(Certain information has been omitted from this exhibit and filed separetly with
the SEC pursuant to a request for confidential treatment under Rule 24b-2)
Exhibit 10.16
LICENSE AGREEMENT
AGREEMENT made and effective as of the 26th day of February, 1996, by
and between CNS, Inc., a Delaware corporation ("Licensee"), and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
M.D. ("Licensor").
R E C I T A L S
WHEREAS, Licensor is now and has been engaged in developing certain
Products (as defined in Subsection 1.1) for use in preventing dental damage;
WHEREAS, the Products embody inventions and designs owned by Licensor
and Licensor has available certain know-how relating to the Products;
WHEREAS, Licensor owns or controls, or may hereafter own or control,
certain know-how, patents or patent applications relating to the Products;
WHEREAS, Licensor desires to license to Licensee and Licensee desires
to license from Licensor certain know-how and patent applications of Licensor
relating to the Products.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements hereinafter set forth and other good consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. GENERAL DEFINITIONS. As used herein, the following terms shall be
defined in the manner set forth below:
1.1 Products. The term "Products" shall mean the Laryngoscope Dental
Warning System and parts, and components therefor and related thereto, all
improvements thereto, and any other products similar in function or purpose to
such product developed by Licensor during the term of this Agreement using any
Licensed Patents or Know-how.
1.2 Know-how. The term "Know-how" shall mean any and all tangible and
intangible information, technology, documents and materials in the possession
and control of Licensor, necessary in order to enable Licensee to utilize fully
the rights granted by Licensor to Licensee hereunder and shall include, without
limiting the foregoing, the ideas, concepts, confidential information, trade
secrets and techniques, as well as all the materials, documents, manuals,
schematics, blueprints, specifications, patterns, art work, bills of materials
and technical specifications and other information of Licensor relating to the
Products.
1.3 Licensed Patents. The Term "Licensed Patents" shall mean the
following: (i) the United States patent applications listed on Schedule 1.3
attached hereto and any patents arising therefrom; (ii) the rights, patents and
patent applications, if any, in any country or jurisdiction in the world
corresponding to the United States patent applications listed on Schedule 1.3
attached hereto; and (iii) any division, continuation, continuation-in-part,
divisional, reissued or extended letters patent, applications and ▇▇▇▇▇ patents,
utility models, utility model conversions, inventor's certificates relating to
any of the foregoing United States patents and patents pending and foreign
patent rights, which may be developed, acquired or controlled by Licensor during
the term of this Agreement and with respect to which Licensor shall have the
right to grant the license hereinafter provided.
1.4 Contract Year and Quarter. The term "Contract Year" shall mean each
period of twelve consecutive months commencing on January 1 of the year
designated in Subsection 4.2. The term "Contract Quarter" shall mean each period
of three consecutive months commencing each January 1, April 1, July 1 and
October 1.
1.5 Net Sales. The term "Net Sales" shall mean the net amount collected
by Licensee from any end-user, sublicensee, assignee or other person relating to
or arising from the sale of Products after the deduction of (i) any amounts
repaid or credited by reason of rejections or returns and (ii) trade and
quantity discounts actually allowed and taken.
1.6 Earned Royalty. The term "Earned Royalty" shall mean the royalty
payable to Licensor on Products.
2. GRANT OF LICENSES.
2.1 Patent and Know-how License. Licensor hereby grants to Licensee an
exclusive, worldwide, transferable license to manufacture, have manufactured,
use, lease, sell and otherwise practice the Products and all Know-how and any
invention disclosed or claimed in any of the Licensed Patents.
2.2 Sublicenses and Assignments. Subject to the further provisions of
this Subsection 2.2, Licensee may sublicense and/or assign to any third party,
including affiliates of Licensee, any and all rights granted hereunder. For any
sublicense and/or assignment granting rights to sell Products to parties other
than Licensee to be valid, Licensee shall, prior to any such assignment or
sublicense, enter into a written assignment and/or sublicense agreement with
such proposed sublicensee and/or assignee under which the assignee and/or
sublicensee agrees to (i) make payments of royalties to Licensee at commercially
reasonable rates based upon the sale of Products, and (ii) provide Licensee
records, data and other information necessary to verify the assignee's and/or
sublicensee's performance of its obligations under such sublicense and/or
assignment agreement. Licensee agrees that it shall take all such action as is
reasonable in order to fully enforce the obligations of any such sublicensee
and/or assignee under any such sublicense and/or assignment agreement.
2.3 Patent Costs. Licensor shall be responsible for and pay all patent
costs and expenses to be incurred in obtaining, prosecuting, owning and
maintaining any of the Licensed Patents issued or to be issued under the law of
any jurisdiction, including filing, prosecution, working and maintenance costs
and taxes; provided, however, that Licensee shall, at Licensor's request, be
responsible for and pay all costs and expenses to be incurred in maintaining any
of the Licensed Patents issued or to be issued in a foreign jurisdiction, which
payments will be deducted from any future royalty payments on foreign sales of
the Products.
2.4 Exploitation. Except as set forth in Section 8, Licensee shall not
be under any obligation to use, exploit, develop or market any license under
this Agreement. Licensee shall be entitled to use its sole business judgment in
deciding the manner and extent, if any, of any exploitation of any licenses
granted hereunder and in deciding whether to use any other products, devices,
techniques or technology competing therewith in any field of use.
3. REPRESENTATIONS AND WARRANTIES.
3.1 Licensor hereby warrants and represents to Licensee as follows:
(a) This Agreement has been duly authorized, executed and delivered by
Licensor and constitutes a valid and binding obligation of Licensor, enforceable
in accordance with its terms. The execution, delivery and performance of this
Agreement by Licensor and the consummation of the transactions contemplated
hereby do not and will not conflict with or result in any material breach of any
of the provisions of, or constitute a material default under, or result in a
material violation of, or require any authorization, consent or approval, under
the provisions of any agreement or instrument to which Licensor is bound or
affected, or any law, statute, rule, regulation, judgment order or decree to
which Licensor is subject.
(b) Licensor owns all the rights with respect to the Products, Licensed
Patents and Know-how.
(c) To Licensor's knowledge, there is no reason that enforceable
patents will not issue in the United States from the applications listed on
Schedule 1.3, or in any other jurisdiction where corresponding rights are
sought.
(d) To Licensor's knowledge, the Products, Licensed Patents and
Know-how do not infringe on any patent, copyright or other intellectual property
right of any third party.
(e) Licensor has not received notice of any claims, actions, suits or
proceedings pending or threatened effecting Licensor, the Licensed Patents or
Know-how, which, if adversely determined, would have a material adverse effect
upon Licensee's ability to manufacture, have manufactured, use or sell the
Products or otherwise practice the rights and technology licensed to Licensee by
Licensor under this Agreement, and to Licensor's knowledge, there is no
reasonable basis for anyone to bring such claims, actions, suits or proceedings.
(f) Licensor has not received any claim from any third-party
proceedings relating to the Licensed Patents, Know-how, or the Products which
are based upon infringement of any patent or misappropriation or misuse of trade
secrets.
3.2 Licensee hereby warrants and represents to Licensor as follows:
(a) Licensee is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
(b) This Agreement has been duly authorized, executed and delivered by
Licensee and constitutes a valid and binding obligation of Licensee, enforceable
in accordance with its terms. The execution, delivery and performance of this
Agreement by Licensee and the consummation of the transactions contemplated
hereby do not and will not conflict with or result in any material breach of any
of the provisions of, or constitute a material default under, or result in a
material violation of, or require any authorization, consent or approval, under
the provisions of Licensee's Certificate of Incorporation or Bylaws or any other
agreement or instrument to which Licensee is bound or affected, or any law,
statute, rule, regulation, judgment order or decree to which Licensee is
subject.
4. CONSIDERATION AND REPORTS.
4.1 Fixed License Fees. Licensee agrees to pay to Licensor the
following amounts: (a) $15,000 upon the execution of this Agreement; and (b)
$35,000 upon receiving clearance to market the Products from the Food and Drug
Administration, which amount will be credited as a prepayment of royalties.
4.2 Royalties. Licensee agrees to pay to Licensor royalties as follows
based on the Net Sales of Products: (a) 5% of Net Sales of the Products; and (b)
3% of Net Sales of any disposable blade products which are manufactured by
Licensee and which incorporate the Product into the blade. The royalty provided
for in this Section 4 shall be terminated if and when the Licensed Patents are
invalidated or expire. The Earned Royalty due hereunder shall be payable each
Contract Quarter as set forth in Subsection 4.4.
4.3 Minimum Royalties. To maintain its rights hereunder, Licensee shall
pay to Licensor minimum royalties beginning in the first complete calendar
quarter after FDA approval of the Products. Within forty-five (45) days after
the end of each Contract Quarter after the commencement of the minimum royalties
and during the remaining term of this Agreement, Licensee shall pay Licensor the
minimum royalties specified on Schedule 4.3 less (i) the aggregate amount of
Earned Royalties actually paid to Licensor for the Contract Quarter ended, (ii)
the amount of royalties paid to Licensor in any Contract Quarter for that
Contract Year which exceeded the minimum royalties for that Contract Quarter
(iii) the aggregate amount of royalties paid by any sublicensee or assignee of
this Agreement. Licensee's failure to pay any and all amounts payable under the
preceding sentence within forty-five (45) days after receipt of written notice
from Licensor that such amounts have not been timely paid shall render the
licenses granted hereunder void, and thereupon Licensee shall have no further
rights or interests of any kind or nature with respect to the Products, Knowhow,
Licensed Trademarks or Licensed Patents and Licensee shall take any and all
action that Licensor may request to further document the provisions hereof. In
the event that Licensee complies with Section 4.2 but fails to pay the minimum
royalties due under this Section 4.3, Licensor's exclusive remedy is to
terminate this Agreement, and Licensor will not be entitled to any damages or
injunctive or mandatory relief relating to Licensee's obligations under this
Section 4.3.
4.4 Quarterly Payments. All royalties due Licensor from Licensee
hereunder shall be payable on a Contract Quarterly basis. Within forty-five (45)
days after the end of each Contract Quarter during the term of this Agreement,
Licensee shall pay to Licensor the royalty due Licensor under Subsections 4.2
and 4.3 through the end of the preceding Contract Quarter and shall furnish
Licensor with a written statement setting forth the number of Products sold and
the Net Sales received during such Contract Quarter, and the resulting amount of
the royalty due Licensor under Subsections 4.2 and 4.3.
4.5 Late Payment. Licensee shall pay a late payment fee to Licensor
calculated at a variable rate of 2% over the prime per annum interest rate as
set from time to time by Norwest Bank Minneapolis, N.A., Minneapolis, Minnesota
(the "Interest Rate"), on any and all amounts that are at any time overdue and
payable to Licensor under this Agreement, such interest being calculated on each
such overdue amount from the date when such amount became due to the date of
actual payment thereof. Such late payment fee shall be in addition to and not in
lieu of any and all other rights or remedies that Licensor may have under this
Agreement or law relating to a default by Licensee under this Agreement.
4.6 Records. During the term of this Agreement and for three (3) years
after termination of this Agreement, Licensee shall at all times maintain
accurate and up-to-date records containing complete data from which amounts due
to Licensor under this Agreement may be readily calculated. Further, Licensee
shall preserve and permit examination of such records by Licensor's
representatives at reasonable intervals and under reasonable conditions during
the term of this Agreement and for three (3) years thereafter and, upon request,
shall supply to Licensor's representatives all information useful in making a
proper audit and verification of Licensee's performance of its obligations under
this Agreement.
5. INDEMNIFICATION.
5.1 Indemnification by Licensor. Licensor shall indemnify and hold
Licensee harmless from and against any and all claims, damages, costs (including
reasonable attorneys' fees), judgments and liabilities of any kind or nature
arising out of the breach by Licensor of any of its warranties, representations
and covenants under this Agreement.
5.2 Indemnification by Licensee. Licensee shall indemnify and hold
Licensor harmless from and against any and all claims, damages, costs (including
reasonable attorneys' fees), judgments and liabilities of any kind or nature:
(a) arising out of the breach by Licensee of any of its covenants under this
Agreement; or (b) arising out of or related to the use, development,
manufacturing or marketing of the Products, Know-how or Licensed Patents,
including but not limited to, product liability claims.
6. PROTECTION AGAINST INFRINGEMENT. In the event that either party
becomes aware of activity on the part of any, or a claim made by a, third party
which may constitute or relate to infringement of the Licensed Patents, or any
other intellectual property rights with respect to which Licensee is granted a
license hereunder, that party shall give the other party written notice thereof.
Licensee shall, at its option and at its sole expense, initiate and thereafter
diligently maintain reasonable efforts to prevent and ▇▇▇▇▇ such infringement,
including the initiation of an appropriate civil action for infringement and the
taking of such other action as may be necessary or appropriate, to enforce the
Licensed Patents or other intellectual property rights with respect to which
Licensee is granted a license hereunder. In such event, (i) Licensor will permit
the use of its name in, and as a party to, all such suits and execute all
pleadings, documents and other papers necessary or appropriate in conjunction
therewith and (ii) Licensee shall receive the full benefits of any action it
takes pursuant to this subsection, including retaining all sums recovered in any
such suit or in settlement thereof after paying Licensor the Earned Royalties
which shall be calculated from the amount of Net Sales, if any, imputed to
support any award of compensatory damages (as opposed to punitive or any other
damages). Licensor may, at its option and its cost and expense, participate in
meetings with Licensee and/or its counsel and receive all pleadings, documents
and other related papers useful for the purpose of keeping Licensor informed of
the status of any proceedings commenced by Licensee pursuant to this Section 6.
7. TERM AND TERMINATION.
7.1 Term. This Agreement shall commence on the effective date hereof
and shall expire, unless earlier terminated pursuant to the terms of this
Agreement, upon the expiration of the last of the Licensed Patents to expire.
7.2 Termination. (a) If either party defaults in any of its obligations
under this Agreement, the other party shall have the right to terminate this
Agreement by giving ninety (90) days' written notice of termination specifying
the reason for termination, provided that such notice will be of no effect and
termination will not occur if the specified default is cured prior to the
expiration of said ninety (90) day notice period.
(b) Upon the termination of any license granted under this Agreement,
Licensee may, after the effective date of such termination, sell any of its (i)
completed Products, (ii) Products then in the process of manufacture and (iii)
Products with respect to which manufacture has been committed at the time of
termination by reason of either (x) any contracts for the purchase of materials
to be used in the manufacture of such Products or (y) any contract for the sale
of such Products. All such sales and uses shall be subject to the royalty
provisions of Section 4 of this Agreement as though the termination of this
Agreement had not occurred.
(c) Except as expressly provided in Subsection 7.2(b), after
termination of this Agreement, Licensee may not use, develop, market or sell the
Products, Licensed Trademarks, Know-how, or Licensed Patents in any way or
manner and Licensee shall take any and all steps reasonably requested by
Licensor to fully document the complete vesting of all rights licensed hereunder
to Licensee from Licensor upon any such termination.
7.3 Continuing Obligations. Termination shall not relieve or release
either party from its obligations to make any payment which may be owing to the
other under the terms of this Agreement or from any other liability which either
party may have to the other arising out of the terms of this Agreement.
Additionally, notwithstanding anything contained herein to the contrary,
Sections 3 and 5, and Subsections 4.2, 4.3, 4.4, 4.5 and 4.6 shall survive
termination of this Agreement and remain in full force and effect; provided,
that Licensor and Licensee hereby acknowledge that they may not bring claims
against one another based upon the representations and warranties contained in
Section 3, except to the extent such representations and warranties are not
accurate as of the date hereof.
8. REGULATORY APPROVALS. Licensee shall submit a 510(k) notification
filing to the FDA, prior to June 30, 1996, for the purpose of satisfying the
required premarket notification before sale of the Products may begin.
9. MISCELLANEOUS.
9.1 Force Majeure. Neither party shall be responsible for any delay or
failure in the performance of any obligation hereunder due to strikes, lockouts,
fires, floods, acts of God, embargoes, wars, riots, or act or order of any
government or governmental agency; provided, however, nothing set forth in this
Subsection 9.1 shall be construed to relieve Licensee of the requirement that it
pay minimum royalties pursuant to Subsection 4.3 hereof or suffer a loss of the
licenses herein granted.
9.2 Waiver. The waiver or failure of either party to enforce the terms
of this Agreement in one instance shall not constitute a waiver of said party's
right under this Agreement with respect to other violations.
9.3 Remedies. Except as otherwise provided herein, the election by
either party of any particular right or remedy shall not be deemed to exclude
any other right or remedy and all rights and remedies of either party shall be
cumulative. Except as otherwise provided herein, the parties agree that, in
addition to any other relief afforded under the terms of this Agreement or by
law, each party shall have the right to enforce this Agreement by injunctive or
mandatory relief to be issued against the other party, it being understood that
both damages and specific performance shall be proper modes of relief and are
not to be considered as alternative remedies.
9.4 Notices. All notices and replies thereto required hereunder shall
be in writing, signed by the party giving notice, placed in an envelope and
either delivered by hand or sent by facsimile or registered mail, postage
prepaid, return receipt requested, and properly addressed to the other party.
Notices sent by mail shall be deemed received on the date of receipt indicated
by the receipt verification provided by the United States Postal Service.
Notices sent by facsimile shall be deemed received on the date indicated on the
sender's confirmation report. Notice shall be given, mailed or sent to the other
party at the following addresses or at such other address as may be given by
proper notice:
If to Licensor: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.:______________
With a copy to: ▇▇▇▇▇▇▇▇, Rooney & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
If to Licensee: CNS, Inc.
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
Either party hereto may designate any other address for notices given
hereunder by written notice to the other party given at least ten (10) days
prior to the effective date of such change.
9.5 Entire Agreement. This Agreement represents the entire agreement
between the parties with respect to the subject matter hereof; there are no oral
promises, representations or warranties. No modification of this Agreement or
waiver of any of its terms shall be binding upon the parties unless said
modification or waiver is in writing, signed by both parties, and states that it
is an amendment to this Agreement.
9.6 Parties in Interest. This Agreement shall inure to the benefit of,
be binding upon, and be enforceable against the parties hereto, their respective
successors and assigns.
9.7 Governing Law. This Agreement shall be governed by, construed and
enforced under the internal laws (and not the laws of conflicts) of the State of
Minnesota.
9.8 Severability. If any portion of this Agreement is held invalid by
the final judgment of any court of competent jurisdiction, such portion shall be
deemed revised or "blue lined" so that it is enforceable to the fullest extent
possible under applicable law and the remaining provisions shall remain in full
force and effect as if such invalid provision had not been included herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CNS, INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, M.D. Its: President
SCHEDULE 4.3
MINIMUM ROYALTIES
Minimum Royalties
Period Per Quarter
1. All Contract Quarters prior to completion $[Confidential Treatment Requested]
of the first full Contract Year of royalty
payments.
2. Contract Quarters during second Contract $[Confidential Treatment Requested]
Year of royalties.
3. Contract Quarters during third Contract $[Confidential Treatment Requested]
Year of royalties.
4. All Contract Quarters after third Contract $[Confidential Treatment Requested]
Year and prior to termination of the Agreement
