exv10w1



 







Exhibit 10.1



Protected by Fed. R. Evid. 408






SETTLEMENT, LICENSE AND RELEASE AGREEMENT




     This Settlement, License and Release Agreement (the “Agreement”) is made by and between Sutura,
Inc., a corporation organized under the laws of Delaware, having a principal place of business at
17080 Newhope Street, Fountain Valley, California 92078 (“Sutura”); Abbott Laboratories, a
corporation organized and existing under the laws of Illinois, having a principal place of business
at 100 Abbott Park Road, Abbott Park, Illinois 60064-6057 (“Abbott Laboratories”); and Abbott
Vascular Inc., a corporation organized and existing under the laws of Delaware, and a wholly owned
subsidiary of Abbott Laboratories, having a principal place of business at 400 Saginaw Drive,
Redwood City, California 94063 (“AVI”).



     WHEREAS, Sutura is the current assignee and owner of all right, title and interest in United States
Letters Patent Nos. 5,860,990; 6,117,144; 6,245,079; 6,551,331; 6,562,052; and 7,004,952 (the
“Nobles Patents”).



     WHEREAS, Abbott and its subsidiary, AVI, currently hold an exclusive license in United States
Letters Patent Nos. 5,720,757; 5,810,850; and 6,348,059 (the “Hathaway Patents”), by virtue of a
March 28, 1995 License Agreement between the Indiana University Foundation (“IUF”) and Perclose,
Inc. (the “Hathaway License”), in which Abbott and AVI now hold all the rights of Perclose, Inc.



     WHEREAS, Sutura has asserted, in a suit styled Sutura, Inc. v. Abbott Laboratories and Perclose,
Inc., Civil No. 2:06-CV-536 (TJW) (the “Patent Litigation”), that Abbott and Perclose, Inc.,
infringe the Nobles Patents by making, using, marketing, selling and/or offering for sale products
sold as The Closer, The Closer S, ProGlide and Perclose A-T.



     WHEREAS, Abbott and AVI have asserted counterclaims in the Patent Litigation alleging that Sutura
infringe the Hathaway Patents by making, using, marketing, selling and/or offering for sale the
SuperStitch.



     WHEREAS, Abbott and AVI deny infringing the Nobles Patents and raise other defenses to Sutura’s
claims including, but not limited to defenses relating to the alleged invalidity of the Nobles
Patents, and Sutura denies infringing the Hathaway Patents and raises other defenses to Abbott’s
claims including, but not limited to defenses relating to the alleged invalidity of the Hathaway
Patents.



     WHEREAS, the Parties hereto have mutually agreed to amicably settle their differences and the
dispute between them on the terms and conditions set forth herein.



     NOW, THEREFORE, in consideration of the promises and covenants set forth herein, the receipt and
sufficiency of which are hereby acknowledged, the Parties do hereby agree and covenant as follows:



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1.0 DEFINITIONS




     As used herein, the following terms shall have the meanings set forth below:



     “Abbott” means Abbott Laboratories, together with its parents, subsidiaries, including
without limitation Abbott Vascular Inc. and Perclose Inc., predecessors, successors, affiliates,
divisions, assigns, present and former directors, officers, shareholders, partners, principals,
agents, employees, representatives, attorneys, indemnitors, and insurers.



     “Abbott Patents” means (a) the Hathaway Patents; (b) all foreign counterparts, divisions,
continuations, continuations-in-part, patents of addition, substitution, registrations, reissues,
reexaminations or extensions of any kind with respect to any of the Hathaway Patents, and any other
patents that claim priority to or provide priority for any patent application from which any of the
Hathaway Patents derived. The titles, filing dates, and patent or serial numbers of the foregoing
are set forth on Exhibit A; provided, however, that the failure to list a patent or counterpart on
Exhibit A shall not exclude the omitted patent or counterpart from the Abbott Patent Rights.
“Abbott Patents” shall not include any rights in any patents that Abbott acquires after the
Effective Date of this Agreement with a right to license or sublicense unless they are presently
pending and will automatically fall under the terms of the Hathaway License.



     “Effective Date” means the date of execution by the last Party hereto.



     “Field Of Use” means the field of closure of femoral vascular access sites.



     “Hathaway License” means the certain License Agreement dated March 28, 1995, by and between
the Indiana University Foundation on behalf of Indiana University and Perclose, as amended and as
assigned to ARTI, now known as IURTC. A copy of the Hathaway License is annexed hereto as “Exhibit
C.”



     “IURTC” means the Indiana University Research & Technology Corporation, together with its
parents, subsidiaries, predecessors, successors, affiliates, divisions, assigns, present and former
directors, officers, shareholders, partners, principals, agents, employees, representatives,
attorneys, indemnitors, and insurers.



     “Minor Modification” means in reference to an existing device a change in the dimensions,
proportions, materials, or the general location of existing features of the existing device,
provided that such change(s) do not alter the basic configuration or operation of the device. A
change that extends the use of a device outside the Field of Use is not a Minor Modification.



     “Parties” means Sutura, Abbott Laboratories and Abbott Vascular Inc., each individually
referred to as a “Party.”



     “Sutura” means Sutura, Inc., together with its parents, subsidiaries, predecessors,
successors, affiliates, divisions, assigns, present and former directors, officers, shareholders,
partners, principals, agents, employees, representatives, attorneys, indemnitors, and insurers.



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     “Sutura Patents” means (a) the Nobles Patents; (b) all foreign counterparts,
divisions, continuations, continuations-in-part, patents of addition, substitution, registrations,
reissues, reexaminations or extensions of any kind with respect to any of the Nobles Patents, and
any other patents that claim priority to or provide priority for any patent application from which
any of the Nobles Patents derived. The titles, filing dates, and patent or serial numbers of the
foregoing are set forth on Exhibit B; provided, however, that the failure to list a patent or
counterpart on Exhibit B shall not exclude the omitted patent or counterpart from the Sutura Patent
Rights. “Sutura Patents” shall not include any rights in any patents that Sutura acquires after the
Effective Date of this Agreement with a right to license or sublicense.



     “Net Sales” shall have the meaning ascribed to it in the Hathaway license, and that meaning
shall be the gross revenues actually received by Sutura upon sales of a Licensed Product, which
sales would, but for the license granted hereunder, infringe a Valid Claim in the country for which
the Licensed Product is sold, less (a) normal and customary rebates, and cash and trade discounts,
(b) sales, use and/or other excise taxes or duties actually paid, (c) outbound shipping and
insurance charges paid or allowed, (d) import and/or export duties actually paid, and (e) amounts
allowed or credited due to returns or retroactive price decrease.



2.0 CROSS LICENSES




     2.1 License to Abbott. Sutura hereby grants to Abbott a nonexclusive, paid-up, worldwide
license under the Sutura Patents to make, have made, use, market, offer for sale, sell and
have-sold, devices in the Field Of Use. The rights granted under this License do not include the
right to grant sublicenses.



     2.2 License to Sutura. Abbott hereby grants to Sutura a nonexclusive, royalty bearing,
worldwide license and sublicense under the Abbott Patents to make, have made, use, market, offer
for sale, sell and have-sold, devices in the Field Of Use. The rights granted under this License
do not include the right to grant sublicenses.



     2.3 No Knock-Offs. The licenses and sublicense granted under Sections 2.1 and 2.2 above do
not extend to any product made by either Party that is a copy of or is otherwise substantially
identical to a product of the other Party.



     2.4 Retained Rights. This Agreement shall not be construed as granting a license under
any intellectual property rights of Sutura, on the one hand, and Abbott, on the other hand, other
than as expressly set forth hereunder.



3.0 ROYALTIES




     3.1 Royalties Payable by Sutura. Beginning with the first accrual of Net Sales on which a
royalty is due hereunder, Sutura shall provide to Abbott a quarterly royalty report as follows:
Within fifteen (15) days after the end of each calendar quarter, Sutura shall deliver to Abbott a
true and accurate report, giving such particulars of the business conducted by Sutura, if any,
during such calendar quarter as are pertinent to an account for payments hereunder. Such report
shall include at least (a) the total of Net Sales by Sutura; (b) the calculation of royalties; and
(c) the total royalties so calculated and due Abbott. Simultaneously with the delivery of each
such report, Sutura shall pay to Abbott the total royalties, if any, due to Abbott for the



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period of such report. If no royalties are due, Sutura shall so report. The requirements
and obligations of this Section apply only to the manufacture, use, marketing, offer for sale or
sale of products, in the Field Of Use, following the Effective Date of this Agreement. If the
Hathaway License is amended to provide Abbott with royalty terms that are more advantageous to
Abbott without Abbott having provided additional consideration to secure such advantageous terms,
Abbott shall notify Sutura and shall offer to Sutura the option to amend its royalty obligations in
this Agreement to coincide with such more favorable royalty; provided, however, that Sutura agrees
to accept any additional terms in such amended Hathaway License that are financially more onerous
than those provided for in this Agreement. The report and payment under this section shall be
delivered to the address below or such other address as Abbott shall from time to time inform
Sutura:



Division Finance, Dept. AV42

Attn: Jill Tallman

Abbott Vascular Inc.

3200 Lakeside Drive

Santa Clara, CA 95054




     3.2 Indemnity For Royalties. Sutura takes full responsibility for royalties owed under the
Hathaway License, pursuant to Section 3.1. To the extent IURTC, under any circumstances, seeks
payment from Abbott for royalties due under the Hathaway License as a result of any sales of
devices made pursuant to the license grant of Section 2.2, Sutura agrees to take full
responsibility for any such amounts owed and agrees to, at Sutura’s election, defend Abbott and (if
unsuccessful) fully indemnify Abbott for any such claims by IURTC. If Sutura elects not to defend
Abbott, Sutura likewise agrees to reimburse and indemnify Abbott to the extent that Abbott is ever
required by the order of either a court or an arbitrator to pay IURTC for any royalties due as a
result of any sales of devices made pursuant to the license grant of Section 2.2, in which case
Sutura would also pay for Abbott’s reasonable attorneys’ fees and costs associated with any such
action.



     3.3 Payments by Abbott. Abbott shall make a one time payment to Sutura of Twenty Three
Million and 00/100 Dollars ($23,000,000.00) in return for the rights granted in this Agreement and
its Exhibits, such payment to be made by wire transfer within ten (10) days of the Effective Date
of this Agreement to the following account:


FARMERS AND MERCHANTS BANK OF LONG BEACH CA

ABA: 122201198

ACCOUNT NAME: SUTURA INC.

A/C # 20001711


Street Address:

302 Pine Avenue

Long Beach, California 90802

U.S.A.



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     3.4 Books of Account and Audit. During the term of the license under Section 2.2
and for one year after the expiration of said license, Sutura shall keep full and accurate books of
account sufficient to record the number of devices sold during each royalty period, as well as the
total revenues and the country-by-country breakdown of those revenues. During the term of the
license under Section 2.2 and for one year thereafter, Abbott, or an authorized agent of Abbott,
upon twenty (20) calendar days prior written notice, shall have the right, at its own expense and
at reasonable times during business hours, to have the aforesaid records of Sutura examined by a
duly accredited public accountant or a representative of Abbott for the sole purpose of, and only
to the extent necessary for, verifying the number of devices sold during each royalty period, as
well as the total revenues and the country-by-country breakdown of those revenues. Such audits
shall be permitted no more than once each calendar year, and said accountants or representatives
shall hold information learned in the course of any and all audits hereunder in strictest
confidence.



4.0 REPRESENTATIONS AND WARRANTIES; DISCLAIMERS




     4.1 Right to Grant License. Abbott represents and warrants that it has the legal power to
grant the rights and licenses to Sutura to the Abbott Patent Rights as set forth in Section 2.2.
Sutura represents and warrants that it has the legal power to grant the rights and licenses to
Abbott to the Sutura Patent Rights as set forth in Section 2.1.



     4.2 No Conflicting Agreements. Each Party represents and warrants that it neither has
entered into nor will it enter into any agreement with any third party which conflicts in any way
with their respective obligations under this Agreement.



     4.3 Disclaimer of Warranties. THE EXPRESS WARRANTIES IN THIS SECTION 4 ARE IN LIEU OF ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.



     4.4 No Other Claims. Each Party represents and warrants that as of the Effective Date of
this Agreement it has no other claims or causes of action against any other Party to this
Agreement, except those that are the subject of the mutual release of Section 5.1 and the dismissal
of Section 5.2.



5.0 MUTUAL RELEASES AND DISMISSAL OF ACTION




     5.1 Releases. Within ten (10) days following the Effective Date, Sutura shall execute the
release attached hereto as Exhibit D, and Abbott shall execute the release attached hereto as
Exhibit E.



     5.2 Stipulation of Dismissal. Within ten (10) days following the Effective Date, the
Parties shall jointly execute the Stipulation of Dismissal attached hereto as Exhibit F, where
Sutura’s and Abbott’s claims are dismissed with prejudice. Upon the full delivery of the fully
executed releases as set forth under Section 5.1, the Parties shall file the fully executed
Stipulation of Dismissal with the United States District Court for the Eastern District of Texas.



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6.0. COVENANT NOT TO SUE




     6.1 Sutura’s Covenant Not to Sue Abbott. With respect to any issued or pending patent
rights owned or controlled by Sutura as of the Effective Date of this Agreement, Sutura covenants
not to sue Abbott for infringement of such rights based on the manufacture, use, offer to sell, or
sale of Abbott’s The Closer, Closer S, Perclose AT, and Proglide products as they existed as of or
prior to the Effective Date or any Abbott product which is a Minor Modification of such products.



     6.2 Abbott’s Covenant Not to Sue Sutura. With respect to any issued or pending patent
rights owned or controlled by Abbott as of the Effective Date of this Agreement, Abbott covenants
not to sue Sutura for infringement of such rights based on the manufacture, use, offer to sell, or
sale of Sutura’s SuperStitch product as it existed as of or prior to the Effective Date or any
Sutura product which is a Minor Modification of such product.



7.0 CONFIDENTIALITY




     7.1 The Parties agree that the amount, terms and conditions of the Agreement are confidential. The
Parties further agree not to issue any press releases or otherwise disclose the amounts of any
payments made hereunder to any entity; provided, however, that the Parties may disclose such and
only such information relating to the settlement as required by the following circumstances,
together with such other information as it may deem necessary:



     7.1.1 To the extent that such disclosure is required under the terms of a pre-existing agreement
between any Party and a third-party, including the Hathaway License;



     7.1.2 To the extent that such disclosure is necessary under the laws or regulations of the United
States (including without limitation the rules and regulations of the SEC relating to the public
disclosure of material information), the laws or regulations of any of the several states or
territories, or the laws or regulations of any other country;



     7.1.3 To any third-party representing or otherwise assisting a Party in the preparation, filing or
dissemination of financial information, including without limitation to taxing authorities; and



     7.1.4 To any third-party during negotiations for the sale, license, assignment or transfer of an
interest in or to some or all of the assets, stock, or either, of any Party, to a third-party.



     7.2 In each instance where disclosure is allowed under Section 6.1, the disclosing Party shall, to
the extent permitted by applicable law, regulation or practice, redact the financial terms of this
Agreement from any publicly accessible version of this Agreement and file a confidential
nonredacted version with the appropriate authorities or agency as may be required.



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     7.3 Each Party may disclose the existence of this Agreement to its employees on a
need-to-know basis, including the employees of any related subsidiary, parent and/or affiliated
company.



     7.4 The Hathaway License attached hereto as Exhibit C is to remain confidential to the Parties and
successors-in-interest to that License, except that Sutura may have and grant further access to the
Hathaway License to the extent necessary to exercise Sutura’s rights and fulfill its obligations as
set forth in this Agreement, provided that any person or entity to whom Sutura discloses the
Hathaway License agrees to maintain the confidentiality of that License in a manner consistent with
the provisions of this Agreement.



8.0 NOTICES




     8.1 Any notice required or permitted by this Agreement shall be sent by (a) certified mail, return
receipt requested or (b) a recognized courier service, and such notice shall be effective on the
date received as indicated by the carrier receipt, if sent and addressed as follows or to such
other address as may be designated by a party in writing:



	 	 	 	 	 
	 

	 	If to Sutura:
	 	Mr. David Teckman

President/CEO

Sutura, Inc.

17080 Newhope Street

Fountain Valley, CA 92708
	 
	 	 	 	 
	 

	 	With copy to:
	 	Dr. Anthony Nobles

Chief Technology Officer

Sutura, Inc.

17080 Newhope Street

Fountain Valley, CA 92708
	 
	 	 	 	 
	 

	 	If to Abbott:
	 	Dr. John M. Capek

Executive Vice President, Medical Devices

Abbott Laboratories

3200 Lakeside Drive

Santa Clara, CA 95054-2807
	 
	 	 	 	 
	 

	 	With copy to:
	 	Ms. Laura Schumacher

Executive Vice President, General Counsel and Secretary

Abbott Laboratories

100 Abbott Park Road

Abbott Park, IL 60604-6049






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9.0 MISCELLANEOUS




     9.1 Execution in Counterparts. This Agreement may be executed in counterparts, such
counterparts consisting of a single agreement notwithstanding that all signatories are not
signatories to the original or to the same counterpart.



     9.2 Binding Effect. This Agreement shall be binding upon the Parties hereto, their
respective representatives, administrators, parents, subsidiaries, affiliates, divisions,
successors, predecessors, and assigns.



     9.3 Construction. This Agreement is the product of extensive negotiation between and has
been drafted by the Parties. The terms and conditions of this Agreement shall be construed as a
whole according to its fair meaning and not strictly for or against any of the Parties by reason of
any presumption.



     9.4 Entire Agreement. This Agreement constitutes the final expression and the complete and
exclusive integrated statement of all of the agreements, conditions, promises, representations and
covenants among the Parties with respect to the subject matter hereof, and supersedes all prior
agreements, negotiations, representations, understandings and discussions among the Parties, their
respective representatives and any other person or entity with respect to the subject matter
covered hereby. Any change, modification or amendment to this Agreement must be in writing, must
specifically refer to this Agreement and must be signed by duly authorized representatives of the
Parties against whom the change, modification or amendment is to be enforced.



     9.5 Voluntary and Knowing Execution by Authorized Persons. The Parties acknowledge that
this Agreement is made and executed by and of their own free will, after consultation with counsel
of their own choosing, and that they have not been knowingly influenced or induced to enter into
this Agreement as a result of any improper act or action. Both Parties warrant and represent that
the persons executing this Agreement on their respective behalf have authority and are authorized
to do so.



     9.6 Assignment. The rights and obligations created by this Agreement for any Party are not
assignable by that Party without the express written consent of the other Parties, which consent is
not to be unreasonably withheld, except that rights and obligations created by this Agreement may
be assigned to affiliates, subsidiaries and/or successors in interest to the business to which the
Agreement relates, of any Party, without written consent of the other Parties. Any assignment of
such rights and obligations shall include all obligations, including, but not limited to, the
indemnity obligation under Paragraph 3.2. No assignment of this agreement shall relieve the
assigning Party of its obligations under this agreement that accrued prior to such assignment.



     9.7 Governing Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without giving effect to the conflict of law principles thereof.
The United States District Court for the Eastern District of Texas shall retain personal
jurisdiction over the Parties for the purpose of enforcing this Agreement.



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     9.8 Alternative Dispute Resolution of Disputes. Any controversy or claim arising
out of or relating to this Agreement shall be finally settled by Alternative Dispute Resolution
(“ADR”) in accordance with the provisions set forth herein and attached hereto as Exhibit G, which
is made a part hereof.



     9.9 Severability. If any of the provisions of this Agreement shall be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate or render unenforceable the
entire Agreement, but rather the entire Agreement shall be construed as if not containing the
particular invalid or unenforceable provision or provisions, and the rights and obligations of each
Party shall be construed and enforced accordingly. However, in the event such provision is
considered an essential element of this Agreement, then the Parties shall promptly negotiate a
replacement thereof.



     9.10 Non-waiver. No course of dealing, course of performance or failure of any Party to
strictly enforce any term, right or condition of this Agreement shall be construed as a waiver of
any term, right or condition, unless such waiver is set forth in a writing signed by the Party who
is alleged to have waived the term, right or condition, which writing shall expressly reference the
term, right or condition to be waived and state that the term, right or condition has been waived.


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     IN WITNESS WHEREOF, the Parties have caused their duly authorized representatives to execute
this Agreement.



	 	 	 	 	 	 	 
	Sutura, Inc.	 	Abbott Laboratories
	 
	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 
	 

	 	Signature
	 	 	 	Signature
	 
	 	 	 	 	 	 
	Name

	 	 	 	Name	 	 
	 

	 	 
	 	 	 	 
	 

	 	Print/Type
	 	 	 	Print/Type
	 
	 	 	 	 	 	 
	Title

	 	 	 	Title	 	 
	 

	 	 
	 	 	 	 
	 

	 	Print/Type
	 	 	 	Print/Type
	 
	 	 	 	 	 	 
	Date:

	 	 	 	Date:	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Abbott Vascular Inc.	 	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Signature	 	 	 	 
	 
	 	 	 	 	 	 
	Name
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Print/Type	 	 	 	 
	 
	 	 	 	 	 	 
	Title
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Print/Type	 	 	 	 
	 
	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 






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