EXHIBIT 10.1
DEVELOPMENT AND LICENSING AGREEMENT
FOR
SAFETY "SELDINGER" NEEDLE DEVICE
BETWEEN
MED-DESIGN CORPORATION
AND
MEDAMICUS, INC.
This Development and Licensing Agreement (the "Agreement") is entered into and
made effective as of this 25th day of August, 2000 (the "Effective Date") by and
between:
Med-Design Corporation MedAmicus, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(hereinafter referred to as (hereinafter referred to as
"Med-Design") "MedAmicus")
RECITALS
WHEREAS, Med-Design is engaged in the development of safety needle
devices for various medical applications and holds certain intellectual property
rights related thereto;
WHEREAS, MedAmicus desires to have Med-Design develop a safety
"SELDINGER" type needle device for certain applications and to license the
technology to MedAmicus;
NOW THEREFORE, for and in consideration of the mutual covenants and
undertakings contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties,
intending to be legally bound, hereby agree as follows:
1. DEFINITIONS
1.1 "Seldinger Needle Device" (also referred to as guidewire
introducer) as used herein shall mean ***.
1.2 The "Product" as used herein shall mean a Seldinger Needle Device
of the type illustrated in Exhibit A attached hereto.
1.3 "Patent Rights" as used herein shall mean patents and patent
applications relating to the Product, or any improvement or modification to the
Product, its manufacture or use, and any subsequently filed patent applications
and any patents issuing therefrom that are owned by or assigned to Med-Design
and any other patents and patent applications in which Med-Design has an
ownership or licensable interest relating to the Product.
1.4 "Venous Field" as used herein shall mean use of the Product for
venous applications, including pacing, port and the dialysis markets, which are
not inconsistent with rights conveyed to Becton, ▇▇▇▇▇▇▇▇▇ and Company. Nothing
in this agreement grants MedAmicus any rights to the A/V Fistula Needle Set
products developed by Med-Design.
1.5 "Arterial Field" as used herein shall mean use of the Product in
arterial applications, which are not inconsistent with rights conveyed to
Becton, ▇▇▇▇▇▇▇▇▇ and Company, and specifically excluding PICC applications.
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2. PRODUCT DEVELOPMENT
Med-Design and MedAmicus have set forth the primary specifications (the
"Specifications") of the Product along with an estimate of development costs and
time schedule attached hereto as Exhibit B. Prior to commencing work,
appropriate technical personnel from each party will evaluate, and all parties
will mutually agree to modifications of Exhibit B, if necessary. Med-Design will
then develop the Product according to the agreed upon Specifications and within
the agreed upon time schedule. Deviations from that which is set forth in
Exhibit B, which materialize as the work progresses, including deviations
requested by Med-Design's patent counsel, shall be mutually agreed upon in good
faith by the parties in writing. Approval of changes shall not be unreasonably
withheld by either party. If material changes in the design are requested by
MedAmicus, Exhibit B shall be amended to provide for a reasonable extension of
time to complete the project.
Upon mutual agreement of the successful completion of each milestone in
the time schedule, MedAmicus will pay Med-Design the amounts set forth in
Exhibit B for such milestone.
If mutual agreement, as contemplated above in this paragraph cannot be
reached by the parties, this Agreement shall automatically be terminated without
recourse for damages between the parties or the requirement for arbitration;
however, the previously signed Confidentiality Agreements between the parties
shall continue in force.
Upon completion of the design, all Specifications and drawings of the
design for the Product shall be provided to MedAmicus in a form which will allow
MedAmicus to transfer the Product to be manufactured and meet the requirements
of the Medical Device Directive and ISO 46001.
MedAmicus has responsibility to procure all regulatory approvals to
market the Product.
3. LICENSE
MedAmicus is hereby granted an exclusive, worldwide license under the
Med-Design Patent Rights to make, use, sell, and have made the Product for the
Venous Field. If MedAmicus knows that a person is using or selling the Product
or will use or sell the Product for use other than in the Venous Field,
MedAmicus will not sell Product to such person without prior written consent
from Med-Design. Med-Design will retain the right to purchase the Product from
MedAmicus at a mutually agreed upon price for sale to customers outside the
Venous Field to which MedAmicus has been granted exclusivity as set forth above.
No sub-licenses are permitted under this Agreement.
Med-Design grants MedAmicus a revocable, non-exclusive license to make,
use, sell, and have made the Product for the Arterial Field. It is understood
that Med-Design shall have the right to terminate the revocable, non-exclusive
license in the Arterial Field at any time, at Med-Design's sole discretion,
provided however that, Med-Design and MedAmicus may negotiate in good faith to
modify the termination right as set forth in the Arterial Field for a specific
market upon MedAmicus' request at terms to be negotiated.
During the term of this Agreement, Med-Design hereby grants MedAmicus a
license to use all trademarks which are or may be owned by Med-Design and not
licensed to others, in connection with the Product under an appropriate
royalty-free trademark license agreement.
4. ROYALTIES
4.1 As consideration for the licenses granted hereunder, MedAmicus will
pay to Med-Design royalties at the rate of twenty per cent (20%) of the net
sales price of the Product. Royalties shall be paid on the net sales price of
Products, which shall mean the sales price less returns, warranty claims,
refunds and custom or import duties. Royalties are payable based on sales of the
Product being recorded by MedAmicus on a country by country basis.
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In the event the Product is incorporated into a procedural kit, the net
sales price on which the royalty shall be applied shall be calculated by
applying to the net sales price of the procedural kit, a fractional multiplier
having as its denominator the list price of the kit and as its numerator the
list price of the Product, if the Product is sold separately in an arms length
transaction in substantially the same quantity at generally the same time as the
transaction to which this subparagraph relates. If the Product is not sold
separately in such a transaction, the net sales price on which a royalty rate is
applied shall be calculated by applying to the net sales price of the kit, a
fractional multiplier having as its denominator the total manufacturing cost of
the kit and as its numerator the manufacturing cost of the included Product. It
is understood that in no event shall the net sales price for the Product in a
kit, or multiple kit contract, be less than the selling price of the Product, if
the Product is sold separately in an arm's length transaction in substantially
the same quantity at generally the same time.
4.2 MedAmicus agrees to keep complete and accurate records of its sales
of the Product and all data necessary for the computation of payments to be made
to Med-Design hereunder. Payments shall be made on or before the last business
day of July, October, January and April of each year for the sales of the
Product during the preceding quarterly periods ending on the last day of June,
September, December and March, respectively. Such payments shall be accompanied
by a statement showing the total net sales of the Product by MedAmicus, and such
other particulars as are necessary for an accurate accounting of the payments
made pursuant to this Agreement. Payment of the amount due shall accompany such
statement.
4.3 To the extent sales requiring a royalty payment may have been made
by MedAmicus in a country other than the United States, such royalty payments
shall be made by MedAmicus in United States dollars on the basis of conversion
from the currency of such other country, at the rate of exchange recited in the
Wall Street Journal on the last business day of the calendar quarter in which
the sales occurred, and shall be paid at the time and in the manner set forth
above. MedAmicus agrees to accompany the statements to Med-Design with copies of
their rates of exchange used in calculating exchange rates for royalties in
regard to countries outside the United States.
5. MINIMUMS
In order to retain the licenses granted above, MedAmicus must sell,
either alone or as part of a kit, not less than the number of units of the
Product during each royalty year under this Agreement as set forth in Exhibit C
attached hereto. In the event MedAmicus does not sell the minimum quantities
recited for each year in Exhibit C, MedAmicus may pay the royalty for that
number of units which would be sufficient to meet the applicable minimum
quantities and, if it does so, MedAmicus may retain the exclusive license
granted herein.
In the event MedAmicus does not sell the minimum quantities recited for
each year in Exhibit C, MedAmicus may pay an additional royalty for that number
of units which would be sufficient to meet the applicable minimum quantities
and, if it does so, MedAmicus may retain the exclusive license granted herein.
For purposes of making this additional royalty payment, MedAmicus shall
calculate an average unit selling price of the Product actually sold during the
royalty year, and shall multiply that average unit selling price times the
number of units that would be sufficient to meet the applicable minimum
quantities, and then multiply that total times the royalty rate. In the event
less than twenty per cent of the minimum quantities recited for a year were
actually sold for that year, then the average unit selling price for the above
calculation shall be set at $***.
If MedAmicus does not sell the minimum quantities set forth in Exhibit
C, and chooses not to pay the additional royalties necessary to retain the
exclusive license as set forth above in this paragraph, then Med-Design has the
option, in its sole discretion, (a) to convert the exclusive license to a
non-exclusive license; (b) to terminate the license granted herein and demand
the return of all manufacturing drawings originally provided to MedAmicus by
Med-Design, provided Med-Design agrees to purchase any dedicated manufacturing
equipment at its book value; or (c) to terminate this Agreement in its entirety.
6. INTELLECTUAL PROPERTY
6.1 WARRANTY
Med-Design warrants that it holds Patent Rights to the Product.
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6.2 OBLIGATION FOR ENFORCING PATENT RIGHTS
(A) In the event either party hereto receives notice of
alleged third party infringement of any of the Patent Rights covering
the Product, it shall promptly notify the other party in writing of
such infringement. Med-Design shall have the right, but not the
obligation, to bring suit and to control the conduct of such suit
against the third party infringer, and to join MedAmicus as a party to
such suit, if necessary, in which event Med-Design shall hold MedAmicus
free, clear and harmless from any and all costs and expenses of such
litigation. In the event Med-Design exercises the right to bring suit,
MedAmicus shall have the right to receive twenty-five per cent (25%) of
the damages recovered after a deduction for all legal expenses by
Med-Design, including attorney's fees, incurred and paid by Med-Design
in such lawsuit and Med-Design shall have the right to retain any
remaining damages recovered.
(B) If Med-Design does not bring suit against a third party
infringer, as herein provided in subparagraph (A) above, within nine
months after receipt of notice, MedAmicus shall have the right, but
shall not be obligated, to bring suit to stop such third party
infringement, and to join Med-Design as a party to such suit if
necessary, in which event MedAmicus shall hold Med-Design free, clear
and harmless from any and all costs and expenses of such litigation,
except as set forth in the following sentence. If MedAmicus exercises
its right to bring suit against a third party infringer of the Patent
rights, Med-Design shall have the right to voluntarily join the suit
and be represented by its own counsel, at its own expense. In the event
MedAmicus exercises the right to bring suit for such alleged
infringement, Med-Design shall have the right to receive twenty-five
per cent (25%) of all damages recovered. If Med-Design does not join
the suit by MedAmicus, MedAmicus shall be entitled to deduct the cost
of its legal expenses, including attorney's fees, incurred and paid by
it in such lawsuit from the recovery of the suit before calculating
Med-Design's portion of the recovery.
6.3 DEFENDING INFRINGEMENT CLAIMS
If MedAmicus is sued in the United States by a third party in an action
for patent infringement based on the manufacture, use or sale of the Product in
the United States under the Patent Rights, then the following shall apply:
(i) If the infringement claim covers features under Med-Design's
Patent Rights, and on which MedAmicus is paying royalties to
Med-Design under Paragraph 4 of this Agreement, then MedAmicus
may deduct the following from royalties due Med-Design in the
United States based on sales of such Product in the United
States covered by the third party patent:
(ii) 50% of the cost and expenses (including legal fees) incurred
in defense and disposition of the patent infringement action.
(iii) The deduction shall be made against present and future
royalties due for sales in the United States until MedAmicus
has recovered such costs and expenses; except that, if
Med-Design's Patent Rights become involved in such suit and
are held invalid or unenforceable by a court of competent
jurisdiction, then MedAmicus shall have no further liability
to Med-Design relative to such invalid or unenforceable Patent
Rights and Med-Design shall refund up to half of the royalties
paid with respect to such invalid or unenforceable Patent
Rights; provided however that, Med-Design, at its option,
shall have the right to join in any such suit and defend such
suit against MedAmicus and select counsel to defend such suit,
at any time during the course of any such suit. Med-Design's
liability for infringement by MedAmicus of third party patents
shall be limited to the deduction from royalties as set forth
above due for sales in the United States covered by the third
party patent.
6.4 INTERNATIONAL PATENT RIGHTS
Should MedAmicus desire patent protection outside the United States,
and the right to obtain patent protection in countries outside the United States
still exists, then MedAmicus shall pay all costs associated with obtaining such
patent protection, but any such patents shall be the sole property of
Med-Design.
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6.5 RIGHTS OF MED-DESIGN
Except as specifically set forth herein, nothing in this Agreement
provides that any intellectual property rights of Med-Design shall accrue to
MedAmicus.
7. LIMITATION OF LIABILITY AND WARRANTY
MedAmicus will indemnify and hold Med-Design harmless from any claims
made by customers, physicians or patients related to the malfunction, perceived
malfunction or product liability of any nature relative to the Product.
Neither party will be liable to the other for any consequential,
indirect, punitive, special or incidental damages, whether foreseeable or
unforeseeable based upon this Agreement (including but not limited to, claims
for loss of goodwill, profits, investments, use of money or use of products,
interruption in use, stoppage of other work or impairment of other assets, or
labor claims) arising out of breach of express or implied warranty, breach of
contract, misrepresentation, negligence, strict liability in tort or otherwise,
except as otherwise provided above in this paragraph.
8. TERM OF AGREEMENT AND TERMINATION
8.1 TERM
This Agreement shall become effective as of the Effective Date and
shall continue in effect for a period equivalent to the remaining life of the
applicable Patent Rights, or until the Patent Rights are held invalid or
unenforceable by a court of competent jurisdiction, and so long as the Product
is covered by one or more of the Patent Rights, unless terminated earlier by
mutual agreement of the parties or pursuant to the other termination terms
herein. Upon its expiration, the Agreement may be extended, by mutual agreement
of the parties in writing, for additional periods of one year.
8.2 TERMINATION
As set forth in Section 5, this Agreement may be terminated by
Med-Design for MedAmicus' failure to meet the Minimum Purchase Quantities set
forth in Exhibit C.
8.3 TERMINATION EVENTS
Notwithstanding the termination provisions stated in Sections 8.1 and
8.2 above, either party shall be entitled to terminate this Agreement by notice
in writing to the other party in the event that any of the following occurs:
(a) If the other party enters into bankruptcy or debt
reorganization proceedings.
(b) If a receiver is appointed over any of the other party's
property.
(c) If the other party discontinues business.
(d) If the other party fails to perform any of its obligations
hereunder, and such failure continues for thirty days after
written notice of failure is given to the other party.
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9. MISCELLANEOUS:
9.1 NOTICE
All notices or other communications hereunder shall be in writing and
shall be hand delivered or sent by first class United States mail to the
following address. Mailed notice shall be effective two days following the day
of mailing; however, hand delivery and fax transmissions of notices shall be
effective the day received.
MED-DESIGN MEDAMICUS
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
The Med-Design Corporation MedAmicus, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇ Fax: ▇▇▇-▇▇▇-▇▇▇▇
9.2 GOVERNING LAW
This Agreement shall be considered as made and executed in the State of
Pennsylvania, and this Agreement shall be constructed and enforced according to
the laws of the State of Pennsylvania.
9.3 SEVERABILITY
The invalidity or unenforceability of any provision of this Agreement
shall not affect or impair the validity or enforceability of any other
provisions; and section titles and captions in this Agreement are for
convenience only and do not define, limit or construe the contents of such
paragraphs.
9.4 ASSIGNMENT
This Agreement shall not be assigned without the prior written consent
of the other party.
9.5 SUCCESSORS
This Agreement and all of its terms shall be binding upon the
successors and permitted assigns of both parties.
9.6 COMPLETE AGREEMENT
Other than previously signed Confidentiality Agreements which shall
stay in full force and effect, this Agreement contains the entire understanding
among and between the parties and supersedes any prior written or oral
agreements between them respecting the subject matter contained herein.
9.7 ARBITRATION
The parties shall attempt in good faith to resolve any dispute arising
out of the Agreement, promptly by negotiations between executives of the parties
who have authority to settle disputes. After notice of a dispute and the dispute
being unresolved by executives for two months, any such unresolved dispute,
controversy or claim arising out of or relating to this Agreement, or the
breach, validity or termination thereof, shall be finally settled by arbitration
and either party may submit the dispute to arbitration. The arbitration shall be
conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association in effect at the time of arbitration, except as modified
by mutual agreement of the parties. The seat of the arbitration shall be (i)
Minneapolis (if MedAmicus is a named defendant), or (ii) Philadelphia (if MDC is
a named defendant); provided, however, that the arbitrators may hold hearings in
such other locations as the arbitrators determine to be most convenient and
efficient under the circumstances. The appointing authority shall be the
American Arbitration Association. Any award rendered by the arbitrators shall be
in writing and shall be final and binding upon the parties, and may include an
award of costs, including reasonable attorney's fees and disbursements, but
shall not include punitive or consequential damages. Judgment upon the award
rendered may be entered in any court having jurisdiction thereof or having
jurisdiction over the appropriate party or its assets. While any dispute is
pending hereunder, the parties will continue to perform their obligations as set
forth herein.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written:
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THE MED-DESIGN CORPORATION MEDAMICUS, INC.
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Signature Signature
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Print Name Print Name
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Title Title
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Date Date
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EXHIBIT B
TIME AND PAYMENT SCHEDULE:
-------------------- ---------------------------------------- -------- ---------
Project Definition Final agreement by technical personnel *** $***
on all Specifications, timetable and
cost to complete
-------------------- ---------------------------------------- -------- ---------
Design Review II Design output from Med-Design *** $***
-------------------- ---------------------------------------- -------- ---------
Design Review III Design Verification through animal
testing *** $***
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Technology Transfer Transfer of all documentation, fixtures, *** $***
molds, prototypes to MedAmicus
-------------------- ---------------------------------------- -------- ---------
EXTERNAL COSTS:
All external costs will be borne by MedAmicus. These costs include, but are not
limited to:
* Molds, fixtures and other capital equipment
* All external testing, including animal testing
* All parts for prototypes
* Costs for consultants for manufacturing startup
SPECIFICATIONS:
See attached pages 1-3
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EXHIBIT C
MINIMUM PURCHASE QUANTITIES
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ROYALTY YEAR QUANTITY IN UNITS
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1 ***
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2 ***
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3 ***
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4 ***
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5 To Contract Termination ***
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Royalty year 1 commences on first day product is commercially shipped for
non-clinical purposes, or December 31, 2000 whichever is first. In the event of
unforeseeable circumstances, this date may be extended by mutual written consent
of the parties. Royalty years thereafter commence on the annual anniversary of
Royalty Year 1.
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