EXHIBIT 10.17
Portions of the following exhibit have been omitted under a request for
confidential treatment under Section 24b-2 of the Securities Act of 1934.
Locations of these omitted portions is denoted by the following legend. [ * * ]
LICENSE AGREEMENT
THIS LICENSE AGREEMENT ("Agreement") is made this 3rd day of October,
2001, by and between Ash Medical Systems, Inc. ("AMS"), an Indiana corporation
having a principal place of business at 0000 Xxxx Xxxxxx, Xxxx Xxxxxxxxx,
Xxxxxxx, and Rockwell Medical Technologies, Inc. ("RMTI"), a Michigan
corporation having a principal place of at 00000 Xxxxx Xxxx, Xxxxx, Xxxxxxxx.
WITNESSETH:
WHEREAS, AMS represents and warrants that it is the owner of certain
proprietary technology, a patent granted, U.S. and foreign patent applications
pending, processes, methods, designs, technical know-how, information,
associated rights and tangible property relating to a Iron Delivery Method for
transferring iron to a patient from dialysate more specifically set forth in
U.S. Patent No. 5,906,978, European Patent Application No. 97937224.05, Canadian
Patent Application No. 2,263,779, and U.S. Continuation Patent Application
Serial No. 09/143,143 (the "Technology"); and
WHEREAS, RMTI desires to secure from AMS, and AMS is willing to provide
RMTI with an exclusive, worldwide, non-transferable license to use the
Technology to manufacture, have manufactured, use, commercialize and sell liquid
and/or dry dialysate compositions which utilize the Technology for the treatment
of patients in renal failure by hemodialysis or peritoneal dialysis (or by any
therapy) (hereinafter referred to as the "Products") upon certain terms and
conditions.
NOW THEREFORE, for and in consideration of the recitals and covenants
set forth herein, the parties agree as follows:
ARTICLE I
TERM
This Agreement shall begin on the date first written above and shall
continue until terminated by agreement of the parties or as otherwise provided
herein. Each subsequent twelve (12) month period constitutes a year ("Year").
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ARTICLE II
GRANT OF LICENSE
AMS hereby grants to RMTI, subject to the conditions outlined in
Article III, an exclusive, worldwide, non-transferable license to manufacture,
have manufactured, commercialize, use, market, and sell the Products, and/or
otherwise exploit the Technology in the treatment of patients with renal failure
by hemodialysis and peritoneal dialysis, such Technology relating to the
delivery of iron from dialysate includes all inventions, improvements,
enhancements and modifications thereto made, conceived or acquired by AMS after
the date of this Agreement and any patent based on and covering the same which
AMS now or thereafter owns, controls or has the right to commercially exploit.
ARTICLE III
CONSIDERATION FOR GRANT
3.1 Patent Costs. If RMTI deems it necessary for AMS to seek additional
patent protection on any portion of the Technology not already covered by U.S.
Patent No. 5,906,978 and pending U.S. and foreign patent applications to enhance
protection of their exclusive license, AMS, at RMTI's expense, will prepare and
file the requested patent applications. All future costs for filing,
prosecuting, issuing, and/or maintaining patents covering the Technology,
including the existing patents and patent technology and such additional patent
applications requested by RMTI, including maintenance fees once patent(s) issue,
will be borne by RMTI as long as this Agreement is in force. All future costs
for filing, prosecuting, issuing, and/or maintaining corresponding foreign
patents shall be borne by RMTI during the term of the Agreement. RMTI agrees to
pay all outstanding invoices for filing, prosecuting, issuing, and/or
maintaining patents associated with the Technology existing at the time of
execution of this Agreement, in a total amount not to exceed Ten Thousand
Dollars ($10,000.00). AMS will use best efforts to keep RMTI fully advised as to
the status and course of prosecution of all such pending patent applications,
including supplying copies of all official papers received, and copies of all
papers filed by the attorneys involved. Upon 15 days advance notice to AMS, RMTI
has the right to discontinue preparation and/or prosecution of any such
additional patent(s) at any time, and shall be kept advised of the status of
same in a manner sufficiently detailed and prompt to enable effective exercise
of this right. AMS shall have the right to continue
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efforts to obtain any such existing or additional patents at its own expense in
any instance where RMTI decides to discontinue such efforts.
3.2 Non-Refundable License Fee. RMTI agrees to pay AMS the sum of Two
Hundred Fifty Thousand Dollars ($250,000.00) license fee, which shall be
non-refundable, payable in three segments: One Hundred Thousand Dollars
($100,000.00) upon execution of this Agreement; Seventy-Five Thousand Dollars
($75,000.00) within six (6) months of such date; and Seventy-Five Thousand
Dollars ($75,000.00) within twelve (12) months of such date.
3.3 Royalty. RMTI shall pay AMS a royalty ("Royalty") in the amount of
[* *] of RMTI's increase in revenue over the revenue that RMTI would have earned
on its liquid and dry dialysate without the Product. The Royalty will be based
on [* *] of the increase in the "average actual selling price" over the "base
average actual selling price" of liquid and dry dialysate containing the
Product, on a 55-gallon drum equivalent basis. The "average actual selling
price" of the Product includes actual gross invoice price for Products sold to
independent and unrelated third parties in the normal course of business, less
any and all chargebacks, rebates, discounts, buying group discounts, taxes,
duties, handling or other charges, credits, fees allowances, and returns. The
"base average actual selling price" is the weighted average actual selling price
of liquid and dry dialysate products without iron on a 55-gallon drum equivalent
basis sold by RMTI during the 12-month period preceding the month in which RMTI
first offered Products for sale. The "base average actual selling price" will be
readjusted, using a 12 month weighted average, every anniversary date from the
date the Product was first offered for sale, however, it can never be adjusted
lower than the initial 12-month period preceding the month in which RMTI first
offered Products for sale. Royalty shall be paid on the 15th day of the second
month following the month in which the Royalty was earned.
3.4 Continuation Fee. In the event that RMTI does not have the Product
to the market by the end of Year 5 of this Agreement, RMTI shall have the choice
to pay AMS the additional sum of $250,000.00 per annum as a fee for continuation
of this Agreement ("Continuation Fee") until the Product is on the market. Once
the Product is on the market the Continuation Fee will be eliminated.
Continuation Fees, if due, will be paid on anniversary date of this Agreement
beginning with the 5th anniversary date.
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3.5 Technical Support. RMTI, at its sole cost and expense, shall be
responsible for all regulatory affairs associated with the Products, including
clinical trials and commercialization submissions to the U. S. Food and Drug
Administration. AMS, including its Medical Director, agrees to provide, and RMTI
agrees to pay AMS for, such reasonable technical and clinical support as RMTI
may request. AMS' current Medical Director, Xx. Xxxxxxx X. Xxx, shall be billed
at the rate of $187.50 per hour or $1,500.00 per day and all other personnel
will be billed at mutually agreed-upon market rates. Expenses will be reimbursed
promptly upon invoicing by AMS.
3.6 Audits. RMTI shall make its records and facilities involved in the
performance of this Agreement available to independent CPA auditors designated
by and at the expense of AMS, at reasonable and mutually convenient times during
normal business hours for audit purposes and shall take any reasonable actions
facilitate such. All information obtained during any such audit shall be deemed
confidential, and such auditors shall report to both AMS and RMTI only the
conclusion reached by their audit relative to the accuracy and adequacy of
Royalty payments made to AMS hereunder
ARTICLE IV
WARRANTIES AND REPRESENTATIONS BY AMS AND RMTI
4.1 AMS warrants to RMTI that AMS is the sole and exclusive owner of
the Technology as of the date of execution hereof, including all patents and
patent applications, that AMS has the right to grant the exclusive license
granted hereunder; that no agreement or other document effective as of the date
of execution hereof has been executed which is in conflict herewith and will not
execute any such agreement during the term hereof; that AMS officers have the
full right, authority and authorization to execute this Agreement and to grant
the exclusive rights granted to RMTI hereunder; and that no consent or
authorization of any third party is required as a condition precedent to its
execution or performance of this Agreement.
4.2 RMTI hereby represents to AMS that it has executed no agreement or
other document in conflict herewith; that its officers have the full right,
authority and authorization to execute this Agreement; and that no consent or
authorization of any third party is required as a condition precedent to its
execution or performance of this Agreement.
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4.3 RMTI represents to AMS that no Products will be knowingly sold or
otherwise distributed except in full compliance with all legal and regulatory
requirements.
ARTICLE V
INFORMATION AND OWNERSHIP REGARDING THE INVENTIONS
5.1 The Technology which relates to the delivery of iron by dialysate,
and all inventions, improvements, enhancements and modifications thereto made,
conceived or developed by AMS or its agents or representatives after the date of
this Agreement, and any patent covering the same in whole or in part which AMS
now or hereafter owns, controls or has the right to commercially exploit, shall
be and remain the sole and exclusive property of AMS, subject to and included
within the license hereby granted. AMS shall, upon demand, execute and deliver
to RMTI, or cause to be executed and delivered to RMTI, such documents as may be
deemed necessary or advisable by counsel for RMTI for filing in the appropriate
public offices to evidence the grant of the exclusive license hereby granted to
RMTI.
5.2 All inventions, improvements, enhancements and modifications to the
Technology made, conceived or developed by RMTI or its agent and representative
during the term of this Agreement and any patent covering the same in whole or
in part ("RMTI Enhancements"), shall be the sole property of RMTI. Should RMTI
chose not to maintain its exclusive license under Section 3.4 of this Agreement,
or if this Agreement is terminated by AMS or RMTI under Section 7 of this
Agreement, RMTI grants AMS a non-exclusive, royalty-free license to exploit such
RMTI Enhancements.
ARTICLE VI
INFRINGEMENT, INDEMNIFICATION AND INSURANCE
6.1 Infringement. RMTI may choose to prosecute at its own expense and
for its own benefit, any party infringing on the rights granted to RMTI pursuant
to this Agreement and AMS shall cooperate fully with such. In any case where
RMTI chooses not to prosecute an infringing party, AMS shall have the right to
prosecute at its own expense and for its own benefit such infringing party and
RMTI shall cooperate fully with such.
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6.2 Indemnification.
6.2.1 RMTI shall indemnify and hold harmless AMS, its
officers, directors, agents and representatives, and employees
from and against any and all claims, losses, damages,
judgments, costs, awards, expenses (including reasonable
attorney's fees) and liabilities of every kind (collectively,
"Losses") arising directly out of or resulting directly from
any breach by RMTI of any of its warranties, guarantees,
representations, obligations or covenants contained herein.
6.2.2 AMS shall indemnify and hold harmless RMTI, its
officers, directors, agents and representatives, and employees
from and against any and all Losses arising directly out of or
resulting directly from any breach by AMS of any of its
warranties, representations, obligations or covenants
contained herein.
6.3 Insurance. RMTI agrees to purchase, at its sole cost,
comprehensive general liability insurance (occurrence or claims-made form) for
bodily injury and property damage, including contractual and product liability,
in an amount of not less than $3,000,000 combined single limits and provide AMS
with a certificate of insurance naming AMS as an additional insured. Such
contract of insurance shall be primary with respect of any other insurance
available to AMS and shall contain a waiver of subrogation by RMTI's insurance
carrier against AMS and its insurance carrier with respect to all obligations
assumed by RMTI pursuant to this Agreement. Such insurance shall contain
provisions to the effect that policy limits may not be reduced, terms changed,
or the policy canceled with less than thirty (30) days written notice to AMS.
6.4 Sublicenses. It is recognized that RMTI may from time to time
deem it necessary or desirable to grant sublicenses to third parties under the
Technology licensed to it pursuant to this Agreement, under terms and conditions
it deems best suited to each such situation, in order to prevent unlicensed
infringement, resolve disputes and/or litigation, maintain orderly and effective
marketing of the Products or for other reasons, and the parties therefore agree
that in any such event RMTI will first consult with AMS concerning each such
matter and AMS shall have the right to approve or disapprove any such
sublicense, providing however that AMS shall not act unreasonably in exercising
such right. RMTI agrees to preserve AMS' royalty dollar amount on a 55-gallon
drum equivalent basis if Products are sublicensed.
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ARTICLE VII
TERMINATION
7.1 This Agreement may be terminated as follows:
7.1.3 At the sole option of AMS and upon written
notice by AMS, in the event RMTI fails to meet any of its financial
obligations under this Agreement. RMTI will have fifteen (15) days
following receipt of notice to cure the violation.
7.1.2 At the option of either party and upon thirty
(30) days written notice, in the event of the other party's failure
to perform any of its non-financial duties or obligations under
this Agreement. The defaulting party will have thirty (30) days
following receipt of notice to cure the violation.
7.1.3 At the option of RMTI, at any time during the
term hereof upon ninety (90) days written notice.
7.2 Remedies hereunder are not exclusive. The non-breaching party shall
have all remedies available at law or in equity. The provisions of Article VIII
and the obligations for payment of royalties under Section 3.3 shall survive any
termination of this Agreement.
ARTICLE VIII
CONFIDENTIALITY
8.1 Definition of Confidential Information. As used in this Agreement,
"Confidential Information" shall mean all information which is transmitted in
written, graphic or photographic form and marked as "Confidential" or if
transmitted in oral form and reasonably known to be confidential or claimed to
be so by the discloser at the time of transmittal, but Confidential Information
does not include that which (a) can be shown by the receiving party to have been
in its possession prior to disclosure to it by the transmitting party; (b) at
the time of disclosure hereunder is, or thereafter becomes, through no fault of
the receiving party, part of the public domain by publication or otherwise; or
(c) is furnished to the receiving party by a third party after the time of
disclosure hereunder as a matter of right, who owes no obligation of
confidentiality to the transmitting party with respect to the Confidential
Information.
8.2 Exchange of Information. All Confidential Information exchanged
between AMS and RMTI pursuant to this Agreement or previously exchanged between
AMS and
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RMTI relating to the subject matter hereof, shall be kept confidential by each
party with the same degree of care normally accorded by such party to its own
confidential information except for purposes authorized by this Agreement.
Neither party shall disclose such Confidential Information to any person or
entity during the term of this Agreement, provided, however, that each party may
disclose said Confidential Information to responsible officers and employees of
any party who require said information for the purposes contemplated by this
Agreement, provided that said officers and employees shall have assumed like
obligations of confidentiality. This obligation of confidentiality shall survive
the termination of this Agreement for a period of five (5) years after the
termination of this Agreement.
ARTICLE IX
ASSIGNABILITY
9.1 Notwithstanding the references in this Agreement to
non-transferability of the license contained herein, (i) AMS shall be permitted
to assign its rights and obligations under this Agreement to a third party
purchaser of all or substantially all of AMS' business, and (ii) RMTI shall be
permitted to assign its rights and obligations under this Agreement to a third
party purchaser of all or substantially all of RMTI's business. This Agreement
shall be binding upon and shall inure to the benefit of AMS and RMTI and their
permitted assigns and successors in interest.
ARTICLE X
GOVERNING LAW
10.1 This Agreement shall be governed by and construed in accordance
with the laws of the State of Indiana; provided, however, that any patent
question or controversy shall be resolved in the courts having jurisdiction over
the patent in question in accordance with the laws applicable to such patent.
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ARTICLE XI
NOTICES
11.1 For purposes of notices given pursuant to this Agreement, the
addresses as set forth in Section 11.2 shall be used unless changed by written
notice given by one party to the other:
11.2 For the purposes of notices under Section 11.1 above, the
following addresses shall be used:
For AMS: Ash Medical Systems, Inc.
0000 Xxxx Xxxxxx
Xxxx Xxxxxxxxx, XX 00000
Attn.: Xxxxxx X. Xxxxxx, President and CEO
Facsimile Number: (000) 000-0000
For RMTI: Rockwell Medical Technologies, Inc.
00000 Xxxxx Xxxx
Xxxxx, XX 00000
Attn.: Xxxxxx Xxxxxxx, Chairman, President, CEO
Facsimile Number: (000) 000-0000
11.3 All notices hereunder shall be in writing and shall be deemed
given when (a) personally delivered; (b) when received, if mailed by certified
mail, return receipt requested, postage prepaid; (c) when received when sent by
courier service, UPS, or equivalent carrier; or (d) on the first business day
after receipt of facsimile copy when transmitted by confirmed facsimile, with
hard copy mailed by United States mail.
ARTICLE XII
MISCELLANEOUS
12.1. Headings. The headings used in this Agreement are for purposes of
convenience and ready referral and shall not be deemed to limit the construction
of any paragraph to which they appertain.
12.2 Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect or limit the validity or enforceability of
any other provision hereof.
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12.3 No Waiver. No waiver by either party or any breach of the terms of
this Agreement shall be deemed a waiver of any subsequent breach thereof.
12.4 Entire Understanding. This Agreement embodies the entire
understanding and agreement between the parties and supersedes all previous
negotiations, representations and writings, written or oral, with respect to the
subject matter hereof. This Agreement may be amended or modified only by an
instrument in writing, duly signed by the parties hereto.
12.5 This Agreement may be executed in more than one counterpart, each
of which shall be deemed an original document, and all of which taken together
shall be one and the same agreement.
ATTEST: ASH MEDICAL SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------- ---------------------------
Xxxxxx X. Xxxxxx
President and CEO
ATTEST: ROCKWELL MEDICAL TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------- ---------------------------
Xxxxxx Xxxxxxx
Chairman, President, CEO
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