Exhibit 10.1
DEVELOPMENT AND LICENSE AGREEMENT
This Development and License Agreement (the "Agreement") is entered into as of
26th April, 2004 (the "Effective Date"), by and between ATS MEDICAL, INC. and
ERYSAVE AB. ATS and ErySave may be referred to in this Agreement, individually,
as a "party," and, collectively, as "parties.")
Witness that, WHEREAS
A. ATS is a medical device company engaged in, among other things, the
development, manufacture and commercialisation of medical and related
products.
B. ErySave is a technology company engaged in, among other things, the
development of medical products and wishes to enter into this Agreement
to complete their development, in collaboration with ATS, and to
license ATS to develop, manufacture, import, export, market,
distribute, sell and use the subject products.
C. ATS wishes to collaborate with ErySave to complete the development of
the products which are the subject of this Agreement and to market,
distribute and sell those products on the terms set out in this
Agreement.
In consideration of the mutual promises and agreements of the parties set out in
this Agreement, the receipt and sufficiency of which is acknowledged by the
parties, THE PARTIES AGREE as follows:
1. DEFINITIONS
1.1 In this Agreement the capitalized terms defined below and
parenthetically elsewhere shall have the meanings here or there
supplied whenever such terms are used in their capitalised form:
1.1.1 Affiliate(s) means in respect of either party any corporation or other
business entity which is part of the same enterprise grouping as the
party and which controls, is controlled by, or is under common control
with such party, where control means at least majority ownership or
control of at least a majority of the voting shares or the power in
fact to control management decisions.
1.1.2 Agreement means this agreement, all annexes, appendices and additions
to this agreement, and all modifications, amendments, extensions and
renewals of this agreement.
1.1.3 ATS means ATS Medical, Inc., a Minnesota corporation which has its
principal place of business at 3905 Annapolis Lane, Suite 105,
Minneapolis, Minnesota, 55447 USA.
1.1.4 CE Certification or CE-Mark means compliance with the European Union
Medical Device Directive (93/42/EEC).
** The appearance of a double asterisk denotes confidential information that has
been omitted from the exhibit and filed separately, accompanied by a
confidential treatment request, with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.
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1.1.5 CE-Approved Prototype - the Prototype designed and/or manufactured in
conformance with the Specifications and which has obtained CE
Certification.
1.1.6 ErySave means ErySave AB, a Swedish corporation which has its principal
place of business at IDEON, SE-223 70 Lund, Sweden.
1.1.7 Know-How means all present and future confidential and substantial
information, research, studies, specifications, samples, materials,
documents, trade secrets, data, methods, processes, and special
abilities acquired, licensed, owned or controlled by or on behalf of
ErySave concerning or relating to the PARSUS Technology, including but
not limited to analytical and clinical data, product forms and
specifications, methods of preparation, assembly and manufacture,
information contained in registration dossiers, and all third party
data relating to the PARSUS Technology to which ErySave has access.
1.1.8 License means the licenses granted by ErySave to ATS pursuant to Part 5
of this Agreement
1.1.9 Licensed Field means the field of intra-operative cardiovascular
surgery.
1.1.10 Net Sales means the gross revenues invoiced or otherwise receivable by
ATS or its Affiliates in respect of revenues from Products that were
made by (or were made under authority of) ATS or its Affiliates and
were sold, leased, transferred or otherwise made available to
independent third parties, less (i) reasonable, customary and usual
trade or quantity discounts actually taken by customers, (ii) sales,
use, value-added and excise taxes imposed and paid in respect of sales
of Products and included in the invoice price, (iii) import and export
duties or fees, and shipping and delivery charges; and (iv) refunds for
customer returns.
1.1.11 PARSUS Technology means any device or method, as now existing or later
developed, for separating particles from fluids using ultrasound,
including, but not limited to, any device or method that is within the
scope of any claim of PCT Patent Application Publication No. WO
02/072235, filed March 11, 2002 and entitled "Device And Method For
Separation."
1.1.12 Patents means those patent rights, patents applications and patents
owned or controlled by ErySave or to which ErySave has acquired rights,
and which claim any PARSUS Technology, including patents and patent
rights deriving or issuing therefrom and all extensions, additions,
reissues, continuations, continuations-in-part or divisions thereof and
any substitute applications thereof and any protection certificate for
any of the aforesaid and all other patents claiming priority with or
from such patents anywhere in the world and all derivations,
improvements or further developments thereof created by, applied for,
granted to, acquired, controlled or licensed by ErySave after the date
of this Agreement relating to the PARSUS Technology.
1.1.13 Product(s) means any device made from, made with, based on, containing,
or incorporating PARSUS Technology, including but not limited to, the
Prototype, restricted to applications and indications in the Licened
Field where the development, manufacture, importation, export,
marketing, distribution, sale or use involves in any
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way the Know-How or is dependent upon, covered by or within the scope
of any claim or invention disclosed in the Patents.
1.1.14 Prototype means the ErySave fat emboli cleaner device known as
"MindShield" presently under development and which includes a "Base
Unit," a "Disposable Disc" and "Disposable Disc/Kit," which, upon
completion of development, shall be deemed to be a Product.
1.1.15 Royalty means the royalty payable by ATS to ErySave pursuant to Part 7
of this Agreement.
1.1.16 Specifications means the design requirements, functional requirements,
testing procedures, quality assurance procedures, and documentation
requirements for the Prototype or other Products as agreed upon by the
parties.
1.1.17 Trademarks means the trademark or marks listed in Appendix 2 to this
Agreement and such other of ErySave's trademarks or tradenames and such
further identification and marks as ErySave may from time to time
designate for use on, with or in relation to, among other things,
Products.
2. PROTOTYPE DEVELOPMENT PHASE
2.1 The Prototype Development Phase shall comprise the time period and
relate to all work with respect to the development of the Prototype
into a commercially viable Product. The Prototype Development Phase
shall be deemed completed upon obtaining CE Certification for the
Prototype. It is anticipated that obtaining CE Certification for the
Prototype will be completed within twenty four (24) months from the
date of execution of this Agreement.
2.2 ErySave shall, in accordance with a development plan and budget
elaborated by ErySave in consultation with ATS, complete the
development of the Prototype in accordance with the Specifications and
provide the CE-Approved Prototype and/or its related design
documentation to contract manufacturers to be chosen by agreement of
both parties for the purpose of establishing full-scale production of
the CE-Approved Prototype for commercial sale. ATS will, on request and
at no additional cost to ErySave, provide reasonable assistance to
ErySave in this process.
2.3 The parties shall, where appropriate or necessary and acting
reasonably, elaborate and agree on the Specifications. Additionally,
the parties shall establish target dates for completion of the
development for the Prototype, the provision of the CE-Approved
Prototype and/or its related design documentation to contract
manufacturers for full-scale commercial production, and obtaining
marketing authorization in the U.S., Europe and other markets for the
CE-Approved Prototype.
2.4 ErySave shall be responsible for and shall bear all costs associated
with obtaining a CE-Certification for the Prototype.
2.5 ErySave shall be responsible for achieving the development milestones
set out in sub-paragraphs (b) - (g) of this paragraph as described in
more detail in Appendix 4; and ATS shall pay ErySave the aggregate sum
of SEK 10,000,000.00 in the following installments
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and based on the completion of the following milestones, regardless of
the order in which each milestone is achieved:
(a) Execution of this Agreement - SEK 1,430,000.
(b) Completion of development of the Disposable Disc in
accordance with the Specifications - SEK 1,430,000. At a
minimum the Disposable Disc shall be a full-size disc
(5-1/2 inch or equivalent size) made of disposable
material (polymer or other) and shall incorporate
micromechanical channels in the Disposable Disc.
(c) Completion of development of the Disposable Disc/Kit in
accordance with the Specifications - SEK 1,430,000. At a
minimum the Disposable Disc/Kit shall be a full-size
disc (5-1/2 inch or equivalent size) made of disposable
material with a lid attached to the disc, and shall
include tubing and flow control devices attached to the
disc/lid set, and shall have a throughput of a minimum
of one liter/hour, with a minimum fat emboli removal of
90%.
(d) Completion of the GLP (Good Laboratory Practice) animal
studies for the Prototype needed for CE-Certification -
SEK 1,430,000.
(e) Completion of development of the Base Unit in accordance
with the Specifications - SEK 1,430,000.
(f) Completion of the transfer of manufacturing information
for the CE-Approved Prototype to selected contract
manufacturers for full-scale production of the
CE-Approved Prototype for commercial sale - SEK
1,430,000. Transfer of manufacturing information shall
be defined as the transfer from ErySave to the relevant
manufacturer or manufacturers of all documentation in
ErySave's possession or control which are relevant or
necessary for the manufacturing of all components
comprising the CE-Approved Prototype.
(g) Receipt of CE-Mark Approval - SEK 1,420,000.
2.6 ErySave shall invoice ATS for each installment amount payable under
paragraph 2.5 upon the occurrence of the events specified and ATS shall
make payment of such invoices within thirty days of receipt of the
invoice. Interest shall accrue and be paid by ATS on all overdue
invoice amounts at the rate of 1.0% simple interest per month (12%
simple interest per annum) until paid.
2.7 All amounts payable under this Part 2 shall be paid in full without any
withholding or deduction. ErySave shall return any amounts that are not
required for expenses related to the achievement of the development
milestones to ATS.
2.8 ATS shall make all payments required to be made under this Part 2 to
ErySave in Swedish Kronor (SEK).
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2.9 ErySave shall have no obligation to manufacture and supply any
Prototype or CE-Approved Prototype for use by ATS other than as may be
set out herein or mutually agreed in writing.
2.10 Notwithstanding anything to the contrary in this Agreement, upon thirty
(30) days prior written notice and with the prior written consent from
ATS, ErySave may subcontract the performance of all its obligations for
the Prototype Development Phase under this Part 2.
2.11 The parties shall, as far as reasonably practicable, carry out the
Prototype Development Phase in a timely manner and using their
commercially reasonable efforts.
2.12 The parties shall immediately advise one another of any anticipated
delay in meeting the schedule or milestone during the Prototype
Development Phase.
2.13 In the event of any anticipated or possible delay which has the
potential to cause substantial inconvenience, cost or loss to the
parties or either of them, the parties shall forthwith consult with one
another as to ways of avoiding the delay and of dealing with the
consequences of the delay.
2.14 The parties acknowledge their mutual understanding that the Prototype
Development Phase involves development work, the progress and results
of which cannot necessarily be anticipated or planned for in advance,
and that there needs to be a high degree of mutual flexibility in terms
of scheduling, support and resources, particularly in respect of
unforeseen delays and other difficulties which might arise.
2.15 In the event ATS develops additional Products and elects to involve
ErySave in any related development process, the parties will follow a
similar product development phase as set forth in this Part 2 followed
by a commercial phase as set forth in Part 3. The specific terms,
conditions and requirements for completing the product development
phase and commercial phase for any future Products involving ErySave
are to be determined by mutual agreement of the parties.
3. COMMERCIAL PHASE
3.1 The Commercial Phase for the CE-Approved Prototype shall commence upon
the completion of the Prototype Development Phase and shall involve all
duties and obligations as set forth in this Part 3. During the
Commercial Phase, ATS shall undertake the tasks described in this
Section 3; and the parties shall elaborate and agree on target launch
dates for the U.S., major European markets, and other markets.
3.2 ATS shall be responsible for and shall bear all costs associated with
obtaining the permits, licences, registrations, certificates, approvals
and other regulatory authorisations required to manufacture,
distribute, market, sell and use the CE-Approved Prototype, including
without limitation, obtaining regulatory approvals in all non-CE
countries and for any local work needed to transform the CE-Mark into a
marketing authorization in any other countries. ErySave will, on
request, provide reasonable assistance to ATS and share with ATS any
required information in ErySave's possession or control.
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3.3 ErySave shall co-operate with ATS by providing data and information
produced in the course of ErySave's development work on the Prototype
as may assist ATS in obtaining the authorisations referred to in
paragraph 3.2. ATS will, on request, share with ErySave all information
in ATS' possession or control arising out of ATS activities in
obtaining the authorizations referred to in paragraph 3.2 for use by
ErySave with respect to any CE-Approved Product.
3.4 ErySave and ATS shall be jointly responsible for procuring the
manufacturing of the Disposable Discs for the CE-Approved Prototype and
for ensuring the supply of the Disposable Discs for the CE-Approved
Prototype to ATS's contract manufacturer(s).
3.5 ATS shall be responsible for procuring the commercial manufacture and
supply of remaining components of the CE-Approved Prototype and for
assembly, sterilization and packaging of the final components of the
CE-Approved Prototype; and ErySave shall assist ATS in the transfer and
set-up of the processes and methods which will be required to
manufacture the CE-Approved Prototypes by a commercial contract
manufacturer or manufacturers agreed to in writing by both parties.
3.6 ATS shall use commercially reasonable efforts to diligently pursue the
commercialization of the CE-Approved Prototypes and shall meet the
requirements of the market by making or having made and offering or
having offered for sale adequate quantities of the CE-Approved
Prototypes on commercially reasonable terms.
3.7 ATS shall at all times in relation to the CE-Approved Prototypes
conduct itself and use efforts substantially consistent with like
conduct and effort devoted to other products of similar commercial
potential or significance.
3.8 ATS shall use commercially reasonable efforts to actively and
effectively promote, market, distribute and sell the CE-Approved
Prototypes at its own expense and for its own account, maintain an
adequate sales force, assign sufficient staff to the CE-Approved
Prototypes for the purposes of this Agreement, establish and maintain a
system of after-sales support for the CE-Approved Prototypes, maintain
sufficient stocks of the CE-Approved Prototypes, and properly handle
and store the CE-Approved Prototypes. In markets where ATS does not
have its own representation, ErySave and ATS shall be jointly
responsible for the commercialisation of the Product.
3.9 ATS shall conduct its advertising, promotional and marketing activities
consistent with industry practices and may make use of marketing
information, materials and documentation and product and technical
documentation, specifications, instructions for use, directions,
indications and standards supplied by ErySave, if any.
3.10 ATS shall use commercially reasonable efforts to ensure that all the
CE-Approved Prototypes are properly packaged and labelled and are
accompanied by proper and sufficient manuals and other literature
setting out and containing such clear and plain safety information,
instructions and warnings as may be required by applicable law and as
may be required or advisable in the circumstances. ATS shall not alter,
remove or modify the CE-Approved Prototypes or any aspect of their
safety systems or features, without the prior, specific, written
permission of ErySave.
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3.11 ATS shall use commercially reasonable efforts to substantially comply
with all laws, rules, regulations and administrative directions
concerning the production, marketing, distribution, sale and use of the
CE-Approved Prototypes. ErySave shall, on request, provide reasonable
assistance to ATS to enable compliance with all such laws, rules,
regulations and administrative directions. Each of the parties shall
promptly notify the other of changes or other developments in the
applicable laws, rules, regulations and administrative directions of
which it becomes aware and which are relevant to either parties'
obligations under this Agreement.
3.12 ATS shall not distribute or sell any obsolete CE-Approved Prototypes or
CE-Approved Prototypes with insufficient remaining shelf-life.
3.13 ATS shall prepare and deliver to ErySave at the commencement of this
Agreement, and then periodically (at least yearly, but no more than
quarterly), a report containing specific detail of ATS' future
development, manufacturing, marketing, and sales activities, plans and
projections relating to the CE-Approved Prototypes, together with a
comparison of actual activities and results to the activities, plans
and projections that had been predicted in the prior report. ErySave
shall have the right to approve such future plans and projections,
acting reasonably.
3.14 In addition to and without in any way limiting its obligations under
this Part 3, ATS shall adhere to the following minimum marketing
performance criteria described in more detail in Appendix 3:
a. development of brochure(s) for the CE-Approved
Prototypes;
b. development of sales training programs and
implementation of sales force training classes the
CE-Approved Prototypes;
c. development of website content and relevant links for
the CE-Approved Prototypes;
d. incorporation of graphics in ATS trade show exhibit
booths the CE-Approved Prototypes;
e. inclusion of the CE-Approved Prototypes in cardiac
surgery symposia supported by ATS;
f. hiring and training of manager for the CE-Approved
Prototypes;
g. inclusion of the CE-Approved Prototypes in journal
advertising campaigns;
h. development of a design and performance manual, and
development and maintenance of processes for order
entry, equipment service requests, etc. for the
CE-Approved Prototypes;
i. During each twelve month period beginning twenty four
months after U.S. FDA approval, ATS shall make royalty
payment(s) at least equal to **.This amount will
increase ** for each subsequent year. For example the
amount will be ** in year one, ** in year two, ** in
year three and so on. If FDA approval has not been
received within twenty four months of CE Certification,
ATS shall make royalty payment(s) at least equal to **.
This amount will increase ** for each subsequent year
until FDA approval has been received (at which point the
amount will be increased to ** plus an extra ** for each
subsequent year.
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3.15 ATS shall carry out its obligations under this Part 3 using
commercially reasonable efforts, in a timely manner and at its own
expense.
3.16 ATS shall report to ErySave, on a quarterly basis or as otherwise
agreed upon by the parties, regarding the activities to be undertaken
by ATS under this Part 3 and, to the extent permitted by law, shall
share with ErySave all data and information relating to or arising from
such activities.
4. PROJECT GROUP AND REPORTING
4.1 Each party shall designate one person to be the focal point for contact
between the parties in respect of the Products. Any change to the
designations shall be by notice in writing to the other party.
4.2 The parties' designated persons appointed pursuant to this Part 4 shall
form a Steering Committee consisting of at least one representative of
ATS and one or more representative of ErySave. The Steering Committee
shall meet in person or by telephone conference at such intervals as
the designated persons may from time to time determine for the purposes
of regular reporting regarding both the product development and
commercial phases. In addition and without limiting the foregoing, with
respect to the Prototype, the Steering Committee shall meet at a
minimum once every two weeks via Webcast Conference Call and once every
two months face-to-face to review matters during both the Prototype
Development Phase and the Commercial Phase.
4.3 With respect to the Prototype, progress reviews shall include ErySave's
Development Project Manager, ErySave's President, ATS's Medical PARSUS
Product Manager, ATS's Vice President Marketing & Business Development,
and others to be determined by mutual agreement of ErySave's President
and ATS's Vice President Marketing & Business Development.
5. GRANT OF LICENSE
5.1 ErySave hereby grants ATS, and ATS hereby accepts, the world-wide, and
exclusive right and license under the Know-How and Patents to use and
practise the PARSUS Technology to develop, manufacture, import, export,
market, distribute, sell and use the CE-Approved Prototype and any
future Products during the term of this Agreement.
5.2 ErySave hereby grants to ATS, and ATS hereby accepts, the world-wide,
non-exclusive right and license to use the Trademarks on and in
connection with the sale, offering for sale, distribution and
advertising of the CE-Approved Prototype and any future Products during
the term of this Agreement subject to the restrictions under Part 6.
5.3 ATS is authorized to sub-license its rights and obligations under this
Agreement to sub-distributors, provided ATS remains liable for
performance by all sub-licensees of all obligations sub-licensed and
ATS informs ErySave of the identity of sub-licensees as soon as
reasonably practicable following their agreement and provides ErySave
with a copy of the sublicense agreements.
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5.4 The License is restricted to the Licensed Field and the CE-Approved
Prototype and future Products and does not in any way limit or restrict
the rights of ErySave or any third party licensee of ErySave from using
and practising the PARSUS Technology for any purpose outside the
Licensed Field.
6. TRADEMARKS
6.1 All CE-Approved Prototypes and future Products or their packaging shall
be marked with an acknowledgement that the CE-Approved Prototype or
Product is manufactured and marketed under license from ErySave.
6.2 ATS shall, if commercially reasonable, include the ErySave name, logo
and PARSUS trademark on the Prototypes and Products, as may be directed
by ErySave in accordance with ErySave's corporate identity policies in
effect from time to time or otherwise as advised by ErySave; and all
CE-Approved Prototypes and Products shall, if commercially reasonable,
bear such of the Trademarks as ErySave may determine. ATS shall show
ErySave its intended uses of the Trademarks (including the ErySave
name, logo and trademark(s)) in advance of such use, and seek ErySave's
approval thereof, which shall not be unreasonably withheld. ATS will
provide rationale for all instances where the ErySave name, logo or
trademark(s) are not included on the Prototypes and Products, .after
which ATS may sell, offer for sale, distribute and advertise the
CE-Approved Prototype and any other Products bearing only ATS
trademarks. ATS may, in its sole discretion, use the Trademarks along
with ATS trademarks subject to the following restrictions set forth in
this Part 6.
6.3 The Trademarks shall be and remain the sole and exclusive property of
ErySave, who shall be responsible to obtain and maintain all such
trademark registrations as deemed necessary or advantageous.
6.4 ATS shall not use the Trademarks for any article, product, goods,
merchandise or service other than the CE-Approved Prototype and
Products. ATS shall use the Trademarks in respect of the CE-Approved
Prototype and Products in a manner consistent with this Agreement and
ErySave's corporate identity policies in effect from time to time,
without any addition, deletion, amendment or modification other than
with ErySave's prior, written permission. ATS and ErySave are not
authorized to use any of the Trademarks owned by the other party as a
corporate name.
6.5 Both parties, shall conduct their respective activities at all times in
a manner that maintains the reputation, status and goodwill of each
parties trademarks, and neither party shall do anything that could tend
to damage, impair or destroy the reputation, status or goodwill of the
other's trademarks, the CE-Approved Prototype, Products or the parties
to this Agreement.
6.6 ErySave shall have the right upon reasonable notice to inspect ATS's
records of utilizing the Trademarks, as well as of the quality of the
Products and Prototypes on which they are affixed or applied, and to
require reasonable adjustment therein to the extent necessary to
safeguard its rights under trademark law.
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7. ROYALTY AND OTHER PAYMENTS
7.1 In respect of all CE-Approved Prototypes which are being developed or
marketed and sold by ATS or its Affiliates, ATS shall pay to ErySave on
all Net Sales the Royalty calculated in accordance with the criteria
set out in Appendix 1 to this agreement. The Royalty shall accrue
whenever a CE-Approved Prototype or future Product sale is invoiced by
ATS or its Affiliates to or otherwise becomes owing by their customers.
7.2 In respect of all permitted sub-licenses of the PARSUS Technology
granted to independent third parties by ATS or its Affiliates relating
to CE-Approved Prototypes, ATS shall pay to ErySave ** of all up-front,
down payment, milestone, fee, royalties, or like payments (if any)
receivable by ATS or its Affiliates. Such amounts shall be payable to
ErySave within thirty (30) days from the date of receipt of such
up-front, down payment, milestone, fee or like payment by ATS or its
Affiliate, and ATS shall provide a monthly accounting of such receipts
(as well as of the number of CE-Approved Prototypes or future Products
invoiced by ATS's sub-licensees in sufficient detail as to permit
calculation of the amounts due to ATS and its Affiliates, and the
related calculation of the amounts due by them to ErySave), or shall
provide a statement that no CE-Approved Prototype or future Product
sales were invoiced and/or that no amounts were due by sublicensees to
ATS and Affiliates. Such monthly accountings or statements shall be
made by ATS.
7.3 The Net Sales Royalty shall be calculated and payable on a calendar
quarterly basis in arrears commencing on the last day of the first
calendar quarter after the first sale of a CE-Approved Prototype is
invoiced.
7.4 Within thirty days after the end of each calendar quarter, ATS shall
pay the Royalty. Within thirty days after the end of each calendar
month, ATS shall provide a monthly accounting of the number of
CE-Approved Prototypes or future Products invoiced by ATS, its
Affiliates, and its sub-licensees in sufficient detail as to permit
calculation of the amounts due or shall provide a statement that no
CE-Approved Prototype or future Product sales were invoiced. Such
accountings or statements shall be made by ATS.
7.5 ATS shall make all payments due under this Part 7 in US dollars. All of
ATS's accruals in non-US currency shall be translated into US dollars
at the exchange rates prevailing at the time of ATS's invoice (or
otherwise as required by US GAAP, consistently applied), free and clear
of and without deduction or delay in respect of any demand, set-off,
counter claim or other dispute and, so far as legally possible, each
such payment shall be made free and clear of any taxes imposed by or
under the authority of any government or public authority.
7.6 ATS shall pay interest on overdue payments owing under this Part 7 at
the rate of 1% simple interest per month (12% simple interest per
annum) until paid.
7.7 Royalties and other payments accruing hereunder shall be paid to
ErySave or ErySave's designated payee, named by ErySave in written
notice to ATS.
7.8 ATS may deduct and withhold and shall remit and pay to the proper
authority, any withholding or similar tax which ATS is required to
deduct, withhold and remit in
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respect of Royalty on ErySave's behalf. ATS shall claim, or assist
ErySave to do so, exemption from withholding tax on royalties, if any,
under applicable taxation treaties. Proof of such withholding tax
payments in a form satisfactory to the payee shall be secured and sent
to the payee as evidence of such payment.
7.9 ATS shall at its principal place of business, during the term of this
Agreement and for a period of three (3) years thereafter, keep true and
accurate records of all matters connected with the development,
manufacture and sale of CE-Approved Prototypes and shall also keep
proper records of sales invoices and all books of account relating to
payments from sub-licensees containing such correct entries complete in
every particular as may be necessary to enable the amounts due to
ErySave to be conveniently ascertained and audited.
7.10 Upon not less then ten (10) day's prior written request by ErySave, ATS
shall produce the records and books of account referred to in paragraph
7.9 and calculations for Cost of Goods Sold (as defined in Appendix 1)
certified as correct by ATS or its agents and, if so requested by
ErySave, which shall not be more than twice in any calendar year, ATS
shall permit those records and books to be examined by an independent
accountant nominated by ErySave and reasonably acceptable to ATS, and,
at ErySave's expense, ATS shall permit that accountant to take copies
of or extracts from the records and books. In addition, ATS shall give
the independent accountant all assistance, access and facilities
reasonably necessary to enable the independent accountant to verify the
records and books and shall supply such other information as may be
reasonably necessary or proper to enable the amounts payable to ErySave
under this Agreement to be ascertained and verified. If the independent
accountant identifies a deviation equal to or greater than ten percent
(10%) from the amounts identified as payable to ErySave by ATS then the
independent accountant's cost shall be paid by ATS. ATS shall
immediately remit to ErySave any outstanding Royalty or other payments
identified as owing and unpaid by the independent accountant and
overdue interest thereon. If the independent accountant identifies that
excess Royalties have been paid, such excess Royalties shall be applied
against the Royalties owed in the next calendar quarter.
7.11 In the event that an investigation of ATS' books and records is made
pursuant to paragraph 7.10, certain confidential and proprietary
business information of ATS may necessarily be made available to the
person or persons conducting such investigation. It is agreed that such
confidential and proprietary business information shall be retained in
confidence by ErySave, its agent or representative, and shall not be
used by ErySave, its agent or representative, or disclosed to any third
party other than as contemplated under this Agreement without the prior
express written permission of ATS unless required by law. It is
understood and agreed, however, that such information may be used in
any proceeding based on ATS' failure to make payment of Royalties or
other payments required under this Agreement.
8. RIGHT OF FIRST REFUSAL
8.1 ATS is hereby granted a right of first refusal to exploit any new
devices or products or applications for any devices or products for use
outside of the Licensed Field but relating to the care of cardiac
surgery patients.
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8.2 In the case of each such new device or product or application for any
new device or product, ATS's right of first refusal shall arise upon
receipt from ErySave of written notice that such a device or product or
application for such a device or product has been developed to at least
the concept stage and shall expire 90 days thereafter if the parties
are unable to reach an agreement, acting reasonably, for the further
development and commercialization of the device or product or
application for the device or product.
8.3 ATS is hereby granted a right of first negotiation for all healthcare
applications not included in Section 8 above.
9. FUTURE PRODUCT DEVELOPMENT
9.1 To the extent ATS elects to have ErySave participate in the development
of future Products that employ the PARSUS Technology in the Licensed
Field, the parties shall share equally the cost of all future
development of and improvements to such future Products, including the
cost of all patenting arising out of inventions relating to such future
Products. If ATS does not elect to have ErySave participate, then ATS
shall pay such costs. As indicated in Section 12.5, all such inventions
and the associated patent and other intellectual property rights shall
be and remain the property of ErySave and shall fall within the scope
of the License, as provided in this Agreement. ATS and its agents,
employees, contractors and representatives shall execute such
assignments as ErySave may consider necessary or desirable to implement
its property interest.
9.2 To the extent ATS elects to have ErySave participate in the development
of such future Products, the parties shall consult with one another
regarding such future Product development work and shall, acting
reasonably, establish agreed plans and budgets for such work.
9.3 Neither party shall acquire any rights in the other party's
intellectual property or other proprietary rights or technology with
respect to any future Products except as explicitly set forth by
written agreement executed by both parties.
10. ERYSAVE'S REPRESENTATIONS, OBLIGATIONS, INDEMNITY AND DISCLAIMER
10.1 ErySave shall provide to ATS, in useable form, all Know-How in
existence as of the Effective Date and reasonable technical support,
information, ongoing research, and any other later acquired Know-How
for future Product developments referred to in paragraph 9.1, to the
extent ErySave has such technical information and research, but ErySave
shall have no obligation to create or develop technical information or
research for ATS.
10.2 ErySave shall provide such other or additional assistance to ATS in the
form of promotion and training on the use of the CE-Approved Prototypes
or future Products as ATS may from time to time reasonably request and
ATS shall reimburse and remunerate ErySave for such assistance as the
parties may from time to time agree, provided that ErySave shall have
no obligation to provide such support in the absence of agreement as to
its reimbursement and remuneration or due to lack of availability of
ErySave staff or other resources.
10.3 ErySave represents and warrants that it has the sole, exclusive and
unencumbered right to grant the licences and rights herein granted to
ATS, and that it has not granted any
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option, licence, right or interest in or to the PARSUS Technology to
any third party which would conflict with the rights granted by this
Agreement.
10.4 ErySave represents and warrants that, insofar as it is aware, the
PARSUS Technology, Patents, Know-How, or Trademarks do not infringe or
misappropriate any patent, trademark, copyright, mask right, moral
right, trade secret or other industrial, intellectual or proprietary
rights of any third party ("Third Party IP Rights").
10.5 ErySave shall defend, indemnify and hold harmless ATS and its
directors, officers, employees and agents from all claims, suits,
demands, losses, costs, attorney's fees, damages, and loss of profits
in any way connected with, caused by, resulting from or related to: (i)
information, materials, components or items provided, developed or
produced by ErySave to the extent attributable to such provision,
development or production; or (ii) breach of any term or condition of
this Agreement; or (iii) any warranty made by ErySave under this
Agreement; but excluding any claims, suits, losses, costs, attorney's
fees, damages, and loss of profits or part thereof to the extent based
solely on ATS's negligence or breach of this Agreement or the
negligence of any third party acting by, through or under ATS or to the
extent arising from ATS's operations or actions. ErySave shall conduct
the defense in any such third party action arising as described herein
and ATS shall cooperate with such defense, at the expense of ErySave,
provided that ErySave reasonably consults with ATS. ATS may, at its own
expense, assist in such defense if it so chooses, provided that ErySave
will control such defense and all negotiations relative to the
settlement of any such claim. Notwithstanding any of the foregoing,
ErySave shall not settle any such claim without ATS' prior written
consent, which consent will not be unreasonably withheld.
10.5.1 If, under this Agreement, any Product or any part thereof, which
becomes the subject of any claim, suit or proceeding for infringement
or misappropriation of any Third Party IP Rights, or if any Products,
or any part thereof, is held or otherwise determined to infringe or
misappropriate any Third Party IP Rights, then ErySave will at its
expense, and without limiting its other obligations under this
Agreement, achieve the following results in the listed order of
preference:
(i) Secure for ATS the right to continue using and
practising the PARSUS Technology and to continue
manufacturing, importing, marketing, distributing,
selling and using the Products or any part thereof to
the fullest extent consistent with the License granted
by this Agreement;
(ii) Replace or modify the Products, or any part thereof, to
make the Products non-infringing but without degradation
in operation, performance, or utility; or
10.5.2 Notwithstanding anything to the contrary set forth in this Agreement,
ErySave has no liability for misappropriation or infringement of any
Third Party IP Rights arising from: (i) ErySave's compliance with any
designs, specifications or instructions of ATS; (ii) modification of
the Product by ATS or its representatives without the prior knowledge
and written approval of ErySave; or (iii) use of the Product by ATS in
violation of this Agreement or not in accordance with instructions for
use.
- 13 -
10.6 Except as otherwise provided in this Agreement, ErySave makes no other
representation or warranty (including any warranty of merchantability
or fitness for a particular purpose) to ATS or anyone else with respect
to the use of the PARSUS Technology or the development, manufacture,
use, marketing, distribution, and sale of Products pursuant to this
Agreement and except as otherwise provided in this Agreement disclaims
all liability in connection therewith, including liability for special,
incidental, consequential or penalty damages, including for lost
profits or goodwill, even if advised of the possibility thereof.
11. ATS'S REPRESENTATIONS, OBLIGATIONS AND INDEMNITY
11.1 ATS shall indemnify and save harmless ErySave and its directors,
officers, employees and agents from all claims, suits, actions,
judgments, losses, costs, expenses, attorney's fees, damages, and loss
of profits in any way connected with, caused by, resulting from or
related to: (i) information, materials, components or items provided,
developed or produced by ATS, or (ii) breach of any term or condition
under this Agreement; or (iii) breach of any warranty made by ATS under
this Agreement; but excluding any claims, suits, losses, costs,
attorney's fees, damages, and loss of profits or part thereof based
solely on ErySave's negligence or breach of this Agreement or the
negligence of any third party acting by, through or under ErySave. ATS
shall conduct the defense in any such third party action arising as
described herein and ErySave shall cooperate with such defense, at
ATS's expense, provided that ATS reasonably consults with ErySave.
ErySave may, at its own expense, assist in such defense if it so
chooses, provided that ATS will control such defense and all
negotiations relative to the settlement of any such claim.
Notwithstanding any of the foregoing, ATS shall not settle any such
claim without ErySave's prior written consent, which consent will not
be unreasonably withheld.
11.2 ATS shall obtain and carry in full force and effect commercial, general
liability and product liability insurance which shall protect ATS and
ErySave with respect to events covered by paragraph 11.1. Such
insurance shall be written by a reputable insurance company authorized
to do business in the State of Minnesota, USA and the country of
Sweden, shall list ErySave as an additional named insured thereunder,
shall be endorsed to include product liability coverage and shall
require thirty (30) days written notice to be given to ErySave prior to
any cancellation or material change thereof. The limits of such
insurance shall not be less than Three Million Dollars ($3,000,000 USD)
per occurrence with an aggregate of Ten Million Dollars ($10,000,000
USD) for personal injury or death, and Three Million Dollars
($3,000,000 USD) per occurrence with an aggregate of Ten Million
Dollars ($10,000,000 USD) for property damage. Upon request, ATS shall
provide ErySave with certificates of insurance evidencing the same.
11.3 ATS warrants that it will substantially follow all applicable
standards, specifications, laws, regulations, guidelines and rules
relating to the development, manufacture, use, distribution and sale of
Products.
11.4 Except with respect to obtaining CE Certification for the Products, ATS
shall be responsible for obtaining all approvals, authorisations,
permissions or licenses necessary or desirable to enable the Products
to be used in its business operations. ErySave shall be provided with
copies of all such approvals, etc. and any associated filings and
information provided to and received from applicable authorities.
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12. INTELLECTUAL PROPERTY RIGHTS
12.1 Subject to this paragraph, ErySave shall take all steps necessary to
file, prosecute and maintain the validity and subsistence of the PARSUS
Technology and the Know-How and Patents. In each case that ErySave
decides not to file, prosecute and maintain any patent application or
patent for any PARSUS Technology in the Licensed Field, it shall
promptly notify ATS and ATS shall have the option thereafter to file,
prosecute and maintain such patent applications or patents in and to
any PARSUS Technology itself. ErySave will do all acts and execute all
documents reasonably necessary for the purposes of this paragraph. If
ATS so files, prosecutes or maintains, then 50% of any reasonable
attorney's fees, government fees and expenses incurred by ATS in
filing, prosecuting and maintaining any Patents, Trademarks or Know-How
shall be applied against and reduce any future Royalties or other
payment(s) otherwise payable to ErySave under this Agreement.
12.2 ATS shall not do any act (or fail to act) so as to reduce the rights of
ErySave in the PARSUS Technology.
12.3 Other than as expressly provided for in this Agreement, nothing in this
Agreement shall be construed as granting either party any right or
license, either express or implied, under any patents or other
industrial or intellectual property right, including trade secrets and
know-how, of the other party.
12.4 ErySave shall own all right, title and interest in, to and associated
with any improvement, development, discovery or invention or any future
Products as it relates to and employs the PARSUS Technology, whether
made by ErySave or any ErySave employee, or ATS or ATS employee or any
third party during the term of and in connection with this Agreement,
including any intellectual property rights, know-how, trade secrets,
inventions, data and information, but then any such improvement,
development, discovery, invention, data and information, and any
intellectual property rights, know-how, trade secrets thereto shall be
subject to the License.
12.5 Each party shall, within 30 days of becoming aware of any complaint,
claim or allegation that the exercise of the rights under this
Agreement constitutes an infringement or misappropriation of any Third
Party IP Rights, give the other party written notice of such claim,
etc. Likewise, each party shall, within 30 days of acquiring knowledge
or reasonable belief that any third party is infringing or
misappropriating any Patents, Trademarks or Know-How, give the other
party written notice of such knowledge or reasonable belief.
12.6 Any prosecution against third party infringers of ErySave Patents or
Know-how shall be conducted by ErySave, upon consultation with ATS. The
parties shall equally share the costs of, all claims and legal
proceedings against third parties relating to third party infringement
of any Patents or Know-How in the Licensed Field, and the benefits of
such proceedings (after reimbursement to the parties of their
respective legal and court costs thereof) shall be shared equally
between them.
12.7 If either party elects not to participate in a proceeding referred to
in paragraph 12.7 it shall notify the other party within ninety (90)
days of giving or receiving notice pursuant to paragraph 12.6, the
other may elect to proceed alone and shall have the right to
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institute or defend proceedings in its own name and at its own expense
and shall be entitled to receive all benefits derived therefrom,
subject to, in the case where ATS is the continuing party, remaining
liable to pay Royalty on all such benefits that are intended to
compensate for lost or reduced Product sales or similar loss or damage.
The non-participating party shall, if so requested in writing by the
continuing party, lend all necessary support to the proceedings on
condition that the continuing party indemnifies it against all costs,
damages and expenses which may be incurred in so doing.
12.8 Neither party shall settle or compromise any proceedings under this
Part 12 without the consent of the other party if the settlement or
compromise obliges the other party to make any payment or part with any
property or other right or assume any obligation or grant any licence
or other rights or be subject to any injunction or other restraint by
reason of such settlement or compromise.
13. CONFIDENTIALITY
13.1 In this Part 13 the following terms shall have the following meanings
whenever such terms are used in their capitalised form:
13.1.1 Confidential Information means any information which was not or is not
in the public domain at the time of its disclosure and which is
communicated in any way or form by either party to the other, either
before or after the date of this Agreement, whether or not such
information is identified as confidential, including, without
limitation, information relating to products, processes, services,
businesses, personnel, research, commercial activities, formulas,
substances, materials, programmes, devices, concepts, inventions,
patents, designs, methods, techniques, marketing and commercial
strategies, data, trade secrets, know-how, plans, operations, tests,
studies, manuals, market reports, customers, financial status, and the
like.
13.1.2 Disclosing Party means the party making disclosure of or otherwise
communicating Confidential Information to the other party.
13.1.3 Recipient means the party receiving or otherwise obtaining Confidential
Information from the other party.
13.2 The provisions of this Part 13 shall supersede and replace any
confidentiality agreement previously entered into between the parties
regarding the subject matter of this Agreement.
13.3 Confidential Information shall be and remain the property of the
Disclosing Party. The Recipient shall obtain no right of any kind in
Confidential Information other than the right to use it for the
purposes consistent with this Agreement.
13.4 Confidential Information shall be used by the Recipient only for the
purposes consistent with this Agreement and for no other use or purpose
so long as the Confidential Information is subject to this Agreement.
13.5 Confidential Information shall be kept strictly confidential by the
Recipient and shall not be disclosed to any third party by the
Recipient, other than with the prior, written
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permission of the Disclosing Party or as may be required by law or
under appropriate confidentiality obligations.
13.6 The Recipient may disclose Confidential Information only to those of
its directors, officers, employees and agents, including permitted
contractors, who are necessarily and directly involved in, and who need
to know of the Confidential Information as an essential part of,
performing the Recipient's obligations under this Agreement; and the
Recipient shall ensure that they enter into a confidentiality agreement
with the Recipient covering the disclosed Confidential Information on
terms no less onerous than those of this Part 13, that they use the
Confidential Information only for the purposes of this Agreement and
that they do not make any copies of or extracts from the Confidential
Information, except as authorised by the Disclosing Party in writing or
as necessitated by the requirements of this Agreement.
13.7 In the event the Recipient is required to make disclosure of
Confidential Information under the compulsion of law or authority, the
Recipient shall promptly inform the Disclosing Party and shall
cooperate with the Disclosing Party, but at no cost to Recipient, in
order to enable the Disclosing Party to take such action as it deems
necessary or appropriate to avoid or minimize the disclosure of such
Confidential Information.
13.8 In the event of any unauthorised disclosure of Confidential
Information, the Recipient shall immediately inform the Disclosing
Party and shall co-operate with it in determining what steps should be
taken.
13.9 The obligations of confidence, non-use and non-disclosure set out in
this Part 13 shall not apply to any information that is:
(a) information which the Recipient can establish was known to the
Recipient prior to its disclosure hereunder;
(b) information which is or becomes generally available to the
public through no act or omission of the Recipient;
(c) information which is rightfully received by the Recipient from
a third party who is not under an obligation of
confidentiality; or
(d) information which is specifically released, in writing, from
the scope of this Agreement by the Disclosing Party.
13.10 Upon the expiry or termination of this Agreement, the parties shall
each immediately return to the other all Confidential Information
received from the other in whatever form and all copies thereof.
13.11 The obligations of the parties under this Part 13 shall survive the
expiry or termination of this Agreement and shall remain binding upon
the parties, unless otherwise agreed, for a period of five (5) years
thereafter.
14. TERM
14.1 This Agreement shall remain in full force and effect, unless earlier
terminated in accordance with the provisions of this Agreement, until
the expiry of the last to expire
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patent right which makes up the Patents or until the Know-How is no
longer confidential, whichever is the longer.
15. EARLY TERMINATION
15.1 Breach. If either party is in material default or breach of any of its
representations, covenants or obligations under this Agreement, the
other party may give notice of such breach to the defaulting party
requesting the latter to remedy the default or breach and stating the
intention of the notifying party that this Agreement should terminate
in the event the other party fails to remedy the breach or default. If
the defaulting party fails to remedy the breach within sixty (60) days
after the date of notice, then this Agreement shall terminate
immediately upon the expiry of the sixty day period.
15.2 Insolvency. This Agreement shall terminate immediately if ATS shall
become insolvent or bankrupt, or if a receiver shall be voluntarily or
involuntarily appointed to direct its business for the benefit of
creditors or otherwise.
15.3 CE Certification. If CE Certification for the Prototype is not obtained
within thirty-six (36) months from the date of execution of this
Agreement, ATS may terminate this Agreement by written notice of such
termination given within the 30 days following the end of such 36th
month.
15.4 ATS Challenge to Patents. In the event ATS disputes or challenges the
validity or subsistence of any of the patent rights which make up the
Patents, ErySave may terminate this Agreement upon ninety (90) days'
written notice to ATS in respect of each such patent right or in
respect of this entire Agreement, in ErySave's discretion, unless ATS
withdraws or abandons such dispute or challenge to any of the patent
rights which make up the Patents with that ninety (90) day period.
15.5 Effects of termination
(a) Goodwill, etc. After Termination or Expiration. In the event of
termination of this Agreement under this Part 15, or in the event of
expiration, ATS shall have no claim, right or entitlement to any
compensation for the loss of any right, advantage or goodwill
associated with this Agreement and all rights granted to ATS under this
Agreement, and all rights granted by ATS to any sub-licensee, shall
cease and they shall forthwith cease any further use, practise under or
exploitation of the Technology, provided however they shall be entitled
for a period of three (3) months after the date of termination to
dispose of any stock of Products in existence at the date of
termination, subject to the payment of Royalty and other amounts due in
respect thereof.
(b) No Prejudice of Accrued Rights. Termination or expiration of this
Agreement, for whatever cause, shall be without prejudice to the rights
of the parties accrued under this Agreement up to the date of
termination.
(c) Termination for ATS's Breaches of Certain Marketing Obligations
Entails Payment by ErySave. If ATS fails to meet the performance
criteria set out in one of sub-paragraphs 3.14a-h within 60 days of
receipt of written notice from ErySave that such performance criteria
has not been met, despite ATS's having attempted in good faith to
perform, and if as a consequence, ErySave obtains the right to
terminate this Agreement
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under Section 15.1 ErySave must pay to ATS one half of the total sum
paid to ErySave by ATS pursuant to paragraph 2.5. This provision shall
not apply if ATS has also failed to meet the performance criteria in
subparagraph 3.14(i).
(d) No Use of Trademarks After Termination. Upon the expiry or
termination of this Agreement, regardless of the reasons for
termination, ATS's licence under paragraph 5.2 shall terminate, and ATS
shall cease using the Trademarks and shall have no claim to the
Trademarks or any right or property in the intangibles or goodwill of
the Trademarks.
16. MISCELLANEOUS
16.1 For good and valid commercial reasons, the parties shall keep the terms
of this Agreement confidential and shall make no disclosure of its
contents other than as may be agreed by both parties in writing,
required by law, or required by either party to enforce its rights
hereunder. However, both parties have the right to disclose the
agreement to financial institutions, given that a valid Non Disclosure
Agreement has been signed.
16.2 If any provision of this Agreement should as a matter of law be or
become void or unenforceable, this Agreement shall be construed as if
such provision was not contained herein and the remainder of this
Agreement shall remain in full force and effect.
16.3 In the event that any strike, lockout, other industrial disturbance,
epidemic, landslide, lightning, earthquake, fire, storm, flood,
drought, other act of God, rebellion, war, civil disturbance, act of
terrorism, explosion, or act or decision of any governmental authority
or court of law renders impossible the performance of any of the
obligations of the parties or either of them under this Agreement, the
party or parties affected shall be excused the performance of the
relevant obligation or obligations upon notifying the other party in
writing, giving a detailed explanation of the occurrence in question.
Upon the giving of such a notice, the performance of the party giving
notice shall be abated only to the extent and for so long as
performance remains impossible. Except for the payment of money,
neither party shall be required to make up any performance that is
abated in accordance with this paragraph.
16.4 This Agreement may not be assigned by either party, other than to an
Affiliate of the party, without the prior, written permission of the
other party which consent shall not be unreasonably withheld, except
that ErySave and ATS may assign the agreement to any third party that
acquires substantially all its assets or of its shares and also may
assign to a wholly owned subsidiary.
16.5 During the term of this Agreement, Erysave and ATS shall not develop,
manufacture, produce, market, distribute, sell, handle, acquire an
interest in, or become involved, with any product, or service, which
directly or indirectly competes with Products' or which in any way
conflicts or could conflict with their obligations under this
agreement, other than with prior written permission of the other party.
Any violation should of this paragraph would constitute a breach of the
agreement.
16.6 In entering into and carrying out their obligations under this
Agreement, the parties are independent contractors and shall have no
power or authority, express or implied, to bind the other party, act on
the other party's behalf, or in any way enter into or incur any
- 19 -
liability for or on behalf of the other party, and nothing in this
Agreement shall be construed as giving rise to a relation of
partnership or agency between the parties.
16.7 Any disagreement or dispute which may arise between the parties in
relation to or connection with this Agreement shall be settled amicably
and expeditiously by good faith negotiation. Any such dispute, other
than non-payment by ATS to ErySave of any amount or amounts owing under
this Agreement, which cannot be so settled within 60 days after the
commencement of negotiation shall be referred to non-binding mediation
by a single, independent mediator who is an expert in the field of
medical product development to be appointed by agreement of the
parties. Any such dispute which cannot be so settled within 90 days of
the cessation of the time for negotiation shall be referred to and
finally settled by arbitration by three arbitrators, one to be
appointed by each party and the third to be appointed by the first two,
in accordance with the international commercial arbitration rules of
the London Court of International Arbitration. All decisions,
determinations and rulings of the arbitrators shall be final and shall
be fully and irrevocably accepted by the parties. Any such arbitration
shall be held in London, England in the English language. The parties
shall use their best efforts to conduct all dispute resolution
procedures under this Agreement as expeditiously, efficiently and
cost-effectively as possible.
16.8 This Agreement shall be governed by the laws of England in respect of
all matters, including without limitation the execution, interpretation
and performance of this Agreement.
16.9 All notices and payments required or permitted by this Agreement shall
be delivered to the relevant party as noted in Part 1, and either party
may, in writing, change the address to which notices may be given.
16.10 This Agreement constitutes the entire agreement between the parties
concerning the subject matter of this Agreement and any representation,
promise or condition not incorporated in this Agreement shall not be
binding upon either party. No amendment, modification or addition to
this Agreement shall be binding on the parties unless made in writing
and executed by both parties.
16.11 The waiver on the part of either party of any right or interest
hereunder shall not imply the waiver of any other right or interest or
any subsequent waiver.
16.12 In the event ATS and ErySave elects to develop additional Products in
any related development process, the parties will follow a similar
commercial phase procedure with specific terms, conditions and
requirements to be determined by mutual agreement of the parties. `
- 20 -
IN WITNESS WHEREOF the parties have executed two (2) copies of this Agreement,
each of which shall be considered an original.
ATS MEDICAL INC ERYSAVE AB
_____________________________________ ___________________________________
MICHAEL DALE HENRIK JONSSON
CEO CEO
April 26th 2004 April 26th 2004
_____________________________________ ___________________________________
RICHARD CURTIS LENNART SJOLUND
VP Marketing Business development Chairman
April 26th 2004 April 26th 2004
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APPENDIX 1 CALCULATION OF ROYALTY
ROYALTY IS THE SHARE OF GROSS PROFITS ATTRIBUTABLE TO ERYSAVE PURSUANT TO THE
FOLLOWING:
1. PRODUCT DISPOSABLE KITS
A. WHERE ATS SELLS THE DISPOSABLES DIRECTLY:
- - ErySave and ATS will ** all Gross Profit **. Gross Profit shall be defined
as: Net Sales less Cost of Goods Sold less the ATS Fee. The ATS Fee shall
be defined as ** of Net Sales until cumulative Net Sales under this
Agreement reach **, then ** of Net Sales until cumulative Net Sales exceed
**, and then ** of Net Sales thereafter. Cost of Goods Sold shall be
calculated as determined in accordance with the US generally accepted
accounting principles, consistently applied, followed by ATS. Cost of
Goods Sold shall include the following costs of ATS related only to the
Product(s): raw materials, direct labor including wages and benefits,
sub-contract purchases, indirect labor, factory overhead, depreciation,
facility overhead, supplies, bad debt expense and freight in.
- Example 1
Sales <** Sales ** Sales >**
Net Sales amount ** ** **
ATS Fee ** ** **
Cost of Goods Sold ** ** **
Gross Profit ** ** **
Royalty ** ** **
- Example 2
Sales <** Sales ** Sales >**
Net Sales amount ** ** **
ATS Fee ** ** **
Cost of Goods Sold ** ** **
Gross Profit ** ** **
Royalty ** ** **
B. WHERE ATS USES SUB-DISTRIBUTORS TO SELL DISPOSABLE:
- - ErySave and ATS will ** all Gross Profit **. Gross Profit shall be defined
as: Net Sales from amounts invoiced to sub-distributors less ATS's Cost of
Goods Sold less the ATS Fee. The ATS Fee is defined as ** of Net Sales
regardless of cumulative sales growth. Cost of Goods Sold shall be
calculated as first described above. In the case that gross profit is
negative ErySave will not have to cover any loss.
- Example
Net Sales amount **
ATS Fee **
Cost of goods **
Gross profit **
Royalty **
- 22 -
- - If any other model is used for a sub-distributor, ATS shall notify
ErySave in advance and obtain ErySave's consent, including agreement as
to the calculation of Royalty, before ATS signs an agreement with the
sub-distributor.
2. PRODUCT DEVICES
A. WHERE ATS SELLS THE DEVICES DIRECTLY:
- - ErySave and ATS will ** all Gross Profit **. Gross Profit shall be defined
as: Net Sales less Cost of Goods Sold less the ATS Fee. Cost of Goods Sold
shall be calculated as first described above. The ATS Fee shall be defined
as ** of Net Sales. In the case that gross profit is negative ErySave will
not have to cover any loss.
- Example
Net Sales amount ** ** **
ATS Fee ** ** **
Cost of Goods Sold ** ** **
Gross Profit ** ** **
Royalty ** ** **
B. WHERE ATS USES SUB-DISTRIBUTORS TO SELL DEVICES:
- - ErySave and ATS will ** all Gross Profit **. Gross Profit shall be defined
as: Net Sales less Cost of Goods Sold less the ATS Fee. Cost of Goods Sold
shall be calculated as first described above. The ATS Fee is defined as **
of Net Sales regardless of cumulative sales growth. In the case that gross
profit is negative ErySave will not have to cover any loss
- Example
Net Sales amount ** ** **
ATS Fee ** ** **
Cost of Goods Sold ** ** **
Gross Profit ** ** **
Royalty ** ** **
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APPENDIX 2
TRADEMARKS
PARSUS
MindShield
ErySave
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