EXHIBIT 10.22
CONFIDENTIAL TREATMENT HAS BEEN SOUGHT
FOR PORTIONS OF THIS EXHIBIT PURSUANT TO RULE 24B-2 UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
EXOGEN, INC.
AND
XXXXX & NEPHEW, INC.
MASTER AGREEMENT
August 10, 1998
TABLE OF CONTENTS
PAGE
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SECTION 1. Purchase of Exogen Common Stock by S&N..................1
SECTION 2. United States Sales Representative Agreement............1
SECTION 3. Payment on Initial Payment Date.........................2
SECTION 4. License Agreement.......................................2
SECTION 5. United States Stocking Distribution Agreement...........2
SECTION 6. Global Stocking Distribution Agreement;
Option to Purchase Additional Shares of
Exogen Common Stock.....................................3
SECTION 7. Certain Rights of First Negotiation.....................6
SECTION 8. Certain Covenants of Exogen.............................7
SECTION 9. Certain Covenants of S&N...............................10
SECTION 10. Representations and Warranties of Exogen...............12
10.1 Power and Authority...........................12
10.2 Valid Issuance of Exogen Common Stock.........12
10.3 Consents......................................13
10.4 Compliance with Other Instruments.............13
10.5 ISO 9000 and CE Xxxx of Approval..............13
10.6 Millenium Compliance..........................13
SECTION 11. Representations and Warranties of S&N..................14
11.1 Power and Authority...........................14
11.2 Consents......................................14
11.3 Compliance with Other Instruments.............14
SECTION 12. Miscellaneous..........................................14
12.1 Survival of Warranties........................14
12.2 Deductible....................................14
12.3 Claim Notice..................................15
12.4 Remedies......................................15
12.5 Successors and Assigns........................15
12.6 Governing Law.................................16
12.7 Counterparts..................................16
12.8 Titles and Subtitles..........................16
12.9 Notices.......................................16
12.10 Attorneys' Fees...............................16
12.11 Amendments and Waivers........................16
12.12 Severability..................................16
12.13 Entire Agreement..............................16
12.14 Press Releases and Announcements..............17
12.15 Arbitration...................................17
SCHEDULES
SCHEDULE 5 Terms and Conditions of U.S. Stocking Distribution Agreement
SCHEDULE 6A Terms and Conditions of Global Stocking Distribution Agreement
SCHEDULE 6B Terms and Conditions of Individual Country Stocking Distribution
Agreement (Prior to Exercise of Global Distribution Option)
SCHEDULE 7 Terms and Conditions to Serve as the Basis for Good Faith
Negotiations
SCHEDULE 8 U.S. and Foreign Patents, Trademarks and Applications
SCHEDULE 9 Current International Arrangements
SCHEDULE 10 Required Consents
EXHIBITS
EXHIBIT A Common Stock Purchase Agreement
EXHIBIT B U.S. Sales Representative Agreement
EXHIBIT C License Agreement
MASTER AGREEMENT
Master Agreement ("Agreement") dated as of August 10, 1998
between Exogen, Inc., a Delaware corporation ("Exogen"), and Xxxxx & Nephew,
Inc., a Delaware corporation ("S&N").
RECITALS
WHEREAS, Exogen manufactures and sells Sonic Accelerated
Fracture Health Systems ("SAFHS"); and
WHEREAS, S&N desires to acquire certain rights from and
interests in Exogen.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein and intending to be legally bound hereby, the parties hereto
agree as follows:
SECTION 1. Purchase of Exogen Common Stock by S&N. On the date
hereof (the "Initial Closing Date"), Exogen will issue and sell to Xxxxx &
Nephew Holdings, Inc., an affiliate of S&N, and Xxxxx & Nephew Holdings, Inc.
will purchase from Exogen, 820,000 shares of Common Stock, par value $.0001 per
share, of Exogen ("Exogen Common Stock"). The price to be paid for each share of
Exogen Common Stock to be so purchased by S&N shall be $5.00, or an aggregate
purchase price of $4,100,000. In connection with such issuance, sale and
purchase, on the Initial Closing Date (i) Exogen and Xxxxx & Nephew Holdings,
Inc. shall execute and deliver the Common Stock Purchase Agreement in the form
of Exhibit A to this Agreement (the "Purchase Agreement"), and the Registration
Rights Agreement in the form of Annex A to the Purchase Agreement (the "Initial
Registration Rights Agreement"), (ii) Exogen shall deliver or cause to be
delivered to Xxxxx & Nephew Holdings, Inc. all certificates (other than the
Exogen Common Stock certificate (as required in the Purchase Agreement) and
other documents contemplated by the Purchase Agreement to be delivered by it,
(iii) to the extent possible, the Exogen Common Stock certificate required in
the Purchase Agreement; and (iv) Xxxxx & Nephew Holdings, Inc. shall deliver to
Exogen the Purchase Price (as defined in the Purchase Agreement) in the manner
contemplated by the Purchase Agreement. If Exogen is not able to deliver the
Exogen Common Stock certificate on the Initial Closing Date, then Exogen shall
deliver such certificate to Xxxxx & Nephew Holdings, Inc. no later than five (5)
business days following the Initial Closing Date.
SECTION 2. United States Sales Representative Agreement. On
the Initial Closing Date, Exogen and S&N shall execute and deliver the United
States Sales Representative Agreement in the form of Exhibit B to this Agreement
(the "U.S. Sales Representative Agreement").
SECTION 3. Payment on Initial Payment Date. On the Initial
Closing Date, S&N shall deliver to Exogen $1,000,000 by wire transfer to
Exogen's bank account (designated at least one business day prior to the Initial
Closing Date).
SECTION 4. License Agreement. On the Initial Closing Date,
Exogen and S&N shall execute and deliver a License Agreement in the form of
Exhibit C to this Agreement (the "License Agreement").
SECTION 5. United States Stocking Distribution Agreement.
(a) Exogen and S&N will enter into a United States Stocking
Distribution Agreement having the terms and conditions set forth in Schedule 5
to this Agreement (the "U.S. Stocking Distribution Agreement") in accordance
with the following:
(i) If the Requisite Approval Date (as defined in Section
4(b) of the U.S. Sales Representative Agreement) occurs prior to or on
July 31, 2002, Exogen and S&N will enter into such agreement within 30
days following the Requisite Approval Date, provided that in no event
will the U.S. Stocking Distribution Agreement become effective prior to
August 1, 2000.
(ii) If S&N desires to enter into such agreement even
though the Requisite Approval Date has not occurred or has occurred
after July 31, 2002 and so notifies Exogen of such desire prior to the
termination or expiration of the U.S. Sales Representative Agreement,
Exogen and S&N will enter into such agreement within 30 days following
such notification, provided that in no event will the U.S. Stocking
Distribution Agreement become effective prior to August 1, 2000. Each
of Exogen and S&N shall negotiate in good faith the terms of the U.S.
Stocking Distribution Agreement and shall use diligent efforts to enter
into such agreement within the foregoing timetable.
(b) In consideration for the execution and delivery of the
U.S. Stocking Distribution Agreement, S&N shall pay to Exogen an aggregate of
[****], which shall be payable as follows: [****] concurrently with the
execution and delivery of the U.S. Stocking Distribution Agreement and [****] on
the first anniversary of such execution and delivery. Such payments shall be
made by wire transfer to an account designated by Exogen no later than two (2)
business days prior to the execution and delivery of the U.S. Stocking
Distribution Agreement.
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.
2
SECTION 6. Global Stocking Distribution Agreement; Option to
Purchase Additional Shares of Exogen Common Stock.
(a) S&N shall have the option (the "Global Distribution
Option"), exercisable by S&N by written notice given to Exogen at any
time during the period commencing on the Initial Closing Date and
ending on the [****] of the Initial Closing Date ("Global Option
Period"), to cause Exogen to enter into with S&N or one or more of its
Affiliates a Global Stocking Distribution Agreement having the terms
and conditions set forth in Schedule 6A to this Agreement (the "Global
Stocking Distribution Agreement"). Each of Exogen and S&N shall
negotiate in good faith the terms of the Global Stocking Distribution
Agreement and shall use diligent efforts to enter into the Global
Stocking Distribution Agreement as promptly as practicable after the
exercise of such option.
(i) Exogen represents and warrants that Schedule 9 sets
forth a complete and accurate list of all sales representative,
distribution and similar arrangements to which Exogen is a party with
respect to territories outside of the United States as of the date of
this Agreement ("Current International Arrangements"), together with a
description of: the territory covered by each current International
Arrangement; Exogen's rights to terminate each Current International
Arrangement; the expiration date of each Current International
Arrangement; and any extension or renewal rights. S&N's right to
commence distribution in any country outside the United States shall be
subject to and limited by the terms and conditions disclosed on
Schedule 9, and any extension, renewal or amendment to any Current
International Arrangement as is permitted pursuant to Section 6(e) of
this Agreement. Notwithstanding anything contained herein to the
contrary, Exogen shall use diligent efforts to terminate the Current
International Arrangements as soon as possible following S&N's exercise
of its Global Distribution Option.
(ii) For purposes of this Agreement:
"Affiliate" means (A) any entity directly
controlling, controlled by, or under common control with another entity, or (B)
any person or entity owning or controlling more than 50% of the outstanding
voting securities of an entity. "Control" means possession of the power to
direct or cause the direction of the management and policies of an entity,
whether through the ownership of a majority of the outstanding voting securities
or by contract or otherwise.
"Global Option Exercise Date" means the date, if
any, on which S&N provides the written notice referred to in Section 6(a).
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.
3
(b) Exogen hereby grants to S&N an option (the "Option") to
purchase from the Company additional shares of Exogen Common Stock for its own
account or its designee, subject to the following terms and conditions:
(i) The Option shall be exercisable by S&N beginning only
when and if S&N exercises the Global Distribution Option within the
time period specified in Section 6(a), and any time thereafter until
the second anniversary of the Global Option Exercise Date.
(ii) The Option may be exercised in whole or in part, but
may only be exercised one time. In order to exercise the Option, S&N
shall give to Exogen a written notice of S&N's election to exercise the
Option (the date of such notice being referred to herein as the "Option
Exercise Date") and S&N's designation of the date on which the purchase
by S&N of the shares of Exogen Common Stock shall be closed (the
"Option Closing Date"), which date shall be no earlier than three
business days following the Option Exercise Date and no later than (A)
the 45th day after the Option Exercise Date or (B) the third business
day after the expiration of any applicable waiting period under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, whichever is
later. On the Option Closing Date, S&N shall pay to Exogen the
aggregate purchase price for the shares of Exogen Common Stock
purchased pursuant to exercise of the Option in immediately available
funds by wire transfer to a bank account designated by Exogen, and
Exogen shall deliver to S&N a certificate representing the number of
shares of Exogen Common Stock so purchased by S&N, registered in the
name of S&N or its nominee.
(iii) The maximum number of shares of Exogen Common Stock
which can be purchased upon exercise of the Option is equal to the
difference between (A) the number of shares of Exogen Common Stock
equal to nineteen percent (19%) of the number of shares of Exogen
Common Stock issued and outstanding as of the Option Exercise Date
(after giving effect to the shares issuable upon exercise of the
Option), minus (B) the number of shares of Exogen Common Stock
purchased by S&N on the Initial Closing Date (adjusted to reflect any
stock dividends, stock splits or similar events).
(iv) The price to be paid for each share of Exogen Common
Stock to be purchased by S&N pursuant to exercise of the Option shall
be equal to the average of the last reported sale price per share of
Exogen Common Stock as reported on the Nasdaq National Market or such
other national securities exchange or securities quotation system on
which such shares are then traded or quoted, using the last reported
sale price for each of the 20 consecutive trading days ending on the
third trading day immediately preceding the Option Exercise Date.
(v) On the Option Closing Date or as soon thereafter as is
practicable, Exogen and S&N shall enter into a Registration Rights
Agreement having terms and
4
conditions substantially similar to those contained in the Initial
Registration Rights Agreement and covering the shares of Common Stock
purchased upon exercise of the Option.
(c) If S&N exercises the Global Distribution Option, S&N shall
pay to Exogen by wire transfer an aggregate of [****], which shall be payable as
follows: [****] concurrently with the execution and delivery of the Global
Stocking Distribution Agreement and [****] on the first anniversary of such
execution and delivery. Exogen shall designate to S&N in writing the bank
account to which funds should be transferred no later two (2) business days
prior to the execution and delivery of the Global Distribution Agreement.
(d) If, during the period ending on the earlier of the Global
Option Exercise Date and the expiration of the Global Option Period, Exogen
desires to commence or continue the distribution or sale of Products (as defined
in the U.S. Sales Representative Agreement) in a country in which Exogen does
not then have a sales representative, distribution or other similar agreement in
effect (including by reason of the termination, expiration, renewal or extension
of a prior agreement in such country) or in which Exogen is not then selling
Products directly, Exogen shall so notify S&N. If S&N so elects within 10 days
following receipt of such notice, S&N shall have the exclusive right for a
period of 60 days after receipt of such notice to negotiate with Exogen with
respect to a stocking distribution agreement in such country with S&N (or an
Affiliate of S&N) having the terms and conditions set forth in Schedule 6B to
this Agreement (the "Individual Country Stocking Distribution Agreement").
Exogen and S&N shall negotiate in good faith the terms and conditions of any
such agreement, including the payment of an up front fee if Exogen has
previously engaged in distribution activities or expended funds to obtain
regulatory approval to distribute in that country. If the terms and conditions
of any such agreement require the payment by S&N of any fee, the fee paid by S&N
shall be credited against any amount that may become due pursuant to the first
sentence of Section 6(c). If Exogen and S&N do not reach agreement on the terms
of an agreement within the 60 day period referenced above, Exogen shall be free
to negotiate such an agreement with any other third party, provided that such an
agreement can be terminated by Exogen on no more than ninety (90) days' notice
(or such longer period as is required by applicable law).
(e) In the event that S&N elects under Section 6(d) to enter
into Individual Country Stocking Distribution Agreements and S&N has paid Exogen
at least [****] in up front fees (pursuant to Section 6(d)) for such agreements,
then S&N shall have the right at any time following the last payment to exercise
the Global Stocking Distribution Option without payment of the amounts required
under Section 6(c), and the provisions of Section 6(c) shall be of no further
force or effect.
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.
5
SECTION 7. Certain Rights of First Negotiation.
(a) If, at any time prior to August 1, 2008, Exogen desires to
enter into an agreement of any kind (including, without limitation, an agreement
for sale, development, manufacture, license or distribution) with a third party
with respect to, or in connection with, any ultrasound or mechanical stress
therapy (and any intellectual property rights relating thereto) for the
treatments and indications set forth in Section 1 of the U.S. Sales
Representative Agreement, the U.S. Stocking Distribution Agreement, Global
Stocking Distribution Agreement or Individual Country Stocking Distribution
Agreement or any new indication, including, without limitation, spine,
cartilage, wounds, osteoporosis or other muscular-skeletal tissues, Exogen shall
give S&N notice thereof. If S&N so elects within 10 days following receipt of
such notice, S&N shall have the right, on a non-exclusive basis, for a period of
45 days after receipt of such notice to negotiate with Exogen with respect to a
letter of intent for any such agreement. During such 45 day period, Exogen shall
not execute a letter of intent or definitive agreement with any other person or
entity. If a letter of intent is executed with S&N within such 45 day period,
such letter of intent shall be subject to and conditioned upon approval by the
board of directors of Xxxxx & Nephew plc no later than 45 days from the
execution of the letter of intent ( the period from execution of a letter of
intent until approved by such board of directors to be referred to as the
"Approval Period"). During the Approval Period and for a period of 90 days
thereafter, if approved by the Xxxxx & Nephew plc board of directors, Exogen
shall not initiate, encourage or participate in any discussions with respect to
such agreement or arrangement with any other person or entity. Exogen and S&N
shall negotiate in good faith the terms and conditions of any such letter of
intent and agreement. The parties acknowledge that the letter of intent and
agreement may include the terms and conditions set forth in Schedule 7 to this
Agreement.
(b) If, at any time during the effectiveness of any of the
U.S. Sales Representative Agreement, the U.S. Stocking Distribution Agreement or
the Global Stocking Distribution Agreement, Exogen desires to sell, transfer or
otherwise dispose of substantially all of the assets of Exogen or to effect a
merger, consolidation, recapitalization, issuance of shares of capital stock or
other transaction, as a result of which the stockholders of Exogen immediately
prior to such transaction own less than a majority of the voting securities of
the surviving entity after such transactions, Exogen shall give S&N notice
thereof. If S&N so elects within 10 days following receipt of such notice, S&N
shall have the right, on a non-exclusive basis, for a period of 45 days after
receipt of such notice to negotiate with Exogen with respect to a letter of
intent for any such transaction. During such 45 day period, Exogen shall not
execute a letter of intent or definitive agreement with any other person or
entity. If a letter of intent is executed with S&N within such 45 day period,
such letter of intent shall be subject to and conditioned upon approval by the
board of directors of Xxxxx & Nephew plc during the Approval Period. During the
Approval Period and for a period of 90 days thereafter, if approved by the Xxxxx
& Nephew plc board of directors, Exogen shall not initiate, encourage or
participate in any discussions with any other person or entity relating to such
transaction. Exogen and S&N shall negotiate in good faith with respect to any
such letter of intent and transaction.
6
(c) Nothing set forth in Section 7(a) or (b) shall be deemed
to require Exogen or S&N to enter into an agreement with the other party with
respect to the types of transactions or agreements covered by these Sections.
SECTION 8. Certain Covenants of Exogen.
(a) Exogen shall use diligent efforts to obtain, as soon as
reasonably practicable, national reimbursement approval for the SAFHS 2000 and
3000 devices in each of France, Germany and Holland; provided, that failure to
obtain such approvals shall not constitute a default under this Agreement if
Exogen has otherwise complied with this Section 8(a).
(b) Exogen warrants and represents to S&N that, except as set
forth on Schedule 8, it is the sole and exclusive owner of the patents and
patent applications set forth in Schedule 8 and the inventions therein set
forth, the trademarks and trademark applications set forth in Schedule 8, and
the copyright in all software, directions for use, labeling and promotional
materials heretofore used in association with SAFHS devices (collectively,
"Intellectual Property"). Exogen will pay all maintenance fees for issued
patents prior to applicable due dates and renew all registered trademarks prior
to applicable renewal dates and prosecute all patent applications; provided,
however, that if Exogen elects not to maintain any patent, renew any trademark
or prosecute any patent application in any territory in which S&N has
distribution or sales representative rights, it shall give notice to S&N at
least 60 days prior to the due date for such maintenance fee or renewal, and S&N
may pay such amounts and take such actions as are required for such maintenance,
renewal or prosecute any patent application in any territory in which S&N has
distribution or sales representative rights and Exogen shall execute such
agreements, assignments or other documents as may be required in order to make
S&N a co-assignee or co-owner of any patent or trademark for which S&N has paid
a fee for so long as S&N continues to pay such fees. Exogen shall not, without
the prior written approval of S&N, which approval shall not be unreasonably
withheld, sell, transfer, convey, pledge or otherwise encumber the Intellectual
Property or any Intellectual Property developed in the future relating to
Products in any territory in which S&N has distribution or sales representative
rights; provided, however, that Exogen shall not be precluded from engaging in a
transaction covered by Section 7 in accordance with such Section or from
granting a security interest in substantially all of its assets in connection
with obtaining a loan or line of credit or similar financing from one or more
financial institutions, provided Exogen delivers an effective and legally
binding agreement from the secured party wherein the secured party agrees to
subordinate its claims and interests to that of S&N and not to disturb,
terminate or modify any rights S&N may have with respect to any security or
collateral if the secured party exercises its rights with respect to such
security or collateral.
(c) (i) Exogen shall indemnify S&N and its employees,
Affiliates, sales representatives and distributors from and against any
claim or suit for patent, trademark or copyright infringement arising
out of or connected with the sale and marketing of Products. Exogen
warrants and represents to S&N that it has received no notice of
patent, trademark or copyright infringement from any third party with
respect to
7
Products. Exogen shall promptly notify S&N of any future suits, claims
or demands relating to the Intellectual Property.
(ii) Each party shall promptly notify the other party of
any lawsuit, demand, claim or other action or threat thereof in respect
of which indemnification may be sought under Section 8(c)(i). Exogen
shall have sole control over the defense and settlement of any such
action and S&N shall reasonably cooperate with Exogen in such defense
at Exogen's expense.
(d) If either party has evidence that a third party is
infringing the Intellectual Property, it will promptly notify the other
party.
(i) Exogen shall have the first right to enforce any
Intellectual Property rights against any infringement or alleged
infringement thereof, and shall notify S&N, within three (3) months of
receipt of the notice referred to above, whether it intends to
institute suit against any such infringer or alleged infringer. If
Exogen so elects, it shall have the right to control, settle and defend
such suit in a manner consistent with the terms and provisions of this
Section 8(d) and shall at all times keep S&N informed as to the status
thereof. S&N may elect to share equally in the Expenses (as defined in
Section 8(e)) of any such suit, by notice to Exogen within 30 days
following receipt of Exogen's notice of intent to institute suit.
(ii) If Exogen elects not to enforce any Intellectual
Property rights relating to an alleged infringement claim in a
territory in which S&N has distribution or sales representative rights,
S&N may, in its sole judgment, institute suit against any such
infringer or alleged infringer and control, settle and defend such suit
in a manner consistent with the terms and provisions of this Section
8(d). In such event, S&N shall at all times keep Exogen informed as to
the status thereof. Exogen may elect to share equally in the Expenses
of any such suit, by notice to S&N within 30 days following receipt of
S&N's notice of intent to institute suit. Notwithstanding the
foregoing, no settlement, consent judgment or other voluntarily final
disposition of any such suit may be entered into without the consent of
Exogen, which consent will not be unreasonable withheld.
(iii) In any suit covered by this Section 8(d), the party
not controlling the litigation (the "Participant Party") shall
reasonably cooperate in such litigation. Each party agrees that, if it
is the Participant Party, it may be named (if appropriate) as a party
in any suit brought by the other party under this Section 8(d);
provided that S&N shall not be made a party to a suit with respect to a
territory in which it does not have distribution or sales
representative rights. Each party agrees to make available relevant
records, papers, information, samples and specimens, as well as to have
its employees testify upon request.
8
(iv) Any recovery of damages or costs in any infringement
suit under this Section 8(d), where such damages and costs relate to an
infringement claim in a territory in which S&N has distribution or
sales representative rights, shall be applied as follows:
(A) first, either (I) equally to each party until all
Expenses of the suit have been reimbursed (or repaid in such other proportion as
actually paid by the parties), if the parties had agreed to share the Expenses
equally or (II) to the party solely undertaking the Expenses of such suit until
all such Expenses have been reimbursed;
(B) if the Participant Party shared equally in the
Expenses, the balance of any recovery shall be shared equally between the
parties;
(C) if Exogen controlled the litigation and S&N did
not share equally in the Expenses, the balance of any recovery shall be divided
75% to Exogen and 25% to S&N; and
(D) if S&N controlled the litigation and Exogen did
not share equally in the Expenses, the balance of any recovery shall be divided
75% to S&N and 25% to Exogen.
Any damages or costs recovered in a suit, where such damages
and costs relate to an infringement claim in a territory in which S&N does not
have distribution or sales representative rights shall be for the sole benefit
of Exogen.
(e) Subject to Section 12.2, Exogen shall indemnify and hold
harmless S&N and its Affiliates from all Losses and Expenses (as defined in
Section 12.2) incurred by S&N and its Affiliates: (i) as required by this
Agreement or any agreement contemplated hereby; or (ii) in connection with or
arising out of: (A) any breach by Exogen of any of its covenants in this
Agreement or any Agreement contemplated herein; (B) any failure of Exogen to
perform any of its obligations in this Agreement or any agreement contemplated
herein; (C) any breach of any warranty or the inaccuracy of any representation
or warranty of any Exogen or its Affiliates contained or referred to in this
Agreement or any agreement contemplated hereby; (D) the violation of any law,
rule or regulation by Exogen or its Affiliates; or (E) any personal injury,
death or property damage arising out of or in connection with the manufacture,
use or sale of Products. Provided, however, Exogen shall not be so obligated to
indemnify S&N or its Affiliates to the extent that Losses were caused by or
resulted from the negligent act or omission or willful misconduct following the
date of this Agreement of S&N or its Affiliates, sales representatives or
distributors.
(f) During the term of the agreements to be executed pursuant
to this Agreement and for one year following the termination or expiration of
the last of such agreements, Exogen shall not solicit any employee of S&N or its
Affiliates. Notwithstanding the foregoing, Exogen shall not be in breach of this
covenant if Exogen (i) makes solicitation
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for employment by general advertisement in periodicals of broad distribution;
(ii) hires any such person if at the time such person responds to such
solicitation, such person has terminated his or her employment with S&N or its
Affiliate, voluntarily or involuntarily, and Exogen has not otherwise solicited
such person; or (iii) S&N is in default under any of the agreements executed
pursuant to this Agreement and such person provides a service reasonably
necessary for Exogen to satisfy the obligations of S&N or Exogen thereunder.
SECTION 9. Certain Covenants of S&N.
(a) Until the earlier of August 1, 2008 or termination of this
Master Agreement and all agreements contemplated hereby, and except as
specifically provided for in this Master Agreement, without the prior written
approval of Exogen's board of directors, S&N will not (i) acquire any Exogen
Common Stock (or securities exchangeable, convertible or exercisable therefor)
other than as contemplated herein and other than securities issued as dividends
on shares of Exogen Common Stock purchased by S&N pursuant to this Agreement,
(ii) commence a tender offer for more than 20% of the then outstanding shares of
Exogen Common Stock; or (iii) make any public announcement relating to (i)or
(ii) above; provided, that the foregoing shall not be applicable in the event
that any person or persons acting in concert not affiliated with S&N (as defined
in the regulations under the Securities Exchange Act of 1934) (A) acquires or
makes a tender offer for outstanding Common Stock of Exogen equal to or greater
than 20% of the outstanding shares of Exogen Common Stock (other than in an
underwritten public offering) or (B) indicates publicly its intention to effect
such a transaction.
(b) Subject to Section 12.2, S&N shall indemnify and hold
harmless Exogen and its Affiliates from all Losses and Expenses incurred by such
S&N and its Affiliates (i) as required by this Agreement or any agreement
contemplated hereby; or (ii) in connection with or arising out of: (A) any
breach by S&N or its Affiliates of any of their respective covenants in this
Agreement or any Agreement contemplated herein; (B) any failure of any S&N or
its Affiliates to perform any of their respective obligations in this Agreement
or any agreement contemplated herein; (C) any breach of any warranty or the
inaccuracy of any representation or warranty of any S&N or its Affiliates
contained or referred to in this Agreement or any agreement contemplated hereby;
(D) the violation of any law, rule or regulation by S&N or its Affiliates; or
(E) any personal injury, death or property damage arising out of or in
connection with repairs or alterations made to Products without the written
approval of Exogen, which approval shall not be unreasonably withheld. Provided,
however, S&N shall not be so obligated to indemnify Exogen or its Affiliates to
the extent that Losses caused by or resulting from the negligent act or
omissions of Exogen or its Affiliates.
(c) S&N shall comply and shall cause its employees,
Affiliates, sales representatives and distributors to comply with all U.S. and
foreign labeling and other regulatory requirements and restrictions applicable
to the marketing and sale of Products in the United States and in such other
countries in which S&N has exercised its option to distribute Products. All
Products shall be marked with Exogen's trademarks and all product labeling and
packaging that is not Exogen's standard labeling and packaging
10
shall be subject to Exogen's consent, which shall not be unreasonably withheld.
(d) During the term of the agreements to be executed pursuant
to this Agreement and for one year following the termination or expiration of
the last of such agreements, S&N shall not solicit any employee of Exogen or its
Affiliates. Notwithstanding the foregoing, S&N shall not be in breach of this
covenant if S&N (i) makes solicitation for employment by general advertisement
in periodicals of broad distribution; or (ii) hires any such person if at the
time such person responds to such solicitation, such person has terminated his
or her employment with Exogen or its Affiliate, voluntarily or involuntarily,
and S&N has not otherwise solicited such person; or (iii) Exogen is in default
under any of the agreements executed pursuant to this Agreement and such person
provides a service reasonably necessary for S&N to satisfy the obligations of
S&N or Exogen thereunder.
(e) Except as set forth below, S&N shall not enter into or
assume any distribution or sales representative agreement with any other person
or entity pursuant to which S&N distributes or sells "Competing Products" (as
defined below) in the United States or in any other country as to which S&N has
distribution or sales representative rights. "Competing Products" shall mean
non-invasive low intensity ultrasonic or electrical products for the treatment
of bone fractures, osteotomies, arthrodeses (other than spine fusions) and
distractive osteogenesis. Notwithstanding anything contained herein to the
contrary, S&N shall be permitted to acquire, through merger, consolidation, or
asset acquisition an entity, assets or business which distributes or sells
Competing Products in the United States or such other country or countries if
such acquisition is part of an acquisition which includes products other than
the Competitive Products ("Competitive Acquisition"). S&N shall provide Exogen
with written notice of any Competitive Acquisition no later than the date on
which such Competitive Acquisition is consummated and the parties shall discuss
the impact of the Competitive Acquisition on this Agreement, if any, and any
amendment that could be made to this Agreement in order to accommodate the
Competitive Acquisition. No later than 30 days following receipt of such notice,
Exogen shall elect by written notice to S&N to either (i) continue this
Agreement without amendment; (ii) continue this Agreement with amendment in
accordance with the discussions referred to above; or (iii) terminate this
Agreement, in any of which cases, subject to any amendment under clause (ii),
S&N shall be permitted to sell and distribute the Competitive Products. If
Exogen elects the option set forth in clause (ii) above, then the parties shall
negotiate in good faith for a period of 30 days with respect to such amendment.
If Exogen elects the option set forth in clause (iii) above, then Exogen will
pay S&N [****] if Exogen makes such
-------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.
11
election prior to the first anniversary of this Agreement; [****] if Exogen
makes such election prior to the second anniversary of this Agreement; [****] if
Exogen makes such election prior to the third anniversary of this Agreement;
[****] if Exogen makes such election prior to the fourth anniversary of this
Agreement; or [****] if Exogen makes such election anytime after the fourth
anniversary of this Agreement. Upon receipt of payment S&N shall, if requested
by Exogen, assign to Exogen all agreements relating to the Products with its
distributors. In addition, S&N will allow Exogen to offer employment to all
Transferred Employees (as defined in the U.S. Sales Representative Agreement)
who remain employed by S&N and shall cooperate with Exogen in the transfer of
any such individuals who accept re-employment with Exogen. Provided, however,
S&N shall not be liable or responsible if Transferred Employees do not wish to
be re-employed by Exogen or elect to remain employees of S&N. If Exogen elects
the option set forth in clause (ii) above and the parties are unable to agree
upon an amendment to this Agreement within the 30 day period, Exogen may elect
between the options set forth in clauses (i) and (iii). If Exogen fails to
provide notice of its election of the options set forth in this Section or in
the preceding sentence, then Exogen shall be deemed to have elected the option
contained in clause (i). Nothing contained herein shall limit or prohibit S&N
from acquiring or owning directly or indirectly not in excess of 10% of the
equity of an entity that is engaged in the manufacture, sale or distribution of
a Competitive Product.
SECTION 10. Representations and Warranties of Exogen.
In addition to the representations and warranties made on the
Initial Closing Date by Exogen in the Purchase Agreement and the U.S. Sales
Representative Agreement, Exogen represents and warrants to S&N as follows:
10.1 Power and Authority. Exogen has all requisite power and
authority to enter into and carry out the transactions contemplated by this
Agreement. All corporate action on the part of Exogen, its officers, directors
and shareholders necessary for the authorization, execution and delivery of this
Agreement and the performance of all obligations of Exogen hereunder has been
taken, and this Agreement constitutes the valid and legally binding obligation
of Exogen, enforceable against Exogen in accordance with its terms, except (i)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors' rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies, and (iii) to the
extent the indemnification provisions contained in the Registration Rights
Agreement may be limited by applicable federal or state securities laws.
10.2 Valid Issuance of Exogen Common Stock. The Exogen Common
Stock being purchased by S&N pursuant to Section 1 or which may be purchased by
S&N upon
-------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.
12
exercise of the Option, when issued, sold and delivered in accordance with the
terms hereof for the consideration expressed herein, will be duly and validly
issued and outstanding, fully paid and nonassessable with no personal liability
attaching to the ownership thereof, free and clear of any Encumbrances (as
defined in the Purchase Agreement), other than Encumbrances, if any, arising as
a result of actions taken by S&N, and not subject to preemptive or similar
rights of stockholders of Exogen or others.
10.3 Consents. Except as disclosed on Schedule 9 hereto and
for any notifications or filings as may be required under applicable federal or
state securities laws, if any, which shall be made on a timely basis, no
consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any person (governmental or private) on
the part of Exogen or its Subsidiary (as defined in the Purchase Agreement) is
required in connection with the consummation of the transactions contemplated by
this Agreement.
10.4 Compliance with Other Instruments. The execution,
delivery and performance of this Agreement by Exogen and the consummation of the
transactions contemplated hereby will not (x) result in any violation of or be
in conflict with or constitute, with or without the passage of time and giving
of notice, either a default under any provisions of its Second Amended and
Restated Certificate of Incorporation or Amended and Restated Bylaws, any
provisions of any instrument, judgment, order, writ, decree or contract to which
it is a party or by which it is bound, or to the best knowledge of Exogen, of
any provision of domestic (federal, state or local) or foreign law, statute,
rule or regulation applicable to Exogen or the Subsidiary, or (y) result in the
creation of any lien, charge or Encumbrance upon any assets of Exogen or its
Subsidiary or the suspension, revocation, impairment, forfeiture, or nonrenewal
of any material permit, license, authorization, or approval applicable to Exogen
or its Subsidiary, their business or operations or any of their assets or
properties.
10.5 ISO 9000 and CE Xxxx of Approval. Exogen warrants and
represents to S&N that the SAFHS 2000 device complies with International
Standards Organization ("ISO") Certification 9003 and the Medical Device
Directive and received the CE Xxxx of Approval on March 24, 1998, and that such
certification and approval will be maintained in full force and effect at
Exogen's expense. Exogen shall use its diligent efforts to obtain and maintain
ISO 9000 certification and the CE Xxxx of Approval for the SAFHS 3000 device at
Exogen's expense.
10.6 Millenium Compliance. Exogen represents and warrants that
the Products will process dates correctly before, on and after January 1, 2000,
such that the features and performance of the Products will be unaffected by the
transition from the twentieth century to the twenty first century; provided,
however, that the Products are used in accordance with
13
written instructions.
SECTION 11. Representations and Warranties of S&N.
In addition to the representations and warranties made on the
Initial Closing Date by S&N in the Purchase Agreement and the U.S. Sales
Representative Agreement, S&N represents and warrants to Exogen as follows:
11.1 Power and Authority. S&N has all requisite power and
authority to enter into and carry out the transactions contemplated by this
Agreement. All corporate action on the part of S&N, its officers, directors and
shareholder necessary for the authorization, execution and delivery of this
Agreement and the performance of all obligations of S&N hereunder has been
taken, and this Agreement constitutes the valid and legally binding obligation
of S&N, enforceable against S&N in accordance with its terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors' rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies, and (iii) to the
extent the indemnification provisions contained in the Registration Rights
Agreement may be limited by applicable federal or state securities laws.
11.2 Consents. Except as disclosed on Schedule 9 hereto and
for any notifications or filings as may be required under applicable federal or
state securities laws, if any, which shall be made on a timely basis, no
consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any person (governmental or private) on
the part of S&N is required in connection with the consummation of the
transactions contemplated by this Agreement.
11.3 Compliance with Other Instruments. The execution,
delivery and performance of this Agreement by S&N and the consummation of the
transactions contemplated hereby will not result in any violation of or be in
conflict with or constitute, with or without the passage of time and giving of
notice, either a default under any provisions of its Certificate of
Incorporation or Bylaws, any provisions of any instrument, judgment, order,
writ, decree or contract to which it is a party or by which it is bound, or to
the best knowledge of S&N, of any provision of domestic (federal, state or
local) or foreign law, statute, rule or regulation applicable to S&N.
SECTION 12. Miscellaneous.
12.1 Survival of Warranties. The warranties, representations
and covenants of Exogen and S&N contained in or made pursuant to this Agreement
shall survive the execution and delivery of this Agreement and shall in no way
be affected by any investigation of the subject matter thereof made by or on
behalf of S&N or Exogen.
12.2 Deductible. "Losses" means any and all losses, costs,
obligations, liabilities, settlement payments, awards, judgments, fines,
penalties, damages, expenses, deficiencies and other charges. "Expenses" means
any and all reasonable expenses incurred in
14
connection with investigating, defending, or asserting any claim, action, suit
or proceeding incident to any matter indemnified against hereunder (including,
without limitation, court filing fees, court costs, arbitration fees or costs,
witness fees, and reasonable fees and disbursements of legal counsel. No payment
under Section 8(e) or 9(b) with respect to any Losses as a result of a breach of
a representation or warranty under this Agreement or any other agreement
contemplated hereby shall be payable until the time such Losses incurred by an
indemnitee shall aggregate more than $30,000 (the "Deductible"), and then only
to the extent that such Losses, in the aggregate for the indemnitee, exceed the
Deductible. For purposes of the preceding sentence, each of the representations
and warranties made by this Agreement and the agreement executed pursuant to
this Agreement shall be deemed to have been made without the inclusion of
limitations or qualifications as to materiality, such as the words "Material
Adverse Effect," "immaterial," "material" and "in all material respects" or
words of similar import.
12.3 Claim Notice. A party seeking indemnification under
Sections 8(e) and 9(b) shall, promptly upon becoming aware of the facts
indicating that a claim for indemnification may be warranted, give to the party
from whom indemnification is being sought a claim notice relating to such Loss
(a "Claim Notice"). Each Claim Notice shall specify the nature of the claim, the
applicable provisions of this Agreement or other instrument under which the
claim for indemnity arises, and, if possible, the amount or the estimated amount
thereof. No failure or delay in giving a Claim Notice (so long as the same is
given prior to expiration of the representation or warranty upon which the claim
is based) and no failure to include any specific information relating to the
claim (such as the amount or estimated amount thereof) or any reference to any
provision of this Agreement or other instrument under which the claim arises
shall affect the obligation of the party from whom indemnify is sought.
12.4 Remedies. In case any one or more of the covenants and/or
agreements set forth in this Agreement or any agreement contemplated by this
Agreement shall have been breached by any party hereto, S&N, with respect to a
breach by Exogen, and Exogen, with respect to a breach by S&N, may proceed to
protect and enforce its rights either by suit in equity and/or by action at law,
including, but not limited to, an action for damages as a result of any such
breach and/or, where appropriate, an action for specific performance of any such
covenant or agreement contained in such agreement.
12.5 Successors and Assigns. Except as otherwise provided
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors, permitted assigns, heirs and
personal representatives of the parties, except that neither party may assign
its rights and obligations under this Agreement to any person without the prior
written consent of the other party or in accordance with Section 7 of this
Agreement. Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.
15
12.6 Governing Law. This Agreement shall be governed and
construed under the laws of the State of Delaware without regard to the
principles of conflicts or choice of law.
12.7 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.8 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
12.9 Notices. Unless otherwise provided, any notice required
or permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery or confirmation of facsimile
transmission (with a copy to be sent in accordance with this Section) to the
party to be notified or upon deposit with the United States Post Office, by
registered or certified mail, postage prepaid and addressed to the party to be
notified at the address indicated for such party on the signature page hereof or
at such other address as such party may designate by ten (10) days' advance
written notice to the other party. In the case of notices to be sent to S&N, a
copy shall also be delivered to: Xxxxx & Nephew, Inc., 0000 Xxxxxx Xxxx,
Xxxxxxx, Xxxxxxxxx 00000, Attention General Counsel, Facsimile Number
000-000-0000. In the case of notices to be sent to Exogen, a copy shall also be
delivered to Xxxxxxx, Xxxxxxx & Xxxxxxxx, LLP, 0000 Xxxxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention Xxxxx X. Xxxxxxxxx, Esquire.
12.10 Attorneys' Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
12.11 Amendments and Waivers. No term of this Agreement may be
amended, discharged or terminated and the observance of any term of this
Agreement may not be waived (either generally or in a particular instance and
either retroactively or prospectively), without the prior written consent of the
parties. No waiver of any of the provisions of this Agreement shall be deemed to
or shall constitute a waiver of any other provision hereof (whether or not
similar). No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof.
12.12 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
12.13 Entire Agreement. This Agreement and the documents
referred to herein constitute the entire agreement between the parties and no
party shall be liable or bound to the
16
other party in any manner by any warranties, representations, or covenants
except as specifically set forth herein or therein.
12.14 Press Releases and Announcements. Each of the parties
hereto agrees that it will not issue any press release or announcement relating
to the subject matter of this Agreement without the prior written approval of
the other parties; provided, however, that any party may make any public
disclosure it believes in good faith is required by law, stock exchange rules or
regulation (in which case the disclosing party shall advise the other party,
provide it with a copy of the proposed disclosure prior to making the
disclosure, and use reasonable efforts to agree upon the text of such press
release, before issuing any such press release).
12.15 Arbitration. Any dispute concerning this Agreement and
any agreement contemplated hereunder (except the U.S. Sales Representative
Agreement) shall be submitted to a panel of three arbitrators. Each party shall
appoint one arbitrator and the two arbitrators shall appoint a third arbitrator.
The arbitration proceedings shall be conducted in accordance with the then
current Rules for Large, Complex Disputes of the American Arbitration
Association, or in accordance with such other rules or procedures as the
Arbitrator may specify. The arbitration shall take place in Wilmington,
Delaware. Each party will bear its own arbitration expenses plus one-half of the
arbitrators' fee. This arbitration shall be non-binding.
17
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
EXOGEN, INC.
By: /s/ Xxxxxxx X. XxXxxxxx
---------------------------
Name: Xxxxxxx X. XxXxxxxx
Title: President and Chief Executive Officer
Address: 00 Xxxxxxxxxxxx Xxx.
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000
Facsimile Number: 000-000-0000
XXXXX & NEPHEW, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
Orthopaedic Division
Address: 0000 Xxxxxx Xxxx
Xxxxxxx, XX 00000
Facsimile Number: 000-000-0000
[SIGNATURE PAGE TO MASTER AGREEMENT]
18
SCHEDULE 5
TERMS AND CONDITIONS OF
U.S. STOCKING DISTRIBUTION AGREEMENT
General: S&N to have exclusive rights in the United States
for the sale, promotion and marketing of Products
(as defined in the U.S. Sales Representative
Agreement).
Term of Agreement: From execution and delivery until July 30, 2008,
unless terminated earlier pursuant to termination
rights. S&N to have the option to renew for
consecutive three-year terms on mutually
acceptable terms and conditions. If terms and
conditions of first renewal term not agreed to,
then the agreement shall be renewed for one five
year period on a non-exclusive basis with no
Minimum Number of Orders requirements (as defined
in the U.S. Sales Representative Agreement).
Termination rights: Material default by other party not cured within
60 days after notice.
Exogen's responsibilities: Manufacturing, shipment FOB New Jersey to S&N,
product training to S&N's sales personnel, product
warranty work at Exogen's expense, provision of up
to 100 demonstration units annually at standard
manufacturing cost plus 25%, maintenance of U.S.
regulatory approvals, CE xxxx, quality
registrations and U.S. intellectual property
rights in good standing.
S&N's Sales, marketing, promotion and distribution. S&N
responsibilities: to be responsible for [****]. S&N to provide
reasonable follow-up contact with physicians and
patients. Minimum Number of Units requirements to
be negotiated in good faith. S&N to pay for
Products within 30 days of shipment.
-------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.
i
Transfer prices: Transfer prices to be established for first 4
years as set forth on the following chart based on
average selling price of [****] provided that
transfer prices to be renegotiated during such
4-year period in good faith if the average selling
prices increases or decreases by more than 15%.
See following table:
Year 1 Year 2 Year 3 Year 4
------ ------ ------ ------
Annual Sale Price [*****] [*****] [*****] [*****]
Manufacturing Cost [*****] [*****] [*****] [*****]
Transfer Price [*****] [*****] [*****] [*****]
Other terms: Parties to explore in good xxxxx xxxx fide
opportunities for joint manufacturing (provided
such opportunity does not result in material
adverse financial consequences to either party).
If parties agree to such an arrangement, parties
to share equally any manufacturing costs savings
that are achieved.
-------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.
ii
SCHEDULE 6A
TERMS AND CONDITIONS OF
GLOBAL STOCKING DISTRIBUTION AGREEMENT
General: S&N to have exclusive distribution rights (subject
to the provisions of Section 6(a)(i) of this
Agreement) for the sale, promotion and marketing
of Products in all countries other than Japan and
with respect to China, Korea and Taiwan, subject
to Teijin Limited's distribution rights pursuant
to an undated one page letter from Exogen to
Teijin ("Letter Agreement").Upon written notice
from S&N of its intention to exercise its
distribution rights in one or more of China, Korea
and Taiwan (subject only to Teijin's rights under
the Letter Agreement, Exogen will notify Teijin
Limited and commence negotiations with respect to
such designated country or pursuant to the Letter
Agreement. If Teijin and Exogen do not enter into
an agreement covering the specified country or
countries within the specified time period, Exogen
shall so notify S&N and S&N shall be deemed to
have exercised its option with respect to these
countries.
Term of Agreement: From execution and delivery until July 30, 2008,
unless terminated earlier pursuant to termination
rights. S&N to have option to renew for
consecutive three-year terms on mutually
acceptable terms and conditions. If terms and
conditions of the first renewal term are not
agreed to, then the agreement shall be renewed for
one five years period on a non-exclusive basis
with no Minimum Number of Orders requirements.
Termination rights: Material default by other party not cured within
60 days after notice.
Exogen's Manufacturing, shipment FOB New Jersey to S&N,
responsibilities: product training to S&N's sales personnel, product
warranty work at Exogen's expense, provision of up
to 100 demonstration units annually at standard
manufacturing cost plus 25%, maintenance of
regulatory approvals, CE xxxx, quality
registrations and
iii
intellectual property rights in good standing,
except as S&N may be responsible in accordance
with the next succeeding paragraph.
S&N's Sales, marketing, promotion and distribution.
responsibilities: Minimum Number of Units requirements to be
negotiated in good faith for the first two (2)
years of the term and shall be negotiated in good
faith at least six months prior to each year
thereafter. The Minimum Number of Units
requirement shall be determined based upon
relevant criteria on a country-by-country basis or
on a multiple country basis including: the number
of orthopaedic surgeons; the number of fractures;
population; reimbursement; regulatory approvals
and status; and S&N experience with trauma
products. Use diligent efforts to obtain and
maintain, at S&N's expense, import, regulatory and
reimbursement approvals in any country (other than
France, Germany and Holland) where S&N wishes to
commence distribution. S&N to pay for Products
within the time period to be negotiated in good
faith (principally based on the expected
reimbursement cycle) on a country by country basis
or on a multiple country basis, depending upon the
arrangement. S&N to be responsible for
pre-certifying, arranging shipping, invoicing and
making collections from patients and/or their
insurers. S&N to provide reasonable follow-up
contact with physicians and patients.
Transfer prices: To be negotiated in good faith on a
country-by-country basis or on a multiple country
basis, prices to be established for the first
three years based on an estimated average selling
price and manufacturing cost (taking into account
the projected market size, reimbursement levels,
competition and other relevant factors) and to be
renegotiated in good faith during such three-year
period if the average selling price increases or
decreases by more than 15%. All payments will be
made in U.S. Dollars.
Other terms: Parties to explore in good xxxxx xxxx fide
opportunities for joint manufacturing (provided
such opportunity does not result in material
adverse financial consequences to either party).
If parties agree to such an arrangement, parties
to share equally any manufacturing costs savings
that are achieved.
iv
SCHEDULE 6B
TERMS AND CONDITIONS OF
INDIVIDUAL COUNTRY STOCKING DISTRIBUTION AGREEMENT
(PRIOR TO EXERCISE OF GLOBAL DISTRIBUTION OPTION)
General: S&N to have exclusive distribution rights for the
sale, promotion and marketing of Products in the
country, subject to rights of Teijin Limited
described in Schedule 6A.
Term of Agreement: From execution and delivery until July 30, 2008,
unless terminated earlier pursuant to termination
rights. S&N to have option to renew for
consecutive three-year terms on mutually
acceptable terms and conditions. If terms and
conditions of the first renewal term are not
agreed to, then the agreement shall be renewed for
one five years period on a non-exclusive basis
with no Minimum Number of Orders requirements.
Termination rights: Material default by other party not cured within
60 days after notice.
Exogen's Manufacturing, shipment FOB New Jersey to S&N,
responsibilities: product training to S&N's sales personnel, product
warranty work at Exogen's expense, provision of up
to 100 demonstration units annually at standard
manufacturing cost plus 25%, maintenance of U.S.
regulatory approvals, CE xxxx, quality
registrations and intellectual property rights in
good standing, except as S&N may be responsible in
accordance with the next succeeding paragraph.
S&N's Sales, marketing, promotion and distribution.
responsibilities: Minimum Number of Units requirements to be
negotiated in good faith for the first two (2)
years of the term and shall be negotiated in good
faith at least six months prior to each year
thereafter. The Minimum Number of Units
requirement shall be determined based upon
relevant criteria on a country-by-country basis or
on a multiple country basis including: the number
of orthopaedic surgeons; the number of fractures;
population; reimbursement; regulatory approvals
and status; and S&N experience with trauma
products. Use diligent efforts to obtain and
maintain, at S&N's expense, import, regulatory and
reimbursement approvals in any country (other than
U.S., France, Germany and
v
Holland) where S&N wishes to commence
distribution. S&N to pay for Products within the
time period to be negotiated in good faith on a
country-by-country basis or on a multiple country
basis, depending on the distribution arrangement.
S&N to be responsible for pre-certifying,
arranging shipping, invoicing and making
collections from patients and/or their insurers.
S&N to provide reasonable follow-up contact with
physicians and patients.
Transfer prices: To be negotiated in good faith; prices to be
established for the first three years based on an
estimated average selling price and manufacturing
cost (taking into account the projected market
size, reimbursement levels, competition and other
relevant factors) and to be renegotiated in good
faith if the average selling prices increase or
decrease by more than 15% during such three-year
period. All payments will be made in U.S. Dollars.
vi
SCHEDULE 7
TERMS AND CONDITIONS TO SERVE AS THE
BASIS FOR GOOD FAITH NEGOTIATIONS
Any such agreement that involves the formation of a joint venture would
contemplate (i) administration of the joint venture by a board consisting of an
equal number of representatives of S&N and Exogen, (ii) contribution by Exogen
of such technology, infrastructure and licenses as shall be agreed upon, (iii)
contribution by S&N of such cash and regulatory support as shall be agreed upon,
and (iv) S&N to be exclusive distributor on a transfer price arrangement or on
the basis of sharing total profits/losses (after interest on distributorship
capital employed).
vii
SCHEDULE 8
U.S. AND FOREIGN PATENTS,
TRADEMARKS AND APPLICATIONS
(L) indicates license
PATENTS
Index No. Number Country Status Issued (Filing) Inventor(s) Description
------------------------------------------------------------------------------------------------------------------------
Xxxxxxxxxx
0* 0000000 XXX Issued 7/23/85 Xxxxxx Method for Healing Bone
Fractures by Ultrasound
2 5003965 / USA Issued 4/2/91 Talish / Medical Device for Ultrasonic
8042 Lifshey Treatment of Living Tissue
and/or Cells
2A 1328485 / Canada Issued Talish / Medical Device for Ultrasonic
8042 Lifshey Treatment of Living Tissue
and/or Cells
3 5186162 / USA Issued 2/16/93 Talish / Ultrasonic Transducer Device
0089 Lifshey for Treatment of Living
Tissues and/or Cells
4 5211160 / USA Issued 5/18/93 Talish / Ultrasound Orthopaedic
0090 Lifshey Treatment Head and Body -
Mounting Means Therefor
5 5520612 / USA Issued 5/28/96 Winder / Acoustic System for Bone
4031 Talish / Ryaby Fracture Xxxxxxx
0X Xxxxx # Xxxxx Published 12/17/96 Winder / Acoustic System for Bone
8-332209 Talish / Ryaby Fracture Therapy
601-11J
(Cross
Reference:
Section 28)
5B 080390 4031 Taiwan Issued 8/11/96 Winder / Acoustic System for Bone
Talish et al Fracture Therapy
6 5556372 / USA Issued 9/17/96 Talish / Apparatus for Ultrasonic Bone
601-8 Ryaby et al Treatment (SAFHS 2000(R))
-------------
* Patent Term Extension under 35 USC#156:Filed 12/5/94; Extension received
5/31/96; term extension --5 years to 11/12/2007.
vii
6B Pub. EPO Published 12/03/97 Talish / Apparatus for Ultrasonic Bone
#0-000-000 Ryaby et al Treatment (SAFHS 2000(R))
000-0 XXX/XXX
0X Xxxxx Xxxxx Published 9/17/96 Talish / Acoustic System for Bone
#8-238284 Ryaby et al Fracture Therapy
000-0 Xxxxx
0 0000000 / XXX Issued 5/6/97 Ryaby / Gel Containment Structure
601-4 Talish /
XxXxxx
0 0000000 XXX Issued 5/26/98 Talish / Locator Method & Apparatus
601-3FWC Lifshey
8B Pub. EPO Published 12/12/97 Talish / Locator Method & Apparatus
#0-000-000 Lifshey
601-3 PCT/EPO
8D PCT/US95-1 China Published 3/14/98 Talish / Locator Method & Apparatus
96742.I #CN-1175195A Lifshey
601-3
PCT/China
9 5762616 601-7 USA Issued 6/9/98 Talish Apparatus for Ultrasonic
Treatment of Sites
Corresponding to the Torso
9A PCT/US97 PCT Published 9/18/97 Talish Apparatus for Ultrasonic
WO97 / 33649 Treatment of Sites
601-7 PCT Corresponding to the Torso
11 D380440 601-9 USA Issued 7/1/97 Talish / Ultrasonic Transducer Housing
Ryaby / (Design Patent)
Urgovitch
11A Reg. # Japan Registered 8/29/97 Talish / Ultrasonic Transducer Housing
998899 601-9J Urgovitch / (Japanese Design Patent)
Scowen / Ryaby
12* 5730705 USA Issued 3/24/98 Talish / Ultrasonic Treatment for Bony
661905 601-13 Ryaby / Ingrowth
Xxxxxx / Bobyn
25A WO98 / 10729 PCT Published 3/19/98 Talish Cast Punch
601-19 PCT
------------
*Co-owned between Exogen, Inc. and inventors.
ix
00 Xxxxx Xxxxx Published (10/28/97) Winder / Acoustic System for Bone
#9-276352 Talish / Ryaby Fracture Therapy
000-00 XXX
Xxxxx
(Cross-reference:
Section 5A)
Mechanical Strain
2 (L) 5273028 / USA Issued 12/28/93 XxXxxx / Xxxxx Non-Invasive Means for
3009 In-Vivo Bone Growth
Stimulation
2A (L) 000000 Xxxxxx Issued 5/23/93 XxXxxx / Xxxxx Non-Invasive Means for
0000-000 Xx-Xxxx Xxxx Xxxxxx
Xxxxxxxxxxx
0X (X) 000000 Xxxxxxxxx Issued 5/26/93 XxXxxx / Xxxxx Non-Invasive Means for
2030/3009 In-Vivo Bone Growth
Stimulation
3 (L) 5376065 3018 USA Issued 12/27/94 XxXxxx / Xxxxx Non-Invasive Method for
In-Vivo Bone Growth
Stimulation
4 (L) 5103806 2025A USA Issued 4/14/92 XxXxxx / Xxxxx Method for the Promotion of
Growth, Ingrowth & Healing of
Bone Tissue & Prevention of
Osteopenia by Mechanical
Loading of the Bone Tissue
5 (L) 5191880 2025B USA Issued 3/9/93 XxXxxx / Xxxxx Method for the Promotion of
Growth, Ingrowth & Healing of
Bone Tissue & Prevention of
Osteopenia by Mechanical
Loading of the Bone Tissue
Other
1 (L) 4993413/ USA Issued 2/19/91 XxXxxx / Electromagnetic: Method and
2032 Xxxxx Apparatus for Inducing a
Current and Voltage in Living
Tissue
2 4719907 USA Issued 1/19/88 Xxxxx Orthopedic Pin Placement Guide
3.0-001
x
PATENT APPLICATIONS
Index No. Number Country Status Issued (Filing) Inventor(s) Description
Date
[****]
TRADEMARKS
Index No. Number Country Status Issued (Filing) Trademark
Date
1 650974 10.1-002 USA Registered 00/0/00 XXXXX(X)
0X 0-000000 / Xxxxx Listed (10/31/95) SAFHS(R)
10.1-002J
1B 548993 / Canada Registered 4/10/92 SAFHS(R)
10.1-002C Mexico
2 74/530521 USA Registered 7/11/95 EXOGEN(R)
10.1-008
3 720034 / USA Registered 7/16/96 SAFHS 2000(R)
00.0-000
0X 0 / 000000 / Xxxxx Listed (10/30/95) SAFHS 2000(R)
10.1-009J
TRADEMARK APPLICATIONS
Index No. Number Country Status Issued (Filing) Xxxxxxxxx
Xxxx
0X 0-000000 / Xxxxx Pending (10/30/95) EXOGEN(R)
10.1-011J
3A 7 / 111521 / Mexico Pending (10/30/95) SAFHS 2000(R)
10.1-009J Canada Pending
4 317,761 Exogen USA Pending (7/1/97) EXOGEN 2000(TM)
10.-007
------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.
xi
SCHEDULE 9
CURRENT INTERNATIONAL ARRANGEMENTS
Note on termination rights/notice periods
Rights to terminate and the notice periods for termination of sales
representative, distribution, marketing and consulting arrangements are subject
to applicable laws and regulations. This Schedule 9 summarizes the notice
periods Exogen believes are due under applicable local laws as they exist as of
the Initial Closing Date. The laws of many countries require that notice periods
be extended depending on the duration of the sales representative, distribution,
marketing or consulting arrangements. Thus the termination rights and notice
periods stated below may change due to the continued duration of such
arrangements and/or changes in applicable laws and regulations.
[****]
------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.
xii
SCHEDULE 10
REQUIRED CONSENTS
None
xiii
