PATENT AND TECHNOLOGY LICENSE AGREEMENT
This
Patent and Technology License Agreement (“Agreement”),
effective this 23 day of March 2007 (the “Effective
Date”),
is by
and between Quick-Med
Technologies, Inc.,
a
Delaware corporation having offices at 0000 XX 00xx Xxx, Xxxxxxxxxxx, Xxxxxxx
00000 (“QMT”)
and
Derma
Sciences, Inc.,
a
Pennsylvania corporation having offices at 000 Xxxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxx, Xxx Xxxxxx 00000 (“DERMA”)
(each
singularly a “Party”
and
collectively the “Parties”).
WHEREAS,
QMT owns or controls certain Patent Rights and Technology (as such terms are
defined below) relating to its proprietary NIMBUS®
technology and has the right to grant licenses under such Patent Rights and
Technology; and
WHEREAS,
QMT agrees to grant, and DERMA desires to obtain, an exclusive license to such
Patent Rights and Technology in the Field and Exclusive Territory (as such
terms
are defined below) and a non-exclusive license to such Patent Rights and
Technology in the Field in the Non-exclusive Territory (as defined below) on
the
terms and conditions of this Agreement.
NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
agreements herein contained, and for other good and valuable consideration,
the
receipt and sufficiency of which are hereby acknowledged, the Parties do hereby
agree as follows:
1. Definitions.
The
following terms, whether used in the singular or the plural, shall have the
following meanings for purposes of this Agreement:
1.1 “Affiliate”
means
any corporation, firm, partnership or other entity, which controls, is
controlled by or is under common control with a Party. For purposes of this
Section 1.1, “control” means direct or indirect ownership of more than fifty
percent (50%) of the outstanding stock or other voting rights entitled to elect
directors thereof or the ability to otherwise control the management of the
corporation, firm, partnership or other entity.
1.2 “Commercialization”
or “Commercialize”
means
all activities directed towards obtaining pricing and Reimbursement Approvals,
Regulatory Approval, manufacturing, marketing, promoting, distributing,
importing, offering for sale or selling a Product.
1.3 “Commercially
Reasonable Efforts”
has
the
meaning set forth in Section 5.1(b) hereof.
1.4 “Composition
and Process”
means
QMT’s confidential and proprietary composition and process for the bonding of
certain Materials to substrates usable on Products.
1.5 “Confidential
Information”
has
the
meaning set forth in Section 10.1 hereof.
For
purposes of clarification, the Technology shall be deemed to be Confidential
Information of QMT.
1.6 “Contract
Year”
means
the twelve (12) month period beginning on the Contract Year Start Date and
ending on the first anniversary thereof, and each consecutive 12-month period
thereafter during the Term.
1.7 “Contract
Year Start Date”
means
earlier to occur of (i) date of First Commercial Sale of Conforming Gauze or
other Product or (ii) the 180th
day
following the date on which either DERMA or QMT first obtains Regulatory
Approval for a primary or secondary wound dressing utilizing the QMT
Intellectual Property.
1.8 “DERMA
Invention”
has
the
meaning set forth in Section 12.2(b) hereof.
1.9 “DERMA
Marks”
has
the
meaning set forth in Section 12.6 hereof.
1.10 “Designee”
shall
mean a corporation or other entity that is employed by, under contract to,
or in
partnership with DERMA or an Affiliate thereof, to make, use, sell, promote,
distribute, market, import, or export Products in the Territory.
-1-
1.11 “Disclosing
Party”
has
the
meaning set forth in Section 10.1 hereof.
1.12 “Exclusive
Territory”
means
the United States of America and Canada and their respective territories and
possessions.
1.13 “FDA”
means
the United States Food and Drug Administration or any successor agency
thereto.
1.14 “Field”
means
the field of conforming gauze, oil-emulsion acetate, gauze sponges, gauze
bandage rolls, gauze packing strips and Unna Boot dressings used solely for
wound care and sold to the institutional market not for resale as more
specifically described on Exhibit E.
The
Field specifically excludes products provided to, developed for, or sold to
the
general, over-the-counter consumer market and, subject to the non-exclusive
rights granted to DERMA pursuant to Section 2.1(b) hereof, the United States
government, including, without limitation, the Department of Defense and/or
agencies and military services thereof.
1.15 “First
Commercial Sale”
shall
mean the first sale to an independent third party of a Product.
1.16 “Improvements”
means
know-how, technical information, inventions, developments, discoveries,
software, methods, techniques, procedures, formulae, data (including without
limitation clinical data), processes and other proprietary ideas, whether or
not
patentable or copyrightable, that are conceived, discovered, developed, or
reduced to practice during the Term by or on behalf of DERMA and/or its
Affiliates, and which are useful for or useable in the practice of the Patent
Rights and Technology.
1.17 “Indemnitees”
has
the
meaning set forth in Section 9.1 hereof.
1.18 “Initial
Term”
has
the
meaning set forth in Section 11.1 hereof.
1.19 “Know-how”
means
the tangible and intangible information, including, without limitation, data,
results, formula, designs, specifications, methods, processes, techniques,
ideas, discoveries, technical information, process information, clinical
information and other information which is owned or controlled (with the right
to sublicense) by QMT as of the Effective Date relating to the Composition
and
Process in Field.
1.20 “Materials”
means
the chemical components, which are listed on Exhibit
B
hereto,
as
modified by any Improvements
thereto
to the extent such modification is part of the Composition and Process as agreed
by the parties hereto.
1.21 “Minimum
Royalties”
has
the
meaning set forth in Section 3.4 hereof.
1.22 “Net
Sales”
means
the gross invoiced sales price of all Products sold, leased, licensed or
otherwise transferred by DERMA and its Affiliates and its Designees along with
any other amounts and consideration received in connection therewith, after
deduction of the following items, to the extent such items are actually
incurred, taken or borne by the seller thereof and do not exceed reasonable
and
customary amounts in the market in which such sale occurred: (a) trade, cash
or
quantity discounts or rebates actually taken and documented; (b) credits or
allowances given or made for rejection, or approved return of, defective goods
actually taken and documented; (c) taxes or government charges, duties or
tariffs (other than an income tax) levied on the sale, transportation or
delivery of a Product and documented. No costs incurred in the manufacturing,
selling, advertising, and distribution of the Products, including without
limitation overhead costs, shall be deducted nor shall any deduction be allowed
for any other uncollectible accounts or allowances.
-2-
1.23 “Non-exclusive
Territory”
means
all countries outside the Exclusive Territory in which QMT has not entered
into
an exclusive license for the Patent Rights and Technology in the Field with
a
Third Party, either as of the date hereof or as of any date in the
future.
1.24 “Patent
Rights”
mean
the patents, patent applications, patent extensions, certificates of invention,
or applications for certificates of invention, together with any divisions,
continuations or continuations-in-part thereof, which are owned or controlled
by, or licensed (with the right to sublicense) to QMT which are listed in
Exhibit
A
hereto.
1.25 “Product”
means
any product in the Field that is covered by, derived from, or manufactured
using
or incorporating, or otherwise uses or contains the QMT Intellectual Property,
and which does not require premarket approval or the performance of clinical
trials (or their equivalent) from the applicable Regulatory Authority prior
to
receiving Regulatory Approval.
1.26 “Promotional
Materials”
has
the
meaning set forth in Section 5.4 hereof.
1.27 “QMT
Intellectual Property”
means
collectively the Technology, Patent Rights and Improvements.
1.28 “QMT
Marks”
has
the
meaning set forth in Section 12.6 hereof.
1.29 “Recipient”
has
the
meaning set forth in Section 10.1 hereof.
1.30 “Regulatory
Approval”
means
the approval of the applicable Regulatory Authority necessary for the marketing
and sale of the Product in a country in the Territory, excluding separate
pricing and/or Reimbursement Approvals that may be required, and including
the
expansion or modification of the label in the Field.
1.31 “Regulatory
Authority”
means
any federal, national, multinational, state, provincial or local regulatory
agency, department, bureau or other governmental entity with authority over
the
marketing and sale of a pharmaceutical product in a country, including the
FDA
in the United States and Health Canada in Canada.
1.32 “Regulatory
Filings”
has
the
meaning set forth in Section 7.3 hereof.
1.33 “Reimbursement
Approval”
shall
mean such governmental and other approvals in the Territory for a buyer to
claim
reimbursement at any level for the purchase of the Products from private or
public health organizations, including all pricing approvals.
1.34 “Renewal
Term”
has
the
meaning set forth in Section 11.1 hereof.
1.35 “Royalty”
has
the
meaning set forth in Section 3.1 herein.
1.36 “Sell-Off
Period”
has
the
meaning set forth in Section 11.6(a) hereof.
1.37 “Technology”
means
the Materials and Know-how.
1.38 “Term”
has
the
meaning set forth in Section 11.1 hereof.
1.39 “Territory”
means
collectively the Exclusive Territory and Non-exclusive Territory.
1.40 “Third
Party”
means
any entity other than a Party to this Agreement or their respective
Affiliates.
-3-
2. License.
2.1 Grant.
Subject
to the terms and conditions of this Agreement, QMT hereby grants to DERMA during
the Term: (a) an exclusive, royalty-bearing right and license, without the
right
to grant sublicenses (except as set forth in Section 2.2), under the QMT
Intellectual Property to make, use, sell, and offer for sale and import Products
(including therein, without limitation, the right to enter into private
label/OEM agreements relative thereto provided such agreements are not a
sublicense of the QMT Intellectual Property) within the Field in the Exclusive
Territory; and (b) a non-exclusive royalty-bearing right and license, without
the right to grant sublicenses (except as set forth in Section 2.2), under
the
QMT Intellectual Property to make, use, sell, and offer for sale and import
Products to or on behalf of the United States government and all agencies and
military services thereof.
2.2 Sublicenses.
DERMA
may only grant sublicenses to its Affiliates with a term that is no longer
than
the Term of this License but with no further right to grant sublicenses to
anyone other than an Affiliate; provided that each such sublicensee shall first
agree in writing to be bound by all of the terms of this Agreement. Upon
termination of this Agreement, any sublicense granted hereunder shall
immediately cease and terminate without any additional action by
QMT.
2.3 Right
to Negotiate for Exclusivity Relative to Certain Manufacturers.
The
parties acknowledge that DERMA will be seeking to sell certain Products to
a
European wound care company (the “European Company”) for sale in the European
Union (which would be outside the Exclusive Territory). QMT agrees that from
the
Effective Date until the first anniversary of the Effective Date (the “Defined
Period”), DERMA may approach such European Company in connection with the sale
of the Products and enter into discussions with such European Company for an
exclusive arrangement with respect to the Products. In such an event, DERMA
and
QMT will engage in good faith negotiations during the Defined Period with a
view
to reaching a mutually agreeable agreement upon the terms of a grant by QMT
of a
license to permit DERMA to have the exclusive right to make and sell certain
Products to the European Company. Any such agreement would be exclusive only
to
the European Company and would not affect QMT’s rights with respect to the
license of its QMT Intellectual Property or the manufacture and/or sale of
Products outside the Territory except with respect to the license, manufacture
or sale to the European Company. In any event the terms and conditions of
Derma’s agreement with the European Company would be consistent with the terms
and conditions hereunder. If QMT and DERMA are unable to arrive at an agreement
within the Defined Period, then this Section 2.3 shall expire and be of no
further force or effect.
2.4 Transfer
of Know-how.
Promptly
after the Effective Date, QMT shall disclose the Know-how to DERMA solely for
purposes of DERMA’s research, development and manufacture of Products during the
Term. DERMA agrees that such Know-how is QMT’s Confidential Information and
shall treat such Confidential Information in accordance with Section 10
hereof.
2.5 Non-Exclusive
Territory.
DERMA
shall have a non-exclusive, royalty-bearing right and license, without the
right
to grant sublicenses, under the QMT Intellectual Property to use, sell, and
offer for sale Products within the Field (with the exception of products
provided to, developed for, or sold to the general, over-the-counter consumer
market) in the Non-exclusive Territory. QMT retains all rights to grant other
licenses with respect to the QMT Intellectual Property in the Field for any
purpose whatsoever in the Non-Exclusive Territory, including, without
limitation, exclusive, semi-exclusive, co-exclusive or non-exclusive licenses.
In connection therewith, QMT has the right any time to terminate the license
granted to DERMA under this Section 2.5 in all or in any part of the
Non-Exclusive Territory upon thirty (30) days prior written notice to
DERMA.
-4-
2.6 Governmental
Rights; University of Florida.
All
rights and licenses granted by QMT under this Agreement are subject to (i)
any
limitations imposed by the terms of any government grant, government contract
or
government cooperative agreement applicable to the QMT Intellectual Property
that is the subject of this Agreement, and/or (ii) applicable requirements
of 35
U.S.C. Sections 200 et seq.,
as
amended, and implementing regulations and policies. Without limitation of the
foregoing, DERMA agrees that, to the extent required under 35 U.S.C. Section
204, any Product used, sold, distributed, rented or leased by DERMA or an
Affiliate in the United States will be manufactured substantially in the United
States, Canada or Mexico. Furthermore, certain of the rights granted hereunder
are subject to a reservation of rights by the University of Florida and its
affiliates to use the Patent Rights for its research and educational purposes
and the licenses granted hereunder are expressly made subject to such rights
and
the license from University of Florida.
2.7 Manufacturing
Restrictions.
Notwithstanding Section 2.3 above, DERMA acknowledges and agrees that it shall
not manufacture the Products outside of the Exclusive Territory (with the
exception of Mexico). Under no circumstances shall DERMA manufacture any portion
of the Products using QMT Intellectual Property at a location outside of the
Exclusive Territory (with the exception of Mexico) without the prior written
consent of QMT.
2.8 No
Other Rights.
Except
for the express license granted pursuant to Section 2.1 hereof, no license,
express or implied, is granted by either Party to the other Party or its
Affiliates under any intellectual property rights owned or controlled by such
Party or its Affiliates.
2.9 Provisional
Exclusivity Relative to New Products.
DERMA
may, from time to time, request that QMT develop for DERMA’s account new wound
and related skin care products incorporating the QMT Intellectual Property
(such
products, “New Products”). Any such request shall be in writing (a “New Product
Request”) and if QMT agrees to any such request, the parties contemplate that
the costs of development of any such New Products will be shared between QMT
and
DERMA in a manner to be determined. In the event QMT agrees to develop a New
Product with DERMA pursuant to a New Product Request, then, subject to the
terms
of this Agreement: (i) DERMA, for a period of one year from the date of the
introduction of such New Product(s) (such period, the “Exclusivity Period”),
upon payment of a Royalty of ten percent (10%) on Net Sales of such New Products
shall have the exclusive, world-wide right and license, without the right to
sublicense, under the QMT Intellectual Property to make, use, sell, and offer
for sale (including therein, without limitation, the right to enter into private
label/OEM agreements relative thereto) each New Product, (ii) DERMA, following
the Exclusivity Period and during such period as QMT has not granted exclusive
licenses relative to such New Product(s) to any other company or companies,
upon
payment of a Royalty of ten percent (10%) on Net Sales of such New Products
shall have the non-exclusive, world-wide right and license, without the right
to
sublicense, under the QMT Intellectual Property to make, use, sell, and offer
for sale (including therein, without limitation, the right to enter into private
label/OEM agreements relative thereto) each New Product, and (iii) DERMA, during
the Exclusivity Period, shall have exclusive negotiating rights relative to
securing an exclusive license in respect of such New Products; provided that
if
no exclusive right is secured for such New Product within such Exclusivity
Period then there shall be no further obligation on QMT to negotiate with DERMA
on such exclusive rights on such New Product. In the event QMT grants DERMA
an
exclusive license relative to any New Product, the Royalty in respect of such
New Product shall thereafter be increased from ten percent (10%) to twenty
percent (20%) on Net Sales of such New Product.
-5-
3. Consideration;
Royalties.
3.1 Royalties.
In
consideration of the license granted to DERMA pursuant to Section 2.1 hereof,
commencing with the First Commercial Sale of each Product by DERMA or its
Affiliates, DERMA shall pay to QMT a royalty (“Royalty”)
equal
to: (i) twenty percent (20%) on Net Sales for each Product in the Field in
the
Exclusive Territory, and (ii) ten percent (10%) on Net Sales for each Product
within the Field in the Non-Exclusive Territory on a nonexclusive basis. In
the
event DERMA is required to pay Royalties to any Third Party in order to make,
use or sell Products, DERMA’s Royalty obligation to QMT under this Section 3.2
shall not be affected.
3.2 Conforming
Gauze Incentive.
In the
event DERMA obtains FDA 510K approval for use of Conforming Gauze as a
“secondary” dressing during the months of set forth below, DERMA shall make an
incentive payment to QMT calculated as follows:
Table
3.2
|
Month
of FDA
510K
Approval
|
Incentive
Payment
|
|
June,
2007
|
$15,000
|
|
July,
2007
|
$7,500
|
|
August,
2007
|
$5,000
|
3.3 Non-Monetary
Consideration.
Without
the prior written consent of QMT, DERMA and its Designees and Affiliates shall
not solicit any material consideration for the commercial sale of any Product
other than as will be accurately reflected in Net Sales. In the event DERMA
and/or its Designees or Affiliates receive any consideration for the sale or
transfer of any Product other than as will be accurately reflected in Net Sales,
QMT and the party accepting such non-cash consideration shall act reasonably
and
negotiate in good faith an appropriate value for all such non-cash
consideration
-6-
3.4 Minimum
Royalties.
Subject
to Section 11.3 below, during the Initial Term DERMA shall pay to QMT minimum
Royalties (“Minimum
Royalties”)
as
follows:
Table
3.4
|
Contract
Year
|
Minimum
Royalties
|
|
Contract
Year 1
|
US$300,000
|
|
Contract
Year 2
|
US$600,000
|
|
Contract
Year 3
|
US$1,000,000
|
|
Contract
Year 4
|
US$1,500,000
|
|
Contract
Year 5
|
US$2,000,000
|
In
the
event for a given Contract Year DERMA fails to pay to QMT Royalties equal to
or
greater than the Minimum Royalties set forth above in the applicable Contract
Year, QMT’s exclusive remedy for such failure (other than the collection of
Royalties earned but not paid to QMT) shall be amendment of this Agreement
to
remove DERMA’s exclusive rights relative to the Products or terminate the
Agreement as more specifically set forth in Section 11.3.
In
the
event the launch of Gauze Sponges, Gauze Bandage Rolls, Gauze Packing Strips,
Oil Emulsion Acetate and/or Unna Boot Dressings is delayed by virtue of the
failure of the FDA to grant 510K approval for use of any of the foregoing
Products as a primary dressing (such Products, “Affected Products”), then
Minimum Royalties payable pursuant to this Section 3.4 shall be adjusted in
accordance with Section 3.5 hereinbelow to the same extent as if DERMA had
determined not to proceed with the development or commercialization of the
Affected Product(s). Provided, however, any adjustment to Minimum Royalties
relative to a given Affected Product effected pursuant to Section 3.5
hereinbelow shall be removed, and Minimum Royalties relative to such Affected
Product shall be reinstated, effective 180 days from FDA 510K approval of such
Affected Product for use as a primary dressing.
-7-
3.5 Adjustments
to Minimum Royalties.
In the
event that DERMA determines not to proceed with the development or
commercialization of a given Product (such event, “Discontinuance” and such
Product(s), “Discontinued Product(s)”), then DERMA shall provide QMT with six
(6) months notice of such Discontinuance following which period the Minimum
Royalties for all applicable Contract Years shall be reduced by the Minimum
Royalties associated with the Discontinued Product(s). Minimum Royalties
associated with a given Discontinued Product shall be determined as follows:
(i)
subtract from the Minimum Royalties for the Contract Year in which the
Discontinuance becomes effective (such Contract Year, the “Effective Contract
Year”) the Minimum Royalties for the preceding Contract Year; (ii) divide the
result in (i) by the number of Products attributable to the Effective Contract
Year; and (iii) multiply the result in (ii) by the number of Discontinued
Products. In the event that DERMA has not achieved a First Commercial Sale
of a
given Product within the end of the Contract Year set forth below in Table
3.5,
and DERMA has not paid the Minimum Royalties required under Section 3.4, then
QMT shall have the right to terminate the license with respect to such Product
or make the license hereunder nonexclusive.
For
purposes of the foregoing calculation, the following Products shall be deemed
attributable to the specified Contract Years and all subsequent Contract
Years:
Table
3.5
|
Products
|
Contract
Year
|
|
Conforming
Gauze
|
1
|
|
Gauze
Sponges
|
2
|
|
Gauze
Bandage Rolls
|
2
|
|
Gauze
Packing Strips
|
2
|
|
Oil
Emulsion Acetate
|
3
|
|
Unna
Boot Dressings
|
4
|
Discontinued
Products shall forthwith be removed from the license granted under Section
2
hereof.
3.6 License
Fee and Advance Royalties.
DERMA
shall pay to QMT a License Fee in the amount of Fifty Thousand Dollars ($50,000)
on the Effective Date. DERMA shall pay to QMT the sums of Twenty Five Thousand
Dollars ($25,000) upon each of three (3) months, six (6) months and nine (9)
months following the Effective Date (such payments, “Advance Royalties”).
Subject to Section 3.4, if applicable, Advance Royalties shall be fully credited
against Royalties payable hereunder. Provided, however, anything herein
contained to the contrary notwithstanding, no Advance Royalties shall be payable
on or after the date of the First Commercial Sale.
-8-
4. Payments,
Reports and Records.
4.1 First
Commercial Sale.
Within
thirty (30) days of its occurrence, DERMA shall notify QMT of the date of First
Commercial Sale of a Product by DERMA or its Designees or Affiliates to a Third
Party end user in each new country in the Territory.
4.2 Payments.
Upon
First Commercial Sale of a Product and thereafter during the Term, DERMA shall
furnish to QMT, within thirty (30) days from the last business day of each
quarter during each Contract Year, a written report showing the following:
(i)
number of Products sold; (ii) the Net Sales of all Products sold by DERMA and
its Designees and Affiliates during the reporting period listed by country,
and
qualifying deductions, as defined in Section 1.23 hereof, listed by category
of
deduction; (iii) the Royalties payable in United States dollars which shall
have
accrued hereunder in respect of such sales; (iv) withholding taxes, if any,
required by law to be deducted in respect of such sales, as applicable; and
(v)
the exchange rates used in determining the amount of United States dollars,
if
applicable. All Royalty Payments or Minimum Royalties payments shall be due
and
payable on the date such report is due. If no payments are due for any reporting
period hereunder, DERMA shall so report. All reports delivered pursuant to
this
Section shall constitute the Confidential Information of DERMA and shall be
subject to Section 10 hereof. All payments to QMT under this Agreement shall
be
made in United States dollars by check payable to “Quick-Med Technologies, Inc.”
or, if requested by QMT, by wire transfer to an account designated by
QMT.
All
payments shall be made from the United States office of DERMA.
4.3 Exchange
Rates.
If
DERMA receives revenues from the sale of Products in currency other than United
States dollars, revenues shall be converted to United States dollars using
a
conversion rate for foreign currency calculated by averaging the conversion
rates of such foreign currency on the last business day of each month within
the
applicable quarter as published in the eastern edition of The
Wall Street Journal.
Any and
all loss of exchange value, taxes, or other expenses incurred in the transfer
or
conversion of foreign currency into U.S. dollars, and any income, remittance,
or
other taxes on payments based on foreign Net Sales required to be withheld
at
the source shall be the exclusive responsibility of DERMA. Royalty Reports
shall
show sales both in the local currency and US dollars, with the exchange rate
used clearly stated.
4.4 DERMA’s
Recordkeeping and Inspection.
DERMA
shall, and shall cause its Affiliates and Designees to, keep for at least seven
(7) years records of all sales of Products in sufficient detail to permit QMT
to
confirm the accuracy of DERMA’s Royalty payment calculations. At the request of
QMT, no more frequently than once per year, upon at least five (5) business
days
prior written notice to DERMA and at the expense of QMT (except as otherwise
provided below), DERMA shall permit an independent certified public accountant,
selected by QMT, to inspect, during regular business hours, any such DERMA,
Affiliate or Designee records for the then-preceding seven (7) years solely
to
the extent necessary to verify such calculations; provided
that
such
accountant has, in advance, entered into a confidentiality agreement with DERMA
(substantially similar to the confidentiality provisions of this Agreement)
limiting the disclosure of such information to authorized representatives of
the
Parties. Results of any such inspection shall be made available to both Parties.
If such inspection reveals a deficiency in the calculation of Royalties
resulting in an underpayment to QMT, DERMA shall promptly paid to QMT such
deficient amount and if such underpayment is equal to five percent (5%) or
more,
DERMA shall pay all costs and expenses of such inspection. If such inspection
reveals a deficiency in the calculation of Royalties resulting in an overpayment
to QMT, DERMA may credit such overpayment against future Royalty Payments due
QMT hereunder. If, during any Contract Year during the Term, an inspection
reveals a deficiency in the calculation of Royalties resulting in an
underpayment to QMT by twenty percent (20%) or more, then DERMA shall, at its
sole cost and expense, thereafter supply QMT with annual audits by a mutually
agreeable independent auditing firm for each remaining Contract Year during
the
Term.
4.5 Interest
on Late Payments.
Amounts
that are not paid by DERMA when due shall accrue interest, from the due date
until paid, at a rate equal to one and a half percent (1.5%) per month (or
the
maximum allowed by law, if less).
-9-
5. Diligence
and Commercialization Requirements.
5.1 Diligence
and Commercialization Efforts by DERMA.
(a) DERMA
will have full responsibility for seeking and obtaining Regulatory Approval
and
Reimbursement Approval and for the Commercialization of all Products in the
Field in the Territory. DERMA shall provide to QMT written monthly development
status reports describing, in reasonable detail, the efforts undertaken for,
and
the status of development of, the Products by DERMA. Such status reports shall
also summarize the clinical trials, Regulatory Filings, applications and
Regulatory Approvals with respect to any Product that DERMA has made, sought
or
obtained. If DERMA elects to stop or abandon, either permanently or temporarily,
the development, Regulatory Approval or Commercialization of Products, DERMA
shall promptly notify QMT of such decision.
(b) DERMA
will exercise Commercially Reasonable Efforts and diligence in undertaking
Product development, including investigations, clinical studies, and other
appropriate actions required to obtain Regulatory Approval and Reimbursement
Approval and obtain and maintain regulatory filings and to Commercialize
Products in the Field in the Territory. For purposes of this Agreement,
“Commercially
Reasonable Efforts”
means,
with respect to a given Product, efforts consistent with the efforts normally
used by DERMA in good faith and fair dealing for a product of its own discovery
of similar market potential at a similar state in its product life.
5.2 Technical
Support Assistance by QMT.
Upon
prior mutual agreement of the Parties, QMT shall provide, and DERMA shall fund,
certain technical support assistance activities in conjunction with DERMA’s
Commercially Reasonable Efforts to develop Products in the Field in the
Territory. QMT
shall
provide such technical support assistance activities at the FTE rate of one
thousand dollars (US$1,000) per day plus expenses (including without limitation
travel, lodging and meals) for each QMT employee or the equivalent.
5.3 Commercialization
of Products.
Promptly after obtaining Regulatory Approval for the Product in the Exclusive
Territory from the applicable Regulatory Authority, the Parties will mutually
agree on launch dates for the Commercialization of the Products in the Exclusive
Territory.
5.4 Advertising
and Promotional Materials.
DERMA
shall develop relevant written sales, promotion and advertising materials
relating to the Product (“Promotional
Materials”)
consistent with its standard operating procedures, for use in the Exclusive
Territory and compliant with all applicable laws and the provisions of the
applicable Regulatory Approvals. Prior to their use by DERMA, DERMA shall
provide QMT with copies of all Promotional Materials, including, if necessary,
English translations, for QMT’s review and comment. Subject to any limitations
imposed by applicable law, all such Promotional Materials and all documentary
information and oral presentations (where practicable) regarding the marketing
and promotion of the Product in the Territory shall acknowledge the Parties’
license arrangement and shall, if requested by QMT, display the QMT names and
logos in accordance with the Trademark Standards set forth in Exhibit
C.
5.5 Product
Label.
The
Parties agree that DERMA and its Affiliates and Designees, if any, shall, if
requested by QMT, include QMT’s name and/or logo, relevant QMT Marks and patent
numbers on all Product packaging, promotional materials and other materials
(in
written or electronic form) related to the Product in the Territory in
accordance with the Trademark Standards set forth in Exhibit
C.
-10-
6. Supply.
6.1 Suppliers.
It is
essential to the use of the QMT Intellectual Property as well as to maintaining
the underlying QMT Marks associated therewith owned by QMT that the quality
of
the Materials meet the quality standards of QMT and that the suppliers of the
necessary Materials agree to maintain the secrecy of the Materials and the
Composition and Process, and not reverse engineer or determine all or any part
of the Materials or Composition and Process through the supply of such
Materials. Therefore, subject to the terms and conditions hereof, DERMA shall
only purchase Materials from a Supplier approved by QMT. DERMA shall provide
the
name of a supplier to QMT, and QMT may disapprove of such Supplier, provided
that QMT shall not act unreasonably in such disapproval. All Third-Party
suppliers to be certified must sign a confidentiality and non-competition
agreement in the form attached hereto as Exhibit
D
prior to
commencing any supply of Materials.
6.2 No
Implied License.
Notwithstanding the foregoing, no express or implied license to any QMT
Intellectual Property is granted to any such Third Party in connection with
the
manufacture, transfer or sale of the Materials; provided
however
that the
DERMA’s use of the Materials shall be covered by the licenses under QMT
Intellectual Property granted above so long as the DERMA has complied with
the
terms of this Agreement.
6.3 Inspection.
QMT
shall upon its request be entitled to review any and all purchase orders and
shipping documents to confirm the use of the Materials in accordance with the
QMT Intellectual Property. DERMA shall be solely responsible for all matters
and
all obligations between the DERMA and the supplier.
-11-
7. Research
and Development Data and Regulatory Filings.
7.1 Product
Data.
DERMA
shall be responsible for the development of all data and other information
relating to the Products and Product sales, including without limitation all
stability and safety data, (collectively the “Product
Data”)
necessary to support sales of Products in the Field in the
Territory.
7.2 Copies
of Product Data.
Upon
the reasonable written request of QMT, DERMA will provide to QMT copies of
all
Product Data that DERMA would reasonably provide publicly to the market or
to
customers or potential customers during DERMA’s marketing of Products. For
purposes of this Section 7.2, any Confidential Information of DERMA or a Third
Party may be redacted from such Product Data prior to delivery to
QMT.
7.3 Regulatory
Approvals.
Unless
otherwise agreed by the Parties, any and all Regulatory Approvals obtained
and
regulatory filings made and licenses, registrations, certificates and government
approvals (“Regulatory
Filings”)
obtained by DERMA during the Term related to the Product in the Field in the
Exclusive Territory, will be in the name of and owned by DERMA.
7.4 Access
to Regulatory Filings.
QMT,
its Affiliates, and its respective sublicensees shall have access in a timely
manner to all data contained or referenced in such submissions or applications
for Regulatory Approvals by DERMA, including all reports, correspondence and
conversation logs, in each case as may be reasonably necessary to enable QMT
to
develop, manufacture and Commercialize products outside the Field in the
Exclusive Territory or Products in the Field and outside the Exclusive
Territory. DERMA shall provide appropriate notification of such right of QMT
to
the Regulatory Authorities. QMT, its Affiliates, and its respective sublicensees
shall have the right to cross-reference and make any other use of the other
DERMA’s Regulatory Filings for the Product, including access to all data
contained or referenced in such Regulatory Filings.
7.5 Adverse
Events.
DERMA
shall comply with all applicable laws with respect to reporting any adverse
medical event with respect to any Product and shall notify QMT of any such
event
within 24 hours of its occurrence along with the results of any follow up
investigation.
-12-
8. Representations
and Warranties; Disclaimer; Limitation of Liability.
8.1 Representations
and Warranties of DERMA.
DERMA
covenants, represents and warrants to QMT as follows:
(a) DERMA
is
a corporation duly organized, validly existing and in good standing under the
laws of Pennsylvania. DERMA has all requisite corporate power to own and operate
its properties and assets and to carry on its business as presently being
conducted and as proposed to be conducted. DERMA has, and will have on all
relevant dates, all requisite legal and corporate power to execute and deliver
this Agreement, and to carry out and perform its obligations under the terms
of
this Agreement;
(b) The
execution and delivery of this Agreement and the performance of the transactions
contemplated hereby have been duly authorized by all appropriate DERMA corporate
action. The performance by DERMA of any of the terms and conditions of this
Agreement on its part to be performed does not and will not constitute a breach
or violation of any other agreement or understanding, written or oral, to which
it is a party;
(c) Neither
DERMA nor its Affiliates is prohibited by any law, rule or regulation or by
any
order, directive or policy of any Regulatory Authority from developing any
pharmaceutical products, or assuming the Regulatory Approvals are obtained,
will
be prohibited by any law, rule or regulation or by any order, directive or
policy of any Regulatory Authority from manufacturing or selling any of the
Products; and
(d) DERMA
covenants that neither it nor its Affiliates shall, during the Term, develop
or
commercialize any products in the Field that compete, directly or indirectly,
with the Products other than products which use silver and/or honey as their
only active anti-microbial ingredients.
8.2 Representations
and Warranties of QMT.
QMT
represents and warrants to DERMA as follows:
(a) QMT
is a
corporation duly organized, validly existing and in good standing under the
laws
of the State of Nevada. QMT has all requisite corporate power to own and operate
its properties and assets and to carry on its business as presently being
conducted and as proposed to be conducted. QMT has, and will have on all
relevant dates, all requisite legal and corporate power to execute and deliver
this Agreement, and to carry out and perform its obligations under the terms
of
this Agreement;
(b) QMT
covenants that neither it nor its Affiliates shall, during the Term, develop
or
commercialize any products in the Field that compete, directly or indirectly,
with the Products; and
(c) The
execution and delivery of this Agreement and the performance of the transactions
contemplated hereby have been duly authorized by all appropriate QMT corporate
action. The performance by QMT of any of the terms and conditions of this
Agreement on its part to be performed does not and will not constitute a breach
or violation of any other agreement or understanding, written or oral, to which
it is a party.
8.3 Disclaimer
of Warranty.
Except as otherwise expressly provided in this agreement, QMT makes no
representations and extends no warranty of any kind, either express or implied,
with respect to the QMT Intellectual Property, including without limitation
warranties of the validity or enforceability of the patent rights,
merchantability, fitness for a particular purpose and non-infringement of any
Third Party patents or proprietary rights. All Uniform Commercial Code
warranties are expressly disclaimed by QMT.
8.4 Limitation
of Liability.
Except
with respect to liability arising from breach of Section 10 and liability
arising under Section 9 herein, it is agreed by the Parties that neither Party
shall be liable to the other Party for any special, consequential, indirect,
exemplary or incidental damages (including lost or anticipated revenues or
profits relating to the same), arising from any claim relating to this
Agreement, whether such claim is based on contract, tort (including negligence)
or otherwise, even if an authorized representative of such Party is advised
of
the possibility or likelihood of same.
8.5 Modification
to QMT Intellectual Property.
DERMA
shall not modify, change or vary from the QMT Intellectual Property as it is
applied to the Products. If DERMA seeks to change or modify the QMT Intellectual
Property used in the Product, it shall notify QMT sixty (60) days prior to
making such change whereupon, so long as DERMA is in compliance with this
Agreement, the parties shall reasonably cooperate to adjust the formulation
of
the QMT Intellectual Property as necessary to meet the Product requirements
of
DERMA. Any such reformulation shall constitute an Improvement and shall be
owned
exclusively by QMT and shall be licensed to DERMA under the terms of this
Agreement.
-13-
9. Indemnification
and Insurance.
9.1 Indemnification
by DERMA.
DERMA
shall indemnify, defend and hold harmless QMT and its Affiliates and their
respective directors, officers, employees and agents, and their respective
successors, heirs and assigns (the “Indemnitees”)
against any liability, damage, loss or expense (including reasonable attorneys’
fees and expenses of litigation) incurred by or imposed upon the Indemnitees
in
connection with any claim, demand, suit, action or judgment arising out of
any
theory of product liability (including without limitation actions in the form
of
tort, warranty or strict liability) or based on, or caused by any act or
omission of DERMA, its Affiliates or Designees with respect to the development,
manufacture, use sale, offer for sale, importation or exportation of any
Product, except to the extent that such liability, damage, loss or expense
is
directly attributable to the negligence or misconduct of QMT or its Affiliates.
9.2 Notice
and Cooperation.
Any
Indemnitee seeking indemnification under Section 9.1 shall provide DERMA with
prompt written notice of any claim, demand, suit, action or judgment for which
indemnification is sought under this Agreement. An Indemnitee’s failure to
deliver written notice to DERMA within a reasonable time after the commencement
of any such action, to the extent prejudicial to the DERMA’s ability to defend
such action, shall relieve DERMA of liability to the Indemnitee under this
Section 9. DERMA agrees, at its own expense, to provide attorneys reasonably
acceptable to the Indemnitees to defend against any such claim. The Indemnitees
shall cooperate fully with DERMA in such defense and will permit DERMA to
conduct and control such defense and the disposition of such claim, suit, or
action (including all decisions relative to litigation, appeal and settlement);
provided,
however,
that
any Indemnitee shall have the right to retain its own counsel at the expense
of
DERMA, if representation of such Indemnitee by the counsel retained by DERMA
would be inappropriate because of actual or potential conflicts in the interests
of such Indemnitee and any other party represented by the counsel retained
by
the DERMA. DERMA agrees to keep the Indemnitees informed of the progress in
the
defense and disposition of such claim and to consult with the Indemnitees with
regard to any proposed settlement. The indemnification under this Section 8
shall not apply to amounts paid in settlement of any liability, claim, lawsuit,
loss, demand, damage, cost or expense if such settlement is effected without
the
consent of DERMA.
9.3 Insurance.
DERMA
shall obtain and carry in full force and effect product liability insurance
in
amounts that are reasonable and customary in the pharmaceutical industry for
similar products, but in no event shall such insurance be less than Five Million
Dollars ($5,000,000) per occurrence and Five Million Dollars ($5,000,000) in
aggregate. Within thirty days of the start of each Contract Year, DERMA shall
provide QMT with a certificate evidencing the insurance coverage required herein
and all subsequent renewals thereof. The insurance coverage required herein
does
not constitute a limitation on DERMA’s obligation to indemnify QMT under this
Agreement.
-14-
10. Confidentiality.
10.1 Confidential
Information.
As used
in this Agreement, the term “Confidential
Information”
shall
mean all scientific, technical, trade or business information of either Party
(the “Disclosing
Party”)
disclosed to the other Party (the “Recipient”),
whether or not in writing, and regardless of whether it is marked as
confidential, including any portion of analyses, compilations, forecasts,
studies or other documents prepared by Recipient which contains such
information. By way of illustration, but not limitation, Confidential
Information may include inventions, Know-how, processes, methods, techniques,
assays, formulas, compositions, compounds, projects, developments, plans,
research data, clinical data, financial data, personnel data, computer programs,
customer and supplier lists and contacts at or knowledge of customers or
prospective customers of the Disclosing Party.
10.2 Disclosure
of Confidential Information.
Except
as expressly permitted in this Section 10, during the Term of this Agreement
and
for a period of five (5) years thereafter, the Recipient shall hold in
confidence and shall not directly or indirectly disclose, communicate or in
any
way divulge to any person any Confidential Information, without the prior
written consent of the Disclosing Party. The Recipient shall use such
Confidential Information solely for the purposes of this Agreement. The
Recipient shall not provide or grant access to the Confidential Information
to
any Third Party, except
the
Recipient may disclose Confidential Information received by it under this
Agreement only to those of its directors, officers, employees, agents and
consultants, and the directors, officers, employees, agents and consultants
of
its Affiliates, who have a need to know such Confidential Information in the
course of the performance of their duties and who are bound by a written
agreement to protect the confidentiality of such Confidential
Information.
10.3 Limitation
on Obligations.
The
obligations of the Recipient specified in Section 10.2 above shall not apply
to
any Confidential Information to the extent the Recipient can demonstrate, by
clear and convincing evidence, that such Confidential Information:
(a) was
in
the public domain prior to the time of its disclosure under this
Agreement;
(b) entered
the public domain after the time of its disclosure under this Agreement through
means other than an unauthorized disclosure resulting from an act or omission
by
the Recipient;
(c) is
or was
disclosed to the Recipient at any time, whether prior to or after the time
of
its disclosure under this Agreement, on a non-confidential basis by a Third
Party, provided that such Third Party is not, to the Recipient’s knowledge,
bound by an obligation of confidentiality to the Disclosing Party with respect
to such Confidential Party;
(d) is
independently developed by the Recipient without reference to the Confidential
Information of the Disclosing Party; or
(e) is
required to be disclosed by the Recipient to comply with applicable laws or
to
comply with governmental regulations; provided,
that
the Recipient provides prior written notice of such disclosure to the Disclosing
Party and takes reasonable and lawful actions to avoid and/or minimize the
degree of such disclosure.
10.4 Equitable
Relief.
The
Recipient agrees that any breach of this Section 10 may cause the Disclosing
Party substantial and irreparable damages and, therefore, in the event of any
such breach, in addition to other remedies that may be available, the Disclosing
Party shall have the right to seek specific performance and other injunctive
and
equitable relief.
10.5 Ownership
of Confidential Information.
The
Recipient agrees that the Disclosing Party (or any Third Party entrusting its
own confidential information to the Disclosing Party) is and shall remain the
exclusive owner of the Confidential Information disclosed to the Recipient
and
all patent, copyright, trademark, trade secret, and other intellectual property
rights in such Confidential Information or arising therefrom. Except as
expressly set forth in this Agreement, no option, license, or conveyance of
such
rights to the Recipient is granted or implied under this Agreement.
-15-
11. Term
and Termination.
11.1 Term.
Unless
terminated sooner as provided in this Section 11, the initial term of this
Agreement shall extend from the Effective Date for a period equal to the shorter
of (i) five (5) years from the First Commercial Sale of Conforming Gauze, or
(ii) seven (7) years from the Effective Date (the “Initial
Term”),
and
may be renewed for additional one-year terms (each a “Renewal
Term”)
by
mutual agreement of the Parties (the Initial Term and each Renewal Term,
collectively, the “Term”).
11.2 Material
Breach by DERMA.
Except
as set forth in Section 11.3 below, the failure by DERMA to comply with any
of
its material obligations contained in this Agreement, including without
limitation, its breach of its obligations under Sections 3.4 herein, shall
entitle QMT to give to DERMA written notice specifying the nature of the default
and requiring it to cure such default. If such default is not cured within
thirty (30) days after the receipt of such notice, then QMT shall be entitled,
without prejudice to any of its other rights conferred on it by this Agreement
and in addition to any other remedies available to it by law or in equity,
to
terminate this Agreement effective upon written notice to DERMA. The right
of
QMT to terminate this Agreement, as hereinabove provided, shall not be affected
in any way by its waiver or failure to take action with respect to any previous
default.
11.3 DERMA’s
Failure to Meet Minimum Royalties.
In the
event for a given Contract Year DERMA fails to make the subject Minimum
Royalties payments, but nevertheless makes payments aggregating not less than
fifty percent (50%) of the subject Minimum Royalties, QMT’s exclusive remedy
shall be amendment of this Agreement to remove DERMA’s exclusive rights relative
to the Products. Provided, further, in the event (a) for a given Contract Year
DERMA fails to make Royalty payments aggregating at least fifty percent (50%)
of
the subject Minimum Royalties requirement, or (b) for three Contract Years
DERMA
fails to make Royalty Payments equal to or greater than meet the Minimum
Royalties amounts set forth in Section 3.4 hereof, QMT’s exclusive remedies
(other than collection of earned and unpaid royalties) shall be, at its sole
option, cancellation of this Agreement or amendment of this Agreement to remove
DERMA’s exclusive rights relative to the Products.
Anything
hereinbefore or hereinafter contained to the contrary notwithstanding, the
remedies set forth in the immediately preceding paragraph shall be the sole
remedies available to QMT by reason of the failure of DERMA to pay to QMT
Royalties equal to or greater than the Minimum Royalties set forth in Section
3.4 hereof. The right of QMT to terminate this Agreement or convert the license
in the Exclusive Territory to non-exclusive, as hereinabove provided, shall
not
be affected in any way by its waiver or failure to take action with respect
to
any previous default.
11.4 Material
Breach by QMT.
The
failure by QMT to comply with any of its material obligations contained in
this
Agreement shall entitle DERMA to give to QMT written notice specifying the
nature of the default and requiring it to cure such default. If such default
is
not cured within thirty (30) days after the receipt of such notice, DERMA shall
be entitled, without prejudice to any of its other rights conferred on it by
this Agreement and in addition to any other remedies available to it by law
or
in equity, to terminate this Agreement effective upon written notice to QMT.
The
right of DERMA to terminate this Agreement, as hereinabove provided, shall
not
be affected in any way by its waiver or failure to take action with respect
to
any previous default.
11.5 Bankruptcy.
Either
Party may terminate this Agreement immediately by providing written notice
if
the other Party: (a) applies for or consents to the appointment of a receiver,
trustee, liquidator or custodian of itself or of all or a substantial part
of
its assets, (b) becomes unable, or admits in writing its inability, to pay
its
debts generally as they mature, (c) makes a general assignment for the benefit
of its creditors, (d) is dissolved or liquidated in full or in substantial
part,
(e) commences a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
consents to such relief or to the appointment of or taking possession of its
property by any official in such an involuntary case or such other proceeding
commenced against it, (f) takes any action for the purpose of effecting any
of
the foregoing, and (g) becomes the subject of an involuntary case or other
proceeding seeking liquidation, reorganization or other relief with respect
to
itself or its debts under any bankruptcy, insolvency or other similar law now
or
hereafter in effect that is not dismissed within ninety (90) days of
commencement.
-16-
11.6 Effect
of Termination.
(a) In
the
event of termination of this Agreement pursuant to Sections 11.2, 11.3, 11.4
or
11.5 then (a) all licenses and rights granted to DERMA hereunder (except as
set
forth in Section 11.6(d) below) shall terminate and DERMA shall immediately
cease to develop, manufacture, use and sell Products, and (b) DERMA shall be
obligated to pay QMT any accrued Royalty payments, provided,
however,
that
DERMA shall have no obligation to pay to QMT the difference between actual
Royalties owed and paid to QMT as of the date of termination and the Minimum
Royalties of the applicable Contract Year. Notwithstanding the foregoing, in
the
event this Agreement is terminated pursuant to Section 11.2, 11.3, 11.4 or
11.5,
DERMA shall be permitted to sell-off any and all inventory of Products existing
at the date termination, provided that such sales occur within six (6) months
after such termination, and provided further that DERMA remains obligated to
pay
actual Royalties and report to QMT on the sale of any such Products (the
“Sell-Off
Period”).
Any
remaining inventory of Products after such Sell-Off Period shall be destroyed
by
DERMA at its sole expense.
(b) Without
limiting any other legal or equitable remedies that QMT may have, if QMT
terminates this Agreement in accordance with Section 11.2, 11.3 or 11.5, then,
at the request of QMT, DERMA shall, as soon as reasonably possible and to the
extent that it has the right to do so or is permitted by applicable law or
the
applicable Regulatory Authority, transfer to QMT or QMT’s designee possession
and ownership of (i) all governmental or regulatory correspondence, conversation
logs, filings and approvals (including all Regulatory Approvals) relating
exclusively to DERMA’s development or Commercialization of the Product in the
Field in the Territory, and (ii) copies of all data, reports, records and
materials in DERMA’s possession or control relating exclusively to DERMA’s
development or Commercialization of Products in the Field in the Territory,
including all non-clinical and clinical data relating to the Product in the
Field in the Territory, (iii), all agreements pertaining to contract research
organizations (CROs), clinical trials and supply of material required to
continue development of the Product. DERMA shall execute all documents and
take
all such further actions as may be reasonably requested by QMT in order to
give
effect to the foregoing subsections (i), (ii) and (iii) herein.
(c) Any
expiration or termination of this Agreement shall not relieve DERMA from any
obligation that accrued prior to such expiration or termination. Any obligation
under any provision of this Agreement which is intended to survive expiration
or
termination of this Agreement, including without limitation, Sections 1, 7.3,
7.4, 8, 9, 10, 11.6, 12 and 13 shall survive.
(d) Upon
expiration or termination of this Agreement, QMT shall grant and hereby grants
to DERMA a non-exclusive, royalty-free, fully paid up, worldwide right and
license to use any DERMA Inventions relating solely to improvements to DERMA’s
products to the extent that such improvements relate solely to the manufacture
and use of DERMA’s products, and which are not covered by, derived from,
manufactured using or incorporating, or otherwise using or containing the QMT
Intellectual Property, the Materials or the Composition and Process.
11.7 Challenge
to Patent Rights. If
DERMA,
directly or indirectly, by itself or through one of its Affiliates, brings
any
action or proceeding without
"Cause" (defined below) challenging
the validity, enforceability or an interference action of or with respect to
any
of the Patent Rights (a “Challenge”), then QMT shall have the right to terminate
this Agreement at any time following such event upon written notice.
"Cause",
for purposes of the preceding sentence, shall mean (i) any third party claim,
action or suit filed or brought in any applicable court or through any
administrative procedure against DERMA, or (ii) the withholding of payment
for
the Products by customers of DERMA, which in each case presented in clause
(i)
and/or (ii) above is predicated upon the invalidity of the Patent Rights,
which has, or if successfully prosecuted could reasonably be expected to
have, a material adverse effect upon DERMA.
-17-
12. Intellectual
Property Rights.
12.1 Ownership
of Intellectual Property.
QMT
shall own all right, title and interest in the copyright, patent, trademark,
trade secret or other intellectual property rights in the Patent Rights and
Know-how, including without limitation any derivatives, variations, and or
Improvements thereto.
12.2 Ownership
of Inventions.
Inventorship shall be determined in accordance with United States patent law
at
the time the inventor made the invention. Each Party shall ensure that its
employees, consultants, agents, and representatives are contractually required
to assign to such Party all rights, title, and interest to any inventions,
to
maintain all Confidential Information, and to promptly disclose to such Party
all such inventions.
(a) QMT
Inventions.
QMT
will have and retains sole and exclusive title to all inventions, developments,
Improvements, discoveries and Know-how relating to the QMT Intellectual Property
which are made, conceived or reduced to practice solely by QMT, its Affiliates,
employees, consultants, agents or other Persons acting under its authority
in
the course of or as a result of this Agreement or in the course of any
activities inside and outside the Field and Territory.
(b) DERMA
Inventions.
In the
event any invention, development, Improvement, discovery, or Know-how relating
to the QMT Intellectual Property is made, conceived or reduced to practice
by
DERMA, its Affiliates, employees, consultants, agents or other persons acting
under its authority in the course of, in connection with or as a result of
this
Agreement, either solely or jointly with QMT, an Affiliate or a Third Party,
(each a “DERMA
Invention”)
such
DERMA Invention shall be promptly disclosed by DERMA to QMT in writing. All
DERMA Inventions shall be owned by QMT and any Patent Rights under any DERMA
Inventions shall be owned by QMT. DERMA hereby assigns and agrees to assign
all
right, title, and interest to such DERMA Inventions to QMT, shall execute any
documents reasonably necessary to fulfill the purposes of this Section 12.2(b),
and hereby appoints QMT as its attorney to execute and deliver any such
documents on its behalf in the event the DERMA should fail or refuse to do
so
within a reasonable period following QMT’s request. Any
such
DERMA Invention shall be subject to the license granted to DERMA under this
Agreement.
12.3 Prosecution
of Patent Rights.
QMT, by
counsel it selects, shall have the right, but not the obligation, to prepare,
file, prosecute and maintain the Patent Rights in QMT’s name and in countries
designated by QMT at the sole discretion of QMT. QMT shall bear all the costs
and expenses associated with the filing, prosecution and maintenance of such
Patent Rights.
-18-
12.4 Third
Party Infringement.
Each
Party shall promptly notify the other Party in writing of any alleged
infringement of the Patent Rights and of any available evidence
thereof.
(a) QMT
shall
have the first right, but not the obligation, under its own control and at
its
own expense, to prosecute any Third Party infringement of the Patent Rights
and/or to defend the Patent Rights in any declaratory judgment or other action
brought by a Third Party which alleges invalidity, unenforceability or
non-infringement of the Patent Rights. QMT may enter into any settlement,
consent judgment or other voluntary final disposition of any infringement or
declaratory judgment action hereunder without the prior written consent of
DERMA. Any recovery or damages derived from any such action shall be retained
by
QMT.
(b) In
the
event QMT institutes a court proceeding relating to the infringement of the
Patent Rights in the Field under Section 12.4(a), DERMA shall have the right
to
intervene in such proceeding and QMT shall not oppose such intervention,
provided that (i) DERMA notifies the court and QMT of its intention to intervene
within 180 days of the commencement of such proceeding, and (ii) DERMA shares
equally with QMT the total costs incurred by QMT (including without limitation
attorney and expert fees) of conducting such proceeding. QMT shall retain
control of the conduct and settlement of any such proceeding; provided, however,
that no settlement, consent judgment or other voluntary final disposition of
such action may be entered into without the prior written consent of DERMA,
which consent shall not be unreasonably withheld or delayed. Any recovery of
damages for any such proceeding (or settlement thereof) shall be applied first
in satisfaction of any out-of-pocket expenses incurred by the Parties relating
to the proceeding (including without limitation attorney and expert fees) and
the balance shall be equally divided between the Parties.
(c) In
the
event that QMT declines to commence legal action to defend against a declaratory
action alleging invalidity of the Patent Rights or to prosecute infringements
of
the Patent Rights in the Field, QMT shall notify DERMA of its decision promptly
in writing. Thereafter, DERMA shall have the right, but shall not be obligated,
to commence legal action at its own expense to defend or prosecute such
infringements relating to the Patent Rights in the Field. No settlement, consent
judgment or other voluntary final disposition of the suit may be entered into
without the consent of QMT, which consent shall not be unreasonably withheld
or
delayed. The total cost of any action commenced solely by DERMA shall be borne
by DERMA, and DERMA shall retain any recovery or damages derived
therefrom.
12.5 Infringement
Allegations.
In the
event that a Third Party asserts or alleges that a Product manufactured or
sold
by DERMA or its Affiliates infringes a patent or other proprietary right of
such
Third Party, DERMA shall assume the defense of such claim and shall indemnify
QMT for all reasonable expenses and/or damages incurred by it as a result of
such claim. QMT may participate in the defense of such claim through counsel
of
its own choosing and at its sole expense. In the event that QMT receives notice
of such assertion or allegation, QMT shall notify DERMA of such allegation
or
assertion. DERMA may enter into any settlement, consent judgment, or other
voluntary final disposition of any infringement action under this Section 10.5
in the Field; provided,
however,
that
DERMA shall not enter into any settlement, consent judgment or other voluntary
final disposition that admits or concedes that an aspect of the Patent Rights
is
invalid or unenforceable, without the prior written consent of QMT, which
consent shall not be unreasonably withheld or delayed.
12.6 Trademarks.
QMT is
and shall remain the owner of all right, title and interest to the common law
trademark and goodwill associated with the name “Nimbus®,”
and
any other marks it develops in association with the QMT Intellectual Property
(collectively, the “QMT
Marks”)
and
DERMA agrees that it will not at any time assert or claim any interest in,
nor
register or attempt to register the QMT Marks or any marks confusingly similar
thereto. DERMA shall be responsible for the selection, registration and
maintenance of all other trademarks and trade names that it employs in
connection with Products (collectively, the “DERMA
Marks).
QMT
agrees that it will not at any time assert or claim any interest in, nor
register or attempt to register the DERMA Marks or any marks confusingly similar
thereto.
-19-
13. Miscellaneous.
13.1 Use
of
Name/Public Statements.
Except
to the extent required by applicable law or regulation, each Party agrees that
it will not at any time during or following termination of this Agreement use
the name of the other Party or any names, insignia, symbols, or logotypes
associated with the other Party or any variant or variants thereof or the names
of the other Party’s employees orally or in any literature, advertising, or
other materials without the prior written consent of Party whose name is to
be
used, which consent shall not be unreasonably withheld.
13.2 Assignment.
This
Agreement may not be assigned or otherwise transferred by either Party without
the prior written consent of the other Party, which consent shall not be
unreasonably withheld or delayed; provided,
however,
that
either Party may, without such consent, assign this Agreement and any of its
rights or obligations hereunder to its Affiliates or in connection with the
transfer or sale of all or substantially all of the portion of its business
to
which this Agreement relates, or in the event of its merger or consolidation
or
change in control or similar transaction; provided,
further,
that the
assigning Party shall deliver written notice of any such permitted assignment
to
the other Party. This Agreement shall be binding upon and inure to the benefit
of the successors and permitted assigns of the Parties and the name of a Party
appearing herein shall be deemed to include the names of such Party’s successors
and permitted assigns to the extent necessary to carry out the intent of this
Agreement. Any attempted assignment not in accordance with this Section 13.2
shall be void.
13.3 Independent
Contractors.
QMT and
DERMA shall at all times act as independent parties and nothing contained in
this Agreement shall be construed or implied to create an agency or partnership.
Neither Party shall have the authority to contract or incur expenses on behalf
of the other.
13.4 Notices.
Any
notice or communication required or permitted to be given or made under this
Agreement by one of the Parties hereto to the other shall be in writing and
shall be deemed to have been sufficiently given or made for all purposes if
sent
by hand, recognized national overnight courier, confirmed facsimile
transmission, or mailed by certified mail, postage prepaid, return receipt
requested, addressed to such other Party at its respective address as
follows:
If
to
DERMA:
Derma
Sciences, Inc.
000
Xxxxxxxx Xxxxxx
Xxxxx
000
Xxxxxxxxx,
Xxx Xxxxxx 00000
Attn:
Xxxxx X. Xxxxxxxxx
Fax:
000.000.0000
If
to
QMT:
Quick-Med
Technologies, Inc.
0000
XX
00xx
Xxx
Xxxxxxxxxxx,
Xxxxxxx 00000
Attn:
Xxxxx Xxxxxx, President
Fax:
000.000.0000
13.5 Severability.
If any
one or more of the provisions of this Agreement shall be held to be invalid,
illegal or unenforceable, that provision shall be stricken and the remainder
of
this Agreement shall continue in full force and effect; provided,
however,
that
the Parties shall renegotiate an acceptable replacement provision so as to
accomplish, as nearly as possible, the original intent of the
Parties.
13.6 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Florida and applicable U.S. Federal law, without regard to any choice
of law principles that would dictate the application of the laws of another
jurisdiction. The state and federal courts located in Florida shall have
exclusive jurisdiction over any dispute arising under this
Agreement.
13.7 Entirety;
Amendment.
This
Agreement represents the entire agreement of the Parties and expressly
supersedes all previous written and oral communications between the Parties.
No
amendment, alteration, or modification of this Agreement or any exhibits
attached hereto shall be valid unless executed in writing by authorized
signatories of both Parties.
13.8 Waiver.
The
failure of any Party hereto to insist upon strict performance of any provision
of this Agreement or to exercise any right hereunder will not constitute a
waiver of that or any other provision or right.
-20-
IN
WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their
duly authorized representatives as of the date first written above.
DERMA
SCIENCES, INC.
By: /s/
Xxxxx
X. Xxxxxxxxx
Xxxxx
X.
Xxxxxxxxx
Vice
President of Marketing and
Business
Development
QUICK-MED
TECHNOLOGIES,
INC.
By: /s/
Xxxxx
X. Xxxxxx
Xxxxx
X.
Xxxxxx
President
-21-
EXHIBIT
A
Patent
Rights
Issued
Title Number Issued
Intrinsically
Bactericidal Absorbent Dressing US
7.045,673 5/16/06
And
Method of Fabrication
International
Country Number
Australia 000000
Xxxxxx
Pending
Canada Pending
China
99814229.9
Russia
004160
Europe
Pending
Indonesia Issued
India
Allowed
Japan Pending
Korea
Pending
Mexico
Pending
Published
Patent Applications
Title Number
Absorbent
Materials with Covalently Bonded Nonleachable US
2002-017
Polymeric
Antimicrobial Surfaces & Method of Preparation
7828-A1
(Continuation
in Part submitted 1/28/2002)
Publication
Number
Same
as
above WO
03039602A2
Same
as
above EP
1450966
-22-
EXHIBIT
B
Materials
-23-
EXHIBIT
C
QMT
Trademark Standards
-24-
EXHIBIT
D
Form
of Confidentiality and Non-competition Agreement
-25-
EXHIBIT
E
Products
|
1.
|
Conforming
gauze bandage used as a secondary dressing to hold primary dressing
in
place: either 100% cotton or a blend of rayon and PET
|
2. Gauze
sponges, gauze bandage rolls, gauze packing strips: 100% cotton
3. Oil
emulsion acetate: 100% acetate
4. Unna
boot: 100% cotton
-26-
