LICENSE AGREEMENT
BETWEEN
AVENSYS LABORATORIES INC.
AND
AVENSYS INC.
McCarthy Tetrault LLP
April 13, 2006
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TABLE OF CONTENTS
1.
INTERPRETATION...........................................................1
1.1
DEFINITIONS........................................................1
1.2
HEADINGS...........................................................4
1.3 EXTENDED
MEANINGS..................................................4
1.4 STATUTORY
REFERENCES...............................................4
1.5 ACCOUNTING
PRINCIPLES..............................................4
1.6
CURRENCY...........................................................5
1.7
SCHEDULES..........................................................5
2. GRANTS
AND
COVENANTS.....................................................5
2.1 LICENSE
GRANT......................................................5
2.2
TRADE-MARKS
LICENSE................................................6
2.3
EXCLUSIVITY........................................................7
2.4 NO
CONTESTATION....................................................7
3.
OBLIGATIONS OF
LICENSEE..................................................7
3.1
COMMERCIALIZATION OF THE
PRODUCTS..................................7
3.2
RECORDS............................................................8
4.
FIELD-RELATED RESEARCH AND
DEVELOPMENT...................................8
4.1
SCOPE..............................................................8
4.2
REPORT.............................................................8
4.3
PROTOTYPES.........................................................9
4.4
DOCUMENTATION AND
ASSISTANCE.......................................9
4.5
COSTS..............................................................9
4.6
REVENUE............................................................9
4.7
STANDARDS..........................................................9
5.
SPECIFIC
PROJECTS.......................................................10
5.1 SCOPE AND
COSTS...................................................10
5.2
CONFIDENTIALITY...................................................10
6.
OWNERSHIP...............................................................10
7.
COMPENSATION............................................................11
7.1 ROYALTY
RATE......................................................11
7.2 REDUCTION
FOR THIRD PARTY ROYALTIES...............................11
7.3
PAYMENT...........................................................11
7.4 SINGLE
ROYALTY....................................................12
7.5
TAX...............................................................12
8. PURSUIT
AND MAINTENANCE OF PATENT AND TRADE-MARKS
RIGHTS................12
8.1
PATENTS...........................................................12
8.2
TRADE-MARKS.......................................................12
9.
INFRINGEMENTS...........................................................13
9.1 DUTY TO
INFORM....................................................13
9.2
INFRINGEMENT BY THIRD
PARTIES.....................................13
9.3
INFRINGEMENT OF THIRD PARTIES'
RIGHTS.............................14
10. TERM AND
TERMINATION....................................................14
10.1
TERM..............................................................14
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10.2
TERMINATION FOR MATERIAL
BREACH...................................14
10.3
TERMINATION FOR
INSOLVENCY........................................15
10.4
EFFECT OF
TERMINATION.............................................15
11.
CONFIDENTIALITY.........................................................16
11.1
CONFIDENTIAL
INFORMATION..........................................16
11.2
EXCEPTIONS........................................................16
11.3
NONDISCLOSURE
OBLIGATIONS.........................................16
11.4
RETURN............................................................17
11.5
INJUNCTIVE
RELIEF.................................................17
12.
REPRESENTATIONS AND
WARRANTIES..........................................17
12.1
MUTUAL REPRESENTATIONS AND
WARRANTIES.............................17
12.2
AVENSYS LAB'S
REPRESENTATIONS AND WARRANTIES......................18
12.3
LICENSEE'S REPRESENTATIONS AND
WARRANTIES.........................18
13. LIMITATION
OF LIABILITY.................................................18
14.
INDEMNIFICATION.........................................................19
14.1
INDEMNIFICATION BY
LICENSEE.......................................19
14.2
INDEMNIFICATION BY AVENSYS
LAB....................................19
14.3
NOTIFICATION AND
COOPERATION......................................19
15. PROJECT
MANAGEMENT......................................................20
15.1
PROJECT
MANAGERS..................................................20
15.2
MEETINGS..........................................................20
16.
GENERAL.................................................................20
16.1
PUBLIC
ANNOUNCEMENT...............................................20
16.2
RELATIONSHIP OF THE
PARTIES.......................................20
16.3
FURTHER
ASSURANCES................................................21
16.4
BENEFIT OF THE
AGREEMENT..........................................21
16.5
ENTIRE
AGREEMENT..................................................21
16.6
AMENDMENTS AND
WAIVERS............................................21
16.7
ASSIGNMENT........................................................21
16.8
SEVERABILITY......................................................21
16.9
NOTICES...........................................................22
16.10
GOVERNING
LAW.....................................................23
16.11
COUNTERPARTS......................................................23
16.12
FACSIMILES........................................................23
A) PATENT
LIST................................................................25
B) PATENT
APPLICATIONS........................................................26
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LICENSE AGREEMENT made as of April 13, 2006.
BETWEEN:
AVENSYS LABORATORIES INC., a corporation incorporated under Part
1A
of the Companies Act (Quebec), having its head office at 247,
boulevard Thibeau, Trois-Rivieres, Quebec G8T 6X9, herein acting
and
represented by its duly authorized representative as he so
declares;
(hereinafter referred to as the "Avensys Lab")
AND:
AVENSYS INC., a corporation incorporated under Part 1A of the
Companies Act (Quebec), having its head office at 880, Selkirk,
Pointe-Claire, Quebec H9R 3S3, herein acting and represented by
its
duly authorized representative as he so declares;
(hereinafter referred to as "Licensee")
WHEREAS the parties, ITF Optical Technologies Inc. ("ITF") and
Manaris
Corporation have entered into an asset purchase agreement dated as
of the date
hereof, for the sale by ITF to Licensee and Avensys Lab of certain
assets
associated with ITF's all-fiber photonics solutions manufacturing
business (the
"Asset Purchase Agreement");
WHEREAS Avensys Lab is the owner of or has the right to sub-license
certain
intellectual property;
WHEREAS in conjunction with the Asset Purchase Agreement, Avensys
Lab wishes to
grant, and Licensee desires to acquire, an exclusive license under
Avensys Lab's
Intellectual Property (as defined below), subject to the terms and
conditions
set forth hereinafter;
WHEREAS Avensys Lab and Avensys wish to collaborate to discover and
develop new
technologies in the Field (as defined below), subject to the terms
and
conditions set forth hereinafter;
NOW THEREFORE, in consideration of the mutual promises set forth
hereinafter,
the parties agree as follows:
1.
INTERPRETATION
1.1
Definitions
In this Agreement, unless something in the subject matter or
context is inconsistent therewith:
1.1.1
"Affiliates" has the meaning attributed thereto in
the Canada Business Corporations Act.
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1.1.2
"Agreement" means this agreement entitled "License
Agreement", all Schedules hereto and all instruments
supplemental hereto or in amendment or in
confirmation hereof.
1.1.3
"Asset Purchase Agreement" shall have the meaning set
forth in the Preamble.
1.1.4
"Avensys Lab's Intellectual Property" means the
Patents, the Trade-Marks and any other Intellectual
Property either currently owned by Avensys Lab and/or
developed by Avensys Lab during the term of this
Agreement pursuant to any Field-related research and
development conducted in accordance with Section 4.
1.1.5
"Business Day" means a day other than a Saturday,
Sunday or statutory holiday in Quebec.
1.1.6
"Confidential Information" has the meaning set forth
in Section 11.1.
1.1.7
"Documentation" means the notes, sketches, tables,
drawings, technical specifications, processes, and
models, if any, developed by Avensys Lab related to
Avensys Lab's Intellectual Property.
1.1.8
"Field" means the field within which Avensys Lab will
carry out research and development in accordance with
Section 4, as more fully described in Schedule 1.1.8,
as amended from time to time.
1.1.9
"Intellectual Property" means all worldwide
intellectual and industrial rights and includes
rights to (i) inventions and patents for inventions,
including all divisional, continuing, substitute,
renewal, re-issue and all other applications and/or
letters patent therefor, (ii) copyrights, (iii)
designs and industrial designs, (iv) trade-marks, and
any word, symbol, icon, logo or other indicia of
origin adopted or used in connection with any product
or service, (v) know-how, trade secrets and
confidential information, and (vi) other proprietary
rights.
1.1.10 "Licensee
Intellectual Property" means any
Intellectual Property owned by Licensee that, by
agreement of the parties from time to time, shall be
expressly excluded from the application of Sections
6.2 and 6.3 hereof. In particular, Licensee
Intellectual Property shall include Licensee's
Intellectual Property in the Processes.
1.1.11 "Patent
Improvements" means any modifications,
improvements, enhancements or advances that are
directly related to the Patents, whether or not those
improvements constitute patentable improvements under
the laws of any jurisdiction.
1.1.12 "Patents"
means the registered patents and pending
applications for patents, either owned by Avensys Lab
or for which Avensys Lab has the right to sub-license
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without liability to a third party as listed in
Schedule 1.1.11, and all patents to be issued
pursuant thereto and all divisions, continuations,
continuations-in-part, reissues, substitutes and
extensions thereof.
1.1.13
"Processes" means the manufacturing processes
developed by Avensys Labs or Licensee (as
demonstrated by their business records) related to
and/or used to develop and/or manufacture the
Products.
1.1.14 "Process
Improvements" means any modifications,
improvements, enhancements or advances that are
directly related to the Processes, whether or not
those
improvements constitute patentable improvements
under the laws of any jurisdiction.
1.1.15 "Product"
means any and all products developed,
manufactured or Sold by Licensee in the Field that
use or incorporate Avensys' Lab Intellectual
Property.
1.1.16 "Project
Manager" has the meaning set forth in
Section 15.1.
1.1.17
"Prototype" means Field-related, functional,
pre-production applications of Avensys Lab
Intellectual Property, developed by Avensys Lab in
accordance with Section 4.
1.1.18 "Revenue"
means all of the revenues recognized in
accordance with the GAAP (as defined in Section 1.5)
and received by Licensee from the Sale of any
Products in any or all parts of the world, less the
following deductions to the extent required or
permitted by the GAAP in connection with the
recognition of such revenues:
1.1.18.1 credit, allowance or refunds given on
account of returned goods;
1.1.18.2 transportation charges invoiced separately
and
actually charged to third parties;
1.1.18.3 taxes, duties and customs on all sales of
Products;
1.1.18.4 agents' commissions paid by Avensys for the
sale of Products;
1.1.18.5 uncollectible amounts;
1.1.18.6 bona fide special rebates provided by
Avensys for Products purchased by third
parties; and
1.1.18.7 bona fide trade, quantity and cash
discounts.
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1.1.19 "Royalty"
has the meaning set forth in Section 7.1.
1.1.20 "Sale",
"Sell" (and other derivatives) means market,
promote, distribute, sale, rent, lease, license or
other form of distribution of a Product to an end
user, distributor, any other person or entity, either
directly or through a chain of distribution.
1.1.21
"Territory" means worldwide.
1.1.22
"Trade-Marks" means Avensys Lab trade-mark(s) listed
in Schedule 1.1.22, as amended from time to time.
1.2
Headings
The division of this Agreement into Articles and Sections and
the insertion of headings are for convenience of reference
only and shall not affect the construction or interpretation
of this Agreement. The terms "this Agreement", "hereof",
"hereunder" and similar expressions refer to this Agreement
and not to any particular Article, Section or other portion
hereof and include any amendment hereto. Unless something in
the subject matter or context is inconsistent therewith,
references herein to Articles or Sections are to Articles or
Sections of this Agreement.
1.3 Extended
Meanings
In this Agreement, words importing the singular number only
shall include the plural and vice versa, words importing the
masculine gender shall include the feminine and neuter genders
and vice versa and words importing persons shall include
individuals,
partnerships, limited liability companies,
associations, trusts, unincorporated organizations and
corporations.
1.4 Statutory
References
In this Agreement, unless something in the subject matter or
context is inconsistent therewith or unless otherwise herein
provided, a reference to any statute is to that statute as now
enacted or as the same may from time to time be amended,
re-enacted or replaced and includes any regulations made
thereunder.
1.5 Accounting
Principles
Wherever in this Agreement reference is made to a calculation
to be made in accordance with generally accepted accounting
principles ("GAAP"), such reference shall be deemed to be to
the generally accepted accounting principles in Canada from
time to time approved by the Canadian Institute of Chartered
Accountants, or any successor institute, applicable as at the
date on which such calculation is made or required to be made
in accordance with generally accepted accounting principles
and applied in a manner consistent with prior periods of the
Seller.
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1.6
Currency
All references to currency herein are to lawful money of
Canada.
1.7
Schedules
The following are the Schedules to this Agreement:
Schedule 1.1.8 - Field
Schedule 1.1.11 - List of Patents
Schedule 1.1.22
- List of Trade-Marks
Schedule 7.1 - Royalty
Schedule 7.3.2 - Avensys Lab's bank account information
2.
GRANTS AND COVENANTS
2.1 License
Grant
2.1.1
Subject to the terms, conditions and restrictions of
this Agreement, Avensys Lab hereby grants to Licensee
a personal, irrevocable, sole (i.e. exclusive,
subject to the rights of Avensys lab set forth in
Section 2.1.3 below) license, within the Territory,
to use, copy, enhance and modify Avensys Lab's
Intellectual Property and any Patent Improvements in
order to develop, manufacture, use and Sell the
Products.
2.1.2
Notwithstanding anything to the contrary in this
Agreement, the license granted herein to Licensee
includes the right:
2.1.2.1 to grant
sublicenses (subject to terms and
conditions substantially similar to those
set forth in this Section 2) to Affiliates
of Licensee to use, copy, enhance and modify
Avensys Lab's Intellectual Property in order
to develop, manufacture, use or Sell the
Products;
2.1.2.2 to translate
the Documentation; and
2.1.2.3 to have
Products manufactured or assembled
by third parties and/or developed by or with
third parties solely for the benefit of
Licensee for the manufacture, use or Sale by
Licensee or its Affiliates.
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2.1.3 For
greater certainty, nothing herein shall prevent
Avensys Lab from using, copying, enhancing, modifying
the Avensys Lab's Intellectual Property and any
Patent Improvements:
2.1.3.1 for its
internal use;
2.1.3.2 in the context
of the development or
commercialization of Prototypes; or
2.1.3.3 in the context
of research and development
activities unrelated to the Field or its own
behalf or on behalf of a third party.
2.2
Trade-Marks License
2.2.1
Subject to the terms, conditions and restrictions of
this Agreement, Avensys Lab hereby grants to Licensee
a personal, irrevocable, exclusive license, within
the Territory, to use the Trade-Marks only in
association with the Products.
2.2.2
Licensee shall comply with Avensys Lab's standard
trade-mark guidelines as to the form and manner in
which the Trade-Marks may be used pursuant hereto. In
particular, Licensee shall not change, amend or
otherwise modify the Trade-Marks. Moreover, Licensee
shall identify the Trade-Marks, when used as
trade-marks, with a notation that the mark is a
registered/unregistered trade-mark of Avensys Lab, as
the case may be. Upon request, Licensee shall submit
for approval by Avensys Lab, acting reasonably,
samples of any packaging, documentation, advertising,
brochures and other material on which the Trade-Marks
appears or is intended to be used in relation to
Products being manufactured, used or Sold by
Licensee.
2.2.3
Licensee acknowledges that Avensys Lab is the
exclusive owner of the Trade-Marks and all goodwill
associated therewith, that all use of the Trade-Marks
by it enures to the benefit of Avensys Lab, and that
it shall not dispute or contest the validity,
ownership or enforceability of the Trade-Marks nor
attempt to dilute the value of the goodwill attached
thereto.
2.2.4 To
the limited extent required to protect Avensys
Lab's rights in the Trade-marks, during the term of
the Agreement, Licensee shall give Avensys Lab's
representatives reasonable access to Licensee's
facilities, at Avensys Lab's expense, at reasonable
times during business hours, subject to Avensys Lab
giving Licensee at least five (5) Business Days prior
notice, for the purpose of quality control in
relation to Products branded with the Trade-marks, as
the case may be.
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2.3
Exclusivity
In order to assure Licensee of the exclusive rights under
Avensys Lab's Intellectual Property to commercialize the
Products, and except as provided by this Agreement, Avensys
Lab shall not:
2.3.1
itself use Avensys Lab's Intellectual Property to
develop, produce, market, distribute and sell
products (other than Prototypes) in or related to the
Field; or
2.3.2
grant to a third party any rights or licenses to use,
copy, enhance or modify any of Avensys Lab's
Intellectual Property to develop, produce, market,
distribute and/or sell products in or related to the
Field.
2.4 No
Contestation
2.4.1
Licensee hereby undertakes not to contest Avensys
Lab's Intellectual Property nor the rights of Avensys
Lab therein at any time during or after expiration or
termination of this Agreement.
2.4.2
Avensys Lab hereby undertakes not to contest any and
all rights of Licensee to the Products and any
enhancements to the Product that are made as
permitted by this Agreement at any time during or
after expiration or termination of this Agreement.
3.
OBLIGATIONS OF LICENSEE
3.1
Commercialization of the Products
3.1.1
Licensee shall use commercially reasonable efforts to
Sell the Products.
3.1.2
Licensee shall conduct its business with respect to
the
Products in a professional manner.
3.1.3
Subject to Section 2.2, the Parties agree that
Licensee shall be free to make decisions in
connection with its marketing activities, including
the terms of sale and the price of the Product, in an
autonomous and independent manner.
3.1.4
Licensee may, in its discretion, mark every Product
and any documents it issues in respect thereof with
the Trade-Marks as are required pursuant to this
Agreement and as agreed between the Parties from time
to time. For greater certainty, Licensee may also
distribute the Products on a "white label" basis,
without use of the Trade-marks.
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3.2
Records
3.2.1
Licensee shall maintain all books and records under
generally accepted accounting practices evidencing
all the Sales of Product, the Revenue received in
respect thereof and Royalty payments under this
Agreement.
3.2.2 For
the period in which the Royalties accrue
hereunder and for a period of three (3) years after
completion of Royalty payment, Licensee shall grant
Avensys Lab or its designated professional advisors
reasonable access during business hours to inspect
books and records kept by Licensee relating to the
Sales of Product, the Revenue received in respect
thereof and Royalty payments under this Agreement and
shall make such books and records available and
permit them to audit, inspect and take copies of the
books and records. In the event that such audits and
inspections reveal accounting or other errors in
relation to Royalty payments due to Avensys Lab, the
difference shall be paid immediately by Avensys Lab
or Licensee, as the case may be, with interest at a
rate
of one percent (1%) monthly (twelve per cent
(12%) annually). All costs and expenses arising out
of such audits and inspections shall be borne by
Avensys Lab
3.2.3 In
the event Avensys Lab wishes to inspect the books
and records maintained by Licensee in relation to the
Sales of Products, the Revenue received in respect
thereof
and Royalty payments under this Agreement, it
shall notify Licensee, in writing, of necessary
matters including the subject period, scope and
period of such inspection as well as the organization
to which the inspector belongs and the title and name
of the inspector at least twenty (20) Business Days
prior to the inspection commencement date.
4.
FIELD-RELATED RESEARCH AND DEVELOPMENT
4.1 Scope
Avensys Lab agrees to
