THIS AGREEMENT CONTAINS CONFIDENTIAL TERMS WHICH HAVE BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
LICENSE AGREEMENT
THIS AGREEMENT is made upon the 27th day of December, 1996 and shall be
effective as of January 1, 1997, by and between IOMED, INC., a Utah corporation
("Iomed"), and FILLAUER, INC., a Delaware corporation (the "Licensee"). Iomed
and the Licensee are referred to herein individually as a "Party," and
collectively as the "Parties".
RECITALS:
A. On the effective date of that certain Asset Acquisition Agreement
between the Parties, of even date herewith (the "Purchase Agreement"), the
Licensee has purchased from Iomed certain assets of Iomed's Motion Control
Division ("Motion Control").
B. Iomed is the exclusive licensee or the owner of certain patented and
unpatented technology, trade secrets, trademarks and trade names which are
utilized by Motion Control in connection with its business of **** (the
"Business").
C. The Purchase Agreement contemplates that Iomed will grant to the
Licensee an exclusive license to such technology, trademarks and trade names, in
order to permit the Licensee to continue to operate the Business.
D. The Parties desire to enter into this Agreement in order to fulfill
the requirements of the Purchase Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing Recitals and the
covenants and agreements set forth herein, together with other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Parties agree as follows:
1. Licenses.
(a) On the effective date of this Agreement, Iomed herewith
grants to the Licensee an ****, royalty bearing sublicense in and to the rights
of Iomed to utilize the United States Letters Patent identified on Exhibit "A"
hereto (which is incorporated herein by reference), for the use, manufacture and
sale of those prosthetic devices described on Exhibit "B" hereto (which is
incorporated herein by reference), as granted to Iomed by that certain License
Agreement, dated October 1, 1992 (the "University License"), between Iomed and
the University of Utah Research Foundation. The United States Letters Patent
described on Exhibit "A" hereto are referred to herein as the "University
Patents," the products described on Exhibit "B" hereto, together with any
improvements or additions thereto developed by the Licensee or its
"Sublicensees" (as hereinafter defined) after the effective date of this
Agreement, are referred to herein as the "University Products," and the
sublicense granted by this paragraph 1(a) is referred to herein as the
"Sublicense." The Sublicense shall be exclusive even as to Iomed; provided,
however, that the Licensee acknowledges that the University License reserves to
the University of Utah Research Foundation the right to utilize the University
Patents for educational and research purposes at the University of Utah. In no
event shall any use of the University Patents by the University of Utah Research
Foundation be deemed or construed to constitute a breach of this Agreement by
Iomed.
(b) On the effective date of this Agreement, Iomed grants to
the Licensee an exclusive, world-wide, fee-bearing license (the "License") in
and to all patented and unpatented technology, trademarks, tradenames, know-how
and trade secrets owned or licensed by Iomed and which have been employed by
Motion Control in its conduct of the Business, for the purpose of enabling the
Licensee to develop, manufacture, market and sell those products described on
Exhibit "C" hereto (which is incorporated herein by reference), together with
any improvements or additions thereto developed by the Licensee or its
Sublicensees after the date of this Agreement (collectively the "Iomed
Products"). Such Iomed technology (the "Iomed Technology") is more particularly
described on Exhibit "D" hereto, which is incorporated herein by reference. The
License shall be exclusive even as to Iomed.
(c) Pursuant to the Sublicense and the License, the Licensee
shall have the right to grant further sublicenses in and to the University
Patents and the Iomed Technology to persons or entities owned by, or under
common control with, the Licensee (collectively "Sublicensees"). Otherwise, the
Licensee may not sublicense, sell, assign or transfer the Sublicense or the
License without the prior written consent of Iomed. No Sublicensee shall have
the right to further sublicense its rights under either the University Patents
or the Iomed Technology.
2. Royalty and License Fee.
(a) In consideration of the grant of the Sublicense, the
Licensee shall pay to Iomed an earned royalty of **** (the "Royalty") **** (as
hereinafter defined) received by the Licensee or its Sublicensees from all sales
of the University Products which are made between the effective date of this
Agreement and **** (the "Royalty Period"). Following the Royalty Period, no
royalties, fees or other payments shall be due Iomed as the result of or in
connection with the sale by the Licensee or any of its Sublicensees, of the
University Products or any other products which incorporate or utilize any of
the technology which is the subject of the University Patents or which is
otherwise covered by the Sublicense.
(b) As consideration for the License, the Licensee shall pay
to Iomed, ****(the "License Fee") **** received by the Licensor, or its
Sublicensees, from all sales of Iomed Products which are made between the
effective date of this Agreement and **** (the "Fee Period"). Following the Fee
Period, no license fee or other payment (other than the Royalty specified in
paragraph 2(a) hereof to the extent applicable) shall be due or payable to Iomed
by the Licensee or any of its Sublicensees as a result of or in connection with
the manufacture or sale of the Iomed Products or any other product which
incorporates any of the Iomed Technology.
(c) As used in this Agreement, the term "Net Sales Proceeds"
shall mean ****.
(d) In the event that a University Product or an Iomed Product
is sold by the Licensee or by one of its Sublicensees to a person, firm or
entity which is owned or controlled by or is under common control with the
Licensee or such Sublicensee, then the Royalty or the License Fee, as
appropriate, which shall be due and payable to Iomed as the result of such sale
shall be calculated on the basis of the greater of (i) ****, or (ii) ****.
3. Payment of Royalty and License Fee.
(a) The Royalty and the License Fee shall be paid to Iomed by
the Licensee **** Payment of the Royalty and License Fee shall be made within
**** of the final day of each **** during the Royalty Period or the License Fee
Period, as appropriate. Each such payment shall be accompanied by a report,
certified by the Chief Financial Officer of the Licensee setting forth the total
number of each of the University Products and the Iomed Products sold by the
Licensee or its Sublicensees during the **** in question, together with a
statement as to the manner in which the Net Sales Proceeds from such sales was
calculated.
(b) All Royalty and License Fee payments shall be made in
United States Dollars. Any currency exchange adjustments required by reason of
the sale of the University Products or the Iomed Products outside the United
States shall be made as of the last business day of the **** during which the
Royalty or License Fee was earned, and shall be based upon the exchange rate for
the currency in question quoted by The Wall Street Journal on the last business
day of such calendar quarter.
(c) Notwithstanding any provision of this Agreement to the
contrary, in the event that, on any of the first five anniversary dates of the
effective date of this Agreement, Iomed shall not have received, during the
immediately proceeding twelve-month period, License Fees in the amount of at
least ****, the Licensee shall pay to Iomed, within 30 days of such anniversary
date, the difference between **** and the amount of the License Fees actually
received by Iomed during such twelve-month period.
4. Records and Audit Rights.
(a) The Licensee shall keep and maintain, and shall cause and
require each of its Sublicensees to keep and maintain, accurate books and
records concerning the manufacture and sale of the University Products and the
Iomed Products, including purchase orders, shipping invoices, records of
returned goods, and records detailing the costs incurred by the Licensee or its
Sublicensees in making such sales and all payments received by the Licensee and
the Sublicensees as a result of such sales. Such books and records shall be
sufficiently detailed to enable to Licensee to calculate, in accordance with
generally accepted accounting principles, the Net Sales Proceeds received by the
Licensee and the Sublicensees from their sale of the University Products and the
Iomed Products, and to determine the amount of the required Royalty and License
Fee payments. Iomed shall have access to and the right, upon reasonable notice,
to inspect and audit such books and records in order to verify the correctness
of the Royalty and License Fees paid by the Licensee. Any such audit shall be
conducted by an accounting firm selected by Iomed.
(b) If Iomed causes the books and records of the Licensee or
of any of the Sublicensees to be audited, and such audit establishes that the
Licensee did not pay to Iomed the full amount of the Royalty or License Fee
actually due for the period covered by such audit, the Licensee shall
immediately pay to Iomed all additional amounts due, plus interest thereon at
the rate of ****. If such audit establishes that the Licensee has underpaid the
Royalty or License Fee by **** or more during the period covered by the audit,
the Licensee shall reimburse Iomed, upon demand, for all costs and expenses of
such audit.
5. Product Liability Indemnification. Iomed does not make or give, and
hereby specifically disclaims, any warranty, express or implied, concerning the
University Products or the Iomed Products, including but not limited to the
warranties of merchantability or fitness for a particular purpose. As to all
University Products and Iomed Products that are sold or distributed on or after
the effective date of this Agreement, the Licensee hereby agrees to indemnify
and hold Iomed harmless from and against, and hereby assumes liability for the
payment of, any loss, liability or damage and for all costs and expenses,
(including reasonable costs of investigation and reasonable attorneys,
accountants and expert witness fees) of whatever kind and type that may be
imposed upon, suffered or incurred by or asserted against Iomed as a consequence
of or in connection with any liability from or relating to the use of the
University Products or the Iomed Products by customers of the Licensee or its
Sublicensees, or by the ultimate end-users of such University Products and Iomed
Products.
6. Patent and Trademark Matters.
(a) The Licensee shall diligently prosecute and maintain all
of the patents, trademarks and tradenames specified on Exhibits "A" and "D"
hereto (collectively, the "Patents and Marks") using counsel of its choice and
at its sole cost and expense. If, for any reason, the Licensee elects to abandon
the prosecution, maintenance or reinstatement of any of the Patents and Marks,
it will promptly notify Iomed of such election and, in any event, shall provide
such notice in sufficient time to allow Iomed to comply with its obligations
under Article 9 of the University License.
(b) If either Party learns that any claim or suit (an
"Action") has been made or brought for patent, trademark or other infringement
as the result of the manufacture or sale of the University Products or the Iomed
Products, such Party shall promptly notify the other Party of such action. The
Licensee shall have the first right, but not the obligation, to defend and to
control the defense of such Action, at its expense. Iomed will assist the
Licensee, without cost to the Licensee, in the defense of such Action by
providing information and fact witnesses to the extent reasonably available.
Iomed shall have the right to be represented in such Action by its own legal
counsel, at its own expense, provided that such legal counsel will act only in
an advisory capacity. If Licensee elects not to defend such claim, it shall so
notify Iomed, in writing, and Iomed shall, thereafter, have the right and
option, but not the obligation, to defend and control the defense of such Action
or the settlement thereof.
(c) If either Party learns of any infringement of the Patents
and Marks by a third party, or of another improper or illegal use of the
technology covered by the Sublicense or the License, such Party shall promptly
notify the other of the alleged infringement, in writing. The Licensee shall
have the first right to settle with or institute legal action against the
alleged infringer. Any monies or other benefits which are recovered through such
settlement or legal action shall be retained by the Licensee. If the Licensee
does not initiate settlement or legal action within 60 days after its receipt of
notice of the alleged infringement, then Iomed shall have the right to settle
with or institute legal action against the alleged infringer and to retain all
monies or other benefits which are recovered through such action.
7. Representations and Warranties of Iomed. Iomed represents and
warrants to the Licensee as follows:
(a) Iomed is a corporation duly organized, validly existing
and in good standing under the laws of the State of Utah, and has the full legal
right and corporate power and authority to enter into this Agreement and to
perform all of its obligations under this Agreement.
(b) Iomed has taken all corporate action which is necessary,
required or appropriate to authorize and enable it to enter into and perform
this Agreement.
(c) This Agreement, when executed and delivered by both of the
Parties, will constitute a valid and binding legal obligation of Iomed.
(d) The University License is in full force and effect upon
the effective date of this Agreement and, to the knowledge of Iomed, neither the
grant of the Sublicense nor the utilization of the Sublicense by the Licensee in
the manner contemplated herein will result in any breach or violation of the
University License.
(e) No person or entity has made any claims or threatened that
Iomed's use and application of the University Patents or the Iomed Technology in
connection with the Business is in violation or infringement of any patent,
patent license, trade name, trademark, servicemark, know-how, formula or other
proprietary or trade rights of such third party.
(f) To the best knowledge of Iomed, neither the University
Patents nor the Iomed Technology infringe any patent rights, copyrights, trade
secret rights or other proprietary rights of any third party.
8. Representations and Warranties of the Licensee. The Licensee
represents and warrants to Iomed as follows:
(a) The Licensee is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the full legal right and corporate power and authority to enter into this
Agreement and to perform all of its obligations under this Agreement.
(b) The Licensee has taken all corporate action which is
necessary, required or appropriate to authorize or enable it to enter into and
perform this Agreement.
(c) This Agreement, when executed and delivered by both of the
Parties, will constitute a valid and binding legal obligation of the Licensee.
(d) Prior to its execution and delivery of this Agreement, the
Licensee received from Iomed, and has had the opportunity to review, a copy of
the University License.
9. Survival of Representations and Warranties. The representations and
warranties of Iomed, as set forth in paragraph 7 hereof, and the representations
and warranties of the Licensee, as set forth in paragraph 8 hereof, are true,
correct and accurate as of the effective date of this Agreement, and shall
survive the execution of this Agreement for a period of one year.
10. Additional Covenants of Iomed.
(a) During the entirety of the Royalty Period, Iomed will
carry out all of its obligations under the University License in a timely
fashion and shall otherwise take such commercially reasonable actions as may be
necessary to maintain the University License in full force and effect.
(b) Iomed shall hold the Licensee and its Sublicensees
harmless from and against any and all claims of or liabilities to the University
of Utah Research Foundation for amounts due under the University License as a
result of or in connection with the manufacture and sale of the University
Products by the Licensee in accordance with the terms of this Agreement.
11. Additional Covenants of the Licensee.
(a) Within five days of the effective date of the grant of any
sublicense under the Sublicense or the License, the Licensee shall provide Iomed
with written notice of such grant. Such written notice shall include a complete
copy of the sublicense in question, and a statement as to the nature of the
relationship between the Licensee and the Sublicensee. Each such sublicense
shall require the Sublicensee to maintain the books and records called for by
paragraph 4 hereof, shall authorize Iomed to inspect and audit such books and
records in the manner set forth in paragraph 4 hereof, and shall obligate the
Sublicensee to maintain the confidentiality of the Iomed Technology.
(b) The Licensee shall not take any action under the
Sublicense or the License, or otherwise take or omit to take any action, which
could reasonably be expected to result in the breach or violation of the
University License.
(c) Prior to the end of the Fee Period, the Licensee shall not
merge or consolidate with any other person or sell all or substantially all of
its assets to any person if (i) the resulting, surviving transferee entity fails
to assume all obligations of Licensee under this Agreement by operation of law
or pursuant to an agreement reasonably satisfactory to Iomed and (ii) the
creditworthiness of the resulting, surviving or transferee entity (determined by
Iomed in a commercially reasonable manner) is materially weaker than that of the
Licensee immediately prior to such transaction.
(d) Until the expiration of the Fee Period, the Licensee shall
not declare or pay any dividend on any of its issued or outstanding equity
securities unless, prior to such declaration or payment, it shall have either
(i) paid to Iomed, since the immediately prior anniversary of the effective date
of this Agreement, License Fees equal to at least ****, or (ii) created and set
aside a reserve fund sufficient to enable the Licensee to pay to Iomed all
amounts required by paragraph 3(c) hereof for the **** period during which such
dividend is declared or paid.
(e) The Licensee shall use reasonable efforts to manufacture
and sell University Products and Iomed Products, and to otherwise commercially
develop and exploit the technology covered by the Sublicense and the License.
12. Termination.
(a) Licensee may, at its option, terminate this Agreement if
any representation or warranty of Iomed contained in this Agreement shall prove
to be false or inaccurate and a claim therefore is asserted within the survival
period provided by paragraph 9 hereof, or if Iomed shall be in material breach
of any of the other provisions of this Agreement, which breach shall continue
uncured for a period of 30 days after written notice thereof by the Licensee.
(b) Iomed may, at its option, terminate this Agreement for any
of the following reasons: (i) If any of the representations or warranties of the
Licensee contained in this Agreement shall prove to be inaccurate or false and a
claim therefore is asserted within the survival period provided in paragraph 9
hereof, or if the Licensee shall be in material breach of any of the other
provisions of this Agreement, including but not limited to its obligations to
pay the Royalty and the Licensee Fee in accordance with the provisions of
paragraphs 2 and 3 hereof, which breach shall continue uncured for a period of
30 days after written notice thereof by Iomed.
(ii) If the Licensee shall be adjudicated bankrupt or
insolvent by any court of competent jurisdiction or shall be voluntarily or
involuntarily placed in reorganization under any bankruptcy law or shall make an
assignment for the benefit of creditors or shall consent to the appointment of a
receiver, liquidator or trustee for itself in any court whatsoever, seeking to
take advantage of any bankruptcy or insolvency act, or shall admit in writing
its inability to pay its debts as they mature.
13. Effect of Termination.
(a) Upon the termination of this Agreement, by either Party,
pursuant to the provisions of paragraph 12 hereof, any obligation which accrued
prior to the effective date of such termination shall continue in full force and
effect and shall not be terminated, reduced or otherwise altered as the result
of or in connection with such termination. Additionally, the rights and
obligations of the Parties set forth in paragraphs 5, 10(b) and 14 hereof shall
survive the termination of this Agreement.
(b) Upon the termination of this Agreement, by either Party,
pursuant to paragraph 12 hereof, the right of the Licensee and of its
Sublicensees to manufacture or sell the University Products, the Iomed Products
or any other products which incorporate or are based upon any of the technology
covered by the Sublicense or the License shall completely terminate. Following
such termination the Licensee shall, upon the written request of Iomed, assign
(and cause each Sublicensee to similarly assign) to Iomed all improvements to
the University Products and to the Iomed Products which are developed by the
Licensee and its Sublicensees after the effective date of this Agreement.
14. Confidentiality.
(a) The Licensee acknowledges that the Iomed Technology (the
"Confidential Information") constitutes the valuable, unique and proprietary
asset of Iomed; provided, however, that the term "Confidential Information", as
used herein, shall not include any information or data which (i) is in or
becomes a part of the public domain by any means other than the Licensee's
breach of its obligations hereunder or (ii) is rightfully known to the Licensee
at the time of disclosure by Iomed, as demonstrated by the contemporaneous
written records of the Licensee, or (iii) is, at any time, disclosed to the
Licensee by a third party who has received and disclosed such information
without the breach of any obligation of confidentiality to Iomed or to any third
party. For purposes of this paragraph 14, information shall not be deemed to be
part of the public domain or within the Licensee's knowledge merely because it
may be embraced in a more general disclosure, or because it may be derived from
combinations of information generally available to the public or otherwise
within the Licensee's knowledge.
(b) The Licensee shall maintain all of the Confidential
Information in confidence and shall not, except as specifically permitted
herein, disclose the same to any third party (including without limitation
affiliates of the Licensee who are not Sublicensees) unless required to do so by
court order or by law, in which case the Licensee shall notify Iomed, in
writing, prior to making such disclosure and shall cooperate with Iomed to
preserve and protect the confidentiality of the Confidential Information to the
fullest extent possible. The Confidential Information may be disclosed by the
Licensee to those of its employees who need to know the same in order to enable
the Licensee to utilize the Sublicense and the License, and to its permitted
Sublicensees; provided that each such person and entity is advised of the
obligations of confidentiality contained herein. Any breach of the provisions of
this Paragraph 14(b) by such employees or Sublicensees shall be deemed, for all
purposes, to constitute a breach hereof by the Licensee.
15. Relationship of the Parties. This Agreement shall not be deemed or
construed to create between Iomed and the Licensee the relationship of principal
and agent, joint venturers, co-partners, employer or employee, master or
servant, or any other similar relationship. Neither Party shall have the right
or authority to bind or to act for or on behalf of the other Party.
Additionally, neither Party shall be liable to any third party, in any way, for
any engagement, obligation, contract, representation or transaction, or for any
negligent act or omission to act of the other Party, except as otherwise
specifically provided in this Agreement.
16. Notices. All notices, requests, consents, approvals and other
communications given pursuant to this Agreement shall be deemed given only if
reduced to writing and delivered personally, by United States mail with postage
prepaid and return receipt requested, by overnight delivery service, or by
telecopier (FAX) transmission, to the appropriate Party as set forth below:
Iomed: Iomed, Inc.
0000 Xxxx 0000 Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: President
FAX: (000) 000-0000
The Licensee: Fillauer, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attn: President
FAX: (000) 000-0000
Either Party may change its address by giving notice of such change in the
manner set forth herein. Any notice given to either Party by mail or by
overnight courier shall be deemed delivered two business days after such notice
is deposited in the United States mail or placed in the possession of a
nationally recognized overnight courier service, as appropriate, and any notice
given by FAX transmission shall be deemed delivered when sent by confirmed
transmission prior to 6 p.m. Eastern time on a business day.
17. Remedies. Should default occur in the performance of any obligation
set forth in this Agreement, the non-defaulting Party shall be entitled to
obtain an injunction compelling the specific performance of the obligations of
this Agreement, in addition to any action for damages or for other relief as may
be available to the non-defaulting Party at law or in equity. The defaulting
Party shall, in addition to any damages which may result from such default, pay
to the non-defaulting Party the costs, including reasonable attorneys' fees,
incurred by the non-defaulting Party in causing the cure of such default or in
otherwise enforcing its rights under this Agreement.
18. Waiver. Any waiver by either Party of a breach of any term or
condition of this Agreement shall not constitute a waiver of any subsequent
breach of the same or any other term or condition of this Agreement.
19. Entire Agreement. With the exception of the Purchase Agreement and
the agreements contemplated thereby, this Agreement constitutes the entire
agreement and understanding between the Parties in regard to the subject matter
hereof and supersedes any other understanding between the Parties, whether
written or oral, as to such subject matter. This Agreement may not be modified
or amended orally, but only by an agreement, in writing, executed by both of the
Parties.
20. Governing Law. This Agreement shall be construed in accordance
with, and governed by, the laws of the State of Utah, without giving effect to
the choice of law rules thereof.
21. Recordation. The Licensee may record the grant of the License and
the Sublicense, as provided in this Agreement, with the United States Patent
Office, and Iomed shall execute and deliver such documents as may be reasonably
necessary to effect such recordation.
22. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties have caused this License Agreement to
be executed by their duly authorized representatives as of the date first herein
written.
IOMED:
IOMED, INC.
By: /s/ Xxx X. Xxxxxxxxxxx
Its: President & CEO
THE LICENSEE:
FILLAUER, INC.
By: /s/ B. Xxxxxxx (Illegible)
Its: President & COO
