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EXHIBIT 10.26
SECOND AMENDED LICENSE AGREEMENT
This Second Amended License Agreement made this 1st day of January 1995
by and between Xx. Xxxxxxxx X. Xxxxxxxx, an individual residing in Chicago,
Illinois (hereinafter "Licensor") and Neostar Medical Technologies, Inc., a
Delaware corporation, having a place of business in North Brunswick, New Jersey,
(formerly Akcess Medical Products, Inc., hereafter "Licensee").
WITNESSETH
WHEREAS, the parties previously entered into License and Amended License
Agreements dated February 26, 1990 and July 23, 1991, respectively, and now wish
to substitute this new Second Amended License Agreement for the earlier License
Agreement and Amended License Agreement;
WHEREAS, the parties are also presently involved in litigation pending in
federal courts in Chicago, Illinois, and Newark, New Jersey, and wish to finally
resolve and settle all issues in such pending civil actions;
WHEREAS, Licensor owns United States Patent Nos. ***; ***; ***; ***; ***;
and Canadian Patent Nos. *** and ***, and has the right to grant sublicenses
under United States Patent No. ***.
WHEREAS, Licensor has developed and acquired confidential and proprietary
information, including drawings, manufacturing procedures, vendor and supplier
contacts, specifications and other information and materials relating to
*** and an *** as well as manufacturing equipment and hardware relating to a
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*** (hereafter "confidential information and equipment"), which Xxxxxxxx has
previously supplied to Licensee.
WHEREAS, Licensee wishes to obtain and Licensor is willing to grant to
Licensee the non-exclusive, personal right to manufacture and sell ***, covered
by Licensor's patents and using or derived from Licensor's confidential
information and equipment.
WHEREAS, Licensor represents to Licensee that Licensor owns federally
registered trademarks in the name "XXXXXXXX," hereafter the "XXXXXXXX" xxxx and
Licensee wishes to obtain and Licensor is willing to grant to Licensee, the
personal right to use the "XXXXXXXX" xxxx, as set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises
made herein and for other good and valuable consideration, the parties agree as
follows:
I. DEFINITIONS
A. LICENSED PATENT RIGHTS -- Shall mean United States Patent Nos.
*** and Canadian Patent Nos. *** all foreign counterparts for such patents with
the exception of the *** and any divisions, continuations, continuations-in-part
or reissues of all such patents.
B. LICENSED PRODUCTS -- Shall mean any *** (1) that is covered
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by any claim of the applicable patents in the Licensed Patent Rights, as set
forth in paragraph II.B. or (2) that is made using any Licensed Apparatus; or
(3) that incorporates, is made in accordance with, or is derived from, Licensed
Proprietary Information. In addition to the above, Licensed Products shall also
mean *** covered by Canadian Patent Nos. *** or United States Patent No. ***
and, to the limited extent set forth below, ***.
C. LICENSED APPARATUS -- Shall mean any apparatus, machine, equipment
or device provided by Licensor to Licensee for the manufacture of ***.
D. LICENSED TRADEMARK RIGHTS -- Shall mean all trademarks, tradenames
and service marks in the "XXXXXXXX" name and all current or future United States
trademark registrations of the "XXXXXXXX" xxxx used in connection with,
identifying, advertising or promoting the Licensed Products.
E. PROPRIETARY INFORMATION -- Shall mean confidential information and
equipment now in the possession of Licensor that was disclosed to Licensee by
Licensor and shall include, but not be limited to, research and development
information, drawings, specifications, manufacturing procedures and techniques,
vendor and supplier contacts, equipment designs, quality control procedures and
other information necessary for the successful manufacture and sale of ***.
F. NET SALES -- Shall mean the amount invoiced to Licensee's
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customers (including End Users and Distributors) f.o.b. Licensee's factory,
exclusive of allowances for returns, taxes or unpaid invoices actually "written
off" by Licensee as being uncollectible after each annual audit by Licensee, but
shall include all *** covered by this Agreement.
G. End User -- Shall mean any bona fide customer of Licensee who
purchases Licensed Products for purposes other than resale to unrelated third
parties.
H. Distributor -- Shall mean any entity that purchases Licensed
Products for purposes of resale to unrelated third parties.
II. LICENSE GRANT
A. Licensor hereby grants Licensee a personal, non-exclusive,
non-transferable right and license under said Licensed Patent Rights and
Licensed Proprietary Information to make, have made, use or sell Licensed
Products and to use Licensed Apparatus and Licensed Proprietary Information.
Licensee shall have no right to grant sublicenses under any of the Licensed
Patents. The sale of a Licensed Product for which a royalty has been paid under
this Agreement shall not be considered as the grant of a sublicense.
B. The license for *** shall be under United States Patent Nos. ***
and any divisions, continuations, reissues and foreign counterparts thereof.
C. The license granted under U.S. Patent Nos. *** and
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*** and Canadian Patent No. *** is unlimited, except as follows:
1. In the field of hemodialysis in the United States, Licensee is
limited to the manufacture and sale of catheters having the "circle-C"
cross-sectional configuration shown in Exhibit A. Licensee is not licensed to
make, have made or sell hemodialysis catheters having a double-D cross-sectional
configuration of the type sold by Xxxxxxx Instrument Company, as shown in
Exhibit B or a triple-lumen catheter of the cross sectional configuration shown
in Exhibit C.
2. In the field of hemodialysis outside the United States,
Licensee shall only have the right to manufacture hemodialysis cathethers in
Canada that are covered by Canadian Patent No. *** for sale in all countries
other than the United States, Germany and France.
D. No license or right is granted by implication or otherwise with
respect to any patent, patent application or other item of Proprietary
Information of Licensor except as specifically set forth in the definition of
Licensed Patent Rights and Licensed Proprietary Information.
E. Licensor hereby grants Licensee a personal, non-exclusive,
non-transferable right and license to use the Licensed Trademark Rights in
connection with identifying, advertising or promoting the Licensed Products by
Licensee, except for smooth-bore acute hemodialysis catheters covered by U.S.
Patent Nos. *** or *** that are sold in the United States.
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III. ROYALTIES
A. Commencing on January 1, 1995, Licensee shall pay Licensor a
royalty for all *** manufactured or sold by Licensee that are Licensed Products.
The royalties due shall be as follows:
FOR SALES MADE DIRECTLY TO END USERS
1. For all acute *** covered by any Licensed Patent other than
U.S. Patent No. ***, the royalty due shall be *** of Licensee's Net Sales
of Licensed Products.
2. For all *** covered by U.S. Patent No. ***, the royalty due
shall be *** of Licensee's Net Sales of Licensed Products.
FOR SALES MADE TO DISTRIBUTORS
1. For all acute *** covered by any Licensed Patent other than
U.S. Patent No. ***, the royalty due shall be *** of Licensee's Net Sales
of Licensed Products.
2. For all *** covered by U.S. Patent No. ***, the royalty due
shall be *** of Licensee's Net Sales of Licensed Products.
B. In the case of all royalties due Licensor, there shall be included
in the royalty base for the purpose of determining the
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royalties due, the Net Sales of all *** products which are sold in combination
with, or packaged with, the ***.
C. Licensee shall complete the payments due Licensor for equipment
sold to Licensee under the earlier February 26, 1990 and April 24, 1991
Agreements within sixty (60) days and shall also pay Licensor the amount of ***
which shall be made payable in two installments. The first installment shall be
made within thirty (30) days after Licensee receives final long-term financing
for its business operations, which it anticipates it will receive within the
next ninety (90) days. The second installment of *** shall be made six (6)
months after payment of the first installment. Licensee shall be entitled to
treat only the first installment payment as a credit that can be applied to the
payment of future royalties.
D. In the event Licensor shall hereafter ***, Licensor shall ***,
provided Licensee ***.
E. In the event the applicable claims of any Licensed Patent are
finally adjudged to be invalid or unenforceable in any final order or judgment
in any civil action or other proceeding from which no appeal has been or can be
taken, then Licensee shall
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receive the benefit of any such final order or judgment as if it were a party to
that proceeding including, specifically, relief from any obligation to pay
further royalties under the applicable claim of any such patent.
F. As part of the settlement of other litigation, Licensor gave ***,
a limited release to make and sell an *** having a specific structure and
design. Should *** sell variations of that structure or design (including a ***
design) that are competitive with products sold by Licensee and are covered by
U.S. Patent No. ***, for a period of two (2) years without paying any royalty to
Licensor or without being subject to a proceeding in which a royalty is being
sought, Licensee shall then have the right to escrow one-half (1/2) of the
royalties due Licensor under paragraphs III.A.2. above (royalties due under U.S.
Patent No. ***) until such time as royalties of at least *** are paid by *** or
its successor or an action is taken by Licensor to collect royalties of at least
*** from *** or its successor.
IV. BOOKS, RECORDS AND PAYMENTS
A. Licensee shall keep accurate and complete books and records
sufficient to determine the quantity of Licensed Products made and sold to the
extent necessary to accurately reflect all items material to the determination
of the amounts due and owing Licensor, and shall cause the same to be reviewed
at its expense by its outside certified public accountants least annually as
part of
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its annual audit of the books and records of the entire business of Licensee.
B. The books and records of Licensee shall identify the quantity of
all Licensed Products that are made, used, sold or otherwise disposed of by
Licensee, with credit for returns for which credit is given to customers. Such
records shall show separately the quantity of Licensed Products made for or sold
to each End User or each Distributor or that are otherwise used or disposed of,
net price and the date of invoice and shipment. Sales shall be considered as
made on the date of invoice unless shipped more than thirty (30) days before
invoiced, in which event such sales shall be considered as made on the date of
shipment.
C. Within one month after the last day of each calendar quarter,
Licensee shall send Licensor a report, in writing, certified by an officer of
Licensee as to its correctness, showing separately the quantity of Licensed
Products subject to a royalty payment that were made, used and/or sold to End
Users and to Distributors or that were otherwise disposed of by Licensee, and
then computing the amount of royalty due Licensor for the preceding quarter as
to each category of customer; the initial quarter shall begin on January 1, 1995
and end on March 30, 1995. Each such report shall be accompanied by the proper
royalty amount then payable to Licensor as shown in such report. The report due
for each quarter which coincides with the end of a calendar year or portion of a
calendar year in which termination of this Agreement
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occurs shall also include a statement of the total payments for such year made
pursuant to this Agreement.
D. All such reports, books, records and accounts shall be retained
for not less than three (3) years, and shall be open to examination at
Licensor's expense at all reasonable times, not more than twice per year, by an
independent outside certified public accountant designated by Licensor.
E. Any failure by Licensee to keep and maintain such books and
records or to provide reports or payments to Licensor as required by this
Agreement shall constitute a material breach of this Agreement.
F. In the event an audit of Licensee's books and records by an
outside certified public accountant establishes that Licensee's payments to
Licensor are deficient by an amount greater than *** of the amount actually due
Licensor, Licensee shall be required, upon receipt of notice of such deficiency,
to pay Licensor *** times the amount due, plus interest at the prime rate
charged by major New York banks at the time the deficiency is discovered.
G. Within thirty (30) days of June 30 and December 31 of each year,
Licensee shall provide Licensor one copy of each item of sales and promotional
literature for each Licensed Product and a single sterile or non-sterile sample
of each Licensed Product in its customary packaging. Within thirty (30) days of
December 31 of each year, Licensee shall also provide Licensor with a complete
product catalog identifying the products Licensee sells.
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V. TERM AND TERMINATION
A. This Agreement shall continue in full force and effect, unless
sooner terminated as herein provided, with respect to the various Licensed
Products licensed hereunder, until the expiration date of each corresponding
Licensed Patent Right Covering each Licensed Product.
B. Licensor may terminate this Agreement upon written notice to
Licensee, if:
1. Licensee shall become insolvent, or shall make any assignment
for the benefit of creditors, or Licensee is adjudicated bankrupt, or a
receiver or trustee of the Licensee's properties shall be appointed.
2. Licensee shall remain in default of any payment or report
required hereunder or fail to comply with any other provision of this
Agreement for a period of more than forty-five (45) days after written
notice specifying such default or failure is given Licensee by Licensor.
3. Licensee shall otherwise continue to violate any term,
condition or provision of this Agreement for a period of more than
forty-five (45) days after written notice specifying such violation is
given Licensee by Licensor.
In the event Licensee cures any default within the forty-five (45) day time
period set forth above, the subject Agreement shall not be terminated and shall
remain in full force and effect.
C. Termination of this Agreement shall not relieve Licensee of the
obligation to make payments accruing under this Agreement
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prior to termination nor shall it bar Licensor from obtaining any relief to
which Licensor may be entitled in law or in equity, including the right to bring
suit for infringement by Licensee of any issued patent of said Licensed Patent
Rights.
D. Upon termination of this Agreement for any reason, License shall
immediately cease its use of Proprietary Information and anything derived
therefrom and shall return to Licensor all documents or materials containing
Proprietary Information and shall immediately discontinue its manufacture or
sale of Licensed Products.
VI. ASSIGNMENTS
A. This Agreement shall inure to the benefit of, and be binding upon,
the successors, legal representatives or assigns of Licensor.
B. This Agreement and the licenses granted hereunder, are personal
and shall not be assigned by Licensee to any other business or entity (except
entities wholly-owned by the same shareholders of Licensee or completely
controlled by Licensee), nor shall it be extended to any third party that
purchases any part of Licensee's assets or stock, without the prior written
consent of Licensor. Notwithstanding the foregoing, however, Licensee shall have
the right to assign this License as part of the sale of the entire business or
assets to which this Agreement relates, provided such sale is not made to any
entity that is involved in litigation with Licensor relating to the Licensed
Patents (including appeals)
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at the time any such assignment, purchase, sale or transfer is made.
VII. HANDLING OF PROPRIETARY INFORMATION
A. Licensor will, after execution of this Agreement, and at
Licensor's expense, except where otherwise indicated and except to the extent to
which Proprietary Information has already been disclosed to Licensee, render the
following services to Licensee:
1. Disclose to Licensee any additional Proprietary Information
necessary for the manufacture of Licensed Products, including
specifications for quality of the Licensed products;
2. Keep Licensee generally informed of new technology developed
by Licensor relating to the Licensed Products, and the Licensed
Apparatus.
B. Licensee shall keep in strict confidence all Proprietary
Information disclosed by Licensor, notwithstanding the termination of any of the
licenses and rights granted herein, shall take all reasonable precautions to
prevent the unauthorized disclosure thereof and shall disclose such Proprietary
Information only to officers, employees or consultants of Licensee or its
authorized assigns to whom such disclosure is necessary for the production of
Licensed Products. A list of all officers, employees or consultants to whom
Proprietary Information has been disclosed shall be maintained by licensee and
shall be available for inspection by representatives of Licensor.
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VIII. USE OF NAME
A. Licensee shall prominently use the Licensed Trademark Rights in
the name "XXXXXXXX" in identifying, advertising or promoting all Licensed
Products, except ***. Licensee agrees to use, for identifying *** covered by
U.S. Patent Nos. *** or ***, the name "XXXXXXXX" only in conjunction with the
terms *** or *** and also agrees that no other words shall be used in connection
with the name "XXXXXXXX"; Licensee further agrees to use, for identifying ***,
the name "XXXXXXXX" only in conjunction with the words *** or *** or *** or ***
or *** and also agrees that no other words shall be used in connection with the
name "XXXXXXXX" (such terms shall hereinafter be described in this Agreement as
the "Xxxxxxxx Licensed Trademarks for Neostar"). Licensee shall, however, be
entitled to use the words *** or *** in identifying, advertising or promoting
the Licensed Products, in conjunction with the name "XXXXXXXX" so long as such
use does not create confusion with the use of the "XXXXXXXX" name *** in
connection with *** or ***. Licensee further agrees that the Xxxxxxxx Licensed
Trademarks for Neostar, wherever used in identifying, advertising or promoting
the Licensed Products, shall be the most prominently displayed words or
markings. While Licensee may use other words or markings, such as "Neostar," in
conjunction with the sale of the Licensed Products,
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such other words or markings (a) must be less prominently displayed than the
Xxxxxxxx Licensed Trademarks for Neostar; (b) must not serve to imply that a
party other than Xxxxxxxx was the inventor and designer of such Licensed
Products; and (c) must be displayed wholly apart and separate from the Xxxxxxxx
Licensed Trademarks for Neostar. Licensee acknowledges with respect to the
parties hereto that full and complete ownership and interest in all the Licensed
Trademark Rights remains with the Licensor. Licensee will take no action
inconsistent with Licensor's ownership in the Licensed Trademark Rights and
agrees that all uses of the Licensed Trademark Rights by Licensee shall inure to
the benefit of the Licensor. Furthermore, Licensee will in no way interfere with
Licensor in attempting to obtain federal registration of the Licensed Trademark
Rights. Licensor agrees that nothing in this Amended License Agreement shall
give the Licensee any right, title or interest in the Licensed Trademark Rights
other than the right to use such Licensed Trademark Rights in accordance with
this Amended License Agreement. Licensee further agrees not to challenge the
title of Licensor to the Licensed Trademark Rights.
B. Because Licensor does not want the "XXXXXXXX" name associated with
products that do not satisfy standards for quality acceptable to Licensor,
Licensor shall have the right to inspect Licensed Products and the facilities
used to manufacture Licensed Products and to require Licensee to immediately
discontinue the use of the "XXXXXXXX" name in connection with any products,
whenever such products do not satisfy reasonable standards for safe,
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quality, commercially acceptable medical products. Such reasonable standards
shall include, at a minimum, the relevant FDA quality control standards.
C. Upon termination of this Agreement, Licensor may agree to allow
Licensee to continue to use the Licensed Trademark Rights. If no such agreement
is reached, Licensee agrees to cooperate with Licensor or its appointed agent in
applying to the appropriate authorities to cancel any recording of this
Agreement made in the United States Patent and Trademark Office. However, the
Licensee shall have the right to sell its inventory of products that prominently
display the "XXXXXXXX" name at the time of termination.
IX. PATENT MARKING
Except for its *** that are in Licensee's current inventory, Licensee
agrees to apply to all Licensed Products sold under this Agreement, where it is
possible to do so, and in all events to all packages in which such products are
sold, appropriate markings stating that the products are licensed under the
appropriate Licensed Patent Rights. Where possible, patent markings should also
appear on product literature, as well as packaging. To the extent permitted by
Licensor's *** (copies of which are provided to Licensee), the "XXXXXXXX(R)"
name shall also appear on packaging and literature associated with each Licensed
Product that is sold by Licensee.
X. SEVERABILITY CLAUSE
If any part, provision, covenant or condition of this
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Agreement shall be held to be invalid, illegal, void or unenforceable in any
respect, such invalidity, illegality, voidness or unenforceability shall not
affect any other parts of this Agreement, and this Agreement shall be construed
as if such invalid, illegal, void or unenforceable part, provision, covenant or
condition had never been contained herein. If, moreover, any one or more of the
parts, provisions, covenants or conditions contained in this Agreement shall for
any reason be held to be excessively broad as to time, duration, geographical
scope, activity or subject, it shall be construed, by limiting and reducing it,
so as to be enforceable to the extent compatible with the applicable law as it
shall then appear.
XI. NOTICES
All notices required or permitted by this Agreement shall be in writing
and shall be sent by registered mail, postage prepaid, addressed as follows:
Licensor:
Xx. Xxxxxxxx Xxxxxxxx
0000 Xxxxx Xxxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Licensee:
Neostar Medical Technologies
000 X. Xxxxxx Xxxxx
Xxxxx Xxxxxxxxx, Xxx Xxxxxx 00000
Any party may change the address to which notices shall be sent to it by
notice in writing to the other party.
XII. NON-WARRANTIES AND WARRANTY
A. Nothing in this Agreement shall be construed as:
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1. a warranty or representation by Licensor as to the validity
or scope of any patent that has issued from the Licensed Patent rights;
2. a warranty or representation that making, using or selling of
Licensed Products or use of Licensed Apparatus by Licensee will be free
from infringement of any patents owned by others than Licensor.
B. Licensee hereby releases and holds Licensor harmless from any and
all product liability claims, actions, losses, damages and liability resulting
from or arising out of the manufacture, use or sale by Licensee of Licensed
Products or the use by Licensee of Licensed Apparatus for the duration of this
Agreement.
C. Licensee agrees to indemnify Licensor for all product liability
claims, actions, losses, proceedings, damages, liabilities, costs and expenses,
including attorneys' fees arising out of, in connection with or resulting from
the manufacture, use or sale of Licensed Products by Licensee or the use of
Licensed Apparatus by Licensee.
D. Licensor has not made, and does not make, any representation,
warranty or covenant, express or implied, with respect to the condition,
quality, durability, suitability, fitness for particular purpose or
merchantability of Licensed Products or Licensed Apparatus. Further, Licensor
expressly disclaims any and all warranties, express or implied, regarding the
condition, quality, durability, suitability, fitness for particular purpose or
merchantability of Licensed Products or Licensed Apparatus.
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E. Licensor has reviewed the Neostar product line as reflected in the
most current Neostar Medical Technologies product catalog received by him on
December 24, 1994 and, with the exception of the *** with a *** and the ***
reflected by catalog number *** (which is covered by unlicensed patents),
represents that he has no other patents owned or controlled by him, other than
the Licensed Patents, for which a license is now required.
XIII. EFFECTIVE DATE
This Agreement shall become effective and binding upon the parties hereto
on the date first above written.
IN WITNESS WHEREOF, the parties hereto have caused to be signed by their
duly authorized officers, this Agreement at the places and on the dates set
forth below.
XX. XXXXXXXX X. XXXXXXXX, LICENSOR
Dated: Jan. 10, 1995 /s/ X. Xxxxxxxx
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NEOSTAR MEDICAL TECHNOLOGIES, INC.,
LICENSEE
Dated: Jan. 13th, 1995 By /s/ [unreadable]
----------------- -------------------------------------
Its: President
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[PICTURE]
EXHIBIT
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[PICTURE]
EXHIBIT
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EXHIBIT
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