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Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
EXHIBIT 10.4.39
DISTRIBUTION AGREEMENT
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
***, 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.
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
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Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-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
(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.
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
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Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
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 *** shall mean a device that provides 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.
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 Section 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
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
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Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
(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).
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 ***.
3.3 SUPPLY TO THIRD PARTIES. Neoprobe grants Ethicon ***. 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 ***. 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 *** 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.
ARTICLE 5 - RESPONSIBILITIES OF THE PARTIES
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Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
5
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
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 II "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, *** 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.
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 ***.
Additional inventories will be provided ***. 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; *** 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
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
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Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
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.
5.8 MINIMUM PURCHASE REQUIREMENTS.
(a) During each of the first three (3) Commercial Years, Ethicon shall
purchase from Neoprobe the following ***:
Commercial Year Minimum Purchase Requirement
--------------- ----------------------------
*** ***
*** ***
*** ***
As used in this Section 5.8, a ***.
(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:
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 *** of Products not
delivered or replaced.
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
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Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
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 *** 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
***.
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 *** 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 *** 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 *** 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.
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. *** 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, *** . *** 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. *** shall have the right to review and amend any qualification protocol(s)
initiated by *** 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, *** may jointly
establish an appropriate qualification protocol, and *** 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 *** . *** up to a maximum unit quantity of ***
respectively, PROVIDED THAT, ***. The agreed upon cost to *** or less. In the
event the *** are sold to *** customers, *** agrees *** the appropriate gross
margin on the sale of these Units in accordance with the agreed upon Transfer
Prices outlined for *** as referenced in Schedule 5.2, PROVIDED THAT, any ***
sold will be *** against the MPRs for that Calendar Year accordingly.
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
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Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
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 *** from the
Effective Date. *** at its sole discretion, may continue the *** of these Sales
and Marketing Organization activities.
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.
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
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
9
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
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 *** 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 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
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
10
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
borne by Neoprobe if the independent accountant finds no underpayment and by
Ethicon if an underpayment is found.
5.25 ***.
5.26 ***.
*** agrees to use its best efforts to provide ***.
*** shall use its best efforts to provide ***.
*** at its sole expense, shall use its best efforts to develop and
release an ***.
*** agrees to review all designs *** 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 *** listed on Schedule 6.1 hereto, PROVIDED THAT, (a) *** 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") for the entire calendar
quarter; (b) the R&D Personnel are *** continued Product support and (c) the R&D
Personnel are available to ***. 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 *** 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
*** for the R&D Personnel shall be provided to Ethicon prior to the Effective
Date.
6.2 IMPROVED PRODUCT AND *** 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.
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 programs *** set forth
in Schedule
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
11
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
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.
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;
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
12
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
(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.
8.2 RESULTS OF ETHICON'S AUDIT. Ethicon shall promptly (no more than
*** 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 *** remedy or cause
the remedy of any deficiencies that were noted in such audit, or if any such
deficiency can not reasonably be remedied ***, 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
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
13
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
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.
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
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
14
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
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.
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
Section 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).
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.
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
15
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
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 *** 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.
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
----------------------
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
16
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
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 *** mutually agreed upon by Neoprobe and Ethicon and as described in
Schedule 10.2 hereto, ***.
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 *** 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
(b) for any reason set forth under Section 17.6 below, and this
failure lasts longer than *** from such desired delivery date;
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
17
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
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 *** 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 ***. 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 *** to the Trademarks.
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
*** 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
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
18
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
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 *** 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 *** 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.
14.3 Ethicon may terminate this Agreement upon *** 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 ***
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 ***
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.
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
19
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
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.
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
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
20
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
by reason of such ruling on evidence.
15.5 To the extent possible, the arbitration hearings and award will be
maintained in confidence.
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.
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.
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
21
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
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.
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
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
22
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
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.
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.
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
23
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
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.
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
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
24
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement.
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 Name: Xxxxxxxx Xxxxxx
Title: President, CEO Title: V.P. Business Development
Date: Sept. 28, 1999 Date: Sept. 28, 1999
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
25
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
Appendix A Patent, Computer Software, and Mask Work License Agreement
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 an 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.
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.
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
26
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
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:
(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 ***
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.
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
27
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
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 *** 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.
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.
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
28
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
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.
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 *** 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 *** 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 ***.
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
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
29
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
between the parties without the prior written approval of the other party.
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.
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.
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
30
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
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.
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 Xxxxxx
President, CEO
Date: Sept. 28, 1999 Date: Sept. 28, 1999
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
31
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
32
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
Schedule 2.11 Patents and Patent Applications
NEOPROBE PATENTS
PATENT NUMBER SERIAL NUMBER FILING DATE PATENT TITLE
*** *** *** ***
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
33
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
Schedule 2.15 Products
NEOPROBE MODEL # DESCRIPTION NEOPROBE MODEL # DESCRIPTION
*** *** *** ***
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
34
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
Schedule 2.19
Trademarks
SCHEDULE 2.19
NEOPROBE TRADEMARKS & TRADE NAMES (1)
U.S. REGISTRATION # OUS REGISTRATION #
Audible Tone Sequence ***
Neoprobe *** *** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
Neoprobe and Design *** ***
Blue Tip ***
NE02000 ***
*** ***
*** ***
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
35
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
Schedule 3.2 Third Party Agreements
SCHEDULE 3.2
DATE OF DELIVERY OF EXCLUSIVE DISTRIBUTION RIGHTS
PARTY TERRITORY DATE*
*** *** ***
***
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
36
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
Schedule 5.2 Transfer Pricing for Products
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 description(2) Provisional Transfer Floor Actual Transfer
Year Price(4) Price(6) Price
Initial Period(1) *** *** *** ***
All other Products *** ***
*** Products *** *** ***
Year *** *** *** *** *** during ***
*** ***
*** Products *** *** ***
Years *** *** *** *** ***
*** *** *** ***
*** *** *** *** ***
*** *** *** ***
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
37
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
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 ***.
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)
*** unit, one (1) *** and other accessories (including, but not limited to,
*** ) 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
xxxx-up. 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
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
38
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
shall be calculated in like manner as the "Current Cost Estimate" shown in
the table in paragraph II.
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.
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
39
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
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 Current Cost Estimated
Pricing Estimate 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.
2. The Demonstration Unit Price of *** for the returned and refurbished
demonstration units ("Returned Units") from *** 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 Ehticon 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.
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
40
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
Schedule 5.6 Sales and Marketing Literature
LIST OF APPROVED MARKETING LITERATURE
DOCUMENT REVIEW USE QUANTITY
NUMBER AS OF
9/15/99
neo2000tm BlueTipTM Probe Sales 99-581 *** ***
Training Binder
neo2000tm Gamma Detection 99-582 *** ***
System Operation Manual
neo2000tm Gamma Detection 99-583 *** ***
System Operation Training Binder
Neoprobe 14mm Reusable Probe 99-584 *** ***
Sales Aid
neo2000tm BlueTipTM Probe Sales 99-585 *** ***
Aid
neo2000tm Gamma Detection 99-586 *** ***
System Sales Aid
***
***
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
41
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
Schedule 5.18 Sales and Marketing Organization
Schedule 5.18 Sales and Marketing Organization
***
Employee Location Title Hire Date
*** *** *** ***
***
*** *** *** ***
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
42
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
Schedule 5.25 ***
***
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
43
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
Schedule 6.1 R&D ***
SCHEDULE 6.1
***
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
44
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
Schedule 6.3 R&D Programs
SCHEDULE 6.3
EXISTING NEOPROBE R&D PROGRAMS
PRODUCT DESCRIPTION IMPACT AVAILABILITY
*** *** *** ***
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
45
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
Schedule 10.2 *** Descriptions
SCHEDULE 10.2
MATERIAL FOR ***
1) ***
2) ***
3) ***
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
46
Confidential portions of this Exhibit are subject to a Request for Confidential
Treatment under Rule 24b-2
Exhibit 2.17 ***
***
1. *** .
2. *** .
3. *** .
4. *** .
5. *** .
6. ***.
Text which has been omitted and filed separately under Rule 24b-2, pursuant to
which Neoprobe Corporation has requested confidential treatment of this
information, has been replaced by " *** " in this Exhibit.
