Exhibit 10.41
LICENSE AGREEMENT
This Agreement entered into and effective as of December 19, 2005
(the
"Effective Date") is between PROTEIN POLYMER TECHNOLOGIES, INC., a
Delaware
corporation (hereinafter referred to as "Company"), and SURGICA
CORPORATION, a
Delaware corporation (hereinafter referred to as "Licensor").
Company and
Licensor are each hereinafter referred to as a "Party" and
collectively as the
"Parties".
W I T N E S S E T H:
WHEREAS, the Licensor and Company entered into an Asset Purchase
Option
Agreement, dated as of November 23, 2005 (the "Option Agreement"),
pursuant to
which Company, among other things, obtained the right to purchase
from Licensor
substantially all of the assets of Licensor then existing or
thereafter acquired
through the date of the exercise of the Option (as that term is
defined in the
Option Agreement);
WHEREAS, as partial consideration offered by Licensor to induce
Company
to enter into the Option Agreement, Licensor desires to grant to
Company, and
Company desires to obtain from Licensor, an exclusive license to
Licensor's
intellectual property rights; and
WHEREAS, in connection with the Option Agreement and this
Agreement,
the Parties are entering into a separate Supply Agreement (defined
below),
pursuant to which Licensor shall supply to Company certain
manufactured Product,
services and cooperation and Company shall provide to Licensor
certain services
and cooperation.
NOW, THEREFORE, in consideration of the premises and mutual
covenants
and agreements herein set forth and for other good and valuable
consideration,
the receipt and adequacy of which are hereby acknowledged, the
Parties hereto
hereby agree as follows:
1.
DEFINITIONS.
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In this Agreement
(including
the recitals) the following
expressions
shall have the following meanings unless the context otherwise
requires:
"Affiliate" shall mean, in relation to either Party, (a) any
corporation, partnership, limited liability company, or other
entity
("Entity") in which the relevant Party directly or indirectly holds
50%
or more of the voting interests, (b) any Entity which holds
directly or
indirectly 50% or more of the voting stock or shares of the
relevant
Party, (c) any other Entity in which 50% or more of the voting
interests is directly or indirectly held by any Entity described in
clause (b), or (d) any Entity in which the relevant Party directly
or
indirectly holds less than 50% of the voting interests but has
management control of such Entity in that it has the ability to
appoint
or remove the majority of the directors or managers of such Entity.
For
the purpose of this definition, Licensor shall not be an Affiliate
of
Company, and Company shall not be an Affiliate of Licensor.
"Assumed Liability Matters" shall mean those specified
liabilities of the Licensor set forth in Schedule B.
"Calendar Quarter" shall mean the usual and customary calendar
quarters, the first quarter being the months of January, February
and
March, the second quarter being the months of April, May and June,
the
third quarter being the months of July, August and September, and
the
fourth quarter being the months of October, November and December.
"Copyrights" shall mean all copyright and rights in the nature
of copyright now or subsequently owned or controlled by Licensor or
its
Subsidiaries at any time prior to or during the term of this
Agreement
relating to or embodying any part of the Know-How, including
without
limitation any materials consisting of or containing software or
databases.
"Cost of Goods Sold" shall mean, for any applicable period,
Company's cost of goods for Products sold determined in accordance
with
generally accepted accounting principles, consistently applied.
"ECA" means the European Competent Authorities, any Notified
Bodies, or any successor agencies responsible for European
Regulatory
Approvals.
"FDA" shall mean the United States Food and Drug
Administration or any successor agency vested with administrative
and
regulatory authority to approve testing and commercial distribution
of
products for human and veterinary use in the United States.
"Field" shall mean any and all human or veterinary
applications.
"Fully-Burdened Cost" shall mean all of the direct and
proportional indirect costs and expenses for providing the
specified
Product or services, including but not limited to raw materials and
supplies, labor, equipment, utilities, facilities and overhead as
determined according to generally accepted accounting principles
(GAAP)
consistently applied.
"Governmental Body" means any: (a) nation, principality,
state, commonwealth, province, territory, county, municipality,
district or other jurisdiction of any nature; (b) federal, state,
local, municipal, foreign or other government; (c) governmental or
quasi-governmental authority of any nature (including any
governmental
division, subdivision, department, agency, bureau, branch, office,
commission, council, board, instrumentality, officer, official,
representative, organization, unit, body or Entity and any court or
other tribunal); (d) multi-national organization or body; or (e)
individual, entity or body exercising, or entitled to exercise, any
executive, legislative, judicial, administrative, regulatory,
police,
military or taxing authority or power of any nature.
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"Gross Margin" shall mean, for a Product, the invoiced price
of such Product upon the sale by Company or any Affiliate of the
Company to another entity, less the Cost of Goods Sold of such
Product
for the applicable accounting period.
"Intellectual Property" shall mean all Patents, Know-How,
Trademarks and Copyrights.
"Know-How" shall mean all trade secrets, inventions, methods,
processes, know-how and negative know-how, techniques, products,
designs, cultures, other biological materials and other materials
and
compositions, information, data or experience whether patentable or
not, useful in the Field that are (i) owned or controlled by
Licensor
or its Subsidiaries as of the Effective Date or (ii) developed,
acquired or that otherwise become controlled by Licensor or its
Subsidiaries at any time during the term of this Agreement,
including
without limitation, processes, techniques, methods, operating
instructions, machinery designs, raw material or product
specifications, drawings, blue prints, laboratory books, notes,
records
and any other technical and commercial information relating to
research, design, development, manufacture, assembly, use or sale
of
the Products in the Field.
"Know How Documentation" shall mean complete and accurate
written documentation concerning all Confidential Information of
Licensor necessary or desirable to use, practice and/or otherwise
exploit the Know-How and related Intellectual Property, including
but
not limited to the Device Master Record, Device History Record,
Design
History File, and Quality System Record (as those terms are defined
in
21 CFR 820, Quality System Regulation) for each of PVA Plus(TM),
MaxiStat(TM), and MicroStat(TM) (510(k) clearance numbers K001678,
K020033, and K032619, respectively), the 510(k) submissions as
supplemented or amended resulting in such clearances, internal
audit
reports, reports and communications associated with an inspection
or
audit of Licensor's operations by a Governmental Body, and
laboratory
notebooks, experimental reports, batch records, invention
disclosures,
and patent applications.
"Net Profit" shall mean Net Sales less (i) the amount paid by
Company for goods pertaining to the Products sold by Company that
are
obtained by Company pursuant to the Supply Agreement or other
similar
arrangement, (ii) other monies paid to Licensor by Company under
the
Supply Agreement, and (iii) Company's Fully Burdened Cost in
providing
the services and cooperation to Licensor as set forth in the Supply
Agreement and/or the applicable Project Plan (as that term is
defined
in the Supply Agreement).
"Net Sales" shall mean the gross invoice price of Products
sold by Company to any other entities, less (i) quantity and/or
cash
discounts actually allowed or taken; (ii) freight, postage and
insurance; (iii) amounts repaid or credited by reasons of
rejections or
return of goods or because of retroactive price reductions
specifically
identifiable to Products; (iv) amounts payable resulting from
governmental (or agency thereof) mandated rebate programs; (v)
third-party rebates to the extent actually allowed; (vi) custom
duties
and taxes (excluding income, value-added and similar taxes), if
any,
directly related to the sale; and (vii) any other specifically
identifiable amounts included
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in such Product gross sales that will be credited for reasons
substantially equivalent to those listed hereinabove.
"Patent(s)" shall mean:
(a) any and all patents and applications for patents
owned or controlled by Licensor as of the Effective Date which
are useful in the Field including, but not limited to, those
that are identified in Schedule A, attached hereto, along with
any and all foreign counterparts thereof, all continuations,
continuations-in-part, divisions and renewals thereof, all
patent supplementary protection certificates and similar
rights that are based on or derive priority from any of the
foregoing or which may be granted thereon, and all reissues,
re-examinations, extensions, patents of addition and patent of
importation thereof;
(b) any and all patent applications by Licensor or its
Subsidiaries useful in the Field that are filed, acquired or
that otherwise become controlled by Licensor during the term
of this Agreement, all continuations, continuations-in-part or
divisions of any such applications, any patents which shall
issue based on such applications, continuations,
continuations-in-part, or divisions and any and all patents,
patent supplementary protection certificates and similar
rights that are based upon or derive priority from any of the
foregoing or which may be granted thereon and all reissues,
renewals or extensions thereof or patents of addition thereto;
and
(c) all such patent applications, patent certificates and
rights, a Valid Claim of which would be infringed by the
manufacture, marketing, use or sale of Product (but for the
license granted herein).
"Product(s)" shall mean any product which (i) if made, used or
sold would infringe one or more Valid Claims in an issued Patent
but
for the License granted pursuant to Section 3.1 of this Agreement,
or
(ii) otherwise uses, incorporates or was conceived, developed or
reduced to practice using the Patents or Know-How that comprise, in
part, the Intellectual Property subject to the License set forth in
Section 3.1 hereof.
"Regulatory Agency" means (a) the FDA, (b) the ECA, or (c) any
other Governmental Body with regulatory authority similar to the
FDA or
ECA in any other jurisdiction anywhere in the world.
"Regulatory Approval" shall mean with respect to any country,
filing for and receipt of all regulatory agency or other
registrations,
clearances and approvals required in such country in respect of
Product
for any purpose specified in this Agreement or, if no purpose is
specified, to enable Product to be manufactured, offered for sale,
sold
and distributed, and for Non-Clinical Use or Clinical Use to take
place, in such country.
"Subsidiary" shall mean a corporation, limited liability
company or partnership of which a Party holds 50% or more of the
voting
or economic interest. For the purpose of this definition, Licensor
shall not be a Subsidiary of Company.
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"Supply Agreement" shall mean that certain Supply and Services
Agreement entered into between Licensor and Company of even date
herewith.
"Third Party" shall mean a person other than Licensor, Company
or their respective Affiliates.
"Trademarks" shall mean any and all trademarks, trade names,
service marks, service names, logos and similar proprietary right
owned, controlled or licensed by Licensor to be used in connection
with
the Licensor's Intellectual Property or Products.
"Valid Claim" shall mean a claim in any unexpired Patent which
has not been held invalid by a decision of a court or other
appropriate
body of competent jurisdiction against which there is no appeal or
where any period for appealing against such decision has expired
without an appeal having been validly submitted.
2.
CONDITIONS TO LICENSE.
---------------------
2.1
Licensor hereby represents and warrants that, as a condition
precedent to entering into this Agreement, Licensor has:
(a) Successfully obtained Angiodynamics, Inc.'s ("Angiodynamics")
written consent, the form of which is attached as Exhibit D to the
Option
Agreement, to the assignment to Company of all of Licensor's rights
and
obligations under the Distributor Agreement dated June 28, 2002 by
and between
Licensor and Angiodynamics; and
(b) Received an unconditional and irrevocable assignment of all
rights, title and interest of its employees, officers and/or
directors
(including, without limitation, Louis R. Matson) in and to all
inventions
pertaining or applicable to the Field.
3.
ASSIGNMENT OF 510(K) CLEARANCES; GRANT OF LICENSE.
-------------------------------------------------
3.1
Rights Granted.
--------------
(a) Subject to the terms and conditions of this Agreement
(including, without limitation, Company's payment of the License
Fee), Licensor
hereby sells, assigns, transfers, conveys, grants, and delivers and
Company
hereby accepts from Licensor all of Licensor's right, title and
interest in and
to its 510(k) Clearances, including numbers: K001678 relating to
PVA Plus(TM),
K020033 relating to MaxiStat(TM) and K032619 relating to
MicroStat(TM), filed
with the United States Food and Drug Administration and all
information
submitted along with such applications ("510(k) Clearances").
(b) Upon execution and delivery of this Agreement, Licensor shall
effectuate the sale, assignment, transfer, conveyance, grant and
delivery of the
510(k) Clearances to Company by delivering to Company (or its
designees) a duly
executed bill of sale and assignment for the 510(k) Clearances in
substantially
the form of Exhibit A, attached hereto, and shall notify the FDA of
the same by
delivering to Company (or its designees) a duly executed letter of
notification
in substantially the form of Exhibit B, attached hereto.
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(c) Subject to the terms and conditions of this Agreement
(including, without limitation, Company's payment of the License
Fee), Licensor
hereby grants to Company and Company hereby accepts from Licensor
an exclusive
(even as against Licensor), worldwide license, with the right to
sublicense, to
the Intellectual Property to make, have made, modify, import, use,
offer to
sell, sell and have sold Products and perform and have performed
all processes
under the Intellectual Property, solely in the Field in all
countries in the
world (the "License").
(d) Solely with respect to the License of Trademarks set forth
herein, (i) Company may utilize and exploit such Trademarks only in
connection
with the Products, (ii) Licensor may from time to time request
samples of
Company's use of the Trademarks in commerce, and (iii) Company
shall comply with
the reasonable written use standards and requirements imposed by
Licensor
concerning the use of its Licensor's Trademarks.
(e) Licensor hereby agrees that it shall not, without the prior
written consent of Company, use, make, have made, modify, import,
use, perform,
offer to sell, sell or have sold any products, compositions or
methods in the
Field, or license or transfer to any Third Party (including without
limitation,
any Affiliate) any of such rights in the Field.
(f) With respect to any Intellectual Property developed or
acquired by Licensor after the Effective Date, Company agrees that
the License
with respect to such after-acquired Intellectual Property shall be
subject to
any contractual obligations of Licensor under bona fide arm's
length third party
agreements; provided that, in the event the License is restricted
or limited by
any such contractual obligations of Licensor, then Licensor shall
use reasonable
commercial efforts to exclude or, where applicable, to minimize any
such
restriction or limitation.
(g) Licensor acknowledges and agrees that the License set forth
in Section 3.1 above, includes, without limitation, a license to
make, have
made, modify, import, use, offer to sell, sell and have sold any
and all of
Licensor's Products that have received, or during the term of this
Agreement
will receive, Regulatory Approval from any applicable Regulatory
Agency.
(h) To the extent permissible under the terms of any and all
marketing and/or distribution agreements in effect as of the
Effective Date, or
in effect during the term of this Agreement, Licensor shall
sublicense all of
its rights under such agreements to Company for the duration of
this Agreement.
To the extent that such a sublicense requires the consent of the
other
contractual party, Licensor shall reasonably cooperate with Company
to obtain
such consent.
4.
TRANSFER OF LICENSED TECHNOLOGY.
-------------------------------
No later than ten (10) days after the Effective
Date,
Licensor
shall
provide to Company a copy of the current Device Master Record and
Quality System
Record for each of PVA Plus(TM), MaxiStat(TM), and MicroStat(TM),
together with
a copy
of the
submissions
as
amended
or
supplemented
resulting
in
their
respective
510(k)
clearances.
Thereafter,
Licensor
shall
provide
Know How
Documentation as requested in writing by Company within ten (10)
days.
6
5.
PAYMENT TO LICENSOR.
-------------------
5.1
License Fee; Indemnification Against Certain Claims.
---------------------------------------------------
(a) Upon execution and delivery of this Agreement and no later
than five (5) calendar days after the Effective Date, Licensor
shall provide
Company written, complete and accurate records specifying
Licensor's total debt
concerning the categories set forth in Schedule C, attached hereto.
(b) Promptly upon Company receipt and diligent review of
Licensor's records concerning its outstanding debts, Company shall
deliver to
Licensor, or to Licensor's designee(s), the "License Fee" in full
satisfaction
of its license fee obligations hereunder, which shall consist of
(i) the
assumption of "Assumed Liability Matters" by the Company as of the
Effective
Date as set forth in Schedule B and (ii) an aggregate amount of up
to Three
Hundred and Ninety One Thousand and Zero Cents ($391,000.00) as set
forth in
Schedule C, to satisfy Licensor's outstanding debts and/or
liabilities.
(c) Company's License Fee obligations shall consist of assuming
and repaying Company's outstanding debt as provided in Section
5.1(b) above as
of the Effective Date in an aggregate amount not to exceed the
amount specified
in Section 5.1(b). Company agrees to take all commercially
reasonable steps
necessary to assume, pay, perform and discharge when due, all of
Company's
outstanding debt as provided in Section 5.1(b) as of the Effective
Date in an
aggregate amount not to exceed the amount specified in Section
5.1(b)
(d) Company shall indemnify, hold harmless and defend Licensor
from and against and will pay or reimburse Licensor with respect to
any and all
claims by Sapphire Group LLC against Licensor to which Licensor may
become
subject, directly arising out of or in connection with any fees
found by a court
of competent jurisdiction to be actually owed by Licensor to
Sapphire Group LLC
arising solely pursuant to that certain engagement letter signed by
Sapphire
Group LLC and agreed to by Licensor, dated as of July 7, 2003, as
amended
pursuant to that amendment letter signed by Sapphire Group LLC and
agreed to by
Licensor, dated as of July 6, 2004, and as supplemented by that
supplement
letter signed by Sapphire Group LLC and agreed to by Licensor,
dated as of June
3, 2005, solely in connection with Licensor entering into and
executing the
Option Agreement, the License Agreement and/or the Asset Purchase
Agreement, as
to each, if and when entered into and executed by Licensor and
Company (a
"Sapphire Claim"). Notwithstanding the foregoing, the Licensor's
right to
defense of such claims as set forth in this Section 5.1(d) shall
not be
dependent upon any finding by any court of competent jurisdiction
with respect
to any such Sapphire Claim. All Sapphire Claims shall be resolved
pursuant to
those procedures set forth in Section 7.3. In no event, shall
Company's total
liability pursuant to this Section 5.1(d) exceed Two Hundred
Thousand Dollars
and Zero Cents ($200,000.00), such total liability shall not be
reduced by any
reasonable attorneys' fees incurred by Company in defense of
Licensor to any
such Sapphire Claim as provided herein.
5.2
Royalties.
---------
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(a) Subject to the provisions of this Agreement, Company shall
pay Licensor, no later than forty-five (45) days after the close of
each
Calendar Quarter throughout the term of this Agreement, a royalty
equal to
twenty-five (25%) of Company's Net Profit from Products for the
Calendar Quarter
(or part thereof in the case of the first or last Calendar Quarter
for which a
royalty is payable if not a full quarter) then ended (the "Surgica
Royalty").
(b) In the event any Product or Products are sold pursuant to a
sales agreement, marketing agreement, distribution agreement or
similar
arrangement to which the Company is a party with any entity ("Net
Distributor
Revenue"), Company shall pay Licensor, no later than forty-five
(45) days after
the close of each Calendar Quarter, the royalty specified in
Section 5.2(a) as
applied to the Company's share or interest in the Product or
Product-related
revenue from said entity's sale of Products; provided, however,
that in no case
shall Company have any obligation to pay any amounts to Licensor
under this
Section 5.2(b) for the sale of Products by Company to any other
entities.
(c) Company shall deliver to Licensor written reports of Net
Profit, Net Sales and Net Distributor Revenue during the preceding
Calendar
Quarter on or before the forty-fifth (45th) day following the end
of each
Calendar Quarter. Such reports shall include a calculation of the
earned royalty
due and shall be accompanied by the monies due. If no earned
royalties are due,
then Company shall indicate such on its written report.
6.
CONFIDENTIALITY.
---------------
6.1
Subject to Section 6.3, during the term of this Agreement and for
a period of five (5) years thereafter (except with respect to trade
secrets, for
which the obligations of non-use and non-disclosure shall continue
for so long
as such trade secrets are protected by their owner as trade
secrets), each Party
shall maintain in confidence and shall not disclose to any Third
Party any
know-how, trade secrets, business or technical information or other
information
("Confidential Information") received from the other Party relating
to any
Product, and shall not use the other Party's Confidential
Information except for
the purposes of this Agreement without the prior written consent of
such other
Party. These confidentiality and non-use obligations shall not
apply to any
Confidential Information that the receiving Party can demonstrate:
(a) at the time of disclosure to the receiving Party was, or
thereafter becomes, a part of the public domain through no fault of
the
receiving Party, its Affiliates, distributors or sublicensees;
(b) was subsequently lawfully disclosed to the receiving Party by
a Third Party not under an obligation of confidentiality with or
through the
disclosing Party;
(c) was in the lawful possession of the receiving Party prior to
disclosure by the disclosing Party; or
(d) is required to be disclosed by judicial or administrative
order, provided that notice is given to the disclosing Party and
the disclosing
Party has an opportunity, if reasonable under the circumstances, to
seek a
protective order, and further provided, that disclosure is limited
solely to
compliance with the judicial or administrative order.
8
6.2
During the term of this Agreement, each Party shall take all
reasonable steps to:
(a) prevent any disclosure in breach of Section 6.1 of
Confidential Information of the other which would be materially
prejudicial to
the interests of the other Party;
(b) limit the disclosure of information to such of its
Affiliates, distributors and sub-licensees and their respective
employees that
require the information for the purposes of this Agreement; and
(c) ensure that the persons referred to in Section 6.2(b) enter
into appropriate confidentiality agreements containing use and
disclosure
restrictions at least as restrictive as those set forth herein.
6.3
Notwithstanding the foregoing provisions of this Section, the
Parties and their Affiliates, distributors and sublicensees shall
be entitled to
disclose Confidential Information of the other Party which would
otherwise be
protected by the provisions of Section 6.1 to actual or potential
customers for
any Product in so far as such disclosure is reasonably necessary to
commercialize such Product.
7.
INDEMNIFICATION.
---------------
7.1
Company Indemnification. Except as otherwise provided in this
Agreement, Company shall indemnify and hold harmless, pursuant to
the provisions
of this Section 7, Licensor and each of its officers, directors,
employees,
agents and Affiliates (collectively, the "Licensor Indemnitees"),
from and
against, and will reimburse each such Licensor Indemnitee with
respect to, any
and all Third Party claims, actions, demands, losses, damages,
liabilities,
costs and expenses to which such Licensor Indemnitee may become
subject,
including reasonable fees and disbursements of counsel and expenses
of
reasonable investigation (collectively, "Licensor Losses"), arising
out of,
based upon or caused by: (a) the inaccuracy of any representation
or the breach
of any warranty, covenant or agreement of Company contained in this
Agreement,
the Supply Agreement or the Option Agreement; (b) any failure by
Company to
conduct its obligations arising hereunder in a diligent and
professional manner
and in accordance with all applicable laws and regulations; or (c)
any gross
negligence or intentional wrongdoing by Company in the performance
of its
obligations (except in each case, and solely to the extent, that
any Licensor
Loss is due to (x) the gross negligence or willful misconduct of
one or more
Licensor Indemnitees); provided, however, that, in each case,
Company shall not
be obligated to indemnify the Licensor Indemnitees for claims
arising out of any
Product's infringement of any intellectual property right of a
Third Party
unless such claim results from Company's (i) misuse or mishandling
of the
Product or (ii) unauthorized modification of the Product.
7.2
Licensor Indemnification. Licensor shall indemnify and hold
harmless, pursuant to the provisions of this Section 7, Company and
each of its
officers, directors, employees, agents and Affiliates
(collectively, the
"Company Indemnitees"), from and against, and will reimburse each
such Company
Indemnitee with respect to, any and all Third Party claims,
actions, demands,
losses, damages, liabilities, costs and expenses to which such
Company
Indemnitee may become subject, including reasonable fees and
disbursements of
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counsel and expenses of reasonable investigation (collectively,
"Company
Losses"), arising out of, based upon or caused by: (a) the
inaccuracy of any
representation or the breach of any warranty, covenant or agreement
of Licensor
contained in this Agreement, the Supply Agreement or the
