EXHIBIT 10.2
PATENT LICENSE
AGREEMENT
THIS PATENT LICENSE
AGREEMENT (the
“License Agreement”) is made effective this 1st day of
May, 2008 (the “Effective Date”) by and between DePuy
Spine, Inc. and Biedermann Motech GmbH (collectively,
“Plaintiffs”), on the one hand, and Alphatec Spine,
Inc. (“Alphatec” or “Licensee”), on the
other hand. Plaintiffs and Alphatec are sometimes referred to
herein as a “Party”, and collectively as the
“Parties.” This License Agreement is part of the
Settlement and Release Agreement entered into concurrently
herewith.
ARTICLE 1
DEFINITIONS
1.1 “The ‘678
patent” shall mean U.S. Patent No. 5,207,678 and any
reissues, re-examinations, continuations, continuations-in-part,
extensions and divisionals of the ‘678 patent and any foreign
patents related thereto.
1.2 “Confidential
Information” shall mean with respect to a Party (the
“Receiving Party”), all information designated as
confidential and which is disclosed by the other Party (the
“Disclosing Party”) to the Receiving Party hereunder or
to any of its employees, consultants, affiliates, licensees or
sublicensees, except to the extent that the Receiving Party can
demonstrate by written record or other suitable physical evidence
that such information, (a) as of the date of disclosure is
demonstrably known to the Receiving Party or its affiliates other
than by virtue of a prior confidential disclosure to such Party or
its Affiliates; (b) as of the date of disclosure is in, or
subsequently enters, the public domain, through no fault or
omission of the Receiving Party; (c) is obtained from a third
party having a lawful right to make such disclosure free from any
obligation of confidentiality to the Disclosing Party; or
(d) is independently developed by or for the Receiving Party
without reference to or reliance upon any Confidential Information
of the Disclosing Party.
1.3 “Licensed Product”
shall mean [***].
1.4 “Net Sales” shall
mean [***].
1.5 “Affiliates” shall
mean any entity that directly or indirectly controls, is controlled
by, or is under common control with another entity, and for such
purpose “control” shall mean the possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of the entity, whether through the
ownership of voting securities, by contract or
otherwise.
1.6 [***].
1.7 “Territory” shall
mean the entire world.
1.8 “Valid Claim” shall
mean, notwithstanding the terms of the Consent Judgment related to
the ‘678 Patent signed as of even date herewith by the
Parties, a claim contained in the ‘678 patent that
(a) has not been revoked, held invalid, or declared
unpatentable or unenforceable in a decision of a court or other
body of competent jurisdiction that is unappealable or unappealed
within the time allowed for appeal, or (b) has not been
rendered unenforceable through a disclaimer filed by
Plaintiffs.
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Confidential Treatment
Requested
ARTICLE 2
LICENSE
GRANT
2.1 Plaintiffs hereby grant to
Licensee a non-exclusive, non-transferable (except as set forth in
Article 6) right and license under the ‘678 patent to make,
have made, use, sell, offer for sale and import the Licensed
Products, including Future Licensed Products, in the
Territory.
2.2 Licensee shall not have any
right to sublicense any of the rights granted in Article 2.1 to any
third party without the prior written consent of Plaintiffs, such
consent to be granted or withheld with the sole discretion of
Plaintiffs. The provisions set forth in this Article 2.2 shall not
be deemed to limit Alphatec’s ability to sublicense the
rights granted in Article 2.1 to its sales representatives or sales
agents for purposes of selling the Licensed Products, or
Alphatec’s rights as set forth in Article 6.1.
2.3 [***].
ARTICLE 3
ROYALTY AND
PAYMENTS
3.1 Licensee agrees to pay
Plaintiffs a continuing royalty, through the term of this License
Agreement, equal to [***]% of Net Sales.
3.2 Licensee agrees to make payments
four (4) times per year for royalties accrued in each calendar
quarterly period. Payments shall be made on or before forty-five
(45) days following the end of each calendar
quarter.
3.3 Concurrently with the payments
set forth in Article 3.2, Licensee shall provide to Plaintiffs a
statement of the most recent quarterly worldwide sales, imports,
and uses of the Licensed Products. Licensee shall maintain records
of all worldwide sales, imports, and uses of the Licensed Products
for at least (3) years from the date of such sales, imports,
and uses.
3.4 Once per year, Plaintiffs shall
have the right to have an independent third party accounting firm
audit, at Plaintiffs’ expense, Licensee’s compliance
with Articles 3.1, 3.2, and 3.3. The auditor shall maintain in
confidence any prices, costs, profits, or other financial
information obtained during the course of the audit, and such
information shall be deemed to be Confidential Information. Upon
completion of the audit, the auditor shall notify Plaintiffs
whether Licensee complied with articles 3.1, 3.2, and 3.3, and, if
not, what the correct royalty should have been. Licensee shall
remedy any failure to pay the correct royalty within ten business
days. In the event that any such audit reveals an underpayment of
[***]% or more, Licensee shall reimburse Plaintiffs for all
expenses associated with the audit.
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Confidential Treatment
Requested
3.5 To the extent any exchange rate
between a foreign currency and U.S. currency is required for any
obligation hereunder, the rate shall be the exchange rate on the
last business day of the quarterly period in which the obligation
is due as determined by that day’s Wall Street Journal
, Western Edition.
3.6 In the event that any statement
and payment are not made by Licensee by the date provided under
this License Agreement, interest shall be payable on the past due
amounts at the rate equal the prime lending rate, as published in
the Wall Street Journal , Western Edition, plus [***]%
compound monthly, from the date payment was due until the date of
actual payment. Licensee shall also pay any collection costs
incurred by Plaintiffs including, without limitation, reasonable
attorneys’ fees.
3.7 All payments required under this
License Agreement shall be paid in United States currency, without
deduction of ta
