EXHIBIT 10.33
LICENSE AGREEMENT
This Agreement, dated as of December ___ , 1996, is by and among
InnerDyne, Inc., a corporation organized and existing under the laws of the
State of Delaware and having an office at 0000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX
00000 (hereinafter referred to as "IDI"); and United States Surgical
Corporation, a corporation organized and existing under the laws of the State
of Delaware and having principal offices at 000 Xxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxxxx (hereinafter referred to as "USSC") (IDI and USSC, collectively
hereinafter referred to as the "Parties").
NOW THEREFORE, in consideration of the mutual promises, agreements,
covenants, undertakings and obligations set forth herein and for other good
and valuable consideration, the Parties hereto agree as follows:
ARTICLE 1 - DEFINITIONS
1.1 DEFINITIONS. For the purposes of this Agreement, the definitions
set forth below shall be applicable.
Action - The term "Action" means a claim, action, suit or proceeding,
whether civil or criminal or in law or in equity.
Affiliate - The term "Affiliate" means a Person (defined below)
controlled by, controlling or under common control with a Party. For the
purpose of this Agreement, "control" means: (i) the ownership, directly or
indirectly, of 50% or more of the voting stock or analogous interest in such
Person, or in a Party; or (ii) the commonality of 50% or more of the active
directors on the Board of either such corporation with the active directors
on the Board of the other; or (iii) the commonality of 50% or more of the
active directors on the Board of either such corporation with the executive
officers, or holders of 5% or more of any class of the outstanding capital
stock, of the other; or (iv) the commonality of 50% or more of the partners
(general or limited), principals, or other
CONFIDENTIAL TREATMENT REQUESTED
controlling parties of any such other Person, with the partners (general or
limited), principals or other controlling Persons of any other Affiliate of a
Party as defined herein; or (v) the existence of any other relationship
between a Party and such other Person which results in effective managerial
control by one over the other, regardless of whether such control is
continuously exercised.
[****] - The term [*****] shall mean the [******] on a Product calculated
as the difference between (a) [*****], and (b) [*****] during such period,
including [*****] all calculated in accordance with GAAP.
Confidential Information - The term "Confidential Information" means
verbal and written disclosures from IDI, on the one hand, or USSC, on the
other hand, (the "Discloser") to the other Party (the "Disclosee"), which
concern the Discloser, including without limitation information which
concerns the Discloser's business, operations, products or research and
development efforts, or which concern the Products or Know-How, but shall not
include information which: (a) at or after the time of disclosure is
published or otherwise becomes a part of the public domain through no fault
of Disclosee (but only after, and only to the extent that, it is published or
otherwise becomes part of the public domain); (b) Disclosee can show was
known to it at the time of disclosure, free of restriction; (c) has been or
hereafter is disclosed to Disclosee without any obligation of confidentiality
by a third Person who is in lawful possession of such information and has the
right to disclose it to Disclosee; (d) has been or hereafter is disclosed by
Discloser to a third Person free of any obligations of confidentiality; or
(e) is disclosed by Disclosee pursuant to the order or requirement of a
court, administrative agency or other governmental body, provided that the
Disclosee promptly informs the Discloser of its intent to make such
disclosure, takes all reasonable steps to limit such disclosure and does not
inhibit the Discloser in taking whatever lawful steps the Discloser considers
necessary to attempt to preserve the confidentiality of such information.
Disclosures made to Disclosee by Discloser which are specific shall not be
deemed to be within the foregoing exceptions merely because they are embraced
by general disclosures in the public domain or in the possession of Disclosee.
[*****] - The term [*****] means [********] of a Party which are [******]
calculated in accordance with GAAP, including a [******].
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Field - The term "Field" means [******].
First Milestone - The term "First Milestone" means [*******]
FDA - The term "FDA" means the United States Department of Health
and Human Services, Food and Drug Administration, or any successor agency.
510(k) Approval - The term "510(k) Approval" shall have the meaning set
forth in the laws and regulations governing or promulgated by the FDA.
GAAP - The term "GAAP" means generally accepted accounting
principles applied on a consistent basis.
Governmental Authority - The term "Governmental Authority" means
any court, administrative agency or commission or other governmental agency
or instrumentality, federal, state or local or any arbitrator of competent
jurisdiction including, without limitation, the FDA and all International
Regulatory Agencies (defined below).
International Regulatory Agency - means any federal, state or local
governmental agency outside the United States performing the same or similar
functions as the FDA.
Investigational Device Exemption - The term "Investigational Device
Exemption shall have the meaning set forth in the laws and regulations
governing or promulgated by the FDA.
Know-How - The term "Know-How" means any and all secret information or
Confidential Information, trade secrets, specifications, test results,
analyses and data, inventions, methods, processes, formulae, mixtures,
compositions, delivery systems, designs, techniques, applications, ideas or
concepts, whether or not reduced to practice, relating directly to the
Products, including, but not limited to, technology that is or could be the
subject matter of a foreign or domestic patent or patent application, whether
or not reduced to writing in a patent application.
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Net Sales - (i) The term "Net Sales" for any period means [******]. The
term "Net Sales" shall [*****].
(ii) For the purposes of the "Net Sales" definition, the term
[******]. The Net Sales price of any Product [*****]. In the event that
the [*****] is inflated or discounted by USSC above or below [*****] as
the case may be, [******].
Patents and Patent Applications - The term "Patents and Patent
Applications" shall mean all patents and patent applications identified on
SCHEDULE 1 hereto, all other patents and patent applications filed by or
assigned to IDI prior or subsequent to the date hereof and relating to any
invention, method, process, formula, mixture composition and delivery system
having direct application to a Product, and all other foreign and domestic
patent applications filed in the name of, or assigned to, IDI covering any
invention, method, process, formula, mixture, composition and delivery system
having direct application to a Product and all foreign and domestic patents
issuing on any of the foregoing patent applications, and all continuations,
continuations-in-part, divisions, reissues, reexaminations, additions, and
renewals thereof.
Person - The term "Person" or "Persons" means any individual,
corporation, partnership, association, trust or other entity or organization,
including, without limitation, a Governmental Authority.
Product Marketing Approval - The term "Product Marketing Approval" shall
have the meaning set forth in the laws and regulations governing or
promulgated by the FDA.
Products - The term "Product" or "Products" means [*****] and embody or
utilize any or all of the following [******].
Second Milestone - The term "Second Milestone" means [******]. For
purposes of this definition [*******].
Sublicensee - The term "Sublicensee" means any third Person to whom USSC
grants a sublicense to manufacture or sell a Product in accordance with the
terms of this Agreement.
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Subsidiary - The term "Subsidiary" means any Person, 50% or more of the
outstanding shares of any class of stock, general partnership interest, or
other equity of which is owned by USSC; and any operating division of USSC
not separately incorporated or organized as an independent business Person.
Third Milestone - The term "Third Milestone" means [****].
1.2 OTHER DEFINITIONS. In addition to the defined terms set forth in
Section 1.1 above, the following terms shall have the meanings set forth in
the referenced Sections of this Agreement:
Term Section
---- -------
Development Work 3.1
Force Majeure Event 15.1
IDI Indemnitees 7.1
Information 2.2
Inventions 3.2
Joint Results 14.1
License 2.1
Outside Offer 11.2
Royalty 4.1
Term 13.1
ARTICLE 2 - THE GRANT
2.1 GRANT. IDI hereby grants to USSC, and USSC hereby accepts, [*******]
(the "License"), [*****]. Without limiting the foregoing, the Parties hereby
intend that the License grants and conveys to USSC substantially all of IDI's
rights and interests in respect of the Patents and Patent Applications and in
the Know-How.
2.2 TENDER OF TECHNOLOGY. Within [*****] business days after the date
of this Agreement, IDI shall deliver to USSC (i) [*****] version of each
[****] now in IDI's possession and control, if any, and [****] of the
disposable thermal ablation devices, (ii) a copy of all written conceptual,
technical and design information, specifications, test results, analyses,
data, drawings, formulae, mixtures, compositions,
CONFIDENTIAL TREATMENT REQUESTED
delivery systems, and any other useful information reduced to writing
(collectively, "Information") concerning the Patents and Patent Applications,
Know-How and Products now in IDI's possession or control.
ARTICLE 3 - FURTHER DEVELOPMENT; IMPROVEMENTS
3.1 FURTHER DEVELOPMENT. The Parties recognize and agree that from time
to time during the Term additional development work on the Product
(collectively, "Development Work") is desirable to further develop and/or
enhance its commercial value. IDI shall conduct such Development Work as the
Parties may mutually agree. The terms of such Development Work shall be
subject to the Parties' agreement, provided that the Parties agree that
[********]. IDI will [*********]. IDI shall [******]. USSC and its
representatives shall have [*****]. Nothing herein in this Section 3.1 shall
[******].
3.2 IMPROVEMENTS. If, during the term of this Agreement, IDI conceives
or develops any new invention, method, process, formula, mixture,
composition, delivery system, modification or improvement directly relating
to a Product, or the use or manufacture thereof (collectively, "Inventions"),
IDI shall promptly following conception or development furnish full details
thereof to USSC, including all Know-How directly involving or related
thereto. Such Inventions shall be deemed included in the License, except
insofar as USSC, upon request by IDI, agrees in writing to exclude from the
License all or any portion of such Inventions.
3.3 SURVIVAL. The provisions of this Article 3 shall survive
termination of this Agreement.
ARTICLE 4 - CONSIDERATION
4.1 CONSIDERATION. The total consideration to be paid by USSC for the
rights granted hereunder and the non-compete agreement pursuant to Article 10
shall be the following:
(a) License Fees as follows:
(i) [******];
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(ii) [******],
(iii) [*****]; and
(iv) [*****].
(b) A [*******] (the "Royalty") at the rate set forth below based on
[******] occurring during the Term of this Agreement, but only with respect
to [******]. Notwithstanding, all [****] if and for so long as [***] where
such [***].
Royalty If USSC's [**********] is:
------- -------------------------
[******] Less than or equal to [********]
[******] Greater than [*****] but less than [*****]
[*******] Equal to or greater than [******]
4.2 [******]. [*******] shall be payable for a sale of a Product
[******].
4.3 ROYALTY ACCRUAL. The Royalty shall accrue as and when a sale
subject to a Royalty is recorded by USSC in accordance with the definition of
[***], and shall be paid to IDI [*******].
CONFIDENTIAL TREATMENT REQUESTED
ARTICLE 5 - REPORTS, PAYMENT AND RECORDS
5.1 REPORTS. USSC agrees to deliver quarterly written reports to IDI
for each three (3) month period ending on the last day of the months of
March, June, September, and December of each year, within forty-five (45)
days after the end of each such period. The report shall set forth the
number of Products sold by USSC, its Subsidiaries, Affiliates, Sublicensees
and permitted assignees during the immediately preceding calendar quarter,
[***] applicable to all such Products, and the calculation and amount of the
Royalty payable to IDI. Royalties shall be calculated using an estimated
[***] for the calendar year in which such Royalties are payable. For the
first calendar year in which Royalties are payable, the estimated [***] for
such calculations shall be reasonably estimated by USSC. In subsequent
calendar years, the estimated [***] for such calculations shall be the actual
[***] for the prior calendar year. All information contained in such
quarterly reports shall be treated as USSC's Confidential Information subject
to Article 6.
5.2 PAYMENT AND RECORDS. Simultaneously with the submission of each
report, USSC shall pay to IDI by check or bank transfer the full amount of
the Royalty payable to IDI for the report period under the terms of this
Agreement. Within [*****] after the end of each calendar year, USSC shall
calculate the Royalties actually payable with respect to [***] during such
calendar year using the [*****]for such calendar year and shall provide a
report to IDI setting forth such calculation. If the Royalties previously
paid by USSC with respect to [*****] during such calendar year [******]],
USSC shall pay the additional amount to IDI by check or bank transfer
simultaneously with the submission of such report to IDI. If the Royalties
previously paid by USSC [******] during such calendar year are [*******],
unless the amount exceeds [**********]in which event such amount shall be
paid by IDI to USSC within thirty (30) days of IDI receiving such Royalty
report. USSC shall maintain records in sufficient detail and, upon
reasonable notice, [***********]. Such examinations shall occur on or after
February 15 of any calendar year [*******], only during business hours, and
not more than once a year, and shall be solely for the purpose of verifying
the calculation of the Royalty due under this Agreement. A final such
examination may occur once during the year immediately succeeding termination
of this Agreement. In the event [************]. In any other event, the fees
and expenses [***] shall be borne by IDI. Unless written objection is
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made by IDI and delivered to USSC within 60 days after completion of such
examinations, the calculation of Royalties paid by USSC prior to the date of
such examination shall be final and binding on the Parties, except insofar as
adjusted or corrected as a result of USSC's regular annual audit. The
results of any audit conducted pursuant to this Section 5.2 shall be binding
upon the Parties. In the event that, as a result of any such audit, there is
any adjustment in the Royalty payable by USSC to IDI for the period covered
by the audit, (a) if the Royalties previously paid by USSC with respect to
the period covered by the audit are less than the Royalties actually payable
to IDI with respect to such period, USSC shall pay the additional amount to
IDI by check or bank transfer within sixty (60) days after completion of the
audit and (b) if the Royalties previously paid by USSC with respect to the
period covered by the audit are greater than the Royalties actually payable
to IDI with respect to such period, USSC shall reduce subsequent quarterly
Royalty payments due to IDI by such excess amount, unless the amount exceeds
[***********], in which event such amount shall be paid by IDI to USSC within
sixty (60) days of IDI receiving such audit report. It is understood that
USSC shall not be required to furnish or permit the examination of the
identities, at any time, of customers or other non-price information as to
specific sales. Any information provided to IDI or its accountants pursuant
hereto shall be treated as USSC's Confidential Information subject to Article
6.
ARTICLE 6 - PROPRIETARY INFORMATION
6.1 USSC CONFIDENTIALITY. USSC represents and warrants to IDI that it
has not, directly or indirectly, disclosed and agrees that it will not,
directly or indirectly, disclose, either during or for five (5) years
subsequent to the termination of this Agreement, any Confidential Information
of IDI, to any other Person, except to its attorneys and accountants as
required in connection with this Agreement who have been and will be
instructed to maintain its confidentiality and to third Persons who shall
execute binding written agreements requiring such third Persons not to
disclose Confidential Information disclosed to them by USSC. Notwithstanding
the foregoing, USSC shall have the right to use Confidential Information of
IDI without obtaining such written agreement in connection with any
regulatory interaction and patent filings involving or relating to the
Products.
6.2 IDI CONFIDENTIALITY. IDI represents and warrants to USSC that it
will not, directly or indirectly, disclose during or for five (5) years
subsequent to the termination
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of this Agreement, any Confidential Information of USSC, to any other Person,
except to IDI's attorneys and accountants as required in connection with
this Agreement who have been and will be instructed to maintain its
confidentiality.
6.3 VENDORS. It is not intended by this Article 6 that USSC shall be
required to obtain specific written commitments of confidentiality in
relation to this Agreement from materials and/or component suppliers where
only specifications are disclosed to said materials and/or component
suppliers by USSC.
6.4 EQUITABLE RELIEF. The Parties agree and acknowledge that any breach
of this Article 6 by IDI or USSC would likely cause irreparable injury to the
other Party and that such other Party's remedy at law for any such breach
would be inadequate. Accordingly, the Parties agree that, in addition to any
other remedies provided for herein or otherwise available at law, temporary
and permanent injunctive relief and other equitable relief may be granted in
any Action which may be brought by either Party to enforce the provisions of
this Article 6 without the necessity of proof of actual damage. Each Party
agrees promptly to seek temporary and permanent injunctive relief against any
of its Affiliates, directors, officers, employees or consultants who breach
the aforesaid obligations with respect to any matter relating to this
Agreement.
6.5 SURVIVAL. The provisions of this Article 6 shall survive
termination of this Agreement.
ARTICLE 7 - INDEMNIFICATION
7.1 INDEMNIFICATION. Subject to the fulfillment by IDI of its
obligations pursuant to Section 7.2 below, USSC agrees to defend, indemnify
and hold harmless IDI and each of its directors, officers, employees, agents
and representatives (collectively, "IDI Indemnitees"), from and against any
claims, demands, judgments, executions, awards, or damages, including
reasonable attorney's fees and expenses incurred by USSC in defending the
same, constituting a product liability Action or other Action arising as a
result of the design, manufacture, use or sale of a Product by USSC, its
Subsidiaries, Affiliates, Sublicensees or permitted assigns. In satisfaction
of the foregoing indemnification and hold harmless agreement, USSC may pay
directly to the claimant or plaintiff in any such claim or Action, the amount
of any award, judgment, settlement or recovery, or execution rendered
thereon, and may pay to IDI and each IDI
CONFIDENTIAL TREATMENT REQUESTED
Indemnitee, any other damages or reasonable expenses sustained by them in
defending any such Action. USSC shall have the sole and exclusive right and
obligation to conduct the legal defense, or to enter into any settlement
agreement, as it, in its sole discretion, deems appropriate. IDI may
participate in such Action through its own attorneys at its sole cost and
expense, subject to USSC's control of such Action.
7.2 NOTICE. In the event that any claim is asserted against IDI or an
IDI Indemnitee or any such Person is made a defendant in any Action involving
a matter which is the subject of USSC's indemnification and hold harmless
agreement as set forth above, then within thirty (30) days of such Person's
receipt of written notice of such event and within seven (7) days of receipt
of a complaint or other formal pleading regarding such event, IDI shall give
written notice of such Action to USSC, and USSC shall assume the defense and
control the defense and any settlement on behalf of such defendant. IDI
shall provide its full cooperation to USSC in connection with the defense of
such Action; provided that USSC shall reimburse IDI for all reasonable and
documented out-of-pocket expenses incurred by IDI in providing such
cooperation (other than attorneys fees and expenses).
7.3 SURVIVAL. The provisions of this Article 7 shall survive
termination of this Agreement.
ARTICLE 8 - REGULATORY INTERACTION
8.1 REGULATORY INTERACTION. Interaction with regulatory agencies in any
country, including but not limited to the FDA and any International
Regulatory Agencies, concerning the Products shall be conducted by USSC after
a transition period during which regulatory activities initiated by IDI prior
to the effective date of this Agreement will be transitioned to USSC.
Similarly, for purposes of any filings with the FDA and any International
Regulatory Agencies concerning the Products, USSC shall be the official
company sponsor, and any regulatory filings initiated prior to the effective
date of this agreement by IDI will be transitioned to USSC as soon as is
practical. IDI will use its best efforts to complete such transition
activities as soon as possible, but such transition, as evidenced by IDI
filing all necessary written requests for transfer, shall be completed no
later than 60 days from the effective date of this Agreement. [*************].
In the event of a dispute between USSC and IDI concerning any matter
relating to interaction with the FDA and any International Regulatory
Agencies, USSC
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shall have final authority to act as USSC, in its sole discretion, deems
appropriate with respect to the matter in dispute.
8.2 ASSISTANCE. During the Term, IDI, at USSC's request, shall assist
USSC in connection with regulatory interaction with the FDA and any
International Regulatory Agencies concerning the Products; provided that USSC
shall reimburse IDI for all reasonable and documented out-of-pocket expenses,
other than attorneys fees and expenses, incurred by IDI in providing such
assistance.
8.3 MARKETING RIGHTS. Notwithstanding any provision of this Agreement
to the contrary, USSC shall not be obligated to, and shall have no liability
to IDI for failure to evaluate, develop, test, conduct clinical trials, make,
have made, use, practice, manufacture or have manufactured any Product or
practice or use the Know-How or for failure to seek or pursue any regulatory
approvals with the FDA or any International Regulatory Agencies. USSC shall
have the unqualified right, at any time to cease or suspend all marketing
efforts and all efforts to obtain regulatory approvals from the FDA or any
International Regulatory Agencies. Nothing herein shall prevent USSC from
setting its own prices for Products or determining USSC's marketing policies
and practices in its sole discretion.
ARTICLE 9 - PATENT PROSECUTION AND INFRINGEMENT
9.1 PATENT PROSECUTION. Within ten (10) business days after the date of
this Agreement, IDI shall deliver to USSC copies of all Patents and Patent
Applications in its possession or control and all related documents and
correspondence in its possession or control to the extent not delivered by
the date of this Agreement. Subject to the last sentence of this Section
9.1, during the Term and subject to Section 9.2, USSC shall, at its own
expense, use reasonable commercial efforts to obtain and maintain patents
based on the Patents and Patent Applications in the United States. [****]
shall also assume prosecution and all future costs incurred and due during
the term of this Agreement in connection with the Patents and Patent
Applications filed prior to the date hereof set forth in SCHEDULE 1. [****]
agrees to fully cooperate with [****] in the preparation, filing and
prosecution of all applications for letters patent which [****] may file and
prosecute in the United States and foreign countries in accordance with this
Section 9.1, and in the prosecution of the Patents and Patent Applications,
and, in connection with such applications and the Patents and Patent
Applications, [***]further agrees to execute and deliver all documents which
[****] may deem necessary or
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desirable; provided that [****]shall reimburse [***] for all reasonable
out-of-pocket expenses (other than attorneys fees and expenses) incurred by
[****] in fulfilling its obligations set forth in this Section 9.1.
9.2 NOTICE. IDI, on the one hand, and USSC, on the other hand, shall
promptly give written notice to the other of any apparent infringement by a
third Person discovered by it with respect to any patent issuing from the
Patents and Patent Applications. Such notice shall set forth the facts of
the apparent infringement in reasonable detail. [***] shall have the sole
and exclusive right to bring or settle, in [***] sole discretion, any Action
with respect to such apparent infringement at its own expense and for its own
benefit; In such event, [***] agrees to cooperate with [***] and to join in
such Action as a party plaintiff if requested to do so by [***] and to give
[***] all needed information, assistance and authority to file and prosecute
such Action; provided that [***] shall reimburse [***] for all reasonable and
documented out-of-pocket expenses, other than attorneys' fees and expenses,
incurred by [***] in providing such assistance.
9.3 PATENT DEFENSE. If USSC or IDI receives notice of a claim or Action
by a third Person alleging infringement of such third Person's rights in
connection with the manufacture, use or sale of a Product by USSC, its
Affiliates, Subsidiaries, Sublicensees or permitted assignees, USSC shall
have the sole and exclusive right to conduct the legal defense, and to enter
into any disposition with respect thereto, as USSC in its sole discretion
deems desirable. All costs of USSC's defense, including its attorneys' fees
and court costs, and any damages awarded or amounts paid in settlement in any
such Action shall be the sole responsibility of USSC. IDI shall fully
cooperate with USSC in its defense of such infringement claim or Action,
provided that USSC shall reimburse IDI for all reasonable and documented
out-of-pocket expenses, other than attorneys' fees and expenses, incurred by
it in providing such cooperation.
9.4 PATENT DEFENSE OF [***]. Subject to fulfillment by [***] of its
obligations pursuant to Section 9.6 below, [****] shall defend [***] against
a third Person's infringement claim or Action which results from the [*****]
its Affiliates, Subsidiaries, Sublicensees or permitted assignees, and
indemnify [***] against the cost of such defense undertaken by [***],
including reasonable attorneys' fees and expenses and court costs, and
damages awarded or amounts paid in settlement in any such Action. However,
notwithstanding the foregoing, [***].
CONFIDENTIAL TREATMENT REQUESTED
9.5 PATENT DEFENSE COSTS. The cost of [****] defense of any Action
referred to in Section 9.4 above and any damages awarded or any amount paid
in settlement or other disposition of such Action, [*****] as in existence on
the date of this Agreement and provided that, in the event of a settlement,
[*****], which approval shall not be unreasonably withheld. Notwithstanding,
[***] approval of a settlement shall not be required if such settlement would
(a) result in a greater than [*****]sharing of the costs and damages by [***]
, and/or (b) not maintain Royalties of a minimum of [******]. During the
pendency of any such Action, [***] under the terms of this Agreement. [***]
shall instruct such escrow agent to deposit such payments in an
interest-bearing account and to release the same to the third Person(s), if
any, awarded damages in such Action pursuant to such award of damages, or to
the third Person(s), if any, with whom [***] settles pursuant to this Section
9.5, to the extent required by the terms of such settlement, and the balance,
if any, of the principal and interest to [***].
9.6 NOTICE. In the event that any claim is asserted against [***] or
[***], or any of its respective officers, directors, employees, agents or
representatives, or such person is made a party defendant in any Action
involving a matter which is the subject of [***]'s indemnification and hold
harmless agreement as set forth above, or [***] or [***] becomes aware of an
Action or patent or patent application which might provide the basis for a
third Person's claim of infringement against [****], its Subsidiaries,
Affiliates, Sublicensees or permitted assignees as a result of their
manufacture, use or sale of a Product, then within thirty (30) days of
receipt by any one or more of [****] or by [***] of written notice of any
such event, and within ten (10) days of such Party's receipt of a written
complaint or other formal pleading regarding any such event, such Party shall
give the other Party hereto written notice of such Action or patent or patent
application.
CONFIDENTIAL TREATMENT REQUESTED
ARTICLE 10 - NON-COMPETE
10.1 NON-COMPETE. In consideration of the payments to be made to it
hereunder, during the Term, IDI hereby agrees not to, directly or indirectly,
develop, manufacture, or sell within the Field any Product or similar device
to any Person, or to [********] with respect to the design, development,
manufacture or sale within the Field of any Product or similar device
involving [*********], without USSC's prior written consent in USSC's sole
and absolute discretion. Notwithstanding the foregoing, IDI shall not be
limited in any respect by this Section 10.1 from developing, manufacturing or
selling any current or future products incorporating [********]. IDI shall
not be deemed in breach of this Agreement if [*******]. IDI shall reasonably
cooperate with any such enforcement efforts.
10.2 EQUITABLE RELIEF. The Parties agree and acknowledge that any
breach of this Article 10 by IDI would likely cause irreparable injury to
USSC and that USSC's remedy at law for any such breach would be inadequate.
Accordingly, the Parties agree that, in addition to any other remedies
provided for herein or otherwise available at law, temporary and permanent
injunctive relief and other equitable relief may be granted in any Action
which may be brought by USSC to enforce any provision of this Article 10
without the necessity of proof of actual damage.
ARTICLE 11 - RIGHT TO PURCHASE AND RIGHT OF FIRST REFUSAL
11.1 RIGHT TO PURCHASE. USSC shall have the right, at its option,
exercisable by notice to IDI during the Term, to purchase the Patents and
Patent Applications and Know-How within the Field by paying to IDI the
following amount:
(a) If exercised prior to payment of [*****], the sum of [*******]; or
(b) If exercised after payment of [*******], but prior to payment of
[******], the sum of [**********]; or
(c) If exercised after payment of [*******], but prior to payment of
[******], the sum of [*******]; or
(d) If exercised after the payment of [********], the sum of [*****].
CONFIDENTIAL TREATMENT REQUESTED
The above amounts are each to be reduced by [*******] if USSC agrees, at
its option, that the Field shall include only applications within [*****],
and excluding applications in [******]. In such event, [*******] to (a)
evaluate, develop, test, conduct clinical trials, obtain governmental
approvals, make, have made, use, practice, manufacture, have manufactured,
sell, transfer or commercialize Products, or (b) to practice and use the
Know-How.
Following such purchase by USSC, USSC shall have no further obligation to
make payments to IDI pursuant to Section 4 of this Agreement. Following such
purchase by USSC, [*******], solely outside the Field to (a) evaluate,
develop, test, conduct clinical trails, obtain governmental approvals, make,
have made, use, practice, manufacture, have manufactured, sell, transfer and
commercialize products incorporating inventions, methods or processes,
formulae, mixtures, compositions and delivery systems disclosed and/or
claimed in the Patents and Patent Applications, and (b) to [*******] at the
sole option of USSC, if USSC elects to exclude [****] as set forth
immediately above).
11.2 RIGHT OF FIRST REFUSAL. Without limiting USSC's rights under
Section 11.1, IDI hereby grants to USSC, and USSC hereby accepts, the right
of first refusal set forth herein. In accordance with such right of first
refusal, IDI shall not transfer, by sale, license or otherwise, any interest
in any of the Patents or Patent Applications, the Know-How or a Product to
any third Person, except pursuant to this Article 11. No such sale, license
or other transfer shall be made by IDI without the prior written consent of
USSC, which may be withheld in its sole and absolute discretion. Prior to
any sale, license or other transfer, IDI shall obtain a BONA FIDE, written
offer (the "Outside Offer") from such third Person describing the subject of
such sale, license or other transfer, the interest to be sold, licensed or
otherwise transferred, and a stated cash consideration at which the third
Person offers to acquire, and IDI desires to sell, license or otherwise
transfer, said interest. After obtaining the Outside Offer, IDI shall
promptly, and before accepting the Outside Offer, deliver to USSC an offer,
irrevocable for [*****]days from its receipt, to sell to USSC the interest
which is the subject of the Outside Offer for the cash consideration and upon
all other terms and conditions stated in the Outside Offer. A copy of the
Outside Offer shall accompany the offer by IDI to USSC. If USSC accepts such
offer within said [*****]days, IDI shall transfer the relevant interest to
USSC pursuant to the terms and conditions of such offer. Otherwise, subject
to the confidentiality and non-compete provisions of Articles 6 and 10, IDI
may transfer such
CONFIDENTIAL TREATMENT REQUESTED
interest to the third Person who made the Outside Offer in accordance with
its terms and conditions during the [******] days immediately following
expiration of the aforesaid [*****] day period provided the terms thereof are
no more favorable to such third Person then were last offered to USSC.
11.3 RIGHTS TO THE IDI TECHNOLOGY. Should USSC determine not to [******]
within the Field based upon the "IDI Technology" which is licensed to USSC
under this Agreement (i.e. for purposes of this Agreement "IDI Technology"
means the Patents and Patent Applications, Know-How, Improvements and
Information) (a) as stated in a written notice to IDI by an officer of USSC,
or (b) if USSC [*******] for Products within the Field for [*****], USSC will
[*****] for a thirty (30) day period following the delivery of such notice or
[*****]. The [****] the IDI Technology will be [*******], if such occurs
prior to the payments of any Milestones payment by USSC to IDI pursuant to
Section 4.1(a), and [*****] thereafter.
11.4 EQUITABLE RELIEF. The Parties agree and acknowledge that any
breach of this Article 11 by IDI would likely cause irreparable injury to
USSC and that USSC's remedy at law for any such breach would be inadequate.
Accordingly, the Parties agree that in addition to any other remedies
provided for herein or otherwise available at law, temporary and permanent
injunctive relief and other equitable relief may be granted in any Action
which may be brought by USSC to enforce any provision of this Article 11
without the necessity of proof of actual damages.
ARTICLE 12 - REPRESENTATIONS AND WARRANTIES
12.1 REPRESENTATIONS AND WARRANTIES. Each Party hereby represents and
warrants to the other Parties that (a) it has full right, power and authority
to enter into and be bound by the terms and conditions of this Agreement, to
transfer the rights and to carry out their respective obligations under this
Agreement, without the approval or consent of any other Person, (b) the
entering into of this Agreement, the transfer of rights and the carrying out
of their respective obligations under this Agreement is not prohibited,
restricted or otherwise limited by any contract, agreement or understanding
entered into by such Party, or by which such Party is bound, with any other
Person, including, without limitation, any Governmental Authority, (c) there
is no contract, agreement or understanding entered into by it, or by which
such Party is bound, which if enforced, terminated or modified, would be in
derogation of, contrary to, or adversely
CONFIDENTIAL TREATMENT REQUESTED
affect the rights acquired or to be acquired hereunder by USSC, and (d) there
is no Action or investigation pending or currently threatened against such
Party which, if adversely determined, would restrict or limit such Party's
right to enter into this Agreement, transfer the rights or carry out such
Party's obligations under this Agreement.
12.2 FURTHER REPRESENTATIONS AND WARRANTIES. IDI further represents and
warrants to USSC that: (a) it has not been granted, assigned or otherwise
transferred and it is not obligated to grant, assign or otherwise transfer,
and it shall not, except as permitted by Section 11.2 or Section 19.1 of this
Agreement, during the Term grant, assign or otherwise transfer any right,
title, interest, license or option, in, to, and under any Patents and Patent
Applications, Products or Know-How to any other Person including, without
limitation, any Governmental Authority; (b) no other Person has, or during
the Term of this Agreement (other than as permitted by this Agreement), shall
have, the right to acquire any right, title, interest, license or option in,
to, or under any Patents and Patent Applications, Products or Know-How; (c)
it has not filed any patent application or been issued or assigned any patent
on or prior to the date of this Agreement for any instrument, device or
system similar to a Product, other than the Patents and Patent Applications;
(d) all documents conferring ownership of the Know-How in IDI including any
agreement, power of attorney and recordation of license, are properly
executed and binding on IDI; (e) to the best of its knowledge and belief,
all of the Patents and Patent Applications included in SCHEDULE 1 hereto
remain in good standing and are not abandoned, lapsed or expired; (f) to the
best of its knowledge and belief, IDI is not aware of any act of fraud or
misrepresentation in connection with any of the Know-How including any act of
inequitable conduct in the prosecution of any of the Patents or Patent
Applications included in SCHEDULE 1 hereto; (g) to the best of its knowledge
and belief, IDI is not aware of any basis for invalidity or unenforceability
of any of the Patents and Patent Applications included in SCHEDULE 1 hereto,
including, without limitation, (i) material prior art which has not been
disclosed in the cumulative prosecution of the Patents and Patent
Applications included in SCHEDULE 1 hereto, and (ii) claim of prior invention
by others; and (h) to the best of its knowledge and belief, USSC's
manufacture, use or sale of a Product substantially as described in the
Patents and Patent Applications (excluding any further development work USSC
may do) would not infringe the patent rights of any third Person.
CONFIDENTIAL TREATMENT REQUESTED
12.3 RELIANCE. All representations, warranties and covenants made by
the Parties shall be considered to have been relied upon by the other Party
hereto regardless of any discussion, review or investigation made by or on
behalf of, the other Party, and shall survive termination of this Agreement.
12.4 SURVIVAL. The provisions of this Article 12 shall survive
termination of this Agreement.
ARTICLE 13 - TERM AND TERMINATION
13.1 TERM. The term of this Agreement (the "Term") shall commence upon
the date hereof and shall terminate upon the later of (a) Twenty (20) years,
and (b) the last day upon which all valid claims included in a patent within
Patents and Patent Applications expire.
13.2 EARLY TERMINATION. This Agreement shall be subject to termination
prior to the end of the Term as follows:
(a) Upon thirty (30) days prior written notice by IDI to USSC, in the
event that USSC fails to pay IDI all license fees and Royalties due under
Article 4 within (15) days after the due date of any such payment, unless
such failure is cured within ten (10) days after such notice;
(b) If at any time IDI shall fail to comply in any material respect with
any of its obligations under Articles 6, 10 or 11, or commit any fraud upon
USSC in connection with this Agreement or have willfully misrepresented any
matter which is the subject of the representations and warranties of IDI
contained herein, USSC may, subject to Section 13.4 below, terminate this
Agreement upon seven (7) days prior written notice to IDI, if such failure
is not cured within thirty (30) days after such notice. The remedies provided
in this Section 13.2(b) shall be in addition to any other remedies available
at law or in equity; or
(c) If at any time USSC shall fail to comply in any material respect
with any of its obligations under Articles 6, 7 or 9, or commit any fraud
upon IDI in connection with this Agreement or have willfully misrepresented
any matter which is the subject of the representations and warranties of USSC
contained herein, IDI may, subject to Section 13.4, terminate this Agreement
upon seven (7) days prior written notice to USSC, if such failure is not
cured within thirty (30) days after such notice. The
CONFIDENTIAL TREATMENT REQUESTED
remedies provided in this Section 13.2(c) shall be in addition to any other
remedies available at law or in equity;
(d) Upon ten (10) days prior written notice to USSC, if IDI shall have
[******] under Section 11.3; or
(e) Notwithstanding any provision of this Agreement, [*******]
13.3 ESCROW. In the event that IDI commits any failure, fraud or
misrepresentation described in Section 13.2(b) above, in addition to all
other remedies available to it at law or in equity, USSC may, at its option
and in its sole discretion, thirty (30) days subsequent to the commencement
of any Action, by either Party hereto or any third Person, relating to or
arising out of such failure, fraud or misrepresentation, deposit with a bank
escrow agent payments then due or thereafter becoming due under this
Agreement until final determination of any damages to which USSC may be
entitled by reason of such breach. USSC shall instruct such escrow agent to
deposit such payments in an interest-bearing account and to release same only
(i) pursuant to agreement of the Parties, or (ii) to USSC to the extent of
any and all damages and costs awarded to USSC pursuant to a final
unappealable judgment of a court of competent jurisdiction and the balance,
if any, of principal and interest to IDI. The Parties agree that any such
withholding of payments shall not limit IDI's liability for damages in the
event of any failure, fraud or misrepresentation specified in Section 13.2(b)
or in the event of any other breach of this Agreement by IDI, and shall not
affect any right or license granted to USSC hereunder, or any other provision
of this Agreement or any Party's other available remedies.
13.4 NO TERMINATION. Notwithstanding any other provision of this
Agreement, a Party contesting in good faith any payment or issue under this
Agreement (i) who continues to comply with all other payment obligations and
provisions of this Agreement, and (ii) which pays over any such contested
amount to a bank escrow agent (with binding instructions to invest such
amount in an interest-bearing account and to release same only pursuant to
agreement of the Parties or final unappealable judgment of a court of
competent jurisdiction) shall not be considered in breach of this Agreement
for purposes of giving rise to any right of termination in the other Party,
so long as the contesting Party is vigorously pursuing its claim, until there
is a final judgment of a court of competent jurisdiction adverse to such
contesting Party with which judgment such Party has failed to comply within
fifteen (15) days after written notice thereof.
CONFIDENTIAL TREATMENT REQUESTED
ARTICLE 14 - RIGHTS AFTER TERMINATION
14.1 RIGHTS AFTER TERMINATION.
(a) All rights and obligations of the Parties which accrue on or before
the effective termination date shall be fully enforceable by either Party
after termination.
(b) If this Agreement terminates and, as a result thereof, USSC is
required to cease making Products, USSC may, nonetheless, subject to the
Royalty provisions set forth herein, [******].
(c) All Know-How, inventions, developments and improvements, whether
patentable or not, are and, after termination of this Agreement, shall (i)
remain the property of IDI insofar as the same were conceived, made and
developed solely by IDI, prior to, or in performance of, this Agreement; and
(ii) the property of USSC insofar as the same were conceived, made and
developed within the Field solely by USSC prior to, or in performance of,
this Agreement or jointly by IDI and USSC ("Joint Results") in the
performance of this Agreement. USSC shall retain exclusive ownership of all
Know-How, inventions, developments and improvements within the Field which
were its property as of or prior to the date of this Agreement or which were
conceived, made and developed during the Term solely by USSC, whether or not
the same is necessary to reduce to practice any Joint Results.
(d) If this Agreement is terminated under Section 13.2(d) and [***],
then in such event, (i) USSC shall promptly [*****] and (ii) USSC shall
[*****] within the Field embodying Improvements solely to the IDI Technology
and which are [****]during the term of this Agreement prior to the date of
termination of this Agreement and, in consideration thereof, [********]. For
purposes of the aforesaid license, the definition of Net Sales set forth in
this Agreement, Section 4.3 and Article 5 shall apply, as if set out herein
at length; provided, however, that "IDI" shall be substituted for "USSC" and
"USSC" shall be substituted for "IDI" in such provisions.
14.2 SURVIVAL. The provisions of this Article 14 shall survive
termination of this Agreement.
ARTICLE 15 - FORCE MAJEURE
CONFIDENTIAL TREATMENT REQUESTED
15.1 FORCE MAJEURE. If either Party is prevented from or delayed in
performing any of its obligations hereunder due to any cause which is beyond
the non-performing Party's reasonable control, including fire, explosion,
flood, or other acts of God, laws, regulations or acts, omissions or delays
of any Governmental Authority; war or civil commotion; strike, lockout or
labor disturbances; or failure of public utilities or common carrier (each a
"Force Majeure Event"), such non-performing Party shall not be deemed in
violation of this Agreement as a result thereof. The non-performing Party
shall use reasonable commercial efforts to cure or correct any such Force
Majeure Event and to resume performance of its affected obligations as soon
as practicable.
ARTICLE 16 - PUBLICITY
16.1 PUBLICITY. IDI shall not issue any press release or make any
public disclosure, announcement, comment or statement concerning the
existence or the terms and conditions of this Agreement or the transactions
contemplated hereby without the prior written consent of USSC, unless such
disclosure is required by law. In such event, IDI shall use all reasonable
efforts to obtain confidential treatment of materials or information so
disclosed and shall provide, to the extent possible, prompt, written and
sufficient advance notice thereof to USSC to enable USSC to seek a protective
order or otherwise prevent or restrict such disclosure. Each Party shall
give the other Party at least one business day written notice, with an
opportunity to comment, of any press release to be issued by such Party in
connection with this Agreement or the transactions contemplated hereby. Such
written notice shall be accompanied by a copy of the planned press release.
16.2 SURVIVAL. The provisions of this Article 16 shall survive
termination of this Agreement.
ARTICLE 17 - WAIVER
17.1 NO WAIVER. No waiver by either Party, express or implied, or any
breach of any term, condition, or obligation of this Agreement by either
Party shall be construed as a waiver of any subsequent breach of any term,
condition, or obligation of this Agreement, whether of the same or different
nature.
ARTICLE 18 - NOTICES
CONFIDENTIAL TREATMENT REQUESTED
18.1 NOTICES. Any notice required or permitted to be given hereunder
shall be in writing and shall be mailed by certified mail, return receipt
requested, or delivered by messenger or air courier, and all payments shall
be delivered, to the party to whom such notice or payment is required or
permitted to be given at its address set forth as follows: if given to IDI,
to: Attn.: President/CEO, InnerDyne, Inc., 0000 Xxxxxxxx Xxxxxx, Xxxxxxxxx,
XX 00000; or, if given to USSC, to: Attn.: Xxxxxx X. Xxxxxx, Vice President
and General Counsel, United States Surgical Corporation, 000 Xxxxxx Xxxxxx,
Xxxxxxx, XX 00000. Any such notice shall be considered given when
delivered, as indicated by signed receipt or other written delivery record.
A Party may change that address to which notice to it is to be given by
notice as provided herein.
ARTICLE 19 - ASSIGNMENTS
19.1 NO ASSIGNMENT. Neither this Agreement nor the performance of any
part hereof may be assigned or transferred by either Party hereto without the
prior written consent of the other Party, except that (a) USSC may (i) assign
this Agreement, or the rights and obligations hereunder, to an Affiliate or
Subsidiary of USSC, provided that USSC guarantees the performance by such
Affiliate or Subsidiary thereof, and (ii) enter into a sublicense with any
third Person on terms as it shall determine in its sole and absolute
discretion provided, however, that such sublicense is not inconsistent with
the terms of this Agreement, and (b) nothing in this Section 19.1 is intended
to restrict or limit IDI's rights provided in Section 11.2 of this Agreement.
Any assignment, sublicense or transfer or attempt thereat other than as
permitted by this Section 19.1 and in compliance with the provisions hereof
shall be null and void.
ARTICLE 20 - CONSTRUCTION; ADJUDICATION
20.1 CONSTRUCTION. This Agreement, the validity, construction,
performance and interpretation thereof, and all issues and controversies
arising therefrom shall be construed and enforced in accordance with the
internal laws of the State of Delaware, U.S.A. applicable to contracts made
and to be performed entirely within the State of Delaware, U.S.A. without
reference to its conflict of law provisions.
20.2 EXCLUSIVE FORUM. Any Action under this Agreement by either Party
shall be brought only in, and the Parties hereby consent to the exclusive
venue and jurisdiction of, the federal and state courts located in the State
of Delaware, U.S.A. The
CONFIDENTIAL TREATMENT REQUESTED
Parties further consent that any process or notice of motion or other
application to any such court, and any papers in connection therewith, may be
served by certified mail, return receipt requested or by personal service or
in such other manner as may be permissible under the rules of the applicable
court.
20.3 SURVIVAL. The provisions of this Article 20 shall survive
termination of this Agreement.
ARTICLE 21 - ENTIRE UNDERSTANDING/AMENDMENT
21.1 ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding and agreement between the Parties, and supersedes all previous
agreements (whether written or oral) concerning the subject matter hereof.
This Agreement shall not be modified, amended, or supplemented except by a
written document executed by all of the Parties.
CONFIDENTIAL TREATMENT REQUESTED
ARTICLE 22 - HEADINGS
22.1 HEADINGS. The headings in this document are for information
purposes only and are not meant to have any legal effect in interpreting this
document.
ARTICLE 23 - SEVERABILITY; FURTHER ASSURANCES
23.1 SEVERABILITY. The invalidity or unenforceability of any paragraph
or provision of this document shall not affect the validity or enforceability
of any one or more of the other paragraphs or provisions.
23.2 COOPERATION. The Parties hereto will execute any further
instruments or perform any acts which are or may be necessary to effectuate
each of the terms and provisions of this Agreement.
ARTICLE 24 - COUNTERPARTS
24.1 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
CONFIDENTIAL TREATMENT REQUESTED
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
INNERDYNE, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
UNITED STATES SURGICAL CORPORATION
By: /s/ Xxxxx Xxxxx
-------------------------------------------------
Name: Xxxxx Xxxxx
--------------------------------------------
Title:
---------------------------------------
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 1
Title Date Patent No. Application No. Country Status
----- ---- ----------- --------------- ------- ------
[*****] [***] [*****] [*****] US Issued
[*****] [***] [*****] [*****] US&Foreign Issued
(Europe, Canada, Japan)
[*****] [***] [*****] [*****] US Issued
[*****] [***] [*****] [*****] US Issued
[*****] [***] [*****] [*****] US&Foreign Issued
(Europe)
[*****] [***] [*****] [*****] US Issued
[*****] [***] [*****] [*****] US&Foreign Issued
(Europe, Japan)
[*****] [***] [*****] [*****] US&Foreign Pending
(Europe, Japan)
