DISTRIBUTION AGREEMENT BETWEEN NEOPROBE CORPORATION AND ETHICON ENDO-SURGERY, INC.
Exhibit
10.13
BETWEEN
NEOPROBE
CORPORATION
AND
ETHICON
ENDO-SURGERY, INC.
This
is
an Agreement dated and effective as of the last date of signature below
(“Effective Date”), by and between Ethicon Endo-Surgery, Inc. a corporation
organized under the laws of the State of Ohio, having a business address at
0000
Xxxxx Xxxx, Xxxxxxxxxx, Xxxx 00000 (“Ethicon”); and Neoprobe Corporation, a
corporation organized under the laws of the State of Delaware, having a business
address at 000 Xxxxx Xxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxx 00000 (“Neoprobe”,
together with Ethicon, the “Parties”, and each a “Party”).
ARTICLE
1 - BACKGROUND
1.1 Ethicon
manufactures and markets surgical instruments and accessories for minimally
invasive surgery, including trocars, staplers, ligation devices, hand-held
instruments, retractors, manipulation devices, electrosurgery and diagnostic
surgical products.
1.2 Neoprobe
manufactures and markets radiation detection devices, including but not limited
to, devices for use in intraoperative lymphatic mapping (“ILM”) and gamma
radiation guided surgery.
1.3 Ethicon
has developed and continues to develop certain technology, know how,
intellectual property, devices and instruments for use in ILM and gamma
radiation guided surgery.
1.4 The
devices manufactured and marketed by Neoprobe complement Ethicon’s surgical
instruments and accessories for minimally invasive surgery, ILM and gamma
radiation guided surgery and the Parties desire that Ethicon distribute the
Products (as defined below) on a worldwide exclusive basis pursuant to the
terms
of this Agreement.
1.5 The
Parties entered into a standstill and rights agreement (the “Standstill and
Rights Agreement”) on August 10, 1999, pursuant to which Ethicon paid Neoprobe
four hundred thousand dollars ($400,000.00) in consideration of Neoprobe
obligations in the Standstill and Rights Agreement.
1.6 In
connection with a good faith purchase order placed by Ethicon on August 13,
1999
for Products (the “PO”), Neoprobe placed purchase orders with the appropriate
vendors to fill the PO in accordance with the terms thereof.
Therefore,
in consideration of the mutual promises, covenants and agreements hereinafter
set forth, the Parties agree as follows:
ARTICLE
2 - DEFINITIONS
The
following terms, when used with initial capital letters, shall have the
following meanings:
2.1 “Affiliate”
is any entity that directly or indirectly controls, is controlled by, or is
under common control with a specified Party, and for such purpose “control”
shall mean the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of the entity, whether through
the
ownership of voting securities, by contract or otherwise.
2
2.2 A
“Change
of Control” shall be deemed to have occurred if (A) any “person” (as such term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as
amended (the “Exchange Act”) is or becomes the “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
Neoprobe representing 30% or more of the combined voting power of Neoprobe’s
then outstanding securities; or (B) the stockholders of Neoprobe approve a
merger or consolidation of Neoprobe with any other corporation, other than
a
merger or consolidation which would result in the voting securities of Neoprobe
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 80% of the combined voting power of the voting
securities of Neoprobe or such surviving entity outstanding immediately after
such merger or consolidation, or the stockholders of Neoprobe approve a plan
of
complete liquidation of Neoprobe or an agreement for the sale or disposition
by
Neoprobe of all or substantially all of Neoprobe’s assets.
2.3 “Commercial
Year” shall mean a one (1) year period commencing on January 1 and any
anniversary thereof during the term of this Agreement.
2.4 “Control
Unit” shall mean a gamma radiation detection device including a
microcomputer-based unit which measures the presence of gamma-emitting isotopes,
including, but not limited, to the model 2000 Control Unit.
2.5 “First
Commercial Year” is the one (1) year period commencing on January 1, 2000. The
four (4) years following the First Commercial Year shall be referred to as
the
“Second”, “Third”, “Fourth” and “Fifth” Commercial Years,
respectively.
2.6 “Gross
Profit” is the difference between Neoprobe’s cost as indicated in Schedule 5.2
and the Transfer Price indicated in Schedule 5.2.
2.7 “Improved
Product” or “Improved Products” shall mean an enhancement or modification to an
existing Product.
2.8 “Insolvency
Event” shall mean the occurrence of any of the following events:
(a) Neoprobe
shall admit in writing its inability, or be generally unable, to pay its debts
as such debts become due; or
(b) Neoprobe
shall (1) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator of itself or of
all
or a substantial part of its property, (2) make a general assignment for the
benefit of its creditors, (3) commence a voluntary case under the United States
Bankruptcy Code, as now or hereafter in effect (the “Bankruptcy Code”), (4) file
a petition seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or readjustment of debts,
(5) fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in any involuntary case under the
Bankruptcy Code, or (6) take any corporate action for the purpose of effecting
any of the foregoing; or
3
(c) A
proceeding or case shall be commenced by or against Neoprobe in any court of
competent jurisdiction, seeking (1) its liquidation, reorganization, dissolution
or winding-up, or the composition or readjustment of its debts, (2) the
appointment of a trustee, receiver, custodian, liquidator or the like of
Neoprobe or of all or any substantial part of its assets, or (3) similar relief
in respect of Neoprobe under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, or an order,
judgment or decree approving or ordering any of the foregoing shall be entered
and continue unstayed and in effect for a period of ninety (90) days; or an
order for relief against Neoprobe shall be entered in a case under the
Bankruptcy Code.
2.9 “Know-How”
shall mean all know-how relating to the design, development, manufacture, sale
or use of any Product or Improved Product, including, without limitation,
processes, techniques, methods, products, apparatuses, materials and
compositions which are reasonably related thereto.
2.10 “New
Product” shall mean an instrument or device developed by or for Neoprobe prior
to and/or during the term of this Agreement and any extensions thereof other
than a Product or Improved Product.
2.11 “Patent
Applications” are the U.S. Patent applications listed in Schedule 2.11 hereto;
all foreign counterparts of such applications; and all continuations,
continuations-in-part, and divisionals of such applications.
2.12 “Patents”
are the U.S. Patents listed in Schedule 2.11 hereto and any patents subsequently
issuing from the Patent Applications as well as renewals, reissues,
reexaminations, extensions, and patents of addition and patents of importation.
Furthermore, Patents shall also include each patent, U.S. or foreign, which
Neoprobe owns or is empowered to grant a license to Ethicon prior to or during
the term of this Agreement or any extension thereof, the practice of which
is
reasonably necessary for Ethicon to sell the Product.
2.13 “Probe”
shall mean a hand-held gamma radiation-sensing device that connects to a Control
Unit.
2.14 “Probe
Isolation Module” or “PIM” shall mean a device that provides a type BF applied
part interface between a 14mm Probe and a Control Unit.
2.15 “Product”
or “Products” shall mean instruments and devices used for radiation detection,
including but not limited to, Neoprobe portable radioisotope detector systems,
probes and related accessories set forth on Schedule 2.15 attached hereto as
may
be amended from time to time by mutual agreement of the Parties or a New Product
added to Schedule 2.15 pursuant to Section 5.7 or Section 6.2.
4
2.16 “Raw
Materials” shall mean the materials, components, and packaging required to
manufacture and package any Product in accordance with the
Specifications.
2.17 “Regulatory
Compliance” shall mean compliance with (i) all applicable statutes, laws, and
regulations, including good manufacturing practices (“GMP”) and (ii) Ethicon
Endo-Surgery, Inc. Quality Assurance Requirements, which are attached and
incorporated into this Agreement as Exhibit 2.17.
2.18 “Specifications”
shall mean the requirements with which the Product must conform as specified
by
21 CFR §820.181 and include device specifications, production process
specifications, quality assurance procedures and specifications, packaging
and
labeling specifications, and installation, maintenance and servicing procedures
and methods that are contained in the Device Master Record for the
Product.
2.19 “Trademarks”
shall mean the (i) U.S. and foreign marks set forth in Schedule 2.19 hereto;
(ii) any unregistered trademarks used in connection with Products; and (iii)
all
copyrights or distinctive features of the packaging, including but not limited
to trade dress, used in connection with the Products.
2.20 “Year
2000 Compliance” shall mean: (a) the Products perform in a consistent manner and
functions without interruptions regardless of the date in time on which the
Product is delivered, used and/or further distributed, whether before, on or
after January 1, 2000 and whether or not the dates are affected by leap
years;
(b) the
Product, if computerized, accept, calculate, compare, sort, extract, sequence
and otherwise process date inputs and date values, and return and display date
values and perform, in a consistent manner regardless of the dates used, whether
before, on or after January 1, 2000;
(c) the
Product, if computerized, accept and respond to two-digit year-date input in
a
manner that resolves any ambiguities as to the century in a defined,
predetermined and appropriate manner; and
(d) the
Product, if computerized, store and display date information in ways that are
unambiguous as to the determination of the century.
ARTICLE
3 - APPOINTMENT
3.1 Distribution
Rights.
Subject
to the terms and conditions of this Agreement, and specifically to the terms
and
conditions of Sections 3.2 and 3.3 below, Neoprobe hereby appoints Ethicon,
and
Ethicon hereby accepts the appointment as Neoprobe’s exclusive distributor on a
worldwide basis during the term of this Agreement and any extension thereof
at
the agreed upon Transfer Prices (as defined below).
5
*
Portions have been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential
treatment.
3.2 Third
Party Rights.
The
granting to Ethicon by Neoprobe of the rights in Section 3.1 shall be on a
country-by-country basis subject to Neoprobe’s termination of distribution and
similar rights granted to third parties by Neoprobe or its Affiliates (“Third
Party Agreements”). Neoprobe represents and warrants that Schedule 3.2
accurately sets forth all countries where any such Third Party Agreement is
in
effect. Neoprobe represents and warrants that it has contractual rights which
enable it to rightfully terminate such Third Party Agreements in accordance
with
the time lines set forth in Schedule 3.2 and covenants to take such actions
and
rightfully terminate all such Third Party Agreements as soon as practicable
in a
manner that would not prejudice the non-competition provisions imposed on such
third parties therein and to deliver exclusive distribution rights pursuant
to
Section 3.1 to Ethicon on or before the dates set forth Schedule 3.2. Neoprobe
agrees to indemnify and hold harmless Ethicon and its Affiliates and their
respective officers, directors, employees and agents from and against any
liability, loss, costs (including reasonable attorneys’ fees), expenses or
damages that are attributable to claims of third parties against Ethicon arising
out of Neoprobe’s efforts to terminate the rights of such third parties as
contemplated by this Section 3.2. This obligation shall survive termination
of
this Agreement. Neoprobe agrees that upon the termination of each of the Third
Party Agreements, the right to distribute the Products in the territories
covered by such Third Party Agreement shall immediately be added to this
Agreement and shall be subject to the terms and conditions set forth herein,
at
no additional license or other fee to Ethicon.
3.3 Supply
to Third Parties.
Neoprobe grants Ethicon the exclusive right to supply Products to all other
distributors of Products or at Ethicon’s request on a case by case basis, assign
to Ethicon the underlying Third Party Agreement with such distributor if such
distributor consents to such assignment. As used in this Section 3.3 the term
“supply” shall mean, filling purchase orders (either to Neoprobe or directly to
Ethicon), and shipping, invoicing, and collecting for such orders according
to
the applicable terms of the Third Party Agreements. Neoprobe agrees to forward
any purchase orders for Products it receives to Ethicon promptly (but in any
event within five (5) business days of receipt of the purchase order). Ethicon
shall pay Neoprobe for Products shipped to such distributors in accordance
with
Section 5.2 herein. Ethicon’s sales of Products to such distributors (except to
Century Medical, Inc. in Japan) shall be included in the calculation of any
average selling price and minimum purchase requirements (“MPRs”) of a Product
covered by this Agreement.
ARTICLE
4 - TERM
The
initial term of this Agreement (the “Initial Term”) shall commence on the
Effective Date and shall continue until December 31, 2004 (the “Initial Term
Date”), unless earlier terminated as expressly provided under the terms of this
Agreement; provided,
however,
that
Ethicon shall have the option (the “Option”) of extending the term of this
Agreement for two (2) subsequent two (2) year periods [*] (in Ethicon’s sole
reasonable judgment) than the immediately preceding Commercial Year. Neoprobe
shall deliver to Ethicon written notice (the “Renewal Notice”) setting forth the
Initial Term Date not less than one (1) year nor more than one (1) year and
thirty (30) days prior to such date or the date of the expiration of any such
period of extension, as the case may be. In the event that Ethicon exercises
the
Option, it shall deliver to Neoprobe written notice thereof within ninety (90)
days following its receipt of the Renewal Notice.
6
ARTICLE
5 - RESPONSIBILITIES OF THE PARTIES
5.1 Supply
of the Product.
During
the term of this Agreement, Neoprobe shall manufacture and sell the Products
and
Improved Products exclusively to Ethicon in accordance with the Specifications,
and shall not sell, supply or distribute any Products or Improved Products
to
any third party. Neoprobe shall supply Ethicon (and its Affiliates) with all
of
those quantities of Products as ordered by Ethicon (and its Affiliates) pursuant
to this Agreement.
5.2 Transfer
Pricing.
The
transfer price (the “Transfer Price”) for each type of Product shipped by
Neoprobe during the term of this Agreement shall be set forth on Schedule 5.2
hereto. The Transfer Prices set forth therein include all costs of packaging
in
accordance with the Specifications and all cost of delivery F.O.B. Neoprobe’s
manufacturing facility. Ethicon shall pay the Transfer Prices set forth in
Schedule 5.2 for delivery of the Products within thirty (30) days from the
date
of invoice. The date of invoice shall not be earlier than the date of shipment.
Ethicon agrees to purchase the demonstration units referenced in Notes 2 and
3
of Article 11 “Demonstration Units” of Schedule 5.2 hereto within thirty (30)
days after the units have been returned to Neoprobe and refurbished to the
reasonable satisfaction of Ethicon.
5.3 Cost
Reduction Programs.
Neoprobe hereby agrees that it shall use its best reasonable efforts to minimize
the costs of manufacturing the Products to the extent it may do so without
compromising the quality and/or regulatory status of the Products or compliance
with the terms of this Agreement. Each Party will reasonably cooperate with
the
other Party in the pursuit of cost reduction programs in the manufacture of
the
Products. Each Party shall inform the other party of cost reduction initiatives
related to the manufacture of Products within fourteen (14) days after cost
reduction initiatives have begun. The resulting savings will initially be
allocated to the Party that has incurred documented costs until such costs
have
been recovered. Thereafter, fifty percent (50%) of the savings shall be
allocated to the Party which has initiated and funded the cost reduction
program.
5.4 Demonstration
Unit Pricing.
During
the term of this Agreement or any extension thereof, the Transfer Price for
Products and fully functional demonstration units shall be as listed in Schedule
5.2.
5.5 Risk
of Loss.
Neoprobe shall ship Products, at Ethicon’s cost, to any location chosen by
Ethicon utilizing carriers chosen by Ethicon. The risk of loss with respect
to
the Products shall remain with Neoprobe until the Product is loaded aboard
the
common carrier at Neoprobe’s manufacturing facility for a Product, or other
location mutually agreed upon by both Parties. Neoprobe will pack the Product
in
a manner suitable for shipment to enable the Product to withstand the effects
of
reasonable shipping conditions, including handling during loading and
unloading.
7
5.6 Labeling
and Sales Literature.
As of
the Effective Date, Neoprobe has on hand, the labeling, inserts, sales
literature or customer instructions for Products in the quantities and at the
respective costs listed on Schedule 5.6. Existing inventories of all labeling,
inserts, sales literature, or customer instructions for all Neoprobe Products
shall be provided to Ethicon at Ethicon’s request at Neoprobe’s cost. Additional
inventories will be provided to Ethicon at Ethicon’s cost. Master art work for
all labeling, inserts, sales literature or customers instructions shall be
made
available to Ethicon should additional quantities be produced by Ethicon or
should changes be desired by Ethicon. Neoprobe will provide to Ethicon
documented evidence of Neoprobe’s internal copy clearance review and approval;
and Ethicon shall have the right to review and accept master art work for all
labeling, inserts, sales literature or customer instructions prior to production
of such.
5.7 Transfer
Price and Forecasts for New Products.
Before
a New Product the research and development of which is not funded by Ethicon
(“Unfunded New Product”) may be added to Schedule 2.15 and become a Product
subject to the terms of this Agreement, the Parties must agree to a Provisional
Transfer Price (as defined in Schedule 5.2) and to a forecast of Ethicon’s
expected purchases of such Unfunded New Product including a schedule of desired
delivery dates for the following six (6) months, the first three (3) months
of
this forecast shall constitute a binding purchase order. Neoprobe shall be
under
no obligation to deliver and Ethicon shall be under no obligation to accept
any
Unfunded New Products until a Provisional Transfer Price and forecast is
established for such New Product. If the Parties cannot agree upon a Provisional
Transfer Price and forecast within ninety (90) days, Neoprobe shall be free
to
market and distribute the Unfunded New Product (a “Proposed Transaction”)
subject to a right of first refusal of Ethicon. Pursuant to Ethicon’s right of
first refusal, Neoprobe shall not consummate or agree to consummate a Proposed
Transaction with any party without first giving prompt notice thereof to Ethicon
in writing (the “Notice”) specifying the pricing, terms, conditions and other
material provisions of such Proposed Transaction. In the event that Ethicon
elects to consummate a transaction upon the same pricing, terms, conditions
and
other material provisions as specified in the Notice, Ethicon shall have thirty
(30) days to so notify Neoprobe and Neoprobe shall use all reasonable commercial
efforts to facilitate the consummation of such a proposed transaction with
Ethicon or its Affiliate within ninety (90) days following the receipt of such
notification. In the event that Ethicon fails to elect to exercise this right
of
first refusal within the above mentioned thirty (30) day period, Neoprobe may
enter into an agreement with the party identified in the Notice with respect
to
the Proposed Transaction on terms that are not less favorable to Neoprobe than
the terms specified by Neoprobe in the Notice; provided,
however,
that in
the event that (a) Neoprobe and the third party identified in the Notice are
unable to consummate such an agreement within sixty (60) days or (b) the
pricing, terms, conditions and other material provisions of the Proposed
Transaction are modified to be materially less favorable to Neoprobe than were
specified in the Notice, then Neoprobe shall be required pursuant to this
Section 5.7 to give anew the requisite notice to Ethicon and comply with the
right of first refusal set forth herein for an additional thirty (30) business
day period following the receipt of such new notice.
8
5.8 Minimum
Purchase Requirements.
(a) During
each of the first three (3) Commercial Years, Ethicon shall purchase from
Neoprobe the following minimum numbers of the neo2000 System and/or Products
or
New Products consisting of a Control Unit and Probe (Neoprobe shall provide
accessories to support the aforementioned neo2000 Systems; however, no minimums
will be established for these accessories):
|
Commercial
Year
|
Minimum
Purchase Requirement
|
|
|
First
|
400
neo2000 Systems, Products and/or New Products consisting of a Control
Unit
and Probe
|
|
|
|
||
|
Second
|
500
neo2000 Systems, Products and/or New Products consisting of a Control
Unit
and Probe
|
|
|
|
||
|
Third
|
600
neo2000 Systems, Products and/or New Products consisting of a Control
Unit
and Probe
|
As
used
in this Section 5.8, a “neo2000
System” consists of a model 2000 Control Unit and a reusable Probe. Subject to
the provisions of Sections 3.2 and 3.3, to the extent that there is any delay
in
Ethicon’s ability to exclusively distribute the neo2000 Systems worldwide on an
exclusive basis in any market due to a breach of Neoprobe of any of its
representations, warranties, covenants or obligations under this Agreement,
the
MPR for the Commercial Years set forth above shall be reduced with respect
thereto on a pro rata basis based upon the number of days of the delay and
the
number of days in the applicable Commercial Year. Purchase orders for neo2000
Systems placed by Ethicon prior to the First Commercial Year shall count towards
the MPR for the First Commercial Year. The MPRs set forth in this Section 5.8(a)
shall be completely satisfied at such time as the purchases of neo2000 Systems
by Ethicon exceed fifteen hundred (1,500) units in the aggregate at any time
prior to or during the first three (3) Commercial Years during the term of
this
Agreement. Demonstration units purchased pursuant to Section 5.2 shall not
count
towards the MPRs.
(b) The
MPR
for a Product set forth in Section 5.8(a) is a “take or pay” obligation. In the
event Ethicon does not meet its MPR for a Commercial Year as required by Section
5.8(a), Neoprobe shall notify Ethicon of the deficiency and Ethicon shall have
forty-five (45) days to either place a purchase order for the neo2000 Systems
and/or Products consisting of a Control Unit and Probe to make up the difference
between actual purchases and the MPR or pay Neoprobe an amount equal to the
Gross Profit on the amount of purchases necessary to satisfy such
MPR.
5.9 Ethicon
Obligation to Commercially Exploit.
Neoprobe shall consider the MPRs of Section 5.8 above as complete satisfaction
of any duty, whether express or implied, which could be imposed upon Ethicon
to
commercially exploit its rights under this Agreement and is accepted by Neoprobe
in lieu of any best efforts obligation on the part of Ethicon.
5.10 Reduction
of Minimum Purchase Requirements.
The
MPRs set forth under Section 5.8(a) above shall for any applicable Commercial
Year be reduced in the following circumstances:
9
*
Portions have been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential
treatment.
(a) If
Neoprobe fails for any reason other than a Major Forces event under Section
17.6
below to deliver the Products to Ethicon in accordance with the terms of this
Agreement, or replace Products which are defective under Section 11.1 below,
then the MPRs shall be reduced by an
amount
equal to one and one-half (1 ½) times the number of Products not delivered or
replaced.
(b) If
any
Products is voluntarily or involuntarily recalled from the market or withdrawn
from sale because of a lack of governmental approvals or for reason of safety,
efficacy or quality, or if a Major Forces event under Section 17.6 occurs,
then
the MPRs for the Products shall be waived until a period of six (6) months
shall
have elapsed after either market re-entry or the Major Forces event is removed,
whichever is applicable, and shall then be proportionately reduced.
(c) If
this
Agreement is terminated pursuant to Articles 12 or 14 below during any
applicable Commercial Year, then the MPRs for all Products shall be
proportionately reduced for such Commercial Year, and Ethicon shall be relieved
of MPRs for all Products thereafter.
5.11 Forecasts.
Within
thirty (30) days of the Effective Date, Ethicon shall provide Neoprobe with
a
forecast of its expected purchases of the Products, including a schedule of
desired delivery dates, for the following six (6) months, and the first four
(4)
months of this forecast shall constitute a binding purchase order. Thereafter,
Ethicon shall (a) update the forecasts monthly so that its expected purchases
and schedule of desired delivery dates are continually forecast for a six (6)
month time period, the first four (4) months of such rolling forecasts
constituting a binding purchase order and (b) provide a report of actual monthly
Product sales.
5.12 Adjustment
of Forecasts.
Ethicon
may adjust the total number of Products to be delivered pursuant to Section
5.11
above upon sixty (60) days written notice, provided however, that any such
adjustment shall not serve to reduce Ethicon’s obligation to purchase the total
number of Product indicated in the binding purchase order. In any given month,
if Ethicon wants Neoprobe to deliver more than [*] of the total number of the
Products indicated in the binding purchase order, then Neoprobe shall not be
obligated to supply the excess above [*], but Neoprobe shall nevertheless use
its best reasonable efforts to deliver to Ethicon any such excess above one
hundred twenty percent (120%) on a priority basis.
5.13 Delivery.
Neoprobe shall deliver the Products to Ethicon in accordance with the schedule
of delivery dates specified in the binding purchase orders set forth in Section
5.11 above.
10
*
Portions have been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential
treatment.
5.14 Provision
of Information.
No
later than seven (7) days after the execution of the Agreement and provided
that
Neoprobe has such information in its possession or has a legal or contractual
right to access to such information, Neoprobe agrees to provide Ethicon with
documentation setting forth a complete list of all current Neoprobe customers
and potential customer leads (including, but not limited to, outstanding leads
and quotations from terminated distributors). Included in this documentation
will be customer names, location, Products purchased, date of Product purchase,
Product service history, and specific contact information in the case of
customer leads.
5.15 Product
Changes.
Neoprobe shall not change the form, fit, function, components or materials
of
any of the Products (or any change or modification to the Specifications),
the
process by which the Products are manufactured or the Raw Materials, without
the
prior written consent of Ethicon, such consent not to be unreasonably withheld.
Neoprobe shall provide Ethicon notice of all other changes at least fourteen
(14) days prior to making any such changes. If the Parties agree on any such
change, improvement or modification, they shall modify the Specifications to
reflect the same. Ethicon shall have the right to review and amend any
qualification protocol(s) initiated by Neoprobe prior to the execution of such
protocol(s), and shall have the right to review and agree upon the subsequent
results of the protocol prior to releasing change into production. In the event
of any change, Ethicon and Neoprobe may jointly establish an appropriate
qualification protocol, and Ethicon and Neoprobe shall determine an appropriate
inventory level for the pre-change Product in order to cover on-going
requirements during the qualification process.
5.16 Purchase
of Neoprobe 1500 Units.
Ethicon
agrees to purchase existing inventories of Neoprobe 1500 Control Units each
accompanied by a 14mm reusable Probe, noise adjustment fixture, battery charger,
cord set, carrying case, operation manual, detector probe cable and Probe
collimator (“Neoprobe 1500 Systems”) up to a maximum unit quantity of fifty (50)
Neoprobe 1500 Systems respectively, provided
that,
Ethicon
has received all prior agreed upon inventory stocking and sales Demonstration
Units orders for the neo2000 System. The agreed upon cost to Ethicon for a
Neoprobe 1500 System cost is $5,881.00 or less. In the event the Neoprobe 1500
Systems are sold to Ethicon customers, Ethicon agrees to rebate to Neoprobe
the
appropriate gross margin on the sale of these Units in accordance with the
agreed upon Transfer Prices outlined for neo2000 Systems as referenced in
Schedule 5.2, provided
that,
any
Neoprobe 1500 Systems sold will be credited against the MPRs for that Calendar
Year accordingly.
5.17 Sales
of Product.
All [*]
distributed under this Agreement, shall be within the sole discretion of
[*].
5.18 Neoprobe
Sales and Marketing [*].
Neoprobe shall [*] for Neoprobe’s sales and marketing organization (the “Sales
and Marketing Organization”) which include, but is not limited to, Neoprobe
employees and programs, consulting agreements, etc. as referenced heretofore
in
Schedule 5.18 for a [*] from the Effective Date. [*] at its sole discretion,
may
continue the [*] directly or indirectly of these Sales and Marketing
Organization activities.
11
*
Portions have been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential
treatment.
5.19 Training
Assistance.
Neoprobe shall provide Ethicon with all information in its possession reasonably
necessary or appropriate to enable Ethicon to market the Products, and Neoprobe
agrees further to consult with and advise Ethicon in such matters, including
without limitation, the preparation of promotional, advertising and sales
materials and presentations.
Provided
that it has the personnel on staff and subject to the availability of the Sales
and Marketing Organization, Neoprobe shall provide reasonable sales training
to
Ethicon and its Affiliates at reasonable locations selected by Ethicon (travel
expenses to be paid by Ethicon) and consented to by Neoprobe, such consent
not
to be unreasonably withheld. Thereafter Neoprobe will provide similar sales
training from time to time in connection with any Products that become available
at times and locations reasonably selected by Ethicon and consented to by
Neoprobe, such consent not to be unreasonably withheld.
5.20 [*]
Program.
The
Parties agree to develop and negotiate the terms for an [*] and to implement
such [*] within [*] after the Parties complete their marketing and customer
assessments. The revenues for such program will be shared according to the
gross
revenues, less the selling [*], as agreed to for Transfer Pricing of Products
in
Schedule 5.2.
5.21 [*]
Expenses.
Ethicon
will fund the costs related to the [*] pursuant to Section 11.1 and the [*]
Program only with respect to Products sold by [*] to its customers but not
to
the third party distributors listed on Schedule 3.2 up to a limit of [*] of
Products of the immediately preceding Commercial Year sold by [*] but not to
the
[*]. Net sales shall mean the revenue received by [*] from the sale of the
Products to an independent third party less the following amounts: (i)
discounts, including cash discounts, or rebates actually allowed or granted;
(ii) credits or allowances actually granted upon claims or returns, regardless
of the party requesting the return; (iii) freight charges paid for customer
delivery; and (iv) taxes or other governmental charges levied on or measured
by
the invoiced amount whether absorbed by the billing or billed
party.
5.22 Disposition
of Defective Product.
Without
prejudice to any other remedy which Ethicon may have, Neoprobe shall replace
at
its own cost and expense, including reimbursement of freight and disposition
costs incurred by Ethicon, Products that fail to comply with the Specifications
or other warranties made in Article 11. Ethicon shall notify Neoprobe of the
existence and nature of any non-compliance or defect which comes to its
attention and Neoprobe shall have a reasonable opportunity, [*], to inspect
such
defective Product and provide Ethicon with detailed written instructions to
return or dispose of such defective Product. Ethicon shall [*]. If Neoprobe
fails to so inspect and instruct Ethicon as to the disposition of such defective
Product, Ethicon may dispose of such defective Product as it sees fit and
Neoprobe shall promptly (i) reimburse Ethicon for all direct, out-of-pocket
costs incurred by Ethicon in respect of such disposition, and (ii) replace
such
defective Product at its own cost and expense.
12
5.23 Independent
Testing.
If,
after Neoprobe’s inspections of any Product, the parties disagree as to whether
such Product conforms to the Specifications and other warranties made in Article
11 or whether the Product has such a defect, either party may deliver the item
to an independent third-party laboratory, mutually and reasonably acceptable
to
both parties, for analytical testing to confirm such item’s conformance to the
Specifications and other warranties made in Article 11 or the presence or
absence of defects. All costs associated with such third-party testing shall
be
at Ethicon’s expense unless the tested item is deemed by such third-party to be
defective or not in compliance with the Specifications and other warranties
made
in Article 11, in which case all such costs, including reimbursement of freight
and disposition costs, shall be promptly paid by Neoprobe. No inspection or
testing of or payment for Product by Ethicon or any third-party agent of Ethicon
shall constitute acceptance by Ethicon thereof, nor shall any such inspection
or
testing be in lieu or substitution of any obligation of Neoprobe for testing,
inspection and quality control as provided in the Specifications and other
warranties made in Article 11 or under applicable local, state, or federal
laws,
rules, regulations, standards, codes or statutes.
5.24 Transfer
Price Reporting.
(a) Ethicon
shall, within ninety (90) days from the end of December 31 of each calendar
year
during the term of this Agreement, deliver to Neoprobe a report of the actual
Transfer Price for the Initial Period (as defined in Schedule 5.2) or the
preceding Commercial Year, including a schedule calculating the actual Transfer
Price. Ethicon shall keep for a period of at least three (3) years after the
date of entry, accurate books and records reasonably necessary to verify the
accuracy of the information used to establish the actual Transfer Price as
described in Schedule 5.2.
(b) Neoprobe
shall have the right after thirty (30) days advance written notice to Ethicon,
to appoint an independent certified accountant at its own expense, acceptable
and approved by Ethicon (which approval shall not be unreasonably withheld)
who
shall have access to Ethicon’s records during reasonable business hours for the
sole purpose of verifying the accuracy of the calculation of the Transfer Prices
for the Products for a period not more than the previous four (4) calendar
quarters, but this right may not be exercised more than once in any calendar
year. Ethicon shall be entitled to withhold approval of an accountant which
Neoprobe nominates unless the accountant duly executes a confidentiality
agreement with Ethicon which shall obligate such accountant to keep the
information it receives from Ethicon in confidence.
(c) Unless
otherwise agreed to by the Parties, if as a result of the audit performed
pursuant to Section 5.24(b), the independent certified accountant determines
that Ethicon has under-reported any information (e.g., the information used
to
calculate Net Selling Price) used to calculate the Transfer Price for a Product
and as a result Neoprobe has received less than it should have under the
Agreement, Ethicon shall, no later than forty-five (45) business days
after receiving notice of such underpayment, remit to Neoprobe the amount of
the
underpayment. If as a result of the audit performed pursuant to Section 5.24(b),
the independent certified accountant determines that Ethicon has over-reported
any information (e.g., the information used to calculate Net Selling Price)
used
to calculate the Transfer Price for a Product and as a result Neoprobe has
received more than it should have under the Agreement, Neoprobe shall, no later
than forty-five (45) business days after receiving notice of such overpayment,
remit to Ethicon the amount of the overpayment less the reasonable fees of
the
independent
13
*
Portions have been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential
treatment.
certified
accountant, but in no case shall Ethicon be required to remit any amount to
Neoprobe if the fees of the independent certified accountant exceed the amount
of the Ethicon overpayment.
(d) If
as a
result of an audit performed pursuant to Section 5.24(b), it is determined
by
the independent certified accountant that Ethicon has underpaid any payment
due
to Neoprobe by more than [*], in addition to remitting the amount of the
underpayment as described in Section 5.24(c), Ethicon shall pay Neoprobe
interest on such amount at the rate per annum of “prime” (interest changing as
and when the “prime” changes); such interest being payable on demand. As used
herein, the term “prime” refers to the prime rate of interest per annum
announced, from time to time, by major money center banks in the United States
and as published daily in The
Wall Street Journal;
provided, however, that if The
Wall Street Journal
should
ever cease, for any reason, to publish such rate on a daily basis, then the
prime rate shall be at the rate of interest designated and in effect from time
to time, by Citibank, N.A., in New York, New York as its prime
rate.
(e) In
the
event the audit conducted pursuant to Section 5.24(b) reveals an inaccuracy
in
the information reported to Neoprobe which results in an underpayment by Ethicon
and if Ethicon disagrees with the results of such audit and further in the
event
the parties can not resolve such disagreement, the Parties shall mutually choose
an independent accountant acceptable to both to conduct a second audit. The
Parties agree to be bound by the results of the second independent audit. The
cost of an audit conducted pursuant to this Section 5.24(e) shall be borne
by
Neoprobe if the independent accountant finds no underpayment and by Ethicon
if
an underpayment is found.
5.25 14mm
Probe Accessory Marketing Implementation Program.
Neoprobe agrees to implement the 14mm Probe accessory program attached hereto
as
Schedule 5.25 in accordance with the deadlines set forth therein.
5.26 PIM. (a)
Neoprobe shall, at its sole expense, develop and release an external Probe
Isolation Module (“EPIM”) and associated labeling and end-user communications
subject to the provisions of Sections 5.15 and 8.12. Neoprobe agrees to use
its
best efforts to obtain all necessary market clearances from appropriate
regulatory authorities as soon as practicable and to replace and in-service
all
14mm reusable adaptor cables (model #2007) currently in distribution with the
EPIM in countries where there are Third Party Agreements in effect within sixty
(60) days thereof. Neoprobe agrees to use its best efforts to obtain all
necessary market clearances from appropriate regulatory authorities as soon
as
practicable and to provide Ethicon with sufficient quantities of the EPIM to
replace all 14mm reusable adaptor cables (model #2007) currently in distribution
in the U.S. by January 15, 2000 and outside the U.S. by February 14,
2000.
(b) Neoprobe
agrees to use its best efforts to provide EPIM’s to Ethicon for all sales and
training demonstration units in Ethicon’s possession at cost to Ethicon by
January 15, 2000.
14
*
Portions have been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential
treatment.
(c) Neoprobe
shall use its best efforts to provide EPIM’s for all finished goods and
work-in-progress neo2000 Systems at Neoprobe warehousing facilities by January
15, 2000.
(d) Neoprobe,
at its sole expense, shall use its best efforts to develop and release an
internal Probe Isolation Module (“IPIM”), by March 15, 2000 compatible with all
Probe Products.
(e) Neoprobe
agrees to review all designs and modifications to the control unit, Probes
and
accessories during design and manufacturing phases of the EPIM and IPIM with
Ethicon in accordance to Section 5.15.
5.27 Should
Ethicon develop and sell an instrument or device (a “Competing Ethicon Product”)
which is a direct clinical replacement of a Product, Ethicon shall agree to
provide Neoprobe financial consideration of [*] of Net Sales of the Competing
Ethicon Product during the term of this Agreement.
ARTICLE
6 - PRODUCT IMPROVEMENTS
AND
RESEARCH AND DEVELOPMENT
6.1 Research
& Development Payments.
Ethicon
agrees to fund at the end of each calendar quarter during the first three (3)
years of the Agreement, a total of one hundred twenty-five thousand dollars
($125,000.00) per calendar quarter for the four (4) technical research and
development personnel in the job positions listed on Schedule 6.1 hereto,
provided that, (a) Neoprobe retains the identified research and development
personnel or persons in Ethicon’s reasonable judgment adequately skilled and
trained personnel to fill the job positions listed on Schedule 6.1 (“R&D
Personnel”) to the entire calendar quarter; (b) the R&D Personnel are
utilized at Ethicon’s sole discretion for continued Product support and (c) the
R&D Personnel are available to support to Ethicon identified and funded
R&D programs. The one hundred twenty-five thousand dollars ($125,000.00) per
calendar quarter as stated above shall be prorated in the event that less than
four (4) individuals are available. The four hundred thousand dollars
($400,000.00) paid in consideration for the Standstill and Rights Agreement
shall be credited against the research and development payments with any excess
promptly returned to Ethicon within ten (10) days if no further research and
development payments are to be made pursuant to this Section 6.1. A copy of
the
retention programs for the R&D Personnel shall be provided to Ethicon prior
to the Effective Date.
6.2 Improved
Product and Ethicon [*] New Products.
With
respect to Improved Products and New Products the research and development
[*],
once the Parties agree to a Provisional Transfer Price and to a forecast of
[*]
of the Improved Product or [*] including a schedule of desired delivery dates
for the following six (6) months, the first three (3) months of this forecast
shall constitute a binding purchase order for such Improved Product [*], such
Improved Product [*] shall be added to the Agreement and shall become a Product
within the meaning of Section 2.15.
15
*
Portions have been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential
treatment.
6.3 Existing
[*] R&D Programs.
Within,
[*] days after the Effective Date, [*] agrees to review existing [*] research
and development programs as described in Schedule 6.3 (the “R&D Programs.”)
and in its sole discretion, agree to fund any or none of the R&D Programs in
addition to the research and development payments made pursuant to Section
6.1.
[*] shall have sixty (60) days to make its determination and to inform [*]
of
the result. The Parties agree to negotiate in good faith within [*] days from
the Effective Date an agreement setting forth: (i) development work plan(s)
for
the R&D Programs (ii) the transfer pricing for such any products resulting
from the funded R&D Programs and (iii) ownership of intellectual property
developed under such programs. In no event shall the [*] products developed
under such R&D [*] set forth in Schedule 5.2.
6.4 Ethicon
Identified Research Programs.
Ethicon
may request that Neoprobe conduct certain R&D activities on behalf of
Ethicon (“Ethicon Identified R&D”). In the event that Ethicon requests that
Neoprobe conduct such Ethicon Identified R&D, Ethicon and Neoprobe shall, in
good faith, negotiate an agreement setting forth: a) responsibility for costs
associated with such Ethicon Identified R&D; b) ownership of designs,
prototypes, or intellectual property; and (c) royalties, if any, payable to
Neoprobe on instruments developed under such Ethicon Identified R&D and sold
by Ethicon.
6.5 Reports.
Upon
Ethicon’s written request, but no more than once per month, Neoprobe shall
promptly provide Ethicon written research and development progress reports
and
activity reports relating to Products and Improved Products that are identified
in the Specifications or Schedule 6.3.
ARTICLE
7 - REPRESENTATIONS AND WARRANTIES
7.1 Execution
and Performance of Agreement.
Neoprobe and Ethicon each represents and warrants to the other that it has
full
right, power and authority to enter into and perform its respective obligations
under this Agreement. Neoprobe and Ethicon each further represents and warrants
to the other that the performance of its obligations under this Agreement will
not result in a violation or breach of, and will not conflict with or constitute
a default under any agreement, contract, commitment or obligation to which
such
Party or any of its Affiliates is a party or by which it is bound or infringe
upon the rights of any third party and that it has not granted and will not
grant during the term of this Agreement or any renewal thereof, any conflicting
rights, license, consent or privilege with respect to the rights granted
herein.
7.2 Intellectual
Property.
Neoprobe represents and warrants to Ethicon that (a) Neoprobe owns all of the
rights, title and interest in and to the Patents, Neoprobe Trademarks, Know-How
and all other intellectual property that appear on or are otherwise used in
connection with the Products; (b) no academic institution, member of an academic
institution, corporation or other entity, or any local, state or federal
government holds any property rights through it in any Product; (c) Neoprobe
is
able to consummate this Agreement in the capacity of a free agent; (d) the
manufacture, use and sale of the Products in accordance with the terms of this
Agreement does not present any issue of infringement of Neoprobe’s or any third
party’s rights under any issued patent or license; (e) it has no outstanding
encumbrances or agreements, whether written, oral or implied, which would be
inconsistent with the licenses granted herein; (f) the use of the Neoprobe
Trademarks by Ethicon hereunder does not and will not infringe the rights of
any
third party; and (g) Neoprobe is presently aware of no infringement or dispute
by any third party of any Neoprobe Patent or any Neoprobe
Trademark.
16
7.3 Year
2000 Compliance.
Neoprobe hereby represents and warrants to Ethicon that:
(a) it
is
able to demonstrate Year 2000 Compliance in full production versions of the
Products and all of its services related to its performance hereunder, with
accompanying documentation;
(b) Neoprobe’s
information systems and other business systems for estimates, performance
schedules, orders, confirmations, manufacture and delivery, invoicing, crediting
of payments and other business operations are able to accept and properly
process input for dates before, on or after January 1, 2000; and
(c) Neoprobe
is now planning and taking action to implement and will continue to implement,
in a commercially reasonable manner, any and all measures to continue to perform
its obligations under this Agreement with respect to Year 2000 Compliance
strictly according to its terms and otherwise to meet the needs of its
relationship with Ethicon;
(d) Neoprobe
will promptly provide to Ethicon, in response to Ethicon’s periodic requests for
updates, information concerning its Year 2000 Compliance program to the extent
it affects performance of this Agreement and might impair its performance
hereunder.
7.4 Neoprobe
expressly represents and warrants that a) it owns all of the right, title and
interest in and to the Products listed on Schedule 2.15 as of the Effective
Date; b) it is empowered to supply the Products to Ethicon; c) it has no
outstanding encumbrances or agreements, contracts, understandings or
arrangements of any kind pursuant to which any entity may purchase from
Neoprobe, or has the right to sell or market, the Product or any component
of
such Product except for the Third Party Agreements; e) it is empowered to grant
Ethicon licenses of the scope set forth in Articles 12, 13 and 14 below and
f)
it has the financial capacity to supply the Product to Ethicon in view of the
terms and conditions set forth in this Agreement.
ARTICLE
8 - REGULATORY COMPLIANCE AND QUALITY ASSURANCE
8.1 Inspections.
Ethicon
shall have the right, upon reasonable notice to Neoprobe and during regular
business hours, to inspect and audit manufacturing processes and procedures,
quality assurance/control processes and procedures, inventory, work-in-process,
Quality System Regulations (“QSRs”) records in the countries where any Product
is marketed, Raw Materials and the facilities being used by Neoprobe (or any
third party) for production and storage of Products to assure compliance by
Neoprobe (and its suppliers) with (a) all applicable statutes, laws and
regulatory requirements and standards, including, without limitation, QSRs
enforced by the United States Food and Drug Administration (the “FDA”), (b)
Ethicon Endo-Surgery, Inc. Quality Assurance Requirements, (c) the terms and
provisions of this Agreement. To the extent it has the right to do so, Neoprobe
agrees to give Ethicon access during normal working hours to such records as
are
reasonably necessary to enable Ethicon to conduct its audit, including quality
control records, test records, Device History Record and Device Master Records.
Ethicon’s right of access to Neoprobe (or its agent’s) Confidential Information
shall be restricted to those matters necessary to verify the compliance of
Neoprobe (or its agents) with (a) all applicable statutes, laws and regulatory
requirements and standards, including, without limitation, QSRs enforced by
the
FDA, (b) Ethicon Endo-Surgery, Inc. Quality Assurance Requirements, (c) the
terms and provisions of this Agreement. Ethicon personnel exercising this right
of inspection shall comply with applicable rules and regulations in place at
the
manufacturing facility when such personnel or representatives are made aware
of
such rules and regulations.
17
8.2 Results
of Ethicon’s Audit.
Ethicon
shall promptly (no more than ten (10) business days after conclusion of any
audit conducted pursuant to Section 8.1) share the results of the audit with
Neoprobe. If Ethicon believes that a deficiency exists, it shall inform Neoprobe
and Neoprobe shall within ten (10) business days remedy or cause the remedy
of
any deficiencies that were noted in such audit, or if any such deficiency can
not reasonably be remedied within ten (10) business days, present to Ethicon
a
written plan to remedy such deficiencies as soon as possible. Failure by
Neoprobe to remedy or cause the remedy of a deficiency in the agreed upon time
period shall be deemed a material breach of this Agreement; provided however,
that if in Neoprobe’s reasonable judgement it disagrees with Ethicon’s
conclusion that a deficiency exists and if the Parties continue to disagree
after reasonable discussion, Neoprobe shall have the right to have an
independent regulatory expert conduct the same audit as Ethicon. If the
independent expert agrees with Neoprobe that no deficiency exists, Ethicon
shall
bear the cost of such audit. If the independent expert agrees with Ethicon’s
assessment, Neoprobe shall bear the cost of the independent expert and shall
correct all deficiencies as provided in this Section 8.2. Neoprobe acknowledges
that the provisions of this Article Eight granting Ethicon certain audit rights
shall in no way relieve Neoprobe of any of its obligations under this Agreement,
nor shall such provisions require Ethicon to conduct any such
audits.
8.3 510(k)
Clearance.
Neoprobe represents and warrants that it has obtained 510(k) to the extent
it is
required to do so clearance from the FDA to manufacture and sell the Products;
and that the submissions which Neoprobe made to the FDA were made in good faith
and contained accurate and complete data and information regarding the Product
as required by applicable laws, rules and regulations. Neoprobe shall maintain
for the term of this Agreement or any extension thereof all 510(k) clearances
for the Products. Furthermore, Neoprobe shall file, and maintain at its own
cost
for the Products listed on Schedule 2.15 as of the Effective Date, all
appropriate registrations with the FDA and similar regulatory authorities in
the
United States and in foreign countries which have the authority to approve
the
sale of the Product for use in humans. Neoprobe shall review all Product changes
agreed to pursuant to Section 5.15 for regulatory impact in the United States
and other countries where any Product is marketed, and shall provide Ethicon
with copies of all regulatory impact review documentation.
18
8.4 Regulatory
Compliance.
Neoprobe represents and warrants that all Products sold or delivered to Ethicon
during the term of this Agreement or any extension thereof shall be manufactured
and delivered in accordance with Regulatory Compliance, and that continually
during the term of this Agreement or any extension thereof no Products delivered
by Neoprobe to Ethicon will be adulterated or misbranded at the time of delivery
within the meaning of the Federal Food, Drug and Cosmetic Act. Neoprobe shall
notify Ethicon in accordance with Section 8.8 below after receiving notice
of
any claim or action by the FDA relating to non-compliance with this Article
or
any notice with respect to any violation of any applicable laws, rules or
regulations. In addition, Neoprobe shall notify Ethicon of any adverse reaction,
malfunction, injury or other similar claims with respect to the Products of
which it becomes aware in accordance with Section 8.8 below.
8.5 Regulatory
Inspections.
Neoprobe shall notify Ethicon of any FDA inspection, or any inspection from
any
other regulatory body, of the facilities for the manufacture of the Products,
or
any request for information from the FDA or other regulatory body related to
the
manufacture of the Products, as soon as practically possible after Neoprobe
becomes aware of such inspection or such request.
8.6 Recalls.
Upon
mutual consent of the Parties, which consent may not be unreasonably withheld,
or in the case of a recall required by an agency with competent jurisdiction,
Neoprobe shall be required to institute and fund any recall, field corrective
action, or the like in circumstances relating to a breach by Neoprobe of the
warranty set forth in Article 11 below or other breach of its representations,
warranties, guarantees, covenants or other obligations hereunder. In such
circumstances, the actual retrieval of the Products and costs associated with
that retrieval shall be undertaken and absorbed by Neoprobe. The Parties shall
maintain adequate records concerning traceability of the Products, and shall
cooperate with each other in the event that any procedures described in this
paragraph are undertaken. In the event of any such recall, Neoprobe shall accept
recalled Products and deliver to Ethicon replacement Products at Neoprobe’s sole
cost and expense.
8.7 Cooperation.
Because
regulatory requirements vary throughout the world, the Parties agree to
cooperate with one another to obtain regulatory approvals.
8.8 Adverse
Experiences and Product Complaints.
Each
Party shall notify the other within three (3) business days of any serious
and
life-threatening adverse experiences related to the Product of which it becomes
aware. Each Party shall notify the other within ten (10) business days of any
other adverse experiences related to a Product of which it becomes aware.
Neoprobe shall be responsible for all reporting to the FDA and all other
regulatory bodies where any Product is marketed. Neoprobe shall provide Ethicon
with a copy of the quarterly adverse experience reports for the Products, or
any
other reportable events, which Neoprobe is required by the Act to submit to
the
FDA or any other regulatory requirements in countries where any Product is
marketed, within three (3) business days of its submission. Each Party shall
notify the other of any serious complaints relating to the Products which it
receives within thirty (30) days of becoming aware of such
complaint.
8.9 Corrective
Action.
In the
event any governmental agency having jurisdiction shall request or order, or
if
Ethicon shall determine to undertake, any corrective action with respect to
any
Product, including any recall, corrective action or market action, and the
cause
or basis of such recall or action is attributable to a breach by Neoprobe of
any
of its warranties, guarantees, representations, obligations or covenants
contained herein, then Neoprobe shall be liable, and shall reimburse Ethicon
for
the reasonable costs of such action including the cost of any Product which
is
so recalled whether or not any such specific unit of Product shall be
established to be in breach of any warranty by Neoprobe hereunder.
19
8.10 Provision
of Information.
Upon
Ethicon’s request, Neoprobe shall provide Ethicon with access to the following
information at no cost to Ethicon:
(a) necessary
data, descriptions, processes, photographs and statements of claims for safety,
efficacy or performance;
(b) technical
data to allow Ethicon to prepare up-to-date customer instruction for the
Products;
(c) the
Device Master Records for the Products and the Device History Records for the
Products, as defined in 21 Code of Federal Regulations §800, for the Products
and components thereof; and
(d) copies
of
all U.S. and foreign regulatory submissions, including the 510(k) submission,
for the Products.
8.11 Provision
of Support.
Neoprobe shall provide Ethicon with the following support at no cost to Ethicon:
a)
claim
support for any claims, indications, or other representations included in any
labeling, inserts, sales literature or customer instruction prepared by Neoprobe
relating to the Products (it is understood and agreed that in the event Ethicon
reasonably disagrees with any such claims, indications, or other
representations, Neoprobe shall modify the same in the manner agreeable to
both
Parties; and
b)
prompt
review and approval, as appropriate, of all training materials and sales and
promotional literature developed by Ethicon relating to the Products (it being
understood and agreed that no such review shall relieve Neoprobe of
responsibility for the accuracy of such materials).
c)
Neoprobe agrees to promptly obtain and maintain CE marking for all Products,
provided
however,
it is
the obligation of Ethicon, at its expense, to obtain other regulatory approvals
necessary for distributors to market the Products in a specific country.
Neoprobe agrees to support Ethicon in obtaining such regulatory approvals,
including but not limited to, by providing any necessary documentation within
Neoprobe’s control.
8.12 Labeling
and Sales Literature.
Neoprobe shall be responsible for the appearance, text and regulatory compliance
of all Neoprobe originated package labeling used in connection with the
Products. Any labeling, inserts, sales literature, or customer instruction
prepared by Ethicon relating to the Product is subject to written approval
by
Neoprobe, which approval shall not be unreasonably withheld (it being understood
and agreed that no such review shall relieve Neoprobe of responsibility for
the
accuracy of such materials).
20
ARTICLE
9 - INDEMNIFICATION
9.1 Indemnification
by Neoprobe.
Neoprobe shall indemnify and hold harmless Ethicon and its Affiliates and their
respective officers, directors and employees from and against any and all
damages, liabilities, claims, costs, charges, judgments and expenses (including
interest, penalties and reasonable attorneys’ fees) (collectively “Damages”)
incurred by such party that (i) arise as the result of Neoprobe’s breach of this
Agreement or of any obligation, covenant, warranty or representation made to
Ethicon under this Agreement; or, (ii) which result from any claim made against
Ethicon in connection with Neoprobe’s sale of defective Product; or (iii) which
result from the negligent acts or willful malfeasance on the part of Neoprobe
or
Neoprobe’s employees or agents in connection with Neoprobe’s registration or
other activities or actions in connection with the Product; (iv) which result
from Ethicon’s use of promotional materials, provided by Neoprobe, so long as
Ethicon’s use is in accordance with the Agreement; or (v) which result from any
claim of patent or trademark infringement made against Ethicon by a third party
which arises as a consequence of Ethicon’s promotion of the
Product.
9.2 Neoprobe
Insurance.
Neoprobe shall obtain and maintain in full force and effect valid and
collectible product liability insurance in respect of the Products for death,
illness, bodily injury and property damage in an amount not less than $10
million per occurrence. Such policy shall name Ethicon as an insured or an
additional insured thereunder and Neoprobe shall grant like coverage to Ethicon
under a standard broad form vendor’s endorsement thereto. Neoprobe shall within
ten (10) days of the Effective Date provide Ethicon with evidence of this
coverage, provided that the existence of such coverage shall in no way limit
Neoprobe’s liability or obligations hereunder. Such insurance policy shall
provide that in the event such insurance coverage should be materially adversely
changed or terminated for any reason, the insurer thereunder will give Neoprobe
and Ethicon ten (10) days prior notice of such change or
termination.
9.3 Indemnification
by Ethicon.
Ethicon
shall indemnify and hold harmless Neoprobe and its Affiliates and their
respective officers, directors and employees from and against any and all
Damages incurred by such party which: (i) arise out of Ethicon’s breach of this
Agreement or of any obligation, covenant, warranty or representation made to
Neoprobe under this Agreement; or, (ii) result from the negligent acts or
willful malfeasance on the part of Ethicon or its employees or agents, in
promoting the Product in a manner inconsistent with the Product’s
labeling.
9.4 Claims.
(a) A
Party (hereinafter referred to as the “Indemnifying Party”) indemnifying another
party or parties (hereinafter referred to as the “Indemnified Party”), pursuant
to this Agreement, shall indemnify and hold the Indemnified Party harmless
against any and all actions, suits, proceedings, demands, claims, assessments,
costs, judgments, legal and other expenses incidental to any of the foregoing
(hereinafter referred to as a “Claim”). In the event a Claim is made upon the
Indemnified Party, the Indemnified Party shall promptly
give notice of such Claim to the Indemnifying Party, and shall promptly deliver
to such Indemnifying Party all information and written material available to
the
Indemnified Party relating to such Claim. If such Claim is first made upon
the
Indemnifying Party, the Indemnifying Party shall promptly give notice of such
Claim to the Indemnified Party.
21
(b) The
Indemnified Party will, if notified of the Indemnifying Party’s election to do
so within fifteen (15) days of the date of notice of a Claim, permit the
Indemnifying Party to defend in the name of the Indemnified Party any Claim
in
any appropriate administrative or judicial proceedings and take whatever actions
may be reasonably requested of the Indemnified Party to permit the Indemnifying
Party to make such defense and obtain an adjudication of such Claim on the
merits, including the signing of pleadings and other documents, if necessary;
provided that the Indemnifying Party shall defend the Claim with counsel
reasonably satisfactory to the Indemnified Party and provide the Indemnified
Party with evidence reasonably satisfactory to the Indemnified Party that the
Indemnifying Party can satisfy the Claim if it is upheld. In addition to the
liability for the ultimate settlement or judgment, if any, arising out of such
Claim under this Agreement, the Indemnifying Party shall be solely responsible
for all the expenses incurred in connection with such defense or proceedings,
regardless of their outcome. However, the Indemnifying Party shall not be
responsible for any expenses, including attorneys fees and costs, incurred
by
the Indemnified Party to monitor the defense of the Claim by the Indemnifying
Party.
(c) In
the
event the Indemnifying Party does not accept the defense of such Claim under
the
terms hereof, the Indemnified Party shall be entitled to conduct such defense
and settle or compromise such Claim, and the Indemnifying Party’s
indemnification obligation under this Agreement shall be absolute, regardless
of
the outcome of such Claim. The Indemnified Party, at its option, may elect
not
to permit the Indemnifying Party to control the defense against a Claim. If
the
Indemnified Party so elects, then the Indemnifying Party shall not be obligated
to indemnify the Indemnified Party against any settlements, judgments or other
costs or obligations arising thereunder which the Indemnified Party may make
or
incur relating to such Claim.
ARTICLE
10 - COVENANTS
10.1 During
the term of this Agreement and any extension thereof, Neoprobe shall not enter
into any agreements, contracts, understandings or arrangements with any person
other than Ethicon relating to the distribution or licensing of the Product
or
Improved Products during the term of this Agreement or any extension
thereof.
10.2 Within
thirty (30) days from the Effective Date, Neoprobe shall place with an escrow
agent mutually agreed upon by Neoprobe and Ethicon and as described in Schedule
10.2 hereto, a description of Neoprobe’s process for the manufacture of the
Products and Improved Products in sufficiently clear and detailed terms that
it
can be readily followed and carried out by a trained scientist or engineer
to
make the Products and Improved Products in the manner Neoprobe considers most
efficient (“Escrowed Process”). Furthermore, should Neoprobe alter, modify or
change its process for manufacturing the Products and Improved Products,
Neoprobe shall amend the description in escrow to include such alteration,
modification or change. Pursuant to the exercise of its rights and licenses
under its Secondary License as set forth in Section 13.1 below, Ethicon shall
have the right, at any time, and without Neoprobes’s consent, to access the
Escrowed Process and the escrow agent is hereby directed to release such
material to Ethicon and its Affiliates upon receiving a written request from
Ethicon. Ethicon agrees not to exercise its rights to access the Escrowed
Process except in connection with the exercise of its rights under its Secondary
License and any such exercise shall be a material breach of the terms of this
Agreement.
*
Portions have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request
for
confidential treatment.
22
ARTICLE
11 - WARRANTY
11.1 Warranty.
Neoprobe warrants during the warranty period set forth under Section 11.2 below
that all Products delivered to Ethicon under this Agreement shall be
manufactured in accordance and conformity with the Specifications and in
compliance with this Agreement, and that the Product so delivered shall be
of
merchantable quality, free from defects in design, construction, materials and
workmanship. Neoprobe warrants that it shall comply with all present and future
statutes, laws, ordinances and regulations relating to the manufacture, assembly
and supply of the Product, including, without limitation, those enforced by
the
FDA (including compliance with QSRs) and International Standards Organization
Rules 9,000 et seq. Ethicon shall be entitled during the warranty period to
return to Neoprobe for exchange or full credit at Ethicon’s original cost,
including incurred freight and insurance costs, any Products returned by a
customer of Ethicon for defects in design, construction, materials or
workmanship. Any inspection by Ethicon shall not relieve Neoprobe of its
obligation to manufacture Products which meet the Specifications and comply
with
good manufacturing practices.
11.2 Warranty
Period.
The
initial warranty period shall [*], whichever is later.
11.3 Warranty
Pass-through.
Neoprobe agrees that Ethicon may pass the warranty given to Ethicon under this
Section 11.1 above along to Ethicon’s customers.
11.4 [*].
As
part of Neoprobe’s warranty obligation described in Sections 11.1 and 11.2,
Neoprobe agrees [*] to [*]. Neoprobe shall provide Ethicon with a procedure
for
handling customer returns for servicing and repairing Products covered under
the
warranty obligations described in Sections 11.1 and 11.2 within thirty (30)
days
of the Effective Date.
11.5 Replacement
Parts.
With
respect to Products outside of the warranty periods set forth in Section 11.2
above, Neoprobe shall provide repairs and replacement parts, as appropriate,
for
devices manufactured by Neoprobe at reasonable rates and prices mutually agreed
upon in writing by both Parties.
ARTICLE
12 - FAILURE TO SUPPLY, CHANGE
OF
CONTROL OR INSOLVENCY EVENT
12.1 If
Neoprobe fails to supply [*] of the Products meeting the Specifications on
a
desired delivery date specified on a binding purchase order under either of
the
following conditions:
(a) for
any
reason other than those set forth under Section 17.6 below, and this failure
lasts longer than [*] from such desired delivery date; or
23
*
Portions have been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential
treatment.
(b) for
any
reason set forth under Section 17.6 below, and this failure lasts longer than
[*] from such desired delivery date;
then
Ethicon shall thereafter have the right to [*] terminate this Agreement upon
written notice to Neoprobe and to manufacture or have manufactured the Product.
Additionally, if a Change of Control occurs followed by a failure to supply
lasting longer than [*] from the desired delivery date set forth in a binding
purchase order, or an Insolvency Event occurs, then [*] upon written notice
to
Neoprobe, Ethicon shall have the right to [*] terminate this Agreement upon
written notice to Neoprobe.
12.2 In
the
event that a Change of Control occurs and such controlling or surviving entity
is a competitor of Ethicon, then Ethicon shall have the right to immediately
terminate this Agreement upon written notice to Neoprobe.
ARTICLE
13 - PATENTS, TRADEMARKS AND CONFIDENTIAL INFORMATION
13.1 License.
Ethicon
and its Affiliates shall have a fully paid-up worldwide, exclusive license
under
the Patents to use, sell, offer for sale, import or otherwise dispose of,
Products for the term of this Agreement or any extension thereof. Ethicon shall
also have a secondary license (the “Secondary License”) which includes a
worldwide, exclusive, paid-up license under all Patents and Know-How necessary
to make, have made, import, use or sell the Products, Improved Products and
Ethicon Funded New Products; a license under Neoprobe’s regulatory clearances,
including Neoprobe’s 510(k), to market the Products, Improved Products and
Ethicon Funded New Products and an exclusive, irrevocable, sub-licensable,
right
to continue to use the Neoprobe Trademarks pursuant to the restrictions set
forth in Section 13.2. Ethicon’s Secondary License shall run for the term of
this Agreement and any extension thereof, assuming Ethicon had exercised all
rights to extensions thereof. In the event Ethicon exercises its rights under
its Secondary License, to make, have made or import the Products, Improved
Products and/or Ethicon Funded New Products Neoprobe shall make available to
Ethicon all of the information then in Neoprobe’s possession or at its free
disposal relating to the manufacture of the Products, Improved Products and/or
Ethicon Funded New Products. Ethicon hereby agrees not to exercise its rights
to
make, have made, import, use or sell the Products, Improved Products and Ethicon
Funded New Products under its Secondary License, except in the event of a
failure to supply meeting the requirements of Section 12.1 above or a
termination of this Agreement by Ethicon pursuant to Section 14.1, and any
such
exercise shall be a material breach of the terms of this Agreement.
13.2 Trademarks.
Ethicon
shall have the right to promote and sell the Product under any trademark
selected by Ethicon which trademark and all rights and goodwill associated
thereto shall be and shall remain the property of Ethicon. Nothing herein shall
be deemed to give one Party, either during the term of this Agreement or
thereafter, any right to trademarks or copyrights of the other Party or to
their
use except that Ethicon shall have the right to use Neoprobe’s Trademarks in
association with the marketing and sale of the Products during the term of
this
Agreement, any extension thereof or as provided by Section 13.1 if it chooses
to
do so, but Ethicon shall acquire no ownership rights to the
Trademarks.
24
13.3 Confidential
Information.
All
written information designated as confidential and exchanged between Neoprobe
and Ethicon while this Agreement is in effect shall be treated as confidential
information. Neither Party shall for three (3) years after the date of
expiration or termination of this Agreement, use (other than in the performance
of its obligations hereunder) or disclose such information to any third party
without the prior written approval of the other Party, unless such information
has become public knowledge through no fault of the Party receiving such
information, or comes to such Party from a third party under no obligation
of
confidentiality with respect to such information, or was in the possession
of
such Party prior to the date of disclosure, or is developed by or on behalf
of
such Party without reliance on confidential information received hereunder,
or
is requested to be disclosed in compliance with applicable laws or regulations
in connection with the sale of the Product, or is otherwise required to be
disclosed in compliance with an order by a court or other regulatory body having
competent jurisdiction, or is product-related information which is reasonably
required to be disclosed in connection with marketing the Products. The
obligations imposed by this section shall not limit any
rights provided to Ethicon pursuant to Section 12.1 above to manufacture or
have
manufactured the Product following Neoprobe’s failure to supply pursuant to this
Agreement; provided that the disclosure of confidential information to a third
party (except as may be reasonably required in preliminary discussions with
such
third party) for the purpose of enabling such Party to manufacture the Products
shall be conditioned upon such third party signing a confidentiality agreement
prohibiting the disclosure of such information to any other party and limiting
the use of such information to the manufacturing of the Products.
ARTICLE
14 - TERMINATION
14.1 This
Agreement may be terminated by either Party in the event the other materially
fails to perform or otherwise materially breaches any of its obligations under
this Agreement (other than pursuant to Article 12) by giving written notice
of
its intent to terminate and stating the grounds for termination. The Party
receiving the notice shall have thirty (30) days from the date of receipt of
the
notice to cure the failure or breach. In the event it is cured, the notice
shall
be of no effect. In the event it is not cured, this Agreement then shall,
without more, terminate at the end of such thirty (30) day period. If the
failure to perform or other breach is due to circumstances covered under Section
17.6 below, then this subsection shall not apply until such circumstances have
ceased.
14.2 For
purposes of Section 14.1 a breach by Neoprobe of its obligations, covenants,
representations or warranties under Section 3.2 and 3.3 shall be deemed to
be a
material failure to perform and a material breach of its obligations under
this
Agreement. If Ethicon exercises its rights to terminate this Agreement under
Section 14.1, Neoprobe grants Ethicon an exclusive paid-up worldwide license
under the Patents to make, have made, use, sell, offer for sale, import or
otherwise dispose of, the Products, rights under Neoprobe’s regulatory
clearances, including 510(k), to market the Products, and rights to all Know-How
necessary to make, have made, use, sell, offer for sale, import or otherwise
dispose of, the Products, such license and rights shall run for the term of
this
Agreement and any extension thereof, assuming Ethicon had exercised all rights
to extensions thereof. Ethicon further shall have the exclusive right to
continue to use the Neoprobe Trademarks pursuant to the restrictions set forth
in Section 13.2. In the event Ethicon exercises its right to terminate this
Agreement under Section 14.1, Neoprobe shall make available to Ethicon all
of
the information then in Neoprobe’s possession or at its free disposal relating
to the manufacture of the Products.
25
*
Portions have been omitted and filed separately with the Securities and
Exchange
Commission pursuant to a request for confidential
treatment.
14.3 Ethicon
may terminate this Agreement upon ninety (90) days written notice if Ethicon
discovers a patent of a third party which arguably covers in whole or in part
any aspect of the Product and the infringement is not cured within such ninety
(90) day period in a manner which is satisfactory in Ethicon’s sole
discretion.
14.4 Following
the effective date of termination of this Agreement, Ethicon shall have the
right and option to either (i) continue to sell Products in the Territory on
an
exclusive worldwide basis for a period of [*], or (ii) on written notice to
Neoprobe, sell to Neoprobe and have Neoprobe buy, within thirty (30) days after
request, all of the Products in the Ethicon’s stock which were received by
Ethicon [*] of less prior to the effective date of the effective date of
termination which are in good condition. Such Products shall be repurchased
at
the most recent landed cost for such Products in effect hereunder prior to
termination of this Agreement, and will be shipped to the designation selected
by the Neoprobe, freight collect. Outdated, used or damaged Products shall
either be made available to Neoprobe for destruction by Neoprobe at their then
current location, or shipped to Neoprobe, freight collect, as determined by
Neoprobe.
14.5 Termination
of this Agreement for any reason shall not affect rights and obligations of
the
Parties accrued through the effective date of termination, including without
limitation indemnification provisions relating to the Product manufactured
or
distributed during the term of this Agreement or any extension
thereof.
ARTICLE
15 - RESOLUTION OF DISPUTES
15.1 Any
dispute, claim or controversy arising from or related in any way to this
agreement or the interpretation, application, breach, termination or validity
thereof, including any claim of inducement of this agreement by fraud or
otherwise, will be submitted for resolution to arbitration pursuant to the
commercial arbitration rules then pertaining of the CPR Institute for Dispute
Resolution, or successor (“CPR”), except where those rules conflict with these
provisions, in which case these provisions control. The arbitration will be
held
in Cincinnati, Ohio.
15.2 The
panel
shall consist of three (3) arbitrators chosen from the CPR Panels of
Distinguished Neutrals (or, by agreement from another provider of arbitrators)
each of whom is a lawyer with at least fifteen (15) years experience with a
law
firm or corporate law department of over twenty-five (25) lawyers or was a
judge
of a court of general jurisdiction. In the event the aggregate damages sought
by
the claimant are stated to be less than $5 million, and the aggregate damages
sought by the counterclaimant are stated to be less than $5 million, and neither
side seeks equitable relief, then a single arbitrator shall be chosen, having
the same qualifications and experience specified above. Each arbitrator shall
be
neutral, independent, disinterested, impartial and shall abide by The Code
of
Ethics for Arbitrators in Commercial Disputes approved by the AAA. There shall
be no ex parte
communications with an arbitrator either before or during the arbitration,
relating to the dispute or the issues involved in the dispute or the
arbitrator’s views on any such issues.
26
15.3 The
Parties agree to cooperate (a) to obtain selection of the arbitrator(s) within
forty-five (45) days of initiation of the arbitration, including jointly
interviewing the final candidates,
(b) to meet with the arbitrator(s) within forty-five (45) days of selection
and
(c) to agree at that meeting or before upon procedures for discovery and as
to
the conduct of the hearing which will result in the hearing being concluded
within no more than nine (9) months after selection of the arbitrator(s) and
in
the award being rendered within sixty (60) days of the conclusion of the
hearings, or of any post-hearing briefing, which briefing will be completed
by
both sides within thirty (30) days after the conclusion of the hearings. In
the
event no such agreement is reached, (a) the CPR will select arbitrator(s),
allowing appropriate strikes for reasons of conflict or other cause and three
(3) peremptory challenges for each side, and permitting the Parties, prior
to
exercising their final peremptory challenge, jointly to interview each of the
top three (3) final candidates (for no more than one (1) hour each) if a single
arbitrator is being selected or the top five (5) finalists if a panel of three
(3) is being selected, (b) the arbitrator(s) shall set a date for the hearing
in
accord with the above schedule, commit to the rendering of the award within
sixty (60) days of the conclusion of the evidence at the hearing, or of any
post-hearing briefing (which briefing will be completed by both sides in no
more
than thirty (30) days after the conclusion of the hearings), and (c) the
arbitrator(s) shall provide for discovery according to these time limits, giving
recognition to the understanding of the Parties that they contemplate reasonable
discovery, including document demands and depositions, but that such discovery
be limited so that the time limits specified herein may be met without
difficulty. In no event will the arbitrator(s), absent agreement of the parties,
allow more than a total of ten (10) days for the hearing or permit either side
to obtain more than a total of forty (40) hours of deposition testimony from
all
witnesses, including both fact and expert witnesses, or serve more than twenty
(20) individual requests for documents, including subparts, or twenty (20)
individual requests for admission or interrogatories, including subparts.
Multiple hearing days will be scheduled consecutively to the greatest extent
possible.
15.4 The
arbitrator(s) must render their award by application of the substantive law
of
the State of Ohio and are not free to apply “amiable compositeur” or their own
or another’s view of “natural justice and equity.” The arbitrator(s) shall
render an opinion setting forth findings of fact and conclusions of law with
the
reasons therefor stated. A transcript of the evidence adduced at the hearing
shall be made and shall, upon request, be made available to either party. The
arbitrator(s) shall have power to exclude evidence on grounds of hearsay,
prejudice beyond its probative value, redundancy, or irrelevance and no award
shall be overturned by reason of such ruling on evidence.
15.5 To
the
extent possible, the arbitration hearings and award will be maintained in
confidence.
27
15.6 The
United States District Court for the Southern District of Ohio, Western Division
at Cincinnati, may enter judgment upon any award. In the event the panel’s award
exceeds $5 million in monetary damages or includes or consists of equitable
relief, or rejects a claim in excess of that amount or for that relief, then
the
court shall vacate, modify or correct any award (including remanding to the
arbitrators for further proceedings) where the arbitrators’ findings of fact are
clearly erroneous, and/or where the arbitrators’ conclusions of law are
erroneous; in other words, the court will undertake the same review as if it
were a federal appellate court reviewing a district court’s findings of fact and
conclusions of law rendered after a bench trial. An award for less than $5
million in damages and not including equitable relief or which neither rejects
a
claim in excess of that amount or for that relief, may be vacated, modified
or
corrected only pursuant to the Federal Arbitration Act. The Parties consent
to
the jurisdiction of the above-specified Court for the enforcement of these
provisions, the review specified herein, and the entry of judgment on any award.
In the event such Court lacks jurisdiction, then any court having jurisdiction
of this matter may enter judgment upon any award and provide the same relief,
and undertake the same review, as specified herein.
15.7 In
the
event the expanded judicial review provided for under Section 15.6 above is
not
available from the court as a matter of law, the party unable to obtain such
review may instead obtain review of the arbitrators’ award or decision by a
single appellate arbitrator (the “Appeal Arbitrator”) selected from the CPR list
of distinguished neutrals and pursuant to then current CPR selection procedures.
No Appeal Arbitrator shall be selected unless he or she can commit to rendering
a decision within forty-five (45) days following oral argument as provided
in
this Section. Any such review must be initiated with the CPR within thirty
(30)
days following the date the district court declines the expanded review
specified in Section 15.6 above. In the event timely review is sought, the
Appeal Arbitrator will make the same review of the arbitration panel’s ruling
and its bases that the Court of Appeals of the federal circuit where the
arbitration hearings are held would make of findings of fact and conclusions
of
law rendered by a district court after a bench trial and then modify, vacate
or
affirm the arbitration panel’s award or decision accordingly. The Appeal
Arbitrator will consider only the arbitration panel’s findings of fact and
conclusions of law, pertinent portions of the hearing transcript and evidentiary
record as submitted by the parties, opening and reply briefs of the party
pursuing the review, and the answering brief of the opposing party, plus a
total
of no more than four (4) hours of oral argument evenly divided between the
parties. The party seeking review must submit its opening brief and any reply
brief within seventy-five (75) and one hundred twenty (120) days, respectively,
following the date the court declines the expanded review specified in Section
15.6; whereas, the opposing Party must submit its responsive brief within one
hundred ten (110) days of that date. Oral argument shall take place within
five
(5) months after the district court declines the expanded review specified
in
Section 15.6, and the Appeal Arbitrator shall render a decision within
forty-five (45) days following oral argument.
15.8 Each
party has the right before or, if the arbitrator(s) cannot hear the matter
within an acceptable period, during the arbitration to seek and obtain from
the
appropriate court provisional remedies such as attachment, preliminary
injunction, replevin, etc. to avoid irreparable harm, maintain the status
quo,
or
preserve the subject matter of the arbitration.
28
15.9 EACH
PARTY HERETO WAIVES ITS RIGHT TO TRIAL OF ANY ISSUE BY
JURY.
15.10 EACH
PARTY HERETO WAIVES ANY CLAIM TO PUNITIVE OR EXEMPLARY, CONSEQUENTIAL DAMAGES
FROM THE OTHER.
15.11 EACH
PARTY HERETO WAIVES ANY CLAIM FOR ATTORNEYS’ FEES AND COSTS AND PREJUDGMENT
INTEREST FROM THE OTHER.
15.12 Any
dispute, controversy or claim arising out of or related to this agreement,
or
the interpretation, application, breach, termination or validity thereof,
including any claim of inducement by fraud or otherwise, which claim would,
but
for this provision, be submitted to arbitration shall, before submission to
arbitration, first be mediated through non-binding mediation in accordance
with
the Model Procedures for the Mediation of Business Disputes promulgated by
the
CPR then in effect, except where those rules conflict with these provisions,
in
which case these provisions control. The mediation will be held in Cincinnati,
Ohio and shall be attended by a senior executive with authority to resolve
the
dispute from each of the operating companies that are parties.
15.13 The
mediator shall be neutral, independent, disinterested and shall be selected
from
a professional mediation firm such as ADR Associates or JAMS/ENDISPUTE or
CPR.
15.14 The
Parties shall promptly confer in an effort to select a mediator by mutual
agreement. In the absence of such an agreement within fifteen (15) days of
initiation of the mediation, the mediator shall be selected by CPR from a list
generated by CPR with each Party having the right to exercise challenges for
cause and two (2) peremptory challenges within seventy-two (72) hours of
receiving the CPR list.
15.15 The
mediator shall confer with the Parties to design procedures to conclude the
mediation within no more than forty-five (45) days after initiation. Under
no
circumstances shall the commencement of arbitration under Section 15.1 above
be
delayed more than forty-five (45) days by the mediation process specified
herein.
15.16 Each
Party agrees not to use the period or pendancy of the mediation to disadvantage
the other Party procedurally or otherwise. No statements made by either side
during the mediation may be used by the other or referred to during any
subsequent arbitration.
15.17 Each
Party has the right to pursue provisional relief from any court, such as
attachment, preliminary injunction, replevin, etc., to avoid irreparable harm,
maintain the status quo, or preserve the subject matter of the arbitration,
even
though mediation has not been commenced or completed.
29
*
Portions have been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential
treatment.
ARTICLE
16 - DISCLAIMER
[*].
Furthermore, all business decisions, including without limitation, sale, price
and promotion of the Product marketed under this Agreement and the decision
whether to sell the Product shall be within the sole discretion of [*]. Neoprobe
realizes that Ethicon (and its Affiliates) already sells a complete line of
diagnostic and surgical devices and [*] under this Agreement.
ARTICLE
17 - MISCELLANEOUS
17.1 [*]
17.2 Transfer
and Assignment.
Neither
Party shall transfer or assign this Agreement, in whole or in part, without
the
prior written consent of the other Party (which shall not be unreasonably
withheld); except that Ethicon may, without such consent, assign this Agreement
to an Affiliate or with the sale of substantially all of the assets of the
business to which the Products relate.
17.3 Communications.
All
communications, purchase orders, invoices, payments and notices required or
called for under this Agreement shall be in writing, shall be transmitted by
facsimile or first class mail, postage prepaid, and shall be deemed delivered
upon confirmed receipt if by facsimile or mailing to the address below or to
such other address as either Party may give to the other in
writing:
If
to
Ethicon:
Ethicon
Endo-Surgery, Inc.
0000
Xxxxx Xxxx
Xxxxxxxxxx,
Xxxx 00000
Attn:
President
Facsimile:
(000) 000-0000
If
to
Neoprobe:
Neoprobe
Corporation
000
Xxxxx
Xxxxx Xxxxx, Xxxxx 000
Xxxxxx,
Xxxx 00000
Attn:
President
Facsimile:
(000) 000-0000
17.4 Relationship
of Parties.
The
Parties hereto are entering into this Agreement as independent contractors,
and
nothing herein is intended or shall be construed to create between the Parties
a
relationship of principal and agent, partners, joint venturers or employer
and
employee. Neither Party shall hold itself out to others or seek to bind or
commit the other Party in any manner inconsistent with the foregoing provisions
of this Article 17.
30
17.5 No
Waiver.
The
failure of either Party to enforce at any time for any period the provisions
of
this Agreement shall not be construed to be a waiver of such provisions or
of
the right of such Party thereafter to enforce each such provision.
17.6 Major
Forces.
Subject
to Ethicon’s rights set forth in Article 12 above, neither Party shall be
responsible for and the terms of this Agreement shall be inapplicable to any
defaults or delays which are due to unforeseen causes beyond the Parties’
control including, but without limitation, acts of God or public enemy, acts
or
other order of a government, particularly full market approval by the United
States Food and Drug Administration and any foreign government equivalent
approval, fire, flood or other natural disasters, embargoes, accidents,
explosions, strikes or other labor disturbances (regardless of the
reasonableness of the demands of labor), shortage of fuel, power or raw
materials, inability to obtain or delays of transportation facilities, incidents
of war, or other unforeseen events causing the inability of a Party, acting
in
good faith with due diligence, to perform its obligations under this
Agreement.
17.7 Publicity.
With
respect to any other publicity, neither Party shall originate any such
publicity, news release or public announcement, written or oral, whether to
the
public or press, stockholders or otherwise, relating to this Agreement or any
of
its terms, to any amendment or performances under the Agreement, save only
such
announcements as in the opinion of counsel for the Party making such
announcement is required by law to be made. If a Party decides to make an
additional announcement required by law under this Agreement, it will give
the
other Party thirty (30) days advance written notice, or any shorter notice
period otherwise required by law, of the text of the announcement so that the
other Party will have an opportunity to comment upon the
announcement.
17.8 Bankruptcy.
All
licenses granted under or pursuant to this Agreement, by Neoprobe to Ethicon
are
for all purposes of Section 365(n) of the Bankruptcy Code, licenses to
“intellectual property” as defined in the Bankruptcy Code. The Parties agree
that Ethicon, as a licensee of such rights under this Agreement, shall retain
and may fully exercise all of its rights and elections under the Bankruptcy
Code. Neoprobe agrees during the term of this Agreement to create and maintain
current copies or, if not amenable to copying, detailed descriptions or other
appropriate embodiments, of all such licensed intellectual property. If a case
is commenced by or against Neoprobe under the Bankruptcy Code, then, unless
and
until this Agreement is rejected as provided in the Bankruptcy Code, Neoprobe
(in any capacity, including debtor-in-possession) and its successors and assigns
(including, without limitation, a Bankruptcy Code trustee) shall either perform
all of the obligations provided in this Agreement to be performed by Neoprobe
or
provide to Ethicon all such intellectual property (including all embodiments
thereof) held by Neoprobe and such successors and assigns, as Ethicon may elect
in a written request, immediately upon such request. If a Bankruptcy Code case
is commenced by or against Neoprobe, this Agreement is rejected as provided
in
the Bankruptcy Code and Ethicon elects to retain its rights hereunder as
provided in the Bankruptcy Code, then Neoprobe (in any capacity, including
debtor-in-possession) and its successors and assigns (including, without
limitation, a Bankruptcy Code trustee) shall provide to Ethicon all such
intellectual property (including all embodiments thereof) held by Neoprobe
and
such successors and assigns immediately upon Ethicon’s written request therefor.
All rights, powers and remedies of Ethicon provided under this Article are
in
addition to and not in substitution for any and all other rights, powers and
remedies now or hereafter existing at law or in equity (including, without
limitation, the Bankruptcy Code) in the event of any such commencement of a
bankruptcy proceeding by or against Neoprobe. Ethicon, in addition to the
rights, powers and remedies expressly provided herein, shall be entitled to
exercise all other such rights and powers and resort to all other such remedies
as may now or hereafter exist at law or in equity (including the Bankruptcy
Code) in such event.
31
17.9 Entire
Agreement.
The
Parties have, in this Agreement, incorporated all representations, warranties,
covenants, commitments and understandings on which they have relied in entering
into this Agreement and, except as provided herein, the Parties make no
covenants or other commitments to the other concerning their future actions.
Accordingly, this Agreement
(a) constitutes
the entire agreement and understanding between the Parties, and there are no
promises, representations, conditions, provisions or terms relating to it other
than as set forth in this Agreement, and
(b) supersedes
all previous understandings, agreements and representations between the Parties,
written or oral, relating to the subject matter of this Agreement. This
Agreement may be altered or amended only upon mutual written
consent.
17.10 Survival
of Certain Provisions.
The
provisions of this Agreement set forth in Sections 3.2, 5.22, 10.2, 13.3, 14.3,
14.4, 17.7 and 17.14 and Articles 7, 8, 9, 11, 12 and 15 any remedies for the
breach thereof, shall survive the termination of this Agreement under the terms
hereof.
17.11 Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
17.12 Expenses.
Each
party shall pay all of its own fees and expenses (including all legal,
accounting and other advisory fees) incurred in connection with the negotiation
and execution of this Agreement and the arrangements contemplated
hereby.
17.13 Modifications
and Amendments.
This
Agreement shall not be modified or otherwise amended except pursuant to an
instrument in writing executed and delivered by each of the parties
hereto.
17.14 Construction.
The
parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any of the provisions of this
Agreement.
32
17.15 Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of Ohio, without giving effect to the choice of laws provisions
thereof.
17.16 Incorporation
of Exhibits and Schedules.
The
Exhibits and Schedules identified in this Agreement are incorporated herein
by
reference and made a part hereof.
The
Parties agree to the terms of this Agreement, as indicated by the signatures
of
their respective corporate officers, duly authorized as of the last date of
signature below.
| NEOPROBE CORPORATION | ETHICON ENDO-SURGERY, INC. | ||
| By: /s/ Xxxxx Xxxx | By: /s/ Xxxxxxxx Xxxxxx | ||
|
Name: Xxxxx
Xxxx
Title: President,
CEO
Date: Sept.
28, 1999
|
Name: Xxxxxxxx
Xxxxxx
Title: V.P.
Business Development
Date: Sept.
28, 1999
|
33
APPENDIX
A
PATENT,
COMPUTER SOFTWARE, AND MASK WORK LICENSE AGREEMENT
This
is
an agreement (hereinafter referred to as “Agreement”) dated and effective as of
September, 28, 1999 (“Effective Date”), by and between the following
parties:
a) Ethicon
Endo-Surgery, Inc., a corporation organized under the laws of the State of
Ohio,
having its principal office at 0000 Xxxxx Xxxx, Xxxxxxxxxx, Xxxx 00000
(“Ethicon”); and
b) Neoprobe
Corporation, a corporation having its principal office at 000 Xxxxx Xxxxx Xxxxx,
Xxxxx 000, Xxxxxx, Xxxx (“Licensor”).
ARTICLE
1 - BACKGROUND
1.1 Licensor
has represented to Ethicon that it owns issued U.S. and foreign patents,
copyrighted computer software, mask works, and pending U.S. and foreign patent
applications, `covering instruments for radiation detection.
1.2 Ethicon
desires to obtain a exclusive license from the Licensor under such patents
and
equivalent pending patent applications. Ethicon further desires to obtain an
exclusive license from the Licensor for such copyrighted software and mask
works.
1.3 Licensor
is willing to grant such a license to Ethicon upon the terms and conditions
set
forth below.
1.4 Ethicon
and Licensor have entered into a Distribution Agreement dated September 28,
1999
to which this Patent, Computer Software, and Mask Work License Agreement is
attached as Appendix A (“Distribution Agreement”) whereby Licensor has granted
Ethicon exclusive rights to distribute Licensor’s gamma radiation detection
products.
Therefore,
in consideration of the mutual promises contained in this Agreement, the parties
agree as follows:
ARTICLE
2 - DEFINITIONS
The
following terms, when used with initial capital letters, shall have the meanings
set forth below, terms set forth herein in capital letters and not defined
below
shall have the meanings set forth in the Distribution Agreement.
2.1 “Licensed
Product” is any instrument, or other product developed by or for Ethicon, which,
but for the licenses granted under this Agreement, would infringe at least
one
Valid Claim of the Licensed Patents in the country in which any Licensed Product
is made, used or sold or which uses any Know How, Licensed Software or Licensed
Mask Works.
34
2.2 “Licensed
Patents” are the U.S. Patent applications and U.S. Patents listed in Schedule
2.11 of the Distribution Agreement as well as any counterpart patent
applications and any patents subsequently issuing from such applications.
Licensed Patents shall also include any other counterparts of the above
worldwide, as well as all continuations, continuations-in-part, divisions,
renewals, reissues, reexaminations, extensions, and patents of addition and
patents of importation. Furthermore, Licensed Patents shall also include each
patent which Licensor owns or is empowered to grant a license to Ethicon prior
to or during the term of this Agreement, the practice of which is reasonably
necessary for Ethicon to make, have made, use, sell, offer for sale, import
or
otherwise dispose of a Licensed Product.
2.3 “Licensed
Software” shall mean any copyrightable computer software (both source code and
object code) used in connection with the Licensed Products.
2.4 “Licensed
Mask Work” shall mean any “mask work,” as defined in Section 901 of the U.S.
Copyright Act, used in connection with the Licensed Products.
2.5 “Derivative
Work” shall mean a work that is based upon one or more pre-existing works, such
as a revision, modification, translation, abridgment, condensation, expansion,
or any other form in which such pre-existing works may be recast, transformed,
or adapted and that, if prepared without authorization of the owner of the
copyright in such pre-existing work would constitute a copyright infringement.
For purposes hereof, a “Derivative Work” shall also include any compilation that
incorporates such a pre-existing work.
2.6 “Valid
Claim” is a bona fide, unexpired issued claim in the Licensed Patents which has
not been held invalid or unenforceable by a decision of a court or other
governmental agency of competent jurisdiction, unappealable or unappealed within
the time allowed for appeal, and which has not been admitted to be invalid
by
the Licensor or his successors or assigns through reissue or
disclaimer.
2.7 “Net
Sales” is the revenue which Ethicon or its Affiliates actually collect from the
sale of the Licensed Product to an unaffiliated third party, less the following
amounts: (i) discounts, including cash discounts, or rebates actually allowed
or
granted, (ii) credits or allowances actually granted upon claims or returns
regardless of the party requesting the return, (iii) freight charges paid for
delivery, and (iv) taxes or other governmental charges levied on or measured
by
the invoiced amount whether absorbed by the billing or the billed
party.
ARTICLE
3 - TERM
Unless
otherwise terminated in accordance with the provisions of Article 10 herein,
the
term of this Agreement shall be from the Effective Date until the date upon
which the last of the Licensed Patents expires.
ARTICLE
4 - LICENSE GRANT AND RELEASE
4.1 In
addition to the rights and licenses granted to Ethicon under the Distribution
Agreement and subject to the terms and conditions of this Agreement, Licensor
grants Ethicon the following licenses:
35
*
Portions have been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential
treatment.
(a) a
non-exclusive, worldwide, fully paid-up license under the Licensed Patents
and
Know How to make, have made, use, sell, offer for sale, import or otherwise
dispose of, the Licensed Product;
(b) a
non-exclusive, worldwide, fully paid-up license under the Licensed Software
to
make, display, have made, make derivative works from, use, sell, offer for
sale,
import, or otherwise dispose of the Licensed Product; and
(c) a
non-exclusive, worldwide, fully paid-up license under the Licensed Mask Works
to
make, have made, use, sell, offer for sale, import or otherwise dispose of,
and
reproduce the Mask Work by optical, electronic or any other means in, the
Licensed Product.
4.2 In
the
event that the Distribution Agreement is terminated by Licensor in accordance
with the provisions of Article 14.1 of the Distribution Agreement, Ethicon’s
Licenses under Article 4.1 above shall remain in effect, however, Ethicon shall
thereafter be required to pay Licensor a royalty of twenty percent (20%) on
Net
Sales of Licensed Products where, but for the licenses granted under this
Agreement, such Licensed Product would infringe at least one Valid Claim of
the
Licensed Patents in the country in which any Licensed Product is made, used
or
sold. No multiple earned royalties shall be payable because the Licensed Product
is covered by more than one of the Licensed Patents. If Ethicon takes a third
party license to a patent which covers a Licensed Product, [*].
4.3 Ethicon
shall have the right to extend the licenses granted herein to any of its
Affiliates, upon the terms and conditions of this Agreement, provided Ethicon
agrees in writing to be responsible for the performance by such Affiliates
of
all of Ethicon’s obligations hereunder.
4.4 Licensor
forever releases and discharges Ethicon and its Affiliates, directors, officers,
employees, suppliers and customers (the “Released Parties”) from and against all
claims, liabilities, damages and other expenses whatsoever relating to the
manufacture, use, sale, offer for sale or importation of the Licensed Product
by
or on behalf of the Released Parties prior to the Effective Date.
4.5 Any
Derivative Work created by or for Ethicon based upon the Licensed Software
or
Licensed Mask Work shall be the exclusive property of Ethicon, and with respect
to the Licensed Software or Licensed Mask Work upon which this Derivative Work
is based, Ethicon’s license granted under 4.1(b) or (c) shall be perpetual and
fully paid-up.
ARTICLE
5 - PAYMENTS
5.1 Non-refundable
Upfront Payment.
In full
consideration for the execution of this Agreement, and for the exclusive license
and release granted to Ethicon under Article 4 herein, Ethicon shall pay
Licensor the non-refundable sum of four million dollars ($4,000,000.00) within
three (3) business days of the Effective Date.
36
5.2 Royalty
Payments.
Except
as specifically set forth herein, Ethicon shall not have any royalty obligations
during the term of this Agreement.
5.3 Upfront
Payment as Adequate Consideration.
Except
as specifically set forth in the Distribution Agreement, Licensor shall consider
the upfront payment set forth in Article 5.1 above as complete satisfaction
of
any duty, whether express or implied, which could be imposed upon Ethicon to
commercially exploit its rights during the term of this Agreement, and is
accepted by Licensor in lieu of any best efforts or other obligation on the
part
of Ethicon.
ARTICLE
6 - RESERVED
ARTICLE
7 - ENFORCEMENT
The
parties acknowledge that it is of the utmost importance to Ethicon to ensure
that infringement of the Licensed Patents is prevented. Accordingly, each party
shall promptly notify the other party in writing of any infringement by third
parties relating to the Licensed Patents. If within ninety (90) days of such
notice Licensor has not entered into a royalty-bearing license agreement with
such third party under the Licensed Patents or such third party continues its
infringing activity, then Licensor shall thereafter promptly initiate and
diligently pursue legal proceedings against such third party to protect the
Licensed Patents, provided that Licensor shall not be obligated to initiate
separate litigation against more than one infringer at any one time. Should
Licensor fail to take prompt legal action or diligently pursue legal
proceedings, then Ethicon shall be relieved of its obligation to make the earned
royalty payments set forth in Article 4.2 above until such time as either
Licensor enters into a royalty-bearing license agreement with such third party
under the Licensed Patents or such third party discontinues its infringing
activity.
ARTICLE
8 - PATENT PROSECUTION AND MAINTENANCE
8.1 Licensor
is solely responsible for the continued prosecution of any pending patent
applications included in the Licensed Patents, as well as the prosecution of
patent applications subsequently filed pursuant to Article 8.2 below. Licensor
shall also be solely responsible for the issuance of such applications after
allowance.
8.2 Licensor
shall pay all government fees in any given country required to maintain the
Licensed Patents, including official taxes, annuities and maintenance fees.
Any
decision to pay any such taxes, annuities or maintenance fees shall be in the
sole discretion of Licensor and Licensor may, at any time, after providing
written notice to Licensee, drop prosecution or maintenance of any Licensed
Patent.
ARTICLE
9 - WARRANTIES AND REPRESENTATIONS
9.1 Licensor
expressly warrants and represents that a) it owns all of the right, title and
interest in and to the Licensed Patents, Licensed Software, and Licensed Mask
Works; b) it is empowered to grant the licenses and release granted herein;
c)
it has no outstanding encumbrances or agreements, including any agreements
with
academic institutions, universities, or third party employers, whether written,
oral or implied, which would be inconsistent with the licenses and release
granted herein; d) the Licensed Patents are the only patents or pending patent
applications related to any instrument for radiation detection which the
Licensor currently owns or otherwise have the right to grant licenses therein,
whether domestic or foreign; and e) it is unaware of any information which
would
raise a substantial question of the validity of any of the Licensed Patents,
Licensed Software; or Licensed Mask Works.
37
9.2 Licensor
shall indemnify and hold Ethicon harmless from all liabilities, demands,
damages, expenses and losses upon the breach of any of the warranties and
representations set forth in Article 9.1 above. In the event of any breach
of
the warranties and representations set forth in Article 9.1 above, Licensee
shall be entitled to recover all payments made to Licensor under article 5.1
above.
ARTICLE
10 - TERMINATION
10.1 Ethicon
may terminate either this Agreement in full or a portion of its exclusive
license in any given country at any time during the term of this Agreement
upon
four (4) months written notice to Licensor, and such termination shall become
effective at the end of the four (4) month notice period.
10.2 Either
party may terminate this Agreement upon sixty (60) days written notice for
any
material breach or default of the other party. Such termination shall (subject
to the provisions of Article 11 below) become effective at the end of the sixty
(60) day period unless during such period the party in breach or default cures
such breach or default.
ARTICLE
11 - RESOLUTION OF DISPUTES
11.1 Any
dispute, claim or controversy arising from or related in any way to this
agreement or the interpretation, application, breach, termination or validity
thereof, including any claim of inducement of this agreement by fraud or
otherwise, shall be settled in accordance with the provisions of Article 15
of
the Distribution Agreement.
11.2 From
the
date one party notifies the other it wishes to commence an arbitration
proceeding until such time as the matter has been finally settled by
arbitration, the running of the time period set forth in Article 10.1 above,
as
to which a party must cure a breach, shall be suspended as to the subject matter
of the dispute.
ARTICLE
12 - MISCELLANEOUS
12.1 Business
Decisions.
Subject
to the provisions of the Distribution Agreement, all business decisions,
including without limitation the design, manufacture, sale, price and promotion
of the Licensed Product shall be within the sole discretion of
Ethicon.
12.2 Confidentiality
and Publicity.
Neither
party shall disclose the financial terms of this Agreement to an unaffiliated
third party, except for legal, financial, accounting or other similar advisors
who agree to keep the financial terms of this Agreement confidential, without
the prior written approval of the other party. Furthermore, neither party will
originate any publicity, news release, or other public announcement, written
or
oral, whether to the public press, to stockholders, or otherwise, relating
to
this Agreement, to any amendment hereto or to performance hereunder or the
existence of an arrangement between the parties without the prior written
approval of the other party.
38
12.3 Notices.
All
notices hereunder shall be in writing and shall be deemed to have been duly
given if delivered personally, one day after delivery to a nationally recognized
overnight delivery service, charges prepaid, three days after sent by registered
or certified mail, postage prepaid, or when receipt is confirmed if by,
facsimile or other telegraphic means:
In
the
case of Licensor:
Neoprobe
Corporation
000
Xxxxx
Xxxxx Xxxxx, Xxxxx 000
Xxxxxx,
Xxxx 00000
Attn:
President
Facsimile:
(000) 000-0000
In
the
case of Ethicon:
Ethicon
Endo-Surgery, Inc.
0000
Xxxxx Xxxx
Xxxxxxxxxx,
Xxxx 00000
Attn:
President
Facsimile:
(000) 000-0000
With
a
copy to:
Chief
Patent Counsel
Xxxxxxx
& Xxxxxxx
Xxx
Xxxxxxx & Xxxxxxx Xxxxx
Xxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Such
addresses may be altered by written notice given in accordance with this Article
12.3.
12.4 Assignment.
Ethicon
may assign this Agreement or any rights and obligations contemplated herein
to
an Affiliate of Ethicon or to a company acquiring substantially all of the
assets of Ethicon to which this Agreement relates, without the consent of
Licensor, upon giving written notice thereof to Licensor. In all other
instances, neither Ethicon nor Licensor shall assign this Agreement or any
rights granted hereunder without the prior written consent of the other party.
Subject to the foregoing, this Agreement shall bind and inure to the benefit
of
the respective parties hereto and their successors and assigns.
39
12.5 Force
Majeure.
Any
delays in or failures of performance by either party under this Agreement shall
not be considered a breach of this Agreement if and to the extent caused by
occurrences beyond the reasonable control of the party affected, including
but
not limited to: acts
of
God; acts, regulations or laws of any government; strikes or other concerted
acts of workers; fires; floods; explosions; riots; wars; rebellions; and
sabotage; and any time for performance hereunder shall be extended by the actual
time of delay caused by such occurrence.
12.6 Licensor
Bankruptcy.
Notwithstanding anything to the contrary in the Distribution Agreement, all
rights and licenses granted under or pursuant to this Agreement by Licensor
to
Ethicon are, for all purposes of Section 365(n) of Title 11, U.S. Code (the
“Bankruptcy Code”), licenses of rights to “intellectual property” as defined in
the Bankruptcy Code. The parties agree that Ethicon, as a licensee of such
rights under this Agreement, shall retain and may fully exercise all of its
rights and elections under the Bankruptcy Code. Licensor agrees during the
term
of this Agreement to create and maintain current copies or, if not amenable
to
copying, detailed descriptions or other appropriate embodiments, of all such
licensed intellectual property. If a case is commenced by or against Licensor
under the Bankruptcy Code, then, unless and until this Agreement is rejected
as
provided in the Bankruptcy Code, Licensor (in any capacity, including
debtor-in-possession) and its successors and assigns (including, without
limitation, a Bankruptcy Code trustee) shall either perform all of the
obligations provided in this Agreement to be performed by Licensor or provide
to
Ethicon all such intellectual property (including all embodiments thereof)
held
by Licensor and such successors and assigns, as Ethicon may elect in a written
request, immediately upon such request. If a Bankruptcy Code case is commenced
by or against Licensor, this Agreement is rejected as provided in the Bankruptcy
Code and Ethicon elects to retain its rights hereunder as provided in the
Bankruptcy Code, then Licensor (in any capacity, including debtor-in-possession)
and its successors and assigns (including, without limitation, a Bankruptcy
Code
trustee) shall provide to Ethicon all such intellectual property (including
all
embodiments thereof) held by Licensor and such successors and assigns
immediately upon Ethicon’s written request therefor. All rights, powers and
remedies of Ethicon provided under this Article are in addition to and not
in
substitution for any and all other rights, powers and remedies now or hereafter
existing at law or in equity (including, without limitation, the Bankruptcy
Code) in the event of any such commencement of a bankruptcy proceeding by or
against Licensor. Ethicon, in addition to the rights, powers and remedies
expressly provided herein, shall be entitled to exercise all other such rights
and powers and resort to all other such remedies as may now or hereafter exist
at law or in equity (including the Bankruptcy Code) in such event.
12.7 Relationship
of Parties.
The
parties hereto are entering into this Agreement as independent contractors,
and
nothing herein is intended or shall be construed to create between the parties
a
relationship of principal and agent, partners, joint venturers or employer
and
employee. Neither party shall hold itself out to others or seek to bind or
commit the other party in any manner inconsistent with the foregoing provisions
of this Article.
40
12.8 Integration.
It is
the mutual desire and intent of the parties to provide certainty as to their
future rights and remedies against each other by defining the extent of their
mutual undertakings as provided herein. The parties have in this Agreement
incorporated all representations, warranties, covenants, commitments and
understandings on which they have relied in entering into this Agreement and,
except as provided for herein and in the Distribution Agreement, neither party
has made any covenant or other commitment to the other concerning its future
action. Except where specifically set forth herein, in the event of any conflict
between the terms of this Agreement and the Distribution Agreement, the terms
of
the Distribution Agreement shall control. Accordingly, except as expressly
set
forth herein, this Agreement constitutes the entire agreement and understanding
between the parties with respect to the matters contained herein, and there
are
no prior oral or written promises, representations, conditions, provisions
or
terms related thereto other than those set forth in this Agreement. The parties
may from time to time during the term of this Agreement modify any of its
provisions by mutual agreement in writing.
12.9 Headings.
The
inclusion of headings in this Agreement is for convenience only and shall not
affect the construction or interpretation hereof.
This
Agreement is signed on the dates set forth below by duly authorized
representatives of Ethicon and the Licensor, respectively.
| Licensor | Ethicon Endo-Surgery, Inc. | ||
| By: /s/ Xxxxx Xxxx | By: /s/ Xxxxxxxx Xxxxx | ||
|
Date: Sept.
28, 1999
|
Date: Sept.
28, 1999
|
41
Schedule
2.11 Patents
and Patent Applications
42
|
NEOPROBE
PATENTS
|
||||||
|
Patent
Number
|
Serial
Number
|
Filing
Date
|
Patent
Title
|
|||
|
US4782840
|
06/905880
|
10-Sep-86
|
Method
for Locating Differentiating, and Removing Neoplasms (RIGS)
|
|||
|
US4801803
|
07/027197
|
17-Mar-87
|
Detector
and Localizer for Low Energy Radiation Emissions (RIGS)
|
|||
|
US4889991
|
07/248816
|
23-Sep-88
|
Gamma
Radiation Detector with Enhanced Signal Treatment
|
|||
|
US4893013
|
07/248920
|
23-Sep-88
|
Detector
and Localizer for Low Energy Radiation Emissions
|
|||
|
US5070878
|
07/404403
|
08-Sep-89
|
Detector
and Localizer for Low Energy Radiation Emissions
|
|||
|
XX0000000
|
07/629271
|
18-Dec-90
|
Detector
and Localizer for Low Energy Radiation Emissions
|
|||
|
XX0000000
|
08/214814
|
17-Mar-94
|
Radiation-Based
Laproscopic Method For Determining Treatment Modality
|
|||
|
US5429133
|
07/992617
|
18-Dec-92
|
Radiation
Responsive Laparoscopic Instrument
|
|||
|
US5441050
|
07/992622
|
18-Dec-92
|
Radiation
Responsive Surgical Instrument
|
|||
|
US5475219
|
08/329505
|
26-Oct-94
|
Validation
of Photon Emission Based Signals Using an Energy Window Network in
Conjunction With a Fundamental mode Discriminator
Circuit
|
|||
|
US5495111
|
08/329319
|
26-Oct-94
|
Crystal
Array based Localizer for tissue sampling
|
|||
|
US5682888
|
08/662600
|
13-Jan-96
|
Apparatus
and System for Detecting and Locating Photon Emissions with Remote
Switch
Control
|
|||
|
US5732704
|
08/542955
|
13-Oct-95
|
Radiation
Based Method Locating And Differentiating Sentinel Node
|
|||
|
US5857463
|
08/543032
|
13-Oct-95
|
Remotely
controlled system for tracking and locating a source of photon
emission
|
|||
|
US5916167
|
08/949125
|
10-Oct-97
|
Surgical
probe apparatus and system
|
|||
|
US5928150
|
08/944078
|
04-Oct-97
|
System
for locating and detecting a source of photon
emissions.
|
|||
|
D390480
|
29/060780
|
07-Oct-96
|
Detector
Unit for Radiation Detecting Probe
|
|||
|
D390481
|
29/060782
|
10-Oct-96
|
Radiation
Detecting Probe
|
|||
|
D390485
|
29/060781
|
07-Oct-96
|
Handle
Unit for Radiation Detecting Probe
|
|||
|
D400249
|
29/077957
|
14-Oct-97
|
Console
for Controlling a radiation probe
|
|||
|
D411118
|
29/067945
|
18-Mar-97
|
Console
for controlling a radiation probe
|
|||
|
D411468
|
29/092799
|
27-Aug-98
|
Console
for controlling a radiation probe - medium scope
|
|||
|
D412125
|
29/092808
|
27-Aug-98
|
Console
for controlling a radiation probe-broad
|
|||
|
Filed
|
08/949107
|
10-Oct-97
|
Surgical
probe apparatus and system
|
|||
|
Filed
|
08/067947
|
08-Mar-97
|
Detector
unit for radiation detecting probe
|
|||
|
Filed
|
08/067946
|
18-Mar-97
|
Radiation
detecting probe
|
|||
|
Filed
|
08/067944
|
18-Mar-97
|
Radiation
detecting probe
|
|||
|
Filed
|
29/092780
|
27-Aug-98
|
Console
for controlling a radiation probe - narrow scope
|
|||
|
Filed
|
09/167704
|
06-Oct-98
|
Radiation
response surgical probe apparatus
|
|||
|
Filed
|
09/167643
|
06-Oct-98
|
Surgical
probe apparatus and system
|
|||
|
Filed
|
09/167008
|
06-Oct-98
|
Radiation
probe with compound semiconductor crystal performing in a
trapping
|
|||
|
Filed
|
09/167420
|
06-Oct-98
|
Surgical
probe apparatus
|
|||
|
Filed
|
09/178322
|
23-Oct-98
|
System
and apparatus for detecting and locating sources of
radiation
|
|||
|
Filed
|
09/177714
|
23-Oct-98
|
Scanning
system and method for locating sources of radiation emission
RIGS
|
|||
|
Filed
|
09/177725
|
23-Oct-98
|
Scanning
a radiation source with a count rate output derived with a Dynamic
window
|
|||
43
|
NEOPROBE
PATENTS
|
||||||
|
Patent
Number
|
Serial
Number
|
Filing
Date
|
Patent
Title
|
|||
|
US478280
|
61905880
|
10-Sep-86
|
Method
for Locating Differentiating, and Removing Neoplasms
(RIGS)
|
|||
|
US4801803
|
07/027197
|
17-Mar-87
|
Detector
and Localizer for Low Energy Radiation Emissions (RIGS)
|
|||
|
US4889991
|
07/248816
|
23-Sep-88
|
Gamma
Radiation Detector with Enhanced Signal Treatment
|
|||
|
US4893013
|
07/248920
|
23-Sep-88
|
Detector
and Localizer for Low Energy Radiation Emissions
|
|||
|
US5070878
|
071404403
|
08-Sep-89
|
Detector
and Localizer for Low Energy Radiation Emissions
|
|||
|
XX0000000
|
07/629271
|
18-Dec-90
|
Detector
and Localizer for Low Energy Radiation Emissions
|
|||
|
XX0000000
|
08/214814
|
17-Mar-94
|
Radiation-Based
Laproscopic Method For Determining Treatment Modality
|
|||
|
US5429133
|
07/992617
|
18-Dec-92
|
Radiation
Responsive Laparoscopic Instrument
|
|||
|
US5441050
|
07/992622
|
18-Dec-92
|
Radiation
Responsive Surgical Instrument
|
|||
|
US5475219
|
08/329505
|
26-Oct-94
|
Validation
of Photon Emission Based Signals Using an Energy Window Network in
Conjunction With a Fundamental mode Discriminator
Circuit
|
|||
|
US5495111
|
08/329319
|
26-Oct-94
|
Crystal
Array based Localizer for tissue sampling
|
|||
|
US5682888
|
08/662600
|
13-Jan-96
|
Apparatus
and System for Detecting and Locating Photon Emissions with Remote
Switch
Control
|
|||
|
US5732704
|
08/542955
|
13-Oct-95
|
Radiation
Based Method Locating And Differentiating Sentinel Node
|
|||
|
US5857463
|
08/543032
|
13-Oct-95
|
Remotely
controlled system for tracking and locating a source of photon,
emission
|
|||
|
US5916167
|
08/949125
|
10-Oct-97
|
Surgical
probe apparatus and system
|
|||
|
US5928150
|
08/944078
|
04-Oct-97
|
System
for locating and detecting a source of photon
emissions.
|
|||
|
D390480
|
29/060780
|
07-Oct-96
|
Detector
Unit for Radiation Detecting Probe
|
|||
|
D390481
|
29/060782
|
10-Oct-96
|
Radiation
Detecting Probe
|
|||
|
D390485
|
29/060781
|
07-Oct-96
|
Handle
Unit for Radiation Detecting Probe
|
|||
|
D400249
|
29/077957
|
14-Oct-97
|
Console
for Controlling a radiation probe
|
|||
|
D411118
|
29/067945
|
18-Mar-97
|
Console
for controlling a radiation probe
|
|||
|
D411468
|
29/092799
|
27-Aug-98
|
console
for controlling a radiation probe - medium scope
|
|||
|
D412125
|
29/092808
|
27-Aug-98
|
Console
for controlling a radiation probe-broad
|
|||
|
Filed
|
08/949107
|
10-Oct-97
|
Surgical
probe apparatus and system
|
|||
|
Filed
|
08/067947
|
08-Mar-97
|
Detector
unit for radiation detecting probe
|
|||
|
Filed
|
08/067946
|
18-Mar-97
|
Radiation
detecting probe
|
|||
|
Filed
|
081067944
|
18-Mar-97
|
Radiation
detecting probe
|
|||
|
Filed
|
29/092780
|
27-Aug-98
|
Console
for controlling a radiation probe - narrow scope
|
|||
|
Filed
|
09/167704
|
06-Oct-98
|
Radiation
response surgical probe apparatus
|
|||
|
Filed
|
09/167643
|
06-Oct-98
|
Surgical
probe apparatus and system
|
|||
|
Filed
|
09/167008
|
06-Oct-98
|
Radiation
probe with compound semiconductor crystal performing in a
trapping
|
|||
|
Filed
|
09/167420
|
06-Oct-98
|
Surgical
probe apparatus
|
|||
|
Filed
|
09/178322
|
23-Oct-98
|
System
and apparatus for detecting and locating sources of
radiation
|
|||
|
Filed
|
09/177714
|
23-Oct-98
|
Scanning
system and method for locating sources of radiation emission
RIGS
|
|||
|
Filed
|
09/177725
|
23-Oct-98
|
Scanning
a radiation source with a count rate output derived with a dynamic
window
|
|||
44
Schedule
2.15 Products
45
Schedule
2.15 Products
|
NEOPROBE
MODEL #
|
DESCRIPTION
|
|
|
neo2000TM
Control Uni
|
||
|
2000
|
neo2000
Control Xxxx
|
|
|
0000
|
XX
Xxxxx Xxxx, X. Xxxxxxx
|
|
|
2008
|
Op
Manual - English (2000)
|
|
|
2020
|
Instr
Video (2000)
|
|
|
2010
|
Accy
Case
|
|
|
14mm
Probe & Collimator
|
||
|
1017
|
14mm
Probe
|
|
|
1013
|
14mm
Collimator
|
|
|
BlueTipTM
Probes & Collimators
|
||
|
2001
|
12mm
Uncollimated Tip
|
|
|
2002
|
12mm
Collimated Tip
|
|
|
2003
|
19mm
Uncollimated Tip
|
|
|
2004
|
12mm
BTP Collimator
|
|
|
2019
|
19mm
BTP Collimator
|
|
|
Probe
Cables
|
||
|
2021
|
Probe
Cable (14mm/2000)
|
|
|
2012
|
Disposable
Handle, 12-pack
|
|
|
Int’l
Power Cords
|
||
|
1021
|
N.
America (for 1500/1000)
|
|
|
1022
|
Continental
Europe
|
|
|
1023
|
UK
|
|
|
0000
|
Xxxxx
|
|
|
1025
|
Denmark
|
|
|
1026
|
Xxxxxxxxx
|
|
|
0000
|
Xxxxx
|
|
|
1028
|
Israel
|
|
|
1029
|
Xxxxx
|
|
|
0000
|
Xxxxx
|
|
|
0000
|
Xxxxxxxxx
|
|
|
1034
|
China
|
|
|
1050
|
Ground
Plug Adapter
|
|
|
1500
Control Unit
|
||
|
1500
|
1500
Control Unit
|
|
|
1508
|
Op
Manual (1500)
|
|
|
1510
|
Op
Manual Int’l (1500)
|
|
|
1502
|
Instr
Video (1500)
|
|
|
1514
|
Carry
Case
|
|
|
19mm
Probe & Accessories
|
||
|
1002
|
19mm
Probe
|
|
|
1015
|
19mm
Collimator
|
|
|
1016
|
19mm
Shield
|
|
|
1007
|
Background
Shield
|
|
|
1009
|
O-ring
10-Pack
|
|
|
Probe
Cables
|
||
|
1003
|
Reusable
Probe Cable
|
|
|
1503
|
Probe
Tip Adapter Cable (1500)
|
|
|
1500
Battery Chargers
|
||
|
1504
|
US
Battery Charger (1500)
|
|
|
1531
|
Canadian
Batt Chrgr (1500)
|
|
|
1530
|
EU
Battery Charger (1500)
|
|
|
1020
|
Int’l
Battery Charger
|
|
|
1519
|
Intl
Charger Adapter Cable
|
|
|
Model
1000
|
||
|
1000
|
1000
Console (w/ 1014 case)
|
|
|
1008
|
1000
Op Manual
|
|
|
1014
|
1000
Carry Case
|
|
|
1004
|
1000
US Charger
|
|
|
1030
|
1000
EU Charger
|
|
|
1019
|
1000
Intl Adapter Cable
|
|
46
Schedule
2.19 Trademarks
47
Schedule
2.19
Neoprobe
Trademarks & Trade Names(1)
|
U.S.
Registration #
|
OUS
Registration #
|
||||
|
Audible
Tone Sequence
|
1959649
|
||||
|
Neoprobe
|
1938283
|
1510060
|
Austria | ||
|
541191
|
Benelux | ||||
|
8155193
|
1 U K | ||||
|
1787313
|
Spain | ||||
|
1787314
|
Spain | ||||
|
000000
|
Xxxxxx | ||||
|
2079214
|
Germany | ||||
|
00000
|
Xxxxxx | ||||
|
00000
|
Xxxxxx | ||||
|
784400
|
Taiwan | ||||
|
446971
|
S. Korea | ||||
|
800774
|
Taiwan | ||||
|
Appl
#T093C002090
|
Italy 11/93 | ||||
|
Appl
#113414/93
|
Japan 11/93 | ||||
|
(?)
Appl #38908/93
|
S. Korea 11/93 | ||||
|
(?)
Appl #38909/93
|
S. Korea 11/93 | ||||
|
(?)
Appl #2861/97
|
Singapore N/A | ||||
|
Neoprobe
and Design
|
446971
(4/26/99)
|
||||
|
Appl
#75/636945 (2/2/99)
|
|||||
|
Blue
Tip
|
Appl
#75/734590 6/99
|
||||
|
NE02000
|
Appl
#75/432104 6/98
|
||||
|
NEOLINK
|
Appl
#75/784096 8/99
|
||||
|
NEOMAX
|
Appl
#75/783829 8/99
|
||||
| 1 |
Correspondence
from X. Xxxxxx, dated 9/21/99
|
48
Schedule
3.2 Third
Party Agreements
49
SCHEDULE
3.2
Date
of Delivery of Exclusive Distribution Rights
|
PARTY
|
TERRITORY
|
DATE*
|
||
|
Artimed
|
Poland
|
60
days
|
||
|
CEI
|
Brazil
|
60
days
|
||
|
Century
Medical, Inc.
|
Japan
|
03/03/09**
|
||
|
CM
Nuclear
|
S.
Africa
|
60
days
|
||
|
Endoskopiki
|
Greece
|
60
days
|
||
|
Endounique
|
Austria
|
60
days
|
||
|
Epsilon
|
Turkey
|
60
days
|
||
|
Evergreen
|
China
|
60
days
|
||
|
Global
Damon Pharma
|
Korea
Thailand
Singapore
Taiwan
|
6
months
|
||
|
KOL
Bio-Medical
|
USA
|
10/15/99
|
||
|
Xxxxxx
|
Ireland
|
6.25
months
|
||
|
Sigma
B.V.B.A.
|
Belgium
|
6.25
months
|
||
|
Sigma
B.V.
|
The
Netherlands
|
6.25
months
|
| * |
Stated
as time running from the Effective Date of this
Agreement
|
|
**
|
Initial
Term is 5 Years with an automatic term renewal of 5 years provided
Century
is meeting its contractual
obligations.
|
Neoprobe
agrees to use its reasonable best efforts to reduce the stated time if possible
under a particular distribution agreement with a party listed
above.
50
Schedule
5.2 Transfer
Pricing for Products
51
*
Portions have been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential
treatment.
SCHEDULE
5.2
TRANSFER
PRICING
| I. |
Saleable
Product
|
|
A.
|
The
following schedule shall be used, in conjunction with paragraph I.B.,
to
determine the applicable per unit Transfer Price for all Products
meeting
the Specifications:
|
|
Commercial
|
|
Product
|
|
Provisional
|
|
Floor
|
|
Actual
Transfer
|
|
Year
|
|
Description(2)
|
|
Transfer
Price (4)
|
|
Price(6)
|
|
Price
|
|
Initial
Period(1)
|
[*]
|
[*]
|
[*]
|
[*]
|
||||
|
[*]
|
[*]
|
[*]
|
||||||
|
All
other Products
|
[*]
|
[*]
|
||||||
|
[*]
Products
|
[*]
|
[*]
|
[*]
|
|||||
|
Year
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
||||
|
[*]
|
[*]
|
[*]
|
||||||
|
[*]
|
[*]
|
[*]
|
||||||
|
[*]
|
||||||||
|
[*]
Products
|
[*]
|
[*]
|
||||||
|
Years
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
||||
|
[*]
|
[*]
|
[*]
|
[*]
|
|||||
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
||||
|
[*]
|
[*]
|
[*]
|
[*]
|
52
*
Portions have been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential
treatment.
Notes
|
1.
|
For
purposes of this Schedule 5.2 only, the Initial Period shall mean
the
period beginning on the Effective Date of the Agreement and ending
on
March 31, 2000.
|
|
2.
|
Products
described include all Products as defined in Section 2.15 of the
Agreement.
|
|
3.
|
For
purposes of this Schedule 5.2, a “System” shall be defined as one (1)
neo2000 control unit, one (1) reusable 14mm probe and other accessories
(including, but not limited to, cord set, operations manual, detector
probe cable and adapter, Probe collimator) sold as a package meeting
the
Specifications.
|
|
4.
|
The
Provisional Transfer Price (the “Provisional Price”) is the amount that
shall be used solely for purchase orders and invoicing purposes.
The
Provisional Price shall be recalculated annually, by the end of the
first
calendar quarter of each Commercial Year, and will then be in effect
for
the subsequent twelve-month period as described in paragraph
I.B.2.
|
|
5.
|
Net
Selling Price (“NSP”) shall mean the revenue received by Ethicon or an
Affiliate from the sale of the Product to an independent third party
less
the following amounts: (i) discounts, including cash discounts, or
rebates
actually allowed or granted; (ii) credits or allowances actually
granted
upon claims or returns, regardless of the party requesting the return;
(iii) freight charges paid for customer delivery; and (iv) taxes
or other
governmental charges levied on or measured by the invoiced amount
whether
absorbed by the billing or billed party. Commissions paid by Ethicon
to
its sales representatives shall not be deducted from the amount that
Ethicon charges to such third party in determining the
NSP.
|
|
6.
|
Average
Net Selling Price (“Average NSP”) shall mean the sum of the NSP for all
units sold during the commercial year, including [*] as provided
for in
Section 3.2 and 3.3, divided by the total number of units sold during
that
same commercial year provided that the total number of units is [*]
Commercial Year.
|
|
7.
|
“Floor
Price” shall mean the minimum Transfer Price and the minimum Provisional
Price for a unit as defined in the schedule above or based on the
actual
cost (“Cost”) to manufacture plus the indicated percentage markup. The
Cost to manufacture are the direct material and labor costs for Products
supplied to Neoprobe from its suppliers plus Neoprobe’s direct and
indirect overhead charges, provided that any cost reductions or
volume-related discounts or other associated cost savings are applied
to
the Cost in the Floor Price calculation. Neoprobe’s overhead charges
mentioned above shall be calculated in like manner as the “Current Cost
Estimate” shown in the table in paragraph
II.
|
53
*
Portions have been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential
treatment.
| B. |
Provisional
Price Calculation
|
|
1.
|
During
the Initial Period, the Provisional Price for each unit shipped to
Ethicon
will be as established in the schedule in paragraph
I.A.
|
|
2.
|
During
the first calendar quarter of each Commercial Year, the average NSP
will
be recalculated based on the actual world-wide sales recognized during
the
prior Commercial Year, except that, [*], the average NSP will be
recalculated based on the actual world-wide sales recognized during
the
period from the Effective Date to
[*].
|
|
3.
|
Concurrently,
the Provisional Price will also be recalculated based on the recalculated
average NSP as described above. The recalculated Provisional Price
shall
be equal to the recalculated average NSP multiplied by the percentage
indicated in the “Provisional Transfer Price” column of the schedule in
paragraph I.A. above or the amount in the “Floor Price” column, whichever
is greater. This revised Provisional Price will be in effect for
the
following twelve-month period, and will be communicated to Neoprobe
no
later than March 31 of each Commercial
Year
|
| C. |
Reconciliation
to Actual Transfer Price
|
On
[*]
the Provisional Price will be reconciled to the actual Transfer Price based
on
actual, world-wide average NSP for the period from the Effective Date [*] After
the Initial Reconciliation, the Provisional Price will be reconciled to the
actual Transfer Price by the end of the first calendar quarter of each
Commercial Year, i.e. March 31, based on actual, world-wide average NSP for
the
previous Commercial Year. Any overpayments or underpayments to Neoprobe shall
be
reflected on the first invoice to Ethicon after April 1 as a lump-sum
adjustment.
54
*
Portions have been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential
treatment.
II. Sample
Demonstration Units
Products
purchased by Ethicon to be used as promotional product demonstration units,
training units or sales representative samples will be priced according to
the
calculation under “Demonstration Unit Pricing” under the following
schedule:
|
Demonstration
Unit
Pricing
|
Current
Cost Estimate
|
Estimated
Demonstration Unit Price1
|
||||
|
[*]
[*]
[*]
|
[*]
[*]
|
[*]
|
[*]
[*]
|
|||
|
Control
unit only:
[*]
[*]
[*]
|
[*]
[*]
[*]
|
[*]
[*]
[*]
|
[*]
[*]
[*]
|
|||
|
Probes:
[*]
[*]
[*]
[*]
[*]
[*]
[*]
[*]
|
[*]
[*]
[*]
[*]
[*]
[*]
[*]
|
[*]
[*]
[*]
[*]
[*]
[*]
|
[*]
[*]
[*]
[*]
[*]
[*]
|
|||
|
All
other Products
|
[*]
|
Notes
|
1.
|
The
“Estimated Demonstration” Unit Price” is based on the current estimated
Cost of the Products provided to Ethicon by Neoprobe as shown in
the
“Current Cost Estimate” column in the above schedule and represents the
maximum Demonstration Unit Price. It is agreed that any cost reductions,
volume-related deductions or associated Cost savings shall reduce
the Cost
in the demonstration unit pricing
calculation.
|
55
*
Portions have been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential
treatment.
|
2.
|
The
Demonstration Unit Price of [*] for the returned and refurbished
demonstration units (“Returned Units”) [*] only. The maximum quantity of
Returned Units is [*]. Any and all other demonstration system purchases
shall be made at the [*] whichever is less. For tracking and compliance
purposes, Neoprobe shall provide Ethicon with a list of serial numbers
for
those demonstration units [*] including serial numbers for all related
components.
|
|
3.
|
The
Demonstration Unit Price of [*] demonstration units from the [*]
only. The
maximum quantity of [*] Blue Tip [*]. Any and all other demonstration
unit
purchases shall be made at the [*]. For tracking and compliance purposes,
Neoprobe shall provide Ethicon with a list of serial numbers for
those
demonstration units owned by the current U.S. distributor including
serial
numbers for all related components.
|
56
Schedule
5.6 Sales
and
Marketing Literature
57
SCHEDULE
5.6
LIST
OF APPROVED MARKETING LITERATURE
|
DOCUMENT
|
REVIEW
NUMBER
|
USE
|
QUANTITY
AS
OF
9/15/99
|
|||
|
neo2000™
BIueTip™ Probe Sales Training Binder
|
99-581
|
Released
for use by Sales Reps; internal use only; not for dissemination to
users/
public
|
1
(Master)
|
|||
|
neo2000™
Gamma Detection System Operation Manual
|
99-582
|
Released
for use by product users
|
75
|
|||
|
neo2000™
Gamma Detection System Operation Training Binder
|
99-583
|
Released
for use by Sales Reps; internal use only; not for dissemination to
users/
public
|
1
(Master)
|
|||
|
Neoprobe
14mm Reusable Probe Sales Aid
|
99-584
|
Released
for use by Sales Reps to interface with potential
customers
|
2,500
|
|||
|
neo2000™
BlueTip™ Probe Sales Aid
|
99-585
|
Released
for use by Sales Reps to interface with potential
customers
|
6,000
|
|||
|
neo2000™
Gamma Detection System Sales Aid
|
99-586
|
Released
for use by Sales Reps to
interface
with potential customers
|
6,000
|
58
Schedule
5.18 Sales and Marketing Organization
59
Schedule
5.18 Sales and Marketing Organization
|
EUROPE
|
||||||
|
Employee
|
Location
|
Title
|
Hire
Date
|
|||
|
Xxxxxxx,
Xxxx
|
Oxfordshire,
England
|
Marketing
Director
|
00/0/00
|
|||
|
Xxxxxxx,
Xxx-Xxxxxx
|
Xxxxx,
Xxxxxxxxxxx
|
Clinical
Specialist
|
0/0/00
|
|||
|
Xxxxxxx,
Xxxxxxxxx
|
Xxxx,
Xxxxx
|
Clinical
Specialist
|
0/0/00
|
|||
|
Xxxxxx,
Xxxxx
|
Xxxxxxxxx,
Xxxxxxx
|
Professional
Educ. Mgr
|
0/0/00
|
|||
|
X.X.
|
||||||
|
Xxxxxxx,
Xxxxxx
|
Xxxxxxxx,
XX (Seattle)
|
Clinical
Specialist
|
5/14/98
|
|||
|
Gates,
Xxx
|
XxXxxxxx,
TX (Dallas)
|
Western
Area Dir.
|
1/12/98
|
|||
|
Xxxxxxxx,
Xxxxx
|
Westerville,
OH
|
Clinical
Specialist
|
1/12/98
|
|||
|
Xxxxxxx,
Xxxx
|
Raleigh,
NC
|
Sales
Director
|
8/1/96
|
60
Schedule
5.25 14 mm Probe Accessory Marketing Implementation Program
61
Schedule
5.25 14mm Probe Accessory Marketing Implementation Program - Page 1
Program Revised
labeling and customer instructions for the Neoprobe Reusable Probes when used
neo2000 Control Units
Scope The
Parties agree to the following key items of the Program:
|
·
|
A
Warning shall be developed and placed on the neo2000 Control Units
as well
as, added to Section 1.1-1, System Warnings, Cautions and Notes of
the
Operation Manual, as well as any promotional material and read as
follows:
“Warning! To minimize the risk of safety hazards (electric shock or
xxxxx)
and to maintain proper operation, Neoprobe Corporation recommends
that
this equipment not be in contact with the patient or operator when
any
electrosurgical device is in use and
energized.”
|
|
·
|
Recommendation
shall be added to Section 1.1-1 and Section 4.3-1, Sterilization
Procedures of the Operation Manual and read as follows: “When reusable
probes, Models 1002 and 1017 are used with the neo2000 Control Unit,
it is
recommended that the probes always be placed in commercially available
sterile surgical drape barriers [as noted
above].”
|
|
·
|
Written
communications shall be developed and provided to all Neoprobe customers
on the Warning and Recommendation.
|
|
·
|
Customer
inservicing shall be conducted to reinforce the written communications
and
ensure proper procedures are followed during Product
use.
|
62
Responsibilities
and Timing
|
Actions
|
Responsibility
|
Timing
from
Effective
Date
|
||
|
Finalize
Regulatory strategy.
|
Neoprobe
|
7
days
|
||
|
Develop
Warning and Recommendation labeling and revised Operation Manual
pages
(include artwork and copies)
|
Neoprobe
|
21
days
|
||
|
Prepare
written communications on Warning and Recommendations and send to
all
Neoprobe Customers (“Customers”); Prepare inservicing
script
|
Neoprobe
- Preparation of communications including script and mailing to
Customers
Ethicon
- Affixing Labels and inserting new Operation Manual pages where
Customer
inservicing to existing neo2000 customers will be done b Ethicon
(as noted
below)
|
7-10
days
|
||
|
Conduct
Customer inservicing to existing neo2000 customers where Third Party
Agreements are not in effect (refer to Schedule 3.2 of the
Agreement)
|
Ethicon
|
45
days from final printed labeling and operations manual
updates
|
63
Schedule
5.25 14mm Probe -Accessory Marketing Implementation Program - Page
2
In
- Service Script
Neo2000
Gamma Detection System
The
following information is required to be disseminated to the customer during
inservice training.
To
ensure
the intended operation, and safe and effective use of the neo2000 Gamma
Detection System, when configured with the Model 1002 (19mm) or Model 1017
(14mm) detector probes, follow these basic rules:
1) To
minimize the risk of safety hazards (electric shock or bums) and to maintain
proper operation, Neoprobe Corporation recommends that this equipment not be
in
contact with the patient or operator when any electrosurgical device is in
use
and energized.
a) For
existing accounts:
Add
the ESU warning label to the front of the console as depicted
here:
 |
||
|
WARNING!
To
minimize the risk of safety hazards (electric shock or bums) and
to
maintain proper operation, Neoprobe Corporation recommends that this
equipment not be in contact with the patient or operator when any
electrosurgical device is in use and energized.
|
||
2) When
reusable probes, Models 1002 and 1017 are used with the neo2000 Control Unit,
it
is recommended that the probes always be placed in commercially available
sterile surgical drape barriers. Refer the customer to page 4.3-3 for the
surgical sheath product information (i.e., Microtek Probe Drape Catalog No.
3787; 0-000-000-0000).
3) Update
the Operation Manual with new pages for Sections: l.1-1, 4.1-1, and 7.1-1 will
be provided with this in-service document.
64
Schedule
6.1 R&D
Personnel
65
SCHEDULE
6.1
INSTRUMENT
DEVELOPMENT POSITIONS
|
POSITION
|
CURRENT
INCUMBENT
|
|
|
Director,
Instrument Development
|
Xxxx
Xxxxx
|
|
|
Project
Engineer
|
Xxxx
Xxxx
|
|
|
Project
Engineer
|
Open
|
|
|
Software
Engineer FT Consultant
|
Olwen
Wee
|
|
|
Executive
Assistant
|
Xxxx
Xxxxx
|
66
Schedule
6.3 R&D
Programs
67
*
Portions have been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential
treatment.
Schedule
6.3 R&D
Programs
SCHEDULE
6.3
EXISTING
NEOPROBE R&D PROGRAMS
|
PRODUCT
|
DESCRIPTION
|
IMPACT
|
AVAILABILITY
|
|||
|
[*]
|
·
[*]
·
[*]
·
[*]
·
[*]
|
·
[*]
|
·
[*]
·
[*]
·
[*]
|
|||
|
[*]
|
·
[*]
|
·
[*]
·
[*]
·
[*]
|
·
[*]
·
[*]
|
|||
|
[*]
|
·
[*]
·
[*]
·
[*]
|
·
[*]
|
·
[*]
·
[*]
|
|||
|
[*]
|
·
[*]
·
[*]
·
[*]
·
[*]
· [*]
|
·
[*]
|
·
[*]
·
[*]
|
68
Schedule
10.2 Escrowed Process Descriptions
69
SCHEDULE
10.2
MATERIAL
FOR ESCROW
1) Copy
of
the Product Technical Documentation
2) Copy
of
the Method Sheets(Manufacturing Instructions)
3) Copy
of
the Verification and Validation Procedures
70
Exhibit
2.17 Ethicon Endo-Surgery, Inc. Quality Assurance requirements
ETHICON
QUALITY ASSURANCE REQUIREMENTS
|
1.
|
Neoprobe
shall maintain a quality assurance system for the manufacture of
the
Products that is compliant with the requirements of FAR 820, Quality
System Regulation, Current Good Manufacturing
Practices.
|
|
2.
|
Neoprobe
represents and warrants that each of the Products is marked and attested
to comply with Council Directive 93/42/EEC and that each of the Products
is compliant with EN60601-1 and any related requirements relating
to such
Product.
|
|
3.
|
Neoprobe
shall provide Ethicon with the most recent copies of all applicable
EC
certificates # 02033 and all other certifications upon Ethicon’s written
request.
|
|
4.
|
Neoprobe
represents that each of the Products is marked (UL) and attested
to comply
with Underwriters Laboratory safety requirements. Neoprobe shall
be
responsible for assuring that each of the Products is compliant with
UL
2601-1; Medical Electrical Equipment, Part 1: General Requirements
for
Safety.
|
|
5.
|
Neoprobe
shall be responsible for assuring all external suppliers maintain
the
appropriate quality, process and material controls to assure that
the
goods and services they provide are delivered on schedule and meet
the
requisite material and quality
specifications.
|
|
6.
|
Pursuant
to Section 8.2, Neoprobe shall agree to provide Ethicon with a written
plan to remedy deficiencies lasting longer than ten (10) business
days
with updates on a monthly basis until such activities necessary to
correct
such deficiencies are completed.
|
71
