PRODUCT LICENSE AND DISTRIBUTION AGREEMENT

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Exhibit 10.1

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A
CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED
WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

Execution Version

PRODUCT LICENSE AND DISTRIBUTION AGREEMENT

This PRODUCT LICENSE AND DISTRIBUTION AGREEMENT (this “Agreement”) is entered into as of July 19, 2011 (the “Effective Date”), by and between PuriCore, Inc., a Delaware corporation (“PuriCore”), and MISONIX, INC., a New York corporation (“Misonix”). PuriCore and Misonix may be referred to as a “Party” and together as the “Parties”.

RECITALS

PuriCore has ownership of certain patents, know-how and other intellectual property related to its Vashe irrigating solution products.

Misonix develops and sells proprietary therapeutic ultrasound products.

PuriCore International Limited and PuriCore plc, each Affiliates of PuriCore, and Misonix entered into a Share Purchase Agreement and related agreements to acquire the issued shares of Labcaire Systems Limited, which was a subsidiary of Misonix. Litigation has arisen related to claims of breach of warranty and other allegations in connection with this acquisition. Misonix has denied the claims and allegations in such litigation. Misonix, PuriCore and its Affiliates have negotiated a settlement to this litigation which includes the license and distribution by Misonix of PuriCore’s Vashe system under the terms and conditions set forth in this Agreement.

THEREFORE, in consideration of the mutual covenants and agreements contained herein, and intending to be legally bound hereby, the Parties agree as follows:

DEFINITIONS

Whenever used in this Agreement, the following terms shall have the following meanings:

1.1

“510(k)” shall mean a Premarket Notification submission filed with the FDA in compliance with Section 510(k) of the Food, Drug and Cosmetic Act of 1938, as amended, per the requirements defined in 21 CFR Part 807 at least 90 days before the commercial distribution is to begin.

1.2

“Affiliate” shall mean any corporation or other legal entity which controls, is controlled by, or is under common control with, a Party; “control” means the right to elect or appoint a majority of the directors or similar governing body or the holding, directly or indirectly, of 50% (or if less, the maximum amount permitted by law) or more of the capital, income interests or voting rights in the corporation or other entity.

1.3

“Applicable Law” shall mean, with respect to the Licensed Products in the Territory, all federal and state laws, statutes, codes and regulations, governing the activities contemplated by this Agreement, including cGMP.

1.4

“Business Day” shall mean any day, from Monday through Friday, except for days on which commercial banks in New York, New York are authorized or required by law to close.

1.5

“cGMP” shall mean “Good Manufacturing Practices” for the medical device industry, as in effect from time to time in the Territory, as set forth in the Quality System Regulations at 21 CFR part 820.

1.6

“Contract Year” shall mean the twelve-month period beginning on the date that is forty-five (45) days after the Effective Date; unless there is a delay to delivery of Licensed Product by PuriCore that is caused by PuriCore, in which case the beginning date shall be the earlier of the date that PuriCore makes the first delivery of Licensed Product to Misonix or ninety (90) days after the Effective Date; and ending on the one year anniversary of such date and each twelve-month period thereafter.

1.7 “Extension Period” shall have the meaning set forth in Section 14.1 .

1.8

“FDA” shall mean the United States Food and Drug Administration or any successor agency.

1.9

“Field,” prior to the market availability of sterile Licensed Product, shall mean the use of the Licensed Product as an irrigating solution specifically for the treatment of human wound care with emphasis on use in conjunction with therapeutic ultrasonic procedures. After market release of sterile Licensed Product, “Field” shall mean the use of the Licensed Product, both sterile and non-sterile, as an irrigating solution specifically for the treatment of human wound care principally in conjunction with therapeutic ultrasonic procedures.

1.10

“Gross Profit” shall mean the amounts indicated as “gross profit” on Exhibit C , as Exhibit C may be updated hereunder, and shall not mean gross profit as it may be understood under generally accepted accounting principles in the United States or any other accounting principles.

1.11 “Initial Term” shall have the meaning set forth in Section 14.1 .

1.12

“Licensed Products” shall mean only those PuriCore proprietary Vashe solution products that are described on Exhibit A .

1.13

“Licensed Technology” shall mean the PuriCore Patents and related know-how and other proprietary technology that cover and are incorporated in the Licensed Products.

1.14

“Minimum Gross Profit” shall mean the cumulative amount of Gross Profit to PuriCore on the paid purchase price from sales of Licensed Products to Misonix under this Agreement until such cumulative Gross Profit aggregates a total amount of two million dollars ($2,000,000); provided that the two million dollars ($2,000,000) requirement may be reduced pursuant to Section 6.6 .

1.15

“Net Sales” shall mean Misonix’s and its Affiliates’ (including all sales made by any Sales Representative on behalf of Misonix or any of its Affiliates) gross receipts from sales of Licensed Products less the sum of (a) discounts actually allowed in amounts customary in the trade; (b) sales, tariff duties and/or use taxes directly imposed and with reference to particular sales; (c) outbound transportation prepaid or actually allowed; and (d) amounts actually allowed or credited on returns. No deductions shall be made for commissions paid to any Sales Representative, or for cost of collections.

1.16 “Notes” shall mean those Loan Notes as defined in the SPA.

1.17

“Product Labeling” shall mean the labeling as required, permitted and agreed by and with the FDA under the 510(k) clearance for the Licensed Product and any other Applicable Law.

1.18 “PuriCore Patents” shall mean those patents set forth on Exhibit B .

1.19

“Quarterly Minimum Gross Profit” shall mean the amount of Minimum Gross Profit that is allocated to be earned from sales of Licensed Product to Misonix in any specific quarter during the Initial Term, which may be reduced on a pro rata basis in the event that the Minimum Gross Profit is reduced pursuant to Section 6.6 , so that [* * *].

1.20

“Regulatory Approval” shall mean, with respect to any country, all governmental and regulatory registration and approvals (including but not limited to all approvals for labeling and all pricing approvals) required for the manufacture, marketing, use, sale and distribution of Licensed Products in such country.

1.21 “Royalty” shall have the meaning set forth in Section 4.10 .

1.22

“Sales Representatives” shall mean sales employees of Misonix and professional persons or companies that regularly act as sales representatives on behalf of third party companies in the medical device and surgical industry, whether acting in an independent or direct capacity, and shall not include any person or company that derives more than 50% of its annual revenues from selling products of its own manufacture.

1.23

“SPA” shall mean that certain Share Purchase Agreement dated as of 4 August 2009 between Misonix, Inc and PuriCore International Limited and PuriCore plc regarding the acquisition of Labcaire Systems Limited, as varied.

1.24

“Specifications” shall mean the specifications set forth on Exhibit A or as otherwise provided in writing to Misonix by PuriCore and reasonably acceptable to Misonix.

1.25 “Take or Pay Payments” shall have the meaning set forth in Section 6.5.

1.26

“Territory” shall mean the United States and its territories. The Territory may be expanded upon mutual written agreement of the Parties as Regulatory Approvals in other countries or territories may be obtained.

1.27

“Third Party” shall mean any person or entity that is not a Party or an Affiliate of a Party.

1.28

“Trigger Date” shall mean any of the three Trigger Dates defined in Sections 2.2, 4.9(c) and 7.5 .

GRANT OF LICENSE

2.1

License . Subject to the terms of this Agreement, including without limitation the exclusivity provisions of Section 2.2 and the authority limitations of Section 3 , PuriCore hereby grants to Misonix a license under the Licensed Technology to use and sell the Licensed Products in the Field in the Territory. The license granted in this Section 2.1 does not include any rights of Misonix to grant sublicenses to any Third Party or to have Licensed Products sold by any Third Party on behalf of Misonix, except that Misonix may utilize Sales Representatives. A list of Misonix’s current Sales Representatives is attached as Schedule 2.1 . Misonix shall update Schedule 2.1 not less than ten (10) days prior to the commencement of each Contract Year if there are any changes or updates to Schedule 2.1 . PuriCore acknowledges that Misonix has no control over the purpose for which its customers use the Licensed Product once sold; and, therefore, Misonix cannot be held to be in breach of this Agreement if it has sold the Licensed Product in the Field in good faith even if the customer does not use the Licensed Product for or in conjunction with ultrasonic procedures.

2.2

Exclusivity Covenant . PuriCore covenants that it will not license the Licensed Technology or sell Licensed Products to any therapeutic ultrasound company for distribution in the Field in the Territory. In the event that PuriCore chooses (in its sole discretion and despite the exclusivity covenant) to license the Licensed Technology or sell Licensed Products to any therapeutic ultrasound company in the Field in the Territory (the date of which shall be a “ Trigger Date ”), then (a) Misonix will not have any exclusivity under this Section 2.2 or this Agreement, and (b) the Minimum Gross Profit shall be reduced and certain payment obligations will be eliminated as set forth in Section 6.6 .

2.3

Trademark/Branding/Labeling . All Licensed Products supplied to Misonix under this Agreement will be labeled with Misonix branding. Misonix will develop its own branding and trade dress under which it will sell the Licensed Products. Misonix is granted no rights to the Vashe trademark, or any other PuriCore trademark, any Vashe or PuriCore branding or trade dress, including any color, packaging, art or style used by PuriCore. Notwithstanding anything to the contrary in the foregoing, Misonix shall have the right to identify PuriCore on the labeling of the Licensed Products if required to do so by Applicable Law.

DISTRIBUTION APPOINTMENT, AUTHORITY AND OBLIGATIONS

3.1

Appointment . Subject to the terms of this Agreement, including without limitation the exclusivity provisions of Section 2.2 and the authority limitations of Section 3 , PuriCore hereby appoints Misonix as a distributor of the Licensed Products in the Field in the Territory, and Misonix hereby agrees to act in that capacity during the term of this Agreement.

	3.2		Authority; Distribution Channels . Misonix and its Affiliates may sell Licensed Products through all distribution channels, except it may not sell through “over the counter” channels, hospital pharmacies (except that it may sell to a hospital pharmacy if it is acting as the purchasing agent for other or all departments in its hospital), and home healthcare. Misonix shall not, directly or indirectly, hold itself out as an agent or representative of PuriCore or as otherwise having the authority to bind PuriCore. Without the prior written consent of PuriCore, Misonix shall not use PuriCore’s name for any reason.

	3.3		Covenants .

	(a)		Marketing and Promotion . Misonix shall actively market, promote, distribute and sell the Licensed Products within the Territory in the Field, and shall use commercially reasonable efforts to do so, which efforts shall be at least to the same extent that it markets and promotes its other products.

	(b)		Reports .

(i)

Upon termination of this Agreement, Misonix shall provide a detailed written report to PuriCore, in a mutually agreeable format, describing the Licensed Product customers and customer locations and any other related information reasonably requested by PuriCore, broken down by type of Licensed Product.

(ii)

In the event that Misonix is manufacturing the Licensed Products and paying PuriCore the Royalty in accordance with Section 4.10 , on a quarterly basis, Misonix shall provide a detailed written report to PuriCore, in a mutually agreeable format, describing the Licensed Product sold, the information underlying the Net Sales calculation (including gross receipts and all deductions), the calculation of Royalties and any other related information (not including customer names or locations) reasonably requested by PuriCore, broken down by type of Licensed Product.

(iii)

PuriCore shall treat all information provided and subject to review under this Section 3.3 in accordance with the confidentiality provisions of Section 9 .

	(c)		Records . Misonix shall keep full, complete and proper records and accounts of sales of Licensed Products in sufficient detail to confirm information provided or that may need to be provided in reports to PuriCore in accordance with Section 3.3 .

	(d)		Audits .

(i)

Compliance with Agreement Terms . Upon the written request of PuriCore, and not more than once in each calendar year, Misonix shall permit an independent consultant selected by PuriCore, at PuriCore’s expense, to have access during normal business hours, and upon prior written notice, to such of the records of Misonix as may be reasonably necessary to verify Misonix’s compliance with this Agreement, including the Field, Territory and distribution channel authorization, for any calendar year ending not more than thirty-six (36) months prior to the date of such request. Such consultant shall enter into a reasonably acceptable confidentiality agreement with Misonix obligating such consultant to retain all such information in confidence pursuant to such confidentiality agreement, including PuriCore; provided that such consultant can provide a report to PuriCore with regard to its findings.

(ii)

Royalty Calculations . Upon the written request of PuriCore, and not more than once in each calendar year when the reports are provided pursuant to Section 3.3(b)(ii) , Misonix shall permit an independent certified public accounting firm selected by PuriCore (the “ Auditor ”), at PuriCore’s expense, to have access during normal business hours, and upon prior written notice, to such of the records of Misonix as may be reasonably necessary to verify the accuracy of the reports hereunder and compliance with this Agreement for any calendar year ending not more than thirty-six (36) months prior to the date of such request. Upon the written request of Misonix, PuriCore shall cause the Auditor to enter into a reasonably acceptable confidentiality agreement with Misonix obligating such firm to retain all such information in confidence pursuant to such confidentiality agreement.

(e)

No Sales Outside the Field or Territory . Subject to Section 2.1 , Misonix shall not directly or indirectly sell, have sold, or seek, market, promote or otherwise induce the sale of, Licensed Products outside of the Territory or outside the Field, or where one should reasonably be aware that the ultimate destination for a Licensed Product is outside the Territory or the ultimate use of the Licensed Product is outside the Field.

(f)

Other Solutions . Misonix shall not sell or distribute in the Territory in the Field any irrigating solution that has anti-microbial properties other than the Licensed Products. This Section 3.3 (e) shall cease to be in effect in the event Misonix no longer has exclusivity under Section 2.2 .

(g)

No Alterations . Misonix shall not make any alterations or knowingly permit any alterations to be made to any Licensed Product without PuriCore’s express prior written consent, which consent may be granted or withheld in PuriCore’s sole discretion.

SUPPLY AND PURCHASE

4.1

Supply of Licensed Products . Subject to the terms of this Agreement, Misonix shall purchase from PuriCore all of its requirements for Licensed Products, and PuriCore shall supply such requirements to Misonix.

4.2

Compliance with Applicable Law . PuriCore shall manufacture or cause to be manufactured and supply the Licensed Products being provided hereunder to Misonix in accordance with all Applicable Law, including, without limitation, those enforced by the FDA (including compliance with cGMP), in all material respects.

4.3

Development of Sterile Licensed Products . PuriCore shall use commercially reasonable efforts to develop a sterile Vashe solution product in an IV-hangable, pre-filled container that has 510(k) clearance within the first Contract Year. Should such a sterile Licensed Product not be available by the end of the first Contract Year, PuriCore will solicit the technical support of Misonix to cooperate with PuriCore in pursuing the development and validation of such a sterile Licensed Product.

4.4

Samples . PuriCore will furnish Misonix with samples of Licensed Products at no charge (except that Misonix will pay all delivery costs and charges related to delivery of samples) up the following maximum amounts of samples per Contract Year:


Contract Year		Maximum Quantity of Samples
One		[* * *]% of Licensed Product units purchased
Two		[* * *]% of Licensed Product units purchased
Three		[* * *]% of Licensed Product units purchased
All Extension Periods		[* * *]% of Licensed Product units purchased

4.5

Forecasting . At least thirty (30) days prior to the start of each quarter of each

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