| | Pursuant
to a 1992 settlement agreement, the Company entered into a license agreement with
another medical product manufacturer (the “Licensor”), whereby the Licensor granted
to the Company a nonexclusive right and license to manufacture and sell products
which are subject to the patents issued to the Licensor. The license agreement
will terminate upon the expiration or invalidation of the last related patents,
which will expire in August 2008. For the rights and license granted under the
agreement, the Company paid the Licensor a nonrefundable prepaid royalty in the
amount of $600,000. In addition to the prepaid royalty, the Company agreed to
pay the Licensor a continuing royalty of 5.75% of sales (which will not exceed
$450,000 for any calendar year) made in the United States, of products covered
by the license agreement. Royalties of $450,000 were paid or accrued in each of
the years ended December 31, 2005, 2004 and 2003. During
2002, the Company entered into a license agreement with another medical product
manufacturer (the “Licensor”), whereby the Licensor granted to the Company an
exclusive worldwide license to manufacture and sell products which are subject
to the patents issued to the Licensor. For the rights and license granted under
the agreement, the Company agreed to pay the Licensor a royalty of 5% of net sales,
which will not exceed $62,500 for calendar year 2003 and $75,000 per year for
calendar year 2004 through 2005. |
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