EXHIBIT 10.6
LICENSE AGREEMENT
This Agreement,
made as of the 7th day of April, 2000 by and between ReGen
Biologics, Inc. a Delaware corporation having its principal place
of business at 509 Commerce Street, Franklin Lakes, New Jersey
07417 (hereinafter “REGEN”), and Linvatec Corporation,
a Florida corporation, having its principal place of business at
11311 Concept Boulevard, Largo, Florida 33773 (hereinafter
“LINVATEC”).
WITNESSETH:
WHEREAS, REGEN has
designed and developed the Sharp Shooter® device, a disposable
surgical device which allows surgeons to accurately place a cannula
in the knee against the meniscus and deliver a needle and suture
for meniscus repair;
WHEREAS, LINVATEC
is in the business of marketing and selling medical devices and
desires to market, promote, sell and distribute the Sharp
Shooter® device;
NOW, THEREFORE, in
consideration of the foregoing premises and the covenants contained
herein, the parties hereby agree as follows:
1. DEFINITIONS
Capitalized terms
used in this Agreement shall have the meanings set forth
below.
1.1
“Affiliate” shall mean any company or entity controlled
by, controlling, or under common control with a party hereto, and
shall include (without limitation) any company in which a party
owns or controls directly or indirectly more than fifty percent
(50%) of the voting stock or participating profit interest, and any
company which owns or controls, directly or indirectly, more than
fifty percent (50%) of the voting stock of a party.
1.2
“Approval Date” shall mean the date of a Regulatory
Approval of the Product in a country of the Territory.
1.3
“Confidential Information” shall mean any information
deemed by a party to be its confidential or proprietary
information, including without limitation, the terms of this
Agreement, any engineering designs and drawings, know-how, trade
secret, research data, process, technique, research project, work
in process, future development, scientific, manufacturing,
marketing, business plan, financial or personnel matter relating to
the party, its present and future products, sales, suppliers,
customers, employees, investors or business.
1.4
“Distribution Phase” shall mean the initial portion of
the term of this Agreement during which REGEN supplies Product to
LINVATEC and controls all manufacturing and regulatory compliance
issues related to Product.
1.5
“Effective Date” shall mean the date on which this
Agreement has been signed by all parties.
1.6
“Improved Product” shall mean any product which is
developed based on the Product whether or not claimed by one or
more Product Patents.
1.7
“Licensed Field” shall mean meniscal tissue
repair.
1.8
“Manufacturing Phase” shall mean that portion of the
term of this Agreement following the Distribution Phase during
which LINVATEC manufactures Product and controls all regulatory
issues related to Product.
1.9
“Net Sales” shall mean the total of the gross invoice
prices for Products sold by LINVATEC, its Affiliates, or
sublicensees, less the sum of the following actual and customary
deductions where applicable: cash, trade, or quantity discounts;
sales, use, tariff, import/export duties or other excise taxes
imposed on particular sales; costs of insurance, packing, and
transportation from place of manufacture to point of delivery; and
credits to customers because of rejections or returns; and
commissions and similar costs of sales.
1.10
“Product” shall mean a device (for example, the Sharp
Shooter® in the form as it exists on the Effective Date, as
further described in Exhibit A), the manufacture, use or sale
of which would, but for this Agreement, infringe a Valid
Claim.
1.11
“Product Patent” shall mean the patents and patent
applications listed in Exhibit B hereto and any and all other
patents and/or patent applications in the Territory now or
hereafter during the term of this Agreement owned or controlled by
REGEN and disclosing and claiming the Product, together with any
and all patents that may issue or may have issued therefrom in the
Territory including any and all renewals, divisions, continuations,
continuations-in-part, reissues, substitutions, confirmations,
registrations, revalidations, revisions, extensions or additions of
or to any of the aforesaid patents and patent applications. From
time to time during the term of this Agreement, REGEN will provide
LINVATEC, upon request, with an updated version of
Exhibit B.
1.12
“Regulatory Approvals” shall mean all registrations,
permits and approvals by the competent regulatory agencies in the
Territory which are required for the importation, marketing,
promotion, distribution and sale of the Product in a country of the
Territory.
1.13
“Technology” shall mean all information, technical data
and other know-how which relates to the manufacture, use or sale of
the Product (including clinical data, medical uses and methods,
product forms, specifications and manufacturing data) which REGEN
has heretofore developed or acquired, or may hereafter develop or
acquire, and possesses at any time during the term of this
Agreement and which REGEN is free to disclose and furnish to
LINVATEC hereunder.
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1.14
“Territory” shall mean the geographical area described
in Exhibit C.
1.15
“Trademark” shall mean the trademark described in
Exhibit D.
1.16 “Valid
Claim” shall be deemed to mean a claim in an unexpired patent
included within the Product Patents which has not been held
unenforceable, unpatentable or invalid by a decision of a court or
other governmental agency of competent jurisdiction, unappealable
or unappealed within the time allowed for appeal, and which has not
been admitted to be invalid or unenforceable through reissue or
disclaimer. If in any country there should be two or more such
decisions conflicting with respect to the validity of the same
claim, the decision of the higher or highest tribunal shall
thereafter control; however, should the tribunals be of equal rank,
then the decision or decisions upholding the claim shall prevail
when the conflicting decisions are equal in number, and the
majority of decisions shall prevail when the conflicting decisions
are unequal in number.
2. Grant of Rights
2.1
License Grant. Subject to the terms of this Agreement, REGEN hereby
grants to LINVATEC an exclusive, royalty bearing license under the
Product Patents and Technology, with the right to sublicense, to
make, have made, use, offer for sale and sell the Product in the
Licensed Field and in the Territory.
2.2
Prior Distribution Rights. The rights granted to LINVATEC in
Section 2.1 are exclusive but subject to the rights of Sulzer
Orthopedics AG and its Affiliates (hereinafter
“Sulzer”) to distribute the Product outside of the
United States in conjunction with the sale and distribution of
REGEN’s collagen meniscus implant product. REGEN shall have
the right to buy from LINVATEC, for delivery to Sulzer, and
LINVATEC shall supply to REGEN at cost, such quantities of Product
as required to comply with REGEN’s supply obligation to
Sulzer, not to exceed one Sharp Shooter® per collagen meniscal
implant procedure. REGEN shall pay the cost of shipping such
Product. For purposes of the preceding sentence, “cost”
means the price currently charged REGEN by its suppliers of Product
(whether or not LINVATEC’s cost of manufacture subsequently
decreases), and “Sharp Shooter’ means one disposable
handle and one box containing ten disposable needles for use in the
handle. LINVATEC shall also supply to REGEN for delivery to Sulzer
a reasonable quantity of Product literature at LINVATEC’s
cost.
2.3
Improvements. If REGEN develops or acquires an Improved Product,
REGEN shall notify LINVATEC thereof in writing. Such Improved
Product shall be included in the License Grant and subject to the
royalty requirements.
2.4
Export and Import Licenses. LINVATEC shall obtain at its expense
all permits, approvals and licenses required for the export of the
Product from the United States of America, and any and all permits,
approvals and licenses required for the import of the Product into
the various countries of the Territory.
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3. Financial Terms
3.1
License Fee. LINVATEC shall pay to REGEN a license fee of three
hundred thousand U.S. dollars ($300,000) in accordance with the
payment Schedule set forth in Exhibit G. In consideration for
the license fee, REGEN shall, promptly after the Effective Date,
provide to LINVATEC the items set forth in
Exhibit H.
3.2
Royalties. LINVATEC shall pay to REGEN a royalty on Net Sales of
the Product as follows: (a) at a rate of twelve percent (12%)
for disposable handles and (b) at a rate of ten percent (10%)
for all other components of the Product. Royalties are due and
payable within thirty (30) days after the end of a calendar
quarter in which such Net Sales were generated. All payments under
this Agreement shall be made in U.S. dollars by wire transfer to an
account designated by REGEN from time to time. No royalty shall be
due on samples given to LINVATEC’s employee sales
representatives or sold to LINVATEC’s Manufacturer
Representatives or similar agents.
3.3
Inventory Purchase. LINVATEC shall purchase from REGEN, and REGEN
sell to LINVATEC, REGEN’s inventory of Product in the
quantities and at the prices listed in Exhibit I. REGEN shall
deliver the Product no later than sixty (60) days after the
Effective Date. LINVATEC shall pay for the Product after delivery
within thirty (30) days of receipt of the invoice from
REGEN.
3.4
Taxes and Duties. LINVATEC shall pay all export and import duties,
any and all sales, use, excise, value added, transfer or other
taxes or assessments, imposed by any governmental authority on any
sale to LINVATEC under this Agreement, except for any taxes which
are imposed on REGEN’s net income.
4. Manufacture
4.1
REGEN will, through its current suppliers, manufacture Product for
LINVATEC during the Distribution Phase. LINVATEC shall provide
REGEN with a non-binding forecast and shall place orders for
Product from time to time. REGEN shall fill the orders at a price
equal to its cost and shall ship Product to LINVATEC within eight
(8) to twelve (12) weeks of receipt of the order and with
a Certificate of Regulatory Compliance. This Distribution Phase
will end at the start of the Manufacturing Phase.
4.2
LINVATEC shall begin the Manufacturing Phase as soon as possible,
but in any event, at its discretion when it deems all necessary
steps to be in place.
4.3
Effective upon the start of the Manufacturing Phase, REGEN hereby
assigns to LINVATEC all of its rights to have Product manufactured
by those third party suppliers, identified in Exhibit J, who
are presently manufacturing Product for REGEN. Such suppliers shall
thereafter be permitted by REGEN to manufacture Product only for
LINVATEC.
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4.4
LINVATEC shall have the right in its sole discretion to have
Product manufactured by such suppliers or to change suppliers or to
assume for itself the manufacture of Product.
4.5
REGEN shall promptly after the Effective Date provide to LINVATEC
copies of all drawings, data, costs and other information of REGEN
and it suppliers necessary to enable LINVATEC to begin the
Manufacturing Phase as soon as possible.
4.6
REGEN represents and warrants that the Products manufactured by
such third party suppliers comply with all U.S. and European
regulatory requirements.
4.7
The parties will promptly after the Effective Date begin to change
Product labeling to indicate that Product is “Manufactured
for” LINVATEC.
5. Regulatory Approvals;
Packaging; Regulatory Compliance
5.1
Regulatory Approval Plan. REGEN hereby represents and warrants that
it has obtained all Regulatory Approvals necessary to market
Product in the United States and has complied, and has required its
Product suppliers to comply, with all regulatory requirements
necessary in the U.S. REGEN and LINVATEC shall cooperate in
obtaining the Regulatory Approvals in all other countries of the
Territory. Within ninety (90) days after the Effective Date,
the parties will agree on a plan for obtaining Regulatory Approval
in Japan and other countries of the Territory where such approval
is required. Insofar as legally permissible, all Regulatory
Approvals shall be in the name of REGEN. If the parties are unable
to agree on a regulatory approval plan for a particular country
within that period, such country shall be deemed excluded from the
Territory.
5.2
Regulatory Compliance.
(a) Packaging
Materials and Inserts. Any packaging materials and package inserts
must comply in all respects with the Regulatory Approvals and any
applicable laws. During the Distribution Phase, LINVATEC shall
submit samples of all LINVATEC originated packaging materials and
package inserts to REGEN for written approval (which approval shall
not be unreasonably withheld). Approval by REGEN does not relieve
LINVATEC from its responsibility to comply with all applicable laws
and Regulatory Approvals.
(b) Manufacturing
Operations and Product Handling. All operations in connection with
the manufacture and packaging of the Product must be conducted in
accordance with the then current good manufacturing practices and
quality systems regulations applicable in the Territory. Each party
shall follow safe handling, storage, transportation, use and
disposal practices with respect to the Product as required by the
Regulatory Approvals, quality systems regulations and applicable
laws.
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(c) Reporting
Requirements. Each party shall provide to the other all information
in its possession as necessary for the other party to comply with
the U.S. FDA or non-U.S. equivalent adverse reaction reporting
requirements.
(d) Regulatory
Compliance. In performing its rights and obligations under this
Agreement, each party shall comply with and adhere to all
Regulatory Approvals.
(e) Compliance
with Laws. The parties shall comply with all applicable present and
future orders, regulations, requirements and laws of any and all
federal, state, provincial and local authorities and agencies in
the Territory relating to the promotion, marketing, sale and
distribution of the Product.
5.3
Regulatory and Quality System Requirements
(a) The
parties agree that responsibility for the Regulatory and Quality
System Requirements will vary during the term of this Agreement
depending upon who has control over the Product’s design
history file, device master record and design dossier as those
terms are defined by FDA at 21 CFR § 820.3(e) and MDD
93/42/EEC Annex VII Clause 3 (hereafter “Design File”).
Initially, during the Distribution Phase, the control of the Design
File will be with REGEN. Subsequently, during the Manufacturing
Phase, LINVATEC will assume control of the Design File and the
manufacture of Product, either by itself or through third party
suppliers, which may or may not be the same as REGEN’s
suppliers. Therefore, during the Distribution Phase REGEN shall
maintain the Design File and during the Manufacturing Phase
LINVATEC shall maintain the Design File.
(b) The
parties agree that REGEN owns the patent on the Product and the
Design File. REGEN hereby transfers to LINVATEC the responsibility
to maintain the Design File during the Manufacturing Phase. In the
event of the termination of this Agreement, LINVATEC must return
the updated Design File to REGEN within ten (10) working
days.
(c) Each
party shall, during its respective period of control of the Design
File, guarantee implementation of a design system according to
current regulations and requirements, as amended from time to time,
to assure all authorizations and approvals can be obtained (for
example, QSR, ISO 9001 and EN 46001). This design system shall
include complete records of authorized design changes. During the
Manufacturing Phase LINVATEC shall inform REGEN, in writing, of any
significant Product design changes, including supporting
documentation describing the changes and obtain REGEN’s
approval prior to implementation.
(d) Each
party will record and forward to the other party all information
received from any source, domestic or international, alleging a
deficiency related to the identity, quality, durability,
reliability, safety, effectiveness or performance of a Product
(i.e. complaint) after it is released for distribution. This shall
include all servicing of the Product which represents a complaint
in accordance with 21 C.F.R. § 820.3(b) and
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MDD 93/42/EEC Annex VII Clause
3.1 and all requirements of 21 C.F.R. Part 820 Quality System
Regulations and future changes to regulations related to the
applicable regulatory statutes and directives. In particular,
LINVATEC agrees to maintain complaint files for the Products in
accordance with 21 C.F.R. § 820.198 and provide REGEN a copy
for its records.
(e) Each
party agrees to immediately notify the other party of any
information of which it becomes aware which relates to the safety
or efficacy of the Products. Upon receipt of any such information,
the parties shall consult in an effort to arrive at a mutually
agreeable course of action, if any is required; provided, however,
that either party shall have the right following such consultation
to initiate such action as it deems appropriate in the event the
parties are unable to agree on a course of action. REGEN agrees
that it will promptly notify LINVATEC of any information suggesting
that an MDR reportable event may have occurred involving a Product
it believes may have been sold by LINVATEC, and will cooperate
fully with LINVATEC to assist LINVATEC in discharging REGEN’s
obligation to submit MDR reports and associated filings and to
otherwise comply with 21 C.F.R. § 803 and 820.198.
(f) LINVATEC
shall be responsible for handling all domestic and international
complaints, repairs and service including the domestic and
international reporting of adverse events related to all Products.
In particular, LINVATEC agrees that it will, during both the
Distribution and Manufacturing Phases, discharge fully
REGEN’s obligations by notifying applicable regulatory
authorities of reportable events involving the Products as required
by law including, without limitation, Medical Device Reports under
the MedWatch program of the United States Food and Drug
Administration and Device Vigilance Reports required by the
countries of the European Union, and in such event shall keep REGEN
fully apprised of its actions and provide copies of all submissions
made. LINVATEC understands that duplicative or other MDR and
vigilance filings will not be made by REGEN.
(g) LINVATEC
shall, both during the terms of this Agreement and after its
expiration or termination, keep confidential its source of Product,
information and data about REGEN. LINVATEC shall not disclose such
information to any third party, expect FDA, Notified Body and/or
Competent Authority as required, without REGEN’s prior
approval and except as may be required to enable LINVATEC to
manufacture Product through third party suppliers.
(h) REGEN
shall, both during the terms of this Agreement and after its
expiration or termination, keep confidential the terms of this
Agreement, the fact that its suppliers produce Product, and all
other information and data received from or about LINVATEC. REGEN
shall not disclose such information to any third party, except FDA,
Notified Body and/or Competent Authority as required, without
LINVATEC’s prior approval.
(i) Both
parties shall, during normal working hours, require their suppliers
to allow full access to production facilities and records by the
FDA, Notified Body and/or
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Competent Authority for purposes
of verification, confirmation, and audit of said records and
practices according to QSR, ISO 9001, EN 46001, and MDD
(93/42/EEC).
(j) Each
party shall notify the other of any communications with the FDA,
Notified Body or Competent Authority, as well as direct customers
of any Product complaints or recalls.
(k) Both
parties shall allow access to any and all quality recor
