Exhibit 10.1
NITINOL MEDICAL TECHNOLOGIES, INC.
CONSULTING AGREEMENT
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THIS CONSULTING AGREEMENT (the "Agreement"), made as of the 27th day of
February, 1998, is entered into by Nitinol Medical Technologies, Inc., a
Delaware corporation with its principal place of business at 00 Xxxxxxxx Xxxxxx,
Xxxxxx, XX 00000 (the "Company"), and Xxxxxx Xxxxx, M.D., residing at 0 Xxxx
Xxxxx, Xxxxxx, XX 00000 (the "Consultant").
INTRODUCTION
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The Company desires to retain the services of the Consultant and the
Consultant desires to perform certain services for the Company. In addition,
the Consultant has agreed to assign certain inventions to the Company in
consideration of the consultancy established by this Agreement. In
consideration of the mutual covenants and promises contained in this Agreement
and other good and valuable consideration, the receipt and sufficiency of which
is acknowledged by both parties, the parties agree as follows:
1. Services.
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1.1 Consulting Services. The Consultant agrees to perform the
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consulting, advisory and related services to and for the Company that are
specified on Exhibit A to this Agreement, and such other services as the Company
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and the Consultant may agree hereafter. During the Consultation Period (as
defined below), the Consultant shall serve as Chief Scientific Officer of the
Company, reporting to the Chief Executive Officer of the Company. During the
Consultation Period, the Consultant shall not engage in any competitive
employment, business, or other activity, and he shall not assist any other
person or organization that competes, or intends to compete, with the Company.
Notwithstanding the foregoing, the Consultant shall not be required to devote
more than eight (8) days per month to the performance of services under this
Agreement and, in addition, shall be entitled to vacation and sick time
consistent with past practice.
1.2 Other Employment and Policies. The Company acknowledges that the
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Consultant is a member of the staff of Xxxx Israel Deaconess Medical Center
("BIDMC") and a member of the faculty of Harvard University Medical School
("Harvard" and, together with BIDMC, the "Institutions") and is subject to the
policies and regulations of the Institutions, including policies and regulations
concerning consulting, conflicts of interest, and assignment of inventions and
intellectual property (the policies and regulations of the Institutions being
referred to herein
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collectively as the "Policies"). Consultant's obligations under this Agreement
shall be subject to his compliance with the Policies and, in the event of a
conflict, the Policies shall control. Notwithstanding anything in this Agreement
to the contrary, Consultant shall be under no obligation to perform or refrain
from any services or other actions under this Agreement if doing so would
violate or conflict with any of the Policies. In order to ensure that the
services to be performed by the Consultant in accordance with the provisions of
this Agreement (other than this Section 1.2) and compliance with the terms of
this Agreement, including the provisions of Article 7, are consistent with and
in compliance with the Policies, the Consultant shall notify the Institutions of
the execution of this Agreement and seek their approval of the terms hereof. The
Consultant shall notify the Company promptly upon receipt of notice from the
Institutions, or upon his otherwise becoming aware, that the Consultant's
performance of services or compliance with the terms of this Agreement would be
in conflict with the Policies. The Company shall have the right to terminate the
Consultation Period if, as a result of the Policies, the Consultant is not able
to comply with any material provision of this Agreement, such termination to be
effective thirty (30) days after written notice to the Consultant.
2. Term. This Agreement shall commence on the date hereof and shall
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continue until December 31, 1999, unless sooner terminated in accordance with
the provisions of Section 5 (such term, as it may be extended pursuant to
Section 4, being referred to as the "Consultation Period").
3. Compensation.
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3.1 Consulting Fees. The Company shall pay to the Consultant
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consulting fees of $8,333 per month during the Consultation Period, payable in
advance on the first day of each month. Payment for any partial month shall be
prorated.
3.2 Royalty on Product Sales.
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(a) The Company agrees to pay the Consultant a royalty in the
amount of (i) one percent (1%) of the Net Sales (as defined below) of Products
(as defined below) sold by the Company, its affiliates or licensees (or any of
their direct or indirect sublicensees) and (ii) five percent (5%) of License
Fees (as defined below). Such royalties shall be paid on a quarterly basis
within 60 days after the end of each calendar quarter, and shall be accompanied
by a statement setting forth in reasonable detail the calculation thereof. In
the case of a Covered Invention made jointly by the Consultant with others, if
the Consultant is not a primary inventor of the Covered Invention who made a
significant inventive contribution thereto (it being understood that the
inclusion of the Consultant as one of several inventors on a patent application
shall not be sufficient in and of itself to constitute primary inventorship or
to reflect significant inventive contribution), then the royalty payable to the
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Consultant hereunder shall be apportioned based on the number of inventors. For
example, if there is one other inventor of a Covered Invention as to which the
Consultant was not a primary inventor who made a significant inventive
contribution, the Consultant will be entitled to receive one half of the amount
of royalties the Consultant otherwise would have received as a result of that
Covered Invention. For avoidance of doubt, the parties acknowledge that if a
Covered Invention is made jointly by the Consultant with others but the
Consultant is a primary inventor of such Covered Invention who made a
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significant inventive contribution thereto (it being understood that the
inclusion of the Consultant as one of several inventors on a patent application
shall not be sufficient in and of itself to constitute primary inventorship or
to reflect significant inventive contribution), then the royalty payable to the
Consultant hereunder relating to such Covered Invention shall not be
apportioned. In the event of the death of the Consultant, royalties shall
continue to be payable to the executors or personal representatives of his
estate or to such other persons as they may direct.
(b) As used herein, the following terms shall have the following
meanings:
(i) "Product" means any product, device, composition,
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method or service whose manufacture, use, provision or sale is covered by a
Claim of an Applicable Patent Right.
(ii) "Covered Inventions" has the meaning set forth in
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Section 7.1.
(iii) "Applicable Patent Rights" means all United States and
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foreign patents and/or patent applications or the equivalent thereof that
describe or claim a Covered Invention, and all continuations, continuations-in-
part, divisionals, reissues, reexaminations or extensions thereof.
(iv) "Claim" means any (A) claim of an issued patent
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included in the Applicable Patent Rights that has not been declared invalid in
the jurisdiction in question by a court of competent jurisdiction in any
unappealed and unappealable decision, and (B) claim of a patent application
included in the Applicable Patent Rights, provided that such claim of a patent
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application shall to constitute a Claim as of the seventh anniversary of the
date of filing of such patent application (or, in the case of a divisional or
continuation application, the date of filing of the earliest parent
application).
(v) "Net Sales" means the total amount received by the
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Company, its affiliates or licensees (or any of their direct or indirect
sublicensees) from the sale of Products to third parties, less only the
following amounts (to the extent the total amount received by the Company
otherwise reflects such amounts):
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(A) refunds for returned Products, (B) freight and insurance costs incurred in
shipping Products to customers and billed to such customers, (C) quantity and
trade discounts actually allowed and taken, (D) sales, use, value-added and
other taxes or government charges that are incurred in connection with the sale,
exportation or importation of the Products and are billed to customers (but
specifically excluding income taxes), and (E) charge back payments and/or
rebates for Products provided to managed health care organizations or federal,
state and local governments, including Medicare and Medicaid. With respect to
sales of Products by licensees, the definition of "Net Sales" shall be modified
to be consistent with the definition of such term in the agreement between the
Company and such licensee, such that the basis for payment of royalties from Net
Sales by such licensee shall be the same for the Company and the Consultant,
provided that the definition of "Net Sales" in such agreement between the
Company and such licensee is not materially less favorable to the licensor than
the definition contained herein.
(vi) "License Fees" means all fees and other payments of any
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kind (but excluding royalties or other payments based upon Net Sales) received
by the Company as consideration for any license or sublicense of a Covered
Invention or Applicable Patent Right, provided that License Fees shall not
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include bona fide payments made by a third party to the Company to fund
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research and development or as an equity investment in the Company.
(c) If the Company wishes to sell or assign (rather than license) any
of the Applicable Patent Rights to any third party, then, prior to and as a
condition of such sale or assignment, the Company shall obtain the binding
written agreement of such third party, in form and substance reasonably
satisfactory to Consultant, to assume and perform all of the Company's royalty
payment and other obligations under this Section 3.2, Section 3.5 and Section 8
hereof that relate to such Applicable Patent Right or to any Product whose
manufacture, use, provision or sale is covered by a Claim of such Applicable
Patent Right.
3.3 Reimbursement of Expenses. The Company shall reimburse the
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Consultant for all reasonable and necessary expenses incurred or paid by the
Consultant in connection with, or related to, the performance of his services
under this Agreement. The Consultant shall submit to the Company itemized
monthly statements, in a form satisfactory to the Company, of such expenses
incurred in the previous month. The Company shall pay to the Consultant amounts
shown on each such statement within 30 days after receipt thereof.
3.4 Benefits. The Consultant shall not be entitled to any benefits,
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coverages or privileges, including, without limitation, social security,
unemployment, medical or pension payments, made available to employees of the
Company.
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3.5 Records; Inspection. The Company shall keep full and accurate
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records containing all information necessary to calculate the royalties and
other amounts payable to the Consultant under Section 3.2. Upon at least five
days prior written notice to the Company, no more often than once in each
calendar year, the Consultant may inspect such records for the purpose of
verifying the proper amount of such payments.
4. Extension of Consultation Period. The Consultation Period shall
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automatically be extended for successive one year renewal periods unless either
the Company or the Consultant provides written notice to the other party, at
least 60 days prior to the expiration of the initial term or any renewal period,
of its or his desire to terminate the Consultation Period effective as of the
end of the initial term or the then current renewal period, as applicable. Upon
expiration of the Consultation Period, the Company's obligation to pay royalties
and other amounts to the Consultant pursuant to Section 3.2 shall remain in full
force and effect.
5. Termination.
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(a) Termination by the Company. Without prejudice to any right or
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remedy which either party may then have due to any failure of the other party to
perform his or its obligations under this Agreement, the Company may terminate
the Consultation Period upon 30 days' prior written notice to the Company. In
the event of such termination, the Consultant shall be entitled to payment for
services performed and expenses paid or incurred prior to the effective date of
termination, subject to the requirements regarding reimbursement of expenses set
forth in Section 3.3 and, in addition, to continued compensation under Section
3.1 for twelve (12) months after the effective date of termination. In
addition, the Company's obligation to pay royalties to the Consultant pursuant
to Section 3.2 shall remain in full force and effect. The Company may also
terminate the Consultation Period, effective upon giving written notice of
termination to the Consultant, if the Consultant materially breaches any
provision of Section 7 and if such breach is not cured within 30 days after
receipt by the Consultant of written notice thereof from the Company (or, if
such breach is not reasonably capable of being cured within that 30-day period,
the Consultant fails to commence and diligently pursue reasonable efforts to
cure), in which event, if such breach causes the Company substantial harm, the
Company's obligation to make payments under Sections 3.1 and 3.2 shall
terminate.
(b) Termination by the Consultant. Without prejudice to any right or
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remedy which either party may then have due to any failure of the other party to
perform his or its obligations under this Agreement, the Consultant may
terminate the Consultation Period upon 30 days' prior written notice to the
Company. In the event of such termination, the Consultant shall be entitled to
payment for services performed and expenses paid or incurred prior to the
effective date of termination, subject to the requirements regarding
reimbursement of expenses set forth in Section 3.3.
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In addition, the Company's obligation to pay royalties to the Consultant
pursuant to Section 3.2 shall remain in full force and effect.
6. Cooperation. The Consultant shall use his reasonable best efforts in
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the performance of his obligations under this Agreement. The Company shall
provide such access to its information and property as may be reasonably
required in order to permit the Consultant to perform his obligations hereunder.
The Consultant shall cooperate with the Company's personnel, shall not interfere
with the conduct of the Company's business and shall observe all rules,
regulations and security requirements of the Company concerning the safety of
persons and property.
7. Inventions and Proprietary Information.
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7.1 Inventions.
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(a) Except as otherwise provided in Section 7.1(d) below, all
inventions, discoveries, computer programs, data, technology, designs,
innovations and improvements (whether or not patentable and whether or not
copyrightable) ("Inventions") (i) which are made, conceived, reduced to
practice, created, written, designed or developed by the Consultant, solely or
jointly with others, in the course of rendering services to the Company within
the Consultation Period or while using Company facilities, or (ii) which involve
the use of nitinol in medical devices and are made, conceived, reduced to
practice, created, written, designed or developed by the Consultant, solely or
jointly with others, during the Consultation Period, whether or not in the
course of rendering services to the Company or while using Company facilities,
or (iii) which are made, conceived, reduced to practice, created, written,
designed or developed during the Consultation Period by the Consultant if
directly derived from Proprietary Information (as defined below), shall be the
sole property of the Company (the Inventions described in this sentence are,
subject to Section 7.1(d), referred to herein as "Covered Inventions"). The
Consultant hereby assigns to the Company all of his rights to Covered Inventions
and any and all related patents, copyrights, trademarks, trade names, and other
industrial and intellectual property rights and applications therefor, in the
United States and elsewhere. During the Consultation Period and for a period
ending ten (10) years after the date of this Agreement, upon request of the
Company and at the Company's expense (including, after the Consultation Period,
reasonable payment for the Consultant's time), the Consultant shall execute such
further assignments, documents and other instruments as may be necessary or
desirable to fully and completely assign all of his rights to Covered Inventions
to the Company and to assist the Company in applying for, obtaining and
enforcing patents or copyrights or other rights in the United States and in any
foreign country with respect to any Covered Invention.
(b) The Consultant shall promptly disclose to the Company all
Covered Inventions and will maintain adequate and current written records (in
the
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form of notes, sketches, drawings and as may be specified by the Company) to
document the conception and/or first actual reduction to practice of any Covered
Invention. Such written records shall be available to and remain the sole
property of the Company at all times, and shall be maintained at the facilities
of the Company.
(c) In addition to the foregoing, the Consultant agrees that the
Company shall have a right of first negotiation, as described in this
subsection, with regard to (i) any Inventions that involve the use of nitinol in
medical devices and are made, conceived, or reduced to practice by the
Consultant, solely or jointly with others, during the one year period
immediately following the end of the Consultation Period, and (ii) any
Inventions which are made, conceived, reduced to practice, created, written,
designed or developed at any time after the Consultation Period if directly
derived from Proprietary Information (as defined below) (the Inventions
described in preceding clauses (i) and (ii) are, subject to Section 7.1(d),
referred to herein as "Later Inventions"). If the Consultant makes a Later
Invention, he shall notify the Company reasonably promptly in writing thereof
and, if the Company wishes, shall enter into good faith negotiations in which
the Consultant and the Company shall endeavor to reach a mutually acceptable
agreement under which the Consultant would grant the Company an exclusive
license to his rights in such Later Invention on fair market terms. If the
Consultant and the Company have not reached and executed such an agreement
within 90 days after the Consultant's notice to the Company of the Later
Invention, then the Consultant may license a third party or otherwise exploit
such Later Invention as he wishes, provided that the Consultant shall not enter
into any license with a third party on terms that, taken as a whole, are more
favorable to such third party than the terms, taken as a whole, of any written
offer made by the Company to the Consultant in the course of their negotiations
in the 90-day period and rejected by the Consultant. Nothing in this subsection
(c) shall be construed as a waiver by the Company of its rights under Section
7.2 with respect to Proprietary Information if such rights are otherwise
applicable.
(d) Notwithstanding anything herein to the contrary, however,
neither the Covered Inventions nor the Later Inventions shall include any
Invention that Consultant is required to assign to an Institution pursuant to
any of the Policies, and the Consultant shall have no obligation to the Company
hereunder with respect to any such Invention.
7.2 Proprietary Information.
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(a) The Consultant acknowledges that his relationship with the
Company is one of high trust and confidence and that in the course of his
service to the Company he will have access to and contact with Proprietary
Information. The Consultant agrees that he will not, during the Consultation
Period or at any time thereafter, disclose to others, or use for his benefit or
the benefit of others, any Proprietary Information.
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(b) For purposes of this Agreement, "Proprietary Information"
shall mean all confidential information (whether or not patentable and whether
or not copyrightable) owned, possessed or used by the Company, including,
without limitation, any Covered Invention, formula, vendor information, customer
information, apparatus, equipment, trade secret, process, research, report,
technical data, know-how, computer program, software, software documentation,
hardware design, technology, marketing or business plan, forecast, unpublished
financial statement, budget, license, price, cost and employee list that is
communicated to, learned of, developed or otherwise acquired by the Consultant
in the course of his service as a consultant to the Company, provided that
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"Proprietary Information" shall not include any information that (i) is or
becomes known or available to the general public under circumstances involving
no breach by the Consultant of the terms of this Section 7.2, (ii) is generally
disclosed to third parties by the Company without restriction on such third
parties, (iii) is approved for release by written authorization of the Board of
Directors or Chief Executive Officer of the Company, (iv) is rightfully
furnished to the Consultant by a third party without an obligation of
confidentiality, or (v) is required to be disclosed by law, government
regulation or court order.
(c) This Agreement is not intended to inhibit the Consultant from
publishing research results or information generated or obtained in the course
of the Consultant's activities as a member of faculty or staff of the
Institutions. To the extent any such publication contains any Proprietary
Information, the Consultant shall furnish the Company a copy of such proposed
publication at least thirty (30) days prior to publication thereof, and shall,
at the request of the Company (i) delay such publication if and to the extent
reasonably necessary to permit the Company to file expeditiously a patent
application relating to information disclosed therein, if applicable, and (ii)
remove from such publication any Proprietary Information identified specifically
by the Company.
(d) Upon termination of this Agreement or at any other time upon
request by the Company, the Consultant shall promptly deliver to the Company all
records, files, memoranda, notes, designs, data, reports, price lists, customer
lists, drawings, plans, computer programs, software, software documentation,
sketches, laboratory and research notebooks and other documents (and all copies
or reproductions of such materials) relating to the business of the Company
except that the Consultant may retain a copy of such documents concerning the
Covered Inventions as may be reasonably necessary to enable the Consultant to
enforce his rights under this Agreement.
(e) The Consultant represents that his retention as a consultant
with the Company and his performance under this Agreement does not, and shall
not, breach any agreement that obligates him to keep in confidence any trade
secrets or confidential or proprietary information of his or of any other party
or to refrain from competing, directly or indirectly, with the business of any
other party. The
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Consultant shall not disclose to the Company any trade secrets or confidential
or proprietary information of any other party.
(f) The Consultant acknowledges that the Company from time to
time may have agreements with other persons or with the United States
Government, or agencies thereof, that impose obligations or restrictions on the
Company regarding inventions made during the course of work under such
agreements or regarding the confidential nature of such work. The Consultant
agrees, to the extent not inconsistent with the provisions of this Agreement, to
be bound by all such obligations and restrictions that are known to him and to
take all actions necessary to discharge the obligations of the Company under
such agreements.
7.3 Remedies. The Consultant acknowledges that a breach of the
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provisions of this Section 7 may result in serious and irreparable injury to the
Company for which the Company cannot be adequately compensated by monetary
damages alone. The Consultant agrees, therefore, that, in addition to any other
remedy it may have, the Company shall be entitled to enforce the specific
performance of this Agreement by the Consultant and to seek both temporary and
permanent injunctive relief (to the extent permitted by law) without the
necessity of proving actual damages.
8. Indemnification. The Company shall indemnify and hold harmless the
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Consultant and his executors, administrators, personal representatives,
successors and assigns against all liabilities, damages, losses and expenses
(including reasonable attorneys' fees) incurred by or imposed upon any of the
foregoing persons in connection with any claim, suit, action, demand or judgment
(including but not limited to those based on any theory of product liability
whether brought in tort, warranty, strict liability or other form) arising out
of the design, production, manufacture, marketing, provision, use, sale or other
disposition of any product, process or service that uses any Covered Invention
or results from any services provided by the Consultant under this Agreement.
9. Independent Contractor Status. The Consultant shall perform all
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services under this Agreement as an "independent contractor" and not as an
employee or agent of the Company. The Consultant is not authorized to assume or
create any obligation or responsibility, express or implied, on behalf of, or in
the name of, the Company or to bind the Company in any manner.
10. Notices. All notices required or permitted under this Agreement shall
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be in writing and shall be deemed effective upon receipt or, if earlier and if
notice is mailed by registered or certified mail, postage prepaid, addressed to
the other party at the address shown above, or at such other address or
addresses as either party
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shall designate to the other in accordance with this Section 10, three days
after deposit in the mail.
11. Pronouns. Whenever the context may require, any pronouns used in this
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Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular forms of nouns and pronouns shall include the plural, and vice
versa.
12. Entire Agreement. This Agreement constitutes the entire agreement
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between the parties and supersedes all prior agreements and understandings,
whether written or oral, relating to the subject matter of this Agreement.
13. Amendment. This Agreement may be amended or modified only by a
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written instrument executed by both the Company and the Consultant.
14. Governing Law. This Agreement shall be construed, interpreted and
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enforced in accordance with the laws of the Commonwealth of Massachusetts.
15. Successors and Assigns. This Agreement shall be binding upon, and
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inure to the benefit of, both parties and their respective executors,
administrators, personal representatives, successors and assigns, including any
corporation with which, or into which, the Company may be merged or which may
succeed to its assets or business, provided, however, that the obligations of
the Consultant are personal and shall not be delegated by him.
16. Miscellaneous.
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16.1 No delay or omission by either party in exercising any right
under this Agreement shall operate as a waiver of that or any other right. A
waiver or consent given by either party on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.
16.2 The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
16.3 In the event that any provision of this Agreement shall be
invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.
NITINOL MEDICAL TECHNOLOGIES,
INC.
By:/s/ Xxxxxx X. Xxxxx
_____________________________
Title: Chief Executive Officer
__________________________
CONSULTANT
/s/ Xxxxxx Xxxxx
________________________________
Xxxxxx Xxxxx, M.D.
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EXHIBIT A
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Services
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1. Development of minimally invasive medical devices, including nitinol-based
medical devices, both independently and in collaboration with employees of
the Company.
2. Assistance concerning patent protection for Covered Inventions.
3. Clinical advice concerning the use of Company products.
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