EX-10.1
EXCLUSIVE LICENSE AND SUPPLY AGREEMENT
BY AND AMONG
SURGICOUNT MEDICAL, INC. A CALIFORNIA CORPORATION AND
A PLUS INTERNATIONAL, INC. A CALIFORNIA CORPORATION
DATED
JANUARY 26, 2007
This Exclusive License and Supply Agreement ("Agreement") is entered
into this day by and between SurgiCount Medical, Inc., a California corporation
with an office located at 00000 Xxxx Xxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx
00000, ("SurgiCount"), and A Plus International, Inc., a California corporation
with an office located at 0000 Xxxxxxxxxx Xxxxxx, Xxxxx, Xxxxxxxxxx 00000
("A Plus").
WHEREAS SurgiCount is the Owner of all right title and interest in
United States Patent No. 5,031,824 and European Patent 1032911 ("Licensed
Patent");
WHEREAS SurgiCount plans to continue to market, distribute and sell
gauze sponges, laparotomy sponges, O.R. towels, specialty sponges, and gowns
which utilize machine-readable information to identify and account for the item
("Product") to its customers world-wide;
WHEREAS SurgiCount does not have the capacity to manufacture its
Product;
WHEREAS pursuant to the Supply Agreement dated August 10, 2005 ("Supply
Agreement"), A Plus has previously been engaged in the business of manufacturer
of the Product to be marketed, distributed, and sold world-wide by SurgiCount;
WHEREAS A Plus desires to obtain exclusive license rights to
manufacture said Product; and
WHEREAS to induce A Plus to commit the resources, forego other
potential opportunities, and incur the expenses necessary to properly
manufacture and distribute the Product, SurgiCount desires to grant A Plus an
exclusive license to manufacture the Product.
NOW THEREFORE IT IS HEREBY AGREED AS FOLLOWS:
SECTION 1. GRANT OF LICENSE. Upon the terms and conditions set forth
herein and under the Licensed Patent during the term of this Agreement, and
absent a material breach of this Agreement by A Plus, SurgiCount hereby grants
to A Plus the exclusive, world-wide License to manufacture and import the
Product produced under the Licensed Patent. A Plus is further granted the right
to sublicense the Licensed Patent to the extent necessary to carry out this
grant.
SECTION 2. SUPPLY OF PRODUCT; EXCLUSIVITY AND SOLE SOURCE. During the
term of this Agreement, SurgiCount shall purchase exclusively from A Plus, and A
Plus shall use its best efforts to supply to SurgiCount, all of SurgiCount's
requirements for the Product. A Plus shall not manufacture, import
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Exclusive License and Supply Agreement
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or otherwise provide the Product for any party other than SurgiCount. If A Plus
fails to (i) provide SurgiCount with all its required supply of Product ordered
pursuant to this Agreement or (ii) meet any mutually pre-determined criteria for
pricing thresholds, quality standards or service levels, and such failure
continues for more than thirty (30) days after written notice from SurgiCount to
A Plus specifying the nature of the failure, then such failure shall not be
considered a breach of this Agreement but will entitle SurgiCount to purchase
Product from an alternative manufacturer. SurgiCount shall be entitled to
purchase Product from an alternative manufacturer until such time as A Plus is
able to cure the nature of the failure, to the reasonable satisfaction of
SurgiCount.
SECTION 3. DEMAND PROJECTIONS / PRICE PROJECTIONS. Upon the execution of,
and on each anniversary date of, this Agreement, SurgiCount shall provide A Plus
with projections of the maximum/minimum levels of inventory of Product required
by SurgiCount for the upcoming twelve (12) month period. Such projections shall
be forecasted on a quarterly basis. SurgiCount shall be obligated to purchase
the minimum level of inventory projected by SurgiCount on an annual basis before
the end of such twelve-month period, and A Plus shall be obligated to maintain
sufficient inventory of Product on hand at all times to satisfy at least the
next sixty (60) days of SurgiCount's minimum Product projections. The pricing
schedule of the Product for SurgiCount shall remain at its current price for the
first three (3) years of this agreement, thereafter said price schedule shall be
based upon the Cotlook Index and the RMB exchange rate, all as more specifically
set forth in Exhibit A attached hereto.
SECTION 4. SHIPMENT OF GOODS; TITLE AND RISK OF LOSS; DEFECTIVE PRODUCT.
A Plus shall ship the Product to SurgiCount on such schedules and to such
destinations as requested by SurgiCount, at A Plus's sole cost and expense, FOB
Chino, California. Legal title and risk of loss with respect to Product
furnished by A Plus hereunder shall pass to SurgiCount upon delivery of the
Product by A Plus to Chino, California.
SECTION 5. INVOICE. A Plus shall invoice SurgiCount for Product upon
delivery of Product according to the purchase orders of SurgiCount. Payment
terms for SurgiCount are net 30 days from delivery of Product to SurgiCount or
its customer or date of the invoice to SurgiCount; whichever is later. Payment
shall be in United States Dollars and made in immediately available funds.
SECTION 6. TERM AND TERMINATION.
(a) The Term of this Agreement shall be eight (8) years
from the date it is executed by both parties (the "Term"). Either party may
terminate this Agreement without cause at any time after expiration of the Term
upon delivery of ninety (90) days prior written notice. If either party shall,
at any time during the Term of this Agreement, materially breach any obligation
hereunder and such breach shall not be cured within thirty (30) days after
written notice from the non-breaching party specifying the nature of the breach,
the non-breaching party may terminate this Agreement immediately upon expiration
of such cure period.
(b) Should SurgiCount terminate this Agreement without
cause prior to the expiration of the Term, or if it materially defaults upon any
obligation set forth herein and remains in default for thirty (30) days after
written notice from A Plus, including but not limited to
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SurgiCount's failure to timely make any payments to A Plus required herein, then
A Plus may, in addition to all other remedies it may have at either law or
equity, take either of the following remedial actions, at the election of A
Plus:
(1) Require SurgiCount to purchase all Product that is
(i) in A Plus's inventory or the inventory of an A
Plus supplier on the date of termination or default,
(ii) in transit to or from an A Plus facility on the
date of termination or default, (iii) work in process
at A Plus or an A Plus supplier on the date of
termination or default, or (iv) on order from an A
Plus supplier on the date of termination or default
(collectively, the "Current A Plus Inventory"); or
(2) A Plus may sell the A Plus Inventory directly to
SurgiCount's customers.
SECTION 7. NOTICES. Any notice required to be given hereunder shall be in
writing (other than Purchase Orders or unless specifically provided to the
contrary in this Agreement), addressed to each party at the last known address
of its principal place of business, which at the time of execution of this
Agreement is as follows:
To SurgiCount: SurgiCount Medical, Inc.
00000 Xxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx, President
To A Plus: A Plus International Inc.
0000 Xxxxxxxxxx Xxxxxx
Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxx, Executive Vice President
Notices shall be deemed given when personally delivered or mailed certified
mail, postage prepaid, return receipt requested, or consigned to a private
overnight delivery service. A party may change its address to which notices are
to be sent by written notice to A Plus, and such changed address shall be
effective ten (10) days after the giving of notice thereof.
SECTION 8. TIME OF THE ESSENCE. Time is of the essence for the
performance of all the obligations of the parties under this Agreement.
SECTION 9. HEADINGS; ENTIRE AGREEMENT. The headings of this Agreement are
provided for convenience of reference only, and are not an integral part of this
Agreement and shall not affect its construction or interpretation. This
Agreement embodies the entire agreement and understanding of the parties hereto
with respect to the subject matter hereof, and supersedes all previous
understandings, agreements, negotiations, commitments, or any other writings or
communications with respect to such matter, including the Supply Agreement. If
any terms of any purchase order conflict with any term of this Agreement, this
Agreement shall control. This Agreement may only be amended by written agreement
of the parties.
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SECTION 10. APPLICABLE LAW. This Agreement is made under, governed by and
shall be interpreted solely under the laws of the State of California, without
regard to any choice of law provisions of the State of California.
SECTION 11. ASSIGNMENT, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. The rights
and obligations of the parties under this Agreement shall benefit and be binding
upon the successors and assigns of each party, including any entity with which
said party may merge or consolidate or to which all or substantially all of its
assets may be transferred. Nothing expressed or referred to in this Agreement
will be construed to give any person other than the parties to this Agreement
any legal or equitable right, remedy, or claim under or with respect to this
Agreement or any provision of this Agreement. This Agreement and all of its
provisions and conditions are for the sole and exclusive benefit of the parties
to this Agreement and their successors and permitted assigns.
SECTION 12. RELATIONSHIP OF THE PARTIES. A Plus is only an independent
contractor and supplier to SurgiCount. This Agreement does not in any manner or
for any purpose create a partnership, joint venture, or employment relationship
between the parties hereto.
SECTION 13. INDEMNIFICATION.
(a) BY SURGICOUNT. SurgiCount agrees to indemnify, defend, save
and hold harmless A Plus from and against all losses, suits and claims that may
(i) arise due to SurgiCount's breach of this Agreement or (ii) arising from any
claim of patent infringement upon the manufacture, use or sale of the Product.
In such event, and in addition to payment of all losses, suits and claims,
SurgiCount, at its own cost and expense, shall pay all reasonable charges of
attorneys and all other costs and other expenses arising therefrom or incurred
by A Plus in connection therewith.
(b) BY A PLUS. A Plus agrees to indemnify, defend, save and hold
harmless SurgiCount from and against all losses, suits and claims (i) that arise
due to A Plus's breach of this Agreement or (ii) arising from A Plus's direct
acts, errors or omissions in manufacturing the Product. Any indemnity obligation
set forth herein shall not include A Plus' indemnity of SurgiCount for losses,
suits or claims arising from any claim related to component parts used in the
Product. In such event, and in addition to payment of all losses, suits and
claims, A Plus, at its own cost and expense, shall pay all reasonable charges of
attorneys and all other costs and other expenses arising therefrom or incurred
by SurgiCount in connection therewith.
(c) INDEMNIFICATION PROCEDURES. As promptly as practicable after
any indemnitee referred to in Section 13(a) or 13(b) obtains knowledge of any
action, suit, claim or demand as to which it will or may be entitled to
indemnity under Section 13(a) or 13(b), such indemnitee shall give notice to the
indemnifying party. The indemnifying party shall be entitled to assume control
of the defense or settlement of such action, suit, claim or demand, provided,
however, that (i) the indemnitee shall be entitled to participate in the defense
of such matter and to employ counsel of its own choosing and at its own expense
to assist in the handling of such matter, and (ii) the indemnifying party shall
obtain the prior written approval of the indemnitee, which approval shall not be
unreasonably withheld or delayed, before entering into any settlement of such
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matter or ceasing to defend against such matter.
SECTION 14. CONFIDENTIAL INFORMATION.
(a) In order to assist each of the parties hereto in performing
their respective obligations set forth herein the parties will exchange
financial and other information. The parties acknowledge that some of this
information may consist of Confidential Information. As used in this Agreement,
the term "Confidential Information" shall mean (i) proprietary information of
any of the parties; (ii) information marked or designated by any of the parties
as confidential; (iii) information, whether or not in written form and whether
or not designated as confidential, which is known to a party as being treated by
as confidential by the other party; and (iv) information provided to any party
by third parties which a party is obligated to keep confidential. Confidential
Information includes, but is not limited to, discoveries, ideas, designs,
specifications, drawings, techniques, models, data, programs, documentation,
manufacturing processes both automated and direct labor, know-how, customer
lists, marketing plans, financial, and technical information.
(b) SurgiCount hereby acknowledges that A Plus' Confidential
Information is and shall continue to be the exclusive property of A Plus,
whether or not disclosed or entrusted to SurgiCount pursuant to this Agreement.
(c) SurgiCount acknowledges that any disclosure of A Plus'
Confidential Information to any third party will cause irreparable harm to A
Plus. SurgiCount agrees not to disclose any Confidential Information of A Plus,
directly or indirectly, under any circumstances or by any means, to any third
person without the express written consent of A Plus. SurgiCount further agrees
that it will not copy, transmit, reproduce, summarize, quote, or make any
commercial or other use whatsoever of any Confidential Information of A Plus
without the express written consent of A Plus. SurgiCount agrees to exercise the
highest degree of care in safeguarding the Confidential Information of A Plus
against loss, theft, or other inadvertent disclosure, and agrees generally to
take all steps necessary to ensure the maintenance of confidentiality.
Confidential Information may be disclosed or revealed to employees or agents of
SurgiCount where such employees or agents are required to keep confidential the
Confidential Information under similar obligations or confidentiality.
SECTION 15. ADDITIONAL SURGICOUNT OBLIGATIONS. SurgiCount shall provide
appropriate scanners, software and other hardware to A Plus to proceed with the
manufacturing process, together with all data matrix and master tags.
Additionally, SurgiCount shall on each anniversary date of this agreement
provide a validation report to A Plus and assist in the validation process.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed this 26th day of January, 2007.
[SIGNATURES ON FOLLOWING PAGE]
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"A PLUS" A Plus International, Inc. a California
corporation
By:
-------------------------------------------
Xxxxx Xxx, its Executive Vice President
"SURGICOUNT" SurgiCount Medical, Inc. a California
corporation
By:
-------------------------------------------
Xxxxxxx Xxxxx, its Director and CEO of
Patient Safety Technologies, Inc., its sole
shareholder
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EXHIBIT A TO
EXCLUSIVE LICENSE AND SUPPLY AGREEMENT
BY AND AMONG
SURGICOUNT MEDICAL, INC. A CALIFORNIA CORPORATION AND
A PLUS INTERNATIONAL, INC. A CALIFORNIA CORPORATION
DATED
JANUARY 26, 2007
After the third (3rd) anniversary of this Agreement, the price for
Product shall be subject to adjustment from time to time based upon the
occurrence of any of the following:
a. CHANGE IN COST OF COTTON. The current price for cotton per the
CotLook 'A' Index (C/F Far East) ("CotLook Index") is 58.90 cents USD per pound.
If the price of cotton as published in the CotLook Index changes to $0.70 USD
per pound or more and sustains that change for 90 days, the price of the Product
shall be adjusted by the corresponding change in the cost of cotton used in the
Product. If the price of cotton published in the CotLook Index changes to $0.50
USD per pound or less and sustains that change for 90 days, the price of the
Product shall be adjusted by the corresponding change in the cost of cotton used
in the Product. Such adjustment shall be based upon the 90 day average price set
forth in the CotLook Index for the 90 days immediately prior to the Notice of
Adjustment.
b. CHANGE IN EXCHANGE RATE. The current exchange rate for the
Industrial & Commercial Bank of China RMB Spot Rate to the US dollar is
777.35RMB to 100USD. The price of the Product shall be adjusted each January 2nd
and July 1st during the term of this agreement and any extension thereof, by the
corresponding change in the exchange rate for RMB to USD.
c. CHANGE IN PRICE OF DATA MATRIX TAGS. Until the data matrix tag
becomes a vendor supplied component from SurgiCount directly, any change in the
cost of the data matrix tag from Technographics will be reflected in the final
cost of the sponge from A Plus.
d. NOTICE OF ADJUSTMENTS. Whenever the price shall be adjusted
pursuant to the provisions set forth above, the party calling for the adjustment
shall within thirty (30) days of such adjustment deliver a Notice of Adjustment
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the new price of the Product after giving effect to
such adjustment, the method by which such adjustment was calculated and the
effective date of the adjustment.
