TECHNOLOGY LICENSE AGREEMENT
Draft 1 — For Discussion Purposes Only
July 17, 2023
Prepared by: Calderwood & Harkness LLP, 700 Louisiana Street, Suite 3400, Houston, TX 77002, on behalf of Brightfield Cloud Services Inc.
Delivered to: Whitmore & Falk LLP, 100 Federal Street, 28th Floor, Boston, MA 02110, counsel to Nexilis Innovations Ltd.
CONFIDENTIAL — Subject to further negotiation. This draft does not constitute a binding agreement until fully executed by both parties.
ATTORNEY WORK PRODUCT — C&H Matter No. 1042-00003
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TECHNOLOGY LICENSE AGREEMENT
This TECHNOLOGY LICENSE AGREEMENT (this "Agreement") is entered into as of [●], 2023 (the "Effective Date"),
BY AND BETWEEN:
Nexilis Innovations Ltd., a Delaware corporation, with principal offices at 77 Kendall Square, Suite 400, Cambridge, MA 02139 ("Licensor" or "Nexilis"),
and
Brightfield Cloud Services Inc., a Delaware corporation, with principal offices at 4200 Bluebonnet Parkway, Suite 1100, Austin, TX 78745 ("Licensee" or "Brightfield").
Licensor and Licensee are each referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Licensor is the sole and exclusive owner of certain patented and proprietary distributed-cache orchestration technology known as the "DeltaSync Platform," including fourteen (14) issued U.S. utility patents (U.S. Patent Nos. 11,234,567 through 11,234,580) and six (6) pending U.S. patent applications (App. Nos. 17/901,201 through 17/901,206), together with related technical know-how, trade secrets, software, algorithms, protocols, architectures, specifications, and documentation;
WHEREAS, the DeltaSync Platform enables sub-millisecond data synchronization across geographically dispersed cloud nodes, providing significant performance advantages in distributed computing environments;
WHEREAS, Licensee develops and markets the "Stratos" enterprise cloud-management platform, a comprehensive suite of cloud-management and hybrid-cloud infrastructure tools, to mid-market and enterprise customers across multiple industry verticals;
WHEREAS, Licensee desires to obtain an exclusive license to incorporate, deploy, and commercialize the DeltaSync Platform technology within Licensee's Stratos platform and related enterprise software-as-a-service (SaaS) products and services;
WHEREAS, the Parties have entered into that certain Mutual Nondisclosure Agreement dated June 19, 2023 (the "NDA"), governing the exchange of confidential information in connection with the transactions contemplated hereby, and the Parties have conducted preliminary technical and commercial diligence pursuant thereto;
WHEREAS, Licensor desires to grant such license to Licensee on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the meanings ascribed to them below:
"Affiliate" means, with respect to any Party, any entity directly or indirectly controlling, controlled by, or under common control with such Party, where "control" means the direct or indirect ownership of fifty percent (50%) or more of the outstanding voting securities of an entity or equivalent ownership interest, or the power to direct or cause the direction of the management and policies of such entity, whether through ownership of voting securities, by contract, or otherwise.
"Aggregate License Fee" means the total sum of Eight Million Dollars ($8,000,000), comprising the Upfront License Fee and the three (3) Annual Maintenance Payments, as more particularly described in Article IV.
"Annual Maintenance Payment" means each of the three (3) annual payments in the amount of One Million Six Hundred Thousand Dollars ($1,600,000) payable by Licensee to Licensor pursuant to Section 4.2 of this Agreement.
"Confidential Information" means (a) "Confidential Information" as defined in the NDA dated June 19, 2023, and (b) all Licensed Technology and Licensed Know-How disclosed by Licensor to Licensee hereunder, and (c) the terms and conditions of this Agreement. For the avoidance of doubt, the NDA is hereby supplemented, and the protections afforded to Confidential Information thereunder shall extend to all information exchanged in connection with this Agreement.
"DeltaSync Patents" means, collectively, (a) the fourteen (14) issued U.S. utility patents listed on Exhibit A hereto (U.S. Patent Nos. 11,234,567 through 11,234,580), (b) the six (6) pending U.S. patent applications listed on Exhibit A hereto (App. Nos. 17/901,201 through 17/901,206), and (c) all continuations, continuations-in-part, divisionals, reissues, reexaminations, extensions, supplementary protection certificates, and foreign counterparts of any of the foregoing, whether now existing or hereafter filed, issued, or granted.
"DeltaSync Platform" means Licensor's proprietary distributed-cache orchestration engine, including all software, firmware, algorithms, protocols, architectures, specifications, source code, object code, APIs, and related materials embodied therein or associated therewith.
"Derivative Works" means any and all modifications, enhancements, improvements, adaptations, translations, compilations, and derivative works (as such term is defined in 17 U.S.C. § 101) of the Licensed Technology created by or on behalf of Licensee during the Term.
"Effective Date" means the date first written above in the preamble of this Agreement.
"Field of Use" has the meaning set forth in Section 2.3.
"Improvement" means any enhancement, modification, improvement, invention, discovery, development, or innovation relating to or derived from the Licensed Technology, whether or not patentable, that is developed, conceived, or reduced to practice during the Term by either Party or jointly by the Parties.
"Initial Term" means the five (5)-year period commencing on the Effective Date, as described in Section 3.1.
"Licensed Know-How" means all trade secrets, technical data, specifications, documentation, design documents, architecture descriptions, source code, object code, application programming interfaces (APIs), algorithms, protocols, test suites, development tools, build environments, configuration files, databases, data structures, and other non-patented proprietary information related to the DeltaSync Platform, in each case to the extent owned or controlled by Licensor as of the Effective Date or during the Term.
"Licensed Technology" means, collectively, the DeltaSync Patents and the Licensed Know-How.
"Licensee Products" means Licensee's Stratos enterprise cloud-management platform and any successor, replacement, or related enterprise SaaS products and services developed by or on behalf of Licensee into which the Licensed Technology is integrated, incorporated, or embedded in whole or in part.
"Renewal Term" means each successive two (2)-year renewal period following the expiration of the Initial Term, as set forth in Section 3.2.
"Stratos Platform" means Licensee's proprietary enterprise cloud-management platform, including all versions, updates, and successor products thereof.
"Term" means the Initial Term together with any Renewal Terms, as applicable.
"Territory" means worldwide, without geographical limitation.
"Upfront License Fee" means the sum of Three Million Two Hundred Thousand Dollars ($3,200,000), as set forth in Section 4.1.
Section 1.2 — Rules of Construction
The following rules of construction shall apply to this Agreement:
(a) The headings and titles of the Articles, Sections, and Subsections of this Agreement are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Agreement.
(b) Unless the context otherwise requires, words importing the singular number shall include the plural number and vice versa, and words importing one gender shall include all genders.
(c) The word "including" and words of similar import shall mean "including, without limitation," and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.
(d) References to any statute, law, regulation, or rule shall be deemed to include references to such statute, law, regulation, or rule as amended, supplemented, or re-enacted from time to time, and to any successor statute, law, regulation, or rule.
(e) References to "days" shall mean calendar days unless "business days" is expressly specified. "Business days" means any day other than a Saturday, Sunday, or a day on which banks in either New York, New York or Austin, Texas are authorized or required to close for regular business.
(f) References to any agreement, document, or instrument shall be deemed to include references to such agreement, document, or instrument as amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
(g) The terms "hereof," "herein," "hereby," "hereunder," and derivative or similar words refer to this entire Agreement.
(h) The language used in this Agreement shall be deemed to be the language chosen by the Parties to express their mutual intent, and no rule of strict construction shall be applied against either Party.
ARTICLE II — LICENSE GRANT
Section 2.1 — Grant of Exclusive License
Subject to the terms and conditions of this Agreement and upon Licensee's payment of the Aggregate License Fee in accordance with Article IV, Licensor hereby grants to Licensee an exclusive (even as to Licensor, subject to Section 2.5), non-transferable (except as provided in Section 13.3), royalty-free (subject to payment of the Aggregate License Fee), worldwide license under the Licensed Technology to:
(a) use, reproduce, modify, adapt, and create Derivative Works of the Licensed Technology;
(b) integrate, incorporate, and embed the Licensed Technology into Licensee Products;
(c) make, have made, sell, offer for sale, import, export, distribute, sublicense (solely as permitted under Section 2.2), and otherwise commercialize Licensee Products incorporating or embodying the Licensed Technology, in any medium or form and through any distribution channel;
(d) use the Licensed Technology internally for development, testing, quality assurance, benchmarking, performance evaluation, technical support, customer demonstrations, and other purposes reasonably related to Licensee's business within the Field of Use.
The license granted pursuant to this Section 2.1 shall be fully paid-up within the Field of Use upon Licensee's complete payment of the Aggregate License Fee in accordance with Article IV. No per-unit, per-seat, revenue-based, or other ongoing royalty payments shall be due or payable by Licensee for the exercise of the rights granted herein.
Section 2.2 — Sublicensing
Licensee may sublicense the rights granted under Section 2.1 solely as follows:
(a) Affiliates. Licensee may grant sublicenses to Affiliates of Licensee, provided that each such Affiliate agrees in writing, in a form reasonably acceptable to Licensor, to be bound by terms and conditions no less restrictive than those set forth in this Agreement, and Licensee shall remain primarily responsible for the acts and omissions of its Affiliates with respect to the Licensed Technology.
(b) Third-Party Contractors and Service Providers. Licensee may grant sublicenses to third-party contractors, consultants, and service providers performing services for or on behalf of Licensee, solely to the extent necessary for such third parties to perform such services, subject to written confidentiality and restricted-use obligations that are at least as protective as those set forth in this Agreement and the NDA.
(c) End-User Sublicenses. Licensee may sublicense the Licensed Technology as embedded, incorporated, or integrated into Licensee Products that are distributed to end-user customers in the ordinary course of Licensee's business, provided that such end-user sublicense shall be limited to the end user's right to use the Licensee Product in accordance with its applicable terms of service or end-user license agreement and shall not grant any stand-alone rights to access, extract, decompile, reverse engineer, or otherwise separately exploit the Licensed Technology.
Licensee shall have no right to sublicense the Licensed Technology on a stand-alone basis (i.e., separate and apart from a Licensee Product) to any third party without the prior written consent of Licensor. For purposes of clarity, nothing in this Section 2.2 shall limit Licensee's right to make the Licensed Technology available to its end-user customers solely as an integral component of Licensee Products.
Section 2.3 — Field of Use
The license granted pursuant to this Article II is for use in connection with all enterprise software-as-a-service (SaaS) applications and related cloud-management, hybrid-cloud infrastructure, multi-cloud orchestration, edge computing, and distributed computing products and services, without limitation as to industry vertical, market segment, geographic market, or end-customer classification (collectively, the "Field of Use"). For the avoidance of doubt, the Field of Use includes, but is not limited to, the provision of cloud-management, data-synchronization, caching, and related services to customers in the financial services, healthcare, manufacturing, retail, telecommunications, media, energy, government, education, and technology sectors.
Section 2.4 — Retained Rights of Licensor
As between the Parties, Licensor retains all right, title, and interest in and to the Licensed Technology, including all intellectual property rights embodied therein, that are not expressly granted to Licensee under this Agreement. Nothing contained in this Agreement shall be construed to grant Licensee any rights to the Licensed Technology outside the Field of Use or outside the scope of the license expressly granted in Section 2.1. Any rights not expressly granted to Licensee herein are reserved by Licensor.
Section 2.5 — Exclusivity Covenant
During the Term, Licensor covenants and agrees that it shall not:
(a) grant to any third party any license, sublicense, or other right under the Licensed Technology within the Field of Use, whether on an exclusive or non-exclusive basis; or
(b) itself directly or indirectly use the Licensed Technology to develop, market, distribute, sell, offer for sale, or otherwise commercialize any products or services that compete with Licensee Products within the Field of Use.
Notwithstanding the foregoing, Licensor expressly retains the right to (i) continue sponsored research, academic collaborations, and internal research and development activities using the Licensed Technology, provided that no commercial products or services within the Field of Use result therefrom without Licensee's prior written consent, (ii) license the Licensed Technology to third parties for use outside the Field of Use, and (iii) use the Licensed Technology internally for administrative and non-commercial purposes unrelated to the Field of Use.
Section 2.6 — No Implied Licenses
No rights or licenses with respect to the Licensed Technology or any other intellectual property of either Party are granted by implication, estoppel, exhaustion, or otherwise, except as expressly set forth in this Agreement. All rights not expressly granted herein are reserved.
ARTICLE III — TERM AND RENEWAL
Section 3.1 — Initial Term
This Agreement shall commence on the Effective Date and shall continue in full force and effect for a period of five (5) years from the Effective Date, unless earlier terminated in accordance with Article VIII (the "Initial Term").
Section 3.2 — Renewal
Upon expiration of the Initial Term, this Agreement shall automatically renew for successive two (2)-year periods (each, a "Renewal Term"), unless either Party provides written notice of non-renewal to the other Party at least one hundred eighty (180) days prior to the expiration of the then-current Term (whether the Initial Term or any Renewal Term). Any such Renewal Term shall be on the same terms and conditions as set forth in this Agreement. For the avoidance of doubt, no additional license fees or other payments shall be due or payable by Licensee for any Renewal Term, as the license granted herein is fully paid-up upon Licensee's complete payment of the Aggregate License Fee in accordance with Article IV.
Section 3.3 — Survival
The following provisions shall survive the expiration or termination of this Agreement for any reason: Article I (Definitions), Section 6.1 (Licensor's Ownership), Section 6.2 (Licensee's Ownership), Section 6.3 (Improvements, solely with respect to ownership provisions), Article VII (Representations and Warranties, solely to the extent necessary to give effect to indemnification claims arising during the Term), Section 8.4 (Effect of Termination), Section 8.5 (Post-Termination Wind-Down), Article IX (Confidentiality), Article X (Indemnification), Article XI (Limitation of Liability), Article XII (Dispute Resolution), and Article XIII (Miscellaneous), together with any other provisions that by their nature or express terms are intended to survive termination or expiration. The survival of any provision shall not imply that other provisions that are not listed do not survive if the context so requires.
ARTICLE IV — FEES AND PAYMENT
Section 4.1 — Upfront License Fee
In partial consideration for the license and other rights granted hereunder, Licensee shall pay to Licensor an upfront license fee in the amount of Three Million Two Hundred Thousand Dollars ($3,200,000) (the "Upfront License Fee"), representing forty percent (40%) of the Aggregate License Fee, within thirty (30) days following the Effective Date. The Upfront License Fee shall be payable by wire transfer of immediately available funds in United States Dollars to a bank account designated by Licensor in writing prior to or on the Effective Date.
Section 4.2 — Annual Maintenance and Support Payments
In further consideration for the license and other rights granted hereunder, Licensee shall pay to Licensor three (3) Annual Maintenance Payments, each in the amount of One Million Six Hundred Thousand Dollars ($1,600,000), totaling Four Million Eight Hundred Thousand Dollars ($4,800,000) in the aggregate, payable as follows:
(a) The first Annual Maintenance Payment shall be due and payable on the first (1st) anniversary of the Effective Date;
(b) The second Annual Maintenance Payment shall be due and payable on the second (2nd) anniversary of the Effective Date; and
(c) The third Annual Maintenance Payment shall be due and payable on the third (3rd) anniversary of the Effective Date.
Each Annual Maintenance Payment shall be payable by wire transfer of immediately available funds in United States Dollars to the bank account designated by Licensor. Together with the Upfront License Fee, the three (3) Annual Maintenance Payments constitute the total Aggregate License Fee of Eight Million Dollars ($8,000,000).
Section 4.3 — No Royalties
The license granted pursuant to this Agreement is fully paid-up within the Field of Use. No per-unit, per-seat, per-transaction, revenue-based, usage-based, or other ongoing royalty, milestone, or earn-out payments shall be due or payable by Licensee for the exercise of the rights granted herein, whether during the Initial Term, any Renewal Term, or otherwise.
Section 4.4 — Taxes
All fees and payments set forth in this Agreement are exclusive of any and all applicable sales, use, value-added, goods and services, withholding, excise, transfer, or similar taxes, duties, tariffs, or governmental charges ("Taxes"). Licensee shall be responsible for the payment of all such Taxes, however designated, imposed on or with respect to the transactions contemplated by this Agreement, excluding only taxes based on Licensor's net income, capital, or franchise taxes imposed by reason of Licensor's organizational status. If Licensee is required by applicable law to withhold or deduct any taxes from amounts payable to Licensor, Licensee shall timely remit such withheld amounts to the appropriate taxing authority and provide Licensor with written evidence of such withholding as reasonably requested.
Section 4.5 — Late Payments
Any amount payable under this Agreement that is not paid when due shall bear interest from the date such amount became due until the date of actual payment at a rate equal to the lesser of (a) one and one-half percent (1.5%) per month (eighteen percent (18%) per annum), compounded monthly, or (b) the maximum rate permitted by applicable law. The accrual of interest under this Section 4.5 shall not limit or waive any other rights or remedies available to the non-breaching Party under this Agreement or at law or in equity.
Section 4.6 — Non-Refundable Payments
All payments made by Licensee to Licensor under this Agreement are non-refundable and non-creditable, except as expressly provided in Section 8.4 (with respect to a pro-rata refund upon termination for Licensor's uncured material breach) and Section 10.2 (with respect to a pro-rata refund in the event of certain remedial measures following an infringement claim). For the avoidance of doubt, in the event of termination by Licensee for convenience pursuant to Section 8.3, no refund of any fees previously paid shall be due or payable.
ARTICLE V — DELIVERY AND TECHNICAL SUPPORT
Section 5.1 — Delivery of Licensed Technology
Within thirty (30) days following the Effective Date, Licensor shall deliver, or cause to be delivered, to Licensee the following materials in connection with the Licensed Technology:
(a) complete and current source code and compilable object code for the DeltaSync Platform, in a format and on a medium reasonably acceptable to Licensee, including all build scripts, configuration files, and development tools necessary to compile, build, and deploy the DeltaSync Platform;
(b) all technical documentation, functional specifications, architecture documents, design documents, API documentation, data-flow diagrams, system requirements, and user manuals relating to the DeltaSync Platform, in electronic format;
(c) copies of all issued DeltaSync Patents, pending patent application files (including prosecution histories to the extent available), and any correspondence with the U.S. Patent and Trademark Office relating thereto; and
(d) any additional materials, tools, libraries, dependencies, or information reasonably necessary for Licensee to integrate the Licensed Technology into the Stratos Platform and to exercise the rights granted under Section 2.1.
The specific technical specifications, delivery formats, acceptance testing criteria, and timelines for delivery are set forth in Exhibit C attached hereto. Licensor shall use commercially reasonable efforts to deliver all materials in accordance with the schedule set forth in Exhibit C. Licensee shall have thirty (30) days following receipt of the delivered materials to conduct acceptance testing in accordance with the criteria set forth in Exhibit C (the "Acceptance Period"). If the delivered materials fail to conform to the acceptance criteria in any material respect, Licensee shall provide written notice to Licensor specifying the deficiencies, and Licensor shall use commercially reasonable efforts to remedy such deficiencies within fifteen (15) days of receipt of such notice.
Section 5.2 — Source Code Escrow
Within sixty (60) days following the Effective Date, Licensor shall establish and thereafter maintain, at Licensor's sole cost and expense, a source code escrow arrangement with an independent, nationally recognized escrow agent reasonably acceptable to both Parties. The source code escrow arrangement shall provide for the deposit of the complete and current source code for the DeltaSync Platform, including all updates and modifications thereto provided to Licensee during the Term. The release conditions under the escrow arrangement shall include, at a minimum, the following events: (a) Licensor's filing for bankruptcy or being adjudicated bankrupt or insolvent; (b) Licensor's material breach of this Agreement that remains uncured for sixty (60) days following written notice thereof; (c) Licensor's cessation of business operations or dissolution; or (d) Licensor's failure to maintain the DeltaSync Patents as required under Section 6.4 without providing Licensee the opportunity to assume such maintenance. The form of the source code escrow agreement is attached hereto as Exhibit D.
Section 5.3 — Technical Support and Cooperation
During the first twelve (12) months following the Effective Date (the "Support Period"), Licensor shall provide reasonable technical assistance and consultation to support Licensee's integration of the Licensed Technology into the Stratos Platform, including assistance with system architecture, API integration, performance tuning, debugging, and quality assurance testing. Such technical assistance shall not exceed one hundred twenty (120) hours per calendar quarter during the Support Period. Licensor shall designate Dr. Eoin Callahan, Licensor's Chief Technology Officer, or his qualified designee reasonably acceptable to Licensee, as the primary technical contact for all integration support matters. Technical support shall be provided remotely via videoconference, email, and shared collaboration tools, or on-site at Licensee's facilities if mutually agreed by the Parties.
Following the expiration of the Support Period, Licensor shall have no obligation to provide ongoing technical support unless otherwise agreed in writing by the Parties. Licensee may request additional technical support beyond the Support Period, and the Parties shall negotiate the scope, duration, and compensation for any such additional support in good faith.
Section 5.4 — Training
Within the first six (6) months following delivery of the Licensed Technology pursuant to Section 5.1, Licensor shall provide up to two (2) training sessions for Licensee's engineering and technical staff. Each training session shall be approximately two (2) business days in duration and shall cover the architecture, functionality, configuration, and integration methodology of the DeltaSync Platform. Training sessions may be conducted on-site at Licensee's facilities in Austin, Texas, or remotely via videoconference, at Licensee's election. Licensor shall provide all training materials, including slide decks, reference guides, and hands-on exercises, in electronic format. Licensee shall be responsible for any travel and lodging costs incurred by Licensor's personnel for on-site training sessions.
ARTICLE VI — INTELLECTUAL PROPERTY OWNERSHIP
Section 6.1 — Licensor's Ownership
As between the Parties, Licensor retains and shall retain all right, title, and interest in and to the Licensed Technology, including all DeltaSync Patents, all Licensed Know-How, and all intellectual property rights embodied therein or associated therewith. Nothing in this Agreement shall be construed as an assignment or transfer of ownership of the Licensed Technology from Licensor to Licensee. Licensee acknowledges and agrees that its rights in the Licensed Technology are limited to the license rights expressly granted under Article II of this Agreement.
Section 6.2 — Licensee's Ownership
As between the Parties, Licensee retains and shall retain all right, title, and interest in and to:
(a) the Stratos Platform and all pre-existing intellectual property of Licensee, including all patents, copyrights, trademarks, trade secrets, know-how, and other proprietary rights owned or controlled by Licensee as of the Effective Date or developed by Licensee independently of the Licensed Technology during the Term; and
(b) any and all Derivative Works created by or on behalf of Licensee, subject to Licensor's underlying and continuing ownership of the Licensed Technology from which such Derivative Works are derived. For the avoidance of doubt, Licensee's ownership of Derivative Works shall not diminish or impair Licensor's ownership of the underlying Licensed Technology.
Licensee does not grant Licensor any rights, licenses, or interests in Licensee's pre-existing intellectual property, in the Stratos Platform, or in any Derivative Works, except as may be expressly set forth elsewhere in this Agreement. Nothing in this Agreement shall be construed to limit Licensee's right to independently develop, acquire, license, market, or distribute any products, technologies, or services that do not utilize the Licensed Technology.
Section 6.3 — Improvements
The ownership of Improvements shall be determined as follows:
(a) Licensor Improvements. Any Improvement made solely by employees, contractors, or agents of Licensor shall be solely owned by Licensor and shall automatically be deemed part of the Licensed Technology. Accordingly, such Licensor Improvements shall be included within the scope of the license granted to Licensee under Article II, and Licensor shall promptly disclose any such Improvement to Licensee and deliver all materials related thereto.
(b) Licensee Improvements. Any Improvement made solely by employees, contractors, or agents of Licensee shall be solely owned by Licensee. For the avoidance of doubt, Licensor shall have no rights in or to any Licensee Improvement, subject to Licensor's underlying ownership of the Licensed Technology.
(c) Joint Improvements. Any Improvement made jointly by personnel of both Licensor and Licensee (a "Joint Improvement") shall be jointly owned by both Parties, with each Party having an equal, undivided ownership interest. Each Party shall have the right to exploit, license, and otherwise use Joint Improvements without the consent of, or any obligation to account to, the other Party; provided, however, that Licensor's exploitation of any Joint Improvement shall be subject to and limited by the exclusivity covenant set forth in Section 2.5 of this Agreement.
Each Party shall promptly inform the other Party of any Improvement of which it becomes aware and shall cooperate with the other Party in documenting and, if applicable, protecting the intellectual property rights in such Improvement.
Section 6.4 — Patent Prosecution and Maintenance
Licensor shall, at its own cost and expense, diligently prosecute all pending DeltaSync Patent applications and maintain all issued DeltaSync Patents during the Term, including the timely payment of all maintenance fees, annuities, and other charges required to keep such patents in force. Licensor shall keep Licensee reasonably informed of the status of all patent prosecution and maintenance activities with respect to the DeltaSync Patents, including by providing copies of material correspondence with the U.S. Patent and Trademark Office or any foreign patent office upon Licensee's reasonable request.
If, at any time during the Term, Licensor decides to abandon, not file, not prosecute, or not maintain any DeltaSync Patent or any claim thereof, Licensor shall provide Licensee with written notice of such decision at least ninety (90) days prior to any applicable deadline. Upon receipt of such notice, Licensee shall have the right (but not the obligation) to assume the prosecution, maintenance, and defense of such DeltaSync Patent at Licensee's sole cost and expense, and Licensor shall execute all documents and take all actions reasonably necessary to effectuate the transfer of prosecution and maintenance responsibilities to Licensee. Any DeltaSync Patent maintained or prosecuted by Licensee pursuant to this Section 6.4 shall remain the property of Licensor, and the license granted herein with respect to such DeltaSync Patent shall continue in full force and effect.
ARTICLE VII — REPRESENTATIONS AND WARRANTIES
Section 7.1 — Mutual Representations and Warranties
Each Party hereby represents and warrants to the other Party, as of the Effective Date, that:
(a) it is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, and has the requisite corporate power and authority to own, lease, and operate its properties and to carry on its business as now being conducted;
(b) it has full corporate power and authority to enter into this Agreement and to perform its obligations hereunder, and the execution, delivery, and performance of this Agreement have been duly authorized by all necessary corporate action on its part;
(c) the execution, delivery, and performance of this Agreement by such Party do not and will not (i) violate or conflict with any provision of its certificate of incorporation, bylaws, or other organizational documents, (ii) violate or conflict with any material agreement, instrument, order, judgment, decree, or award to which such Party is a party or by which such Party or its assets are bound, or (iii) require any consent, approval, authorization, or filing that has not already been obtained or made; and
(d) this Agreement constitutes the legal, valid, and binding obligation of such Party, enforceable against such Party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity.
Section 7.2 — Licensor's Representations and Warranties
Licensor hereby represents and warrants to Licensee, as of the Effective Date, that:
(a) Licensor is the sole and exclusive owner of the entire right, title, and interest in and to the Licensed Technology, free and clear of all liens, encumbrances, security interests, charges, options, claims, and restrictions of any kind, except as disclosed on Exhibit B attached hereto;
(b) each of the issued DeltaSync Patents is valid, subsisting, and enforceable, and has been properly filed with and issued by the U.S. Patent and Trademark Office, and all required maintenance fees and annuities have been timely paid through the date hereof;
(c) to Licensor's knowledge (which, for purposes of this Section 7.2, means the actual knowledge of Dr. Samira Hajjar, Nathan Woolsey, and Dr. Eoin Callahan, in each case after reasonable inquiry), the Licensed Technology, including the DeltaSync Platform as delivered to Licensee, does not infringe, misappropriate, or otherwise violate any issued patent, registered copyright, trade secret, or other intellectual property right of any third party;
(d) there is no pending or, to Licensor's knowledge, threatened litigation, arbitration, administrative proceeding, opposition, reexamination, inter partes review, post-grant review, or other legal or governmental proceeding challenging or involving the validity, enforceability, ownership, or scope of any DeltaSync Patent or any other component of the Licensed Technology;
(e) Licensor has not previously granted, and there are no outstanding grants of, any license, sublicense, option, covenant not to sue, or other right under the Licensed Technology that would conflict with or impair the exclusive license granted to Licensee herein within the Field of Use, and no third party has any right to use the Licensed Technology within the Field of Use;
(f) all natural persons who are or were inventors of the inventions claimed in the DeltaSync Patents, and all natural persons who contributed to the development of the Licensed Know-How, have executed valid, written assignment agreements assigning all of their right, title, and interest in and to such inventions and know-how to Licensor, and no such assignment is subject to any dispute or challenge;
(g) Licensor has disclosed to Licensee, in writing, all material encumbrances, obligations, restrictions, commitments, or agreements relating to the Licensed Technology, including any commitments or obligations to Ridgeline Ventures, Ashcroft Meridian Partners, or any of their respective affiliates or portfolio companies, or to any other investor, partner, collaborator, or licensee of Licensor, and Exhibit B sets forth a complete and accurate list of all such items;
(h) the Licensed Know-How, as delivered to Licensee pursuant to Section 5.1, will be complete and accurate in all material respects and will include all information reasonably necessary for a competent software engineering team to integrate the DeltaSync Platform into an enterprise SaaS platform; and
(i) Licensor has complied in all material respects with all applicable laws, regulations, and orders in connection with the development, ownership, and licensing of the Licensed Technology.
Section 7.3 — Licensee's Representations and Warranties
Licensee hereby represents and warrants to Licensor, as of the Effective Date, that:
(a) Licensee shall use the Licensed Technology solely within the scope of the license expressly granted pursuant to Article II and in compliance with all applicable laws and regulations; and
(b) Licensee has, and throughout the Term will maintain, the technical capability, engineering resources, and infrastructure necessary to integrate the Licensed Technology into the Stratos Platform and to exercise the rights granted hereunder.
Section 7.4 — Disclaimer
EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE VII, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND, WHETHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, WITH RESPECT TO THE LICENSED TECHNOLOGY, THE STRATOS PLATFORM, OR ANY OTHER SUBJECT MATTER OF THIS AGREEMENT. EACH PARTY HEREBY SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, NON-INFRINGEMENT, ACCURACY, RELIABILITY, PERFORMANCE, OR RESULTS. LICENSOR DOES NOT WARRANT THAT THE LICENSED TECHNOLOGY WILL BE ERROR-FREE, UNINTERRUPTED, OR FREE OF VIRUSES OR OTHER HARMFUL COMPONENTS, OR THAT ANY DEFECTS WILL BE CORRECTED, EXCEPT TO THE EXTENT EXPRESSLY SET FORTH IN THIS AGREEMENT.
ARTICLE VIII — TERMINATION
Section 8.1 — Termination for Material Breach
Either Party may terminate this Agreement upon sixty (60) days' prior written notice to the other Party if the other Party commits a material breach of any provision of this Agreement and fails to cure such breach within such sixty (60)-day notice period. The notice of termination shall specify in reasonable detail the nature of the material breach. For purposes of this Section 8.1, a material breach shall include, without limitation, (a) Licensee's failure to make any payment required under Article IV when due, (b) Licensor's breach of the exclusivity covenant set forth in Section 2.5, (c) either Party's material breach of Article IX (Confidentiality), or (d) either Party's material breach of its representations and warranties set forth in Article VII. If the breaching Party cures the identified breach within the sixty (60)-day cure period, the notice of termination shall be deemed withdrawn and this Agreement shall continue in full force and effect.
Section 8.2 — Termination for Insolvency
Either Party may terminate this Agreement immediately upon written notice to the other Party if the other Party:
(a) files a voluntary petition in bankruptcy or is the subject of an involuntary petition in bankruptcy that is not dismissed within ninety (90) days of filing;
(b) is adjudicated bankrupt or insolvent by a court of competent jurisdiction;
(c) makes a general assignment for the benefit of its creditors;
(d) has a receiver, trustee, custodian, or similar official appointed for a substantial part of its property or assets; or
(e) dissolves, liquidates, or winds up its business operations (other than in connection with a merger, consolidation, or reorganization where the surviving entity assumes all obligations under this Agreement).
The rights and licenses granted under this Agreement are and shall be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code (11 U.S.C. § 365(n)), licenses of rights to "Intellectual property" as defined in Section 101 of the Bankruptcy Code. Licensee, as licensee of such rights, shall retain and may fully exercise all of its rights and elections under the Bankruptcy Code.
Section 8.3 — Termination for Convenience by Licensee
Licensee may terminate this Agreement at any time, with or without cause, upon ninety (90) days' prior written notice to Licensor. In the event of termination pursuant to this Section 8.3, all fees previously paid by Licensee to Licensor pursuant to Article IV shall be non-refundable, and any fees that have accrued but remain unpaid as of the effective date of termination shall become immediately due and payable.
Section 8.4 — Effect of Termination
Upon the expiration or termination of this Agreement for any reason:
(a) all licenses and rights granted to Licensee under Article II shall terminate (except during the wind-down period provided in Section 8.5), and Licensee shall cease all use of the Licensed Technology, subject to Section 8.5;
(b) each Party shall, within thirty (30) days following the effective date of termination (or the end of the wind-down period under Section 8.5, as applicable), return to the other Party, or at the other Party's election destroy, all Confidential Information of the other Party in its possession or control, and shall provide written certification of such return or destruction upon request;
(c) if this Agreement is terminated by Licensee pursuant to Section 8.1 due to Licensor's uncured material breach, Licensor shall, within sixty (60) days of the effective date of termination, refund to Licensee a pro-rata portion of the Aggregate License Fee attributable to the unexpired portion of the then-current Term, calculated on a straight-line basis from the Effective Date through the end of the Initial Term (or, if during a Renewal Term, from the beginning of such Renewal Term through the end thereof); and
(d) termination or expiration of this Agreement shall not affect any rights, obligations, or liabilities of either Party that have accrued prior to the effective date of such termination or expiration, including without limitation any payment obligations that have accrued but remain unpaid.
Section 8.5 — Post-Termination Wind-Down
Following the expiration or termination of this Agreement for any reason, Licensee shall have a twelve (12)-month wind-down period (the "Wind-Down Period"), commencing on the effective date of termination or expiration, during which Licensee may continue to use the Licensed Technology solely to the extent necessary to: (a) fulfill existing customer contracts and obligations that were entered into prior to the effective date of termination; (b) provide maintenance and support for Licensee Products that incorporate the Licensed Technology and that were deployed prior to the effective date of termination; and (c) transition end-customers to alternative solutions that do not incorporate the Licensed Technology. During the Wind-Down Period, all other terms and conditions of this Agreement shall remain in effect with respect to Licensee's permitted use of the Licensed Technology. Upon expiration of the Wind-Down Period, Licensee's rights to use the Licensed Technology shall terminate in their entirety.
ARTICLE IX — CONFIDENTIALITY
Section 9.1 — Confidentiality Obligations
The terms and conditions of the Mutual Nondisclosure Agreement dated June 19, 2023 (the "NDA"), entered into by and between the Parties, are hereby incorporated by reference and shall continue in full force and effect throughout the Term and for the applicable survival period set forth in Section 9.2. In addition to the obligations set forth in the NDA, each Party agrees to keep strictly confidential the terms and conditions of this Agreement (including all pricing, payment, and business terms) and shall not disclose such terms and conditions to any third party without the prior written consent of the other Party, except:
(a) to such Party's Affiliates, officers, directors, employees, accountants, attorneys, financial advisors, lenders, investors, and prospective investors, in each case on a need-to-know basis and subject to written confidentiality obligations no less restrictive than those contained in this Agreement and the NDA;
(b) as required by applicable law, regulation, governmental rule, stock exchange requirement, or order of a court or governmental body of competent jurisdiction, provided that the disclosing Party shall, to the extent legally permissible, provide the other Party with prompt written notice of such required disclosure and shall cooperate with the other Party's efforts to obtain a protective order or other appropriate remedy to limit such disclosure; and
(c) in connection with the enforcement of this Agreement or the exercise of any rights or remedies hereunder in any legal or regulatory proceeding.
Section 9.2 — Duration
The confidentiality obligations set forth in this Article IX and in the NDA shall survive the expiration or termination of this Agreement for a period of five (5) years from the effective date of such expiration or termination; provided, however, that with respect to any Confidential Information that constitutes a trade secret under applicable law, the confidentiality obligations shall continue for so long as such information retains its status as a trade secret.
ARTICLE X — INDEMNIFICATION
Section 10.1 — Indemnification by Licensor
Licensor shall indemnify, defend, and hold harmless Licensee and its Affiliates, and their respective officers, directors, employees, agents, successors, and assigns (collectively, the "Licensee Indemnitees"), from and against any and all losses, damages, liabilities, deficiencies, claims, actions, judgments, settlements, interest, awards, penalties, fines, costs, or expenses of whatever kind, including reasonable attorneys' fees and the costs of enforcing any right to indemnification hereunder (collectively, "Losses"), arising out of or resulting from any third-party claim, suit, action, or proceeding (each, a "Third-Party Claim") alleging that the Licensed Technology, as delivered by Licensor to Licensee, or Licensee's use thereof within the scope of the license granted herein, infringes, misappropriates, or otherwise violates any issued U.S. patent, registered U.S. copyright, trade secret, or other intellectual property right of a third party.
Licensor's indemnification obligations under this Section 10.1 are conditioned upon Licensee:
(a) providing Licensor with prompt written notice of any such Third-Party Claim (provided that any delay in providing such notice shall not relieve Licensor of its indemnification obligations except to the extent Licensor is materially prejudiced by such delay);
(b) granting Licensor sole control of the defense and settlement of such Third-Party Claim (provided that Licensor shall not settle any such claim in a manner that imposes any obligation on Licensee or admits any liability on behalf of Licensee without Licensee's prior written consent, which shall not be unreasonably withheld); and
(c) providing reasonable cooperation to Licensor, at Licensor's expense, in the defense of such Third-Party Claim, including making available relevant documents, information, and personnel.
Section 10.2 — Remedial Measures
If any Licensed Technology, or any part thereof, becomes, or in Licensor's reasonable judgment is likely to become, the subject of a Third-Party Claim of infringement, misappropriation, or other violation of a third party's intellectual property rights, Licensor shall, at its sole option and expense, use commercially reasonable efforts to:
(a) procure for Licensee the right to continue using the Licensed Technology in accordance with the terms of this Agreement;
(b) modify or replace the infringing portion of the Licensed Technology so that it becomes non-infringing, while maintaining substantially equivalent functionality, performance, and compatibility with the Stratos Platform; or