Adjusted License Agreement - SurModics Inc. and Cordis Corp.
ADJUSTED LICENSE AGREEMENT
THIS AGREEMENT, dated January 1, 2003, by and between SurModics, Inc.,
a corporation of the State of Minnesota, which has an office at 9924 West 74th
Street, Eden Prairie, MN 55344, (hereinafter referred to as SURMODICS), and
Cordis Corporation, which has offices located at 14201 NW 60th Street, Miami
Lakes, Florida 33126 (hereinafter referred to as CORDIS).
WHEREAS, SurModics is engaged in biological, chemical and technical
research and has developed a body of technology and know-how, including
reagents, processes and devices which the parties believe will improve the
performance of various products and processes of Cordis.
WHEREAS, the technology of SurModics includes confidential information
(including trade secrets and other know-how) which is proprietary to SurModics
and SurModics is in the process of securing patent coverage for certain items of
its technology, and continues to maintain the confidentiality of other portions
of its technology.
WHEREAS, SurModics and Cordis desire to cancel the Stent License
Agreement dated October 24, 1996, as amended;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth below and for other good and valuable consideration of which receipt
is acknowledged, the parties agree as follows:
1. DEFINITIONS
The following definitions apply to this Agreement and to all addenda
thereto:
a. "Effective Date" means January 1, 2003;
b. [Intentionally Omitted]
c. "Patent Rights" means the patent application(s) and patent(s)
having a worldwide priority date earlier than the Effective
Date and identified in Attachment A hereof, together with all
foreign counterparts, divisions, continuations and
continuations in part applications based thereon, any patent
issuing on any of said applications, and any reissues or
extensions based on any of such patents.
d. [Intentionally Omitted]
e. [Intentionally Omitted]
** CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
f. "Licensed Products" means those items specifically described
in Attachment B (the "Exclusive Products") and Attachment C
(the "Non-Exclusive Products") which:
i. but for the license granted herein the manufacture,
use or sale would infringe (or a surface treatment
process employed to produce a product or a reagent
used in such process would infringe) any Valid Claim
of Patent Rights, or
ii. are produced through the use of SurModics Licensed
Technology.
g. "SurModics Licensed Technology" means those items described on
Attachment D, including, to the extent those items in
paragraph 2 of Attachment D were not known to the public at
the time of their disclosure by SurModics to Cordis.
h. [Intentionally Omitted]
i. "Net Sales" means the total actual billing for sales of
Licensed Products, less the following deductions where they
are applicable with respect to such billings and when
separately shown on invoices:
i. discounts actually allowed and taken;
ii. any customs, duties, taxes or other governmental
excise or charge upon or measured by the production,
sale, transportation, delivery or use of Licensed
Product and actually paid by Cordis;
iii. amounts allowed or credited on rejections or returns;
iv. transportation charges prepared or allowed
v. Licensed Product distributed for use in clinical
trials, prior to receiving regulatory approval for
commercial sale for a particular indication in a
particular country.
Notwithstanding the above, if any Licensed Product is sold
both separately and as an integral part of a combination
product containing one or more integral components in addition
to that Licensed Product, then Net Sales of that Licensed
Product resulting from sales of that combination product will
be calculated by multiplying the Net Sales for the combination
product as calculated above by the fraction A/B where A is the
invoice price of the Licensed Product as sold separately and B
is the invoice price of the combination product. It is
understood that if any Licensed Product is sold only as an
integral part of a combination product, then Net Sales of that
Licensed Product will include the entire sales price of the
combination product.
** CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
A Licensed Product shall be considered sold when it is shipped
or when it is invoiced, whichever is earlier. To assure
SurModics the full royalty payment contemplated in this
Agreement, Cordis agrees that in the event any Licensed
Product is sold to an Affiliate for purposes of resale, Earned
Royalties for that Licensed Product shall be computed upon the
selling price at which such Licensed Product is then resold to
a non-Affiliate, rather than on the selling price of Cordis to
the Affiliate; Cordis shall promptly report sales to
Affiliates and be responsible for accurately reporting the
ultimate sales to a non-Affiliate.
j. "Affiliate" means any entity which owns at least 50% of, is at
least 50% owned by, or is under common ( at least 50%)
ownership with Cordis.
k. "Valid Claim" means a claim of an issued patent of Patent
Rights that has not been held invalid by a court of competent
jurisdiction, or other appropriate governmental body of
competent jurisdiction, beyond possibility of appeal.
2. LICENSE
a. SurModics grants to Cordis a world-wide license under the
SurModics' Patent Rights and the SurModics Licensed
Technology, to make, have made for it, use, sell, or import
into the United States, the Licensed Products. The license
granted herein is **.
b. **.
c. Subject to the limited license granted herein, SurModics shall
retain all other rights to the Patent Rights and the SurModics
Licensed Technology.
3. [Intentionally Omitted]
4. ROYALTIES
Cordis will pay to SurModics royalties as follows:
** CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
a. Earned Royalties as provided for in Attachment E.
b. Minimum Royalties as provided for in Attachment F.
5. ROYALTY PAYMENTS, REPORTS, RECORDS
a. Cordis will make written reports and payments to SurModics
within sixty (60) days after the last day of each calendar
quarter ending March 31, June 30, September 30, and December
31. Each such report shall state the worldwide Net Sales, unit
volumes, Earned Royalty, Minimum Royalty, corrections of error
in prior royalty payments, and data and calculations used by
Cordis to determine such payments. Each report shall be
accompanied by payment in full of the royalty due SurModics
for that quarter.
b. Cordis will maintain, in accordance with its conventional
accounting practices, true and accurate records supporting the
reports and payments made under this Agreement. SurModics
shall have the right to carry out an audit of such records no
more frequently than once per calendar year by a certified
public accountant of its choice. Such accountant shall have
reasonable access to Cordis' offices and the relevant records,
files and books of account, and such accountant shall have the
right to examine any other records, reasonably necessary to
determine the accuracy of the calculations provided by Cordis
under Paragraph 5(a). Such audit shall be at SurModics expense
except that if cumulative underpayment errors for any period
are found that exceed **% of the payment made to SurModics
during that period being audit, then Cordis will bear the cost
of such audit.
c. All royalties on sales of each Licensed Product to be paid to
SurModics by Cordis under this Agreement shall be paid in U.S.
Dollars to SurModics in the United States. For the purpose of
calculating Earned Royalties on sales outside the United
States, Cordis shall utilize the average rate of exchange on
the last business day of that calendar quarter as quoted in
the Wall Street Journal.
d. Any sum required under U.S. tax laws (or the tax laws of any
other government) to be withheld by Cordis from payment for
the account of SurModics shall be promptly paid by Cordis for
and on behalf of SurModics to the appropriate tax authorities,
and Cordis shall furnish SurModics with official tax receipts
or other appropriate evidence issued by the appropriate tax
authorities sufficient to enable SurModics to support a claim
for income tax credit in respect to any sum so withheld. Any
such tax required to be withheld shall be an expense of and
borne by SurModics.
6. [Intentionally Omitted]
** CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
7. TERM
a. The license granted herein under the Patent Rights shall begin
on the Effective Date and shall extend until expiration of the
last to expire patent of Patent Rights, unless earlier
terminated pursuant to the provisions of this Agreement. The
license granted herein under SurModics Licensed Technology
shall begin on the Effective Date and shall extend for **
thereafter subject to the provisions of Paragraph 7(b).
b. If the license with respect to SurModics Licensed Technology
continues for the ** stated above, and upon full payment by
Cordis to SurModics of any monies due under this Agreement,
the license herein granted with respect to SurModics Licensed
Technology shall be deemed **.
8. PATENTS
a. To the best of its ability, Cordis shall see to it that all
Licensed Products sold by Cordis shall be appropriately marked
with the applicable patent numbers, in conformity with
applicable law.
b. [Intentionally Omitted]
c. [Intentionally Omitted]
d. [Intentionally Omitted]
9. [Intentionally Omitted]
10. TERMINATION
**.
11. CONTINUING OBLIGATIONS SUBSEQUENT TO TERMINATION
a. Upon any termination of this Agreement or any of the licenses
granted herein, the following rights and obligations shall
continue to the degree necessary to permit their complete
fulfillment or discharge:
i. SurModics right to receive and Cordis' obligation to
pay royalties to the extent owed; and
ii. Cordis' obligation to maintain records and SurModics
right to audit under Paragraph 5, with respect to
sales; and
** CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
iii. Any cause of action or claim of either party, accrued
or to accrue, because of any breach or default by the
other party; and
iv. Cordis' and SurModics' obligation to maintain
confidentiality under Paragraph 13; and
v. If this Agreement, or License granted in this
Agreement, has been terminated, Cordis' obligation to
forebear from use of SurModics Licensed Technology.
vi. [Intentionally Omitted]
b. [Intentionally Omitted]
12. REPRESENTATIONS AND WARRANTIES
a. [Intentionally Omitted]
b. Each party has the full and unrestricted right to enter into
this Agreement.
c. Nothing in this Agreement shall be construed as:
i. A warranty or representation by SurModics as to the
validity or scope of any Patent Rights; or
ii. A warranty or representation that anything made,
used, sold, or otherwise disposed of, or any process
practiced, under any License granted in this
Agreement is or will be free from infringement of
patents of third persons; or
iii. A requirement that SurModics file any patent
application, secure any patent, or maintain any
patent in force; or
iv. An obligation to bring or prosecute actions or suits
against third parties for infringement of any patent
(except as provided in Paragraph 12A); or
v. An obligation to furnish any manufacturing or
technical information not encompassed within
SurModics Licensed Technology; or
vi. Conferring any right on either party to use in
advertising, publicity, or otherwise any trademark or
trade name of the other; or
vii. Granting by implication, estoppel, or otherwise any
licenses or rights under patents or other proprietary
information of SurModics other than those included
within Patent Rights and SurModics Licensed
Technology.
** CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
d. [Intentionally Omitted]
e. Except as provided in a certain agreement regarding sale of
Reagent, SurModics does not make any representations, extend
any warranties of any kind, either express or implied, or
assume any responsibilities whatever with respect to use,
sale, or other disposition by Cordis, its Affiliates or its
vendees or transferees of Licensed Products incorporating or
made by use of the Patent Rights and SurModics Licensed
Technology.
f. [Intentionally Omitted]
12A. INFRINGEMENT LITIGATION
To the extent that any Patent Rights licensed hereunder may be
infringed by the manufacture, use, sale or importation of any Licensed Product
by any third party, SurModics shall have the right, but not the obligation, if
such Licensed Product is a Non-Exclusive Product, to prosecute at its own
expense, or at the expense of Cordis if Cordis so requests, any action SurModics
deems necessary. If SurModics fails to commence prosecution of such action
within ninety (90) days following written request by Cordis or if the Licensed
Product is an Exclusive Product, then Cordis may, in its own name and at its own
expense, prosecute such action. If Cordis prosecutes any such action, it will
not without the advance written consent of SurModics admit to the invalidity or
unenforceability of any patent or claims within the Patent Rights or grant a
license to a third party to any such patents or claims. SurModics shall
cooperate and, if necessary, become a named party to the action. Should Cordis
prosecute such action, Cordis shall indemnify, defend, and hold harmless
SurModics from any claims or counterclaims related to the patent or patents in
suit, lawsuit expenses (including attorneys fees), costs and judgments arising
out of such litigation, but excluding adverse judgments regarding the validity,
enforceability or claim interpretation of the patent or patents in suit. If
SurModics elects to prosecute any such action, and it does so at its own
expense, then it shall have the right to control the litigation. If Cordis
elects to prosecute any such action, and it does so at its own expense, then it
shall have the right to control the litigation. If SurModics prosecutes such
action at Cordis' expense, the proceeds of the litigation, if any, shall first
be used to reimburse Cordis for its expense of the litigation and the remainder,
if any, shall be divided equally between SurModics and Cordis. In any such
action, the prosecuting party shall promptly notify the non-prosecuting party of
its decision to prosecute.
13. CONFIDENTIALITY
a. Cordis agrees to maintain in confidence SurModics Licensed
Technology for a period of ** from the Effective Date. Cordis
agrees not to disclose any of SurModics Licensed Technology
nor to use the same except in accordance with this Agreement,
except to a governmental agency as required by law (and only
to the extent required by law and with appropriate safeguards
to its confidentiality), and in the event such requirement for
disclosure is to a non-United States governmental entity then
Cordis shall review such disclosure with SurModics prior to
submission to such entity.
** CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
b. [Intentionally Omitted]
c. [Intentionally Omitted]
d. [Intentionally Omitted]
e. [Intentionally Omitted]
14. ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their successors to the entire assets and business
of the respective parties hereto. Either party may assign its rights
and obligations under this Agreement to a financially responsible third
party, but only in connection with a complete transfer to the third
party of the business to which this agreement pertains, such as in the
event the SurModics transfers its ** coatings business or if Cordis
transfers its ** business. The assigning party will so inform the other
party to this Agreement without delay of any assignment made in
accordance with the conditions of this Agreement. This Agreement shall
not otherwise be assignable by either party without the prior written
consent of the other party. Any and all assignments of this Agreement
or any interest therein not made in accordance with this paragraph
shall be void.
15. GOVERNMENT APPROVAL
Cordis shall have the sole responsibility, at Cordis' sole expense, for
obtaining any government approvals that may be required for the
investigation or marketing of Licensed Products.
16. PRODUCT LIABILITY
Cordis will defend and indemnify SurModics under this Agreement against
all losses, liabilities, lawsuits, claims, expenses (including
attorney's fees), costs, and judgments incurred through personal
injury, property damage, or other claims of third parties, arising from
the design, manufacture, use, or sale of Licensed Products.
17. NO WAIVER
Any waiver of any term or condition of this Agreement by either party
shall not operate as a waiver of any other or continued breach of such
term or condition, or any other term or condition, nor shall any
failure to enforce a provision hereof operate as a waiver of such
provisions or of any other provision hereof.
18. NOTICES
All communications or other notices required or permitted under this
Agreement shall be in writing and shall be deemed to be given when
personally delivered, or when mailed by registered or certified mail,
postage prepaid, and addressed as follows:
** CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
If to SurModics:
License Administration
SurModics, Inc.
9924 West 74th Street
Eden Prairie, MN 55344
If to Cordis:
Vice President, New Business Development
Cordis Corporation
7 Powder Horn Drive
Warren, NJ 07040
copy to:
Chief Patent Counsel
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
19. CAPTIONS
The captions and headings of this Agreement are for convenience only
and shall in no way limit or otherwise affect any of the terms or
provisions contained herein. This Agreement shall be construed without
regard to any presumption or other rule requiring construction hereof
against the party drafting this Agreement.
20. FORCE MAJEURE
Neither party shall be liable for failure to perform as required by any
provisions of this Agreement where such failure results from a cause
beyond such party's reasonable control such as acts of God, regulation
or other acts of civil or military authority, required approval(s) of
government bodies, fires, strikes, floods, epidemics, quarantine
restrictions, riot, delays in transportation and inabilities to obtain
necessary labor, materials, or manufacturing facilities. In the event
of any delay attributable to any of the foregoing causes, the time for
performance affected thereby shall be extended for a period equal to
the time lost by reason of such delay. The cumulative effect of all
such delays under this Paragraph 20 shall not exceed one (1) year.
21. NO AGENCY
Nothing in this Agreement authorizes either SurModics or Cordis to act
as agent for the other as to any matter, or to make any representations
to any third party indicating or implying the existence of any such
agency relationship. SurModics and Cordis shall each refrain from any
such representations. The relationship between SurModics and Cordis is
that of independent contractors.
** CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
22. SEVERABILITY
Should any provisions of this Agreement, or the application thereof, to
any extent be held invalid or unenforceable, the remainder of this
Agreement and the application thereof other than such invalid or
unenforceable provisions shall not be affected thereby and shall
continue valid and enforceable to the fullest extent permitted by law
or equity.
23. GOVERNING LAW
For the purposes under this Agreement, the parties agree and admit that
jurisdiction and venue are proper in a federal district court in
Chicago, Illinois. This Agreement shall for all purposes be governed
and interpreted in accordance with the laws of the State of Illinois,
except for its conflict of laws provisions.
24. ARBITRATION
a. In the event of any dispute concerning this Agreement,
including its interpretation, performance, breach or
termination, the procedures of this Paragraph 24 shall apply;
provided, however, that either party shall have the
unrestricted right at any time to seek a court injunction
prohibiting the other party from making unauthorized
disclosure or use of confidential information as provided for
in Paragraph 13 or unauthorized use of SurModics Licensed
Technology.
b. Both parties will use good faith and reasonable efforts to
resolve any dispute informally and as soon as practical. If
any such dispute is not resolved informally within a
reasonable period, then the Chief Executive Officers or those
having equivalent/corresponding rank of the parties will meet
at a mutually agreeable time and place to attempt to resolve
the dispute.
c. If the parties are unable to resolve a dispute as provided
immediately above, either party may submit the dispute for
resolution by mandatory, binding arbitration. Said arbitration
shall take place in Newark, New Jersey, if requested by
SurModics and in Minneapolis, Minnesota, if requested by
Cordis, and shall take place under the auspices of the
American Arbitration Association under its Commercial
Arbitration Rules. Each party shall select one independent,
qualified arbitrator and the two arbitrators so selected shall
then select a third arbitrator in accordance with the
Commercial Rules. Each party reserves the right to object to
any individual arbitrator (no matter by whom chosen) who has
been employed by or affiliated with a competing organization.
d. The arbitrators, who shall act by majority vote, shall be
empowered to decree any and all relief of an equitable nature,
including but not limited to temporary restraining orders,
temporary injunctions, and/or permanent injunctions and shall
also be able to award damages, with or without an accounting
of costs. Judgment
** CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
on the award rendered by the arbitrator(s) may be entered into
any court having jurisdiction thereof. Each party shall bear
its own costs and divide other reasonable arbitrator costs
equally. Both parties waive any right to any punitive damages.
25. ENTIRE AGREEMENT
This Agreement, together with other written agreements executed
contemporaneously herewith, constitutes the entire agreement between
the parties with respect to the licenses granted herein, and no party
shall be liable or bound to the other in any manner by any warranties,
representations or guarantees except as specifically set forth herein.
This Agreement shall not be altered or otherwise amended except by an
instrument in writing signed by both parties.
26. PUBLICITY
Neither Cordis or SurModics will originate any news release,
promotional material or press statements concerning the existence of
this Agreement or the terms herein without the prior written consent of
the other party (excepting as required by law and in that case with
adequate prior notice to the other party seeking consent and comments).
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
SURMODICS, INC. CORDIS CORPORATION
By ________________________ By _______________________
Its ____________________ Its ___________________
** CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
Schedule of Attachments
Attachment A -- Patent Rights
Attachment B -- Exclusive Products
Attachment C -- Non-Exclusive Products
Attachment D -- SurModics Licensed Technology
Attachment E -- Earned Royalties
Attachment F -- Minimum Royalties
** CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
ATTACHMENT A
PATENT RIGHTS
1. United States Patent No. 6,214,901 B1 to Chudzik et al, issued
April 10, 2001, titled BIOACTIVE AGENT RELEASE COATING
2. United States Patent No. 6,344,035 B1 to Chudzik et al, issued
February 5, 2002, titled BIOACTIVE AGENT RELEASE COATING
3. United States Patent Application Ser. No. **
4. United States Patent Application Ser. No. **
5. United States Patent Application Ser. No. **
6. United States Patent Application Ser. No. **
7. United States Patent Application Ser. No. **
8. United States Patent Application Ser. No. **
** CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
ATTACHMENT B
EXCLUSIVE PRODUCTS
1. **.
** CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
ATTACHMENT C
NON-EXCLUSIVE PRODUCTS
1. **.
** CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
ATTACHMENT D
SURMODICS LICENSED TECHNOLOGY
1. All Patent Rights of Attachment A.
2. All of the following:
RELATED TO **
-------------- ----------------------------------------------------------------
-------------- ----------------------------------------------------------------
-------------- ----------------------------------------------------------------
RELATED TO **
-------------- ----------------------------------------------------------------
-------------- ----------------------------------------------------------------
-------------- ----------------------------------------------------------------
RELATED TO **
-------------- ----------------------------------------------------------------
-------------- ----------------------------------------------------------------
-------------- ----------------------------------------------------------------
RELATED TO **
-------------- ----------------------------------------------------------------
-------------- ----------------------------------------------------------------
-------------- ----------------------------------------------------------------
** CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
RELATED TO **
-------------- ----------------------------------------------------------------
-------------- ----------------------------------------------------------------
-------------- ----------------------------------------------------------------
RELATED TO **
-------------- ----------------------------------------------------------------
-------------- ----------------------------------------------------------------
-------------- ----------------------------------------------------------------
** CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
ATTACHMENT E
EARNED ROYALTY
1. ** percent (**%) of Net Sales for each unit of Licensed Products sold.
2. In addition to the amount computed pursuant to Paragraph 1, Cordis will
pay the following amounts:
a. **.
b. **.
c. **.
** CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
ATTACHMENT F
MINIMUM ROYALTIES
For each calendar quarter beginning on the Adjusted License Agreement Effective
Date, Minimum Royalties will **.
**.
** CONFIDENTIAL TREATMENT REQUESTED