Lucid Diagnostics Inc S-1/A, filed Oct 1, 2021
Lucid Diagnostics Inc. (LUCD)
As filed with the U.S. Securities and Exchange Commission on October 1, 2021
Registration No. 333- 259721
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
LUCID DIAGNOSTICS INC.
(Exact name of registrant as specified in its charter)
| Delaware | 8731 | 82-5488042 | ||
(State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification Number) |
One Grand Central Place
Suite 4600
New York, New York 10165
212-949-4319
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Lishan Aklog, M.D., Chief Executive Officer
Lucid Diagnostics Inc.
One Grand Central Place
Suite 4600
New York, NY 10165
212-949-4319
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
David Alan Miller, Esq. Jeffrey M. Gallant, Esq. Eric T. Schwartz, Esq. Graubard Miller 405 Lexington Avenue New York, New York 10174 Tel: (212) 818-8800 Fax: (212) 818-8881 |
James T. Seery, Esq. Kelly A. Dabek, Esq. Duane Morris LLP 1540 Broadway New York, New York 10036 Tel: (212) 692-1000 Fax: (212) 692-1020 |
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Non-accelerated filer ☒ | Smaller reporting company ☒ |
| Emerging growth company ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to be Registered | Proposed Maximum Aggregate Offering Price(1) | Amount of Registration Fee | ||||||
| Common Stock(2) | $ | 57,500,000.00 | $ | 6,273.25 | (3) | |||
| (1) | Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) of the Securities Act. | |
| (2) | Includes the amount of common stock subject to an option granted to the underwriters. | |
| (3) | Previously paid. |
The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
EXPLANATORY NOTE
Lucid Diagnostics Inc. is filing this Amendment No. 1 to its registration statement on Form S-1 (File No. 333-259721) (the “Registration Statement”) solely to file certain exhibits to the Registration Statement. Accordingly, this amendment consists only of the facing page, this explanatory note, Part II of the Registration Statement, the signature page to the Registration Statement and the filed exhibits. The remainder of the Registration Statement is unchanged and has therefore been omitted.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The estimated expenses payable by us in connection with the offering described in this registration statement (other than the underwriting discount) will be as follows:
| SEC registration fee | $ | [●] | ||
| FINRA filing fee | $ | [●] | ||
| Accounting fees and expenses | $ | [●] | ||
| Printing and engraving expenses | $ | [●] | ||
| Legal fees and expenses | $ | [●] | ||
| Nasdaq listing fees | $ | [●] | ||
| Federal taxes, and state taxes and fees | $ | [●] | ||
| Transfer agent fees | $ | [●] | ||
| Miscellaneous(1) | $ | [●] | ||
| Total | $ | [●] |
| (1) | This amount represents additional expenses that may be incurred by the registrant in connection with the offering over and above those specifically listed above, including distribution and mailing costs. |
Item 14. Indemnification of Directors and Officers.
Our amended and restated certificate of incorporation and by-laws will provide that all of our directors and officers shall be entitled to be indemnified by us to the fullest extent permitted by law. Our amended and restated by-laws will further provide that we will indemnify any other person whom we have the power to indemnify under section 145 of the Delaware General Corporation Law. In addition, we intend to enter into customary indemnification agreements with each of our directors and officers.
Section 145 of the Delaware General Corporation Law concerning indemnification of officers, directors, employees and agents is set forth below.
“Section 145. Indemnification of officers, directors, employees and agents; insurance.
“(a) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person’s conduct was unlawful.
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“(b) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
“(c) To the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of this section, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.
“(d) Any indemnification under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Such determination shall be made, with respect to a person who is a director or officer of the corporation at the time of such determination, (1) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (3) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (4) by the stockholders.
“(e) Expenses (including attorneys’ fees) incurred by an officer or director of the corporation in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized in this section. Such expenses (including attorneys’ fees) incurred by former directors and officers or other employees and agents of the corporation or by persons serving at the request of the corporation as directors, officers, employees or agents of another corporation, partnership, joint venture, trust or other enterprise may be so paid upon such terms and conditions, if any, as the corporation deems appropriate.
“(f) The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office. A right to indemnification or to advancement of expenses arising under a provision of the certificate of incorporation or a bylaw shall not be eliminated or impaired by an amendment to such provision after the occurrence of the act or omission that is the subject of the civil, criminal, administrative or investigative action, suit or proceeding for which indemnification or advancement of expenses is sought, unless the provision in effect at the time of such act or omission explicitly authorizes such elimination or impairment after such action or omission has occurred.
“(g) A corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify such person against such liability under this section.
“(h) For purposes of this section, references to “the corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this section with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued.
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“(i) For purposes of this section, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to “serving at the request of the corporation” shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the corporation” as referred to in this section.
“(j) The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
“(k) The Court of Chancery is hereby vested with exclusive jurisdiction to hear and determine all actions for advancement of expenses or indemnification brought under this section or under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. The Court of Chancery may summarily determine a corporation’s obligation to advance expenses (including attorneys’ fees).”
Paragraph B of Article Eighth of our certificate of incorporation provides:
“The Corporation, to the full extent permitted by Section 145 of the GCL, as amended from time to time, shall indemnify all persons whom it may indemnify pursuant thereto. Expenses (including attorneys’ fees) incurred by an officer or director in defending any civil, criminal, administrative, or investigative action, suit or proceeding for which such officer or director may be entitled to indemnification hereunder shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized hereby.”
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment of expenses incurred or paid by a director, officer or controlling person in a successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to the court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
Pursuant to the Underwriting Agreement filed as Exhibit 1.1 to this Registration Statement, Lucid Diagnostics has agreed to indemnify the underwriters and the underwriters have agreed to indemnify Lucid Diagnostics against certain civil liabilities that may be incurred in connection with this offering, including certain liabilities under the Securities Act.
Item 15. Recent Sales of Unregistered Securities.
(a) During the past three years, we sold the following shares of common stock without registration under the Securities Act:
| ● | In May 2018, in connection with our formation, we sold a total of 10,000,000 shares of our common stock for a purchase price of $0.001 per share, including 8,187,499 shares to PAVmed; 943,464 shares to CWRU; and 289,679 shares to each of the three individual physician inventors of the EsoGuard technology. | |
| ● | On June 1, 2021, we issued a $22.4 million convertible promissory note to PAVmed, or the “Convertible Note,” in exchange for the cancellation of $22.4 million payable by us to PAVmed related to working capital advances and earned, but unpaid, management services fees. The Convertible Note will mature on May 18, 2028, will bear interest at a rate of 7.875% per annum and will be convertible at the holder’s option into shares of our common stock at a conversion price of $2.00 per share. |
All of the securities described above were or will be issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder.
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Item 16. Exhibits and Financial Statement Schedules.
(a) The following exhibits are filed as part of this Registration Statement:
| Exhibit No. | Description | |
| 1.1 | Form of Underwriting Agreement.* | |
| 3.1 | Form of Amended and Restated Certificate of Incorporation.* | |
| 3.2 | Form of Amended and Restated By-laws.* | |
| 4.1 | Specimen Common Stock Certificate.* | |
| 4.2 | Form of Convertible Promissory Note.* | |
| 5.1 | Opinion of Graubard Miller.* | |
| 10.1# | Lucid Diagnostics Inc. 2018 Long-Term Incentive Equity Plan.* | |
| 10.2† | Amended and Restated License Agreement, dated as of August 23, 2021, by and between Case Western Reserve University and Lucid Diagnostics Inc. | |
| 10.3 | License Agreement, dated as of May 20, 2019, by and between PAVmed Inc. and Lucid Diagnostics Inc. | |
| 10.4.1 | Management Services Agreement, dated as of May 12, 2018, by and between PAVmed Inc. and Lucid Diagnostics Inc.* | |
| 10.4.2 | Amendment to Management Services Agreement, dated as of March 1, 2019, by and between PAVmed Inc. and Lucid Diagnostics Inc.* | |
| 10.4.2 | Second Amendment to Management Services Agreement, dated as of June 5, 2019, by and between PAVmed Inc. and Lucid Diagnostics Inc.* | |
| 10.4.3 | Third Amendment to Management Services Agreement, dated as of July 20, 2020, by and between PAVmed Inc. and Lucid Diagnostics Inc.* | |
| 10.4.4 | Fourth Amendment to Management Services Agreement, dated as of February 1, 2021, by and between PAVmed Inc. and Lucid Diagnostics Inc.* | |
| 10.5.1 | Consulting Agreement, dated as of May 12, 2018, by and between Lucid Diagnostics Inc. and Sanford Markowitz, M.D.* | |
| 10.5.2 | Renewed Consulting Agreement, dated as of May 12, 2021, by and between Lucid Diagnostics Inc. and Sanford Markowitz, M.D.* |
| II-4 |
| Exhibit No. | Description | |
| 10.6.1 | Consulting Agreement, dated as of May 12, 2018, by and between Lucid Diagnostics Inc. and Amitabh Chak, M.D.* | |
| 10.6.2 | Renewed Consulting Agreement, dated as of May 12, 2021, by and between Lucid Diagnostics Inc. and Amitabh Chak, M.D.* | |
| 10.7.1 | Consulting Agreement, dated as of May 12, 2018, by and between Lucid Diagnostics Inc. and Joseph Willis, M.D.* | |
| 10.7.2 | Renewed Consulting Agreement, dated as of May 12, 2021, by and between Lucid Diagnostics Inc. and Joseph Willis, M.D.* | |
| 10.8# | Form of Stock Option Agreement.* | |
| 10.9# | Form of Indemnification Agreement.* | |
| 10.10 | Form of Lock-Up Agreement.* | |
| 10.11 | Quality & Manufacturing Master Services Agreement, dated as of September 1, 2021, by and between Coastline International, Inc. and Lucid Diagnostics Inc. | |
| 10.12# | Form of Restricted Stock Agreement.* | |
| 23.1 | Consent of Marcum, LLP.+ | |
| 23.2 | Consent of Graubard Miller (included in Exhibit 5.1).* | |
| 24.1 | Power of Attorney (included on signature page of this Registration Statement).+ | |
| 99.1 | Consent of Ronald M. Sparks to be named as a director.+ |
| * | To be filed by amendment. |
| + | Previously filed. |
| # | Indicates management contract or compensatory plan. |
| † | Certain confidential portions of this exhibit were omitted by means of marking such portions with asterisks because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed. |
Item 17. Undertakings.
(h) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
(i) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on the 1st day of October, 2021.
| LUCID DIAGNOSTICS INC. | ||
| By: | /s/ Lishan Aklog, M.D. | |
| Name: | Lishan Aklog, M.D. | |
| Title: | Chairman and Chief Executive Officer | |
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
| Name | Position | Date | ||
| /s/ Lishan Aklog, M.D. | Chairman and Chief Executive Officer | October 1, 2021 | ||
| Lishan Aklog, M.D. | (Principal Executive Officer) | |||
| /s/ Dennis M. McGrath | Chief Financial Officer (Principal Accounting | October 1, 2021 | ||
| Dennis M. McGrath | Officer and Principal Financial Officer) | |||
| * | Vice Chairman | October 1, 2021 | ||
| Stanley N. Lapidus | ||||
| * | Director | October 1, 2021 | ||
| Aster Angagaw | ||||
| * | Director | October 1, 2021 | ||
| James L. Cox, M.D. | ||||
| * | Director | October 1, 2021 | ||
| Sanford Markowitz, M.D. | ||||
| * | Director | October 1, 2021 | ||
| Jacque J. Sokolov, M.D. |
| * By: | /s/ Lishan Aklog, M.D. | |
| Lishan Aklog, M.D., as attorney-in-fact |
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Exhibit 10.2
Certain identified information has been excluded from this exhibit because it is both not material and would likely cause competitive harm to the registrant if publicly disclosed. Such information has been marked with a “[***]”.
AMENDED AND RESTATED license agreement
CWRU Western Reserve University – Lucid Diagnostics Inc.
This Amended and Restated License Agreement (hereinafter “Agreement”) entered into as of this 23rd day of August 2021 (“A&R Effective Date”) by and between Case Western Reserve University, an Ohio non-profit corporation, having a principal place of business at 10900 Euclid Avenue, Cleveland, Ohio 44106 (“CWRU”) and Lucid Diagnostics Inc., a Delaware corporation, having a principal place of business at One Grand Central Place, Suite 4600, New York, NY 10165 (“Licensee”). Upon the A&R Effective Date, this Agreement shall amend and restate in its entirety the Existing License Agreement, which existing agreement shall thereafter be of no force and effect.
WITNESSETH
WHEREAS, Licensee is a subsidiary of PAVmed Inc. (“PAVmed”), a for-profit corporation, having a principal place of business at One Grand Central Place, Suite 4600, New York, NY 10165;
whereas, CWRU owns certain rights in certain technology relating to “Esophageal Collection device and Aberrant Vimentin DNA Methylation as a Biomarker of Upper Gastrointestinal Neoplasias” and applications thereof and is interested in licensing same;
WHEREAS, Licensee desires to acquire rights in and to the technology upon the terms and conditions herein set forth;
WHEREAS, CWRU and Licensee entered into a License Agreement effective May 12, 2018 (the “Effective Date”) which was subsequently amended by mutual agreement effective November 20, 2019. The License Agreement and First Amendment to the License Agreement are collectively referred to as the “Existing License Agreement”; and
WHEREAS, CWRU and Licensee desire to amend and restate the Existing License Agreement as set forth hereinafter;
NOW THEREFORE, in consideration of the mutual covenants contained herein and intending to be legally bound hereby, the parties agree as follows:
1. DEFINITIONS
1.1 The term “CLIA” shall mean the Clinical Laboratory Improvements Amendments and associated regulations set forth in 42 C.F.R. Part 493 (Laboratory Requirements).
1.2 The term “Clinical Trial” shall mean the use of a Licensed Product(s) in human subjects in a clinical trial conducted by Licensee accordance with 21 C.F.R. Part 312.
1.3 The term “Copyrights” shall mean CWRU’s copyrights in the Licensed Technology.
1.4 The term “Derivative” shall mean intellectual property (whether in the nature of trade secrets, copyrights, patent applications, patents or other rights) developed by Licensee, which includes, or is based in whole or in part on, the Licensed Technology, including, but not limited to computer software, translations of the Licensed Technology to other foreign languages, adaptation of the Licensed Technology to hardware platforms, abridgments, condensations, revisions, and software incorporating all or any part of the Licensed Technology which may also include Licensee-created modifications, enhancements or other software. Licensee shall be entitled to establish its ownership interest in all Derivatives (but not the Licensed Technology incorporated therein which is not itself a Derivative), other than any Derivatives that incorporate claims in respect of intellectual property that is deemed owned by CWRU by virtue of the application of Section 9, which Derivatives shall be owned by CWRU, provided (a) that all Derivatives (whether owned by Licensee or CWRU) shall be considered Licensed Technology and subject to the terms of this Agreement, including but not limited to, Royalties, and Field of Use (b) Derivatives may not be made, used, or disposed of prior to the end of twenty (20) years from the Effective Date or the expiration date of the last to expire Patent, whichever comes later, unless the License granted under 2.1 of this Agreement is then in effect, and (c) Licensee shall promptly notify CWRU of Licensee-originated bug fixes to the Licensed Technology, which shall be part of the Licensed Product and owned by CWRU. Any copyright registration by Licensee for Derivatives shall give full attribution to CWRU’s Copyrights. CWRU, [***], and any non-profit health care institutions affiliated with CWRU, shall have the right to use Derivatives for research, educational, academic and administrative purposes. If this Agreement terminates or is terminated before the end of the term specified in Section 3 all right, title, and interest in any Derivatives owned by Licensee shall be transferred to CWRU. For clarity, all Derivatives existing as of the A&R Effective Date are listed on Schedule 1.4, attached hereto.
1.5 The term “Dispose” or “Disposition” shall mean the sale, lease or other transfer of Licensed Product(s).
1.6 The term “Dollar”, “U.S. Dollar” and “U.S. $” shall mean lawful money of the United States of America.
1.7 The term “esophagus” means the muscular tube connecting the throat with the stomach, the gastroesophageal junction any other organs related thereto.
1.8 The term “FDA” shall mean the U.S. Food & Drug Administration.
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1.9 The term “FDA Clearance” shall mean the receipt by the Licensee of a 510(k) clearance letter from the FDA submission for a Licensed Product.
1.10 The term “Field of Use” shall mean Use of the Licensed Technology in humans for the detection of changes in the esophagus, including but not limited to Gastroesophageal Reflux Disease, Barrett’s Esophagus and esophageal cancer and tumors for the purpose of collection of esophageal samples, analysis of esophageal samples, and screening, diagnosing, disease staging, disease monitoring and disease prognosis.
1.11 The term “First Commercial Sale” shall mean, with respect to any Licensed Product(s), the first sale for which Revenue has been recognized by Licensee for use or consumption by the general public of such Licensed Product in any country after all required Regulatory Approvals have been granted in such country.
1.12 The term “Fiscal Quarter” or “Quarter” shall refer to the normal quarterly accounting periods of Licensee; if Licensee does not have normal quarterly accounting periods, then “Fiscal Quarters” shall mean the calendar three months periods commencing with January of each year.
1.13 The term “Foreign Equivalent” shall mean the performance or occurrence of activities in non-U.S. jurisdictions similar to the performance or occurrence of activities in the United States covered by the terms “Clinical Trial,” “Regulatory Clearance”, “510(k) Clearance”, “PMA” and “Regulatory Approval,” as each such term is defined in this Article.
1.14 The term “Licensed Product” or “Product” shall consist of any product, service and/or process that either takes a sample from the esophagus and/or tests a sample from the esophagus for one or more DNA biomarkers within the Field of Use, which incorporates either:
(a) a sampling device which incorporates or utilizes Licensed Technology or a Derivative (the “Licensed Device”); or
(b) a DNA biomarker test which incorporates or utilizes Licensed Technology or a Derivative thereof (a “Licensed Biomarker Test”).
For clarity, a Licensed Product or Product may, but shall not be required to, incorporate both the Licensed Device and a Licensed Biomarker Test.
1.14.1 The term “Licensed Technology” or “Technology” shall mean (i) the technology described in Attachment A on an “as is” basis on the Effective Date; (ii) the trade secrets, know-how, design architecture and the software and algorithm related to the technology described in Attachment A, including related code and related Copyrights, on an “as is” basis on the Effective Date; (iii) any claims issuing on Patents covering the foregoing parts i or ii; (iv) Derivatives.
1.14.2 “Licensed Technology” or “Technology” also includes (i) the technology described on Attachment B on an “as is” basis on November 20, 2019 (the “First Amendment Effective Date”); (ii) the trade secrets, know-how, design architecture and the software and algorithm related to the technology described in Attachment B, including related code and related Copyrights, on an “as is” basis on the First Amendment Effective Date; (iii) any claims issuing on Patents covering the foregoing parts i or ii; (iv) Derivatives, subject to the restriction in Sections 2.2.1 and 5.9.
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1.15 The term “Market Exclusivity Period” refers to any exclusive marketing rights granted by the FDA or other U.S. government agency for a specified period upon Regulatory Clearance or Regulatory Approval.
1.16 The term “Management Services Agreement” shall mean a contract between one or more management consultants and Licensee to assist in the management of Licensee.
1.17 The term “Net Sales” shall mean the total Revenues received from the manufacture, use, Disposition or, with respect to Licensed Products that are used in connection with a Licensed Biomarker Test, processing of, Licensed Products or the samples therein, less the total of all:
| a. | discounts allowed in amounts customary in the trade; | |
| b. | sales tariffs, duties and/or taxes imposed on the Licensed Products; | |
| c. | outbound transportation prepaid or allowed; | |
| d. | amounts received in respect of product trials or samples offered in the ordinary course of business on customary terms; and | |
| e. | amounts allowed or credited on returns. |
No deduction shall be made for commissions paid to individuals (whether independent sales agents or persons regularly employed by Licensee). Notwithstanding the foregoing, the Net Sales from the Disposition of any Licensed Product that makes use of a Licensed Device to take a sample which is later evaluated in a test other than with a Licensed Biomarker Test (a “Hybrid Licensed Product”), shall equal [***] of the direct per unit cost associated with manufacturing the Licensed Device, excepting, if the Hybrid Licensed Product makes use of a Licensed Device to take a sample which is later evaluated in a test other than a Licensed Biomarker Test for detecting Barrett’s Esophagus or esophageal cancer, in which case, the Net Sales from such Disposition shall equal [***] of the direct per unit cost associated with manufacturing the Licensed Device; provided that if a portion of the Net Sales from the Disposition of any Hybrid Licensed Product is by the terms of the Disposition expressly allocated to the Licensed Device and such allocated portion exceeds the amount that would be derived under the above formula, the Net Sales from the Disposition of such Hybrid Licensed Product shall be such higher amount. The direct per unit cost associated with manufacturing the Licensed Device shall be the average price per unit paid by Licensee to third parties it has engaged for the manufacturing of the device during the six-month period prior to any applicable date of determination; provided that, under no circumstances shall the direct per unit cost be below [***].
1.18 The term “Other Proceeds” shall mean a percentage of other, non-royalty, proceeds received by Licensee pursuant to a sublicense by Licensee of rights to commercialize Licensed Product(s). Other Proceeds shall include but not be limited to all sublicense issue fees, maintenance fees and non-sales related sublicense milestone payments received by Licensee directly related to the sublicense.
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1.19 The following applies to Technology as defined in 1.14.1 listed in Attachment A:
The term “Patent(s)” shall mean any patent, continuation, continuation-in-part, divisional, or reissue in the U.S.A. or in any other country, which issues to CWRU and is based on intellectual property in existence at the date of the signing of this Agreement.
The following applies to Technology as defined in 1.14.2 listed in Attachment B:
The term “Patent(s) shall mean any patent, continuation, continuation-in-part, divisional, or reissue in the U.S.A. or in any other country, which issues to CWRU and is based on intellectual property in existence at the First Amendment Effective Date.
1.20 The term “PMA” shall mean Premarket Approval Application submitted under Section 515 of the Act.
1.21 The term “Prime Rate” shall mean the interest rate per Year announced from time to time by Key Bank, Cleveland, Ohio, as its prime rate.
1.22 The term “Regulatory Approval” shall mean FDA approval, clearance, or Foreign Equivalent which may include PMA Approval and/or 510(k) Clearance
1.23 The term “Revenue” shall mean the U.S. Dollar value of all consideration (excluding Other Proceeds) realized by Licensee for the Disposition of Licensed Product(s) as determined in accordance with U.S. generally accepted accounting principles.
1.24 The term “Royalties” shall mean Disposition royalties which are calculated as a percentage of Net Sales and will be payable by Licensee to CWRU under the provisions of this Agreement.
1.25 The term “PMA Submission” shall mean the initial filing of a PMA with the FDA or Foreign Equivalent.
1.26 The term “Third Party(ies)” shall mean any party other than the Licensee or CWRU.
1.27 The term “Year” refers to contract years of the License Agreement, i.e., a 12-month period starting with the date (or anniversary) of the Effective Date.
1.28 The term “510(k)” shall mean a premarket notification submitted pursuant to 21 C.F.R. § 807 and containing either a 510(k) summary or a 510(k) statement.
1.29 The term “510(k) Clearance” shall mean the determination by the FDA under 21 C.F.R. § 807.100 that the device has been found to be substantially equivalent to a legally marketed predicate device.
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2. License grant
2.1. Subject to the terms of this Agreement, including without limitation the reserved rights of CWRU and [***], CWRU hereby grants to Licensee, and Licensee hereby accepts, an exclusive, world-wide right to use the Licensed Technology to make, have made, use and Dispose of Licensed Products within the Field of Use.
2.2 CWRU hereby grants to Licensee the right to grant sublicenses, provided that: (i) the sublicensee agrees to abide by and be subject to all the terms and provisions of this Agreement applicable to Licensee; (ii) the sublicensee shall have no further right to grant sublicenses under this Agreement; (iii) in the event any sublicensee (or any entity or person acting on its behalf) initiates any proceeding or otherwise asserts any claim challenging the validity or enforceability of any Patent in any court, administrative agency or other forum, Licensee shall, upon written request by CWRU, terminate forthwith the sublicense agreement with such sublicensee, and the sublicense agreement shall provide for such right of termination by Licensee; (iv) the sublicense agreement shall provide that, in the event of any inconsistency between the sublicense agreement and this Agreement, this Agreement shall control; (v) Licensee remains fully liable for the performance of its and its sublicensee’s obligations hereunder; (vi) Licensee notifies CWRU of any proposed grant of a sublicense and provides to CWRU, upon request, a copy of any proposed sublicense agreement seven (7) business days prior to execution thereof; (vii) no such sublicense or attempt to obtain a sublicensee shall relieve Licensee of its obligations under Section 4 hereof, nor relieve Licensee of its obligations to pay CWRU any and all license fees, royalties and other payments due under the Agreement; and (viii) each sublicensee must be subject to a written agreement that contains obligations, terms and conditions in favor of [***], as applicable, that are substantially similar to those undertaken by Licensee in favor of [***], as applicable, under this Agreement and intended for the protection of the [***], including, without limitation, the obligations, terms and conditions regarding indemnification, insurance and [***]’s third party beneficiary status. In addition, Licensee shall also provide CWRU with a copy of the executed sublicense within seven (7) days after its execution.
2.2.1 Notwithstanding the foregoing, CWRU also grants to Licensee the right to grant to PAVmed, the majority shareholder of Licensee, and its subsidiaries and controlled affiliates, a perpetual, royalty-free, world-wide right to use Technology defined in 1.14.2 (2) that is listed in Attachment B hereto (and related Patents and any Derivatives thereof) outside the Field of Use for internal, non-commercial research purposes only.
2.2.2 Notwithstanding the foregoing, any sublicense must include a grant of rights with respect to both the Licensed Device and a Licensed Biomarker Test and may not allow for the Disposition of solely a Licensed Biomarker Test or solely the Licensed Device without written consent from CWRU, not to be unreasonably withheld.
2.3 CWRU, [***], and any non-profit health care institutions affiliated with CWRU, shall have the right to use, free of charge, any product or process, developed by Licensee which contains or is based on any of Licensed Technology, and/or Derivatives, for research (including but not limited to clinical research by itself or in conjunction with a healthcare institution), educational, academic, or administrative purposes.
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2.4 No provision of this Agreement shall restrict CWRU’s ability to conduct further research and development in the area of Licensed Technology or other areas.
2.5 All Licensed Products shall be manufactured, sold and performed by Licensee in compliance with all applicable governmental laws, rules and regulations. Licensee shall keep CWRU fully informed of, and shall move expeditiously to resolve, any complaint by a governmental body relevant to Licensed Products, except for complaints subject to the Section of this Agreement entitled “Infringement”.
2.6 CWRU retains the right to grant either exclusive or non-exclusive licenses for the Licensed Technology in fields of use other than the Field of Use for which the license hereunder is granted after the Effective Date (a “Permitted License”). CWRU shall provide prompt written notice to Licensee of any Permitted License granted by CWRU, and any material changes to the field of use under any Permitted License or any other outstanding license agreements with any Third Party(ies) or status thereof from and after the Effective Date. Each such notice shall include a reasonably detailed description of the field of use of such Permitted License, or of the material changes to the field of use or status thereof, as applicable, provided that in no event shall CWRU be required to disclose pursuant to the foregoing the identity of any licensee under such Permitted License or any other outstanding license agreements with any Third Party(ies), or any information it is otherwise required to keep confidential pursuant to the terms of such Permitted License or any other outstanding license agreements with any Third Party(ies) (although CWRU shall use diligent efforts to ensure the terms of each Permitted License permit the disclosure to Licensee of the field of use for such Permitted License, and any material changes to the field of use or status thereof, and if despite such efforts CWRU is restricted from making any such disclosure regarding the field of use under such Permitted License, CWRU shall certify in writing to Licensee that the field of use under such Permitted License or the change thereto under such Permitted License or under other outstanding license agreements with any Third Party(ies) does not overlap with the Field of Use hereunder).
2.7 If Licensed Technology was supported under a United States Government funding agreement, then (a) the United States Government has been or will be granted licensing rights as required under the terms of those federal agreements, (b) all rights and requirements of the United States Government and others under Public Law 96-517, and Public Law 98-620, including but not limited to government purpose license, march-in rights, and obligations to provide materials to other researchers shall remain and shall in no way be affected by this Agreement and any right granted in this Agreement greater than that permitted under Public Law 96-517, or Public Law 98-620, shall be subject to modification as may be required to conform to the provisions of those statutes, and (c) products sold in the United States of America, embodying or produced through use of Licensed Technology, will be manufactured substantially in the United States of America, unless a waiver has been obtained from the federal funding agency under whose funding agreement the Licensed Technology was generated.
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2.8 Retained Rights to the Licensed Technology. Notwithstanding the license granted in this Agreement, CWRU, and any non-profit health care institutions affiliated with CWRU, shall retain all rights to use the Licensed Technology for non-commercial research (including but not limited to clinical research by itself or in conjunction with a healthcare institution), educational, academic, or administrative purposes, even in the Field of Use, and shall have the right to permit other academic and nonprofit institutions to use the Licensed Technology for the same purposes. Licensee acknowledges that it has been informed that the Licensed Technology was developed, at least in part, by employees of [***] and that [***] has a paid-up, non-exclusive, irrevocable license to use the Licensed Technology for [***]’s research purposes, but with no right to assign or sublicense (the “[***]”). This license is explicitly made subject to the [***].
2.9 Supply of Research Materials. At Licensee’s expense, and subject to a materials transfer and confidentiality agreement to be negotiated in good faith by the parties, Licensee will provide to CWRU reasonable quantities of all research materials produced, or in the future developed, by the Licensee for the use by CWRU, [***], and other academic and nonprofit institutions in a manner consistent with Section 2.8 above. CWRU shall not use such research materials in a manner detrimental to the Licensee’s legitimate commercial interests in the Licensed Technology granted under this Agreement or transfer such research materials to any Third Party(ies) obtained under this Section 2.9 without the prior written consent of the Licensee. Commercializing or seeking to commercialize such research materials and their derivatives within the Field of Use shall be deemed “detrimental to the Licensee’s commercial interests” within the intent of this Section.
3. TERM OF THIS AGREEMENT
The term of the License shall conclude on the expiration date of the last-to-expire Patent, or at the end of twenty (20) years from the Effective Date in countries where no Patents exist or upon expiration of any exclusive marketing rights, which have been granted by the FDA or other U.S. government agency for a Licensed Product in the United States, whichever comes later, unless otherwise terminated pursuant to another provision of the Agreement.
4. DUE DILIGENCE
4.1 Licensee shall agree to use commercially best efforts to diligently develop, seek Regulatory Approval for, manufacture, market, and otherwise commercialize Licensed Product(s). Thereafter, until the termination of the License Agreement, Licensee shall continue to use its commercially best efforts to market and maintain reasonable availability of the Licensed Products for distribution to, and use by, the public.
4.2 Licensee shall use its commercially best efforts to manufacture, market, and otherwise commercialize Licensed Product(s). Without limiting the generality of the foregoing, it is hereby acknowledged and agreed that Licensee has timely met the following development, regulatory and commercialization performance milestones:
Milestone I: FDA submission for a first Licensed Product
.
Milestone II: FDA Clearance for a first Licensed Product
Milestone III: First Commercial Sale of a first Licensed Product
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4.3 On the Effective Date PAVmed and Licensee shall enter into a Management Services Agreement, whereby PAVmed shall manage Licensee’s operations until such time as Licensee’s board of directors determines that an independent management team is appropriate.
5. ROYALTIES AND FEES
5.1 Licensee shall pay CWRU royalties (the “Royalties”) on Net Sales of Licensed Products covered by the Patents according to the following schedule:
| Royalty | Net Sales | |
| 5% Royalty | Payable on Net Sales less than $100,000,000 per Year | |
| 8% Royalty | Payable on Net Sales greater than or equal to $100,000,000 per Year |
If, on a country-by-country basis and Licensed Product-by-Licensed Product basis, a Licensed Product is not covered by the Patents, Licensee shall pay CWRU Royalties as follows:
| Royalty | Net Sales | |
| 4% Royalty | Payable on Net Sales of such Licensed Product in such country, regardless of the amount of Net Sales |
Royalties shall be payable on a Licensed Product-by-Licensed Product and country-by-country basis until the later of:
| (a) | The expiration of the last-to-expire patent covering such Licensed Product in such country; | |
| (b) | Twenty (20) Years after the Effective Date if such Licensed Product is not covered by the Patents in such country; or | |
| (c) | The expiration date of any Market Exclusivity rights, which have been granted by the FDA or other United States government agency for such Licensed Product in the United States. |
5.2 Licensee shall pay CWRU a percentage of all Other Proceeds according to the following schedule (such payments, “Other Payments”):
| 30% | Prior to First Commercial Sale of a Licensed Product
|
| 15% | Following First Commercial Sale of a Licensed Product
|
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Licensee may deduct from Other Payments to CWRU for a calendar year the sums distributed to CWRU as a shareholder in Licensee (“Distributions”) in the same calendar year. In the event that Distributions exceed the amount due to CWRU for Other Payments in a calendar year, Licensee shall not be obligated to remit to CWRU Other Payments in that calendar year, but no credit (or deduction) shall be applied to Other Payments due to CWRU for the following year(s).
Other Proceeds shall exclude:
| (a) | proceeds derived from any equity or debt financing provided such financing is reasonably priced relative to prevailing market conditions; and | |
| (b) | proceeds received pursuant to assignment of the License Agreement to a Third Party that acquires all or substantially all of the business to which the Agreement relates by merger, sale of assets or otherwise (including a trade sale). |
5.3 As of the A&R Effective Date, CWRU has been issued 943,464 shares of common stock, par value $0.001 per share (“Common Stock”) in Licensee representing seven and seven tenths percent (7.7%) of the shares in Licensee, on a fully diluted basis, taking into account any equity securities then issued and outstanding. [***]
5.4 So long as the Shareholders Agreement remains in effect, CWRU shall have the right, but not the obligation to appoint one observer to attend and participate in, but who will not have any voting rights with respect to, all meetings of the managing board of directors of Licensee (the “Board”), all committees of the Board and all subcommittees of the Board (the “Board Observer”). The Board Observer will have the right to receive all meeting materials sent to the members of the Board, committee members and subcommittee members; provided, however, the Licensee, in its sole discretion, shall have the right to withhold materials or exclude the Board Observer from a portion of a meeting to the extent that delivery of such material or attendance at such portion of a meeting would be reasonably likely, in the reasonable judgment of the Licensee’s counsel, to render any attorney-client privilege of the Licensee ineffective or otherwise limited in any material respect; and provided, further that, prior to any such attendance or participation, the Board Observer has executed a confidentiality agreement in substance and form reasonably acceptable to the Licensee.
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5.5 Licensee shall pay CWRU a minimum annual royalty, which shall be fully creditable against Royalties payable during the same calendar year, as follows:
| $50,000 per Year | Beginning on January 1 following the first anniversary of the First Commercial Sale of a Licensed Product. | |
| $150,000 per Year | If Licensee’s Net Sales for a Year equal or exceed twenty-five million Dollars ($25,000,000) the minimum royalty per year shall increase to one hundred fifty thousand Dollars ($150,000) per year on the following anniversary of the Effective Date and subsequent Years. | |
| $300,000 per Year | If Licensee’s Net Sales for a Year equal or exceed fifty million Dollars ($50,000,000) the minimum royalty per year shall increase to three hundred thousand U.S. Dollars ($300,000) per year on the following anniversary of the Effective Date and subsequent Years. | |
| $600,000 per Year | If Licensee’s Net Sales for a Year equal or exceed one hundred million Dollars ($100,000,000) the minimum royalty per year shall increase to six hundred thousand U.S. Dollars ($600,000) per year on the following anniversary of the Effective Date and subsequent Years. |
5.6 Annual Minimum Royalty payments are to be adjusted by the cumulative percentage change in the CPI-W Consumer Price Index between the December preceding the Effective Date and the December preceding the date on which the payment in question is payable.
5.7 The Licensee will pay $200,000 to CWRU within thirty (30) days of PMA submission for a Licensed Product (the “PMA Milestone Payment”). Licensee shall promptly notify CWRU upon the PMA submission for a Licensed Product.
5.8 Royalty if Licensee Challenges the Patent(s). Notwithstanding the above, should Licensee bring an action seeking to invalidate any Patent included in the Licensed Technology, Licensee will pay Royalties to CWRU at the rate of two (2) times the applicable royalty rate of Net Sales during the pendency of such action. These Royalties shall not be refundable. Moreover, should the outcome of such action determine that any claim of a Patent(s) challenged by Licensee is both valid and infringed by a Licensed Product, Licensee will pay Royalties at the rate of three (3) times the applicable royalty rate of Net Sales thereafter. Further, during the pendency of any action seeking to invalidate any Patent(s) included in the Licensed Technology, Licensee shall not pay Royalties into any escrow or other similar account but shall continue to pay amounts due to CWRU.
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5.9 Should PAVmed, its subsidiaries and/or controlled affiliates desire to expand their rights to the Technology listed in Attachment B of this Agreement (and related Patents and any Derivatives thereof) outside the Field of Use to include commercial purposes, such as the sales of product(s), the parties shall meet and negotiate in good faith to discuss the Royalty to be applied to such product. Such negotiation shall take into account whether or not the Technology listed in Attachment B is being sold as a standalone product or included as part of a combination product (it being agreed and understood that so long as the Technology listed in Attachment B is not being sold as a standalone product, the maximum Royalty percentage shall be [***]). Any such negotiations shall be memorialized in writing through a written amendment to this Agreement to include the applicable provisions regarding Royalties payable.
5.10 As partial consideration for entering into this Agreement, Licensee shall pay to CWRU a one-time fee of ten thousand Dollars ($10,000) due and payable within thirty (30) days of the A&R Effective Date.
5.11 Licensee acknowledges and agrees that, in establishing the pricing for any Licensed Product, it shall, and shall ensure that its Sublicensees will, act in good faith and not take any action the purpose of which is to avoid or reduce, or seek to avoid or reduce, any Royalties payable hereunder.
6. DNA BIOMARKERS.
If Licensee or any of its subsidiaries or controlled affiliates files a patent application with respect to, licenses or acquires from any Third Party or partners with any Third Party with respect to, any diagnostic technology for use with the Licensed Device within the Field of Use, Licensee shall give CWRU written notice of such patent application or license, within thirty (30) days of the filing of such patent application or the completion of such license, acquisition or partnership.
7. PAYMENT TERMS
7.1 Royalties shall be paid by Licensee to CWRU, as defined in the Section entitled “Royalties” for each Fiscal Quarter within sixty (60) days of the end of such Fiscal Quarter, until this Agreement expires or is terminated in accordance with this Agreement. If this Agreement terminates before the end of a Fiscal Quarter, the payment for that terminal fractional portion of a Fiscal Quarter shall be made within ninety (90) days of the date of termination of this Agreement.
7.2 All payments hereunder shall be paid in U.S. Dollars and shall be made by wire transfer to CWRU’s account [***], or by Licensee’s check sent in accordance with the Section entitled “Notices”.
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7.3 All payments including but not limited to Royalties, Annual Minimum Royalties and the PMA Milestone Payment payable hereunder which are overdue shall bear interest until paid at a rate equal to the Prime Rate in effect at the date such payments were due plus four percent (4%) per Year, but in no event to exceed the maximum rate of interest permitted by applicable law. This provision for interest shall not be construed as a waiver of any rights CWRU has as a result of Licensee’s failure to make timely payment of any amounts.
8. REPORTS AND AUDITS
8.1 Licensee shall report Quarterly, within thirty (30) days following the end of each Quarter, to CWRU its Net Sales and Revenues for the just-ended Quarter, which are subject to Royalty payments, in reasonable detail sufficient to allow CWRU to confirm the calculation of Net Sales and the Royalties due. Additionally, Licensee shall include in the foregoing reports (i) the number of Licensed Biomarker Tests and Licensed Devices distributed to Third Party commercial entities and (ii) the number of samples taken using Licensed Devices that Licensee (or its Affiliates or Sublicensees or any Third Party acting on behalf of Licensee, its Affiliates or Sublicensee), received, and the tests that Licensee (or its Affiliates or Sublicensees or any Third Party acting on behalf of Licensee, its Affiliates or Sublicensee) performed on the same, in each case during such just-ended Quarter.
8.2 No later than sixty (60) days after June 30 of each calendar year, Licensee shall provide to CWRU a written annual progress report (“Progress Report”) describing progress on research and development, regulatory approvals, manufacturing, sublicensing, marketing and sales during the most recent twelve (12) month period ending June 30 and plans for the forthcoming year. If multiple Licensed Products are being developed, the Progress Report shall provide the information set forth above for each Licensed Product.
8.3 Reserved.
8.4 Licensee shall maintain accurate books and records such that the Royalties due and payable (including, without limitation, pursuant to Section 5.1) can be easily ascertained. Such books and records shall be maintained at Licensee’s principal place of business and shall be available for inspection by CWRU or its representatives during the normal business day upon not less than ten (10) days prior written notice, provided that CWRU or its representatives agree to protect the confidentiality of the information as to the customers of Licensee.
8.5 Licensee shall make available Licensee’s books and records for audit by an accounting firm or representative of CWRU’s selection, and Licensee agrees to cooperate fully in any such audit, provided that the auditors agree to protect the confidentiality of the information as to the customers of Licensee. Any such audit shall not be more frequent than annually and shall only be in respect of the prior thirty-six month period; provided that in no event may CWRU conduct any such audit in respect of any previously audited period. In the event that such audit determines that the amount of Royalties paid to CWRU during the applicable period was in error by more than five (5%) percent, Licensee shall pay the costs of the auditors.
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9. IMPROVEMENTS AND COLLABORATIONS
9.1 Subject to Section 9.2, (a) Licensee will own all of the right, title and interest in and to any patents, copyrights, mask work rights, trade secrets and any other intellectual property rights (but excluding Patents) that result from the collaboration between the parties or that are developed solely by Licensee employees, consultants (including any of the Inventors that is acting within the scope of services described on Schedule 9.1) or agents, in each case, acting in their capacity as employees, consultants or agents of Licensee, and (b) CWRU will own all of the right, title and interest in and to patents, Patents, copyrights, mask work rights, trade secrets and any other intellectual property rights that are developed solely by CWRU employees (including any of the Inventors), consultants or agents, in each case, acting in their capacity as employees, consultants or agents of CWRU. Notwithstanding the foregoing, nothing in this Agreement shall in and of itself be construed as automatically transferring or conveying, or requiring any CWRU employee, consultant or agent to transfer or convey, the intellectual property rights of CWRU to Licensee. For purposes of this Agreement the term “Inventors” shall mean, collectively, Sanford Markowitz, M.D., Ph.D., Amitabh Chak, M.D. and Joseph Willis, M.D.
9.2 All intellectual property developed by Licensee (solely or jointly with one or more Third Parties) (such intellectual property, the “Licensee Developed IP”) shall be owned by Licensee in accordance with the terms hereof, subject to the remainder of this Section 9.2. The Licensee Developed IP shall be considered “Derivatives” if such intellectual property includes, or is based, in whole or in part, on the Licensed Technology. Notwithstanding the foregoing, such Licensee Developed IP (including all intellectual property developed by Lucid consultants acting within the scope of services described on Schedule 9.1) shall be considered owned by CWRU if, and only if (a) with respect to any Licensee Developed IP that would constitute a Derivative, CWRU has established that it had developed such intellectual property prior to the Effective Date, by way of written records prepared contemporaneously with the development thereof, or (b) CWRU has disclosed in writing to Licensee such intellectual property, which intellectual property shall have been developed by CWRU after the Effective Date but prior to Licensee advising CWRU that it has developed such intellectual property; provided, that, in the case of this clause (b), such intellectual property was not previously disclosed by CWRU (or any of its employees, consultants or agents) to Licensee in the course of any collaboration between the parties, or (c) the Parties determine that such Licensee Developed IP has been developed using or contains information developed from university, federal or other third party funding or resources received by CWRU (collectively, “Outside Funding”) in accordance with Section 9.3.
9.3 If, after the A&R Effective Date, Licensee desires to file a patent that names any of the Inventors as an inventor of such patent, prior to filing such patent (i) Licensee shall obtain written representations from the Inventors that such invention was not developed using and does not contain any information from any Outside Funding, (ii) Licensee shall provide CWRU such patent and a copy of the written representations in order to confirm the accuracy of such representations. CWRU shall have fifteen (15) business days to review such proposed patent filing and to dispute any representations of the Inventor(s). If CWRU determines in good faith, after consultation with Licensee, that the representations of the Inventor(s) are inaccurate regarding the use of Outside Funding, CWRU shall promptly notify Licensee of such determination, and, upon request, provide reasonable documentation to support such determination. Thereafter, such invention shall be considered owned by CWRU. If CWRU does not dispute any representations of the Inventor(s) regarding a proposed patent filing within the fifteen (15) business day review period described herein, such invention shall be considered owned by Licensee and a Derivative (if applicable).
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9.4 Except as provided in this Section 9, nothing herein shall be deemed to grant any license or rights in any other technology, including any intellectual property developed by the Inventors using Outside Funding and not within the scope of services under Schedule 9.1, in addition to the Licensed Technology.
10. PATENTS AND OTHER INTELLECTUAL PROPERTY
10.1 CWRU Property. Intellectual property rights to Licensed Technology such as Patent(s), patent(s), and Copyrights which may be obtainable will remain the property of CWRU, subject to the proprietary rights concerning Derivatives provided in Section 1.4. Trademarks existing on the Effective Date belong to CWRU.
10.2 Subject to Sections 10.3 and 10.6, Licensee shall bear all expenses associated with the Patent preparation, filing, prosecution and maintenance to protect any Licensed Technology for which there is an invention disclosure (the “Covered Expenses”), and Licensee will reimburse CWRU for all past and future Covered Expenses, within thirty (30) days of the receipt of a reasonably detailed invoice therefor.
10.3 In the event that all or any portion of the Patents are optioned and/or licensed by CWRU to other Third Parties outside the Field of Use, or there is otherwise in effect any Permitted License, Licensee’s obligation to reimburse Covered Expenses shall be reduced on a per capita basis based on the number of such options and/or licenses in effect at any given time. CWRU shall provide Licensee with such information that it requests as is reasonably necessary to verify that any invoices for Covered Expenses have been reduced in accordance with the foregoing (it being agreed and understood that CWRU shall in no event be obligated to provide to Licensee pursuant to this Section 10.3 the identity of any licensee or any other information it is restricted from disclosing).
10.4 CWRU has applied for, and/or will apply for and prosecute Patent coverage, at Licensee’s expense, in any country if so requested by Licensee, for any and all Patents listed in Attachment A and Attachment B, to the extent that such protection is reasonably obtainable.
10.5 CWRU may, at its option and sole discretion and after giving prior written notice to Licensee, pursue patent, copyright and/or trademark rights for Licensed Technology in any country for which coverage has not been requested by Licensee in accordance with Section 10.4 above. CWRU will promptly notify Licensee of all fees it incurs in pursuing such patent, copyright and trademark for Licensed Technology (which notification shall include a reasonably detailed invoice describing the fees incurred). If Licensee does not reimburse CWRU for such fees within thirty (30) days of the receipt of each notification, then Licensee shall have no rights under any Patent in that country.
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10.6 CWRU has incurred two hundred seventy-two thousand five hundred fifty-two Dollars and ninety-one cents ($272,552.91) in patent expenses for protection of any Licensed Technology for which there is an invention disclosure, invoiced as of May 4, 2018 (together with any Covered Expenses in respect of the period prior to the Effective Date that have not yet been invoiced, the “Past Patent Expenses”). As of the A&R Effective Date, Licensee has paid $50,000 in Past Patent Expenses. Licensee hereby agrees to pay all remaining unpaid Past Patent Expenses on the A&R Effective Date.
10.7 Licensee shall not contest the validity of the Patents.
11. MARKINGS, TRADEMARKS AND TRADE NAMES; DESIGNATED ASSET ASSIGNMENT
11.1 Licensee shall have included in all sales, marketing literature and invoices relating to Licensed Product, a statement to the effect that “this product or portions thereof is manufactured under license from CWRU Western Reserve University” and, if applicable, either “Patent Pending” or, if applicable, reference the Patent number.
11.2 Licensee shall have marked the appropriate portions of all Licensed Product with any applicable United States of America and foreign Patent numbers in accordance with the applicable laws of the countries in which the materials are intended to be used. Licensee shall neither register nor use any CWRU trademarks or trade names.
11.3 Licensee acknowledges that it does not have any rights or any title whatsoever in or to CWRU’s technology, trade name or in or to any of CWRU’s trademarks, except as provided under this Agreement. Any reference by Licensee to CWRU beyond the above may only be done with express written permission of CWRU’s Associate Vice President for Technology Transfer.
11.4 Licensee acknowledges that under [***] policy, Licensee may not use the name of [***] or of any [***] employee in a manner that reasonably could constitute an endorsement of a commercial product or service; but that use for other purposes, even if commercially motivated, is permitted provided that (1) the use is limited to accurately reporting factual events or occurrences, and (2) any reference to the name of [***] or any [***] employees in press releases or similar materials intended for public release is approved by [***] in advance.
11.5 In consideration of the obligations undertaken by Licensee hereunder, CWRU hereby assigns to Licensee, and Licensee hereby assumes, all right, title and interest in all of the assets within the categories set forth on Attachment C (the “Designated Assets”) in CWRU’s possession as of the Effective Date. CWRU hereby represents and warrants that it has good and marketable title to the Designated Assets, free and clear of all liens or encumbrances, and that no consent of any Third Party that has not been obtained is required to make the foregoing assignment, and that the Designated Assets are all of the tangible assets used by CWRU and its agents in the development of the Licensed Technology. CWRU hereby agrees to execute such other agreements and instruments, and to take such other actions, as may be reasonably requested by Licensee from time to time to vest title in the Designated Assets in Licensee.
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12. TERMINATION
12.1 In the event that Licensee defaults in the payment in full of any amount required to be paid under this Agreement on the date such payment is due, and the payment of such amount is not made within thirty (30) days after written notice of such payment default from CWRU and is not otherwise being disputed by Licensee in good faith, in addition to utilizing any other legal and/or equitable remedies, CWRU shall have the right by written notice to Licensee after such default either (i) to terminate the exclusivity, if any, of the license hereunder (by amending the word “exclusive” in the License Grant to read “non-exclusive”) without any reduction in any of the payments due from Licensee or (ii) to terminate this Agreement. If CWRU terminates this Agreement pursuant to this Section, Licensee shall still pay CWRU any Annual Minimum Royalties due for the next Year thereafter, notwithstanding termination of Licensee’s rights hereunder. In addition, and subject to Section 1.4, in the event of a termination under this Section, Licensee hereby grants to CWRU a fully paid up, perpetual license to use any Licensee Patent(s) necessary to practice any Patent(s) for research, educational and/or administrative purposes.
12.2 In the event that either party to this Agreement defaults in the performance of any of its obligations hereunder (other than any such default described in Section 12.1) and fails to cure such default within sixty (60) days after written notice of such default from such other party, the other party shall have the right by written notice to the defaulting party within sixty (60) days after the expiration of such sixty (60) day period to terminate this Agreement; provided that such sixty (60) day cure period shall be extended by up to an additional ninety (90) days so long as the non-defaulting party reasonably determines in good faith that the defaulting party is diligently taking steps to cure such default.
12.3 The termination of this Agreement shall not terminate (i) the obligation of Licensee to pay any amounts, which have accrued or which are otherwise to be paid by Licensee under Section 12.1 of this Agreement, or (ii) the obligations of Licensee under the Sections entitled “Reports and Audits,” “Patents and Other Intellectual Property,” “Termination,” “Taxes,” “Confidentiality and Trade Secrets,” “Indemnification,” “Insurance,” “Dispute Resolution,” “Infringement,” and “Third Party Beneficiary” hereunder.
12.4 Upon termination of this Agreement, Licensee will immediately discontinue any further use of Licensed Technology and discontinue production of any Licensed Products, except that Licensee’s rights hereunder to use and sublicense to PAVmed, its subsidiaries and/or controlled affiliates the Technology listed in Attachment B (and related Patents and Derivatives thereof) on a royalty-free basis for internal, non-commercial research purposes only, and the parties’ rights and obligations under Section 5.9 (if PAVmed, its subsidiaries and/or controlled affiliates desire to expand such rights outside the Field of Use), shall survive any such termination of this Agreement indefinitely.
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13. TAXES
Licensee shall pay all taxes which may be assessed or levied on, or on account of, the Licensed Technology, Licensed Product made, used or Disposed of hereunder and all taxes (other than taxes imposed by the United States of America or the State of Ohio or jurisdictions within such State) levied on or on account of the amounts payable to, or for the account of, CWRU under this Agreement.
14. NO WARRANTY
CWRU hereby represents and warrants that: (a) to the best of the knowledge of the CWRU Technology Transfer Office, (i) it is the owner by assignment from the inventors of record of all Patents, (ii) it has provided full, accurate and complete disclosure to Licensee of all material information it is aware of and in its possession relating to the Patents and the Licensed Technology, and (iii) it has not granted licenses or other rights under the Patents, the Licensed Technology or otherwise that are in conflict with the terms and conditions of this Agreement; (b) it has the power and authority to enter into this Agreement; (c) it has taken all necessary action to authorize the execution and delivery of this Agreement by its representatives who carried out such execution and delivery, and to authorize the performance of its obligations hereunder, and (d) there are no outstanding license agreements with any Third Party(ies) that have a field of use that overlaps with the Field of Use.
ALL LICENSED TECHNOLOGY, information, materials, services, intellectual property or other property or rights, granted or provided by CWRU pursuant to this agreement (“DELIVERABLES”) are PROVIDED on an “as is” basis. EXCEPT AS PROVIDED IN SECTION 11.5 AND THIS SECTION 14, CWRU makes no warranties of any kind, either expressed or implied, as to any matter including, but not limited to, warranty of fitness for particular purpose, or merchantability, exclusivity or results obtained from use, nor shall EITHER party HERETO be liable tO the OTHER for THE OTHER’s indirect, special, or consequential damages such as loss of profits or INABILITY to use said intellectual property or any applications and derivations thereof. CWRU does not make any warranty of any kind with respect to freedom from patent, trademark, or copyright infringement, or theft of trade secrets and does not assume any liability hereunder for any infringement of any patent, trademark, or copyright arising from the use of DELIVERABLES. licensee agrees that it will not make any warranty on behalf of CWRU, expressed or implied, to any entity concerning the application of or the results to be obtained with DELIVERABLES.
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15. costs
All costs and expenses incurred by Licensee in carrying out Licensee’s obligations under this Agreement shall be paid by Licensee, and Licensee shall not be entitled to reimbursement from Royalties hereunder or otherwise therefor from CWRU. Licensee shall possess or obtain at its own expense all necessary licenses and permits and shall comply with all laws, ordinances, rules or regulations affecting the exportation, use, and/or sale or transfer of the Licensed Product, Licensed Technology and/or Derivatives.
16. confidentiality and trade secrets
16.1 “Confidential Information” shall mean any information relating to the Licensed Technology, the terms of this Agreement (as from time to time amended), Patents, copyrights, algorithms, and software covered by this Agreement or information disclosed to either party hereto (the “Receiving Party”) in connection with performance of this Agreement, provided that such information is marked “Confidential” or designated in writing as “Confidential” within thirty (30) days after disclosure to the Receiving Party by the other party (the “Disclosing Party”); provided that for purposes of CWRU’s confidentiality obligations hereunder as the Receiving Party, “Confidential Information” shall only mean the terms of this Agreement (as amended from time to time), and information concerning Licensee’s business, financial condition and prospects, and commercial activities. All such information shall be Confidential Information, including information disclosed prior to the date of this Agreement, unless such information (i) was already in the Receiving Party’s possession prior to the disclosure thereof by the Disclosing Party as provided in this Section 16.1; (ii) has been published or is published hereafter, unless such publication is a breach of this Agreement; (iii) is received by the Receiving Party from a Third Party not under an obligation of confidentiality with respect thereto; or (iv) is independently developed by the Receiving Party’s employees who did not have access to Confidential Information. In the event that such information shall be established to have been known to the Receiving Party prior to the disclosure thereof by the Disclosing Party by reference to any publication thereof by the Receiving Party or by reference to any internal writing or other business record maintained by the Receiving Party in the ordinary course of business, such information shall not be deemed to be Confidential Information for purposes of this Agreement following notification to the Disclosing Party of such fact.
16.2 The Receiving Party shall maintain in confidence and shall not disclose to any person not a party hereto, nor shall the Receiving Party use or exploit in any way without the Disclosing Party’s written agreement, any Confidential Information until three (3) years after the later of the date of the termination of this Agreement or the end of the term of the last to expire Patent, unless such information ceases to be Confidential Information prior to the end of such period through no fault of the Receiving Party or the Receiving Party and the Disclosing Party enter into an agreement authorizing same. Notwithstanding anything to the contrary herein, CWRU may disclose (on a confidential basis) Confidential Information of Licensee to employees and trustees of [***] who have a need to know such information in connection with any activities related to the Licensed Technology by [***] that are permitted hereunder.
16.3 The Receiving Party shall maintain with respect to such Confidential Information a standard of care which is no less than that standard which the Receiving Party maintains to prevent the disclosure of its own most valuable confidential information but in no event shall the Receiving Party exercise less than reasonable care to prevent the disclosure of Confidential Information by its employees or representatives.
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16.4 Upon termination of this Agreement for any reason, the Receiving Party agrees to return at once to the Disclosing Party, without copying, all originals and copies of all materials (other than this Agreement) containing any Confidential Information of the Disclosing Party in its possession.
16.5 For purposes of this Section the term “Disclosing Party (as it applies to CWRU)” shall include inventors of the Licensed Technology and those working with or under them except that such persons do not have authority to execute an authorizing agreement under Section 16.2.
17. indemnification
Licensee hereby agrees to defend, indemnify and hold harmless CWRU, its trustees, officers, employees, attorneys and agents, including, without limitation, [***] (collectively, the “Indemnified Parties”) from any and all claims relating directly or indirectly to this Agreement (and any reasonable, out-of-pocket expenses or attorney’s fees), arising out of (a) any claims of product liability, personal injury, death, damage to property or violation of any laws or regulations involving Licensee’s or its sublicensee(s)’s acts or omissions in connection with any Patents or the development, use or sale of any Licensed Products, Licensed Technology, Deliverables or Derivatives developed, manufactured, used or sold by Licensee or its sublicensees, (b) the gross negligence or willful misconduct of Licensee, or (c) Licensee’s breach of this Agreement. The previous sentence will not apply to the extent that the relevant claim is determined with finality by a court of competent jurisdiction to result from the gross negligence or willful misconduct of an Indemnified Party. [***] and its trustees, officers, employees, and agents (collectively, “[***]”), will be indemnified, defended by counsel acceptable to [***], and held harmless by Licensee from and against any claim, liability, cost, expense, damage, deficiency, loss, or obligation, of any kind or nature (including, without limitation, reasonable attorneys’ fees and other costs and expenses of defense) (collectively, “Claims”), based upon, arising out of, or otherwise relating to this Agreement or any sublicense, or the use, handling, storage, or disposition of the Licensed Technology by Licensee or others who possess the Licensed Technology through a chain of possession leading back, directly or indirectly, to Licensee, including without limitation any cause of action relating to product liability. The previous sentence will not apply to the extent that the relevant Claim is determined with finality by a court of competent jurisdiction to result from the gross negligence or willful misconduct of an [***]. Notwithstanding any other provision of this Agreement, Licensee’s obligation to defend, indemnify and hold harmless the [***] under this paragraph will not be subject to any limitation or exclusion of liability or damages or otherwise limited in any way.
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18. insurance
18.1 Throughout the term of this Agreement and for a period of ten (10) years thereafter, Licensee shall obtain and maintain coverage, in full force and effect and at no cost or expense to CWRU or [***], under one or more insurance policies providing:
| (i) | Commercial general liability insurance (including, without limitation any event, coverage and any necessary endorsements for products /completed operations, blanket broad form contractual liability as well as for clinical trials if any such trials are to be performed by or on behalf of Licensee) which provides, for each annual policy period, coverage and insurer’s liability of no less than the minimum limits specified in the Section below for injury, death and property damage resulting from each occurrence during the policy period; and | |
| (ii) | Worker’s compensation insurance in respect of all of Licensee’s employees with limits of liability and coverage not less than statutory limits provided by the State of Ohio or other applicable laws and regulations. |
18.2 Subject to the further provisions of this Section, the comprehensive commercial general liability coverage shall have the following minimum limits:
| (i) | From the Effective Date until the date immediately prior to the Clinical Trial or the First Commercial Sale: one million Dollars ($1,000,000) each occurrence; one million Dollars ($1,000,000) general aggregate (other than product liability). Licensee shall have thirty (30) days following the Effective Date to obtain such coverage. | |
| (ii) | From the date immediately prior to the first Clinical Trial: three million Dollars ($3,000,000) each occurrence, three million Dollars ($3,000,000) general aggregate (other than product liability); three million Dollars ($3,000,000) product liability aggregate. | |
| (iii) | After the date immediately prior to the First Commercial Sale: five million Dollars ($5,000,000) each occurrence; five million Dollars ($5,000,000) general aggregate (other than product liability), five million Dollars ($5,000,000) product liability aggregate. |
18.3 Notwithstanding the foregoing, Licensee is at all times required to obtain and maintain levels of insurance appropriate to meet its obligations under this License Agreement, as determined by the Board. Should any of the requirements of this Section 18 not be available in the insurance market at commercially reasonable rates or at all, the parties shall work together in good faith to achieve a commercially reasonable resolution thereof. The specified minimum insurance coverage and limits above do not constitute a limitation on Licensee’s liability or obligation to indemnify or defend any Indemnified Party under this Agreement.
18.4 Each policy of insurance which Licensee is required to obtain hereunder shall (a) be with reputable and financially secure insurance carriers having at least an A rating (A rating or above by A.M. Best) and an A.M. Best Class Size of at least VIII, (b) list each of CWRU and [***] and their respective trustees, officers, employees, faculty, staff, students, agents (including with respect to CWRU, without limitation, [***]), and their respective successors, heirs and assigns as additional insured, (c) be endorsed to provide that the insurer waives all subrogation rights which the insurer otherwise has or could have against any additional insured, (d) be primary in respect of all additional insured, and (e) provide that the identified insurer will not cancel or fail to renew the identified insurance without giving CWRU at least 30 days’ prior written notice thereof.
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18.5 Within thirty (30) days following the Effective Date, and thereafter no later than the day on which any such policy of insurance is renewed or replaced, Licensee shall provide CWRU with a Certificate of Insurance from each such insurer which evidences compliance by Licensee with its obligations hereunder. Upon the from time to time request of CWRU, Licensee shall provide CWRU with a copy of the policy, status of claims and claims history respecting any of the insurance required to be maintained by Licensee hereunder.
18.6 For the avoidance of doubt, the minimum insurance coverage and limits set forth in this Agreement do not constitute a limitation on Licensee’s liability or obligations to indemnify or defend CWRU or [***] and any other additional insured under this Agreement.
19. breach
No acquiescence in any breach of this Agreement by either party shall operate to excuse any subsequent or prior breach.
20. prior agreement
Except for any confidential disclosure agreement executed by the parties, this Agreement supersedes all previous agreements relating to the subject matter hereof, whether oral or in a writing, and constitutes the entire agreement of the parties hereto and shall not be amended or altered in any respect except in a writing executed by the parties.
21. interpretation
This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Ohio, United States of America, without regard to conflict of law principles.
22. dispute resolution
The parties consent to the exclusive jurisdiction of the courts of Cuyahoga County, Ohio to resolve any and all disputes relating to this Agreement. Licensee hereby irrevocably and unconditionally:
| (i) | Waives any objection which it may have at any time to the laying of venue of any lawsuit relating to the Agreement being brought in any court located in Cuyahoga County, Ohio, waives any claim that any such lawsuit has been brought in an inconvenient forum, and waives any right to object, with respect to any lawsuit brought in any such court, that such court does not have jurisdiction over Licensee; and |
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| (ii) | Consents and agrees to service of any summons, complaint or other legal process in any lawsuit by registered or certified mail, postage prepaid, to Licensee at the address for notices described in the Section entitled “Notices” hereof, and consents and agrees that such service shall constitute in every respect valid and effective service (but nothing herein shall affect the validity or effectiveness of process served in any other manner permitted by law). |
23. infringement
23.1 During the term of this Agreement, each party will promptly, and in any event no later than thirty (30) days, report in writing to the other party any actual or threatened infringement of any Patent comprising the Licensed Products of which it becomes aware. With respect to any such actual or threatened infringement in the Field or Use (each, an “Infringement”), each party will provide the other party with all available evidence supporting such actual or threatened Infringement (“Infringement Notice”). The parties will reasonably cooperate with each other to terminate or settle any such Infringement without litigation.
23.2 (a) Licensee will have the first right to commence an action against any such Infringement anywhere in the world at its own expense, provided Licensee gives CWRU sufficient advance notice of its intent to take such action and the reasons therefor. Licensee will have the sole and exclusive right to select counsel for any such Infringement action. Licensee shall bear all costs associated with such Infringement action (including but not limited to attorney’s fees) except that CWRU will cooperate with Licensee in bringing and pursuing such Infringement action as reasonably requested at no cost to Licensee except for reimbursement of reasonable out-of-pocket expenses incurred in rendering such cooperation. Licensee will keep CWRU promptly informed, will regularly consult with CWRU regarding the status of any such Infringement action, and will provide CWRU with copies of all documents filed in, and all material written communications relating to, such Infringement action. If reasonably necessary, CWRU will join as a party to such Infringement action but will be under no obligation to participate except to the extent that such participation is required as the result of being a named party to the Infringement action. CWRU may, at its option and expense, join Licensee in the prosecution or defense of any such Infringement action. Licensee will not settle any such Infringement action without obtaining the prior written consent of CWRU, which consent will not be unreasonably withheld.
(b) If within one hundred and eighty (180) days from the date of the Infringement Notice, the alleged Infringement is not terminated or settled and Licensee has failed to bring any action against the alleged or actual infringer, then CWRU will have the right to bring an action against the alleged or actual infringer at its own expense. CWRU will have the sole and exclusive right to select counsel for any such Infringement action. CWRU shall bear all costs associated with such Infringement action (including but not limited to attorneys’ fees) except that Licensee will cooperate with CWRU in bringing and pursuing such Infringement action as reasonably requested at no cost to CWRU except for reimbursement of reasonable out-of-pocket expenses incurred in rendering such cooperation. CWRU will keep Licensee promptly informed, will regularly consult with Licensee regarding the status of any such Infringement action and will provide Licensee with copies of all documents filed in, and all material written communications relating to, such Infringement action. If reasonably necessary, Licensee will join as a party to such Infringement action but will be under no obligation to participate except to the extent that such participation is required as the result of being a named party to the Infringement action. Licensee may, at its option and expense, join CWRU in the prosecution or defense of such Infringement action. CWRU will not settle any such Infringement action without obtaining the prior written consent of Licensee, which consent will not be unreasonably withheld.
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(c) If a Third Party brings a law suit or proceeding against CWRU that seeks damages from CWRU based on an allegation(s) that the Licensed Technology infringes the intellectual property of said Third Party (a “Suit”), CWRU shall notify Licensee of such Suit and Licensee shall, at its option, undertake the defense of such Suit at Licensee’s own expense and with counsel reasonably acceptable to CWRU; provided that, Licensee shall not settle any such Suit without CWRU’s prior consent, which consent will not be unreasonably withheld. CWRU shall reasonably cooperate with Licensee in such defense. All reasonable costs and expenses incurred in connection with such cooperation will be borne by the Licensee. If (1) Licensee declines to undertake the defense of the Suit within thirty (30) days of notification thereof; or (2) Licensee fails to subsequently undertake and maintain the defense of the Suit or fails to settle such Suit within one hundred and eighty (180) days of its assumption of the defense thereof, then CWRU shall have the right, exercisable in the sole discretion of CWRU and upon advance notice to Licensee within thirty (30) days after the end of the applicable period in clause (1) or (2) above, to undertake the defense of the Suit at CWRU’s own expense and with counsel reasonably acceptable to Licensee; provided that CWRU shall not settle any such Suit without Licensee’s prior consent, which consent will not be unreasonably withheld. Licensee shall reasonably cooperate with CWRU in such defense. All reasonable costs and expenses incurred in connection with such cooperation will be borne by CWRU. Nothing in this Section 23.2(c) shall be construed as (1) obligating either party to resolve any dispute or to settle or defend any claim, suit or proceeding arising out of Licensee’s manufacture, use or sale of Licensed Products, or (2) prohibiting any party from, at its option and expense, joining in the defense of any Suit in which it is named a party. The party that has undertaken the defense of any Suit will keep the other party promptly informed, will regularly consult with the other party regarding the status of any such Suit and will provide the other party with copies of all documents filed in, and all material written communications relating to, such Suit. If the parties agree to grant a non-exclusive license to settle a Suit with a Third Party, the parties will negotiate in good faith to modify the terms of this Agreement (taking into account that a portion of the equity interest in Licensee originally allocated to CWRU was re-allocated to certain members of CWRU faculty), if necessary to address in an equitable manner the economic consequences of such non-exclusive license.
23.3 Any recovery, whether by way of settlement or judgment, from a Third Party pursuant to a legal proceeding initiated in accordance with Section 23.2 shall first be used to reimburse the party initiating such legal proceedings for its actual fees, costs and expenses incurred in connection with such proceeding. The balance of such recovery shall be divided seventy-five percent (75%) to the party that initiated the legal proceeding and twenty-five percent (25%) to the other party.
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23.4 Without limiting the generality of Section 23.2, in the event a party initiates or defends a legal proceeding pursuant to Section 23, the other party shall cooperate fully with and supply all assistance reasonably requested by the party initiating such proceeding, including without limitation, joining the proceeding as a party if requested (at the initiating party’s sole cost). Subject to Section 23.2, the party that institutes any legal proceeding concerning any Patent pursuant to Section 23 shall have sole control of that proceeding.
23.5 Notwithstanding the pendency of any Infringement (or other) claim or action by or against Licensee, Licensee shall have no right to terminate or suspend (or escrow) payment of any amounts required to be paid to CWRU pursuant to this Agreement.
24. notices
Any notice under any of the provisions of this Agreement shall be deemed given when deposited in the mail, postage prepaid, registered or certified first class mail and addressed to the applicable party at the address stated on the signature page hereof, or such other address as such party shall specify for itself by like notice to other party. Each party shall transmit to the other a facsimile copy of each such notice promptly after such deposit in the mail.
25. assignment
The Agreement and the rights or obligations contained therein may not be assigned by either party without the prior written consent of the other party; provided, that, Licensee may, without the consent of the other party, assign the Agreement to a Third Party that acquires all or substantially all of the business to which the Agreement relates by merger, sale of assets or otherwise (including a trade sale), provided that the Third Party is bound by all terms, conditions, and obligations of this Agreement, including the payments of Royalties to CWRU, and only if the Third Party agrees in writing to all terms of this Agreement as if the Third Party were Licensee hereunder and Licensee provides such agreement to CWRU for its records.
26. Headings
The section headings contained in this Agreement are set forth for the convenience of the parties only, do not form a part of this Agreement and are not to be considered a part hereof for the purpose of construction or interpretation hereof, or otherwise.
27. EXPORT CONTROLS
It is understood that CWRU 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 Member that Member shall not export data or commodities to certain foreign countries without prior approval of such agency. CWRU neither represents that a license shall not be required nor that, if required, it shall be issued.
28. THIRD PARTY BENEFICIARIES
[***] is not a party to this Agreement and has no liability to any licensee, sublicensee, or user of anything covered by this Agreement, but [***] is an intended third-party beneficiary of this Agreement and certain of its provisions are for the benefit of [***] and are enforceable by [***] in its own name. Except as provided in the preceding sentence of this Agreement, no entity shall be considered a third party beneficiary of this Agreement.
29. BINDING AGREEMENT
Licensee shall not attempt to invalidate or contest the validity of this Agreement.
(The Balance Of This Page Intentionally Left Blank – Signature Page To Follow)
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in witness whereof, the parties hereto have caused this Agreement to be duly executed in duplicate counterparts, each of which shall be deemed to constitute an original, effective as of the date first above written.
The undersigned verify subject to the penalties of Section 2921.13 of the Ohio Revised Code relating to unsworn falsification to authorities that they have the authority to bind to this Agreement the party on behalf of which they are executing below.
| Case Western Reserve University | Lucid Diagnostics Inc. | |||
| By: | /s/ Michael J. Haag | By: | /s/ Lishan Aklog, M.D. | |
| Name: | Michael J. Haag | Name: | Lishan Aklog, M.D. | |
| Executive Director Technology Management | ||||
| Technology Transfer Office | ||||
| Title: | Case Western Reserve University | Title: | Executive Chairman | |
| Date: | 9/7/21 | Date: | September 1, 2021 | |
| By: | /s/ Michael Lee | |||
| Name: | Michael Lee | |||
| Title: | Treasurer | |||
| Date: | 9/7/2021 | |||
| Address for Notices: | Address for Notices: |
| Technology Transfer Office | |
| Case Western Reserve University | Lucid Diagnostics Inc. |
| 10900 Euclid Avenue | One Grand Central Place, Suite 4600 |
| Cleveland, OH 44106 | New York, NY 10165 |
| Attention: Executive Director | Attention: Lishan Aklog, MD |
| of Technology Management |
Attachment A
Description of Licensed Technology
Attachment B
Description of Licensed Technology
Attachment C
Description of Transferred Assets
Schedule 1.4
Derivatives (as of A&R Effective Date)
Schedule 9.1
Scope of Services
Exhibit 10.3
PATENT LICENSE AGREEMENT
PAVmed Inc. – Lucid Diagnostics Inc.
This Agreement (hereinafter the “Agreement”) entered into as of this May 20, 2019 (“Effective Date”) by and between PAVmed Inc., a Delaware corporation with offices located at One Grand Central Place, Suite 4600, New York, NY 10165 (“Licensor”) and its subsidiary, Lucid Diagnostics Inc., a Delaware corporation, having a principal place of business at One Grand Central Place, Suite 4600, New York, NY 10165 (“Licensee”).
WITNESSETH
WHEREAS, Licensor has the right to grant certain rights under the Licensed Patents (as defined below) to enable Licensee to continue conducting its business, including, without limitation, Licensee’s use of the Licensed Patents in its esophageal cell-sampling device and applications thereof, and Licensor is interested in licensing the same;
WHEREAS, Licensee desire to receive rights under the Licensed Patents upon the terms and conditions herein set forth;
NOW THEREFORE, in consideration of the mutual covenants contained herein and intending to be legally bound hereby, the parties agree as follows:
1. Definitions. Capitalized terms have the meanings set forth or referred to in Appendix A attached hereto.
2. License Grant. Subject to the terms and conditions of this Agreement, and conditioned on Licensee’s compliance therewith, Licensor hereby grants to Licensee a perpetual, royalty-free, non-exclusive, revocable, non-assignable and nontransferable, limited license to use the Licensed Patents solely for the Permitted Use during the Term.
3. Use Restrictions. Except as this Agreement expressly permits, Licensee shall not, and shall not permit any other Person to (a) use the Licensed Patents in any manner or for any purpose that infringes, misappropriates or otherwise violates any Intellectual Property Right or other right of any Person, or that violates any applicable law; (b) use the Licensed Patents for any purpose that is to Licensor’s detriment or commercial disadvantage; or (c) use the Licensed Patents other than for the Permitted Use.
4. Confidentiality.
4.1 Confidential Information. In connection with this Agreement each Party (as the “Disclosing Party”) may disclose or make available to the other Party (as the “Receiving Party”) Confidential Information. “Confidential Information” means information in any form or medium (whether oral, written, electronic or other) that the Disclosing Party considers confidential or proprietary, including information consisting of or relating to the Disclosing Party’s technology, trade secrets, know-how, business operations, plans, strategies, customers, and pricing, and information, whether or not marked, designated or otherwise identified as “confidential”. Without limiting the foregoing, the Licensed Patents and the terms and existence of this Agreement are the Confidential Information of Licensor. The Receiving Party agrees to keep confidential all Confidential Information of the Disclosing Party. Confidential Information does not include information that: (a) was known to the Receiving Party without restriction on use or disclosure prior to such information’s being disclosed or made available to the Receiving Party in connection with this Agreement; (b) was or becomes generally known by the public other than by the Receiving Party’s or any of its Representatives’ noncompliance with this Agreement; or (c) was developed by the Receiving Party without reference to or use of any Confidential Information.
4.2 Feedback. Notwithstanding any other provision in this Agreement, Licensor shall have the unconditional and irrevocable right to use any ideas, information, understandings, knowledge, communications (including all suggestions, comments, feedback, ideas or know-how, whether in oral, written, electronic or other form), modifications, and concepts derived from or related to the Licensed Patents or any improvements, modifications, derivative works, adaptations or enhancements thereto, communicated or otherwise made available to Licensor by or on behalf of Licensee or otherwise, without any restriction and without compensation to any other person or entity.
5. Intellectual Property Rights.
5.1 Intellectual Property Ownership. Licensee acknowledges and agrees that: (a) Licensee does not and will not have or acquire under or in connection with this Agreement any ownership interest in the Licensed Patents, or in any related Intellectual Property Rights; (b) Licensor is and will remain the owner of all right, title and interest in and to the Licensed Patents, including all Intellectual Property Rights relating thereto; and (c) Licensee hereby unconditionally and irrevocably assigns to Licensor its entire right, title and interest in and to any Intellectual Property Rights that Licensee may now or hereafter have in or relating to the Licensed Patents (including any rights in derivative works or patent improvements relating to either of them), whether held or acquired by operation of law, contract, assignment or otherwise.
5.2 Licensee Cooperation and Notice of Infringement. Licensee shall, during the Term: (a) take all reasonable measures to safeguard the Licensed Patents from infringement, misappropriation, theft or misuse; (b) take all such steps as Licensor may reasonably require to assist Licensor in maintaining the validity, enforceability and Licensor’s ownership of the Intellectual Property Rights in the Licensed Patents; (c) promptly notify Licensor in writing if Licensee becomes aware of: (i) any actual or suspected infringement, misappropriation or other violation of Licensor’s Intellectual Property Rights in or relating to the Licensed Patents; or (ii) any claim that the Licensed Patents, including any production, use, marketing, sale or other disposition of the Licensed Patents, in whole or in part, infringes, misappropriates or otherwise violates the Intellectual Property Rights or other rights of any Person; and (d) fully cooperate with and assist Licensor in all reasonable ways in the conduct of any claim, suit, action or proceeding by Licensor to prevent or abate any actual or threatened infringement, misappropriation or violation of Licensor’s rights in, and to attempt to resolve any claims relating to, the Licensed Patents, including having Licensee’s employees testify when requested and making available for discovery or trial relevant records, papers, information, samples, specimens and the like.
6. Term. With regard to the Licensed Patents, this Agreement will become effective on the Effective Date and will continue in effect until all claims of the Licensed Patents (a) expire, or (b) are held invalid and/or unenforceable by a court of competent jurisdiction from which no appeal can be taken (the “Term”). In addition, either party may terminate this Agreement upon breach by the other party, and Licensor may terminate this Agreement if Licensee ceases to be a subsidiary of Licensor, in each case upon written notice from the other party.
7. Disclaimer. ALL LICENSED PATENTS AND OTHER PRODUCTS, INFORMATION, MATERIALS AND SERVICES PROVIDED BY LICENSOR ARE PROVIDED “AS IS.” LICENSOR HEREBY DISCLAIMS ALL WARRANTIES, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHER (INCLUDING ALL WARRANTIES ARISING FROM COURSE OF DEALING, USAGE OR TRADE PRACTICE), AND SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE AND NON-INFRINGEMENT.
8. Miscellaneous.
8.1 Notices. Any notice, request, consent, claim, demand, waiver or other communication under this Agreement will have legal effect only if in writing and addressed to a party as set forth below (or to such other address or such other person that such addressee party may designate from time to time in accordance with this Section 8.1):
| 2 |
| Address for Notices: | Address for Notices: |
| PAVmed Inc. | Lucid Diagnostics Inc. |
| One Grand Central Place, Suite 4600 | One Grand Central Place, Suite 4600 |
| New York, NY 10165 | New York, NY 10165 |
| Attention: Lishan Aklog, MD | Attention: Lishan Aklog, MD |
Notices sent in accordance with this Section 8.1 will be deemed effectively given: (a) when received, if delivered by hand; (b) when received, if sent by a nationally recognized overnight courier or by certified or registered mail; and (c) when sent if by email and if by facsimile with confirmation of transmission.
8.2 Headings. The headings in this Agreement are for reference only and do not affect the interpretation of this Agreement.
8.3 Entire Agreement. This Agreement constitutes the sole and entire agreement of the Parties with respect to the subject matter of this Agreement and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject matter.
8.4 Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
8.5 Amendment and Modification; Waiver. No amendment to or modification of this Agreement is effective unless it is in writing and signed by each Party. No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the Party so waiving. Except as otherwise set forth in this Agreement, no failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.
8.6 Severability. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision hereof.
8.7 Governing Law; Submission to Jurisdiction. This Agreement and any controversy arising out of or relating to this Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to conflict of law principles that would result in the application of any law other than the law of the State of New York.
8.8 WAIVER OF JURY TRIAL. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
8.9 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including PDF) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
| 3 |
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
| LICENSOR: | |
| PAVMED INC. |
| By: |  | |
| Name: | Lishan Aklog, MD | |
| Title: | Chairman & CEO |
| LICENSEE: | |
| LUCID DIAGNOSTICS INC. |
| By: | | |
| Name: | Lishan Aklog, MD | |
| Title: | Executive Chairman |
[Signature Page to PAVmed – Lucid License Agreement]
APPENDIX A
DEFINITIONS
“Confidential Information” has the meaning set forth in Section 4.1.
“Disclosing Party” has the meaning set forth in Section 4.1.
“Intellectual Property Rights” means any and all registered and unregistered rights granted, applied for or otherwise now or hereafter in existence under or related to any patent, copyright, trademark, trade secret, database protection or other intellectual property rights laws, and all similar or equivalent rights or forms of protection, in any part of the world.
“Licensed Patents” means the patents described in Attachment A. “Licensee” has the meaning set forth in the preamble.
“Licensor” has the meaning set forth in the preamble.
“Lucid License Agreement” means that agreement, dated as of May 12, 2018, by and between Licensee and Case Western Reserve University.
“Party” or “Parties” the Licensee and/or the Licensor, as applicable.
“Permitted Use” means, with respect to the Licensed Patents, the use thereof within the Field of Use (as defined in the Lucid License Agreement), solely as a component of any sampling device which incorporates or utilizes Licensed Technology or a Derivative (both capitalized terms as defined in the Lucid License Agreement) thereof.
“Person” means an individual, corporation, partnership, joint venture, limited liability entity, governmental authority, unincorporated organization, trust, association or other entity.
“Receiving Party” has the meaning set forth in Section 4.1.
“Representatives” means, with respect to a Party, that Party’s employees, officers, directors, agents and legal advisors.
“Term” has the meaning set forth in Section 6.
ATTACHMENT A
LICENSED PATENTS
Exhibit 10.11
Quality & Manufacturing Master Service Agreement |
Page 1 of 28 |
| 1. | Scope |
| 1.1. | Lucid Diagnostics Inc. (COMPANY) has contracted with Coastline International, Inc. (SUPPLIER), hereinafter referred to individually as “Party” and collectively as “Parties”, to perform one or multiple of the following (select as appropriate): |
| ☒ | Manufacture the EsoCheck Cell Collection device (PRODUCT) | |
| ☐ | Warehousing and/or order processing of the Device Name device (PRODUCT) | |
| ☐ | Execute the Device Name In Vitro Diagnostic (IVD) test (PRODUCT) | |
| ☐ | Execute subset(s) of the Device Name In Vitro Diagnostic (IVD) test (PRODUCT) |
| 1.2. | This Quality & Manufacturing Master Service Agreement details the responsibilities of each Party regarding the Product(s) listed in Appendix A of this Agreement. | |
| 1.3. | If selected in paragraph 1.1, COMPANY would like to contract with SUPPLIER to manufacture, including the coordination of contract sterilization services, test, release, inventory of raw materials, and storage for WIP Goods for consolidated sterilization in accordance with COMPANY product volume requirements. |
| 2. | Effective Date & Termination |
| 2.1. |
This Agreement shall be effective on the date of the last approval signature. Subject to the terms of this Agreement, including without limitation Sections 2.2 and 12, the Agreement shall remain in effect until the earlier of (a) two (2) years from the effective date of this Agreement, and (b) the date on which the Products listed in Appendix A and/or services are no longer supplied by SUPPLIER to the COMPANY (provided that this sub-clause (b) shall be deemed to have occurred on any date on which there are no firm orders outstanding under this Agreement and on which the PARTIES have mutually agreed to discontinue production of PRODUCT). No less than one-hundred and twenty (120) days prior to the expiration of the term described in clause (a) of the immediately preceding sentence, the Parties shall, in good faith, negotiate the terms for successive renewal of the Agreement, and unless otherwise agreed upon in writing, the term of this Agreement shall be automatically renewed for successive two (2) year terms. In the event of a non-renewal of this Agreement, Parties agree to reduce operations in an orderly fashion. COMPANY or SUPPLIER must provide written notification to other Party of their intent not to renew no less than ninety (90) days prior to date of termination or the expiration of any successive terms. The term shall be extended past contract expiration, if necessary and upon mutual agreement, to accommodate an orderly transition period (and only for the period of time necessary for such orderly transition). Nevertheless, upon termination or expiration of the Agreement for any cause, the Parties agree to continue their reasonable cooperation in order to facilitate an orderly termination of their relationship. Modifications to this Agreement may only be made in writing and require signature approval by both COMPANY and SUPPLIER. |
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| 2.2. | Notwithstanding the foregoing, and in addition to the termination rights described in Section 12 of this Agreement, COMPANY may terminate this agreement without penalty by written notice to the SUPPLIER if the SUPPLIER fails to address, to the COMPANY’s reasonable satisfaction, within a minimum of three (3) routine production LOTS, any reasonable requests or complaints made by the COMPANY regarding the quality or timeliness of the delivery of any PRODUCT or service or any other material aspects directly related to SUPPLIER’s acts or omissions hereunder provided that the COMPANY has given notice to the SUPPLIER of the relevant circumstances, and SUPPLIER has failed to cure the same promptly following such notice. Following such notice, the parties will cooperate with each other as reasonably necessary for COMPANY to transition the services to be provided hereunder to a new supplier in an orderly fashion. | |
| 2.3. | If either Party materially defaults in the performance of any obligation hereunder, the other Party shall have the right to terminate the Agreement following a 90 days’ prior written notice to the other Party, or as otherwise agreed upon by both PARTIES. | |
| 2.4. | Further, to the extent COMPANY determines that SUPPLIER’s manufacturing of the Product fails to meet the manufacturing requirements set forth in the licensing agreement for the Product, including as such requirements pertain to remaining in compliance with the Bayh-Dole Act or Patent and Trademark Law Amendments Act (Pub. L. 96-517, December 12, 1980), the COMPANY shall have the right to terminate this Agreement upon 90 days’ prior written notice to SUPPLIER, provided that any such termination shall not relieve COMPANY from its obligations with respect to any Orders placed prior to the date notice of termination is delivered, including responsibility related to excess and obsolete inventory as indicated in Section 9. | |
| 2.5. | Without limiting the generality of the foregoing, upon any termination, all hard and digital assets belonging to COMPANY are to be returned to the COMPANY within a 2- week period (or if not reasonable practicable, as soon as possible), if so requested by the COMPANY, and at a cost to the COMPANY, as mutually agreed upon with SUPPLIER, and the actual reasonable and out-of-pocket cost to SUPPLIER of returning such assets. Digital assets include, but are not limited to, editable and pdf versions of documents such as SOP’s, protocols, reports, drawings, CAD files, inspection reports, BOMs, emails, and vendor contacts. Hard assets include, but are not limited to, fixtures, equipment, inventory of component materials, existing open orders for components or services at vendors and finished goods devices. |
| 3. | Definitions |
| 3.1. | DEVICE HISTORY RECORD (BATCH RECORD) (DHR) means the complete written record of the history of the batch or lot of a finished device and its production and testing thereof as required under HEALTH AUTHORITY regulations or requirements and in accordance with the DEVICE MASTER RECORD. | |
| 3.2. | COA means a Certificate of Analysis, a document listing testing parameters, specifications, and test results. | |
| 3.3. | COC means a Certificate of Compliance confirming compliance with quality standards and regulations. | |
| 3.4. | COMPONENT means any raw material, substance, piece, part, software, firmware, labeling, or assembly which is intended to be included as part of the finished, packaged, and labeled device. |
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| 3.5. | CUSTOMER ORDER means the written communication between COMPANY and SUPPLIER, setting forth the number of units of each PRODUCT, delivery dates, and exact shipping instructions for each identified ship to customer of COMPANY. | |
| 3.6. | DEVIATION means departure (an action that is planned or unplanned) from an established process or procedure (e.g., approved MASTER BATCH RECORDS, test methods, manufacturing processes, equipment, facilities and/or SOPs). | |
| 3.7. | HEALTH AUTHORITIES can mean all governmental, regulatory, and certification authorities having jurisdiction over the design, manufacture, use and/or sale of the PRODUCT, including but not limited to the US Food and Drug Administration (FDA), and the European Commission (EC). | |
| 3.8. | LOT or BATCH means one or more components or finished devices that consist of a single type, model, class, size, composition, or software version that are manufactured under essentially the same conditions and that are intended to have uniform characteristics and quality within specified limits. | |
| 3.9. | LOT NUMBER means any distinctive symbols, such as a distinctive combination of letters or numbers, or both, from which the history of the manufacturing, packaging, labeling, and distribution of a unit, lot, or batch of finished devices can be determined. | |
| 3.10. | MANUFACTURING AUTHORIZATION means the authorization of SUPPLIER as manufacturer of PRODUCT according to the applicable regulations. | |
| 3.11. | MANUFACTURING MATERIALS means any material or substance used in or used to facilitate the manufacturing process, a concomitant constituent, or a byproduct constituent produced during the manufacturing process, which is present in or on the finished device as a residue or impurity not by design or intent of the manufacturer. | |
| 3.12. | OOS means out of specification results. OOS are testing results, which do not meet the approved SPECIFICATIONS of starting materials, intermediates, PRODUCT, packaging materials, in-process-controls or stability testing, as applicable. | |
| 3.13. | SOPs mean written standard operating procedures established, or to be established, used by SUPPLIER in the manufacturing, testing, storage, packaging, labeling, certification, and delivery of PRODUCT. | |
| 3.14. | SPECIFICATIONS mean any requirement with which a product, process, service, or other activity must conform. Specifications are numerical limits, ranges, or other acceptance criteria to which the PRODUCT or process of making the PRODUCT must conform. | |
| 3.15. | PRODUCTS mean specific SKUs listed in Appendix A, as amended from time to time by mutual agreement of the Parties. | |
| 3.16. | BUSINESS DAYS means any other day than a Saturday, Sunday, or public holiday in the U.S. or Mexico when banks are open for business. | |
| 3.17. | WIP means work in process or goods in process inventory, which includes partially finished goods awaiting further processing and/or in-process for completion. |
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| 4. | General Commitments |
| 4.1. | SUPPLIER shall manufacture the COMPANY Products according to COMPANY Specifications, applicable HEALTH AUTHORITY requirements and guidelines and applicable cGMP rules. | |
| 4.2. | SUPPLIER has established and shall continue to maintain a quality system which operates in accordance with ISO 13485:2016 (or, if applicable, the most recent revision thereof). | |
| 4.3. | SUPPLIER shall be responsible for quality inspection of Products before final release, of which testing and acceptance criteria will be defined by COMPANY. | |
| 4.4. | SUPPLIER may not engage in any form of reverse engineering of the COMPANY Products, nor may SUPPLIER make copies of the Products, nor misuse the COMPANY trademarks or trade names or use such trademarks or trade names in any manner without COMPANY’s prior written approval. | |
| 4.5. | SUPPLIER shall be responsible for the routine maintenance of COMPANY and/or SUPPLIER equipment; any required equipment servicing or repairs of COMPANY equipment will be notified to COMPANY for prior approval and any approved costs for such servicing will be billed to COMPANY with itemized invoice to include details of services completed. | |
| 4.6. | COMPANY shall provide SUPPLIER all necessary bill of materials, component specifications, supplier details, and negotiated pricing for required materials and componentry. | |
| 4.7. | COMPANY shall provide required documentation to perform the assigned work, including but not limited to Standard Operating Procedures, Specifications, assembly instructions, packaging configuration, testing requirements, and acceptance criteria. | |
| 4.8. | COMPANY shall provide whichever tools are reasonably necessary for SUPPLIER to perform the assigned work, except as may be otherwise agreed by the Parties. This includes but is not limited to the following: packaging equipment, manufacturing equipment, leak tester(s), dispensers, and necessary replacement parts. COMPANY commits to provide sufficient equipment in acceptable functioning order to support the volume demands of the Orders. COMPANY equipment valued in excess of $100 shall be identified by asset tags applied by SUPPLIER. | |
| 4.9. | COMPANY shall from time to time provide SUPPLIER a non-binding, rolling 12- month forecast. Based on such forecast, members of the operations teams of each of the Parties shall determine what is an appropriate lead-time for firm order commitments (which shall be no less than three months) and COMPANY may thereafter provide to SUPPLIER a firm order commitment with such lead-time (which shall be no less than three months), provided that COMPANY shall have no obligation to order any specific quantity of units, or to exclusively order any units from SUPPLIER. In the event COMPANY order requirements are reduced, excess inventory terms as described in Section 9 shall apply. |
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| 4.10. | In the event COMPANY production requirements result in extended lapse of manufacturing, terms of downtime rates shall be charged by SUPPLIER, as mutually agreed by the Parties and as described in Appendix B. |
| 5. | General Terms |
The specified manufacturing activities will take place at the SUPPLIER facility:
Coastline De Mexico, S.A. De C.V.
Calle Cipres N4-5 Fraccionamiento Las Brisas
Tijuana, Baja California, 22117 Mexico
Corporate related activities will take place at the SUPPLIER facility:
Coastline International, Inc.
1207 Bangor St.
San Diego, CA 92106
Notifications should be made to the representatives listed below for COMPANY and SUPPLIER. Other communications may be made between various parties as necessary to complete required activities.
| 6. | Use of Third-Parties |
SUPPLIER shall not allow a third party to manufacture, package, label, inspect, test, and release Product unless SUPPLIER has disclosed in writing to COMPANY the SUPPLIER’s use of a third party, the identity of the third party, and the COMPANY has provided written approval for the specific use of such third party.
If SUPPLIER employs a third party to perform any or part of the manufacturing, packaging, labelling, inspection, testing, cleaning, sterilization, release of sample results and/or handling of Product/Sample that is supplied to COMPANY, SUPPLIER shall assure that the third party has been fully qualified via the SUPPLIER’s third party qualification process prior to performing such activity (ies) unless the COMPANY is providing the qualification of the third party. In this case, the COMPANY will provide the SUPPLIER written qualification documentation.
SUPPLIER shall, however, retain all obligations under this Agreement in the event a third party is qualified by and employed by SUPPLIER, and shall be responsible for the third party’s performance in respect hereof. If a third party is used by SUPPLIER to manufacture, package, label, inspect, test, release and/or handle Products, COMPANY may, upon request, review the list of such third party(ies) during an on-site visit and/or audit pursuant to paragraph 9.1 of the table set forth in Section 21 below.
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| 7. | Engineering and Specification Changes |
SUPPLIER shall not change any manufacturing, assembly, or testing process for the Product, or change any documentation, labeling, or specification of the Product without the prior written consent of COMPANY. If COMPANY determines that an engineering or specification change is desirable with respect to any Products, including changes required by regulatory authorities, COMPANY may propose such suggestions to SUPPLIER in writing. SUPPLIER shall advise COMPANY of the feasibility, cost impact, and the amount of time required to implement such change, as mutually agreed upon by PARTIES. In the event of COMPANY change requests due to engineering changes, component substitutions, or any other reason (other than reasons related to SUPPLIER’S gross negligence or willful misconduct), COMPANY shall be responsible to compensate SUPPLIER equal to the out-of- pocket cost incurred by SUPPLIER for the procured components, materials, or other supplies; provided that any such out-of-pocket costs shall have first been approved by COMPANY.
| 8. | Ordering and Delivery |
| 8.1 | COMPANY shall submit Purchase Orders (the “Order(s)”) for Products to the SUPPLIER electronically. COMPANY shall provide firm Orders for no less than three months of PRODUCT (as determined based on the most recent forecast provided by COMPANY). Each Order shall contain the following information: (i) a description of the Product by part number, (ii) the quantity of the Product to be delivered to the COMPANY for the agreed upon time frame, and (iii) the delivery schedule. Each Order shall provide an order number for billing purposes and may include other instructions and terms as may be appropriate under the circumstances. | |
| 8.2 | All Products shall be delivered in accordance with the specifications provided by COMPANY, marked for shipment to COMPANY destination specified in the applicable Order and delivered to a carrier or forwarding agent. All shipments shall be F.O.B. sterilization site, unless otherwise agreed by both Parties. | |
| 8.3 | SUPPLIER at its sole discretion may ship an increase or decrease of up to +/- 10% on any line item of COMPANY Order. SUPPLIER shall invoice COMPANY for line items shipped. |
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| 9. | Excess and Obsolete Inventory |
Any inventory (including finished goods, work-in-process, components, or raw material) or non-cancelable orders for components or raw material that are rendered excess or obsolete due to (in each case except as a result of SUPPLIER’S gross negligence or willful misconduct) (a) the cancellation, delay, or reduction by COMPANY of any Orders, (b) a sustained reduction in Orders that impacts any long lead time parts which SUPPLIER purchased with COMPANY’s advance written authorization in order to meet Order requirements and are non-cancelable or non-returnable, (c) Specification changes following Order acceptance, (d) minimum quantity purchases of component parts or raw material required to fill Orders (provided COMPANY was notified of, and approved, such minimum quantity purchases prior to submission of the Order), (e) the end of a Product’s life, or (f) the termination or expiration of this Agreement (other than due to material breach by SUPPLIER), will be the financial responsibility of the COMPANY, at SUPPLIER’s total purchase price including proportional freight costs, for finished goods and for all other items, including, without limitation, documented restocking charges paid by the SUPPLIER to its suppliers; provided that SUPPLIER uses its commercially reasonable efforts to mitigate any such costs. Notwithstanding the above, COMPANY’s maximum liability under this Section shall be for the cost paid (as defined above) for all inventories necessary to meet COMPANY issued Orders (and for raw material and components needed to produce the quantities of Product based on the then current Orders.) In the event minimum order quantities or long-lead items required to purchase in order to support COMPANY Orders, SUPPLIER will notify COMPANY of such procurement obligation upon Order acceptance, as excess or obsolete inventory will remain the financial responsibility of the COMPANY in accordance with this Section 9 (provided COMPANY was notified of, and approved, such procurement obligation, prior to SUPPLIER incurring such obligation).
| 10. | Pricing and Payment Terms |
The cost for contract manufacturing services for COMPANY Products shall be included in Appendix B, as the same may be updated from time to time by mutual agreement of the Parties. All prices quoted are exclusive of national, state, and local excise, sales, use and similar taxes, including any duties, and COMPANY shall be responsible for such items. The Parties shall, in good faith, negotiate changes in the pricing schedule due to changes in the: market price of materials, equipment, labor, process, and other production costs.
Except as otherwise agreed upon by both Parties, payment for any Products, services, or other costs to be paid by COMPANY hereunder is due thirty (30) days net from the date of issuance of invoice therefore and shall be made in lawful U.S. currency.
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| 11. | Product Warranty |
| 11.1 | SUPPLIER warrants that the Product shall be manufactured to COMPANY’s SPECIFICATIONS, and shall be free from defects in material and workmanship; foregoing defects in material are limited to nonconformities caused by SUPPLIER or which should have been identified by SUPPLIER by proper compliance with inspection parameters that was provided by COMPANY. In the event any Product does not comply with the foregoing, without limiting COMPANY’s rights or remedies, SUPPLIER shall, at COMPANY’s election and at SUPPLIER’S expense, repair or replace the Product free from defect. COMPANY bears all design responsibility for the Product. Subject in each case to Section 6 herein, matters to which SUPPLIER’s warranty will not apply include, without limitation, problems caused in whole or in part by: |
(a) Use, operation, maintenance, assembly, or storage by any party other than the SUPPLIER that is not in accordance with proper instructions, required specifications, regulatory requirements, or standard industry practice;
(b) Alteration by any party other than the SUPPLIER;
(c) Negligence by any party other than the SUPPLIER;
(d) Repair or modifications performed by anyone other than the SUPPLIER;
(e) Use in any manner or procedure other than that for which the Product is labeled;
(f) Use by any person other than trained medical personnel under order of a physician.
In the event of any defects in material not caused by SUPPLIER and notwithstanding SUPPLIER’s proper compliance with inspection parameters provided by COMPANY, the Parties shall, at COMPANY’s election and cost, cooperate to (1) as promptly as practicable have delivered a number of replacement Products equal to up to the number of Products affected by such defects, (2) ensure the defective Products are segregated from all other Products and appropriately disposed of, (3) conduct an investigation to determine and resolve the underlying cause of such defects, and (4) recover for the benefit of COMPANY any damages suffered by COMPANY from the third party responsible for such defects.
SUPPLIER warranty shall extend for a period equal to the shelf life of the product from the date of manufacture, not to exceed two (2) years or as otherwise agreed by the Parties.
| 11.2 | If any Product does not materially conform to the warranty stated in Section 11.1 above, the SUPPLIER shall, at the SUPPLIER’s option and as the COMPANY’s sole and exclusive remedy, repair or replace such Product at the SUPPLIER’s own expense, and ship such repaired or replacement Product back to COMPANY at the SUPPLIER’s own expense, or credit the COMPANY the purchase price. The foregoing warranty, and the remedies provided for in this Section 11.2, are expressly conditioned upon (i) COMPANY providing SUPPLIER with written notice within five (5) business days after learning of any nonconforming Product and prior to the expiration of the warranty period, which notice must identify with particularity the non-conformity, (ii) COMPANY’s full cooperation with SUPPLIER in all reasonable respects relating thereto, and (iii) the absence of any alteration or other modification of the Products by any person or entity other than SUPPLIER (as set forth by example, but not by limitation above), or in a manner not approved by SUPPLIER, in each case subject to Section 6 herein.All defective Products which are covered by the foregoing warranty shall be shipped to the SUPPLIER at SUPPLIER’S sole expense for such repair or replacement. |
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| 11.3 | The warranty set forth in Section 11.1 above does not include Products that have defects or failures resulting directly from any COMPANY supplied components or materials or from COMPANY’s design of Products including, but not limited to, design functionality failures, specification inadequacies, failures relating to the functioning of Products in the manner for the intended purpose or in the specific end user’s environment or failures resulting from unauthorized modification of the Products. COMPANY bears all responsibility directly related to the design of the Product. | |
| 11.4 | If the SUPPLIER disagrees with a claim by COMPANY that a Product does not conform to the warranty provided in Section 11.1, then the Parties agree to submit the dispute to a mutually agreed-upon independent party which has the capability of testing the Product to determine whether or not it does so conform. In the event the Parties cannot agree following good faith discussions upon such independent party, or in the event it is not possible to acquire the services of such an independent party, then such dispute shall be resolved pursuant to Section 18. The cost of the independent testing party shall be borne by the Party against whom the testing party finds, as directed by the testing party. |
| 12. | Delays |
In the event of a delay in the delivery of any Product that does not constitute an event of force majeure and that is not attributable to any act or omission of the COMPANY, SUPPLIER shall give written notice to COMPANY stating the reasons for such delay. SUPPLIER shall take reasonable actions necessary to reduce the period of delay of such production. If any such delay that is directly attributable to any act or omission of the SUPPLIER causes the delivery to be more than thirty (30) calendar days later than the scheduled delivery date, of which was confirmed by SUPPLIER, as set forth in the applicable CUSTOMER ORDER, COMPANY shall have the right to terminate this Agreement pursuant to the terms of Section 2.
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| 13. | Import / Export |
SUPPLIER shall provide all necessary administrative services to effect shipment of equipment and material to Mexico, using the information supplied by COMPANY. Such administrative services shall include, but not be limited to, securing Mexican regulatory import permits or authorizations, preparation of required customs clearance papers, and all necessary trucking, handling, and storage. SUPPLIER will be the importer of record for Mexican Customs purposes and will manage payment for all Mexican customs tariffs, duties, bonds, and Mexican customs broker’s charges, and any all other charges, fees, levies, or permits made pursuant to Mexican law in effect as to the importation to and exportation from Mexico of COMPANY products and/or equipment, in each case after consultation with COMPANY. Aforementioned costs associated with COMPANY-specific products, if any, will be subject to approval beforehand by COMPANY, and subsequently itemized and invoiced to CUSTOMER for reimbursement. COMPANY will be responsible for all customs tariffs, duties, bonds, and customs broker’s charges, and any and all other charges, fees, levies, or assessments made pursuant to U.S. Customs Code as to the importation to and exportation from the U.S. of COMPANY product and/or equipment related to and properly incurred pursuant to this Agreement.
| 14. | Indemnification |
COMPANY shall indemnify SUPPLIER and its affiliates against all liabilities and expenses arising out of or in connection with any claim made by a third party for death, illness, personal injury, damage to property, or infringement of third party’s intellectual property to the extent that the damage is solely attributable to the acts or omissions of COMPANY, its employees, agents, or subcontractors (other than SUPPLIER). SUPPLIER shall indemnify COMPANY and its affiliates against all liabilities and expenses arising out of or in connection with any claim made by a third party for death, illness, personal injury, damage to property, or infringement of third party’s intellectual property to the extent that the damage is solely attributable to the acts or omissions of SUPPLIER, its employees, agents, or subcontractors.
| 15. | Confidentiality |
The Parties acknowledge that during the course of this Agreement, each may obtain confidential information regarding the other Party’s business. Both Parties agree to treat all such information, and the terms of this Agreement, as confidential, to take all reasonable precautions against disclosure of such information to unauthorized third parties during and after the term of this Agreement and to comply in all respects with the terms and conditions of that certain Non-Disclosure, Non-Circumvention and Work Product Agreement, dated as of April 28, 2020, by and between the Parties (the “Confidentiality Agreement”). Upon the written request of any Party, all documents relating to its confidential information will be promptly returned to such Party.
| 16. | Non-Solicitation |
During the term of this Agreement and ending one (1) year following the Termination Date, the Parties shall not, without each Party’s prior written consent, directly or indirectly hire, solicit, or encourage any person to leave the employment or other service of either Party.
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| 17. | Force Majeure |
Any delay in the performance of any of the duties or obligations of either Party hereto shall not be a considered a breach of the terms of the Agreement and the time required for performance shall be extended for a period equal to the period of such delay (not to exceed 90 days, after which the parties shall be entitled to terminate this Agreement), provided that such delay is caused by or the result of any acts of God, acts of the public enemy, insurrections, riots, labor disputes, including strikes, lockouts or boycotts, fires, explosions, flood or other unforeseeable causes beyond the control and without the fault or negligence of the Party so affected (including in connection with the COVID-19 pandemic). The Party so affected shall give prompt notice to the other Party of such cause, and shall take whatever reasonable steps are necessary to relieve the effect of such cause as rapidly as possible.
| 18. | Dispute Resolution |
This Agreement shall be governed by and construed in accordance with the laws of the state of New York, without regard to conflicts of law principles . In the event of any dispute or disagreement that the parties cannot resolve amicably within 15 days (or such longer period as they agree to), then as the exclusive means of resolving the dispute either party may require that the matter be settled by binding arbitration by giving notice of arbitration to the other. Arbitration will take place in the city of the party who receives notice of arbitration (unless another location is agreed to by the Parties), under the Commercial Rules and auspices of the American Arbitration Association. The parties will share the costs of the arbitration, though each shall bear its own costs. The arbitrator shall have no authority to award punitive damages.
| 19. | Miscellaneous |
This Agreement contains the entire agreement between the parties with respect to its subject matter, superseding prior agreements and merging all prior and contemporaneous negotiations, promises, and arrangements; provided that any confidentiality agreement between the parties shall remain in full force and effect and is hereby incorporated by reference. This Agreement may be amended or modified only by written instrument signed by the authorized representatives of both parties. This Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, or permitted successors or assigns.
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| 20. | Notifications |
Notifications to COMPANY
| Company Name: | Lucid Diagnostics Inc. |
Address: |
Headquarters One Grand Central Place 60 East 42nd Street, Suite 4600 New York, NY 10165 |
Corporate Catherine Howard | |
| Director of Manufacturing Operations | |
| Contact Name: | CSH@PAVmed.com Quality Assurance Matthieu Ennis |
| Director of Quality | |
| MJE@PAVmed.com |
Notifications to SUPPLIER
| Supplier Name: | Coastline International, Inc. |
| Address: | 1207 Bangor St. San Diego, CA 92106 |
| Contact Name: | Bryan Blessing |
| Title: | Operations Director |
| Telephone: | (805) 550-0688 (Primary) (888) 748-7177 ext. 103 |
| Email: | Bryan@coastlineintl.com |
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| 21. | Responsibilities |
| TASKS AND RESPONSIBILITIES | COMPANY | SUPPLIER | ||
| 1. General Statement | ||||
| 1.1. | The PARTIES shall operate in compliance with ISO 13485, FDA 21CFR820, EU MDD 2007/47/EC & EU MDR 2017/745 quality requirements as stated herein, environmental, occupational, and health and safety laws, and all other applicable laws, regulations, and local laws concerning manufacturing, testing, storage, packaging, labeling, and distribution of the PRODUCT. This also includes medical device specific regulatory standards and guidances. | X | X | |
| 1.2. | SUPPLIER shall be responsible for obtaining and maintaining, at its expense, all permits, licenses, approvals, authorizations and the like required for its performance of the services defined in the AGREEMENT; in the event of any required COMPANY-specific permit or license, SUPPLIER shall give the COMPANY prior written notice of such requirement, and the COMPANY shall be responsible for any reasonable and documented out-of-pocket expenses associated with such permit or license. | X | X | |
| 1.3. | SUPPLIER shall ensure that it has not been or does not use any persons or entities debarred under 21 U.S.C. § 335(a) or 335(b), nor disqualified as described in 21 CFR 812.119, nor debarred by any enforcement group associated with a HEALTH AUTHORITY; it will not employ in connection with any services any person who is not properly qualified by directly applicable training, experience and supervision to carry out the tasks they are assigned in connection with such services; neither it nor any of its officials or employees have been convicted of a felony under Federal law for conduct relating to the development or approval, including the process for development or approval, of any medical device or regulatory submission; and none of its officials or employees have been convicted of a felony under United States law for conduct otherwise relating to the regulation of any product or medical device under the Food Drug & Cosmetics Act. | X | ||
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| TASKS AND RESPONSIBILITIES | COMPANY | SUPPLIER | ||
| 1.4. | SUPPLIER shall be responsible for maintaining quality compliance of all operations, including but not limited to manufacturing, testing, storage, packaging, labeling and Sterile Lot Release of PRODUCT. Quality compliance shall be established and maintained, including but not limited to the following:
■ Facilities in compliance with HEALTH AUTHORITY requirements or with any conditions described in SUPPLIER’s MANUFACTURING AUTHORIZATION, or Device Master Record. ■ All appropriate equipment, cleaning, utility, and facility qualification and validation activities associated with the PRODUCT. ■ Setting-up, calibrating, cleaning, qualifying, and maintaining all equipment associated with the PRODUCT. |
X | ||
| 2. Design and Development of COMPANY concepts | ||||
| 2.1. | COMPANY shall provide SUPPLIER with all information pertaining to the design and development of any project concepts. | X | ||
| 2.2. | COMPANY and SUPPLIER shall create and retain records necessary for the initiation and maintenance of a Design History File according to each entity’s respective Design Control requirements and based on the requirements in the Design & Development Plan for each project. | X | X | |
| 3. MANUFACTURING MATERIALS and COMPONENTS | ||||
| 3.1. | COMPANY shall provide all documentation for the design, development, qualification, and manufacturing of PRODUCT based on the requirements in the Design & Development Plan for each project. | X | ||
| 3.2. | SUPPLIER shall test and release MANUFACTURING MATERIALS and COMPONENTS purchased by SUPPLIER or received as COMPANY provided materials and used in the manufacturing of PRODUCT. COMPANY maintains the right to increase or modify the sampling plan/parameters of MATERIAL and COMPONENTS as determined necessary. | X | X | |
| 3.3. | SUPPLIER shall, subject to COMPANY’s consent, qualify suppliers for the materials, components and services used in the manufacture and test of PRODUCT. | X | ||
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| TASKS AND RESPONSIBILITIES | COMPANY | SUPPLIER | ||
| 3.4. | SUPPLIER shall ensure that all MANUFACTURING MATERIALS and COMPONENTS used in the manufacturing of PRODUCT fully comply with the respective SPECIFICATIONS provided by COMPANY. | X | X | |
| 3.5. | COMPANY is responsible for communicating to SUPPLIER label specification/drawing for label generation of finished PRODUCT labeling. COMPANY supplied label specifications and drawings shall be maintained in SUPPLIER’s document control system and Device Master Record. | X | X | |
| 3.6. | COMPANY and SUPPLIER shall both approve label SPECIFICATIONS of finished PRODUCT labeling prior to use. | X | X | |
| 3.7. | SUPPLIER is responsible for generating components labeling including lot numbers and expiration dating, where needed, which must comply with approved label SPECIFICATIONS. | X | ||
| 4. Quality Records and Documentation | ||||
| 4.1. | SUPPLIER shall draft all necessary DEVICE MASTER RECORDS (DMRs) in accordance with HEALTH AUTHORITIES’ requirements and provide to COMPANY | X | ||
| 4.2. | COMPANY and SUPPLIER shall review and approve in writing DEVICE MASTER RECORDS as well as device related procedures, work instructions, and validations. | X | X | |
| 4.3. | SUPPLIER shall store and maintain DEVICE MASTER RECORDS and DEVICE HISTORY RECORDS to prevent any loss or deterioration. Copies of DEVICE MASTER RECORDS and DEVICE HISTORY RECORDS for applicable devices will be made available to COMPANY. | X | ||
| 4.4. | SUPPLIER shall retain all original manufacturing and testing records, including all raw data, as part of the DEVICE HISTORY RECORD. | X | ||
| 4.5. | SUPPLIER shall store/retain all paper and electronic documentation and records per the SUPPLIER’s procedures. SUPPLIER is required to maintain all documentation and records for a minimum of 10 years from the date of manufacture, unless otherwise mutually agreed upon by PARTIES in writing for transfer and storage by COMPANY. | X | X | |
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| TASKS AND RESPONSIBILITIES | COMPANY | SUPPLIER | ||
| 4.6. | Upon the expiry of the storage periods of DEVICE MASTER RECORDS and DEVICE HISTORY RECORDS, or upon termination of Agreement, SUPPLIER shall promptly notify COMPANY in writing and await instructions for the transfer of records to COMPANY or for written authorization for destruction of records. COMPANY is required to provide authorization or transfer instructions within 30 days of notification. | X | X | |
| 5. Manufacturing and Testing | ||||
| 5.1. | COMPANY is responsible for authorizing the SUPPLIER to MANUFACTURE PRODUCT by issuing a written request such as a CUSTOMER ORDER. | X | ||
| 5.2. | SUPPLIER shall use only PRODUCT documents provided by or approved by COMPANY in the manufacturing and testing of PRODUCT. | X | ||
| 5.3. | SUPPLIER shall provide a unique LOT or BATCH NUMBER for each LOT or BATCH of PRODUCT as well as provide the corresponding manufacturing date and expiration date to be used as part of Unique Device Identification for labeling. | X | ||
| 6. Reworking And Reprocessing | ||||
| 6.1. | SUPPLIER shall promptly notify COMPANY of any PRODUCT that does not meet specifications. | X | ||
| 6.2. | SUPPLIER shall promptly notify COMPANY of any PRODUCT that requires REWORK or REPROCESSING. | X | ||
| 6.3. | SUPPLIER shall define and COMPANY shall approve any rework and reprocessing procedures prior to the implementation of any PRODUCT rework or reprocessing. Rework procedures shall be approved and released via the same process as original procedures. | X | X | |
| 7. Date of Expiration | ||||
| 7.1. | COMPANY shall determine the date of expiration of PRODUCT based on shelf life studies. | X | ||
| 8. Quality Control Testing | ||||
| 8.1. | SUPPLIER shall conduct release testing and/or inspection on every LOT of PRODUCT and issue to COMPANY a COA and/or COC. | X | ||
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| TASKS AND RESPONSIBILITIES | COMPANY | SUPPLIER | ||
| 8.2. | COMPANY shall have defined and provided to SUPPLIER in writing acceptance criteria (i.e. action limit) for each in-process test performed and each PRODUCT release test, if required, shall have an established SPECIFICATION. | X | ||
| 8.3. | SUPPLIER shall promptly notify COMPANY of any proposed changes to acceptance criteria (i.e. action limit) and SPECIFICATIONS associated with PRODUCT and such changes shall not be implemented without prior written approval from COMPANY. | X | ||
| 9. Suppliers and Subcontract Suppliers | ||||
| 9.1. | If requested, SUPPLIER will provide COMPANY with a list of all suppliers or subcontract suppliers of COMPONENTS and MANUFACTURING MATERIALS used in the PRODUCT. With respect to all such suppliers or subcontract suppliers, SUPPLIER shall ensure that it procures the necessary audit rights so that in the event COMPANY desires to audit suppliers or subcontract suppliers of COMPONENTS and MANUFACTURING MATERIALS, it shall have the right (albeit through SUPPLIER) to do so and SUPPLIER will provide the necessary documentation and facilitate COMPANY’s audit of such suppliers and subcontract suppliers. Audits conducted of subcontractors shall be at direction of, or otherwise authorized by, COMPANY and performed by outside auditors at COMPANY’s cost; provided that the Parties agree to reconsider in good faith from time to time who will bear the cost of scheduled and unscheduled audits of subcontractors based on, among other relevant factors, the then-current volumes of PRODUCTS being manufactured by SUPPLIER for COMPANY. | X | X | |
| 9.2. | SUPPLIER shall ensure the quality compliance to SPECIFICATIONS of any suppliers or subcontract suppliers of COMPONENTS and MANUFACTURING MATERIALS used in the PRODUCT. | X | ||
| 9.3. | SUPPLIER shall promptly notify COMPANY of any changes (additions or removal) to suppliers or subcontract suppliers of COMPONENTS and MANUFACTURING MATERIALS used in the PRODUCT. | X | ||
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| TASKS AND RESPONSIBILITIES | COMPANY | SUPPLIER | ||
| 9.4. | COMPANY shall approve in writing any changes (additions or removal) of any suppliers or subcontract suppliers of COMPONENTS and MANUFACTURING MATERIALS used in the PRODUCT prior to implementation. | X | ||
| 9.5. | SUPPLIER shall maintain a suitable qualification program for suppliers of COMPONENTS. | X | ||
| 10. Product Release | ||||
| 10.1. | SUPPLIER shall review and approve its DEVICE HISTORY RECORDS for each LOT according to its approved internal procedures. | X | ||
| 10.2. | If requested, SUPPLIER shall provide COMPANY the following PRODUCT documents for review:
■ Completed LOT HISTORY RECORDS ■ COA and/or COC ■ DEVIATION reports, investigations associated with the batch ■ Analytical data (in-process and release test data) |
X | ||
| 10.3. | SUPPLIER shall provide additional requested documentation and information to COMPANY in order to understand and evaluate any deviations, out-of- specification (OOS) results, investigations, or other quality related issues to the PRODUCT. | X | ||
| 10.4. | For any LOT of rejected PRODUCT, SUPPLIER shall provide COMPANY with a statement of rejection, specifying the reasons for rejection. SUPPLIER shall promptly notify COMPANY of any LOT of PRODUCT aborted during manufacturing. Statements of rejection or notices of aborted LOTS shall be forwarded to COMPANY within five (5) business days after SUPPLIER’s Quality Assurance Unit review. Any rejected PRODUCT will be disposed of in accordance with industry best practices by SUPPLIER and not used for any other purpose, without the consent of COMPANY. | X | ||
| 10.5. | SUPPLIER shall promptly notify COMPANY of the quantities of PRODUCT aborted, rejected, retained, and released. | X | ||
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| TASKS AND RESPONSIBILITIES | COMPANY | SUPPLIER | ||
| 10.6. | SUPPLIER is responsible for authorizing the FINAL RELEASE of PRODUCT with review of DHR, Sterilization Documentation, and any other LOT specific records necessary. COMPANY shall provide review and, unless an alternative approval process is agreed by the Parties, approval signature on SUPPLIER release Record, and SUPPLIER shall thereafter notify the DISTRIBUTION CENTER via PRE-ALERT FORM of the inbound shipment at least twenty-four (24) hours in advance of the expected PRODUCT arrival at the DISTRIBUTION CENTER. | X | X | |
| 11. Shelf-life Testing | ||||
| 11.1. | COMPANY or third party shall generate all Shelf-life Testing protocols. SUPPLIER shall support COMPANY by building PRODUCT. | X | X | |
| 11.2. | COMPANY is responsible for the review of all shelf- life data as required in the Design & Development Plan for each project. | X | ||
| 11.3. | COMPANY shall approve all shelf-life protocols and reports and any amendments as required in the Design & Development Plan for each project. | X | ||
| 12. Storage And Shipment Of PRODUCT and Components | ||||
| 12.1. | COMPANY shall communicate to SUPPLIER the storage conditions of PRODUCT, which will be included in product specifications. | X | ||
| 12.2. | SUPPLIER shall handle and store PRODUCT and COMPONENTS safely according to approved procedures and storage conditions for the PRODUCT, maintain systems for controlling quarantined, rejected or recalled materials, and maintain storage facilities appropriate for conditions specified on PRODUCT label and component SPECIFICATIONS. | X | ||
| 12.3. | SUPPLIER shall notify COMPANY of any adverse conditions or events or DEVIATIONS associated with the storage of PRODUCT, within two (2) business days of becoming aware. SUPPLIER shall evaluate and document the potential impact to product quality as a result of any events or DEVIATIONS and submit a written report, preliminary or final, to COMPANY within 5 business days of becoming aware. SUPPLIER shall take all action reasonably necessary to address any such adverse conditions or events or DEVIATIONS. | X | ||
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| TASKS AND RESPONSIBILITIES | COMPANY | SUPPLIER | ||
| 12.4. | COMPANY shall review the SUPPLIER’s report and shall notify the SUPPLIER in writing of the disposition of PRODUCT. | X | ||
| 13. DEVIATIONS | ||||
| 13.1. | SUPPLIER shall fully document any DEVIATIONS made during the course of manufacturing, testing, packaging, labeling, storage and distribution of PRODUCT. | X | ||
| 13.2. | SUPPLIER shall notify COMPANY in writing within two (2) business days of becoming aware of any DEVIATIONS related to the PRODUCT. | X | ||
| 13.3. | SUPPLIER shall investigate, evaluate and document any potential impact of every DEVIATION and shall justify any recommendations for further action. SUPPLIER shall provide a written report of investigation, preliminary or final, to COMPANY within five (5) business days of becoming aware of any DEVIATION related to the PRODUCT. | X | ||
| 13.4. | COMPANY shall approve all DEVIATIONS related to PRODUCT. | X | ||
| 14. OOS, Suspect Test Results | ||||
| 14.1. | SUPPLIER shall promptly notify COMPANY of any confirmed OOS or suspect test results obtained for a LOT during release or stability testing. SUPPLIER shall notify COMPANY in writing within two (2) business days after confirmation of OOS or suspect test results. | X | ||
| 14.2. | SUPPLIER shall conduct the OOS investigation in accordance with its approved procedures and provide company a written report, preliminary or final, within five (5) business days after confirmation of OOS or suspect test results. | X | ||
| 14.3. | SUPPLIER shall obtain written COMPANY approval of all OOS or suspect test results, including but not limited to, any plans for re-testing, re-sampling, and disposition. | X | X | |
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| TASKS AND RESPONSIBILITIES | COMPANY | SUPPLIER | ||
| 15. Validation | ||||
| 15.1. | SUPPLIER shall ensure that all processes, equipment, computer systems, cleaning and methods to manufacture, test, package, label, and store PRODUCT are in compliance according to its approved procedures and shall ensure that processes, equipment, computer systems, cleaning and methods are validated and remain in a validated state for manufacture and testing of PRODUCT. This may include sterilization of product or oversite of sterilization process through a third party supplier. Validation records shall be provided to CUSTOMER upon request. | X | ||
| 15.2. | SUPPLIER shall ensure that all software used in their Quality Management System is evaluated for validation and validated appropriately per SUPPLIER procedure. Validation records shall be provided to CUSTOMER upon request. | X | ||
| 15.3. | SUPPLIER shall provide PRODUCT process, cleaning/sterilization, or method validation protocols and reports to COMPANY for approval as required in the Design & Development Plan for each project. | X | ||
| 15.4. | SUPPLIER shall provide a copy of all approved PRODUCT-related validation protocols and reports to COMPANY. | X | ||
| 15.5. | Upon request, SUPPLIER shall make all relevant validation records and data available to COMPANY. | X | ||
| 16. Change Control | ||||
| 16.1. | Both PARTIES shall make changes to controlled documents in observance of all notification requirements of any respective HEALTH AUTHORITY. | X | X | |
| 16.2. | SUPPLIER shall promptly provide COMPANY with prior written notification of all changes to MANUFACTURING MATERIALS, COMPONENTS, PRODUCT, validated processes, facilities, utilities, equipment and methods that may impact the PRODUCT regulatory filings or require a regulatory submission, prior to implementation of such changes and shall not issue a MANUFACTURER’S RELEASE for any LOTS manufactured under such change until any needed regulatory approvals are obtained. | X | ||
| 16.3. | SUPPLIER shall provide changes to PRODUCT- specific master manufacturing and testing documentation to COMPANY for review and approval in writing prior to implementing any such changes. COMPANY will control labeling and packaging content and review final device packaging and labeling as part of DMRs. | X | X | |
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| TASKS AND RESPONSIBILITIES | COMPANY | SUPPLIER | ||
| 16.4. | After implementation of the approved changes at SUPPLIER, SUPPLIER shall forward a copy of the relevant revised PRODUCT-specific documents to COMPANY within two (2) business days. | X | ||
| 16.5. | COMPANY is responsible for the timely reporting of changes in PRODUCT-specific documentation to the applicable licensee and/or HEALTH AUTHORITY. | X | ||
| 17. Audits and Compliance | ||||
| 17.1. | Upon reasonable notice to SUPPLIER, SUPPLIER shall permit COMPANY or its appointed representatives (hereinafter “Auditors”) to conduct audits of all documents, processes, procedures, materials, supplies, equipment, packaging and facilities of SUPPLIER (or any third party engaged by SUPPLIER) applicable to PRODUCT for the purposes described herein (hereinafter an “Audit”). | X | ||
| 17.2. | COMPANY or its Auditors may have access to SUPPLIER for routine compliance audit purposes once a year. Such Audits shall be conducted with reasonable notice during regular business hours. | X | ||
| 17.3. | In addition to the compliance audits, COMPANY and its Auditors shall be entitled to conduct “For Cause” investigative Audits, to address significant PRODUCT quality or safety problems.
For Cause Audits shall relate to significant operational concerns at SUPPLIER (or applicable third party), and may include but are not limited to lot rejection by COMPANY, unresolved OOS investigations, Warning Letter or any deficiency letter issued by a HEALTH AUTHORITY, as they pertain to systems or observations associated with the testing of PRODUCT. Such inspections or Audits, to the extent reasonably practical, shall be conducted in a manner that shall not materially interrupt or impair any significant operations at SUPPLIER (or applicable third party). |
X | ||
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| TASKS AND RESPONSIBILITIES | COMPANY | SUPPLIER | ||
| 17.4. | If requested, an exit meeting shall be held between representatives from SUPPLIER and COMPANY and/or its Auditors to discuss Audit nonconformances. | X | X | |
| 17.5. | COMPANY shall provide a written report of all Audit nonconformances to SUPPLIER within thirty (30) calendar days. COMPANY shall communicate all expected nonconformances to SUPPLIER at the conclusion of the audit. | X | ||
| 17.6. | SUPPLIER (or applicable third party) shall correct all noted deficiencies as soon as practicable, and shall provide COMPANY with a written Corrective Action Plan to Audit observations within fifteen (15) calendar days of receipt of Audit report. | X | ||
| 17.7. | If, within forty (40) business days after receiving an Audit report, SUPPLIER (or applicable third party) cannot remedy an Audit nonconformance the PARTIES shall use good faith efforts to agree upon a reasonable written plan and timetable for such remedy. | X | X | |
| 18. Inspections by HEALTH AUTHORITIES | ||||
| 18.1. | SUPPLIER shall inform COMPANY with as much advance notice as possible, but at least within two (2) Business Days of notification, of any regulatory activities of which they become aware that could reasonably be expected to prompt an inspection at SUPPLIER involving the PRODUCT (e.g. pre- approval, for cause, post approval, or other inspections). SUPPLIER shall promptly notify COMPANY in writing of any unannounced audits or inspections involving the PRODUCT. |
X | X | |
| 18.2. | SUPPLIER shall allow COMPANY or its Auditors to participate in any PRODUCT-related inspections if deemed necessary by COMPANY. COMPANY shall be available for consultation during the Inspection but shall not participate during the inspection unless requested by SUPPLIER or a HEALTH AUTHORITY representative. | X | X | |
| 18.3. | SUPPLIER shall not discuss with any HEALTH AUTHORITY any activities relating to the PRODUCT not actually performed by SUPPLIER, or sub-contracted by SUPPLIER. | X | ||
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| 18.4. | SUPPLIER shall inform COMPANY in writing daily of potential issues identified during an inspection. | X | ||
| 18.5. | SUPPLIER shall allow COMPANY or its Auditors to attend the inspection closeout to address any PRODUCT-related observations. SUPPLIER is responsible for addressing process qualifications, manufacturing, testing, packaging, labeling, facility, and compliance observations as applicable. | X | ||
| 18.6. | For regulatory observations that specifically involve the PRODUCT, SUPPLIER shall hold discussions with COMPANY sufficiently in advance of any commitment to a regulatory agency. COMPANY shall prepare and/or comment on SUPPLIER proposed responses specific to PRODUCT within time commitments needed to address regulatory concerns. COMPANY and SUPPLIER have joint final approval for the PRODUCT responses related to SUPPLIER to be submitted. | X | X | |
| 18.7. | For regulatory observations that involve any quality, production, material, laboratory, facilities, equipment, or packaging system-related quality issues that are not specific to the PRODUCT, SUPPLIER has final approval for the responses to be submitted. | X | ||
| 18.8. | Prior to filing regulatory inspection reports and responses, SUPPLIER shall provide COMPANY with copies of completed regulatory inspection reports and responses, in each case purged only of trade secret or other confidential or proprietary information of SUPPLIER that is unrelated to its obligations under this Quality Agreement or is unrelated to PRODUCT. | X | ||
| 18.9. | SUPPLIER shall promptly correct any site-related violations or deficiencies. SUPPLIER shall promptly notify COMPANY and discuss solutions in good faith to reach written agreement on such issue within thirty (30) days of initiating discussions. |
X | ||
| 18.10. | If any HEALTH AUTHORITY or any entity representing such an authority requests access to SUPPLIER’s records, facilities, equipment and/or personnel, or conducts an unannounced inspection, or takes any other regulatory action (including without limitation any warning letters and FDA-483s), in each case relating to a COMPANY PRODUCT, then SUPPLIER will notify COMPANY by email within twenty-four (24) hours. COMPANY shall have the right to be present at any Audit or inspection by a HEALTH AUTHORITY that relates to the PRODUCT, and, where time permits, to conduct a pre-Audit inspection, so long as audit is announced with detailed notification prior to inspection. | X | ||
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| TASKS AND RESPONSIBILITIES | COMPANY | SUPPLIER | ||
| 18.11. | SUPPLIER shall promptly provide COMPANY copies of all relevant communications between SUPPLIER and any HEALTH AUTHORITY relating to PRODUCT. Where SUPPLIER is required or intends to respond to any such communication, SUPPLIER will provide COMPANY with a copy of such communication and SUPPLIER’s proposed response sufficiently in advance of the date that such response is to be submitted, in order to permit COMPANY to review and comment upon such response. COMPANY and SUPPLIER shall jointly agree on any written response relating to PRODUCT. | X | X | |
| 19. Complaints and PRODUCT Recalls | ||||
| 19.1. | COMPANY is responsible for complaint handling, including the receipt, collection, management, and reporting activities for customer complaint events. This includes notification of recall/field action to HEALTH AUTHORITIES, regulatory bodies, distributors, and end user communications. | X | ||
| 19.2. | COMPANY or other sub-supplier shall receive and deliver to SUPPLIER all relevant PRODUCT identified as having defects related to PRODUCT complaints. | X | ||
| 19.3. | SUPPLIER shall assess and promptly notify COMPANY of any PRODUCT defects or complaints that may be a result of SUPPLIER’s or other sub- supplier’s manufacturing of the PRODUCT. | X | ||
| 19.4. | When reasonably requested by COMPANY, SUPPLIER shall promptly perform investigations and shall provide COMPANY with any necessary documentation. | X | X | |
| 19.5. | If COMPANY determines a recall may be necessary, then COMPANY shall inform SUPPLIER in writing specifying the details of the recall within twenty-four (24) hours of initial notification. | X | ||
| 19.6. | If SUPPLIER receives any non-PRODUCT related complaints or recalls which may impact the quality of COMPANY’s PRODUCT, SUPPLIER shall notify COMPANY in writing of any non-PRODUCT complaints or recalls received directly from an investigator site or consumer within 48 hours of complaint receipt. | X | ||
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Approvals
| Coastline International, Inc. | Lucid Diagnostics Inc. | |||
| Signature: | /s/ Bryan Blessing | Signature: | /s/ Lishan Aklog | |
| Name: | Bryan Blessing | Name: | Lishan Aklog | |
| Title: | Director, Operations | Title: | Executive Chairman | |
| Date: | 9/1/2021 | 1:24:16 PM PDT | Date: | 9/1/2021 | 4:13:56 PM EDT | |
Quality & Manufacturing Master Service Agreement |
Revision#: A Page 27 of 28 |
Appendix A
Quality & Manufacturing Master Service Agreement |
Revision#: A Page 28 of 28 |
Appendix B