EXHIBIT 10.8.5
AGREEMENT
AGREEMENT entered by and between Chronimed Inc., a Minnesota
corporation ("CHMD") and XXX Corporation, a _____________ corporation ("XXX")
executed and deemed effective_____________, ________ (the "Effective Date").
WHEREAS, XXX is the owner of certain proprietary know-how, technology
and patent rights ("Proprietary Technology," as defined in more detail below)
relating to blood glucose test strips and meters, and
WHEREAS, CHMD desires to obtain a worldwide, non-exclusive, license to
manufacture, distribute, market and sell a blood glucose test embodying the
Proprietary Technology developed by XXX, all on the terms and conditions set
forth herein below;
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein contained, the parties hereby agree as
follows:
1. DEFINITIONS
1.1 "PROPRIETARY TECHNOLOGY" shall mean the technology embodied in that
certain blood glucose test strip and glucose test algorithm of the XXX meter as
the same exists in the current XXX Glucose Control System commercially provided
by XXX as of the Effective Date.
1.2 "LICENSED PRODUCT (s)" shall mean any glucose Test System or
glucose Test Strip marketed by CHMD which embodies, is made using, or otherwise
incorporates the Proprietary Technology (a "Proprietary Test System" or
"Proprietary Test Strip," respectively). For purposes of this Agreement, "Test
System" shall mean any device capable of measuring analyte in a sample (I.E.,
blood or other bodily material), but not including a Test Strip; and "Test
Strip" shall mean any device containing chemical reagents to which a sample is
applied which allows analysis of an analyte by a Test System.
1.3 "NET REVENUES" shall mean CHMD's gross revenues for sales of
Proprietary Test Strips by CHMD or its Affiliates to non-affiliated third
parties, less any separately itemized shipping charges, sales or exercise taxes
paid directly by CHMD, normal and customary trade discounts, returns, rebates
and allowances.
1.4 "ROYALTY YEAR" shall mean annual periods commencing Ninety (90)
days from the date of the Food and Drug Administration (FDA) registration (I.E.,
clearance by the FDA of a 510(k) application for a Proprietary Test Strip) or
April 1, 2000 whichever occurs first and continuing each year thereafter during
the term of this Agreement.
1.5 "DOLLAR(S) shall mean United States Dollars. All royalty due for
sales in countries foreign to the United States shall be converted (for the
purpose of calculation only)
into equivalent United States funds at the rate set forth in The Wall Street
Journal (U.S., Eastern Edition) for the last business day of the calendar
quarter for which such royalties are owed.
1.6 "AFFILIATE(S)" shall mean any corporation or other business entity
controlled or under common control with CHMD for so long as such control exists.
For this purpose "control" shall mean direct and indirect beneficial ownership
of at least fifty one percent (51 % ) of the voting stock of, or at least a
fifty one percent (51 %) interest in the income of such corporation or other
business entity.
2. GRANT OF LICENSE
2.1 Subject to the terms and conditions stated herein, XXX grants to
CHMD and CHMD accepts a non-exclusive, worldwide non-transferable (except as set
forth in Section 9.1 below) right and license under the Proprietary Technology
to make, have made, use, distribute, market and sell Licensed Product(s)
including the right to have any or all of the foregoing performed by an
Affiliate.
2.2 During the first four years of this Agreement, XXX shall not grant
to a third party rights with respect to the Licensed Product(s) royalty
structures more favorable to such third party than as provided to CHMD under
this Agreement without first offering such more favorable royalty structure to
CHMD.
2.3 Subject to CHMD's performance of its obligations under this
Agreement and upon XXX's prior written approval, not to be unreasonably
withheld, CHMD may assign any CHMD rights licensed or granted in Section 2.1;
provided, however, that such assignment shall be solely for the purpose of
permitting CHMD to engage the services of Licensed Product(s) manufacturers,
sales representatives, dealers and other persons to assist CHMD in its
performance under this Agreement and the same shall not alleviate CHMD of its
obligations hereunder.
2.4 XXX and CHMD agree that CHMD receives no licenses or rights
whatsoever, by implication or otherwise, with respect to any other XXX patents,
patent applications, trademarks, technology or other intellectual property
except for the rights to the Proprietary Technology as specifically granted
herein; and upon termination of this Agreement, other than as to inventory in
CHMD's possession at the time of termination, CHMD shall have no further right
to use XXX Proprietary Technology, distribute, market or sell the Licensed
Product(s). Upon termination of this Agreement, CHMD shall retain the sole
ownership of and rights to any manufacturing technologies, know-how, processes,
or devices related to the Licensed Product(s) production or design independently
developed by MM during the term of this Agreement. XXX may not, during the term
of this Agreement nor after its expiration, duplicate any Licensed Product(s)
design feature, technology, or formula enhancement developed by CHMD in each
case to the extent such duplication would infringe the valid claim of an issued
patent without the express written consent of CHMD.
2.5 In consideration for the license and other rights conveyed herein,
and in addition to the royalties identified below, CHMD shall pay XXX Dollars
($XXX) to XXX on or before December 15, 1998.
2.6 CHMD shall notify XXX on or before June 1, 1999, whether CHMD, in
its sole discretion, elects to manufacture, have made, market or sell a blood
glucose Proprietary Test System. In the event CHMD elects to manufacture, have
made, market or sell such a Proprietary Test System, CHMD shall pay to XXX, at
the time of CHMD's notice, an additional lump sum payment of XXX Dollars ($XXX).
In the event CHMD elects not to manufacture, have made, market or sell such
Proprietary Test Systems, the license granted under Section 2.1 above shall be
limited to Proprietary Test Strips and CHMD shall have no license with respect
to Proprietary Test Systems or Proprietary Technology related thereto (i.e., the
subject matter claimed in that certain U.S. Patent Application number #####) and
the remaining terms of this Agreement shall remain intact and fully in force.
2.7 In consideration of the rights granted and other obligations of the
parties herein, the parties agree that during the term of this Agreement that
neither party shall directly or indirectly make, have made, market, sell, have
sold or otherwise distribute any Test Strip (including without limitation a
Proprietary Test Strip) which at the time of the first commercial sale of such
Test Strip is compatible and could be used with a Test System then being
distributed commercially by or on behalf of the other party hereto.
3. LICENSED PRODUCTS) ROYALTIES
3.1 CHMD shall pay to XXX royalties on all CHMD sales of Proprietary
Test Strips during the first five Royalty Years as follows payable in Dollars:
(a) XX percent (XX%) of Net Revenues on all Proprietary Test
Strip sales up to $XX million during a Royalty Year;
(b) XX percent (XX%) of Net Revenues on all Proprietary Test
Strip sales between $XX million and $XX million during a Royalty Year;
and
(c) XX percent (XX%) of Net Revenues on all Proprietary Test
Strip sales exceeding $XX million during a Royalty Year.
3.2 CHMD shall pay to XXX royalties on all CHMD sales of Proprietary
Test Strips occurring after the first five Royalty Years as follows:
(a) XX percent (XX%) of Net Revenues on all Proprietary Test
Strip sales up to $XX million during a Royalty Year;
(b) XX percent (XX%) of Net Revenues on all Proprietary Test
Strip sales between $XX million and $XX million during a Royalty Year;
and
(c) XX percent (XX%) of Net Revenues on all Proprietary Test
Strip sales exceeding $XX million during a Royalty Year.
3.3 CHMD shall pay to XXX, upon the commencement of the first Royalty
Year (as defined herein), a lump sum payment of XX Dollars ($XX). The advance of
XX Dollars ($XX) shall off-set dollar-for-dollar the first XX ($XX) in royalties
to become due and payable to XXX based on Net Revenues generated during the
first Royalty Year.
3.4 In addition to the guaranteed royalty to be paid upon commencement
of the first Royalty Year, CHMD guarantees payment to XXX of XX Dollars ($XX) in
minimum royalties each of the
second, third and fourth Royalty Years. If the total royalties paid to XXX
during one of the foregoing Royalty Years are less than the minimum guaranteed
royalty, then, together with the last royalty payment for such Royalty Year
pursuant to Section 3.5 below, CHMD shall pay to XXX an amount equal to the
difference of the minimum guaranteed royalty and the royalties paid or payable
to XXX pursuant to Section 3.1 above.
3.5 CHMD shall pay all royalties on Net Revenues due XXX, on a calendar
quarterly basis in Dollars within 45 days following the quarter for which
royalties are paid. CHMD shall furnish XXX, with each royalty payment, a
statement specifying total Licensed Product(s) sales for which royalties have
been earned during the royalty quarter and the corresponding royalties paid.
CHMD will at all times during the term of this Agreement and two (2) years
thereafter keep and maintain complete and accurate books of accounting
containing records of Licensed Product(s) sales, billing, and accounts
receivable data in sufficient detail to enable royalties payable to be computed
and verified. CHMD will permit XXX or its representatives to audit such records
at XXX's expense upon reasonable notice to CHMD; provided, however, if a
variation or error producing an underpayment in amounts payable hereunder
exceeding five percent (5%) of the amount paid for any period covered by the
audit is established in the course of any such audit, whereupon all costs
relating to the audit and any unpaid amounts that are discovered shall be paid
by CHMD, together with interest on such unpaid amounts at the rate set forth in
Section 3.7(a) below.
3.6 In the event CHMD shall fail to pay a minimum royalty as required
under Sections 3.3 or 3.4, XXX's exclusive remedy with respect to such
non-payment of a minimum royalty shall be to terminate the license granted under
this Agreement, and XXX shall have no other remedy or claim of damages of any
nature with respect to such non-payment of minimum royalty. The restriction of
remedy provided in this Section 3.6 shall not preclude any other remedy XXX may
have with respect to any other possible non-performance or breach by CHMD.
3.7 In the event CHMD's non-performance or breach, XXX shall be
entitled to the following remedies:
(a) Subject to Section 3.6, if CHMD is in default on any
payment due under this Agreement, the amount in arrears will bear the
interest from the date of the default until the amount is paid in full,
at a rate equal to the maximum rate allowed by the State of XXX. This
interest will be compounded annually from the date of default and shall
be payable on demand.
(b) XXX may terminate this Agreement, and such termination
will be without prejudice to any other rights or claims XXX may have
against CHMD.
(c) Because CHMD's breach of this Agreement may cause XXX
irreparable harm for which money is inadequate compensation,
XXX will be entitled to injunctive relief to enforce this
Agreement, in addition to damages and other available
remedies.
4. XXX COVENANTS, REPRESENTATIONS, AND WARRANTIES
4.1 XXX hereby represents and warrants that to the best of its
knowledge it owns all the Proprietary Technology and has all rights necessary to
grant the license described in Section 2.1 under the terms contained herein.
4.2 Nothing in this Agreement shall be construed as:
(a) A warranty or representation by XXX as to the scope or
validity or enforceability of any Proprietary Technology; or
(b) A warranty or representation that anything made, use, sold
under the license granted will be free from infringements of patents or
other rights of any third parties; or
(c) An obligation or requirement that XXX file or prosecute
any patents applications or secure or maintain any intellectual
property rights in the Proprietary Technology; or
(d) Conferring any right on CHMD or its Affiliates, to use in
advertising, publicity, or any other manner any trademark or trade name
of XXX without prior written consent; or
(e) A warranty or representation that any product sold or
services performed by CHMD, or its Affiliates, whether embodying, made
using or otherwise incorporating by Proprietary Technology or not, is
safe, efficacious, or in compliance with any law or regulations.
4.3 XXX represents that it will make appropriate technical personnel
available for two (2) day meetings in Minnesota, to review the technology
involved in the Proprietary Technology and discuss ways of facilitating its use
by CHMD.
4.4 The execution and delivery by XXX of this Agreement and any other
documents contemplated hereby, and the performance by XXX of any of its
obligations herein will not conflict with, result in a breach or violation of
the terms or conditions of, or constitute a default under any contract or
agreement of XXX, its Articles of Incorporation or By-laws, or any order,
judgment, statute, rule or regulation to which XXX is subject.
4.5 The execution, delivery, and performance of this Agreement have
been duly authorized and approved by the board of directors of XXX and this
Agreement constitutes a valid and binding agreement of XXX in accordance with
its terms.
5. CHMD COVENANTS, REPRESENTATIONS, AND WARRANTIES
5.1 CHMD has or will have the ability to manufacture, distribute,
market and sell the Licensed Product(s) worldwide and will diligently pursue it.
5.2 The Licensed Product(s) shall be (i) manufactured in accordance
with high quality control standards and procedures appropriate for medical
devices of this nature, (ii) free from all defects in workmanship, of
merchantable quality, fit for the particular purpose intended, and (Ili)
manufactured in accordance with all applicable federal, state, laws, rules, or
regulations including, but not limited to, FDA requirements.
5.3 The execution and delivery by CHMD of this Agreement and any other
documents contemplated hereby, and the performance by CHMD of any of its
obligations herein will not conflict with, result in a breach or violation of
the terms or conditions of, or constitute a default under any contract or
agreement of CHMD, its Articles of Incorporation or By-laws, or any order,
judgment, statute, rule or regulation to which CHMD is subject.
5.4 The execution, delivery, and performance of this Agreement have
been duly authorized and approved by the board of directors of CHMD and this
Agreement constitutes a valid and binding Agreement of CHMD in accordance with
its terms.
6. INDEMNIFICATION
6.1 Subject to Section 6.4, below XXX shall indemnify and hold CHMD
harmless from and against any and all liabilities, losses, damages, claims,
deficiencies, costs and expenses (including, without limitation, reasonable
attorney fees and other costs and expenses) incident to any suit, action or
proceeding brought by a third party arising out of or resulting from:
(a) The breach or inaccuracy of any warranty or representation
by XXX herein;
(b) Any breach or failure to perform by XXX of any material
term, covenant, or condition herein;
(c) Any act or omission of XXX, its officers, employees, or
agents in the performance of its obligations or conduct of its business
under this Agreement.
6.2 In the event CHMD incurs any damage, judgment or expense, including
but not limited to attorneys fees or additional license or royalties fees,
arising out of any third party claim alleging that CHMD's exploitation of the
Proprietary Technology or exercise of the license granted herein constitutes
infringement of third party proprietary or intellectual property rights, CHMD
shall have the night to off-set any sums due or coming due XXX under this
Agreement by the amount of such CHMD damages, judgment or expense, without loss
of the license granted by XXX to CHMD herein. Notwithstanding the foregoing,
CHMD shall have no right of off-set under this Section 6.2 or otherwise with
respect to any infringement or alleged infringement arising out of or resulting
from: (i) use of intellectual property or technologies other than the
Proprietary Technology, including in completed products or equipment or any
assembly, combination, method or process in which the Proprietary Technology is
used when the infringement would not result when the Proprietary Technology is
used alone, or (ii) use of the Proprietary Technology in applications or for
purposes not licensed or contemplated under this Agreement.
6.3 Subject to Section 6.4 below, CHMD shall indemnify and hold XXX
harmless from and against any and all liabilities, losses, damages, claims,
deficiencies, costs and expenses (including" without limitation, reasonable
attorney fees and other costs and expenses) incident to any suit, action or
proceeding brought by a third party arising out of or resulting from:
(a) The breach or inaccuracy of any warranty or representation
by CHMD herein;
(b) Any breach or failure to perform by CHMD of any material
term, covenant, or condition herein;
(c) Any act or omission of CHMD, its officers, employees, or
agents in the performance of its obligations or conduct of its business
under this Agreement; or
(d) The manufacture, sale or use of the Licensed Product(s) by
or on behalf of CHMD, including products liability.
6.4 A party (the "Indemnitee") that intends to claim indemnification
under Section 6.1 or 6.3 above, as applicable, shall: (i) promptly notify the
indemnifying party (the "Indemnitor") in writing of any suit, action, or other
proceeding brought by third parties in respect of which the Indemnitee intends
to claim such indemnification hereunder, (ii) provide the Indemnitor sole
control over the defense and settlement of such suit, action, or other
proceeding, and (iii) provide Indemnitor, at Indemnitor's expense and request,
with reasonable assistance and full information with respect to such suit,
action or other proceeding. The failure to deliver written notice to the
Indemnitor within a reasonable time after the commencement of any such action,
if prejudicial to its ability to defend such action, shall relieve such
Indemnitor of any liability to the Indemnitee under this Article 6 but the
omission so to deliver written notice to the Indemnitor shall not relieve the
Indemnitor of any liability that it may have to any Indemnitee otherwise than
under this Article 6. Notwithstanding the foregoing, the Indeninitor shall have
no obligations for any suit, action or other proceeding if the Indemnitee
seeking indemnification makes any admission, settlement or other communication
regarding the same without the prior written consent of Indemnitor, which
consent shall not be unreasonably withheld. Without limiting the foregoing, the
Indemnitee shall have the right to participate in any such suit, action or other
proceeding with counsel of its own choice at its expense; and in all cases,
Indemnitor shall keep the Indemnitee fully infori-xxx of the progress of any
suit, action, or other proceeding it controls under this Section 6.4. For
purposes of the indemnification obligations to a party pursuant to this Article
6, such party shall be deemed to include its directors, officers and employees.
7. TERM & TERMINATION
7.1 This Agreement shall have an initial term of ten (10) years
following the Effective Date, unless otherwise earlier terrninated as set forth
herein. This Agreement shall renew for successive one year terms only by a
written agreement executed by the Parties.
7.2 Either party shall have the right to terminate this Agreement in
the event of any of the following:
(a) A party breaches the Agreement and does not cure such
breach within (30) days after notice from the non-breaching party
specifying, the nature of such breach, including failure by CHMD to
make timely royalty payments to XXX as specified herein.
(b) The dissolution, insolvency, bankruptcy or appointment of
a trustee or receiver for a party, whether voluntary or involuntary.
7.3 Termination of this Agreement for any reason shall not relieve a
party of any obligation owing at the time of termination. In the event this
Agreement is terminated for any reason, CHMD shall provide XXX with a written
inventory of all Licensed Products that CHMD and its Affiliates have in
inventory and CHMD and its Affiliates shall have the right to sell or otherwise
dispose of such Licensed Products, all subject to the payment to XXX royalties
pursuant to Article 3 hereof Articles 1, 8 and 9 and Sections 3.5, 6.1, 6.3 and
6.4 shall survive the expiration and any termination of this Agreement. In
addition, in the event of termination of this Agreement for breach pursuant to
Section 7.2(a) above, the obligations of the breaching party (but not the
terminating party) under Section 2.7 shall continue for a period of one (I)year
after the effective date of such termination. Except as otherwise provided in
this Article 7, all rights and obligations of the parties under this Agreement
shall terminate upon the expiration or termination of this Agreement.
8. CONFIDENTIALITY
8.1 The parties acknowledge that the transactions herein will require
the exchange of information which is or may be confidential or proprietary. As
used herein, the term "Confidential Information" shall mean (i) proprietary
information of any of the parties; (11) information marked or designated by any
of the parties as confidential; (iii) information, whether or not in written
form and whether or not designated as confidential, which is known to a party as
being treated as confidential by the other party; and (iv) information provided
to any party by third parties which any party is obligated to keep as
confidential. Confidential Information includes, but is not limited to,
discoveries, ideas, designs, specifications, drawings, techniques, models, data,
programs, documentation, processes, know-how, customer lists, marketing plans,
and financial and technical information. Confidential Information shall not
include any information of a party now or hereafter (i) voluntarily disseminated
by that party to the public, or (ii) which otherwise becomes part of the public
domain through lawful means.
8.2 Each party hereby acknowledges that each party's Confidential
Information is and shall continue to be the exclusive property of such party,
whether or not disclosed or entrusted to the under this Agreement. Each party
agrees to exercise the highest degree of care in safeguarding the Confidential
Information of the other party against loss, theft, or other inadvertent
disclosure, and agrees generally to take all steps necessary to ensure the
maintenance of confidentiality.
8.3 Upon termination of this Agreement, or as otherwise reasonably
requested, each party agrees to deliver promptly to the owning party all
Confidential Information of the owning party, in all forms and copies, that may
be in the non-owning party's possession or under its control.
8.4 Each party acknowledges that any disclosure of Confidential
Information in violation of this Agreement will cause irreparable harm to the
owning party. If a party fails to abide by the requirements of this Section 8,
the other party will be entitled to specific performance immediate issuance of a
temporary restraining order or preliminary injunction, and to judgment for any
damages caused by such breach, as well as expenses and reasonable attorneys fees
incurred in enforcement of these rights, in addition to and not to the exclusion
of any other remedies provided in equity or at law.
8.5 The terms of this Section 8, and the rights and obligations created
herein, shall survive the termination of this Agreement for any reason.
8.6 Any written communication, including press releases, regarding the
fact of this Agreement or any terms hereunder shall be mutually approved in
writing prior to its publication.
9. MISCELLANEOUS
9.1 This Agreement shall be binding upon and inure to the benefit of
the parties and their legal representatives, successors, and assigns. This
Agreement and the various rights and obligations herein may not be assigned
without the mutual written consent of the parties. Notwithstanding the
foregoing, either party shall have the right to assign this Agreement to a party
that succeeds to all or substantially all of the assigning party's business or
assets relating to this Agreement whether by sale, merger, operation of law or
otherwise; provided that such assignee or transferee promptly agrees in writing
to be bound by the terms and conditions of this Agreement.
9.2 Any notices permitted or required under this Agreement shall be
deemed given upon the date of personal delivery, 24 hours after deposit with an
overnight express delivery service, or 72 hours after deposit in the United
States mail, postage fully prepaid, addressed to the respective party:
IF TO CHMD:
Chronimed Inc.
00000 Xxx Xxxxxx Xxxxx
Xxxxxxxxxx, XXX 00000-0000
Attn: President
With copy to:
Chronimed Inc.
00000 Xxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Attn: General Counsel
If to XXX:
XXX
With copy to:
or at any other address as any party may, from time to time, designate by notice
given in compliance with this Section.
9.3 This Agreement shall be governed by and construed in accordance
with the laws of the State of Minnesota without regard to its choice of law
provisions.
9.4 This Agreement contains the entire understanding between the
parties with respect to the subject matter herein and supercedes any prior
understandings and agreements among them regarding the same.
9.5 In the event of any action by a party under this Agreement to
enforce any of its terms, it is agreed that the prevailing party shall be
entitled to recovery of its costs and reasonable attorneys fees in bringing or
defending such action.
9.6 This Agreement or any section hereof shall not be construed against
a party due to the fact that the Agreement or any section was drafted by that
party.
9.7 If any provision of this Agreement or application of a provision is
held to be invalid or unenforceable, the remainder of this Agreement and the
enforceability thereof shall not be affected by such determination.
9.8 Any failure or delay by a party to enforce this Agreement or any
right herein shall not constitute in any instance a waiver of such right or
ability to obtain a permitted remedy.
9.9 This Agreement may not be amended or supplemented except by a
written instrument signed by the parties. Any action by a party contrary to or
in modification of the terms of this Agreement shall not create a new agreement
among the parties unless specifically consented to in writing by the non-acting
parting.
9.10 Any dispute that arises between the parties with respect to the
performance of this Agreement shall be submitted to binding arbitration by the
American Arbitration Association (or such other arbitration agreed to in writing
by the Parties) to be determined and resolved by said association under its
rules and procedures in effect at the time of the submission. The final
arbitration decision shall be enforceable throughout the courts of the State of
Minnesota and the State of XXX.
9.11 CHMD agrees to xxxx, and require its Affiliates to xxxx, all
Licensed Products sold with all applicable patent numbers or otherwise conform
to patent laws and practices of the country in which such Licensed Products are
sold.
9.12 The relationship of CHMD and XXX established by this Agreement is
that of independent contractors. Nothing in this Agreement shall be construed to
create any other relationship between CHMD and XXX. Neither party shall have any
right, power or authority to assume, create or incur any expense, liability or
obligation, express or implied, on behalf of the other.
9.13 Except as expressly provided herein, each party agrees not to
disclose any terms of this Agreement to any third party without the consent of
the other party, except as required by securities or other applicable laws, to
prospective and other investors and such party's accountants, attorneys and
other professional advisors.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION, WHICH MAY BE ENFORCED
BY THE PARTIES.
CHRONIMED INC. XXX
By By
Its Its
