EXHIBIT 3
PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED (DESIGNATED BY AN
ASTERISK (*)) AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
DATED AUGUST 28, 1998
EXCLUSIVE DISTRIBUTION AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of August 12, 1998
(the "Effective Date"), by and between XXXXXX LABORATORIES, an Illinois
corporation, on behalf of itself and its Affiliates (as defined below)
(collectively, "Abbott"), having a place of business at 000 Xxxxxx Xxxx, Xxxxxx
Xxxx, Xxxxxxxx 00000, and MICRO THERAPEUTICS, INC., a Delaware corporation
("MTI"), having a place of business at 0000-X Xxxxx Xxxxxxx, Xxx Xxxxxxxx,
Xxxxxxxxxx 00000.
RECITALS
A. MTI is engaged in the business of developing and manufacturing the
Products (as defined below), and Abbott is in the business of developing,
manufacturing and distributing pharmaceuticals, medical devices and other
health care products.
B. The parties desire that Abbott act as an exclusive independent
distributor of the Products within the Territory (as defined below) under
the terms and conditions of this Agreement.
C. The parties also desire that Abbott invest in MTI, the details of
which investment are fully described and governed by that certain
Convertible Subordinated Note Agreement ("Note Agreement"), Credit
Agreement ("Credit Agreement") and Security Agreement ("Security
Agreement") between the parties bearing even date herewith.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth below, the parties agree as follows:
DEFINITIONS.
1.1 "AFFILIATE" means any company or entity that controls, is
controlled by or is under common control with, a party to this Agreement.
As used herein, "control" means the direct or indirect ownership of fifty
percent (50%) or more of the authorized issued voting shares in such entity
or such other relationship as in fact legally results in effective control
over the management, business and affairs of such entity.
1.2 "ASP" OR "AVERAGE SELLING PRICE" means the Net Sales of any given
Product divided by the total number of units of that Product shipped
(excluding non-revenue units, such as samples) and invoiced by Abbott or
its Affiliates to Customers.
1.3 "BUSINESS DAY" means any day Monday through Friday excluding
Abbott observed holidays.
1.4 "CHANGE OF CONTROL EVENT" means any sale of all or substantially
all of a party's assets or stock or a change in ownership or control (as
defined in Section1.1) of a party, whether by merger or acquisition or
otherwise.
1.5 "CONFIDENTIAL INFORMATION" means proprietary, non-public
information owned or controlled by one party to this Agreement to which the
other party has access hereunder, including but is not limited to, trade
secrets, discoveries, ideas, concepts, know-how, techniques, designs,
specifications, drawings, diagrams, data, business activities and
operations, customer lists, reports, studies and other technical and
business information.
1.6 "COST" means the transfer price paid by Abbott to MTI for each
Product purchased under this Agreement, as described in Section6.1.
1.7 "CUSTOMER" means any end-user who purchases Products from Abbott
for use in the Territory.
1.8 "EFFECTIVE DATE" means the date first set forth above.
1.9 "FDA" means the United States Food and Drug Administration and
any successor agency thereto.
1.10 "FIELD" means devices and methods of use directed toward diagnosis,
treatment or prevention of blood clot disorders in the peripheral
vasculature, including related peripheral blood clot therapy access
products.
1.11 "FIRST COMMERCIAL SALE" means the first sale by Abbott of any
Product to a Customer after the Effective Date. "First Commercial Sale"
shall not include any sales to Abbott Affiliates or to any third party in
connection with any clinical trials or regulatory or safety testing.
1.12 "LES" means MTI's Liquid Embolic System (Embolyx-TM-) that
includes an embolic agent and delivery system.
1.13 "MARGIN" means Net Sales minus the Cost of the Product sold.
1.14 "MTI'S SUCCESSOR" means a third party who assumes control of MTI's
management, business and affairs following an MTI Change of Control Event.
1.15 "NET SALES" means the gross amounts recorded by Abbott on the
accrual method minus reasonable reserves for bad debt consistent with
generally accepted accounting principles consistently applied by Abbott for
sales of, and in connection with Xxxxxx'x purchase, transportation and
importation of, the Products, less any discounts, rebates and credit for
damaged, outdated, returned, withdrawn and recalled goods, less any
allowances for partial-revenue or non-revenue units (e.g., samples), less
any trade discounts earned or granted, less any cash discounts, management
fees or rebates paid to Customers (including but not limited to Group
Purchasing Organizations ("GPOs"), Integrated Health Care Systems ("IHSs"),
and government agencies) and less all freight charges, insurance and other
costs of shipping and handling, taxes, duties and the like, all to the
extent that any of the foregoing may be recorded or incurred by Abbott in
connection with the sale of Products under this Agreement. For sales
outside of the United States, the aforementioned shall be converted to
United States dollars each calendar quarter, using Xxxxxx'x standard
practices to determine Net Sales.
1.16 "PRODUCTS" means all of the current MTI products referenced in
the attached Exhibit1 as well as MTI's devices or technology developed or
otherwise acquired by MTI after the Effective Date that have any
application in the Field, including but not limited to any improvements,
enhancements or line extensions thereto. The parties shall amend Exhibit 1
from time to time to reflect any and all Product improvements, enhancements
and line extensions and additions of new Products and, as applicable, shall
amend Sections6.1 and 6.2 accordingly.
1.17 "PRODUCT LINES" means the following five (5) categories of Products
as of the Effective Date: thrombolytic brushes, infusion catheters,
infusion guidewires, peripheral micro catheters, and accessory kits.
Product Lines shall also include other Product categories that may be
developed during the Term.
1.18 "QSR" or "QUALITY SYSTEM REGULATIONS" means all applicable
standards relating to manufacturing practices for medical devices
promulgated by the FDA in the form of laws, regulations or guidance
documents (including but not limited to advisory opinions, compliance
policy guides and guidelines), and which guidance documents MTI knows or
reasonably should have known to be applicable, current, feasible and
valuable in ensuring device quality within the device manufacturing
industry for such products in effect on the Effective Date or at any time
thereafter during the Term.
1.19 "SPECIFICATIONS" means MTI's most current specifications for the
manufacture of each of the Products.
1.20 "STANDARD MANUFACTURING COST" means with respect to any
Product, MTI's fully allocated cost of manufacturing such Product (in
accordance with QSR and
the Specifications), as determined in accordance with Generally Accepted
Accounting Principles ("GAAP"), consistently applied, including all
direct and indirect costs related to the manufacture of such Product,
including without limitation, costs for labor, materials (including,
without limitation, components of such Product), quality control,
regulatory compliance, manufacturing administrative expenses,
subcontractors, fixed and variable manufacturing overhead costs and
business unit, division or company costs reasonably allocable to the
manufacture, packaging and labeling of such Product, in each case,
respectively.
1.21 "TERM" means the Initial Term (as defined in Section14.1) plus any
extensions pursuant to Section14.1 and/or Section15.5, unless earlier
terminated pursuant to Sections14.2, 14.3 or 14.4.
1.22 "TERRITORY" means the fifty (50) United States and territories of
the United States (including but not limited to, Puerto Rico) as well as
Canada. The Territory may be expanded from time to time by mutual
agreement of the parties to include additional countries not currently
committed by MTI to alternative distributors for the Products.
2. APPOINTMENT AND STATUS OF ABBOTT
2.1 APPOINTMENT. MTI hereby appoints Abbott as the exclusive
distributor of the Products to Customers in the Territory. During the
Term, MTI shall not itself or through its Affiliates (i) make sales of any
Products within the Territory (except for clinical trials or regulatory
approval or compliance purposes), (ii)appoint or authorize any other
distributor or sales representative to make sales of any Products within
the Territory or (iii) sell any Products to any entity that it knows or has
reason to know will sell such Products in the Territory without Xxxxxx'x
prior written permission. Abbott may, in its discretion, distribute,
market and sell the Products in the Territory through any Affiliate of
Xxxxxx Laboratories or use other subdistributors and agents of its own
choosing in distributing, marketing and selling any Products in the
Territory. Abbott shall have the right during the Term to represent to the
public that it is an authorized exclusive independent distributor of the
Products within the Territory.
2.2 INDEPENDENT CONTRACTOR. Abbott is and at all times shall be an
independent contractor of MTI in all matters relating to this Agreement.
Each party and its employees are not agents or partners of the other party
for any purposes and, except as otherwise expressly agreed in writing by
the other party, have no power or authority to bind or commit the other
party in any way.
3. XXXXXX'X DUTIES. Abbott shall use reasonable commercial efforts to
introduce, promote the sale of, solicit and obtain orders for Products from
Customers in accordance with the terms of this Agreement. Additionally,
Abbott shall be
responsible for all order entry, distribution, billing, collection of sales
revenue, Customer service support (excluding technical Product support),
and processing of returns for the Products in the Territory. In
particular, Abbott shall assume the following responsibilities:
3.1 SALES. Abbott shall assume responsibility for all sales and
marketing activities for the Products in the Territory through its Abbott
Critical Care Systems commercial organization or another commercial
organization at Xxxxxx'x sole discretion. Except as otherwise expressly
stated herein, Abbott shall be responsible for its own sales and marketing
costs, including but not limited to training and maintenance of its sales
organization, formation of clinical symposia, promotion at appropriate
trade shows, publication of promotional materials/reprints, and publication
of appropriate journal advertisements.
3.2 CONTRACTING. As of the Effective Date, except as otherwise
mutually agreed during the Transition Period referenced in Section4.2,
Abbott shall assume full responsibility for negotiating and entering into
all Customer contracts, including but not limited to, all hospital, GPO and
IHS sales contracts for the Products in the Territory. Abbott shall be
solely responsible for establishing sales prices for Products for all
Customers in the Territory. MTI shall provide Abbott with MTI's current
customer lists as well as current and proposed customer contracts for the
Products. In accordance with procedures to be mutually agreed upon and to
be implemented as soon as practicable after the Effective Date, MTI shall
assign to Abbott and Abbott shall administer all of MTI's pre-existing
sales contracts with customers for the Products in the Territory during the
Term.
3.3 FORECAST. The initial sales forecast ("Forecast") covering Net
Sales for the first five (5) full calendar years of the Term is set forth
in the attached Exhibit2. This Forecast shall be revised by mutual
agreement of the parties to account for adverse market/competitive
conditions and/or Product safety and efficacy issues. Abbott and MTI shall
prepare and agree upon a new Forecast prior to September30 of each calendar
year during the Term. Each Forecast shall encompass the following five (5)
full calendar years, with projections gaited on a monthly basis for the
first calendar year and annually thereafter. Such Forecasts shall include
a sales Forecast by Product Line, anticipated quantity and quarterly
estimated delivery dates. With respect to Product Line extensions, the
parties shall make Forecast adjustments as mutually agreed upon,
commensurate with the expanded total available market opportunity
associated with the expanded Product offerings. If the parties are unable
to reach agreement on Forecasts for any year during the Initial Term after
the initial Forecast period set forth in Exhibit2, then Abbott shall
continue to distribute the Products in the Territory for the remainder of
the Initial Term, paying to MTI a commission on Net Sales (pursuant to
Section6.2) based on the weighted average commission (i.e., the percentage
equal to total commissions divided by total Net Sales) paid during the
final calendar year for which a Forecast was mutually agreed by the
parties. If the Initial Term
is extended pursuant to Sections14.1.1 or 14.1.2 and the parties are
subsequently unable to reach agreement for a Forecast for any calendar
year beyond the Initial Term, MTI may terminate this Agreement pursuant
to Section14.4.3.
3.4 NO MINIMUM PURCHASE REQUIREMENTS. Subject to the provisions of
Section14.3, nothing herein shall be construed to obligate Abbott to
purchase any minimum quantity of any of the Products.
3.5 COMPLIANCE WITH LAWS. Subject to Section 4 below, Abbott shall,
at all times during the Term, maintain any necessary legal permits and
licenses required by any governmental unit or agency to distribute the
Products hereunder and shall comply with all applicable national, state,
regional and local laws and regulations, in performing its duties hereunder
and in any of its dealings with respect to the Products as an independent
distributor, except where the failure to obtain such permits or licenses or
failure to comply will not have a material adverse effect on Xxxxxx'x
ability to distribute the Products.
4. MTI'S DUTIES. MTI shall use reasonable commercial efforts to maintain
adequate manufacturing capacity and sufficient supply of the Products
during the Term. Should MTI fail to maintain adequate manufacturing
capacity and/or sufficient supply of the Products, MTI and Abbott shall in
good faith use their best efforts to develop jointly a plan to ensure
continued Product supply, which plan may include, at Xxxxxx'x reasonable
discretion, Xxxxxx'x exercise of its standby right to manufacture the
Products under Section4.12 and appropriate mutually agreed upon Forecast
adjustments pursuant to Section3.3. MTI shall use commercially reasonable
efforts to develop appropriate Product Line extensions in order to assure
maintenance of market-competitive Products in the Field. MTI shall give
due consideration to recommendations from Abbott in this regard. MTI shall
also assume the following responsibilities:
4.1 RESPONSIBILITY FOR REGULATORY AND SAFETY TESTING REQUIREMENTS
AND FOR OBTAINING REQUIRED APPROVALS AND REGISTRATIONS
4.1.1 REGULATORY AND SAFETY TESTING REQUIREMENTS. MTI shall be
considered to be the finished device manufacturer for the Products and shall be
responsible for compliance with all regulatory and safety testing requirements
for the Products in the Territory. MTI shall provide Abbott with the data and
results from clinical trials with respect to each of the Products.
4.1.2 REGULATORY APPROVALS AND REGISTRATIONS. MTI shall establish
and maintain all regulatory approvals required to manufacture and permit sale of
the Products in the Territory, including, at a minimum all necessary, FDA
approvals and the equivalent Canadian approvals for each Product.
4.1.3 QUALITY SYSTEM COMPLIANCE. MTI shall be solely responsible
for
compliance with all Quality System Regulations affecting the Products,
including, at a minimum, International Standards Organization ("ISO")
certification and compliance with FDA Quality System Regulations. During the
Term, MTI shall manage the complaint files associated with the Products in
the Territory and provide copies of those complaint files to Abbott upon
Xxxxxx'x request. In accordance with a timetable to be mutually agreed upon
by the parties, Abbott shall have the right to review MTI's manufacturing
operations in order to ensure compliance with Quality System Regulations.
Abbott may, in its discretion, make QSR recommendations to MTI and MTI shall
use reasonable efforts to implement any QSR recommendations made by Abbott.
4.4.4 POST-MARKETING REGULATORY REPORTING. MTI shall be
responsible for reporting any reportable events, including but not limited to
patient deaths or injuries, associated with the Products to the FDA and other
appropriate authorities; provided, however, that to the extent required by
applicable law Abbott may also report such events to the applicable authorities.
Abbott shall notify MTI of any such event within two (2) Business Days after
Abbott learns of such an event. Each party shall provide the other party with
any assistance reasonably requested by the other party in connection with such
activities, including without limitation access to the Product files. MTI shall
update Abbott periodically (in accordance with a timetable to be mutually agreed
upon by the parties) on any reportable events involving the Products in the
Territory for which MTI has filed reports with the FDA or other regulatory
authorities in the Territory.
4.1.5 POST-MARKETING CLINICAL TRIALS. MTI shall fund, conduct and
complete post-approval clinical trials in order to establish clinical/commercial
user preference status for the Products, in accordance with the Post-Market
Clinical Development Program attached hereto as Exhibit 3. Upon mutual
agreement of the parties regarding appropriate timetables, these clinical trials
shall be conducted by MTI, with assistance from Abbott if so requested by MTI.
4.1.6 REIMBURSEMENT. MTI shall use its best efforts to assist
Customers in obtaining reimbursement from governmental agencies, third-party
payors, or other parties from whom reimbursement may be sought in connection
with sales of the Products to Customers.
4.2 TRANSITION PERIOD. MTI shall transition full commercial
responsibilities for marketing and sale of the Products to Abbott during a six
(6) month transitional period ("Transition Period") beginning with the date of
First Commercial Sale of any Product by Abbott, after which Transition Period
MTI's commercial responsibility for the Products shall be limited to providing
general support upon Xxxxxx'x request.
4.3 LITERATURE. Upon Xxxxxx'x request, MTI shall furnish Abbott, without
charge (except as otherwise agreed in writing), with reasonable quantities of
technical, advertising and selling information and literature in English
concerning the Products which Abbott may incorporate or include with its own
marketing materials and
information relating to the Products. Abbott shall have the right to develop
and distribute its own marketing materials, brochures and other information
regarding the Products in connection with its sales and marketing activities
under this Agreement, subject to the prior approval of MTI, which approval
shall not be unreasonably withheld.
4.4 MARKETING SUPPORT. To assist in selling and marketing the Products in
the Territory, each party shall, as applicable:
4.4.1 provide the other party with any information reasonably
requested by the other party for the purpose of complying with regulatory and
other legal requirements relating to the Products;
4.4.2 provide the other party with information on marketing and
promotional plans for the Products as well as copies of marketing, advertising,
sales and promotional literature concerning the Products, if any; and
4.4.3 provide the other party with certificates of free sale,
trademark authorizations and any other documents relating to the Products which
the other party may reasonably request to satisfy the requirements of the laws
of the various jurisdictions within the Territory and of any competent
authority.
4.5 SALES AND TRAINING. MTI shall provide reasonable initial training of
Xxxxxx'x personnel in the use of the Products, upon Xxxxxx'x request. Abbott
shall pay the cost of any travel and lodging for its personnel attending any
such training, and MTI shall pay the cost of the trainers and materials.
4.6 TRADE SHOWS. For trade shows and congresses pertinent to the Field in
the Territory, MTI shall assist Abbott, subject to mutual written agreement of
the parties, with the promotion of the Products. Such assistance may include
sharing of costs, provision of personnel and materials as well as joint
exhibits.
4.7 PRODUCT CHANGES. MTI shall provide Abbott with at least ninety (90)
days prior written notice of any change in the Specifications or the processes,
materials, equipment, inspection, testing, manufacturing location and the like
of which it has knowledge that may have any effect on the Products or their
uses. MTI shall give due consideration to any comments or suggestions Abbott
may make with respect to such changes.
4.8 INSURANCE. MTI shall at all times during the Term maintain product
liability insurance covering the Products with minimum annual limits of Two
Million Dollars ($2,000,000) per occurrence and Two Million Dollars
($2,000,000) in the aggregate. MTI shall maintain such insurance for a minimum
of five (5) years after termination of this Agreement. Within thirty (30) days
of the Effective
Date, MTI shall deliver to Abbott a certificate of insurance evidencing such
insurance and stating that the policy will not be canceled or modified
without at least thirty (30) days prior written notice to Abbott.
4.9 INTELLECTUAL PROPERTY RIGHTS. MTI shall use reasonable commercial
efforts to file, prosecute, protect and maintain its intellectual property
rights (including patents, know-how and MTI Trademarks, as defined below)
relevant to the Products in the Territory at its own expense. If MTI becomes
aware of any actual or potential third party infringement of such intellectual
property rights or any third party claim that MTI's manufacture and sale of the
Products to Abbott hereunder or Xxxxxx'x sale of Products to Customers infringes
any third party intellectual property rights, MTI shall promptly notify Abbott.
4.10 SAMPLES. During the Term, MTI shall provide Abbott with a reasonable
amount of samples of each of the Products, at no charge, as requested by Abbott
(not to exceed * ( * ) of total unit sales by Product Line on an annual
basis) for sales presentations and medical meeting demonstrations or
presentations and for testing purposes.
4.11 RIGHT OF FIRST DISCUSSION. During the Term, MTI shall provide to
Abbott an exclusive right of first discussion if MTI elects to consider and/or
pursue discussions with third parties on potential commercial collaborations in
the Territory for potential peripheral vascular applications of MTI's LES
(Embolyx-TM-) embolization product currently under development. If MTI
considers and/or desires to pursue potential third party sales, marketing and/or
distribution collaborations for peripheral applications of LES in the Territory,
MTI shall negotiate first and in good faith with Abbott for a period of not less
than * ( * ) days for distribution rights for such products. If the
parties do not execute an agreement for distribution of such products within
such * ( * ) day period (or such longer period as may be mutually agreed upon
by the parties), MTI shall have no further obligations to Abbott in this regard.
MTI shall give serious consideration to any reasonable commercial terms
proposed by Abbott in writing with regard to peripheral LES applications. If
the parties are unable to agree on the terms of such written offer, then for a
period of * ( * ) * following the above-referenced discussion period, MTI
shall not accept a third party offer for commercialization of peripheral LES
applications that, in MTI's sole opinion, is less favorable to MTI than Xxxxxx'x
last written offer, considering all relevant factors, including without
limitation, any equity components as well as milestones, commissions and/or
royalties.
4.12 STANDBY RIGHT TO MANUFACTURE. If MTI is unable or unwilling for any
reason (other than where determined as due to Xxxxxx'x breach of this Agreement
or due to bona fide dispute that the parties have submitted for resolution
pursuant to the provisions of Section15.4) to supply any Products as and when
ordered by Abbott in accordance with this Agreement, then, after the
expiration of a reasonable period of time (not to exceed * ( * ) * ),
during which MTI may remedy the cause of its inability to supply the
Products, Abbott, shall have the right, but not the obligation, to
manufacture or have manufactured the Products under MTI's patents and other
intellectual property rights during the period that MTI is unable to supply.
To the extent necessary to implement Xxxxxx'x standby manufacturing rights
under this Section4.12, MTI hereby grants Abbott a non-exclusive,
royalty-free license under MTI patents and other intellectual property rights
to make, have made, use, import, sell and offer for sale the Products in the
Territory. During such period, MTI shall provide Abbott with manufacturing
know-how and reasonable assistance to enable Abbott (and, as applicable,
Xxxxxx'x third party manufacturer) to manufacture the Products. At such time
as MTI can demonstrate to Xxxxxx'x reasonable satisfaction that MTI is
capable of resuming the manufacture and supply of Products, Xxxxxx'x license
hereunder shall cease and Abbott shall resume purchasing Products from MTI
and Abbott shall return to MTI all MTI equipment and technology utilized by
Abbott for the manufacture of Products.
5. TRADEMARKS AND LABELING.
5.1 TRADEMARK LICENSE. During the Term, MTI hereby grants to Abbott an
exclusive, royalty-free license to use the current and future trademarks, trade
names and logos used by MTI at any time during the Term to identify the Products
(the "MTI Trademarks") solely in the course of Xxxxxx'x advertisement,
promotion, distribution and sale of the Products in the Territory. Xxxxxx'x use
of the MTI Trademarks shall be in accordance with MTI's policies that are
provided to Abbott in writing from time to time. Abbott shall display the MTI
Trademarks on the Products distributed under this Agreement. Use of the MTI
Trademarks on the Products shall not give Abbott any proprietary rights in the
MTI Trademarks except for the license rights granted in this Section5.1.
5.2 OWNERSHIP. Abbott acknowledges that, subject only to the license
granted herein to Abbott, MTI owns and retains all proprietary rights in all MTI
Trademarks.
5.3 NO CONTINUING RIGHTS. Upon termination of this Agreement, Abbott
shall cease all further display, advertising and use of all MTI Trademarks
except in connection with the sale of Products in inventory as provided in
Section 14.5.2 below.
5.4 TRADEMARKS USED IN LABELING. In addition to the MTI Trademarks, the
Products may bear trademarks selected by Xxxxxx ("Xxxxxx Trademarks") in a
manner mutually agreed upon by the parties. Notwithstanding anything to the
contrary set forth herein, MTI shall not use the Abbott Trademarks on any
Product sold outside the Territory without the prior written consent of Abbott.
Upon termination of this Agreement, MTI shall cease all use of the Abbott
Trademarks.
5.5 LOT NUMBERS AND LIST NUMBERS IN LABELING. As soon as commercially
feasible after the Effective Date, MTI shall make the following Product labeling
changes: (a) each saleable unit of the Products shall have an Abbott list number
printed on the label (including the case labeling) and (b) each saleable unit of
the Products shall have identification numbers using the Abbott lot numbering
convention and expiration dating formats (in compliance with * , which Abbott
shall supply to MTI) on the label (including the case labeling). Abbott shall
supply MTI with Product list numbers, lot number suffix and lot number blocks as
soon as commercially feasible after the Effective Date.
6. FINANCIAL TERMS.
6.1 COST. The Cost to Abbott for each Product purchased by Abbott from
MTI under this Agreement shall be an amount equal to MTI's Standard
Manufacturing Cost for the Product sold, not to exceed a maximum percentage of
the appropriate aggregate Average Selling Price for the appropriate time period,
calculated according to the following schedule:
MAXIMUM COST (as a % of Average Selling Price)
MTI PRODUCT LINE EFF. DATE TO 12/31/98 1999 2000-2007
Infusion Catheters * * *
Infusion Guidewires * * *
Peripheral Micro Catheters * * *
Mechanical Thrombolytic Devices * * *
Accessory Kits * * *
The Cost paid by Abbott to MTI for any given Product shall be not less than
a minimum of * ( * ) of the appropriate Average Selling Price for that
Product. The parties shall review MTI's Standard Manufacturing Cost for the
Product sold for each Product and Product Line on or before September 30 of each
year during the Term and establish the Standard Manufacturing Cost for the
Product sold (and accordingly, the Cost for each Product) for the following
calendar year at such time.
6.2 COMMISSIONS. Net Sales and Average Selling Prices for each Product
Line (infusion catheters, infusion guidewires, peripheral micro catheters,
mechanical thrombolytic devices, accessory kits) shall be updated and calculated
by Abbott and reviewed by the parties on a quarterly basis. Within forty-five
(45) days following the end of each calendar quarter during the Term, Abbott
shall pay MTI a commission, calculated by individual Product Line on a calendar
quarterly basis, as follows:
(i) for sales up to and including Forecast, MTI shall receive *
( * ) of the Net Sales of the Products by Abbott, calculated by individual
Product Line ;
(ii) for sales over Forecast up to * ( * ) of Forecast, MTI
shall receive * ( * ) of Net Sales over Forecast and up to * ( * ) of
Forecast, calculated by individual Product Line;
(iii) for sales over * ( * ) of Forecast, MTI shall receive *
( * ) of Net Sales over * ( * ) of Forecast, calculated by individual
Product Line.
For example, if Xxxxxx'x Net Sales of thrombolytic brushes in
calendar year 1999 (for which the Forecast is * ) are * , the commission
payable for this Product Line shall be as follows:
Net Sales Portion Commission Percentage Commission Payable
Up to Forecast
(up to $2,742,000) * *
100-120% Over Forecast
($2,742,001-$3,290,400) * *
Over 120% of Forecast
($3,290,401-$3,500,000) * *
TOTAL *
6.3 MARKETING/DISTRIBUTION FEE. Within fifteen (15) days of Xxxxxx'x
First Commercial Sale of any Product within the Territory, Xxxxxx shall pay MTI
a one time marketing/distribution fee of One Million Dollars ($1,000,000) in
consideration of the Product marketing/distribution rights granted to Xxxxxx
hereunder. Xxxxxx shall promptly notify MTI of its First Commercial Sale.
7. ORDER PLACEMENT
7.1 PURCHASE ORDERS AND ACKNOWLEDGMENTS
7.1.1 PURCHASE ORDERS. All purchases of the Products by Xxxxxx
from MTI shall be made by written purchase order specifying Product type,
quantity, price, requested delivery schedule, delivery location, and shipping
instructions. All purchases of the Products by Xxxxxx from MTI during the Term
shall be subject to the terms and conditions of this Agreement. Any additional
or different terms and conditions in a purchase order or confirmation form which
conflict with this Agreement shall be of no force and effect unless the parties
specifically agree in writing to such conflicting terms and conditions.
7.1.2 ACCEPTANCE OF ORDERS. All orders and modifications to
orders are subject to acceptance by MTI; provided, however, that MTI shall
accept all purchase orders by Xxxxxx for the Products as long as such orders are
consistent with the current Forecasts (as described in Section 3.3 above). MTI
shall use commercially reasonable efforts to fill all other orders by Xxxxxx
for the Products hereunder. If MTI believes that it will not be able to
satisfy Xxxxxx'x orders for the Products, MTI shall promptly notify Xxxxxx,
specifying the reasons for the delay and its expected duration.
7.2 TITLE AND DELIVERY OF PRODUCTS
7.2.1 All Products shall be delivered FOB, MTI's United States
manufacturing facility, to the carrier designated by Xxxxxx. If no such
designation is made by Xxxxxx, MTI shall select the most cost-effective carrier,
given the time constraints known to MTI. MTI's title and the risk of loss to
the Products shall pass to Xxxxxx upon delivery of the Products to the carrier.
7.2.2 Xxxxxx shall pay all taxes (including, without limitation,
sales, value-added and similar taxes) payable with respect to the sale and
purchase of Products under this Agreement, except for taxes based on MTI's
income.
7.2.3 All Products shall be suitably packed for shipment and
marked by MTI for shipment to Xxxxxx'x United States facilities designated in
the purchase order. Xxxxxx shall not export the Product outside the Territory,
and shall pay all freight, insurance and other shipping expenses, as well as any
special packing expense.
7.2.4 MTI may make partial shipments against Xxxxxx'x purchase
orders upon mutual agreement of the parties.
7.2.5 Any delivery of Products by MTI to Xxxxxx which fail to meet
the Specifications shall be promptly returned to MTI at MTI's expense.
7.3 ORDER CHANGES
7.3.1 Xxxxxx may reschedule each order once, provided no such
rescheduling shall exceed forty-five (45) days from the originally scheduled
ship date. MTI shall work with Xxxxxx in good faith on a case by case basis to
resolve any issues related to market changes and potential impact on orders
placed with MTI.
7.3.2 Xxxxxx may cancel all or any portion of an order or change
the scope of an order at any time prior to fifteen (15) days before the
scheduled ship date. Thereafter, Xxxxxx may do so only with MTI's written
approval.
7.4 RECALLS. The parties shall give prompt notice of any contemplated
recall of any Products to the other party (including notice by MTI to Xxxxxx of
any such recall outside the Territory). The parties shall give each other full
cooperation throughout the recall process whether such recall is voluntary or
otherwise, and shall comply in full with applicable laws, regulations and
governmental agency directives with respect to such recall. Any recall expenses
incurred by Xxxxxx resulting from MTI QSR deficiencies, Product quality defects,
Product performance defects or government actions will be fully reimbursed to
Xxxxxx from MTI.
8. PAYMENT AND RECORDS
8.1 PAYMENT TERMS. Xxxxxx shall pay to MTI within forty-five (45) days of
the receipt of invoice an estimated amount mutually agreed by the parties for
the Cost specified in Section 6.1 above for each Product delivered during that
month. Additionally, Xxxxxx shall pay to MTI within forty-five (45) days of the
end of each calendar quarter an actual amount for the commission on Product
sales during such quarter as specified in Section 6.2. All payments shall be
made in United States dollars. In accordance with Section4.10, Xxxxxx may
distribute as clinical samples up to * (* ) of the total number of Products
provided to Xxxxxx under this Agreement without payment of commissions. Such
samples will be included in any reconciliation as Net Sales at the price (if
any) for such samples at zero dollars if the sample was distributed by Xxxxxx
free of charge, and the Cost for such samples shall be reimbursed by MTI to
Xxxxxx pursuant to Section 8.2.
8.2 QUARTERLY RECONCILIATION. At the end of each calendar quarter, Xxxxxx
shall reconcile the estimated payments made to MTI under Section 8.1 above with
the actual Cost for the Products purchased during such calendar quarter and
shall provide a report to MTI of such reconciliation within thirty (30) days
after the end of such quarter. Specifically, reconciliations shall be made
(i) to account for unanticipated changes to Product ASPs, if
such ASP changes served to affect Xxxxxx'x Costs paid pursuant to Sections 6.1
and 8.1, and
(ii) to account for non-revenue (e.g., sample) units distributed
by Xxxxxx but previously paid for by Xxxxxx at a Cost equal to MTI's Standard
Manufacturing Cost sold pursuant to Section 6.1.
If the reconciliation reveals that Xxxxxx owes MTI additional amounts,
Xxxxxx shall remit payment of such amount with its report. If the
reconciliation reveals that Xxxxxx has overpaid in its estimated payment, MTI
shall reimburse Xxxxxx within ten (10) days of receipt of the report.
8.3 SALES RECORDS. No more frequently than once in any twelve (12) month
period during the Term, upon MTI's request and at MTI's expense, Xxxxxx shall
allow an independent auditor mutually agreed upon by the parties to examine
Xxxxxx'x books and records relating to the distribution and sale of the Products
for the purpose of verifying the payments made by Xxxxxx pursuant to Section 8.
If, as a result of such examination, an underpayment or overpayment is found,
the applicable party will rectify the underpayment or overpayment within thirty
(30) days; provided that if such examination shows an underpayment by Xxxxxx of
more than ten percent (10%), then Xxxxxx shall pay the cost of such
audit. The audit shall take place during Xxxxxx'x normal business hours, at
a location to be designated by Xxxxxx, and may not disrupt the operation of
Xxxxxx'x business. The audit shall be completed within five (5) Business Days
and shall cover a period not more than two (2) years back from the date of
the audit. Scheduling of the audit shall be subject to mutual agreement of
the parties.
8.4 COST RECORDS. No more frequently than once in any twelve (12) month
period during the term of this Agreement, upon Xxxxxx'x request and at Xxxxxx'x
expense, MTI shall allow an independent auditor mutually agreed upon by the
parties to examine MTI's books and records relating to the Standard
Manufacturing Cost for the purpose of verifying the Cost paid by Xxxxxx pursuant
to Section 6.1. If, as a result of such examination, an underpayment or
overpayment is found, the applicable party will rectify the underpayment or
overpayment within thirty (30) days; provided that if such examination shows an
overpayment by Xxxxxx of more than ten percent(10%), then MTI shall pay the cost
of such audit. The audit shall take place during MTI's normal business hours,
at a location to be designated by MTI, and may not disrupt the operation of
MTI's business. The audit shall be completed within five (5) Business Days and
shall cover a period not more than two (2) years back from the date of the
audit. Scheduling of the audit shall be subject to mutual agreement of the
parties.
9. RETURNS
Xxxxxx may return for a refund any Product that does not meet MTI's
warranty as set forth in Section 11.2. MTI shall issue a return material
authorization ("RMA") number for such defective Product upon Xxxxxx'x request.
At MTI's expense, Xxxxxx shall return any such defective Product to MTI with
documentation referencing the applicable RMA number. MTI shall submit such
refund and reimbursement of the return shipment cost to Xxxxxx within forty-five
(45) days of receiving the defective Product.
9.2 Each Product delivered under this Agreement shall have, upon Xxxxxx'x
receipt of such Product, at least seventy-five percent (75%) of the applicable
original Product shelf-life remaining, except as otherwise agreed in writing by
Xxxxxx. At MTI's expense, Xxxxxx may return for a refund or replacement, at
Xxxxxx'x option, any Product that does not meet this requirement. MTI shall
submit such refund and reimbursement for shipping costs or replacement Product
to Xxxxxx within forty-five (45) days of receiving the returned Product.
10. CONFIDENTIAL INFORMATION
10.1 IDENTIFICATION OF CONFIDENTIAL INFORMATION. Confidential Information
provided by the disclosing party (or any of its Affiliates) and entitled to
protection under this Agreement shall be identified as such by appropriate
markings on any
documents exchanged. If the disclosing party provides information other than
in written form, such information shall be considered Confidential
Information only if the information by its nature would reasonably be
considered of a confidential nature or if the receiving party, due to the
context in which the information was disclosed, should have reasonably known
it to be confidential, and the disclosing party gives written notice within
ten (10) days of disclosure that such information is to remain confidential
or the disclosing party had previously confirmed in writing that such
information was confidential.
10.2 PROTECTION OF CONFIDENTIAL INFORMATION. Each party acknowledges that
the other party claims its Confidential Information as a special, valuable and
unique asset. During the Term and for three years (3) years thereafter, for
itself and on behalf of its Affiliates, officers, directors, agents, and
employees, each party agrees to the following:
10.2.1 Receiving party shall not disclose the Confidential
Information to any third party or disclose to an employee unless such third
party or employee has a need to know the Confidential Information in order to
enable the disclosing party to exercise its rights or perform its obligations
under this Agreement. Receiving party shall use the Confidential Information
only for the purposes of exercising its rights or fulfilling its obligations
under this Agreement and shall not otherwise use it for its own benefit. In no
event shall the receiving party use less than the same degree of care to protect
the Confidential Information as it would employ with respect to its own
information of like importance which it does not desire to have published or
disseminated;
10.2.2 If the receiving party faces legal action or is subject to
legal proceedings requiring disclosure of Confidential Information, then, prior
to disclosing any such Confidential Information, the receiving party shall
promptly notify the disclosing party and, upon the disclosing party's request,
shall cooperate with the disclosing party in responding to and/or contesting
such request.
10.3 RETURN OF CONFIDENTIAL INFORMATION. All information furnished under
this Agreement shall remain the property of the disclosing party and shall be
returned to it or destroyed or purged promptly at its request upon termination
of this Agreement; provided, however, that Xxxxxx may retain Confidential
Information of MTI as reasonably necessary for Xxxxxx to be able to complete the
sale of Products on order or in inventory at the time of termination and to
support Products already sold by Xxxxxx under this Agreement. All documents,
memoranda, notes and other tangible embodiments whatsoever prepared by the
receiving party based on or which includes Confidential Information shall be
destroyed to the extent necessary to remove all such Confidential Information
upon the disclosing party's request, except that one copy of such information
that may be retained in the legal files of the receiving party. Upon the
request of the
disclosing party, all destruction under this Section 10.3 shall be certified
in writing to the disclosing party by an authorized representative of the
receiving party.
10.4 RESIDUAL INFORMATION. Either party shall be free to use for any
purpose (including, but not limited to, use in the development, manufacture,
marketing and maintenance of its own products and services) the Residuals
resulting from access to or work with Confidential Information of the other
party, provided that the party maintains the confidentiality of the Confidential
Information as provided herein. The term "Residuals" shall mean information in
non-tangible form that may be inadvertently retained by persons who have had
rightful access to the Confidential Information, including the ideas, concepts,
know-how or techniques contained therein. Notwithstanding the provisions of
this Section 10.4, during the Term, neither party may avoid its obligations
toward a particular item of the Confidential Information merely by having a
person commit such item to memory so as to reduce it to a non-tangible form.
Further, this Section 10.4 does not provide to either party a license to use any
patented, trademarked or copyrighted material of the other party.
10.5 LIMITATIONS. The confidentiality obligations in this Section 10 shall
not apply to disclosed information which the receiving party can prove receiving
party knows at the time of disclosure, free of any obligation to keep it
confidential, as evidenced by written records; is or becomes generally publicly
known through no fault of the receiving party; receiving party independently
developed without the use of any Confidential Information, as evidenced by
written records; or receiving party rightfully obtains from a third party who
has the right to transfer or disclose it.
10.6 PUBLIC ANNOUNCEMENTS. Notwithstanding anything to the contrary
contained in this Agreement, neither party may initiate any public announcement
concerning the subject matter of this Agreement or the Convertible Subordinated
Note Agreement without the prior written approval of the other party; provided,
however, that this Section 10.6 shall not be construed to limit Xxxxxx'x ability
to market the Products as it deems necessary or appropriate.
11. REPRESENTATIONS AND WARRANTIES
11.1 RECIPROCAL REPRESENTATIONS AND WARRANTIES. Each party represents
and warrants to the other party as follows:
(i) It is a corporation duly organized and validly existing
under the laws of its state or other jurisdiction of incorporation or formation;
(ii) It has the power and authority to execute and deliver this
Agreement, and to perform its obligations hereunder;
(iii) The execution, delivery and performance by it of this
Agreement and its compliance with the terms and provisions hereof does not and
will not conflict with or result in a breach of any of the terms and provisions
of or
constitute a default under (a) any loan agreement, guaranty, financing
agreement, agreement affecting a product or other agreement or instrument
binding or affecting it or its property, including but not limited to any
agreements resulting in a Change of Control Event; (b) the provisions of its
charter documents or by-laws; or (c) any order, writ, injunction or decree of
any court or governmental authority entered against it or by which any of its
property is bound;
(iv) No authorization, consent or approval of any governmental
authority or third party is required for the execution, delivery or performance
by it of this Agreement, and the execution, delivery or performance of this
Agreement will not violate any law, rule or regulation applicable to such party;
and
(v) This Agreement has been duly authorized, executed and
delivered and constitutes its legal, valid and binding obligation enforceable
against it in accordance with its terms and subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to the availability of particular
remedies under general equity principles.
11.2 MTI PRODUCT WARRANTIES. MTI warrants that the Products
manufactured by MTI and delivered to Xxxxxx hereunder shall (i) from the date of
shipment until the end of the specified shelf-life (as specified in Section9.2)
conform to the Specifications and all applicable laws and regulations relating
to the manufacture of the Product, including, but not limited to FDA and
Canadian Quality System Regulations, (ii) be transferred free and clear of any
security interest, liens, and encumbrances, and (iii) not infringe any third
party patents, trademarks, copyrights, or other third party proprietary rights.
11.3 YEAR 2000 WARRANTIES. The parties make the following warranties
with respect to Year 2000 compliance:
(i) MTI warrants that all software used by it in the manufacture
of Products and in its business relationship with Xxxxxx will, on and following
January1, 2000, have no lesser functionality with respect to records containing
dates before or after January1, 2000 than previously with respect to dates prior
to January2, 2000.
(ii) Xxxxxx warrants that all software used by it in its business
relationship with MTI will, on and following January1, 2000, have no lesser
functionality with respect to records containing dates before or after January1,
2000 than previously with respect to dates prior to January1, 2000.
12 INDEMNIFICATION
12.1 INDEMNIFICATION. Subject to Section 12.3 below, MTI shall at its own
expense, defend Xxxxxx (including its Affiliates, directors, officers, employees
and shareholders) against an "Indemnified Claim," as defined in Section 12.2
below, and hold Xxxxxx (including its Affiliates, directors, officers, employees
and
shareholders) harmless and indemnify Xxxxxx (including its Affiliates,
directors, officers, employees and shareholders) from any loss, expense,
liability and/or settlement (including attorneys' fees) resulting from an
Indemnified Claim.
12.2 INDEMNIFIED CLAIM. For purposes of this Agreement, an "Indemnified
Claim" shall mean: (i) any claim asserting that Xxxxxx'x or any Customers' sale,
purchase, possession, manufacturing in accordance with Section4.12, or use of
the Products or any part thereof infringes any third party patent, trade secret,
trademark, copyright or other proprietary right; (ii) any claim arising from or
related to a failure of MTI to comply with its representations and warranties
under this Agreement; and (iii) any claim asserting that the Products caused
injury or death to a person or damage to property; except to the extent such
Indemnified Claims arise from Xxxxxx'x negligence, willful misconduct or breach
of this Agreement in which event Xxxxxx shall indemnify MTI (including its
Affiliates, directors, officers, employees and shareholders) from such claims.
12.3 LIMITATIONS. Each party's obligation to indemnify the other party is
contingent upon the party seeking indemnification (i) promptly notifying the
indemnifying party of such claim and (ii) cooperating with the indemnifying
party in the defense thereof, of which the indemnifying party shall have control
at the indemnifying party's expense. Notwithstanding the above, the party
seeking indemnification shall have the right but not the obligation, at its own
expense, to participate in any such defense.
12.4 INFRINGEMENTS. If a claim of patent or other proprietary right
infringement is made by a third party with respect to a Product, then MTI, at
its option, shall (i) obtain for Xxxxxx the right to continue to market and
distribute the Product at MTI's own expense, (ii) replace the Product with a
functionally-equivalent non-infringing Product, or (iii) modify the Product so
that it becomes non-infringing, so long as the functionality of the Product is
not adversely affected. If MTI is unable to accomplish any of the foregoing
within one hundred eighty (180) days of the initial claim of infringement, MTI
shall xxxxx Xxxxxx a full refund of Costs paid by Xxxxxx to MTI for all affected
Products and accept return of them, and the parties shall remove all such
affected Products from the Forecast for the remainder of the Term.
13. LIMITATION OF LIABILITY. EXCEPT FOR THE INDEMNIFICATION OBLIGATIONS UNDER
SECTION 12, NEITHER PARTY SHALL, BY REASON OF THE TERMINATION OF THIS AGREEMENT
OR OTHERWISE, BE LIABLE TO THE OTHER PARTY FOR ANY CONSEQUENTIAL, SPECIAL,
INCIDENTAL, OR OTHER DAMAGES (INCLUDING WITHOUT LIMITATION LOSS OF PROFIT)
WHETHER OR NOT ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
14. TERM AND TERMINATION
14.1 INITIAL TERM AND RENEWAL. The Initial Term shall commence as of the
Effective Date and shall continue for the remainder of calendar year 1998 and
for ten (10) full calendar years thereafter, unless terminated earlier pursuant
to this Section 14 and subject to the provisions of Section 14.5. The Initial
Term may be extended pursuant to this Section14.1 and/or Section15.5.
14.1.1 EXTENSION BY MUTUAL AGREEMENT. During the Term, the parties
may negotiate and mutually agree to extend the Term, whether for renewal periods
or for a fixed period.
14.1.2 EXTENSION BY XXXXXX. Xxxxxx may extend the Term for a five
(5) year extension for each five (5) full calendar year period in which Xxxxxx
attains * ( * ) of the Aggregate Sales Forecast (which shall mean the sum of
all individual Product Line Forecasts in any given calendar year) in at least
three (3) of the five (5) calendar years of the period. The five (5) full
calendar year periods to which this provision is applicable shall include the
first full five (5) calendar years of the Initial Term (i.e., 1999-2003), the
second full five (5) calendar years of the Initial Term (i.e., 2004-2008), and,
as applicable, any additional five (5) full calendar year extensions if Xxxxxx
extends the Term pursuant to this Section14.1.2 (i.e., 2009-2013, etc.). Xxxxxx
may exercise this extension upon written notice to MTI, which notice shall be
given no later than ninety (90) days after the end of each applicable five (5)
calendar year period.
14.2 TERMINATION BY XXXXXX. Xxxxxx may terminate this Agreement at any
time upon one hundred and eighty (180) days written notice to MTI.
14.3 TERMINATION BY MTI. MTI may terminate this Agreement upon twelve
(12) months written notice to Xxxxxx if Xxxxxx fails to attain * ( * ) of
the Aggregate Sales Forecast in at least three (3) of the first five (5) full
calendar years of the Initial Term (as per Exhibit2); provided, however, that
within ninety (90) days of the conclusion of any of the first five (5) calendar
years of the Agreement in which Xxxxxx has not attained * ( * ) of the
Aggregate Sales Forecast, Xxxxxx may, at its option, purchase additional Product
from MTI at the appropriate Cost and pay MTI the appropriate commission on such
purchases necessary to compensate for the shortfall between * ( * ) of the
Aggregate Sales Forecast and actual Net Sales of Products in such year. If
Xxxxxx exercises such option for any calendar year, Xxxxxx shall be deemed to
have attained * ( * ) of the Aggregate Sales Forecast for such year.
14.4 TERMINATION BASED ON CHANGE OF CONTROL EVENT. MTI or MTI's Successor
may terminate this Agreement for a Change of Control Event affecting MTI upon
ninety (90) days prior written notice to Xxxxxx. Termination subsequent to a
Change of Control Event shall occur by one of the following two mechanisms:
14.4.1 XXXXXX BUYOUT OF PRODUCT LINES. For a period of ninety (90)
days following Xxxxxx'x receipt of notice from MTI of a Change in Control Event,
the parties shall discuss Xxxxxx'x potential buyout of the Product Lines. Upon
mutual agreement of Xxxxxx and MTI's Successor, Xxxxxx shall purchase all of the
pertinent manufacturing assets (tooling, assembly and packaging equipment,
manufacturing know-how and specifications) for the Products and all intellectual
property rights (patents, additional commercial know-how and the MTI Trademarks)
for the Products in the Field and in the Territory from MTI's Successor for a
price of * ( * ) * for the most recent full calendar year prior to the
Change of Control Event.
14.4.2 MTI'S SUCCESSOR BUYOUT OF AGREEMENT. In the event that
Xxxxxx and MTI's Successor do not agree to proceed with the Xxxxxx buyout of
Product Lines pursuant to Section14.4.1 within ninety (90) days, MTI 's
Successor may terminate this Agreement, and Xxxxxx shall thereby relinquish all
distribution rights under this Agreement, upon one hundred and eighty (180) days
prior written notice, conditioned upon payment of a "Termination Fee" to Xxxxxx.
The Termination Fee shall be calculated and payable over a five (5) year period
as follows:
AMOUNT PAYABLE AS A % OF XXXXXX'X NET SALES IN
YEAR AFTER 12 MONTHS PRECEDING EFFECTIVE
EFFECTIVE DATE OF TERMINATION DATE OF TERMINATION
----------------------------- ----------------------------------------------
Year 1 *
Year 2 *
Year 3 *
Year 4 *
Year 5 *
Such amounts shall be payable by MTI's Successor to Xxxxxx once annually on the
anniversary of the effective date of termination for a period of five (5) years
following termination of this Agreement.
Following an MTI Change of Control Event, if MTI's Successor fails to
notify Xxxxxx of its intention to terminate this Agreement within ninety (90)
days of such MTI Change of Control Event, the Agreement shall remain in effect,
provided that if MTI ceases to exist as a corporate entity, MTI's Successor has
taken assignment of and assumed all rights and obligations of MTI under the
terms and conditions of the Agreement for the remainder of the Term.
14.4.3 TERMINATION BY MTI FOR IMPASSE OVER FORECASTS.
Additionally, if the Initial Term is extended pursuant to Sections14.1.1 or
14.1.2 and the parties are unable to reach agreement for a Forecast for any
calendar
year beyond the Initial Term, then MTI may terminate this Agreement, and
Xxxxxx shall thereby relinquish all distribution rights under this Agreement,
upon one hundred and eighty (180) days written notice of an unresolvable
impasse from MTI to Xxxxxx, conditioned upon payment of a Termination Fee
calculated as set forth in Section14.4.2. Such amounts shall be payable by
MTI to Xxxxxx once annually on the anniversary of the effective date of
termination for a period of five (5) years following termination of this
Agreement.
14.4.4 TERMINATION FOR CAUSE. Either party may terminate this
Agreement by giving the other party ninety (90) days written notice of such
termination if the other party materially breaches or defaults in any of the
material terms or conditions of this Agreement, the Note Agreement, the Credit
Agreement or the Security Agreement and fails to cure such breach or default
within ninety (90) days of receiving notice thereof.
14.5 THE EFFECT OF TERMINATION
14.5.1 DELIVERY OF PREVIOUSLY ORDERED PRODUCTS. Upon any
termination of this Agreement by MTI, Xxxxxx shall be entitled to have delivered
the Products ordered prior to termination.
14.5.2 DISPOSITION OF INVENTORY. Upon any termination of this
Agreement, Xxxxxx may, at its option, either sell all or any part of its
remaining inventory of the Products to Customers or sell to MTI all or any part
of Xxxxxx'x remaining inventory of the Products (excluding discontinued and
demonstration units). MTI shall repurchase all of the Products that Xxxxxx
decides to sell to MTI. Xxxxxx must exercise the right to resell to MTI within
sixty (60) days after termination of this Agreement. The price for such
inventory shall be the Cost paid by Xxxxxx to MTI for such Products, plus
Xxxxxx'x shipping and handling costs.
14.5.3 SURVIVAL. Sections2.2, 4.8, 6.1, 6.2, 7.4, 8.1-8.4, 9.1,
9.2, 10.1-10.6, 11.2, 12.1-12.4, 13, 14.4, 14.5, 15.1 and 15.4-15.11 shall
survive any termination of this Agreement.
15. GENERAL PROVISIONS
15.1 NO WAIVER. The failure of either party to enforce at any time or for
any period any of the provisions of this Agreement shall not be construed to be
waiver of those provisions or of the right of that party thereafter to enforce
each and every provision hereof.
15.2 ASSIGNMENT. Except as otherwise provided herein, this Agreement shall
not be assignable by either party without the prior written consent of the other
party. Any attempted assignment not otherwise permitted herein shall be void.
The provisions hereof shall be binding upon and inure to the benefit of the
parties, their successors and permitted assigns.
15.3 NOTICES. Any notice, report or statement to either party required or
permitted under this Agreement shall be in writing and shall be sent by
certified mail, return receipt requested, postage prepaid, or by facsimile
transmission with confirmation sent by certified mail as above, or by courier,
such as Federal Express, DHL or the like, with confirmation of receipt by
signature requested, directed to the other party at its mailing address set
forth below, or to such other mailing address as the party may from time to time
designate by prior written notice in accordance herewith. Any such notice,
report or statement sent in accordance with this Section15.3 shall be deemed
duly given upon receipt.
15.4 GOVERNING LAW AND DISPUTE RESOLUTION. This Agreement (and any other
documents referred to herein) shall be construed in accordance with the laws of
the State of California without reference to choice of law principles, as to all
matters, including, but not limited to, matters of validity, construction,
effect or performance. Any disputes between the parties relating to this
Agreement that cannot be resolved amicably shall be resolved by binding
Alternative Dispute Resolution in accordance with the attached Exhibit4.
15.5 FORCE MAJEURE. The parties shall not be liable for any delay or
failure of obligations under this Agreement, in whole or in part, for any causes
beyond the reasonable control of the parties, including, but not limited to,
acts of God, war, riot, civil disturbances, strikes, lockouts or other labor
disputes, accident of transportation or other force majeure. If MTI is unable
to supply to Abbott any of the Products for any period of time, then MTI shall
immediately notify Abbott of such inability, stating the reasons therefor and
the estimated time of the delay and the Forecasts shall be adjusted accordingly
by mutual written agreement. In such event, and upon Xxxxxx'x request, the Term
shall be extended for a period equal to the period of time in which MTI is
unable to supply Products to Abbott.
15.6 TITLES OF SECTIONS. The titles of the various sections of this
Agreement are used for convenience of reference only and are not intended to and
shall not in any way enlarge or diminish the rights or obligations of the
parties or affect the meaning or construction of this document.
15.7 INVESTIGATION; JOINT PREPARATION. Each party acknowledges that it has
had adequate opportunity to make whatever investigation or inquiry it deems
necessary or desirable in connection with the subject matter of this Agreement
prior to the execution hereof. Each party further acknowledges that it has read
and understands each provision of this Agreement. This Agreement has been
prepared jointly by the parties and shall not be strictly construed against
either party, it being agreed that each party has had an opportunity to consult
with counsel of its own choosing regarding the term and conditions of this
Agreement.
15.8 BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefits of the parties hereto and, and their respective successor and
permitted assigns.
15.9 INTEGRATION/MODIFICATION/ENTIRE AGREEMENT. This Agreement, together
with the attached Exhibits and the Note Agreement, sets forth the entire
agreement and understanding between the parties as to the subject matter hereof,
and supersedes, integrates and merges all prior discussions, correspondence,
negotiations, understandings or agreements. This Agreement may not be altered,
amended, modified or otherwise changed in any way except by a written
instrument, which specifically identifies the intended alteration, amendment,
modification or other change, clearly expresses the intention to so change this
Agreement, and is signed by an authorized representative of each of the parties.
15.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which when executed shall be deemed an original, and all
of which together shall constitute one and the same instrument.
15.11 SEVERABILITY. If any provision, or portion thereof, of this
Agreement shall be held to be invalid, illegal, void or otherwise unenforceable,
such provision, or portion thereof, shall be amended to achieve as nearly as
possible the same economic effect as the original provision to the fullest
extent permitted by applicable law, and the validity, legality and
enforceability of the remainder of the Agreement will remain in full force and
effect.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the Effective Date.
MICRO THERAPEUTICS, INC. XXXXXX LABORATORIES
By: By:
Title: Title:
Date: Date:
EXHIBIT 1
LIST OF PRODUCTS FROM
PRODUCT CATALOGUE (DOMESTIC PRICE LIST)
VALVED INFUSION CATHETERS
CURRENT EXP. 18 MONTHS (36 MONTH EXPIRATION PENDING, SEPTEMBER 1998)
XXXXX-XXXXXXXX-Registered Trademark- VALVED INFUSION CATHETERS
Model # Diameter (F) Usable Length (Cm) Infusion Length (Cm) Max.
Guidewire
(In.)
201-0236 4 40 5 .035
201-0237 4 40 10 .035
201-0238 4 40 20 .035
201-0230 4 65 5 .035
201-0232 4 65 10 .035
201-0234 4 65 20 .035
201-0231 4 100 5 .035
201-0233 4 100 10 .035
201-0235 4 100 20 .035
201-0239 4 135 5 .035
201-0240 4 135 10 .035
201-0241 4 135 20 .035
201-0216 5 40 5 .038
201-0217 5 40 10 .038
201-0218 5 40 20 .038
201-0210 5 65 5 .038
201-0212 5 65 10 .038
201-0214 5 65 20 .038
201-0211 5 100 5 .038
201-0213 5 100 10 .038
201-0215 5 100 20 .038
201-0227 5 100 30 .038
201-0228 5 100 40 .038
201-0229 5 100 50 .038
201-0219 5 135 5 .038
201-0220 5 135 10 .038
201-0221 5 135 20 .038
201-0222 5 135 30 .038
201-0223 5 135 40 .038
201-0224 5 135 50 .038
FOCUSED-TM- VALVED INFUSION CATHETERS
CURRENT EXP. 18 MONTHS (36 MONTH EXPIRATION PENDING, SEPTEMBER 1998)
Model # Diameter (F) Usable Length (Cm) Infusion Length (Cm) Max.
Guidewire
(In.)
201-0225 5 65 1 .038
201-0226 5 100 1 .038
PERIPHERAL MICRO CATHETERS
CURRENT EXP. 12 MONTHS (36 MONTH EXPIRATION PENDING, SEPTEMBER 1998)
MICROMEWI-TM- SIDEHOLE INFUSION CATHETERS
Model # Diameter (F) Usable Length (Cm) Infusion Length (Cm) Max.
Guidewire
(In.)
201-0120 2.9 150 5 .018
201-0121 2.9 150 10 .018
201-0122 2.9 40 5 .018
201-0124 2.9 180 5 .018
201-0125 2.9 180 10 .018
MICRO PATENCY-TM- ENDHOLE INFUSION CATHETERS
EXP. 5 YEARS
Model # Diameter (F) Usable Length (Cm) Infusion Length (Cm) Max.
Guidewire
(In.)
201-5020 2.9 40 Endhole .018
201-5021 2.9 100 Endhold .018
201-5022 2.9 000 Xxxxxxx .000
XXXXXXXX INFUSION CATHETERS
CURRENT EXP. 18 MONTHS (36 MONTH EXPIRATION PENDING, SEPTEMBER 1998)
MEWI-5-TM- SIDEHOLE INFUSION CATHETERS
Model # Diameter (F) Usable Length (Cm) Infusion Length (Cm) Max.
Guidewire
(In.)
201-0150 5 40 5 .035
201-0151 5 40 10 .035
201-0152 5 40 15 .035
201-0153 5 65 5 .035
201-0154 5 65 10 .035
201-0155 5 65 15 .035
201-0156 5 100 5 .035
201-0157 5 100 10 .035
201-0158 5 100 15 .035
201-0160 5 40 5 .038
201-0161 5 40 10 .038
201-0162 5 40 15 .038
201-0163 5 65 5 .038
201-0164 5 65 10 .038
201-0165 5 65 15 .038
201-0166 5 100 5 .038
201-0167 5 100 10 .038
201-0168 5 100 15 .038
MECHANICAL THROMBOLYSIS
XXXXX THROMBOLYTIC BRUSH-TM-
EXP. 18 MONTHS
Model # Catheter Diameter (F) Usable Length (Cm) Infusion Length (Cm) Brush
Diameter
(mm)
202-0101 6 65 Endhole 6
Contents:
A System contains one Brush Catheter and one Brush Motor Drive Unit
XXXXXXXXX OVER-THE-WIRE BRUSH-TM-
EXP. 18 MONTHS
Catheter
Model # Diameter (F) Usable Length Infusion Length Brush Diameter
(Cm) (Cm) (mm)
202-0107 6 65 Endhole & Sidehole 6
Max Guidewire: .035
Contents:
A System contains one Brush Catheter and one Brush Motor Drive Unit
ACCESSORIES
INTRODUCER SHEATHS
EXP. 5 YEARS
Model # Size (F) Sheath Length (Cm)
203-6001-P10 6 5.5
203-6002-P10 5 40
Contents Per Pack (all models)
1-Hemostasis value with hi-flow sideport and removable 3-way stopcock
1-radiopaque sheath
1-vessel dilator
PULSE-SPRAY ACCESSORY PACK
EXP. 2001
Model #
203-9000-P5 Contents Per Pack (all models):
1-dual check valve
1-1cc luer lock syringe
1-20cc luer lock syringe
INFUSION WIRES
EXP. 18 MONTHS
PROSTREAM SIDEHOLE INFUSION WIRES
Model # Diameter (In.) Usable Length (Cm) Infusion Length (Cm) Max.
Guidewire
(In.)
201-0410 .035 145 3 N/A
201-0411 .035 145 6 N/A
201-0412 .035 145 9 N/A
201-0413 .035 145 12 N/A
201-0414 .035 175 3 N/A
201-0415 .035 175 6 N/A
201-0416 .035 175 9 N/A
201-0417 .035 175 12 N/A
201-0610 .035 145 Endhole N/A
201-0611 .038 145 Endhole N/A
EXHIBIT 2
NET SALES FORECAST
FIVE (5) YEAR ANNUAL NET SALES FORECAST
(NET SALES IN THOUSANDS OF DOLLARS)
1998 1999 2000 2001 2002 2003
NET SALES - THROMBOLYTIC BRUSHES# * * * * * *
NET SALES - INFUSION CATHETERS# * * * * * *
NET SALES - INFUSION GUIDEWIRES# * * * * * *
NET SALES - PERIPHERAL MICRO CATHS# * * * * * *
NET SALES - ACCESSORIES# * * * * * *
TOTAL * * * * * *
# OR EQUIVALENT PRODUCTS
EXHIBIT 2 (cont)
TWELVE (12) MONTH MONTHLY NET SALES FORECAST
(NET SALES IN THOUSANDS OF DOLLARS)
OCT '98 NOV-99 DEC-98 JAN-99 FEB-99 MAR-99 APR-99 MAY-99 JUN-99 JUL-99 AUG-99 SEP-99
NET SALES - THROMBOLYTIC BRUSHES
* * * * * * * * * * * *
NET SALES - INFUSION CATHETERS
* * * * * * * * * * * *
NET SALES - INFUSION GUIDEWIRES
* * * * * * * * * * * *
NET SALES - PERIPHERAL MICRO CATHS
* * * * * * * * * * * *
NET SALES - ACCESSORIES
* * * * * * * * * * * *
* * * * * * * * * * * *
EXHIBIT 3
POST-MARKET CLINICAL DEVELOPMENT PROGRAM
Pursuant to Section 4.1.5, the following represents the Clinical Development
program:
I. *
II. *
III. *
IV. *
EXHIBIT 4
ADR (ALTERNATIVE DISPUTE RESOLUTION)
The parties recognize that a bona fide dispute as to certain matters may arise
from time to time during the term of this Agreement which relates to either
party's rights and/or obligations. To have such a dispute resolved by this
Alternative Dispute Resolution ("ADR") provision, a party first must send
written notice of the dispute to the other party for attempted resolution by
good faith negotiations between their respective presidents (or their
equivalents) of the affected subsidiaries, divisions, or business units within
twenty-eight (28) days after such notice is received (all references to "days"
in this ADR provision are to calendar days).
If the matter has not been resolved within twenty-eight (28) days of the notice
of dispute, or if the parties fail to meet within such twenty-eight (28) days,
either party may initiate an ADR proceeding as provided herein. The parties
shall have the right to be represented by counsel in such a proceeding.
1. To begin an ADR proceeding, a party shall provide written notice to the
other party of the issues to be resolved by ADR. Within fourteen (14) days
after its receipt of such notice, the other party may, by written notice to
the party initiating the ADR, add additional issues to be resolved within
the same ADR.
2. Within twenty-one (21) days following receipt of the original ADR notice,
the parties shall select a mutually acceptable neutral to preside in the
resolution of any disputes in this ADR proceeding. If the parties are
unable to agree on a mutually acceptable neutral within such period, either
party may request the President of the CPR Institute for Dispute Resolution
("CPR"), 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, to
select a neutral pursuant to the following procedures:
(a) The CPR shall submit to the parties a list of not less than
five (5) candidates within fourteen (14) days after receipt of the
request, along with a CURRICULUM VITAE for each candidate. No
candidate shall be an employee, director, or shareholder of either
party or any of their subsidiaries or affiliates.
(b) Such list shall include a statement of disclosure by each
candidate of any circumstances likely to affect his or her
impartiality.
(c) Each party shall number the candidates in order of
preference (with the number one (1) signifying the greatest
preference) and shall deliver the list to the CPR within seven (7)
days following receipt of the list of candidates. If a party
believes a conflict of interest exists regarding any of the
candidates, that party shall provide a written explanation of the
conflict to the CPR along with its list showing its order of
preference for the candidates. Any party failing to return a list
of preferences on time shall be deemed to have no order of
preference.
(d) If the parties collectively have identified fewer than
three (3) candidates deemed to have conflicts, the CPR immediately
shall designate as the neutral the candidate for whom the parties
collectively have indicated the greatest preference. If a tie
should result between two candidates, the CPR may designate either
candidate. If the parties collectively have identified three (3)
or more candidates deemed to have conflicts, the CPR shall review
the explanations regarding conflicts and, in its sole discretion,
may either (i) immediately designate as the neutral the candidate
for whom the parties collectively have indicated the greatest
preference, or (ii) issue a new list of not less than five (5)
candidates, in which case the procedures set forth in subparagraphs
2(a) - 2(d) shall be repeated.
3. No earlier than twenty-eight (28) days or later than fifty-six (56) days
after selection, the neutral shall hold a hearing to resolve each of the
issues identified by the parties. The ADR proceeding shall take place at a
location in the State of California agreed upon by the parties. If the
parties cannot agree, the neutral shall designate a location in the State
of California other than the principal place of business of either party or
any of their subsidiaries or affiliates.
4. At least seven (7) days prior to the hearing, each party shall submit the
following to the other party and the neutral:
(a) a copy of all exhibits on which such party intends to
rely in any oral or written presentation to the neutral;
(b) a list of any witnesses such party intends to call at the
hearing, and a short summary of the anticipated testimony of each
witness;
(c) a proposed ruling on each issue to be resolved, together
with a request for a specific damage award or other remedy for each
issue. The proposed rulings and remedies shall not contain any
recitation of the facts or any legal arguments and shall not exceed
one (1) page per issue.
(d) a brief in support of such party's proposed rulings and
remedies, provided that the brief shall not exceed twenty (20) pages.
This page limitation shall apply regardless of the number of issues
raised in the ADR proceeding.
Except as expressly set forth in subparagraphs 4(a) - 4(d), no discovery shall
be required or permitted by any means, including depositions,
interrogatories, requests for admissions, or production of documents.
5. The hearing shall be conducted on two (2) consecutive days and shall be
governed by the following rules:
(a) Each party shall be entitled to five (5) hours of hearing
time to present its case. The neutral shall determine whether each
party has had the five (5) hours to which it is entitled.
(b) Each party shall be entitled, but not required, to make
an opening statement, to present regular and rebuttal testimony,
documents or other evidence, to cross-examine witnesses, and to
make a closing argument. Cross-examination of witnesses shall occur
immediately after their direct testimony, and cross-examination
time shall be charged against the party conducting the
cross-examination.
(c) The party initiating the ADR shall begin the hearing and,
if it chooses to make an opening statement, shall address not only
issues it raised but also any issues raised by the responding
party. The responding party, if it chooses to make an opening
statement, also shall address all issues raised in the ADR.
Thereafter, the presentation of regular and rebuttal testimony and
documents, other evidence, and closing arguments shall proceed in
the same sequence.
(d) Except when testifying, witnesses shall be excluded from
the hearing until closing arguments.
(e) Settlement negotiations, including any statements made
therein, shall not be admissible under any circumstances.
Affidavits prepared for purposes of the ADR hearing also shall not
be admissible. As to all other matters, the neutral shall have
sole discretion regarding the admissibility of any evidence.
6. Within seven (7) days following completion of the hearing, each party may
submit to the other party and the neutral a post-hearing brief in support
of its proposed rulings and remedies, provided that such brief shall not
contain or discuss any new evidence and shall not exceed ten (10) pages.
This page limitation shall apply regardless of the number of issues raised
in the ADR proceeding.
7. The neutral shall rule on each disputed issue within fourteen (14) days
following completion of the hearing. Such ruling shall adopt in its
entirety the proposed ruling and remedy of one of the parties on each
disputed issue but may adopt one party's proposed rulings and remedies on
some issues and the other party's proposed rulings and remedies on other
issues. The neutral shall not issue any written opinion or otherwise
explain the basis of the ruling.
8. The neutral shall be paid a reasonable fee plus expenses. These fees and
expenses, along with the reasonable legal fees and expenses of the
prevailing party (including all expert witness fees and expenses), the fees
and expenses of a court reporter, and any expenses for a hearing room,
shall be paid as follows:
(a) If the neutral rules in favor of one party on all
disputed issues in the ADR, the losing party shall pay 100% of such
fees and expenses.
(b) If the neutral rules in favor of one party on some issues
and the other party on other issues, the neutral shall issue with
the rulings a written determination as to how such fees and
expenses shall be allocated between the parties. The neutral shall
allocate fees and expenses in a way that bears a reasonable
relationship to the outcome of the ADR, with the party prevailing
on more issues, or on issues of greater value or gravity,
recovering a relatively larger share of its legal fees and expenses.
9. The rulings of the neutral and the allocation of fees and expenses shall be
binding, non-reviewable, and non-appealable, and may be entered as a final
judgment in any court having jurisdiction.
10. Except as provided in paragraph 9 or as required by law, the existence of
the dispute, any settlement negotiations, the ADR hearing, any submissions
(including exhibits, testimony, proposed rulings, and briefs), and the
rulings shall be deemed Confidential Information. The neutral shall have
the authority to impose sanctions for unauthorized disclosure of
Confidential Information.
