Exhibit 10.17
LICENSE AGREEMENT
THIS LICENSE AGREEMENT, made effective as of August 8, 2003 ("EFFECTIVE
DATE"), by and between Specialized Health Products, Inc., a corporation of the
State of Utah, having a place of business at 000 Xxxx 000 Xxxxx, Xxxxxxxxx, Xxxx
00000 (hereinafter referred to as "SHPI" or "LICENSOR") and Becton, Xxxxxxxxx
and Company, a corporation of the State of New Jersey, having a place of
business at 0 Xxxxxx Xxxxx, Xxxxxxxx Xxxxx, Xxx Xxxxxx 00000 (hereinafter
referred to as "BD" or "LICENSEE"), SHPI and BD being hereinafter sometimes
jointly referred to as the "PARTIES".
WITNESSETH:
WHEREAS, SHPI owns or controls PATENTS and TECHNOLOGY (defined
hereinafter) related to components used as needle safety devices for medical
needles; and
WHEREAS, BD desires to obtain and SHPI is willing to grant, certain
rights to the PATENTS and the TECHNOLOGY;
NOW, THEREFORE, in consideration of the promises and mutual covenants
made herein and other good and valuable consideration, receipt of which is
hereby acknowledged, it is agreed by and between the PARTIES as follows:
I. DEFINITIONS
1.1 AGREEMENT YEAR means each consecutive year measured from the first
day of January and ending on the last day of December of such year.
1.2 ASP or AVERAGE SELLING PRICE means the average price per unit of
LICENSED PRODUCT sold by BD during an AGREEMENT YEAR in a particular country to
a third party. For LICENSED PRODUCTS that are sold in trays, the ASP shall be
the imputed unit value of the LICENSED PRODUCT included in that tray, which
value shall be the same as the ASP for the same LICENSED PRODUCT sold as a
single sterile unit. **. "Price" means the gross invoice amount of sales of
LICENSED PRODUCT, less any returns or credits, rebates, excise, sales, use or
value added taxes, cash and trade discounts allowed, import duties and
commissions to agents, but without deduction for uncollected amounts. It is
understood by the parties that ASP may fluctuate on an annual basis throughout
the duration of the Agreement.
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separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
1.3 SPINAL/EPIDURAL FIELD shall mean the use of the LICENSED PRODUCT
with spinal and epidural needles, spinal introducer needle and peripheral block
needles. SPINAL/EPIDURAL FIELD shall not include intravascular catheters or
catheter introducers.
1.4 RADIOLOGY/BIOPSY FIELD shall mean the use of LICENSED PRODUCT with
radiology and biopsy needles, as set forth in Exhibit 1.4. RADIOLOGY/BIOPSY
FIELD shall not include intravascular catheters or catheter introducers.
1.5 INITIAL AVAILABILITY means the first day of the first QUARTER after
the earlier of:
i) the first commercial sale of a LICENSED PRODUCT, or
ii) the later of ** after 510(k) approval is first received
for LICENSED PRODUCT or completion of design verification under Section
3.1 (c). Approval of the 510(k) shall be deemed first received when the
FDA approves LICENSED PRODUCT for use in connection with both a spinal
needle and an epidural needle.
1.6 INVENTION means the inventions disclosed and described in the U.S.
patent applications and international patent applications listed in Exhibit 1.6
attached hereto.
1.7 LICENSED PRODUCT means a needle or introducer, the manufacture,
use, import, promotion, offer for sale or sale of which, but for the license
granted hereunder, would infringe one or more VALID CLAIMS of a patent within
the PATENTS in the country into which such product is sold.
1.8 NET UNITS means the number of units of the LICENSED PRODUCT sold
and shipped by BD to a purchaser.
1.9 PATENTS means those U.S. patent applications and international
patent applications listed in Exhibit 1.3 hereto and those U.S. Patent and
international Patents that may issue from or based on (i) those patent
applications listed in Exhibit 1.3 attached hereto, (ii) any patent application
that may be filed in any country that claims the benefit of the filing date of
any of the patents or applications listed in Exhibit 1.3 hereto, (iii) all
continuation, continuing prosecution and divisional applications based on any of
the aforementioned applications, and (iv) all reissues, reexaminations, renewals
and/or extensions thereof.
1.10 PROTOTYPE shall mean the safety device developed by SHPI and
disclosed to BD hereunder.
1.11 QUARTER means a calendar quarter ending on the last day of March,
June, September or December of each calendar year.
1.12 ROYALTY means any amount payable by LICENSEE in accordance with
Article III any sales of LICENSED PRODUCT within the TERRITORY and any
extensions thereof.
1.13 SUBLICENSEE means any entity selected by BD and approved by SHPI
to which BD sublicenses any of its rights hereunder.
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1.14 TECHNOLOGY means CONFIDENTIAL INFORMATION as defined in Section XI
including, where appropriate, all information, technical data or other know-how
which relates to the design, development, manufacture, use or sale of the
LICENSED PRODUCT (including but not limited to medical uses and methods, product
forms, specifications and manufacturing data) which SHPI owns or controls, and
which SHPI discloses and furnishes to LICENSEE hereunder.
1.15 TERRITORY means the world.
1.16 VALID CLAIM shall mean (a) a claim of an issued PATENT that has
not lapsed or become abandoned and that has not been declared invalid or
unenforceable by an unappealed or unappealable decision or judgment of a court
of competent jurisdiction and/or (b) a pending claim of any pending patent
application included within the definition of PATENTS.
1.17 AFFILIATE means any corporation, company, partnership, joint
venture and/or firm which controls, is controlled by or is under common control
with a PARTY. As used in this paragraph, "control" means (a) in the case of
corporate entities, direct or indirect ownership of at least fifty percent (50%)
of the stock or shares having the right to vote for the election of directors,
and (b) in the case of non-corporate entities, direct or indirect ownership of
at least fifty percent (50%) of the equity interest with the power to direct the
management policies of such non-corporate entities. Unless otherwise specified,
the term BD and LICENSEE as used in this Agreement includes Becton, Xxxxxxxxx
and Company and its AFFILIATES.
1.18 **.
II. GRANT OF LICENSE
2.1 SHPI hereby grants to LICENSEE, subject to the terms and conditions
set forth herein, an exclusive, world-wide right and license under the PATENTS
in the SPINAL/EPIDURAL FIELD to make, have made, use, promote, offer for sale,
sell and import LICENSED PRODUCT in the TERRITORY.
2.2 SHPI hereby grants to LICENSEE the right to sublicense the PATENTS
in the SPINAL/EPIDURAL FIELD to one or more SUBLICENSEES upon LICENSOR's prior
approval, which approval shall not be unreasonably withheld. SHPI agrees not to
sell, license or grant rights to PATENTS for the SPINAL/EPIDURAL FIELD to third
parties. Further, SHPI agrees to expressly exclude the field of spinal
introducer needles from any licenses to third parties. Notwithstanding, SHPI
disclaims any obligation to ensure that products sold, licensed or to which any
rights are granted to third parties are not used as spinal introducer needles.
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2.3 SHPI hereby grants to LICENSEE, subject to the terms and conditions
set forth herein, a non-exclusive, world-wide right and license under the
PATENTS in the RADIOLOGY/BIOPSY FIELD to make, have made, use, promote, offer
for sale, sell and import LICENSED PRODUCT in the TERRITORY.
2.4 Subject to the reversion set forth in Section 5.2, 5.3 and 5.5,
SHPI grants to BD a fully paid up, non-exclusive license to the TECHNOLOGY in
the SPINAL/EPIDURAL FIELD and RADIOLOGY/BIOPSY FIELD. Such grant of license to
the TECHNOLOGY shall not be deemed to be a grant of right to the PATENTS or any
other patents owned or controlled by SHPI. Rather, the grant of such license to
the TECHNOLOGY in the SPINAL/EPIDURAL FIELD and RADIOLOGY/BIOPSY FIELD shall be
subject to any rights to PATENTS, or other patents owned or controlled by SHPI.
III. PAYMENTS
3.1 In consideration of the license and rights granted by SHPI to
LICENSEE to the TECHNOLOGY hereunder, LICENSEE shall pay SHPI:
a) ** Dollars ($**) within thirty (30) days of the EFFECTIVE
DATE;
b) ** Dollars ($**) upon approval of the first device 510(k)
application, received from the Food and Drug Administration relating to
LICENSED PRODUCT;
c) ** Dollars ($**) upon completion of design verification,
including production-quality parts, stampings, molding, and assembly
performance (that is, the end of design and development phase); and
d) ** Dollars ($**) upon INITIAL AVAILABLITY.
3.2 LICENSEE shall pay SHPI an annual royalty payment as follows:
a) for each unit of LICENSED PRODUCT sold by BD and its
Sublicensees in the United States ("U.S.") and Canada, an annual
royalty payment in the amount of ** percent (**%) on average selling
price (ASP);
b) for each unit of LICENSED PRODUCT sold by BD and its
Sublicensees in any region outside the United States ("U.S.") and
Canada, an annual royalty payment in the amount of ** percent (**%) on
ASP; and
c) for each unit of LICENSED PRODUCT which is sold by BD and
its Sublicensees in any region in which there is no VALID CLAIM, but
which is made in a region in which there is a VALID CLAIM, an annual
royalty payment in the amount of ** percent (**%) on ASP.
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3.3 In the event a VALID CLAIM is not allowed within five (5) years of
the EFFECTIVE DATE, BD may elect to terminate this Agreement. Alternatively, BD,
at its sole discretion, may elect to continue under the Agreement. If BD elects
to continue under the Agreement, the annual royalty payment shall be reduced
until such time a VALID CLAIM is allowed as follows:
a) for each unit of LICENSED PRODUCT sold by BD and its
Sublicensees in the United States ("U.S.") and Canada, an annual
royalty payment in the amount of ** percent (**%) on average selling
price (ASP); and
b) for each unit of LICENSED PRODUCT sold by BD and its
Sublicensees in any country outside the United States ("U.S.") and
Canada, an annual royalty payment in the amount of ** percent (**) on
ASP; and
c) for each unit of LICENSED PRODUCT which is sold by BD and
its Sublicensees in any region in which there is no VALID CLAIM, but
which is made in region in which there is a VALID CLAIM, an annual
royalty payment in the amount of ** percent (**%) on ASP.
3.4 BD shall deliver to SHPI written reports of Net Sales of LICENSED
PRODUCT for the QUARTER in which the LICENSED PRODUCT was sold, on or before the
forty-fifth (45th) day following the last day of the QUARTER. Such reports shall
include a calculation of the royalties due and be accompanied by any payment due
pursuant to Section 3.2, Section 3.3 and/or Section 3.5.
3.5A In any one year period prior to an anniversary of the INITIAL
AVAILABILITY in which the royalty that is required in Section 3.2 or 3.3 does
not meet or exceed the amount of the minimum royalty due under this Section, BD
shall, with the payment made for that year, pay an amount ("INCREMENTAL
PAYMENT") as additional royalty sufficient to bring the total royalties payable
for such year up to an amount equal to the minimum royalty required hereby. Any
payments pursuant to this Section shall be made within sixty (60) days of the
date the payment is due. Specifically, BD shall have the following minimum
annual royalty obligations:
a) For the first year after INITIAL AVAILABILITY, the minimum
annual royalty shall be the royalty that would have been due if BD had
sold ** units of LICENSED PRODUCT in the United States during that
period. If XX xxxxx ** units or more of LICENSED PRODUCT during that
period, the ASP used to calculate the minimum annual royalty shall be
the ASP for the units of LICENSED PRODUCT actually sold by BD during
this period. If XX xxxxx less than ** units of LICENSED PRODUCT during
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that period, the ASP shall be $** US per unit of LICENSED PRODUCT. For
purposes of clarity, in the instance that XX xxxxx no units of LICENSED
PRODUCT during this period, the minimum annual royalty shall be $**;
b) For the second year after INITIAL AVAILABILITY, the minimum
annual royalty shall be the royalty that would have been due if BD had
sold ** units of LICENSED PRODUCT in the United States during that
period. If XX xxxxx ** units or more of LICENSED PRODUCT during that
period, the ASP used to calculate the minimum annual royalty shall be
the ASP for the units of LICENSED PRODUCT actually sold by BD during
this period. If XX xxxxx less than ** units of LICENSED PRODUCT during
that period, the ASP shall be $** US per unit. For purposes of clarity,
in the instance that XX xxxxx no units of LICENSED PRODUCT during this
period, the minimum annual royalty shall be $**; and
c) For the third year after INITIAL AVAILABILITY and each year
thereafter, the minimum annual royalty shall be the royalty that would
have been due if BD had sold ** units of LICENSED PRODUCT in the United
States during that period. If XX xxxxx ** units or more of LICENSED
PRODUCT during that period, the ASP used to calculate the minimum
annual royalty shall be the ASP for the units of LICENSED PRODUCT
actually sold by BD during this period. If XX xxxxx less than ** units
of LICENSED PRODUCT during that period, the ASP shall be $** US per
unit of LICENSED PRODUCT. For purposes of clarity, in the instance that
XX xxxxx no units of LICENSED PRODUCT during this period, the minimum
annual royalty shall be $**.
3.5B. **
3.6 BD shall keep accurate books and records of sales of LICENSED
PRODUCT and of all payments due SHPI hereunder for one year after the Term of
the Agreement. BD shall contractually obligate all BD sublicensees to keep
accurate books and records of Net Sales of LICENSED PRODUCT and of all data
necessary for the computation of royalties hereunder for the relevant sale
period.
3.7 SHPI shall have the right to nominate an independent accountant
acceptable to and approved by BD who shall have access to BD and/or its
Sublicensees records during reasonable business hours, upon executing an
appropriate confidentiality agreement, for the purpose of verifying the royalty
payable as provided for in this Agreement for the two (2) preceding years, but
this right may not be exercised more than once in any year, and the accountant
shall disclose to SHPI only information relating solely to the accuracy of the
royalty report and the royalty payments made in accordance with this Agreement.
BD shall impose similar contractual obligations on its sublicensees to allow an
independent public accountant to inspect the sublicensee's books and records to
verify payments under such sublicense.
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3.8 Royalties and other payments under this Agreement shall be made in
United States dollars. To the extent sales requiring a royalty may be made by BD
in a country other than the United States, such royalties shall be made by BD in
United States dollars on the basis of conversion, from the currency of such
other country, at the rate of exchange recited in the report entitled "Rates of
Exchange" issued monthly by BD's International Finance Department which provides
spot exchange rates for each other country where sales were made, on the last
business day of the calendar quarter when the sales occurred, and shall be paid
at the time and in the manner set forth herein, provided however, that
royalties/payments based on any sales under this Agreement shall be payable to
SHPI only after deducting for exchange and all other charges due governments,
including withholding taxes, arising from the origin and transmittal of such
royalties, and further provided that the foregoing is subject to the right to
make payment in any country where currency is blocked and where legal conversion
of the currency billed cannot be made into United States Dollars by depositing
such payments in SHPI's name in a bank designated by SHPI within such country.
BD shall pay all withheld amounts to the appropriate tax or governmental
authorities as required by law and furnish SHPI with official tax receipts or
other appropriate evidence issued by the appropriate authorities to assist SHPI
in supporting a claim for income tax credit in respect of any sums so withheld.
3.9 The payment by BD of the monies due under this Section 3 is
considered complete satisfaction of any duty imposed upon BD to commercially
exploit LICENSED PRODUCTS and is accepted by SHPI in lieu of best or reasonable
efforts obligation on the part of BD. Nothing in this Agreement shall impose
upon BD an obligation to use its best or reasonable efforts to create, continue
or maximize sales of LICENSED PRODUCTS or prevent BD from making, using,
offering to sell, selling, or importing or causing to be made, used, offered for
sale, sold or imported from, to or in any place in the world, products
competitive in nature to LICENSED PRODUCTS. Nothing herein shall in any way
limit BD's free and exclusive right to determine in its sole discretion the
timing or manner of marketing, manufacturing or advertising LICENSED PRODUCTS,
so long as such marketing, manufacturing or advertising is in compliance with
local laws and regulations. Notwithstanding the foregoing, the parties recognize
SHPI's right to terminate this License Agreement as set forth in Section 5.5
3.10 ** For the sake of clarity, it is agreed that transfer of a
LICENSED PRODUCT from or to Becton Xxxxxxxxx & Company to or from a BD AFFILIATE
shall not be deemed as sale of LICENSED PRODUCT and shall not be deemed a
royalty-generating event.
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IV. RESEARCH AND DEVELOPMENT
4.1 BD shall reimburse SHPI for all pre-approved "out-of-pocket"
expenses accrued after the EFFECTIVE DATE, including travel and related expenses
for manufacturing and development activities at BD's request or approved by BD,
for SHPI's performance of its responsibilities under this Agreement (**). Weekly
team meetings will be the mechanism for approving out-of-pocket expenses.
4.2 SHPI and BD shall cooperate to prepare and file an application for
510(k) device approval for the LICENSED PRODUCT that is acceptable to both
PARTIES. BD shall elect which LICENSED PRODUCT shall by submitted for 510(k)
approval. SHPI shall be responsible for design verification, design validation,
the Design Control and Design History File, and the successful 510(k) regulatory
submission(s) relative to the elected spinal and epidural LICENSED PRODUCT. SHPI
shall provide BD with complete and accurate copies of any communication to and
from the Food and Drug Administration with respect to any LICENSED PRODUCT, and
all relevant design data and information. BD, at its expense, shall assist and
cooperate with SHPI through the design verification, design validation, and
regulatory submission and activities. BD shall participate in weekly design
meetings, conference calls, and formal design review meetings.
4.3 BD shall be free to file additional requests for 510(k) approval
for LICENSED PRODUCTS, using any materials, data and information developed in
connection with the request described in Section 4.2. Any efforts by SHPI in
preparing such a request shall be at BD's expense, at rates to be mutually
agreed upon by BD and SHPI.
4.4 SHPI shall be responsible for the development of machined prototype
components and stamped components. SHPI shall also be responsible for
coordination of production stamping tool and of prototype mold parts.
4.5 SHPI shall be responsible for coordination of the development of
proof-in-principle needle assembly machine and development of a prototype
process for assembly of molded parts over the metal component.
4.6 BD shall be responsible for manufacturing, final product assembly,
promotional materials, packaging, distribution and sale of LICENSED PRODUCT.
SHPI shall assist BD on a reasonable basis concerning the final assembly machine
for LICENSED PRODUCT.
4.7 SHPI shall own inventions, whether patentable or not, first
conceived solely by employees of SHPI. BD shall own inventions, whether
patentable or not, first conceived solely by employees of BD. SHPI and BD shall
jointly own title to any and all intellectual property first conceived jointly
or discovered jointly by SHPI's employees or personnel and BD's employees or
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personnel, including but not limited to inventions, processes, manufacturing
techniques, know how, and information, whether patentable or not, arising in
connection with the performance of services under this Agreement. Subject to any
intellectual property rights pre-existing to or independent of such jointly
conceived inventions, each party grants to the other a royalty-free,
non-exclusive worldwide license, with the right to sublicense, on all rights to
jointly conceived inventions.
V. EFFECTIVE DATE AND TERM
5.1 This Agreement shall commence on the EFFECTIVE DATE and shall
continue thereafter until the expiration of the longest-lived patent of the
PATENTS, unless sooner terminated in accordance with the provisions of Sections
3.3, 5.2, 5.3, 5.4 or 5.5.
5.2 BD shall have the right to terminate this Agreement upon ** written
notice to SHPI. Any termination under this Section may not take effect before
the ** anniversary of INITIAL AVAILABILITY. Upon termination under this Section,
BD shall be responsible for any minimum royalties due under Section 3.5 for the
period before termination but after the immediately previous anniversary of the
INITIAL AVAILABILTIY on a pro rata basis. Upon termination under this Section
5.2, all rights to the PATENTS, the TECHNOLOGY and to the 510(k)'s prepared and
submitted by SHPI for devices including the TECHNOLOGY revert to SHPI. Such
reversion of rights to 510(k)'s for devices including the TECHNOLOGY shall not
transfer, or deem to transfer, to SHPI and shall not be deemed to transfer any
rights to any other intellectual property owned by BD related to the subject
device.
5.3 Except as otherwise provided in this Agreement, in the event of a
material breach or default by either of the PARTIES hereto of any term or
provision of this Agreement on their respective parts to be observed or
performed, the PARTY not in breach or default shall have the right to give the
other PARTY notice thereof, whereupon the PARTY receiving such notice shall have
forty-five (45) days to cure or cause the cure of such breach or default, or if
the same cannot reasonably be cured within such forty-five (45) days, the PARTY
receiving such notice shall, within said period, commence or cause the
commencement of such cure and thereafter continue to diligently prosecute or
cause the prosecution of cure of the same. If such breach or default is cured,
this Agreement shall remain in full force and effect. If such breach or default
is not cured, this Agreement may be terminated, subject to Articles XII and
XIII, by the non-defaulting PARTY. The right of either PARTY to terminate this
Agreement shall not be affected in any way by its waiver, or failure to take
action with respect to any previous default. Upon termination under this Section
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5.3, all rights to the TECHNOLOGY and to the 510(k)'s prepared and
submitted by SHPI for devices including the TECHNOLOGY revert to SHPI. Such
reversion of rights to 510(k)'s for devices including the TECHNOLOGY shall not
transfer, or deem to transfer, to SHPI and shall not be deemed to transfer any
rights to any other intellectual property owned by BD related to the subject
device.
5.4 In the event that LICENSEE is dissolved, whether voluntarily or
compulsorily (except in the case of a dissolution for the purposes of
recapitalization and/or non-bankruptcy reorganizations where the resulting
entity agrees to be bound by the terms of this Agreement), or has appointed a
receiver or trustee of its assets or a substantial part thereof, or enters into
a composition with creditors, this Agreement shall thereupon terminate and all
rights granted to Licensee hereunder shall immediately revert to and vest in
SHPI; provided, however, in the case of an involuntary appointment of receivers
or trustees, such appointment shall not result in termination of the license if
the LICENSEE endeavors to set aside the appointment of the receiver or trustee
and is successful in setting aside the receiver or trustee within ninety (90)
days of appointment.
5.5 In the event that BD has not commercially exploited the LICENSED
PRODUCT or the rights granted hereunder within three (3) years of INITIAL
AVAILABILITY, LICENSOR shall have the right to terminate this Agreement upon
sixty (60) days written notice to BD. If this right is not exercised by
LICENSOR, the right shall expire upon the commercial exploitation of LICENSED
PRODUCT by BD or the rights granted hereunder by SUBLICENSEES of BD. Upon
termination under this Section 5.5, all rights to the TECHNOLOGY and to the
510(k)'s prepared and submitted by SHPI for devices including the TECHNOLOGY
revert to SHPI. Such reversion of rights to 510(k)'s for devices including the
TECHNOLOGY shall not transfer, or deem to transfer, to SHPI and shall not be
deemed to transfer any rights to any other intellectual property owned by BD
related to the subject device.
VI. INFRINGEMENT
6.1 In the event that either PARTY becomes aware of an infringement of
the PATENTS by a third party, it promptly shall notify the other PARTY in
writing to that effect. If the infringement is in the SPINAL/EPIDURAL FIELD, BD
shall be permitted, but not required, to bring suit and to control the conduct
thereof against the alleged infringer of any claims of any PATENTS, **. At BD's
request, SHPI will reasonably cooperate with BD in any suit for infringement of
the PATENT brought by BD, including being joined as a party plaintiff to such
suit, against a third party. **. In the event BD exercises the privileges herein
conferred, **. Notwithstanding the foregoing, **.
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6.2 If, after the expiration of ninety (90) days from the date of such
notice, BD has not brought suit against the third party infringer, then SHPI
shall have the right after such ninety (90) day notice period, but not the
obligation, to bring suit against such infringer and, if a court of competent
jurisdiction determines it is necessary, to join BD as a party, **. At SHPI's
request, BD will reasonably cooperate with SHPI in any suit for infringement of
the PATENT brought by SHPI, including being joined as a party plaintiff to such
suit, against a third party. **. Notwithstanding the foregoing, **.
6.3 In the event that any third party brings proceedings challenging
the validity of the PATENTS other than in the context of an infringement suit,
the PARTIES shall notify each other in writing to that effect. During the ninety
(90) day period after such notice, SHPI will have the right, but not the
obligation, to contest such proceedings. SHPI shall bear the expenses of any
such proceeding. SHPI shall have the final decision on all matters relating to
such proceeding and any settlement discussions. At SHPI's request, BD will
reasonably cooperate with SHPI in any suit for infringement of the PATENT
brought by SHPI, including being joined as a party plaintiff to such suit,
against a third party. **.
6.4 If, after the expiration of the ninety (90) days from the date of
such notice, SHPI has not engaged in the proceeding, then LICENSEE shall have
the right after such ninety (90) day notice period, but not the obligation, to
contest such proceedings and join SHPI as a party provided that LICENSEE shall
bear all expenses of such proceeding. SHPI will reasonably attempt to cooperate
with LICENSEE in any such proceedings challenging the validity of the PATENTS
and shall have the right to consult with LICENSEE and to participate in and be
represented by independent counsel in such litigation at its own expense. **.
Where it is necessary for LICENSEE to have standing to contest the proceedings,
SHPI shall assign limited concurrent rights to the licensed PATENTS for the
terms of the proceedings. Notwithstanding the foregoing, **.
6.5 Nothing contained in this ARTICLE VI shall be construed to in any
way limit or interfere with SHPI's right to bring suit and control the conduct
thereof for any and all claims relating to LICENSED PATENTS outside of the
SPINAL/EPIDURAL FIELD.
VII. PATENT PROSECUTION AND MARKING
7.1 SHPI shall use reasonable commercial efforts to file and prosecute
patent applications, and shall maintain all patents, licensed under LICENSED
PATENTS.
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7.2 SHPI shall advise BD promptly of any patents issuing that are
LICENSED PATENTS. BD shall use reasonable commercial efforts to xxxx all
LICENSED PRODUCTS with the appropriate patent marking in compliance with all US
and foreign jurisdiction laws in respect of patent marking, if any, but the
selection, location and particulars of such marking shall be at BD's discretion.
VIII. PRODUCT LIABILITY
LICENSEE shall be responsible for its acts and omissions with respect
to the manufacture, packaging and sale of the LICENSED PRODUCT. **.
IX. FORCE MAJEURE
The obligations of either PARTY to perform under this Agreement shall
be excused if such failure to perform or any delay is caused, in whole or in
part, by reason beyond the reasonable control of such PARTY, including without
limitation, acts of God, embargo, law or governmental regulation, compliance
with any government request or directive, war, terrorist acts, riot,
insurrection, destruction of production facilities or materials by fire,
earthquake or storm, labor disturbance, epidemic, failure of public utilities or
common carriers or any other cause whether similar or dissimilar to those
enumerated which is reasonably beyond the control of the PARTY obligated to
perform ("Force Majeure"). Such delay shall be excused during the continuance of
and to the extent of such Force Majeure, without liability for any failure to
perform this AGREEMENT. The PARTY claiming Force Majeure shall promptly notify
the other PARTY of the termination of such event. Upon the occurrence of such an
event, the duties and obligations of the PARTIES shall be suspended for the
duration of the event preventing proper performance under this Agreement. The
affected PARTY shall resume the performance of its obligations as soon as
practicable after the Force Majeure event ceases. In the event that LICENSEE is
unable to manufacture or have manufactured any LICENSED PRODUCT for a period of
more than ninety (90) days as a result of an event of Force Majeure and as a
consequence does not, during any AGREEMENT YEAR, manufacture or have
manufactured sufficient units of the LICENSED PRODUCT to meet the minimum NET
UNITS for such AGREEMENT YEAR, as set forth in section 3.5, its obligation under
Section 3.5 to pay ROYALTIES on such minimum NET UNITS will be excused for the
AGREEMENT YEAR during which the Force Majeure event prevented its fulfillment of
such obligation, and that obligation and all succeeding obligations of the same
sort, if any, shall be deferred to the next succeeding AGREEMENT YEAR of each.
-----------------
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
X. INDEMNIFICATION, INSURANCE AND DISCLAIMER,
REPRESENTATIONS AND WARRANTEES
10.1 LICENSEE agrees that it shall be solely responsible for all the
expenses connected with its business related to the manufacture and sale of
LICENSED PRODUCT, and for taxes and levies of any and all kinds in connection
with that business and the income therefrom and SHPI shall not be liable for any
such expenses, taxes or levies, or disbursements otherwise paid and incurred,
except as provided in Section 3.8.
10.2 SHPI hereby represents and warrants to LICENSEE as follows:
(a)Neither the execution nor delivery of this Agreement nor
the consummation of the transactions provided for herein, violates any
agreement, lien, instrument, decree, order or judgment to which the
PATENTS, the TECHNOLOGY or SHPI or any of its officers, directors,
shareholders or partners is a party or by which it or they are bound.
SHPI has the authority to grant to LICENSEE the licenses of the
PATENTS, the TECHNOLOGY and the INVENTION that are licensed and
transferred pursuant to this Agreement. Should SHPI acquire, after the
EFFECTIVE DATE, any patent infringed by a LICENSED PRODUCT, such
patents shall be deemed PATENTS to the extent necessary or useful to
make, have made, use, sell, offer to sell or import LICENSED PRODUCTS.
(b) There are no licenses or other similar agreements entered
into by SHPI pertaining to or affecting any of the PATENTS, the
INVENTION or the TECHNOLOGY, relating to safety device components for
the needle safety feature for medical needles in the SPINAL/EPIDURAL
FIELD and RADIOLOGY/BIOPSY FIELD, which would otherwise diminish the
licenses granted to LICENSEE under this Agreement.
(c) There are no patents owned or controlled by SHPI, other
than the PATENTS licensed to BD according to the terms of this
Agreement, having claims that would cover BD's making, having made,
using, selling, offering for sale or importing LICENSED PRODUCT.
(d) There are no suits pending that challenge the validity of
any of the patents within PATENTS. (e) There are no third party
obligations, which would adversely affect SHPI's performance under this
Agreement.
10.3 The Parties hereby agree to indemnify and hold each other harmless
from and against all liabilities, claims, losses, damages, costs and expenses
(including attorneys' fees) resulting from or arising in connection with the
breach by SHPI or BD of any of the warranties set forth in this Article X.
Notwithstanding the foregoing, neither party shall be liable hereunder for
special, indirect, consequential or incidental damages, including, but not
limited to, loss of actual or anticipated profits or revenues, loss by reason of
shutdown, loss of use, loss of accruing interest, nonoperation or increased
expense of manufacturing or operation, delay, or any damages arising in
connection with the reconstruction of or loss of other property or equipment or
any loss of reputation or public image.
Upon receiving notice of any claim for liability under this Article,
the indemnified party shall promptly notify the indemnifying party in writing;
provided, however, that failure to give notice shall not limit or otherwise
reduce the indemnity provided for in this Agreement. The indemnifying party may,
in its sole discretion, assume and conduct the legal defense of the indemnified
party in any suit that could result in claims under this Article. Unless made
with the express written consent of the indemnifying party, no sums paid by the
indemnified party in settlement of any claim shall be recoverable under this
Article.
10.4 With respect to SHPI, nothing in this Agreement shall be construed
as:
(a) A warranty or representation that any patent applications
filed or that may be filed disclosing and claiming any aspect of the
PATENTS will mature into issued patents; or
(b) Granting by implication, estoppel, or otherwise any
licenses or rights other than those expressly granted in this
Agreement.
10.5 Each of the PARTIES represents and warrants that it has not
accepted and will not accept any commitments or restrictions which will
materially affect the value of the rights granted in this Agreement to the other
PARTY.
10.6 If BD is sued by a third party charging infringement of a patent
resulting from the manufacture, sale, offer to sell or use of a LICENSED
PRODUCT, BD shall promptly notify SHPI. BD shall have the right to defend
against such charge of infringement, and during the period in which such
litigation is pending, **.
10.7 **
10.8 LICENSOR MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, WITH
RESPECT TO THE LICENSED INTELLECTUAL PROPERTY NOT EXPRESSLY SET FORTH IN THIS
AGREEMENT. THE LICENSED INTELLECTUAL PROPERTY IS MADE AVAILABLE TO LICENSEE
STRICTLY ON AN "AS IS" BASIS. LICENSOR DOES NOT WARRANT THAT THE LICENSED
INTELLECTUAL PROPERTY IS ERROR FREE OR THAT IT WILL MEET LICENSEE'S
REQUIREMENTS. ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE ARE EXPRESSLY DISCLAIMED AND EXCLUDED.
-----------------
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
10.9 LICENSEE will in all material respects comply with all applicable
local, foreign and international law during the term of this Agreement. LICENSEE
further agrees to register this Agreement as, where, and when required by law,
rule, or regulation of any government or governmental entity, and to pay when
due all costs and fees connected therewith, and to otherwise fully comply with
all applicable laws, rules, and regulations of any government or governmental
authority.
10.10 If BD is sued by a third party as a result of SHPI's selling or
licensing any product under the rights reserved to itself, SHPI shall hold BD
free, clear, and harmless from any and all costs and expenses of such
litigation, including attorneys' fees.
10.11 LICENSEE hereby covenants that it will not, directly or
indirectly, export, license, distribute, sell, transfer or dispose of any
products sold as a result of this Agreement to or within any country in
contravention of any applicable laws, including but not limited to export
control laws. LICENSEE shall require that its distributors covenant to comply
with the prohibitions and restrictions set forth in the prior sentence. If
LICENSEE shall become aware that one of its distributors has exported or
distributed LICENSED PRODUCT in contravention of any applicable law, LICENSEE
shall immediately notify SHPI thereof. LICENSEE shall then immediately (i) cease
making LICENSED PRODUCT available to such distributor, and (ii) use its best
efforts to prevent any further contravention of law by such distributor.
XI. CONFIDENTIAL INFORMATION
11.1 The term "Confidential Information" shall mean the terms and
conditions of this Agreement and all financial, technical and other information,
including all copies thereof (including, without limitation, all agreements,
discoveries, ideas, designs, specifications, drawings, techniques, models, data,
programs, documentation, processes, know-how, customer lists, marketing plans,
books, logs, charts, records, studies, reports, etc.) which may be furnished or
disclosed to recipient by, or acquired by recipient directly or indirectly from,
the disclosing PARTY or its Affiliates, including as a result of an inspection
of any facility of the disclosing PARTY or its Affiliates, or disclosing PARTY's
licensors, licensees or customers. To be considered Confidential Information,
any written information must be marked "confidential" and any information
disclosed in any form other than a writing must be reduced to writing with
thirty (30) days of the initial disclosure of such information, marked
"confidential," and provided to the recipient. For purposes of this Agreement,
Confidential Information shall not include, and the obligations herein shall not
apply to, information that: (a) was legally in the public domain prior to the
time of disclosure to the recipient, (b) is now or subsequently becomes
generally available to the public through no fault of recipient; (c) recipient
can demonstrate was rightfully in its possession prior to disclosure to
recipient by the disclosing PARTY; (d) is independently developed by recipient
without the use of any Confidential Information provided by the disclosing
PARTY; (e) recipient rightfully obtains from a third party who has the right,
without obligation to the disclosing PARTY, to transfer or disclose such
information; or (f) is required by law, regulation, rule, act, or order of any
governmental authority or agency to be disclosed by the receiving PARTY
provided, that in all cases the PARTY receiving the Confidential Information
shall, to the extent permitted, give the other PARTY prompt notice of the
pending disclosure and shall cooperate in such other PARTY's attempts, at such
other PARTY's sole expense, to seek an order maintaining the confidentiality of
the Confidential Information.
11.2 Each PARTY agrees not to use any Confidential Information
disclosed by the other PARTY for any purpose except as outlined in this
Agreement. Each PARTY agrees not to disclose any Confidential Information
received from the other PARTY to third parties or to employees of the recipient,
except to those employees who are required to have the Confidential Information
in connection with the performance of such PARTY hereunder.
11.3 Each PARTY agrees to take all reasonable measures to protect the
secrecy of and prevent the disclosure and unauthorized use of the other PARTY's
Confidential Information. Without limiting the foregoing, the recipient shall
take at least those measures that the recipient takes to protect its own
Confidential Information of a like nature. A recipient shall immediately notify
the disclosing PARTY in the event that it becomes aware of any unauthorized use
or disclosure of the disclosing PARTY's Confidential Information.
11.4 All Confidential Information is provided "as is". Neither PARTY
makes any warranties, express, implied or otherwise, regarding its accuracy,
completeness or performance.
11.5 All documents and other tangible objects containing or
representing Confidential Information of a disclosing PARTY and all copies
thereof which are in the possession of a recipient shall be and remain the
property of the disclosing PARTY and shall be promptly returned to the
disclosing PARTY upon the disclosing PARTY's request, unless the retention of
such Confidential Information is required in connection with any performance or
usage under this Agreement and subject to retention of one (1) complete record
copy thereof to monitor compliance with this Agreement.
11.6 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 other PARTY pursuant to this
Agreement.
11.7 The confidentiality requirements under this Article XI shall
survive until such time as all Confidential Information disclosed hereunder
becomes publicly known and made generally available through no action or
inaction of recipient, not to exceed a maximum of three (3) years from the
termination of this Agreement.
11.8 Effective from the date of commencement of discussions concerning
this License Agreement, any person who makes or provides an oral or written
statement to any Party (or any person for whose benefit a statement is made or
provided to a Party), as to the potential tax consequences that may result from
this License Agreement, shall provide express written authorization to that
Party in substantially the following form:
[Name of Party] (and each employee, representative, or other agent of
[name of Party]) may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of this
License Agreement and all materials of any kind, including opinions or
other tax analyses that are provided to [name of Party] relating to
such tax treatment and tax structure. However, the foregoing does not
constitute an authorization to disclose the identity of any existing or
future Party to this License Agreement or their affiliates, agents or
advisers, or, except to the extent relating to such tax structure or
tax treatment, any specific pricing terms or commercial or financial
information.
Such written authorization shall be provided no later than 30 days from the day
the person providing such written authorization first makes or provides a
statement to a Party regarding the tax consequences of the transaction.
XII. RIGHTS AND OBLIGATIONS UPON TERMINATION
Any termination of this Agreement shall be without prejudice to the
rights of either PARTY against the other which may have accrued up to the date
of such termination and shall be without prejudice to the right of LICENSEE (i)
to dispose of any inventory of the LICENSED PRODUCT manufactured up to the date
of such termination, and (ii) for a period of up to six (6) months following
termination, to complete binding contracts then in existence subject to the
payments thereon as agreed to herein.
XIII. ASSIGNMENT
This Agreement shall not be assignable by either PARTY without the
prior written consent of the other PARTY, except to the successor or assignee of
all or substantially all of its business. It is expressly understood and agreed,
however, that the assignor of any rights hereunder shall remain bound by the
obligations thereof.
XIV. MISCELLANEOUS
14.1 Nothing contained herein shall constitute the PARTIES as partners
or joint venturers and neither PARTY shall be the agent of or have the power to
incur any obligations on behalf of or to pledge the credit of the other PARTY in
any manner whatsoever.
14.2 The failure or delay by either PARTY hereto in the enforcement of
any rights under this Agreement shall not be deemed a waiver or modification
thereof and either PARTY may within the time provided by applicable law commence
appropriate legal proceedings to enforce any or all of such rights.
14.3 Notices given pursuant to this Agreement shall be sent to the
addresses set forth in the opening paragraph of this Agreement, or at such other
address as a PARTY may specify in accordance herewith, and shall be deemed to
have been received according to the following provisions:
(a) In the case of the personal delivery of the notice, the
notice shall be deemed to have been received on the actual day of
delivery or on the next following working day if delivered after 5:00
p.m. on any working day.
(b) If notice is sent by certified mail to the address of the
PARTY referred to herein or such other address as may be provided in
writing by a PARTY from times to time, such notice to be deemed to have
been received not later than on the fifth (5th) day after posting or
earlier, if receipt is confirmed in writing.
(c) If notice is sent by cable, telegram, e-mail, overnight
courier, or facsimile transmission, the notice shall be deemed to have
been received on the working day next following the day of sending
(provided proof can be shown that the notice was received by the
intended recipient).
Notices sent to SHPI shall be addressed to:
President
Specialized Health Products, Inc.
000 Xxxx 000 Xxxxx
Xxxxxxxxx, Xxxx 00000
Fax: (000) 000-0000
Notices sent to LICENSEE shall be sent to:
Vice President
Infusion Therapy Systems and Technique Products
Becton, Xxxxxxxxx and Company
0000 Xxxxx Xxxxx Xxxxxx Xxxxx, Xxxx 00000
Fax: (000) 000-0000
with a copy to:
Chief Intellectual Property Counsel
Becton Xxxxxxxxx and Company
0 Xxxxxx Xxxxx
Xxxxxxxx Xxxxx, Xxx Xxxxxx 00000
Fax: (000) 000-0000
14.4 This Agreement sets forth the entire agreement and understanding
between the PARTIES relating to the subject matter of this Agreement and merges
all prior negotiations between the PARTIES. Neither of the PARTIES shall be
bound by any conditions, undertakings, warranties or representations with
respect to the subject matter of this Agreement other than as expressly provided
in this Agreement, or if subsequent to the date hereof, as may be made in
writing and signed by the PARTIES to be bound thereby.
14.5 No pubic announcement or other disclosure to any third party
concerning the terms or existence of this Agreement or of the relationship
created thereby shall be made, either directly or indirectly, by either PARTY
except as may be legally required, without first obtaining the approval of the
other PARTY and agreement upon the nature and text of such announcement or
disclosure, which approval shall not be unreasonably withheld. The PARTY
desiring to make such public announcement or other disclosure shall inform the
other PARTY of the proposed announcement or disclosure in reasonably sufficient
time prior to public release and shall provide the other PARTY with a written
copy thereof, in order to allow such other PARTY to comment upon and revise such
announcement or disclosure. If legally required to disclose any information
regarding this Agreement, the PARTY so required will consult with the other
PARTY regarding such disclosure and shall make such reasonable changes as may be
requested by such other PARTY in the text of such disclosure, to the extent
compatible with the legal requirements of such disclosure.
14.6 If any term or provision of this Agreement shall for any reason be
held invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other term or provision
hereof, and this Agreement shall be interpreted and construed as if such term or
provision, to the extent the same shall have been held to be invalid, illegal or
unenforceable, had never been contained herein.
14.7 No waiver or modification of any of the terms of this Agreement
shall be valid unless in writing and signed by an authorized representative of
the Parties. Failure by either Party to enforce any rights under this Agreement
shall not be construed as a waiver of such rights, nor shall a waiver by either
Party in one or more instances be construed as constituting a continuing waiver
or as a waiver in other instances.
14.8 Should a dispute arise under this Agreement, the PARTIES shall
consider resolution of the dispute and, their sole discretions, may elect to
resolve such dispute in accordance with the dispute resolution process set forth
in Exhibit 14.8 hereof. The dispute resolution process of Exhibit 14.8 shall
only proceed upon the mutual consent of the PARTIES. This shall not be construed
as requiring that the PARTIES agree to resolve any such dispute in accordance
with Exhibit 14.8.
14.9 The headings used in this Agreement are for convenience and
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
14.10 This Agreement shall be construed in accordance with the laws of
the State of Utah, without regard to its conflict of laws provisions.
IN WITNESS WHEREOF, the PARTIES hereto have caused this Agreement to be
executed as of the date first above written.
BECTON, XXXXXXXXX AND COMPANY SPECIALIZED HEALTH PRODUCTS, INC.
By: /s/ Grank Guido By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------- ---------------------------------
Xxxxx Xxxxx Xxxxxxx X. Xxxxxxx, President
President, Medical Surgical
EXHIBIT 1.4
BD Code Description
1 ** **
2 ** **
3 ** **
4 ** **
5 ** **
6 ** **
7 ** **
8 ** **
9 ** **
10 ** **
11 ** **
12 ** **
13 ** **
14 ** **
15 ** **
16 ** **
17 ** **
18 ** **
19 ** **
20 ** **
21 ** **
22 ** **
23 ** **
24 ** **
25 ** **
26 ** **
27 ** **
--------------------
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
EXHIBIT 1.6
COUNTRY SERIAL NO. FILING DATE SHPI DOCKET
------------------ ----------------- ---------------- -----------------
** ** ** **
** ** ** **
** ** ** **
** ** ** **
------------------ ----------------- ---------------- -----------------
---------------
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
EXHIBIT 14.8
ALTERNATIVE DISPUTE RESOLUTION
The parties recognize that bona fide disputes as to certain matters may
arise from time to time during the term of this Agreement that relate to either
party's rights and/or obligations. To have such a dispute resolved by this
Alternative Dispute Resolution (ADR) provision, a party first must send written
notice of the dispute to the other party for attempted resolution by good faith
negotiations between their respective officers (or their equivalents) within
twenty-eight (28) days after such notice is received (all references to "days"
in this Exhibit 14.8 are to calendar days).
If the matter has not been resolved within twenty-eight (28) days of
the notice of dispute, either party (the "Notifying Party") may notify the other
(the "Receiving Party") in writing that it intends to initiate an ADR
proceedings as provided herein to resolve the dispute ("Written Notice"). If the
Receiving Party agrees to ADR proceedings, either party may initiate an ADR
proceeding as provided herein. The parties shall have the right to be
represented by counsel in such a proceeding.
1. To begin an ADR proceeding, a party shall provide written
notice to the other party of the issues to be resolved by ADR,
including the specific provisions of the Agreement in issue.
Within fourteen (14) days after its receipt of such notice,
the other party may, by written notice to the party initiating
the ADR, add additional issues to be resolved within the same
ADR.
2. Within twenty-one (21) days following receipt of the original
ADR notice, the parties shall select a mutually acceptable
neutral to preside in the resolution of any disputes in this
ADR proceeding. If the parties are unable to agree on a
mutually acceptable neutral within such period, either party
may request the President of the CPR Institute for Dispute
Resolution (CPR), 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, to select a neutral pursuant to the following
procedures:
(a) The CPR shall submit to the parties a list of not
less than five (5) candidates within fourteen (14)
days after receipt of the request, along with a
Curriculum Vitae for each candidate. No candidate
shall be an employee, director, or shareholder of
either party or any of their subsidiaries or
affiliates.
(b) Such list shall include a statement of disclosure by
each candidate of any circumstances likely to affect
his or her impartiality.
(c) Each party shall number the candidates in order of
preference (with the number one (1) signifying the
greatest preference) and shall deliver the list to
the CPR within seven (7) days following receipt of
the list of candidates. If a party believes a
conflict of interest exists regarding any of the
candidates, that party shall provide a written
explanation of the conflict to the CPR along with its
list showing its order of preference for the
candidates. Any party failing to return a list of
preferences on time shall be deemed to have no order
of preference.
(d) If the parties collectively have identified fewer
than three (3) candidates deemed to have conflicts,
the CPR immediately shall designate as the neutral
the candidate for whom the parties collectively have
indicated the greatest preference, excluding any
candidate deemed by a party to have conflicts. If a
tie should result between two candidates, the CPR may
designate either candidate. If the parties
collectively have identified three (3) or more
candidates deemed to have conflicts, the CPR shall
review the explanations regarding conflicts and, in
its sole discretion, may either (i) immediately
designate as the neutral the candidate for whom the
parties collectively have indicated the greatest
preference, or (ii) issue a new list of not less than
five (5) candidates, in which case the procedures set
forth in subparagraphs 2(a) - 2(d) shall be repeated.
3. No earlier than twenty-eight (28) days or later than fifty-six
(56) days after selection, the neutral shall hold a hearing to
resolve each of the issues identified by the parties. The ADR
proceeding shall take place at a location agreed upon by the
parties. If the parties cannot agree, the neutral shall
designate a location other than the principal place of
business of either party or any of their subsidiaries or
affiliates.
4. At least seven (7) days prior to the hearing, each party shall
submit the following to the other party and the neutral:
(a) a copy of all exhibits on which such party intends to
rely in any oral or written presentation to the
neutral;
(b) a list of any witnesses such party intends to call at
the hearing, and a short summary of the anticipated
testimony of each witness;
(c) a proposed ruling on each issue to be resolved,
together with a request for a specific damage award
or other remedy for each issue. The proposed rulings
and remedies shall not contain any recitation of the
facts or any legal arguments and shall not exceed one
(1) page per issue; and
(d) a brief in support of such party's proposed rulings
and remedies, provided that the brief shall not
exceed twenty (20) pages. This page limitation shall
apply regardless of the number of issues raised in
the ADR proceeding.
Except as expressly set forth in subparagraphs 4(a) - 4(d), no
discovery shall be required or permitted by any means, including
depositions, interrogatories, requests for admissions, or production of
documents.
5. The hearing shall be conducted on two (2) consecutive days and
shall be governed by the following rules:
(a) Each party shall be entitled to five (5) hours of
hearing time to present its case. The neutral shall
determine whether each party has had the five (5)
hours to which it is entitled.
(b) Each party shall be entitled, but not required, to
make an opening statement, to present regular and
rebuttal testimony, documents or other evidence, to
cross-examine witnesses, and to make a closing
argument. Cross-examination of witnesses shall occur
immediately after their direct testimony, and
cross-examination time shall be charged against the
party conducting the cross-examination.
(c) The party initiating the ADR shall begin the hearing
and, if it chooses to make an opening statement,
shall address not only issues it raised but also any
issues raised by the responding party. The responding
party, if it chooses to make an opening statement,
also shall address all issues raised in the ADR.
Thereafter, the presentation of regular and rebuttal
testimony and documents, other evidence, and closing
arguments shall proceed in the same sequence.
(d) Except when testifying, witnesses shall be excluded
from the hearing until closing arguments.
(e) Settlement negotiations, including any statements
made therein, shall not be admissible under any
circumstances. Affidavits prepared for purposes of
the ADR hearing also shall not be admissible. As to
all other matters, the neutral shall have sole
discretion regarding the admissibility of any
evidence.
6. Within seven (7) days following completion of the hearing,
each party may submit to the other party and the neutral a
post-hearing brief in support of its proposed rulings and
remedies, provided that such brief shall not contain or
discuss any new evidence and shall not exceed ten (10) pages.
This page limitation shall apply regardless of the number of
issues raised in the ADR proceeding.
7. The neutral shall rule on each disputed issue within fourteen
(14) days following completion of the hearing. Such ruling
shall adopt in its entirety the proposed ruling and remedy of
one of the parties on each disputed issue but may adopt one
party's proposed rulings and remedies on some issues and the
other party's proposed rulings and remedies on other issues.
The neutral shall not issue any written opinion or otherwise
explain the basis of the ruling.
8. The neutral shall be paid a reasonable fee plus expenses.
These fees and expenses, along with the reasonable legal fees
and expenses of the prevailing party (including all expert
witness fees and expenses), the fees and expenses of a court
reporter, and any expenses for a hearing room, shall be paid
as follows:
(a) If the neutral rules in favor of one party on all
disputed issues in the ADR, the losing party shall
pay 100% of such fees and expenses.
(b) If the neutral rules in favor of one party on some
issues and the other party on other issues, the
neutral shall issue with the rulings a written
determination as to how such fees and expenses shall
be allocated between the parties. The neutral shall
allocate fees and expenses in a way that bears a
reasonable relationship to the outcome of the ADR,
with the party prevailing on more issues, or on
issues of greater value or gravity, recovering a
relatively larger share of its legal fees and
expenses.
9. The rulings of the neutral and the allocation of fees and
expenses shall be binding, non-reviewable, and non-appealable
(except in the case of fraud or bad faith on the part of the
neutral), and may be entered as a final judgment in any court
having jurisdiction.
10. Except as provided in paragraph 9 or as required by law, the
existence of the dispute, any settlement negotiations, the ADR
hearing, any submissions (including exhibits, testimony,
proposed rulings, and briefs), and the rulings shall be deemed
Confidential Information (except for information contained in
exhibits or testimony that is already public or later becomes
public through no fault of the parties or that is lawfully
disclosed to a party through an independent third party). The
neutral shall have the authority to impose sanctions for
unauthorized disclosure of Confidential Information.
