EXHIBIT 10.2
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT (the "AGREEMENT") is made and entered
into as of January 5, 2000 (the "EFFECTIVE DATE"), between MACROPORE, INC.
("MACROPORE"), a Delaware corporation, and MEDTRONIC, INC. (as defined below,
"MEDTRONIC"), a Minnesota corporation.
WITNESSETH:
WHEREAS, MacroPore has developed bioabsorbable surgical implants for
use in, among other areas, bone fixation and reconstruction in the
craniofacial skeleton; and
WHEREAS, MacroPore and Medtronic's Affiliate, Medtronic Asset
Management, Inc. ("MAMI"), intend to enter into a Series D Preferred Stock
Purchase Agreement (the "INVESTMENT AGREEMENT") pursuant to which MAMI will
purchase Series D Preferred Stock of MacroPore and receive various rights; and
WHEREAS, it is a condition to MAMI's willingness to purchase such
MacroPore Series D Preferred Stock that the parties enter into this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained herein, and for other valuable consideration,
the receipt and adequacy of which is hereby acknowledged, the parties mutually
agree as follows:
ARTICLE 1
DEFINITIONS
1.1 SPECIFIC DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings set forth or as referenced below:
"AFFILIATE" of a specified person (natural or juridical) means a person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the person specified.
"CONTROL" shall mean ownership of more than 50% of the shares of stock
entitled to vote for the election of directors in the case of a corporation,
and more than 50% of the voting power in the case of a business entity other
than a corporation.
"AGREEMENT" means this Agreement and all Exhibits and Schedules hereto.
"CONFIDENTIAL INFORMATION" means know-how, trade secrets, and unpublished
information disclosed (whether before or during the term of this Agreement)
by one of the parties (the "disclosing party") to the other party or such
other party's designee pursuant to Section 13.5 (the "receiving party"), and
which is marked as proprietary or confidential as provided below, excluding
information that:
(a) was already in the possession of receiving party prior to
its receipt from the disclosing party (provided that the receiving
party is able to provide the disclosing party with reasonable
documentary proof thereof);
PORTIONS OF THIS EXHIBIT MARKED AS [***] HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SEC.
(b) is or becomes part of the public domain by reason of
acts not attributable to the receiving party;
(c) is or becomes available to receiving party from a source
other than the disclosing party which source, to the best of
receiving party's knowledge, has rightfully obtained such
information and has no obligation of nondisclosure or
confidentiality to the disclosing party with respect thereto;
(d) is made available by the disclosing party to a third party
unaffiliated with the disclosing party on an unrestricted basis;
(e) is independently developed by the receiving party
completely without reference to any Confidential Information of the
disclosing party, as evidenced by the receiving party's written
records; or
(f) has been or must be publicly disclosed by reason of legal,
accounting or regulatory requirements beyond the reasonable
control, and despite the reasonable efforts, of the receiving party.
All Confidential Information disclosed by one party to the other
under this Agreement shall be in writing and bear a legend "Proprietary,"
"Confidential" or words of similar import or, if disclosed in any manner
other than writing, shall be followed by confirmation that such information
is confidential by the disclosing party within 30 days.
Specific aspects or details of Confidential Information shall not be
deemed to be within the public domain merely because the aspects or details
of the Confidential Information is embraced by general disclosures in the
public domain. In addition, any combination of Confidential Information shall
not be considered in the public domain or in the prior possession of the
receiving party merely because individual elements thereof are in the public
domain or in the prior possession of the receiving party unless the
combination and its principles are in the public domain or in the prior
possession of the receiving party.
"CRANIAL FIELD" means the reconstruction or fixation of the cranial or facial
skeleton, including but not limited to cranial, cranial-facial, mid-facial
and mandibular applications.
"EXISTING DISTRIBUTION AGREEMENT" means: the Exclusive Sales Distribution
Agreement dated as of July 15, 1999, by and between MacroPore, Inc. and
Normed GmbH; the Exclusive Sales Agency Agreement dated as of July 15, 1999,
by and between MacroPore, Inc. and Medsource; and the Exclusive Sales
Distribution Agreement dated as of October 15, 1999, by and between
MacroPore, Inc. and Surgical Science Systems.
"FDA" means the United States Food and Drug Administration.
"FAILURE OF SUPPLY" means (i) MacroPore's failure, for any reason other than
Force Majeure, to deliver any Product ordered in accordance with the
provisions of Article 5 by the date scheduled for delivery thereof, including
but not limited to a failure to deliver Product which conforms to the
Specifications therefor, which failure is not cured within one month after
MacroPore is notified of such failure, or (ii) MacroPore's failure due to
Force Majeure to deliver any Product
2
ordered in accordance with the provisions of Article 5 by the date scheduled
for delivery thereof, including but not limited to a failure to deliver
Product which conforms to the Specifications therefor, which failure is not
cured within three months after MacroPore is notified of such failure.
"FORCE MAJEURE" means any event or condition, not existing as of the date of
this Agreement, not reasonably foreseeable as of such date and not reasonably
within the control of either party, which prevents in whole or in material
part the performance by one of the parties of its obligations hereunder, such
as an act of government, war or related actions, civil insurrection, riot,
sabotage, strike, epidemic, fire, flood, windstorm, and similar events.
"FOREIGN DEVICE REGULATORY AUTHORITIES" means foreign regulatory authorities,
the function and purpose of which include regulating the design, manufacture,
quality and/or sale of medical devices.
"INTELLECTUAL PROPERTY" means letters patent and patent applications;
trademarks, service marks and registrations thereof and applications
therefor; copyrights and copyright registrations and applications; mask works
and registrations thereof; all inventions, discoveries, ideas, technology,
know-how, trade secrets, data, information, processes, formulas, drawings and
designs, licenses, computer programs and software; and all amendments,
modifications, and improvements to any of the foregoing.
"KNOWLEDGE" means actual knowledge of a fact or the knowledge that such
person could reasonably be expected to have based on reasonable inquiry. The
"knowledge" of an entity shall include the knowledge of such entity's
employees.
"LICENSED INTELLECTUAL PROPERTY" means, with respect to a Failure of Supply
of a particular Product, all Intellectual Property used by MacroPore in
connection with the manufacture or sale of such Product at the time of such
Failure of Supply.
"MACROPORE" means MacroPore, Inc. and its Affiliates.
"MEDTRONIC" means Medtronic, Inc. and its Affiliates.
"NET SALES" of Products for purposes of Article 13 with respect to a
particular period means the amounts that Medtronic or any Affiliate of
Medtronic receives from third parties (eliminating transactions among
Affiliates of Medtronic and/or Medtronic) for net sales of Products during
such period, excluding sales, use or excise tax, freight, duty or insurance
included therein, returns, discounts and allowances, credits or repayments
due to rejections, defects or returns, provided that if Medtronic or any
Affiliate of Medtronic sells at a single price or rate a packaged combination
of products, not all of which if sold individually would be Products, then
"Net Sales" with respect to such sales of packaged products shall equal the
number of units of Products sold as part of such packaged products (less
rejections, defects and returns) multiplied by either (i) the respective
average net selling price during such period of the same type of Product sold
individually, or (ii) the average net selling price during such period for a
comparable product (if the same type of Product is not sold individually), in
either case excluding sales, use or excise tax, freight, duty or insurance
included therein.
3
"NON-CRANIAL FIELD" means uses outside of the Cranial Field.
"PRODUCTS" means all products, devices, systems and instruments now or
hereafter during the Term (as defined in Section 12.1) of this Agreement
developed, manufactured, produced or sold by MacroPore that may be used in
the Cranial Field, including but not limited to MacroPore's MacroSorb(TM)
product line, including all components thereof and accessories thereto, and
any modifications, improvements, substitutions and future generations of such
products made by or under the authority of MacroPore during the Term.
"PRODUCT LIABILITY DAMAGES" means any liability, claim or expense, including
but not limited to reasonable attorneys' fees and medical expenses, arising
in whole or in part out of claims of third parties for personal injury or
loss of or damage to property relating to or arising out of the Products,
whether based on strict liability in tort, negligent manufacture of product,
or any other allegation of liability arising directly from the design,
testing, manufacture, packaging, labeling (including instructions for use),
or sale of the Products.
"SPECIFICATIONS" means MacroPore's current specifications for the Products,
as the same may be amended from time to time by MacroPore in compliance with
this Agreement.
1.2 OTHER TERMS. Other terms may be defined elsewhere in the text of
this Agreement and shall have the meaning indicated throughout this Agreement.
1.3 DEFINITIONAL PROVISIONS.
(a) The words "hereof," "herein," and "hereunder" and words of
similar import, when used in this Agreement, shall refer to this
Agreement as a whole and not to any particular provisions of this
Agreement.
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) References to an "Exhibit" or to a "Schedule" are, unless
otherwise specified, to one of the Exhibits or Schedules attached
to or referenced in this Agreement, and references to an "Article"
or a "Section" are, unless otherwise specified, to one of the
Articles or Sections of this Agreement.
(d) The term "person" includes any individual, partnership,
joint venture, corporation, trust, unincorporated organization or
government or any department or agency thereof.
(e) The term "dollars" or "$" shall refer to the currency of
the United States of America.
(f) All references to time shall refer to Minneapolis,
Minnesota time.
4
ARTICLE 2
APPOINTMENT; ADDITIONAL RIGHTS OF FIRST OFFER
2.1 SCOPE. Subject to the terms and conditions of this Agreement,
MacroPore hereby appoints Medtronic, and Medtronic hereby accepts
appointment, as MacroPore's exclusive worldwide distributor during the Term
with the right to sell and distribute Products solely for use in the Cranial
Field. Except as provided in Section 2.5, Medtronic shall not have any right
to distribute Products for use outside the Cranial Field.
2.2 PAYMENT FOR DISTRIBUTION RIGHTS. In consideration of Medtronic's
rights hereunder, Medtronic shall, within two business days after the date
hereof, pay MacroPore the sum of One Million Five Hundred Thousand Dollars
($1,500,000).
2.3 EXCLUSIVITY.
(a) Medtronic's distribution rights under this Agreement shall
be exclusive throughout the United States and, except for the
Existing Distribution Agreements throughout the world. MacroPore
represents and warrants to Medtronic that, except for the Existing
Distribution Agreements, MacroPore has not entered into any other
distributorship agreements or sales representative agreements,
written or oral, with any third party permitting the sale of Products
for use in the Cranial Field, and, to the extent it has entered into
such agreements in the past, that all such agreements have been
terminated without liability to MacroPore or Medtronic. MacroPore
covenants and agrees that during the Term, MacroPore will not enter
into any such agreement or itself sell or distribute any Products for
use in the Cranial Field. MacroPore will use its reasonable best
efforts to negotiate the termination of the Existing Distribution
Agreements or, if such termination is not commercially feasible, to
convert such existing distributors to sub-distributors of Medtronic.
(b) Except as set forth in Article 13, during the term of this
Agreement, Medtronic shall not purchase or resell any poly-lactic
acid implantable reconstruction or fixation products for use in the
Cranial Field (excluding however, applications in the nose, sinus or
ears) except those purchased from MacroPore hereunder.
2.4 SUBDISTRIBUTORS. Medtronic may appoint subdistributors for the
sale or distribution of Products for use in the Cranial Field; provided that
Medtronic gives MacroPore written notice of the identity of such
subdistributors, and uses commercially reasonable efforts to ensure that such
subdistributors comply with the applicable provisions of this Agreement.
Notwithstanding such appointment of subdistributors, Medtronic shall remain
fully responsible for the performance of all of its covenants and obligations
hereunder, and any shipments by MacroPore to such Medtronic subdistributors
shall be billed by MacroPore to Medtronic directly. Medtronic shall indemnify
and hold MacroPore harmless from and against any claim, loss, damage or
expense (including reasonable attorneys' fees) suffered or incurred by
MacroPore relating to any claim in connection with this Agreement that is
threatened or initiated by any subdistributor or sub-agent appointed by
Medtronic, except for claims for which Medtronic is entitled to
indemnification from MacroPore under Section 11.1.
5
2.5 RIGHT OF FIRST OFFER FOR DISTRIBUTION RIGHTS IN NON-CRANIAL FIELD.
(a) MacroPore shall not enter into any definitive agreement with
respect to the grant by MacroPore of distribution or sales representative
rights with respect to any MacroPore products, devices, systems and
instruments now or hereafter during the Term developed, manufactured,
produced or sold by MacroPore (such proposed grant of such rights referred to
as a "PROPOSED TRANSACTION") unless Medtronic is given MacroPore's Notice (as
defined below) with respect thereto and MacroPore complies with the terms of
this Section 2.5.
(b) If (i) MacroPore receives a bona fide offer or written
indication of interest from a third party to enter into a Proposed
Transaction which MacroPore is willing to accept, or (ii) MacroPore
determines to seek a third party to enter into a Proposed Transaction, then,
in either such event MacroPore shall, within ten (10) days after such event,
notify Medtronic in writing of MacroPore's receipt of such offer or
indication of interest described in (i) above or of MacroPore's determination
described in (ii) above ("MACROPORE'S NOTICE"). MacroPore's Notice shall
include a copy of such offer or indication of interest and any other terms of
such Proposed Transaction proposed by such third party, in the case of (i)
above, or all material terms and provisions upon which MacroPore proposes to
seek a third party to enter into a Proposed Transaction, in the case of (ii)
above. For a period of 45 days following Medtronic's receipt of MacroPore's
Notice with respect to such Proposed Transaction (referred to in this Section
2.5 as the "EXCLUSIVE PERIOD"), Medtronic shall have the exclusive right to
negotiate with MacroPore regarding the material terms of such Proposed
Transaction and, with respect to a Proposed Transaction initiated by
MacroPore pursuant to (ii) above, the irrevocable right and option to enter
into the Proposed Transaction on the terms and provisions specified in
MacroPore's Notice. In the event Medtronic proposes, in the course of
negotiation with MacroPore during the Exclusive Period, terms and provisions
more favorable to MacroPore than those contained in Medtronic's initial
proposal to MacroPore, then Medtronic shall memorialize such revised proposed
terms and provisions in writing prior to the end of the Exclusive Period.
(c) During the Exclusive Period, MacroPore shall negotiate in good
faith exclusively with Medtronic regarding the material terms of such
Proposed Transaction or any comparable transaction. During the Exclusive
Period, MacroPore shall not solicit offers from, negotiate with, or provide
information to any third party regarding the Proposed Transaction or any
comparable transaction. Nothing in this section shall prohibit MacroPore from
consulting with or providing information to its attorneys, accountants,
investment bankers or other consultants or advisors.
(d) If during the Exclusive Period MacroPore and Medtronic fail to
reach agreement in principal upon the material terms for such Proposed
Transaction and, in the event of a Proposed Transaction initiated by
MacroPore pursuant to (b)(ii) above, Medtronic fails to exercise its option
to enter into such Proposed Transaction, then MacroPore shall have 120 days
after the expiration of the Exclusive Period in which to complete such
Proposed Transaction with the third party whose bona fide offer or indication
of interest was described in MacroPore's Notice (with respect to a Proposed
6
Transaction described in (b)(i) above) or with any third party (with
respect to a Proposed Transaction described in (b)(ii) above); provided
that MacroPore may not complete such Proposed Transaction unless the
terms and provisions thereof are, in the aggregate, (with respect to a
Proposed Transaction described in (b)(i) above) more favorable to
MacroPore (as reasonably and in good faith determined by MacroPore's
Board of Directors) than the terms and provisions most favorable to
MacroPore that were proposed by Medtronic in its negotiations with
MacroPore, or (with respect to a Proposed Transaction described in
(b)(ii) above) at least as favorable to MacroPore as the terms and
provisions specified in MacroPore's Notice. If MacroPore fails to
complete such particular Proposed Transaction within such 120-day
period, then Medtronic's rights under this Section 2.5 shall be
reinstated and MacroPore may not enter into such Proposed Transaction
without first giving Medtronic a new MacroPore's Notice and complying
with the terms of this Section 2.5.
2.6 RESERVATION OF RIGHTS. Except as expressly provided herein, no
right, title, or interest is granted, whether express or implied by MacroPore
to Medtronic, and nothing in this Agreement shall be deemed to grant to
Medtronic rights in any products or technology other than the Products.
ARTICLE 3
GENERAL OBLIGATIONS OF MEDTRONIC
3.1 MARKETING AND DISTRIBUTION. Medtronic shall use reasonable best
efforts to further the promotion, marketing, sale and/or other distribution
of Products for use in the Cranial Field. Without limiting the generality of
the foregoing, Medtronic shall maintain adequate sales channels to market and
distribute the Products for use in the Cranial Field.
3.2 QUALITY CONTROL. Medtronic agrees to follow reasonable quality
control standards with respect to the storage, preservation, sale and use of
the Products purchased under this Agreement. Medtronic shall make no
representations or warranties concerning such Products other than as made to
Medtronic by MacroPore or as otherwise may be agreed by the parties.
3.3 SALES AND SERVICE; TRAINING. Medtronic shall be solely responsible
for marketing and selling all Products for use in the Cranial Field.
3.4 INVENTORY. Medtronic shall use commercially reasonable efforts to
maintain sufficient quantities of each Product as reasonably necessary to
meet the demand of customers for the Products in the Cranial Field.
3.5 MARKETING MATERIALS. Subject to Section 4.4, Medtronic shall be
responsible for the preparation of sales and marketing materials for the
marketing and sale of Products for use within the Cranial Field, including
the translation, adaptation and/or modification of MacroPore's sales and
marketing materials, as deemed appropriate by Medtronic, to reflect the
culture or business practices and languages of the particular regions and to
reflect Medtronic as the exclusive distributor of the Products for use in the
Cranial Field. Medtronic shall provide to MacroPore for purposes of review
and approval (such approval not to be unreasonably withheld
7
or delayed) all such sales and marketing materials relating to Products at
least ten (10) days prior to the commercial release of such materials.
3.6 RECORDS AND RECALL. Medtronic shall maintain complete and accurate
records of all Products sold by Medtronic and its subdistributors in
sufficient detail to enable MacroPore to conduct an effective recall of
Products if MacroPore determines that such a recall is required or otherwise
necessary or appropriate. Medtronic shall not initiate a recall of Products
without MacroPore's prior written consent, which consent shall not be
unreasonably withheld. In the event of a recall of any of the Products,
Medtronic will cooperate with and assist MacroPore in effecting such recall,
including promptly contacting any purchasers that MacroPore reasonably
desires to be contacted and promptly communicating to such purchasers the
information or instructions MacroPore reasonably desires to be transmitted
relating to such recall, all of which customer contact and communication
shall be conducted by Medtronic at its own expense. Notwithstanding the
foregoing, MacroPore shall pay, or reimburse Medtronic, for all other costs
of effecting such recall, including any shipping costs related to returning
recalled Products to MacroPore and replacing such recalled Products with new
Products at MacroPore's expense.
In addition, upon MacroPore's request, Medtronic shall provide MacroPore with
access to Medtronic's records of sales of Products in the event of Product
recall or other quality related issue. During the Term of this Agreement,
Medtronic also shall promptly forward all Product complaints which it
receives to MacroPore. Medtronic shall make available to MacroPore for
inspection Medtronic's process and records for adverse events and other
regulatory reporting purposes at mutually agreed upon time and further shall
ensure that Medtronic's processes comply with all applicable laws and
regulations.
3.7 IMPORT APPROVALS. Except for (i) the CE Xxxx, which MacroPore shall
be responsible for obtaining, and (ii) existing import licenses, which
MacroPore shall assign or transfer to Medtronic, Medtronic shall be
responsible for obtaining all import licenses and permits as may be required
to import the Products into countries as selected by Medtronic in accordance
with then prevailing laws and regulations of such countries. All such filings
and registrations of the Products shall be owned by Medtronic and shall be
obtained and maintained in the name of Medtronic, whenever feasible in
accordance with prevailing laws and regulations. MacroPore shall cooperate
fully with Medtronic in its efforts to obtain any such approvals.
3.8 EUROPEAN AUTHORIZED REPRESENTATIVE. Medtronic agrees to act as
MacroPore's European Authorized Representative as required by the Medical
Device Directive and as MacroPore's representative for Products for use
within the Cranial Field in the countries outside the European Common Market.
Medtronic shall, as soon as reasonably practicable, notify, document and
forward to MacroPore or MacroPore's authorized representative all customer
complaints received by Medtronic such that MacroPore can comply with Medical
Device Reporting (MDR) regulations and vigilance. Medtronic shall notify
Competent Authorities of clinical investigations as required, and shall
represent MacroPore if a Competent Authority decides to: (i) refuse to allow
the marketing of a Product in the Cranial Field, (ii) restrict the marketing
of Product in the Cranial Field, or (iii) withdraw a Product from the market
in the Cranial Field. Medtronic agrees to provide the competent authorities
and notified bodies with access to the table of contents for the Technical
File. In addition, Medtronic shall authorize
8
MacroPore to list Medtronic as the Authorized European Representative on
product labeling, outer packaging, and instructions for use.
ARTICLE 4
GENERAL OBLIGATIONS OF MACROPORE
4.1 MANUFACTURE AND SUPPLY OF PRODUCTS. MacroPore shall use commercially
reasonable efforts to manufacture, or have manufactured, Products in
accordance with the Specifications and to ship such Products to Medtronic in
the quantities ordered by Medtronic pursuant to Article 5 of this Agreement.
MacroPore shall be responsible for packaging in accordance with packaging
specifications to be mutually agreed upon by Medtronic and MacroPore, and for
any necessary sterilization of Products purchased under this Agreement in
accordance with the Specifications.
4.2 REGULATORY APPROVALS.
(a) CLINICALS. MacroPore shall be responsible for all clinical study
design, investigator selection, data analysis in connection with
clinical trials of the Products. Medtronic shall assist MacroPore in
such clinical study activities such as investigator selection, and such
other clinical matters as the parties may agree.
(b) DEVICE APPROVALS. MacroPore shall be responsible, on a timely
basis and at its expense, for filing, obtaining and maintaining
regulatory approvals in the Territory. To the extent permitted by law,
all foreign regulatory approvals, including those processed by
Medtronic, shall be owned by MacroPore and shall be in the name of
MacroPore. Except as otherwise required by law or agreed by the
parties, MacroPore will be responsible for the content of its own
labeling. In connection with obtaining Device Approvals, MacroPore
shall bear the expenses of meeting any applicable Product design and
manufacturing facility requirements applicable to its then current
manufacturing facility, and shall take all steps as are necessary to
meet the EMD Directive.
(c) EXPORT. MacroPore shall be responsible for obtaining all export
licenses and permits as may be required to export the Products from the
country of manufacture into the particular countries where such Products
are delivered. Medtronic shall cooperate fully with MacroPore in its
efforts to obtain any such approvals.
(d) GOOD MANUFACTURING PRACTICES/QUALITY SYSTEMS REGULATIONS.
MacroPore shall be responsible for compliance with present and future
applicable statutes, laws, ordinances and regulations of national,
federal, state and local governments now or hereafter in effect relating
to the design, manufacture and/or quality of Products. Without
limitation of the foregoing, MacroPore represents and warrants to
Medtronic that all Products sold and delivered to Medtronic under this
Agreement will have been designed, manufactured and labeled in
accordance with all applicable requirements. MacroPore shall cause
Medtronic's regulatory personnel to be provided with reasonable access
from time to time to the facilities and records of MacroPore for the
purpose of confirming MacroPore's compliance with this Section 4.2(d).
9
4.3 TRAINING. MacroPore at its expense will provide Medtronic with
surgical procedure manuals and a reasonable level of sales and technical
training for Medtronic's dedicated sales personnel for Products and other
appropriate Medtronic personnel. If requested by Medtronic, MacroPore at its
expense will also provide training for up to fifty (50) physicians per annum.
4.4 PRODUCT LITERATURE AND PACKAGING. MacroPore will work jointly with
Medtronic in the preparation of mutually acceptable Product packaging,
labeling and operations and technical manuals for use with the Products, and
will not unreasonably refuse to incorporate any changes thereto reasonably
requested by Medtronic. MacroPore at its expense shall provide Medtronic from
time to time as requested by Medtronic with a reasonable supply of Product
sales and marketing materials in the English language. Pursuant to Section
3.5, Medtronic shall be responsible for the translation, adaptation and/or
modification of MacroPore's sales and marketing materials as deemed
appropriate by Medtronic, and MacroPore shall supply any artwork or other
materials reasonably requested by Medtronic for use solely in connection
therewith.
4.5 SALES LEADS. MacroPore shall forward to Medtronic all leads for
sales of Products in the Cranial Field.
ARTICLE 5
ORDERS FOR PRODUCTS
5.1 PURCHASE ORDERS. Medtronic shall submit purchase orders for Products
to MacroPore in writing, whether by mail, telecopier, telegram or otherwise,
at the time that each forecast is delivered to MacroPore pursuant to Section
5.2. Each purchase order shall, at a minimum, set forth the product numbers,
quantities (subject to Section 5.3), delivery dates, and shipping
instructions and shipping addresses for all Products ordered. Each purchase
order shall be subject to and governed by the terms of this Agreement.
Purchase orders shall be binding upon MacroPore unless and to the extent the
quantities specified therein exceed the amounts specified in the Plan. No
partial shipment of an order shall constitute the acceptance of the entire
order, absent the written acceptance of such entire order. The terms and
conditions of this Agreement shall so govern and supersede any additional or
contrary terms set forth in Medtronic's purchase order or any MacroPore or
Medtronic acceptance, confirmation, invoice or other document unless duly
signed by an officer of Medtronic and an officer of MacroPore and expressly
stating and identifying which specific additional or contrary terms shall
supersede the terms and conditions of this Agreement. Upon the execution of
this Agreement, Medtronic will place a three-month purchase order for
deliveries in January, February and March 2000. Subsequently, Medtronic will
place orders for the next succeeding months on a monthly basis, at the time
that it provides its forecast described in Section 5.2, with all such
subsequent purchase orders submitted at least 60 days in advance of the
earliest scheduled delivery date for such order.
5.2 MEDTRONIC'S FORECASTS. At the time that Medtronic places its order
for the first month following the three months covered by the initial
purchase order, Medtronic shall provide MacroPore with a six-month sales plan
to be mutually agreed upon (but subject to Section 5.3 and Exhibit A)
indicating by month the number of Products anticipated to be sold by
Medtronic
10
or purchased by Medtronic for use as demonstration units (as updated as
provided herein, the "Plan") in the Territory. The Plan shall be updated by
Medtronic on a quarterly basis (on or before the first day of each subsequent
quarter) for a rolling successive six-month period. Each Plan shall be used
for purposes of facilitating Medtronic's marketing plans, MacroPore's
manufacturing plans, and meeting the lead times required by certain of
MacroPore's suppliers, but are not legally-binding on Medtronic or MacroPore
in any manner.
5.3 ORDER LIMITATIONS. During the first 12 months of the Term,
MacroPore shall maintain the ability to supply at least the "Guaranteed
Supply Quantities" specified on Exhibit A hereto. Except as provided in the
immediately proceeding sentence, MacroPore shall not be required to deliver
quantities in excess of 100% of forecasted requirements, provided, however,
that MacroPore shall use all commercially reasonable efforts to supply such
excess.
5.4 MODIFICATION OF ORDERS. Medtronic may cancel or reschedule purchase
orders for products only with MacroPore's prior written approval.
Notwithstanding the foregoing, any purchase order may be cancelled by
Medtronic as to any Products that are not delivered within 60 days after the
delivery date requested by Medtronic pursuant to a purchase order, and any
such cancellation shall not limit or affect any contract remedies available
to Medtronic with respect thereto. Any such cancellation by Medtronic must be
by written notice to MacroPore given within 10 business days after such 60th
day.
5.5 DELIVERY TERMS. Subject to MacroPore's obligations in Section 4.2
above, all deliveries of Products shall be F.O.B. MacroPore's facility in
California. Except as otherwise provided in Article 9 or Article 11 below,
MacroPore shall have no further responsibility for risk of damage to or loss
or delay of Products after their delivery at the aforesaid F.O.B point. All
Product deliveries shall be made by a common carrier specified by Medtronic
or, in the event that no carrier shall have been specified by Medtronic on or
before the date 15 days prior to the requested shipment date, a reputable
common carrier selected by MacroPore.
5.6 PRODUCT CHANGES. MacroPore shall not, without Medtronic's prior
written consent, modify the Specifications for a Product in a manner that
materially affects the performance or regulatory approval status of the
Product or materially increases Medtronic's costs or expenses. Subject to the
foregoing, MacroPore may modify the Specifications for the Product without
the consent of Medtronic, provided that MacroPore notifies Medtronic of such
modifications within 30 days. If such modifications affect the performance or
applicable regulatory approvals of the Product, Medtronic shall not be
obligated to purchase such altered Product.
5.7 CUSTOM PRODUCTS. In the event Medtronic is requested by a customer
to provide customized Products, Medtronic shall provide the specifications
for the customized Product to MacroPore. MacroPore will determine and provide
to Medtronic the additional cost, if any, and the feasibility of providing
the customized Product. Medtronic will thereafter notify MacroPore if it
intends to provide such customer with the customized Product.
5.8 REPORTS. Medtronic shall provide MacroPore, on a quarterly basis,
with reports reflecting Medtronic's sales of the Products (on a
product-by-product basis).
11
ARTICLE 6
MINIMUM PURCHASE QUOTA
6.1 DETERMINATION OF QUOTE. During the first 12-month period of the
Term, Medtronic shall submit purchase orders to purchase at least the minimum
amount set forth on Exhibit A (the "Quota"). By the end of each quarter of
such initial 12-month period, Medtronic shall have submitted purchase orders
for at least the cumulative percentage of the Quota set forth on Exhibit A.
6.2 REDUCTIONS IN QUOTA. Notwithstanding Section 6.1, the Quota for any
period shall be reduced (a) in the case of subpart (i) below by an amount
equal to 1.5 times the aggregate transfer price of Products not supplied by
MacroPore against purchase orders issued by Medtronic in accordance with
Article 5, (b) in the case of subpart (ii) below, by an amount equal to 1.5
times the aggregate transfer price of Products affected by such recall or
withdrawal, and (c) in the case of subpart (iii) below, by a pro rata amount
of the Quota for the applicable period based upon the number of days of such
period that have transpired prior to the removal of the restriction on sale
referenced in such subpart:
(i) If MacroPore materially and substantially fails for any
reason to deliver ordered Products by the date scheduled for
delivery thereof pursuant to purchase orders issued by Medtronic in
accordance with Article 5, including but not limited to a failure to
deliver Products that conform to the then current Specifications and
such failure is not cured within 30 days;
(ii) If a Product covered by this Agreement is recalled from
the market or withdrawn from sale for reasons of product safety or
quality as determined by any applicable governmental authority or by
the mutual agreement of the parties; or
(iii) If Medtronic is restricted in the sale of Products in a
market within the European Common Market that affects the CE Xxxx by
any applicable regulatory authority because approval to sell the
Product is pending, denied or revoked therein.
6.3 TERMINATION OF AGREEMENT. If Medtronic does not order at least the
applicable Quota, as it may be modified as provided herein, and does not
elect to make the Shortfall payment described below, MacroPore shall have the
right, at its option, to terminate this Agreement. Notice of MacroPore's
election to terminate this Agreement (the "Termination Notice") must be given
by MacroPore in writing within 30 days following the period for which
Medtronic has not satisfied the Quota, specifying the amount by which
Medtronic's purchases for such period were below the Quota (the "Shortfall").
If within 30 days after such Termination Notice Medtronic either (i) places
orders for the purchase of sufficient quantities of Products to make up the
Shortfall and agrees to pay for such Products within 10 days after shipment
thereof, or (ii) Medtronic pays MacroPore cash in the amount of 75% of the
Shortfall, then MacroPore's Termination Notice will be deemed to be
automatically withdrawn. If Medtronic pays MacroPore cash in the amount of
75% of the Shortfall, such payment shall be treated as a prepayment for
Products to be ordered by Medtronic in the future and shall be applied toward
the
12
purchase price of such future Product purchase orders as Medtronic directs.
Termination of this Agreement shall be MacroPore's sole and exclusive remedy
for any failure by Medtronic to purchase the applicable Quota.
ARTICLE 7
PRICES AND PAYMENTS
7.1 PRICES. Unless and until otherwise mutually agreed by the parties in
writing, the purchase prices per unit of Products to Medtronic under this
Agreement shall equal [***] of MacroPore's average selling price per unit for
such Product, excluding any sales, use or excise tax, freight duty or
insurance included therein, during the six-month period immediately prior to
the date of this Agreement (the "Transfer Price"). Separate Transfer Prices
will be established for sales in the United States and for each major
international market. If MacroPore's sales were inadequate for purposes of
establishing such average price, then the Transfer Price shall equal [***] of
Medtronic's average selling price per unit for such Products, excluding any
sales, use or excise tax, freight duty or insurance included therein, in such
market during the initial twelve-month period after commencement of
commercial sales of such Products in such market (the "Medtronic Pricing
Period"). If the Transfer Price is to be based on the Medtronic Pricing
Period, then during the Medtronic Pricing Period Medtronic shall pay
MacroPore [***] of Medtronic's published list price as the estimated Transfer
Price, and within 90 days after the end of the Medtronic Pricing Period,
Medtronic or MacroPore, respectively, shall pay the other party the aggregate
amount by which the estimated Transfer Price for Products purchased during
the Medtronic Pricing Period is less than, or more than, respectively, the
actual Transfer Price. Any prices referred to in any information provided to
Medtronic by MacroPore (other than the transfer Prices for Products) are
recommended prices only and Medtronic has no obligation to comply with any
such recommendations.
7.2 PAYMENT TERMS. Payments made by Medtronic for Products purchased
hereunder shall be due and payable in full within 30 days after the date of
invoice by MacroPore. Any payments due hereunder which are not paid on the
date such payments are due shall bear interest at the lesser of one and
one-half percent (1 1/2%) per month or the maximum rate permitted by law,
calculated on the number of days such payment is delinquent. This Section 7.2
shall in no way limit any other remedies available to MacroPore.
7.3 TAXES. The transfer prices for Products established pursuant to this
Article 7 do not include any sales, use, value added or similar taxes,
customs, duties, or tariffs imposed by any governmental authority or agency
on Products or any components thereof that are imported by Medtronic into any
country (other than taxes on the net income of MacroPore), and Medtronic
shall bear all such taxes and duties. MacroPore shall be required to take
appropriate steps to minimize imposition of such taxes by filing sales
exemption certificates and taking similar actions where applicable to the
seller. When MacroPore has the legal obligation to collect and/or pay such
taxes, the appropriate amount shall be added to Medtronic's invoice and paid
by Medtronic, unless Medtronic provides MacroPore with a valid tax exemption
certificate authorized by the appropriate taxing authority. Medtronic shall
not be obligated to pay or reimburse MacroPore for taxes that are not imposed
on the sale of Product to Medtronic.
PORTIONS OF THIS EXHIBIT MARKED AS [***] HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SEC.
13
ARTICLE 8
EMPLOYEES
8.1 OFFERS OF EMPLOYMENT. Medtronic shall have the right to interview
and offer employment to some or all of MacroPore's sales organization. Those
employees of MacroPore that accept such employment with Medtronic are
referred to herein as "Hired Employees." The employment of all Hired
Employees will be at will. Medtronic will set its own initial terms and
conditions of employment for Hired Employees and others it may hire,
including without limitation work rules, benefits and salary and wage
structure, all as permitted by law.
8.2 COBRA. MacroPore will be responsible for satisfying obligations
under Section 601 et seq. of ERISA and Section 4980B of the Code and any
applicable similar state laws, to provide continuation coverage to or with
respect to any MacroPore employee in accordance with law with respect to any
"qualifying event" occurring up to the date of hiring such employee by
Medtronic. Medtronic will be responsible for satisfying obligations under
Section 601 et seq. of ERISA and Section 4980B of the Code and any applicable
similar state laws, to provide continuation coverage to or with respect to
any Hired Employee in accordance with law with respect to any "qualifying
event" which occurs following the date of hire.
8.3 VACATION. Medtronic will assume all obligations to Hired Employees
for any vacation entitlement and vacation pay entitlement as of the date of
hire and MacroPore shall reimburse Medtronic for the amount of accrued
vacation assumed.
8.4 WORKERS' COMPENSATION. MacroPore shall be responsible for all
workers' compensation benefits, occupational diseases claims and employer
liability claims payable to MacroPore employees with respect to (i) claims
filed through the date such employee is hired by Medtronic and (ii) claims
filed after such date resulting from a discrete event or injury occurring
through such date. Medtronic shall be responsible for all workers'
compensation benefits, and employer liability claims payable to Hired
Employees with respect to a discrete event or injury occurring after the date
of hire.
8.5 SEVERANCE. MacroPore shall be responsible for paying to any employee
of its sales organization all termination or severance benefits, if any, that
MacroPore is required to pay, pursuant to its contracts or policies or
pursuant to law, to such employee.
8.6 NO THIRD PARTY BENEFICIARY. The provisions of this Article 8 are not
intended to and shall not be construed as granting rights to or vesting
rights in any party or creating any third party beneficiary, including,
without limitation, any Affected Employee or any Hired Employee.
ARTICLE 9
INSPECTION, WARRANTY AND SERVICE
9.1 INSPECTION OF PRODUCT. Medtronic shall inspect all Products promptly
upon receipt thereof, and in the event of any shortage, damage or discrepancy
in or to a shipment of Products or in the event any of the Products fail to
comply with the then current Specifications for the Products (except for
latent defects not readily observable by Medtronic), Medtronic shall report
the same to MacroPore within 60 days after delivery thereof to Medtronic and
furnish such written evidence or other documentation as MacroPore reasonably
may deem appropriate. If the
14
substantiating evidence delivered by Medtronic reasonably demonstrates that
such shortage, damage or discrepancy or nonconformity with Specifications
existed at the time of delivery of the Products, Medtronic may return the
Products to MacroPore, at MacroPore's expense, and, at Medtronic's request,
MacroPore shall use all reasonable efforts to deliver promptly replacement
Products to Medtronic in accordance with the delivery procedures set forth
herein. Any Products not rejected by Medtronic by written notice given to
MacroPore within such 60-day period (other than Products containing latent
defects not readily observable by Medtronic) shall be deemed to have been
accepted by Medtronic. Following any such acceptance, the sole remedies of
Medtronic with respect to damage to or defects in the Products shall be those
set forth in Sections 9.2 and 11.1.
9.2 WARRANTY.
(a) MacroPore represents and warrants to Medtronic that all
Products sold under this Agreement will have been designed,
manufactured, labeled, packaged and sold to Medtronic in accordance
with all applicable laws and regulations, including (as applicable) FDA
GMP requirements, European Medical Device Directive requirements, ISO
9001 certification or successor requirements, and all other applicable
manufacturing requirements. Upon prior written notice, MacroPore shall
cause Medtronic's regulatory personnel to be provided with reasonable
access from time to time to the facilities and records of MacroPore for
the purpose of confirming MacroPore's and the Product's compliance with
all applicable laws and regulations.
(b) MacroPore warrants to Medtronic and to Medtronic's customers
that Products shall, when delivered to Medtronic, meet the
Specifications and, for a period of 2 years (shelf life) after delivery
of the Product to the customer, be free from defects in materials and
workmanship. The foregoing express warranty is contingent upon proper
use of the Products in the applications for which they were intended as
indicated in the Product label claims. Medtronic shall invoice
MacroPore for, and MacroPore shall promptly pay, all shipping,
transportation, insurance and other expenses actually incurred in
replacing defective Products that were under warranty. MacroPore will
repair, replace or credit Medtronic's account for any Product that it
reasonably determines was defective at the time of shipment to
Medtronic or that does not conform to the express warranties herein;
provided, however, that MacroPore shall have no obligation under this
warranty to repair, make replacements, or grant credits necessitated in
whole or in part by accidents; failure to maintain in accordance with
any transportation, storage, handling, or maintenance, instructions
supplied by MacroPore; damage by acts of nature, vandalism, burglary
neglect or misuse; or other fault or negligence of Medtronic or (except
for any strict liability of MacroPore) the customer or user. Prior to
returning any Product alleged to be defective, Medtronic shall notify
MacroPore in writing of the claimed defect and shall include the model
and lot/serial number of such Product, as well as the number and date
of the invoice therefor. No Product shall be returned without first
obtaining a returned goods authorization from MacroPore, which
authorization shall not be unreasonably withheld.
9.3 LIMITED WARRANTY. THE EXPRESS WARRANTIES SET FORTH ABOVE ARE IN
LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WHICH ARE HEREBY
15
SPECIFICALLY DISCLAIMED, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. IN NO EVENT
SHALL MACROPORE'S LIABILITY FOR PRODUCT WARRANTY INCLUDE ANY INDIRECT,
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES.
ARTICLE 10
CERTAIN REPRESENTATIONS, WARRANTIES AND INDEMNITIES
10.1 REPRESENTATIONS AND WARRANTIES.
(a) MacroPore represents and warrants to Medtronic that the
execution and delivery by MacroPore of this Agreement and the
performance by MacroPore of its obligations hereunder have been duly
authorized by all requisite corporate action and will not violate any
provision of law, any order of any court or other agency of government,
the Articles of Incorporation or Bylaws of MacroPore, as amended, or
any provision of any indenture, agreement or other instrument to which
MacroPore or any of its properties or assets is bound, or conflict
with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any such indenture, agreement or other
instrument, or result in the creation or imposition of any lien,
charge, restriction, claim or encumbrance of any nature whatsoever upon
any of the properties or assets of MacroPore. This Agreement has been
duly executed and delivered by MacroPore and constitutes the legal,
valid and binding obligation of MacroPore, enforceable in accordance
with its terms, subject, as to the enforcement of remedies, to the
discretion of the courts in awarding equitable relief and to applicable
bankruptcy, reorganization, insolvency, moratorium and similar laws
affecting the rights of creditors generally.
(b) Medtronic represents and warrants to MacroPore that the
execution and delivery by Medtronic of this Agreement and the
performance by Medtronic of its obligations hereunder have been duly
authorized by all requisite corporate action and will not violate any
provision of law, any order of any court or other agency of government,
the Articles of Incorporation or Bylaws of Medtronic, as amended, or
any provision of any indenture, agreement or other instrument to which
Medtronic or any of its properties or assets is bound, or conflict
with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any such indenture, agreement or other
instrument, or result in the creation or imposition of any lien,
charge, restriction, claim or encumbrance of any nature whatsoever upon
any of the properties or assets of Medtronic. This Agreement has been
duly executed and delivered by Medtronic and constitutes the legal,
valid and binding obligation of Medtronic, enforceable in accordance
with its terms, subject, as to the enforcement of remedies, to the
discretion of the courts in awarding equitable relief and to applicable
bankruptcy, reorganization, insolvency, moratorium and similar laws
affecting the rights of creditors generally.
16
ARTICLE 11
INDEMNIFICATION
11.1 MACROPORE'S LIABILITY. MacroPore shall indemnify, defend and hold
harmless Medtronic and each of its subsidiaries, officers, directors,
employees, shareholders and distributors from and against and in respect of
any and all demands, claims, actions or causes of action, assessments,
losses, damages, liabilities, interest and penalties, costs and expenses
(including, without limitation, reasonable legal fees and disbursements
incurred in connection therewith and in seeking indemnification therefor, and
any amounts or expenses required to be paid or incurred in connection with
any action, suit, proceeding, claim, appeal, demand, assessment or judgment)
finally awarded ("Indemnifiable Losses"), resulting from, arising out of, or
imposed upon or incurred by any person to be indemnified hereunder by reason
of (i) any breach of representation, warranty, or agreement on the part of
MacroPore under this Agreement, (ii) Product Liability Damages with respect
to the Products, or (iii) other negligence or intentional misconduct of
MacroPore; provided that in no event shall MacroPore be liable for matters
for which Medtronic is responsible under Section 11.2 below or for punitive
or exemplary damages. MacroPore shall maintain product liability insurance or
self-insurance in such amounts as ordinary good business practice for its
type of business would make advisable and shall provide Medtronic with
evidence of this coverage.
11.2 MEDTRONIC'S LIABILITY. Medtronic shall indemnify, defend and hold
harmless MacroPore and each of its subsidiaries, officers, directors,
employees, shareholders and suppliers from and against and in respect of any
and all Indemnifiable Losses resulting from, arising out of, or imposed upon
or incurred by any person to be indemnified hereunder by reason of (i) any
breach of representation, warranty, or agreement on the part of Medtronic
under this Agreement, (ii) product claims whether written or oral, made or
alleged to be made, by Medtronic in its advertising, publicity, promotion, or
sale of any Products where such product claims were not provided by or
approved by MacroPore, (iii) negligent handling by Medtronic of the Products
or changes, additions or modifications to the Products by Medtronic, or (iv)
other negligence or intentional misconduct of Medtronic; provided that in no
event shall Medtronic be liable for matters for which MacroPore is
responsible under Section 11.1 above or for punitive or exemplary damages.
Medtronic shall maintain product liability insurance or self-insurance in
such amounts as ordinary good business practice for its type of business
would make advisable and shall provide MacroPore with evidence of this
coverage.
11.3 PROCEDURE. If a claim by a third party is made and a party (the
"Indemnitee") intends to claim indemnification under this Article 11, the
Indemnitee shall promptly notify the other party (the "Indemnitor") in
writing of any claim in respect of which the Indemnitee or any of its
subsidiaries, directors, officers, employees, shareholders, suppliers or
distributors intends to claim such indemnification and the Indemnitor shall
have sole control of the defense and/or settlement thereof, provided that the
Indemnitee may participate in any such proceeding with counsel of its choice
at its own expense. The indemnity agreement in this Article 11 shall not
apply to amounts paid in settlement of any Indemnifiable Losses if such
settlement is effected without the consent of the Indemnitor, which consent
shall not be withheld unreasonably. The failure to deliver written notice to
the Indemnitor within a reasonable time after the commencement of any such
action, if adversely prejudicial to its ability to defend such action, shall
relieve such Indemnitor of any liability to the Indemnitee under this Article
11, but the
17
omission to so deliver written notice to the Indemnitor shall not relieve the
Indemnitor of any liability that it may otherwise have to any Indemnitee
other than under this Article 11. If the Indemnitor fails to provide defense
of the claim, and diligently defend or settle the same after receipt of
notice from Indemnitee of, and a reasonable opportunity to cure such failure,
the Indemnitee may defend or settle the claim without prejudice to its rights
to indemnification hereunder, provided that the Indemnitee does so diligently
and in good faith and further does not enter into any settlement or agree to
any stipulation that would adversely affect the rights of the Indemnitor or
impose any additional obligation on the Indemnitor without the Indemnitor's
prior written consent (which consent will not be unreasonably withheld). The
Indemnitee under this Article 11, its employees and agents, shall cooperate
fully with the Indemnitor and its legal representatives and provide full
information in the investigation of any Indemnifiable Losses, in order to be
covered by this indemnification.
ARTICLE 12
TERM AND TERMINATION
12.1 TERM. This Agreement shall take effect as of the date hereof and
shall continue in force until the fifth anniversary of the date hereof, and
shall automatically renew for successive five-year periods unless either
party gives the other party written notice of non-renewal at least 180 days
prior to such renewal date (the "Term").
12.2 TERMINATION. Notwithstanding the provisions of Section 12.1 above,
this Agreement may be terminated in accordance with the following provisions:
(a) MacroPore may terminate this Agreement in the manner described
in Section 6.3 hereof;
(b) Except as described in Section 6.3, a party may terminate
this Agreement by giving notice in writing to the other party if the
other party is in breach of any material representation, warranty or
covenant of this Agreement and, except as otherwise provided herein,
shall have failed to cure such breach within 60 days after receipt of
written notice thereof from the first party;
(c) A party may terminate this Agreement at any time by giving
notice in writing to the other party, which notice shall be effective
upon dispatch, should the other party become insolvent, make an
assignment for the benefit of creditors, go into liquidation or
receivership or otherwise lose legal control of its business; or
(d) A party may terminate this Agreement by giving notice in
writing to the other party should an event of Force Majeure preventing
performance by such other party continue for more than 180 consecutive
days as provided in Article 13 below.
12.3 RIGHTS AND OBLIGATIONS ON TERMINATION. In the event of termination
of this Agreement for any reason, the parties shall have the following rights
and obligations:
(a) Termination of this Agreement shall not release either party
from the obligation to make payment of all amounts previously due and
payable.
18
(b) The terminating party shall have the right, at its option, to
cancel any or all purchase orders that provide for delivery after the
effective date of termination.
(c) Medtronic shall have the right, at its option, to require
MacroPore to repurchase from Medtronic all of Medtronic's inventory of
Products (excluding demonstration units and Products with less than 6
months shelf life remaining as of the effective date of termination) as
of the termination date at MacroPore's invoiced price (and inclusive of
any shipping charges or taxes, but net of any price adjustments, credits
or other allowances) to Medtronic for such Products. Medtronic may
exercise its option under this Section 12.3(c) by notifying MacroPore in
writing no later than 30 days after the effective termination date.
Medtronic shall be permitted to resell any such inventory of Products
that MacroPore does not repurchase from Medtronic.
(d) The parties' obligations pursuant to Articles 9, 11 and 14 and
Sections 3.6, 12.3, 12.4, and 15.1 hereof shall survive termination of
this Agreement. All other provisions of this Agreement shall terminate
upon termination of this Agreement.
(e) Upon expiration or termination of this agreement, Medtronic
shall use reasonable best efforts to transfer ownership to MacroPore of
all Product authorizations, registrations, permits and approvals of any
kind with respect to Products and applications therefor, including
without limitation, marketing approval applications, and other
governmental approvals, registrations and the like, at MacroPore's cost
and expense, and shall execute such documents and perform such acts as
may be necessary, useful or convenient to perfect such transfer.
(f) For a period of one year following expiration or termination
of this Agreement, neither party shall solicit or cause to be solicited
for employment any employees of the other party; provided that, if this
Agreement is terminated pursuant to Section 6.3, MacroPore may, for a
period of 60 days from and after such termination, interview and offer
employment to former MacroPore employees hired by Medtronic pursuant to
Section 8.1.
12.4 TERMINATION OF SUBDISTRIBUTORS. If MacroPore terminates this
Agreement in accordance with its rights under Section 12.2, Medtronic shall
have sole responsibility for termination of any subdistributor, including any
costs or expenses associated therewith, and shall indemnify and hold
MacroPore harmless from and against any claim, loss, damage or expense
(including reasonable attorneys' fees) suffered or incurred by MacroPore
relating to the termination of any subdistributor appointed by Medtronic.
ARTICLE 13
FAILURE TO SUPPLY AND FORCE MAJEURE
13.1 NOTICE OF FORCE MAJEURE. Upon giving notice to the other party, a
party affected by an event of Force Majeure shall be released without any
liability on its part from the performance of its obligations under this
Agreement, except for the obligation to pay any amounts due and owing
hereunder, but only to the extent and only for the period that its
performance of such obligations is prevented by the event of Force Majeure.
19
13.2 SUSPENSION OF PERFORMANCE. Subject to Section 13.3 below, during
the period that the performance by one of the parties of its obligations
under this Agreement has been suspended by reason of an event of Force
Majeure, the other party may likewise suspend the performance of all or part
of its obligations hereunder (except for the obligations to pay any amounts
due and owing hereunder) to the extent that such suspension is commercially
reasonable.
13.3 EXERCISE OF LICENSE UPON FAILURE OF SUPPLY. Upon a Failure of
Supply, Medtronic shall have the right to exercise its license rights granted
pursuant to Section 13.4 below to manufacture and sell such Product (but not
any other Product) itself or have such Product manufactured by others.
13.4 LICENSE GRANT.
(a) MacroPore hereby grants Medtronic (i) an exclusive,
sublicensable, worldwide, license to the Licensed Intellectual Property
to make, have made, use, distribute, sell, offer for sale, have sold,
import and otherwise commercialize and exploit Products in the Cranial
Field during the Term. Medtronic may not exercise such license unless
and until the occurrence of a Failure of Supply.
(b) The license granted herein shall be royalty free with respect
to any Products manufactured or supplied to Medtronic by MacroPore or
any Affiliate of MacroPore. If Medtronic exercises its right pursuant to
Section 13.3 to make or have made by a third party a Product, then
subject to the terms of this Agreement, Medtronic shall pay to MacroPore
a royalty equal to [****************] of Medtronic's Net Sales of such
Product.
(c) Within sixty (60) days after the end of each Medtronic fiscal
quarter, Medtronic shall provide MacroPore with a written report
indicating the amount of Net Sales of Products during such quarter and
the amount of the royalties due for such quarter. Simultaneously with
making such report, Medtronic shall pay to MacroPore the amount of
royalties then due.
(d) Medtronic agrees to keep accurate written records sufficient in
detail to enable the royalties payable under this Agreement by Medtronic
to be determined and verified. Such records for a particular quarter
shall be retained by Medtronic for a period of not less than three years
after the end of such quarter.
(e) Upon reasonable notice and during regular business hours,
Medtronic shall from time to time (but no more frequently than once
annually) make available the records referred to in subsection (d) above
for audit at MacroPore's expense by independent representatives selected
by MacroPore to verify the accuracy of the reports provided to
MacroPore. Such representatives shall execute a suitable
confidentiality agreement reasonably acceptable to Medtronic prior to
conducting such audit. Such representatives may disclose to MacroPore
only their conclusions regarding the accuracy and completeness of
royalty payments and of records related thereto, and shall not disclose
Medtronic's confidential business information to MacroPore without the
prior written consent of Medtronic.
PORTIONS OF THIS EXHIBIT MARKED AS [***] HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SEC.
20
13.5 TECHNOLOGY TRANSFER. Upon Medtronic's request any time after a
Failure of Supply, MacroPore shall promptly provide to Medtronic, or a third
party designated by Medtronic, as applicable, copies of such technical
documentation and related know-how and trade secrets, and training as is
reasonably necessary for a skilled manufacturer to make such Product;
provided that any such third party shall agree to maintain the
confidentiality of all such information to the same extent that Medtronic is
obligated to do so under this Agreement, and Medtronic will reimburse
MacroPore for salary and reasonable travel and lodging expenses for MacroPore
personnel with respect to training requested by Medtronic at a location other
than MacroPore's facility to the extent such expenses are substantiated by
expense receipts.
13.6 MAINTAIN LICENSES IN FORCE. MacroPore shall comply with all of the
provisions of, and shall maintain in full force and effect, all license
agreements with third parties pursuant to which MacroPore is licensee of
intellectual property included in the Licensed Intellectual Property.
MacroPore shall promptly notify Medtronic if any such third party licensor
alleges any breach by MacroPore of any such license agreement. Medtronic
shall be entitled, but not obligated, to cure any alleged breach by MacroPore
of such license agreement and set-off the cost of such cure against amounts
otherwise owed to MacroPore hereunder.
13.7 NO LIABILITY. MacroPore shall have no obligation or any liability
under Sections 9.2 or 11.1(ii) with respect to any Products produced by
Medtronic or its third party designee pursuant to the license granted in this
Article 13.
ARTICLE 14
INTELLECTUAL PROPERTY
14.1 TRADEMARK LICENSE. MacroPore hereby grants Medtronic a royalty-free
license to use all trademarks, trade names and logotypes of MacroPore
relating to the Products solely in connection with the sale or other
distribution, promotion, advertising and/or maintenance of the Products in
the Cranial Field. Medtronic shall acquire no right, title or interest in
such MacroPore trademarks, trade names and logotypes, other than the license
provided for above, and Medtronic shall not use any MacroPore trademarks,
trade names and logotypes as part of Medtronic's corporate, trade name,
trademark or logotype or permit any third party under Medtronic's control to
do so without the prior written consent of MacroPore. To the extent permitted
by local law, any statutory powers which would be granted to Medtronic by
virtue of its local use of MacroPore's trademarks or its licensee status are
excluded. Medtronic shall in addition have the right to promote and sell the
Products under trademarks, trade names and logotypes of Medtronic selected by
Medtronic, which trademarks, trade names and logotypes shall be and shall
remain the property of Medtronic, provided however, that Medtronic agrees to
use reasonable efforts to credit MacroPore as the manufacturer, and to
include the brand name, on packaging, brochures and advertisements specific
to the Products.
14.2 TRADEMARK INFRINGEMENT. Medtronic shall promptly notify MacroPore
of any use by any third party of MacroPore's trademarks, trade names or
logotypes or any use by such third parties of similar marks that may
constitute an infringement or passing off of MacroPore's trademarks, trade
names or logotypes of which Medtronic has knowledge. MacroPore reserves the
right in its sole discretion to institute any proceedings against such
third-party infringers and Medtronic shall refrain from doing so. Medtronic
agrees to cooperate fully with MacroPore in
21
any action taken by MacroPore against such third parties, provided that all
expenses of such action shall be borne by MacroPore and all damages that may
be awarded or agreed upon in settlement of such action shall accrue to
MacroPore.
14.3 TERMINATION OF USE OF TRADEMARKS. Medtronic acknowledges
MacroPore's proprietary rights in and to MacroPore's trademarks, trade names
and logotypes, and Medtronic hereby waives all right to any trademarks, trade
names and logotypes now or hereafter originated by MacroPore. Medtronic shall
not after the date of this Agreement adopt, use or register any words,
phrases or symbols that are identical to or confusingly similar to any of
MacroPore's trademarks. Upon termination of this Agreement, Medtronic shall
cease using MacroPore's trademarks, trade names and logotypes in any manner,
subject to Medtronic's right, if any, to continue to sell Products under
Section 12.3(c).
14.4 PATENT RIGHTS.
(a) DEFENSE OF CLAIMS. MacroPore shall defend, or at its option
settle, any suit instituted against Medtronic that is based on an
allegation that any Product constitutes an infringement of any patent or
any other intellectual property right. MacroPore shall have sole
control of defense of any such action, including any appeals and
negotiations for the settlement or compromise thereof and shall have
full authority to enter into a binding settlement or compromise;
provided that MacroPore shall not enter into any settlement or
compromise that may adversely affect Medtronic without Medtronic's
consent, which consent shall not be unreasonably withheld. MacroPore
shall indemnify, subject to the limitations set forth herein, Medtronic
against any final award of damages and costs made against Medtronic and
any settlement amounts as a result of any such action. In order to
qualify for such indemnification, Medtronic shall notify MacroPore
promptly in writing of such claim, suit or proceeding and give MacroPore
such information and assistance as MacroPore may reasonably request to
settle and defend any such claim; provided the failure to give such
notice, information and assistance shall only relieve MacroPore of
liability under this subsection to the extent such failure adversely
affects MacroPore's ability to defend such action.
(b) LIMITATION OF LIABILITY. MacroPore shall have no liability of
any kind to Medtronic under Section 14.4(a) or based upon any other
claim Medtronic may have to the extent any such claim is based upon or
arises out of (a) the use of any Product in combination with an
apparatus or device not manufactured, supplied or approved by MacroPore,
(b) the use of any Product in a manner for which it was not designed or
intended to be used, or (c) any modification of any Product by Medtronic
or any third party that causes it to become infringing.
(c) REPLACEMENT PRODUCT. Notwithstanding the foregoing, if it is
adjudicatively determined that any Product infringes, or in MacroPore's
sole opinion, may be found to infringe a third party's patent or other
intellectual property rights, or if the sale or use of the Products is,
as a result, enjoined, then MacroPore shall, at its option and expense,
either: (i) procure for Medtronic the right under such patent to sell or
use, as appropriate, the Products; or (ii) replace the Products with
other noninfringing functionally equivalent products; or (iii) modify
the Products to make the Products
22
functionally equivalent and noninfringing, remove any prior version of
the Products in Medtronic's inventory and refund the aggregate payments
made therefor by Medtronic; or (iv) if the use of the Products is
prevented by injunction, discontinue Product sales under the Agreement
and remove any Products in Medtronic's inventory and refund the
aggregate payments paid therefor by Medtronic, in which event MacroPore
shall promptly refund to Medtronic a pro rata portion (based on the
portion of the original Term remaining) of the $1,500,000 paid by
Medtronic pursuant to Section 2.2.
14.5 OWNERSHIP. MacroPore represents and warrants to Medtronic the
following: MacroPore owns or possesses licenses or other rights to use all
Intellectual Property used in the research, design, development, manufacture
or sale of the Products (the "MacroPore Intellectual Property"), free and
clear of any liens, charges, security interests, mortgages, pledges,
restrictions, or any other encumbrances of any kind which are inconsistent
with the rights granted to Medtronic hereunder. To the knowledge of
MacroPore, the MacroPore Intellectual Property is valid and has not been
challenged in any judicial or administrative proceeding. MacroPore has taken
all necessary steps or appropriate actions to record its interests, or to
protect its rights, in the MacroPore Intellectual Property. To the knowledge
of MacroPore, no person or entity nor such person's or entity's business or
products has infringed, misused, misappropriated or conflicted with the
MacroPore Intellectual Property or currently is infringing, misusing,
misappropriating or conflicting with the MacroPore Intellectual Property. To
the knowledge of MacroPore, all proprietary technical information developed
by and belonging to MacroPore that has not been patented has been kept
confidential.
14.6 PROTECTION OF MACROPORE'S INTELLECTUAL PROPERTY AND IMPROVEMENTS.
MacroPore shall be responsible for filing, prosecuting and maintaining all US
and foreign patents and copyrights and applications therefor to the extent it
deems necessary or appropriate to protect the MacroPore Intellectual Property.
ARTICLE 15
MISCELLANEOUS
15.1 NONDISCLOSURE. The parties agree not to disclose or use (except as
permitted or required for performance by the party receiving such
Confidential Information of its rights or duties hereunder) any Confidential
Information of the other party obtained during the during the term of this
Agreement until the expiration of five years after the receiving party's
receipt of such Confidential Information. Each party further agrees to take
appropriate measures to prevent any such prohibited disclosure of
Confidential Information by its present and future employees, officers,
agents, subsidiaries, or consultants during such period.
15.2 PUBLIC ANNOUNCEMENT. In the event any party proposes to issue any
press release or public announcement concerning any provisions of this
Agreement or the transactions contemplated hereby, such party shall so advise
the other parties hereto, and the parties shall thereafter use their best
efforts to cause a mutually agreeable release or announcement to be issued.
Neither party will publicly disclose or divulge any provisions of this
Agreement or the transactions contemplated hereby without the other party's
written consent, except as may be required by applicable law or stock
exchange regulation, and except for communications to such
23
party's employees or customers or investors or prospective investors (subject
to appropriate confidentiality obligations).
15.3 COMPLETE AGREEMENT. This Agreement, the Investment Agreement, the
Investors' Rights Agreement, the Supplemental Rights Agreement, the Supply
Agreement, and the Schedules and Exhibits hereto and thereto, constitute the
entire agreement between the parties hereto with respect to the subject
matter hereof and supersede all prior agreements whether written or oral
relating hereto.
15.4 WAIVER, DISCHARGE, AMENDMENT, ETC. The failure of any party hereto
to enforce at any time any of the provisions of this Agreement shall not,
absent an express written waiver signed by the party making such waiver
specifying the provision being waived, be construed to be a waiver of any
such provision, nor in any way to affect the validity of this Agreement or
any part thereof or the right of the party thereafter to enforce each and
every such provision. No waiver of any breach of this Agreement shall be held
to be a waiver of any other or subsequent breach. Any amendment to this
Agreement shall be in writing and signed by the parties hereto.
15.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and the successors or assigns of
the parties hereto; provided, that (i) the rights and obligations of
MacroPore herein may not be assigned except to any person who succeeds to
substantially all of the assets and business of MacroPore to which this
Agreement relates, and (ii) the rights and obligations of Medtronic herein
may not be assigned except to any person who succeeds to substantially all of
that portion of Medtronic's business to which this Agreement relates.
15.6 NOTICES. All notices or other communications to a party required or
permitted hereunder shall be in writing and shall be delivered personally or
by facsimile (receipt confirmed electronically) to such party (or, in the
case of an entity, to an executive officer of such party) or shall be sent by
a reputable express delivery service or by certified mail, postage prepaid
with return receipt requested, addressed as follows:
if to Medtronic, to:
Medtronic, Inc.
Corporate Center
0000 Xxxxxxx Xxxxxx X.X.
Xxxxxxxxxxx, XX 00000
Attention: General Counsel
FAX (000) 000-0000
with a copy to:
Medtronic, Inc.
Corporate Center
0000 Xxxxxxx Xxxxxx X.X.
Xxxxxxxxxxx, XX 00000
Attention: Vice President and Chief Development Officer
FAX (000) 000-0000
24
if to MacroPore, to:
MacroPore, Inc.
0000 Xxx Xxx Xxxxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxxxx
FAX (000) 000-0000
with a copy to:
MacroPore, Inc.
0000 Xxx Xxx Xxxxxx
Xxx Xxxxx, XX 00000
Attention: Vice President of Finance
FAX (000) 000-0000
Any party may change the above-specified recipient and/or mailing address by
notice to all other parties given in the manner herein prescribed. All
notices shall be deemed given on the day when actually delivered as provided
above (if delivered personally or by telecopy) or on the day shown on the
return receipt (if delivered by mail or delivery service).
15.7 EXPENSES. Except as expressly provided herein, MacroPore and
Medtronic shall each pay their own expenses incident to this Agreement and
the preparation for, and consummation of, the transactions provided for
herein.
15.8 GOVERNING LAW. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Minnesota, including all matters
of construction, validity, performance and enforcement, without giving effect
to principles of conflict of laws.
15.9 TITLES AND HEADINGS; CONSTRUCTION. The titles and headings to the
Articles and Sections herein are inserted for the convenience of reference
only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement. This Agreement shall be construed without
regard to any presumption or other rule requiring construction hereof against
the party causing this Agreement to be drafted.
15.10 ILLEGALITY: SEVERABILITY. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
15.11 RELATIONSHIP. This Agreement does not make either party the
employee, agent or legal representative of the other for any purpose
whatsoever. Neither party is granted any right or authority to assume or to
create any obligation or responsibility, express or implied, on behalf of or
in the name of the other party. In fulfilling its obligations pursuant to
this Agreement, each party shall be acting as an independent contractor.
15.12 BENEFIT. Nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
25
15.13 SURVIVAL. All of the representations, warranties, and covenants
made in this Agreement, and all terms and provisions hereof intended to be
observed and performed by the parties after the termination hereof, shall
survive such termination and continue thereafter in full force and effect.
15.14 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed as original and all of which
together shall constitute one instrument.
15.15 EXECUTION OF FURTHER DOCUMENTS. Each party agrees to execute and
deliver without further consideration any further applications, licenses,
assignments or other documents, and to perform such other lawful acts as the
other party may reasonably require to fully secure and/or evidence the rights
or interests herein.
26
IN WITNESS WHEREOF, each of the parties has caused this Distribution
Agreement to be executed in the manner appropriate to each, as of the date first
above written.
MACROPORE, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxxxx
--------------------------------------------
Its: Vice Chairman, Chief Executive Officer
MEDTRONIC, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------
Its: Vice President and Chief Development Officer
27
EXHIBIT A
QUOTA
During the first 12-month of the Term, Medtronic shall submit purchase
orders for at least [********] of Product (based on Transfer Price to Medtronic)
(the "Quota"). By the end of each three-month quarter of such initial 12-month
period, Medtronic shall have ordered at least the following cumulative
percentage of the Quota, and MacroPore shall supply all Products so ordered up
to the following cumulative percentage of the Quota:
Quarter Medtronic Cumulative MacroPore Cumulative
------- Minimum Guaranteed
Order (as % of Quota) Supply (as % of Quota)
--------------------- ----------------------
First [*****] [*****]
Second [*****] [*****]
Third [*****] [*****]
Fourth [*****] [*****]
PORTIONS OF THIS EXHIBIT MARKED AS [***] HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SEC.
28
