1
EXHIBIT 10(m)
ALL SECTIONS MARKED WITH TWO ASTERISKS ("**") REFLECT PORTIONS WHICH
HAVE BEEN REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION BY TRIMEDYNE, INC. AS PART OF A REQUEST FOR CONFIDENTIAL TREATMENT.
LICENSE AGREEMENT
This Agreement is made and entered into by and between Coherent, Inc.,
a Delaware corporation, having its principal office located at 0000 Xxxxxxx
Xxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 (hereinafter "LICENSOR"), and
Trimedyne, Inc., a California corporation having its principal office at 0000
Xxxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxx 00000 (hereinafter referred to as
"LICENSEE").
RECITALS
Whereas, LICENSOR is the owner of U.S. Patent No. 5,037,421 and U.S.
Patent No. 5,147,354 both entitled "Mid Infrared Laser Arthroscopic Procedure"
(the "Licensed Patents");
Whereas, LICENSEE desires to obtain a non-exclusive license under the
Licensed Patents; and
WHEREAS, LICENSOR is willing to grant LICENSEE a non-exclusive license
under the Licensed Patents.
Now therefore, subject to the terms and conditions contained herein,
the parties agree as follows:
1.0 Definitions
-----------
1.1 LICENSED PATENTS shall mean the U.S. Patents referred to
above plus any renewals, divisions, reissues, reexaminations or
continuations-in-part with respect thereto and any corresponding foreign
patents.
1.2 LICENSED LASER shall mean any laser or laser systems which
infringes one or more of the valid claims of the Licensed Patents.
1.3 LICENSED DELIVERY DEVICE shall mean any device that
delivers the laser energy to a desired location which infringes one or more of
the valid claims of the Licensed Patents, including such Devices sold with
original equipment or subsequent thereto.
1.4 LICENSED DEVICE shall mean a Licensed Laser and/or a
Licensed Delivery Device. It shall be presumed that a Licensed Device sold by
LICENSEE infringes the Licensed Patents (in which case royalties would be due
hereunder) if it is used with an arthroscopic or endoscope in a liquid medium
in a method covered by any valid claim of the Licensed Patents, unless (i) the
Licensed Device will be used solely for cardiovascular applications and
appropriate labeling is placed on the Licensed Device or (ii) LICENSEE provides
LICENSOR with a written statement signed by the customer that the Licensed
Device shall not be used for applications that infringe one or more of the
valid claims of the Licensed Patents.
1.5 LICENSED APPLICATION shall mean only orthopedic
applications.
1.6 NET SELLING PRICE for the purpose of computing royalties
shall mean the price at which LICENSEE invoices the sale or lease of Licensed
Devices to its customers. It is further understood and agreed that in respect
of inter-company sales between the LICENSEE and its related
1
2
companies, the Net Selling Price shall mean the price at which the LICENSEE
ordinarily sells to its independent distributors or customers under similar
circumstances. In such event, no royalty shall accrue or be payable in respect
of any subsequent resale of such equipment by such independent distributor or
consumer to a third party.
1.7 EFFECTIVE DATE shall be July 1, 1994.
1.8 SUBSIDIARY shall mean a corporation, company or other
entity more than 50% of whose outstanding shares or securities (representing
the right to vote for the election of directors or other managing authority)
are, now or hereafter, owned or controlled by LICENSEE. Whenever the term
LICENSEE is used through this Agreement, it is intended to include Licensees
and Subsidiaries.
2.0 License Grant
-------------
1.2 LICENSOR grants LICENSEE a non-exclusive, world-wide
license under the Licensed Patents to make, have made, use, lease and sell
Licensed Devices for Licensed Applications which would infringe any valid claim
of the Licensed Patents.
2.2 LICENSOR hereby covenants not to xxx customers of LICENSEE
for using Licensed Devices for Licensed Applications sold or leased by LICENSEE
upon which the requisite royalties have been paid or accrued by LICENSEE under
this Agreement.
2.3 LICENSEE agrees to appropriately xxxx all Licensed Devices
with a notice stating that the products are licensed under U.S. Patent No.
5,037,421 and U.S. Patent No. 5,147,354.
2.4 LICENSOR undertakes that it will not assert against
LICENSEE, or any customer of LICENSEE, any United States patent, or any pending
United States patent application upon which claims may be granted, which would
have a scope broader than any of the independent claims in either U.S. Patent
No. 5,037,421 or U.S. Patent No. 5,147,354. For the purposes of this
paragraph, a claim having a scope broader than the independent claims referred
to above, would necessarily be infringed by performing the steps set forth in
those claims without regard to the specific design of the laser system
generating the 1.8 to 2.2 micron output beam.
3.0 Release of Past Infringement. Execution of this Agreement and
payment of the amount set forth in Section 4.1 hereof shall be in full
settlement of any claim of infringement liability arising under the Licensed
Patents for Licensed Applications prior to the Effective Date of this
Agreement.
4.0 Royalties
---------
4.1 LICENSEE agrees to pay LICENSOR the sum of $100,000 as a
license issue fee, plus $50,000 for past royalties, payable within fifteen (15)
days of execution of this Agreement. Failure to pay this amount when due shall
be considered a material breach of this Agreement and LICENSOR shall be
permitted, in addition to whatever other legal remedies it may be entitled to,
to terminate this Agreement without regard to the notice provisions of Section
6.2 hereof.
4.2 During the term of this Agreement LICENSEE agrees to pay
LICENSOR royalties
2
3
for any Licensed Devices sold or leased by LICENSEE in an amount equal to 2% of
the Net Selling Price for the Licensed Devices.
4.3 For any agreement year during the term of this Agreement,
royalties paid under Section 4.2 hereof shall not be less than $ nor more
than $**. In the event that the Net Selling Price for Licensed Devices sold by
Licensee during any calendar year are insufficient to require payment of $**
of royalties, LICENSEE agrees to pay the difference to LICENSOR with its
royalty payment due August 15 of the next agreement year.
4.4 Royalties shall be paid quarterly and payments shall be
made not more than forty-five (45) days following the termination of each
calendar quarter. Royalties shall be payable hereunder when the sale of
Licensed Devices shall have been invoiced by LICENSEE or shipped, whichever is
sooner.
4.5 With respect to licensed Devices shipped to customers
under lease, LICENSEE shall pay royalties to LICENSOR as if such transaction
were a sale.
4.6 LICENSEE shall have the right to adjust royalties payable
hereunder for returns, bona fide price reductions and allowances of Licensed
Devices sold or leased by LICENSEE on which the requisite royalties shall
previously have been paid hereunder. Royalties will however accrue and be
payable on subsequent sales of Licensed Devices which have been acquired by way
of trade-ins, purchases from leasing companies, or other similar acquisitions.
4.7 If subsequent to the Effective Date, LICENSOR grants
another license to the Licensed Patents with royalty rates and/or up front
payments (exclusive of payments for past infringements) more favorable than
those provided herein, LICENSEE may, at its option, adopt all of the terms of
the new license agreement as of the effective date of such subsequent license.
LICENSOR shall notify LICENSEE of any such subsequent licenses and provide
LICENSEE with the opportunity to exercise its right under this Section 4.7.
Such rights shall be exercised by Licensee in writing within 30 days notice
from Licensor or be deemed waived.
5.0 Records and Reports
-------------------
5.1 LICENSEE will maintain records and keep accounts in
sufficient detail to enable a certified public accountant nominated by LICENSOR
and approved by LICENSEE to determine the amount of royalty actually due and
payable for each calendar quarter year. LICENSEE will permit such a certified
public accountant nominated by LICENSOR and approved by LICENSEE to make
inspection of such records and accounts nor more often than annually, at the
request of LICENSOR. Any such certified accountant shall maintain in
confidence any information learned by it by reason of any such inspection and
not use the same for any purpose whatsoever except to verify royalty payments
and reports made by LICENSEE and to report to LICENSOR any underpayment or
overpayment of royalties. If an audit shall reveal that the LICENSEE has made
an error of 10% or more in its favor in any payment due to LICENSOR, the
LICENSEE shall pay the costs of the audit.
5.2 Unless the maximum royalty pursuant to Paragraph 4.2
hereof has been paid, at the end of each calendar year in which this maximum
royalty has not bee paid, LICENSEE will
3
4
deliver to LICENSOR within 60 days after the end of the calendar year a
statement setting forth the number and type (by model number) of Licensed
Devices sold by LICENSEE during the calendar year. LICENSOR shall retain in
confidence all information contained in such royalty statement.
6.0 Termination
-----------
6.1 LICENSEE may give LICENSOR notice of termination of this
Agreement at any time during the life of the Agreement and such termination
will be effective thirty days following written notice from LICENSEE of intent
to terminate.
6.2 If either party to this Agreement should default in the
performance of any of the terms of this Agreement (including a breach of this
Agreement which can be cured) the non-defaulting party may terminate this
Agreement by providing written notice of termination to the defaulting party
and the termination shall be effective 60 days from said notice unless the
defaulting party cures such default within said 60 day period or taken
reasonable steps to avoid recurrence of the default if the default is of a type
which cannot be cured.
6.3 Should LICENSEE terminate this Agreement (under either 6.1
or 6.2), said notice of termination shall be accompanied by a statement of all
royalty based activities performed by LICENSEE on which royalties are due
hereunder for such period as has elapsed since the last report. Said statement
shall be accompanied by all monies due, including the minimum royalty payment
for the year.
6.4 Unless terminated earlier, this Agreement shall continue
in force until the expiration of the Licensed Patents.
7.0 General
-------
7.1 This License shall not be assignable by LICENSEE without
the express written consent of LICENSOR. LICENSEE may, however, upon written
notice to LICENSOR, assign or extend its rights under this Agreement as a part
of the sale of all or a portion respectively of its business in which Licensed
Devices are manufactured, used or sold pursuant to this Agreement, but only
with respect to the business sold as a part of such sale; provided, however,
that if the acquiring company is selling infringing Devices other than those of
Licensee prior to the acquisition, the $** maximum royalty provision set forth
in Section 4.3 shall terminate and no longer apply after the acquisition. If
LICENSEE acquires a laser business of an unlicensed third party, neither the
acquisition nor this Agreement shall extinguish the third party's liability
for past infringement.
7.2 Any dispute or claim arising out of, in relation to, or in
connection with this Agreement, or the interpretation, making, performance,
breach or termination thereof, shall be finally settled by binding arbitration
in San Francisco, California under the Commercial Arbitration Rules of the
American Arbitration Association by three arbitrators appointed in accordance
with said Rules. Judgment on the aware rendered by the arbitrators may be
entered in any court having jurisdiction thereof. This Agreement shall be
governed by the laws of the state of California. The arbitrators shall apply
California law to the merits of any dispute or claim, without reference to
rules of conflict of law. The costs of the arbitration, including
administrative and arbitrators' fees, shall be shared equally by the parties.
Each party shall bear the cost of its own attorneys' fees and expert witness
fees. The
4
5
arbitrators shall make preliminary findings of fact and conclusions of law
which they shall circulate to the parties for their comment during the next
fifteen days. Between fifteen and thirty days after such circulation, the
arbitrators shall issue their final ruling which shall include findings of fact
and conclusion of law.
7.3 This agreement contains the entire and only agreement
between the parties and supersedes all pre-existing agreements between them
respecting its subject matter. Any changes hereto are effective only if in
writing and signed by both parties.
7.4 Any payment, notice or other communication required by, or
permitted to be made by or given to, either party pursuant to this Agreement
shall be sent to such party by registered, certified or express mail, postage
prepaid, or prepaid courier service, addressed to such party at its address set
forth at the beginning of this Agreement, or to such other addresses as such
party shall designate by written notice given to the other party, and shall be
deemed to have been made, given or provided on the date of mailing.
7.5 The parties to this Agreement shall not disclose the terms
and conditions of this Agreement to any third party without the express written
consent of the other party, except:
(a) In response to bona fide requirements or advice of
counsel;
(b) In response to Government disclosure requirements
and inquiries;
(c) In furtherance of judicial action, but the parties
agree to use their best efforts to obtain a
protective order limiting disclosure to attorneys
only; and
(d) For the purpose of identifying LICENSEE as a
licensee of the Licensed Patents, but excluding any
dollar amounts to be paid under this Agreement.
(d) To prior licensees for the purpose of complying
with "most favored licensee" obligation set forth
in prior license agreements.
The parties may also disclose the terms and conditions of this Agreement on a
confidential basis to potential parties to commercial transactions, for example
to potential investors or potential customers, subject to a written
confidentiality agreement.
7.6 Upon execution of this Agreement, the parties shall
execute a consent decree in the form of Exhibit A attached hereto, and such
documents shall be filed jointly on behalf of the parties in the United States
District Court for the Northern District of California in litigation C94-0591
SBA. Each party is to bear its own cost and attorneys' fees.
7.7 LICENSOR grants LICENSEE a non-exclusive, world-wide
license under U.S. Patent No. 5,257,969 to make, have made, use, lease and
sell products that would infringe upon any valid claim of this patent. There
shall be no royalties due on account of such sales occurring within sixty days
of the date of this Agreement. After this 60 day period, royalties shall be
paid on the sale of products that infringe this patent (which shall be in
addition to other royalties required to be paid hereunder) in an amount equal
to 2% of Net Selling Price until six months past the Effective
5
6
Date and 8% of Net Selling Price thereafter. These sales shall not be counted
towards the minimum or maximum royalties set forth in Section 4.3. For all
other purposes, this patent shall be considered one of the "Licensed Patents"
and the products that infringe upon this patent shall be considered a "Licensed
Device."
Now therefore the parties have caused this Agreement to be signed by
their authorized representatives as of the date first written above.
COHERENT, INC.
Date: December 8, 1994 By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------ -----------------------------
Title: VP & CFO
--------------------------
TRIMEDYNE, INC.
Date: December 9, 1994 By: /s/ Xxxxx Xxxx
------------------------ -----------------------------
Title: President and COO
-------------------------
6
7
XXXXXXX X. STALLMENT
XXXX X. XXXXXXX
XXXXXXX & XXXXXXX
0000 Xxxxx Xxxxxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Attorneys for Plaintiff and Counterdefendant
COHERENT, INC.
TALIVIDIS CEPURITIS, ESQ.
XXXXX & XXXXX, LTD.
00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Attorneys for Defendant and Counterclaimant
TRIMEDYNE, INC.
XXXXXX X. FINE
XXXXX & XXXXXXXX
Xxx Xxxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Attorneys for Defendant
TRIMEDYNE, INC.
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
COHERENT, INC. ) Civil Action No.
Plaintiff, ) C94 0591 SBA
vs. )
)
TRIMEDYNE, INC. )
Defendant. )
) CONSENT DECREE
---------------------------------- --------------
TRIMEDYNE, INC., )
Counterclaimant, )
vs. )
)
COHERENT, INC., )
Counterdefendant.)
EXHIBIT A
---------
1
8
The parties hereto, having resolved their differences in accordance
with a License Agreement executed by them, and having consented to the entry of
the following judgment:
IT IS HEREBY ORDERED:
1. The Court has jurisdiction over the parties and the subject
matter of this action.
2. United States Letters Patents, Nos. 5,037,421, and 5,147,354
are owned by plaintiff and are valid and enforceable in all respects as between
the parties when interpreted to cover orthopedic applications unless and until
there is some other final judicial or administrative (including patent office
reexamination) determination or invalidity and/or unenforceability from which
no appeal can be taken.
3. Defendant Trimedyne, Inc. has infringed or has induced the
infringement of United States Letters Patents, Nos. 5,037,421 and 5,147,354
with respect to certain of the lasers and laser energy delivery devices it
markets as of the date of this judgement for orthopedic applications, unless
and until there is some other final judicial or administrative (including
patent office reexamination) determination from which no appeal can be taken
which limits the scope of one or more of such patents in such a way as to avoid
infringement by such currently marketed products.
4. United States Letters Patent No. 5,257,989 is owned by
plaintiff and is valid and enforceable in all respects as between the parties,
unless and until there is some other final judicial or administrative
(including patent office reexamination) determination of invalidity and/or
unenforceability from which no appeal can be taken.
5. Defendant Trimedyne, Inc. has infringed United States Letters
Patent No. 5,257,989 with respect to certain laser energy delivery devices it
markets as of the date of this judgement, unless and until there is some other
judicial or administration (including patent office reexamination)
determination from which no appeal can be taken which limits the scope of one
or more of such patents in such a way as to avoid infringement by such
currently marketed products.
6. Judgement on the basis of such infringement of United States
Letters Patents, Nos. 5,037,421, 5,147,354, and 5,257,989 is entered in favor
of plaintiff.
7. The above-entitled civil action, including all claims of
plaintiff against defendant and all counterclaims of defendant against
plaintiff is hereby dismissed.
8. There shall be no accounting or award of damages and each
party is to bear its own costs and attorney's fees.
9. This consent judgement is binding upon and constitutes res
judicata between the parties except as otherwise provided above in paragraphs
2, 3, 4 and 5.
2
9
10. The parties waive all right to appeal from this judgment.
Respectfully submitted,
XXXXXXX & XXXXXXX
0000 Xxxxx Xxxxxxxx
Xxx Xxxxxxxxx, XX 00000
(000) 000-0000
Dated: By:
----------------------- ----------------------------
Xxxxxxx X. Stallment
Attorneys for Plaintiff and
Counterdefendant
XXXXX & XXXXX, LTD.
00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
(000) 000-0000
Dated: By:
----------------------- ----------------------------
Talividis Cepuritis, Esq.
Attorneys for Defendant and
Counterclaimant
Xxxxxx X. Fine
XXXXX & XXXXXXXX
IT IS SO ORDERED:
Dated:
--------------------- -------------------------------
U.S. Dist. Judge X.X. Xxxxxxxxx
Atty. Docket No.: XXXX-A0046
3
