LICENSE AND ROYALTY AGREEMENT
-----------------------------
This License and Royalty Agreement ("Agreement"), is made and entered
into as of this 10th day of September, 1997, by and among LASERSIGHT
TECHNOLOGIES, INC., a Delaware corporation ("Licensee"), XXXX X. XXXX, M.D. and
XXXXXX XXXXXXX (collectively, "Licensors").
WHEREAS, Licensors are the owners of the entire, right, title and
interest in and to a certain U.S. letters patent and foreign patents, as
identified on Schedule A attached hereto and made a part hereof, pertaining to a
device for use in human corneal refractive surgery (collectively, the "Licensed
Patents");
WHEREAS, Licensors have certain know-how and confidential technical
information directed to the Licensed Patents (collectively, the "Licensed
Technology");
WHEREAS, Licensee desires to acquire a world wide, limited license to
make, have made, use or sell the devices described in or covered by any claims
of the Licensed Patents (the "Devices") in those countries identified on
Schedule A (the "Territory") and throughout the world, in accordance with the
terms and conditions provided herein; and
WHEREAS, Licensors are willing to grant such a license to Licensee in
accordance with the terms and conditions provided herein;
NOW, THEREFORE, for and in consideration of the mutual promises and
valuable consideration set forth herein, the parties hereto mutually agree as
follows:
1. Grant of License.
(a) Limited License. Licensors hereby grant to Licensee during
the Term a world-wide, non-exclusive, terminable, non-transferable,
non-sublicensable (except as provided herein) right and license to
make, have made, use and sell the Devices under the Licensed Patents
and the Licensed Technology (the "Limited License"). As used herein,
the term Licensed Patents shall include those items listed on Schedule
A, and any reissues, divisionals, continuations, and
continuations-in-part. As used herein, the term Licensed Technology is
limited to that information known to Licensors as of the Effective Date
and specifically excludes any information of Licensors concerning
proprietary software developed or owned by Licensors.
(b) Conversion to Exclusive License. Upon the occurrence of
(i) a ruling by a court of competent jurisdiction, or (ii) a settlement
or other similar agreement between Licensors and Chiron Vision
Corporation ("Chiron"), which concludes the litigation between
Licensors and Chiron related to the Licensed Patents or the Licensed
Technology (the "Litigation"), and terminates all of Chiron's rights in
connection with the Licensed Patents and the Licensed Technology,
Licensors shall give notice of such resolution to Licensee. After
receiving such notice, Licensee shall have sixty (60) days (the "Notice
Period") to convert the Limited License (the "Exclusive Option") into
an exclusive license (the "Exclusive License"). In the event Licensee
so exercises the Exclusive Option, the sole effect will be to amend
Section 1(a) to change the word "non-exclusive" to "exclusive". All
other terms and conditions of Section 1(a) shall remain in full force
and effect. At such time (the "Exclusive Date"), Licensors represent
and warrant that no other party shall have any right, title or interest
in, to or under the Licensed Patents or the Licensed Technology. Upon
the conclusion of the Notice Period and if Licensee does not exercise
the Exclusive Option, nothing contained in this Agreement shall prevent
Licensor from granting additional licenses to the Licensed Patents and
Licensed Technology.
2. Term. This Agreement shall be effective as of the date first set
forth above (the "Effective Date"), and shall commence on the earlier of (i) the
date Licensee commences shipment of the disposable microkeratomes, or (ii)
ninety (90) days subsequent to the date Licensee has received delivery of
completed Limited Production Molds (as defined herein) (the "Commencement
Date"), and shall continue thereafter for a period of thirty-one (31)
consecutive months (the "Initial Term"), unless earlier terminated as provided
for herein. This Agreement thereafter shall renew for additional one (1) year
terms (each a "Renewal Term", and collectively "Renewal Terms", and the Initial
Term together with Renewal Terms shall constitute the "Term") as follows:
(a) Resolution of Litigation. If within thirty (30) days prior
to the termination of the Initial Term or Renewal Term, as the case may
be, the Litigation has been resolved in accordance with Section 1(b),
and Licensee has exercised the Exclusive Option, Licensee shall have
the sole option to renew this Agreement upon the same terms and
conditions set forth herein; provided, however, with respect to
Licensee's obligations pursuant to Section 5 of this Agreement,
Licensee shall be obligated to pay to Licensors, in addition to the
compensation described in Section 5(b) which has not been paid, if any,
only the payments described in Section 5(a)(v) and Section 5(e), and
the amount of such payments may be adjusted as mutually agreed by the
parties. Should Licensee fail to exercise the Exclusive Option, the
parties may mutually agree to renew this Agreement upon terms and
conditions as agreed upon by the parties.
(b) Continuing Litigation. If within thirty (30) days prior to
the termination of the Initial Term or Renewal Term, as the case may
be, the Litigation has not been resolved in accordance with Section
1(b), Licensee shall have the sole option to renew this Agreement upon
the terms and conditions as set forth herein; provided, however, with
respect to Licensee's obligations pursuant to Section 5 of this
Agreement, Licensee shall be obligated to pay to Licensors only the
payments described in Section 5(a)(v) and Section 5(e), and the amount
of such payments may be adjusted as mutually agreed by the parties.
3. Ownership of Intellectual Property.
(a) Licensee acknowledges that Licensors have all right, title
and interest in the Licensed Patents and the Licensed Technology, and
that as between Licensors and Licensee, Licensors have the exclusive
right to use the Licensed Patents and the Licensed Technology, except
as otherwise provided herein. Licensee shall not, at any time, file any
trademark or patent application with the United States Patent and
Trademark Office or any other governmental entity, any copyright
registration with the U.S. Copyright Office or with any other
governmental entity for the Licensed Patents and the Licensed
Technology. Licensee shall not use any of the Licensed Patents and the
Licensed Technology except in accordance with this Agreement. Any
patent or copyright registration obtained or applied for anywhere in
the world that contains the Licensed Patents and the Licensed
Technology or any substantially similar design, shall be transferred to
Licensors without compensation. Notwithstanding anything set forth in
this Section 3(a) to the contrary, the parties acknowledge and agree
that U.S. Letters Patent No. 5,586,980, dated December 24, 1996 (the
"Xxxxxx Patent"), is the sole and exclusive property of LaserSight
Incorporated ("LaserSight"), an affiliate of Licensee, and that the
provisions of this Section 3(a) shall not apply to LaserSight's
activities in connection with the Xxxxxx Patent.
(b) Licensee shall not oppose or seek to cancel or challenge,
in any forum, including, but not limited to, the United States Patent
and Trademark Office or any other governmental authority, any
application or registration of any trademark, service xxxx or patent
which contains the Licensed Patents or the Licensed Technology.
Licensee shall not oppose or seek to cancel or challenge, in any forum,
including, but not limited to, the U.S. Copyright Office, any
application or registration of a design containing the Licensed Patents
or the Licensed Technology. Licensee shall not object to, or file any
action or lawsuit because of, any use by Licensors of the Licensed
Patents or the Licensed Technology, whether such use is by Licensors
directly or through different licensees or authorized users unless such
use conflicts with the terms of this Agreement.
(c) Nothing in this Agreement gives Licensee any right, title,
or interest in any of Licensors' intellectual property except the right
to use in accordance with the terms of this Agreement.
(d) Licensee acknowledges that all designs, artwork,
compilations or derivatives ("Works") included in the Licensed Patents
or the Licensed Technology are the sole property of Licensors. Licensee
acknowledge that any Works, other than trademarks or service marks,
created by it pursuant to this Agreement that contain the Licensed
Patents or the Licensed Technology are also the property of Licensors.
Licensee hereby assigns to Licensors any right, title or interest they
may have in Works, other than trademarks or service marks, developed
under this Agreement to Licensors. Licensee warrants they have and will
maintain appropriate agreements with their employees and independent
contractors to give effect to this Section. Accordingly, Licensee shall
not copy, use, assign or otherwise transfer any rights in any Works or
any derivatives thereof included, except in accordance with this
Agreement. Licensee shall not attempt to obtain or assert copyright
rights in any artwork or design, other than with respect to trademarks
and service marks, which contains the Licensed Patents and the Licensed
Technology, without the express written authorization of Licensors.
Notwithstanding anything set forth in this Section 3(d), the parties
acknowledge and agree that the Xxxxxx Patent is the sole and exclusive
property of LaserSight and that the provisions of this Section 3(d)
shall not apply to LaserSight's activities in connection with the
Xxxxxx Patent.
(e) Licensee acknowledges that its material breach of this
Agreement will result in immediate and irreparable damage to Licensors,
and that money damages alone would be inadequate to compensate
Licensors. Therefore, in the event of a material breach of this
Agreement by Licensee, Licensors, in addition to other remedies, may
immediately obtain and enforce injunctive relief prohibiting the
material breach or compelling specific performance.
4. Limitations on the Limited License. The Limited License is subject
to the following additional limitations:
(a) Distribution. In the event Licensee sells or distributes
the Products (as defined herein) to any person, firm or corporation
related in any manner to Licensee or its officers, directors or major
stockholders, or to an exclusive distributor, Licensee shall make Gross
Profit Payments with respect to such sales or distribution based upon
the Sales Price (as defined herein) generally charged to Licensee's
normal distribution network.
(b) No Other Use. Licensee shall not use the Products, the
Licensed Patents or the Licensed Technology for any purpose other than
in connection with this Agreement.
(c) Selection of Manufacturer. Licensors and Licensee shall
mutually agree on the manufacturer of the Products. Licensee shall (i)
be responsible for the cost of the manufacture of the Products, (ii)
shall enter into contracts for the manufacture of the Device, and (iii)
be responsible for the purchase of those items identified in Section
5(c)(iii) which are necessary to complete the Product.
(d) Premium Rights. Licensee shall not manufacture, sell, or
distribute the Products as Premiums, for publicity purposes, for fund
raising, as giveaways, in combination sales, or for disposal under
similar methods of merchandising except as provided in this subsection;
provided, however, during the first two (2) calendar quarters following
the Commencement Date, Licensee shall have the right to grant Premiums
in an amount not to exceed five percent (5%) of the total disposable
microkeratomes produced during the applicable calendar quarter, and
such amount will be reduced to one percent (1%) for each calendar
quarter thereafter. For purposes of this Agreement, "Premium" shall be
defined as any time the Products are sold or given away for the
purposes of increasing the sale, promoting, or publicizing any other
product, service or establishment, including incentives for sales
force, trade or consumer promotions.
(e) Notices. Licensee shall stamp on the Products or any
packaging for the Products such intellectual property notices as
reasonably directed from time to time by Licensors.
(f) Quality Control. All of the Products, with the exception
of those items described in subsection 5(c)(iii)(H), (I) and (L)
(collectively, the "Excluded Items"), manufactured pursuant to this
Agreement shall be manufactured and produced in accordance with the
specifications developed and provided to Licensee by Licensors.
5. Consideration.
(a) Limited License. As consideration for the Limited
License, Licensee shall pay the following jointly to
Licensors:
(i) $400,000 U.S. shall be paid to Licensors
upon the signing of this Agreement;
(ii) $150,000 U.S. shall be paid to Licensors on
the date six (6) months after the
Commencement Date, and $150,000 U.S. shall
be paid to Licensors on the date twelve (12)
months after the Commencement Date;
(iii) within thirty (30) days after the
Commencement Date, Licensee shall deliver
pursuant to the directions of Licensors a
LaserScan LSX laser system with a list price
of $300,000 U.S. which shall receive the
full manufacturers warranty given to other
customers of Licensee of these products;
(iv) after the Commencement Date, Licensee shall
provide Licensors with the necessary
equipment and supplies to upgrade Licensors
existing LaserScan 2000 with a Ceralase
laser head and eye tracking system and
Licensee will install such upgrade at such
time and in a manner as mutually agreed to
by the parties; and
(v) fifty percent (50%) of the Gross Profit (as
defined herein) ("Gross Profit Payment")
shall be paid to Licensors no later than
forty-five (45) days after the end of each
calendar quarter during the Term.
(b) Exclusive License. Upon conversion to the Exclusive
License, if ever, and as consideration for the Exclusive License,
Licensee, in addition to the consideration under Section 5(a), shall
pay the following jointly to Licensors:
(i) $400,000 U.S. shall be paid to Licensee
within thirty (30) days after the
Exclusive Date;
(ii) $150,000 U.S. shall be paid to Licensee on
the date which is six (6) months after the
Exclusive Date, and $150,000 U.S. on the
date twelve (12) months after the Exclusive
Date; and
(iii) within six (6) months after the Exclusive
Date, Licensee shall deliver pursuant to the
directions of Licensors a LaserScan LSX
laser system with a list price of $300,000
U.S. which shall receive the full
manufacturers warranty given to other
customers of Licensee of these products.
(c) Calculation of Gross Profits. "Gross Profit" shall be
calculated by Licensee within forty-five (45) days after the end of
each calendar quarter during the Term and shall be determined as
follows:
(i) the sum of (A) the Cost of Goods Sold (as
defined herein), (B) any royalty fee imposed
(i) by a court, or (ii) in connection with a
settlement agreement, within the Territory
that determines that the Devices sold by
Licensee infringe the intellectual property
rights of a third party not affiliated with
Licensee or resolves any such dispute, as
applicable, and (C) distribution discounts
and sales commissions associated with the
Products; provided, however, for purposes of
this calculation distribution discounts and
sales commissions shall not exceed 35% of
gross sales, shall be subtracted from the
total invoiced amounts of all sales of the
Products, less any credits for returns
actually made and supported by credit
memoranda issued to the customer (the "Sales
Price");
(ii) any rebates and commissions from
manufacturers, distributors or other sources
shall be deducted from the Cost of Goods
Sold;
(iii) for purposes of determining Gross Profit,
all amounts invoiced by Licensee shall be
included which are the result of Licensee's
sale of the Devices and other related
components including, but not limited to,
(A) disposable microkeratome with gear box,
suction ring and suction handle, (B) motor,
(C) motor power cord, (D) tonometer, (E)
suction and power supply, (F) foot switch,
(G) tubing, (H) user's manual, (I) sterile
packaging, (J) control consoles, (K) blades,
(L) replacement parts, (M) lid speculum, and
other component parts which are manufactured
utilizing the Licensed Patents and/or the
Licensed Technology (collectively, the
"Products").
(d) Cost of Goods Sold. "Cost of Goods Sold" shall include (i)
the manufacturing costs from an OEM vendor of the Products, (ii)
packaging costs associated with the manufacture and distribution of the
Products, (iii) sterilization costs associated with the Products, and
(iv) shipping costs associated with the Products.
(e) Minimum Gross Profit Payments. Commencing on the date
which is seven (7) months after the Commencement Date (the "Minimum
Gross Profit Date"), and continuing through the balance of the Term,
the quarterly Gross Profit Payments which will be paid by Licensee to
Licensors during each calendar quarter shall equal or exceed $400,000
U.S., and after the Exclusive Date this quarterly amount shall increase
to $600,000 U.S. (each a "Minimum Payment Requirement"). Licensee
acknowledges that Minimum Payment Requirements are a floor for the
Gross Profit Payments and Licensee shall use its best efforts to ensure
the Gross Profit Payments exceed the Minimum Payment Requirements.
Notwithstanding anything set forth herein to the contrary, each Minimum
Payment Requirement shall be adjusted as follows (the "Minimum Payment
Requirement Adjustment"):
(i) if the Minimum Gross Profit Date occurs in any
month other than January, the Minimum Payment
Requirement for the calendar quarter in which the
Minimum Gross Profit Date occurs shall be reduced to
the amount resulting from multiplying the applicable
Minimum Payment Requirement, times a fraction, the
numerator of which shall be the number of months
remaining in the calendar quarter in which the Gross
Profit Payment Date occurs, and the denominator of
which shall be four (4) months. A related adjustment
shall be made to the Minimum Payment Requirement for
the calendar quarter during which this Agreement
terminates whereby the Minimum Payment Requirement
then in effect shall be reduced to the amount
resulting from multiplying such Minimum Payment
Requirement, times a fraction, the numerator of which
shall be the difference between the number of months
remaining in the calendar quarter in which the Gross
Profit Payment Date falls and four (4) months, and
the denominator of which shall be four (4) months;
and
(ii) if at any time during the Term, (A) a royalty is
imposed in connection with the sale of the Device, or
(B) an injunction is issued by a court of competent
jurisdiction whereby Licensee is prevented from
distributing the Products or any other dispute arises
in connection with the Licensed Patents or the
Licensed Technology (collectively, a "Patent
Dispute"), the Minimum Payment Requirement then in
effect shall be reduced to the amount resulting from
multiplying such Minimum Payment Requirement times
eighty percent (80%). Any such adjustment shall
remain in effect until such time as the Patent
Dispute is finally resolved in a manner acceptable to
Licensee or the royalty is no longer imposed in
connection with the sale of the Device, as the case
may be. If the Minimum Payment Requirement is reduced
as result of a Patent Dispute such reduction shall
only affect the Minimum Payment Requirements
prospectively. If the duration of any such event or
events described above is less than a calendar year,
any such adjustment shall be pro-rated based on the
number of months during which such event is
continuing.
(f) Minimum Gross Profit Payment Reconciliation. Within
forty-five (45) days after the end of each calendar quarter
after the Minimum Gross Profit Date, Licensee shall calculate
the Minimum Gross Profit Payment shortfall (the "Gross Profit
Payment Shortfall") by subtracting (i) the aggregate of all
quarterly Gross Profit Payments made to Licensors during the
immediately preceding calendar quarter, from (ii) the Minimum
Payment Requirement then in effect as reduced by the Minimum
Payment Requirement Adjustments, if any. If the Gross Profit
Payment Shortfall is a positive number no further action will
be necessary. If the Gross Profit Payment Shortfall is a
negative number, then Licensee agrees to pay the amount of the
Gross Profit Payment Shortfall in cash to Licensors within
forty-five (45) days after the end of the applicable calendar
quarter; provided, however, if in any prior calendar quarter
Gross Profit Payments have exceeded the Minimum Payment
Requirement for the applicable calendar quarter ("Excess Gross
Profit Payment"), Licensee shall be entitled to offset such
Gross Profit Payment Shortfall by a draw down against the
aggregate of all Excess Gross Profit Payments which have been
previously paid to Licensors by Licensee during the current
calendar year and not previously drawn against, if any.
6. Statement, Payments and Penalties.
(a) No later than forty-five (45) days after each calendar
quarter ending in March, June, September and December, Licensee shall
submit to Licensors full and accurate statements (each a "Quarterly
Statement") showing the quantity, description, Cost of the Goods, and
Gross Profits of the Products distributed and/or sold during the
preceding months, including any additional information kept in the
normal course of business by Licensee which is appropriate to enable an
independent determination of the amount due hereunder with respect to
the Products. All Gross Profit Payments then due shall be made
simultaneously with the submission of each Quarterly Statement.
Quarterly Statements shall be submitted whether or not they reflect any
sales or whether any Gross Profit Payments need to be made.
(b) Failure to submit timely or accurate Quarterly Statements
and/or Gross Profit Payments shall result in an additional charge of 1%
per month on any balance unpaid as of the applicable reporting period
or the maximum allowed by applicable law, whichever is lower.
(c) The receipt and/or acceptance by Licensors of the
Quarterly Statements or Gross Profit Payments, or any payments paid
hereunder, shall not preclude Licensors from questioning the
correctness thereof. In the event that any inconsistencies or mistakes
are discovered in Quarterly Statements or payments, they shall
immediately be rectified by Licensee and the appropriate payment shall
be made by Licensee.
(d) Licensee shall, unless otherwise directed in writing by
Licensors, send all Gross Profit Payments by wire transfer as directed
by Licensors, and shall send all statements to Licensors by mail and
facsimile transmission with delivery confirmed to the addressee at the
addresses set out in Section 25.
7. Records and Right to Audit.
(a) Licensee each shall keep, maintain and preserve in its
principal place of business during the Term, any renewal periods and at
least five (5) years following termination or expiration, complete and
accurate books, accounts, records and other materials covering all
transactions related to this Agreement in a manner such that the
information contained in the statements referred to in Section 6 can be
readily determined including, without limitation, customer records,
invoices, correspondence and banking, financial and other records in
Licensee's possession or under its control. Licensors may designate an
independent auditor or auditors and such independent auditor or
auditors shall have the right to inspect and audit all materials
related to this Agreement, subject to the confidentiality requirements
set forth in Section 23.
(b) Such materials shall be available for inspection and audit
(including photocopying) at any time during (i) the Term, and (ii) the
period six (6) months immediately following Licensors receipt of its
final payment due hereunder in the event of termination or expiration;
however, such inspection or audit shall not occur more often than once
every twelve (12) months during the Term, and shall take place during
reasonable business hours and upon at least five (5) days notice by
Licensors and/or their representatives. Licensee will cooperate and
will not cause or permit any interference with Licensors and/or their
representatives in the performance of their duties of inspection and
audit. Licensors, and/or their representatives, shall have free and
full access to said materials for inspection and audit purposes.
(c) Should any audit indicate an underpayment of five percent
(5%) or more of the Gross Profit Payments due Licensors for the period
since (i) the Commencement Date, or (ii) date of the last audit,
whichever is later, the reasonable cost of the audit shall be paid by
Licensee. Should any audit indicate an underpayment of ten percent
(10%) or more, during the same period, Licensee shall pay Licensors an
additional fee equal to ten percent (10%) of the underpayment. Payment
of the audit cost and any additional fees is in addition to the full
amount of any underpayment, including interest as provided in Section
6(b), shall be paid by Licensee if the results of such audit indicate
an underpayment of ten percent (10%) or more. Licensee shall cure any
contract breaches discovered during the audit, provide amended reports
if required, and submit the amount of any underpayment including
interest, additional fees and, if applicable, the cost of the audit
within sixty (60) days from the date of the delivery to Licensee of the
results of the audit.
8. Disclosure of Licensed Patents/Licensed Technology. Upon execution
of this Agreement, Licensors shall promptly disclose to Licensee all information
it possesses relating to the Licensed Patents and the Licensed Technology.
Licensors shall continue to provide any technical assistance reasonably
requested by Licensee from time to time during the Term.
9. Maintenance of Patents. Licensors shall be responsible for all
payments, including, without limitation, payments of maintenance fees, required
to keep the Licensed Patents in force for their full terms.
10. Additional Filings; Approvals. If Licensee (i) desires to market
the Products in any country where regulatory approval is required but not
granted as of the Effective Date, (ii) desires to obtain patent protection
relating to any further discoveries, inventions, technology, know-how,
enhancements, improvements, modifications or other developments relating to the
Licensed Patents or the Licensed Technology in any country where such patent
protection may be granted and has not been granted as of the Effective Date, or
(iii) is required to file with any governmental or other licensing agency any
form or application related to the Products, including without limitation, the
filings or applications described in Section 22(a), Licensors shall provide all
assistance reasonably necessary to enable Licensee to obtain such regulatory
approval, licensing approval or patent protection, as the case may be. The costs
of obtaining all relevant approvals or protection shall be borne solely by
Licensee.
11. Patent Litigation.
(a) Infringement of the Licensed Technology. Should Licensee
or Licensors learn of any infringements of the Licensed
Patents or the Licensed Technology or any part thereof by any
third party, they or it shall promptly notify the other party.
If Licensee has not exercised the Exclusive Option, Licensors
shall have the sole right but not the obligation to pursue
such infringements. Should Licensors pursue such an
infringement, Licensee will cooperate therein as reasonably
requested by Licensors. If any monetary settlement or judgment
is obtained as a result of a suit for infringement, the
proceeds obtained shall be the sole property of Licensors.
If Licensee has exercised the Exclusive Option and
Licensors decline to pursue such an infringement, Licensee may
institute and prosecute suits for infringement in its own name
and at its own expense, and Licensors will join as parties
plaintiff in such suits and cooperate therein as reasonably
requested by Licensee. If any monetary settlement or judgment
is obtained as a result of a suit for infringement, the
proceeds obtained shall be applied first to recover Licensors'
and Licensee's reasonable expenses in proportion to the amount
each expended in such suit, and any excess proceeds shall be
equally divided between Licensee and Licensors.
(b) Defense of Licensed Technology. With the exception of the
Litigation, should any litigation by a third party against
Licensee alleging that the manufacture, use or sale of the
Devices infringes any patent or rights under a patent of such
third party arise, Licensee shall promptly notify Licensors of
such litigation, and Licensors shall defend and/or settle such
litigation at their sole cost and expense; provided however,
the terms and conditions of any such settlement which affect
the rights and/or obligations of Licensee under this Agreement
shall be subject to Licensee's prior approval. In addition,
Licensors shall indemnify and hold harmless Licensee for any
costs and expenses incurred by Licensee in connection with
such third party litigation including, without limitation,
reasonable attorneys' fees, expert witness fees and accounting
fees.
12. Representations and Warranties.
(a) Licensors. Licensors, and each of them, represent,
warrant and covenant:
(i) that they are the sole and exclusive owners
of the Licensed Patents and Licensed
Technology and that they have full legal
capacity, power and authority to (A) enter
into this Agreement, (B) fully perform all
of their obligations hereunder, and (C)
grant the license concerning the Licensed
Patents and Licensed Technology in the
Territory, provided, however, Licensors make
no representation or warranty concerning the
Licensed Patents and Licensed Technology
outside the Territory;
(ii) that to their knowledge all of the Licensed
Patents and the Licensed Technology known to
Licensors has been or will be promptly
disclosed to Licensee and included in the
license granted hereunder;
(iii) that Schedule A represents a complete and
accurate list of all jurisdictions and
registration numbers related to such
jurisdictions where the Licensed Patents
have been registered, and there are no other
jurisdictions where the Licensed Patents
have been registered or an application for
registration has been made;
(iv) that except for the license granted to
Chiron pursuant to that certain Amended and
Restated License Agreement dated effective
January 1, 1994, they have not, individually
or collectively, previously licensed, used
or disclosed the LicensedPatents or the
Licensed Technology or any part thereof
anywhere in the world, and will not do so
during the Term; provided, however, if
Licensee fails to exercise the Exclusive
Option, Licensors shall not be prevented
from granting additional licenses to the
Licensed Technology and the Licensed
Patents;
(v) that to their knowledge no part of the
Licensed Patents or the Licensed Technology
is being infringed in the Territory;
(vi) that to their knowledge each of the Licensed
Patents are valid and enforceable, and no
part of the Licensed Technology will
infringe the rights of any third parties in
the Territory;
(vii) that prior to the Commencement Date the
disposable microkeratome will have been
adequately tested and shall be safe and
effective for its intended use provided it
is properly used by qualified surgeons
specialized in refractive surgery.
(b) Licensee. Licensee represents, warrants and covenants:
(i) that it has the full legal power and
authority to enter into this Agreement and
to fully perform all of its obligations
hereunder;
(ii) that its performance hereunder will comply
with all applicable laws, ordinances,
regulations and codes;
(iii) Licensee shall use its best efforts to begin
the distribution and sale of Products by the
Commencement Date and shall use its best
efforts to continue the bona fide
manufacture, distribution and sale of the
Products during the Term; and
(iv) during the Term, Licensee shall not tie the
sale of the Device to any other product.
13. Termination.
(a) Termination by Licensors. This Agreement may be terminated
by Licensors in the event any of the following defaults occur:
(i) Licensee fails to make any payment due or
fails to deliver any required statement, and
fails to cure such default within fifteen
(15) days from receipt of notice from
Licensors; provided, however, Licensors and
Licensee acknowledge and agree that an
underpayment of any Gross Profit Payment
shall not constitute a failure to make a
payment hereunder;
(ii) Licensee attempts to grant or grants a
sublicense other than as provided pursuant
to Section 31 or attempts to assign or
assigns any right or duty under this
Agreement to any person or entity without
the prior written consent of Licensors;
(iii) Licensee, or any related entities,
manufacture, distribute or sell any products
infringing upon or competing with the
Licensed Patents. Nothing herein is intended
to prohibit or restrict Licensee, or any
related entities, from continuing to sell
their existing products or their utilization
or disposition of the Xxxxxx Patent;
(iv) Licensee materially breaches any provision
in this Agreement in addition to those set
out above in this section, and fails to cure
such breach within thirty (30) days from
receipt of notice from Licensors.
(b) Termination by Licensee.
(i) Licensors materially breach any provision in
this Agreement, and fail to cure such breach
within thirty (30) days from receipt of
notice from Licensors.
(c) Termination by Parties.
(i) If the parties determine that they are
unable to arrange for the manufacture or
continued manufacture of the Device which is
safe and effective for its intended use,
this Agreement shall terminate; provided,
however, nothing set forth in this Section
13(c)(i) shall relieve Licensors from their
obligations set forth in Sections 18 and 22
of this Agreement.
14. Effect of Expiration or Termination.
(a) Other Rights/Remedies. Any termination of this Agreement
will be without prejudice to the rights and remedies of either party
with respect to any provisions or covenants arising out of breaches
committed prior to such termination.
(b) Effect of Expiration or Termination. On the date (the
"Termination Date") which is the later to occur of (i) ninety (90) days
after expiration or termination of this Agreement for any reason, or
(ii) the date after which Licensee's obligations under that certain
Manufacturing Agreement between Licensee and Xxxxxx Medical Development
Ltd. attached hereto as Exhibit B, terminate, Licensee shall
immediately cease all further use of the Products, the Licensed Patents
or the Licensed Technology, directly or indirectly, or any derivation
of the Products, the Licensed Patents or the Licensed Technology. Until
payment to Licensors of any monies due it, Licensors shall have a lien
on any units of Devices not then disposed of by Licensee and on any
monies due Licensee from any person or firm with respect to sales of
the Products.
(c) Disposal of Inventory. After the Termination Date,
Licensee shall have no further right to manufacture the Products or
other products utilizing the Licensed Patents or the Licensed
Technology, but may continue to distribute its remaining inventory of
Products in existence at the time of expiration or termination for a
period of ninety (90) days, provided all statements (including Final
Statement) and payments then due have been delivered and that during
the disposal period Licensee deliver all statements and payments due in
accordance with Sections 6 and comply with all other terms and
conditions of this Agreement. Licensors shall have the option for
thirty (30) days (the "Option Period"), to purchase all remaining stock
after said ninety (90) day period at a price which shall equal
Licensee's actual Cost of Goods Sold. During the Option Period,
Licensee shall not sell its remaining inventory of Products in
liquidating its inventory at a price that is less than that charged by
Licensee to its normal distribution network during the Term. In the
event Licensors elect not to purchase Licensee's remaining inventory,
Licensee will destroy any remaining inventory within thirty (30) days.
(d) Reversion of Rights. After the Termination Date, all
rights granted to Licensee in this Agreement shall revert to Licensors,
including, but not limited to, the right to manufacture and sell
Products. Nothing contained herein shall be construed to allow Licensee
to utilize the Licensed Patents or the Licensed Technology after the
Termination Date.
(e) Final Statement. Thirty (30) days before the expiration of
this Agreement, Licensee shall furnish a statement to Licensors showing
the number and description of Products on hand or in process ("Final
Statement"). If this Agreement is terminated for any reason, such
statement shall be furnished within thirty (30) days after notice of
termination. Licensors shall have the right to conduct physical
inventories to ascertain or verify the amount of remaining inventory.
15. Survival of Rights.
(a) The terms and conditions of this Agreement necessary to
protect the rights and interests of Licensors in the Licensed Patents
and the Licensed Technology and the Products including, but not limited
to, Licensee's obligations under Sections 3, 7, 11, 14, 15, 18, 19, 21
and 23, shall survive the termination or expiration of this Agreement.
(b) The terms and conditions of this Agreement providing for
any activity following the effective date of termination or expiration
of this Agreement shall survive until such time as those terms and
conditions have been fulfilled or satisfied.
16. Marketing Strategy. Licensee shall be responsible for funding the
development and implementation of a sales and marketing strategy related to the
Products.
17. Additional Obligations. Licensee covenants that during the Term, it
shall not manufacture, distribute, market, promote in any manner or sell any
microkeratome; provided, however, the parties acknowledge and agree that
Licensee's utilization or disposition of the Xxxxxx Patent shall not constitute
a violation of this Section 17.
18. Mold Use and Manufacture. The Molds are the exclusive property of
Licensors which Licensee is permitted to use during the Term of this Agreement.
Licensors agree to provide Licensee with (i) dual cavity automatic production
molds ("Final Production Molds"), and (ii) single cavity limited production
molds ("Limited Production Molds"), each capable of producing disposable
microkeratomes which are safe and effective for their intended use
(collectively, the "Molds"). Licensors shall be solely responsible for the
payment of all costs incurred to complete product design, manufacture,
engineering and testing of the Molds; provided, however, Licensors and Licensee
shall share equally in the cost of manufacturing the Limited Production Molds.
Licensee will make no other molds to manufacture disposable microkeratomes. In
the event the Molds need to be replaced, as determined by the manufacturer
thereof, Licensors and Licensee shall share equally in the cost of such
replacement. If this Agreement is terminated subsequent to the production of the
replacement Molds, Licensors shall reimburse Licensee for Licensee's share of
the cost of replacing the Molds.
19. Return of Molds. Within fifteen (15) days following the Termination
Date, Licensee shall return the Molds to Licensors.
20. Payment of Taxes. Licensors represent that they are not subject to
any such tax and no taxes should be deducted, however, if any tax is lawfully
imposed and Licensee is required by law to withhold it, Licensee shall notify
Licensors in order to allow Licensors to contest such imposition. All
consideration paid to Licensors pursuant to this Agreement shall not take into
account any national, federal, state, province, municipal or other government
excise, sales, use, occupational or like taxes, duties, customs or penalties now
in force or enacted in the future (collectively, a "Tax"). If any Tax is
imposed, Licensors shall be responsible for the payment of such Tax. If Licensee
is required by law, rule or regulation to pay or withhold any Tax in connection
with any consideration paid to Licensors pursuant to this Agreement, Licensee
shall be entitled to reduce the applicable Minimum Payment Requirement by the
amount of any such Tax paid or withheld by Licensee during the applicable year.
The parties agree to use reasonable efforts to pursue any certificate of
exemption or similar document or proceeding if advised by counsel that
consideration paid to Licensors pursuant to this Agreement may be exempted from
any Tax.
21. Product Liability. Licensee agrees to indemnify, defend and hold
Licensors their successors and assigns harmless from and against any and all
liability, loss, damage, cost or expense (including reasonable attorneys' fees
and disbursements) arising out of any claims of personal injury or property
damage based on the use, manufacture or sale (other than claims arising in
connection with the design, engineering and/or the specifications of the Devices
delivered pursuant to Section 4(f)) of the Products manufactured and sold by
Licensee, their subsidiary, affiliated and controlled companies. At all times
during the Term, Licensee shall procure and maintain product liability insurance
coverage related to the Products sold pursuant to this Agreement in the amount
of $2 million per year in the aggregate. Licensee shall cause Licensors to be
named as additional insureds under any such insurance policy. Evidence of
insurance coverage will be made available to Licensors upon request.
22. Additional Obligations-Liquidated Damages. Upon execution of this
Agreement, Licensors shall deliver and/or provide to Licensee or its designee:
(a) all engineering and manufacturing drawings, diagrams,
schematics, reports and specifications, xxxx of materials, testing
procedures and testing data, assembly instructions and other related
items utilized in connection with the manufacture of the Devices and
the Products, technical support in connection with the filing of United
States Food and Drug Administration ("FDA") form 510(k) and application
for CE xxxx; assistance in establishing and, thereafter, maintaining
the design and associated documentation of the Products; and
(b) purchase orders for the Molds relating to the Device as
may be necessary for the manufacturer to achieve project schedules.
Licensors acknowledge and agree that Licensee would incur substantial damages in
the event Licensee reasonably determines that Licensors have not satisfied their
obligations set forth in Section 18 and/or this Section 22, and that such
damages would be difficult to calculate. Licensors further acknowledge and agree
that all amounts of money paid and all other property previously paid or
delivered to Licensors by Licensee is a reasonable estimate of Licensee's
damages in the event of default by Licensors pursuant to Section 18 and/or this
Section 22.
23. Confidentiality. Both during and after the Term, none of the
parties shall in any manner, directly or indirectly, disclose or divulge to any
person or entity (other than such party's employees, agents or consultants) any
information related to the Licensed Patents, the Licensed Technology or other
confidential and proprietary trade secret information disclosed to them pursuant
to this Agreement; provided, that such confidentiality obligations will not
apply to (a) matters of public knowledge in the industry; (b) matters known or
disclosed to any party under no obligation of confidentiality either before
entering this Agreement or thereafter; (c) matters which are required to be
disclosed or divulged by law; and (d) matters which the parties hereto mutually
agree in writing to disclose.
24. Force Majeure. Neither party shall be liable for failure to perform
hereunder if such failure is occasioned by any cause beyond such party's
control, including, without limitation, war or civil disturbance, fire, flood,
accident, explosion, interruption of transportation, embargo, inability to
procure or shortage of materials or equipment, interruption of production
facilities, governmental order or regulation (including, without limitation, the
FDA), or labor dispute. Suspension of a party's performance for any such cause
shall be limited to the period of time during which such cause is in effect,
plus a reasonable time thereafter. Such suspension shall not affect the running
of the Term and shall not be regarded as a breach of this Agreement.
25. Notice. Every notice, request, demand, and other communication
contemplated by this Agreement shall be in writing and deemed to have been made
either when personally delivered to the respective party, or three days after it
is deposited, postage prepaid, with an express mail service, or 10 days after it
is deposited, postage prepaid, in the United States mail to the addresses stated
below or such changed address as any party may give by written notice to the
other, provided that concurrently with such deposits a copy of any notice is
sent by telefacsimile:
If to LICENSORS: Xxxx X. Xxxx, M.D. and
Xxxxxx Xxxxxxx
Xxxxx 000 Xx. 00X-00, Xxxxxxxxx 000
Xxxxxxx xx Xxxxxx, Xxxxxxxx
South America
Facsimile: 00-0-000-0000 - Attn: Xxxxxx
Xxxxxxx
Facsimile: 00-0-000-0000 - Attn: Xxxx X.
Xxxx, M.D.
with a copy to: Xxxxx X. Xxxxxxxxxxx, Esq.
Mezzullo & XxXxxxxxxx
0000 Xxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Facsimile: 804-775-3800
If to LICENSEE: LaserSight Technologies, Inc.
00000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: President
Facsimile: 000-000-0000
with a copy to: Xxxx X. Xxxxxxxxx, Esq.
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
Xxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Facsimile: 000-000-0000
26. Waiver. Neither waiver by either party of any breach or default
under this Agreement by the other party, nor the failure of either party to
exercise promptly its rights in the event of such breach or default, shall be
construed as a waiver of any subsequent breach or default, or of any term,
condition or provision of this Agreement.
27. Attorneys Fees. In the event that either party incurs costs and
fees, including attorneys' fees, in enforcing its or their rights under this
Agreement, the party substantially prevailing in any suit or action, including
any appeal, shall be entitled to recover from the other such costs and
attorneys' fees.
28. Severability. Each provision hereof is intended to be severable and
the invalidity or illegality of any portion of this Agreement shall not affect
the validity or legality of the remainder hereof.
29. Governing Law. The validity, formulation, interpretation and
performance of this Agreement shall be governed by the laws of the State of
Virginia, without giving effect to choice of law principles. The parties do
hereby irrevocably submit themselves to the personal jurisdiction of the United
States Federal Court for the Eastern District of Virginia and do hereby
irrevocably agree to service of such court's process upon them, and with respect
to Licensors, on their counsel, Xxxxx X. Xxxxxxxxxxx of Xxxxxxxx & XxXxxxxxxx,
so long as they remain counsel to Licensors and thereafter until such time as it
is verified to Licensee in writing that Licensors' successor counsel has agreed
to accept such service on Licensors' behalf.
30. Entire Agreement. This Agreement represents the entire agreement
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior or contemporaneous understandings between the parties. This
Agreement may not be amended, supplemented or modified except by a subsequent
written agreement signed by both parties hereto.
31. Assignment. This Agreement and all rights granted pursuant to its
terms shall be personal to Licensee and shall not be assigned, sublicensed or
transferred in whole or in part without the prior written consent of Licensors;
provided, however, Licensee may assign or transfer its interest in this
Agreement in connection with the sale or transfer of all or substantially all of
its assets. Licensors may assign this Agreement, in whole or in part, provided
that Licensors agree to continue to provide technical assistance to Licensee
under Section 8(a). Licensee may sublicense the Patents only for the purpose of
having the Device manufactured and/or in order to sell and distribute the Device
and for no other purpose whatsoever.
32. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
be deemed one and the same instrument. The English language version of this
Agreement shall be the official version of this Agreement.
33. Captions. The captions contained herein are intended for
convenience of reference only and shall not be used to interpret any of the
terms or provisions hereof.
34. Additional Documents. The parties hereto agree to execute,
acknowledge and deliver such further documents as may be necessary or proper to
carry out the purpose and intent of this Agreement.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto, by their respective duly
authorized officers, have executed this Agreement as of the date first written
above.
LICENSORS: XXXX X. XXXX, M.D.
/s/Xxxx X. Xxxx, M.D.
-----------------------------------
Xxxx X. Xxxx, M.D.
XXXXXX XXXXXXX
/s/Xxxxxx Xxxxxxx
-----------------------------------
Xxxxxx Xxxxxxx
LICENSEE: LASERSIGHT TECHNOLOGIES, INC.
By:/s/J. Xxxxxxx Xxxxxxx
--------------------------------
J. Xxxxxxx Xxxxxxx
Chief Operating Officer
SCHEDULE A
Licensed Patents
ISSUED PATENTS:
1. United States: U.S. Patent No. 5,133,726/RE35,421
2. Brazil: Xxx. No. XX0000000
3. Columbia: Xxx. No. 144267
4. Taiwan: Xxx. No. 179735
5. Portugal: 94986
6. Germany: Xxx. No. 69005285 (derived from EPO Patent 442156)
7. Spain: Xxx. No. 2048415 (derived from EPO Patent 442156)
8. Sweden: Xxx. No. G94986 (derived from EPO Patent 442156)
9. Japan: Xxx. No. 0000000
PENDING PATENT APPLICATIONS:
1. Austria Patent Appln. No. 90201166.7 (derived from EPO Patent 442156)
2. Belgium Patent Appln. No. 90201166.7 (derived from EPO Patent 442156)
3. Switzerland Patent Appln. No. 90201166.7 (derived from EPO Patent 442156)
4. Denmark Patent Appln. No. 90201166.7 (derived from EPO Patent 442156)
5. France Patent Appln. No. 90201166.7 (derived from EPO Patent 442156)
6. United Kingdom Patent Appln. No. 90201166.7 (derived from EPO Patent 442156)
7. Greece Patent Appln. No. 90201166.7 (derived from EPO Patent 442156)
8. Italy Patent Appln. No. 90201166.7 (derived from EPO Patent 442156)
9. Luxembourg Patent Appln. No. 90201166.7 (derived from EPO Patent 442156)
10. Netherlands Patent Appln. No. 90201166.7 (derived from EPO Patent 442156)
11. Liechtenstein Patent Appln. No. 90201166.7 (derived from EPO Patent 442156)
