Exhibit 10.3
SECOND AMENDED AND RESTATED MANUFACTURING AGREEMENT
THIS SECOND AMENDED AND RESTATED MANUFACTURING AGREEMENT (this "Agreement")
is made and entered into this 15th day of June, 2006 by and among ADM Tronics
Unlimited, Inc., a Delaware corporation ("ADM"), Sonotron Medical Systems, Inc.,
a Delaware corporation ("SMS"), and Ivivi Technlogies, Inc., a New Jersey
corporation ("IVIVI" and together with SMS, the "Subsidiaries"), all of the
foregoing corporations with a principal place of business at 000 Xxxxxxx Xxxxxx,
Xxxxxxxxx, Xxx Xxxxxx 00000.
WITNESSETH
WHEREAS, ADM, SMS, IVIVI and Vet-Sonotron Systems, Inc., a Delaware
corporation ("VET"), entered into a manufacturing agreement, dated as of August
15, 2001 (the "Original Manufacturing Agreement"), pursuant to which ADM, a
Registered Medical Device Manufacturing Facility, as such term is defined
pursuant to the U.S. Food and Drug Administration ("FDA") medical device
regulations, manufactures electronic and other medical and non-medical devices
and products for the Subsidiaries;
WHEREAS, in April 2003, the operations of VET were transferred from ADM to
IVIVI;
WHEREAS, in February 2005, ADM and the Subsidiaries entered into an amended
and restated manufacturing agreement, dated February 10, 2005 (the "Existing
Manufacturing Agreement"), pursuant to which the parties amended and restated
the Original Manufacturing Agreement to, among other things, (i) provide each
Subsidiary with protection of its proprietary and confidential information and
(ii) provide each Subsidiary with the right to engage third-party manufacturers
to manufacture any or all of its products in the event ADM is unable to perform,
or otherwise in breach of any of, its obligations under this Agreement;
WHEREAS, ADM and the Subsidiaries desire to amend and restate the Existing
Manufacturing Agreement to, among other things, provide that the term thereof
shall continue until March 31, 2008 and shall automatically renew for additional
one (1) year periods, subject to the terms and conditions herein contained; and
WHEREAS, the Subsidiaries desire to have ADM continue to provide
manufacturing and regulatory services to the Subsidiaries and ADM desires to
continue to provide such services to the Subsidiaries on terms and conditions as
herein contained.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration the receipt and sufficiency is hereby
acknowledged, the parties hereto agree as follows:
1. ADM shall be the exclusive manufacturer of all current and future
medical, non-medical and veterinary electronic and other devices or products to
be sold, rented or leased by
the Subsidiaries (referred to herein as the "Products") under the terms and
conditions herein contained.
2. ADM will manufacture the Products for the Subsidiaries to appropriate
standards and quality commensurate with the type of product and intended use, it
being understood by the parties hereto that this will include Good Manufacturing
Practices ("GMP") and Quality Service Requirements ("QSR") consistent with FDA
regulations.
3. ADM shall invoice each Subsidiary for any of the Products manufactured
for such Subsidiary at an amount equal to the Direct Cost (as defined herein)
plus 20%. It being understood by the parties hereto that "Direct Cost" shall be
defined and determined as the actual, invoiced cost for all Raw Materials (as
defined below), if any, that are incorporated into or consumed in the
manufacture of the Products and purchased for the Subsidiary by ADM, plus a
direct labor charge equal to the number of hours or portions of hours required
to produce the Products multiplied by the standard hourly manufacturing labor
rate of ADM. Direct Cost shall not include an allocation for overhead,
insurance, administration, rent or other expenses not directly related to the
manufacture of the Products.
4. Each Subsidiary shall purchase and provide ADM with the raw materials,
parts, components or other physical items (collectively, the "Raw Materials")
that may be required for ADM to manufacture such Subsidiary's Products.
5. All invoices from ADM to the Subsidiaries shall be immediately due and
payable upon completion of manufacture of the Products and shall be paid by the
Subsidiaries to ADM in U.S. funds by check, wire transfer or other means
acceptable to ADM. All invoices shall include a price per unit (such price to be
the Direct Cost plus 20%) multiplied by the number of units manufactured.
6. Any invoice not paid within 10 days of its due date shall accrue
interest at the rate of 1% per month for any month or portion of a month during
which time such invoice remains unpaid, it being understood by the parties
hereto that time is of the essence.
7. In accordance with FDA regulations for medical device manufacture, ADM
shall maintain Device History Records (within the meaning of the FDA
regulations) for any of the Products manufactured based upon serial numbers;
however, it will not be responsible for Device Master Records and Device Design
Files (each, within the meaning of the FDA regulations), such being the
responsibility and expense of the Subsidiaries.
8. ADM warrants the Products against defects in material and workmanship
for a period of 90 days after the completion of manufacture. After such 90-day
period, ADM will provide repair services for the Products to the Subsidiaries at
its customary hourly repair rate plus the cost of any parts, components or items
necessary to repair the Products. The Subsidiaries shall pay any repair invoices
to ADM under the same terms as contained in Sections 5 and 6 herein.
9. As between each of the Subsidiaries, on the one hand, and ADM, on the
other hand, each Subsidiary is the sole and exclusive owner of all inventions,
patents, patent applications, copyrights, trade secrets, know-how, proprietary
information and other intellectual
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property rights relating to the Products of such Subsidiary or any improvements
thereto (the "Product IP"), whether existing prior to or after the date hereof
and regardless of the party responsible for creating, conceiving or reducing to
practice such Product IP. To the extent any intellectual property rights that
are included in the Product IP would otherwise vest in ADM or any of its
employees or subcontractors, ADM hereby assigns to the applicable Subsidiary, on
an irrevocable, worldwide and royalty and payment free basis, all right, title
and interest in and to such intellectual property rights, and agrees to execute,
acknowledge and deliver to such Subsidiary, and to cause its employees and
subcontractors to execute, acknowledge and deliver to such Subsidiary, any
further assignments and other documents that such Subsidiary reasonably deems
necessary or desirable to perfect or further evidence such assignment. ADM
agrees to reasonably cooperate with such Subsidiary, or any person to whom such
Subsidiary may have assigned such intellectual property rights, in securing for
such Subsidiary or such assignee any patents or other intellectual property
protections which such Subsidiary or assignee may seek anywhere in the world to
obtain in connection therewith, and ADM shall, and shall cause persons employed
by or otherwise engaged by ADM, to execute, acknowledge and deliver to such
Subsidiary or such Subsidiary's assignee all instruments which such Subsidiary
shall reasonably require, give evidence and do all things which are necessary or
desirable to enable such Subsidiary or its assignee to file and prosecute
applications for, and to acquire, maintain and enforce, all such patents and
other intellectual property protections.
10. (a) To the extent ADM, prior to or after the date hereof, has obtained
or obtains access to or knowledge of any non-public information relating to any
Product designs, specifications, components or technologies, or relating to any
other trade secrets, know-how or proprietary information included in the Product
IP (collectively, "Information"), ADM shall maintain such Information as
confidential information of the applicable Subsidiary, using no less than a
reasonable degree of care, and shall not use or disclose any such Information
other than in connection with the performance of its obligations under this
Agreement. Upon request of the applicable Subsidiary, ADM shall return to such
Subsidiary, or destroy and provide such Subsidiary with written certification of
such destruction, all documents, computer files and other materials in ADM's
possession or control, including all copies thereof, that contain or are derived
from any Information of such Subsidiary. In furtherance of, but without
limiting, the foregoing, ADM acknowledges that the confidentiality provisions of
this Agreement shall be deemed to be an agreement to keep the Information of
IVIVI in confidence as contemplated by Regulation FD promulgated by the
Securities and Exchange Commission. In addition, ADM acknowledges and agrees
that some of the Information of IVIV may be considered "material non-public
information" for purposes of the federal securities laws ("Insider Information")
and that ADM and its officers, directors, employees and representatives who
receive IVIVI's Information will abide by all applicable securities laws
relating to the handling of and acting upon such Insider Information.
(b) Upon request of the applicable Subsidiary, ADM shall return to
such Subsidiary, or destroy and provide such Subsidiary with written
certification of such destruction, all documents, computer files and other
materials in ADM's possession or control, including all copies thereof, that
contain or are derived from any Information of such Subsidiary.
11. Notwithstanding anything contained herein to the contrary, ADM shall
notify each Subsidiary immediately if ADM is, or expects that it will be, unable
to fulfill any of its obligations to such Subsidiary under this Agreement or is
otherwise in breach of any of its obligations to such Subsidiary under this
Agreement. In the event ADM is unable to full, or is otherwise in breach of, any
of its obligations under this Agreement, in addition to any right to terminate
this agreement pursuant to Section 13 hereof, such Subsidiary shall have the
right, without penalty or prejudice to Subsidiary's other rights hereunder, to
engage a third-party or third-parties to manufacture any or all of such
Subsidiary's Products. In such event, if a Subsidiary elects to exercise its
right to utilize a third-party or third-parties to supplement the manufacture of
its Products pursuant to this Section 11, at such Subsidiary's request, ADM
shall accept delivery of such Products from such third-party or third parties,
finalize the manufacture of such Products to the extent necessary for such
Subsidiary to comply with FDA regulations and ensure that the design, testing,
control, documentation and other quality assurance procedures with respect to
the manufacturing process of such Products have been followed.
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12. This Agreement commenced on the date of the Original Manufacturing
Agreement and, unless earlier terminated in accordance with the terms and
conditions of this Agreement, shall continue in effect until March 31, 2008 (the
"Initial Term"). After the Initial Term, this Agreement shall automatically
renew for additional one (1) year periods (each a "Renewal Term"), unless either
Party provides three (3) months' prior written notice to the other Party prior
to the end of the Term of its desire to terminate this Agreement. The Initial
Term, together with all the Renewal Terms, shall be collectively referred to
herein as the "Term".
13. (a) This Agreement may be terminated in accordance with the terms and
conditions set forth below:
(i) This Agreement may be terminated with respect to either
Subsidiary (the "Breaching Subsidiary") by ADM immediately upon written notice
if the Breaching Subsidiary has breached any of its material obligations to ADM
under this Agreement; provided, that in the case of a breach capable of being
cured, ADM shall only have the right to exercise such right of termination if
such breach has continued for a period of thirty (30) days after the Breaching
Subsidiary has received written notice of such breach from ADM. If this
Agreement is terminated by ADM pursuant to this Section 13(a)(i) prior to the
end of the Term, the Breaching Subsidiary shall pay when due all invoices for
any Products finished prior to the date of such termination under the same terms
and conditions set forth in Sections 5 and 6 hereof.
(ii) This Agreement may be terminated with respect to either
Subsidiary by such Subsidiary immediately upon written notice if ADM has
breached any of its material obligations to such Subsidiary under this
Agreement; provided, that in the case of a breach capable of being cured, such
Subsidiary shall only have the right to exercise such right of termination if
such breach has continued for a period of thirty (30) days after ADM has
received written notice of such breach from such Subsidiary. If this Agreement
is terminated with respect to either Subsidiary by such Subsidiary pursuant to
this Section 13(a)(ii) prior to the end of the Term, such Subsidiary shall pay
when due all invoices for any Products finished prior to the date of such
termination under the same terms and conditions set forth in Sections 5 and 6
hereof.
(b) Upon the expiration or termination of this Agreement with respect
to any Subsidiary for any reason, ADM shall, at the expense of such Subsidiary,
deliver all finished Products and all unused Raw Materials for such Subsidiary
to such location as such Subsidiary shall designate; provided, that if such
Subsidiary is then in breach of its material obligations to ADM under this
Agreement, ADM's obligations to such Subsidiary under this Section 13(b) shall
be subject to receipt by ADM of appropriate assurances that all amounts owed to
it under this Agreement, including expenses to be incurred pursuant to this
Section 13(b), will be paid when due.
(c) Termination or expiration of this Agreement with respect to any
Subsidiary shall not affect the rights and obligations of any party hereto that
may have accrued prior to the date of termination or expiration, or any
obligation contained in Sections 5 through 10 and Sections 13 through 16 or any
other provision of this Agreement which is similarly intended to or capable of
continuing to apply after such termination either in respect of pre-termination
matters or otherwise.
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14. The Subsidiaries confirm that this Agreement does not infer any other
relationship between ADM and the Subsidiaries and does not obligate ADM to be
responsible for any debts or other liabilities of the Subsidiaries. The
Subsidiaries are separate entities and each is responsible for any liabilities
that may be created.
15. This Agreement shall be construed and enforced in accordance with the
laws of the State of New Jersey and shall not be modified or terminated except
by a written instrument executed by the parties hereto.
16. This Agreement supercedes any previous agreements, whether written or
oral, between and/or among the parties hereto, and, in particular, the previous
agreement regarding the provision of manufacturing services from ADM to certain
of the Subsidiaries.
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IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be signed as of the date first above written.
ADM TRONICS UNLIMITED, INC.
By: /s/ Andre' Xxxxxx
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Name: Andre' Xxxxxx
Title: President and Chief
Executive Officer
IVIVI TECHNOLOGIES, INC.
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
Title: President and Chief
Executive Officer
SONOTRON MEDICAL SYSTEMS, INC.
By: /s/ Andre' XxXxxx
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Name: Andre' XxXxxx
Title: President
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