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EXHIBIT
10.22
TECHNOLOGY
LICENSE
This Agreement entered into
this 28th day of March, 1996, between Colorado State University
Research Foundation of Fort Collins, Colorado, 80522, (hereinafter
referred to as (“CSURF”), CryoLife, Inc. of 2211 New
Market Parkway, Suite 142, Marietta, Georgia 30067, (hereinafter
referred to as “Company”).
W I T N E S E T
H:
WHEREAS ,
Dr. Chris Orton has invented, is developing and may develop in
the future certain Trade Secrets, Know-How and Patents dealing with
methods, procedures and sciences relating to the science of
enhancing fibroblast and other cellular ingrowth into homograft,
xenograft and bioprosthetic grafts;
WHEREAS , CSURF by
virtue of its contractual relationship with Colorado State
University (“CSU”) and by virtue of CSU’s
contractual relationship with Dr. Orton, is the owner of all
right and title to the Technology;
WHEREAS , the parties
entered into a Technology Option Agreement dated March 1, 1991
(the “1991 Agreement”) pursuant to which the Company
evaluated the Technology for use in certain products currently
under development;
WHEREAS , the Company
now desires to license the Technology in order to continue its
product development and eventually commercialize products utilizing
the Technology and to obtain as part of the license certain
assistance from Dr. Orton; and
WHEREAS , the parties
desire to enter into the following Agreement to license the
Technology and provide for Dr. Orton’s assistance upon
the terms and conditions hereinafter set forth.
NOW THEREFORE , in
consideration of the premises, the Company’s continued
investment in product development incorporating the Technology in
reliance upon the promises hereinafter set forth, and other
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as
follows:
SECTION I.
DEFINITIONS. The following terms shall have the meanings as
hereinafter set forth:
“Commercialization” shall mean the ability after
the Company is satisfied with the safety and efficacy of any
Product to market and distribute the Product without regulatory
restraint within the United States following receipt of premarket
approval from the FDA. Commercialization shall not include limited
sales within the United States under an investigatory device
exemption or similar conditional sale approval received from the
FDA.
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“FDA” shall mean
the United States Food and Drug Administration or successor
agency.
“Milestone
Payments” shall mean the payments required to be made to
CSURF pursuant to Section III(4).
“Minimum
Royalties” shall mean the payments required to be made to
CSURF pursuant to Section III(3).
“Patent(s)” shall
mean U.S. patent number 5,192,312 together with any and all
domestic and foreign patents and patent applications which may in
the future be filed on the Science which are owned, developed or
acquired by CSURF. The term Patents shall also include any and all
U.S. or foreign divisions, continuations, continuations in part,
substitutions, reissues and extensions of the said
Patents.
“Percentage
Royalties” shall mean the payments required to be made to
CSURF pursuant to Section III(1).
“Principal
Investigator” shall mean Dr. Orton or his successor, if
any, and shall be responsible for all technical communications with
the Company. Nothing in this Agreement shall be construed so as to
require CSURF to pursue the Science in the event that
Dr. Orton leaves CSU.
“Products” shall
mean any chemical, device, process, substance or technique which
utilizes the Technology and is intended or adapted for use to
enhance fibroblast or other cellular ingrowth into homograft,
xenograft and bioprosthetic grafts.
“Science” shall
mean the field relating to enhancing fibroblast and other cellular
ingrowth into homograft, xenograft and bioprosthetic grafts,
including any methods, procedures and materials related
thereto.
“Subsidiaries”
shall mean (a) any person or entity directly or indirectly
owning, controlling, or holding power to vote 25% or more of the
outstanding voting securities of Company, (b) any person or
entity 25% or more of whose outstanding voting securities are
directly or indirectly owned, controlled or held with power to vote
by Company, or (c) any executive officer, director, or general
partner of an entity defined under (a) or (b) in the
foregoing. As used in this definition, “control” means
the possession, directly or indirectly, of the power to direct or
cause the direction of the management and polices of an entity or
of Company.
“Technology”
shall mean any trade secrets, know-how and patents heretofore or
hereafter owned, developed or acquired by CSURF which are related
to the Science, including, without limitation, the
Patents.
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SECTION II.
LICENSE.
1. License Grant.
CSURF hereby grants Company the sole and exclusive, worldwide
license to the Technology to develop, manufacture, use and sell
Products. Such license shall continue for the longer of 15 years or
the life of any and all Patent(s).
2. Sublicenses. The
Company shall have the right to grant sublicenses of any rights
granted to it under this License, provided that Company shall have
received the prior approval of CSURF, which shall not be
unreasonably withheld. CSURF’s consent shall not be required
for sublicenses to Company Subsidiaries or for contract processing
or manufacturing sublicenses entered into to facilitate the
Company’s development or production of Products.
3. Performance Goals.
The Company agrees to use its reasonable best efforts to achieve
performance goals agreed upon by CSURF and the Company. The
Company’s performance goals for the 1996 Calendar year are
set forth on “Exhibit A” attached hereto. Performance
goals will be determined by CSURF and the Company upon consultation
with the Principal Investigator in the years following 1996. The
performance goals shall be replaced by the Company’s payment
of minimum royalties under Section III(3) once payments are first
made pursuant to Section III(3)(b).
4. Receipt and Delivery of
Technology. The Company acknowledges both the receipt of the
information which presently constitutes the Technology and fact
that neither CSURF nor Principal Investigator represent or promise
that they will develop or acquire any additional information or
rights that would fall within the definition of Technology. To the
extent CSURF or Principal Investigator develop or acquire any such
information or rights, CSURF agrees to promptly disclose same to
the Company.
SECTION III. PAYMENT
OBLIGATIONS.
1. Percentage
Royalties. Company shall pay CSURF a royalty on Net Sales
(gross sales minus sales tax, returns, discounts and freight, if
any) of Product(s) in each country where Product(s) are protected
by a Patent(s) equal to:
(i) 6% of the first $1
million in Net Sales;
(ii) 4% of Net Sales in
excess of $1 million and up to and including $5 million;
plus
(iii) 3% of Net Sales in
excess of $5 million.
Percentage Royalties on Net Sales of
Product(s) where Product(s) are not protected by Patent(s) shall be
payable at one-half of the foregoing rates.
2. Sublicenses. In the
event that the Company sublicenses the License granted in Section
II(1), the Company shall remain obligated to the terms of this
agreement. Company shall either require the sublicensee to pay the
Percentage Royalties required by this Section III(1)
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or, at the election of the Company in
sublicenses that are not to Subsidiaries, the Company shall pay
CSURF one third of the Percentage Royalties received by Company
from such sublicenses. Company shall also pay CSURF one third of
any upfront, milestone, benchmark or any other miscellaneous income
received from a sublicensee.
3. Minimum Royalties.
In consideration of the exclusive nature of the license grant
contained in Section II, Company agrees to pay CSURF Minimum
Royalties as follows:
(a) $10,000 per year
beginning with a first payment on March 31, 1996 and
continuing each year thereafter until such time as the Company
receives U.S. Government approval permitting Commercialization of
Products.
(b) $20,000 per year
beginning in two equal $10,000 installments payable on
January 31, and July 31, in each of the first two years
after the Company receives U.S. Government approval permitting
Commercialization of the Products; and,
(c) $50,000 per year
thereafter in quarterly installments of $12,500 each payable on
January 31, April 30, July 31, and
October 31.
The Company shall be entitled to credit
Minimum Royalties paid in any year against Percentage Royalties
earned in the same year but not against Percentage Royalties earned
in prior years or subsequent years.
4. Milestone Payments
. The Company shall make the following Milestone Payments to
CSURF:
(a) $10,000 within 30 days
after the filing of a product license application.
(b) $20,000 within 30 days
after receipt of premarket approval from the FDA permitting
Commercialization of the Products within the United
States.
The Company shall be entitled to credit
Milestone Payments made as well as out-of-pocket expenses incurred
by the Company in the prosecution of the Patent(s) against future
Percentage Royalties but the amount of the credit that may be taken
in any year shall be limited, in that year, to the 50% of the
amount by which Percentage Royalties exceed Minimum Royalties in
that year. For example, if $30,000 in Milestone Payments and Patent
prosecution costs were incurred before year 2 and Percentage
Royalties in year 2 exceeded Minimum Royalties paid in year 2 by
the sum of $40,000, the Company would be entitled to credit only
$20,000 of such amount as a credit to Milestone Payments and Patent
prosecution costs in that year. The remaining $10,000 of Milestone
Payments and unreimbursed Patent prosecution costs would be
reimbursed in the same, fashion in future years.
5. Nonexclusive License
Payments. At any time after the third anniversary of
Commercialization, the Company may elect to convert this License
from an exclusive license to a nonexclusive license by notifying
CSURF in writing. In the event the license is converted to a
nonexclusive license as provided in the preceding sentence, the
Company’s obligation thereafter
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to make minimum royalty and milestone
payments shall terminate. If CSURF thereafter relicenses the
Technology to any third party at a lower percentage royalty rate
than that provided in this Agreement, CSURF shall notify the
Company of the lower royalty rate and offer the Company the
opportunity to thereafter pay such lower royalty rate in lieu of
the rate it would otherwise be obligated to pay
hereunder.
6. Accounting for
Payments .
(a) Payments of Percentage
Royalties shall be made on or before the last business day of
January, April, July and October of each year for the sale of all
Products sold during the preceding quarterly periods ending on the
last days of December, March, June and September. Such payments
shall be accompanied by a statement showing the sales of the
Products by the Company to all parties, and such other particulars
as are necessary or which may be reasonably requested by CSURF for
an account of the royalties payable pursuant to this Agreement.
Payment of the amount of royalties due shall accompany such
statement.
(b) The Company shall keep
complete and accurate records of the sales by the Company of
Products. Within 60 days following the end of each quarter of a
calendar year during which the royalties are due under this
Agreement, the Company shall render to CSURF a written report
setting forth the amount of royalties due and payable based on
sales of Products during such quarter, and upon rendering such
report, remit to CSURF the amount of royalties shown thereby to be
due on sales of products.
(c) CSURF shall have the
right for a period of five years after receiving any royalty report
to appoint an independent certified public accountant who is
acceptable to the Company
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