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Exhibit 10.19(a)
AMENDMENT AGREEMENT
THIS AGREEMENT is effective as of the 15th day of April, 1998, by and
between ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ Medical, Division of Ethicon, Inc., a New Jersey
corporation having an office at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(hereinafter "JJM") and BIO-PLEXUS, INC., a corporation of the State of
Connecticut having an office at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(hereinafter "BIO-PLEXUS").
W I T N E S S E T H:
WHEREAS, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ MEDICAL, INC., a New Jersey corporation
(hereinafter "JJMI") and BIO-PLEXUS, INC. previously entered into a Development
and License Agreement dated January 28, 1997 ("the Prior Development and License
Agreement") and a Supply Agreement dated January 28, 1997 ("the Prior Supply
Agreement");
WHEREAS, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ MEDICAL, INC. was the subject of a merger
with ETHICON, INC., a New Jersey corporation and ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ MEDICAL, INC.
was the surviving corporation and changed its name to ETHICON, INC.;
WHEREAS, ETHICON, INC. set up a separate division entitled ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ MEDICAL DIVISION OF ETHICON, INC., the party to this Agreement, which
succeeded to substantially all of the business related to the Prior Supply
Agreement and the Prior Development and License Agreement ("the Prior
Agreements");
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WHEREAS, the parties hereto as parties to the Prior Agreements desire
to cancel the Prior Supply Agreement and amend the Prior Development & License
Agreement as herein described;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE 1. DEFINITIONS
Where used in this Agreement, all terms shall have the meanings
attributed to them in the Prior Development & License Agreement and the
following additional terms shall be as herein defined;
1.1 The term "Net Sales" shall mean the revenue received by JJM or an
affiliate of JJM from the sale of Licensed Products to independent third parties
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, (iv) taxes or other governmental charges levied on or
measured by the invoiced amount whether absorbed by the billing or the billed
party, and (v) agent's and/or distributor's commissions. Product recalls
initiated by JJM will not reduce Net Sales.
1.2 The term "Net Average Selling Price" shall mean the mean price at
which Licensed Products are sold calculated by taking the total Net Sales for
all Licensed
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Products divided by the number of units of Licensed Products sold generating
such Net Sales, as calculated by JJM using generally accepted accounting
principles consistently applied as used in its normal business operations.
1.3 "Commercial Launch" shall have the meaning given in Exhibit 2.
ARTICLE 2. CANCELLATION OF SUPPLY AGREEMENT
2.1 The parties hereto agree that as of the effective date of this
Agreement the Prior Supply Agreement between the parties is terminated and of no
effect. The parties agree that neither party shall have a claim against the
other party for any reason whatsoever based on performance, non-performance or
otherwise under the Prior Supply Agreement. Further, JJM may manufacture
Licensed Product for itself or have Product manufactured by others without
payment to BIO-PLEXUS other than royalties required (if any) under this
Agreement.
ARTICLE 3. MILESTONE PAYMENTS
3.1 Upon execution of this Agreement JJM shall make a single one time
payment to BIO-PLEXUS in the amount of [ ]. This single payment of [ ]
and the payments made pursuant to Paragraph 3.1 of the Prior Development and
License Agreement shall be complete consideration for all development work to be
performed under this Agreement and under the Prior Development & License
Agreement as amended herein.
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3.2 JJM shall pay BIO-PLEXUS the amount of [
] upon establishment of a design freeze expected to occur
approximately May 15, 1998. The design freeze shall be determined by agreement
of the parties, however the design must be completely satisfactory to JJM in its
sole discretion per Exhibits 4 and 5 of this Amendment.
3.3 JJM shall pay BIO-PLEXUS the amount of [
] upon completion and delivery to JJM of the complete design history
and technical files for all Licensed Products. Expected date of completion is
June 1, 1998.
3.4 JJM shall pay BIO-PLEXUS the amount [
] upon design confirmation. Such design confirmation shall be
performance per proposed product specifications as shown in Exhibits 4 and 5,
after twelve (12) weeks of accelerated aging at 60(degree)C. Expected date of
completion September 15, 1998.
3.5 JJM shall pay BIO-PLEXUS the amount of [
] upon delivery by BIO-PLEXUS to JJM of an assembly machine
(expected delivery August 15, 1998) to its facility in Southington, Connecticut.
The assembly machine shall meet the specifications of JJM and shall be
acceptable to JJM in its sole discretion per Exhibit 4. Approximate date of
completion expected October 31, 1998.
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3.6 JJM shall pay BIO-PLEXUS the amount of [
] upon the completed manufacture by JJM of one hundred thousand
(100,000) SNA units that are suitable -for sale, manufactured on the assembly
machine delivered to JJM by BIO-PLEXUS meeting the acceptance criteria supplied
by JJM as defined in Exhibits 4 and 5. Approximate date of completion expected
October 31, 1998.
ARTICLE 4. AMENDMENT TO THE DEVELOPMENT PROGRAM INCLUDED IN THE PRIOR
DEVELOPMENT AND LICENSE AGREEMENT
4.1 Paragraph 3.2 of the Prior Development and License Agreement is
hereby deleted and substituted with the following:
-- 3.2 JJM will separately fund expenditures on Initial
Capital Equipment related to the development of intravenous catheter SNAs
pursuant to this Agreement. ("Initial Capital Equipment" shall mean equipment
sufficient to produce at a capacity of [ ] units of SNAs
per year). Initial Capital Equipment shall include the assembly machine and
manufacturing molds, as defined in Exhibits 4 and 5. The assembly equipment is
to be delivered to JJM's Southington, Connecticut manufacturing facility or such
other facility as JJM may designate. If JJM directs the equipment to be
delivered to another facility, then JJM shall pay reasonable shipping, travel
and temporary living costs incurred by BIO-PLEXUS as a result of such direction.
JJM shall own and take title to all components and subassemblies related to the
manufacturing equipment as they are received or completed by BIO-PLEXUS.
Accounting
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procedures for invoicing and passing of title shall be in accordance
with Exhibit 1 attached hereto. BIO-PLEXUS shall make all reasonable efforts to
transition vendors for such assembly equipment and any raw materials used
therein to JJM.
4.2 JJM shall have the right to specify specific items such as ▇▇▇▇▇
▇▇▇▇▇▇▇ Operating Language and selection of key vendors (molders, etc.), but
will bear the cost of any additional expenses associated with these items over
selections desired by BIO-PLEXUS. Expenditures for Initial Capital Equipment
relating to SNAs shall not exceed [
], except for additional items specified by JJM as discussed above.
This cost includes both the assembly machine and any associated molds and
prototypes.
ARTICLE 5. - CANCELLATION AND AMENDMENT OF CERTAIN SELECTIONS RELATING TO THE
PRIOR DEVELOPMENT AND LICENSE AGREEMENT
5.1 Sections 7.6 and 7.7 of the Prior Development and License Agreement are
hereby deleted and of no further effect. The following new section 7.7 is added:
-- 7.7 JJM may maintain the exclusivity under the present
Development and License Agreement as amended by paying at least minimum royalty
set forth in Exhibit 2, if the actual royalties do not meet or exceed such
minimum royalty amount. Such minimum royalty shall be payable at the end of the
calendar year and actual royalties paid for Net Sales occurring during the year
shall be fully credited against such minimum royalties. If the minimum royalties
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exceed the amount of actual royalties paid on Net Sales for the calendar year,
then JJM shall pay an additional amount equal to the difference between the
minimum royalties due and the actual royalties paid for the given calendar year.
If the royalties for a given calendar year exceed the minimum royalties required
for that calendar year, then no additional payment shall be made. If for any
given calendar year, the royalties due do not equal or exceed the minimum
royalties and JJM elects not to make the additional payment to bring the royalty
payments made up to the amount of the minimum royalties then the License may, at
BIO-PLEXUS' discretion, be cancelled upon sixty (60) days written notice.
5.2 Section 7.8 of the Prior Development and License Agreement is
hereby amended as follows:
a) In the first sentence of Section 7.8 the language "the royalties due
under this Agreement on the minimum purchase requirements in the
associated Supply Agreement provided in 7.6 and 7.8 above" is deleted
and the following language is substituted therefor -- the greater of
actual royalties due or the minimum royalties for that year as provided
in Exhibit 2 of the Amendment Agreement. Failure by JJM to pay the
greater of actual royalties due for a specific period or minimum
royalties for that same period as specified in Exhibit 2, will
constitute a breach of this Agreement by JJM. The sole remedy for
failure to pay minimum royalties (when minimum royalties are greater
than actual royalties) shall be cancellation of this Agreement as
provided in 7.7 above. However, at no
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time will JJM be relieved to pay all royalties due to
date of cancellation.
b) The last two sentences of Section 7.8 of the Prior Development and
License Agreement, specifically "JJMI will provide, during the first
three (3) years after commercial launch (as defined in Exhibit 2 of the
associated Supply Agreement) marketing plans for Licensed Products.
Marketing plans will indicate scheduled promotional activities related
to the Licensed Products." is hereby deleted. JJM will furnish to
BIO-PLEXUS a forecast for Licensed Products on an annual basis in
December of each year.
ARTICLE 6. ROYALTIES
6.1 Paragraph 7.2 of the Prior Development & License Agreement is
hereby deleted and the following is substituted therefore
-- 7.2 JJM shall pay BIO-PLEXUS a royalty on Net Sales in the following
amounts:
a) [ ] of Net Sales up to minimum quantities provided in
Exhibit 2;
b) [ ] of Net Sales for all sales above minimum
quantities set forth in Exhibit 2;
c) An additional [ ] of all Net Sales in excess of the
minimum quantities provided in Exhibit 2 in any quarter in which the
net average selling price
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of Licensed Products [ ]. The
[ ] threshold will be adjusted annually,
if required, for (1) inflation, but, in any event, by an amount not
exceeding the applicable change in the relevant Producer Price Index,
and (2) for fluctuations in currency, to be determined by the weighted
average change of all relevant currencies included in Net Sales versus
the U.S. dollar.
d) In the event that unit volumes exceed an amount determined by
multiplying 2.5 times the contractual minimum amount provided in
Exhibit 2, and the Net Average Selling Price for the quarter is [
], then all unit volumes sold in excess of 2.5
times the contractual minimum amounts for that quarter shall bear a
total royalty rate of [ ].
e) Initial Royalty - For the first eighteen (18) months following
commercial launch, the royalty shall be [
].
f) Minimum Royalties - For each calendar year after Commercial Launch,
JJM shall pay the minimum royalties indicated on Exhibit 2 attached
hereto. -
g) The parties agree that Exhibits C and D of the prior Development and
License Agreement are canceled and of no effect.
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ARTICLE 7. KEY INDIVIDUALS
7.1 BIO-PLEXUS shall use its best efforts to retain the services of the
individuals listed in Exhibit 3 throughout the period relating to the completion
of the Development Program. In the event of headcount reductions at BIO-PLEXUS
or that any employee listed on Exhibit 3 shall give notice to BIO-PLEXUS of his
intention to terminate his employment, BIO-PLEXUS shall provide JJM notice of
such change in status. If the termination of employment is at BIO-PLEXUS'
initiation then JJM shall be informed at least fourteen (14) days prior to the
communication of such termination to the named individual. JJM may, in its sole
discretion, offer employment opportunities to any of the individuals listed on
Exhibit 3 on terms to be determined by JJM at any point after which BIO-PLEXUS
communicates their intention to terminate such named individual to the
individual or the individual indicates his intention to terminate his employment
with BIO-PLEXUS.
7.2 Performance Bonuses - JJM shall provide a fund of up to [
] for use as performance bonuses and/or
overtime payments for the BIO-PLEXUS employees listed in Exhibit 3. Use of the
performance bonus fund for overtime must be approved by JJM. Such performance
bonuses will be paid by JJM at the conclusion of the Development Program and
delivery of product and manufacturing equipment in conformity with the product
and process acceptance criteria outlined in Exhibits 4 and 5. JJM and BIO-PLEXUS
will cooperate to determine the bonus funding per individual. The pool provided
by JJM of [ ]
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available for performance bonuses will be reduced by [
] for each month past October 31, 1998 the Development Program
continues, as evidenced by failure of BIO-PLEXUS to deliver product and
manufacturing equipment in conformity with product and process acceptance
criteria outlined in Exhibits 4 and 5.
7.3 The parties have agreed to list the open developmental items and
their expected completion dates and have attached them hereto as
Exhibits 4 and 5.
ARTICLE 8. AMENDMENT OF FURTHER PROVISIONS
8.1 Paragraph 10.3 in the Prior Development & License Agreement shall
be deleted and the following substituted therefore:
-- 10.3 JJM shall have right to terminate this Agreement (including the
Prior Development and License Agreement) at any time upon One Hundred and Eighty
(180) days written notice to BIO-PLEXUS. --
8.2 JJM agrees to hold BIO-PLEXUS, its employees and officers harmless
and indemnify them from any claims of Products liability based on JJM's sale of
the Licensed Products. BIO-PLEXUS and JJM hereby agree to cooperate in the
defense of any such claim, lawsuit or action. BIO- PLEXUS further agrees to make
available to JJM its employees, document and expertise in the mutual defense of
such action. BIO-PLEXUS hereby agrees to immediately notify JJM of any claim,
lawsuit or action which is within the scope of JJM's undertaking in this
paragraph. Failure to
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provide such notification shall terminate JJM's obligation as to such lawsuit,
claim or action. JJM shall control the management of any such claim, lawsuit or
action, including, without limitation, the selection of counsel, trial strategy,
and determination of the appropriateness and reasonableness of any settlement.
ARTICLE 9. ARBITRATION
9.1 Paragraph 12.11 is deleted and the following is substituted
therefore and shall also govern this Agreement.
-- 12.11 - DISPUTE RESOLUTION
a) 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 Center for Public Resources ("CPR"), except where
those rules conflict with these provisions, in which case these
provisions control. The arbitration will be held in Hartford,
Connecticut.
b) The panel shall consist of three arbitrators chosen from the CPR
Panels of Distinguished Neutrals each of whom is a lawyer specializing
in business litigation with at least 15 years experience with a law
firm of over 25 lawyers or
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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.
c) The parties agree to cooperate (1) to obtain selection of the
arbitrator(s) within 30 days of initiation of the arbitration, (2) to
meet with the arbitrator(s) within 30 days of selection and (3) 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 9 months after selection of the
arbitrator(s) and in the award being rendered within 60 days of the
conclusion of the hearings, or of any post-hearing briefing, which
briefing will be completed by both sides with 20 days after the
conclusion of the hearings. In the event no such agreement is reached,
the CPR will select arbitrator (s), allowing appropriate strikes for
reasons of conflict or other cause and three peremptory challenges for
each side. The arbitrator(s) shall set a date for the hearing, commit
to the rendering of the award within 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
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more than 20 days after the conclusion of the hearings), and provide
for discovery according to these time limits, giving recognition to the
understanding of the parties hereto 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 undue difficulty. In no event will the arbitrator(s) allow
either side to obtain more than a total of 40 hours of deposition
testimony from all witnesses, including both fact and expert witnesses.
In the event multiple hearing days are required, they will be scheduled
consecutively to the greatest extent possible.
d) The arbitrator(s) shall render their award following the substantive
law of Connecticut. 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.
e) To the extent possible, the arbitration hearings and award will be
maintained in confidence.
f) The United States District Court for the District of Connecticut may
enter judgment upon any award. In the event the panel's award exceeds
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$5 million in monetary damages or includes or consists of equitable
relief, then the court shall vacate, modify or correct any award where
the arbitrators' findings of fact are clearly erroneous, and/or where
the arbitrators' conclusions of law are erroneous; in other words, it
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 may be vacated, modified or
corrected only upon the grounds specified in the Federal Arbitration
Act. The parties consent to the jurisdiction of the above-specified
Court for the enforcement of these provisions, the entry of judgment on
any award, and. the vacatur, modification on and correction of any
award as above specified. 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.
g) Each party has the right before or 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.
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h) EACH PARTY HERETO WAIVES ITS RIGHT TO TRIAL OF ANY ISSUE BY JURY.
i) EACH PARTY HERETO WAIVES ANY CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES
FROM THE OTHER.
j) EACH PARTY HERETO WAIVES ANY CLAIM OF CONSEQUENTIAL DAMAGES FROM THE
OTHER UNLESS (1) THE FORESEEABILITY OF SUCH DAMAGES AT THE TIME OF THE
CONTRACT AND (2) THE AMOUNT OF SUCH DAMAGES ARE PROVEN BY CLEAR AND
CONVINCING EVIDENCE. --
ARTICLE 10. MEDIATION
The following shall be added to the Prior Development and License
Agreement and shall also govern this Agreement.
-- 12.14 - MEDIATION
a) 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 Center for
Public Resources ("CPR") then in effect, except where those rules
conflict with these provisions, in which case these provisions
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control. The mediation shall be conducted in Hartford, Connecticut and
shall be attended by a senior executive with authority to resolve the
dispute from each of the operating companies that are parties.
b) The mediator shall be an attorney specializing in business
litigation who has at least 15 years of experience as a lawyer with a
law firm of over 25 lawyers or was a judge of a court of general
jurisdiction and who shall be appointed from the list of neutrals
maintained by CPR.
c) The parties shall promptly confer in an effort to select a mediator
by mutual agreement. In the absence of such an agreement, the mediator
shall be selected from a list generated by CPR with each party having
the right to exercise challenges for cause and two peremptory
challenges within 72 hours of receiving the CPR list.
d) The mediator shall confer with the parties to design procedures to
conclude the mediation within no more than 45 days after initiation.
Under no circumstances shall the commencement of arbitration under
paragraph 12.11.(a) above be delayed more than forty-five (45) days by
the mediation process specified herein.
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e) Each party agrees to toll all applicable statutes of limitation
during the mediation process and 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 during any subsequent arbitration.
f) 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 11. REMAINING PROVISIONS
11.1 All the remaining provisions of the Development & License
Agreement not in conflict with the provisions of the present Amendment shall
remain in full force and effect.
11.2 For the purposes of interpreting this Agreement and the Prior
Development and License Agreement, JJM and JJMI shall be interchangeable and
shall each mean ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ Medical Division of Ethicon, Inc., a New
Jersey corporation.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers or representatives.
BIO-PLEXUS, INC. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ MEDICAL
DIVISION OF ETHICON, INC.
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇ ▇▇▇▇▇▇▇, M.D.
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Title: President and Chief Title: Vice President of
Executive Officer Market and Business Development
Worldwide
Date: April 9, 1998 Date: April 8, 1998
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