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EXHIBIT 10.10
CROSS-LICENSING AGREEMENT, DATED 5/2, 1998, BETWEEN MASIMO LABORATORIES AND
MASIMO CORPORATION.
CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.
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EXHIBIT 10.10
CROSS-LICENSING AGREEMENT
BETWEEN
MASIMO LABORATORIES
AND
MASIMO CORPORATION
DATED 5/2, 1998
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CROSS-LICENSING AGREEMENT
THIS CROSS-LICENSING AGREEMENT ("Agreement") is made and entered into
as of this 2nd day of May, 1998, by and between MASIMO LABORATORIES, a
Delaware corporation ("LABS"), and MASIMO CORPORATION, a Delaware corporation
("MASIMO"), with reference to the following:
RECITALS:
A. MASIMO has developed a new technology ("Masimo Technology" as
defined herein). Masimo Technology incorporates circuitry and software which,
among other things, acquires and detects signals generated by red and infrared
LEDs, and which is designed to extract arterial oxygen saturation and pulse
rate values from such signals.
B. LABS desires a license to MASIMO Technology for certain applications
other than Xxxxx Xxxxx Monitoring.
C. LABS further desires a license to make, use and sell devices which
incorporate MASIMO Technology for Xxxxx Xxxxx Monitoring for distribution
throughout the world.
D. MASIMO desires an option to purchase a license to technology
developed by LABS for use in blood glucose monitoring applications in the
hospital market.
E. MASIMO has acquired substantial Know-How (as defined below) in
extracting signals from signals contaminated by noise.
F. MASIMO has acquired and expects to continue to acquire a
reputation for excellence, and its Trademark has and will continue to acquire
valuable goodwill.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, LABS and MASIMO hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms, whether
used in the singular or the plural shall have the following meaning:
1.1 Accessory means cables (including but not limited to MASIMO's
PC08 and PC12 8-foot and 12-foot patient cables, or any other accessory
manufactured by MASIMO and used with any of the SpO(Sub 2) Sensors.
1.2 Average Selling Price means the total amount, in dollars
(based upon the first sale to arms-length customers), for Products
divided by the number of Products sold that quarter, on a Product by
Product basis.
1.3 Distributor means a party that markets Licensed Devices or
Stand Alone Licensed Devices to End-Users on behalf of LABS or a
customer of LABS that buys Licensed Devices or Stand Alone Licensed
Devices from LABS, private labels such devices, and markets such
Licensed Devices or Stand Alone Licensed Devices to End-Users.
1.4 End User is a direct user of Licensed Devices or Stand Alone
Licensed Devices in a clinical environment for medical diagnostic
purposes on patients.
1.5 Improvement means any invention, adaptation, modification
or change.
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1.6 LABS Technology means technical information, inventions, concepts,
products, components, trade secrets, know-how, techniques, designs, processes,
communications protocols, software, Improvements, whether patentable or not,
patents, patent applications, including any patents issuing thereon and any
and all divisions, continuations and continuations-in-part thereof, and any
and all reissues and reexaminations of any such patents, copyrights, copyright
registrations and applications, and all other intellectual property rights
conceived, originated, discovered, or developed by LABS, solely or jointly
with others, or by others under LABS' direction during the term of this
Agreement.
1.7 Licensed Applications means use of MASIMO SET in all applications
with the exception of applications for Xxxxx Xxxxx Monitoring.
1.8 Licensed Devices means devices for-use in Licensed Applications,
alone or in combination with MASIMO Applications.
1.9 Licensed Trademarks means the MASIMO SET product designation and
word xxxx(s) set forth on Exhibit B.
1.10 MASIMO Applications means use of MASIMO SET for Xxxxx Xxxxx
Monitoring.
1.11 MASIMO Confidential Information means confidential information and
proprietary material of MASIMO and includes, but is not limited to, the
following types of information and other information of a similar nature:
ideas, concepts, materials, techniques, models, data, designs, documentation,
flow charts, budgets, projections, forecasts, marketing and development plans,
the Masimo Technology, the Software, communication protocols, and testing
procedures.
1.12 MASIMO Technology means technical information, inventions,
concepts, products, components, trade secrets, know-how, techniques, designs,
processes, communications protocols, the Software, whether patentable or not
patent applications, copyright applications, the Patent Rights, and copyrights
and all other intellectual property rights relating to MASIMO SET alone or
incorporated in MS Boards, SpO(Sub 2). Sensors, Improvements to the above and
related documentation generated or acquired by MASIMO prior or subsequent to
the effective date of this Agreement.
1.13 MS Boards means MASIMO's standard circuit board or chip set which
contains MASIMO SET and algorithms necessary to process the information
transmitted from the SpO(Sub 2) Sensor and convert it into SP0(Sub 2)
Measurements.
1.14 Net Selling Price means the total sales revenue (including any
amounts received for rental or leasing of the Licensed Devices by LABS) for
the product in question, excluding charges for returns, outbound prepaid or
allowed transportation charges, sales taxes, tariffs or duties directly
imposed with reference to particular sales or similar items. Net Selling Price
shall only include one sale per Licensed Device.
1.15 Party means LABS or MASIMO; Parties means LABS and MASIMO.
1.16 Patent Rights means all patents owned by MASIMO on technology
developed by MASIMO which cover Licensed Applications and MASIMO Applications.
The present patent numbers and patent application are set forth on Exhibit C
to this Agreement.
1.17 Products are MS Boards, SpO(Sub 2) Sensors and Accessories.
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1.18 Software means any and all computer/instrument software and/or
firmware owned by or licensed to MASIMO that is used or useful in connection
with MASIMO Technology for use in any Licensed Application and MASIMO
Applications, including any and all future updates, revisions and Improvements
thereto, all in source code and object code format, and all written
documentation relating to such software.
1.19 SpO(Sub 2), Measurement means noninvasive measurement of arterial
oxygen saturation (accounting for at least Hb and HbO(Sub 2), and possibly
accounting for HbCO and/or HbMeth), plethysmographic waveforms, and/or pulse
rate from neonate, pediatric and adult subjects (excludes fetal measurement
and venous oxygen saturation).
1.20 SpO(Sub 2) Sensor means reusable and disposable standard adult,
pediatric and neonatal Sensors for use with making SpO(Sub 2) Measurements.
Standard SpO(Sub 2) Sensors currently manufactured by Masimo have the
following model number
LNOP(R)-NEO-PT Disposable Neonatal Sensor (preterm)
LNOP(R)-NEO Disposable Neonatal Sensor
LNOP(R)-Adt Disposable Adult Sensor
LNOP(R)-Pdt Disposable Pediatric/Slendor Digit Sensor
LNOP(R)-DC1 Reusable Adult Finger Clip Sensor
Masimo intends to produce additional standard models of SpO(Sub 2)
Sensors. As Masimo produces such additional models, the Parties agree to
negotiate in good faith their pricing for this agreement.
1.21 Stand Alone Licensed Devices means LABS' completed patient monitor
devices which do not incorporate a Licensed Application but incorporate MS
Boards to provide SpO(Sub 2) Measurements. Stand Alone Licensed Devices shall
not include any methods or devices other than MS Boards to account for Hb and
HbO(Sub2) in arterial blood oxygen saturation.
1.22 Standard Cost means the cost for direct materials and labor,
overhead and administration, in accordance with generally accepted accounting
principal
1.23 LABS Confidential Information means confidential
information and proprietary material of LABS and includes, but is not limited
to, the following types of information and other information of a similar
nature: ideas, concepts, materials, techniques, models, data, designs,
documentation, flow charts, budgets, projections, forecasts, marketing and
development plans, communication protocols and testing procedures.
1.24 Xxxxx Xxxxx Monitoring means SPO(Sub 2) Measurement peripheral
venous oxygen saturation measurement, mixed venous oxygen saturation
measurement fetal oximetry, Sudden Infant Death Syndrome "SIDS") monitoring
ECG, blood pressure (non-invasive blood pressure, invasive blood pressure and
continuous non-invasive blood pressure), temperature and respiration
monitoring.
2. LICENSES GRANTED TO LABS
2.1 Licenses Granted to LABS.
2.1.1 MASIMO grants to LABS an exclusive (including of MASIMO),
perpetual, worldwide license to (i) use the MASIMO Technology to
develop Licensed Applications alone or combined with MASIMO
Applications and to develop Licensed Devices, (ii) to make, have made,
use, and sell Licensed Devices, (iii) to sublicense the MASIMO
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Technology for the development of or for use in Licensed Applications
and Licensed Devices, and (iv) to sublicense the use, manufacture and
sale of Licensed Devices.
2.1.2 MASIMO further grants to LABS an exclusive, perpetual,
worldwide license to copy, modify, and make derivative works of the
Software for incorporation into Licensed Devices, to distribute the
Software in conjunction with a transfer of a Licensed Device to
End-Users and Distributors, and to sublicense the right to copy and
modify the Software for incorporation into Licensed Devices.
2.1.3 MASIMO further grants to LABS the right to incorporate MS
Boards into Stand Alone Licensed Devices and to make, have made, use
and sell such Stand Alone Licensed Devices to Distributors, to End
Users of such devices and through other patient monitoring companies
(including, but not limited to, in a private label contract which does
not include LABS name). LABS shall also have the right to sublicense to
one subsidiary, affiliated company, or entity under common control with
LABS at the time of the sublicense, its right to incorporate MS Boards
into Stand Alone Licensed Devices and to make, have made, use and sell
Stand Alone Licensed Devices.
2.1.4 LABS agrees to distribute (i) Stand Alone Licensed Devices
and (ii) Licensed Devices which include MASIMO Applications in
conjunction with and by providing the end-user with an end-user
agreement materially equivalent to the "License Agreement" that is
attached hereto as Exhibit D.
2.1.5 MASIMO retains all rights, title, and interest in the
Masimo Technology, including, without limitation, all patents,
copyrights, trade secrets, and any other intellectual property and
proprietary rights. Nothing in this Agreement should be construed as a
sale of the Software or any copy of the Software.
2.1.6 LABS agrees that the Masimo Technology contains trade
secrets and proprietary information belonging to MASIMO. LABS agrees to
maintain the confidential nature of such trade secrets and proprietary
information and agrees not to use, print, copy, provide, or otherwise
make available, in whole or in part, any portion of the Software or
related materials except with an accompanying confidentiality
agreement.
2.2 Limitations of License Granted. LABS' license under this Agreement
does not include the right to sell MS Boards or SpO(Sub 2) Sensors on an OEM
basis unless such sale is for integration into a Licensed Device, or in
connection with a sublicense of Stand Alone Licensed Devices.
2.3 Trademarks, Legends and Logos.
2.3.1 No Implied License. LABS agrees to include the following
legend on the exterior of or in manuals or other documentation provided
with Licensed Devices which include Masimo Applications and Stand Alone
Licensed Devices which it sells directly.
NO IMPLIED LICENSE
Possession or purchase of this device does not convey any express
or implied license to use the device with replacement parts which
would, alone, or in combination with this device, fall within the
scope of one or more of the patents relating to this device.
A sample label is shown in Exhibit B. LABS agrees to use reasonable
efforts to cause all sublicensees to include this or a similar legend
on devices containing MASIMO Technology or in the use manuals or other
documentation shipped with such instruments.
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2.3.2 Grant by Masimo. MASIMO hereby grants to LABS a perpetual,
nonexclusive license, including the right to grant sublicenses, to use the
Licensed Trademarks in connection with the Licensed Devices, Stand Alone
Licensed Devices, and any products or services within the Licensed Applications,
and in connection with the design, manufacture, distribution, advertisement,
promotion, sale and offering for sale of its Licensed Devices, Stand Alone
Licensed Devices and any other products or services within the Licensed
Applications. MASIMO also grants to LABS a perpetual, non-exclusive license to
use the trademark "MASIMO" and the Masimo Product Designation as part of its
trade and company name.
2.3.3 Quality Control - Tradename. LABS agrees that its use of the
tradename "MASIMO" and the accompanying Masimo Product Designation will adhere
to the same high quality standards which MASIMO has provided in connection with
its products and services on the date of this Agreement. MASIMO shall have the
right upon its reasonable request, to inspect and approve samples of goods and
services offered in connection with the use of the term "MASIMO" and/or the
Masimo Product Designation, and to exercise quality control with resect thereto.
If MASIMO requests samples, MASIMO's approval is deemed if the use is not
disapproved within five (5) business days. If MASIMO disapproves of a use of
MASIMO as a trade or company name due to inadequacy of quality, MASIMO may
provide detailed written notice to LABS of the quality issue. LABS will have
three months from notice from MASIMO to bring the quality up to standard or to
cease any further use of the term MASIMO and the Product Designation as a
tradename until MASIMO has indicated that it is satisfied with the deficiencies
have been corrected. Termination of the right to use MASIMO and the Masimo
Product Designation as part of a tradename shall not affect the remaining terms
of this Agreement and shall not affect Licensed Devices and Stand Alone Licensed
Devices.
2.3.4 Quality Control - Devices. LABS agrees that the Licensed Devices and
Stand Alone Licensed Devices bearing the Licensed Trademark, and any products or
services of LABS associated with the Licensed Trademarks shall be of a high
standard of quality, so as to protect and enhance the goodwill pertaining to the
Licensed Trademarks. MASIMO has the right to inspect the manufacturing and
distribution points of LABS for products bearing Licensed Trademarks, at any
reasonable time, to ensure the ongoing quality of the Licensed Devices, Stand
Alone Licensed Devices, and any products or services offered under the MASIMO
name. Should MASIMO at any time determine that the quality of any Licensed
Device, Stand Alone Licensed Device or any product or service offered under the
MASIMO name, does not adhere to MASIMO's quality standards, MASIMO will provide
written detailed notice to LABS. LABS shall have three months from such notice
to bring the quality of such Licensed Device, Stand Alone Licensed Device,
other product or service up to standard or to cease any further use of the
Licensed Trademark in connection with the promotion or sale of such device or
product until MASIMO has indicated that it is satisfied that the deficiencies in
quality of the Licensed Device have been corrected. For any sublicenses granted
under the Licensed Trademarks, LABS agrees to use its best efforts to coordinate
quality control consistent with this Section 2.3.4 over the manufacture,
advertisement, promotion and sale of the License Devices, Stand Alone Licensed
Devices, and any products or services within the Licensed Applications offered
in connection with the Licensed Trademarks by the sublicensee.
2.3.5 Delivery of LABS Systems to MASIMO. LABS agrees to make available to
MASIMO, upon request, one (1) production sample of each Licensed Device and
Stand Alone Licensed Devices which includes a MASIMO Application. In order to
ensure the quality of the MASIMO Application in the Licensed Devices, MASIMO
will have the right to test this Licensed Device or Stand Alone Licensed Device
and to approve the
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functionality of MASIMO SET for the MASIMO Application in such production
Licensed Device. Such approval will not be unreasonably withheld. In the event
that any of the Licensed Devices or Stand Alone Licensed Devices do not meet
specifications, LABS will have three months from notice from MASIMO to bring the
quality of such Licensed Device or Stand Alone Licensed Device up to standard or
to cease any further use of the Licensed Trademark in connection with the
promotion or sale of such Licensed Device or Stand Alone Licensed Device until
MASIMO has indicated that it is satisfied with the deficiencies and quality of
the Licensed Device has been corrected. After such testing, the Licensed Device
or Stand Alone Licensed Device may remain with MASIMO for further technical
assistance and as a demonstration unit as long as this Agreement is in effect.
2.3.6 Trademark Marking. LABS agrees that it shall use the Masimo
Product Designation set forth in Exhibit B on all Licensed Devices which include
a Masimo Application and which as marketed directly by LABS, and all Stand Alone
Licensed Devices which are marketed directly by LABS in a plainly visible site
associated with the Masimo Application. Prior to any such use, LABS shall obtain
consent from MASIMO as to the use and location of the Licensed Trademark, which
consent shall not be unreasonably withheld. LABS shall use reasonable efforts to
cause all sublicensees and Distributors to include such MASIMO Product
Designation in accordance with this provision.
2.3.7 Advertising. All advertising directly by LABS for Licensed Devices
and Stand Alone Licensed Devices which include MASIMO Applications must include
one or more of the Licensed Trademarks. LABS agrees to use reasonable efforts to
have sublicensees and Distributors comply with the provisions of this section.
2.3.8 Except for the LABS trademark and/or trade names or LABS
sublicensees' or Distributors trademarks or trade names, the Licensed Trademarks
may not be used in direct combination with other trade names, trademarks or
symbols.
2.3.9 LABS agrees not to use the Licensed Trademark in any way which might
endanger MASIMO's rights in and ownership of the Licensed Trademark.
2.3.10 The expense of obtaining and maintaining Licensed Trademark
registrations shall be borne by MASIMO.
2.3.11 Trademark Rights on Change in Control. In the event of a change In
control of MASIMO, and the acquiring entity or party ceases to use MASIMO as a
company name, all rights to the MASIMO trademark shall be and are hereby
assigned to LABS including all goodwill associated with the trademark. In such
event, LABS grants to MASIMO a license to use the MASIMO Product Designation in
connection with the sale of devices for MASIMO Applications. In such event,
quality control passes to LABS with the rights as set forth in Section 2.3.3 in
LABS control instead of MASIMO'S control.
2.3.12 Patent Marking. LABS agrees to xxxx each Licensed Device containing
a Masimo application and Stand Alone Licensed Devices manufactured or sold by it
in accordance with the Statutes of the United States relating to marking of
patented articles. MASIMO will, from time to time, update its patent numbers for
LABS as patents issue. When MASIMO updates its patent numbers, LABS's obligation
to update its product marking shall occur upon the earlier of the exhaustion of
labels for Licensed Devices bearing the current patent numbers or one year from
the update by MASIMO. The Initial Patent marking is shown in Exhibit B. LABS
agrees to use reasonable efforts to cause its sublicensees and Distributors to
comply with this provision.
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3. ROYALTIES
3.1 Royalties to MASIMO For Licensed Devices. LABS shall pay to MASIMO
royalties in the amount of the lesser of [*] of the Net Selling Price or [*]
per MASIMO Application for each Licensed Device sold or otherwise distributed
by LABS which uses MASIMO Applications. This Royalty shall not apply if such
Licensed Device uses an MS-Board or other coreprocessor board purchased from
MASIMO.
3.2 Royalties to MASIMO for integrated Consumable. LABS shall pay to
MASIMO royalties in the amount of [*] of LABS' Net Selling Price of sensors or
accessories which provide for SpO(Sub 2) Measurement in combination with other
measurements in a Licensed Device.
3.3 [*] Royalty on Stand Alone Licensed Devices and Products. [*]
royalty is payable by LABS for Products or Stand Alone Licensed Devices.
3.4 Quarterly Accounting. The Parties agree to provide the other Party
with a quarterly accounting of total product shipments upon which a royalty is
payable to the other Party, along with an accounting of the Net Selling Price
for such products. LABS shall also include in the accounting sufficient
information regarding LABS Average Selling Price to permit MASIMO to verify
margin splits, if such splits are elected. If margin split is checked by LABS,
MASIMO shall provide, as part of its accounting, its standard cost.
3.5 Audit Rights. Each Party shall have the right to verify, at the
requesting Party's expense, and not more frequently than once per year and
upon not less than ten (10) business days prior written notice to the other
Party, the accuracy of the accounting reports provided by the other Party
hereunder, through inspection of the other Party's pertinent records and books
of accounts maintained in the ordinary course of business. Such audit shall be
conducted by a certified public accountant (the "CPA") chosen by the
requesting Party in it reasonable discretion, and which CPA is reasonably
acceptable to the Party being audited. The requesting Party shall pay all
costs, expenses and fees of the CPA unless the audited Party has understated
royalties or other payments owing to the requesting Party by more than five
percent (5%), in which event the CPA's costs, fees and expenses shall be paid
by the audited Party.
4. OPTION GRANTED TO MASIMO
4.1 Option. LABS grants to MASIMO an option to purchase a license to
make, use and sell devices incorporating LABS Technology for use in blood
glucose measurement applications devices and total hemoglobin measurement
applications devices for marketing or other distribution directly to, and only
for use in, hospitals.
4.2 Option Fee. MASIMO agrees to fund research and development
conducted by LABS related to, among other things, noninvasive blood glucose
measurement, for a period of up to two (2) years following the effective date
of this Agreement, and in an amount of two million dollars ($2,000,000). LABS
will request reimbursement for such research costs no more often than monthly,
and MASIMO shall reimburse LABS for such research within 30 days following
receipt of such request for reimbursement. MASIMO understands that LABS has no
proof of concept for glucose and total hemoglobin measurements.
4.3 Exercise of the Option. Provided MASIMO has paid the Option Fee set
forth above, the option described herein shall be exercisable upon delivery of
written notice thereof to LABS within the earlier of LABS providing reasonable
proof of feasibility for noninvasive glucose measurement or non-invasive
hematocrit measurement or fifteen (15) days after the two (2) year
* Confidential material redacted and filed separately with the Commission.
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anniversary of the effective date of this Agreement. After such time, the option
irrevocably expires.
4.4 License Terms. Upon exercise of the option, LABS shall grant to MASIMO
the license to make, use and sell devices incorporating LABS Technology for use
in blood glucose measurement and total hemoglobin measurement applications for
distribution directly or through distributors to hospitals, only for use in
hospitals ("Hospital Glucose Devices"). Such license shall be exclusive for the
earlier of three (3) years following the date that such devices are ready for
sale in such market, or four (4) years from the date that LABS makes the
technology available to MASIMO. Thereafter, this license shall be nonexclusive.
Such license shall include the right to sell such devices on an OEM basis
(excluding companies in glucose monitoring business) to no more than two OEM
companies at any one time. At the initiation of the exclusive license, MASIMO
agrees to pay LABS five million dollars ($5,000,000) in monthly payments over a
period of two years as a license fee. Such license will require MASIMO to pay to
LABS royalties in the amount of [*] of the Net Selling Price of products
incorporating the LABS Technology for use in blood glucose measurement and total
hemoglobin applications and [*] of the Net Selling Price of sensors and
accessories incorporating the LABS Technology for use in blood glucose and total
hemoglobin measurement applications. The Parties understand that the exclusivity
in this license to MASIMO will in no way preclude LABS from conducting testing
and studies in hospitals relating to blood glucose and total hemoglobin
measurement. Upon exercise of the option, the provisions of Section 2.3, except
2.3.2 and 2.3.3, shall apply in reverse with respect to the LABS trademarks and
any LABS product designation, as required by LABS,
4.5 Payment on Change in Control. Upon any change in control of Masimo
(defined as a change in ownership of more than 50% of masimo's assets or stock),
the option of Sections 4.3 and 4.4 is automatically exercised, unless objected
to by LABS. Upon such change in control, MASIMO agrees to pay LABS the five
million dollars ($5,000,000) license fee of Section 4.4 immediately.
4.6 Minimum Royalties. In addition to the license fee, MASIMO agrees to the
minimum yearly royalties set forth below. These royalties begin upon the first
commercial sale of any device by MASIMO including LABS Technology, but not later
than one year after LABS delivers a pilot prototype production core processor
board and sensor for either noninvasive glucose measurement or hematocrit.
Subsequent year payments are due within thirty (30) days of the anniversary of
the first commercial sale. Failure to pay the minimum royalties automatically
converts MASIMO'S license-to non-exclusive.
Year 1 Year 2 Year 3 Year 4
------ ------ ------ ------
$150,000 $500,000 $1,000,000 $2,000,000
4.7 Termination of Exclusivity. The exclusivity of Section 5.4 above shall
terminate if MASIMO is not aggressively marketing a device incorporating LABS
Technology for use in blood glucose measurement or total hemoglobin measurement
within one (1) year of the grant of such license, as follows:
LABS must first notify MASIMO of its intent to cancel the exclusivity.
MASIMO shall have sixty (60) days to cure its failure to aggressively
market such devices. If MASIMO has not cured its failure within such sixty
(60) day period, LABS may terminate the exclusivity on written notice to
MASIMO of such termination. In the event that LABS and MASIMO disagree as
to whether MASIMO is aggressively marketing such devices, the
* Confidential material redacted and filed separately with the Commission.
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Party shall submit the disagreement to an independent three-member panel
(the "Panel"). Each Party shall select one member of the Panel, and the
two members shall select a third member. No Panel member may be an
employee, officer, director, or owner of any shares of either Party, or
related to any employee, officer, director or owner of any shares of
either Party, or otherwise affiliated with either Party such that such
affiliation would tend to influence such person's ability to
independently evaluate this issue.
4.8 Delivery of MASIMO Systems to LABS. MASIMO agrees to make available
to LABS upon request, one (1) sample of each device of MASIMO which includes
blood glucose measurement and/or hemoglobin measurement based upon the LABS
Technology. LABS will have the right to test this device and to approve the
functionality of LABS Technology in such device. Such approval will not be
unreasonably withheld. After such testing, the device may remain with LABS, at
LABS' option, for further technical assistance and as a demonstration unit as
long as this Agreement is in effect.
5. Purchase and Sale of Products
5.1 Purchase of Products. During the term of this Agreement and in
accordance with its provisions, the purchase and sale of Products between the
parties shall be made by means of purchase orders placed by one Party or its
designee to the other Party. For purposes of the Products, the minimum quantity
of Products that may be purchased on a purchase order is 50 units of a
cable-part number, or reusable sensor or MS Board and 500 units of disposable
sensors. Purchase orders issued before expiration or termination of this
Agreement calling for delivery in ninety (90) days or less are non-cancelable.
Purchase orders to MASIMO calling for delivery in more than ninety (90) days
shall be alterable and cancelable by LABS until ninety (90) days prior to the
shipment date, after which such purchase orders become binding.
5.2 Emergency Orders. Purchase orders placed by LABS shall not prevent
LABS from placing emergency orders for units of the Products for delivery in
less than ninety (90) days. MASIMO agrees to use reasonable efforts to delivery
such Products on the requested schedule.
5.3 Price. MASIMO's transfer price for the Products delivered to LABS in
accordance with the terms of this Agreement shall be as set forth on Exhibit E.
All prices are F.O.B. MASIMO's manufacturing facility or distribution point in
the United States. The transfer price for SpO(sub 2). Sensors and Accessories
includes packaging and labeling with LABS-supplied artwork and logos complying
with MASIMO Standard Packaging Guidelines. The transfer price does not include
custom packaging or labeling for SpO(sub 2) Sensors, Accessories, or MS Boards.
If custom labeling for SpO(sub 2). Sensors or Accessories is desired and
feasible as determined by MASIMO, all costs associated with such labeling will
be paid by LABS. Payment by LABS to MASIMO shall be made forty-five (45) days
following receipt of invoice by LABS.
5.4 Currency Basis. Prices for the Products to LABS shall be in
United States dollars.
5.5 Taxes and Levies. All payments to LABS or to MASIMO under this
Agreement are exclusive of taxes and each party shall be responsible for paying
all taxes relating to products marketed by that party (except taxes based upon
the other party's income), including but not limited to all sales, use, personal
property, customs, duties, assessments, levies, and other government impositions
of any nature.
5.6 Transportation. The method of transportation and carrier selected
for Products purchased by LABS shall be as specified by LABS in its purchase
orders. Unless otherwise agree, all transportation charges for Products,
including insurance, levies, and taxes, shall be paid by LABS.
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5.7 Packaging. MASIMO shall package the Products for shipment. Each
shipment shall include a packing list containing: (i) purchase order number;
(ii) model number of the Products; (iii) quantity; (iv) serial number or lot
code of shipped Products; and (v) certificates of compliance for the applicable
quality assurance test performed for the Products being shipped.
5.8 Delivery. MASIMO shall use reasonable commercial efforts to fill all
purchase orders for Products by delivery dates and in the quantity specified by
LABS in its purchase orders. Notwithstanding the above, MASIMO shall have no
obligation to deliver Products in less than ninety (90) days from confirmation.
If a purchase order by LABS calls for more than a 25% increase as compared to
the previous three (3) month average of Products ordered, on a
Product-by-Product basis, MASIMO shall use reasonable commercial efforts to
deliver an amount at least equal to the previous three (3) month average within
ninety (90) days, and shall use reasonable commercial efforts to ship the
remainder within one hundred twenty (120) days of receipt of the purchase order.
6. COMPATIBILITY
6.1 MASIMO Probes. LABS agrees that it will not design or modify SpO(sub
2) Sensors to be used with other than the MS Boards or other Boards designed by
MASIMO for MASIMO Applications. LABS will purchase Sensors for MASIMO
Applications from MASIMO unless the measurements for MASIMO Applications and
Licensed Applications are best integrated in one sensor. In such case, LABS may
manufacture integrated sensors and pay MASIMO a royalty of three percent (3%) of
LABS' Net Selling price of integrated sensors. MASIMO SET will be enabled for
SpO(sub 2). Sensors or other sensors which include MASIMO Applications
measurement capability.
6.2 Engineering Support. During the period that MASIMO is funding LABS'
research and development, MASIMO shall provide engineering support to LABS for
the integration of MASIMO SET into Licensed Devices and Stand Alone Licensed
Devices. MASIMO shall deliver a copy of all Software for MASIMO SET and
sufficient information and documentation to permit LABS to reasonably use and
modify such Software and to reasonably use and modify the Masimo Technology.
Masimo shall continue to deliver, as reasonably requested by LABS, sufficient
information and documentation to permit LABS to reasonably use Masimo Technology
in accordance with the terms of this Agreement
7. INSPECTION AND ACCEPTANCE
7.1 MASIMO Inspection. MASIMO shall provide and maintain an inspection
procedure and quality assurance program for the Products and its production
processes. Complete records of all inspection and quality assurance work done by
MASIMO shall be made available to LABS upon its request at reasonable times
during the term of this Agreement
7.2 LABS Inspection
7.2.1 LABS may inspect the Products upon receipt Any of the
Products or lots of Products ("Lot") which materially fail to meet the
specifications set forth in Exhibit E may be rejected by LABS and
returned to MASIMO for replacement. Prior to returning any Products to
MASIMO, LABS shall notify MASIMO by facsimile that LABS has rejected the
Products, inclusive of the reason or basis of such rejection. Within
five (5) working days of the receipt of the notification, MASIMO will
issue a "Return to Vendor" ("RTV") number to LABS by facsimile, which
RTV number will be LABS' authorization to return the Products.
7.2.2 LABS shall promptly notify MASIMO of any incoming Lot
failure. Products which do not conform to MASIMO's specifications shall
be returned by LABS to
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MASIMO freight collect and insured for full replacement value. Within
twenty (20) days after the date of receipt of the nonconforming Products by
MASIMO, replacement Product will be shipped to LABS at MASIMO's expense.
Should MASIMO fail to replace rejected Products by shipping conforming
Products to LABS within thirty (30) days of its receipt of the
nonconforming Products, LABS shall have the option to cancel without cost
or liability the purchase of such Products and receive, at LABS' option, a
credit or rebate if payment has been made. LABS shall pay freight charges,
insurance and other customary charges for transportation for improperly
rejected Products.
7.2.3 All costs to replace including transportation with respect to
the defective Products shall be the sole responsibility of MASIMO.
7.2.4 If LABS attempts to correct deficiencies to the Products
purchased under this Agreement without prior written authorization from
MASIMO, then MASIMO shall have no further obligations with respect to
such Products.
7.3 Nonconforming Acceptance. LABS may choose to accept the Products
which fail to conform in a minor aspect to the specifications established by
this Agreement without prejudice to its right to reject nonconforming items in
the future. If LABS so chooses, LABS will notify MASIMO of its intent to
accept nonconforming items. However, MASIMO accepts not responsibility for
nonconforming items accepted by LABS.
8. CONFIDENTIALITY
8.1 MASIMO's Confidential Information. LABS shall not use MASIMO's
Confidential Information for any purpose other than exercising the rights
granted to LABS under this Agreement. LABS shall not disclose MASIMO's
Confidential Information to any third party without the prior written consent of
MASIMO.
8.2 LABS's Confidential Information. Except as otherwise expressly
provided in this Agreement, MASIMO shall not use LABS's Confidential Information
for any purpose other than performance of this Agreement, without the prior
written consent of LABS. MASIMO shall not disclose LABS's Confidential
Information to any third party without the prior written consent of LABS.
8.3 Neither Party's obligations under this confidentiality provision
shall apply to information that:
8.3.1 prior to the transmittal was of general public knowledge;
8.3.2 becomes a matter of general public knowledge otherwise
than as a consequence of a breach under this Agreement;
8.3.3 is made public by the Party claiming confidentiality;
8.3.4 is required to be disclosed by applicable law; provided
however, that the Party who may be required to disclose such information
shall notify the other Party in sufficient time for the owner of such
Confidential Information to file the appropriate documents with the
court to obtain a protective order to enforce the confidentiality
requirements of this Agreement;
8.3.5 information which the receiving Party can establish by
competent proof was in its possession at the time of disclosure by the
disclosing Party and was not acquired, directly or indirectly, from the
disclosing Party; or
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8.3.6 information which is received from a third party;
provided, however, that the receiving Party has no reason to know such
information was obtained by said third party, directly or indirectly,
from the other Party under a nondisclosure agreement.
8.4 Injunctive Relief. The Parties acknowledge that (a) the covenants
set forth in this Section 7 ("CONFIDENTIALITY") are essential elements of this
Agreement and that, but for the agreement of the Parties to comply with such
covenants, this Agreement would not have been entered into; (b) neither Party
will have any adequate remedy at law if the other Party violates the terms of
this Section 7 ("CONFIDENTIALITY"); and (c) each Party shall have the right in
addition to any other rights it may have, to obtain in any court of competent
jurisdiction temporary, preliminary and permanent injunctive relief to
restrain any breach, threatened breach, or otherwise to specifically enforce
any, of the covenants in this Section, 7 ("CONFIDENTIALITY") if the other
Party fails to perform any of such covenants under this Section 7
("CONFIDENTIALITY").
9. PROPRIETARY RIGHTS
9.1 LABS Improvements for Licensed Applications. Any Improvement to
MASIMO Technology or Labs Technology made by LABS, by MASIMO, or jointly by
LABS with MASIMO or any third party, which relates to any Licensed
Application, and any new technology acquired by LABS shall be the sole
property of LABS, and LABS has the right to apply for copyrights, patents
(including utility and design patents), or other protection for intellectual
property rights anywhere in the world under its own name and at its own
expense. LABS hereby grants to MASIMO, without additional compensation, a
nonexclusive, nontransferable, perpetual license to make, use and sell devices
consistent with the terms of the License granted to MASIMO in Section 4.4
incorporating such Improvement for use in MASIMO Applications.
9.2 MASIMO Improvements for MASIMO Applications. Any Improvement to
MASIMO Technology made by MASIMO, LABS, or jointly by MASIMO with LABS or any
third party, which relates to any MASIMO Application, shall be the sole
property of MASIMO, and MASIMO has the right to apply for copyrights, patents
(including utility and design patents), or other protection for intellectual
property rights anywhere in the world under its own name and its own expense.
MASIMO hereby grants to LABS, without additional compensation, a nonexclusive,
perpetual license, with the right to grant sublicenses, in accordance with the
provisions of Section 2.
9.3 Further Action. LABS and MASIMO agree to take such further action
and execute such further documents as reasonably necessary to establish
ownership as set forth in Sections 9.1 through 9.3.
10. INDEMNIFICATION
10.1 MASIMO will defend, indemnify and hold LABS harmless against any
and all liability, loss, damages, costs or expenses which LABS may hereafter
incur, as a result of any injury, illness or death of any person which is
caused by any Product manufactured by MASIMO to the extent that such injury,
illness or death resulted from MASIMO's Products. MASIMO shall have no
liability or responsibility of any kind to LABS under this Section 9 unless
LABS shall have notified MASIMO within a reasonable time of such claims, and
shall have given MASIMO an adequate opportunity to defend, including complete
control of such defense. Should LABS desire to have its own counsel
participate in any such. action, the cost of such counsel shall be exclusively
LABS's.
10.2 LABS will defend, indemnify and hold MASIMO harmless against any
and all liability, loss, damages, costs or expenses which MASIMO may hereafter
incur, as a result of any injury, illness or death of any person which is
caused by any product or device manufactured by
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LABS and purchased by MASIMO from LABS, to the extent that such injury, illness
or death results directly from such products manufactured by LABS. LABS shall
have no liability or responsibility of any kind to MASIMO under this Section
unless MASIMO shall have notified LABS within a reasonable time of such claims,
and LABS shall have had an adequate opportunity to defend. Should MASIMO desire
to have its own counsel participate in any such action, the cost of such counsel
shall be exclusively MASIMO's.
10.3 MASIMO shall settle or defend, at MASIMO's own expense, and pay any
damage, costs or fines resulting from all proceedings, threats of proceedings or
claims against LABS or its customers for infringement or alleged infringement by
the MASIMO Applications in Licensed Devices or Stand Alone Licensed Devices, of
intellectual property rights of third parties. LABS agrees to notify MASIMO
promptly in writing of any such proceeding, and to give MASIMO necessary
assistance where practical, to modify the MASIMO Technology to make it
noninfringing or, where practical, to obtain licenses under such intellectual
property rights.
10.4 During and after the term of this Agreement, the Parties agree not
to challenge the validity of any of the patents of the other Party to which this
Agreement relates.
11. REGULATORY COMPLIANCE
11.1 LABS shall be solely responsible for identifying and obtaining, at
its sole cost and expense, all FDA and United States safety agency approvals and
any other agency or regulatory approvals which are required for the development,
manufacture or sale of the Licensed Devices and Stand Alone Licensed Devices.
MASIMO will reasonably cooperate with LABS by providing at no charge to LABS any
MASIMO data in its possession that is reasonably required to obtain the
regulatory approvals, including but not limited to 510(k) application materials
submitted by MASIMO for its own products that incorporate MASIMO Technology.
Disclosure to LABS of any such data shall be subject to the confidentiality
provisions of Section 7 ("CONFIDENTIALITY").
11.2 LABS shall be solely responsible, at its sole cost and expenses,
(i) for identifying and obtaining any necessary approvals or certifications by
any non-U.S. governmental, safety or regulatory entity, including testing or
other procedures, for the sale by LABS of Licensed Devices and Stand Alone
Licensed Devices, (ii) for identifying and complying with any safety
precautions, safety markings, labels or consumer notices required for Licensed
Devices in any country other then the United States, and (iii) for assessing the
appropriateness of the Licensed Devices for any particular Customer application.
MASIMO will cooperate with LABS by providing any data in its possession that is
reasonably required to obtain such approvals or certifications. Disclosure to
LABS of any such data to any third party shall be subject to the confidentiality
provisions of Section 7 ("CONFIDENTIALITY).
11.3 Masimo shall be solely responsible for identifying and obtaining,
at its sole cost and expense, all FDA and United States safety agency approvals
and any other agency or regulatory approvals which are required for the
development, manufacture or sale of Hospital Glucose Devices. LABS will
reasonably cooperate with MASIMO by providing at no charge to MASIMO any LABS
data in its possession that is reasonably required to obtain the regulatory
approvals, including but not limited to 510(k) application materials submitted
by LABS for its own products that incorporate LABS Technology for non-invasive
glucose measurements. Disclosure to MASIMO of any such data shall be subject to
the confidentiality provisions of Section 7 ("CONFIDENTIALITY").
11.4 Regardless of any disclosure to MASIMO by LABS of an ultimate
destination of the Licensed Devices or the Software, LABS shall not transfer or
re-export, whether directly or indirectly, the Software or Licensed Devices
containing the Software, the related documentation, or other related proprietary
information to anyone outside the U.S. as to which export may be in
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violation of the United States Export Laws or regulations without first
obtaining the appropriate license from the U.S. Department of Commerce
and/or any agency or department of the U.S. government, as required.
12. INCIDENT REPORTING. LABS represents that in addition to being
responsible for all regulatory approvals, that should any incidents of failure
of the Licensed Devices which include MASIMO Applications or Stand Alone
Licensed Devices or injury related to such devices be reported to LABS, that it
will promptly (i.e., within two (2) business days) notify MASIMO of any such
field performance problems or deficiencies.
13. TERMINATION
13.1 Termination for Breach. The default by one Party of a
material obligation of such Party under this Agreement shall entitle
the other Party to give the Party in default written notice describing
such default in detail (including all supporting documentation) and
requiring it to remedy such default If such default is not fully
remedied within ninety (90) days after the date of such notice, the
notifying Party shall be entitled to, in addition to all other remedies
available to such Party, terminate this Agreement by a written notice
to the defaulting Party.
13.2 Termination on Insolvency. Either Party may terminate this
Agreement at any time upon or after the filing against the other Party
by any third party of a petition in bankruptcy or insolvency, or upon
or after any adjudication that the other Party is insolvent, or upon or
after the filing by the other Party of any petition or answer seeking
reorganization, readjustment or arrangement of the business of the
other Party under any law relating to bankruptcy or insolvency, or upon
or after the appointment of a receiver for all or substantially all of
the property of the other Party of any assignment or attempted
assignment for the benefit of creditors, or upon or after the
institution of any proceedings for the liquidation or winding up of the
other Party's business.
13.3 Rights Upon Termination. In the event of any valid
termination of this Agreement under Section 13.1 (Termination for
Breach) or 13.2 ("Termination on Insolvency), each Party's rights under
this Agreement shall be terminated except as follows: No termination of
this Agreement shall terminate or otherwise impact LABS' rights under
Sections 2.1.1, 2.1.2, 2.1.4, 2.3 or any sublicenses and private label
patient monitoring company contracts under 2.1.3. No termination shall
impact either Party's rights to collect for accrued royalties or the
licenses granted in this Agreement which continue after termination on
the terms and conditions existing upon termination.
14. DISPUTE. If any dispute or difference shall arise between the
Parties concerning the construction of this Agreement or the rights or
obligations of either Party, the Parties shall strive to settle the same
amicably, but if they are unable to do so within ninety (90) days after such
dispute or difference has arisen, and any claim or cause of action shall be
filed in any court in Orange County, California, U.S.A. MASIMO and LABS each
consents to personal jurisdiction in any action brought in the United States
District Court for the Central District of California and to service of process
upon it in the manner set forth in Section 15.5 hereof ("Notice"). In the event
that such action should be brought in a state court, LABS and MASIMO each
consents to personal jurisdiction in any action brought in Municipal Court or
Superior Court of the State of California in the County of Orange and to service
of process upon it in the manner set forth in Section 15.5 ("Notice") of this
Agreement.
15. MISCELLANEOUS
15.1 Nonassignability. Except in connection with the sale of all
or substantially all of the assets or business of MASIMO to which this
Agreement relates, MASIMO may not assign this Agreement. LABS may
freely assign this Agreement. This Agreement will inure to the benefit
of and bind each Party's successors and assigns.
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15.2 Failure to Enforce. The failure of either Party to enforce at any
time or for any period of time the provisions of this Agreement shall not be
construed to be a waiver of such provisions or of the right of such Party to
enforce each and every such provision.
15.3 Governing Law. This Agreement shall be deemed to have been made in
the State of California, United States of America, and shall be governed by and
construed according to the laws of the State of California.
15.4 Severability. In the event that any of the provisions of this
Agreement shall be held by a court or other tribunal of competent jurisdiction
to be unenforceable, such provisions shall be deleted from this Agreement and
the remaining portions of this Agreement shall remain in full force and effect,
except where the economic equity of both Parties hereto is materially affected
by such unenforceability.
15.5 Notice. Except as either Party may hereafter notify the other with
respect to itself, the addresses of the Parties for all purposes of this
Agreement shall be:
MASIMO: MASIMO CORPORATION
0000 Xxxxxx Xxx. Xxxxxx, XX 00000
Attention: Chief Executive Officer
LABS: MASIMO LABORATORIES
00 Xxxxxxxx
Xxxxxx Xxxxxx, XX 00000
Attention: Chairman
All notices and communications pursuant to this Agreement shall be addressed as
set forth above and shall be delivered to the Party for whom intended by hand or
by postage prepaid, first class, registered or certified mail, return receipt
requested. Such notices and recommendations shall be deemed to have been given
and delivered as of the date of receipt.
15.6 Force Majeure. Neither Party shall be liable to the other Party
hereto for any loss, injury, delay, damages or other casualties suffered or
incurred by such other Party due to strikes, riots, storms, fires, acts of God,
or war or any other cause beyond the reasonable control of either Party.
15.7 Headings. Headings to paragraphs and sections of this Agreement are
to facilitate reference only, do not form a part of this Agreement, and shall
not in any way affect the interpretation hereof.
15.8 Survival From This Agreement. The rights and obligations of the
Parties hereto under Sections 8 ("Confidentiality"), 9 ("Proprietary Rights"), 1
0 ("Indemnification"), 11 ("Regulatory Compliance"), 12 ("Incident Reporting"),
2.1.1, 2.1.2, 2.1.4, 2.3 ("Trademarks, Legends and Logos"), or any sublicenses
and private label patient monitoring company contracts under 2.1.3, and 4
("Option Granted to MASIMO") of this Agreement shall survive and continue after
any expiration or termination of this Agreement and shall bind the Parties and
their representatives, successors, heirs and assignees.
15.9 Exhibits. All exhibits to which this Agreement refers are hereby
incorporated into and made a part of this Agreement.
15.10 Entire Agreement. This Agreement constitutes the entire agreement
between LABS and MASIMO, and there are no other understandings, agreements or
representations, express or
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implied, written or oral, not specified herein. This Agreement may only
be amended by express written agreement and signed by authorized
representatives of both Parties.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date set forth above.
MASIMO CORPORATION MASIMO LABS
By: /s/ XXX X. XXXXX By: /s/ XXXX XXXXXXXX
--------------------------- -------------------------------------
Xxx X. Xxxxx, President Xxxx Xxxxxxxx, Secretary
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