto duly authorized, on the day and year
hereinafter written.

 

 

	
  “LICENSEE”

  	
   

  	
  “LICENSEE”

  
	
  MEDQUEST PRODUCTS INC.

  	
  UNIVERSITY OF UTAH RESEARCH 

  FOUNDATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
  “Pratap Khanwilkar”

  	
   

  	
  By

  	
  “John K. Morris”

  	
   

  
	
   

  	
  (Signature)

  	
   

  	
   

  	
  (Signature)

  	
   

  
	
   

  	
   

  
	
  Name

  	
  Pratap Khanwilkar

  	
   

  	
  Name

  	
  John K. Morris

  	
   

  
	
   

  	
  (Please Print)

  	
   

  	
   

  	
  (Please Print)

  	
   

  
	
   

  	
   

  	
   

  
	
  Title

  	
  President

  	
   

  	
  Title

  	
  General Counsel

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  3/31/99

  	
   

  	
  Date:

  	
  4/7/99

  	
   

  
												

 

Before me this 31 day of March 1999, Pratap Khanwilkar, personally
appeared whose identity was verified by official documentation and who executed
the above instrument, and who executed the above instrument, and acknowledged
to me that they executed the same of their own free will for the purpose
therein set forth.

 

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

 

My Commission Expires: August 10, 2002

 

15

 

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

 

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

 

My Commission Expires: 7-2-2000

 

16

 

EXHIBIT “A”

 

INVENTIONS

 

	
  U-2376

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TITLE

  	
  “Hybrid Magnetically Suspended and Rotated Centrifugal Pumping
  Apparatus and Method”

  
	
   

  	
  INVENTORS

  	
  Paul Allaire and * Eric Maslen of the University of Virginia, Don
  Olsen and Gill Bearnson of the University of Utah, and Pratap Khanwilkar and
  James Long of MedQuest.

  
	
   

  	
  USSN

  	
  08/850,598, filed on May 2, 1997

  
	
   

  	
  PATENT#

  	
  Application

  
	
   

  	
  STATUS

  	
  Patent Pending

  
	
   

  	
   

  	
   

  
	
  U-2376

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TITLE

  	
  “Implantable Centrifugal Blood Pump with Hybrid Magnetic Bearings”

  
	
   

  	
  INVENTORS

  	
  Paul E. Allaire and Ron Flack of the University of Virginia, Gill
  Bearnson and Don Olsen of the University of Utah, and Pratap Khanwilkar, B.
  Ajit Kumar, Mary Sinnot, and James Long of MedQuest.

  
	
   

  	
  USSN (CIP)

  	
  09/064,352, filed on April 22, 1998

  
	
   

  	
  PATENT#

  	
  Application

  
	
   

  	
  STATUS

  	
  Patent Pending

  
	
   

  	
   

  	
   

  
	
  U-2377

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TiTLE

  	
  “Electromagnetically Suspended and Rotated Centrifugal Pumping
  Apparatus and Method”

  
	
   

  	
  INVENTORS

  	
  Paul Allaire’ and Eric Maslen of the University of Virginia, Don
  Olsen and Gill Beamson of the University of Utah, and Pratap Khanwilkar and
  James Long of MedQuest.

  
	
   

  	
  USSN

  	
  08/850,156, filed on May 2,1997

  
	
   

  	
  PATENT#

  	
  Application

  
	
   

  	
  STATUS

  	
  Patent Pending

  

 

17

 

EXHIBIT “B”

 

LICENSE TO THE UNITED STATES GOVERNMENT

 

WHEREAS,                                         of
                                has/have
invented

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

 

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

and

 

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

 

WHEREAS, the UNIVERSITY OF UTAH, hereinafter called the “LICENSOR”, has
acquired by assignment from the inventor the entire right, title and interest
of the inventor to such invention;

 

NOW, THEREFORE

 

1. The LICENSOR, in consideration of the premises and other good and
valuable consideration, hereby grants and conveys to the United States
Government a royalty-free, non-exclusive and irrevocable license for
governmental purposes and on behalf of any foreign government pursuant to any
existing or future treaty or agreement with the United States under the
aforesaid patent application, and any and all divisions or continuations, and
in any and all patents or reissues which may be granted thereon during the full
term or terms thereof. As used herein, “governmental purpose’ means the right
of the Government of the United States, including any agency thereof, to
practice and have practiced (made or have made, used or have used, sold or have
sold) in connection with programs funded in whole or in part by the Federal
Government throughout the world by or on behalf of the Government of the United
States.

 

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

 

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

 

UNIVERSITY OF UTAH

 

 

Richard K. Koehn

Vice President for Research

 

(Date)

 

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

 

 

[Signature and Date]

 

18

 

EXHIBIT “C”

 

Annual NET SALES Report for Medquest
covering: ELECTROMAGNETICALLY SUSPENDED AND ROTATED CENTRIFUGAL PUMPING
APPARATUS AND METHOD, and THE IMPLANTABLE CENTRIFUGAL BLOOD PUMP WITH HYBRID
MAGNETIC BEARINGS, and HYBRID MAGNETICALLY SUSPENDED AND ROTATED CENTRIFUGAL
PUMPING APPARATUS

Each of which is covered under U-2376, U-2377

 

Date:

 

Period Covered:

 

NET SALES

 

A.            Number
of Units Sold:

 

B.            Cost
per Unit:

 

C.            Gross
sales amount (A x B):

 

D.            Deductions:

 

Discounts allowed (case, trade, quantity)

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

Transportation charges (outbound or prepaid)

Allowances (rejections and returns)

 

Total Deductions

 

E.             Net
Sales (C - D):

 

On Separate Document please also provide:

F.             Names
and addresses of all current SUBLICENSEES;

G.            Total
amount spent on product development;

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

I.              The
date of first occurrence of NET SALES in each country;

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

 

19

 

EXHIBIT “D”

 

Due Diligence Report for

MedQuest for the Blood Pump Technology

 

Date:

 

Period Covering:

 

Progress Regarding Specific Due Diligence Milestones:

 

Projected Date of First Sale:

 

20

 

ASSIGNMENT,
ASSUMPTION AND AMENDMENT AGREEMENT

 

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

 

RECITALS

 

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

 

B.            In connection with the sale and
purchase of the Assets, Assignor desires to assign to Assignee all of Assignor’s
right, title and interest in and to that certain License Agreement dated March
31, 1999, by and between Assignor and University, a copy of which is attached
hereto and incorporated herein as Exhibit A together with all amendments,
extensions, renewals and other modifications thereto (the “License Agreement”),
and Assignee desires to accept said assignment and assume the obligations of
Assignor under the License Agreement upon the terms and conditions set forth in
this Agreement.

 

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

 

AGREEMENT

 

NOW, THEREFORE, upon these premises and for
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

 

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

 

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

 

3.             Amendments.

 

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

 

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

 

1

 

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

 

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

 

D.            [INTENTIONALLY OMITTED]

 

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

 

E.             [INTENTIONALLY OMITTED]

 

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

 

F.             [INTENTIONALLY OMITTED]

 

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

 

G.            [INTENTIONALLY OMITTED]

 

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

 

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

 

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

 

I.              Start pre clinical durability test
by January 1, 2007.

 

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

 

J.             Start pre clinical animal tests by
January 1, 2007.

 

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

 

K.            Start human clinical trials by
January 1, 2008.

 

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

 

L.             Submit Regulatory marketing
application by January 1, 2010.

 

2

 

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

 

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

 

ARTICLE 9. ANNUAL
REPORTS

 

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

 

(m)          Exhibit C is deleted in its entirety

 

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

 

ARTICLE 21.
NOTICES

 

Any payment, notice or other
communication required to permitted to be given to either party hereto shall be
in writing and shall be deemed to have been properly given and effective: (a)
on the date of delivery if delivered in person during recipient’s normal business
hours; or (b) on the date of delivery if delivered by courier, express mail
service or first-class mail, registered or certified. Such notice shall be sent
or delivered to the respective addresses given below, or to such other address
as either party shall designate by written notice given to the other party as
follows:

 

In the case of LICENSEE:

 

	
   

  	
  With a copy to:

  
	
  WORLD HEART CORPORATION

  	
   

  
	
  Attn: Jal Jassawalla

  	
  MCCARTHY TETRAULT LLP

  
	
  President & CEO

  	
  Attn: Virginia Schweitzer

  
	
  7799 Pardee Lane

  	
  40 Elgin Street, Suite 1400

  
	
  Oakland, CA 94621

  	
  Ottawa, Ontario, Canada K1P 5K6

  
	
   

  	
   

  
	
  and

  	
   

  
	
   

  	
   

  
	
  WORLD HEART CORPORATION

  	
   

  
	
  Attn: Pratap Khanwilkar

  	
   

  
	
  VP, Rotary Systems and Business Development

  	
   

  
	
  4750 Wiley Post Way, Suite 120

  	
   

  
	
  Salt Lake City, UT 84116

  	
   

  

 

In the case of
LICENSOR:

 

	
   

  	
  With a copy to:

  
	
  UNIV. OF UTAH RESEARCH

  	
  OFFICE OF GENERAL COUNSEL

  
	
  FOUNDATION

  	
  University of Utah

  
	
  Technology Commercialization Office

  	
  309 Park Building

  
	
  615 Arapeen Drive, Suite 310

  	
  Salt Lake City, UT 84112

  
	
  Salt Lake City, UT 84108

  	
   

  

 

3

 

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

 

5.             Miscellaneous.

 

(a)           Binding Effect. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.

 

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

 

(c)           Governing Law. This Agreement shall be
governed by and interpreted in accordance with the laws of Utah, without regard
to any conflicts of law rule that would direct application of the laws of
another jurisdiction.

 

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

 

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

 

	
  ASSIGNOR:

  	
  ASSIGNOR:

  	
   

  
	
   

  	
   

  	
   

  
	
  MEDQUEST PRODUCTS, iNC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BY:  

  	
  ”Pratap Khanwilkar”

  	
   

  	
  BY: 

  	
  ”Jal S. Jassawalah”

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  PRINT NAME: 
  

  	
  Pratap Khanwilkar

  	
   

  	
  PRINT NAME: 

  	
  Jal S. Jassawalla

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TITLE: 

  	
  President/CEO

  	
   

  	
  TITLE: 

  	
  President & CEO

  	
   

  
	
   

  	
   

  	
   

  
	
  UNIVERSITY:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  UNIVERSITY OF UTAH RESEARCH FOUNDATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BY: 

  	
  ”R.E. Gesteland”

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  PRINT NAME: 

  	
  Raymond F. Gesteland

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TITLE: 

  	
  President

  	
   

  	
   

  	
   

  
												

 

4Exhibit 10.12

 

LICENSE AGREEMENT

 

Effective March 31, 1999 (“Effective Date”), the University of Virginia
Patent Foundation (“UVAPF”), a Virginia not-for-profit corporation, having a
principal place of business at 1224 West Main Street, Suite 1-110, Charlottesville,
Virginia, 22903, and MedQuest Products, Inc. (“MedQuest”), a Utah corporation,
having a principal place of business at 825 North, 300 West, Suite NEI07, Salt
Lake City, Utah, 84103, agree as follows:

 

ARTICLE I: RECITALS

 

1.             In the course of research at the University of Virginia, the
University of Utah, and MedQuest Products, Inc., Paul Allaire, Eric Maslen, Ron
Flack, Don Olsen, Gill Bearnson, Pratap Khanwilkar, James Long, B. Ajit Kumar,
and Mary Sinnott have made certain inventions relating to an implantable blood
pump (“Inventions”).

 

2.             The research at the University of Virginia was sponsored, in part,
by the United States Government. As such, any rights granted herein are subject
to a non-exclusive, royalty-free license held by the United States Government
to practice the Inventions.

 

3.             Certain patent applications covering the Inventions have been filed.

 

4.             UVAPF, MedQuest, and the University of Utah Research Foundation are
joint owners of the entire interest in the Inventions and any patent
applications relating thereto.

 

5.             MedQuest desires to obtain exclusive rights to the Inventions and
any patent applications relating thereto in order to develop and commercialize
the Inventions. To this end, MedQuest desires to exclusively license UVAPF’s
rights with respect to the Inventions and any patent applications relating
thereto.

 

6.             UVAPF is willing to grant such a license under the terms and
conditions set forth in this Agreement, and wishes to
reserve the right to practice the Inventions for educational and research
purposes at the University of Virginia.

 

ARTICLE II :
DEFINITIONS

 

7.             UVAPF’s Patent Rights means UVAPF’s
rights in and to:

 

(a)           the
U.S. patent application having serial no. 08/850,598, filed May 2, 1997,
entitled “Hybrid Magnetically Suspended and Rotated Centrifugal Pumping
Apparatus and Method,” and any patent issuing thereon;

 

(b)           the U.S. patent application having
serial no. 09/064,352, filed April 22, 1998, entitled “Implantable Centrifugal
Blood Pump with Hybrid Magnetic Bearings,” and any patent issuing thereon;

 

 

(c)           the
U.S. patent application having serial no. 08/850,156, filed May 2, 1997,
entitled “Electromagnetically Suspended and Rotated Centrifugal Pumping
Apparatus and Method,” and any patent issuing thereon; and

 

(d)           any patent application that is a
continuation, divisional, continuation-in-part, reissue, reexamination,
renewal, foreign equivalent, or extension of any of the patent applications
listed above, and any patent issuing thereon.

 

8.             Licensed Product means any device,
product or apparatus that is covered by UVAPF’s Patent Rights, or uses, or is
made by practicing, any of the Inventions claimed under UVAPF’s Patent Rights.

 

9.             Licensed Territories means all
territories to which UVAPF’s Patent Rights extend.

 

10.           Affiliate means 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.

 

11.           Net Sales means gross sales by MedQuest
or its Affiliates or Sublicensees of any product that incorporates or
completely comprises a Licensed Product, less the following: at-cost and
no-cost sales of Licensed Products for clinical trials or evaluations by
MedQuest, its Affiliates, potential funding sources, or Sublicensees;
above-cost sales of Licensed Products for clinical trials or evaluations by
MedQuest, its Affiliates, potential funding sources, or Sublicensees, provided
that the above-cost revenues for such above-cost sales are paid out to third
parties who carry out such clinical trials or evaluations and are not retained
by MedQuest; cash, trade, and quantity discounts actually allowed; sales, use,
and excise taxes; tariffs and customs duties; outbound transportation costs;
and allowances, credits, and write-offs for rejections, returns, or bad debts.

 

12.           Fractional Multiplier. For Net Sales
occurring with respect to Licensed Products that are not sold separately, and
are sold in combination with or as part of other products, the Fractional
Multiplier shall be the ratio of the manufacturing cost of the included
Licensed Products (in the numerator) to the total manufacturing cost of the
combined or composite products (in the denominator). For Net Sales occurring
with respect to Licensed Products that are sold separately, the Fractional
Multiplier shall be one (1).

 

13.           Royalty Rate. For Net Sales of Licensed
Products occurring in the Licensed Territories, the Royalty Rate shall be one-half
of one percent (0.5%), and for Net Sales of Licensed Products occurring outside
the Licensed Territories, the Royalty Rate shall be one-quarter of one percent
(0.25%).

 

14.           UVA shall mean the University of
Virginia, its governors, trustees, officers, agents, employees, faculty, staff,
and students.

 

 

ARTICLE III :
LICENSE

 

15.           Grant. UVAPF hereby grants to MedQuest
an exclusive license under UVAPF’s Patent Rights during the life of UVAPF’s
Patent Rights to practice the methods, and to make, use, sell, offer to sell,
and import the Licensed Product, throughout the Licensed Territories and all
other territories of the world (“License”).

 

16.           Rights to Affiliates. The rights
licensed to MedQuest hereunder shall extend to Affiliates designated in writing
by MedQuest, provided each such Affiliate agrees in writing to be bound by the
terms and conditions of this Agreement. MedQuest agrees to be fully responsible
for the performance of such authorized Affiliates hereunder.

 

17.           Agreement not to Otherwise License. UVAPF
shall not grant any other license to practice the methods, or to make, use,
sell, offer to sell, import or export the devices, that
are covered by the claims of UVAPF’s Patent Rights. Notwithstanding anything
herein to the contrary, any and all licenses and other rights granted hereunder
are limited by and are subject to the rights and requirements of the United
States Government that may attach as a result of Government sponsorship of
research in which one or more inventions or discoveries covered by UVAPF’s
Patent Rights are conceived or first actually reduced to practice, as set forth
in Title 37 of the Code of Federal Regulations (C.F.R.), Part 401, and in the
relevant Government research contracts, and as such rights and requirements may
be amended or modified by law.

 

18.           Sublicensing. MedQuest shall have the
exclusive right under UVAPF’s Patent 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 UVAPF,
within sixty (60) days of such Sublicensee’s receipt of written notice from
MedQuest or UVAPF of such termination, of its election and agreement to assume
with respect to UVAPF all the obligations contained in its sublicense with
MedQuest.

 

19.           License Issuance Fee. MedQuest shall pay
to UVAPF a License Issuance Fee in the amount of Seventy-Five Thousand Dollars
($75,000) within thirty (30) days after both this Agreement and an agreement
between MedQuest and the University of Utah Research Foundation with respect to
the Foundation’s joint rights in the Inventions have been executed. Time is of
the essence with respect to this payment.

 

20.           Pre-Sales License Maintenance Fee. MedQuest
shall pay to UVAPF a Pre-Sales License Maintenance Fee in the amount of
One-Thousand Dollars ($1,000) within forty-five (45) days of the issuance of
the first-issued patent included within UVAPF’s Patent Rights and within
forty-five (45) days of each anniversary of such issuance until Net Sales of
Licensed Products occur. Notwithstanding the foregoing, MedQuest shall not have
less than forty-five (45) days from the date on which MedQuest receives actual
notice of the issuance of the first-issued patent to pay the first Pre-Sales
License Maintenance Fee.

 

21            Royalties.

 

(a) Determination of Royalties Due. MedQuest shall pay to UVAPF
Royalties on all Net Sales of Licensed Products sold by MedQuest or its
Affiliates or Sublicensees under any 

 

 

unexpired claim of any of UVAPF’s Patent Rights. Such Royalties shall be calculated
in accordance with the following equation:

 

Royalties = Net Sales x Royalty Rate x Fractional Multiplier

 

With respect to Sublicensees, the Royalty shall be paid on such
Sublicensees’ Net Sales; in the event MedQuest sells or otherwise transfers Licensed
Products to an Affiliate for later resale, Royalties will be paid only on the
Net Sales of such Licensed Products by such Affiliate, and not the Net Sales of
such Licensed Products by MedQuest to such Affiliates.

 

(b) Minimum Royalties. Notwithstanding the foregoing, beginning
in 2009, or in the first calendar year in which Net Sales on Licensed Products
by MedQuest, its Affiliates and Sublicensees taken together exceed Two-Million
Dollars ($2,000,000), whichever occurs first, MedQuest shall pay to UVAPF
minimum Royalties of no less than Ten-Thousand Dollars ($10,000) per full
calendar year. If this Agreement or the License is terminated during a calendar
year, the minimum Royalties due UVAPF in such calendar year shall be prorated
based on the number of days that have passed in such calendar year on the date
of termination.

 

(c) Deduction for Insurance Premiums. Any incremental increase
in MedQuest’s insurance premiums, costs, and expenses that is attributable to
MedQuest’s addition of UVAPF or UVA to its insurance policy in accordance with
paragraph 53 of this Agreement shall be deducted from the Royalties due UVAPF.

 

22.           Reports and Payments. MedQuest shall
provide written reports to UVAPF-during the term of this Agreement within
forty-five (45) days after the first days of January, April, July, and October
of each year following 2008, or following the calendar year in which Net Sales
of Licensed Products first occur, whichever occurs first. MedQuest shall state
in each report the number of Licensed Products sold by MedQuest and its
Affiliates and Sublicensees, the corresponding Net Sales of products made and
sold or otherwise disposed of under the License during the preceding calendar
quarter, any deductions made from gross sales in determining such Net Sales,
and the Royalties due thereon. MedQuest shall remit to UVAPF with each such
report the Royalties then due.

 

23.           Records. MedQuest shall maintain
accurate records in sufficient detail to enable the Royalties due UVAPF to be
determined, and shall permit the records to be examined from time to time by
UVAPF at reasonable intervals, during normal business hours, and upon
reasonable notice during the term of this Agreement.

 

24.           Rights Reserved by UVAPF. UVAPF hereby
reserves the right for UVA to practice inventions claimed under UVAPF’s Patent
Rights for educational and research purposes at the University of Virginia.

 

25.           Non-Assertion. UVAPF agrees that with
respect to any U.S. or foreign magnetic bearing patent that, on the Effective
Date of this Agreement, it owns or under which it has the right to grant
licenses, or with respect to any U.S. or foreign magnetic bearing patent that
may later issue on a pending application for patent that, on the Effective Date
of this Agreement, it owns or under which it has the right to grant licenses,
it shall not assert against MedQuest or its vendees, transferees, Affiliates,
or Sublicensees any claims for infringement based on the 

 

 

manufacture, use, sale, offer for sale, importation, or exportation of
any apparatus made or sold by MedQuest or its vendees, transferees, Affiliates,
or Sublicensees under the License granted in this Agreement, or based on the
practice by MedQuest or its vendees, transferees, Affiliates, or Sublicensees
of any method, process, or procedure under the License granted in this
Agreement provided that a royalty on same has been paid hereunder; except that
UVAPF may assert any such claim of infringement if required to do so by a legal
duty to a third party, or may advise a third party of such claim of
infringement if required by a legal duty to such third party.

 

ARTICLE IV: WARRANTIES AND
REPRESENTATIONS

 

26.           Each party hereto acknowledges and agrees that no representation or
promise not expressly contained in this Agreement has been made by the other
party hereto or by any of its agents, employees, representatives or attorneys
concerning the subject matter of this Agreement.

 

27.           Each party warrants and represents that to the best of its knowledge
it has the full right and power to make the promises and grant the licenses set
forth in this Agreement and that there are no outstanding agreements,
assignments, licenses, or encumbrances in existence that are inconsistent with
the provisions of this Agreement.

 

28.           Nothing in this Agreement shall be construed as (i) a warranty or
representation by UVAPF as to the validity or scope of any of UVAPF’s Patent
Rights; (ii) a warranty or representation that anything made, used, imported,
developed, promoted, offered for sale, sold, or otherwise disposed of under any
license granted in this Agreement is not infringing, or will not infringe,
patents, trade secrets or other proprietary rights of third parties; (iii) an
obligation to bring or prosecute actions or suits against third parties for
infringement; (iv) conferring the right to use in advertising, publicity or
otherwise any trademark, trade name, or names, or any contraction,
abbreviation, simulation or adaptation thereof of MedQuest or UVAPF; (v)
conferring by implication, estoppel or otherwise any license or rights under
any patents of UVAPF other than UVAPF’s Patent Rights, except those rights of
non-assertion provided for herein; (vi) any other representations or
warranties, either express or implied, unless specified in this Agreement;
(vii) directly or indirectly operating or applying as a waiver of sovereign
immunity by the Commonwealth of Virginia; or (viii) imposing any obligation or
any liability on any party contrary to applicable law.

 

29.           UVAPF DISCLAIMS AND MAKES NO EXPRESS OR IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO UVAPF’S
PATENT RIGHTS OR ANY LICENSED PRODUCTS.

 

30.           MedQuest represents and warrants that it shall use commercially
reasonable efforts to diligently pursue the development, manufacture, and sale
of Licensed Products throughout the term of this Agreement.

 

31.           UVAPF represents and warrants that it is the owner
of all UVAPF’s Patent Rights, free and clear of any claims or
encumbrances, and has the right to grant the exclusive License provided herein.

 

 

ARTICLE V: TERMINATION

 

32.           Termination. The License shall terminate
upon:

 

(a)           the failure by MedQuest to pay the
License Issuance Fee when due;

 

(b)           notice given to MedQuest by UVAPF on
the failure by MedQuest to pay any Pre-Sales License Maintenance Fee or any
Royalties when due, and failure by MedQuest to remedy such failure within
ninety (90) days after receiving such notice;

 

(c)           to the
extent permitted by applicable and prevailing law, MedQuest filing a petition
in bankruptcy or an equivalent proceeding and being adjudicated a bankrupt, or
a petition in bankruptcy being filed against MedQuest, or MedQuest becoming
insolvent or making an assignment for the benefit of creditors or any other
arrangement pursuant to any bankruptcy law, or MedQuest discontinuing its
business relating to implantable blood pumps, or a receiver being appointed for
MedQuest;

 

(d)           ninety (90) days notice given to UVAPF by MedQuest;

 

(e)           expiration
of the last-to-expire of UVAPF’ s Patent Rights at a time when no applications
are pending for patents that, if issued, would be included within UVAPF’s
Patent Rights;

 

(f)            notice
given to MedQuest by UVAPF of any material breach or default of any material
term of this Agreement by MedQuest, and failure by MedQuest to remedy such
breach or default within ninety (90) days after receiving such notice;

 

(g)           violation of the insurance provisions
of this Agreement as set forth in such provisions; or

 

(h)           failure of MedQuest to execute an
agreement with the University of Utah Research Foundation as provided for in
paragraph 33 of this Agreement.

 

33.           Effect of Agreement. The effect of this
Agreement is contingent upon the execution of an agreement between MedQuest and
the University of Utah Research Foundation with respect to the Foundation’s
joint rights in the Inventions. Such agreement shall be executed within
twenty-one (21) days of the Effective Date of this Agreement or this Agreement
shall be null and void and without legal effect.

 

34.           Rights and Obligations Upon Termination. Upon termination of this Agreement or the License, the following
shall occur:

 

(a)           All
rights under the License and UVAPF’s Patent Rights shall revert to UVAPF,
except that Sublicensees shall have the right to elect to maintain their sublicenses
as specified in Article III.

 

(b)           All
payment obligations of MedQuest toward UVAPF coming due prior to termination
shall remain due and payable, including any License Issuance Fee, any Pre-Sales
Maintenance Fees, and any Royalties due;

 

 

(c)           MedQuest’s
duties to prosecute and maintain UVAPF’s Patent Rights shall cease;

 

(d)           With
respect only to acts occurring prior to the date of termination, MedQuest and
UVAPF’s respective rights and duties in regard to infringement suits,
confidentiality, indemnification, and non-assertion of patent rights shall
survive such termination; and

 

(e)           If
such termination occurs under the insurance provisions of this Agreement,
MedQuest shall have the right to reinstate this Agreement as provided for in
such provisions.

 

ARTICLE VI: PATENTS &
CONFIDENTIAL INFORMATION

 

35.           Marking. MedQuest and its Affiliates and
Sublicensees shall mark, and shall require their respective subcontractors to
mark, all products made under the License that are covered by any unexpired
claims of any of UVAPF’s Patent Rights with a notice sufficient to satisfy the
requirements of Section 287 of Title 35 of the United States Code and any
similar marking provisions in other jurisdictions within the Licensed
Territories.

 

36.           Prosecution and Maintenance of UVAPF’s Patent Rights. MedQuest shall prosecute and maintain UVAPF’s Patent Rights at
MedQuest’s expense. MedQuest may select, in its sole discretion, patent counsel
for performing such prosecution and maintenance, which counsel shall jointly
represent the interest of MedQuest and UVAPF. Upon request, UVAPF shall
cooperate with MedQuest in MedQuest’s prosecution and maintenance of UVAPF’s
Patent Rights by causing the execution of any document and the taking of any
action deemed necessary or desirable by MedQuest. MedQuest agrees that UVAPF
shall bear no portion of the costs, expenses, and fees, if any, incurred by
MedQuest prior to the Effective Date of this Agreement in prosecuting and
maintaining UVAPF’s Patent Rights.

 

37.           Infringement Suits. MedQuest may bring
suit in its own name and at its own expense against infringers of UVAPF’s
Patent Rights. MedQuest shall notify UVAPF of any such infringers and of the
commencement of any such suit. At MedQuest’s expense, UVAPF agrees to join any
such suit if required by law. MedQuest shall pay to UVAPF a share of any excess
of recoveries over costs, expenses, and fees incurred by MedQuest in such a
suit, with such share being determined as follows. If such recoveries are
awarded based on lost Net Sales, UVAPF’s share shall equal such excess
multiplied by the applicable Royalty Rate. Thus:

 

UVAPF’s share
= excess x Royalty Rate

 

If, instead, such recoveries are awarded based on a reasonable royalty,
UVAPF’s share shall equal such excess multiplied by the ratio of the applicable
Royalty Rate to such reasonable royalty. Thus:

 

UVAPF’s share
= excess x (Royalty Rate / reasonably royalty)

 

38.           Invalidation of Claims of Patents. If,
in any proceeding in which the validity or priority of any claim of any patent
included in UVAPF’s Patent Rights is in issue, a judgment or 

 

 

decree is entered that becomes irrevocable through the exhaustion of
all permissible applications for rehearing or review by a superior tribunal, or
through the expiration of the time construction placed on any such claim by
such irrevocable judgment or decree shall thereafter be applicable to this
Agreement with regard to any acts occurring thereafter, and if any such
irrevocable judgment or decree holds any such claim invalid, MedQuest’s obligations
toward UVAPF under this Agreement based on such claim or any claim found by a
court to be patentably indistinct therefrom, including any of MedQuest’ s
payment obligations toward UVAPF, shall cease as of the date on which such
judgment or decree becomes irrevocable.

 

39.           Extension of UVAPF’s Patent Rights. MedQuest
and UVAPF agree that UVAPF’s Patent Rights shall be extended by all means
provided by law or regulation including, without limitation, extensions
provided under U.S. law at 35 U.S.C. §§ 154(b), 155A, and 156. UVAPF agrees to
provide MedQuest with all necessary assistance in securing such extensions
including, without limitation, providing all information regarding applications
for regulatory approval, approvals granted, and the timing of same. MedQuest
acknowledges that, except as provided for under 35 U.S.C. § 156(d)(5), extensions under 35 U.S.C. § 156 must be applied for
within sixty (60) days of the date that a Licensed Product receives permission
under the provision of law under which the applicable regulatory review period
occurred for commercial marketing or use, and that MedQuest’s failure to apply
for such extensions during such sixty (60) day period will cause serious injury
to UVAPF.

 

40.           Confidentiality. MedQuest and UVAPF
shall each take reasonable precautions to maintain the confidential information
of the other in confidence. Such reasonable precautions shall involve at least
the same degree of care MedQuest and UVAPF customarily use to maintain their
own confidential information in confidence. In recognition of the academic
mission of UVA, MedQuest agrees that nothing herein shall prevent UVA or UVAPF,
their officers, agents, employees or students from disclosing or publishing UVA
or UVAPF information, or create any legal liability for doing so.

 

41.           Patent Terms of Art. As used herein in
the appropriate context, the terms “reasonable royalty,” “use,” “make,” “sell,”
“offer to sell,” “import,” “life,” “practice,” “prosecute,” “maintain,” “validity,”
“priority,” “claim,” “construction,” “patentably indistinct,” “cover,” “under,”
and any other term having a well-known meaning in U.S. or foreign patent law,
shall have the meaning attributed to such terms by U.S. or foreign patent law.

 

ARTICLE VII :
GENERAL PROVISIONS

 

42.           Indemnification. Subject to the conflict
resolution provisions provided herein, MedQuest and UVAPF shall each indemnify,
hold harmless, and defend the other against all claims, suits, losses, damages,
costs, fees (including reasonable attorneys fees), and expenses arising out of
their own breach of this Agreement. In addition, MedQuest agrees to indemnify,
hold harmless and defend UVA and UVAPF against any and all claims arising from
the execution of this Agreement or from the exercise of any rights under this
Agreement including, without limitation, against any damages, losses or
liabilities whatsoever for death, injury to person or damage to property, or
for the infringement of third-party intellectual property rights, as a result
of the making, use, importation, development, design, promotion, sale,
possession, 

 

 

operation, or other disposition of any Licensed Products or UVAPF’s
Patent Rights by MedQuest, its Sublicensees, Affiliates, customers, assignees,
or other transferees.

 

43.           Assignment. MedQuest and UVAPF shall not
assign this Agreement without the prior written consent of the other, which
consent shall not be unreasonably withheld, conditioned, or delayed.

 

44.           Governing Law. This Agreement shall be
governed in all respects by the laws of the state of Utah and the United States
without regard to the conflicts of laws provisions of the state of Utah or any
other jurisdiction.

 

45.           Notice. Any notice, report, request,
payment, remittance, reimbursement, or statement provided for in this Agreement
is sufficiently given when delivered in person or sent by certified or
registered mail addressed to the party for whom intended at the address given
above in the opening of this Agreement, or at an address specified by the
intended party by written notice.

 

46.           Entire Agreement. This Agreement is the
entire agreement and understanding between UVAPF and MedQuest on the subject
matter of this Agreement and merges all prior discussions and supersedes all
prior agreements between them relating to the subject matter. UVAPF and
MedQuest shall not be bound by any conditions, definitions, warranties, or
representations with respect to the subject matter of this Agreement, other
than as expressly provided in this Agreement or as set forth in a subsequent
amendment to this Agreement.

 

47.           Waiver. The failure of either party to
this Agreement to insist in any one or more instances upon strict performance
by the other of its obligations hereunder shall not constitute a waiver or
relinquishment of any such obligation for the future, and
the obligation shall continue in full force and effect.

 

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

 

49.           Amendments in Writing. No amendment or
modification to this Agreement shall be valid or binding upon UVAPF or MedQuest
unless made in a writing signed by both UVAPF and MedQuest.

 

50.           Agreement to Take Action to Achieve Purposes. UVAPF and MedQuest agree to execute and deliver all documents,
provide all information, and take or forbear from taking all such action as may
be necessary or appropriate to achieve the purposes of this Agreement.

 

51.           Severability. The provisions of this
Agreement are severable, and in the event that any provision of this Agreement
is determined to be invalid or unenforceable under any controlling body of law,
such invalidity or unenforceability shall not affect the validity or
enforceability of the remaining provisions of this Agreement.

 

 

52.           Conflict Resolution.

 

(a)           Mediation. Except as to issues relating to the validity, construction, or
effect of UVAPF’s Patent Rights, and except for the right of either party to
apply to a court for a temporary restraining order, a preliminary injunction,
or other equitable relief to preserve the status quo or prevent irreparable
harm, any dispute arising in connection with this Agreement that the parties
are unable to resolve within sixty (60) days shall be mediated. The party
raising such dispute shall promptly advise the other party of such dispute. By
not later than five (5) business days after receiving notice of such dispute,
each party shall select for itself a representative who shall have the
authority to bind such party, and shall advise the other party in writing of
the name and title of such representative. By not later than ten (10) business
days after receiving notice of such dispute, the party against whom the dispute
is raised shall select a mediator in the Salt Lake City, Utah area, and such
party’s representative shall schedule a date with such mediator for a hearing.
The parties shall enter into good faith mediation and shall share the costs of
such mediation equally, including reasonable costs of travel.

 

(b)           Arbitration. If the representatives of the parties have not been able to
resolve the dispute within fifteen (15) business days after such mediation
hearing, then such dispute shall be resolved by final and binding compulsory
arbitration in Salt Lake City, Utah. Such arbitration shall be determined in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. The arbitrator(s) shall have no power to add to, subtract from, or
modify any of the terms or conditions of this Agreement, nor to award punitive
damages. All costs and expenses, including reasonable attorneys’ fees and
reasonable travel, room, and boarding expenses, of the prevailing party in such
arbitration shall be borne by the other party.

 

(c)           Litigation. Any claim, dispute, or controversy concerning the validity,
construction, or effect of any of UVAPF’s Patent Rights, and any award rendered
in-arbitration, may be resolved or enforced by either party in either the
courts of the state of Utah or the United States District Court for the
District of Utah, to whose jurisdiction for such purposes MedQuest and UVAPF
each hereby irrevocably consent and submit. All costs and expenses, including
reasonable attorneys’ fees and reasonable travel, room, and boarding expenses,
of the prevailing party in such litigation shall be borne by the other party.

 

53.           Insurance. MedQuest shall not (i) use or
permit the use of Licensed Products in humans as part of clinical trials or
otherwise, or (ii) make, have made, use, import, develop, have developed,
promote, have promoted or sell any Licensed Product, or engage in any other act
involving any Licensed Product or UVAPF’ s Patent Rights, if such act could
possibly give rise to a claim against UVAPF or UVA for damage for personal
injury or property damage, unless MedQuest shall have first provided UVAPF,
unless otherwise agreed to between the patties in writing, with a certificate
of insurance proving that MedQuest or a third party authorized in writing by
UVAPF has in force, during the term of this Agreement, a policy of insurance
that will indemnify UVAPF, its directors, officers, agents, employees, and UVA,
its governors, trustees, faculty, staff and students, against liability claims
for injury or damages arising from such acts. Such insurance policy must: (i)
be drawn in an amount not less than five million dollars ($5,000,000) for each
occurrence as a combined single limit for bodily injury or death, and for
property damage; (ii) be endorsed to name UVAPF, UVA, MedQuest, and their respective
governors, trustees, officers, directors, faculty, staff, employees, agents,
and students as additional insureds under such policy of insurance, and such
insurance shall be deemed primary; and (iii) contain a stipulation that the
required coverage will not be reduced, materially 

 

 

altered, or
canceled without first giving sixty (60) days prior written notice to the
Executive Director of UVAPF and the Director of Risk Management at UVA. Unless
expressly waived in writing by UVAPF, MedQuest agrees that the above-described
liability insurance policy shall be maintained in force for so long as this
Agreement remains in effect. MedQuest must also provide insurance coverage for
five (5) years after termination or expiration of this Agreement. If such five-year
coverage is furnished under the insurance policy obtained during the term of
this Agreement, then MedQuest need not obtain any additional policy during the
five years after the Agreement between the parties has terminated or expired.
Neither MedQuest nor any third party shall terminate, reduce the face value of,
or otherwise materially modify such insurance coverage during the
aforementioned five-year period, unless equal or greater coverage is provided
under another policy in compliance with the foregoing provisions and without
any gap in coverage. This Agreement and the licenses granted herein to MedQuest
shall immediately and automatically terminate without notice in the event
MedQuest, or a party acting under authority of MedQuest, violates any provision
of this paragraph. A termination occurring under this paragraph shall occur and
become effective at the time of the violation that causes such termination.
Notwithstanding the foregoing, MedQuest shall have the right to reinstate the
effectiveness of this Agreement by obtaining the required insurance, whereupon
this Agreement shall automatically become effective and shall be and shall
remain in full force and effect without any further action of the parties
hereto. MedQuest shall insert this paragraph in any sublicense in which
MedQuest grants to a third party the right to make, have made, use, import,
develop, have developed, promote, have promoted or sell any Licensed Product,
with the name of such Sublicensee substituted for the name of MedQuest therein.

 

54.           Non-Use of Names. MedQuest shall not use
the names of UVAPF or UVA or their employees, officers, or agents, or any
adaptation thereof, in any advertising, promotional or sales literature without
prior written consent obtained from UVAPF in each case, except that MedQuest
may state that it is licensed by UVAPF under one or more of the patents and/or
applications comprising UVAPF’s Patent Rights.

 

55.           Technology Export Laws. It is understood
that UVAPF is subject to United States laws and regulations controlling the
export of technical data, computer software, laboratory prototypes, and other
commodities (including the Arms Export Control Act, as amended, and the Export
Administration Act of 1979), and that its obligations hereunder are contingent
on compliance with applicable United States export laws and regulations. The
transfer of certain technical data and commodities may require a license from
the cognizant agency of the United States Government
and/or written assurances by MedQuest that MedQuest shall not export data or
commodities to certain foreign countries without prior approval of such agency.
UVAPF represents neither that a license shall not be required nor that, if
required, such a license shall be issued.

 

 

	
  MedQuest

  	
  UVAPF

  
	
   

  	
   

  
	
  MedQuest
  Products Inc. 

  	
  University
  of Virginia Patent Foundation 

  
	
   

  	
   

  
	
  By

  	
  “Pratap
  Khanwilkar”

  	
  By

  	
  “R.
  MacWright” 

  
	
   

  	
  (signature)

  	
   

  	
  (signature)

  
	
   

  	
   

  	
   

  	
   

  
	
  Name

  	
  Pratap
  Khanwilkar

  	
  Name

  	
  Robert S.
  MacWright

  
	
   

  	
   

  	
   

  	
   

  
	
  Title

  	
  President

  	
  Title

  	
  Executive
  Director

  
	
   

  	
   

  	
   

  	
   

  
	
  Date

  	
  4/1/99

  	
  Date

  	
  3/31/99

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  “H. Wadley”

  
	
   

  	
   

  	
   

  	
  (signature

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name

  	
  Haydn N.G.
  Wadley

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date

  	
  4/1/99

  
	
   

  	
   

  	
   

  	
   

  
	
  Attest

  	
  “Jenny Love”

  	
  Attest

  	
  “Alan
  Bentley

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Jenny Love

  	
   

  	
  Alan R.
  Bentley

  
	
  Date

  	
  4/1/99

  	
  Date

  	
  3/31/99

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00100-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00100-of-00352.parquet"}]]