EXHIBIT 10.25
MANUFACTURING TRANSITION AGREEMENT
This Agreement (the "Agreement") is made as of the 1st day of October,
1997 (the "Effective Date"), by and among Medical Scientific, Inc., a
Massachusetts corporation having a principal place of business at
000 Xxxx Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000 ("MSI"), Conceptus, Inc.,
a Delaware corporation having a principal place of business at
0000 Xxxxxx Xxxxxx, Xxx Xxxxxx, Xxxxxxxxxx 00000 ("Conceptus"), and Microgyn,
Inc., a Massachusetts corporation and wholly owned subsidiary of Conceptus
("Microgyn"). (Conceptus and Microgyn are collectively referred to
hereinafter as the "Company.")
WITNESSETH
WHEREAS, the Company and MSI desire to terminate or amend certain
agreements between them; and
WHEREAS, Microgyn desires to acquire certain manufacturing know-how of
MSI; and
WHEREAS, MSI is willing to exchange such manufacturing know-how for
certain payments and other consideration from the Company;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties agree as follows:
ARTICLE I
TERMINATION, RELEASE AND AMENDMENT OF AGREEMENTS
A. Termination of Agreements.
MSI and Microgyn hereby agree to terminate effective as of the Effective
Date, (i) the Manufacturing Agreement, dated July 23, 1996 (the
"Manufacturing Agreement"), and (ii) the Sublicense Agreement, dated July 23,
1996 (the "Sublicense Agreement"), each entered into by them, upon the terms
and conditions contained herein and those contained in the Royalty Agreement,
dated as of October 1, 1997, the form of which is attached hereto as EXHIBIT A
(the "Royalty Agreement"), entered into by MSI and the Company simultaneously
with this Agreement. MSI and Microgyn acknowledge and agree that, after
termination, neither party shall have any further rights or obligations under
either the Manufacturing Agreement or the Sublicense Agreement, except for
the respective indemnification and confidentiality provisions of such
agreements which survive termination of such agreements.
B. Release of Promissory Note.
In connection with the termination of the Manufacturing Agreement, the
Company further agrees that the obligation of MSI payable to Conceptus, in
the principal amount of $800,000, plus accrued interest thereon is hereby
terminated, provided, that, during the period lasting for 93 days after the
date this Agreement is executed by the parties, November 14, 1997, MSI
neither files a petition in bankruptcy nor has filed, or consents to the
filing, against it of a petition of bankruptcy which is not dismissed within
60 days, or a petition to take advantage of any insolvency nor makes an
assignment for the benefit of creditors.
C. Amendment of Agreements.
1. In connection with the termination of the Sublicense Agreement, the
Company and MSI also agree that Section 1(b)(ii) of the Non-Competition
Agreement by and among MSI, Conceptus and Microgyn dated as of November 26,
1996 (the "Non-Competition Agreement"), is hereby amended to read in its
entirety as follows:
The "Competing Business" shall mean the design, manufacture, and/or
marketing of products in the field of gynecology and urology directly or
indirectly competitive with the Microgyn Sheath System as described in
the Microgyn Business Plan dated as of July 1996, including components
thereof and materials incorporated therein.
In all other respects, the Non-Competition Agreement shall remain in full
force and effect.
2. MSI and Microgyn further agree that the second sentence of Article IV
of the Joint Ownership and Cross-License Agreement, dated July 23, 1996 (the
"Joint Ownership and Cross-License Agreement"), entered into by them, is
hereby amended to read in its entirety as follows:
All such filings shall be in the name of Microgyn and/or Conceptus, Inc.,
the parent company of Microgyn, and all marketing and sales rights
or privileges obtained as a result of such approvals shall accrue solely
to Microgyn and Conceptus, Inc.
In all other respects, the Joint Ownership and Cross-License Agreement shall
remain in full force and effect.
ARTICLE II
MANUFACTURE OF THE PRODUCTS
A. Products.
During the term of this Agreement, MSI agrees to manufacture and to sell
the Products (as defined herein) exclusively to the Company, and the Company
agrees to purchase such Products from MSI. For purposes of this Agreement,
"Products" shall mean those products with the specifications described on
attached EXHIBIT B (the "Existing Products") as well as those products
currently only described on EXHIBIT B, whose specifications shall be attached
to EXHIBIT B once such specifications are developed by MSI and the Company
(the "New Products"). (The specifications for the Products are referred to
herein as the "Product Specifications.")
B. License to Manufacture.
During the term of this Agreement, the Company grants to MSI a
non-royalty bearing license to use any Company proprietary technology,
whether owned or licensed by the Company, necessary to manufacture the
Products exclusively for the Company.
C. Manufacturing Facility.
1. MSI will manufacture the Products in accordance with (i) the Product
Specifications; (ii) Good Manufacturing Practices ("GMP") as required by the
United States Food, Drug and Cosmetic Act, as amended (the "Act"); and (iii)
pertinent rules and regulations of the United States Food and Drug
Administration ("FDA").
2. MSI will not make any changes, that would potentially affect Product
safety or efficacy, in its manufacturing processes or procedures with respect
to the Products or the Product Specifications
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without the Company's prior written approval. The Company agrees, however,
to respond by facsimile to any change requests made by MSI within 24 hours of
receipt of such requests.
3. The Company shall have the right to have qualified employees or
agents of the Company present at MSI's plant at all times during normal
business hours to inspect MSI's facilities and manufacturing procedures for
compliance with GMP and the Company's quality assurance requirements and to
inspect MSI's inventory of Products, work-in-process, raw materials to be
used for Products, production records and such other matters as may be
pertinent to proper quality assurance of Products to be delivered hereunder.
4. MSI will permit authorized representatives of the FDA to inspect
MSI's plant and production facilities relating to or used in connection with
the manufacture of Products and will promptly notify the Company when MSI
receives notice of any such inspection. MSI will advise the Company of the
findings of any FDA inspection and will immediately take steps to correct any
deficiencies found by the FDA relating to the manufacture of the Products.
ARTICLE III
FUNDING FOR MANUFACTURING OPERATIONS
A. Funding
During the period commencing on the Effective Date and continuing until
the earlier of (i) the Transfer Completion Date (as defined below) or (ii)
March 31, 1998, unless earlier terminated pursuant to Article X (the
"Manufacturing Transition Period"), the Company shall pay the direct and
indirect costs associated with the manufacture of the Products and specified
on EXHIBITS D and E attached hereto and incorporated herein by this reference.
1. The Company shall purchase all raw materials, subassemblies and
components necessary for MSI to manufacture the Products (the "Materials").
Until MSI completes a physical inventory of the Materials it has on hand (the
"Materials Inventory"), MSI shall order the Materials on behalf of the
Company and instruct the various vendors to invoice the Company directly for
Materials to be received before November 1, 1997. To the extent that vendors
require that MSI purchase the Materials, the Company shall pay to MSI by wire
transfer upon receipt of copies of invoices from such vendors the amounts due
for the Materials provided. In addition, following completion of the
Materials Inventory by MSI on or about October 30, 1997, the Company shall
reimburse MSI for the cost of all Materials on hand not previously paid for
by the Company; provided, however, the Company shall have the right, within
five days after MSI's completion of the Materials Inventory, to verify the
Materials Inventory information provided by MSI. Thereafter, the Company will
order all Materials in coordination with MSI.
2. Concurrently with the Materials inventory to be taken on or about
October 30, 1997, MSI shall take a physical inventory of its work-in-process
of the Products and finished goods of the Products (the "Product Inventory").
The Company and MSI shall agree on a value of the Product Inventory based on
the direct Materials and labor costs and the Company shall thereafter
purchase the Product Inventory from MSI; provided, however, the Company shall
have the right, within five days after MSI's completion of the Product
Inventory, to verify the Product Inventory information provided by MSI. The
purchase price shall be the agreed upon value less any direct labor costs
included in said value which were previously paid for by the Company.
3. The Company shall prepay the sum of $93,937.00, adjusted as provided
below (the "Overhead Prepayment"), by wire transfer to MSI on the last day of
each calendar month during the
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Manufacturing Transition Period (but not including the last day of the
Manufacturing Transition Period) to cover MSI's costs, as specified on
EXHIBIT D, which includes the salaries of the MSI production employees listed
on EXHIBIT E, associated with the manufacture of the Products for the
succeeding calendar month. MSI acknowledges that the Company has already
paid an aggregate of $187,874.00 by wire transfer to MSI to cover MSI's costs
associated with the manufacture of the Products for the months of October and
November. Prior to each succeeding payment date, MSI shall reconcile the
prior month's actual direct labor costs and related payroll taxes and
employee benefits with the estimated amount of direct labor costs and related
payroll taxes and employee benefits included in the prior month's Overhead
Prepayment and advise the Company of any differences. The next Overhead
Prepayment due from the Company shall be adjusted to reflect such
differences. MSI acknowledges that the Overhead Prepayments required by this
provision shall cease upon the termination of this Agreement; provided,
however, the Company agrees to pay the salaries of the MSI production
employees listed on EXHIBIT E through March 31, 1998 so long as this
Agreement is not terminated as a result of a material breach by MSI. MSI
further acknowledges that if this Agreement is terminated in the middle of a
calendar month, any Overhead Prepayment in excess of the salaries of the MSI
production employees ("Excess Overhead Prepayment") made by the Company shall
be pro rated for such partial month and the unused balance of the Overhead
Prepayment shall be offset against the Cash Component of the Purchase Price
(as defined below) and/or royalties, if any, owed to MSI pursuant to the
Royalty Agreement.
4. The Company shall also make a one-time payment of $6,000 to MSI upon
the signing of this Agreement for certain nonrecurring indirect costs.
Additionally, the Company agrees to pay via wire transfer to MSI within seven
days of receipt of copies of invoices therefor all consulting and
professional fees (not including legal fees) incurred after the Effective
Date, as specified on EXHIBIT F or as approved in writing in advance by the
Company, related to (i) the manufacture or regulatory compliance of the
Products and (ii) the accounting and record keeping for the Products.
5. The Company shall have the right, twice during the term of this
Agreement, and upon reasonable notice and during normal business hours, to
have qualified employees or agents of the Company audit all books, records
and documentation, however prepared and regardless of storage medium,
relating to MSI's labor and Materials costs for manufacturing the Products
for the purpose of assessing and confirming those costs. All information
audited pursuant to this provision shall be considered Confidential
Information for the purposes of Article IX hereof.
6. MSI acknowledges that the Company owns all the capital equipment
listed on EXHIBIT G hereof. Upon termination of this Agreement, MSI agrees
that it will, upon the Company's instruction, promptly assemble and package
all such equipment and the Materials and Product Inventories and ship, at the
Company's expense, such equipment and inventories within five business days
of the date of the Company's instruction, to a location specified by the
Company via a carrier selected by the Company.
ARTICLE IV
UNIT PRODUCTION AND PRODUCT SHIPMENT
A. Unit Production.
During the term of this Agreement, MSI shall produce on an aggregate
basis through December 31, 1997, at least 50% of the number of units of each
Existing Product as specified on EXHIBIT C (the "Minimum Required Units"),
and will use its best efforts to produce 100% of the number of units of each
New Product as specified on EXHIBIT C (the "Target Units") as of the last day
of each calendar month thereafter. Any failure of MSI to produce the Minimum
Required Units for any of the Existing Products or to use its best efforts to
produce the Target Units for any of the New Products, other than a failure
which is due to any factor or factors outside of MSI's control, shall be
deemed a material breach of this Agreement by MSI.
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B. Passage of Title and Shipping Costs.
All shipments of Products to the Company or its customers shall be
F.O.B. MSI's Taunton, Massachusetts facility, and all shipping costs, duties,
fees and taxes, other than taxes payable by MSI based upon its income or
assets, in connection with such sales and shipments shall be the sole
responsibility of the Company. Except for units of Products shipped during
the month of October 1997, MSI shall not invoice the Company for the cost of
such units because the Company shall have already paid such costs pursuant to
Article III of this Agreement; provided, however, the Company shall be
obligated to pay the Unit Payment (as defined below) as provided in Section C
of this Article IV. The parties shall agree to a price to be paid for units
of Products shipped during the month of October 1997.
C. Unit Payments.
As an additional incentive to MSI to ship at least the Minimum Required
Units to the Company as soon as possible and as additional consideration for
the transfer of the Manufacturing Know-How by MSI, the Company agrees to pay
to MSI the following amounts (each, a "Unit Payment"): (i) for each unit
shipped in October 1997, $20 per unit; (ii) for each unit shipped in November
1997, $15 per unit; and (iii) for each unit shipped during the remainder of
the Manufacturing Transition Period, $10 per unit. The Company shall pay the
Units Payments promptly after it has received, inspected and accepted the
units shipped; provided, however, the Company shall not pay the Unit Payment
for any units shipped in excess of the aggregate number of units by Product
specified in EXHIBIT C. The Company agrees that it will inspect all units
promptly upon receipt and that any units not rejected and returned to MSI
within seven business days of receipt shall be deemed accepted.
D. Employee Bonus Pool.
As an incentive to MSI employees to manufacture Products in accordance
with the respective Product Specifications, the Company agrees to pay to MSI
each month during the Manufacturing Transition Period for creation of an
employee bonus pool (the "Bonus Pool") an amount equal to three dollars
($3.00) per unit of Product manufactured by MSI in accordance with the
respective Product Specifications, as determined by the Company upon receipt
and inspection of the units. MSI agrees to set up the Bonus Pool, to deposit
all amounts paid by Conceptus pursuant to this Section D in the Bonus Pool
and to distribute the entire Bonus Pool pro rata to its production employees
listed on EXHIBIT E.
ARTICLE V
TRANSFER OF MANUFACTURING KNOW-HOW
A. Manufacturing Know-How.
For the purposes of this Agreement, the term "Manufacturing Know-How"
shall mean all documentation, information, techniques, technologies and
"know-how" owned or licensed by MSI relating to the manufacture of the
Products.
B. Transfer of Manufacturing Know-How.
As of the Effective Date, MSI hereby assigns and transfers to Microgyn,
free and clear of all liens, mortgages, encumbrances and charges, all of
MSI's intellectual property rights (including, without limitation,
collectively, worldwide patents, trade secrets, copyrights, trademarks, mask
work rights, moral rights, trade names, rights in trade dress, and all other
intellectual property rights and proprietary rights, whether arising under
the laws of the United States or any other state, country or jurisdiction,
including all rights or causes of action for infringement or misappropriation
of any of the foregoing ("Intellectual Property Rights")) to the
Manufacturing Know-How.
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C. License of Manufacturing Know-How.
As of the Transfer Completion Date (as defined below), Microgyn hereby
grants to MSI an exclusive, worldwide, irrevocable, fully-paid license to
use, modify and improve the Manufacturing Know-How in MSI's Field of Use (as
such term is defined in the Joint Ownership and Cross-License Agreement).
D. Cooperation of MSI.
During the Manufacturing Transition Period, MSI shall use its best
efforts to cooperate with the Company in transferring the Manufacturing
Know-How to Microgyn. MSI shall take all steps necessary to help establish
the Company or a third party selected by the Company as a manufacturing
facility to manufacture the Products for the Company.
E. Purchase Price.
In consideration for the transfer of the Manufacturing Know-How by MSI,
the Company will, as of the date on which the Company determines, in its sole
discretion, that the transfer of the Manufacturing Know-How is completed, as
evidenced by the commencement of full commercial production of the Products
by the Company or a third party (the "Transfer Completion Date"):
1. pay in cash by wire transfer the following (the "Cash Component"):
Transfer Completion Date Amount in Cash
------------------------ --------------
October, 1997 $283,000
November, 1997 $225,000
December, 1997 $165,000
January, 1998 $120,000
February, 1998 $80,000
March, 1998 $40,000
provided, however, the Cash Component shall be pro rated if the
Transfer Completion Date shall occur in the middle of a calendar
month; provided, further, the Cash Component shall be reduced by any
unused balance of the Excess Overhead Prepayment; PLUS
2. pay the royalties as provided in the Royalty Agreement; provided,
however, the royalties may be reduced by any unused balance of the
Excess Overhead Prepayment that is not offset against the Cash
Component.
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ARTICLE VI
REGULATORY MATTERS
A. Traceability.
MSI and the Company shall each maintain such traceability records with
respect to the Products as shall be necessary to comply with applicable GMP
regulations, including but not limited to master device and lot history
records.
B. Complaint Files.
Each of MSI and the Company shall maintain appropriate complaint files
relating to the Products manufactured by MSI pursuant to this Agreement and
each shall promptly report in writing to the other any complaint related to
Product quality.
C. Reliability Reporting.
Each of MSI and the Company shall promptly report in writing to the
other any failure of a Product manufactured by MSI pursuant to this
Agreement, any change in the statistically demonstrated reliability of such a
Product or any other material information relative to the reliability of such
a Product.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
A. Representations and Warranties of MSI.
MSI hereby represents and warrants to the Company as follows:
1. MSI is a corporation organized, validly existing and in corporate
good standing under the laws of Massachusetts, has all requisite corporate
power and authority to own and operate its property and carry on its business
and is not required to qualify to do business in any other jurisdiction.
2. The execution and delivery of this Agreement has been duly and
validly authorized by all necessary corporate action on the part of MSI, and
(assuming valid execution by the Company) this Agreement is a valid and
binding obligation of MSI enforceable against it.
3. As of the date of this Agreement, MSI is not a party to any lawsuit,
nor is there any outstanding claim against MSI, alleging that use of the
Manufacturing Know-How infringes the proprietary rights of any third party.
4. As of the date this Agreement, there are no liens, mortgages,
encumbrances, charges or other claims by any third party to the Manufacturing
Know-How.
5. As of the date of this Agreement, MSI is not a party to any
agreement or understanding, oral or written, which would, in any manner, be
inconsistent with the rights granted herein to the Company and MSI shall not
enter into any agreement or understanding, oral or written, during the term
of this Agreement, nor during the term of this Agreement, directly or
indirectly, engage in any activity which would, in any manner, be
inconsistent with the rights herein granted to the Company.
6. MSI represents and warrants that all Products delivered hereunder
will conform to and meet the Product Specifications for a period of one year
from time of delivery to the Company.
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7. MSI represents and warrants that it will manufacture the Products in
accordance with Article II hereof and that such Products shall be free from
defects in materials and workmanship under normal use and service for a
period of one year following delivery. The Company's sole remedy under this
warranty shall be the replacement of any unit of Product which is determined
to be defective during the Manufacturing Transition Period.
8. MSI represents and warrants that all Products delivered hereunder
shall be labeled in conformity with the specifications provided by the
Company, which specifications shall comply with the Act and all applicable
laws of each applicable jurisdiction into which the Company intends to sell
the Products.
B. Representations and Warranties of the Company.
The Company hereby represents and warrants to MSI as follows:
1. Conceptus is a corporation organized, validly existing and in
corporate good standing under the laws of Delaware, has all requisite
corporate power and authority to own and operate its property and carry on
its business and is not required to qualify to do business in any other
jurisdiction in which the failure to be so qualified would have a material
adverse effect on the business, results of operations or financial condition
of Conceptus. Microgyn is a corporation organized, validly existing and in
corporate good standing under the laws of Massachusetts, has all requisite
corporate power and authority to own and operate its property and carry on
its business and is not required to qualify to do business in any other
jurisdiction.
2. The execution and delivery of this Agreement has been duly and
validly authorized by all necessary corporate action on the part of each of
Conceptus and Microgyn, and (assuming valid execution by MSI) this Agreement
is a valid and binding obligation of each of Conceptus and Microgyn
enforceable against each of them.
3. As of the date of this Agreement, neither Conceptus nor Microgyn is
a party to any lawsuit, nor is there any outstanding claim against Conceptus
or Microgyn, respectively, alleging that use of the Manufacturing Know-How
infringes the proprietary rights of any third party.
4. As of the date of this Agreement, neither Conceptus nor Microgyn is
a party to any agreement or understanding, oral or written, which would, in
any manner, be inconsistent with the rights granted herein to MSI and neither
Conceptus nor Microgyn shall enter into any agreement or understanding, oral
or written, during the term of this Agreement, nor during the term of this
Agreement, directly or indirectly, engage in any activity which would, in any
manner, be inconsistent with the rights herein granted to MSI.
5. The Company shall provide MSI on a timely basis with (i) the funding
called for by Article III hereof and (ii) all materials, product designs,
documentation, information and equipment necessary to allow MSI to achieve
the Minimum Required Units and Target Units and to meet the Product
Specifications.
ARTICLE VIII
INDEMNIFICATION
1. MSI and the Company will indemnify and hold each other harmless from
and against any and all suits, actions, losses, obligations, deficiencies,
liabilities, claims, damages, cost and expenses (including court costs and
reasonable attorneys' fees) which arise out of, are caused by, relate to, or
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result or occur from or in connection with their respective acts or omissions
in connection with their respective activities under this Agreement.
2. MSI agrees to indemnify, defend and hold the Company harmless from
and against any and all suits, actions, losses, obligations, deficiencies,
liabilities, claims, damages, cost and expenses (including court costs and
reasonable attorneys' fees) arising from claims that the Manufacturing
Know-How infringes or misappropriates any Intellectual Property Rights of a
third party. MSI agrees that the Company may offset any payments it is
required to make to MSI hereunder or pursuant to the Royalty Agreement
against any funds owed to the Company by MSI pursuant to this second
paragraph of Article VIII.
3. If any claim by a third party is made against any party hereto and
the party against whom said claim is made intends to seek indemnification
with respect thereto as set forth in this Article VIII (the "Indemnitee"),
the Indemnitee will promptly give written notice to the indemnifying party
(the "Indemnitor") of such claim. The failure of the Indemnitee to give
prompt notice shall not relieve the Indemnitor of its obligations hereunder,
unless such failure materially prejudices the defense of the claim for which
indemnification is sought. The Indemnitor will have ten days after such
notice is given to elect, by written notice given to the Indemnitee, to
undertake, conduct and control, through counsel of its own choosing and at
the Indemnitor's sole risk and expense, the good faith settlement or defense
of such claim, and the Indemnitee will cooperate with the Indemnitor in
connection therewith; provided the Indemnitee will be entitled to participate
in such settlement or defense through counsel chosen by the Indemnitee, and
the fees and expense of such counsel will be borne by the Indemnitee; and,
provided further, that the Indemnitor shall not make any settlement involving
the payment of money by the Indemnitee without first making available the
funds needed to pay the settlement and will not make any settlement involving
any injunction or similar restriction against the Indemnitee without the
consent of the Indemnitee, which consent shall not be unreasonably withheld.
If the Indemnitor does not make a timely election to undertake the good faith
defense or settlement of the claim as aforesaid, or if the Indemnitor fails
to proceed with the good faith defense or settlement of the matter after
making such election, in either such event, the Indemnitee will have the
right to contest, settle or compromise the claim at its exclusive discretion,
at the risk and expense of the Indemnitor to the full extent set forth above,
as the case may be. The provisions of this Article VIII shall survive
termination of the Agreement.
ARTICLE IX
CONFIDENTIALITY
For purposes of this Agreement, "Confidential Information" shall mean
any information of a confidential and/or proprietary nature as to which
either party has acquired or, during the term of this Agreement, acquires,
any interest, including, but not limited to, all discoveries, inventions,
improvements and ideas related to any process, formula, machine, device,
manufacture, composition of matter, plan or design, whether patentable or
not, or relating to the conduct of its business which, prior to the date
hereof or during the term of this Agreement, was or is disclosed to the other
party. In order for any information to be deemed Confidential Information, it
must be in written form and appropriately marked confidential at the time of
disclosure to the other party, or alternatively, if the information is
disclosed orally, it must be confirmed as confidential in writing by the
disclosing party within ten days of such disclosure. Notwithstanding the
foregoing, the term "Confidential Information" shall not include any
information which: (i) has been published or otherwise becomes a matter of
public knowledge by any means other than the receiving party's default in the
observance or performance of any term or provision of this Article on its
part to be observed and performed; (ii) was known to the receiving party at
the time of such disclosure or as evidenced by its business records
maintained in the ordinary course; (iii) is at any time disclosed to the
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receiving party by any person or entity not a party hereto who it believes,
after reasonable inquiry, has the right to do disclose same; or (iv) is
independently developed by the receiving party.
During the term of this Agreement and for a period of five years
thereafter, each party will maintain the other party's Confidential
Information in confidence and will not disclose same to any person or entity
not a party hereto or use same for the benefit of any such third party. The
receiving party will keep and maintain complete and accurate written records
of the Confidential Information of the other party, will xxxx such
Confidential Information with such legends as the disclosing party may
reasonably direct, and will promptly deliver same to the disclosing party
upon the expiration or termination hereof or at such other times as the
disclosing party may request.
ARTICLE X
TERM AND TERMINATION
A. Term.
This Agreement shall be effective upon execution by both parties and
shall continue until March 31, 1998 unless sooner terminated in accordance
with the provisions of this Agreement.
B. Termination.
This Agreement may be terminated:
1. By either MSI or the Company upon the other's failure to satisfy any
of its obligations hereunder or material breach of any representation or
warranty hereunder (a "default"). Upon a default, the non-defaulting party
shall provide written notice to the defaulting party of such default, and the
defaulting party shall have ten days to cure such default, unless the default
is a payment default, in which case the defaulting party shall have five days
to cure such default. If the defaulting party fails to cure such default
within said ten day or five day period, the non-defaulting party may
immediately terminate this Agreement. In the event of a payment default, the
defaulting party shall pay interest on the amount due at the rate of 1.5% per
month until payment is made in full. Any payments made by a defaulting party
shall first be applied against accrued interest and then against principal.
2. By either party upon the filing against the other of a petition in
bankruptcy which is not dismissed within 60 days, or upon either party filing
or consenting to the filing against it of a petition in bankruptcy or a
petition to take advantage of any insolvency act, or making an assignment for
the benefit of creditors.
3. Upon any termination of this Agreement by the Company pursuant to
this Article X, including, without limitation, because of MSI's failure to
produce the Minimum Required Units that meet the Product Specifications, then
the Company may deem the Transfer Completion Date to have occurred
immediately and MSI shall forfeit its rights hereunder to receive any future
Overhead Prepayments and the Cash Component of the Purchase Price.
4. Upon any termination of this Agreement by MSI pursuant to this
Article X, then MSI may deem the Transfer Completion Date to have occurred
immediately and the Company shall pay the Cash Component for the full month
in which such termination occurs.
5. Upon any termination of this Agreement pursuant to this Article X,
all rights and obligations of the parties hereunder shall cease except that
the provisions of Articles I, V, VIII, IX, X and XI shall survive termination
of this Agreement and all amounts owed by the Company or MSI to the
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other as of the date of such termination, except as provided is the
proceeding paragraph, shall be immediately due and payable.
ARTICLE XI
MISCELLANEOUS
A. No Assignment.
Neither MSI nor the Company shall have the right to assign any of its
rights or obligations under this Agreement, other than to its successor by
merger, consolidation or sale of assets, without the prior written consent of
the other party, which consent shall not be unreasonably withheld.
B. Severability.
Any provision of this Agreement which is found to be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. Each provision of
this Agreement shall be valid and enforceable to the fullest extent permitted
by law. If any provision contained in this Agreement shall be held to be
excessively broad as to scope, activity or subject so as to be unenforceable
at law, such provision shall be construed by limiting and reducing it so as
to be enforceable to the extent compatible with the applicable law as then in
effect.
C. Notice.
All notices or other communications required or permitted to be given
under this Agreement shall be in writing and will be deemed effective and
given when delivered in person, sent by delivery service or by certified or
registered mail, postage and certification prepaid, or sent by telecopier or
facsimile with confirmation to the following addresses:
If to MSI: Medical Scientific, Inc.
000 Xxxx Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Fax: 000.000.0000
Attn: President
With a copy to: Warner & Xxxxxxxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax: 000.000.0000
Attn: Xxxxxxx X. Xxxxxx, Esq.
If to Microgyn: Microgyn, Inc.
0000 Xxxxxx Xxxxxx
Xxx Xxxxxx, Xxxxxxxxxx 00000
Fax: 000.000.0000
Attn: President
If to Conceptus: Conceptus, Inc.
0000 Xxxxxx Xxxxxx
Xxx Xxxxxx, Xxxxxxxxxx 00000
-11-
Fax: 000.000.0000
Attn: President
With a copy to: Venture Law Group
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Fax: 000.000.0000
Attn: Xxxxxxx X. Xxxx, Esq.
D. Counterparts.
This Agreement may be executed by the parties in separate counterparts,
each of which when so executed and delivered will be an original, but all of
which together will constitute one and the same instrument. In pleading or
proving this Agreement, it will not be necessary to produce or account for
more than one such counterpart.
E. Captions.
The captions of sections or subsections of this Agreement are for
reference only and will not affect the interpretation or construction of this
Agreement.
F. Waivers.
No waiver of any breach or default hereunder will be valid unless in a
writing signed by the waiving party. No failure or other delay by either
party in exercising any right, power, or privilege hereunder will be or
operate as a waiver thereof, nor will any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege.
G. Further Assurances; Cooperation.
From time to time on and after the date hereof, MSI and the Company will
promptly execute and deliver all such further instruments and other
documents, and will promptly take all such further actions, as the other may
reasonably request, in order to effect or confirm the transactions hereby
contemplated and to carry out the purposes of this Agreement. In addition,
each of MSI and the Company will cooperate with the other in all reasonable
respects relating to the transactions and relationship between the parties
contemplated hereby.
H. Force Majeure.
Any delay in the performance of any of the duties or obligations of any
party hereto shall not be considered a breach of this Agreement and the time
required for performance shall be extended for a period equal to the period
of such delay; provided, that such delay has been caused by or is the result
of any acts of God, acts of the public enemy, insurrections, riots,
embargoes, labor disputes (including strikes, lockouts, job actions, or
boycotts), fires, explosions, earthquakes, floods, shortages of material or
energy or other unforeseeable causes beyond the control and without the fault
or negligence of the party so affected. The party so affected shall give
prompt notice to the other party of such cause, and shall take whatever
reasonable steps are necessary to relieve the effect of such cause as rapidly
as possible.
I. Entire Agreement.
This Agreement and the Royalty Agreement, together with the exhibits
hereto and thereto, contain the entire understanding and agreement among the
parties, and supersedes any prior understandings or agreements among them,
with respect to the subject matter hereof.
-12-
J. Governing Law.
This Agreement will to the maximum lawful extent be governed by and
interpreted and construed in accordance with the internal laws of the
Commonwealth of Massachusetts, as applied to contracts made, and entirely to
be performed, within Massachusetts, and without reference to principles of
conflicts or choice of law.
K. Relationship of Parties.
The relationship of the Company and MSI will be one of independent
contracting parties, and not that of partners, joint venturers,
principal-and-agent, or otherwise. Neither the Company nor MSI will have or
purport to have any right, power, or authority to bind the other.
L. Arbitration.
The parties agree to work together in good faith to resolve any disputes
arising under or in connection with this Agreement and the transactions and
relationship between the parties contemplated hereby, and to explore
resolution of the dispute through methods of alternative dispute resolution.
If the parties are unable to resolve a dispute, it shall be finally settled
by a panel of three arbitrators, each having at least five years of
experience as an arbitrator and otherwise mutually acceptable to the parties,
in an arbitration administered by American Arbitration Association in
accordance with the internal laws of the Commonwealth of Massachusetts
(except that any dispute relating to the construction or effect of any patent
shall be resolved under the applicable laws of the United States or such
other jurisdiction as granted such patent). Any demand for arbitration
hereunder must be made before the running of the legal statute of limitations
applicable to the claim at issue. Any such arbitration shall take place in
Boston, Massachusetts, unless otherwise agreed by the parties, and shall be
subject to the then applicable Federal Rules of Civil Procedure. The panel
of arbitrators will not have any right, power, or authority to award any
punitive or exemplary damages or other damages in excess of purely
compensatory damages. Each of the Company and MSI will be responsible for
one-half of the fees and expenses of the panel of arbitrators, and all of
such party's own costs and expenses, in connection with any such arbitration.
Judgment upon any award rendered by the panel of arbitrators, if such award
is in accordance with applicable law and the terms of this Agreement, may be
entered in any court of competent jurisdiction. The decision of the panel of
arbitrators shall be in writing and shall set forth in reasonable detail the
basis for such decision.
[SIGNATURES ON NEXT PAGE]
-13-
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date above first written.
MICROGYN, INC.
By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: Chief Financial Officer
CONCEPTUS, INC.
By: /s/ Xxxxxxx Xxxxxxxx
Name: Xxxxxxx Xxxxxxxx
Title: President and Chief Executive Officer
MEDICAL SCIENTIFIC, INC.
By: /s/ Xxxx X. Xxxxxxxx
Name: Xxxx X. Xxxxxxxx
Title: President
-14-
EXHIBIT A
ROYALTY AGREEMENT
-----------------
See Exhibit 10.26.
EXHIBIT B
EXISTING PRODUCTS:
1. Existing Sheath for Olympus Resectoscope
2. Existing Sheath for Storz Resectoscope
NEW PRODUCTS:
1. New Sheath for ACMI/Circon Resectoscope 25.6F, model GEOSHCF outer sheath
2. New Sheath for Xxxxxxx Xxxxxxxxxxxx 00X, model A4724 outer sheath
PRODUCT SPECIFICATIONS
----------------------
See Attached
This exhibit contains the following:
- Detailed diagram and schedule of the QCII-ASSY SHEATH (O)
- Detailed diagram and schedule of the QCII-ASSY SHEATH (S)
EXHIBIT C
UNITS ORDERED
-------------
Product Type Number of Units Total Units by Month
------------ --------------- --------------------
October 1997 Olympus 1,400
Storz 1,500 2,900
November 1997 Olympus 500
Storz 3,500 4,000
December 0000 Xxxxxx (New) 500
Storz 4,000 4,500
January 0000 Xxxxxx (New) 3,000
Olympus (New) 1,000 4,000
February 0000 Xxxxxx (New) 1,000
Olympus (New) 3,000 4,000
March 0000 Xxxxxx (New) 2,000
Olympus (New) 2,000 4,000
23,400
------
------
EXHIBIT D
MSI MONTHLY OVERHEAD POOL
-------------------------
1. SALARIES $41,554
Position @ MSI % Time to be Spent
-------------- on Microgyn
----------------
Product Development Technologist 100%
Engineer 50%
Chief Executive Officer 60%
Vice President, Engineering 90%
Project Manager 100%
Director Operations 100%
Administrative Assistant 25%
Office Manager 50%
Inventory & Documentation Mgr. 100%
Engineer 50%
2. DIRECT LABOR $20,257
11 Assemblers
1 Production Lead
l Quality Inspector
3. PAYROLL TAXES (@ 7.65%) $ 4,384
4. UNEMPLOYMENT INSURANCE $ 1,542
5. HEALTH INSURANCE $12,500
6. RENT and UTILITIES $ 6,000
7. PROPERTY and LIABILITY INSURANCE $ 2,000
8. SUPPLIES $ 2,000
9. OFFICE, TELEPHONE, POSTAGE & SHIPPING,
REPAIRS & MAINTENANCE & OTHER $ 3,700
TOTAL MONTHLY PAYMENT $93,937
EXHIBIT E
CERTAIN MSI PRODUCTION EMPLOYEES AND SALARIES
---------------------------------------------
Xxxxx Xxxxxxx (Instrument Assembly Supervisor)
Xxxxx Xxxxxxxx (QA Lab Technician)
Xxxxx Xxxxxx
Xxxxx Xxxxxxx
Xxxxx Xxxxxx
Xxxxx Xxxxx
Xxxxxx Xxxxxxx
Xxxx Xxxxx
Xxxxx Xxxxx
Xxxxx Xxxx
Xxxxxxxxx Xxxxx
Xxx Xxxxxx
Xxxxx Xxxxx
TOTAL MONTHLY SALARIES: . . . . . . . . . . . . . . . . . . . . . . . .$20,257
EXHIBIT F
AUTHORIZED CONSULTANTS AND PROFESSIONALS
----------------------------------------
XXXX XXXXXX
XXXXX BIMBO
XXXXXX XXXXXXXXXXXXX
EXHIBIT G
COMPANY'S CAPITAL EQUIPMENT
---------------------------
ASSET NUMBER DESCRIPTION AMOUNT
-------------------------------------------------------------------------
1344 Universal Hub Sheath 9,250.00
1345 ELC 400 Cur Lmps 7,539.00
1345 Shutters for ELCs 6,526.80
1345 ELC-UV6A Cur. Sys. 5,995.50
1345 AC 992 Fluid Disp. 2,756.25
1345 Ultrasonic Cleaner 4,520.45
1345 Drying Oven 5,542.37
1345 1L 309B Radiometer 1,034.25
0000 XX Xxx form. Gen. 14,647.50
1345 Ultrasonic Welder 15,009.75
1345 Bar Sealer 13,193.25
0000 XX Xxx Tapering Equipment 12,883.85
-------------------------------------------------------------------------
Total $98,898.97
-------------------------------------------------------------------------
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