LICENSE AND DEVELOPMENT AGREEMENT
THIS LICENSE AGREEMENT (the "Agreement") is made and entered into as of the 29th
day of October, 1997, between ECHOCATH, INC. ("EchoCath"), a New Jersey
corporation, and MEDTRONIC, INC. ("Medtronic"), a Minnesota corporation.
W I T N E S S E T H:
WHEREAS, EchoCath is the owner of technology and patents relating to
visualization of medical devices using ultrasound methods; and
WHEREAS, Medtronic wishes access to the technology and license rights in the
patents; and
WHEREAS, Medtronic and EchoCath are simultaneously entering into an investment
or subscription agreement pursuant to which Medtronic or its affiliate,
Medtronic Asset Management, Inc. will purchase $1,000,000 of Class A common
stock from EchoCath at a price per share of two dollars and seventy five cents
($2.75) and as shall be agreed to in a definitive Subscription Agreement to be
executed between the parties; and
WHEREAS, the parties will also negotiate in good faith to enter into a Supply
Agreement and a Development Agreement as described herein.
NOW THEREFORE, in consideration of the representations, warranties, covenants
and agreements contained herein, and for other valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties mutually agree
as follows:
ARTICLE 1
DEFINITIONS
1.1 Specific Definitions. As used in this Agreement, the following
terms have the meanings set forth or referenced below:
"Affiliate" of a specified person (natural or judicial) means a person that
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the person specified. "Control"
shall mean ownership of more than 50% of the shares of stock entitled to vote
for the election of directors in the case of a corporation, and more than 50% of
the voting power in the case of a business entity other than a corporation.
"ColorMark"r"" is a trademark of EchoCath and, within this Agreement, means
the technology of EchoCath for inducing vibration in structures to enhance their
visibility in ultrasound images, as more particularly described by the U.S.
Patents listed on Exhibit A.
"Confidential Information" means know-how, trade secrets, and unpublished
information disclosed (whether before or during the term of this Agreement) by
one of the parties (the "disclosing party") to the other party (the "receiving
party") or generated under this Agreement, excluding information which:
(a) was already in the possession of receiving party prior to its
receipt from the disclosing party (provided that the receiving party is
able to provide the disclosing party with reasonable documentary proof
thereof);
(b) is or becomes part of the public domain by reason of acts
not attributable to the receiving party;
(c) is or becomes available to receiving party from a source other than
the disclosing party which source, to the best of receiving party's
knowledge, has rightfully obtained such information and has no
obligation of non-disclosure or confidentiality to the disclosing party
with respect thereto;
(d) is made available by the disclosing party to a third
party unaffiliated with the disclosing party on an unrestricted basis;
(e) has been independently developed by the receiving party
without breach of this Agreement or use of any Confidential Information
of the disclosing party; or
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(f) has been or must be publicly disclosed by reason of legal,
accounting or regulatory requirements beyond the reasonable control, and
despite the reasonable efforts of the receiving party.
All Confidential Information disclosed by one party to the other under this
Agreement shall be in writing and bear a legend "Company Proprietary," "Company
Confidential" or words of similar import or, if disclosed in any manner other
than writing, shall be preceded by an oral statement indicating that the
information is Company proprietary or confidential, and shall be followed by
transmittal of a reasonably detailed written summary of the information provided
to the receiving party with identification as Confidential Information
designated as above within thirty (30) days.
"EchoCath" means EchoCath, Inc. and its Affiliates.
"EchoEye"r"" is a trademark of EchoCath and, within of this Agreement, means
the technology of EchoCath for a forward looking intra-vascular and intra-cavity
ultrasound system for 3-D imaging, as more particularly described by the U.S.
Patents listed on Exhibit A.
"EchoFlow"tm"" is a trademark of EchoCath and, within this Agreement, means
the technology of EchoCath for quantitative method of Doppler flow measurement
using surface contact to vessel or conduit using multi-beam grating technology,
as more particularly described by the U.S. Patents listed on Exhibit A.
"EchoMark"r"" is a trademark of EchoCath and, within this Agreement, means the
technology of EchoCath for quasi-omnidirectional ultrasound transducers, as more
particularly described by the U.S. Patents listed on Exhibit A.
"Expiration" or "Expired" shall mean, with respect to a particular copyright, or
issued patent, the expiration, abandonment, cancellation, disclaimer, award to
another party other than Medtronic or EchoCath (as the context requires) in an
interference proceeding, or declaration of invalidity or unenforceability by a
court or other authority of competent jurisdiction (including rejection in a
re-examination or re-issue proceeding) of such copyright, or patent. References
to an "unexpired" patent mean a patent that is not Expired.
"Field of Use" means cardiothoracic surgical procedures consisting of one or
more of the following:
(1) repair or reconstruction of the heart and/or lungs;
(2) perioperative perfusion of the heart;
(3) protection of the myocardium during surgery;
(4) acute measurement of hemodynamic parameters (flow, pressures, etc.);
(5) removal of air and/or fluid from the heart and vessels;
(6) post-operative placement of drains and temporary
pacing/defibrillation wires;
(7) epicardial placement of pacing/defibrillation leads.
The Field of Use specifically excludes electrophysiology applications (defined
to include mapping, ablation and internal cardioversion but exclude permanent
pacemaker leads and permanent defibrillator leads attached to permanent pulse
generators); and further excludes any procedures solely utilizing angioplasty
catheters and energy delivering therapeutic catheters or probes.
"Knowledge" means actual knowledge of a fact or the knowledge that such person
or its officers or other employees could reasonably be expected to have based on
reasonable investigation and inquiry.
"Invention" means any invention, discovery, know-how, trade secret, data,
information, technology, process or concept, whether or not patented or
patentable, and whether or not memorialized in writing.
"Licensed Technology" means ColorMark"r" technology and EchoMark"r" technology,
(and expressly excluding any technology related to EchoEye or EchoFlow)
heretofore or hereafter designed, developed or used by or for EchoCath, or
heretofore or hereafter acquired by or licensed to EchoCath, and all amendments,
modifications and improvements to any of the foregoing, necessary or useful for
designing, developing, manufacturing, processing or marketing medical devices
which incorporate EchoMark or ColorMark within the Field of Use, and shall
include (a) all U.S. and foreign patents and patent applications related thereto
(including but not limited to the patents and patent applications listed in the
attached Exhibit A, referred to herein as the "EchoCath Patents"), and (b) all
know-how, trade secrets, inventions, discoveries and technical information,
including, but not limited to, information embodied in drawings, designs,
copyrights, copyright applications, trademarks, trade applications, material
specifications, processing instructions, formulas, equipment specifications,
product specifications, confidential data, computer software,
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electronic files, research notebooks, invention disclosures, research and
development reports and the like related thereto.
"Medtronic" means Medtronic, Inc. and its Affiliates.
"Quarter" means a quarter of the Medtronic fiscal year; which begins on May 1 of
each calendar year.
"Product" means any acute device, or any epicardial pacing or defibrillation
lead, which utilizes either the ColorMark"r" or EchoMark"r" technology.
"Royalty Bearing Unit" means a Product sold by Medtronic that is covered by a
valid claim of an unexpired EchoCath Patent in the country in which such Product
is made or sold. Products sold for use in bona fide clinical studies in order to
gain governmental or regulatory approval or market clearance shall not be
considered Royalty Bearing Units.
1.2 Other Terms. Other terms may be defined elsewhere in the text of
this Agreement and shall have the meaning indicated throughout this
Agreement.
1.3 Other Definitional Provisions.
(a) The words "hereof," "herein," and "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provisions of this Agreement.
(b) The terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
(c) References to an "Exhibit" or "Appendix" are, unless otherwise
specified, to one of the Exhibits or Appendices attached to or
referenced in this Agreement, and references to an "Article" or a
"Section" are, unless otherwise specified, to one of the Articles or
Sections of this Agreement.
(d) The term "person" includes any individual, partnership, joint
venture, corporation, trust, unincorporated organization or government
or any department or agency thereof.
(e) The term "Dollars" or "$" shall refer to the currency of the
United States of America.
(f) All references to time shall refer to Minneapolis, Minnesota time.
ARTICLE 2
PURPOSE
2.1 Development and License. This Agreement is intended to establish a
relationship between EchoCath and Medtronic in the area of the Field of Use,
wherein Medtronic may (1) have access to EchoCath technology and development
personnel for developing new products in the Field of Use; (2) purchase certain
EchoCath products, and (3) obtain rights under the EchoCath Patents and know-how
which are included in the Licensed Technology.
ARTICLE 3
LICENSE TO MEDTRONIC
3.1 Grant of License. Subject to the terms and conditions of this Agreement,
EchoCath hereby grants to Medtronic a worldwide exclusive license to the
Licensed Technology to make, have made, use, sell and have sold Products
incorporating or utilizing, and to otherwise commercialize and exploit, the
Licensed Technology in the Field of Use.
3.2 Medtronic Exclusivity. EchoCath will not, without the prior written consent
of Medtronic, supply, sell, transfer or otherwise dispose of Products or
components utilizing Licensed Technology to any third party if EchoCath has
knowledge that such third party intends or is likely to use such Products or
components, or resell such Products or components for use ithin the Field of
Use.
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3.3 Term of License. Unless otherwise terminated under provisions of this
Agreement, Medtronic's rights and obligations as licensed under this Agreement
shall continue (a) in the case of EchoCath Patents, until such time as all of
such patents and copyrights, including any extensions thereof, have Expired, and
(b) in the case of any trade secrets and know-how included in the Licensed
Technology, for the life of such trade secrets and know-how.
3.4 Regulatory Approvals. In connection with Medtronic's commercialization of
the Products in the Field of Use, EchoCath shall transfer to Medtronic any
applicable U.S. FDA 510(k) approvals or similar foreign approvals held by or on
behalf of EchoCath. Medtronic shall be solely responsible for obtaining any
other required regulatory approvals for the Products in Medtronic's discretion,
and EchoCath shall provide Medtronic with reasonable support in connection with
such regulatory approvals pursuant to mutually agreeable terms.
3.5 Technology Transfer. EchoCath shall, upon Medtronic's request from time to
time, provide to Medtronic at no charge (other than reasonable copying charges)
such drawings, specifications, processes, materials, manufacturing procedures,
and other documentation and know-how as is reasonably necessary to enable
Medtronic to utilize its rights under this Agreement. In addition, EchoCath
will, subject to existing commitments and resources, provide such training to
Medtronic technical and manufacturing personnel as is reasonably necessary to
enable Medtronic to fully utilize its rights under this Agreement, at such
reasonable times and places as Medtronic may request from time to time. The
total amount of hours to be provided by EchoCath hereunder for these services
shall not exceed 250 hours per year. Medtronic will pay EchoCath consulting fees
for such services equal to the fully-burdened actual hourly rates of pay of the
EchoCath employees providing such training and will reimburse EchoCath for
reasonable travel and lodging expenses for EchoCath personnel with respect to
training trips requested by Medtronic to the extent such expenses are
substantiated by expense receipts.
ARTICLE 4
LICENSE ACQUISITION FEES
4.1 Consideration. In exchange for the grant of exclusive license
rights in the Field of Use Medtronic agrees to pay a non-refundable license fee
as enumerated below:
(a) Seven Hundred Fifty Thousand Dollars ($750,000) upon execution
of this Agreement; and
(b) Seven Hundred Fifty Thousand Dollars ($750,000) within two business
days after Medtronic's first commercial sale of a Medtronic Product
(other than the standalone EchoMark"r" guidwire) utilizing the
EchoMark"r" or ColorMark"r" technology in the Field of Use.
ARTICLE 5
CAPITAL EQUIPMENT DISTRIBUTION; SUPPLY
5.1 Distribution. Medtronic shall have the right, but not the obligation, to
distribute capital equipment of EchoCath, including what are known as drive
boxes, used in connection with either EchoCath products distributed by Medtronic
or Medtronic Products sold under license from EchoCath. The currently available
capital equipment and its current price to Medtronic are listed in the attached
Exhibit B. The parties agree to add equipment to Exhibit B as it is developed by
EchoCath with present and future products at prices mutually agreed upon. The
parties agree that the prices to Medtronic shall never be higher than those to
any other EchoCath distributor or customer for comparable products, for
comparable volume commitments, and that such Exhibit B price list shall be
renegotiated in good faith at the time the supply agreement is negotiated
pursuant to Section 5.3 and after that on an annual basis.
5.2 Services. EchoCath shall be responsible for installing and servicing any
capital equipment distributed by Medtronic under EchoCath's standard service
contracts, to be entered into between EchoCath and the purchaser; provided that
Medtronic shall have the option to assume responsibility for installation and/or
service of some or all of the EchoCath capital equipment distributed by
Medtronic, in which case EchoCath shall, subject to existing commitments and
resources, provide Medtronic with such specifications and other documentation
and know-how, and such individual training to Medtronic technical and service
personnel, as is reasonably necessary to enable Medtronic to perform such
responsibilities. The total amount of hours to be provided by EchoCath hereunder
for these services shall not exceed 100 hours per year. Medtronic will pay
EchoCath consulting fees for such services equal to the fully-burdened actual
hourly rate of pay for the EchoCath employees providing such training and will
reimburse EchoCath for reasonable travel and lodging expenses for EchoCath
personnel with respect to training trips requested by Medtronic to the extent
such expenses are substantiated by expense receipts.
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5.3 Supply. Medtronic and EchoCath shall negotiate in good faith and use all
commercially reasonable efforts to reach agreement upon and, within 90 days
after the date hereof, enter into a Supply Agreement giving Medtronic the right
to purchase certain products from EchoCath, including EchoCath guidewires,
EchoMark"r" sensors, catheter system interfaces, and ColorMark"r" products. The
prices to Medtronic under such supply agreement shall never be higher than those
to any other EchoCath distributor or customer for comparable products.
ARTICLE 6
ROYALTIES AND REPORTS
6.1 Royalties. Medtronic shall pay to EchoCath a royalty equal to the following
amount for each of the following types of Royalty Bearing Units it sells to
third parties (ignoring transfers among Medtronic):
Per Unit
Royalty Bearing Unit ("RBU") Royalty Rate
EchoCath guidewire $10
Xxxxxxxx cannula $10
All other Products $ 2
For purposes of clarification, notwithstanding the foregoing:
(a) No royalty shall be due upon Medtronic's resale of EchoCath stand
alone guidewires purchased by Medtronic from EchoCath pursuant to the
Supply Agreement referred to in Section 5.3 above;
(b) The Xxxxxxxx cannula currently under development by Medtronic would
not be a Royalty Bearing Unit unless and until such cannula is modified
to incorporate EchoMark"r" or ColorMark"r" technology, and
(c) The $2 per unit royalty rate for "All other Products" applies to (i)
all current Medtronic products which in the future are modified to
incorporate EchoMark"r" or ColorMark"r" technology, and (ii) all future
new Medtronic products incorporating such technology and having an
average selling price per unit, determined in accordance with
Medtronic's established accounting principles ("ASP"), of $100 or less.
The per unit royalty rate for future new Medtronic products
incorporating the EchoMark"r" or ColorMark"r" technology and having an
ASP of over $100 and less than $250 shall be a mutually agreed upon rate
not to exceed $10 per unit. The per unit Royalty rate for future
Medtronic products incorporating either the EchoMark or ColorMark
technologies with an ASP of $250 or more shall be mutually agreed to by
the parties.
6.1.1 Royalties shall not accrue or be due until such time as
Medtronic has achieved sales of Royalty Bearing Units, beginning with
the date of this Agreement, which would otherwise have resulted in the
payment of $1,500,000 in Royalties to EchoCath.
6.2 Cumulative Cap. The total cumulative royalties paid under this Agreement
shall be limited to and shall not exceed the sum of Twenty Million Dollars U.S.
($20,000,000) plus the amount of License Option Fee paid by Medtronic pursuant
to Section 9.1 below ("Cumulative Cap"). The fees set forth in Sections 4.1 and
9.1 and amounts actually paid as Annual Minimum Royalty pursuant to Section 7,
shall be applied against the Cumulative Cap.
6.3 Reports and Payments. Within sixty (60) days after the end of each Quarter,
Medtronic shall provide EchoCath with a written report indicating the number of
each type of Royalty Bearing Unit sold during such Quarter and the amount of the
royalties due to EchoCath for such Quarter. Simultaneously with making such
report and to the extent a payment is due to EchoCath, Medtronic shall pay to
EchoCath the amount of royalties then due.
6.4 Records. Medtronic agrees to keep accurate written records sufficient in
detail to enable the royalties under this Agreement by Medtronic to be
determined and verified. Such records for a particular Quarter shall be retained
by Medtronic for a period of not less than three years after the end of such
Quarter.
6.5 Audit of Records. Upon reasonable notice and during regular business hours,
Medtronic shall from time to time, but no more frequently than semi-annually,
make available the records referred to in Section 6.4 for audit at EchoCath's
expense by independent representatives selected by EchoCath to verify the
accuracy of such reports
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provided by Medtronic to the EchoCath. Such representatives shall execute a
suitable confidentiality agreement reasonably acceptable to Medtronic prior to
conducting such audit. Such representatives may disclose to EchoCath only its
conclusions regarding the accuracy and completeness of royalty payments and of
records related thereto, and shall not disclose Medtronic's confidential
business information to EchoCath without the prior written consent of Medtronic.
ARTICLE 7
ANNUAL MINIMUM ROYALTY; OPTION TO TERMINATE
7.1 Notwithstanding the provisions of Section 6.1.1, starting with the first
Medtronic fiscal year beginning after the date two years following Medtronic's
first commercial sale of a Medtronic Product utilizing either the ColorMark or
the EchoMark technologies in the Field of Use (the "Minimum Royalty Start Date")
Medtronic agrees to pay EchoCath minimum royalties of at least One Hundred
Thousand Dollars ($100,000) per Medtronic fiscal year (the "Annual Minimum
Royalty") subject to the following terms and conditions:
(a) During the first five (5) years after the Minimum Royalty Start
Date, Medtronic shall not be obliged to pay any Annual Minimum Royalty
unless and until the requirements of Section 6.1.1 have been satisfied.
(b) During the first five (5) years after the Minimum Royalty Start
Date, the amount charged against the requirements of Section 6.1.1 shall
be the greater of (i) the Annual Minimum royalty or (ii) the royalties
which, but for Section 6.1.1, would have been paid in any such fiscal
year.
(c) Upon the earlier of (i) the requirements of Section 6.1.1 being
satisfied or (ii) the commencement of the sixth (6th) year following the
Minimum Royalty Start Date, if Medtronic has not generated sales which
(ignoring Section 6.1.1) would have yielded Royalties equal to at least
the Annual Minimum Royalty in any Medtronic fiscal year, Medtronic shall
have the right to pay the amount to make up the difference during the
60-day period ("Annual Cure Period") following the date the last royalty
payment with respect to such fiscal year was due.
7.2 If Medtronic fails to pay the Annual Minimum Royalty by the end of the
Annual Cure Period as provided in Section 7.1 (c), above, EchoCath shall have
the right the option to terminate Medtronic's license rights under this License
Agreement. In order to effectuate a termination of this License Agreement under
the foregoing terms, EchoCath shall pay to Medtronic an amount equal to the
License Acquisition Fees, as actually paid to EchoCath, less an amount equal to
the greater of the Annual Minimum Royalty for each year or the products of RBU's
sold by Medtronic multiplied by the appropriate per unit Royalty rate.
EchoCath's termination option pursuant to this Section shall be EchoCath's sole
right and remedy for Medtronic's failure to pay the Annual Minimum Royalty, and
may be exercised only by delivering written notice to Medtronic within 90 days
after the end of the Annual Cure Period with respect to any Medtronic fiscal
year for which Medtronic has failed to pay at least the Annual Minimum Royalty.
Notwithstanding the foregoing, Medtronic shall have the right to withhold any
particular payment if there is a reasonable basis to conclude that EchoCath has
failed to perform a material obligation under the terms of this Agreement or any
subsequent development agreement, as applicable, and the issue has been
submitted for resolution under Section 14.13, Arbitration, herein.
ARTICLE 8
DEVELOPMENT PROJECTS
8.1 Development Agreement. Medtronic and EchoCath shall negotiate in good faith
and use all commercially reasonable efforts to reach agreement upon and, within
60 days after the date hereof, enter into a Development Agreement for
development by EchoCath of Products or components thereof utilizing the Licensed
Technology. The Development Agreement will require Medtronic and EchoCath to use
reasonable good-faith efforts to complete the following respective obligations
set forth in this Article.
8.2 Development Projects. There shall be two development projects with
separate milestones and mutually agreed upon budgets as follows:
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(a) The first development project shall be accomplished within 60 days
of execution of the Development Agreement, and shall involve EchoCath completing
the EchoMark"r" guidewire manufacturing plan.
(b) The second development project shall be accomplished within 200 days
after completion of the first development project, and shall involve validation
of the EchoMark"r" guidewire system:
8.3 Failure to Meet Milestones. Should EchoCath, for any reason fail to
meet any set of development milestones outlined in Section 8.2 above and in the
Development Agreement above, Medtronic shall notify EchoCath and EchoCath shall
have 60 days to cure. If EchoCath does not cure, Medtronic shall have the right
to undertake product development projects either (1) by itself, or (2) by
engaging third party contractor or consultants, provided that any such
consultant or contract shall be bound by the terms of any applicable
confidentiality agreements between Medtronic and EchoCath related to the
EchoMark"r" or ColorMark"r" technologies. Medtronic shall then have no
obligation to make any milestone payments to EchoCath for those milestones
performed by Medtronic under the Development Agreement.
ARTICLE 9
OPTION FOR ADDITIONAL LICENSE RIGHTS
9.1 Grant of License Option. In addition to the Product development obligations
outlined in Article 8, above and in addition to the fees specified in Section
4.1 above, EchoCath hereby irrevocably grants Medtronic the exclusive right and
option (the "License Option"), exercisable by written notice to EchoCath at any
time within six months after the date hereof (the "Option Period"), to acquire a
worldwide exclusive license to the EchoEye"r" and EchoFlow"r" technologies
within the Field of Use upon mutually agreeable terms and conditions, including
total consideration of not less than $1.5 million, and subject to other
commercially reasonable terms and conditions. In the event that the concept
design validation, described below in this section, is not achieved by the end
of the third month from execution hereof, then the aforementioned six month
period shall be extended to include such additional time as is required for the
concept design validation to be reviewed by Medtronic for a three month period.
For example, if said concept design validation is delivered on the 15th day of
the fourth month from execution hereof, the Option Period shall expire at the
end of the 15th day of the seventh month from execution.
In consideration of such License Option, Medtronic agrees to pay
EchoCath the following amounts (the "License Option Fee") upon the achievement
by EchoCath of the following development milestones:
$50,000 upon signing this Agreement;
I. $200,000 upon the earlier to occur of (i) achievement of concept
design validation of a mutually agreed upon product utilizing either the
EchoEye"r" or EchoFlow technologies in the Field of Use or (ii) six months after
the signing of this Agreement by both parties.
9.2 Right of First Refusal. In the event Medtronic and EchoCath are unable to
agree on the terms of such exclusive license for the EchoEye"r" and EchoFlow"r"
technologies, Medtronic shall have a right of first refusal in connection with
any sale, license or other transfer of such technologies by EchoCath to any
third party during the three month period commencing upon expiration of the
Option Period set forth in Section 9.1. Such "right of first refusal" means that
if EchoCath reaches agreement in principal with, or otherwise indicates its
willingness to accept an offer of, any third party regarding the licensing or
sublicensing, sale or other transfer of any EchoEye"r" or EchoFlow"r"
technologies, then EchoCath shall promptly give written notice (the "Notice") to
Medtronic, which Notice shall (i) specify the pricing, terms, conditions and all
material provisions with respect to the proposed transaction, (ii) identify the
proposed party or parties to such transaction, and (iii) include a copy of the
proposed definitive agreement setting forth the terms of the proposed
transaction between EchoCath and the proposed third party or parties. Medtronic
shall have the irrevocable right and option (the "first refusal option"),
exercisable in writing to EchoCath any time within 45 days after Medtronic's
receipt of the Notice, to elect to enter into such proposed transaction upon the
same pricing (or the monetary equivalent of any non-monetary consideration as
shall be determined by a mutually agreed upon third party), terms, conditions
and other material provisions as set forth in the Notice. If Medtronic so elects
to exercise its first refusal option, EchoCath shall use its/their best efforts
to permit consummation of such proposed transaction with Medtronic within 90
days following exercise. If Medtronic fails to exercise its first refusal option
to enter into such proposed transaction, EchoCath and the proposed party
identified in the Notice may complete such transaction upon the pricing, terms,
conditions and material provisions specified in the Notice and contained in the
proposed definitive agreement included with the Notice; provided that, if (i)
EchoCath and such third party fail to complete such transaction within 90 days
after the expiration of Medtronic's 45-day option, or (ii) if any of
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the pricing, terms, conditions or other material provisions specified in the
Notice and contained in the proposed definitive agreement are modified so as to
be less favorable to EchoCath, or (iii) if the identity of such third party
changes, then, in any such event, EchoCath shall give a new Notice to Medtronic,
and Medtronic shall have a new first refusal option, with respect to such
delayed or modified proposed transaction.
ARTICLE 10
INTELLECTUAL PROPERTY
10.1 Pre-existing Intellectual Property. Any intellectual property that
exists as of the execution of this Agreement shall remain the property of its
original owner, whether or not it is shared with or used by the other party for
purpose of this Agreement.
10.2 Sole Inventions. Any inventions made by a party during the term of
this Agreement exclusively using its own resources and invented by its own
personnel shall remain the property of the inventing party.
10.3 Joint Inventions. Any inventions made jointly by personnel of Medtronic and
EchoCath ("Joint Inventions") shall be owned jointly with each party having
joint rights to use and license such Joint Inventions, subject to Medtronic's
exclusive license rights to EchoCath's joint interest in the Joint Inventions
within the Field of Use.
10.4 Medtronic-Funded Inventions. Any inventions made by EchoCath using funds
provided by Medtronic, but not otherwise using Medtronic intellectual property,
shall be owned by EchoCath. EchoCath hereby grants Medtronic a worldwide (i)
exclusive royalty-free license for use of such inventions within the Field of
Use and (ii) right of first offer (requiring EchoCath to negotiate exclusively
with Medtronic for a period of at least 90 days) and right of first refusal
(pursuant to the procedures described in Section 9.2) to obtain a license to use
such inventions outside the Field of Use on mutually agreeable terms.
ARTICLE 11
CERTAIN REPRESENTATIONS, WARRANTIES AND INDEMNITIES
11.1 Representations and Warranties of EchoCath. EchoCath represents and
warrants to Medtronic as follows:
(a) The execution and delivery by EchoCath of this Agreement and the
performance by EchoCath of its obligations hereunder have been duly authorized
by all requisite corporate action and will not violate any provision of law, any
order of any court or other agency of government, the Certificate of
Incorporation or Bylaws of EchoCath, as amended, or any provision of any
indenture, agreement or other instrument to which EchoCath or any of its
properties or assets is bound, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge, restriction, claim or encumbrance of any nature
whatsoever upon any of the properties or assets of EchoCath.
(b) This Agreement has been duly executed and delivered by EchoCath and
constitutes the legal, valid and binding obligation of EchoCath, enforceable in
accordance with its terms, subject, as to the enforcement of remedies, to the
discretion of the courts in awarding equitable relief and to applicable
bankruptcy, reorganization, insolvency, moratorium and similar laws affecting
the rights of creditors generally.
(c) EchoCath is the owner, or exclusive licensee with the right to grant
sublicenses in the Field of Use, of all right, title and interest in and to the
Licensed Technology free and clear of any liens, mortgages, charges, security
interests, pledges, encumbrances, assessments, restrictions or other third-party
claims of any nature. EchoCath's execution and performance of this Agreement and
Medtronic's use of the Licensed Technology in the Field of Use will not
infringe, misuse, misappropriate or conflict with the rights, including patent
and other intellectual property rights or contract rights, of others. To the
knowledge of EchoCath, the Licensed Technology is valid and has not been
challenged in any judicial or administrative proceeding. Neither any
shareholder, employee or consultant of EchoCath or its Affiliates (or the
employer of any such consultant) has any rights in or to any of the Licensed
Technology. To the knowledge of EchoCath, EchoCath has not failed to take any
necessary steps or appropriate actions to record its interests, or protect its
rights, in the Licensed Technology. To the knowledge of EchoCath, within the
Field of Use, no person or entity nor such person's or entity's business or
products has infringed, misused, misappropriated or conflicted with the Licensed
Technology or currently is infringing, misusing, misappropriating or conflicting
with the Licensed Technology.
Page 8
11.2 Representations and Warranties of Medtronic. Medtronic represents
and warrants to EchoCath as follows:
(a) The execution and delivery by Medtronic of this Agreement and the
performance by Medtronic of its obligations hereunder have been duly authorized
by all requisite corporate action and will not violate any provision of law, any
order of any court or other agency of government, the Certificate of
Incorporation or Bylaws of Medtronic, as amended, or any provision of any
indenture, agreement or other instrument to which Medtronic or any of its
properties or assets is bound, or conflict with, result in a breach of or
constitute (with due notice of lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge, restriction, claim or encumbrance of any nature
whatsoever upon any of the properties or assets of Medtronic.
(b) This Agreement has been duly executed and delivered by Medtronic and
constitutes the legal, valid and binding obligation of Medtronic, enforceable in
accordance with its terms, subject, as to the enforcement of remedies, to the
discretion of the courts in awarding equitable relief and to applicable
bankruptcy, reorganization, insolvency, moratorium and similar laws affecting
the right of creditors generally.
ARTICLE 12
INDEMNIFICATION
12.1 EchoCath's Liability. EchoCath shall indemnify, defend and hold harmless
Medtronic and each of its subsidiaries, officers, directors, employees,
shareholders and distributors from and against and in respect of any and all
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, interest and penalties, costs and expenses (including, without
limitation, reasonable legal fees and disbursements incurred in connection
therewith and in seeking indemnification therefor, and any amounts or expenses
required to be paid or incurred in connection with any action, suit, proceeding,
claim, appeal, demand, assessment or judgment) ("Indemnifiable Losses"),
resulting from, arising out of, or imposed upon or incurred by any person to be
indemnified hereunder by reason of any breach of representation, warranty,
covenant or agreement on the part of EchoCath under this Agreement (excluding
matters for which Medtronic is responsible under Section 12.2 below).
12.2 Medtronic's Liability. Medtronic shall indemnify, defend and hold harmless
EchoCath and each of its subsidiaries, officers, directors, employees,
shareholders and suppliers from and against and in respect of any and all
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, interest and penalties, costs and expenses (including, without
limitation, reasonable legal fees and disbursements incurred in connection
therewith and in seeking indemnification therefor, and any amounts or expenses
required to be paid or incurred in connection with any action, suit, proceeding,
claim, appeal, demand, assessment or judgment) ("Indemnifiable Losses"),
resulting from, arising out of, or imposed upon or incurred by any person to be
indemnified hereunder by reason of any breach of representation, warranty,
covenant or agreement on the part of Medtronic under this Agreement (excluding
matters for which EchoCath is responsible under Section 12.1 above).
12.3 Third Party Claims. If a claim by a third party is made against any
indemnified party, and if the indemnified party intends to seek indemnity with
respect thereto under this Article, such indemnified party shall promptly notify
the indemnifying party of such claim; provided, however, that failure to give
timely notice shall not affect the rights of the indemnified party so long as
the failure to give timely notice does not materially adversely affect the
indemnifying party's ability to defend such claim against a third party. The
indemnifying party shall be entitled to settle or assume the defense of such
claim, including the employment of counsel satisfactory to the indemnified
party, as provided below. If the indemnifying party elects to settle or defend
such claim, it shall notify the indemnified party within thirty (30) days (but
in no event less than twenty (20) days before any pleading, filing or response
on behalf of the indemnified party is due) of its intent to do so. If the
indemnifying party elects not to settle or defend such claim or fails to notify
the indemnified party of its election within thirty (30) days (or such shorter
period provided above) after receipt of the indemnified party's notice of a
claim of indemnity hereunder, the indemnified party shall have the right to
contest, settle or compromise the claim without prejudice to any rights to
indemnification hereunder. Regardless of which party is controlling the
settlement or defense of any claim, (i) both the indemnified party and
indemnifying party shall act in good faith, (ii) the indemnifying party shall
not thereby permit to exist any lien, encumbrance or other adverse charge upon
any asset of any indemnified party or of its subsidiaries, (iii) the
indemnifying party shall permit the indemnified party to participate in such
settlement or defense through counsel chosen by the indemnified party, provided
that all fees, costs and expenses of such counsel in an action controlled by the
indemnifying party shall be borne by the indemnified party, unless the
indemnifying party and indemnified party have different available defenses to
such third party claim, in which case such fees, costs and expenses shall be
borne by the indemnifying party, (iv)
Page 9
no entry of judgment or settlement of a claim may be agreed to without the
written consent of both the indemnified party and the indemnifying party, which
consents shall not be unreasonable withheld, and (v) the indemnifying party
shall agree promptly to reimburse the indemnified party for the full amount of
such claim pursuant to this Article. So long as the indemnifying party is
reasonably contesting any such claim in good faith as permitted herein, the
indemnified party shall not pay or settle any such claim. The controlling party
shall deliver, or cause to be delivered, to the other party copies of all
correspondence, pleadings, motions, briefs, appeals or other written statements
relating to or submitted in connection with the settlement or defense of any
such claim, and timely notices of, and the right to participate pursuant to
support (iii) above in any hearing or other court proceeding relating to such
claim. Notwithstanding anything to the contrary herein, Medtronic shall have
full and exclusive authority to litigate, compromise and settle any claims
related to Product Liability, but shall do so in good faith and in a manner
consistent with Medtronic's corporate policies.
12.4 Cooperation as to Indemnified Liability. Each party hereto shall cooperate
fully with the other parties with respect to access to books, records, or other
documentation within such party's control, if deemed reasonably necessary or
appropriate by any party in the defense of any claim which may give rise to
indemnification hereunder.
ARTICLE 13
PROSECUTION OF PATENTS AND INFRINGEMENT
13.1 Prosecution of Infringement of Licensed Technology by Third Party.
(a) Each of Medtronic and EchoCath shall promptly notify the other if it
knows or has reason to believe that rights to the Licensed Technology are being
infringed or misappropriated by a third party within the Field of Use or that
such infringement or misappropriation is threatened. Medtronic shall, after
learning of and investigating such alleged infringement or misappropriation,
send notice to EchoCath electing to do one of the following: (i) prosecute such
alleged infringement or misappropriation for Medtronic's own account; (ii) offer
EchoCath the choice of participating in such prosecution; or (iii) decline to
prosecute such alleged infringement or misappropriation.
(b) In the event Medtronic elects to prosecute such alleged infringement or
misappropriation for its own account pursuant to (a)(i) above, Medtronic shall
be solely responsible for payment of all of its own costs of prosecution and of
negotiating settlement, and shall retain all proceeds from such prosecution.
Medtronic shall have the right to join EchoCath as a party plaintiff to any such
proceeding if Medtronic believes it is necessary to successfully prosecute such
infringement or misappropriation. EchoCath shall cooperate, at Medtronic's
expense, in connection with the initiation and prosecution by Medtronic of such
suit.
(c) In the event Medtronic offers EchoCath the choice of participating in
such prosecution pursuant to (a)(ii) above, upon receipt of Medtronic's notice,
EchoCath shall have thirty (30) days in which to notify Medtronic in writing of
EchoCath's election to participate in the prosecution of such alleged
infringement or misappropriation. If EchoCath elects to participate, EchoCath
shall be obligated to pay fifty percent (50%) of the costs and expenses incurred
by Medtronic and EchoCath in such prosecution and shall be entitled to receive
fifty percent (50%) of the net proceeds realized from EchoCath's and Medtronic's
prosecuting of such matter and remaining after reimbursement of Medtronic's and
EchoCath's costs and expenses out of the proceeds of such matter.
(d) In the event Medtronic elects not to prosecute pursuant to (a)(iii)
above, EchoCath may, at its option, prosecute such alleged infringement or
misappropriation for its own account, in which event EchoCath shall be solely
responsible for all costs of prosecution and of negotiating settlement and shall
retain all proceeds from such prosecution.
13.2 Protection of Intellectual Property and Improvements. During the term of
this Agreement, EchoCath shall promptly inform Medtronic of any Invention,
improvement, upgrading or modification relating to the Licensed Technology.
EchoCath agrees to protect the Licensed Technology by obtaining and maintaining
appropriate patent rights as recommended by reputable patent counsel. If
Medtronic determines, in its sole discretion, that any Invention conceived,
reduced to practice or otherwise made, developed or acquired by one or more
employees or agents of EchoCath and having application to the Field of Use is
not being adequately protected by patents, Medtronic may so inform EchoCath. If
Medtronic decides that EchoCath's response has been inadequate, Medtronic may
take whatever action it deems necessary at its expense to protect such
Invention. All patents and copyright registrations shall be applied for in the
names of the actual inventors or authors and shall be assigned to EchoCath,
subject to Medtronic's
Page 10
rights and license therein; each party shall execute and deliver such forms of
assignment, power of attorney and other documents which are necessary to give
effect to the provisions hereof.
ARTICLE 14
MISCELLANEOUS
14.1 Non-Disclosure. Except as permitted or required for performance by the
party receiving such Confidential Information of its rights or duties hereunder,
for a period of three (3) years after receipt, each party agrees (i) not to
disclose or use any Confidential Information of the other party obtained in
connection with the performance of this Agreement, and (ii) not to disclose or
provide any of such Confidential Information of the other party to any third
party and to take appropriate measures to prevent any such disclosure by its
present and future employees, officers, agents, subsidiaries, or consultants.
14.2 Relationship. This Agreement does not make either party the employee, agent
or legal representative of the other for any purpose whatsoever. Neither party
is granted any right or authority to assume or to create any obligation or
responsibility, express or implied, on behalf of or in the name of the other
party. In fulfilling its obligations pursuant to this Agreement, each party
shall be acting as a independent contractor.
14.3 Assignment. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and the successors or assigns of the parties hereto;
provided, that (i) the rights and obligations of EchoCath herein may not be
assigned except to any person who succeeds to substantially all of the assets
and business of EchoCath, and (ii) the rights and obligations of Medtronic
herein may not be assigned except to any person who succeeds to substantially
all of that portion of Medtronic's business to which this Agreement relates.
14.4 Complete Agreement. The Exhibits to this Agreement shall be construed as an
integral part of this Agreement to the same extent as if they had been set forth
verbatim herein. This Agreement and the Exhibits hereto constitute the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersede all prior agreements whether written or oral relating hereto.
14.5 Survival. All of the representations, warranties, and covenants made in
this Agreement, and all terms and provisions hereof intended to be observed and
performed by the parties after the termination hereof, shall survive such
termination and continue thereafter in full force and effect.
14.6 Waiver, Discharge, Amendment, Etc. The failure of any party hereto to
enforce at any time any of the provisions of this Agreement shall in no way be
construed to be a waiver of any such provision, nor in any way to affect the
validity of this Agreement or any part thereof or the right of the party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to be a waiver of any other or subsequent breach.
Any amendment to this Agreement shall be in writing and signed by the parties
hereto.
14.7 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed as original and all of which together shall
constitute one instrument.
14.8 Titles and Headings; Construction. The titles and headings to Sections
herein are inserted for the convenience of reference only and are not intended
to be a part of or to affect the meaning or interpretation of this Agreement.
This Agreement shall be construed without regard to any presumption or other
rule requiring construction hereof against the party causing this Agreement to
be drafted.
14.9 Benefit. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties to this Agreement or their
respective successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
14.10 Notices. All notices or other communications to a party required or
permitted hereunder shall be deemed given if in writing and delivered personally
or sent by telecopy (with confirmation or transmission) or certified mail
(return receipt requested) to such party at the following addresses (or at such
other addresses as shall be specified by like notice):
Page 11
if to Medtronic to:
Medtronic, Inc.
Corporate Center
0000 Xxxxxxx Xxxxxx X.X.
Xxxxxxxxxxx, XX 00000
Attention: General Counsel
FAX (000) 000-0000
with a copy to:
Medtronic, Inc.
Corporate Center
0000 Xxxxxxx Xxxxxx X.X.
Xxxxxxxxxxx, XX 00000
Attention: Vice President Corporate Development and Associate General Counsel
FAX (000) 000-0000
if to EchoCath to:
EchoCath, Inc.
0000 Xxxxx Xxx, Xxxxxxxx Xxxxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: President
FAX (000) 000-0000
Medtronic or EchoCath may change their respective above-specified recipient
and/or mailing address by notice to the other party given in the manner herein
prescribed. All notices shall be deemed given on the day when actually delivered
as provided above (if delivered personally or by telecopy) or on the day shown
on the return receipt (if delivered by mail).
14.11 Severability. In case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
14.12 Public Announcement. Each of the parties to this Agreement hereby agrees
with the other parties hereto that, except as may be required to comply with the
requirements of applicable law and the appropriate stock exchanges, such as the
New York Stock Exchange or NASDAQ, no press release or similar public
announcement or communication will be made or caused to be made concerning the
execution or performance of this Agreement unless specifically approved in
advance by Medtronic and EchoCath. The foregoing shall not restrict Medtronic's
or EchoCath's communications with employees or customers.
14.13 Arbitration. Any controversy or claim arising out of or relating to this
Agreement or the alleged breach, termination or validity hereof, including any
alleged fraud in the inducement hereof, shall be resolved by mediation under the
Center for Public Resources (CPR) Mediation Procedure for Business Disputes.
Unless the parties agree otherwise, the mediator will be selected from the CPR
Panels of Neutrals with notification to CPR. Any such claim or controversy which
remains unresolved 45 days after appointment of a mediator, shall be settled by
binding arbitration by three (3) arbitrators in accordance with the CPR
Non-Administered Arbitration Rules, and judgment upon the award rendered by the
arbitrators may be entered by any court having jurisdiction thereof.
Notwithstanding the foregoing, either party may seek interim injunctive relief
from any court of competent jurisdiction.
Page 12
IN WITNESS WHEREOF, each of the parties has caused this License Agreement to
be executed in the manner appropriate to each, as of the date first above
written.
ECHOCATH, INC.
By
-------------------------------
Its
-------------------------------
MEDTRONIC, INC.
By
-------------------------------
Its
-------------------------------
EXHIBITS:
A - List of Present EchoCath Patents and Patent Applications within
Licensed Technology
B - Capital Equipment
STATEMENT OF DIFFERENCES
The registered trademark symbol shall be expressed as....................... 'r'
The trademark symbol shall be expressed as..................................'tm'
Page 13
EXHIBIT A
For the Purposes of this Agreement, the "U.S. Patents" are:
ECHOMARK"r"
U.S. Patents: 5,076,278 Issued: 12/31/91 Expire: 12/31/2011
(Design of Sensor)
5,161,536 Issued: 11/10/92 Expire: 11/10/2012
(Electronics for Detection)
ECHOEYE"r"
U.S. Patent: 5,373,845 Issued: 12/20/94 Expire: 12/20/2014
COLORMARK"r"
U.S. Patents: 5,329,927 Issued 7/19/1994 Expire: 7/19/2014
(Equipment)
U.S. Patents: 5,343,865 Issued 9/16/1994 Expire: 9/16/2014
(Method)
U.S. Patents: 5,425,370 Issued 6/20/1995 Expire: 6/20/2015
("GreyMark")
U.S. Patents: 5,421,336 Issued 6/6/1996 Expire: 6/6/2016
(Needle Engager)
Echo-10 Filed 12/3/96 Serial No. 08/759762
("ColorNeedle")
ECHOFLOW"tm"
U.S. Patents: 5,488,953 Issued 2/6/1996 Expire: 2/6/2016
(Method)
U.S. Patents: 5,540,230 Issued 7/30/1996 Expire: 7/30/2016
(Apparatus)
U.S. Patents: 5,669,388 Issued 9/23/1997 Expire: 6/20/2017
(Automatic Transducer Placement)
Page 14
EXHIBIT B
CAPITAL EQUIPMENT
Present Capital Equipment:
ColorMark"r" Driver Model 000000
Best Distributor Pricing (in quantities > 24): $3,000
EchoMark"r" CSI Model No. CSI 1.0 Best Pricing: COGS+30%
(Present [low quantity] COGS of CSI plus accessories: ~ $6400)
Page 15
