EXHIBIT 10.2
DEVELOPMENT AND LICENSING AGREEMENT
FOR
SAFETY INTRODUCER
BETWEEN
MED-DESIGN CORPORATION
AND
MEDAMICUS, INC.
This Development and Licensing Agreement ("the "Agreement") is entered into and
made effective this 25th day of August, 2000 (the "Effective Date") by and
between:
Med-Design Corporation and MedAmicus, Inc.
2810 Bunsen Avenue 15301 Highway 55 West
Ventura, California 93003 Plymouth, Minnesota 55447
(hereinafter referred to as "MDC") (hereinafter referred to as "MedAmicus")
RECITALS
WHEREAS, MedAmicus and MDC wish to enter into an Agreement for the
development of the MedAmicus Safety Introducer(TM) and the licensing of certain
intellectual property owned by MDC.
WHEREAS, MDC will incorporate MDC's retraction technology for the
needle of the MedAmicus Safety Introducer into the Safety Introducer for use in
introducing pacing leads, infusion ports, dialysis catheters and other pacing
and interventional radiological procedures which require access to the central
venous system.
NOW THEREFORE, for and in consideration of the mutual covenants and
undertakings contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties, intending
to be legally bound, hereby agree as follows:
1. DEFINITIONS
1.1 "MedAmicus Safety Introducer" as used herein shall mean a medical
device used to ***.
1.2 "MDC Patent Rights" as used herein shall means patents and patent
applications relating to MDC's retraction technology and any
improvements or modifications to MDC's retraction technology, its
manufacture or use, and any subsequently filed patent applications and
any patents issuing therefrom that are owned by or assigned to MDC and
any other patents and patent applications in which MDC has an ownership
or licensable interest relating to retraction technology, including any
patents or patent applications on inventions developed by MDC in the
course of MDC's developing retraction technology for the MedAmicus
Safety Introducer under this Agreement.
1.3 The "Product" as used herein shall means the MedAmicus Safety
Introducer with ***.
1.4 "The Field" as used herein shall means any use of the Product which
is not inconsistent with rights conveyed by MDC to Becton, Dickinson &
Company.
1.5 The "Project" as used herein shall mean the development of the
Product.
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2. PRODUCT DEVELOPMENT
MDC and MedAmicus have set forth the primary specifications (the
"Specifications") of the MedAmicus Safety Introducer, along with an
estimate of development costs and timetables, attached hereto as
Exhibit A. Prior to commencing work, appropriate technical personnel
from each party will evaluate, and all parties will mutually agree
including both parties patent counsels, to modifications of Exhibit A,
if necessary. MDC will then develop the Product according to the agreed
upon Specifications and within the agreed upon time schedule.
Deviations from that set forth in Exhibit A, which materialize as the
work progresses, shall be mutually agreed upon in good faith by the
parties in writing. Approval of changes shall not be unreasonably
withheld by either party. If material changes in the design are
requested by MedAmicus, Exhibit A shall be amended to provide for a
reasonable extension of time to complete the Project.
It is estimated by MDC that its development costs (the "Costs") of the
Project shall approximate $300,000, which is subject to reasonable good
faith adjustment as the Specifications become better defined. MedAmicus
shall reimburse MDC for 50% of the Costs. Upon mutual agreement that
there has been successful completion of a milestone, MedAmicus will pay
MDC an amount as set forth in Exhibit A.
Upon completion of the development effort, all subsequent
specifications and drawings of the design shall be provided to
MedAmicus in a form which will allow MedAmicus to transfer the Product
into manufacturing and meet the requirements of the Medical Device
Directive and ISO 46001.
3. LICENSE
MDC grants MedAmicus an exclusive, worldwide license under the MDC
Patent Rights to make, use, sell and have made the Product in the
Field.
During the term of this Agreement, MDC hereby grants MedAmicus a
license to use all trademarks which are or may be owned by MDC in
connection with the Product under an appropriate royalty-free trademark
license agreement.
4. ROYALTIES
4.1 In consideration for the exclusive license granted hereunder,
MedAmicus will pay to MDC royalties each year based on each Product
sold per year worldwide, whether the Product is sold alone in component
form or the Product is sold in a kit, in accordance with the following
schedule:
Product Royalty Rate
------- ------------
Sold in component form $*** per Product
Sold in a kit $*** per kit
The royalty rate set forth in the schedule above may be increased each
year based on (a) the consumer price index or (b) the percentage
increase in MedAmicus price charged for the Product and Product in
component form sold in a kit, whichever is greater.
4.2 MedAmicus agrees to keep complete and accurate records of its
sales of Products and kits and all data necessary for the
computation of payments to be made to MDC hereunder. Payments
shall be made on or before the last business day of July,
October January and April of each year for the sales of the
Product and kits during the preceding quarterly periods ending
on the last day of June, September, December and March,
respectively. Such payments shall be accompanied by a
statement showing the total net sales of the Product and kits
by MedAmicus, and such other particulars as are necessary for
an accurate accounting of the payments made pursuant to this
Agreement. Payment of the amount due shall accompany such
statement.
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5. MINIMUMS
This Agreement does not contemplate any minimums for MedAmicus to
retain its exclusive licenses hereunder.
6. INTELLECTUAL PROPERTY
6.1 OWNERSHIP
It is understood by both parties that the MedAmicus Safety Introducer
is intellectual property owned by MedAmicus. The design concept of the
MedAmicus Safety Introducer was disclosed to MDC under a
confidentiality agreement at a meeting of the party's representatives
on May 31, 2000. MedAmicus shall not acquire any property rights in the
MDC Patent Rights. The development of the retractions technology
applied to the MedAmicus Safety Introducer and any patent rights
relative thereto shall be owned by MDC.
6.2 MEDAMICUS WARRANTY
MedAmicus represents that it is, or will be, applying for U.S. patent
protection on the design of the MedAmicus Safety Introducer, and, at
its sole discretion, shall determine whether to apply for international
patent protection.
6.3 OBLIGATION FOR ENFORCING PATENT RIGHTS
MedAmicus will, at its discretion, vigorously enforce its patented
position related to the Product, unless such patent dispute is related
to MDC's Patent Rights. MedAmicus hereby indemnifies and agrees to hold
MDC harmless against any costs, claims or damages arising out of patent
challenges that may be brought regarding the Product, except when such
challenge is based substantially on the MDC Patent Rights, in which
case Section 6.4 shall apply.
6.4 WARRANTY AND OBLIGATION OF MDC
a) MDC represents that it is the owner of the MDC Patent Rights and
has the right and the ability to grant the license described
herein.
b) If MedAmicus is sued in the United States by a third party in an
action for patent infringement based on the manufacture, use or
sale of the retraction technology portion of the Product
represented by MDC Patent Rights, then the following shall apply:
(1) If the infringement claim is based on needle retraction
features of the Product developed by MDC then MedAmicus may
deduct the following from royalties due Med-Design in the
United States based on sales of such Product in the United
States covered by the third party patent:
(2) 50% of the cost and expenses (including legal fees) incurred
in defense and disposition of the patent infringement
action.
(3) The deduction shall be made against present and future
royalties due for sales in the United States until MedAmicus
has recovered such costs and expenses.
c) MDC, at its option, shall have the right to join in any such suit
and defend such suit against MedAmicus, and select counsel to
defend such suit, at any time during the course of any such suit.
d) MDC's liability for infringement involving retraction technology
by MedAmicus of third party patents shall be limited to the
deduction from royalties as set forth above due for sales in the
United States covered by the third party patent.
e) In the event either party hereto receives notice of alleged third
party infringement of any of MDC's Patent Rights, it shall
promptly notify the other party in writing of such infringement
and the following shall apply:
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(1) MDC shall have the right, but not the obligation, to bring
suit and to control the conduct of such suit against the
third party infringer, and to join MedAmicus as a party to
such suit, if necessary, in which event MDC shall hold
MedAmicus free, clear and harmless from any and all costs
and expenses of such litigation. In the event MDC exercises
the right to bring suit, MedAmicus shall have the right to
receive twenty-five per cent (25%) of the damages recovered
after a deduction for all legal expenses by MDC, including
attorney's fees, incurred and paid by MDC in such lawsuit,
and MDC shall have the right to retain any remaining damages
recovered.
(2) If MDC does not bring suit against a third party infringer,
as herein provided in this subparagraph (c) within nine
months after receipt of notice, MedAmicus shall have the
right, but shall not be obligated, to bring suit to stop
such third party infringement, and to join MDC as a party to
such suit, if necessary, in which event MedAmicus shall hold
MDC free, clear and harmless from any and all costs and
expenses of such litigation, except as set forth in the
following sentence. If MedAmicus exercises its right to
bring suit against a third party infringer of the MDC Patent
Rights, MDC shall have the right to voluntarily join the
suit and be represented by its own counsel, at its own
expense. In the event MedAmicus exercises the right to bring
suit for such alleged infringement, MDC shall have the right
to receive twenty-five per cent (25%) of all damages
recovered. If MDC does not join the suit by MedAmicus,
MedAmicus shall be entitled to deduct the cost of its legal
expenses, including attorney's fees, incurred and paid by it
in such lawsuit from the recovery of the suit before
calculating MDC's portion of the recovery.
7. LIMITATION OF LIABILITY AND WARRANTY
7.1 MedAmicus will indemnify MDC and hold it harmless from any claims
made by customers, physicians or patients related to the malfunction,
perceived malfunction or product liability of any nature relative to
the Product.
7.2 Neither party will be liable to the other for any consequential,
indirect, punitive, special or incidental damages, whether foreseeable
or unforeseeable, based upon this Agreement (including but not limited
to, claims for loss of goodwill, profits, investments, use of money or
use of products, interruption in use, stoppage of other work or
impairment of other assets, or labor claims) arising out of breach of
express or implied warranty, breach of contract misrepresentation,
negligence, strict liability in tort or otherwise, except as otherwise
provided above in this paragraph 7.
8. TERM OF AGREEMENT AND TERMINATION
8.1 TERM
This Agreement shall become effective as of the Effective Date and
shall continue in effect for a period equivalent to the remaining life
of MedAmicus' or MDC patent rights covering aspects of the Product, and
so long as the Product is covered by one or more of the MedAmicus' or
MDC's patent rights, unless terminated earlier by mutual agreement of
the parties or pursuant to the terms hereof. Upon its expiration, the
Agreement may be extended, by mutual agreement of the parties in
writing for additional periods of one year.
8.2 TERMINATION
MedAmicus may terminate this Agreement if MDC fails to meet the
development schedule as set forth in Exhibit A. MedAmicus shall notify
MDC in writing of its intent to terminate pursuant to this provision,
and MDC shall have ninety days in which to cure. If MDC has not cured
within ninety days, MDC shall turn over all drawings, prototypes,
tooling and any other documents associated with the MedAmicus Safety
Introducer, and MedAmicus shall make no further payments for
development work beyond that which has already been paid. MedAmicus
shall have the option to complete the development of the Product
itself. If it does so, then MedAmicus shall keep track of all costs
associated with completing the development and shall deduct from any
future royalties due to MDC, beginning with the first royalties due,
the total cost of all expenditures
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related to the completion of the development of the Product from the
time MedAmicus assumes control of the development effort.
8.3 TERMINABLE EVENTS
Notwithstanding the termination provisions stated in Sections 8.1 and
8.2 above, either party shall be entitled to terminate this agreement
by notice in writing to the other party in the event that any of the
following occurs to the other party:
a) If the other party enters into bankruptcy or debt reorganization
proceedings.
b) If a receiver is appointed over any of the other party's
property.
c) If the other party discontinues business.
d) If the other party fails to perform any of its obligations
hereunder, other than a failure to meet development timetables,
and such failure continues for thirty days after notice of
failure is given.
9. MISCELLANEOUS:
9.1 NOTICE
All notices or other communications hereunder shall be in writing and
shall be hand delivered, faxed, or sent by first class United States
mail to the following address:
MDC MEDAMICUS
--- ---------
Michael Simpson James D. Hartman
The Med-Design Corporation MedAmicus, Inc.
2810 Bunsen Avenue 15301 Highway 55 West
Ventura, CA 93003 Plymouth, MN 55447
Fax 805-339-0209 Fax 763-559-7548
Mailed notice shall be effective two days following the day of mailing;
however, hand delivery and fax transmissions shall be effective the day
received.
9.2 GOVERNING LAW
This Agreement is made and executed in the State of Pennsylvania, and
this Agreement shall be constructed and enforced according to the laws
of the State of Pennsylvania.
9.3 SEVERABILITY
The invalidity or unenforceability of any provision of this Agreement
shall not affect or impair the validity of any other provisions; and
section titles and captions in this Agreement are for convenience only
and do not define, limit or construe the contents of such paragraphs.
9.4 ASSIGNMENT
This Agreement may not be assigned without the prior written consent
of the other party.
9.5 SUCCESSORS
This Agreement and all of its terms shall be binding upon the
successors and permitted assigns of both parties.
9.6 COMPLETE AGREEMENT
Other than previously signed confidentiality agreements which shall
remain in full force and effect, this Agreement contains the entire
understanding among and between the parties and supersedes any prior
written or oral agreements between them respecting the subject matter
contained herein.
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9.7 ARBITRATION
The parties shall attempt in good faith to resolve any disputes arising
out of the Agreement, promptly by negotiations between executives of the
parties who have authority to settle disputes. After notice of a dispute
and the dispute being unresolved by executives for two months, any such
unresolved dispute, controversy or claim arising out of or relating to
this Agreement, or the breach, validity or termination thereof, shall be
finally settled by arbitration and either party may submit the dispute
to arbitration. The arbitration shall be conducted in accordance with
the Commercial Arbitration Rules of the American Arbitration Association
in effect at the time of arbitration, except as modified by mutual
agreement of the parties. The seat of the arbitration shall be (i)
Minneapolis (if MedAmicus is a named defendant), or (ii) Philadelphia
(if MDC is a named defendant); provided, however, that the arbitrators
may hold hearings in such other locations as the arbitrators determine
to be most convenient and efficient under the circumstances. The
appointing shall be the American Arbitration Association. Any award
rendered by the arbitrators shall be in writing and shall be final and
binding upon the parties, and my include an award of costs, including
reasonable attorney's fees and disbursements, but shall not include
punitive or consequential damages. Judgment upon the award rendered may
be entered in any court having jurisdiction thereof or having
jurisdiction over the appropriate party or its assets. While any dispute
is pending hereunder, the parties will continue to perform their
obligations as set forth herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written:
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THE MED-DESIGN CORPORATION MEDAMICUS, INC.
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Signature Signature
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Print Name Print Name
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Title Title
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Date Date
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EXHIBIT A
MILESTONES AND PAYMENT SCHEULE:
--------------------- ---------------------------------------- -------- --------
PAYMENT*
DATE ON
MILESTONE DESCRIPTION (APPROX) DATE
--------------------- ---------------------------------------- -------- --------
Project Definition Final agreement by technical personnel *** $***
on all Specifications, timetable and
cost to complete, including review by
patent counsels
--------------------- ---------------------------------------- -------- --------
Design Review II Design output from MDC *** $***
--------------------- ---------------------------------------- -------- --------
Design Review III Design Verification testing *** $***
--------------------- ---------------------------------------- -------- --------
Technology Transfer Transfer of all documentation, fixtures, *** $***
molds, prototypes to MedAmicus
--------------------- ---------------------------------------- -------- --------
* Payment schedule based on 50% of estimated Costs
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EXTERNAL COSTS:
All external costs will be borne by MedAmicus. These costs include, but are not
limited to:
* Molds, fixtures and other capital equipment
* All external testing, including animal testing
* All parts for prototypes
* Costs for consultants for manufacturing startup
PRIMARY SPECIFICATIONS:
***
EXHIBIT B
Med-Design Intellectual Property
Patent Rights includes the patents and patent applications as identified on the
attached 5 pages, and further includes any substitutions, divisions,
continuations-in-part, or reexaminations or reissues thereof, and any
improvements to the above conceived of or filed on or on behalf of MDC during
the term of this Agreement.
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