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Consulting And Technology Agreement

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Sectors: Health Products and Services
Governing Law: Massachusetts, View Massachusetts State Laws
Effective Date: February 08, 1993
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EXHIBIT 10.5



CONSULTING AND TECHNOLOGY AGREEMENT





RICHARD JONATHAN COHEN





CAMBRIDGE HEART, INC.

TABLE OF CONTENTS





PREAMBLE



ARTICLES



1 DEFINITIONS



2 CONSULTING DUTIES



3 INTELLECTUAL PROPERTY



4 CASH COMPENSATION, REIMBURSEMENT AND GRANT OF WARRANTS



5 DUE DILIGENCE



6 ROYALTIES



7 REPORTS AND RECORDS



8 PRODUCT LIABILITY



9 NON-USE OF NAMES



10 SUBLICENSES



11 ASSIGNMENT



12 DISPUTE RESOLUTION



13 TERMINATION



14 PAYMENTS, NOTICES AND OTHER

15 MISCELLANEOUS PROVISIONS





This Consulting and Technology Agreement ("Agreement") is made and entered into this day of February, 1993 (the "Effective Date"), by and between RICHARD JONATHAN COHEN, a natural person residing at 133 Collins Road, Waban, Massachusetts 02168 (hereinafter referred to as "COHEN"), and CAMBRIDGE HEART, INC., a corporation duly organized under the laws of Delaware and having its principal office at 645 Madison Avenue, 14th Floor, New York, NY 10022 (hereinafter referred to as the "Company").





WHEREAS, COHEN has expertise in each of the TECHNOLOGIES (as defined below) and desires to have the TECHNOLOGIES commercialized and is willing to provide consultation services for this purpose,

WHEREAS, the Company desires to obtain COHEN's consulting services upon the terms and conditions hereinafter set forth,

WHEREAS, the Company desires to obtain COHEN's assistance in transferring the TECHNOLOGIES to the Company,

WHEREAS, the Company and COHEN wish to develop IMPROVEMENTS (as defined below) to the TECHNOLOGIES,

WHEREAS, the Company has represented to COHEN, to induce COHEN to enter into this Agreement, that the Company shall commit itself to a thorough, vigorous and diligent program of exploiting the TECHNOLOGIES and IMPROVEMENTS so that commercialization shall result therefrom.

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows:



ARTICLE 1 - DEFINITIONS



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





1.1 "the Company" shall include any related company of CAMBRIDGE HEART, INC. the voting stock of which is directly or indirectly at least fifty percent (50%) owned or controlled by CAMBRIDGE HEART, INC.



1.2 "TECHNOLOGIES" shall mean TECHNOLOGIES PRIMARILY

LICENSED FROM THIRD PARTIES and OTHER TECHNOLOGIES:



(a) "TECHNOLOGIES PRIMARILY LICENSED FROM THIRD PARTIES"

shall mean:



(i) CARDIAC ELECTRICAL IMAGING,



(ii) ASSESSMENT OF MYOCARDIAL ELECTRICAL STABILITY,



(iii) CARDIOVASCULAR SYSTEM IDENTIFICATION,



(iv) PACING TECHNOLOGY FOR PREVENTION OF CARDIAC DYSRHYTHMIAS,



(v) Other technologies which shall by the mutual written consent of

the Company and COHEN be added to this category.



Technologies (i), (ii), (iii) and (iv) shall fall within the definition to the extent that they fall within (x) the claims of patents or pending applications (whether or not such patents have expired and whether or not any patents issue as the result of such applications), (y) the copyrights (whether or not registered) and copyrightable material or the (z) tangible property licensed to the Company by the Massachusetts Institute of Technology ("MIT") for the development of these technologies.



(b) "OTHER TECHNOLOGIES" shall mean:



(i) the technologies associated with CONTINUOUS CARDIAC OUTPUT

MONITORING which are the subject of a license agreement dated the

date hereof between COHEN and the Company, and



(ii) other technologies which shall by the mutual written consent of

the Company and COHEN be added to this category.



1.3 A "PRODUCT" shall mean any product including, but not limited to,

instrumentation, devices, software, reagents, and supplies:



(a) covered in whole or in part by an issued, unexpired patent claim or a

pending patent claim, or a copyright (whether or not registered),





contained in the TECHNOLOGIES or IMPROVEMENTS in the country in which

any PRODUCT is made, used or sold; and/or



(b) manufactured by using a process which is covered in whole or in part

by an issued, unexpired patent claim or pending patent claim, or a

copyright (whether or not registered), contained in the TECHNOLOGIES

or IMPROVEMENTS in the country in which any PROCESS is used or in

which such product or part thereof is used or sold.



1.4 A "PROCESS" shall mean any process which is covered in whole or in

part by an issued, unexpired patent claim or a pending patent claim or

a copyright (whether or not registered), contained in the TECHNOLOGIES

or IMPROVEMENTS in the country in which such process is used.



1.5 "NET SALES" shall mean collected billings for PRODUCTS and PROCESSES produced hereunder less the sum of the following:



(a) discounts allowed in amounts customary in the trade;



(b) sales, tariffs, duties and/or use taxes directly imposed and with

reference to particular sales;



(c) outbound transportation prepaid or allowed; and



(d) amounts allowed or credited on returns.



No deductions shall be made for commissions paid to individuals whether they be with independent sales agencies or regularly employed by the Company and on its payroll, or for cost of collections. PRODUCTS and PROCESSES shall be considered "Sold" when paid for.



1.6 "TERRITORY" shall mean worldwide.



1.7 "FIELD OF USE" shall mean all.



1.8 "SUBLICENSEE" shall mean a third party sublicensed by the Company to

make, have made, use, lease and/or sell the PRODUCT(S) and

PROCESS(ES).



1.9 "IMPROVEMENTS" shall mean (i) any and all modifications, refinements,

and enhancements to the TECHNOLOGIES conceived of or reduced to

practice by COHEN under the terms of a consulting or employment

contract with the Company and/or (ii) any and all modifications,

refinements and enhancements to the TECHNOLOGIES conceived or reduced

to practice by the Company during any period which COHEN is a

consultant to or employee of the Company. Such IMPROVEMENTS include,

but are not limited to,





(a) United States and foreign patent applications,



(b) United States and foreign patents issued from the applications of (a)

above and from divisionals and continuations of these applications,



(c) COPYRIGHTABLE and TANGIBLE property including computer code, circuit

diagrams, etc.,



(d) Copyrights resulting from material in (c) above, and



(e) Other materials including unissued sections of (a), mathematical

formulae, drawings, trade secrets, know-how and show-how, etc.



ARTICLE 2 - CONSULTING DUTIES



2.1 For a five-year period (the "Consulting Period") starting on the Effective Date of this Agreement, COHEN will be available to the Company for consultation for a minimum of 36 days per year, but no more than 42 days per year, including travel time; provided, that in the event that COHEN is granted a sabbatical (the "Sabbatical") by his current employer commencing at any time during the first year of the Consulting Period, the minimum and maximum number of days which COHEN shall be available to the Company during the Sabbatical shall be increased by 50 days per year (or a prorated portion thereof if the Sabbatical is for less than one year) to 86 days and 92 days, respectively. Consultation will occur at mutually agreeable times and places. COHEN shall coordinate his consulting activity with the Chief Executive Officer of the Company.



2.2 During the Consulting Period, COHEN shall consult for the Company in regard to the development and commercialization of the TECHNOLOGIES and IMPROVEMENTS. During the Consulting Period, COHEN agrees not to be employed by or consult for any other commercial organization (a "commercial organization" shall not be construed to include a university, hospital or other non-profit organization (a "Not-For-Profit")) with regard to the development and commercialization of (i) the TECHNOLOGIES or the IMPROVEMENTS or (ii) any



products or processes which the Company reasonably deems to be competitive with any products or processes which, during the Consulting Period, the Company has commercialized, or planned or sought to commercialize, through the development or exploitation of the TECHNOLOGIES or the IMPROVEMENTS. If the Company shall lose its license needed to develop and commercialize one or more of the TECHNOLOGIES, then, subject to clause (ii) of the preceding sentence, COHEN may be employed by or consult for other commercial organizations regarding the commercialization and development of such TECHNOLOGIES notwithstanding clause (i) of the preceding sentence.



2.3 The Company shall have the right, exercisable upon written notice to COHEN no less than sixty (60) days prior to the expiration of the Consulting Period, or within thirty (30) days of the termination of the Consulting Period if the Consulting Period terminates prior to the fifth anniversary of this Agreement, to extend for up to two additional years the period (the "Noncompete Period") during which COHEN is prohibited from competing with Company as specified in Section 2.2 hereof; provided, that the Company makes payments to COHEN monthly, in advance, throughout such Noncompete Period at a rate equal to the monthly retainer which COHEN would have been entitled to receive pursuant to Section 4.1 hereof (giving effect to the mandatory increases required therein) if the Consulting Period had continued throughout such Noncompete Period.



2.4 (a) In the event that during the Consulting Period, Cohen desires to seek primary employment with any organization other than a Not-for-Profit, Cohen shall notify the Company in writing and the Company shall have the right (the "Employment Option"), exercisable by written notice to COHEN no later than thirty (30) days from receipt of the aforementioned notice from COHEN, to employ COHEN as a full-time employee of the Company for the unexpired portion of the



Consulting Period, at a salary determined as set forth below and on other terms and conditions comparable to those generally prevailing between the Company and its senior executive employees; provided, that any employment agreement between the Company and COHEN shall include, without limitation, the following terms: (i) COHEN's employment duties shall be determined by the Board of Directors of the Company; (ii) during the term of COHEN's employment, the Company and COHEN shall have rights and obligations which are comparable to those set forth in the second sentence of Section 2.2 hereof, and such rights and obligations shall be subject to a two-year extension option on terms comparable to those set forth in Section 2.3 hereof; provided, that the Company makes payments to COHEN monthly, in advance, throughout such Noncompete Period at a rate equal to the monthly salary which Cohen would have been entitled to receive pursuant to this Section 2.4(a) if the employment term had continued throughout such Noncompete Period; and (iii) COHEN shall be entitled to paid days off to observe all holidays which are required to be observed in accordance with the laws of Orthodox Judaism. COHEN's salary during the term of his employment shall be as follows:



(x) In the event COHEN delivers a notice to the Company pursuant

to this Section 2.4 at anytime during the first twenty-four (24)

months of the Consulting Period, COHEN's annual salary shall be 2.25

times the annual consulting fee then being paid to COHEN pursuant to

Section 4.1 hereof (subject to annual increases as provided in such

Section 4.1); and



(y) In the event COHEN delivers a notice to the Company pursuant

to this Section 2.4 at anytime after the expiration of the first

twenty-four (24) months of





the Consulting Period, COHEN's annual salary shall be 2.5 times the

annual consulting fee then being paid to COHEN pursuant to Section 4.1

hereof (subject to annual increases as provided in such Section 4.1).



(b) Notwithstanding the Company's exercise of the Employment Option pursuant to this Section 2.4, the Company may, at its sole option and discretion, deliver a written notice of termination to COHEN at anytime within sixty (60) days following the commencement date of COHEN's full-time employment, and in such case COHEN's employment shall terminate ninety (90) days following the commencement date of COHEN's full-time employment.



(c) In the event that the Company does not exercise the Employment Option pursuant to this Paragraph 2.4, COHEN shall have the right to enter into a bona fide full-time employment arrangement with a third party and to terminate this Agreement effective upon the commencement date of his employment by such third party upon not less than thirty (30) day's written notice to the Company. In the event that COHEN does not enter into a bona fide full-time employment agreement with a third party pursuant to which COHEN's employment commences within four (4) months of the date of COHEN's notice to the Company pursuant to this Paragraph 2.4, COHEN's obligations to the Company under this Agreement shall continue in full force and effect, and COHEN shall be required to deliver a new notice to the Company pursuant to this Paragraph 2.4 prior to entering into any employment agreement with any organization other than a Not-for-Profit.



2.5 During the Consulting Period, COHEN shall be the Chairman of the Company's Scientific Advisory Board.



2.6 COHEN hereby represents and warrants to the Company that the performance by him of his obligations to the Company hereunder will not violate any commitments or undertakings to which COHEN may be bound.





2.7 The Consulting Period shall terminate upon COHEN's death or in the event that, due to physical or mental disability, COHEN is unable to perform consulting services hereunder for a period of 180 consecutive days.



ARTICLE 3 - INTELLECTUAL PROPERTY



3.1 Any enhancements, improvements, refinements or modifications to the TECHNOLOGIES or IMPROVEMENTS, and any other inventions, conceived, or reduced to practice, in whole or in part by COHEN in the context of his consulting activity under this Agreement, shall be assigned to the Company.



3.2 To the extent permissible under the terms of the Company's license agreements with third parties or with COHEN, as the case may be, the Company shall apply for, seek prompt issuance of, and maintain appropriate IMPROVEMENTS patents and copyrights in the
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