EXHIBIT 10.12
SETTLEMENT AGREEMENT
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This Settlement Agreement (hereinafter "Agreement") is made and
entered into effective this 27th day of August, 1999 ("Effective Date"), by
and between ALARIS Medical Systems, Inc., a Delaware corporation ("ALARIS
Medical") formerly known as IVAC Medical Systems, Inc., on the one hand, and
Tyco Healthcare Group, L.P. formerly known as The Xxxxxxx Co. L.P., as
successor in interest to Sherwood Medical Company d/b/a Sherwood, Davis &
Xxxx, a Delaware corporation ("Tyco"), and Sherwood Services A.G. ("SSAG"),
on the other hand, with respect to the following:
RECITALS:
A. ALARIS Medical and Tyco are parties to civil action Case No.
96-CV-2083-JM (LSP) SHERWOOD MEDICAL COMPANY d/b/a SHERWOOD, DAVIS & XXXX
Plaintiff, vs. IVAC MEDICAL SYSTEMS, INC. Defendant, and IVAC MEDICAL SYSTEMS,
INC., Counterclaimant, vs. SHERWOOD MEDICAL COMPANY d/b/a SHERWOOD, DAVIS &
XXXX, Counterdefendant, pending in the United States District Court for the
Southern District of California (the "Action").
B. SSAG is the owner of United States Letters Patent No. 5,293,862,
entitled Disposable Speculum With Bonding Ring, issued on March 15, 1994 ("`862
patent"), of United States Letters Patent No. 5,516,010, entitled Sanitary
Speculum For Tympanic Thermometer Probe, issued on May 14, 1996 ("`010 patent"),
and of United States Letters Patent No. 5,707,343, entitled Disposable Sanitary
Speculum for Tympanic Thermometer Probe, issued on January 13, 1998 ("`343
patent"). Tyco is a licensee of the `010 and `862 patents, with the right to
enforce said patents and grant sublicenses thereto. Tyco is a licensee of the
`343 patent.
C. The Action involves claims by Tyco against ALARIS Medical for
infringement of the `862 and `010 patents. ALARIS Medical has raised certain
defenses, and has filed a counterclaim seeking a declaration of non-infringement
and that the `862 and `010 patents are invalid and unenforceable.
D. SSAG and Tyco assert that the `343 patent is infringed by ALARIS
Medical, and ALARIS Medical denies that it has infringed the `343 patent.
E. The parties desire to amicably settle and compromise the disputes
between them including, but not limited to, those disputes that are the subject
matter of the Action, and to avoid the expense and inconvenience of further
litigation.
TERMS AND CONDITIONS:
IN CONSIDERATION OF THE FOREGOING, AND OF THE COVENANTS AND CONDITIONS
HEREINAFTER SET FORTH AND IN SETTLEMENT OF THE
CONTROVERSIES THAT EXIST BETWEEN THEM, THE PARTIES AGREE AS FOLLOWS:
1. DEFINITIONS
a. "AFFILIATE"
The term "Affiliate" of a party to this Agreement as
used in this Agreement shall mean a person or entity controlling, controlled by,
or under common control with, a party or a parent or subsidiary of a party. An
ownership interest of fifty percent (50%) or more shall constitute control as
that term is used herein.
b. "EFFECTIVE DATE"
The term "Effective Date" as used in this Agreement
shall mean the date first written above.
c. "CURRENT PRODUCT"
The term "Current Product" as used in this Agreement
shall mean probe covers for tympanic thermometers that were sold by ALARIS
Medical as of the Effective Date of this Agreement.
d. "FOREIGN COUNTERPART(S)"
The term "Foreign Counterpart(s)" as used in this Agreement
shall mean all foreign patent applications and issued foreign patents which
claim priority from, or share common priority with, an identified United States
patent or patent application or which disclose and claim the same invention that
is the subject matter of such identified United States patent or patent
application.
e. "REASONABLE MODIFICATIONS"
The term "Reasonable Modifications" as used in this
Agreement shall mean changes that do not alter the basic design (flat frame and
stretchable film) of the Current Product, such as changes in material or
dimensions.
2. CONSENT JUDGEMENT AND DISMISSAL
Upon final execution of this Settlement Agreement by the
parties, the parties through their respective counsel shall execute a Consent
Judgement and Dismissal in the form attached hereto as Exhibit A, and shall, not
later than ten (10) days after execution of this Agreement, present the same to
the Court for approval and filing.
3. VALIDITY/ENFORCEABILITY
Subject to the provisions of this Agreement, IVAC agrees that
the `343 patent, as well as the `862 and `010 patents (pursuant to Consent
Judgment and Dismissal) are not invalid and are enforceable.
4. MUTUAL RELEASE
Conditioned upon execution by the parties of this Agreement
and upon execution of the Consent Judgement and Dismissal (Exhibit A) and except
for the specific obligations of the parties pursuant to this Agreement, ALARIS
Medical, on the one hand, and Tyco and SSAG, on the other hand, on behalf of
themselves their respective predecessors, successors, parents, Affiliates,
subsidiaries, heirs, executors, administrators, assigns, stockholders, officers,
directors, attorneys, agents, employees and representatives, each hereby release
and discharge the opposing party and its respective predecessors, successors,
parents, subsidiaries, heirs, executors, administrators, assigns, stockholders,
officers, directors, attorneys, agents, employees and representatives, from any
and all debts, claims, demands, damages liabilities, obligations, causes of
action (including, without limitation, those asserted in the Complaint, Answer
and Counterclaims of the Action), agreements, suits, sums of money, and rights,
whether known or known, suspected or unsuspected, which i.) relate to probe
covers for tympanic thermometers, and ii.) are based on any actions or inaction
occurring prior to the Effective Date of this Agreement, and which the party now
owns or holds, or at any time heretofore owned or held, by reason of any act,
matter, cause or thing whatsoever.
5. WAIVER OF CODE SECTION
ALARIS Medical, Tyco, and SSAG hereby waive with respect to
the release of paragraph 4 above, the benefits of Section 1542 of the Civil Code
of California to the extent that such benefits may contravene a provision
hereof. Such action reads as follows:
"1542 GENERAL RELEASE; EXTENT.
A GENERAL RELEASE DOES NOT EXTEND TO
CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME
OF EXECUTING THE RELEASE, WHICH IF KNOWN
BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR."
6. LICENSE GRANTS
a. Tyco hereby grants ALARIS Medical and its Affiliates a
non-exclusive, worldwide license under the `862 and `010 patents and all
extensions, reissues, reexaminations, divisionals, continuations,
continuations-in-part and Foreign Counterparts thereof, to make, have made, use
and sell, or otherwise distribute and to practice processes and methods under
the `862 and `010 patents with respect to probe covers for ALARIS Medical
thermometers.
b. SSAG hereby grants ALARIS Medical and its Affiliates a
non-exclusive, worldwide license under the `343 patent and all extensions,
reissues, reexaminations, divisionals, continuations, continuations-in-part and
Foreign Counterparts thereof, to make, have made, use and sell, or otherwise
distribute and to
practice processes and methods under the `343 patent with respect to probe
covers for ALARIS Medical thermometers.
c. The license rights granted pursuant to subparagraph a.
above shall not include the right to make, have made, use, and sell with respect
to probe covers designed for or intended for use on a Tyco or any other third
party tympanic thermometer.
d. The license rights and grant pursuant to subparagraph a.
above shall not include the right to grant any sublicense.
7. COVENANT NOT TO XXX
x. COVENANT BY TYCO AND SSAG
Tyco and SSAG covenant not to xxx ALARIS Medical or
its Affiliates, or any of its customers or distributors or suppliers, for
infringement of any patent owned by Tyco or SSAG or as to which Tyco or SSAG has
the right to xxx, by reason of ALARIS Medical or its Affiliates making, having
made, using or selling, or their customers, distributors or suppliers making
using or selling, in the United States or elsewhere, Current Product, or any
products of substantially the same design sold under a different trademark or
model designation, and Reasonable Modifications thereof.
b. APPLICABLE PATENTS AND PATENT APPLICATIONS
Except as otherwise provided herein, the respective
covenants under this Paragraph 7 of this Agreement shall apply to patents that
have issued or been granted in at least one country, and to the claims of all
extensions, reissues, reexaminations, divisionals, continuations,
continuations-in-part and Foreign Counterpart patents and patent applications
thereof, and to all patents or patent applications of Tyco and its Affiliates
which may be filed in the future.
8. PAYMENT OBLIGATION
In consideration of the rights granted by Tyco to ALARIS
Medical by this Agreement and without admission of infringement, ALARIS Medical
shall pay to Tyco the sum of $3,950,000.00 (Three Million and Nine Hundred and
Fifty Thousand Dollars) within ten days of the Effective Date of this Agreement
by both parties.
9. REPRESENTATION AND WARRANTY OF TYCO
Tyco and SSAG represent and warrant that they have the
authority to grant ALARIS Medical the rights granted herein and to enter into
the covenants included herein.
10. PUBLICITY
a. Tyco and ALARIS Medical and their respective Affiliates
agree to refrain from releasing any information to any third party with respect
to the existence or terms of this Agreement without the prior written consent of
the other party, except as set forth in the Press Release(s) attached hereto as
Exhibit B, or as otherwise provided herein. This prohibition includes, but is
not limited to, educational and scientific conferences, promotional materials,
governmental filings, and discussions with lenders, investment bankers, public
officials, and the media, but shall not extend to disclosures necessary in
accordance with Security and Exchange Commission requirements, nor to investment
bankers and lenders.
b. If Tyco or ALARIS Medical and/or their respective
Affiliates determines that a release of information subject to the prohibition
in the preceding paragraph is required by law, they shall promptly notify the
other party in writing thirty (30) days before the time of the proposed release.
The notice shall include the exact text of the proposed release and the time and
manner of the release. If requested by the other party hereto, the party seeking
to release information shall furnish to the other an opinion of counsel that the
release of all the information is required by law. At the other party's request
and before the release, the party desiring to release the information shall
consult with the other party on the necessity for the disclosure and the text of
the proposed release. Absent approval in advance from the other party, in no
event shall a release, other than one in accordance with subparagraph a. above,
include information regarding the existence or terms of this Agreement that is
not required by law.
c. Should any third party seek to obtain any information by
legal process with respect to the existence or terms of this Agreement from any
party hereto, such party to this Agreement shall promptly notify the other party
hereto, and shall take all appropriate measures to avoid and minimize the
release of such information.
11. PAYMENT OF COSTS AND ATTORNEYS FEES
The parties hereto shall pay their own costs and attorneys'
fees incurred in connection with the Action and this settlement.
12. PROTECTIVE ORDERS
The parties agree to abide by the terms of the Protective
Order regarding confidentiality filed in the Action which shall remain in force
and effect, and documents produced in discovery, which were designated
"Confidential" or "For Counsels' Eyes Only," and all deposition transcripts,
shall be destroyed or retained in confidence by counsel of record for the
parties. This Agreement is hereby designated "Confidential" pursuant to the such
Protective Order.
13. ABSENCE OF WAIVER
The failure of any party to enforce at any time any provision
of this Agreement shall in no way be construed as a waiver of such provision,
nor in any way to affect the validity of this Agreement or any part thereof, or
the right of any party to later enforce each and every such provision. No waiver
of any breach of this Agreement shall be held to be a waiver of any other or
subsequent breach.
14. ENTIRE AGREEMENT
This Agreement shall constitute the entire agreement between
the parties hereto with respect to the subject matter hereof, and shall
supersede all previous negotiations, commitments, and writings. This Agreement
shall not be modified or altered in any manner except by an instrument in
writing executed by all of the parties hereto.
15. SEVERABILITY
If any provision of this Agreement is found to be prohibited
by law and invalid, or for any reason such provision is held unenforceable, in
whole or in part, that provision shall be considered severable and its
invalidity or unenforceability shall not affect the remainder of this Agreement,
which shall continue in full force and effect.
16. NOTICE
Any notice, report, written statement or payment to a party
permitted or required under this Agreement shall be in writing and shall be sent
by certified mail, return receipt requested, Federal Express, or hand delivery
at the respective addresses set forth below, or to such other addresses as the
respective parties may from time to time designate:
For Tyco Healthcare Group, L.P.:
Xxxxx Xxxxx, Esq.
Vice President, Intellectual Property
The Xxxxxxx Company
15 Xxxxxxxxx, XX 00000
with copies to:
Xxx Xxxx, Esq.
Xxxxx & Xxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
and copies to:
Xxxxx XxXxx, Esq.
Xxxxxxx Xxxxxx Xxxxxxx & XxXxxxx
2100 Symphony Towers
000 X Xxxxxx
Xxx Xxxxx, XX 00000
and copies to:
Xxxxxxx Xxxxxxxxx, Esq.
CEO
Sherwood Services X.X.
Xxxxxxxxxxxxxx 0
XX 0000 Xxxxxxxxxxxx
Xxxxxxxxxxx, 02048
For ALARIS Medical Systems, Inc.:
Xxxxx X. Xxxx, Esq.
Corporate Vice President, Legal Affairs
ALARIS Medical Systems, Inc.
00000 Xxxxxxxxx Xxxxxx, Xxxxxxxx X
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
with copies to:
Xxxxxxx X. Xxxxxx, Esq.
Xxxxxxxx Xxxxxx Xxx & Xxxxxx, LLP
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx Xxxxx
Xxx Xxxxxxx, XX 00000
17. APPLICABLE LAW
This Agreement shall be deemed to be executed and to be
performed in the State of California and shall be construed in accordance with
the laws of the State of California as to all matters, including, but not
limited to, matters of validity, construction, effect, or performance.
18. NO ADMISSION
Subject to the provisions of the Consent Judgement and
Dismissal and to paragraph 4 hereof, neither the entering into this Agreement,
nor any provision hereof, shall be deemed as an admission by any party of any
legal position or of any wrong-doing of or by any party to this Agreement, or
party to the Action.
19. ASSIGNMENT
The obligations of this Agreement shall be binding upon the
parties hereto, their successors and legal representatives, specifically
including the respective assignee or transferee of rights in any patent owned by
any party and subject to the covenant granted herein. In the event of an
assignment or transfer, including the right to receive proceeds in whole or in
part, the assignor or transferor shall advise the assignee or transferee of this
Agreement, and the obligations hereunder. As to any assignment or transfer, the
transferee will expressly acknowledge to the other party an assumption of rights
and obligations of this Agreement. However, the benefits granted under this
Agreement, including the license grant and rights of paragraph 6 and covenants
of paragraph 7 shall not be assigned or transferred by any party without written
consent of the other party except in connection with a merger, consolidation, or
sale of all or substantially all of the assets of its entire business to which
this Agreement pertains.
20. CAPTIONS
Captions are inserted herein only as a matter of convenience,
and for reference, and in no way define, limit, or describe the scope of this
Agreement or the intent of any provision herein.
21. CONSTRUCTION
This Agreement has been prepared with the participation of
both parties, and shall not be strictly construed against either party.
22. COUNTERPARTS.
This Agreement may be executed in counterparts, each of which
shall be deemed an original, but both of which shall constitute one and the same
instrument.
23. CONSULTATION WITH COUNSEL AND RELIANCE
The parties each acknowledge that they have had the
opportunity to consult with counsel of its choice, and that in executing this
Agreement it has not relied upon any statements, representations or agreements
of any other person other than those contained herein.
24. TERM
This Agreement shall be effective as of the Effective Date and
it shall remain effective until and terminate upon the expiration date of the
last-to-expire of the patents included within the scope of the license grant and
the covenants not to xxx set forth above in paragraphs 6 and 7.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers, effective as of the Effective Date.
ALARIS Medical Systems, Inc.
(formerly IVAC Medical Systems, Inc.)
By:
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Xxxxx X. Xxxxxxxxxxxxx
Title: President and Chief Operating Officer
ATTEST:
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Tyco Healthcare Group, L.P.
By:
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Title:
ATTEST:
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Sherwood Services A.G.
By:
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Title:
ATTEST:
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