Exhibit 10.1
SETTLEMENT AND PATENT LICENSE AGREEMENT
This SETTLEMENT AND PATENT LICENSE AGREEMENT (this "Agreement") is
entered into as of September 28, 2006 (the "Effective Date") between ANALYTICAL
SPECTRAL DEVICES, INC., a Colorado corporation ("ASD"), and CDEX, INC., a Nevada
corporation, any of its wholly-owned subsidiaries, and any other of its
subsidiaries over which CDEX exerts control ("CDEX"). ASD and CDEX are sometimes
referred to in this Agreement collectively as the "Parties" and individually as
a "Party."
WHEREAS ASD is the owner of U.S. Patent No. 6,771,369, called "System
and Method for Pharmacy Validation and Inspection" (the " `369 Patent");
WHEREAS ASD filed suit against CDEX in the United States District Court
for the District of Colorado for patent infringement of the `369 Patent, Civil
Action No. 06-CV-426-REB-CBS (the "Litigation");
WHEREAS CDEX filed a counterclaim in the Litigation seeking a
declaration of noninfringement, invalidity and unenforceability of the `369
Patent; and
WHEREAS the parties desire to resolve all aspects of the present
dispute without the further time and expense of litigation or other legal
action.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, ASD and CDEX agree as follows:
1. DEFINITIONS. As used in this Agreement:
1.1 "ASD" means Analytical Spectral Devices, Inc.
1.2 "CDEX Exit Revenue" means the amount CDEX receives from the sale of
a Licensed Product under GAAP accounting practices as used in CDEX's financial
reporting, without making any credits or deductions whatsoever.
1.3 "Claims" means any and all claims, counterclaims, third-party
claims, contribution claims, indemnity claims, demands, damages, debts,
liabilities, accounts, reckonings, obligations, costs, expenses, liens,
attorneys' fees, actions, causes of action, and all other claims of every kind
and nature in law or equity, whether arising under state, federal, international
or other law, which were asserted or could have been asserted in, or which arise
from the same transactions or occurrences as those claims which were asserted in
the Litigation, or any of which accrued or arose prior to the dismissal of the
Litigation, whether such claims are absolute or contingent, direct or indirect,
known or unknown.
1.4 "Disposable Cuvette" means any cuvette sold for use with the
ValiMed System.
1.5 "Licensed Product Area" means for use in verifying liquid
pharmaceuticals.
1.6 "Litigation" means the action pending in the United States District
Court for the District of Colorado for patent infringement, Civil Action No.
06-CV-426-REB-CBS.
1.7 "Licensed Patents" means U.S. Patent No. 6,771,369 and each
continuation, continuation-in-part, divisional, reissue, reexamination and
foreign counterpart of that patent. A list of Licensed Patents and each
published application therefore owned as of the Effective Date is appended to
this Agreement as Exhibit A and such list will be updated from time to time as
additional Licensed Patents issue.
1.8 "Licensed Product" means any product that, but for the license
granted in Section 2 below, would infringe one or more valid claims of a
Licensed Patent. The parties acknowledge and agree that the ValiMed System is a
Licensed Product. For the sake of clarity, a "valid" claim is one which has not
been held to be invalid by a court or administrative agency of final
jurisdiction or all appeals with respect to same have been exhausted.
1.9 "Services" means updates to the ValiMed System Library and
maintenance of any Licensed Product in the Licensed Product Area.
1.10 "Standstill Patents" means any patent other than Licensed Patents
owned or acquired by either Party during [ * ] after the Effective Date of this
Agreement, or application for such patent filed by either Party that issues
during [ * ] after the Effective Date of this Agreement.
1.11 "ValiMed System" means the ValiMed Medication Validation System or
any substantially similar machine used to validate liquid pharmaceuticals.
1.12 "ValiMed System Library" means the library of pharmaceutical
spectral signatures used by the ValiMed System.
2. LICENSE. Subject to the terms and conditions of this Agreement, ASD
grants CDEX a worldwide, non-exclusive, non-transferable (except as provided in
Section 9 below) license, without the right to sublicense, under the Licensed
Patents, to make, have made, use, offer to sell, sell and otherwise distribute
and import the Licensed Products in the Licensed Product Area. To the extent
that a CDEX customer, distributor, manufacturer, supplier, subsidiary or
end-user makes, uses, sells or offers to sell a Licensed Product in the Licensed
Product Area, it is understood and agreed that the license grant above will
extend to such entity if and only if CDEX has paid a royalty on such Licensed
Product in accordance with the payment schedule set forth in Exhibit B to this
Agreement. ASD grants no licenses other than those expressly stated in this
section 2.
3. ROYALTIES.
3.1 Royalties Payable by CDEX. As long as the license granted to CDEX
in Section 2 is in effect, CDEX will pay ASD a royalty as specified in Exhibit
B.
3.2 Royalty Reports. Within [ * ] days after the close of CDEX's fiscal
quarter, CDEX will provide to ASD a report containing a calculation of the
amount of royalties owed to ASD for such quarter.
3.3 Payment of Royalties. Payments of the royalties owed under this
Agreement, as set forth in Exhibit B, will be due when the reports calculating
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* The omitted information is confidential and is being filed separately with the
Securities and Exchange Commission.
such royalties as required under Section 3.2 are provided. All royalty payments
will be made by wire transfer in U.S. dollars and in immediately available
funds. ASD will be entitled to a late fee calculated at the rate of [ * ] per
annum for late royalty payments if more than [ * ] days have elapsed after
giving notice to CDEX that payment is past due. Wire transfer payments shall be
sent to the following bank:
[ * ]
3.4 Taxes. ASD will be responsible for properly reporting and paying
all taxes and similar fees it owes to governmental entities as a result of the
royalty payments made pursuant to this Agreement. If any such taxes or fees must
be withheld from a royalty payment by CDEX, CDEX will use reasonable efforts to
furnish ASD with appropriate evidence of the amount withheld and the payment of
such amount to the appropriate governmental entity so that the ASD can claim any
corresponding deduction or credit to which it may be entitled.
3.5 Audit Rights. CDEX will keep and maintain accurate and detailed
books and records relating to its activities under this Agreement for at least [
* ] after the end of each CDEX fiscal quarter during which such activities
occur. [ * ]
3.6 Royalties on Services. CDEX will pay a royalty on revenue
recognized for Services for any calendar year in which the revenue recognized
for Services exceeds the thresholds set forth below:
[ * ]
The royalty rate for Services is equal to the royalty rate for
Licensed Product as set forth in Exhibit B to this Agreement [ * ] .
3.7 Patent Marking. CDEX will ▇▇▇▇ each Licensed Product with the
issued United States Licensed Patent applicable to such Licensed Product, in
accordance with 35 U.S.C. ss. 287 ("Patent Notice") and to the extent ASD has
notified CDEX in writing of ASD's request to so ▇▇▇▇. CDEX agrees to (a) amend
such Patent Notice (including, but not limited to, the addition and deletion of
one or more patents), from time to time, at ASD's reasonable written request and
(b) notify ASD of any request for disclosure under 35 U.S.C. ss. 287(b)(4)(B)
related to the Licensed Patents. [ * ]
4. STANDSTILL AGREEMENT.
4.1 [ * ] Standstill Agreement. Subject to the terms and conditions of
this Agreement and for a period of [ * ] commencing on the Effective Date (the
"Standstill Period"), each of the Parties hereby covenant not to ▇▇▇ (a) the
other Party on any of their respective Standstill Patents and/or (b) each
other's customers, manufacturers, suppliers, subsidiaries, end-users or
distributors on any of their respective Standstill Patents for activities
conducted in the Licensed Product Area. A list of each Party's Standstill
Patents and published applications filed therefor during the Standstill Period
owned as of the Effective Date is appended to this Agreement as Exhibit C. The
Parties agree that Exhibit C to this Agreement shall be amended and supplemented
as additional Standstill Patents issue. Nothing in this Agreement prevents suit
on the Standstill Patents after the Standstill Period expires.
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* The omitted information is confidential and is being filed separately with the
Securities and Exchange Commission.
4.2 No Accrual of Damages. Subject to the terms and conditions of this
Agreement, each of the Parties hereby waive any and all claims, demands,
damages, debts, liabilities, accounts, reckonings, obligations, costs, expenses,
liens, attorneys' fees, actions and causes of action related to patent
infringement in the Licensed Product Area that would otherwise accrue during the
Standstill Period against the other Party and the other Party's customers,
manufacturers, suppliers, distributors or end-users.
5. RELEASES AND DISMISSAL.
5.1 ASD Releases to CDEX. [ * ]
5.2 CDEX Releases to ASD. [ * ]
5.3 Unknown Claims. [ * ] .
5.4 Denial of Liability. The Parties acknowledge that they are entering
into this Agreement to resolve disputed claims, that nothing herein shall be
construed to be an admission of liability, and that ASD on the one hand, and
CDEX on the other, expressly deny any liability to the other Party. Each Party
shall bear its own costs and attorney's fees incurred in this action.
5.5 Dismissal. Within five (5) days of the execution of this Agreement,
the Parties shall jointly file a stipulation of dismissal requesting the United
States District Court for the District of Colorado dismiss with prejudice all
claims and counterclaims in the Litigation, each Party to bear its own costs.
6. TERM AND TERMINATION OF LICENSE.
6.1 Term. [ * ]
6.2 Termination. [ * ]
6.3 Effects of Termination by ASD. [ * ]
6.4 Survival. Sections 1, 3, 4, 6.3, 7, 10 and 11 will survive the
termination of this Agreement.
7. NO IMPLIED LICENSES. All rights to ASD's Licensed Patents or either
Party's Standstill Patents not expressly granted in this Agreement are reserved.
There are no implied licenses as a result of this Agreement.
8. ACKNOWLEDGEMENT OF VALIDITY. As part of this Agreement and so long
as it and the license granted hereunder remains in effect, CDEX acknowledges the
validity of the `369 Patent and will not challenge the validity of the `369
Patent. However, nothing herein shall prevent CDEX from challenging the validity
of the `369 Patent if ASD was ever to assert that patent for any reason against
CDEX or against any party licensed under Section 2 of this Agreement, or if this
Agreement were ever terminated.
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* The omitted information is confidential and is being filed separately with the
Securities and Exchange Commission.
9. ASSIGNMENT. CDEX may not assign or transfer, by operation of law or
otherwise, any of its rights under this Agreement or delegate any of its duties
under this Agreement to any third party without ASD's prior written consent.
CDEX may, however, assign or transfer any of its rights under this Agreement or
delegate any of its duties under this Agreement to any third party who purchases
all or substantially all of the assets relating to the Licensed Product in the
Licensed Product Area (whether by asset purchase or merger). Any attempted
assignment or transfer in violation of the foregoing will be void. Such third
party must agree to be bound by the terms of this Agreement, otherwise the
assignment is void and ASD can terminate the Agreement in accordance with
Paragraph 6.2.
10. DISPUTE RESOLUTION/ARBITRATION.
10.1 Initial Efforts to Resolve Disputes. [ * ]
10.2 Arbitration. [ * ]
10.3 Arbitration Procedure. [ * ]
10.4 Governing Law, Jurisdiction and Venue. This Agreement shall be
governed by, interpreted and construed in accordance with the laws of Delaware,
without reference to conflicts of laws principles. 11. GENERAL PROVISIONS.
11.1 Injunctive Relief. [ * ]
11.2 Publicity. The Parties will issue a press release in the form
attached hereto as Exhibit D, the same day that the United States District Court
for the District of Colorado enters the stipulation of dismissal described in
Section 5.5 above. The terms of the settlement shall not be publicly disclosed,
except as described in Section 11.3 below. ASD will be entitled, but not
obligated to identify CDEX as a licensee under the Licensed Patents in ASD's
promotional material, including its website. CDEX may identify itself as a
licensee under the Licensed Patents in CDEX's promotional material, including
its website.
11.3 Confidentiality. The terms of this Agreement, excluding the terms
of the stipulation of dismissal described in Section 5.5 and the press release
discussed in Section 11.3 above, shall be held in strictest confidence by the
parties and shall not be publicized or disclosed in any manner whatsoever.
Notwithstanding the prohibition in this paragraph, the parties may disclose this
Agreement in confidence to a Court (or otherwise as directed by law) and to the
Parties' respective attorneys, accountants, auditors, tax preparers, and
financial advisors. In the event any party is requested to disclose this
Agreement to a Court or otherwise as directed by law, that party will provide
reasonable notice to the other party in advance of any such disclosure so that
the other party may consider and effect objecting to such disclosure.
11.4 Warranties; Disclaimers; Limitations. [ * ]
11.5 Duly Existing. [ * ]
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* The omitted information is confidential and is being filed separately with the
Securities and Exchange Commission.
11.6 Comprehension. [ * ]
11.7 Interpretation. [ * ]
11.8 Entire Agreement. This is an enforceable Agreement. This
Agreement, including the attached Exhibits which are incorporated by reference
herein, constitute the entire agreement between the Parties and supersede all
previous communications, representations, agreements or understandings, either
oral or written, between the Parties with respect to the subject matter hereof.
This Agreement may be amended, supplemented or modified only by a written
instrument duly executed by or on behalf of each Party hereto which specifically
refers to this Agreement.
11.9 Waiver. No waiver of any breach of any provision of this Agreement
shall constitute a waiver of any prior, concurrent or subsequent breach of the
same or any provisions hereof, and no waiver shall be effective unless made in
writing and signed by an authorized representative of the waiving party.
11.10 Notices. Any notice required or permitted by this Agreement shall
be in writing and shall be sent by a reliable overnight courier service, return
receipt requested; by prepaid registered or certified mail, return receipt
requested; or by facsimile to the other Party at the address below or to such
other address for which such Party shall give notice hereunder. Such notice
shall be deemed to have been given one (1) day after the date of sending if by
overnight courier service, or five (5) days after the date of sending by
registered or certified mail, or upon confirmed receipt if delivered by
facsimile, excepted that notice of change of address shall be effective only
upon receipt.
To ASD:
[ * ]
To CDEX:
[ * ]
11.11 Severability. If any provision of this Agreement shall be
determined to be invalid, illegal or unenforceable under any controlling body of
law, that provision shall be reformed, construed and enforced to the maximum
extent permissible; and the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
11.12 Section Headings. The section headings used in this Agreement and
the attached Exhibits shall be intended for convenience only and shall not be
deemed to supersede or modify any provisions.
11.13 Counterparts. This Agreement may be signed in counterparts, each
of which shall be deemed an original hereof, but all of which together shall
constitute one and the same instrument.
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* The omitted information is confidential and is being filed separately with the
Securities and Exchange Commission.
11.14 Duty to Effectuate. The Parties agree to perform any lawful
additional acts, including the execution of additional agreements, as are
reasonably necessary to effectuate the purpose of this Agreement.
Effective: September 28, 2006
ANALYTICAL SPECTRAL DEVICES, INC. CDEX, INC.
By: _________________________ By: __________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Executive Officer Title: Chief Executive Officer
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* The omitted information is confidential and is being filed separately with the
Securities and Exchange Commission.