EXHIBIT 10.1
PATENT LICENSE AGREEMENT
This LICENSE AGREEMENT (the "Agreement") dated October 23, 1998
("Effective Date") between SurgiJet, Inc., a California corporation (the
"COMPANY") and VisiJet, Inc., a California corporation ("LICENSEE").
1. BACKGROUND
1.1 COMPANY holds the U.S. and international patents, and assignments
of patent applications from certain employees and consultants, set, forth is
EXHIBIT A ("Inventions"), and owns or will own any Licensed Patents (as
hereinafter defined) which may issue to such Inventions.
1.2 COMPANY desires to license the Licensed Patent to the extent
required for LICENSEE to perfect the Inventions and market the Licensed
Products, as hereinafter defined, at the earliest possible time in order that
the Licensed Products therefrom may be available for public use and benefit.
1.3 LICENSEE is desirous of perfecting the Inventions end of
manufacturing, producing and selling the Licensed Products and wishes to obtain
a license to use the Licensed Patent to the extent required to develop,
manufacture, use, and sell Licensed Products in the ophthalmic field.
2. DEFINITIONS
2.1 "Licensed Patent" means any Letters Patent or international patent
issued or hereafter issued, and pending patent, upon the Inventions, and/or any
divisions, continuations, or reissue thereof.
2.2 "Licensed Products" means any product or part thereof in the
Licensed Field of Use, the manufacture, use, or sale of which:
(a) Is covered by a valid claim of any issued, unexpired
Licensed Patent directed to the Inventions. A claim of as issued, unexpired
Licensed Patents shall be presumed to be valid unless and until it has been held
to be invalid by a final judgment of a court of competent jurisdiction from
which no appeal can be or is taken; or
(b) Is covered by any claim being prosecuted in a pending
application directed to the Inventions.
2.3 "Net Sales" means the gross revenue derived by LICENSEE and/or its
sublicensees from Licensed Products, whether or not assembled (and without
excluding therefrom any components or subassemblies thereof, whatever their
origin and whether or not patent impacted), less the following items but only
insofar as they actually pertain to the disposition of such Licensed Products by
LICENSEE or its sublicensees, are included is such gross revenue, and are
separately billed:
(a) Import, export, excise and sales taxes, and custom duties;
(b) Costs of insurance, packing, and transportation from the
place of manufacture to the customer's premises or point of installation;
(c) Costs of installation at the place of use; and
(d) Credit for returns, allowances, or trades.
2.4 "Licensed Field of Use" means the medical and surgical fields
related to ophthalmological applications.
2.5 "Licensed Territory" means the territory set forth in EXHIBIT B
attached hereto.
2.6 "Exclusive" means that, subject to any provisions to the contrary
in this Agreement, COMPANY shall not grant further licenses in the Licensed
Territory in the Licensed Field of Use.
3. GRANT
3.1 COMPANY hereby grants and LICENSEE hereby accepts a license under
the Licensed Patents to make, use, and sell Licensed Products for use in the
Licensed Field of Use within the Licensed Territory.
3.2 Said license is Exclusive, including the right to sublicense
pursuant to Article 13, in the Licensed Field of Use for a term commencing as of
the Effective Date and ending on the first to occur of the following:
(a) as to each Licensed Product, the expiration of the life of
the Licensed Patent or other patent contemplated under this Agreement directed
to such Licensed Product; or
(b) as to all Licensed Products, the termination of this
Agreement for any reason.
3.3 All rights in and to the Licensed Patents owned by the COMPANY and
not specifically licensed herein are exclusively reserved to the COMPANY.
Without limitation to the immediately foregoing, the COMPANY retains and shall
have the right to practice the Inventions and related Licensed Patents in a
manner not inconsistent with this Agreement, to use the Inventions and related
Licensed Patents for itself or in collaboration with third party academic or
not-for-profit research institutions, and to publish any information included in
the Licensed Patents. This Agreement shall not be deemed to grant any right,
either express or implied, is such reserved right, and no use or license to
anyone else of such reserved right by the COMPANY shall be deemed to violate or
interfere with the LICENSEE's right under this Agreement.
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4. DILIGENCE
4.1 As an inducement to COMPANY to enter into this Agreement, LICENSEE
agrees to use all reasonable efforts and diligence to proceed with the
development, manufacture, and sale or lease of Licensed Products and to
diligently develop markets for the Licensed Products. Unless LICENSEE has one or
more Licensed Products available for commercial sale prior to the anniversary of
the Effective Date in the year 2000, LICENSEE agrees that COMPANY may terminate
this Agreement. COMPANY may terminate this Agreement if LICENSEE or a
Sublicensees has not sold any Licensed Products on or after the anniversary of
the Effective Date in the year 2001.
4.2 On or before the anniversary of the Effective Date or each year
until LICENSEE markets any Licensed Products, LICENSEE shall make a written
annual report to COMPANY covering the preceding year ending June 30, regarding
the progress of LICENSEE toward commercial use of Licensed Products. Such report
shall include, at a minimum, information sufficient to enable COMPANY to
ascertain progress by LICENSEE toward meeting the diligence requirements of this
Article 4.
5. ROYALTIES
5.1 LICENSEE agrees to pay to COMPANY a non-creditable, nonrefundable
license issue royalty of Sixty Thousand Dollars ($60,000) upon execution of this
Agreement.
5.2 In addition, beginning on the Effective Date and on each
anniversary of the Effective Date thereafter, until termination of the license
contemplated in this Agreement, LICENSEE shall pay to COMPANY a yearly royalty
of Sixty Thousand Dollars ($60,000). Said yearly royalty payments are
non-refundable, but are creditable against Running Royalties (as defined herein)
to the extent provided in Paragraph 5.4 herein.
5.3 In addition, LICENSEE shall pay COMPANY earned royalties on Net
Sales as follows: seven percent (7%) of the Net Sales for such period of time
equal to the duration of the license contemplated under this Agreement (the
"Running Royalties"). All Running Royalties shall be paid by LICENSEE to COMPANY
on or before 45 days after March 31st, June 30th, September 30th and December
31st of each calendar year of the license contemplated in this Agreement, and
shall be submitted together with a statement of Running Royalties for each such
applicable period setting forth the calculation thereof.
5.4 Creditable payment under this Agreement shall be an offset to
LICENSEE against up to fifty percent (50%) of each Running Royalty payment which
LICENSEE would be required to pay pursuant to Paragraph 5.3, until the entire
credit is exhausted.
5.5 Running Royalties on sales in currencies other than U.S. Dollars
shall be calculated using the appropriate foreign exchange rate for such
currency quoted by the Bank of America (San Francisco) foreign exchange desk, on
the close of business on the last banking day of each calendar quarter. All
royalty payment to COMPANY shall be in U.S. Dollars. All non-U.S. taxes related
to royalty payments shall be paid by LICENSEE and are not deductible from the
payment due COMPANY.
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5.6 Within thirty (30) days after receipt of a statement from COMPANY,
LICENSEE shall reimburse COMPANY:
(a) for all United States and foreign patent expenses
corresponding to the Inventions incurred by COMPANY prior to the Effective date;
and
(b) for all costs incurred by COMPANY in connection with the
preparation, filing and prosecution of all patent applications and maintenance
of patent corresponding to the Inventions after the Effective Date.
5.7 In the event of any sublicense pursuant to Article 1 herein,
LICENSEE shall pay to COMPANY one-half of all license issue royalties, yearly
royalties and Running Royalties (or other earned royalty income) received by
LICENSEE from its sublicensees in excess of that which is payable to COMPANY
pursuant to this Article 5. LICENSEE may retain the remainder of such income
from sublicensees.
6. ROYALTY REPORTS, PAYMENTS, AND ACCOUNTING
6.1 Beginning with the first sale of a Licensed Products, LICENSEE
shall make quarterly written reports (even if there are no sales) and Ruining
Royalty payment to COMPANY on the dates set forth is Paragraph 5.3. The reports
shall be in a form of mutually agreeable to the parties and shall state the
number, description, and aggregate Net Sales of Licensed Products during such
completed calendar quarter, and resulting calculation pursuant to Paragraph 5.3
of the Running Royalty payment due COMPANY for such completed calendar quarter.
Concurrent with the making of each such report, LICENSEE shall include the
payment due COMPANY for the Running Royalty for the calendar quarter covered by
such report.
6.2 LICENSEE agrees to keep and maintain records for a period of three
(3) years showing the manufacture, sale, use, and other disposition of products
sold or otherwise disposed of under the license herein granted. Such records
will include general ledger records showing cash receipt and expenses, and
records which include production records, customers, serial numbers, and related
information in sufficient detail to enable the royalties payable hereunder by
LICENSEE to be determined. LICENSEE further agrees to permit its books and
records to be examined by COMPANY from time to time to the extent necessary to
verify the reports provided for in Paragraph 6.1. Such examination is to be made
by COMPANY or its designee, at the expense of COMPANY, except in the event that
the results of the audit reveal as under-reporting of royalties due COMPANY of
five percent (5%) or more, then the audit costs shall be paid by LICENSEE.
7. WARRANTIES
7.1 Standing. COMPANY represents that it is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
California, with all corporate powers necessary to own its assets and property
and to carry on its business as so owned and conducted.
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7.2 Authority. COMPANY represents and warrants that it has full power
and authority to execute and deliver this Agreement, to grant the licensee
granted herein and to perform its obligations hereunder.
7.3 Title. COMPANY represents and warrants that to the best of its
knowledge that it is the sole and exclusive owner of the Inventions,
7.4 Negation of Warranties. Nothing in this Agreement is or shall be
construed as:
(a) A warranty or representation by COMPANY as to the validity
or scope of any Licensed Patents;
(b) A warranty or representation that anything made, used,
sold, or otherwise disposed of under any license granted or contemplated by this
Agreement is or will be free from infringement of patents; copyright, and other
right of third parties;
(c) An obligation to bring or prosecute actions or suits
against third parties for infringement, except to the extent and in the
circumstances described is Article 11;
(d) Granting by implication, estoppel, or otherwise any
licenses or right under parties or other right of COMPANY or other persons other
than Licensed Patents, regardless of whether such patents or other rights are
dominant or subordinate to any Licensed Patents; or
(e) An obligation to furnish any technology or technological
information other than that contained in the Licensed Patents.
7.5 Except as expressly set forth in this Agreement, COMPANY MAKES NO
REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OF THE LICENSED PRODUCTS WILL
NOT INFRINGE ANY PATENT, COPYRIGHT, TRADE, OR OTHER RIGHTS OR ANY OTHER EXPRESS
OR IMPLIED WARRANTIES.
8. INDEMNITY AND INSURANCE
8.1 LICENSEE agrees to indemnify, hold harmless, and defend COMPANY and
its respective directors, officers, employees, consultants and agents against
any and all claims for death, illness, personal injury, property damage, and
improper business practices arising out of the manufacture, use, sale, or other
disposition of Inventions, Licensed Patents, or Licensed Produce, by LICENSEE or
sublicensees, or their customers.
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8.2 COMPANY shall not be liable for any indirect, special,
consequential or other damages whatsoever, whether grounded in tort (including
negligence), strict liability, contract or otherwise. COMPANY shall not have any
responsibilities or liabilities whatsoever with respect to Licensed Products.
8.3 LICENSEE shall at all times comply, through insurance or
self-insurance, with all statutory workers' compensation and employers'
liability requirements covering any and all employees with respect to activities
performed under this Agreement.
8.4 In addition to the foregoing, LICENSEE shall maintain, during the
term of this Agreement, Comprehensive General Liability Insurance, including
Products Liability Insurance, with reputable and financially secure insurance
carriers to cover the activities of LICENSEE and its sublicensees. Such
insurance shall provide minimum limits of liability of Two Million Dollars
($2,000,000) and shall include COMPANY, its directors, officers, employees,
consultants and agents as additional insureds. Such insurance shall be written
to cover claims incurred, discovered, manifested, or made during or after the
expiration of this Agreement. At COMPANY'S request, LICENSEE shall furnish a
Certificate of Issuance evidencing primary coverage and requiring thirty (30)
days prior written notice of cancellation or material change to COMPANY.
LICENSEE shall advise COMPANY, in writing, that it maintains excess liability
coverage (following form) over primary insurance for at least the minimum limits
set forth above. All such insurance of LICENSEE shall be primary coverage;
insurance of COMPANY shall be excess and noncontributory.
9. MARKING
Prior to the issuance of patents on the Inventions, LICENSEE agrees to
xxxx Licensed Products (or their containers or labels) made, sold, or otherwise
disposed of by it under the license granted in this Agreement with the words
"Patent Pending," to the extent so applicable, and following the issuance of one
or more patents, with the numbers of the Licensed Patents.
10. COMPANY NAMES AND MARKS
LICENSEE agrees not to identify COMPANY in any promotional advertising
or other promotional materials to be disseminated to the public or any portion
thereof or to use the trade names or any trademark, service xxxx, trade name, or
symbol of COMPANY, or that is associated with either of them, without company's
prior written consent.
11. INFRINGEMENT BY OTHERS: PROTECTION OF LICENSED PATENTS
11.1 In the event that either party learns of facts which it concludes
might constitute an infringement of any of the Licensed Patents by any third
party during the term of this Agreement, the party learning of such facts shall
promptly notify the other party in writing, setting forth such facts and the
basis for its conclusion, and shall include with such notice any other
reasonably available evidence in support thereof.
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11.2 LICENSEE shall have the obligation to take all appropriate action
against the infringing party and LICENSEE shall pay all costs and expenses
("including without limitation attorneys' fees and costs of investigation and
experts) incurred in connection with such action. Any legal counsel engaged by
LICENSEE shall be reasonably satisfactory to COMPANY. COMPANY, at LICENSEE's
expense, shall have the right to participate in, and, to the extent that it may
wish to jointly assume the prosecution of such action with counsel reasonably
satisfactory to LICENSEE. LICENSEE shall obtain the consent of COMPANY prior to
settling any such action. If LICENSEE shall fail to take all appropriate action
as specified hereunder, then COMPANY shall have the right to take such action
and LICENSE shall pay or reimburse COMPANY for all cost and expenses (including
without limitation attorneys' fees and cost of investigation and experts}
incurred in connection with such action.
11.3 Any proceeds from any settlement or judgment of any infringement
claim, action, suit or proceeding brought by LICENSEE shall be allocated and/or
paid within thirty (30) days of receipt thereof as follows: (i) first to
reimburse LICENSEE (and COMPANY, pari passu to the extent that it has not
otherwise been reimbursed for attorneys' fees, costs and expenses incurred in
connection with participation in the prosecution of such infringement) for
attorneys' fees and other cots and expenses reasonably incurred in connection
with the prosecution or other efforts to terminate the infringement pursuant to
the terms of this Agreement; and (ii) thereafter, the remainder shall be divided
equally between the parties.
11.4 Any equitable relief, including, without limitation, declaratory
and injunctive relief, whether or not obtained in conjunction with the recovery
of monetary damages, shall inure to the benefit of both COMPANY and LICENSEE.
11.5 Notwithstanding any provision of this Article 11, in the event any
infringement action, suit or proceeding is brought hereunder by either party to
enforce any rights in or to the Devices or the Technology, each party, if
legally necessary, shall, upon the written request of the other party, be named,
joined and participate therein as a nominal plaintiff.
12. SUBLICENSES
12.1 LICENSEE may grant sublicenses during the Exclusive period as set
forth herein and only pursuant to express written consent of COMPANY, such
written consent not to be unreasonably withheld.
12.2 If LICENSEE is unable or unwilling to serve or develop a potential
market or market territory for which there are willing sublicensees, LICENSEE
will, at COMPANY'S request, negotiate in good faith all necessary sublicenses
hereunder.
12.3 Any sublicenses granted by LICENSEE under this agreement shall be
subject and subordinate to terms and conditions of this Agreement, except:
(a) Sublicense terms and conditions shall reflect that any
sublicensees shall not further sublicense; and
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(b) The earned royalty rate specified in the sublicenses may
be at higher rates than the rates in this Agreement.
Any such sublicenses also shall expressly include the provisions of Articles 6,
7, and 8 for the benefit of COMPANY and provide for the transfer of all
obligations, including the payment of royalties specified in such sublicenses,
to COMPANY or its designee, in the event that this Agreement is terminated.
12.4 LICENSEE agrees to provide COMPANY a copy of any sublicense
granted pursuant to this Article 12.
13. TERMINATION
13.1 LICENSEE may terminate this Agreement only by giving COMPANY
notice, in writing at least thirty (30) days in advance of the effective date of
the proposed termination selected by LICENSEE, of good cause for termination of
the Agreement, and COMPANY fails to remedy any such cause within thirty (30)
days after such notice. For the purposes of this Section 13.1, the term "good
cause" shall mean the failure or breach of any representation or warranty made
by COMPANY in Article 7 of this Agreement, with the exception that LICENSEE
shall be deemed to have waived any misrepresentation or breach of representation
or warranty of which such party had knowledge before the effective date of this
Agreement.
13.2 COMPANY may terminate this Agreement if LICENSEE:
(a) Is in default in payment of royalty or providing of
reports;
(b) Becomes a bankrupt or is insolvent;
(c) Is in breach, of any provision hereof; or
(d) Provides any false report;
and LICENSEE fails to remedy any such default, breach, or false report within
(30) days after written notice thereof by COMPANY.
13.3 Surviving any termination are:
(a) LICENSEE's obligation to pay royalties accrued or
accruable;
(b) Any cause of action or claim of LICENSEE or COMPANY,
accrued or to accrue, because of any breach or default by the other party; and
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(c) All of LICENSEE'S covenants and agreements contained
herein with respect to confidentiality and secrecy.
14. ASSIGNMENT
This Agreement may not be assigned.
15. ARBITRATION
15.1 Any controversy arising under or related to this Agreement, and
any disputed claim by either party against the other under this Agreement
excluding any dispute relating to patent validity or infringement arising under
this Agreement, shall be settled by arbitration in accordance with the Licensing
Agreement Arbitration Rules of the American Arbitration Association.
15.2 Upon request by either party, arbitration will be by a third party
arbitrator mutually agreed upon in writing by LICENSEE and COMPANY within thirty
(30) days of such arbitration request. Judgment upon the award rendered by the
arbitrator shall be final and non-appealable and may be entered in any court
having jurisdiction thereof.
15.3 The parties shall be entitled to discovery in like manner as if
the arbitration were a civil suit in the California Superior Court. The
Arbitrator may limit the scope, time and/or issues involved in discovery.
15.4 Any arbitration shall be held at the place then designated by the
COMPANY, California, unless the parties hereto mutually agree in writing to
another Place.
16. NOTICES
All notices under this Agreement shall be deemed to have been fully
given when done in writing and deposited in the United States mail, registered
or certified, and addressed as follows:
To COMPANY: SurgiJet, Inc.
00-X Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
To LICENSEE: VisiJet, Inc.
00-X Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Either party may change its address upon written notice to the other
party.
17. CONSTRUCTION
17.1 This Agreement shall be governed by the laws of the United States
and of the state of California applicable to agreements negotiated, executed and
performed wholly within California.
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17.2 The failure of COMPANY to enforce at any time any of the
provisions of this Agreement, or any rights in respect thereto, or to exercise
any election herein provided, shall in no way be considered to be a waiver of
such provisions, rights, or elections or in any way to affect the validity of
this Agreement.
17.3 It is mutually agreed that this Agreement contains the entire
Agreement between the parties hereto applying to the matters herein contained,
and that the same has been entered into in reliance upon only the provision
contained herein and not upon any representations by either of the parties; that
this Agreement shall supersede all representations, agreements, statements and
understandings relating to such matters made prior to execution of this
Agreement, and that this Agreement can only be amended by an Agreement in
writing executed by all of the parties hereto.
17.4 The rule of construction that an agreement shall be interpreted
against the drafting party shall not apply to this Agreement. In this Agreement,
whenever the context so requires, the masculine, feminine or neuter gender, and
the singular or plural number or tease, shall include the others.
18. RELATIONSHIP OF PARTIES
Each party shall conduct all business in such party's own name as an
independent contractor. No joint venture, partnership, employment, agency or
similar arrangement is hereby created between the parties. Neither party has the
right or power to act for or on behalf of the other or to bind the other in any
respect whatsoever.
19. SEVERABILITY
If any provision of this Agreement is determined to be illegal, invalid
or otherwise unenforceable by a court of competent jurisdiction, then to the
extent necessary to make such provision and/or this Agreement legal, valid or
otherwise enforceable, such provision shall be limited, construed or severed and
deleted from this Agreement, and the remaining portion of such provision and the
remaining other provisions hereof shall survive, remain in full force and effect
and continue to be binding, and shall be interpreted to give effect to the
intention of the parties insofar as that is possible.
20. AMENDMENT AND WAIVER
Neither this Agreement nor any of its provisions may be amended,
changed, modified or waived except in a writing duly executed by the party to be
bound thereby.
21. FURTHER ASSURANCES
The parties shall execute any and all additional documents and
instruments and shall take any and all other actions necessary or desirable to
carry out the intent and purpose of this Agreement.
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22. COUNTERPARTS
This Agreement may be executed is one or more counterparts, each of
which shall be deemed to be an original but all of which shall together shall
all constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
duplicate originals by their duly authorized officers or representatives.
SURGIJET, INC.
By: /S/ XXX X. XXXXXXX
---------------------
Name: Xxx X. Xxxxxxx
Title: Chairman
VISIJET, INC.
By: /S/ XXX X. XXXXXXX
---------------------
Name Xxx X. Xxxxxxx
Title: President
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EXHIBIT A
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[U.S. and international patents, and assignment of patent applications from
certain employees and consultants, held by SurgiJet]
SURGIJET
(LETTERHEAD)
SURGIJET, INC.
WATERJET PATENT PORTFOLIO
AS OF OCTOBER 7, 1998
DESCRIPTION PATENT # ISSUED
----------- -------- ------
SURGICAL LIQUID XXXXX APPARATUS* 5,037,431 AUG 6, 1991
METHOD AND APPARATUS FOR TISSUE 5,322,504 JUN 21, 1994
EXCISION AND REMOVAL BY FLUID JET**
FLUID JET SURGICAL CUTTING INSTRUMENT 5,591,184 JAN 7, 1997
METHOD AND APPARATUS FOR TISSUE 5,674,226 OCT 7, 1997
EXCISION AND REMOVAL BY FLUID JET
FLUID JET SURGICAL CUTTING TOOL 5,562,692 OCT 8, 1996
HYDROJET APPARATUS FOR REFRACTIVE 5,643,299 JUL 1, 1997
SURGERY
METHOD OF USING FLUID JET SURGICAL 5,735,815 APR 7, 1998
CUTTING TOOL
*ASSIGNEE: THE CURATORS OF THE UNIVERSITY OF MISSOURI. EXCLUSIVE LICENSE ISSUED
TO SURGIJET, INC FOR THE LIFE OF THE PATENT.
**ASSIGNEE: US SURGICAL CORPORATION. REASSIGNED TO SURGIJET, INC. NOTE: MOST OF
THE ABOVE PATENTS ARE ASSIGNED TO SENTINEL MEDICAL, THE PREVIOUS NAME FOR
SURGIJET, INC.
SURGIJET
(LETTERHEAD)
SURGIJET, INC.
WATERJET PATENT PORTFOLIO
APPLIED FOR AND ALLOWED
AS OF OCTOBER 7, 1998
DESCRIPTION APPLICATION ALLOWED
----------- ----------- -------
METHOD AND APPARATUS FOR THERMAL 08/755,622 AUG 4, 1998
PHOCOEMUSIFICATION BY FLUID THROTTLING
METHOD AND APPRATUS FOR DENTAL 08/890,496 SEPT 28, 1998
TREATMENT USING HIGH PRESSURE LIQUID
JET
EXHIBIT B
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The Licensed Territory is worldwide.
