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JOINT DEVELOPMENT AND
EXCLUSIVE LICENSE AGREEMENT
 
WHEREAS, Live Tissue Connect (“LTC”) (“LICENSOR”) owns certain Patents (as
hereinafter defined) and Technical Information (as hereinafter defined) relating
to certain medical devices;
 
WHEREAS, ConMed Corporation, including its affiliates, (“LICENSEE”)
(collectively “LICENSEE”), wishes to obtain from LICENSOR and LICENSOR wishes to
grant to LICENSEE certain exclusive rights under the Patent and Technical
Information, all subject to the terms and conditions set forth herein;
 
WHEREAS, the parties wish to define research and development projects to focus
on the development of products for first development of a marketable product for
coagulation of tissue for removal of tissue in duct and vessel sealing and
second reconnection of opposing end or sides of live tissues and organs. First
products for procedures to be developed are listed in Addendum 1 attached
hereto.
 
NOW, THEREFORE, LICENSEE AND LICENSOR HEREBY AGREE AS FOLLOWS:
 
1. Definitions. As used herein, the following terms will have the meanings set
forth below:
 
(a) “Boxes” means the power source which is part of the Product.
 
(a) “Improvement” or “Improvements” means any modifications, whether or not
patentable, of the Product (as hereinafter defined), (including any related
patents or unpublished research and development information, unpatented
invention, know-how, trade secrets, and technical data made by LICENSOR or
LICENSEE) provided such modification, if unlicensed, would infringe one or more
claims of the Patents.
 
(b) “Licensed Territory” means all of the world except the former Soviet Union.
 
(c) “Net Sales” means gross sales of the Products billed and shipped by LICENSEE
or its subsidiaries or affiliates, less normal and customary allowances and
discounts actually allowed (other than advertising allowances, or fees or
commissions to salesmen or sales representatives), returns, invoices written off
as uncollectible, billed taxes and customs duties paid by LICENSEE, costs of
insurance and transportation (freight and transit insurance), and shall not
include samples or demonstration materials or any sale to LICENSEE employees for
any reason other than resale. The term “Net Sales” shall not include sales
between the parties, sales by independent distributors which have purchased
Product from LICENSEE, or sales between LICENSEE and its affiliates or
subsidiaries.
 
(d) “Patents” means all U.S. Patents listed on Addendum (2) and all divisions,
continuation, reissues, reexaminations, substitutes, extensions, and
equivalents, or any and all patents or applications which derive from, claim
priority from U.S. Patents listed in Addendum 2 attached hereto.
 

 Exhibit 10.22

    Page 1 of 10 Pages

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(e) “Product” means a power source and set of hand instruments designed to bond
or weld and reconnect living soft biological tissue without the use of foreign
matter or conventional wound closing devices such as sutures, staples, sealant,
or glues and avoid charring, searing and necrosis using low heat delivery aimed
at restoration of the normal functions of the live organs and tissue, the
manufacture, use or sale of which would, if unlicensed, infringe a valid claim
of the Patents or utilize the Technical Information. Product expressly includes
any Improvements to such Products. The first Product shall be the duct and
vessel sealing power sources and accompanying hand instruments and the second
Product shall be a reconnection power source and accompanying hand instruments.
 
(f) “Technical Information” means the unpublished research and development
information, know-how, and technical data provided by LICENSOR to LICENSEE or
developed by LICENSOR pursuant to the LICENSEE’S Development Project that may be
necessary or useful to make, use and sell the Product.
 
(g) “Third Party” means a person or entity other than LICENSOR, LICENSEE or
their affiliates.
 
(h) “Valid Claim” means a claim of any of the Patents that has not expired or
been held invalid by a court of competent jurisdiction.
 
2. Exclusive License.
 
(a) Grant Of Exclusive License As To Product Generally. LICENSOR hereby grants
to LICENSEE an exclusive license under the Patents and Technical Information to
import, make, have made, use, sell and/or distribute the Product in the Licensed
Territory. BOXES are to be manufactured by Licensor unless otherwise agreed by
both parties.
 
(b) Grant of Right to Manufacture. LICENSOR hereby grants to LICENSEE an
exclusive license under the Patents to manufacture the Products in the Licensed
Territory and to use the Technical Information to manufacture the Products in
the Licensed Territory.
 
(c) Exclusive License. LICENSOR represents and warrants that the licenses
granted to LICENSEE to the Patent and the Technical Information pursuant to this
Agreement are, and shall remain, exclusive as to all persons, including
LICENSOR, in the Licensed Territory.
 
(d) Reservation of Right to Perform Research. Notwithstanding the
above-described grant of exclusive license, LICENSOR retains a non-exclusive
right to use the Patents and Technical Information in connection with performing
research relating to the development of new Products or to perfection of prior
designs of the Product; provided further that the retained non-exclusive right
to use the Patents and Technical Information as provided in this subsection
shall not be construed as providing LICENSOR with the right to manufacture or
sell any Product resulting from LICENSOR’S research relating to the development
of new Products, it being understood that any new Products developed in this
manner shall be subject to the terms of this Agreement to the extent that the
manufacture, use or sale of such newly developed devices infringes a valid claim
of a Patent or utilizes Technical Information.
 

 Exhibit 10.22

    Page 2 of 10 Pages

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(e) No Express License. Notwithstanding any other language in this Agreement
that may suggest otherwise, this Agreement shall in no way be construed as
providing any license, express or implied, to any patent or intellectual
property owned by or licensed to LICENSEE.
 
(f) Improvements to Technology, Equipment and Instruments by LICENSEE. Product
improvements on technology, equipment and instruments by LICENSEE as provided in
this subsection shall not be construed as providing LICENSEE with the right to
manufacture or sell any Product resulting from LICENSEE’S research relating to
the development of new Products, without it being understood that any new
Products developed in this manner shall be subject to the terms of this
Agreement to the extent that such newly developed devices infringe a valid claim
of a Patent.
 
3. Development Projects.
 
(a) Licensor’s Development Project. LICENSOR shall submit the development
schedule for the initial Product, duct and vessel sealing power sources as an
addendum to this Agreement within thirty (30) days of signing this Agreement
which schedule must be acceptable to LICENSEE.
 
(b) Licensee’s Development Project.  LICENSEE shall submit a development
schedule for the accompanying hand instruments as an addendum to this Agreement
within sixty (60) days of signing of this Agreement.
 
(c) Cooperation. The parties shall cooperate in the development projects as
defined above such that each shall have access to the research and development
information, know-how, and technical data that may be necessary or useful to the
other in developing the equipment and handpieces.
 
4. Regulatory Approvals. LICENSOR shall be primarily responsible, including
paying any related costs, for obtaining the appropriate regulatory approvals for
the use of the Products. These approvals will include FDA marketing clearances,
CE marking and applicable safety agency requirements for manufacturing and
distribution of the Products. LICENSOR agrees to submit to LICENSEE any proposed
submissions which relate to the Products prior to submitting to any governmental
agency, for comment and approval, and agrees not to make any submissions without
such approval. Such approval shall not be unreasonably withheld.
 
5. Licensing Fees and Royalty Payments. In consideration for the above-described
exclusive license of the Patents, LICENSEE agrees to make royalty payments as
follows:
 
The total sum of one million dollars ($1,000,000) to be paid into the account
designated below payable according to Addendum 3:
 

 Exhibit 10.22

    Page 3 of 10 Pages

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Bank of America
ABA: 111000025
For Further Credit to:
Live Tissue Connect, Inc.
500 No. Shoreline, Suite 701 No.
Corpus Christi, TX 78471
Acct. Number: 005770576306
 
(a) Ten percent (10%) of the Net Sales sold in the Licensed Territory by
LICENSEE until such time as the cumulative Net Sales equal Thirty Five Million
Dollars ($35,000,000). Royalties shall be paid on a quarterly basis and shall be
paid within 45 days following the end of each quarter.
 
(b) Seven percent (7%) of the Net Sales of the Products sold in the Licensed
Territory by LICENSEE after the cumulative Net Sales reach Thirty Five Million
Dollars ($35,000,000) Royalties shall be paid on a quarterly basis and shall be
paid within 45 days following the end of each quarter.
 
(c) Nothing in this Agreement shall be construed as creating any implied royalty
obligation, including, but not limited to, any obligation to pay royalties with
respect to the use of the Technical Information.
 
(d) Minimums
 
(1) Conmed agrees to pay a minimum royalty on handpieces subject to subsection
(3) below.
 
(2) Failure to meet minimum purchases or royalties set forth below at the
earlier of the time when the Product is officially launched or the commencement
of the fourth year after the execution of the Joint Development and Exclusive
License Agreement between LICENSOR and LICENSEE results in a loss of exclusivity
as the sole remedy. The term “officially launched” shall mean that the clinical
tests of the Product are complete, key surgeons have used it in their surgeries,
have tested the functional capability of the instruments, and written white
papers to give sales force marketing materials necessary to launch the product
marketing. However, at Conmed’s option, Conmed may elect to cure the default by
paying an amount equal to the profit LICENSOR would make on the required minimum
purchase of the Boxes and payment of the minimum royalty on the handpieces in
accordance with the following terms:
 

 Exhibit 10.22

    Page 4 of 10 Pages

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Official Launch Vessel and Duct Sealing
 
Year
# of power
source units
Surgeries per year
@ 2 day per unit
200 days
Instruments
per surgery
 Revenue
@ 100 per tool
Minimum annual
Royalty
1
         
2
         
3
         
4
125
50,000
2
$10,000,000
$1,000,000
5
250
120,000
2
$20,000,000
$2,000,000
6
400
160,000
2
$32,000,000
$2,390,000
7
600
240,000
2
$48,000,000
$3,360,000
7 and
thereafter
1,000
400,000
2
$80,000,000
$5,600,000

 
6. Accounting and Procedures for Royalty Payments
 
Payments hereunder will be subject to the following provisions, it being
understood that LICENSEE will have no obligation to comply with this Section
unless and until LICENSEE becomes obligated to make royalty payments as provided
for in Section 3:
 
(a) Within forty-five (45) days after the end of each calendar quarter, LICENSEE
will make all required royalty payments as specified in Section 3 that LICENSEE
becomes obligated to pay during such quarter. The obligation to make royalty
payments specified in Section 3 accrue on the earlier of the invoice date or
consideration receipt date for the relevant sales. All payments will be
accompanied by a report, in a form identifying the Product, Net Sales of
Products, the amount payable to LICENSOR and the computation thereof. All
payments will be made in United States Dollars.
 
(b) Any taxes that are imposed by any national, state or local governmental
entity and required to be paid or withheld by LICENSEE for the account of
LICENSOR on amounts payable under this Agreement will be deducted from the
amount payable at the rates specified by applicable law. Any taxes other than as
described in the definition of “Net Sales” above, will be borne by LICENSOR, and
the amounts otherwise payable shall not be “grossed up” so that the net amount
payable to LICENSOR will not be reduced by such other taxes paid or withheld by
LICENSEE, with LICENSOR agreeing to pay any taxes that may be due in any
jurisdiction.
 
(c) To the extent required by this Section, LICENSEE will keep full and accurate
books and records, setting forth Net Sales and amounts payable to LICENSOR.
LICENSEE will permit LICENSOR, by independent certified national public
accountants employed by the LICENSOR, to examine such books and records at
reasonable times, but not later than five years following the rendering of any
such reports, accountings and payments. The expense of such examination will be
borne by LICENSOR, unless LICENSEE is determined therefrom to have underpaid
LICENSOR by five percent (5%) or more, in which case such expenses will be paid
by LICENSEE.
 

 Exhibit 10.22

    Page 5 of 10 Pages

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7. Commercialization and Marketing. LICENSEE shall use reasonably diligent
efforts to promote the sales of the Products, it being understood that
reasonably diligent efforts to promote the sales shall mean that LICENSEE shall
offer materially similar commissions and marketing programs for the Products as
it offers for similar products.
 
8. Representations and Agreements.
 
(a) LICENSOR represents and warrants to LICENSEE and agrees that:
 
(1) LICENSOR is the legal and beneficial owner of the Patents on the date hereof
and of the Technical Information, and LICENSOR has not entered into and, during
the term of this Agreement will not enter into, any agreement with any other
person, entity or firm granting any rights to the Product, the Patent or the
Technical Information that are inconsistent with the provisions of this
Agreement;
 
(2) As of the date of this Agreement, LICENSOR has no actual knowledge that the
use or sale of the Product by LICENSEE will infringe any Third Party patents and
has not received any notification that its Patents infringe any Third Party
patents.
 
(3) LICENSOR believes the Patents to be valid and enforceable.
 
(4) LICENSOR will timely pay any maintenance and/or annuity fees on the Patents
and agrees, at no expense to LICENSEE, to defend the validity of the Patents in
any action brought by a Third Party.
 
Except as expressly provided herein, LICENSOR makes no other representations or
warranties, express or implied, regarding the Patent, the Technical Information,
or the Product.
 
9. Enforcement of Licensed Patents
 
(a) Notice of Infringement. LICENSOR and LICENSEE shall promptly notify each
other of any actions of a Third Party of which either LICENSOR or LICENSEE is,
aware that may constitute infringement of the Patent.
 
(b) Right to Sue. After any notice of infringement pursuant to Section 8(a),
LICENSEE shall have a six (6) month period within which to exercise the right,
at its sole option, either: (1) to bring an infringement suit; or (2) to decline
to bring an infringement suit. In the event that LICENSEE elects to bring an
infringement suit, LICENSOR agrees to cooperate with LICENSEE in bringing such
suit, and agrees to be named as a party to such litigation or to have LICENSEE
bring suit in the name of and on behalf of LICENSOR. In the event that LICENSEE
declines to bring an infringement suit, LICENSOR, at its sole option, may bring
suit to enforce the Patents.
 

 Exhibit 10.22

    Page 6 of 10 Pages

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(c) Attorneys Fees and Costs of Litigation. The costs and attorneys fees of any
infringement litigation brought by LICENSEE or LICENSOR shall be borne
exclusively by the party bringing suit, unless otherwise agreed upon by the
parties. The costs and attorneys fees of defending any first-filed declaratory
judgment action with respect to the Patents shall be shared equally by LICENSOR
AND LICENSEE, unless otherwise agreed upon by the parties or unless the other
party has filed the declaratory judgment action, in which case, the party filing
the declaratory judgment action shall be required to defend such suit entirely
at its own cost and expense.
 
(d) Splitting of Recoveries for Patent Infringement. Any recovery received in
any infringement suit to enforce the Patents shall be shared according to the
respective party’s contributions to the costs and attorneys fees of maintaining
such suit. The term “recovery” as used in this Section shall include
compensatory damages (reasonable royalties, lost profits, price erosion,
convoyed sales, or any other form of compensatory damages in patent infringement
lawsuits), enhanced damages for willfulness, awards of attorneys fees,
pre-judgment interest and sanctions.
 
(e) Settlement Authority. Settlement authority shall rest in the party paying
the majority of costs and fees associated with any infringement lawsuit,
provided that such settlement does not grant, expressly or impliedly, any right
to make, use, sell, or offer to sell the Product in the Licensed Territory or to
import the Product into the Licensed Territory. In the event such fees and costs
are split equally, settlement authority shall rest solely with LICENSEE. Any
settlement granting, expressly or impliedly, any right to make, use, sell, offer
to sell or import the Product in the Licensed Territory must first be approved
in writing by LICENSOR with approval of the other party, which approval shall
not be unreasonably withheld, and LICENSEE. This provision does not require
written approval for settlements for past damages.
 
(f) Choice of Counsel. The party bearing the majority of the attorneys fees and
costs associated with any litigation for infringement of the Patents shall have
the right to select counsel to handle such infringement litigation. In the event
such fees and cost are split equally, the right to select counsel with approval
of the other party, which approval shall not be unreasonably withheld, shall
rest solely with LICENSOR.
 
10. Term. This Agreement will remain in effect for so long as the Patents are
valid, unless earlier terminated as provided herein. The provisions of this
Section 10 will survive the expiration or termination (whether under Section 11
or otherwise) of this Agreement, and the provisions of Section 5 will survive as
to payments which accrue or become payable prior to expiration or termination.
In addition, the representations set forth in Section 8 shall survive
termination of this Agreement.
 

 Exhibit 10.22

    Page 7 of 10 Pages

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11. Termination. This Agreement may be terminated prior to the expiration hereof
as follows:
 
(a) If either LICENSEE or LICENSOR breaches or defaults in the performance or
observation of any of the provisions of this Agreement, and such breach or
default is not cured within sixty (60) days after the giving of written notice
by the other party specifying such breach or default, the other party will have
the right to terminate this Agreement upon a further thirty (30) days’ notice.
If any representation or warranty of any party as contained in this Agreement is
materially incorrect or inaccurate, such will be deemed to be a breach or
default of this Agreement by such party.
 
(b) The obligations of LICENSEE under this Agreement are conditioned upon
LICENSEE’s satisfaction, which shall be determined in its sole discretion, with
further due diligence review concerning, among other things, the Patents
relating to the Products, the development schedule to be provided by LICENSOR
pursuant to Section 3(a) and the marketability of the Products. If LICENSEE has
been not communicated to LICENSOR its satisfaction with further due diligence
review on or before May 31, 2005, then this Agreement shall have no binding
effect upon either party and both parties hereto shall thereupon be released
from all liabilities hereunder.
 
12. Force Majeure. No party will be liable for failure or delay in performing
obligations set forth in this Agreement, and no party will be deemed in breach
of its obligations, if such failure or delay is due to natural disasters or any
causes reasonably beyond the control of such party.
 
13. Product Liability Indemnification. LICENSEE will indemnify and hold LICENSOR
harmless from and against any and all product liability claims, demands,
liabilities, losses, damages, money judgments or expenses (including reasonable
attorneys’ fees arising out of the testing, use, manufacture, sale or
distribution of the Product, in each case by LICENSEE, its affiliates and
customers); provided, however, that with respect to any claim covered by the
foregoing LICENSEE indemnification, LICENSOR will give LICENSEE notice as soon
as practicable of any such claim or action and LICENSEE will have the right to
control any compromise, settlement or defense thereof; provided further that
LICENSOR will be entitled to be indemnified in accordance with the terms hereof
notwithstanding LICENSOR’ failure to give timely notice to LICENSEE if LICENSEE
had not been prejudiced by such failure to give notice. This indemnity does not
extend to any claims, demands, liabilities, losses, damages, money judgments or
expenses due to LICENSOR’s negligence or misconduct.
 
14. Miscellaneous
 
(a) Any controversy or claim arising out of, or relating to this Agreement, or
its breach, will be settled by arbitration in New York City, New York in
accordance with the then-governing rules of the American Arbitration
Association. Judgment upon the award rendered may be entered and enforced in any
court of competent jurisdiction. Before any arbitration proceeding may be
commenced, however, the parties will meet in person at least two times within
sixty (60) days in New York City to discuss in good faith a resolution to such
controversy or claim.
 

 Exhibit 10.22

    Page 8 of 10 Pages

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(b) Upon a change in control or a sale of all or substantially all of the assets
of the business of LICENSOR to which this Agreement relates, this Agreement
shall remain in full force and effect and such transferee shall agree to assume
all duties and obligations of LICENSOR hereunder.
 
(c) This Agreement will inure to the benefit of, and be binding upon, the heirs
and personal representatives of the parties, and upon the successors and
permitted assigns.
 
(d) Neither party shall assign its rights in the Patents or this Agreement to
any person or entity without the prior consent of the other party, which consent
may not be unreasonably withheld, it being understood that it would not be
unreasonable to withhold such consent if a party sought to assign its rights in
the Patents or in this Agreement to any competitor of the other party.
 
(e) Any notice required under this Agreement will be in writing and sent by
registered mail, postage prepaid and addressed to the parties at their
respective addresses as set forth below.
 
(f) No press releases or public announcements regarding the terms of this
Agreement shall be made by either party without the prior written approval of
the other party (which approval shall not be unreasonably withheld), except as
may be necessary, in the opinion of counsel for such party, to meet the
requirements of any law or governmental regulation or any applicable exchange
regulation (in which event the other party will be notified before, if practical
under the circumstances, and after any action is taken thereon), or as may be
necessary or appropriate in connection with a party’s communications with its
independent auditors and lenders.
 
(g) This Agreement sets forth the entire agreement and understanding between the
parties to the subject matter hereof and supersedes and cancels all documents,
verbal consents or understandings relating to the subject matter hereof, made
between LICENSOR and LICENSEE before the conclusion of this Agreement, and none
of the terms of this Agreement will be amended or modified except in a writing
signed by the parties hereto.
 
(h) A waiver by any party of any term or condition of this Agreement in any one
instance will not be deemed or construed to be a waiver of such term or
condition for any similar instance in the future or of any subsequent breach
hereof. All rights, remedies, undertakings, obligations and agreements contained
in this Agreement will be cumulative and none of them will be a limitation of
any other remedy, right, undertaking, obligation or agreement of any party.
 
(i) Headings in this Agreement are included herein for ease of reference only
and have no legal effect.
 

 Exhibit 10.22

    Page 9 of 10 Pages

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In WITNESS WHEREOF, the parties hereto have caused this Development and
Exclusive License Agreement to be duly executed as of 3/8/05.
 

LIVE TISSUE CONNECT, INC.     CONMED CORPORATION /s/ Donald S. Robbins    
/s/ William W. Abraham

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Name: Donald S. Robbins
Title: President and CEO     Name: William W. Abraham
Title: Senior Vice President       525 French Road       Utica, New York
13502-5994          With copies to:     With copies to: Schiff Hardin LLP    
ConMed Corporation Attention: Ernest M. Stern, Esq.     Attention: General
Counsel 1101 Connecticut Avenue, N.W.     525 French Road Washington, D.C.
20036      Utica, New York 13502-5994

 

 Exhibit 10.22

    Page 10 of 10 Pages

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