As filed with the Securities and Exchange Commission
on July 27, 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
--------------------------------
Date of Report (Date of earliest event reported): July 20, 1998
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DALTEX MEDICAL SCIENCES, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-14026 13-3174562
- ----------------- ----------- -------------------
(State or other (Commission (I.R.S. Employer
jurisdiction File No.) Identification No.)
of incorporation)
7777 Glades Road, Boca Raton, Florida 33434
- --------------------------------------- ----------
(Address of principal executive offices) (Zip code)
(561) 994-0511
--------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
-----------------------------
(Former name or former address,
if changed since last report)
Item 2. - Acquisition or Disposition of Assets.
-------------------------------------
On July 20, 1998, the Registrant and The Trustees of
Columbia University in the City of New York ("Columbia") entered into a
certain Settlement and Mutual Release Agreement, dated as of April 30, 1998
and attached hereto as Exhibit 2.1 (the "Settlement Agreement"). Under the
Settlement Agreement, the Registrant has reassigned and granted back to
Columbia all of its right, title and interest as Columbia's exclusive licensee
to certain patent and proprietary rights pursuant to certain License
Agreements with Columbia, as set forth in Appendix A and Appendix B to the
Settlement Agreement, and has agreed to pay Columbia the sum of $70,000.00 as
follows: $15,000.00 on July 31, 1998, and $5,000.00 at the end of each
calendar month thereafter, until the full amount is paid. Under the Settlement
Agreement, the Registrant has also assigned to Columbia its rights as licensor
under certain Sublicense Agreements with Arrow International, Inc. ("Arrow")
and W. L. Gore & Associates, Inc. ("Gore") (together, the "Sublicense
Agreements") and its rights under a certain Patent Settlement Agreement with
Becton Dickinson and Company ("Becton") (the "Patent Settlement Agreement").
In exchange for such assignments by and payments from the
Registrant, and pursuant to the Settlement Agreement, Columbia has agreed to
release the Registrant from: (a) payment of all royalties, sublicensing fees
and development costs earned or otherwise due and owing to Columbia up to and
including April 30, 1997 (which total amount is approximately $165,000.00)
plus up to a maximum of $10,000.00 from the period of May 1, 1997 through
March 31, 1998; and (b) all amounts due and owing Columbia and its counsel for
patent prosecution and other legal fees relating to the above-mentioned
License Agreements (which total amount is approximately $660,000.00).
Pursuant to certain Mutual Release Agreements entered into
separately with the Registrant, each of Arrow, Gore and Becton has consented
to the Registrant's assignment of its rights under the Sublicense Agreements
and the Patent Settlement Agreement, respectively, to Columbia and has
released the Registrant from any further obligations under such agreements.
Item 7. - Financial Statements and Exhibits.
----------------------------------
(b) Pro Forma Financial Statements:
As of the date of the filing of this Form 8-K, it is impractical for the
Registrant to provide the financial statements required by this Item 7(b).
In accordance with Item 7(b) of Form 8-K, such financial statements will
be filed no later than 60 days after August 4, 1998.
(c) Exhibits:
2.1 Settlement and Mutual Release Agreement dated as of April 30, 1998
between Daltex Medical Sciences, Inc. and The Trustees of Columbia
University in the City of New York.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
DALTEX MEDICAL SCIENCES, INC.
Date: July 27, 1998 By: /s/ C. Lawrence Rutstein
------------------------
C. Lawrence Rutstein
Secretary
SETTLEMENT AND MUTUAL RELEASE AGREEMENT
---------------------------------------
This Settlement and Mutual Release Agreement ("Agreement") entered
into as of the 30th day of April, 1998 ("Effective Date") between DALTEX
MEDICAL SCIENCES, INC., a corporation of the State of Delaware, having a place
of business at 7777 Glades Road, Suite 214, Boca Raton, Florida 33434
("Licensor"), and THE TRUSTEES OF COLUMBIA UNIVERSITY IN THE CITY OF NEW YORK,
a not-for-profit corporation of the State of New York, having a place of
business at 630 West 168th Street, New York, NY 10032 ("Columbia").
RECITALS
--------
WHEREAS, Daltex is the exclusive licensee of certain patent and
proprietary rights pursuant to License Agreements with Columbia as set forth
in Appendix A and Appendix B hereto, and which are incorporated and made part
of this Agreement; and
WHEREAS, Columbia currently has a claim against Daltex for royalties,
sublicensing fees, development costs, patent prosecution and other legal fees
relating to the above-mentioned License Agreements which are currently due and
owing; and
WHEREAS, Columbia and Daltex, to their mutual benefit,
wish to settle their differences, financial and otherwise, on the following
terms and conditions;
NOW, THEREFORE, in consideration of the premises and of the promises
and conditions hereinafter contained, the parties hereto agree as follows:
DALTEX OBLIGATIONS
------------------
A. Upon the Effective Date of this Agreement:
1. Daltex hereby assigns, reassigns, transfers, or otherwise
grants back to Columbia all of its right, title and interest as Columbia's
licensee to the Patents set forth in Appendix A of this Agreement; and further
agrees to execute all documents necessary to effectuate such assignment,
reassignment, grant back or transfer to Columbia. "Patents" shall be defined
to include the patents listed in Appendix A, together with all corresponding
foreign patents and foreign applications, and any continuations,
continuations-in-part, divisions, additions, extensions, substitutions,
reissues or reexaminations thereof.
2. The three "License Agreements" set forth in Appendix B of
this Agreement, by and between Columbia and Daltex, as and to the extent such
License Agreements are modified by the Patent Settlement Agreement of January
1, 1995 ("Patent Settlement Agreement") with Becton Dickinson and Company
2
("Becton"), will be terminated and of no further force and effect; except
only with respect to those obligations of Columbia and Daltex which survive
such termination, as expressly provided for in the License Agreements. In
connection therewith, Daltex shall return to Columbia all "Licensed Technical
Information" provided to Daltex under the License Agreements.
3. Daltex's Sublicense Agreement with Arrow International, Inc
("Arrow"), as modified ("Arrow Sublicense Agreement"), and as, and to the
extent that such Arrow Sublicense Agreement may be modified by the Patent
Settlement Agreement, and Daltex's Sublicense Agreement with W.L. Gore and
Associates ("Gore"), as amended ("Gore Sublicense Agreement"), respectively,
and which are incorporated and made a part hereof as set forth in Appendix C,
shall be assigned, reassigned, or otherwise transferred to Columbia, upon the
terms and conditions set forth in this Agreement.
a. Subject to and expressly conditioned upon obtaining the
written consent of Arrow to the terms and conditions of this Section 3 of this
Agreement, Columbia will stand in Daltex's place as licensor to Arrow under
the Arrow Sublicense Agreements, including with respect to all of Daltex's
rights and obligations under the Arrow Sublicense Agreement, and, inter alia,
its rights to receive any payments due under the Arrow Sublicense Agreement
(but except with respect to Daltex's
3
obligations to provide "Improvements" to Arrow under Section 2(a) of the Arrow
Sublicense Agreement, which obligation shall not be assigned, transferred or
otherwise revert to Columbia; and which exception shall be consented to by
Arrow), and the Arrow Sublicense Agreement shall otherwise remain in full
force and effect; except as otherwise agreed in writing between Columbia and
Arrow.
b. Subject to and expressly conditioned upon obtaining the
written consent of Gore to the terms and conditions of this Section 3 of this
Agreement, Columbia will stand in Daltex's place as licensor to Gore under the
Gore Sublicense Agreements, including with respect to all of Daltex's rights
and obligations under the Gore Sublicense Agreement, and, inter alia, its
rights to receive any payments due under the Gore Sublicense Agreement (but
except with respect to Daltex's obligations to provide "Improvements" to Gore
under Section 15 of the Gore Sublicense Agreement and Daltex's obligation to
provide continuing representations and warranties to Gore under Section 2(c)
and (d) of the Gore Sublicense Agreement, which obligations shall not be
assigned, transferred or otherwise revert to Columbia; and which exception
shall be consented to by Gore), and the Gore Sublicense Agreement shall
otherwise remain in full force and effect; except as otherwise agreed in
writing between Columbia and Gore.
4
4. Subject to the terms and conditions of this Agreement, and
expressly conditioned upon obtaining the written consent of Becton to the
terms and conditions of this Section 4 of this Agreement, all rights and
obligations of Daltex under the Patent Settlement Agreement (which Patent
Settlement Agreement is incorporated and made a part hereof as Appendix D),
including Daltex's rights with respect to the patents as set forth and defined
in Appendix D to this Agreement ("Becton Patents"), shall be assigned,
transferred, or otherwise revert, to the extent permissible under the Patent
Settlement Agreement, to Columbia, including assignment to Columbia of any
payments made or to be made by Becton to Daltex under Article V(4) of the Patent
Settlement Agreement; except that Daltex's obligations to provide
"Improvements" under Article VIII (1)(a) and (b) of the Patent Settlement
Agreement shall not be assigned, transferred or otherwise revert to Columbia;
and which exception shall be consented to by Becton. In addition, and subject
to the written consent of Becton and Arrow, Article V(2) of the Patent
Settlement Agreement shall be modified so that any payments due to Becton from
Daltex under such Article, if any, shall be made directly to Becton by Arrow.
Notwithstanding this foregoing, Columbia shall not assume, nor shall this
Agreement be interpreted to mean that Columbia has assumed, any obligations
which Daltex owed or owes to any parties other than Columbia
5
under the Patent Settlement Agreement prior to the Effective Date of this
Agreement.
5. Daltex specifically warrants and represents:
a. that it has fully complied with its obligations under the
Patent Settlement Agreement, including but not limited to, payment of all
monies, if any, that Daltex is required to pay, either itself, or in
conjunction with Columbia, under Article V of the Patent Settlement Agreement
("Becton Payments");
b. that as to Arrow and Gore it has fully complied with its
obligations under the Sublicense Agreements;
c. that it has not entered into any other agreements, including
sublicense agreements, either written or oral, with any parties other than
Arrow or Gore with respect to any of Daltex's rights under its License
Agreements with Columbia; and
d. it has not sublicensed, or otherwise transferred rights
under, the Becton Patents, other than as specifically set forth in the Patent
Settlement Agreement as regards the Arrow Sublicense Agreement, to Gore, or
any other party.
6. Daltex shall immediately cease selling, marketing,
distributing and/or sublicensing products protected or otherwise covered by
the Patents or any claim therein.
6
7. Daltex agrees to pay Columbia the sum of $70,000.00 as follows:
$15,000.00 within twenty (20) days after the Effective Date of this Agreement,
and $5,000.00 at the end of each calendar month thereafter, until the full
amount is paid. The balance of the sum due and owing after Daltex's initial
payment shall be secured by a Promissory Note executed by Daltex in favor of
Columbia, in the amount of $55,000.00 and is attached hereto and incorporated
herein as Appendix E, which payments thereunder shall be made on the last
business day of each calender month, commencing June 30 1998, respectively. In
the event Daltex fails to make its full payment to Columbia on any of the
dates so provided, the entire outstanding amount due to Columbia shall be
immediately due, owing and payable to Columbia.
MUTUAL RELEASE
--------------
B. Upon the Effective Date of this Agreement, and in
consideration of the compromise of Daltex's debt to Columbia as set forth in
Section A(8) of this Agreement:
1. Columbia shall release Daltex from payment of all: (a)
amounts due and owing Columbia and its counsel, Baker and Botts, f/k/a
Brumbaugh, Graves, Donohue and Raymond, in full satisfaction of Daltex's
obligation to Columbia for all Patent prosecution costs, including legal
expenses incurred in the
7
procurement of the Patents; which total amount is approximately $660,087.20;
and (b) royalties, development fees, and/or sublicensing fees, earned or
otherwise due and owing to Columbia up to and including April 30, 1997
pursuant to the License Agreements, Sublicense Agreements, or Patent
Settlement Agreement; which total amount is approximately $165,373.66.
2. For the period of May 1, 1997 through March 31, 1998,
Columbia will conduct, within sixty (60) days of said Effective Date of this an
Agreement, an audit of Daltex's books and records with respect to any
royalties, development fees, and/or sublicensing fees, earned or otherwise due
and owing to Columbia from Daltex pursuant to the License Agreements,
Sublicense Agreements or Patent Settlement Agreement, and shall release Daltex
for any such royalties, development fees, and/or sublicensing fees, earned or
otherwise due and owing to Columbia from Daltex for the period of May 1, 1997
through March 31, 1998, up to and including an amount of $10,000.00. Any
amount of royalties, development fees, and/or sublicensing fees, earned or
otherwise due and owing to Columbia from Daltex, (as determined by Columbia's
audit of Daltex's books and records) pursuant to the License Agreements,
Sublicense Agreements or Patent Settlement Agreement for the period of May 1,
1997 through March 31, 1998 in excess of the amount of $10,000.00, shall
remain due and owing and be paid to Columbia by Daltex, or its
8
successors and assigns, and further is not and shall not be covered by this
Release.
3. Any royalties, development fees, and/or sublicensing fees,
earned or otherwise due and owing to Columbia from Daltex, on or after April
1, 1998, pursuant to the License Agreements, Sublicense Agreements, or Patent
Settlement Agreement, (other than payment by Daltex of the sum of $2,500.00
which amount represents Columbia's share of the development fee received by
Daltex from Arrow for the period of February 1, 1998 through April 30, 1998
under the Arrow Sublicense Agreement, prior receipt of such amount is hereby
acknowledged by Columbia), which have been, or are subsequently, collected by
Daltex, or its successors and assigns, on or after April 1, 1998, pursuant to
the License Agreements, Sublicense Agreements, or Patent Settlement Agreement,
shall remain due and owing and be paid to Columbia by Daltex, or its
successors and assigns, and further are not and shall not be covered by this
Release. Columbia shall have the right to audit Daltex's books and records
upon reasonable notice to Daltex, or its successor, up to one (1) year after
the Effective Date of this Agreement to determine Daltex's compliance with
this section.
4. This Agreement shall not operate in any respect as a release
of any of Daltex's obligations under the Patent Settlement Agreement which
performance was due by Daltex
9
or which accrued prior to the Effective Date of this Agreement, including its
obligation to make Becton Payments, if any.
5. Except with respect to those matters not released as set forth in
this Agreement, including any claims relating to Daltex's representations and
warranties made under this Agreement, which claims, if any, together with such
representations and warranties, shall survive any such release to Daltex
herein, Columbia, its successor and assigns, upon the Effective Date of this
Agreement, shall and hereby releases Daltex from any and all claims it had,
has, or may have against Daltex.
C. For good and valuable consideration, Daltex, its successors
and assigns, upon the Effective Date of this Agreement, shall and hereby
releases Columbia from any and all claims it had, has or may have against
Columbia.
ENTIRE AGREEMENT
----------------
D. This Agreement constitutes the entire agreement between the
parties regarding the subject matter hereof, and supersedes all prior or
contemporaneous understandings or agreements, whether oral or written. This
Agreement shall be modified or amended only by a writing signed by both Daltex
and Columbia.
10
E. This Agreement shall be construed, interpreted and applied
in accordance with the laws of the State of New York. For purposes of
enforcement of this Agreement, Daltex hereby consents to the personal
jurisdiction of the Courts of the State of New York.
F. This Agreement shall inure to the benefit of and bind Daltex
and Columbia, respectively, and their successors and assigns.
IN WITNESS WHEREOF, the parties have, through their duly
authorized representatives, executed this Agreement on the date set forth
above.
DALTEX MEDICAL SCIENCES, INC.
By: /s/ Bruce Hausman
---------------------------------
BRUCE HAUSMAN
Title: President & CEO
-------------------------------
Date: 5/26/98
-------------------------------
THE TRUSTEES OF COLUMBIA UNIVERSITY
IN THE CITY OF NEW YORK
By: /s/ Joel M. Granowitz
---------------------------------
JOEL M. GRANOWITZ
Title: Executive Director - CIE
-------------------------------
Date: 7/20/98
-------------------------------
11
APPENDIX A: PATENTS
----------------------
1. U.S. Patent No. 4,563,485 - "Infection--Resistant Materials
and Method of Making Same Through Use of Nalidixic Acid Derivatives".
2. U.S. Patent No. 4,581,028 - "Infection--Resistant Materials
and Method of Making Same Through Use of Sulfonamides".
3. U.S. Patent No. 4,612,337 - "Method for Preparing
Infection-Resistant Materials".
4. U.S. Patent No. 4,952,411 - "Method of Inhibiting the
Transmission of AIDS Virus".
5. U.S. Patent No. 5,019,096 - "Infection--Resistant
Compositions, Medical Devices and Surfaces and Methods for Preparing and Using
Same".
6. U.S. Patent No. 5,133,090 - "Antiviral Glove".
7. U.S. Patent No. 5,334,588 - "Composition for Inhibiting
Transmission of Hepatitis B Virus".
8. U.S. Patent No. 5,616,338 - "Infection--Resistant Silicone
Compositions, Medical Devices and Surfaces and Methods for Preparing and Using
Same".
9. U.S. Patent Application, Serial No. 07/996,489 entitled,
"Antiviral Contraceptive Devices, Particularly Condoms".
-i-
APPENDIX B:
-----------
LICENSES BETWEEN COLUMBIA UNIVERSITY AND DALTEX
-----------------------------------------------
1. First License between Columbia and Daltex, dated January 11,
1985.
2. Second License between Columbia and Daltex, dated December
11, 1985.
3. Third License between Columbia and Daltex, dated December
28, 1987, as amended May 10, 1989.
-ii-
APPENDIX C:
-----------
DALTEX SUBLICENSES
------------------
1. Daltex to Arrow International, Inc., dated March 28, 1991;
as modified by the First License Modification Agreement, dated October 27,
1995, and by the Second License Modification Agreement, dated May 30, 1997.
2. Daltex to W.L. Gore and Associates, dated May 13, 1992; as
amended by the License Amendment Agreement, dated February 3, 1997, and by the
Second License Amendment Agreement, dated February 27, 1998.
-iii-
APPENDIX D:
-----------
PATENT SETTLEMENT AGREEMENT between
THE TRUSTEES OF COLUMBIA UNIVERSITY
IN THE CITY OF NEW YORK, DALTEX
MEDICAL SCIENCES, INC., ARROW
INTERNATIONAL INC. and BECTON
DICKINSON AND COMPANY, effective
January 1, 1995:
Becton Patents which Daltex has the right to sublicense under
the Patent Settlement of January 1, 1995:
1. U.S. Patent No. 4,925,668 - "Anti-Infective and Lubricious
Medical Articles and Method for Their Preparation".
2. U.S. Patent No. 4,999,210 - "Anti-Infective and Lubricious
Medical Articles and Method for Their Preparation".
3. U.S. Patent No. 5,013,306 - "Anti-Infective and Lubricious
Medical Articles and Method for Their Preparation".
-iv-
APPENDIX E: Form of Promissory Note for $55,000.00.
- -----------