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EXHIBIT 10.1
EXCLUSIVE LICENSE AGREEMENT
between
EMORY UNIVERSITY
and
MEDICAL SAFETY TECHNOLOGIES, INC.
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TABLE OF CONTENTS
ARTICLE 1.
DEFINITIONS.............................................. 3
ARTICLE 2. GRANT OF
LICENSE......................................... 4
ARTICLE 3. ROYALTIES AND OTHER
PAYMENTS............................. 5
ARTICLE 4. REPORTS AND
ACCOUNTING................................... 5
ARTICLE 5.
PAYMENTS.................................................. 6
ARTICLE 6. DEVELOPMENT AND MARKETING
PROGRAM......................... 7
ARTICLE 7. PATENT
PROSECUTION........................................ 7
ARTICLE 8.
INFRINGEMENT.............................................. 7
ARTICLE 9. EXCLUSION OF WARRANTIES AND
INDEMNIFICATION............... 8
ARTICLE 10.
CONFIDENTIALITY........................................... 9
ARTICLE 11. TERM AND
TERMINATION..................................... 10
ARTICLE 12.
ASSIGNMENT............................................... 11
ARTICLE 13.
MISCELLANEOUS............................................ 11
ARTICLE 14.
NOTICES.................................................. 12
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THIS LICENSE AGREEMENT is made and entered into as of this 30th
day of
December, 2003 ("Effective Date") by and between EMORY
UNIVERSITY, a nonprofit
Georgia corporation with offices located at 1380 South Oxford
Road, N.E.,
Atlanta, Georgia 30322, (hereinafter referred to as "EMORY") and
MEDICAL SAFETY
TECHNOLOGIES, INC., a corporation located at 202 South Wheeler
Street, Plant
City, Florida 33563(hereinafter referred to as "LICENSEE").
WITNESSETH
WHEREAS, EMORY is the assignee of all right, title, and interest
in
inventions developed by employees of EMORY and is responsible
for the
protection and commercial development of such inventions;
and
WHEREAS, Arnold Berry, as an employee of Emory, developed an
invention
known as "Medical Procedure Kit with Individual
Angularly-Presented
Compartments", Emory File No. 92019, (hereinafter "Invention");
and
WHEREAS, LICENSEE represents that it has the necessary expertise
and
will, as appropriate, to acquire the necessary resources to
fully develop,
obtain approval for, and market medical products based upon the
inventions
claimed in the above referenced patent applications; and
WHEREAS, EMORY wants to have such inventions developed,
commercialized, and made available for use by the public.
NOW, THEREFORE, for and in consideration of the mutual covenants
and
the premises herein contained, the parties, intending to be
legally bound,
hereby agree as follows.
ARTICLE 1. DEFINITIONS
The following terms as used herein shall have the following
meaning:
1.1 "Affiliate" shall mean any corporation or non-corporate
business entity which controls, is controlled by, or is under
common control
with LICENSEE. A corporation or non-corporate business entity
shall be regarded
as in control of another corporation if it owns or controls at
least fifty
(50%) percent of the voting stock of the other corporation, or
(i) in the
absence of the ownership of at least fifty (50%) percent of the
voting stock of
the other corporation or (ii) in the case of a non-corporate
business entity,
or non-profit corporation, if it possesses, directly or
indirectly, the power
to direct or cause the direction of the management and policies
of such
corporation or non-corporate business entity, as applicable.
Unless otherwise
specified, the term LICENSEE includes Affiliates.
1.2 "Agreement" or "License Agreement" shall mean this
Agreement,
including all APPENDICES attached to this Agreement.
1.3 "Dollars" shall mean United States dollars.
1.4 "EMORY" shall mean Emory University.
1.5 "Field of Use" shall mean receptacles for sharps.
1.6 "Inventors" shall mean Arnold Berry.
1.7 "Indemnitees" shall mean the inventors, EMORY, its
directors,
employees and students, and their heirs, executors,
administrators, successors
and legal representatives.
1.8 "Licensed Patents" shall mean United States Patent No.
5,462,163 entitled "Safe Receptacle for Sharps".
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1.9 "Licensed Product(s)" shall mean any products, services,
or
processes covered by the Licensed Patents or utilizing Licensed
Technology.
1.10 "Licensed Technology" shall mean all technical
information,
data, know-how, trade secrets, designs, specifications, models,
materials and
methods known to Inventors as of the Effective Date and
disclosed or
transferred to Licensee in connection with this Agreement,
provided that such
technical information and data is useful or required for the
manufacture, use,
development, or sale of any Licensed Product.
1.11 "Licensed Territory" means the world.
1.12 "Net Selling Price" of Licensed Products shall mean the
gross
selling price paid by a purchaser of a Licensed Product to
LICENSEE or
sublicensee, or any other party authorized by LICENSEE to sell
Licensed
Products (net of discounts, sales, or other similar taxes, and
allowances) and,
if applicable, the value of all properties and services received
in
consideration of a Sale of a Licensed Product, less only returns
which are
accepted by LICENSEE from unrelated purchasers in accordance
with LICENSEE's
normal practice and for which LICENSEE gives credit to such
purchasers. Where a
Sale is deemed consummated by a gift, use, or other disposition
of Licensed
Products for other than a selling price stated in cash, the term
"Net Selling
Price" shall mean the average gross selling price billed by
LICENSEE in
consideration of the Sale of comparable Licensed Products during
the three (3)
month period immediately preceding such Sale, without reduction
of any kind.
1.13 "Sale" or "Sold" shall mean the sale, transfer, exchange,
or
other disposition of Licensed Products whether by gift or
otherwise by
LICENSEE, its Affiliates, sublicensees or any third party
authorized by
LICENSEE to make such sale, transfer, exchange or disposition
including, but
not limited to, the use of Licensed Products by LICENSEE, or any
other person
or entity authorized to use Licensed Products by LICENSEE. Sales
of Licensed
Products shall be deemed consummated upon the first to occur of:
(a) receipt of
payment from the purchaser; (b) delivery of Licensed Products to
the purchaser
or a common carrier; (c) release of Licensed Products from
consignment; (d) if
deemed Sold by use, when first put to such use; or (e) if
otherwise
transferred, exchanged, or disposed of, whether by gift or
otherwise, when such
transfer, exchange, gift, or other disposition occurs.
ARTICLE 2. GRANT OF LICENSE
2.1 Grant. EMORY hereby grants to LICENSEE an exclusive license
to
practice Licensed Patents and Licensed Technology, and to make,
use, and sell
Licensed Products, in the Field of Use in the Licensed Territory
during the
term of this Agreement.
2.2 Government Rights. The license granted in Section 2.1 is
conditional upon and subject to rights retained by the United
States Government
in invention developed by non-profit institutions with the
support of federal
funds.
2.3 Retained License. The license granted in Section 2.1 above
is
further conditional upon and subject to a right and license
retained by EMORY
on behalf of itself, and EMORY research collaborators to make,
use and transfer
Licensed Products and practice Licensed Technology for research
or educational
purposes only.
2.4 Sublicenses. LICENSEE may grant Sublicenses to a
Sublicensee,
subject to the terms of this paragraph. LICENSEE shall remain
responsible to
EMORY for the payment of all fees and royalties due
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under this Agreement, whether or not such payments are made to
LICENSEE by its
Sublicensees. Each Sublicense agreement shall:
(i) incorporate by reference the terms and conditions of
this
Agreement,
(ii) be consistent with the terms and conditions of this
Agreement,
(iii) prohibit further sublicensing by the Sublicensee of
rights
granted by the Sublicense,
(iv) include a provision requiring the Sublicensee to
indemnify
Emory and maintain liability coverage to the same extent
that
LICENSEE is so required pursuant to Section 9.3 of this
Agreement.
2.5 No Implied License. The license and rights granted in
this
Agreement shall not be construed to confer any rights upon
LICENSEE by
implication, estoppel, or otherwise as to any technology not
specifically
identified in this Agreement as Licensed Patents or Licensed
Technology.
ARTICLE 3. ROYALTIES AND OTHER PAYMENTS
3.1 License Fee. LICENSEE shall pay EMORY a License Fee in
the
amount of $13,000 upon the execution of this Agreement. Should
LICENSEE fail to
make this License Fee payment to EMORY within thirty days, this
agreement shall
be null and void.
3.2 Royalties. LICENSEE shall pay EMORY the following
royalties:
(i) Three percent (3%) of Net Sales of Licensed Products
3.3 Sublicense Fees. LICENSEE shall pay EMORY fifty percent
(50%)
of all payments or other consideration received by LICENSEE from
its
sublicensees.
3.4 Minimum Royalties. LICENSEE shall pay EMORY a Minimum
Royalty
Payment in accordance with the following table:
Year Minimum Payment
(creditable)
1st $ 0
2nd $ 5,000
3rd $ 7,500
4th $ 10,000
5th plus each year thereafter until the $ 15,000
end of the patent life
Minimum Royalty Payments shall be due at the commencement of
each year of the
License Agreement, and are fully creditable against royalties to
be paid during
the following twelve-month period. For avoidance of doubt, the
first Minimum
Royalty Payment of $5,000, covering 2nd year royalties, will be
due on the
first (i.e., one-year) anniversary of the Effective Date.
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ARTICLE 4. REPORTS AND ACCOUNTING
4.1 Royalty Reports. During the term of this Agreement, LICENSEE
shall
furnish to EMORY written reports setting forth the following
information:
(i) the gross selling price of all Licensed Products Sold by
LICENSEE and sublicensees, in each country of the Licensed
Territory during the reporting period, together with the
calculations of Net Selling Price;
(ii) the royalties payable in Dollars;
(iii) a summary of all reports provided to LICENSEE by
LICENSEE'S
Sublicensees;
(iv) the amount of any consideration received by LICENSEE
from
Sublicensees and an explanation of the contractual
obligation
satisfied by such consideration; and
Reports shall be made semiannually until the first Sale of a
Licensed Product
and quarterly thereafter. Semiannual reports shall be due within
thirty (30)
days of the close of every second and fourth LICENSEE fiscal
quarter. Quarterly
reports shall be due within thirty (30) days of the close of
every LICENSEE
fiscal quarter. LICENSEE shall keep accurate records in
sufficient detail to
enable royalties and other payments payable hereunder to be
determined.
LICENSEE'S Sublicensees shall have, and shall be notified by
LICENSEE that they
have, the option of making any royalty payment directly to
EMORY.
4.2 Right to Audit. EMORY shall have the right, upon prior
notice to
LICENSEE, not more than once in each LICENSEE fiscal year,
through an
independent public accountant selected by EMORY and acceptable
to LICENSEE,
which acceptance shall not be unreasonably refused, to have
access during
normal business hours of LICENSEE as may be reasonably necessary
to verify the
accuracy of the royalty reports required to be furnished by
LICENSEE pursuant
to Section 5.1 of the Agreement. LICENSEE shall include in any
sublicenses
granted pursuant to this Agreement, a provision requiring the
sublicensee to
keep and maintain records of Sales made pursuant to such
sublicense and to
grant access to such records by EMORY'S independent public
accountant. If such
independent public accountant's report shows any underpayment of
royalties by
LICENSEE, its Affiliates or sublicensees, within thirty (30)
days after
LICENSEE'S receipt of such report, LICENSEE shall remit or shall
cause its
sublicensees to remit to EMORY:
(i) the amount of such underpayment; and
(ii) if such underpayment exceeds five (5%) percent of the
total
royalties owed for the fiscal year then being reviewed, the
reasonably
necessary fees and expenses of such independent public
accountant performing
the audit. Otherwise, EMORY's accountant's fees and expenses
shall be borne by
EMORY. Any overpayment of royalties shall be fully creditable
against future
royalties payable in any subsequent royalty periods.
4.3 Confidentiality of Records. All information subject to
review
under this Article 4 shall be confidential. Except where
provided by law, EMORY
and its accountant shall retain all such information in
confidence.
4.4 Progress Reports. LICENSEE shall, no less frequently than
once
every twelve months until a Licensed Product has been
Registered, provide EMORY
with a written report detailing LICENSEE's or Sublicensee's
activities related
to developing Licensed Products. Such reports shall incorporate
sufficient
detail regarding the amount and use of research and development
funds to enable
EMORY to verify LICENSEE'S compliance with the diligence
requirements set forth
in Section 6 of this Agreement.
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ARTICLE 5. PAYMENTS
5.1 Payments. Royalties and sublicense fees payable to EMORY as
a
result of activities occurring during the period covered by each
royalty report
provided for under Article 4 of this Agreement shall be due and
payable on the
date such Royalty Report is due. Payments of royalties in whole
or in part may
be made in advance of such due date.
Payments should be directed to the following address:
Attention: Director
Emory University
Office of Technology Transfer
1784 North Decatur Road, Suite 130
Atlanta, GA 30322
Any payment in excess of one hundred thousand ($100,000.00)
dollars shall be
made by wire or transferred to an account of EMORY designated by
EMORY from
time to time; provided, however, that in the event that EMORY
fails to
designate such account, LICENSEE and Sublicensees may remit
payment to EMORY to
the address provided above.
5.2 Interest. Royalties and other payments required to be paid
by
LICENSEE pursuant to this Agreement shall, if overdue, bear
interest at the
lesser of the maximum applicable legal rate of interest on
overdue commercial
accounts or a per annum rate of ten (10%) percent until paid.
The payment of
such interest shall not foreclose EMORY from exercising any
other rights it may
have because any payment is overdue.
ARTICLE 6. DEVELOPMENT AND MARKETING PROGRAM
6.1 Diligence Obligations. LICENSEE shall directly, or in
collaboration with Sublicensees, use its commercially reasonable
efforts to
bring Licensed Products to market through a thorough, vigorous,
and diligent
program for exploitation of the right and license granted in
this Agreement to
LICENSEE and to create, supply, and service in the Licensed
Territory as
extensive a market as possible. In no instance shall LICENSEE's
best efforts be
less than efforts customary in LICENSEE's industry. LICENSEE
shall present a
business plan to EMORY within six months of the Effective
Date.
ARTICLE 7. PATENT PROSECUTION AND MAINTENANCE
7.1 Prosecution and Maintenance of Licensed Patents. The
maintenance
of the
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