PRODUCT DEVELOPMENT INCENTIVE AGREEMENT
THIS AGREEMENT (this "Contract"), made and entered into effective as of the
8th day of November, 1995 by and between OXBORO MEDICAL INTERNATIONAL, INC., a
Minnesota corporation ("COMPANY"), and XXXXXX XXXXX ("XXXXX");
WITNESSETH:
WHEREAS, XXXXX has developed and/or contributed to the development of
various PRODUCTS (as defined below); and
WHEREAS, COMPANY desires to obtain from XXXXX, and XXXXX desires to grant
to COMPANY, an exclusive license for making, using and selling the PRODUCTS, on
the terms and subject to the conditions set forth below; and
WHEREAS, COMPANY desires to receive information and assistance from XXXXX
to enable COMPANY to use XXXXX'x KNOW-HOW (as defined below) to make or have
made, use and sell the PRODUCTS, on the terms and subject to the conditions set
forth below;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter contained, the parties hereto agree as follows:
1. Definitions. Whenever used in this Contract, the following capitalized
terms will have the meanings set forth below:
1.1 The term "PRODUCTS" shall include only the items set forth on the
attached Exhibit 1.1 (HH).
Further items may be added to the foregoing list of PRODUCTS by
mutual agreement between XXXXX and the Board of Directors of
Company, which PRODUCTS are made in whole or in part using the
KNOW-HOW supplied by XXXXX and shall be deemed to be "ADDITIONAL
PRODUCTS" as defined below.
1.2 The term "NET SALES PRICE" means the gross invoice or billing
price of the PRODUCTS or ADDITIONAL PRODUCTS (as defined below),
sold by COMPANY with no deductions except for: (a) freight
charges; (b) trade, quantity and cash discounts; (c) any sales
tax applicable to the sale of the PRODUCTS or ADDITIONAL
PRODUCTS; and (d) such credits or allowances, if any, given or
made because of the rejection or return of any PRODUCTS or
ADDITIONAL PRODUCTS previously delivered to a customer by
COMPANY.
1.3 The term "KNOW-HOW" means accumulated knowledge, technical
information, methods of use, and the like, concerning the
PRODUCTS or the ADDITIONAL PRODUCTS which XXXXX has in his
possession or acquires during the term of this Contract and which
XXXXX is free to disclose to COMPANY.
2. Grant of PRODUCT License.
2.1 XXXXX hereby grants to COMPANY an exclusive world-wide license to
make, to have made, to use and to sell the PRODUCTS, together
with an exclusive world-wide license to use the KNOW-HOW to make,
to have made, to use and to sell the PRODUCTS. For the purposes
of this Contract, the term "exclusive" means that XXXXX will not
supply, provide or grant to any person or entity other than
COMPANY or its affiliates rights to make, have made, use, sell,
or utilize the PRODUCTS, the ADDITIONAL PRODUCTS or the KNOW-HOW
without the prior written consent of COMPANY.
2.2 XXXXX hereby grants to COMPANY the right to grant to purchasers
of the PRODUCTS a non-exclusive license to use the purchased
PRODUCTS and ADDITIONAL PRODUCTS and any related KNOW-HOW
necessary for the use of the PRODUCTS and ADDITIONAL PRODUCTS
purchased.
3. Supplying of KNOW-HOW; Rights to ADDITIONAL PRODUCTS.
3.1 XXXXX has, contemporaneously with the execution of this Contract,
furnished to COMPANY all KNOW-HOW concerning the PRODUCTS in
existence as of the date hereof. XXXXX further agrees to promptly
provide COMPANY with any additional KNOW-HOW developed or
acquired by XXXXX during the term of this Contract and useful or
necessary to enable COMPANY to make, to have made, to use and to
sell the PRODUCTS or any ADDITIONAL PRODUCTS.
3.2 XXXXX agrees to offer to COMPANY all products, concepts, and
ideas that he may develop after the date of this Contract and for
a period of two years following the expiration or termination of
this Contract and that are within the same category as or similar
to the products COMPANY is marketing at the time of such
development. COMPANY shall determine, within a reasonable time,
whether it is interested in obtaining the rights to and
developing and marketing such product, concept, or idea. The
Company shall have thirty (30) days to accept or reject the
offer. If the Company accepts such additional products, such
products shall be defined as "ADDITIONAL PRODUCTS", and such
ADDITIONAL PRODUCTS shall be subject to all of the provisions of
the Agreement. If the Company rejects or fails to accept the
additional products within said thirty (30) day period, then
XXXXX shall be entitled to enter into an agreement regarding said
products with any third party on any terms; however, if the
Company responds to the offer with a counter-offer which is
rejected by XXXXX, then XXXXX shall be entitled to enter into an
agreement regarding said products with any third party on terms
no more favorable to such third party than the terms
counter-offered by the Company for such products.
4. Incentive Payment.
4.1 Commencing on the date of XXXXX'X termination of employment with
the COMPANY ("Termination Date"), COMPANY will pay to XXXXX an
INCENTIVE PAYMENT in the amounts of Four Percent (4%) on the NET
SALES PRICE of all PRODUCTS and ADDITIONAL PRODUCTS sold by
COMPANY. Except as expressly provided in this Contract, COMPANY
will continue to pay an INCENTIVE PAYMENT to XXXXX for the life
of the PRODUCTS and ADDITIONAL PRODUCTS.
4.2 Within fifteen (15) days after the close of each month from and
after XXXXX'X Termination Date, COMPANY will pay XXXXX the
INCENTIVE PAYMENT due on PRODUCTS and ADDITIONAL PRODUCTS sold
during the preceding month.
4.3 COMPANY will have the option at any time to cease paying the
INCENTIVE PAYMENT to XXXXX with respect to any individual item
included in the PRODUCTS by giving all rights to such item back
to XXXXX. COMPANY will also have the right to maintain its
exclusive license to an individual item included in the PRODUCTS
and ADDITIONAL PRODUCTS, even if such item is defined as no
longer sold by COMPANY, by paying to XXXXX an amount equal to
Four Percent (4%) times the average annual NET SALES PRICE for
the item over the COMPANY's three (3) preceding fiscal years,
which amount shall be paid to XXXXX each year that the COMPANY
wishes to maintain its exclusive license.
5. COMPANY's Development Obligations. COMPANY will have the
responsibility, at its sole expense: (a) to complete the development
of the PRODUCTS and ADDITIONAL PRODUCTS; (b) to carry all PRODUCT and
Additional Product concepts through to production; (c) to manufacture
or produce the PRODUCTS and the ADDITIONAL PRODUCTS; (d) to prepare,
file and prosecute all necessary and desirable patent, trademark and
copyright applications and Federal Drug Administration registrations
relating to the PRODUCTS or ADDITIONAL PRODUCTS; (e) to advertise,
market, promote and distribute the PRODUCTS and the ADDITIONAL
PRODUCTS; and, (f) with respect to (a) through (e) above, any
expenditure(s) in excess of $15,000.00, cumulative or otherwise, must
be approved by the Board of Directors.
6. Records; Audit Rights. COMPANY agrees to keep true and detailed
records containing all information required for the computation and
verification of INCENTIVE PAYMENT to be paid by COMPANY under this
Contract. Upon written notice from XXXXX, COMPANY will make all
records containing information required for the computation of
INCENTIVE PAYMENT available to XXXXX or his designee for review and
audit. If the audit by XXXXX reveals any deficiency in INCENTIVE
PAYMENT paid to XXXXX, COMPANY will reimburse XXXXX for the cost of
the audit, and will pay the INCENTIVE PAYMENT deficiency to XXXXX
within five (5) business days of completion of the audit. If an audit
reveals any payments which exceed the amount of Incentive Payments to
XXXXX as determined pursuant to the terms hereof, XXXXX will
immediately reimburse the Company the amounts of such overpayments and
the cost of such audit if such audit is or was requested by XXXXX. If
payments are accurate, then the party requesting the audit shall pay
the cost of the audit.
7. Duration and Termination. This Contract may be terminated by either
party in the event of a breach under or default in the performance of
any material provision, term or condition of this Contract and the
giving of written notice specifying the alleged breach or default, if
the party in breach or default fails to cure the alleged breach or
default within thirty (30) days of receipt of notice, or fails or
commence actions to cure the breach or default within such thirty (30)
day period and thereafter diligently prosecute such cure to
completion. Upon the termination of this Contract: (a) COMPANY will
immediately lose all rights to manufacture and produce the PRODUCTS
and the ADDITIONAL PRODUCTS, which rights shall immediately revert to
XXXXX; (b) COMPANY will immediately lose all rights to sell or
distribute the PRODUCTS and the ADDITIONAL PRODUCTS, which rights
shall immediately revert to XXXXX; provided however that COMPANY will
have the right to sell its inventory of any completed PRODUCTS and
ADDITIONAL PRODUCTS manufactured or produced as of the date of
termination; (c) COMPANY will immediately lose all rights to use the
KNOW-HOW, will cease using the KNOW-HOW in all respects, and will
transfer all rights pertaining to the KNOW-HOW back to XXXXX; (d)
COMPANY will continue to pay the INCENTIVE PAYMENT as provided in this
Contract based on the NET SALES PRICE of PRODUCTS sold by COMPANY
following the termination of this Contract; (e) COMPANY will assign to
XXXXX all patents, trademark and Federal Drug Administration
registrations, copyrights and similar intellectual property rights, as
well as all applications therefor, which relate to or are derived from
the PRODUCTS, the ADDITIONAL PRODUCTS or the KNOW-HOW; and (f) XXXXX
will have the right to utilize the KNOW-HOW and to manufacture and
sell the PRODUCTS and the ADDITIONAL PRODUCTS, either on his own
account or through such other persons or entities as he may select.
8. Notices. All notices given hereunder shall be in writing and shall be
personally served or sent by registered or certified mail, return
receipt requested. Notices to COMPANY shall be given to COMPANY at its
corporate headquarters, which as of the date of this Contract is 00000
Xxxxxxx Xxxxxx X.X., Xxx Xxxx, Xxxxxxxxx 00000. Notices to XXXXX shall
be addressed to XXXXX at XXXXX'x residence address as the same appears
on the records of COMPANY. Notices to COMPANY or XXXXX shall be sent
to such other address as COMPANY or XXXXX shall specify in writing to
the other.
9. General Provisions.
9.1 This Contract is the entire contract between the parties
concerning the subject matter hereof and supersedes and replaces
any existing contract between the parties hereto relating to the
subject matter hereof, and COMPANY and XXXXX hereby acknowledge
that there are no agreements or understandings of any nature,
oral or written, regarding XXXXX'x relationship with COMPANY
relating to the subject matter hereof, apart from this Contract.
9.2 No provisions of this Contract may be modified, waived, or
discharged unless such modification, waiver, or discharge is
agreed to in a writing signed by XXXXX and COMPANY. No waiver by
or noncompliance with, any condition or provision of this
Contract to be performed by the other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the
same or any prior or subsequent time.
9.3 No failure on the part of either party to exercise, and no delay
in exercising any right hereunder, for up to six (6) months of
the date such right arises, shall operate as a waiver thereof,
nor shall any single or partial exercise of any right hereunder
within such six (6) month period by either party preclude any
other or further exercise thereof or the exercise of any other
right. Any right hereunder must be exercised within six (6)
months of the date such right arises, or such right shall be
deemed to be waived.
9.4 It is further agreed and understood by the parties hereto that if
any part, term, or provision of this Contract is held
unenforceable in the jurisdiction in which either party seeks
enforcement of the Contract, this Contract shall be construed as
if not containing the invalid provision or provisions. Invalidity
or unenforceability of any portion or provision of this Contract
shall not affect the validity or enforceability of the remaining
provisions of this Contract, which shall remain in full force and
effect and shall govern the rights and obligations of the parties
hereto.
9.5 Any controversy or claim arising out of, or relating to, this
Contract or its breach shall be settled by arbitration in
accordance with the governing rules of the American Arbitration
Association then in effect. Judgment upon the award rendered
shall be binding upon the parties hereto and may be entered in
any court of competent jurisdiction. Costs and attorneys' fees
shall be paid as the arbitrators' award shall specify. As the
sole exception to arbitration, each party shall have the right to
obtain injunctive relief, only, from any court having
jurisdiction so as to preserve that party's rights for resolution
in any pending or imminent arbitration proceedings, but no such
injunction shall prohibit such arbitration proceedings and the
injunctions may be modified or vacated as a result of the
arbitration award.
9.6 This Contract shall be construed and enforced in accordance with
the laws of the State of Minnesota. By executing this Contract,
the parties do hereby agree and submit to personal jurisdiction
in the State of Minnesota for the purposes of any suit or
proceeding brought to enforce the terms and conditions of this
Contract and agree that any such suit or proceeding shall be
venued in Anoka County, Minnesota.
9.7 With the exception of: (a) XXXXX'x right to assign or bequeath,
upon notice to COMPANY but without COMPANY's prior written
consent, his rights to receive payments pursuant to this
Contract; and (b) COMPANY's right, without XXXXX'x prior written
consent, to subcontract for the manufacture, production,
advertising, marketing, sale or distribution of the PRODUCTS or
the ADDITIONAL PRODUCTS, the rights and obligations of COMPANY
and XXXXX under Contract cannot be assigned by either COMPANY or
XXXXX without the prior written consent of the other party, which
consent will not be unreasonably withheld. The terms, conditions,
and covenants herein shall be binding upon the heirs and personal
representatives of XXXXX and the successors or assigns of COMPANY
or any Subsidiary or Affiliate of COMPANY.
9.8 This Contract may be executed in one or more counterparts, each
of which shall be deemed to be an original, but all of which
together shall constitute one and the same contract.
9.9 Except as may be otherwise determined pursuant to Article 9.5, in
the event that any legal action must be taken by either party to
enforce this Contract, all costs and expenses of the prevailing
party in connection with any such action, including, but not
limited to, reasonable attorneys' fees and legal expenses shall
be paid on demand and presentation of appropriate evidence by the
nonprevailing party.
IN WITNESS WHEREOF, the parties have caused this Contract to be executed
effective as of the date and year first above written.
XXXXX
/s/ Xxxxxx Xxxxx
Xxxxxx Xxxxx
OXBORO MEDICAL INTERNATIONAL, INC.
By /s/ Xxxxx Xxxxxxxxx
Its Chief Financial Officer
EXHIBIT 1.1 (HH)
TO
PRODUCT DEVELOPMENT INCENTIVE AGREEMENT
1. Sheet Tape/Write-on Labels
2. Foam Scope Organizer
3. Foam Endoscope Guard
4. Endoscope Holder
5. Tubing "Pig" Holder
6. I.V. Tube/Wire Holder
7. Armsecure(TM)
8. Footsecure(TM)
9. Mayo Stand Instrument Holder
10. Instrument ID Tape Remover
11. Instrument Basin Strainer
12. Instrument Guard-Foam
13. Instrument Usage Organizer
14. Foam Tray Liners
15. Pocket Holder (single/double)
16. Poly Bags - Large/Wheelchairs
17. Poly Bags - Large/Walkers
18. Cloth Bags - Large/Wheelchairs & Walkers
19. Cautery Tip Cleaners
20. Patient Positioners - Foam
21. I.V. Cover/Banded Bag
