SUBLICENSE AGREEMENT Dispenser Products
Exhibit
10.4
Dispenser
Products
THIS
SUBLICENSE
AGREEMENT (this
"Agreement") is made as of 2nd
day of
June, 2006 by and between INNOPUMP
INC. (“INN”),
a corporation formed under the laws of the State of Delaware, having an address
at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (“Innopump”), and VDM
HOLDINGS, LLC,
(“VDM”)
a limited liability company formed under the laws of the State of New York
having an address at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or any
majority owned subsidiary thereof.
RECITALS
A. Pursuant
to that certain Amended and Restated License Agreement dated as of January
1,
2003 (the “Master License Agreement”) between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (“▇▇▇▇▇▇▇”) and
Sea Change, attached as Exhibit B hereto, ▇▇▇▇▇▇▇ granted to Sea Change the
exclusive right to exploit a certain variable flow dispenser described
in
PCT/DE 99/02568 Pumpkopf.
B. Pursuant
to that certain License Agreement dated as of May 1, 2005 (the “Sub-License,
Development and Technology Transfer Agreement for Versadial Delivery Pump”)
between Sea Change Group (“SCG”) and Innopump (“INN”), attached as Exhibit A
hereto, SCG granted to INN the exclusive rights, including development,
manufacture, marketing, sales, and support for the Versadial® delivery
pump.
C. VDM
and
INN desire to enter into this Sublicense Agreement to grant VDM the exclusive
right to exploit and market the Dispensers through direct response marketing
and
non-exclusively through other selected channels of distribution, upon and
subject to the terms and conditions hereof.
NOW,
THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the parties hereto agree as follows:
1. SUBJECT
TO MASTER LICENSE AGREEMENT:
This
License is and shall be subject and subordinate to the Master License Agreement
and to all matters to which the Master License Agreement is and shall be subject
and subordinate. Notwithstanding anything to the contrary contained in this
License, VDM does not have any rights in respect of the Dispensers greater
than
INN's rights under the Master License Agreement. The provisions, terms,
conditions and covenants of the Master License Agreement are incorporated by
reference into this License such that, except to the extent that they are
inapplicable or specifically modified by the provisions of this License for
the
purposes of incorporation by reference, each and every provision, term,
condition and covenant of the Master License Agreement binding upon or inuring
to the benefit of the licensor thereunder shall, in respect of this License,
bind or inure to the benefit of INN, and each provision of the Master License
Agreement binding upon or inuring to the benefit of the licensee thereunder
shall, in respect of this License, bind or inure to the benefit of VDM, with
the
same force and effect as though those provisions were completely set forth
in
this document. To the extent possible, the provisions of the Master License
Agreement incorporated by reference into this License shall be construed as
consistent with and complementary to the other provisions of this License,
but
in the event of any inconsistency, those provisions of this License not
incorporated by reference from the Master License Agreement shall control.
Capitalized terms used herein shall have the meaning ascribed to them in the
Master License Agreement. INN covenants and agrees it will take all necessary
action to enforce its rights under the Master License Agreement and will provide
VDM with notice of any defaults under the VDM Agreement.
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2. TERRITORY:
The
Territory shall be global.
3. GRANT
OF LICENSE:
3.1 INN
hereby grants to VDM the exclusive right through direct marketing channels
to
(the “License”) license, manufacture, distribute or develop the Dispenser
(together with any Improvements), whether alone or in conjunction with third
parties; and manufacture or produce and sell the Products in the Territory
for
all product sectors.
3.2. VDM
may
sublicense, as differentiated from an assignment of this Agreement, which is
covered separately below, all or part of its rights hereunder in the Territory.
Any sublicense is subject to VDM providing that INN shall be entitled to receive
all relevant documentation in connection therewith to verify the revenues
thereunder, including, without limitation, copies of the sublicense and all
reports, audits, and other documentation delivered to VDM as provided by the
sublicense and the operation thereof and shall be subject to all covenants
of
the VDM license contained in this Agreement.
3.3. Any
assignment of this Agreement is prohibited except with (i) the prior written
consent of INN (which consent may be withheld by INN it its sole
discretion).
4. TERM:
The
term of the License shall commence on the date first stated above and shall
continue in effect until expiration of the Master License Agreement.
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5. ROYALTIES:
In
consideration of the rights granted to it under this Agreement, VDM agrees
to
pay to INN the following royalties or License fees (the
"Royalties").
5.1. With
respect to the sale of Dispensers, purchased by VDM from INN (or from a party
designated by INN that has been licensed by INN to sell dispensers), to a third
party or as a component of a Product, or through VDM sublicensing to third
parties, excluding VDM majority owned subsidiaries, INN shall receive 3.5%
of
Net Sales. As used herein, “Net Sales” shall mean VDM’s gross revenues less only
applicable sales, use, value added or similar taxes assessed on sales,
authorized returns, allowances, discounts, credit card merchant discount charges
and breakage.
5.2. Such
Royalties to be paid on the same basis as required of INN to ▇▇▇▇▇▇▇, as
detailed in Exhibit A hereto, in the Master License calculated on cash receipts.
5.3. VDM
shall
retain liability for the payment of any Royalties notwithstanding any
sublicensing by VDM of any of its rights hereunder.
6. MINIMUM
PURCHASES:
6.1. In
order
to secure and maintain it exclusive rights hereunder, VDM will purchase a
minimum number of Dispensers each year, based on the date of binding purchase
orders, from INN or an entity designated by INN, as follows:
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Time
period
|
Minimum
Dispensers Ordered per Time Period
|
Minimum
Dispensers Ordered in Aggregate from Inception
|
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|
Inception
through Dec. 31, 2006
|
40,000
|
40,000
|
||
|
Calendar
2007
|
75,000
|
115,000
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||
|
Calendar
2008
|
115,000
|
230,000
|
||
|
Calendar
2009 and thereafter
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5%
increase over prior calendar year minimum
|
Prior
year minimum plus current Time Period
minimum
|
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6.2.
|
If
VDM fails to meet the minimum in any calendar year, exclusivity shall
not
be terminated unless such failure to meet the Aggregate Minimum is
not met
by the end of the following calendar year. If VDM loses its exclusivity
through failure to make minimums, the balance of the term of this
Agreement shall be on a non-exclusive basis provided VDM continues
to pay
all Royalties earned when due and otherwise complies with this
Agreement.
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6.3.
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First
year minimums shall be accrued from first purchase of dispensers
by VDM,
which occurs prior to inception (i.e. prior to the start of the Term)
of
this agreement.
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3
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6.4.
|
INN
agrees to sell dispenser components to VDM using “most favored nation”
pricing, meaning the price will be no lower that INN’s best price offered
it’s customers, prior to royalties, and consistent with the provisions
of
the Master Agreement.
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7. REPRESENTATIONS
AND WARRANTIES:
7.1. Representations
of INN:
INN
hereby represents and warrants to VDM as follows:
7.1.0.
INN has
full power and authority to enter into this Agreement and to perform its
obligations contained herein;
7.1.1.
The
execution, delivery and performance of this Agreement are within INN's corporate
powers, have been duly authorized by all necessary corporate action, do not
and
will not violate any law, rule, regulation, order, writ, judgment, injunction,
decree, award or contractual restriction binding on or affecting INN or any
of
its properties;
7.1.2.
INN
represents and warrants that INN is not subject to any other agreement wherein
a
third party may have a claim to the use or ownership of the Dispenser that
is
adverse to the interest of VDM granted herein.
7.1.3.
INN has
no knowledge of any existing infringement of its rights to grant the License,
nor of any dispute as to the ownership or any other matter that would adversely
affect INN's ability to enter into this Agreement or grant the rights herein
granted.
7.2. Representations
of VDM:
VDM
hereby represents and warrants to INN as follows:
7.2.1.
VDM has
full power and authority to enter into this Agreement and to perform its
obligations contained herein; and
7.2.2.
the
execution, delivery and performance of this Agreement are within VDM's corporate
powers, have been duly authorized by all necessary corporate action, do not
and
will not violate any law, rule, regulation, order, writ, judgment, injunction,
decree, award or contractual restriction binding on or affecting VDM or any
of
its properties.
8. COVENANTS
OF VDM:
VDM
further covenants and agrees:
8.1. To
use,
apply and direct its best efforts to promote the sale or other disposition
of
the Dispenser and the Products within the Territory.
8.2. To
conduct all of VDM's operations hereunder in compliance in all material respects
with all applicable laws, rules and regulations of all applicable governmental
authorities.
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10. CONFIDENTIALITY:
Except
as required by request of, or to fulfill obligations to, INN or any affiliated
entity, applicable legal or accounting requirements or disclosure obligations
relative to security offerings, each of the parties hereto for themselves,
and
each of their respective representatives and Affiliates, covenants and agrees
that it shall treat and safeguard as confidential and secret and shall not
use
or disclose to others any proprietary or confidential information (the
”Protected Information”) disclosed to it, its agents, representatives, officers,
directors, employees or advisors with respect to the transactions contemplated
herein. Each of the parties and their Affiliates shall return to the others
all
Protected Information furnished to any of them or any of their agents,
representatives, officers, directors, employees or advisors by the others or
their agents, representatives, officers, directors, employees or advisors and
shall maintain such confidentiality during the applicable term hereof or of
this
Agreement to which such material applies, and for a period of three (3) years
after the Term. For purposes of this provision, Protected Information shall
not
include sales and royalty information or any other information, which is, at
the
time of its disclosure, in the public domain or otherwise becomes available
to a
party on a non-confidential basis from an independent source, which is not
prohibited from revealing such information.
11. BOOKS
AND RECORDS:
11.1. If
requested by INN, and on no more frequent than a monthly basis VDM shall provide
INN with copies of all customer invoices, shipments, and a schedule of cash
receipts. Such information shall be provided by the 15th day of the following
month. VDM shall also provide, when requested, on a quarterly basis copies
of
all invoices from suppliers, a list of all shipments to customers, a current
list of all suppliers and customers and ten (10) samples of any products VDM
produces. Such information and samples shall be provided by the 15th day of
the
month following the close of the prior quarter. In addition, at the request
of
INN, an annual audit of the Company's financial statements with respect to
payments and earnings due or earned pursuant to this Agreement may be requested
by INN and shall be performed by an independent accounting firm at the sole
cost
of VDM and shall be provided to INN within 60 days of the fiscal year end.
11.2. While
this Agreement remains in effect, and for the period of two (2) years
thereafter, VDM shall keep and maintain complete and accurate books and records
of all its purchases and sales of Dispensers and Products, in sufficient detail
to enable determination of Royalties payable hereunder. VDM shall permit INN,
by
its duly authorized agents and representatives, to examine and audit VDM's
books
and records during reasonable business hours, and with reasonable advance
written notice, for the purpose of verifying any payment required under this
Agreement and VDM's compliance with its obligations hereunder. In the event
any
amounts due and payable to INN have been underpaid by ten percent (10%) or
more,
VDM shall pay promptly to INN the cost of such examination and audit, in
addition to the amount of such underpayment. Any payments or statements not
challenged within two (2) years of receipt thereof shall be deemed
accepted.
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11.3. If
three
(3) consecutive audits show that amounts due and payable to INN have been
underpaid by five percent (5%) or more, VDM shall pay promptly to INN (i) the
cost of all such examinations and audits, plus (ii) twice the amount of such
underpayment.
11.4. All
sublicenses shall incorporate terms comparable to these provisions as to the
maintenance of books and records and access thereto and confidentiality, with
the right of INN to act directly in connection therewith.
12. BROKERS:
Neither
party has employed any broker or finder in connection with the transactions
contemplated by this Agreement
13. TERMINATION:
INN
shall have the right to terminate this Agreement by written notice delivered
to
VDM upon the occurrence of any of the following events:
13.1. If
the
VDM fails to make payments or submit statements and reports as required hereby,
and fails to cure such breach within ten (10) days after receipt of written
notice from INN, sent by certified or registered mail.
13.2. If
VDM
becomes subject to any voluntary or involuntary insolvency, bankruptcy or
similar proceedings, or an assignment for the benefit of creditors is made
by
VDM, and the same remains undischarged for a period of thirty (30)
days.
13.3. If
VDM
breaches any other term or provision of this Agreement and fails to cure such
breach within thirty (30) days after receipt of written notice from INN, sent
by
certified or registered mail, specifying the particulars of such
breach.
13.4. If
VDM
demonstrates a pattern of violation of this Agreement wherein INN has repeatedly
been obligated to, and has properly provided demands and termination notices
and
such pattern continues unabated, INN may validly commence an arbitration to
terminate this Agreement based on such pattern of violations.
14. EFFECT
OF EXPIRATION OR TERMINATION:
14.1. On
expiration or termination of this Agreement, VDM shall immediately stop the
manufacture, sale and distribution of all Products and shall send INN a complete
inventory report and accounting with full payment due, within sixty (60) days
after such expiration or termination.
14.2. If
this
Agreement is not terminated because of VDM's breach, VDM shall have a period
of
180 days, commencing with the expiration or other such termination date in
which
to sell-off Products under this Agreement which are on hand or in process as
of
such date: provided, however, VDM complies with all the terms and conditions
of
this Agreement, including but not limited to, VDM's obligation to pay royalties
on and to account to INN for such sales.
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14.3. On
expiration or termination of this Agreement, other than as provided in section
14.2, VDM and any permitted sub-licensees hereunder shall have no further right
to exercise the rights licensed. All remaining Products and component parts
thereof shall be destroyed and VDM shall promptly deliver to INN a certificate
of destruction evidencing same. VDM agrees that (i) its failure to cease the
manufacture, sale and/or distribution of Products upon the expiration or
termination of the Agreement will result in immediate and irreparable damage
to
INN, (ii) there is no adequate remedy at law for such failure and (iii) in
the
event of such failure, INN shall be entitled to injunctive relief. INN shall
be
entitled to recover from VDM, in addition to any other remedies in the event
of
default, any and all attorneys' fees, costs and expenses, including collection
agency fees, incurred by INN to enforce the provisions hereof.
15. INDEMNIFICATION:
15.1.
INN
shall indemnify VDM, its parents, subsidiaries, Affiliates, officers, directors,
representatives, employees and agents ("Indemnities"), from and against, and
shall hold Indemnities harmless against any claims, damages, liabilities or
final judgments resulting from any and all third party claims, liabilities
demands, causes of action, judgments, and expenses (including but not limited
to
reasonable attorney's fees and court costs) (i) for a breach of any of the
warranties or representations of INN herein, or (ii) based upon VDM's use of
the
Dispenser as authorized by this Agreement violating or conflicting with rights
of such third parties to use of the Dispenser; provided, however, that VDM
shall
notify INN in writing within ten (10) business days after VDM receives
notification of any claim or suit covered by the foregoing indemnity. INN shall
have the right and option to undertake and control the defense of any such
claim
or suit and VDM shall cooperate fully with INN in connection
therewith.
15.2.
VDM
shall indemnify INN, its parents, subsidiaries, Affiliates, officers, directors,
representatives, employees and agents ("Indemnities"), from and against, and
shall hold Indemnities harmless against any claims, damages, liabilities or
final judgments resulting from any and all third party claims, liabilities
demands, causes of action, judgments, and expenses (including but not limited
to
reasonable attorney's fees and court costs) for a breach of any of the
warranties or representations of VDM herein; provided, however, that INN shall
notify VDM in writing within ten (10) business days after INN receives
notification of any claim or suit covered by the foregoing indemnity. VDM shall
have the right and option to undertake and control the defense of any such
claim
or suit and INN shall cooperate fully with VDM in connection
therewith.
16. INSURANCE:
VDM
agrees to obtain and maintain at its own expense, if requested in writing by
INN, a comprehensive general liability insurance policy, from a recognized
insurance company and in a form reasonably acceptable to INN, providing coverage
of the minimum amounts of U.S. $1,000,000 per event and U.S. $1,000,000 in
the
aggregate to insure against all claims of third parties, with INN named as
an
additional insured, and with an endorsement that such insurance may not be
canceled or amended except upon thirty (30) days prior written notice to INN.
VDM shall provide written evidence to INN of such coverage promptly upon demand
for same.
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17. APPLICABLE
LAW; JURISDICTION:
The
terms and conditions of this Agreement and all matters directly or indirectly
related hereto shall be governed by the internal law of the State of New York,
without regard to its conflict or choice of law provisions.
18. ARBITRATION:
18.1. Any
dispute arising out of, in connection with, or in relation to this Agreement
or
the making of validity thereof or its interpretation or any breach thereof
shall
be determined and settled by arbitration in New York City by a sole arbitrator
having substantial experience in matters of this nature pursuant to the
commercial arbitration rules and regulations then obtaining of the American
Arbitration Association and any award rendered therein shall be final and
conclusive upon the parties, and a judgment thereon may be entered in the
highest court of the forum, state or federal, having jurisdiction. The service
of any notice, process, motion or other document in connection with an
arbitration award under this Agreement or for the enforcement of an arbitration
award hereunder may be effectuated by either personal service or by certified
or
registered mail to the respective addresses provided herein.
18.2. By
execution and delivery of this Agreement, the parties each respectively accept,
for itself and its property, generally and unconditionally, the jurisdiction
of
the aforesaid Arbitration Tribunal, Courts and any related Appellate Court,
irrevocably agrees to be bound by any judgment rendered thereby and in
connection with this Agreement, and irrevocably waive any objection either
party
may now or hereafter have as to the venue of any such action or proceeding.
Each
party consents to the service of process in the Arbitration or out of any of
the
aforementioned Courts by mailing copies thereof by certified mail, postage
prepaid, such service to become effective three (3) business days after such
mailing. Nothing herein shall effect either party's right to service of process
in any other manner prescribed by law. Any judicial proceeding by either party
against the other involving, directly or indirectly, any matter, in any way
arising out of, related or connected with this Agreement shall be brought only
in a Court located in the City of New York.
18.3.
The
non-prevailing party in any arbitration shall be responsible for the fees of
the
AAA and the arbitrator as well as all of the prevailing party’s actual costs and
expenses incurred (including reasonable attorney’s fees and expenses) in
connection with the arbitration. Prevailing party, in this connection, shall
mean a party that receives an unqualified award for the relief requested in
the
Demand for Arbitration.
19. ENTIRE
AGREEMENT; AMENDMENT; SEVERABILITY:
The
entire agreement between the parties is incorporated in this Agreement
(including all schedules and exhibits attached hereto) and supersedes all prior
discussions and agreements among the parties relating to the subject matter
hereof. This Agreement can be modified only in writing when duly signed by
authorized representatives of each party. Each provision hereof is intended
to
be severable. If any term or provision hereof is determined by a court of
competent jurisdiction illegal or invalid for any reason, such illegality or
invalidity shall not affect the validity of the remainder of this
Agreement.
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20. EXPRESS
AND IMPLIED PROMISES:
The
parties acknowledge that no other party, or any agent or attorney of any other
party, has made any promise, representation or warranty whatsoever, express
or
implied, not contained herein concerning the subject matter hereof, to induce
them to execute this Agreement, and acknowledge that they have not executed
this
instrument in reliance on any such promise, representation or warranty not
contained herein, and further acknowledge that there are no other agreements
or
understandings between the Parties relating to this Agreement that are not
contained herein.
21. NOTICES:
Any
notice to be given hereunder shall be sent by registered or certified mail,
return receipt requested, major overnight carrier, or telecopy to a facsimile
number provided by the respective party with a copy sent by regular mail, or
by
delivering the same personally to the parties at the addresses first set forth
herein. Any party may designate a different address by notice so given. Any
notice mailed, sent by overnight carrier or personally delivered as aforesaid
shall be deemed to have been given on the date of receipt; telecopies shall
be
deemed received on the business day after being sent by telecopy.
22. FORCE
MAJEURE:
No
party shall be responsible for, and shall not be considered in breach or default
of this Agreement on account of any failure to perform or delay in the
performance of any obligations hereunder caused by acts of God, flood, fire,
storm, war, labor disturbances, including strikes and lockouts, governmental
regulations, or interference or other events not within the reasonable control
of the responsible party and which such party in unable to overcome by the
exercise of reasonable diligence. The time to perform the relevant obligation
shall be extended until the circumstances or condition is relieved, but in
no
event shall such delay exceed 90 days without the express written consent of
the
party to whom the obligation is owed.
23. COUNTERPARTS;
FACSIMILE SIGNATURES:
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but which individually or together shall constitute one
and
the same instrument. The submission of a party's signature by facsimile
transmission shall be deemed an original signature, provided that the original
signature page is immediately transmitted to the other parties in accordance
with the notice section of this Agreement.
24. RELATIONSHIP
OF THE PARTIES:
Nothing
in this Agreement shall be construed to create an agency, partnership or joint
venture between the parties, and no party shall have, nor shall it hold itself
out to any third party as having, the power to obligate or bind any other in
any
manner whatsoever.
25. WAIVERS:
No
delay or omission by any party in exercising any right or power accruing upon
the non-compliance or failure or performance by any other party hereto of any
provisions of this Agreement shall impair any such right or power, or to be
construed to be a waiver thereof. A waiver by any party of any of the covenants,
conditions or agreements hereof to be performed by any other party must be
in
writing and signed by the party who is waiving such covenants, conditions or
agreements.
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IN
WITNESS HEREOF, the parties have executed, or caused this Agreement to be
executed, as of the date first above written.
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VDM
HOLDINGS, LLC
|
INNOPUMP
INC.
|
||
| By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ |
By
/s/
▇▇▇▇ Block
|
||
|
▇▇▇▇▇
▇▇▇▇▇▇
President
|
▇▇▇▇
Block
President
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EXHIBIT
A
Sublicense,
Development and Technology Transfer Agreement dated
May
1, 2005 between Innopump, Inc. and Sea Change Group, LLC
[set
forth as Exhibit 10.3 to this Registration Statement
and incorporated herein by reference]
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EXHIBIT
B
Amended
and Restated License Agreement dated
January 1, 2003 between Sea
Change Group, LLC and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
[set
forth as Exhibit 10.2 to this Registration Statement
and incorporated herein by reference]
12