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EXHIBIT 10.21
ROYALTY AGREEMENT
THIS ROYALTY AGREEMENT made this 15th day of October, 1998 by and
between Genomic Solutions, Inc., a Delaware corporation ("GSI") with a
principal place of business at 0000 Xxxxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxx
00000, and Millipore Corporation, a Massachusetts corporation
("Millipore") with a principal place of business at 00 Xxxxx Xxxx,
Xxxxxxx, XX 00000.
WHEREAS, simultaneously with the execution of this Agreement, GSI
is purchasing the assets of the Electrophoresis Business (the "Business")
of ESA, Inc. (the "Seller") including, without limitation, all rights of
the licensee under that certain license agreement, dated September 15,
1987, as amended (the "PDI License Agreement"), between Millipore and
Protein Databases Inc.;
WHEREAS, the Seller entered into a Royalty Agreement, dated July
31, 1996, with Millipore (the "'96 Royalty Agreement"), pursuant to which
Seller agreed to pay Millipore royalties on the sale of Products (as
defined below);
WHEREAS, GSI has required as a condition to such purchase, that
the Seller obtain the consent of Millipore; and
WHEREAS, Millipore wishes to obtain the royalty described herein
and has required as a condition to giving its consent to such sale that
GSI enter into this Royalty Agreement with Millipore;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, GSI and Millipore agree as follows:
1. GSI shall pay to Millipore a royalty in an amount equal to
two percent (2%) of Net Sales Revenues (as hereinafter defined) received
by GSI up to a maximum aggregate amount of royalties paid to
Millipore hereunder of $950,000.
2. As used herein, the following terms shall have the following
meaning:
(a) "Net Sales Revenues" shall mean amounts paid to GSI or its
Affiliates for the sale of Products less (i) freight, shipping and
handling; (ii) packaging; (iii) sales, use or other taxes or
charges and import or export duties; (iv) cash or other trade
discounts or allowances, including volume discounts; and (v)
amounts paid or credited with respect to returns or allowances,
whether related to defective or non-conforming goods or otherwise;
(vi) commissions to third parties which are not Affiliates of GSI;
and (vii) intercompany sales between GSI and its Affiliates. In no
event shall Net Sales Revenue include any amount attributable to
any part of any equipment, product or system, which part is not a
Product.
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(b) "Products" shall mean all products that: (1) were
designed or manufactured by the Seller's predecessor, Oxford
GlykoSystems, Inc., in its conduct of its Electrophoresis
Business; (ii) were designed or manufactured by the Seller using
any of the technology transferred by Millipore to the said Oxford
GlykoSystems, Inc. in February, 1995 (the "Millipore
Technology"); or (iii) are hereafter designed or manufactured by
GSI using the Millipore Technology.
(c) "Affiliate" shall mean, with respect to any Person, any
other Person which directly or indirectly controls, is controlled
by, or is under common control with, such Person. A Person
shall be regarded as in control of another Person only if it
owns, or directly or indirectly controls, at least fifty percent
(50%) of the voting stock or other ownership interest of the
other Person.
(d) "Person" shall mean any individual, corporation,
partnership or other entity.
3. Royalty payments due to Millipore shall accrue to Millipore in the
calendar quarter in which GSI receives payment of relevant Net Sales
Revenues and shall be payable to Millipore within forty-five (45) days
after the end of such quarter. At the time of making each royalty payment,
GSI shall provide Millipore a written report describing sales in the
quarter and the method of calculation of the royalties.
4. GSI shall keep accurate records of the Products sold by it which
generate Net Sales Revenues. Upon written request by Millipore received by
GSI at least three business days prior to the proposed date of inspection
and made not more than once per calendar year, GSI shall make such records
available for inspection by Millipore at GSI's principal place of business
during normal business hours and on a confidential basis. As a condition to
any such inspection, Millipore and each of its representatives
participating in the inspection shall execute and deliver to GSI prior to
such inspection a nondisclosure agreement in a form which GSI shall
reasonably request. Neither Millipore nor any of its representatives shall
disclose any information acquired as a result of any such inspection to any
person or entity or use any such information other than in connection with
a review of royalties paid by GSI hereunder or enforcement of Millipore's
rights hereunder.
5. Millipore represents and warrants to GSI as follows:
(a) Millipore will not release any rights to practice the intellectual
property licensed to Millipore under the PDI License Agreement without
GSI's prior written consent.
(b) Following transfer of the assets of the Business to GSI, GSI will
not have any obligation to PDI with respect to such assets, the Products or
the PDI License Agreement, and GSI's sole obligation and liability to
Millipore in
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connection with the use or sale of such assets (including, without
limitation, the use of intellectual property licensed to Millipore
under the PDI License Agreement) or the sale of Products shall be the
payment of the royalties required hereunder, provided that GSI shall
provide Millipore with the written report of sales and calculation of
royalties required by paragraph 3 for the quarter in which this
Agreement is signed covering all sales in such quarter by GSI
beginning with sales on the date hereof.
6. All obligations with respect to the payment of all royalties due to
PDI under the PDI License Agreement have expired. Millipore agrees to
indemnify and hold GSI harmless with respect to all claims by PDI for
royalties due under the PDI License Agreement.
7. This Royalty Agreement shall be governed by, and construed and
enforced in accordance with, the substantive laws of The Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, GSI and Millipore have executed this Agreement as
of the date first above written.
GENOMIC SOLUTIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx
Title: President and CEO
MILLIPORE CORPORATION
By: /S/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: VP & CEO
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