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EXHIBIT 10.1
LICENSE AND DISTRIBUTORSHIP AGREEMENT
This Agreement (the "Agreement"), dated and effective as of November 22, 1999 by
and between Cohesion Technologies, Inc. ("Cohesion"), a corporation duly
organized and existing under the laws of the State of Delaware and having its
principal place of business at 0000 Xxxxx Xxxxx, Xxxx Xxxx, XX 00000, Xxxxxx
Xxxxxx Surgical, a division of Tyco Healthcare Group LP ("USS"), a limited
partnership duly organized and existing under the laws of the State of Delaware
and having its principal place of business at 000 Xxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxxxx 00000, and Tyco Healthcare Group AG, a corporation organized and
existing under the laws of Switzerland and having its principal place of
business at Xxxxxxxxxxxxxx 0, XX-0000 Xxxxxxxxxxxx, Xxxxxxxxxxx (THG) (Cohesion,
USS/THG, each a "Party" and collectively, the "Parties").
In consideration of the mutual promises and, covenants contained herein, the
parties hereto agree as follows:
ARTICLE 1 - DEFINITIONS
1.l For purposes of this Agreement, the definitions set forth below shall be
applicable.
"Act" shall mean the United States Food, Drug and Cosmetic Act of 1938, as
amended to date and during the term of this Agreement, including, without
limitation the Medical Device Amendments of 1976.
"Action" shall mean a legal claim, action, suit, proceeding or arbitration.
"Affiliate" shall mean with respect to any specified Person, any other Person,
as of the date of the execution of this Agreement, that directly or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, the Person specified. For purposes of this definition,
"control" including, with correlative meanings, the terms "controlled by" and
"under common control with" means ownership directly or indirectly of more than
fifty percent (50%) of the equity capital having the right to vote for election
of directors in the case of a corporation and more than fifty percent (50%) of
the beneficial interest in the business entity other than a corporation.
"Confidential Information" shall mean, unless specified in writing to the
contrary, all non-public information disclosed by one of the Parties to the
other Party, including the terms of this Agreement; provided, however, that
"Confidential Information" shall not include information that (i) can be
demonstrated to have been in the public domain or publicly known prior to the
date of disclosure by the disclosing Party; or (ii) that can be demonstrated
from written records, to have been in the receiving Party's possession from
another source not under an obligation of secrecy to the disclosing Party prior
to disclosure by the disclosing Party; or (iii) that becomes part of the public
domain or publicly known by publication or otherwise, not due to any
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unauthorized act by the receiving Party; or (iv) that can be demonstrated by
written records to have been independently developed by the receiving Party
without the use of the disclosing Party's Confidential Information.
"FDA" shall mean the United States Department of Health and Human Services, Food
and Drug Administration, or any successor governmental organization.
"Regulatory Approvals" shall mean FDA's and International Regulatory Agencies'
(defined below) clearance of the CoStasis Products for use in the Field.
"Rights Technology" shall mean any and all secret or confidential information,
trade secrets, specifications, tests results, analyses, data, inventions,
modifications and improvements, methods, processes, formulae, compositions,
designs, techniques, applications, ideas or concepts, whether or not reduced to
practice, including, without limitation, technology that is or could be the
subject matter of a foreign or domestic patent or patent application, whether or
not reduced to writing in a patent application, relating to the CoStasis
technology and as to which (i) Cohesion either conceives or develops during the
term of this Agreement relating to the CoStasis technology, or (ii) Cohesion
has, or during the term of this Agreement obtains, any rights, title or
interest, in either case, that relates to the CoStasis technology and which is
not otherwise subject to USS/THG's rights under this Agreement. Rights
Technology shall not include Cohesion's "CoSeal" product line or future product
lines involving PEG or recombinant technology.
"Field" shall mean all medical applications relating to hemostasis in surgical
applications including, without limitation, the use of the CoStasis Products and
the CoStasis Product improvements mutually agreed upon by the parties. The Field
does not include femoral access closure, sealing, gluing, adhesion prevention or
drug delivery.
"International Regulatory Agency" shall mean any national, provincial, state or
local governmental agency or other organization outside of the United States
which performs functions similar to the FDA.
"Laws" shall mean any statute, regulation, rule, ordinance, guideline, order,
judgment, decision or interpretation of the FDA, any International Regulatory
Agency, the Securities Exchange Commission or any applicable governmental
organization.
The "CoStasis Product" or" the "CoStasis Products" shall mean those specific
products listed in Exhibit A-3 attached hereto, as Exhibit A-3 may be amended
from time to time on the mutual agreement of the parties to include upgrades or
other specific improvements to the CoStasis Products. The "CoStasis Products"
shall not include Cohesion's "CoSeal" product line or future product lines
involving PEG or recombinant technology.
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"CellPaker" shall mean a needle-less syringe device for drawing blood from a
human for direct placement into a centrifuge and centrifuging to separate plasma
from red and white blood cells. The CellPaker is a proprietary accessory device
of Cohesion.
"Net Sales" shall mean gross sales of the CoStasis Products billed and shipped
by or on behalf of USS or its Subsidiaries, Affiliates, Sublicensees, or
permitted assignees, less normal or customary allowances and discounts actually
allowed, returns, invoices written off as uncollectable (but only to the extent
of the Variable Transfer Prices attributable thereto), billed taxes and customs
duties paid by USS, costs of insurance and transportation, freight and transit
insurance, and shall not include samples or demonstration materials or any sale
to USS employees for any reason other than resale. The term "Net Sales" shall
not include sales between the Parties, sales by independent distributors (but
shall include such sales to independent distributors), or sales between USS and
its Affiliates, Subsidiaries, Sublicensees or permitted assignees.
For the purposes of the "Net Sales" definition, where CoStasis Products are sold
in packages, trays, or other groups of items consisting of one or more CoStasis
Products and one or more non-Products (the "Package"), Net Sales shall be
calculated for each CoStasis Product within a Package as though it were sold
separately.
[Text Deleted]
"Patents" or "Patent Rights" shall mean any and all patents and patent
applications relating to the CoStasis Products in the Field on file within the
Territory and presently or hereafter owned by Cohesion or a Cohesion Affiliate
and/or in which Cohesion or a Cohesion Affiliate has or obtains any right, title
or interest including, without limitation the patents and patent applications
set forth on Exhibit A-1 attached hereto, and all continuations,
continuations-in-part, divisions, reissues, reexaminations, additions, and
renewals thereof.
"Person" or "Persons" shall mean any individual, corporation, partnership,
association, trust or other entity or organization including a governmental or
political sub division or any agency or instrumentality thereof.
"Regulatory Authorities " shall mean collectively, the FDA and the International
Regulatory Agencies.
"Sublicensee" shall mean any third Person to whom USS grants a sublicense to
sell the CoStasis Product.
"Domestic Territory" shall mean those geographical areas included in Exhibit
A-4. Said Exhibit shall be amended to include Canada if Cohesion determines that
it will use a distributor for sales therein rather than making direct sales.
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"International Territory" shall mean those geographical areas included in
Exhibit A-5.
"Territory" or "Territories" shall mean the Domestic Territory and the
International Territory.
"Trademarks" or "Trademark Rights" shall mean only those trademarks and
trademark applications and copyrights included in Exhibit A-2, used by Cohesion
in connection with the CoStasis Products in the Territory in the Field presently
or hereafter owned by Cohesion or a Cohesion Affiliate and/or in which Cohesion
or a Cohesion Affiliate has or obtains any right, title or interest.
1.2 In addition to the foregoing defined terms, the following terms shall have
the meanings set forth in the referenced Sections of this Agreement:
Term Section
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Force Majeure Event 18.1
Marketing Rights 3.1
Cohesion Indemnitees 12.1
Cohesion Inventions 11.1
Promotional Materials 3.2
Term 15.1
USS Indemnitees 12.1
USS Inventions 11.1
ARTICLE 2 - APPOINTMENT
2.1 (a) For the term of this Agreement, USS hereby accepts appointment as
Cohesion's sole and exclusive distributor, with the right to sell and distribute
the CoStasis Products throughout the Domestic Territory in the Field, in all
surgical specialties in the Field not contraindicated for the CoStasis Products,
subject to Section 3.1, Article 5 and other terms and conditions set forth in
this Agreement.
(b) For the term of this Agreement, THG hereby accepts appointment as Cohesion's
sole and exclusive distributor, with the right to sell and distribute the
CoStasis Products throughout the International Territory in the Field, in all
surgical specialties in the Field not contraindicated for the CoStasis Products,
subject to Section 3.1, Article 5 and other terms and conditions set forth in
this Agreement.
(c) In connection with such appointments, Cohesion hereby grants to USS and THG
(hereinafter collectively referred to as USS/THG, with references to the
"Territory" to be construed as references to their respective portions of the
Territory, i.e., Domestic Territory and International Territory), in their
respective Territories, the following:
(i) Marketing Rights (as set forth in Article 3 below) during the term of this
Agreement; and
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(ii) an exclusive, royalty-free, paid-up license, with right to sublicense,
under the Patents in the Territory solely for the purpose of selling and
distributing the CoStasis Products in the Field, such license to continue during
the term of this Agreement; and
(iii) a license under the Trademarks in the Territory as set forth in Exhibit
2.1 (the "Trademark License") solely for the purpose of advertising and
marketing the CoStasis Products, such license to continue during the term of
this Agreement. The form of Trademark License set forth in Exhibit 2.1 shall be
executed by the parties simultaneously with the execution of this Agreement.
(d) All references in the Agreement to rights and obligations of USS/THG with
respect to the CoStasis Products shall also be deemed to include Affiliates and
Sublicensees appointed by USS/THG, subject to written agreements no less
restrictive than this Agreement. USS/THG shall from time to time provide
Cohesion with a list of such Affiliates and Sublicensees of USS/THG.
Notwithstanding such appointment of Sublicensees, USS/THG shall remain fully
responsible for the performance of all its covenants and obligations under this
Agreement.
(e) Cohesion shall promptly forward to USS/THG all leads for sales of CoStasis
Products in the Field in the appropriate Territory. USS/THG shall promptly
forward to Cohesion all leads for sales of CoStasis Products either (i) outside
the Field or (ii) in the Field and outside the Territory.
(f) During the term of USS/THG's distribution rights pursuant to this Article 2,
USS/THG shall not market or sell in the Territory any new products not already
sold which are competitive with the CoStasis Products.
2.2 Cohesion shall (i) not exercise any Marketing Rights in the Territory for
any of the CoStasis Products in the Field, other than as described in Section
8.5, nor permit any other third Person to exercise any Marketing Rights in the
Territory for any of the CoStasis Products in the Field, and (ii) subject to
Section 8.4, enforce its rights to prevent any other third Person, directly or
indirectly, from exercising any Marketing Rights in the Territory for any of the
CoStasis Products in the Field.
2.3 This Agreement shall not be construed to provide USS or THG with any right
to manufacture CoStasis Products.
ARTICLE 3 - MARKETING AND SALES RIGHTS AND OBLIGATIONS
3.1 Cohesion hereby grants to USS/THG the exclusive right to promote, market,
sell and distribute the CoStasis Products for use in the Field in their
respective portions of the Territory, subject to Article 5 and other terms and
conditions of this Agreement. . Notwithstanding the foregoing, it is agreed that
Cohesion may take up to [Text Deleted] following the execution of this Agreement
in which to terminate certain international distributor agreements, and that
THG's exclusive rights in the countries affected by those agreements shall
become effective on the earlier to occur of i) the termination of such
agreement(s) or ii) the end of said [Text
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Deleted]. Subject to Section 3.2, USS/THG's Marketing Rights in their respective
portions of the Territory for the CoStasis Products in the Field shall include
the following: (a) the exclusive right to market and solicit orders including,
without limitation, advertise, promote sales and contact potential customers,
prepare and distribute the most recently approved marketing and sales brochures
and materials, pursue sales leads, answer customer inquiries, make quotations
and take orders, and (b) exclusively train customers of the CoStasis Products
with such assistance by Cohesion as provided in this Article 3. All
communications or inquiries received by Cohesion from potential customers for
CoStasis Products shall be promptly forwarded by Cohesion to USS/THG. All
decisions regarding USS/THG marketing, solicitation, handling of customer
inquiries and training shall be in USS/THG's sole discretion.
3.2 Cohesion is legally responsible for the accuracy of all product information
regarding the CoStasis Products provided by Cohesion to USS/THG and included by
USS/THG in CoStasis Products advertising, promotional material, sales aids,
sales brochures and product labeling and packaging under the Act (collectively,
"Promotional Materials"), provided USS/THG distributes only the most recently
revised and approved, as set forth in this Section 3.2, version of such
Promotional Materials. USS/THG shall submit all Promotional Materials prepared
for use with marketing of the CoStasis Products for prior review and approval by
Cohesion, which approval shall not be unreasonably withheld or delayed. If any
Promotional Materials have been previously approved by Cohesion, USS/THG shall
not be required to resubmit such Promotional Materials for Cohesion's review and
approval.
3.3 USS/THG shall promote a CoStasis Product within the Field only for
indications covered by the labeling or literature which accompany the CoStasis
Product and which have been approved, cleared or otherwise allowed by the
applicable Regulatory Authorities in the country in which such promotion occurs.
3.4 Cohesion shall provide assistance in training with respect to the CoStasis
Products for USS/THG's marketing and sales personnel and, in accordance with
USS/THG's reasonable requests, to customers procured by USS/THG. Such training
shall be conducted by competent, technically qualified employees or
representatives of Cohesion. Cohesion shall bear the expense associated with
such training as they relate to Cohesion's employees or representatives; USS/THG
shall bear the expenses associated with such training as they relate to the
training facility and supplies. Cohesion training of USS/THG's marketing and
sales personnel shall occur at such times and locations as are mutually agreed
consistent with the mutually beneficial objective of the parties to effect rapid
and thorough training of USS/THG's marketing and sales personnel to maximize
sales of the CoStasis Products. Within the limitations set forth in this Section
3.4, Cohesion shall also provide support for USS/THG's marketing efforts,
including regulatory review of marketing materials, as set forth in Section 3.2,
conducted pursuant hereto as USS/THG's shall reasonably request. Cohesion shall
bear the costs of providing all of the support and assistance described in this
Section 3.4 up to a maximum of [Text Deleted] per calendar year. Any costs
incurred by Cohesion above [Text Deleted] in any calendar year for such support,
if approved in writing in advance by USS/THG, shall be reimbursed to Cohesion by
USS/THG within 30 days after receipt of an invoice therefor at the end of the
appropriate calendar year.
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3.5 Cohesion shall make available to USS/THG , at the "No P.O. Prices" as set
forth in Tables 6 and 7, demonstration CoStasis Products ("Demonstration
Products"), to be used only for demonstration purposes and not for subsequent
resale by USS/THG. USS/THG shall not purchase Demonstration Products in an
amount exceeding [Text Deleted] of its first six month sales forecast prepared
pursuant to Section 4.2 hereof for each calendar year of this Agreement.
Demonstration Products purchased pursuant to this Section shall not be counted
toward the minimum purchase requirements set forth in Article 5 hereof. USS/THG
may request that such Demonstration Products be shipped directly to a hospital/
account, or shipped directly to a U.S. Surgical facility, the shipping costs for
which USS/THG shall reimburse Cohesion within thirty (30) days of the end of
each calendar quarter.
3.6 Cohesion shall accept and fill CoStasis Products purchase orders forwarded
to it by USS/THG. In addition, Cohesion shall accept and fill purchase orders
for Centrifuges forwarded to it by USS/THG, and shall accept and fill purchase
orders for CellPaker Units forwarded to it by USS/THG.
3.7 The Parties shall continuously communicate and update each other concerning
customer purchase orders, customer pricing and purchase terms, shipping and
delivery of CoStasis Products, and customer invoicing, payment and complaints.
Notwithstanding the foregoing, CoStasis Products shall be invoiced by USS/THG,
but shipped C.I.F. destination and delivered to customers (or as otherwise
directed by USS/THG) directly by Cohesion or its representatives, employing
two-day Federal Express shipping or the equivalent carrier selected by Cohesion
(subject to the approval of USS/THG), the aggregate cost of which insurance and
freight (including supply of appropriate Cohesion shipping containers and
packing materials) shall be reimbursed quarterly by USS/THG, within thirty (30
days) of receipt of an invoice therefor at the end of the appropriate calendar
quarter, except where such costs have been charged directly to USS/THG's
accounts with the applicable carriers. USS/THG shall have sole responsibility
for customer payments and collections, and Cohesion shall be solely responsible
for warranty repairs for CoStasis Products. Cohesion shall have no right,
responsibility or liability for order processing, invoicing, billing or
collection with respect to the CoStasis Products nor any responsibility for any
delays or damages in shipment, except to ensure that reasonable insurance for
shipment delays or damages is maintained.
3.8 Cohesion agrees, at USS/THG's option, to accept orders by electronic data
interchange with USS, and in connection therewith to allow USS/THG to install
and maintain, at USS/THG's expense, a connection between Cohesion's QAD computer
system and USS/THG's SAP computer system.
3.9 USS/THG agree to provide Cohesion on a timely basis with certain sales,
customer, and marketing data relating to the CoStasis Products. Such data may
include customer feedback on the basic CoStasis Products and ideas for
improvements thereto, individual case reports of CoStasis Product uses, data
relating to account usage, ordering, re-ordering, non-ordering of CoStasis
Products, conversion from and data regarding competitive products, and such
other information as USS/THG and Cohesion deem to be reasonably useful to the
implementation of this Agreement.
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ARTICLE 4 - SUPPLY OBLIGATIONS
4.1 Cohesion shall fill USS/THG's purchase orders and arrange shipment to
USS/THG's customers USS/THG within the Territory of the entirety of their
requirements for the CoStasis Products, at the Transfer Prices defined in
Article 7 of this Agreement. In the event that USS/THG orders in any month more
than 125% of the amount of CoStasis Products estimated to be ordered in such
month pursuant to Section 4.2 hereof, Cohesion shall ship the CoStasis Products
that exceed said 125% as soon as reasonably possible, but in no event more than
sixty (60) calendar days after receipt of USS/THG's purchase orders therefor.
4.2 Forty-five (45) calendar days before the start of each calendar year during
the term of this Agreement, USS/THG will provide Cohesion with a twelve (12)
month forecast of its anticipated monthly purchase requirements for CoStasis
Products (the "Forecast"). The Forecast shall be updated by USS/THG on a
quarterly basis, with the updates to be provided to Cohesion forty-five (45)
calendar days before the start of each calendar quarter, for rolling successive
twelve-month periods.
ARTICLE 5 - MAINTENANCE OF EXCLUSIVE DISTRIBUTION RIGHTS
5.1 During the term of this Agreement, USS/THG shall attain the minimum
aggregate annual purchases of Units ("Minimum Aggregate Annual Purchase
Amounts") set forth in this Article 5.
5.2 By the conclusion of the calendar years set forth below in Table 1, 2 and 3,
USS/THG shall have purchased from Cohesion a Minimum Aggregate Annual Purchase
Amount of CoStasis Products in the Territory as a whole, and as to the Domestic
Territory identified in Exhibit A-4, and as to the International Territory
identified in Exhibit A-5, as follows:
Table 1 - USS/THG Purchases in Units for Total Territory
Year 2000 Year 2001 Year 2002 Year 2003 Year 2004
