LICENSE AND DEVELOPMENT AGREEMENT
THIS LICENSE AND DEVELOPMENT AGREEMENT is entered into effective as of
this _____ day of ___________________, 1996, by and between CELL ROBOTICS,
INC., a New Mexico corporation (hereinafter referred to as "Owner," "Licensor,"
or "CRI") and GEM EDWARDS, INC., an Ohio corporation ("Licensee" or "GEM").
RECITALS
WHEREAS, CRI is the owner of certain proprietary and inventive rights
covered by a U.S. patent and other technological assets; and
WHEREAS, GEM desires to acquire the rights to use the patents and
technological assets subject to the terms and conditions hereinbelow set forth.
NOW, THEREFORE, in consideration of these premises and of the mutual
covenants and agreements hereinafter set forth, Owner and Licensee hereby agree
as follows:
SECTION 1: DEFINITIONS
1.1. "Affiliates" shall mean any person that directly or indirectly
controls or is controlled by or is under the common control of a party, its
officers, directors, employees, agents, independent contractors and/or
servants, or a person that beneficially owns, directly or indirectly, five
percent (5%) of more of the voting securities of a party.
1.2. "Confidential Information" includes all Trade Secrets,
information, knowledge, design specifications, design criteria, inventions,
discoveries, know-how, patents and patent rights, processes, and concepts
embodied or incorporated in or manifested or represented by any of the Licensed
Patents, Licensed Technology or Future Improvements, and all other information
that has been marked confidential or is known to be proprietary, whether or not
patented or patentable and whether or not copyrighted or copyrightable, which
becomes known or could become known to either party by virtue of this Agreement
and/or communicated by, from or through agents or employees of either party.
Confidential Information shall not include (i) information which at the time of
disclosure is published or otherwise in the public domain, (ii) information
which after disclosure becomes part of the public domain otherwise than through
a breach of this Agreement, (iii) information which was known to a party prior
to its disclosure by the other party, (iv) information which becomes known to a
party from a third party source on a non-confidential basis and (v) information
which is independently developed by a party otherwise than pursuant to this
Agreement.
1.3. "Product" or "Products" shall mean a commercial application,
utilizing the Licensed Technology within the Field of Use.
1.4. "Field of Use" shall mean the utilization of the Licensed Patents,
Licensed Technology and Future Improvements in the development and
commercialization of a Product to be used solely for obtaining blood samples.
1.5. "Geographical Territory" means the geographical area of the United
States of America.
1.6. "Licensed Patents" means (i) U.S. Patent No. 5432811, (ii) any
patents that may issue from pending U.S. Application No. 08-297,295, and (iii)
any patents that may issue from the licensed technology and any patents which
may issue from any divisional, continuation, reissue or substitute application
based thereon, including any patents which issue from applications not yet made
as of the date of this Agreement. Licensed Patents shall be limited to
inventions and proprietary information utilizing and implementing the Licensed
Technology in the Field of Use.
1.7. "Licensed Technology" means any trade secret, intellectual
property, confidential information, patents, know-how and inventions related in
any manner to any portion or phase of any scientific or technical information,
design, process, procedure, formula, improvement or other information related
thereto, developed and owned by Owner and related to the use of lasers to
obtain blood samples. Licensed Technology shall be limited to inventions and
proprietary information utilizing and implementing the Licensed Technology in
the Field of Use.
1.8. "Future Improvements" means any and all inventions and
improvements in processes, and manufacturing techniques relative to the
articles falling within the scope of the Licensed Patents and Licensed
Technology, made, devised or discovered by Owner or by Licensee, either alone
or jointly with others.
1.9. "Trade Secrets" shall mean, without limitation, any and all
written material, instruction manuals, blueprints, technical specifications,
account information, customer records, procedures, detail drawings, graphic
designs, inventions, discoveries, computer programs (both source and object
codes), their organization, structure, sequence, logic, coherence, look and
feel, subroutines, formulas, design, concept and know-how, and any other
material owned or produced by either party, whether or not patented or
patentable and whether or not copyrighted or copyrightable, including their
business plans, marketing strategies, clients and customers, projections,
suppliers, dealers and distributors.
SECTION 2: LICENSE GRANT
2.1. Subject to the terms and conditions set forth in this Agreement
and the payment of royalties provided for herein, the Owner hereby grants to
the Licensee an exclusive, non-transferrable, non-sublicensable license to the
Licensed Patents and Licensed Technology solely within the Field of Use in the
Geographical Territory and an exclusive, non-transferrable, non-sublicensable
right to manufacture, sell and distribute Products utilizing the Licensed
Patents and Licensed Technology solely in the Field of Use within the
Geographical Territory.
2.2. The Owner hereby agrees to extend the License Agreement to include
any and all future patents and patent applications, inventions, improvements
and discoveries in products, processes and manufacturing techniques relative to
the articles falling within the scope of the License granted in Section 2.1
above.
2.3. The Owner hereby agrees to extend the License Agreement to include
any and all patents on Future Improvements to the extent not specifically
excluded herein, made, devised or developed by Owner or Licensee or under the
direction or supervision of Owner or Licensee.
2.4. During the term of this License Agreement, and subject to the
exclusivity of Licensee remaining in full force and effect in accordance with
the terms hereof, Owner will refrain from directly or indirectly marketing
Product within the Field of Use in the Geographical Territory.
2.5. Except as specifically granted herein, Licensee and its Affiliates
are prohibited from manufacturing, selling, distributing and marketing Product
in any other geographical area of the world or from manufacturing, marketing or
distributing products utilizing or exploiting the Licensed Patents and Licensed
Technology outside of the Field of Use in any geographical area of the world.
Owner reserves to itself all rights of manufacture, marketing, sale and
distribution of the Licensed Patents and Licensed Technology within the Field
of Use and any other geographical area of the world outside of the Geographical
Territory as well as the worldwide right to manufacture, market, sell and
distribute products utilizing the Licensed Patents and Licensed Technology
outside of the Field of Use.
2.6. Nothing in this Agreement shall be construed to prevent Owner from
licensing the Licensed Patents or Licensed Technology to any other person or
entity or to grant any such person or entity the right to use the Licensed
Patent or Licensed Technology in any manner which would not violate the rights
of Licensee within the Field of Use in the Geographical Territory, subject to
the provisions of Section 2.7 below.
2.7. During the term of this Agreement, Owner shall not grant to any
third parties the right to exploit the Licensed Patents and Licensed Technology
within the Field of Use in the country of Canada without first granting to
Licensee the first right and option to obtain such rights upon the same terms
and conditions, and subject to the same minimum performance requirements, as
Owner is willing to grant to such third party.
SECTION 3: PRODUCT DEVELOPMENT
3.1. GEM shall provide the necessary resources to design and develop
the Product, conduct clinical testing, prepare documentation for the FDA and
apply for FDA Clearance To Market for such Product. CRI agrees to make
available to GEM certain CRI personnel qualified to assist GEM in the
preparation of FDA documentation, clinical testing and to assist in Product
design. CRI shall have the right, but not the obligation, to also contract
with third parties for certain services, including qualified testing
organizations. Any and all personnel provided by CRI to GEM and other services
contracted for by CRI to assist in Product development shall be subject to the
prior approval of GEM; GEM shall compensate CRI at agreed-upon rates for all
such personnel assistance and third-party services on a net 30-day basis. All
such Product Development Expenses paid directly to CRI for CRI support shall be
recoupable by GEM against royalties due to CRI under Section 8 of this License
Agreement on a dollar-for-dollar basis during the first year of this License
Agreement.
3.2. CRI agrees to prepare and submit all required Pre-Market
Notifications to the FDA. CRI shall be responsible for FDA Pre-Market
Notification submissions and shall take all acts necessary to ensure that such
submissions are made in accordance with FDA Guidelines On Pre-Market
Notification, Pre-Market Notification For Laser Products and 21 C.F.R. GEM
agrees to reimburse CRI for such services, including services provided by CRI
employees and consultants. CRI agrees to correct, at its sole cost and
expense, any technical deficiencies as to form of any FDA submissions that
results in a Refusal to Accept ("RTA") and shall remedy, re-prepare and
resubmit all documentation in the event of any such RTA at its sole cost and
expense. If resubmission is required due to any reasons other than a technical
deficiency, the cost of any such resubmission shall be shared equally by CRI
and GEM. Notwithstanding, it is understood and agreed that CRI shall have no
liability whatsoever to GEM for any denial by the FDA of a Clearance To Market
with respect to the Product for any reason whatsoever other than a technical
deficiency in the submission.
3.3. In connection with the Product development, concurrently with the
execution of this Agreement, GEM shall order from CRI and CRI shall manufacture
and deliver to GEM (i) ten laser perforator prototypes for use in clinical
testing, at the price of $400 each, and (ii) ten multi-faceted crystals for use
in pre-production models, at a price of $200 each. Payment shall be due net 30
days from delivery. Further, upon 60 days following the submission or as
otherwise agreed between the parties of the FDA Pre-Market Notification
documents, GEM agrees to order from CRI and CRI shall sell to GEM 90 additional
multi-faceted crystals at a price of $200 each, payment due on a net 30 days
basis. GEM agrees to provide at its sole cost and expense any and all
materials and supplies needed by CRI to conduct clinical testings, the cost
whereof shall be included in the Product Development Expenses described
elsewhere herein.
3.4. It is understood that Owner and Licensee shall at all times and
for all purposes hereunder be deemed independent of one another, and neither
party shall directly or indirectly imply or represent to others, or permit
their agents, employees or affiliates to imply or represent to others that
either has the authority to act for, represent or bind the other in any manner
by virtue of this Agreement. Each party expressly agrees to indemnify, defend
and hold harmless the other for any damages which may be sustained by virtue of
any breach of this Section 3.4.
SECTION 4: LASER SUPPLY
4.1. Throughout the term of this License Agreement, GEM agrees that it
shall utilize CRI as its sole and exclusive of supply of multi-faceted crystal
resonator (MCR) laser rods. CRI shall provide MCR rods to GEM at a price of
$200 each. CRI and GEM shall agree upon the physical and operational
parameters of such MCR rods prior to first delivery; and CRI shall be
responsible for testing and certifying that such rods conform to the specified
limits. CRI shall warrant that the MCR rods are merchantable, fit for their
intended use and will remain functional for the useful life of the Product.
GEM shall have the right to reject any non-conforming laser rods and CRI agrees
to replace any defective rods with conforming MCR laser rods under the supply
agreement.
4.2. If during the term of the License Agreement the fully-burdened
acquisition cost to CRI of MCR laser rods exceeds the $200 per unit agreed-upon
price, then CRI will provide MCR laser rods to GEM at a price equal to CRI's
fully-burdened acquisition cost. In the event CRI's fully-burdened acquisition
cost for MCR laser rods exceeds $200 per unit and GEM can identify a source of
supply for less than CRI's fully-burdened cost, GEM will notify CRI of such
source. CRI agrees to test the crystals from the source of supply identified
by GEM and, if such crystals meet or exceed applicable requirements, CRI agrees
to utilize the source and sell MCR laser rods to GEM at CRI's actual fully-
burdened acquisition cost, but in no event less than $200 per unit. In the
event GEM's cost for MCR rods exceeds $200 per unit, the royalty payable to CRI
on Product sales shall be equal ten percent (10%) of all Products sold which
incorporate MCR laser rods which cost GEM an amount greater than $200 per unit.
4.3. On all sales of MCR laser rods, payment shall be due on a net 10-
day basis for monthly deliveries of less than 100 units, or a net 30-day basis
for monthly deliveries in excess of 100 units.
4.4. Notwithstanding the foregoing, if during the term of this License
Agreement CRI is unable to provide GEM with MCR laser rods in the quantities
and timeframes required by GEM, then GEM shall be permitted to purchase MCR
laser rods from third party suppliers to cover any such supply unavailability,
without such purchases having the effect of terminating the exclusive supply
arrangement with CRI.
SECTION 5: USE OF LICENSED PATENTS, TECHNOLOGY AND FUTURE IMPROVEMENTS
5.1. Subject to the provisions of Section 3 above, Licensee shall be
solely and exclusively responsible for the determination of the manufacture,
marketing and distribution of Products exploiting the Licensed Patents and
Licensed Technology within the Field of Use in the Geographical Territory.
Licensee shall likewise be solely and exclusive responsible for any and all
costs, obligations, liabilities and debts which may be created or incurred in
connection with the use or other exploitation of the Licensed Patents and
Licensed Technology within the scope of the License. Licensee agrees to
indemnify and hold harmless Owner from any and all liability with respect to
such obligations and expenses.
5.2. Nothing in this License Agreement shall be construed to prevent
Owner from licensing the Licensed Patents and/or Licensed Technology to any
other person or entity or to grant any such person or entity the right to use
the Licensed Patents and Licensed Technology in any manner which would not
violate the exclusive limited grant of this License.
5.3. At all times throughout the term hereof, Licensee shall place such
notices and disclaimers as may be required by applicable law to identify Owner
as the Owner of the Licensed Patents and Licensed Technology embodied in the
Products. Licensee shall at no time make any claim, either directly or
indirectly, with respect to any right, title or interest in and to the Licensed
Patents or Licensed Technology as they may now exist or as they may in the
future be improved or developed.
5.4. Licensee may utilize the Licensed Patents and Licensed Technology
in the form and with the content that they now possess or which in the future
may possess with the express written consent of Owner. Licensee shall have no
right to make any substantive or formal changes in any of the subject matter of
the Licensed Patents or Licensed Technology or their related Products without
the express written consent of Owner. Licensee may recommend changes and
modifications to the Licensed Patents and Licensed Technology, but any such
recommendations may not incorporated into Product without Owner's express prior
written consent. Licensee agrees to indemnify and hold harmless Owner from any
liability which may arise by virtue of any unauthorized modification or
amendment to the Licensed Patents or Licensed Technology without the consent of
Owner.
5.5. All uses of the Licensed Patents and Licensed Technology,
including the manufacture and sale of any and all Product shall be at all times
in conformance with standards and specifications of quality and workmanship
which have been established and approved by Owner. Absent such written
standards or specifications, the uses of the Licensed Patents and Licensed
Technology shall be only attended with the highest quality of intellectual,
academic and professional integrity. The failure of Licensee to maintain such
highest degree of intellectual, academic and standards shall constitute a
default hereunder.
5.6. Licensee shall offer and be responsible for all customer support
and service with respect to all Products within the Geographical Territory.
Licensee shall offer to purchasers of Product customary product warranty
consistent within industry standard. Licensee shall be solely and exclusively
liable for all warranty claims under any express or implied warranty, and
agrees to indemnify, defend and hold harmless Owner from any liability with
respect thereto.
5.7. Except for import duties, fees and tariffs incurred by Owner,
Licensee shall pay directly all income, franchise, sales, use, personal
property, ad valorem, value added, stamp or other taxes, levies, customs duties
or fees, including withheld taxes, together with all penalties, fines and
interest thereon that in any way arise out of this Agreement, whether on or
measured by the price, the charges, the programs or the services furnished, or
their use, however designated.
5.8. Throughout the term of this Agreement, Licensee shall have the
right to appoint dealers, distributors or sales representatives to market and
sell Product and as well as to enter into joint marketing and distribution
arrangements with distributors, dealers, representatives and third parties.
Licensee shall promptly disclose in writing to Owner the name and address of
any third party with whom Licensee has entered into a written distribution,
joint marketing or dealer arrangement and shall provide Owner with a copy of
such agreement. Licensee shall be responsible for ensuring that any third
parties acting as distributors, dealers, representatives or joint marketers
under written agreements shall be bound by the confidentiality and intellectual
property provisions of this License Agreement. Any and all revenues realized
by Licensee pursuant to such third party arrangements shall be subject to the
royalty provisions of Section 8.1 hereof.
5.9. GEM shall be responsible for the design, manufacture and sale of
Product under the License Agreement and shall be exclusively liable for any
claims for bodily injury or property damage arising out of the sale or use of
the Product by third parties, whether such claim is based upon negligence,
strict liability in tort or breach of warranty. GEM shall indemnify, defend
and hold harmless CRI from and against any claims brought by third parties for
any defect in materials or design in connection with the manufacture or sale of
Product as well as any liability which may arise to third parties resulting
from such manufacture or sale of Product. GEM shall obtain and maintain a
policy or policies of product liability and general public liability insurance
with policy limits in amounts to be agreed upon by the parties.
5.10. Throughout the term of this Agreement, Licensee shall forebear and
refrain from utilizing any of the Licensed Patents or Licensed Technology
outside of the Field of Use and outside of the Geographical Territory, and
Licensee shall not grant to any third person or party any right to utilize,
sublicense or otherwise exploit any of the Licensed Patents or Licensed
Technology outside of the Field of Use or outside of the Geographical Territory
without the express written consent of Owner. Further, Licensee agrees that it
will not interfere or compete with the exercise by Owner or third parties
licensed by Owner of its right to utilize or exploit any of the Licensed
Patents or Licensed Technologies in any manner that does not violate or is
inconsistent with the rights granted to Licensee hereunder.
5.11. Licensee, for itself and affiliates, agrees that it will not
directly or indirectly, either as principal, agent, partner, stockholder,
consultant or otherwise, solicit, attempt to obtain or assist any other person
or entity other than CRI, or its affiliates, in soliciting or attempting to
obtain or accept or conduct any business of any nature that competes directly
or indirectly with the right or ability of Owner to utilize the Licensed
Patents and Licensed Technology in any manner that does not violate the rights
granted to Licensee hereunder; nor shall Licensee consult or enter into any
agreement or arrangement with any other person, firm or corporation to conduct
any research or development or themselves directly or indirectly conduct any
research or development on their own related to the development of a product or
device, or directly or indirectly market, distribute or sell any device or
product that utilizes laser technology to obtain blood samples that would
directly or indirectly compete with any Product developed, marketed or sold
pursuant to this Agreement, or any product developed, marketed or sold by Owner
or its licenses utilizing the Licensed Patents and Licensed Technology.
SECTION 6: FUTURE IMPROVEMENTS
6.1. Any Future Improvements made or developed by Owner to the Licensed
Patents or Licensed Technology throughout the term hereof shall be promptly
disclosed by Owner to Licensee and shall be included within the meaning of
Licensed Patents and Licensed Technology as used under this Agreement. The
addition of such future developments or improvements shall be subject to the
same terms, conditions and covenants contained herein.
6.2. Any Future Improvements made or devised by Licensee with respect
to any of the Licensed Patents or Licensed Technology, whether or not
patentable or copyrightable, shall be immediately disclosed by Licensee to
Owner and shall redound to the benefit of and shall become the sole, exclusive
and separate property of Owner, subject to the terms of this License Agreement.
Upon Owner's request, Licensee shall promptly assign to Owner any and all
Licensee's right, title or interest in and to such future developments or
improvements and any patent copyright interest resulting therefrom, subject to
Licensee's right to use such improvements or developments in accordance with
the terms and conditions of this Agreement. Owner shall have the right to use,
disclose or otherwise exploit such future improvements or developments made or
devised by Licensee and may license others to use or exploit such improvements
or developments free of any right, claim or interest of Licensee.
6.3. At the request of Owner, or his assigns, for the term hereof,
Licensee agrees to assign to Owner or persons, firms or corporations designated
by Owner, any and all right, title and interest in and to any Future
Improvements made, devised or discovered by Licensee, or its employees, and to
execute at any and all times any and all proper instruments necessary or deemed
desirable by Owner to effectuate such conveyancing, transferring and assigning.
SECTION 7: TERM AND TERMINATION
7.1. The License herein granted to Licensee shall terminate upon the
first to occur of any of the following:
7.1.1. The tenth (10th) anniversary of the date hereof or the
expiration of the latest Licensed Patent, whichever is later;
7.1.2. Licensee shall become insolvent or shall make an
assignment of assets for the benefit of creditors, file or petition for relief
under federal bankruptcy law, whether voluntary or involuntary;
7.1.3. By Licensee, in the event of a material breach or default
by Owner in the performance of its obligations hereunder, which Owner fails to
cure within sixty (60) days of written notice to Owner specifying the material
breach or default, requesting the discontinuance of such material breach or
default, and/or stating what action is necessary to cure the material breach or
default; provided, however, that no prior notice shall be required and
termination shall be effective immediately upon written notice if the breach or
default is based upon a violation or threatened violation of the provisions in
this Agreement relating to proprietary rights and confidential information.
7.1.4. By Owner, in the event of a material breach or default by
Licensee in the performance of its obligations hereunder, which Licensee fails
to cure within sixty (60) days of written notice to Licensee specifying the
material breach or default, requesting the discontinuance of such material
breach or default, and/or stating what action is necessary to cure the material
breach or default; provided, however, that no prior notice shall be required
and termination shall be effective immediately upon written notice if the
breach or default is based upon a violation or threatened violation of the
provisions in this Agreement relating to proprietary rights and confidential
information.
7.1.5. By Licensee without cause by paying a termination fee to
Owner equal to (i) if terminated during the Product development period, the
amount of guaranteed royalty described in Section 8.3 hereof ($375,000) plus
the difference between $7,716 and the amount of all invoices paid by GEM to
CRI, if less, plus the amount of any outstanding expenses incurred in good
faith by CRI on behalf of and approved by GEM in connection with the Product
development; (ii) if terminated during the first license year, an amount equal
to $375,000, less the amount of any royalties paid to CRI prior to the
termination date, plus the amount of any expenses incurred by CRI with GEM's
approval in connection with CRI's performance under the License Agreement; or
(iii) if terminated after the first license year, an amount equal to the
aggregate royalties paid by GEM to CRI during the last preceding two fiscal
quarters, plus the amount of any outstanding expenses incurred by CRI with
GEM's approval in connection with CRI's performance under the License
Agreement.
7.1.6. By Owner in the event that aggregate cumulative royalties
on sales paid by GEM to CRI under the License Agreement for any fiscal year are
less than 50% of the royalties set forth below, and GEM fails to voluntarily
pay any royalty deficiency within 30 days following the fiscal year end, CRI
shall have the right to modify the rights of GEM under the License Agreement to
become non-exclusive within the Geographical Territory. If GEM fails to cure
the royalty deficiency (on an aggregate, cumulative basis) before the end of
the fiscal year immediately following the deficient year, CRI shall have the
right to terminate the License Agreement altogether:
Aggregate Annual
License Year Cumulative Royalties
Year 1 $375,000
Year 2 $750,000
Year 3 and thereafter $1,125,000
7.2. Upon termination of this License, all rights of Licensee hereunder
shall terminate and Licensee shall deliver to Owner all copies of documentation
or information containing Licensed Technology in accordance with Section 10
hereof; provided, however, that Licensee shall continue to be liable for all
warranty claims and customer support and services with respect to the Product
sold during the term hereof.
SECTION 8: ROYALTIES
8.1. For and in consideration of the License set forth herein, Licensee
shall pay a royalty to Owner on all revenues derived from the sale, license,
marketing and distribution of the Product ("Product Revenues") equal to: (i)
fifteen percent (15%) of all Product Revenues for each of the first 2,500
Product units sold, leased or otherwise disposed of during any year; provided,
however, that on sales of Product through third parties under marketing and
distribution arrangements, such royalties shall not be less than $150.00 per
unit; plus (ii) ten percent (10%) of all Product Revenues less returns
generated from the sale, lease or other disposition of Product units in excess
of 2,500 units during any given year; provided, however, that on sales of
Product through third parties pursuant to marketing and distribution
arrangements such royalties shall be no less than $100.00 per unit; plus (iii)
on sales of Products that are peripheral to a customer's use of the Product,
including disposable and accessory products sold for use with the Product,
including, without limitation, infection control, finger shields, batteries and
recharge kits, a royalty equal to ten percent (10%) of all peripheral product
revenues less returns where Licensee's audited gross margin is equal to or
greater than 40%, with such royalty percentage to be proportionately reduced on
sales of peripheral products where Licensee's audited gross margin is below
40%.
8.2. For the purposes of Section 8.1(i) and (ii) above, the first year
of this License Agreement shall be deemed to consist of the first 24 months
following the date of receipt from the FDA of a Clearance To Market with
respect to the Product.
8.3. Licensee shall be obligated to pay to Owner a minimum royalty
equal to the royalty payable upon the sale of 2,500 Product units with a
schedule of delivery not to exceed 30 months from the date of this Agreement,
contingent only upon the receipt of a Clearance To Market Notification with an
allowance for home use from the FDA. On or before the date of receipt of the
Clearance To Market, such delivery schedule and royalty payments schedule may
be extended by Licensee but in no event to exceed 24 months from the date of
receipt of the Clearance To Market. In the event actual Product sales are less
than the 2,500 unit minimum guarantee, Licensee shall nevertheless be liable to
pay to Owner the full amount of royalties that would be due upon such sales.
8.4. In the event that aggregate cumulative royalties on sales paid by
Licensee to Owner under this Agreement for any fiscal year are less than fifty
percent (50%) of the royalties set forth below, and Licensee fails to
voluntarily pay any royalty deficiency within thirty (30) days following the
fiscal year-end, Owner shall have the right to modify the rights of Licensee
hereunder to become non-exclusive within the geographical territory:
Aggregate Annual
License Year Cumulative Royalties
Year 1 $375,000
Year 2 $750,000
Year 3 and thereafter $1,125,000
8.5. All royalties due hereunder shall be due and payable to Owner
within twenty (20) days following the end of each fiscal quarter based upon
Product Revenues received during such fiscal quarter.
8.6. Within twenty (20) days following the end of each fiscal quarter
during the term hereof, Licensee agrees to furnish to Owner a royalty report
certified by Licensee's Chief Financial Officer showing in detail all
transactions in Product during the preceding quarter and a calculation of
royalties due therefrom. At the time of delivering such quarterly royalty
reports, Licensee shall pay to Owner all royalties shown to be due and owing up
to the end of the last preceding fiscal quarter and not previously paid to
Owner.
8.7. Licensee shall keep and maintain in accordance with generally-
accepted accounting principles consistently applied, full, clear and accurate
books, records and accounts relating to all transaction in Product. Up to
twice annually, Licensee shall permit an independent auditor selected by Owner
to examine such books, records and accounts on reasonable prior notice at
mutually agreed-upon dates and times for the purpose of determining the
royalties payable to Owner pursuant to the terms of this Agreement. In the
event the results of such audit show royalties due and payable in excess of
percent (5%) of all royalties paid by Licensee to Owner during the period
covered by such audit, Licensee shall be responsible for all costs incurred by
Owner in connection with the conduct of such audit and review.
SECTION 9: PERFORMANCE
Licensee covenants and agrees that it shall use its best efforts to
manufacture, market and promote the sale of the articles incorporated in the
Licensed Patents and Licensed Technology within the Geographical Territory and
otherwise to exercise and utilize the Licensed Patents and Licensed Technology
granted pursuant to this Agreement.
SECTION 10: PROPRIETARY RIGHTS
10.1. Licensee recognizes and agrees that the Licensed Patents and
Licensed Technology, including any documentation, is subject to proprietary
rights of Owner and that Owner retains all such proprietary rights, which
include trade secret, copyright, inchoate patent and patent, and any other form
of proprietary right, and that these proprietary rights of Owner are protected
by civil and criminal law, are very valuable to Owner, and that the use and
disclosure of the Licensed Technology must be carefully and continuously
controlled by Licensee. The recorded Licensed Technology licensed hereunder
shall be kept in a secure place by Licensee under access and use restrictions
sufficient to protect Owner's proprietary rights under conditions no less
strict than those applied by Licensee to Licensee's own valuable trade secrets
and proprietary property rights. Licensee shall keep each and every item of
the Licensed Technology free and clear of any claims, liens and encumbrances
except the ownership rights of Owner; and any act of Licensee, voluntary or
involuntary, purporting to create a claim, lien or encumbrance on any item of
the Licensed Technology shall be void. At the end of the term, Licensee shall
return all documents, disks, records or tapes containing the Licensed
Technology unencumbered to Owner, and/or shall certify to Owner that any items
or copies of partial copies of the Licensed Technology not returned to Owner
have been destroyed by Licensee. Licensee may make copies of the Licensed
Technology for its own internal use only, pursuant to the scope of this License
but not for any form of distribution. Licensee agrees to notify Owner
immediately of any unauthorized possession, use or knowledge of the Licensed
Technology or any part of it and will cooperate fully with Owner in any action
of Owner being necessary to protect Owner's proprietary rights, which
cooperation shall not be construed in any way as a waiver of Owner's rights to
recover damages or obtain relief against Licensee for any harm to Owner's
proprietary rights or for breach of this Agreement. If Licensee shall violate
the provisions of this paragraph of this License Agreement, or otherwise act in
derogation of Owner's proprietary rights, whether such rights are exclusively
stated in this Agreement, determined by law, or otherwise, Owner shall have, in
addition to any other remedies, the right to injunctive relief, enjoining such
actions. Licensee hereby acknowledges that other remedies are inadequate.
10.2. Any and all Product designs, blueprints, drawings or other
materials made or prepared by Licensee or by third parties under contract with
Licensee in connection with its development of Product, including any and all
design copyrights, but excluding developments which would constitute Future
Improvements, shall be the sole and exclusive property of Licensee. Licensee
agrees to grant to Owner a License to utilize any and all blueprints or other
Product designs developed by Licensee for the manufacture and sale of Product
in areas outside of the Geographical Territory. On all sales by Owner of
Product utilizing Licensee's proprietary blueprints or Product designs outside
of the Geographical Territory, Owner agrees to pay Licensee a royalty equal to
two percent (2%) of Products sales. Notwithstanding, it is understood that
Owner shall have the right to develop and utilize its own design for Products
sold outside of the Geographical Territory without obligation to Licensee.
SECTION 11: WARRANTY AND COVENANTS
11.1. Owner warrants and represents that, to its best knowledge, the
Licensed Patents and Licensed Technology hereby licensed do not infringe upon
or violate any patent, copyright, trade secret or any other proprietary right
of any third party. Owner further warrants and represents that, to its best
knowledge, he has the sole and exclusive ownership of and the rights to the
Licensed Patents and Licensed Technology and has the right to grant this
exclusive License and has not granted to any other person, firm or corporation
any right, license, assignment, shop right or privilege thereto or thereunder
within the Field of Use in the Geographical Territory. Owner further warrants
and represents that it is not aware of any fraud or misrepresentation, or any
other illegal act, used or employed in the development of the Licensed
Technology or in the proceedings for or to obtain the issuance of any Licensed
Patents hereunder.
11.2. To the best of the knowledge of Owner, Owner owns and possesses
or will obtain all rights to the Licensed Patents or Licensed Technology, as
well as Future Improvements, and such rights are or will be sufficient in order
for Licensee to conduct Licensee's manufacturing activities as agreed in this
Agreement. To the best of Owner's knowledge, the activities contemplated by
this Agreement do not and will not infringe upon and no one has asserted to
Owner that such activities conflict with or infringe upon, any intangible
property rights owned, possessed or used by any third party which are of the
same kind as the Licensed Patents, Future Improvements and Licensed Technology.
11.3. Notwithstanding the provisions of Section 11.1 and 11.2 above,
Owner makes no warranty or representation with respect to the Licensed Patents
and Licensed Technology as to any effect, limitation, restriction or impairment
which may exist or result from the assertion of rights under U.S. Patent No.
5,165,418 licensed to Becton Dickinson. Owner agrees to prepare a notification
to Becton Dickinso n, subject to the review and approval of Licensee, advising
Becton Dickinson of the purposes and intent of this License Agreement. In the
event any claim, proceeding or other action is brought claiming the Licensed
Patent or Licensed Technology or the exercise of rights hereunder infringe upon
U.S. Patent No. 5,165,418, Owner shall have the sole and exclusive obligation
to defend such action and interpose such a defense, but only if necessary to
protect and preserve the rights of Licensee under this Agreement to develop,
manufacture and market Product in the Field of Use within the Geographical
Territory. In such event, Owner shall be solely responsible for all costs
incurred in connection therewith. If Owner is not required to defend and
elects not to defend such action, Licensee shall have the right, but not the
obligation, to maintain a defense at its sole cost and expense and without any
obligation or liability to Owner. Owner agrees to indemnify and hold harmless
Licensee against any judgments against Owner or Licensee in connection with
such infringement action, excluding any costs or expenses incurred by Licensee
in defense of any such action or claim.
11.4. Owner covenants and that except as expressly permitted under this
Agreement, during the term of this License Agreement, Owner shall not grant to
any person,firm or corporation other than Licensee any right, license,
assignment, shop right or privilege derived from or in connection with any of
the Licensed Technology, Licensed Patents or Future Improvements in the Field
of Use within the Geographical Territory.
SECTION 12: NECESSARY INFORMATION AND DOCUMENTS
The Owner shall furnish to the Licensee, or to its nominees and patent
attorneys, all information and documents regarding such inventions which are
reasonably available to the Owners, including the apparatus, processes, and
formula in respect thereof, to enable the Licensee to operate hereunder and to
enable its attorneys to prepare and prosecute patent applications therefor.
Owner shall render to the Licensee such services in a consulting capacity as
may be requested by Licensee to instruct the Licensee, or its appointed
nominees, in all operations pertaining to the industrial and commercial
exploitation of the Licensed Technology and Licensed Patents.
SECTION 13: PATENT APPLICATIONS
13.1. After the Owner has been provided all reasonably necessary
information, drawings, blueprints, and other data, and has executed all
necessary papers, documents, and instruments by Licensee, Owner shall cause to
be prepared, filed and prosecuted, at its own expense, in the name of the Owner
and with the least possible delay, an application or applications for letters
patent of the United States on any Licensed Technology, and, insofar as is
reasonable possible, on all improvements hereafter made by the Owner or
Licensee during the term of this License Agreement, as well as corresponding
applications for letters patent in such other countries as may be deemed
advisable by mutual consent. In connection with all such patent applications,
Licensee shall, without further consideration or compensation therefor, at the
request of the Owner, do all acts necessary for obtaining, sustaining,
reissuing, disclaiming, or extending letters patent on such patent applications
and shall give testimony in cases of interference as well as providing evidence
in conjunction therewith.
13.2. All patents shall be the sole and exclusive property of the
Owner, subject to the exclusive License hereby granted. The Owner shall, upon
demand, execute and deliver to the Licensee such documents as may be deemed
necessary or advisable by counsel for the Licensee for filing in the
appropriate patent offices to evidence the granting of the exclusive License
hereby granted.
SECTION 14: TRADEMARK
Licensee, or its assigns, may affix on all Products utilizing the Licensed
Patents and/or Licensed Technology, if any, a trademark selected by Licensee,
which trademark shall be the sole and exclusive property of Licensee and for
which Licensee will have the right at its own expense to file application for
registration of any trademark in the United States or elsewhere.
SECTION 15: COVENANT TO RETAIN CONFIDENCES
Each party, for itself and affiliates, agrees to maintain in confidence
and neither disclose nor permit others to disclose any or all Confidential
Information of the other party or any or all Confidential Information made,
devised, developed or discovered in connection with this Agreement. Each party
acknowledges and agrees that its agents, employees, independent contractors,
affiliates, associates, distributors, dealers and the like are and will be
subject to, and bound by, the terms of this agreement of confidentiality.
Either party may disclose such Confidential Information only to those employees
or others under its control engaged in efforts to develop the Product, on a
need-to-know basis, and only to those employees and others who have been
directed and will be required to maintain the disclosed subject matter in
confidence at all times hereafter; provided, further, that all such individuals
must execute and deliver an agreement to be bound by the non-disclosure and
confidentiality provisions contained herein. Upon termination of this
Agreement, all records, files, memoranda, reports, price lists, customer lists,
drawings, plans, sketches, documents, prototypes, testing data, equipment,
electronically-stored information on disk, tape or medium or existing in
computer memory transmitted by any means, including, but not limited to,
telephone or electronic data transmission or the like, relating to the business
of either party or its affiliates but in the possession of the other party by
virtue of this Agreement shall be returned, together with all copies, to the
Owner or Licensee, as the case may be, and shall remain the sole and separate
property of such party. Each party shall be liable to the other for any breach
of the covenants of confidentiality contained herein by its agents, employees
or affiliates. These obligations of confidentiality shall survive the
termination of this Agreement and shall terminate only as to such portions of
the Licensed Patents or Licensed Technology as are found by a court of
competent jurisdiction following exhaustion of all rights of appeal to be in
the public domain without breach by a party to this Agreement.
SECTION 16: MISCELLANEOUS
16.1. Payment of Expenses of Prevailing Party in Dispute.
Unless otherwise specifically provided for herein, in the event
that there is a dispute concerning this Agreement, including, without
limitation, the issue of compliance with any term of this Agreement, the court
may in its discretion, direct that the prevailing party shall be entitled to
reimbursement from the other party of reasonable attorneys' fees and other
expenses incurred in resolving the said dispute.
16.2. Survival and Incorporation of Representations.
The representations, warranties, covenants and agreements made
herein or in any certificates or documents executed in connection herewith
shall survive the execution and delivery thereof, and all statements contained
in any certificate or other document delivered by the company hereunder or in
connection herewith shall be deemed to constitute representations and
warranties made by the company in this Agreement.
16.3. Incorporation by Reference.
All appendices to this Agreement and all documents delivered
pursuant to or referred to in this Agreement are herein incorporated by
reference and made a part hereof.
16.4. Parties in Interest.
All covenants, agreements, representations, warranties and
undertakings in this Agreement contained by and on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether or not so expressed.
16.5. Amendments and Waivers.
This Agreement may not be amended, nor may compliance with any
term, covenant, agreement, condition or provision set forth herein be waived
(either generally or in a particular instance and either retroactively or
prospectively) unless such amendment or waiver is agreed to in writing by all
parties hereto.
16.6. Assignment.
Neither party may transfer or assign any of its respective rights
or obligations under this Agreement without the consent of the other. In the
event either party receives a bonafide offer from a third party to acquire such
rights, it agrees to notify the other party hereto and to include such party in
all negotiations which may be entered into in connection with any proposed
transfer. The restriction against transfer contained in this Section 16.6
shall not be deemed to preclude Licensee from entering into third party
marketing and distribution arrangements subject to the terms and conditions of
this Agreement.
16.7. Waiver.
No waiver of any breach of any one of the agreements, terms,
conditions, or covenants of this Agreement by the parties shall be deemed to
imply or constitute a waiver of any other agreement, term, condition, or
covenant of this Agreement. The failure of either party to insist on strict
performance of any agreement, term, condition, or covenant, herein set forth,
shall not constitute or be construed as a waiver of the rights of either or the
other thereafter to enforce any other default of such agreement, term,
condition, or coven ant; neither shall such failure to insist upon strict
performance be deemed sufficient grounds to enable either party hereto to
forego or subvert or otherwise disregard any other agreement, term, condition,
or covenants of this Agreement.
16.8. Governing Law.
This Agreement shall be construed and enforced in accordance with
and governed by the laws of the State of New Mexico.
16.9. Notices.
All notices required or permitted hereunder shall be sufficient
if delivered personally or mailed to the parties at the address set forth above
or at such other address as either party may designate in writing from time to
time. Any notice by mailing shall be effective 48 hours after it has been
deposited in the United States certified mail, return receipt requested, duly
addressed and with postage prepaid.
16.10. Counterparts.
This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which shall together constitute one
agreement.
16.11. Captions.
The caption and heading of various sections and paragraphs of
this Agreement are for convenience only and are not to be construed as defining
or limiting, in any way, the scope or intent of the provisions hereof.
16.12. Severability.
Wherever there is any conflict between any provision of this
Agreement and any statute, law, regulation or judicial precedent, the latter
shall prevail, but in such event the provisions of this Agreement thus affected
shall be curtailed and limited only to the extent necessary to bring it within
the requirement of the law. In the event that any part, section, paragraph or
clause of this Agreement shall be held by a court of proper jurisdiction to be
invalid or unenforceable, the entire Agreement shall not fail on account
thereof, but the balance of the Agreement shall continue in full force and
effect unless such construction would clearly be contrary to the intention of
the parties or would result in unconscionable injustice.
16.13. Execution of Documents.
The parties hereto agree to execute and deliver any and all other
documents necessary and convenient to effectuate the sale and purchase herein
provided for, and both parties, as an inducing condition, represent that they
have the authority to enter into this Agreement and to make the foregoing
commitments for themselves.
16.14. Time.
Time is of the essence of this Agreement and each of its
provisions.
16.15. Entire Agreement.
This Agreement constitutes the entire agreement of the parties
hereto with respect to the subject matter hereof. There are no
representations, warranties, conditions, or obligations except as herein
specifically provided. Any amendment or modification hereof must be in
writing.
IN WITNESS WHEREOF, the parties have signed the Agreement the date and
year first above written.
OWNER:
CELL ROBOTICS, INC., a New Mexico
corporation
Attest:
- ---------------------------- By: ------------------------------------
Secretary Ronald K. Lohrding, President
LICENSEE:
GEM EDWARDS, INC., an Ohio corporation
Attest:
- ---------------------------- By: -------------------------------------
Secretary