EXHIBIT 10.27
THIRD AMENDMENT TO
SUPPLY AND DISTRIBUTION RIGHTS AGREEMENT
THIS THIRD AMENDMENT (the "Third Amendment") is made as of November 6,
2001, by and between Ethicon, Inc. ("Ethicon") and Closure Medical Corporation
("Closure Medical"), formerly known as Tri-Point Medical Corporation.
BACKGROUND
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WHEREAS, Ethicon and Closure Medical have entered into that certain
Supply and Distribution Rights Agreement, dated as of March 21, 1996, as amended
by the First Amendment, dated as of September 15, 1998, and the Second
Amendment, dated as of September 30, 1998 (collectively referred to herein as,
the "Agreement").
WHEREAS, Ethicon and Closure Medical have agreed to amend the Agreement
as set forth herein to provide certain additional terms and conditions under
which a Surgical Dressing Product and a Wound Dressing Product will be supplied
to Ethicon.
TERMS
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NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, and intending to be legally bound,
the parties hereby agree as follows:
1. All capitalized terms not defined herein shall have the definitions
given to them in the Agreement.
2. All references to "Tri-Point Medical Corporation" shall be deleted and
replaced with "Closure Medical Corporation," and all references to
"Tri-Point" shall be deleted and replaced with "Closure Medical."
3. Except as otherwise set forth herein, each of the Surgical Dressing
Product and Wound Dressing Product shall be treated as Product for the
purposes of the Agreement and this Amendment.
4. Article I(Q) of the Agreement shall be amended by adding to the end
thereof the following sentence:
"Notwithstanding the foregoing, for the Wound Dressing Product only,
the Field shall include formulations of cyanoacrylates for the **;
provided, however, that in the event either (A) ** or (B) **, the
Field, for the Wound Dressing Product only, will not include
formulations of cyanoacrylates for the **."
5. Article I(W) of the Agreement shall be amended by adding to the end
thereof the following:
"The Invoice Price for the Surgical Dressing Product shall initially be
a price to be agreed to by the parties ** (the "Surgical Dressing
Product Invoice Price"), **. The invoice price for the Wound Dressing
Product shall initially be $**. The Invoice Price for the Surgical
Dressing Product and Wound Dressing Product may be **"
6. New Article I(AS1) shall be added to read in its entirety as follows:
'"Surgical Dressing Product" shall mean a **.'
7. New Article I(AX) shall be added to read in its entirety as follows:
'"Wound Dressing Product" shall mean a **.'
8. Article III(G) of the Agreement shall be amended by adding a new
Section 3 after Section 2 thereof:
"3. In consideration of Closure Medical extending Ethicon's rights
under this Agreement by entering into the Third Amendment and of
Closure Medical reaching certain milestones relating to the Wound
Dressing Product, Ethicon shall pay to Closure Medical the following
payments:
a. the sum of **;
b. the sum of **;
c. the sum of **; and
d. the sum of **"
9. Closure Medical hereby acknowledges, as of the date of the Third
Amendment, that the payment obligations of Ethicon under Article
III(G)(1) and Article III(G)(2) and under Article III(H)(1) have been
satisfied in full.
10. New Article III(M) shall be added to read in its entirety as follows:
"Reversion of Rights. Ethicon shall have the right and option,
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exercisable in Ethicon's sole discretion by delivering notice to
Closure Medical at any time prior to ** of the Wound Dressing Product.
If Ethicon ** the Wound Dressing Product, then as of the date of such
written notice by Ethicon, (i) ** and (ii) **."
11. Article IV(B)(1) of the Agreement shall be amended by adding to the end
thereof the following:
"The Purchase Price for each unit of Surgical Dressing Product
purchased from Closure Medical shall be ** for the Surgical Dressing
Product; provided, however, that in no event shall the Purchase Price
for the Surgical Dressing Product **. The Purchase Price for each unit
of Wound Dressing Product purchased from Closure Medical shall be **
for the Wound Dressing Product; provided, however, that in no event
shall the Purchase Price for the Wound Dressing Product **."
12. Article IV(B)(3) of the Agreement shall be amended by adding to the end
thereof the following:
"Notwithstanding the minimum purchase price for the Surgical Dressing
Product or Wound Dressing Product set out in Paragraph B.1. above, in
the event that for ** of such Surgical Dressing Product or Wound
Dressing Product, as the case may be, by Ethicon in either the U.S. or
the E.C., the minimum purchase price for such Surgical Dressing Product
or Wound Dressing Product is ** Surgical Dressing Product or Wound
Dressing Product as calculated in Paragraph B.2 of Article IV over such
quarter (the "Dressing Product Measurement Quarter"), then the minimum
purchase price for such Surgical Dressing Product or Wound Dressing
Product purchased by Ethicon ** of such Surgical Dressing Product or
Wound Dressing Product during the Dressing Product Measurement
Quarter."
13. Article IV(C)(2) of the Agreement shall be deleted in its entirety and
replaced with the following:
"2. In the event Ethicon does not meet, with respect to purchases of
Wound Dressing Product or purchases of Product, as the case may be, the
applicable annual purchase minimums set out on Exhibit B for **, as the
case may be, in the U.S. or E.C. (it being understood that if no
commercial sales have commenced in either the U.S. or E.C. after
Regulatory Approval, then the first year shall be deemed to ** Closure
Medical notifies Ethicon of such Regulatory Approval), then Closure
Medical's sole and exclusive remedy shall be (A) **, and (B) **;
provided, however, **. It is understood that any such failure to meet
the annual purchase minimums of Product or Wound Dressing Product, as
the case may be, **. For purposes of clarity, the parties acknowledge
and agree that the **."
14. Article V(E) of the Agreement shall be amended by adding to the end
thereof the following sentence:
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"In addition, Closure Medical agrees to **, as the case may be."
15. Article VI(H) shall be amended by deleting the first two address blocks
and replacing them with the following:
"if to Closure Medical to:
Closure Medical Corporation
0000 Xxxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: President
Fax: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxx & Xxxxxxx LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000"
16. The specifications for the Surgical Dressing Product and the Wound
Dressing Product are attached hereto as Exhibits I and II,
respectively, as supplemented or amended by mutual agreement of the
parties from time to time.
17. Exhibit B of the Agreement shall be deleted and replaced by the new
Exhibit B attached hereto, as supplemented or amended by mutual
agreement of the parties from time to time.
18. Closure Medical represents and warrants to Ethicon that the
representations and warranties made in (IV)(J)(1) subsections (d), (e)
and (f) for the Product are true and accurate as of the date of this
Third Amendment for the Wound Dressing Product and the Surgical
Dressing Product, and that the representations and warranties in
(IV)(J)(1)(g) and (h), as if such related to the entering into of the
Third Amendment by Closure Medical, are true and accurate. Ethicon
represents that the representations and warranties in (IV)(J)(2), as if
such related to the entering into of the Third Amendment by Ethicon,
are true and accurate.
19. Except as set forth herein, all terms, provisions and conditions of the
Agreement shall remain in full force and effect including, without
limitation, the restrictions on public disclosure contained in Article
(V)(A)(3) of the Agreement. Moreover, in the event disclosure of this
Third Amendment is required by applicable law, the party required to
make disclosure will, to the extent permitted, redact the pricing
information and payment terms contained herein.
20. This Third Amendment shall be governed by and construed in accordance
with the laws of the State of New Jersey without regard to conflicts of
law rules or principles.
21. This Third Amendment may be executed and delivered in any number of
separate counterparts, each of which shall be deemed an original and
all of which taken together shall constitute one and the same original
agreement.
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IN WITNESS WHEREOF, the parties have caused this Third Amendment to be
executed by their duly authorized officers as of the date first set
forth above.
ETHICON, INC.
By: /s/ XXXXXX X. XXXXXXXXX
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Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President, New Business
Development
CLOSURE MEDICAL CORPORATION
By: /s/ XXXXXX X. XXXX
-------------------------------------
Name: Xxxxxx X. Xxxx
Title: President and CEO
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EXHIBIT B
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Annual Purchase Minimums for Product
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(in units)
[INFORMATION REDACTED]
Annual Purchase Minimums for Wound Dressing Product
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(in units)
[INFORMATION REDACTED]
