LICENSE AGREEMENT
NOTE: PORTIONS OF THIS EXHIBIT MARKED WITH "*'S" HAVE BEEN OMITTED PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. A COPY OF THIS EXHIBIT
IN ITS ENTIRETY HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
THIS AGREEMENT, entered into this 16th day of January, 1995, by and
between Michigan Critical Care Consultants, Inc., a Michigan corporation with
its principal place of business at 000 Xxxxxxx Xxxxxxxxxx Xxxxx, Xxxxx X, Xxx
Xxxxx, Xxxxxxxx 00000 (hereinafter "MC3") and AVECOR Cardiovascular Inc., a
Minnesota corporation with its principal place of business at 00000 Xxxxxx Xxxx
0, Xxxxxxxx, Xxxxxxxxx 00000 (hereinafter "AVECOR").
WHEREAS, the Regents of the University of Michigan, a constitutional
corporation of the State of Michigan (hereinafter "Michigan"), owns, controls
or has rights with respect to certain technology relating to the design of
passively filling blood pumps for use in connection with respiratory and/or
circulatory support;
WHEREAS, MC3 and Michigan have entered into a license agreement dated as
of August 8, 1991 (hereinafter, the "Michigan License Agreement"), a copy of
which is attached hereto as Exhibit I, under which Michigan has granted MC3 an
exclusive license to such technology, including the right to sublicense such
technology;
WHEREAS, MC3 has developed and owns certain technology which is or may be
useful in connection with AVECOR's manufacture, use, or sale of passively
filling blood pumps;
WHEREAS, MC3 is willing to grant to AVECOR a license to the Michigan
technology and certain of MC3's technology, and AVECOR is willing to accept
such license upon and subject to the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
set forth below, the parties mutually agree as follows:
ARTICLE
1.
DEFINITIONS
The parties agree that the following words, terms and phrases where
written with an initial capital letter shall, unless the context otherwise
indicates, have the following meanings for purposes of this Agreement:
(a) "Michigan Technology" shall mean Patents and Know-how licensed to MC3
under the Michigan License Agreement and relating to passively filling blood
pumps for use in connection with respiratory and/or circulatory support,
including specifically technology covered by U.S. Patents 5,222,880, 5,281,112
and 5,342,182 together with any reissues, continuations, extensions,
divisionals, foreign patents and patent applications based thereon and more
fully described in Michigan's Intellectual Property Office File Numbers 584 and
585.
(b) "MC3 Technology" shall mean Patents and Know-how developed, owned or
otherwise licensable by MC3 which are or may be useful in connection with the
manufacture, use or sale of passively filling blood pumps and more specifically
described in Exhibit II hereto, as such Exhibit may be amended form time to
time by the parties in writing.
(c) "Technology" shall mean the Michigan Technology and the MC3
Technology.
(d) "Product" shall mean that certain blood pump for use in connection
with respiratory and/or circulatory support (exclusive of applications relating
to pumping breathable liquids) and more specifically described in Exhibit III
attached hereto, including Improvements as defined below, and specifically
encompassing both Disposables and Hardware, as such terms are defined below.
(e) "Patents" shall mean all patents or applications therefor or
reissues, continuations or extensions thereof relating to Products and which
are owned, controlled, acquired or otherwise licensable by a party hereto
during the term of this Agreement, including specifically the Licensed Patents
as defined in the Michigan License Agreement.
(f) "Know-how" shall mean all trade secrets and non-patented information,
such as confidential information, inventions, intellectual property,
discoveries, improvements, modifications, and enhancements, techniques,
concepts, data, technical information and specifications (including
engineering, testing and manufacturing specifications), diagrams,
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schematics, charts and lists relating to Products or the Technology and
owned, controlled, acquired or otherwise licensable by a party hereto during
the term of this Agreement.
(g) "Improvements" shall mean Know-How or Patents relating to
modifications of or enhancements to Products developed by either party during
the term of this Agreement which serve to improve, correct, update, adjust or
change the design, performance characteristics, specifications or manufacturing
processes of Products.
(h) "Documentation" shall mean those elements of Know-how and other items
of relevant information which are in writing or other tangible form including,
without limitation, drawings, diagrams, blueprints, computer programs,
technical publications, manuals, designs and artwork which relate to the
manufacture, inspection, quality control, installation, maintenance, testing,
operation and/or repair of Products.
(i) "Subsidiary" shall mean any corporation more than fifty percent (50%)
of whose securities having ordinary voting power for the election of directors
are owned or controlled directly or indirectly by either party hereto.
(j) "Unit" shall mean any individual Disposable or Hardware unit.
(k) "Disposables" shall mean, with respect to Products, the disposable
pump chamber.
(l) "Hardware" shall mean, with respect to Products, the control console
together with the pump rotor, rollers, motor, chamber supports, tensioning
mechanism and related parts and equipment.
(m) "Net Sales Price" shall mean the price received by AVECOR or its
sublicensees from customers for the sale of Products only, expressly excluding
revenue derived from other value added products or treatments, and less
freight, duties, taxes, royalties paid to other licensors on treatment
technologies applied to Products, discounts, returns and refunds; provided,
such deductions are separately identified in customer invoices or specifically
documented in the books and records of AVECOR kept pursuant to Article 4.7
hereof and set forth in the reports provided by AVECOR to MC3 pursuant to
Article 4.6 hereof. Provided however that when the Disposable Products are
packaged as a system and sold with other disposable medical devices and at a
discounted sales price, then the net sales price assignable to
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the Disposable Products shall be discounted at a rate not to exceed the
discount rate applied to the other disposable medical devices included in the
packaged system.
(n) "Effective Date" shall mean the date set forth on the first page of
this Agreement, being the date as of which the parties have duly executed this
Agreement.
ARTICLE
2.
LICENSE GRANTS
2.1 MC3'S GRANT. MC3 hereby grants to AVECOR, subject to all the terms of
this Agreement, an exclusive, non-transferable, royalty-bearing and worldwide
right and license under Technology, Patents and Know-how owned, controlled,
acquired or otherwise licensable by MC3 during the term of this Agreement to
make, have made, use, lease, sell or otherwise transfer the Products in
connection with respiratory and/or circulatory support applications, subject
to:
(a) those rights reserved to Michigan, the United States Government
and/or third parties under Articles 3.3 and 3.4 of the Michigan License
Agreement;
(b) the right of MC3 to utilize the Technology in connection with
applications relating to breathable fluids or to make, have made, use,
lease and sell products relating to breathable fluids;
(c) the right of MC3 to utilize the Technology in connection with
applications other than respiratory and/or circulatory support and to
make, have made, use, lease and sell products other than products in
connection with respiratory and/or circulatory support applications; and
(d) the right of MC3 to utilize the Technology in connection with
its continued internal research, development and testing of the Products.
2.2 AVECOR'S GRANT. In the event AVECOR develops any Improvements to the
Technology or Products during the term of this Agreement, AVECOR shall and
hereby does grant to MC3, subject to all the terms of this Agreement, a non-
exclusive, non-transferable, and worldwide right and license under Patents and
Know-how owned, controlled, acquired or
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otherwise licensable by AVECOR during the term of this Agreement to make,
have made, use, lease, sell or otherwise transfer the Products incorporating
any or all such Improvements for all purposes (including specifically for
applications to breathable fluids) other than in connection with respiratory
and/or circulatory support applications. The license granted by AVECOR under
this Article 2.2 shall include the right to grant sublicenses to third
parties; provided, that AVECOR shall receive the benefit of any Improvements
developed by MC3's sublicensees with respect to Products, and AVECOR shall
further receive a proportionate and commercially reasonable royalty to be
mutually agreed upon by MC3 and AVECOR payable out of royalties received by
MC3 from its sublicensees related to such Improvements.
2.3 SUBLICENSES. AVECOR shall not grant sublicenses under rights obtained
hereunder from MC3 without the prior written consent of both MC3 and Michigan;
provided, that MC3 hereby agrees that AVECOR may grant sublicenses under rights
received pursuant to Article 2.1 above to any of its Subsidiaries for so long
as they shall remain Subsidiaries of AVECOR, and AVECOR shall be entitled to
sublicense third party contractors for the limited purpose of manufacturing
parts and components of Products for sale by AVECOR, provided such third party
contractors agree in writing to maintain the confidentiality of MC3's Know-how
in accordance with the terms of Article 5 hereof and to promptly return all
Documentation provided to them upon termination of their contracts with AVECOR.
2.4 SCOPE OF GRANT. No license is granted by either party to the other,
either directly or by implication, estoppel or otherwise, under any Patents or
Know-how other than specifically granted in Articles 2.1, 2.2 and 2.3 above.
Nothing herein shall require either party to disclose to the other proprietary
or confidential information received by such party from third parties which
confidential information such party is precluded from disclosing to others. No
right, license or privilege is granted hereunder by either party to the other
to use such party's names, logos, trademarks or service marks, whether
registered or not.
ARTICLE
3.
KNOW-HOW AND DOCUMENTATION TRANSFER
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3.1 INITIAL DOCUMENTATION. Within thirty (30) days of the written request by
AVECOR, MC3 shall provide AVECOR with all Documentation within the scope of the
license grant contained in Article 2.1 above in reproducible form.
3.2 SUBSEQUENT DOCUMENTATION. In addition to the Documentation to be
delivered pursuant to Article 3.1 above and within a reasonable time after it
becomes available, each party shall deliver to the other party all
Documentation within the scope of the license grants contained in Articles 2.1
and 2.2 above relating to Improvements to the Products developed by the
delivering party during the term of this Agreement. Such Documentation shall
likewise be in reproducible form.
3.3 STANDARDS OF MEASUREMENT. All Documentation provided by one party to the
other in accordance with this Agreement shall be in the English language and
shall conform to the standards of measurement then in use by the party
delivering the Documentation.
3.4 TECHNICAL ASSISTANCE. In partial consideration for the technical
assistance and license fee set forth in Article 4.1 below and at the request of
AVECOR, MC3 shall provide AVECOR at AVECOR's facilities with up to eighty (80)
hours of technical assistance through salaried employees of MC3 during a period
of twelve (12) months from the date of this Agreement. All travel time of such
MC3 employees to and from AVECOR's facilities shall count against the above
eighty (80) hours of technical assistance. All requests for such technical
assistance by AVECOR at its facilities must require no less than six (6) hours
of scheduled services per request. Thereafter, each party shall provide the
other party with a reasonable amount of technical assistance as requested by
the other party in order to enable such other party to reduce to practical
application Know-how transferred to it hereunder. The party receiving such
technical assistance shall pay the party providing assistance at the providing
party's then current rates for such services billed in one-half hour
increments, plus reasonable travel and living expenses actually incurred in the
course of providing such technical assistance. The party receiving technical
assistance shall have the right to approve the individual or individuals
providing such technical assistance prior to the initial rendering of such
services.
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3.5 GOVERNMENT LICENSES AND APPROVALS. MC3 shall assist AVECOR in obtaining
any governmental licenses or approvals which may be required for the
manufacture, use and/or sale of the Products as contemplated by this Agreement.
All such assistance provided by MC3 shall count against the eighty (80) hours
of technical assistance to be provided by MC3 under Article 3.4 above. MC3
acknowledges and agrees that AVECOR shall have the right to make all filings
and obtain all licenses and approvals in AVECOR's name from the Food and Drug
Administration (the "FDA") under the Federal Food, Drug and Cosmetic Act (the
"Act") and regulations promulgated thereunder, and all other U.S. and foreign
governmental determinations which are necessary to permit the commercial
distribution of the Products within the United States and abroad. The cost of
obtaining any requisite U.S. or foreign governmental approvals, licenses or
permits shall be borne by AVECOR.
ARTICLE
4.
CONSIDERATION
4.1 TECHNICAL ASSISTANCE AND LICENSE FEE. In consideration for the
Documentation delivered under Article 3.1 above, AVECOR shall pay to MC3 a
technical assistance and license fee of ********************************. Such
fee shall be payable by certified or cashier's check in two (2) equal
installments. One-half of such fee shall be due within ten (10) days of the
execution of this Agreement, and one-half shall be due upon submission by
AVECOR to the FDA of a request for approval under Section 510(K) of the Act and
the regulations thereunder.
4.2 ROYALTIES. In consideration for the rights and licenses granted to AVECOR
by MC3 under Article 2.1 hereof, AVECOR shall pay to MC3 royalties as follows:
(a) ****************************************************************
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**************************************************************************
******************************************.
(b) ****************************************************************
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******************************************.
4.3 MINIMUM ROYALTIES. AVECOR agrees to pay to MC3 a minimum annual royalty
as set forth below. AVECOR's obligation to pay minimum annual royalties shall
commence when AVECOR receives FDA approval with respect to a submission by
AVECOR under Section 510(K) of the Act for U.S. marketing clearance of a
Product developed under the Technology. Annual minimum royalties for each year
commencing with FDA approval under this Article 4.3 shall be as follows:
***** ********
***** ********
***** ********
***** ********
In the event AVECOR exercises its option pursuant to Article 9.1 to extend
the term of this Agreement in accordance with such Article 9.1, the
minimum annual royalty for the ********************** during the term of
this Agreement shall be **************************************************
**************************************************************************
***************.
4.4 PAYMENTS. Royalties on Disposables shall become due and payable upon the
delivery of the Disposables by AVECOR or its sublicensees to the customer, and
AVECOR shall pay all such royalties due and payable to MC3 within thirty (30)
days of the close of the calendar quarter during the term of this Agreement in
which the Products are delivered. Royalties on Hardware shall become due and
payable from and after the first calendar year in which AVECOR realizes
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a net profit from the sale of Hardware. Such royalties shall be due and
payable within sixty (60) days after the close of such year and every
calendar year thereafter during the term of this agreement in which AVECOR
realizes a net profit on the sale of Hardware during such year. All payments
for technical assistance provided by one party to the other pursuant to
Article 3.4 hereof shall be payable within thirty (30) days of the date of
the providing party's invoice therefor. All payments shall be made by bank
transfer to the bank or banks designated in writing by MC3 or AVECOR as
applicable from time to time during the term of this Agreement. All payments
shall be made in United States dollars. All amounts not paid when due and
payable hereunder shall bear interest from the date such amounts are due and
payable at a rate of two (2) points above the prime lending rate as
established by the Chase Manhattan Bank, N.A. in New York City, New York, or
at such lower rate as may be required by law. Any royalties due hereunder
based on sales in currencies other than United States dollars shall be
determined by converting such foreign currencies into their equivalent in
United States dollars at the exchange rate of such currency as reported in
the WALL STREET JOURNAL on the last business day of the quarter during which
such payments accrue.
4.5 TAXES. Except as provided in the definition of Net Sales Price, all fees
and royalty payments due to MC3 under Articles 4.1, 4.2 and 4.3 above shall be
without deduction for sales, use, excise, personal property or other similar
taxes or other duties imposed on such payments by the government of any country
or any political subdivision thereof and any and all such taxes shall be
assumed by and paid by AVECOR.
4.6 REPORTS. No later than forty-five (45) days after the close of each
calendar quarter during each year of this Agreement, AVECOR shall provide MC3
with a report relating to the prior calendar quarter setting forth the gross
sales and total Net Sales Price of Products sold, the number of Units shipped,
the amounts payable as royalties for the calendar quarter just ended, and the
various calculations used to arrive at all such amounts, including the
quantity, description (nomenclature and type designation), country of
manufacture and, to the extent reasonably available, country of sale of
Products. In case no royalties are due for any calendar quarter, AVECOR shall
so report. The reports provided for hereunder shall be certified by an
9
authorized representative of AVECOR to be correct to the best of AVECOR's
knowledge and information.
4.7 BOOKS AND RECORDS. AVECOR shall keep at its expense full and accurate
books and records as may be necessary for the purpose of determining the
amounts of royalties payable to MC3 pursuant to Articles 4.2 and 4.3 above.
AVECOR shall make such books and records available to MC3 or its accountants or
other representatives upon written request by MC3 during normal business hours
throughout the term of this Agreement and for a period of six (6) years after
the date of origination of any such books or records for the limited purpose of
verifying AVECOR's payments of royalties. The rights and obligations of this
Article 4.7 shall survive termination of this Agreement.
4.8 BEST EFFORTS OBLIGATION. During the term of this Agreement, AVECOR agrees
to use its best efforts to develop, test, manufacture, market, sell and
technically support the Products and further agrees to use its best efforts to
obtain all necessary approvals from the FDA and all other governmental agencies
whose approval is necessary to manufacture, market or sell the Products.
AVECOR agrees that its best efforts shall include, at a minimum, the obligation
to use at least the same level of effort in connection with the Products as it
uses in connection with its other products. In the event of an assignment by
AVECOR of this Agreement pursuant to Article 11.2(i) hereof to any successor in
interest to the business of AVECOR, in addition to the requirements of Article
11.2 with respect to minimum royalties, AVECOR agrees to secure, as a condition
of such assignment, that the assignee shall expressly agree in writing to the
fulfillment of the terms of this Article 4.8.
ARTICLE
5.
CONFIDENTIALITY
5.1 PROTECTION OF KNOW-HOW. Each party shall, and shall require its
employees, agents and sublicensees to, protect all Know-how, and other
proprietary information, delivered or disclosed to it pursuant to this
Agreement against unauthorized disclosure to third parties during the term of
this Agreement and for three (3) years thereafter by maintaining all such Know-
how in confidence with at least the same degree of care as it uses to maintain
the confidentiality of its
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own information of a confidential nature. Each party shall not divulge and
shall cause its employees, agents and sublicensees not to divulge, in whole
or in part, such Know-how to any third party or to any of its own personnel
not having a need to know during the term of this Agreement and for a period
of three (3) years thereafter; provided, that neither party shall be liable
for the use or disclosure of Know-how which:
(a) was in the possession of the receiving party prior to its
receipt from the disclosing party;
(b) is or becomes part of the public knowledge or literature through
no fault of the receiving party;
(c) is or becomes available to the receiving party from a source
other than the disclosing party and having no obligation to the disclosing
party in respect thereof; or
(d) is made available by the disclosing party to a third party
unaffiliated with the disclosing party on an unrestricted basis.
5.2 SURVIVING OBLIGATION. The obligation of each party to protect against the
unauthorized use or disclosure of Know-how or other proprietary information
shall survive any termination of this Agreement.
5.3 MARKETING DISCLOSURES. Notwithstanding Article 5.1 above, AVECOR shall be
entitled to make such limited and reasonable disclosures of information
concerning the Products as are customary and necessary to market the Products
to its customers.
ARTICLE
6.
WARRANTY AND LIABILITY
6.1 WARRANTY. Each party warrants and represents that it has the legal power
to extend and receive the rights granted hereunder with respect to its Patents
and Know-how. EXCEPT AS PROVIDED ABOVE, MC3, INCLUDING ITS OFFICERS AND
EMPLOYEES, MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND,
EITHER
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EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND ASSUMES NO
RESPONSIBILITIES WHATEVER WITH RESPECT TO THE DESIGN, DEVELOPMENT,
MANUFACTURE, USE, SALE OR OTHER DISPOSITION BY AVECOR OR ITS SUBLICENSEES OF
THE PRODUCTS.
6.2 QUALITY CONTROL. AVECOR warrants and covenants that it will follow the
same quality control standards which AVECOR has adopted or shall in the future
adopt for itself, provided they are reasonably required to maintain Product
quality.
6.3 AVECOR'S INDEMNITY. AVECOR hereby agrees to indemnify and hold harmless
MC3 and Michigan, and their respective officers, employees and agents, from and
against any claim, demand, liability, damages, loss or costs arising out of any
claims of third parties against MC3 or Michigan which arise out of the
manufacture, sale, use or operation of any Products sold or otherwise
transferred by AVECOR, or the use by AVECOR of any invention related to the
Technology. MC3 or Michigan, as appropriate, shall promptly notify AVECOR in
writing of any such claim and shall permit AVECOR through its counsel to defend
the same and shall give AVECOR all available information, assistance and
authority (at AVECOR's expense) to assume such defense. AVECOR shall have
control of the defense of any such claim, including appeals from any judgment
and any negotiations for settlement or compromise of such claim with full
authority to enter into a binding settlement or compromise. MC3 shall be
entitled to participate at its option and expense through counsel of its own
selection, and may join in any legal actions related to any such claims,
demands, damages, losses and expenses.
6.4 INDIRECT OR CONSEQUENTIAL DAMAGES. THE ENTIRE RISK AS TO PERFORMANCE OF
THE PRODUCTS IS ASSUMED BY AVECOR AND ITS SUBLICENSEES. In no event shall MC3,
including its officers and employees, be responsible or liable for any
indirect, special, incidental, or consequential damages or lost profits of
AVECOR or its sublicensees, users or any other individual or entity regardless
or legal theory. The above limitations on liability apply even though MC3, its
officers or employees may have been advised of the possibility thereof.
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6.5 PRODUCT LIABILITY INSURANCE. AVECOR shall purchase and maintain in effect
during the term of this Agreement a policy of product liability insurance which
adequately covers claims that may reasonably arise with respect to any Products
manufactured, sold, licensed or otherwise distributed by AVECOR and which
specifies MC3 and Michigan, including their officers and employees, as
additional insured parties.
6.6 NO REPRESENTATIONS. AVECOR shall not, and shall require that its
sublicensees do not, make any statements, representations or warranties or
accept any liabilities or responsibilities whatsoever to or with regard to any
person or entity which are inconsistent with any disclaimer or limitation
included in this Article 6, except for normal and customary warranties with
respect to the Products for which AVECOR and its sublicensees will be fully and
solely liable.
6.7 MICHIGAN DISCLAIMERS. AVECOR acknowledges the terms of Article 12,
Disclaimer of Warranty and Limitations on Liability, contained in the Michigan
License Agreement and expressly agrees to the disclaimers of warranty made
therein by Michigan, to the limitations on liability set forth therein for the
benefit of Michigan and that the risk of performance of the Products
manufactured by AVECOR hereunder rests solely with AVECOR and not with MC3, all
as more specifically set forth in such Article 12.
ARTICLE
7.
INTELLECTUAL PROPERTY RIGHTS
7.1 NO WARRANTY. Neither party, including its respective officers and
employees, makes any representations or warranties that any Patent is or will
be held valid, or that the manufacture, use, sale or other distribution of any
Products will not infringe upon any patent or other rights not vested in either
party.
7.2 PATENT PROSECUTION, MAINTENANCE. Each party shall control all aspects of
filing, prosecuting, and maintaining its Patents, including foreign filings and
Patent Cooperation Treaty filings. Each Party shall notify the other party of
all information received by it relating to the filing, prosecution and
maintenance of Patents, including any lapse, revocation, surrender,
invalidation or abandonment of any of its Patents. AVECOR shall, at its own
expense, perform all actions
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and execute or cause to be executed all documents necessary to support such
filing, prosecution, or maintenance of both the MC3 and AVECOR Patents..
7.3 SUBSTITUTION RIGHTS. Either party may in its sole discretion decide to
refrain from or to cease prosecuting or maintaining any of its Patents,
including any foreign filing or any Patent Cooperation Treaty filing. In the
event that a party makes such decision with respect to a U.S. patent or patent
application, or with respect to a foreign filing or Patent Cooperation Treaty
filing which has been requested in writing by the other party, such party shall
notify the other party promptly and in sufficient time to permit the other
party at its sole discretion to continue such prosecution or maintenance at the
other party's expense. If the other party elects to continue such prosecution
or maintenance, the party who has elected to cease prosecuting or maintaining
the Patent shall execute such documents and perform such acts at the other
party's expense as may be reasonably necessary for the other party to so
continue such prosecution or maintenance.
ARTICLE
8.
ADDITIONAL COVENANTS
8.1 COMPLIANCE WITH LAWS. AVECOR shall comply with all provisions of any
applicable laws, regulations, rules and orders relating to the licenses granted
hereunder and to the testing, production, transportation, export, packaging,
labeling, sale or use of Products, or otherwise applicable to AVECOR's
activities hereunder. AVECOR shall obtain such written assurances regarding
export and re-export of technical data contained in the Technology as may be
required by U.S. Office of Export Administration regulations, and AVECOR hereby
gives such written assurances to MC3 as may be required under those
regulations.
8.2 PUBLICITY. AVECOR agrees to refrain from using the name of Michigan in
publicity or advertising without the prior written approval of Michigan's
Director of the Intellectual Properties Office. Reports in scientific
literature and presentations of joint research and development work are not
considered publicity.
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8.3 PRODUCT MARKING. AVECOR agrees to xxxx Products with appropriate patent
notices if and when applicable, as approved by MC3, which approval will not be
unreasonably withheld.
8.4 MANUFACTURE IN THE UNITED STATES. AVECOR agrees to substantially
manufacture all Products in the United States.
8.5 GOVERNMENT APPROVALS. It is understood that AVECOR has the responsibility
to do all that is reasonably necessary to obtain any governmental approvals to
manufacture and/or sell the Products.
8.6 REGISTRATION OR RECORDATION. If the terms of this Agreement, or any
assignment or license under this Agreement, are or become such as to require
that this Agreement or license or any part hereof be registered with or
reported to a national or supranational agency in any country or area in which
AVECOR or its sublicensees do business, AVECOR will, at its expense, undertake
such registration or report. Prompt notice and appropriate verification of the
act of registration or report of any agency ruling resulting from such filing
or notice will be supplied by AVECOR to MC3. Any formal recordation of this
Agreement or any license herein granted which is required by the law of any
country as a prerequisite to enforceability of this Agreement or license in the
courts of any such country or for any other reason shall also be carried out by
AVECOR at its expense, and appropriately verified proof of recordation shall be
promptly furnished to MC3.
ARTICLE
9.
TERMINATION
9.1 TERM. This Agreement shall enter into force upon the date first above
written and shall continue in force for an initial term of five (5) years from
the date on which AVECOR receives approval from the FDA with respect to the
submission of a request for the Products under Section 510(K) of the Act and
its regulations. Upon the expiration of such initial term, AVECOR may, at its
sole option, upon written notice to MC3, extend the term of this Agreement
until the expiration of the last to expire of the Patents then covered by this
Agreement or the useful life of the Know-how licensed hereunder, whichever is
longer.
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9.2 TERMINATION. Notwithstanding the provisions of Article 9.1 above, this
Agreement may be terminated in accordance with the following provisions:
(a) By either party immediately upon written notice in the event:
(i) the other party is adjudicated bankrupt, files for
bankruptcy, goes into liquidation, makes an assignment for the
benefit of creditors or otherwise loses control of its business; or
(ii) the other party breaches any material term, condition
or obligation of this Agreement and fails to cure such breach within
sixty (60) days of receiving written notice thereof from the non-
breaching party.
(b) By AVECOR immediately upon written notice in the event that any
of the Technology is adjudicated by a court of competent jurisdiction to
be invalid and such adjudication is final and unappealable; provided that
such Technology is material to the Products and provided further that, in
the event such Technology is adjudicated invalid by a lower court and MC3
appeals from such judgment, MC3 shall indemnify and hold harmless AVECOR
from and against all costs, damages and liabilities incurred by AVECOR and
arising out of the continued use of the Technology and the manufacture,
use, sale and/or lease of Products between the date of the judgment of the
lower court and the final, unappealable adjudication referred to above.
(c) By the party whose performance is not prevented by an event of
Force Majeure on written notice to the other party should an event of
Force Majeure continue for more than six (6) months as provided in Article
10.3 below.
(d) Automatically upon the expiration of sixty (60) days after the
termination of the Michigan License Agreement, subject to AVECOR's rights
pursuant to Article 9.3(e) below.
9.3 CONSEQUENCES OF TERMINATION. The rights and obligations of the parties in
the event of termination shall be as follows:
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(a) event of termination by either party under Article 9.2(a)(i)
above, all licenses granted hereunder shall continue and all obligations
of AVECOR to make payments hereunder in accordance with the terms of this
Agreement shall likewise continue. In addition, in the event of the
commencement of an insolvency or bankruptcy proceeding or reorganization
involving MC3 or if MC3 makes an assignment for the benefit of creditors,
AVECOR shall be entitled to complete access to all Patents, Know-how and
Documentation of MC3 and all embodiments thereof and any Documentation or
Know-how not in AVECOR's possession will promptly be delivered to AVECOR
upon AVECOR's request. In the event of the commencement of an insolvency
or bankruptcy proceeding or reorganization involving AVECOR, MC3 shall
have all of the remedies available to it at law in the event AVECOR is
unable to carry out its obligations under this Agreement. The
representations, warranties and covenants set forth in this Article 9.3(a)
shall survive the execution, delivery, termination or expiration of this
Agreement.
(b) In the event of termination of this Agreement by MC3 under
Article 9.2(a)(ii) or Article 9.2(c) above, the license granted by MC3 to
AVECOR pursuant to Article 2.1 hereof shall terminate. AVECOR shall
cease using all Technology licensed to it hereunder by MC3 for any
purpose, including specifically the manufacture and sale of Products, and
shall return to MC3 all Documentation transferred to AVECOR and shall
destroy all other copies of such Documentation; provided, however, that
AVECOR shall not be so obligated to the extent that such Documentation and
Know-how pertains to the maintenance or repair of Products for which
royalties have been paid and which AVECOR normally provides to its
customers in the ordinary course of business for the purpose of permitting
adequate technical support of the Products. In the event of such
termination, the license granted to MC3 by AVECOR pursuant to Article 2.2
hereof shall survive termination of this Agreement and continue in full
force and effect.
(c) In the event of termination of this Agreement by AVECOR under
Article 9.2(a)(ii) above and in the event AVECOR secures a judgment of a
court of competent jurisdiction which judgment is final and unappealable
and which holds that MC3 is in material breach of this Agreement, the
license granted by MC3 to AVECOR pursuant to
17
Article 2.1 hereof shall continue for a period of five years from the
date such final judgment is issued; provided, that, in such case, AVECOR
shall have no further obligation to pay royalties to MC3 pursuant to
Articles 4.2 and 4.3 hereof. Further, in the event of such termination,
the license granted by AVECOR to MC3 pursuant to Article 2.2 hereof
shall terminate forthwith, and MC3 shall cease using any AVECOR Patents
and Know-How relating to improvements for any purpose. Additionally,
notwithstanding anything else in this section, termination by AVECOR
does not affect any sublicenses of AVECOR technology that may have been
lawfully granted by MC3. MC3 shall promptly return all Documentation
provided to it by AVECOR, and shall destroy all copies of such
Documentation. Notwithstanding the termination of this Agreement by
AVECOR pursuant to Article 9.2(a)(ii) above, until such time as AVECOR
shall have secured the final and unappealable judgment referred to
above, the license grants contained in Articles 2.1 and 2.2 hereof shall
continue and AVECOR shall be obligated to continue paying royalties to
MC3 pursuant to Articles 4.2 and 4.3 hereof and to otherwise observe and
comply with its obligations contained herein.
(d) In the event of termination of this Agreement by AVECOR pursuant
to Article 9.2(b) above, all licenses granted hereunder shall terminate
forthwith, and each party shall cease using any of the other party's
Patents and Know-How for any purpose. Each party shall promptly return to
the other party all Documentation provided to it by the other party, and
shall destroy all copies of such Documentation.
(e) In the event of the termination of this Agreement pursuant to
Article 9.2(d) above, MC3 shall be obligated to immediately notify AVECOR
in writing of the termination of the Michigan License Agreement. Within
sixty (60) days of receipt of such notice of termination of the Michigan
License Agreement, AVECOR may by written notice to Michigan elect to
continue in force this Agreement on and subject to the terms and
conditions set forth herein and, for all purposes of this Agreement,
Michigan shall be substituted for MC3 and shall assume all obligations and
acquire all rights of MC3 hereunder.
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ARTICLE
10.
FORCE MAJEURE
10.1 DEFINITION AND NOTICE. Force Majeure shall mean any event, not existing
as of the date of this Agreement and not reasonably foreseeable or within the
control of the parties as of such date, which prevents in whole or part the
performance by one of the parties of its obligations hereunder, including,
without limitation the following: acts of State or governmental action,
(including, without limitation, failure to grant any license or approval
required for performance hereunder), crisis, war, strikes, natural catastrophe,
and prolonged shortage of energy supplies. Any party affected by an event of
Force Majeure shall promptly provide the other party with written notice
describing such event, its cause and possible consequences. Upon giving such
notice, the party whose performance is prevented by the event of Force Majeure
shall be relieved of any liability hereunder, except for the obligation to pay
amounts due and owing, but only to the extent and only for so long as its
performance is prevented by the event of Force Majeure.
10.2 SUSPENSION OF PERFORMANCE. During the period the performance of one of
the parties has been suspended by reason of Force Majeure, the other party may
likewise suspend performance of all or part of its obligations, except for the
obligation to pay amounts due and owing, to the extent commercially reasonable.
10.3 TERMINATION. If the event of Force Majeure preventing performance shall
continue for more than six (6) consecutive months, the party whose performance
is not prevented by such event of Force Majeure may terminate this Agreement on
written notice to the other party without any liability hereunder, except the
obligation to make payments due to such date.
ARTICLE
11.
GENERAL PROVISIONS
11.1 COMPLETE AGREEMENT. This Agreement, including the Recitals and the
Exhibits attached hereto, constitutes the complete agreement of the parties
with respect to the subject matter hereof and there are no representations,
agreements, or conditions not expressly set forth herein.
19
11.2 ASSIGNMENT. This Agreement may not be assigned by either party without
the prior written consent of the other party and, in the absence of such
consent, any attempted assignment will be null and void; provided, however,
that (i) subject to the terms set forth below in this Article 11.2, either
party may assign its rights and obligations under this Agreement to any
successor in interest of all or substantially all of the business of such party
by merger, purchase or operation of law; and (ii) MC3 may assign its rights and
obligations hereunder to Michigan. In the event of an assignment by AVECOR
pursuant to Article 11.2(i) above to any successor in interest to the business
of AVECOR, whether by way of merger, purchase or operation of law, the minimum
annual royalty payable by AVECOR under Article 4.3 hereof shall, for the three
(3) years immediately following the year of such assignment, be an amount equal
to the minimum royalty otherwise provided for each of such three (3) years
pursuant to Article 4.3 or the amount of royalties actually paid by AVECOR
under Article 4.2 in the complete calendar year immediately prior to such
assignment, whichever is greater. All terms and conditions of this Agreement
will be binding on and inure to the benefit of the successors and permitted
assigns of the parties.
11.3 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Michigan.
11.4 AMENDMENT. Any change, extension, revision, or waiver of or under this
Agreement will be valid and binding only if in writing and duly executed by the
party agreeing to be bound thereby.
11.5 SECRECY. The parties hereto expressly agree that the financial terms of
this Agreement are strictly confidential. Each party shall, and shall cause
its employees, agents and sublicensees to, maintain in absolute secrecy the
financial terms of this Agreement, and shall not disclose any of such
information to any third party or to any of its own personnel not having a need
to know without the prior written authorization of the other party; provided,
that neither party shall be liable for the disclosure of the above information
to the extent such disclosure is required to comply with any state or federal
securities laws.
20
11.6 INVALIDITY. In the event that any term, provision, or covenant of this
Agreement shall be determined by a court of competent jurisdiction to be
invalid, illegal, or unenforceable, that term will be curtailed, limited, or
deleted, but only to the extent necessary to remove such invalidity,
illegality, or unenforceability, and the remaining terms, provisions, and
covenants shall not in any way be affected or impaired thereby. In the event
that the time period of any covenant shall be held unenforceable as a matter of
law, said covenant will be interpreted to be effective for an enforceable time
period.
11.7 NOTICES. Any notice, demand, or request given to, made, or required to be
made hereunder shall be deemed sufficiently made if given in writing, and sent
by registered mail, return receipt requested, to the parties at the following
addresses:
If to AVECOR: AVECOR Cardiovascular, Inc.
00000 Xxxxxx Xxxx 0
Xxxxxxxx, XX 00000
Attention: Xx. Xxxxx X. Xxxx
If to MC3: Michigan Critical Care Consultants, Inc.
000 Xxxxxxx Xxxxxxxxxx Xxxxx, Xxxxx X
Xxx Xxxxx, XX 00000
Attention: Xx. Xxxxxxx Xxxxxxx
or to such other addresses as the parties may from time to time specify by
written notice in compliance with this Article 11.6. Any such notice
shall be deemed to have been served on the fifth (5th) day after the day
on which the letter was posted.
11.8 AVECOR agrees that all terms of the Michigan License Agreement, attached
as Exhibit I, which, by their nature, apply to MC3 sublicensees, shall apply to
AVECOR, whether such terms are expressly restated in this Agreement.
11.9 INTERPRETATION. AVECOR agrees that the terms of the Michigan License
Agreement, which by their nature apply to MC3 sublicensees, shall apply to
AVECOR, whether or not such terms are expressly restated in this Agreement.
21
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
Michigan Critical Care AVECOR Cardiovascular Inc.
Consultants, Inc. (MC3) (AVECOR)
By: /S/ Xxxxxxx Xxxxxxx By: /S/ Xxxxxx X. XxXxxxxx
---------------------------------- -----------------------------------
Its: President Its:Treasurer
---------------------------------- ----------------------------------
22
EXHIBIT II
PRODUCTS
23
AMENDMENT TO LICENSE AGREEMENT
This Amendment to License Agreement (this "Amendment"), effective as of
November 7, 1997, is made by and between Michigan Critical Care Consultants,
Inc. ("MC3") and AVECOR Cardiovascular Inc. ("AVECOR").
A. AVECOR and MC3 have entered into a License Agreement, dated as
of January 16, 1995 (the "License Agreement").
B. Section 4.2(b) of the License Agreement requires AVECOR to pay
royalties to MC3 out of AVECOR's "net profit" for Hardware from and after the
first calendar year in which AVECOR generates a net profit on the sale of
Hardware.
C. The term "net profit" is presently not defined in the License
Agreement and the parties wish to define such term for the purposes of Section
4.2(b) of the License Agreement.
In consideration of the foregoing premises and intending to be legally
bound, AVECOR and MC3 agree as follows:
1. AMENDMENT OF SECTION 4.2(b). Section 4.2(b) of the license
agreement is amended by adding the following to the end of such section:
For the purposes of this Section 4.2(b), the definition of "net profit"
with respect to Hardware sold during a given period ("NET PROFIT") will be
defined as the Net Sales Price of such Hardware, less its Cost, which is
defined as the sum of the Material, Labor and Overhead used to produce the
Hardware. For this purpose:
(i) "Material" is defined as the sum of the standard cost of the
parts used to produce the Hardware, as determined by AVECOR's
standard xxxx of materials for the Hardware (as the same may be
changed from time to time) and accumulated by AVECOR's manufacturing
software for the Hardware produced.
(ii) "Labor" is defined as the sum of the standard cost of the direct
labor hours used to produce the Hardware, as determined by AVECOR's
standard parts' routings (as the same may be changed from time to
time) and accumulated by AVECOR's manufacturing software for the
Hardware produced.
(iii) "Overhead" is defined as the sum of the actual manufacturing
and quality expenses used to produce the Hardware, excluding Material
and Labor, as currently assigned by AVECOR's monthly product costing
system in the course of its normal financial reporting. Subject to
the foregoing sentence, "actual manufacturing and quality expenses"
include department expenses, manufacturing labor variances, material
purchase price variances, warranty expenses and other material
adjustments, where "department expenses" include production supplies
and other indirect expenses, production administration,
warehousing, production engineering, quality administration, raw
material receiving inspection, sterilization, quality engineering,
product testing and other necessary departmental expenses as
required by AVECOR's quality processes.
Provided, however, that all of the above calculations will be determined
in accordance with Generally Accepted Accounting Principles at the time of
calculation, applied on a consistent basis. AVECOR's calculation of Cost
and Net Profit will be included in each report required by Section 4.6
below for each period in which royalties are due under Section 4.2(b).
AVECOR will keep and maintain records of its calculations of Cost and Net
Profit on Hardware pursuant to Section 4.7 below, and MC3 will have the
right to inspect such records as provided in such Section.
2. DEFINED TERMS. Unless otherwise defined herein, capitalized terms
used in this Amendment will have the meanings given in the License Agreement.
3. EFFECTIVE DATE. Notwithstanding the later execution of this
Addendum, the parties hereby agree that this Addendum will be deemed to be
effective as of the effective date of the License Agreement.
4. PRIORITY. In the event of any conflict or inconsistency between the
terms of this Amendment and the License Agreement, the terms of this
Amendment will be controlling.
5. NO OTHER CHANGES. Except as specifically amended by this Amendment, all
other provisions of the License Agreement remain in full force and effect.
AVECOR and MC3 have caused this Amendment to be duly executed on their
behalf by their respective duly authorized representatives as of the date first
written above.
MICHIGAN CRITICAL CARE AVECOR CARDIOVASCULAR INC.
CONSULTANTS, INC.
By: /s/ Xxxxxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------- ----------------------------
Its: President Its: Treasurer
--------------------------------------- ---------------------------
2
