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EXHIBIT 10.13
EXCLUSIVE LICENSE AGREEMENT
THIS EXCLUSIVE LICENSE AGREEMENT is made and entered into as of the 10th
day of December 1995 by and between MISONIX, INC., a New York Corporation with
its principal offices at 0000 Xxx Xxxxxxx, Xxxxxxxxxxx, Xxx Xxxx 00000
(hereinafter referred to as "MISONIX") and MDA, INC., a Nevada Corporation
having its principal offices at 0000 Xxxx Xxxxxxx Xxxx, Xxxxx X-000, Xxx Xxxxx,
Xxxxxx 00000 (hereinafter referred to as "MIDA").
WITNESSETH:
WHEREAS, MISONIX has a business which is, in part, based on the
research, development, and manufacturing of ultrasonic equipment for scientific
and industrial purposes; and
WHEREAS, MDA has a business which is, in part, that has been organized
to market and sell, on a worldwide basis, medical devices specifically designed
to improve the treatment of patients desiring a surgical procedure commonly
referred to as "Liposuction" or "Liposculpturing" (hereinafter referred to as
the "Procedure"); and
WHEREAS, MISONIX has already utilized its engineering experience,
ultrasonic technology, and prototype manufacturing capabilities to design and
manufacture ultrasonic systems (hereinafter referred to as the "System")
specifically for use in performing the Procedure; and
WHEREAS, MDA has experience in identifying various needs in marketing
and selling to the medical fields on a worldwide basis, especially the
specialties of Plastic and Reconstructive Surgery, Cosmetic Surgery and Surgical
Dermatology; and
WHEREAS, MISONIX desires to continue further technical and application
engineering directed to advanced designs of the System utilizing its patented
technology and, in addition, manufacture the finished product; and
WHEREAS, MDA desires to use its marketing and selling skills to market
the System on an exclusive worldwide basis.
WHEREAS, the Parties entered a Letter of Agreement dated September 11,
1995, under which significant advancements have been made relative to
identifying the specifications and performance requirements of the System as a
result of cooperative efforts by both MISONIX and MDA.
NOW THEREFORE, in consideration of the premises and promises, warranties
and representations herein contained, the parties hereto agree to enter into
this
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Exclusive License Agreement between MISONIX and MDA for the period of time
commencing with the day and year first above written for a period of ten (10)
years ending on December 31, 2005 under the following conditions:
A. MDA to Receive:
l. Exclusive worldwide marketing and sales rights to the System
utilizing MISONIX Ultrasonic Liposuction technology (including
Patent No. 5,419,761; and all improvement patents and foreign
patents now or hereafter held by MISONIX). MISONIX retains the
rights to ultrasonic technologies for non-medical applications.
2. Exclusive rights to utilize MISONIX letter, dated October 15,
1993, from the U.S. Food and Drug Administration, which provides
for marketing the System under Section 510(K), based on
substantial equivalence to devices marketed prior to enactment
of the Medical Device Act of 1976.
3. Access to MISONIX technical support and the design history of
the System.
4. Right to modify specifications to meet clinical/market needs at
MDA's cost.
5. Right of name and logo selection by MDA.
6. Commitment by MISONIX to designate and supply a dedicated
product development team to work with MDA market development
team and support staffs for sucessful future project
development(s).
7. First right of license for existing technology improvements or
future medical technology developed by MISONIX (except for
angioplasty) while the Exclusive License Agreement is in force.
B. MISONIX to Receive:
1. A License Fee payment of three hundred thousand dollars
($300,000.00) upon execution of the Exclusive License Agreement.
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2. MDA will provide market and application development, and a
clinical and marketing plan (milestones) to MISONIX on or before
December 31, 1995, and on an every six (6) month basis
thereafter. MDA to be responsible for planning and funding
clinical tests of the System.
3. Upon delivery of five (5) prototype units, MDA will pay the cost
of the Systems which is four thousand dollars ($4,000.00) per
unit, plus an additional License Fee of one hundred thousand
dollars ($100,000.00).
4. At the start of regular production, or one year from the date of
the Exclusive License Agreement, whichever comes first, the
additional License Fee of one hundred thousand dollars
($100,000.00) will be paid by MDA for a total License Fee
payment of five hundred thousand dollars ($500,000.00).
5. Development funding for the autoclavability (i.e. sterilization)
of the converter and umbilical cable and the manufacturability
of the System including having printed circuit board and other
components established for production as contrasted with
prototypes will be provided by MDA. It is estimated at a maximum
of thirty thousand ($30,000.00) per month until the start of
production. Start of production is defined as production of
commercially saleable produced Systems in the quantities needed
to meet the minimum annual purchases specified in Schedule D. A
fifteen thousand dollar ($15,000.00) advance will be made by MDA
to MISONIX against future xxxxxxxx (the "Advance") for the
purpose of assuring that MISONIX will implement the start of the
subject development work as soon as possible. MISONIX will
invoice MDA following the end of each month for the actual
amount expended, which is to be paid by MDA within ten (10)
working days of invoicing by MISONIX. Estimated time frame will
be six months from the date first written above, subject to
suggestions of, and modifications by, technicians for both
parties.
6. MDA to grant MISONIX a security interest in this Exclusive
License Agreement to secure performances by MDA of its
obligations thereunder. UCC and other documents will be executed
by MDA in furtherance of the security interest.
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C. Both Parties to Agree:
Mutual non-competition clause in Ultrasonic Assisted Liposuction for the
life of this Exclusive License Agreement. Each party agrees, during the
term of this Exclusive License Agreement, not to compete nor engage in,
directly or indirectly, the ultrasonic assisted liposuction business
except through this Exclusive License Agreement.
D. Quantity and Price. MISONIX agrees to sell to MDA and MDA agrees to buy
from MISONIX one hundred percent (100%) of MDA's requirement of the
aforesaid Ultrasonic Assemblies in accordance with the price list set
forth in Schedule A. Technological changes and variations from the
prototype specifications shall increase the cost appropriately. In
addition, the prices can be increased by MISONIX only under one of the
following circumstances: MISONIX may, with written notification to MDA,
increase the price in accordance with the rise in the Official Consumer
Price Index (CPI). Such increase in the price in accordance with the CPI
can be made once each year during the term of the Agreement, except
during the first year, and whenever the cost of labor and/or raw
material to MISONIX changes substantially, MISONIX may change the price
of the Ultrasonic Units, with a ninety (90) day advance written notice
to MDA, to reflect such substantially changing and/or raw material
costs. All Ultrasonic Units for MDA will be manufactured in accordance
with the specifications set forth in Schedule B which will be revised
from time to time by written consent of both parties.
All shipments will be F.O.B. point of origin. MDA will remit payment
within thirty (30) days from the date each invoice is received by MDA
with respect to shipments of Ultrasonic Units. Credit terms: (a) open
account for up to 20 Units at any time, (b) balance by Letter of Credit
or fifty percent (50%) cash payment at time of order. MDA has no
obligation to pay for any shipment of Ultrasonic Units that does not
meet the specifications as set forth in Schedule B and have been
returned to, and accepted by, MISONIX for credit.
E. Delivery. MDA shall submit purchase orders setting forth the quantities,
delivery date and shipping instructions with respect to each shipment
such purchase order to be received by MISONIX at least ninety (90) days
prior to the stipulated delivery date. MISONIX shall ship each order to
MDA or MDA's designee to the location specified, as instructed by MDA.
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F. Quality. It is understood and agreed that all Ultrasonic Units sold to
MDA hereunder will meet the established specifications, as described in
the attached Schedule B, which Schedule may be revised from time to time
by agreement of the parties hereunder. Furthermore, MISONIX shall adhere
to current good manufacturing practice (GMP) and to all applicable US
governmental laws and regulations, as may be amended from time to time
relating to the manufacture, sale and shipment of Ultrasonic Units sold
hereunder. Cost of future filings and modifications of units
necessitated thereby to be borne by MDA, which shall receive prior
notice of proposed actions and expenditures and shall participate in the
decision making process.
G. Quality Assurance. MISONIX will provide MDA with the test results of all
Ultrasonic Units to be shipped to MDA. Furthermore, MISONIX shall advise
MDA of any changes in the manufacturing process or in materials which
have an impact on the quality or performance of the Ultrasonic Units
purchase hereunder.
All Ultrasonic Units delivered to MDA shall be subject to acceptance by
MDA's quality assurance staff. Unless MDA gives MISONIX notice to the
contrary within ten (10) working days after receipt of a shipment of a
Product, such shipment shall be deemed to be accepted by MDA. MDA or
MDA's designee shall have the right to reject any shipment made to it
hereunder which does not meet such quality assurance specifications when
received by it at such designation. In the event that any such shipment
is not approved by MDA because it does not meet said specification, MDA
shall advise MISONIX in writing and MISONIX agrees to replace such
shipment at its expense including charges incurred by MDA for freight
and customs clearance if application, and resubmit to MDA within
forty-five (45) days. At MISONIX'S option, MDA shall return any such
rejected shipment to MISONIX at MISONIX'S expense.
H. Taxes. Any and all taxes imposed upon or with respect to or measured by
the sale or delivery by MISONIX to MDA of Ultrasonic Units in accordance
with MDA's instructions shall be for MDA's account.
I. Force Majeure. MISONIX'S obligations and any delays in deliveries
hereunder or portion thereof, and MDA's obligations to take delivery
hereunder when due, shall be excused by strikes, riots, war, invasion,
acts of God, fire, explosion, floods, delay of carrier, shortages or
failures in the supply of materials, acts of
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government agencies or instrumentality's, judicial action, delay in
constructing manufacturing facilities, and other contingencies beyond
the reasonable control of the party to be excused. In such event(s),
MISONIX will make reasonable efforts to fulfill MDA's requirements for
and MDA will make reasonable efforts to take delivery of Ultrasonic
Units as defined herein. If for any of the reasons set forth above,
MISONIX shall be unable to deliver any of the agreed upon quantities of
MISONIX Ultrasonic Units when due, MISONIX shall immediately notify MDA
of such inability and of the period for which such inability is expected
to continue. In the event MDA elects to manufacture or have Ultrasonic
Units manufactured by a third party during the period that MISONIX is
unable to do so, MDA may use or release to said third party MISONIX'S
confidential technical information and know-how relating to Ultrasonic
Units under a confidentiality agreement acceptable to MISONIX, which
shall not be unreasonably withheld, to enable MDA or said third party to
manufacture Ultrasonic Unit for MDA's account.
J. Royalty. In consideration for the assignment granted in Paragraph A (1.)
above, MDA shall be obligated to pay MISONIX a royalty of five percent
(5%) on net sales of system and/or accessories covered by one or more of
the patents owned or controlled by MISONIX and sold by MDA in any part
of the world.
K. Royalty Record Keeping. MDA shall keep complete and accurate records of
all sales of the systems and/or accessories identified in Paragraph J as
qualifying for royalties. On or before the thirtieth (30th) day after
the end of each calendar quarter, MDA shall submit a written report,
setting forth sales and calculations of the amount of royalty due and
payable based upon sales by MDA during said calendar quarter. Upon
MISONIX's request, and on reasonable notice, MDA shall permit, at the
expense of MISONIX, an independent certified public accountant
acceptable to both parties to have access during reasonable business
hours to such of MDA's records as may be necessary to determine, in
respect of any quarterly period ending not more than two (2) years prior
to the date of such request, the correctness of any reports and payments
made under this Exclusive License Agreement. In the event that the
MISONIX accountant discovers an underpayment of five percent (5%) or
more, the fees of such accountant shall be borne by MDA. MDA agrees that
the choice of MISONIX' regular independent accountants (presently Ernst
& Young LLP) is acceptable to MDA. MISONIX undertakes and agrees that
neither they nor any certified public accountant selected by them
pursuant
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third party except to the extent necessary to enforce this Exclusive
License Agreement and that MISONIX and the certified public accountant
will otherwise keep such information strictly confidential. This right
of inspection may not be exercised more than once in any one (1)
calendar year.
L. Royalty Payment. The payment of the Royalty will be sixty (60) days
following the end of the previous calendar quarter. Net Sales as used
herein shall be the gross invoice price of the System and/or accessories
less the sum of the following:
a) Quantity and cash discounts allowed in amounts customary in the
trade.
b) Sales taxes, tariff duties and use taxes directly imposed with
reference to particular sales.
c) Outboard transportation prepaid.
d) Amounts credited or allowed on returns.
No deductions shall be made for commissions paid whether they be with
independent sales agencies or employees of MDA. Systems and/or
accessories shall be considered "sold" when billed or invoiced by MDA.
M. Infringement. MDA shall have the right, in its sole discretion and at
its expense, to initiate legal proceedings against any infringer of the
patents and technology covered by this Exclusive License Agreement. Any
settlement or recovery received from any such proceeding shall be one
hundred percent (100%) to MDA. MDA, in turn, shall pay MISONIX five
percent (5%) of any resulting settlement less the cost for obtaining the
recovery, including attorney's fees. In the event MDA initiates or
carries on legal proceedings to enforce any Patent covered by this
Exclusive License Agreement against an alleged infringer, MISONIX shall
cooperate reasonably with and supply all assistance reasonably requested
by MDA.
The cost of defending any challenges by third parties to the patents
and technology covered by this Exclusive License Agreement and their
application to the Procedure shall be that of MDA. MISONIX shall
cooperate with MDA by supplying all applicable technical information
including, but not limited to, patent application files.
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The cost of defending any challenges by third parties and their
infringement outside of the Procedure to the patents and technology
covered by this Exclusive License Agreement shall be shared by MISONIX
and MDA on a fifty & fifty percent (50% & 50%) basis.
N. Term. This Exclusive License Agreement shall be effective when signed by
both parties, and shall continue in effect for a period of ten (10)
years. MDA shall have the option to renew this Exclusive License
Agreement for five (5) successive one (1) year periods on the same terms
and conditions, and the price of Ultrasonic Units to be purchased during
each one (1) year period shall also be determined pursuant to the terms
and conditions of this Exclusive License Agreement. MDA must notify
MISONIX that it intends to exercise the option at least sixty (60) days
prior to the expiration of the ten (10) year term of the present
Exclusive License Agreement, and thereafter in each successive year at
least sixty (60) days prior to the expiration of the year in which the
option is being exercised.
0. Termination for Cause. If either party shall at any time fail to abide
by any of the material provisions of the Exclusive License Agreement,
the other party shall have the right to terminate this Exclusive License
Agreement on sixty (60) days prior written notice to the defaulting
party specifying the default complained of, provided, however, if said
defaulting party cures the default complained of within the said sixty
(60) day period, or if a nonmonetary default which reasonably would take
more than sixty (60) days to cure and the defaulting party is actively
taking steps to cure the same, the Exclusive License Agreement shall
continue in full force and effect as if no default has occurred. The
right of either party to terminate this Exclusive License Agreement, as
hereinabove provided, shall not be affected in any way by its waiver of,
or its failure to take action with respect to, any previous default.
This Exclusive License Agreement may also be terminated by the other
party in the event that a petition of bankruptcy is filed by or against
a party and not dismissed within thirty (30) days, or a receiver or
trustee is appointed for all or a part of the property of a party, or a
party makes an assignment for the benefit of creditors.
P. Rights of Termination. Any termination of this Exclusive License
Agreement as provided herein shall not relieve either party of any
obligation arising hereunder prior to such termination. In the event of
termination, all patents developed by the parties for ultrasonic
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liposuction during the term of the Exclusive License Agreement shall
revert to MISONIX.
Q. Inability To Supply Full Requirements. In the event that MISONIX cannot
supply one hundred percent (100%) of MDA's requirement of Ultrasonic
Units, after reasonable prior notice and time to gear up for this, MDA
may either itself manufacture or have a third party manufacture the
amount not supplied by MISONIX during the period that MISONIX cannot
supply the same. MDA may release to said third party MISONIX'S
confidential information and know-how relating to Ultrasonic Units under
a confidentiality agreement acceptable to MISONIX which shall not be
unreasonably withheld, to enable the third party to manufacture the
amount of Ultrasonic Units not supplied by MISONIX for MDA.
R. Purchase Orders. A schedule of the minimum required purchase orders is
annexed hereto as Schedule D. The provisions of this Exclusive License
Agreement shall prevail over any inconsistent statements of provisions
contained in any document related to this Exclusive License Agreement
passing between companies including, but not limited to, any purchase
order, acknowledgment, confirmation or notice. This Exclusive License
Agreement shall supersede and prevail over any other agreement
applicable to the subject matter of this Exclusive License Agreement
between the parties which may be in effect at the time this Exclusive
License Agreement is executed.
S. Limited Warranty and Liability
1. MISONIX warrants that the materials described herein shall meet
the specifications as set forth in Schedule B but DOES NOT
WARRANT THE SUITABILITY OR USES WHICH MAY BE MADE OF THE SAME OR
THE UNITS TO BE PRODUCED HEREUNDER.
2. Except as provided in Paragraph (3) hereafter, MISONIX shall not
be liable for, and MDA assumes responsibility for, and hereby
agrees to indemnify and hold harmless MISONIX for and against
all costs, expenses, and damage (including reasonable attorney's
fees arising from any claim for personal injury and property
damage resulting from the handling of the Ultrasonic Units)
following MDA's acceptance of the Ultrasonic Units after it has
completed its testing as provided in Quality Assurance.
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3. Except as provided in Paragraph (5) hereof, MDA shall not be
liable for, and MISONIX assumes responsibility for and agrees to
indemnify and save harmless, MDA, for all personal injury and
property damages which occur during MISONIX'S manufacturing
process of Ultrasonic Units or which Ultrasonic Units are being
delivered to MDA or its designees or for claims based on
violations of Federal, State or local laws or regulations
applicable to employee or environmental protection in such
manufacture or delivery by MISONIX; e.g., a claim based on
MISONIX'S violations of environmental standards, standards
dealing with providing a safe place to work, or the
transportation of hazardous materials.
4. Either party, upon learning of any claims or suits, under
Paragraphs (2) or (3) of this Article, shall notify the other,
but MDA's attorneys shall handle and control such claims or
suits which fall under Paragraph (2) above on Limited Warranty
and Liability and MISONIX'S attorneys shall handle and control
such claims or suits which fall under Paragraph (3) above on
Limited Warranty and Liability.
5. Notwithstanding the foregoing provisions hereof, MDA shall
secure product liability insurance coverage covering personal
injury and property damage for the products produced hereunder,
at the full cost and expense of MDA, in an amount of not less
than five million dollars ($5,000,000) with a deductible of not
greater than two hundred thousand dollars ($200,000), covering
both MISONIX and MDA for any and all liability.
T. Arbitration. All disputes between the parties arising hereunder shall be
finally settled by arbitration in the City of New York, by the American
Arbitration Association, by a board of three arbitrators one of whom is
selected by each party and the third selected by the two arbitrators, or
if they cannot agree, from the lists of the American Arbitration
Association.
U. Notices. Any notice or request required or permitted to be given under
or in connection with this Exclusive License Agreement shall be deemed
to have been sufficiently given if in writing and delivered to an
officer of such party or sent by registered airmail, telex or telegram,
prepaid, to the party for which such notice is intended, at the address
set forth for such party below:
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In the case of MDA: President
Medical Device Alliance, Inc.
0000 Xxxx Xxxxxxx Xxxx
Xxxxx X-000
Xxx Xxxxx, Xxxxxx 00000
In the case of MISONIX: President
MISONIX, Incorporated
0000 Xxx Xxxxxxx
Xxxxxxxxxxx, XX 00000
or to such other address for such party as it shall have therefore
furnished in writing to the other party. If sent by mail, telex or
telegram, the date of mailing or transmission shall be deemed to be the
date on which such notice or request has been given.
V. Assignment. MDA or MISONIX may assign rights under this Exclusive
License Agreement in whole or in part to any of their respective
affiliates or subsidiaries. Upon the other party's request, the
assigning party shall enter into a separate counterpart agreement with
any such affiliate or subsidiary; it being expressly agreed that the
assignor shall remain bound by the obligations hereof. Such counterpart
agreement shall be in the same form as this Exclusive License Agreement,
except for necessary changes to reflect the extent of the assignment,
the substitution of the affiliate's or subsidiary's name, the effective
date of the assignment and the inclusion of a new provision enabling the
non-assigning party to terminate such separate counterpart agreement in
the event that the assignee ceases to be an affiliate or subsidiary of
the assigning party. This Exclusive License Agreement shall not
otherwise be assignable by either party without the prior written
consent of the other party.
W. Entire Exclusive License Agreement. This Exclusive License Agreement
sets forth the entire Exclusive License Agreement and understanding
between the parties as to the subject matter hereof and merges all prior
discussions and negotiations between them, and neither of the parties
shall be bound by any conditions, definitions, warranties,
understandings or representations with respect to such subject matter
other than as expressly provided herein or as duly set for the on or
subsequent to the date hereof in writing and signed by a proper and duly
authorized officer or representative of the party to be bound thereby.
X. Governing Law. This Exclusive License Agreement shall be construed in
accordance with the laws of the State of New York.
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Y. Confidentiality. After execution of the present Exclusive License
Agreement, MISONIX shall disclose to MDA all technical information
reasonably necessary to use Ultrasonic Units or their equivalents, and
MDA shall hold such information except as provided in Paragraph I
dealing with Force Majeure, and Paragraph Q, dealing with Inability To
Supply Full Requirement of this Exclusive License Agreement. MISONIX
shall also release to MDA all technical information and know-how which
are reasonably necessary to manufacture Ultrasonic Units, and MDA may
use such information the manner set forth in the aforementioned
Paragraphs of this Exclusive License Agreement to manufacture Ultrasonic
Units, and MDA may use such information in the manner set forth in the
aforementioned Paragraphs of this Exclusive License Agreement to
manufacture Ultrasonic Units or to have such devices manufactured by a
third party only as permitted in this Exclusive License Agreement. In
addition to and not in lieu hereof, the parties re-affirm the provisions
of the confidential Disclosure Agreement dated August 11, 1995, which
remains in effect and is annexed as Schedule C hereto provided, however,
that such non-disclosure obligation shall remain in effect for the term
of this Exclusive License Agreement and a period of two years
thereafter.
Information which is necessary for obtaining or maintaining approval of
Ultrasonic Units or its equivalents by any regulatory agency of any
foreign country shall be an exception to the above confidentiality
obligations, but only to the extent necessary and provided said
confidentiality is maintained to the fullest extent possible by MDA.
IN WITNESS WHEREOF, this Exclusive License Agreement has been entered into as of
the day and year first above written.
MISONIX, INCORPORATED MEDICAL DEVICE ALLIANCE, INC.
By: /s/ XXXXXX XXXXXXXX By: /s/ XXXXXX X. XXXXXX
---------------------------- ----------------------------
Xxxxxx Xxxxxxxx Xxxxxx X. XxXxxx
Its: President and CEO Its: Chairman
