EXHIBIT 10(Z)
October 16, 1996
VIA FEDERAL EXPRESS
Misonix, Incorporated
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Gentlemen:
This letter will serve as notice under Section 5.2 of the Development and
Option Agreement dated as of August 27, 1996 by and between Misonix,
Incorporated ("Misonix") and United States Surgical Corporation ("USSC") that
USSC hereby exercises its option to acquire the license and other rights from
Misonix set forth in the Exhibit A License attached thereto.
Enclosed are duplicate originals of the License Agreement which have been
signed by USSC. Please execute both and keep one original for your files.
We will call you shortly to introduce you to our team leader, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, and look forward to a mutually rewarding relationship concerning the
technology.
Very truly yours,
/s/ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
Vice President, Strategic Planning
and Business Development
EN/SS/aas
Enclosures
LICENSE AGREEMENT
This Agreement, dated as of October 16, 1996, is by and between Misonix
Incorporated, a New York corporation, with its principal place of business at
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Misonix"), and United States
Surgical Corporation, a Delaware corporation, with its principal place of
business at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("USSC").
WHEREAS, Misonix designs and develops ultrasonic medical devices and
desires to further develop its proprietary ultrasonic cutting, sealing and
dissection technology (the "Technology"); and
WHEREAS, USSC develops, manufactures, markets and sells medical products.
NOW THEREFORE, in consideration of the mutual promises, covenants,
undertakings and obligations set forth herein and for other good and valuable
consideration the receipt of which is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1 - DEFINITIONS
1.1 For the purposes of this Agreement, the definitions set forth below
shall be applicable.
Affiliate - The term "Affiliate" means a corporation or other entity
controlled by, controlling or under common control with another person,
corporation or other entity. For the purpose of this Agreement, "control" means:
(i) the ownership, directly or indirectly, of 50% or more of the voting stock or
analogous interest in a corporation or other entity, by another person,
corporation or other entity; or (ii) the commonality of 50% or more of the
directors on the Board of a corporation or other entity with the directors on
the Board of another corporation or other entity; or (iii) the commonality of
50% or more of the directors on the Board of a corporation or other entity with
the executive officers, or holders of 5% or more of any class of the outstanding
capital stock, of another corporation on or other entity; or (iv) the
commonality of 50% or more of the partners (general or limited), principals, or
other controlling parties of any entity, with the partners (general or limited),
principals or other controlling parties of another entity; or (v) the existence
of any other relationship between a corporation or entity and another person,
corporation or other entity which results in effective managerial control by one
over the other, regardless of
the level of commonality of the number of directors, partners, principals or
other controlling parties or whether such control is continuously exercised.
Field - The term "Field" means all human and veterinary medical
applications.
Know-How - The term "Know-How" means any and all secret or confidential
information, trade secrets, specifications, test results, analyses and data,
inventions, methods, processes, formulae, mixtures, compositions, designs,
techniques, applications, ideas or concepts, whether or not reduced to practice,
relating directly or indirectly to the Products, including, but not limited to,
technology that is or could be the subject matter of a foreign or domestic
patent or patent application, whether or not reduced to writing in a patent
application.
Net Sales - (i) The term "Net Sales" means gross sales of the Products
billed and shipped by USSC or its Subsidiaries, Affiliates, Sublicensees, or
permitted assignees, less allowances and discounts actually allowed (other than
advertising allowances, or fees or commissions to salesmen or sales
representatives), returns, billed taxes and customs duties paid by USSC, freight
and transit insurance, and shall not include samples or demonstration materials
or any sale to USSC employees for any reason other than resale. The term "Net
Sales" shall not include sales between the parties, sales by independent
distributors, or sales between USSC and its Affiliates, Subsidiaries,
Sublicensees or permitted assignees.
(ii) For the purposes of this Section 1.1(e), the term "Products" shall
also include Products sold in packages, trays, or other groups of items
consisting of one or more Products and one or more non-Products (the "Package"
or "Packages"). The Net Sales price of any Product sold in a Package shall bear
the same ratio to the Net Sales price of the Package, as the individual retail
list price of the Product bears to the sum of all individual retail list prices
of every item in the Package if all of such items were sold separately.
Patents and Trademarks - The term "Patents and Trademarks" means all
patents, patent applications, registered trademarks and trademark applications
identified on Schedule 1 hereto, all other foreign and domestic patents, patent
applications, registered trademarks and trademark applications filed by or
assigned in whole or in part to Misonix prior or subsequent to the date hereof
and covering or relating to any Invention (defined below) having application to
a Product, all foreign and domestic patents and registered trademarks issuing on
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any of the foregoing patent applications and trademark applications, and all
continuations, continuations-in-part, divisions, reissues, reexaminations,
additions, and renewals thereof.
Products - The term "Product" or "Products" means any instrument, device or
system usable in the Field (defined below) which involve or relate to the
Technology and embody or utilize any or all of the following in which Misonix
has or, during the term of this Agreement, acquires a proprietary interest: (i)
the inventions, methods, processes, formulae, mixtures, and compositions
disclosed and/or claimed in the Patents and Trademarks (defined below), and any
invention, method, process, formula, mixture, or composition similar or related
to, or designed for use with, any of the foregoing; (ii) every part,
subassembly, component or accessory of, and addition or improvement to, any of
the foregoing; (iii) Know-How (defined below); and (iv) all registered
trademarks and trademark applications within Patents and Trademarks and all good
will associated with such registered trademarks and trademark applications.
Sublicensee - The term "Sublicensee" means any third party to whom USSC
grants a sublicense to manufacture or sell the Products.
Subsidiary - The term "Subsidiary" means any corporation, partnership or
other entity, 50% or more of the outstanding shares of any class of stock,
general partnership interest, or other equity of which is owned by USSC; and any
operating division of USSC not separately incorporated or organized as an
independent business entity.
Trademarks - The term "Trademarks" means all registered trademarks and
trademark applications within Patents and Trademarks.
ARTICLE 2 - THE GRANT
2.1 Misonix hereby grants to USSC, and USSC hereby accepts from Misonix, an
exclusive worldwide right and license during the term of this Agreement (and for
five (5) years after the Unilateral Termination Date in the event of a
termination of this Agreement under Section 14.1(c) below), including the right
to grant sublicenses, to evaluate, develop, test, conduct clinical trials,
obtain governmental approvals, make, have made, use, practice, manufacture, have
manufactured, sell, transfer or commercialize Products and to practice and use
the Know-How and the Trademarks throughout the world (the "License").
ARTICLE 3 - IMPROVEMENTS IN THE FIELD; PRODUCT MANUFACTURE
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3.1 If, during the term of this Agreement, Misonix conceives, develops or
acquires any new invention, method, process, design, formula, mixture,
composition, modification or improvement relating to a Product, or the use or
manufacture thereof (collectively "Invention"), Misonix shall furnish full
details thereof to USSC, including all conceptual, technical and design
information, specifications, test results, analyses and data, prototypes,
drawings, formulae, mixtures, compositions and any other useful information.
Such inventions, methods, processes, formulae, mixtures, compositions,
modifications and improvements shall be deemed, without any compensation being
due thereby, included in the License except insofar as USSC, upon request by
Misonix, agrees in writing to exclude from the License all or any portion of
such inventions, methods, processes, formulae, mixtures, compositions,
modifications or improvements.
3.2 All Patents and Trademarks and all inventions, methods, processes,
formulae, mixtures, compositions, delivery systems, modifications or
improvements thereto referred to in Section 3.1 above, shall be the exclusive
property of Misonix, subject to the License hereby granted.
3.3 Misonix hereby covenants and agrees for as long as this Agreement shall
be and remain in effect, that it shall not grant to any other or different
person, or entity, any other right, option or license to evaluate, develop,
test, conduct clinical trials, obtain governmental approvals, make, have made,
use, practice, manufacture, have manufactured, sell, transfer or commercialize
any Product, or any new inventions, methods, processes, formulae, mixtures,
compositions, modifications or improvements thereon, or, to practice or use the
Know-How or to use the Trademarks, anywhere in the world.
3.4 The parties acknowledge that USSC has substantial expertise in the
manufacture of surgical products. USSC shall have the right, in its discretion,
to manufacture or have one or more third parties selected by it, in its
discretion, to manufacture the Product. However, if during the term of this
Agreement, USSC wishes to have a party other than USSC manufacture the Product,
it shall notify Misonix in writing thereof and shall for a period of thirty (30)
days thereafter negotiate with Misonix in good faith concerning a manufacturing
agreement on terms and conditions mutually acceptable to both parties in their
discretion.
ARTICLE 4 - CONSIDERATION
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4.1 The total consideration to be paid by USSC for the license and other
rights granted hereunder and the non-compete agreement pursuant to Article 8
shall be a license fee (the "License Fee"), milestone payments (the "Milestone
Payments") and a periodic royalty (the "Royalty"), all calculated and payable in
accordance with this Article 4.
4.2 The License Fee shall be in the amount of Two Hundred and Seventy Five
Thousand Dollars ($275,000) and shall be payable with execution and delivery of
this Agreement.
4.3 The Milestone Payments shall be as follows:
(a) One Hundred Thousand Dollars ($100,000) payable within three (3)
business days of USSC's completion of the first full production units of
both the hook probe and the damping/sealing probe (the "First Generation"),
but no less than fifty percent (50%) of such amount on the date which is
one year from the date hereof;
(b) One Hundred Thousand Dollars ($100,000) if USSC completes the
first full production units of the First Generation on or before March 1,
1997; and
(c) One Hundred Thousand Dollars ($100,000) payable within three (3)
business days of (i) receipt by USSC of FDA Approval to market the Product
or (ii) approval of USSC's application to market the Product in any country
in the world.
4.4 The Royalty shall be as follows:
(a) an amount equal to five percent (5%) of Net Sales of a Product
occurring during the term of this Agreement; and
(b)
(i) if USSC terminates this Agreement under Section 14.1(c) and
on such termination date (the "Unilateral Termination Date") neither
Misonix nor any Affiliate of Misonix owns or has exclusive license
rights to a issued patent covering the Product, which patent is
unexpired and has not been held invalid by a court of competent
jurisdiction from which no appeal can be taken, an amount equal to
five percent (5%) of Net Sales of a Product for a period of five (5)
years after the Unilateral Termination Date, provided, and for so long
as, in either case, USSC has the License; or
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(ii) If USSC terminates this Agreement under Section 14.1(c) and
on the Unilateral Termination Date either Misonix or any Affiliate of
Misonix owns or has exclusive license rights to a issued patent
covering the Product, which patent is unexpired and has not been held
invalid by a court of competent jurisdiction from which no appeal can
be taken, an amount equal to five percent (5%) of Net Sales of a
Product for the Unilateral Termination Patent Protected Period
(defined below), provided and for so long as, in either case, USSC has
the License. For purposes of the immediately preceding sentence the
"Unilateral Termination Patent Protected Period" shall mean the number
of years following the Unilateral Termination Date which shall be
equal to (x) five years, minus (y) the longest number of years, not to
exceed five years, which remain on the life of a patent which (aa) as
of the Unilateral Termination Date either Misonix or any Affiliate of
Misonix owns or under which either Misonix or any Affiliate of Misonix
has exclusive license rights, and (bb) which patent covers the
Product. The Unilateral Termination Patent Protected Period and USSC's
rights granted by Misonix under this Agreement to sell Products shall
in no event extend longer than five (5) years from the Unilateral
Termination Date.
4.5 The Royalty shall accrue as and when a sale subject to a royalty is
recorded by USSC in accordance with Section 1.1(e), and shall be paid to Misonix
quarterly on or before forty-five (45) days after each calendar quarter during
which a sale is recorded.
ARTICLE 5 - PAYMENT, REPORTING AND RECORDS
5.1 USSC agrees to deliver quarterly written reports to Misonix for each
three (3) month period ending on the last day of the months of March, June,
September, and December of each year, within forty-five (45) days after the end
of each such period. The report shall set forth the number of Products sold by
USSC, its Subsidiaries, Affiliates, Sublicensees and permitted assignees during
the immediately preceding calendar quarter, Net Sales applicable to all such
Products, and the amount of License Fees and Royalties (and including any
catchup adjustments) then payable to Misonix. All information contained in such
quarterly reports shall be treated as USSC's Confidential Information (defined
below) subject to Article 6.
5.2 Simultaneously with the submission of each report, USSC shall pay to
Misonix by check or bank transfer the full amount of License Fees and Royalties
due to Misonix for the report period under the terms of this
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Agreement. USSC shall maintain records in sufficient detail and, upon reasonable
notice, allow any independent certified public accounting firm of nationally
recognized standing, appointed by Misonix, and reasonably acceptable to USSC, to
examine its consolidated books and records, and the books and records of its
Sublicensee~" and permitted assignees pertaining to the Products. Such
examinations shall occur on or after February 15 of any calendar year (or, if
Misonix appoints for purposes of such examination the accounting firm employed
by USSC to conduct its regular annual audit, prior to February 15,) only during
business hours, and not more than once a year, and shall be solely for the
purpose of verifying the calculation of License Fees and Royalties due under
this Agreement. A final such examination may occur once during the year
immediately succeeding termination of this Agreement. In the event Misonix
appoints for the purpose of examining USSC's consolidated books and records the
accounting firm employed by USSC to conduct its regular annual audit, and if the
examination provided for herein is performed at substantially the same time as
such regular annual audit, the fees and expenses of the accounting firm
performing the examination shall be borne by USSC. In any other event, the fees
and expenses of the accounting firm performing the examination shall be borne by
Misonix. Unless written objection is made by Misonix and delivered to USSC
within thirty (30) days after completion of such examinations, the calculation
of License Fees and Royalties paid by USSC prior to the date of such examination
shall be final and binding on the parties, except insofar as adjusted or
corrected as a result of USSC's regular annual audit. It is understood that USSC
shall not be required to furnish or permit the examination of the identities, at
any time, of customers or prices or other information as to specific sales. Any
information provided to Misonix or its accountants pursuant hereto shall be
treated as USSC's Confidential Information subject to Article 6.
ARTICLE 6 - PROPRIETARY INFORMATION
6.1 USSC hereby represents and warrants that it will not, directly or
indirectly, disclose, either during or for three (3) years subsequent to the
term of this Agreement, any Confidential Information of Misonix to any other
person or entity, except to its attorneys and accountants as may be required in
connection with this Agreement who have been or will be instructed to maintain
its confidentiality and to third parties who shall execute binding written
agreements requiring such third parties not to disclose Confidential Information
disclosed to
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them by USSC. Notwithstanding the foregoing, USSC shall have the right to use
Confidential Information of Misonix without obtaining such written agreements in
connection with any regulatory and patent filings involving or relating to
matters covered by this Agreement.
6.2 Misonix hereby agrees that it will not, directly or indirectly,
disclose during or for three (3) years subsequent to the term of this Agreement,
any Confidential Information of USSC, to any other person or entity, except to
the Misonix's attorneys and accountants as may be required in connection with
this Agreement who have been and will be instructed to maintain its
confidentiality and, to the extent necessary in the reasonable opinion of
Misonix's counsel, to be publicly disclosed and/or included in any filings
required under applicable securities laws involving or relating to matters
covered by this Agreement, provided, that in any such event, Misonix shall
advise USSC thereof as far in advance as is reasonably possible under the
circumstances to permit USSC to comment thereon and to take any action which it
may deem appropriate to limit the scope and extent of such disclosure.
6.3 It is not intended by this Article 6 that USSC or Misonix shall be
required to obtain specific written commitments in relation to this Agreement
from materials and/or component suppliers where only specifications are
disclosed to said materials and/or component suppliers by USSC or Misonix.
6.4 For purposes of this Agreement, "Confidential Information" shall mean
verbal and written disclosures from Misonix, on the one hand, or USSC, on the
other hand, (the "Discloser") to the other party (the "Disclosee"), which
concern the Discloser including, without limitation, information which concerns
the Discloser's business, operations, products or research and development
efforts, or which concern the Products or Know-How, but shall not include
information which: (a) at the time of disclosure is published or otherwise
becomes a part of the public domain through no fault of Disclosee (but only
after, and only to the extent that, it is published or otherwise becomes a part
of the public domain); (b) Disclosee can show was known to it at the time of
disclosure, free of restriction; (c) has been or hereafter is disclosed to
Disclosee without any obligation of confidentiality by a third party who is in
lawful possession of such information and has the right to disclose it to
Disclosee; (d) has been or hereafter is disclosed by Discloser to a third party
free of any obligations of confidentiality; (e) is independently developed by
Disclosee; or (f) is
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disclosed by Disclosee pursuant to the order or requirement of a court
administrative agency or other governmental body provided that the Disclosee
promptly informs the Discloser of its intent to make such disclosure, takes all
reasonable steps to limit such disclosure and does not inhibit the Discloser in
taking whatever lawful steps the Discloser considers necessary to attempt to
preserve the confidentiality of such information. Disclosures made to Disclosee
by Discloser which are specific shall not be deemed to be within the foregoing
exceptions merely because they are embraced by general disclosures in the public
domain or in the possession of Disclosee. The existence, terms and conditions of
this Agreement shall be deemed Confidential Information of the parties to this
Agreement.
6.5 The parties hereby acknowledge and agree that any breach of this
Article 6 by Misonix, on the one hand, or USSC, on the other hand, would likely
cause irreparable injury to the other party and that such other party's remedy
at law for any such breach would be inadequate. Accordingly, the parties agree
that, in addition to any other remedies provided for herein or otherwise
available at law temporary and permanent injunctive relief and other equitable
relief may be granted in any action, suit or proceeding which may be brought by
either party to enforce the provisions of this Article 6 without the necessity
of proof of actual damage. Each party agrees promptly to seek temporary and
permanent injunctive relief against any of its directors, officers, employees or
consultants who breach the aforesaid obligations with respect to any matter
relating to this Agreement.
6.6 The provisions of this Article 6 shall survive termination of this
Agreement for three (3) years.
ARTICLE 7 - INVENTIONS
7.1 All patentable and unpatentable inventions, discoveries and ideas
("Inventions") relating to Products which are made or conceived solely by
employees of USSC or other persons or entities or retained by USSC during the
term of this Agreement shall be the property of USSC. All Inventions which are
made or conceived solely by Misonix or by other persons or entities retained by
Misonix shall be the property of Misonix, but subject to USSC's rights set forth
in this Agreement. All Inventions which are made or conceived by Misonix (and/or
other persons or entities retained by Misonix), on the one hand, and USSC
(and/or other persons or entities retained by USSC), on the other hand,
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shall be owned jointly by Misonix and USSC, but subject to USSC's rights set
forth in this Agreement.
ARTICLE 8 - NON-COMPETE
8.1 Misonix agrees that during the term of this Agreement, except as
expressly permitted by this Agreement, it shall not, directly or indirectly,
develop, manufacture, or sell any Product, or similar or related instrument,
device or system, or Know-How to any third person or entity, or to consult with
or provide technical assistance or advice to any third person or entity with
respect to the design, development, manufacture or sale of any Product or
similar instrument, device, or system without USSC's prior written consent in
USSC's sole and absolute discretion. The foregoing shall not be construed to
prohibit Misonix from engaging in its own development of Products and Know-How,
subject to the rights of USSC with respect thereto as set forth in this
Agreement. In addition, Misonix shall have the right to continue its undertaking
with Medical Device Alliance, Inc. ("MDA") in connection with the development of
devices used in ultrasonic soft tissue aspiration and related endeavors provided
it does not involve the Technology or violate Article 6 above.
8.2 The parties acknowledge and agree that any breach of this Article 8 by
Misonix would likely cause irreparable injury to USSC and that USSC's remedy at
law for any such breach would be inadequate. Accordingly, the parties agree
that, in addition to any other remedies provided for herein or otherwise
available at law, temporary and permanent injunctive relief and other equitable
relief may be granted in any action, suit or proceeding which may be brought by
USSC to enforce any provision of this Article 8 without the necessity of proof
of actual damage.
ARTICLE 9 - INDEMNIFICATION
9.1 Subject to the fulfillment by Misonix of its obligations pursuant to
Section 9.2 below, USSC agrees to defend, indemnify and hold harmless Misonix
and each of Misonix's directors, officers, employees, agents, and
representatives, from and against any claims, demands, judgments, executions,
awards, or damages, including reasonable attorney's fees and expenses incurred
by USSC in defending the same, constituting a product liability action or other
action, suit or proceeding arising as a result of the design, manufacture, use
or sale of a Product by USSC, its Subsidiaries, Affiliates, Sublicensees or
permitted assigns. In
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furtherance of the foregoing, USSC shall include Misonix as a covered person on
USSC's product liability insurance in an amount of at least $5,000,000, with
waiver of subrogation. In satisfaction of the foregoing indemnification and hold
harmless agreement, USSC may pay directly to the claimant or plaintiff in any
such claim, action, suit or proceeding, the amount of any award judgement
settlement or recovery, or execution rendered thereon, and may pay to Misonix
and Misonix's directors, officers, employees, agents, and representatives, any
other damages or reasonable expenses sustained by them in defending any such
claim, action, suit or proceeding. USSC shall have the right to conduct the
legal defense, or to enter into any settlement agreement, as it, in its sole
discretion, deems appropriate. Misonix may participate in such action, suit or
proceeding through its own attorneys at their sole cost and expense.
9.2 In the event that any claim is asserted against Misonix or Misonix's
directors, officers, employees, agents or representatives, or such person is
made a defendant in any action, suit or proceeding involving a matter which is
the subject of USSC's indemnification and hold harmless agreement as set forth
above, then within ten (10) days of such person's receipt of notice of such
event and within seven (7) days of receipt of a complaint or other formal
pleading regarding such event, such persons shall give written notice of such
claim, action, suit or proceeding to USSC, and USSC shall be given an
opportunity to assume the defense and control any settlement on behalf of such
persons. Misonix shall provide their full cooperation to USSC in connection with
the defense of such claim, action, suit or proceeding.
9.3 Misonix shall provide indemnifications to USSC with respect to product
liability (on any legal theory) actions, suits and proceedings to the same
extent as set forth above in this Article 9 for Products which Misonix may, in
Misonix's discretion, sell or transfer to USSC. For purposes of this Section
9.3, Misonix's collection of royalties hereunder shall not be deemed to
constitute the sale or transfer of Products.
9.4 The provisions of this Article 9 shall survive termination of this
Agreement.
ARTICLE 10 - FDA INTERACTION
10.1 Interaction with the regulatory agencies in any country including, but
not limited to, the U.S. Food and Drug Administration (collectively, "FDA")
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concerning the Products shall be conducted by USSC, and for purposes of any
filings with the FDA concerning the Products USSC shall be the official company
sponsor. In the event of a dispute between USSC and Misonix concerning any
matter relating to interaction with the FDA, USSC shall have final authority to
act as USSC, in its sole discretion, deems appropriate with respect to the
matter in dispute.
10.2 During the term of this Agreement, Misonix shall, at USSC's request,
assist USSC during FDA interaction concerning the Products; provided that USSC
shall reimburse Misonix for all out-of-pocket expenses, other than attorneys
fees, incurred by Misonix in providing such assistance.
10.3 Notwithstanding any provision of this Agreement to the contrary, USSC
shall not be obligated to, and shall have no liability to Misonix for failure to
evaluate, develop, test, conduct clinical trials, make, have made, use,
practice, manufacture or have manufactured any Product or practice or use the
Know-How or for failure to seek or pursue any FDA or other regulatory approvals.
USSC shall have the unqualified right, at any time to cease or suspend all
marketing efforts and all efforts to obtain FDA or other regulatory approvals.
Nothing herein shall prevent USSC from setting its own prices for Products or
determining USSC's marketing policies and practices in its sole discretion.
ARTICLE 11 - PATENT AND TRADEMARK PROSECUTION AND INFRINGEMENT
11.1 Upon or prior to the date of this Agreement, Misonix shall deliver to
USSC copies of all Patents and Trademarks in its possession or control and all
related documents and correspondence in its possession or control to the extent
not delivered by the date of this Agreement. During the term of this Agreement
and subject to Section 11.3, USSC shall, at its own expense, use reasonable
efforts to obtain and maintain patents and trademark registration based on the
Patents and Trademarks in the United States. USSC shall also assume prosecution
and all future costs incurred and due during the term of this Agreement in
connection with the Patents and Trademarks filed prior to the date hereof set
forth in Schedule 1. Misonix agrees to fully cooperate with USSC in the
preparation, filing and prosecution of all applications for letters patent and
trademark registrations which USSC may in its sole discretion file and prosecute
in the United States and foreign countries in accordance with this Section 11.1,
and in the prosecution of the Patents and Trademarks, and, in connection with
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such applications and the Patents and Trademarks, Misonix further agrees to
execute and deliver all documents which USSC may deem necessary or desirable.
11.2 Misonix, on the one hand, and USSC on the other hand, shall promptly
give written notice to the other of any apparent infringement discovered by it
with respect to any patent or trademark issuing from the Patents and Trademarks.
Such notice shall set forth the facts of the apparent infringement in reasonable
detail. USSC shall have the right to bring or settle, in USSC's sole discretion,
any action, suit or proceeding with respect to such apparent infringement at its
own expense and for its own benefit; provided, however, that after recovery by
USSC of its litigation costs, including reasonable outside attorneys fees, USSC
shall pay to Misonix at the Royalty rate set forth in Article 4 from the amount
actually received by USSC in connection with the settlement or a judgment in
such litigation. In such event, Misonix agrees to cooperate with USSC and to
join in such action, suit or proceeding as a party plaintiff if requested to do
so by USSC and to give USSC all needed information, assistance and authority to
file and prosecute such suit; provided that USSC shall reimburse Misonix for all
out-of-pocket expenses incurred by it in providing such assistance, other than
attorneys' fees and expenses, incurred by Misonix.
11.3 If USSC or Misonix receives notice of a claim, action, suit or
proceeding by a third party alleging infringement of such third party's rights
in connection with the manufacture, use or sale of a Product by USSC, its
Affiliates, Subsidiaries, Sublicensees or permitted assignees, USSC shall have
the right to conduct the legal defense, and to enter into any disposition with
respect thereto, as USSC in its sole discretion deems desirable. Misonix shall
fully cooperate with USSC in its defense of such infringement claim, provided
that USSC shall reimburse Misonix for all out-of-pocket expenses, other than
attorneys' fees and expenses, incurred by it in providing such cooperation.
11.4 Subject to the fulfillment by Misonix of its obligations pursuant to
Section 11.6 below, USSC shall defend Misonix against a third party infringement
claim which results from the manufacture, use or sale of a Product by USSC, its
Affiliates, Subsidiaries, Sublicensees or permitted assignees, and indemnify
Misonix against the cost of such defense undertaken by USSC, including
reasonable attorneys' fees and court costs, and damages awarded or amounts paid
in settlement in any such action. However, notwithstanding the foregoing, if
Misonix had actual knowledge on or prior to the date of the Development and
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Option Agreement of a claim by a third party for infringement, USSC shall have
no obligation to defend or indemnify Misonix. USSC shall at all times keep
Misonix apprised of the status of any such claim, action, suit or proceeding and
allow Misonix to participate in all major decisions regarding the conduct of
such litigation including without limitation any decision to settle or pursue
the case to trial, provided, however, that USSC shall retain exclusive authority
to make all decisions regarding the conduct of such litigation or the
negotiation and consummation of any settlement.
11.5 The cost of USSC's defense of any claim referred to in Section 11.4
above, and any damages awarded or any amount paid in settlement or other
disposition of such claim, shall be set off against and, thereby, reduce, as set
forth in this Section 11.5, fifty percent (50%) the outstanding and future
Royalties due from USSC to Misonix.
(a) Except with respect to circumstances set forth in Section 11.5(b)
during the pendency of any such claim, action, suit or proceeding, USSC shall
have the right to deposit with a bank escrow agent the payments then due and
thereafter becoming due under the terms of this Agreement. USSC shall instruct
such escrow agent to deposit such payments in an interest-bearing account and to
release the same to the third party(s), if any, awarded damages in such action,
suit or proceeding pursuant to such award of damages, or to the third party(s),
if any, with whom USSC settles pursuant to this Section 11.5(a), to the extent
required by the terms of such settlement, and pay USSC's legal costs and
expenses as and when billed to USSC in connection with any such claim, action,
suit or proceeding and the balance, if any, of the principal and interest to
Misonix after final determination of and any reduction for all of the foregoing.
Such future Royalties shall be subject to escrow in accordance with this Section
11.5(a).
(b) Notwithstanding Section 11.5(a) above, in the event that Misonix
commits or has committed any fraud upon USSC in connection with this Agreement
or misrepresentation or breach of warranty of any matter which is the subject of
any of Misonix 's representations and warranties contained herein, in addition
to all other remedies available to it at law or in equity, USSC shall have the
right upon the receipt of any claim or the commencement of any action, suit or
proceeding, by either party hereto or any third party, relating to or arising
gout of such fraud or misrepresentation or breach of warranty, deposit with a
bank escrow agent the payments then due and thereafter becoming due
14
under the terms of this Agreement. USSC shall instruct such escrow agent to
deposit such payment in an interest-bearing account and to release the same to
the third party(s), if any, awarded damages in such action, suit or proceeding
pursuant to such award of damages or to the third party(s), if any, with whom
USSC settles pursuant to this Section 11.5(b), to the extent required by the
terms of such settlement, and to pay USSC's legal costs and expenses as and when
billed to USSC in connection with any such claim, action, suit or proceeding and
the balance, if any, of the principal and interest to Misonix after final
determination if and any reduction for all of the foregoing, the liability of
Misonix and the Principals for such award, amounts paid in settlement and USSC's
legal costs and expenses shall be up to the entire amount in escrow pursuant to
this Section 11.5(b), plus all future Royalties payable by USSC under this
Agreement. Such future Royalties shall be subject to escrow in accordance with
this Section 11.5(b). Notwithstanding the foregoing, the parties agree that any
such withholding of payments shall not limit the liability of Misonix for
damages in the event of any fraud, misrepresentation or breach of warranty
specified in this Section 11.5(b) or in the event of any other breach of this
Agreement by any of them, and shall not affect any right or license granted to
USSC hereunder or any other provisions of this Agreement or any party's
available remedies.
11.6 In the event that any claim is asserted against Misonix or USSC, or
any of their respective officers, directors, employees, agents or
representatives, or such person is made a party defendant in any action or
proceeding involving a matter which is the subject of USSC's indemnification and
hold harmless agreement as set forth above, or Misonix becomes the subject of a
claim of infringement against USSC, its Subsidiaries, Affiliates, Sublicensees
or permitted assignees as a result of their manufacture, use or sale of a
Product, then within 10 days of receipt by any Misonix or by USSC of notice of
any such event, and within 7 days of such party's receipt of a written complaint
or other formal pleading regarding any such event, such party shall give the
other party hereto written notice of such claim, action, suit, proceeding,
patent or patent application.
ARTICLE 12 - RIGHT OF FIRST REFUSAL
12.1 Misonix hereby grants to USSC, and USSC hereby accepts, the right of
first refusal set forth herein. In accordance with such right of first
15
refusal, Misonix hereby agrees that during the term of this Agreement and except
pursuant to this Article 12, it shall not, directly or indirectly transfer, by
sale, license or otherwise, to any third person or entity, a) any interest in
any of the Patents and Trademarks, a Product or the Know-How. No such sale,
license or other transfer shall be made without the prior written consent of
USSC, which may be withheld in its sole and absolute discretion. Prior to
offering or responding to an offer for such sale, license or other transfer,
Misonix hall have complied with all of their respective obligations under this
Agreement to be complied with prior to such offer or response. Prior to any
sale, license or other transfer, Misonix shall obtain a bona fide written offer
(the "Outside Offer") from such third party describing the subject of such sale,
licensee or other transfer, the interest to be sold, licensed or otherwise
transferred, and a stated cash consideration at which the third party offers to
acquire, and Misonix desires to sell, license or otherwise transfer, said
interest. After obtaining the Outside Offer, Misonix shall promptly, and before
accepting the Outside Offer, deliver to USSC an offer, irrevocable' for forty
five (45) days from its receipt, to sell, license or otherwise transfer to USSC
the interest which is the subject of the Outside Offer for the cash
consideration and upon all other terms and conditions stated in the Outside
Offer. A copy of the Outside Offer shall accompany the offer to USSC. If USSC
accepts such offer within said forty five (45) days, Misonix shall transfer the
relevant interest to USSC pursuant to the terms and conditions of such offer.
Otherwise, subject to the confidentiality and non-compete provisions of Articles
6 and 10, Misonix may transfer such interest to the third party who made the
Outside Offer in accordance with its terms and conditions during the sixty (60)
days immediately following expiration of the aforesaid forty-five (45) day
period. Notwithstanding the foregoing, nothing herein contained shall be
construed to limit the right of Misonix (or to give USSC any rights with respect
to any sale of shares of capital stock of Misonix or the merger or combination
of Misonix with or into any~other firm, corporation or entity, but the rights of
USSC set forth in this Agreement shall survive any such sale, merger or
combination. Notwithstanding, Misonix shall not have the right, and nothing in
this Section 12.1 or anything else in this Agreement shall be construed to
authorize Misonix to sell, license or otherwise transfer any of the license or
other rights granted to USSC under this Agreement.
16
12.2 The parties acknowledge and agree that any breach of this Article 12
by Misonix would likely cause irreparable injury to USSC and that USSC's remedy
at law for any such breach would be inadequate. Accordingly, the parties agree
that in addition to any other remedies provided for herein or otherwise
available at law, temporary and permanent injunctive relief and other equitable
relief may be granted in any action, suit or proceeding which may be brought by
USSC to enforce any provision of this Article 12 without the necessity of proof
of actual damages.
ARTICLE 12A - DEVELOPMENT FUNDING
12A.1 Subject to the terms of this Section 12A.1, development funding for
Products which USSC may in its sole discretion desire to have developed by
Misonix hereunder ("Development Funding") shall be at the cost of USSC. Prior to
Misonix incurring any Development Funding costs or expenses, Misonix shall
notify USSC in writing of the proposed project and proposed expenditures in
reasonable detail and USSC shall have a period of ten business days within which
to approve or reject the same, in writing, in USSC's sole discretion. If such
proposed expenditures are approved by USSC, the acceptance by USSC shall be
accompanied by a check to Misonix in the approved amount of the agreed upon
Development Funding. If such proposed expenditures are rejected, such rejection
shall be reasonably detailed. Misonix shall maintain books and records
concerning Development Funding during the term of this Agreement and for five
(5) years thereafter. USSC and its representatives shall have the right to
review such books and records during normal business hours upon prior notice.
Nothing hereinabove in this Section 12A.1 commits USSC to any Development
Funding or prohibit or limit USSC from engaging in development of Products by
itself or with any third party at the cost of USSC.
12A.2 The provisions of this Article 12A shall survive termination of this
Agreement.
ARTICLE 13 - REPRESENTATIONS AND WARRANTIES
13.1 Each of the parties hereby represents and warrants that (a) it has
full right, power and authority to enter into and by bound by the terms and
conditions of this Agreement, to transfer the rights and to carry out their
respective obligations under this Agreement, without the approval or consent of
any other person or entity; (b) the entering into of this Agreement, the
transfer of rights and the carrying out of their respective obligations under
this Agreement
17
is not prohibited, restricted or otherwise limited by any contract, agreement or
understanding entered into by any of them or Misonix's directors, officers,
employees or consultants, or by which any of such persons or entities is bound,
with any other person or entity, including, without limitation, any federal,
state or local governmental body, agency or authority; (c) there is no contract,
agreement or understanding entered into by them or Misonix's directors,
officers, employees or consultants, or by which any of such persons or entities
is bound, which if enforced,, terminated or modified, would be in derogation of,
contrary to, or adversely affect the rights acquired or to be acquired hereunder
by USSC; and (d) there is no action, suit, proceeding or investigation pending
or currently threatened against any of them which, if adversely determined,
would restrict or limit the right of any of them to enter into this Agreement,
transfer the rights or carry out their respective obligations under this
Agreement.
13.2 Misonix hereby further represents, warrants and covenants that (a) it
has not granted, assigned, sold or otherwise transferred, and it is not
obligated to grant, assign, sell or otherwise transfer, and they shall not,
except to the extent and in the manner expressly permitted by this Agreement,
grant, assign, sell or otherwise transfer during the term of this Agreement any
right, title, interest, license, or option, in, to, and under any Patents and
Trademarks, Products, Know-How to any other person or entity including, without
limitation, any federal, state or local governmental body, agency or authority;
(b) no other person or entity has, or during the term of this Agreement shall
have, the right to acquire, except to the extent and in the manner expressly
permitted by this Agreement, any right, title, interest, license or option in,
to or under any Patents and Trademarks, Products, Know-How; (c) it has not filed
any patent application or trademark application or been issued or assigned any
patent or registered trademark on or prior to the date of this Agreement for any
instrument, device or system similar to a Product, other than the Patents and
Trademarks; and (d) to the best of their knowledge, without special review for
this purpose, USSC's manufacture, use or sale of a Product substantially as
described in the Patents and Trademarks which exist as of the date of the
Development and Option, Agreement dated as of August 27, 1996 by and between
Misonix and USSC, would not infringe the patent rights or trademark rights of
any third person or entity.
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13.3 All representations, warranties and covenants made by the parties
shall be considered to have been relied upon by the other parties hereto
regardless of any discussion, review or investigation made by, or on behalf of1
the other parties, and shall survive termination of this Agreement.
13.4 The provisions of this Article 12 shall survive termination of this
Agreement.
ARTICLE 14 - TERM AND TERMINATION
14.1 The term of this Agreement shall commence upon the date hereof and
shall terminate upon last of the following:
(a) With respect to all of the provisions of this Agreement (i) insofar as
the same relate to Products which embody at least one valid claim included in a
patent within the Patents and Trademarks, the last day upon which all such valid
claims covering an invention embodied in such Product expire, or (ii) twenty
(20) years, whichever is later;
(b) Upon the written agreement of USSC and Misonix; and
(c) Notwithstanding any other provision of this Agreement, USSC at all
times shall have the right for any or no reason to terminate this Agreement upon
ten (10) days prior written notice to Misonix. In the event USSC effects
termination in accordance with this Section 14.1(c), there shall not be due to
the Principals any termination penalty or similar payment but, in such event,
the parties shall have the rights and obligations set forth in Section 4.4(b)
above.
ARTICLE 15 - RIGHTS AFTER TERMINATION
15.1 All rights and obligations of the parties which accrue on or before
the effective termination date shall be fully enforceable by either party after
termination.
15.2 If this Agreement terminates and, as a result thereof, USSC is
required to cease making Products at the end of the term of this Agreement or
after the Unilateral Termination Period, as the case may be, USSC may,
nonetheless, for a period not to exceed six (6) months after such termination,
and subject to the periodic royalty provisions set forth herein, dispose of
inventory of Products, complete and dispose of any Products in the process of
manufacture, and utilize materials then on order.
15.3 All Know-How, inventions, developments and improvements, whether
patentable or not, are and, after termination of this Agreement, shall (i)
remain the property of Misonix insofar as the same were conceived, made and
19
developed solely by Misonix prior to, or in performance of, this Agreement; and
(ii) the property of USSC insofar as the same were conceived, made and developed
solely by USSC prior to, or in performance of, this Agreement or jointly by
Misonix and USSC ("Joint Results") in the performance of this Agreement. USSC
shall retain exclusive ownership of all Know-How, inventions, developments and
improvements which were its property as of or prior to the date of this
Agreement or which were conceived, made and developed during the term of the
Agreement solely by USSC, whether or not the same is necessary to reduce to
practice any Joint Results.
15.4 Following termination of this Agreement, USSC shall assign to Misonix,
to the extent permissible by law, all filings with the FDA concerning Products
on which a royalty would be payable hereunder.
15.5 The provisions of this Article 15 shall survive termination of this
Agreement.
ARTICLE 16 - WAIVER
16.1 No waiver by any party, express or implied, or any breach of any term,
condition, or obligation of this Agreement by any party shall be construed as a
waiver of any subsequent breach of any term, condition, or obligation of this
Agreement, whether of the same or different nature.
ARTICLE 17 - NOTICES
17.1 Any notice required or permitted to be given hereunder shall be in
writing and shall be mailed by certified mail, return receipt requested, or
delivered by messenger or air courier, and all payments shall be delivered, to
the party to whom such notice or payment is required or permitted to be given at
its address set forth as follows: if given to Misonix, to: Misonix Incorporated,
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; or, if given to USSC, to: Attn.:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President and General Counsel, United States Surgical
Corporation, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. Any such notice shall be
considered given when delivered, as indicated by signed receipt or other written
delivery record. A party may change that address to which notice to it is to be
given by notice as provided herein.
ARTICLE 18- ASSIGNMENT
18.1 Neither this Agreement nor the performance of any part hereof may be
assigned or transferred by any one or
20
more of Misonix and any one or more of the Principals, on the one hand, and
USSC, on the other hand, without the prior written consent of the other party in
its sole and absolute discretion, except that (a) USSC may assign this Agreement
and the performance of any part hereof without such consent to an Affiliate of
USSC, and (b) USSC may enter into one or more sublicenses with any third persons
or entities on terms and conditions as USSC shall determine in its sole and
absolute discretion provided, however, that any such sublicense is not
inconsistent with the terms of this Agreement.
ARTICLE 19 - CONSTRUCTION
19.1 This Agreement shall be construed and enforced in accordance with the
Laws of the State of New York and any action, suit or proceeding brought under
this Agreement shall be brought only in, and the parties hereby consent to the
jurisdiction of, the federal and state courts located in the State of New York.
19.2 The provisions of this Article 19 shall survive termination of this
Agreement.
ARTICLE 20 - ENTIRE UNDERSTANDING/AMENDMENT
20.1 This Agreement and the attached schedules constitute the entire
understanding and agreement between the parties, and supersedes all previous
agreements (whether written or oral) concerning the subject matter hereof. This
Agreement shall not be modified, amended, or supplemented except by a written
document executed by both parties.
ARTICLE 21 - HEADINGS
21.1 The headings in this document are for information purposes only and
are not meant to have any legal effect in interpreting this document.
ARTICLE 22 - SEVERABILITY; FURTHER ASSURANCES
22.1 The invalidity or unenforceability of any Articles, Section or
provision of this document shall not affect the validity or enforceability of
any one or more of the other Articles, Sections or provisions.
22.2 The parties hereto will execute any further instruments or perform any
acts which are or may be necessary to effectuate each of the terms and
provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
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MISONIX INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: PRES & CEO
UNITED STATES SURGICAL CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: V.P., Strategic Planning &
Business Development
22
SCHEDULE I
Patent/Trademark
Title Country No. Status Date
----- ------- ---------------- ------ ----
23