PATENT LICENSE
AND
TRADEMARK AGREEMENT
Effective June 15, 2000, Retrac Medical, Inc., a Delaware corporation whose
business address is ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Retrac"), and
Safe Tech Medical Products, Inc., a Texas corporation whose business address is
673 ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, whose address also
is 673 1 ▇▇▇▇▇▇▇ Drive, Houston, Texas (collectively "Safetech"), agree as
follows:
ARTICLE I
BACKGROUND
1.1 Safetech represents that it is the owner of all rights, title and
interests in United States Patents Nos. 5,401,245; 5,527,306; 5,785,693; and
5,533,983; and all divisions, continuations, continuations-in-part, reissues and
extensions thereof; and all applications or patents related thereto or based
thereon filed or issued in the United States and in any foreign country or
jurisdiction, including but not limited to Canada, China, Japan, Mexico,
Belgium, Denmark, France, Germany, Italy, The Netherlands, Switzerland, and the
United Kingdom, all of which are identified in Exhibit A hereto (hereinafter
collectively "the Patents").
1.2 Safetech represents that it has identified various marks, trade
names or brand names for needless connector-products covered by the Patents
which it has used or intended to use in commerce, including STAT-LINK and
STAT-VIAL CONNECTOR, as well as others, all of which are identified in Exhibit B
hereto (hereinafter collectively "the Marks").
1.3 Safetech desires to grant to Retrac an exclusive, worldwide license
under the Patents and all existing and future modifications and enhancements
thereto, and to the exclusive use of certain Resources of Safetech as defined
hereafter, and to transfer to Retrac all rights it may have in the Marks,
subject to the terms of this Agreement.
1.4 Retrac desires to receive an exclusive, worldwide license under the
Patents and all existing and future modifications and enhancements thereto, and
to the Resources, and to obtain all available rights in the Marks, pursuant to
the terms of this Agreement.
ARTICLE II
DEFINITIONS
2.1 Safetech and Retrac are hereafter commonly referred to as "parties"
(in singular and plural usage, as required by the context).
2.2 Terms defined in this Article 1I shall have their defined meaning
throughout this Agreement.
2.3 "Licensed Subject Matter" shall mean the subject matter covered by
the Patents, all existing and future modifications and enhancements thereto, and
the Resources.
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2.4 "Resources" shall mean any and all information, equipment and
expertise possessed by Safetech that may assist Retrac to make, use, sell or
offer for sale the Licensed Subject Matter, including but not limited to
engineering design documentation, trade secrets, know how, product prototype and
production tooling, FDA and other governmental approval certifications, and
clinical research reports.
2.5 "Confidential Information" shall mean (1) trade secrets and other
proprietary information; (2) information marked or designated as confidential;
(3) information, whether or not in written form and whether or not designated as
confidential, which is known to as being treated as confidential; and (4)
information provided by third parties which a party is obligated to keep
confidential. Confidential Information includes, but is not limited to,
products, designations, devices, techniques, data, formulas, discoveries, ideas,
designs, logos, drawings, specifications, models, data, programs, documentation,
know-how, customer lists, marketing methods, plans, strategies, operations,
revenues, expenses, profits, sales, key personnel, customers, suppliers, pricing
policies, and any other information concerning the business affairs of the
parties to this License Agreement.
2.6 "Licensed Products" shall mean any product covered by, or
manufactured in accordance with, a valid and enforceable claim of one of the
Patents.
2.7 "Gross Profit" shall mean the selling price at which a customer is
invoiced by Retrac in the usual course of business for Licensed Products less
the cost of goods sold; provided, however, the Gross Profit shall not include,
and there shall be deducted from the computation of Gross Profit for determining
royalty payments due under this Agreement, that portion of the selling price
attributable to (i) freight, (ii) insurance for the Licensed Products, (iii)
sales or use taxes, (iv) tariff duties, (v) amounts credited on returns, (vi)
commissions paid, (vii) charges for "pass-through items" purchased from third
parties regardless of whether a "▇▇▇▇-up" is charged, (viii) marketing costs
associated with the advertising, promotion, distribution and sale of the
product, (ix) discounts actually allowed, (x) accessories not necessary for the
practice of the invention claimed the Patents.
ARTICLE III
LICENSE GRANT
3.1 BASIC GRANT. Safetech does hereby grant, and Retrac does hereby
accept, subject to the terms and conditions of this Agreement, an exclusive
license to make, use, sell and offer for sale, in the United States and in all
foreign countries and jurisdictions, devices and methods embodying subject
matter claimed in any and all valid and enforceable claims of the Licensed
Subject Matter, and the exclusive fight to use, in the U.S. and in all foreign
countries and jurisdictions, the Resources.
3.2 SUB-LICENSES. The license granted pursuant to this Agreement shall
include the right to grant sub-licenses at the sole discretion of Retrac,
subject to the terms of this Agreement.
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ARTICLE IV
COMPENSATION
4.1 CASH AND STOCK. Retrac shall pay to Safetech One Million Seven
Hundred Twenty-Five Thousand Dollars ($1,725,000.00) in cash and stock, as
follows:
(a) Within 30 days of the close of an IPO Retrac shall pay to
Safetech Three Hundred Seventy Five Thousand Dollars ($375,000.00) in cash.
(b) Within thirty (30) days after the close of an IPO, Retrac
shall reissue to Safetech One Million Three Hundred Fifty Thousand Dollars
($1,350,000.00) in restricted common stock of Retrac as valued at the opening
IPO price.
4.2 ROYALTY. Retrac shall pay to Safetech nine percent (9.0%) of the
Gross Profit realized by Retrac on Licensed Products sold during the first five
years after the effective date of this Agreement. Thereafter, for the remaining
life of each of the Patents, Retrac shall pay to Safetech eight percent (8.0%)
of the Gross Profit realized by the Retrac on Licensed Products sold.
ARTICLE V
PATENT MAINTENANCE
5.1 MAINTENANCE FEES AND ANNUITIES. Safetech shall, at its own expense,
timely pay all maintenance fees and annuities necessary to keep the Patents in
force for the respective maximum lives of all of the Patents.
5.2 NOTICE TO RETRAC. Safetech shall notify Retrac in writing when a
maintenance fee is due and when it has been paid.
ARTICLE VI
WARRANTIES AND REPRESENTATIONS
6.1 RIGHT TO MAKE AND PERFORM AGREEMENT. Safetech represents and
warrants that it has full power and authority to enter into and perform this
Agreement and to make the conveyances herein, and that the person signing this
Agreement on Retrac's behalf has been duly authorized and empowered to enter
into this Agreement.
6.2 OWNERSHIP OF PATENTS AND RESOURCES - NO CONFLICT. Safetech
represents and warrants that it exclusively owns and possesses proper legal
title to the Patents and the Resources, that it is under no present obligation
to any third party with respect to the Patents and the Resources and that it
shall not assume any future obligation to any third party with respect to the
Patents or the Resources, or that may impair any of Retrac's fights under this
Agreement.
6.3 NO LIENS OR SECURITY INTERESTS. Safetech further represents and
warrants that the Patents and Resources are free from any liens and security
interests.
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ARTICLE VII
CONFIDENTIALITY
7.1 ACKNOWLEDGMENT OF CONFIDENTIALITY. The parties acknowledge that in
the course of conducting negotiations leading to the execution of this License
Agreement and in the course of exercising the rights and carrying out the
responsibilities specified herein, the parties have had and will have access to
Confidential Information of the other party and acknowledge the receipt thereof.
7.2 PROTECTION OF CONFIDENTIAL INFORMATION. Except where otherwise
provided in accordance with this License Agreement, the parties shall take all
steps reasonable and prudent to protect the Confidential Information of the
other party from access by any other persons and shall not disclose the
Confidential Information of the other party to any other persons without
express, prior written authorization from the other party and under a written
Confidentiality Agreement binding the other persons to the terms as this License
Agreement.
7.3 INJUNCTIVE RELIEF. The parties agree that in the event of a breach
of the confidentiality obligation under this Article VH by one party, the
non-breaching party will suffer irreparable harm and that monetary damages may
be inadequate to compensate for such breach. Accordingly, the parties shall, in
addition to any other remedies available at law or in equity, be entitled to
injunctive relief to enforce the terms of this Article VII.
ARTICLE VIII
IMPROVEMENTS AND ENHANCEMENTS
8.1 DEVELOPMENTS BY SAFETECH. The license granted under this Agreement
shall extend to all improvements and enhancements made by Safetech to the
subject matter of the Patents and needless connectors generally, without any
additional royalty or other cost to Retrac.
8.2 RIGHT TO DEVELOP. Retrac shall have the right to improve and
enhance the Licensed Subject Matter, and develop products embodying such
improvements and enhancements.
8.3 RIGHTS IN IMPROVEMENTS AND ENHANCEMENTS. Retrac shall retain all
rights to any improvements and enhancements to the Licensed Subject Matter made
by Retrac, including but not limited to patent rights and rights under trade
secret law.
ARTICLE IX
PATENT ENFORCEMENT
9.1 ENFORCEMENT BY SAFETECH. In the event Retrac notifies Safetech of a
person Retrac believes is infringing one or more of the Patents, Safetech shall,
within ten days of such notification notify Retrac as to what, if any, action
Safetech intends to take regarding the alleged infringement.
9.2 ENFORCEMENT BY RETRAC. Retrac, at its sole discretion and at its
expense, may, but is not obligated to, prosecute infringement of any of the
Patents, and shall retain all recoveries and awards as a result of such action;
provided, Retrac shall first give Safetech ten days prior written notice of
Retrac's intent to enforce one or more of the Patents and Safetech, within that
ten day period, may instead elect to enforce the Patents itself. In the event
that Retrac elects to enforce one or more of the Patents, the legal fees and
expenses of such enforcement shall be deductible by Retrac from royalties due
Safetech, and Retrac may join Safetech as a complainant in such action.
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ARTICLE X
ACCOUNTING AND PAYMENTS
10.1 STATEMENTS. On or before the ninetieth (90th) day following the
last day of each calendar quarter occurring during the term of this Agreement,
Retrac shall furnish to Safetech a written statement specifying the total
quantity of Licensed Products sold by Retrac during the preceding calendar
quarter, the invoiced amount for each such Licensed Product (including a
computation of deductions) and a computation of the total royalties due. A
similar statement shall be rendered and payment made within ninety (90) days
after and as of the date of termination of this Agreement covering the period
from that covered by the immediately preceding statement to the date of
termination. Safetech shall treat all such statements as confidential.
10.2 PAYMENTS. By the date on which each statement of subsection 10.1
is due, Retrac shall make payment to Safetech of the royalties due from such
sales.
10.3 RECORDS. Retrac shall keep true and accurate records, files and
books of account containing all of the data reasonably required for the full
computation and verification of the royalties to be paid hereunder and the
information and reports to be provided Safetech under this Agreement. After
reasonable notice, Retrac shall permit the aforesaid records, files and books of
account to be adequately examined at Retrac's offices at ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and extracts made therefrom annually during usual business
hours, by a Certified Public Accountant appointed by Safetech and at Safetech's
expense. The first annual examination/audit may be made by Safetech at any time
after the first quarterly report required in subsection 10.1. Safetech shall
treat any and all information learned from such examination/audit as
confidential.
ARTICLE XI
NOTICES, PAYMENTS AND REPORTS
11.1 NOTICES. All notices for all purposes and reports under this
Agreement shall be given or made by mailing the same by registered or certified
mail return receipt requested or by Express Mail or comparable overnight
delivery service, (the date of confirmed delivery to the recipient is to be
considered the effective date of such Notice), addressed in the following
manner:
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IF TO SAFETECH:
Safe Tech Medical Products, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇
IF TO RETRAC:
Retrac Medical, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
or to such other address as either of the parties shall designate by written
notice to the other. Any such notice, instruction or communication shall be
deemed given when actually received or, if earlier, five days after deposit in
the United States Mail or two business days after deposit with an air courier.
11.2 PAYMENTS. All payments to Safetech shall be remitted by cheek to
the order of Safetech at the address set forth in subsection 11.1.
11.3 NOTICE OF LITIGATION. Safetech shall promptly notify Retrac of the
commencement of any litigation or of any Patent and Trademark Office proceeding
involving the Patents after the granting or issuance thereof.
ARTICLE XII
TERM AND TERMINATION
12.1 TERM. The term of the License shall be until all of the Patents
have expired, become invalid, or become unenforceable, and thereafter for so
long as Licensed Products are being sold by Retrac.
12.2 EFFECT OF TERMINATION. Upon termination of this Agreement all
obligations between the parties shall cease, except the confidentiality
obligations of Article VII, which shall survive this Agreement.
ARTICLE XIII
GENERAL
13.1 TRANSFERABILITY. Retrac may assign or transfer the license rights
granted herein at its sole discretion. Safetech may not assign, sell,
hypothecate or otherwise transfer or encumber its rights under this Agreement
without the prior written permission of Retrac.
13.2 INTEGRATION. This Agreement constitutes the entire understanding
of the parties and may not be modified or amended except by an instrument in
writing executed by the parties hereto which expressly states that it is an
amendment hereto.
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13.3 MODIFICATION. No modification to this Agreement, nor any waiver of
any rights, shall be effective unless consented to in a writing which references
this Agreement and the waiver of any breach or default shall not constitute a
waiver of any other right or any subsequent breach or default. No modification
of the terms of this Agreement by Addendum, Exhibit, or otherwise shall be
effective unless executed by both parties, hereto.
13.4 BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the respective heirs, successors, assigns and legal
representative of each party.
13.5 FORCE MAJEURE. Neither party shall be liable for any loss, expense
or damage caused by delays in performance resulting from acts of God, supplier
delay or any other cause beyond the reasonable control of Safetech or Retrac.
13.6 SEVERABILITY. Should a court of competent jurisdiction later
consider any provision of this Agreement to be invalid, illegal or
unenforceable, it shall be considered severed from this Agreement. All other
provisions, rights and obligations shall continue without regard to the severed
provision, provided that the remaining provisions of this Agreement are in
accordance with the intention of the parties.
13.7 LEGAL CONSTRUCTION: JURISDICTION. Except to the extent otherwise
agreed to in writing by the parties, this Agreement and the performance, rights
and obligations of the parties hereunder shall be governed and interpreted in
accordance with the laws of the State of New York and the United States of
America. The parties consent to the personal and exclusive jurisdiction of New
York federal and state courts for Rockland County, as applicable.
13.8 ADVICE OF COUNSEL. The parties acknowledge that prior to execution
of this agreement they have had the opportunity to fully consult with their
respective counsel regarding this agreement and that they understand all the
terms, obligations, conditions and consequences herein and accept the same.
13.9 RECORDATION. The panics agree to execute an acknowledgment of this
License Agreement for recordation in the US Patent Office.
13.10 CONFIDENTIALITY OF AGREEMENT. The parties agree that there will
be no public disclosure of the financial terms of this Agreement except as
required by law, Court or government agency.
13.11 HEADINGS. The headings and subheadings of the various Articles
and Sections of this Agreement are inserted merely for the purpose of
convenience and do not express or imply any limitation, definition (except
Article II) or extension of the specific terms of the Article and Section so
designated.
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IN WITNESS WHEREOF each of the parties has caused this Agreement to be
executed in duplicate originals by its duly authorized representative.
Executed: June 15th, 2000
Safe Tech Medical Products, Inc.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Retrac Medical, Inc.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, President/CEO
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EXHIBIT A TO PATENT LICENSE AND TRADEMARK AGREEMENT
United States Patents:
5,401,245
5,527,306
5,785,693
5,533,983
International Application
PCT/US95/15761
Corresponding Foreign National Applications
Canada 2 204 048
European Patent Office 95 942 548.9
Japan 517 ▇▇▇/▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇'▇ ▇▇▇▇▇▇▇▇ of China 95 197 269.3