EXHIBIT 10.11
Development Alliance and Supply Agreement
by and between
Biosense Xxxxxxx, Inc.
and
Stereotaxis, Inc.
Dated May 7, 2002
TABLE OF CONTENTS
PAGE
------
1 DEFINITIONS....................................................1
1.1 Construction......................................... 1
1.2 Definitions.......................................... 2
2 LICENSE GRANTS................................................ 8
2.1 Licenses Granted; Appointment....................... 8
2.2 License Grant to Stereotaxis........................ 9
2.3 Exclusivity......................................... 10
2.4 Stereotaxis Permitted Activities.................... 10
2.5 Preferred Partner and Third Party Integrations...... 12
2.6 Single Purchase Offers.............................. 14
2.7 Latest Localization Platform........................ 14
3 DEVELOPMENT AND OVERSIGHT.................................... 14
3.1 Joint Steering Committee............................ 14
3.2 Development of the Compatible
CARTO System and Compatible NIOBE System............ 15
3.3 Development of the Daughter Products and
Consulting.......................................... 17
3.4 Additional Daughter Products........................ 17
3.5 Major Delays........................................ 18
3.6 Failure to Obtain Approval.......................... 18
4 MARKETING, DISTRIBUTION AND MANUFACTURE...................... 18
4.1 Biosense as Manufacturer............................ 18
4.2 Marketing and Promotions, Distribution
Obligations......................................... 18
4.3 Forecast............................................ 19
4.4 Identification of Stereotaxis and Biosense.......... 20
4.5 Product Labeling.................................... 20
5 STEREOTAXIS COMPONENT SUPPLY..................................21
5.1 Manufacture of Components........................... 21
5.2 Forecasts........................................... 21
5.3 Pricing............................................. 21
5.4 Vendor Requirements................................. 21
5.5 Purchase Orders..................................... 21
5.6 Terms............................................... 21
5.7 Taxes............................................... 21
5.8 Conflicting Terms ................................................22
5.9 Annual Stereotaxis Reports and Audits ............................22
6 STEREOTAXIS MARKETING AND DISTRIBUTION .................................22
6.1 Right to Distribute ..............................................22
6.2 Forecasts ........................................................22
6.3 Pricing ..........................................................22
6.4 Purchase Orders ..................................................23
6.5 Terms ............................................................23
6.6 Taxes ............................................................23
6.7 Conflicting Terms ................................................23
6.8 Annual Stereotaxis Reports .......................................23
7 REVENUE SHARE ..........................................................24
7.1 Daughter Product Sales ...........................................24
7.2 Compatible NIOBE System ..........................................24
7.3 Discounting ......................................................25
7.4 Exchange Rates ...................................................25
7.5 Payment ..........................................................25
7.6 Annual Biosense Reports and Audits ...............................25
8 MANUFACTURING QUALITY AND ACCEPTANCE ...................................26
8.1 Conformance with Specifications ..................................26
8.2 Manufacturing Specifications .....................................26
8.3 Packaging of Lots and Lot Sizes ..................................27
8.4 Quality Guidelines ...............................................27
8.5 Quality Control ..................................................27
8.6 Rejection ........................................................27
8.7 Rejection by Lot .................................................28
8.8 Rejection Procedure ..............................................28
8.9 Presence At Facility .............................................29
8.10 Exchange of Information ..........................................29
9 REGULATORY MATTERS .....................................................29
9.1 Regulatory Approvals .............................................29
9.2 Cooperation to Obtain and Maintain Approvals .....................30
9.3 Exchange of Information ..........................................30
9.4 Inspections ......................................................30
10 REPRESENTATIONS AND WARRANTIES .........................................30
10.1 Stereotaxis ......................................................30
10.2 Biosense .........................................................31
10.3 Sole Remedy ......................................................32
10.4 Warranty Procedures ..............................................32
iii
10.5 Recalls ................................................ 33
10.6 Correction of Flaws .................................... 33
10.7 LIMITATION OF WARRANTIES ............................... 34
11 INDEMNIFICATION .............................................. 34
11.1 Indemnity .............................................. 34
11.2 Procedure .............................................. 34
11.3 Remedy ................................................. 34
11.4 Indemnity .............................................. 34
11.5 Procedure .............................................. 34
11.6 Remedy ................................................. 35
12 PROPRIETARY RIGHTS ........................................... 35
12.1 Stereotaxis ............................................ 35
12.2 Biosense ............................................... 35
12.3 Joint Ownership ........................................ 35
12.4 Developed Intellectual Property ........................ 37
13 CONFIDENTIALITY .............................................. 38
13.1 Definition ............................................. 38
13.2 Protection of Information .............................. 39
14 TERM AND TERMINATION ......................................... 40
14.1 Term ................................................... 40
14.2 Termination ............................................ 40
14.3 Effect of Termination or Expiration - Survival ......... 41
15 DISPUTE RESOLUTION ........................................... 41
16 ASSIGNMENT ................................................... 42
17 GENERAL ...................................................... 42
17.1 Force Majeure .......................................... 42
17.2 Insurance .............................................. 43
17.3 Notices ................................................ 43
17.4 Entire Agreement ....................................... 43
17.5 Captions and Section Headings .......................... 44
17.6 Partial Invalidity ..................................... 44
17.7 Presumptions ........................................... 44
17.8 Waiver ................................................. 44
17.9 Cumulative Remedies .................................... 44
17.10 Independent Contractors ................................ 44
17.11 Confidentiality of Agreement ........................... 44
17.12 Authority .............................................. 45
iv
17.13 Counterparts...................................................... 45
v
EXECUTION COPY
DEVELOPMENT ALLIANCE AND SUPPLY AGREEMENT
This
Development Alliance and Supply Agreement (the "Agreement") is
made and entered into on May 2002 (the "Effective Date") by and between
Biosense Xxxxxxx, Inc., a California corporation, having a place of business at
0000 Xxxxxxx Xxxxxx Xx., Xxxxxxx Xxx XX 00000 ("Biosense") and
Stereotaxis,
Inc., a Delaware corporation, having a principal place of business at 0000
Xxxxxx Xxxx Xxxxxx, Xx. Xxxxx, XX, 00000 ("Stereotaxis").
RECITALS
WHEREAS, Stereotaxis has developed a computerized instrument control
system. ("Stereotaxis NIOBE System", as defined below) that enables navigation
utilizing externally applied magnetic fields of inter alia associated
proprietary, interventional, disposable, electrophysiology devices;
WHEREAS, Biosense has developed and commercialized an electrophysiology
mapping and Localization system known as the CARTO(TM) system ("CARTO System",
as defined below) and associated proprietary, interventional, disposable,
electrophysiology devices;
WHEREAS Stereotaxis and Biosense desire to jointly develop a Compatible
NIOBE - CARTO System (as defined below) and to jointly develop certain
associated proprietary, interventional, disposable, electrophysiology devices
("Daughter Products", as defined below) and to manufacture, market and sell such
Daughter Products; and
"WHEREAS Biosense will contribute to the costs of the development of
the Compatible NIOBE - CARTO System and the Daughter Products by inter alia
providing development facilities, manufacturing, engineering and administrative
support, regulatory resources and intellectual property rights and Biosense will
also contribute certain costs allocated to the marketing, promotions and
distribution of products as set forth in this Agreement;
WHEREAS Stereotaxis will contribute inter alia intellectual property
rights and certain development support and financial contributions to the
development of the Compatible NIOBE - CARTO Systems (it being acknowledged by
the parties that certain financial burdens in accordance with this Agreement
also rest with Biosense);
NOW THEREFORE, in consideration of the mutual promises, covenants and
conditions herein, the Parties agree as follows:
AGREEMENT
1 DEFINITIONS
1.1 Construction. All references in this Agreement to "Articles" "Sections and
"Exhibit" refer to the articles, sections and exhibits of this Agreement.
1
1.1.1 As used in this Agreement, neutral pronouns and any variations thereof
shall be deemed to include the feminine and masculine and all terms
used in the singular shall be deemed to include the plural, and vice
versa, as the context may require.
1.1.2 The words "hereof", "herein" and "hereunder" and other words of similar
import refer to this Agreement as a whole, as the same may from time to
time be amended or supplemented, and not to any subdivision contained
in this Agreement.
1.1.3 The word "including" when used herein is not intended to be exclusive
and means "including, without limitation."
1.2 Definitions. As used herein:
1.2.1 "510K Submission" will mean acceptance by the U.S. FDA of an
application for 510K clearance. As used herein, "acceptance" will mean
that the U.S. FDA has received the application and assigned a control
number for such application.
1.2.2 "Additional Daughter Products" will have the meaning set forth in
Section 3.4.
1.2.3 "Affiliates" will mean any corporation or other entity that is directly
or indirectly controlling, controlled by or under common control with a
Party. For the purpose of this definition, "control" will mean the
direct or indirect ownership of more than fifty percent (50%) of the
capital stock of the subject entity entitled to vote in the election of
directors (or, in the case of an entity that is not a corporation,
interests entitled to vote in the election of the corresponding
managing authority).
1.2.4 "Business Days" will mean any day, other than a Saturday or Sunday, on
which banks are open for business in New Jersey.
1.2.5 "Restricted Parties" will mean Medtronic, Guidant, St. Jude Medical,
Boston Scientific and EP Medsystems, their Affiliates and successors in
interest. The Parties acknowledge that Stereotaxis's existing contract
Localization developer, Internav Inc., is not a Restricted Party.
1.2.6 "Biosense Field" will mean the field of Localization and
electrophysiologic mapping technologies for electrophysiology.
1.2.7 "Paragraph Biosense IP" will have the meaning set forth in Section 12.
1.2.8 "CARTO System" will mean the Biosense product that is marketed under
the name "CARTO XP Navigation System" and any successor name, which is
an electrophysiologic navigation and mapping technology that inter
alia associates local electrical activity with catheter location and
determines the 3D coordinates of catheter location, using proprietary
catheters and associated products.
2
1.2.9 "Clinical" will mean in respect of interventional procedures, and
procedures on human subjects; and "clinic" will have a corresponding
meaning.
1.2.10 "Commercial Failure" will have occurred (i) if the sales of Daughter
Products at any time following the first anniversary of the Commercial
Launch Date are at an aggregate run rate of less than one catheter
month Compatible NIOBE-CARTO System, provided that Compatible NIOBE
Systems sold for less than $450,000 will be excluded from such
calculation; (ii) the Compatible CARTO Installation Ratio is less than
25%; or (iii) Stereotaxis' installed base of Compatible NIOBE Systems
comprises less than 25% of the Stereotaxis' forecast provided to
Biosense in a letter of even date herewith.
1.2.11 "Commercial Launch Date" will mean the first date upon which a Daughter
Product is made commercially available in the U.S. market (or where
otherwise specified herein, an alternative geographical market) and on
which the Compatible CARTO System and the Compatible NIOBE System are
also commercially available the U.S. market (or where otherwise
specified herein, an alternative geographical market).
1.2.12 "Components" will mean any components included in the Daughter Products
that are manufactured by or on behalf of Stereotaxis and supplied to
Biosense by Stereotaxis hereunder.
1.2.13 "Component Specifications" will mean the specifications for the
Components agreed upon by the Joint Steering Committee (which will,
with full cooperation of the Parties, use reasonable efforts to
integrate into Components improvements in cost, performance or
reliability of features).
1.2.14 "Component Manufacturing Specifications" means the detailed
manufacturing release specifications for the Components established in
accordance with Section 8.
1.2.15 "Component Transfer Price" will have the meaning set forth in
Section 5.
1.2.16 "Control" of Stereotaxis' will mean a direct or indirect ownership or
control of more than fifty percent (50%) of the relevant voting stock
entitled to elect directors, or more than a fifty percent (50%)
interest in the decision-making authority of such corporation.
"Relevant voting stock" will be considered stock issued to or acquired
by venture capital or other financial investors (other than those
venture capital or financial investors affiliated with a Restricted
Party), to Stereotaxis management or employees, to Siemens AG, Philips
Medical System, GE Medical Systems, Toshiba Medical Systems, Meditec
Corporation (Marubeni affiliate), Sumitomo Corporation, Mitsui Bussain
Medical Inc., MC Medical, Inc. (Mitsubishi affiliate) and to Hitachi
Medical Corp., will not be included in calculating whether a change of
Control of Stereotaxis has occurred.
1.2.17 "Compatible CARTO Installation Ratio" means at any time the aggregate
number of Compatible CARTO System installations then completed, divided
by the aggregate number of Compatible NIOBE System installations as at
the time 6 months prior, provided that
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Compatible NIOBE Systems installed prior to the Commercial Launch Date
and any Compatible CARTO systems installed together therewith will be
excluded from such calculation for a period of 2 years from the
Commercial Launch Date.
1.2.18 "Cost of Goods" will mean, with respect to each Party's relevant cost
of goods, the cost of goods calculated in accordance with US GAAP,
applied on a consistent basis and in a manner consistent with
Stereotaxis' or Biosense's, as the case may be, audited financials. In
the event that in respect of the Cost of Goods of Daughter Products the
Parties are unable to agree on the cost of a catheter product or on
such definition or there is a bona fide dispute as to the application
of the agreed upon definition, "Cost of Goods" will have the meaning
set forth in Exhibit B.
1.2.19 "Daughter Product One" will mean Parent Product One modified in such a
manner as enables it to be navigable and perform its original mapping,
Localization, ablation or other functions when used with a Compatible
Stereotaxis NIOBE - CARTO System and in accordance with the terms of
this Agreement.
1.2.20 "Daughter Product Two" will mean Parent Product Two modified in such a
manner to enable such product to be navigable and perform its original
mapping, Localization, ablation or other functions when used with a
Compatible Stereotaxis NIOBE - CARTO System and in accordance with the
terms of this Agreement.
1.2.21 "Daughter Products" will mean Daughter Product One, Daughter Product
Two and any Additional Daughter Products nominated pursuant to Section
3.4, each of which comprises one of the proprietary, interventional,
disposable, electrophysiology devices developed or marketed by Biosense
for use with the CARTO System and modified in such a manner as enables
it to be navigable and perform its original mapping, Localization,
ablation or other functions when used with an Compatible Stereotaxis
NIOBE - CARTO System in accordance with the terms of this Agreement.
1.2.22 "Daughter Products Specifications" will mean the feature specifications
for Daughter Product Two or any Additional Daughter Products to be
determined by the Joint Steering Committee (which will, with full
cooperation of the Parties, use reasonable efforts to integrate into
Daughter Products improvements in cost performance or reliability of
features) as the same may be revised from time to time and provided
that such specifications will be revised in timely fashion to reflect
such modifications to the corresponding Parent Products as are of
material clinical or commercial relevance to the usage of the Daughter
Products
1.2.23 "Daughter Products Transfer Price" will have the meaning set forth in
Section 6.3.
1.2.24 "Defects" will mean defects contained in Daughter Products or
Components, as the case may be, prior to delivery of such Daughter
Products to Stereotaxis or Components to Biosense, latent or non-latent
consisting of the failure of Daughter Products or Components to comply
with the applicable Manufacturing Specifications, or any requirement
the FDC Act, including
4
without limitation, of FDA QSR or other regulatory agency requirements
with which the relevant Party has agreed to comply, or is obligated to
comply, pursuant to Section 8.
1.2.25 "Distribute" shall mean, in respect of a product, its distribution to
customers, including (subject to the terms of this Agreement) setting
pricing policy, taking purchase orders, delivering and effecting
transfer of title, either directly or through multiple tiers of
distribution. "Distribution" shall have a corresponding meaning.
1.2.26 "electrophysiology" will mean in respect of the electrical
characteristics and activity of the heart. "Electrophysiological" and
"electrophysiologic" will have corresponding meanings.
1.2.27 "electrophysiologic mapping" will mean using a catheter having a
transmitter or receiver at the distal tip to record, in respect of
points or areas of heart tissue, the electrical signals being generated
by such tissue.
1.2.28 "FDA QSR" will mean the U.S. FDA medical device Quality System
Regulations, as amended from time to time, and any successor
regulations or comparable regulations of any successor agency(ies)
thereafter.
1.2.29 "Gross Profits" will mean, with respect to each Party's relevant gross
profits, gross profits calculated in accordance with U.S. GAAP, applied
on a consistent basis and in a manner consistent with such Party's
audited financials. In the event that the Parties are unable to agree
on such definition or there is a bona fide dispute as to the
application of the agreed upon definition, "Gross Profits" will have
the meaning set forth in Exhibit B.
1.2.30 "Initial Daughter Products" will mean Daughter Product One and Daughter
Product Two.
1.2.31 "Compatible CARTO System" will mean the CARTO System, made compatible
with the Compatible Stereotaxis NIOBE System in accordance with the
Compatible CARTO Specifications and the terms of Exhibit A.
1.2.32 "Compatible CARTO Specifications" will mean the feature specifications
for the Compatible CARTO System to be determined by Biosense in
consultation with the Joint Steering Committee and in a manner
consistent with Exhibit A, as the same may be revised from time to
time. Upon completion of such specification it will be deemed an
Exhibit to this Agreement.
1.2.33 "Compatible NIOBE System" will mean the Stereotaxis NIOBE System,
including such modifications as determined by Stereotaxis in
consultation with the Joint Steering Committee, as are reasonably
required to make it compatible with Compatible CARTO System.
1.2.34 "Compatible NIOBE-CARTO System" will mean a Compatible computerized
interventional electrophysiological Localization, mapping, ablation and
instrument control system comprising one Compatible NIOBE System and
one Compatible CARTO System.
5
1.2.35 "Intellectual Property Rights" will mean all rights in or arising
under: (i) Patents; (ii) all copyrights in both published and
unpublished works, all registrations and applications therefor and all
associated moral rights; (iii) all know-how, trade secrets,
confidential information, software, technical information, data,
process technology, plans, drawings and blueprints required to be
disclosed by the Parties to one another hereunder; and (iv) databases,
data compilations and collections and technical data; and (v) any other
similar rights in or arising under Technology worldwide, in each case,
whether arising under the laws of the United States or any other state,
country or jurisdiction.
1.2.36 "Joint IP" will have the meaning set forth in Section 12.3.1.
1.2.37 "Localization" will mean the determination of the three dimensional
coordinates, relative to a fixed or control point or points, of the
distal (internal) tip of a catheter where such catheter has a signal
transmitter and/or receiver in its distal tip which, either directly or
indirectly through another catheter, sends and/or receives data (that
is used to determine such three dimensional coordinates) to or from an
external transmitter and/or receiver via electromagnetic, ultrasound or
other signals but shall not be taken to include imaging technologies
such as ultrasonic imaging, imaging through optical fibers or other
optical means, other imaging modalities or electrophysiologic recording
systems.
1.2.38 "Marketing and Promotions" will mean in respect of a product (i)
interacting (using written materials or otherwise) with actual and
potential customers to facilitate their placing purchase orders for the
product (and such other activities other than Distribution as are
generally considered to be marketing activities in respect of a product
in the medical devices industry); and (ii) conducting promotions (using
written materials or otherwise) at trade shows and other relevant
forums (and such other activities as are generally considered to be
promotions activities in respect of a product in the medical devices
industry) respectively.
12.39 "Milestones" will mean the development milestones with respect to
development of the Compatible CARTO System and Daughter Products as set
forth in Exhibit A and "Milestone" will have a corresponding meaning.
1.2.40 "Net Revenue" for Daughter Products will mean the bona fide price of
sale or other transfer, after deduction of the following: prompt
payment discounts, quantity discounts, rebates, returns, refunds and
other similar discounts or amounts, including taxes, actually allowed
and given, at which Biosense or any of its Affiliates sells or
otherwise transfers Daughter Products to its customers (other than
other Affiliates) as determined in accordance with U.S. GAAP applied on
a consistent basis and in manner consistent with procedures used by
Biosense to calculate revenues for its other relevant product lines for
financial reporting purposes. In the event Daughter Products are
sold together with other products at a single price, such single price
will be allocated (pro rata where applicable) among Daughter Products
and the other products based on the market price for such products when
sold separately. In reference to products other than Daughter Products,
"Net Revenue" will have a corresponding meaning.
6
1.2.41 "Parent Product One" will mean the Biosense Navi-Star catheter used as
the electrophysiological mapping catheter for data acquisition in the
CARTO System, which contains a miniature sensor embedded in the
catheter tip that collects data and relays it to the CARTO System.
1.2.42 "Parent Product Two" will mean the Biosense Navi-Star TC ablation
catheter used to ablate heart tissue in electrophysiological
procedures.
1.2.43 "Parent Products" will mean any of the proprietary, interventional,
disposable, electrophysiology devices developed and/or marketed by
Biosense for use with the CARTO System, as modified or improved from
time to time, and includes, without limitation, Parent Product One and
Parent Product Two.
1.2.44 "Party" will mean a Party to this Agreement. "Parties" will have a
corresponding meaning.
1.2.45 "Patent Rights" will mean all classes or types of patents, utility
models and design patents including, without limitation, originals,
divisions, continuations, continuations-in-part, extensions or reissues
and patent applications for these classes or types of patent rights, in
all countries of the world.
1.2.46 "PMA" will mean premarket approval by U.S. FDA in respect of an
application for such approval pursuant to the Federal Food, Drug, and
Cosmetic Act.
1.2.47 "preclinical" will mean in respect of procedures or research, animal or
phantom procedures or other research not conducted on human subjects.
1.2.48 "Revenue Share" will have the meaning set forth in Section 7.
1.2.49 "Stereotaxis Field" will mean the field of computerized control of the
motion of interventional or other percutaneous devices using externally
applied magnetic fields.
1.2.50 "Stereotaxis NIOBE System" will mean the NIOBE advanced permanent
magnet system designed by Stereotaxis that provides computerized remote
control and guidance of the distal (internal), end of proprietary
catheters guidewires and other percutaneous devices during certain
interventional procedures.
1.2.51 "Stereotaxis Localization System" will mean Stereotaxis' catheter-based
electromagnetic Localization system having only a basic level of
Localization functionality, as more fully described in Exhibit D.
1.2.52 "Stereotaxis IP" will have the meaning set forth in Section 12.1.
1.2.53 "Target Completion Date" in respect of a Milestone will mean the date
for such Milestone determined in accordance with Exhibit A.
7
1.2.54 "Technical Failure" will mean, (i) in respect of the Compatible NIOBE
-- CARTO System, (a) its failure as reasonably determined by Biosense,
to perform the functions of the CARTO System and of the NIOBE System in
accordance with clinically acceptable quality standards or (b) a
determination by Biosense that the Compatible NIOBE-CARTO will not
produce acceptable technical results within acceptable budgetary
limits; or (ii) in respect of the Initial Daughter Products, their
failure to conform with the relevant Daughter Product Specifications.
1.2.55 "Technology" will mean (i) works of authorship including, without
limitation, computer programs, algorithms, routines, source code and
executable code, whether embodied in software or otherwise,
documentation, designs, files, records and data; (ii) inventions
(whether or not patentable), improvements, and technology, (iii)
proprietary and confidential information, including technical data and
customer and supplier lists, trade secrets, show how, know how and
techniques; and (iv) processes, devices, prototypes, schematics, bread
boards, net lists, mask works, test methodologies and hardware
development tools and all instantiations of the foregoing in any form
and embodied in any media.
1.2.56 Term" will have the meaning set forth in Section 14.1.
1.2.57 "U.S. FDA" will mean United States Food and Drug Administration, and
any successor agency thereto.
1.2.58 "Year 1" will mean the twelve (12) months commencing on the first day
of the first month immediately following the Commercial Launch Date.
"Year 2", "Year 3", etc. will mean the twelve (12) month periods
following Year 1, Year 2, etc. respectively.
2 LICENSE GRANTS
2.1 Licenses Granted: Appointment
2.1.1 Daughter Products. Stereotaxis hereby grants to Biosense a limited,
non-exclusive (subject to Sections 2.4 and 4.4), worldwide,
non-transferable (except as set forth in Section 2.4 and Article 16),
license under Stereotaxis' Intellectual Property Rights in and to the
Stereotaxis' IP, to make, have made, use, import, sell, offer for sale,
or otherwise dispose of (directly or through multiple tiers of
distribution) Daughter Products.
2.1.2 Stereotaxis NIOBE System. Stereotaxis hereby grants to Biosense a
limited, (subject to Sections 2.4 and 4.4), non-transferable (except as
set forth in Section 2.4 and Article 16), worldwide license, under
Stereotaxis' Intellectual Property Rights in the Stereotaxis IP, to
make, have made, use, import, sell, offer for sale, or otherwise
dispose of (directly or through multiple tiers of distribution) the
Compatible CARTO Systems for use with the Daughter Products.
2.1.3 Development License. Stereotaxis hereby grants to Biosense a limited,
non-transferable (except as set forth in Section 2.4 and Article 16),
worldwide license under Stereotaxis'
8
Intellectual Property Rights in the Stereotaxis IP, to use the
Stereotaxis IP for the purpose of, internally at Biosense, completing
the development, integration and testing work in connection with
development of the Compatible CARTO System, the Compatible NIOBE System
and the Daughter Products as is required to give effect to the terms of
this Agreement.
2.1.4 No Implied Rights. No rights or licenses are granted hereunder by
implication, estoppel or otherwise. The only non-exclusive licenses
granted or to be granted to Biosense pursuant to this Agreement are as
expressly stated in this Section 2.1.
2.2 License Grant to Stereotaxis.
2.2.1 Daughter Products. For the purposes of giving effect to Section 2.4 and
4.4 Biosense hereby grants to Stereotaxis a limited, non-exclusive,
worldwide, non-transferable (except as set forth in Section 2.4 and
Article 16), license under Biosense' Intellectual Property Rights in
and to the Biosense' IP, to make, have made, use, import, sell, offer
for sale, or otherwise dispose of (directly or through multiple tiers
of distribution) Daughter Products.
2.2.2 CARTO System. Biosense hereby grants to Stereotaxis a limited,
non-exclusive (subject to Sections 2.4), non-transferable (except as
set forth in Article 16), worldwide license, under Biosense'
Intellectual Property Rights in the Biosense IP, to make, have made,
use, import, sell, offer for sale, or otherwise dispose of (directly or
through multiple tiers of distribution) the Compatible NIOBE Systems
for use with the Daughter Products.
2.2.3 Development License. Biosense hereby grants to Stereotaxis a limited,
non-transferable (except as set forth in Article 16), worldwide license
under Biosense' Intellectual Property Rights in the Biosense IP, to use
the Biosense IP for the purpose of, initially at Stereotaxis,
completing such development, integration and testing work in connection
with development of the Compatible CARTO System, the Compatible NIOBE
System and the Daughter Products as is required to give effect to the
terms of this Agreement.
2.2.4 Localization System Placements. Subject to Section 2.4, Biosense hereby
grants to Stereotaxis a limited, non-transferable (except as set forth
in Article 16), worldwide license (the "Localization License"), under
Biosense's Intellectual Property Rights in the Biosense IP (to the
extent if any, required) to make, have made, use, import, sell, offer
for sale or otherwise make available (directly or through multiple
tiers of distribution) the Stereotaxis Localization System (and
associated interventional disposable devices) pursuant to the
provisions, including the royalty provisions, of Section 2.4. For the
avoidance of doubt, the "associated interventional disposable devices"
referred to in the above sentence, applies to Stereotaxis developed
catheters and devices, and not to Biosense developed catheters and
devices.
2.2.5 No Implied Rights. No other rights or licenses are granted hereunder by
implication, estoppel or otherwise. The only non-exclusive licenses
granted or to be granted to Stereotaxis pursuant to this Agreement are
as expressly stated in this Section 2.2.
9
2.3 Exclusivity.
2.3.1 Stereotaxis. During the Term (subject to Sections 2.3.4, 2.4 and 4.4),
Stereotaxis will not engage in research and development, clinical
development, Marketing and Promotions or Distribution activities in the
Biosense Field; and
2.3.2 Biosense. During the Term, Biosense will not engage in research and
development, clinical development or Marketing and Promotions or
Distribution activities in the Stereotaxis Field.
2.3.3 Clinical Development. Neither Party will be taken to be in breach of
its obligations pursuant to Sections 2.3.1 and 2.3.2 above by reason of
any pre-clinical or clinical development activities initiated and
conducted by a Party or by third party physicians or hospitals with
technical, systems, service or financial support from such Party,
provided that the Party is obligated to provide such support pursuant
to a sponsored research agreement between the Party and such physician
or hospital and provided that such sponsored research agreement was:
entered into in the ordinary course; will not delay performance under
this Agreement; such support is not development engineering services
provided for a third party; and such support and agreement are
provided on terms both consistent with past practices of the Party and
consistent with relevant industry standards.
2.3.4 Termination. This Agreement will terminate (except in respect of any
antecedent breach) upon the occurrence of:
2.3.4.1 Technical Failure;
2.3.4.2 Commercial Failure; or
2.3.4.3 Seven (7) years from the Effective Date, contingent in respect of that
during Years Six (6) and Seven (7), on Biosense being generally
regarded in the field of electrophysiologic Localization as having one
of the leading market shares, or otherwise as provided for in Section
14 herein.
2.4 Stereotaxis Permitted Activities.
2.4.1 Own Development. Nothing in this Agreement will be taken to prevent
Stereotaxis development, Marketing and Promotions, Distribution or
other activities in respect of catheters or other interventional
instruments designed for non-Localized electrophysiological procedures.
2.4.1.1 Stereotaxis may continue with its own development program and
subsequent commercial activities with [***] (or, in the event of a
technical failure or a commercial failure of the activities with [***],
as determined by Stereotaxis, with one or more other manufacturers of a
Localization mechanism, provided that Stereotaxis with use reasonable
commercial efforts to work with only one such additional manufacturer)
in respect of the
[*** Indicates portions of this exhibit have been omitted and filed separately
with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]
10
Stereotaxis Localization System and associated proprietary disposable
localized devices until such time as the Commercial Launch Date,
provided that such development program:
2.4.1.2 does not involve collaboration with a Restricted Party, and
2.4.1.3 includes contract development from independent parties.
2.4.2 Localization System Placements.
2.4.2.1 Limit on Number of Placements. In connection with exercising its rights
under Section 2.4.1 and subject to Section 2.4.2.2, Stereotaxis agrees
that it may sell and/or license ("Stereotaxis Customer Localization
License") to third parties (each a "Stereotaxis Customer") only up to,
but not more than fifty (50) Stereotaxis Localization Systems.
2.4.2.2 The Localization License is granted by Biosense as a limited
non-exclusive license to Stereotaxis under any necessary Biosense IP at
a royalty rate according to the table below:
[***]
2.4.2.3 In the case of units sold using a different subcontractor (i.e., other
than [***]), then the above royalty rates shall be [***]. In addition,
if:
2.4.2.3.1 Stereotaxis exercises its rights pursuant to the Localization License;
or
2.4.2.3.2 Biosense loses distribution rights following Commercial Failure,
Technical Failure or other termination of placements of Compatible
NIOBE-CARTO Systems pursuant to this Agreement (including expiration
of the Term),
2.4.2.3.3 then Biosense shall be entitled to [***] of Stereotaxis' Net Revenues
in respect of it sales of disposable Localization catheters and
devices comprising Daughter Products or such devices as are utilized
subject to the Localization License. The Parties recognize that
Biosense grants the licenses herein only to the extent if any,
required to permit Stereotaxis to sell Stereotaxis Localization
Systems and/or grant such Stereotaxis Customer Localization Licenses
(and licenses in respect of proprietary localized disposable devices
to be used with the Stereotaxis Localization System) as permitted
pursuant to this Section 2.4.
2.4.2.4 Conversion of Stereotaxis Customers. Stereotaxis and Biosense will,
prior to and following the Commercial Launch Date, use all
commercially reasonable efforts, to convert Stereotaxis Customers to
usage of the Compatible CARTO System.
[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]
11
2.4.2.5 Limits on Localization License. Pursuant to the Localization License,
each Stereotaxis Customer Localization License (and licenses in respect
of electrophysiological localized disposable devices to he used with
the Stereotaxis Localization System) will be limited to a term ending
24 months following the Commercial Launch Date. Where this limitation
results in any Stereotaxis Customer having permitted usage of its
Stereotaxis Localization System for a period of less than five (5)
years ("Diminished Usage Period"), Biosense will make available to each
such customer by way of discounts, rebates or otherwise ("Rebate") in
respect of the Compatible CARTO System or other Biosense products
(other than the Daughter Products) purchased by the customer, a
reasonable discount to its list price on such products, such discount
pro rated inversely to the number of years of ownership by the customer
of the Stereotaxis Localization System.
2.4.3 Technical Failure. Commercial Failure or Delay.
2.4.3.1 Additional Stereotaxis Localization System Placements. In the event of
Technical Failure or Commercial Failure or delay in the Commercial
Launch Date for Compatible NIOBE-CARTO Systems (with relevant
disposable products that customers can use therewith) beyond April 30,
2004 ("Delay"), Stereotaxis will have the right to place additional
Stereotaxis Localization Systems (and proprietary localized disposable
devices to be used therewith) in the manner set out in this Section
2.4.3.
2.4.3.2 Failure. In the event of Technical Failure or Commercial Failure or
other termination as referred to in Section 14.2.3, Stereotaxis will
have the right to grant up to 500 licenses to third parties under its
Localization License having terms ending no later than three (3) years
following the date of such Technical Failure or Commercial Failure in
order to enable Stereotaxis to secure access to an alternative catheter
based Localization system that is compatible with the Stereotaxis NIOBE
System. The parties recognize herein that after the expiration of the
three (3) year period following any Commercial Failure or Technical
Failure, the Localization Licenses under the Biosense IP shall no
longer exist.
2.4.3.3 Delay. In the case of Delay, Stereotaxis will have the right to grant
up to 500 licenses pursuant to Section 2.4.3.2 until such time as the
Commercial Launch Date.
2.4.3.4 Biosense Distribution. In the case of Technical Failure, Commercial
Failure or Delay, Biosense will have the right to act as sole
distributor of such additional Stereotaxis Localization Systems (and
proprietary electrophysiological localized disposable devices to be
used therewith), based on reasonable commercial terms to be mutually
agreed upon by Biosense and Stereotaxis.
2.5 Preferred Partner and Third Party Integrations.
2.5.1 Outside Biosense Field. The Parties shall use reasonable commercial
efforts to cooperate (but without obligation) to bring the integration
of the Compatible NIOBE-CARTO System with additional imaging and
information modalities relevant to electrophysiology (including,
without limitation, digital x-ray fluoroscopy and intraoperative and
pre-operative 3D data
12
sets). Biosense will be Stereotaxis's preferred partner for the
Localization of Stereotaxis' medical devices outside of the Biosense
Field. Accordingly, Stereotaxis will grant Biosense a right of first
notice for all product development activities that are undertaken by
Stereotaxis relating to Localization of Stereotaxis' medical devices
outside of the Biosense Field as set forth in Section 2.5.2.
Additionally, the Parties will, within a reasonable period after the
Effective Date, enter into good faith discussions to consider
collaboration in the fields of neurology and interventional
neuroradiology.
2.5.2 Notice.
2.5.2.1 During the Term, at least sixty (60) days prior to Stereotaxis entering
into material and substantial negotiations regarding a potential
agreement regarding the Localization of medical devices outside of the
Biosense Field Stereotaxis agrees to notify Biosense in writing,
together with a summary description of the proposed potential agreement
that would be the subject of such negotiations ("Initial Notice"). Upon
request by Biosense given within ten (10) days of the date of such
Initial Notice, Stereotaxis and Biosense will discuss the terms and
conditions under which Stereotaxis and Biosense would enter into an
agreement like the proposed potential agreement with a third party. In
the event that Stereotaxis and Biosense have not agreed upon such terms
and conditions within thirty (30) days after the date Stereotaxis
provided the Initial Notice to Biosense, Stereotaxis will be free to
enter into such agreement with a third party without further
obligations to Biosense, and on any terms that Stereotaxis considers
appropriate. It is understood that, because Stereotaxis will be
providing the Initial Notice to Biosense prior to the commencement of
material and substantial negotiations with a third party, Stereotaxis
may not be able to define the entire or exact scope of the rights and
obligations of the potential agreement, and accordingly, so long as the
Initial Notice describes in general terms a product, field or rights
that overlap with the product, field or rights actually negotiated
with, or granted to, a third party, Stereotaxis will be deemed to have
satisfied its obligations, under this Section 2.5.2; also, it is
understood that Stereotaxis need only provide one (1) such Initial
Notice in any twelve (12) month period before engaging in such material
and substantial negotiations with any third party or parties.
2.5.2.2 Stereotaxis also agrees to notify Biosense in the event that
Stereotaxis reasonably considers it is engaged in substantive
discussions in respect of the sale of the company or substantially all
of its assets. For the avoidance of doubt, the provisions of Section
2.5.2.1 will not apply in respect of any such notice.
2.5.2.3 No Implied Obligation. The only obligations of Biosense and Stereotaxis
under this Section 2.5.2 are as expressly stated herein, and there are
no further implied obligations relating to the matters contemplated
therein. Without limiting the foregoing, it is further acknowledged and
agreed that this Section 2.5.2:
2.5.2.3.1 will not be deemed to apply to a change of Control of Stereotaxis; and
2.5.2.3.2 Stereotaxis is not obligated under this Section 2.5.2 to provide to
Biosense any particular information other than as expressly stated in
this Section 2.5.2.
13
2.5.2.3.3 If Biosense disputes Stereotaxis' right to proceed with a transaction
with a third party, Biosense will request that such dispute be
resolved in accordance with Section 15.
2.6 Single Purchase Offers. The parties agree to discuss in good faith
whether to implement distribution arrangements whereby customers are
provided with a single offer to purchase a Compatible NIOBE-CARTO
system.
2.7 Latest Localization Platform. The Parties acknowledge that the latest
generation Biosense's Localization technology platform used as of the
Effective Date is the CARTO XP system. In the event that Biosense at
any time during the Term launches a new Localization technology
platform Biosense will use reasonable efforts to develop and commence
distribution of a NIOBE compatible upgrade to the new Localization
technology platform. In such case the parties will enter into good
faith negotiations to determine the technically feasible and
commercially reasonable development cycle for such upgrade and to
determine the contributions of the Parties to its development funding,
provided that in the event the new Localization technology platform
includes technologies that are reasonably determined by Biosense as
not being reasonably capable of being made compatible with the NIOBE
System, Biosense will notify Stereotaxis in writing of the same (and
of the reasons therefor) at the earliest practicable opportunity in
the development cycle of the new Localization technology platform and
the Parties will enter into good faith negotiations to consider
amending this Agreement in a manner that adequately and reasonably
addresses any substantially negative consequences for Stereotaxis as a
result of the such incompatibility. This Section 2.7 will apply to any
new Localization technology platform in the same manner as it is
applicable to the Compatible CARTO System.
3 DEVELOPMENT AND OVERSIGHT
3.1 Joint Steering Committee.
3.1.1 Establishment. The Parties will establish a Joint Steering Committee.
Each Party may appoint up to three (3) representatives to the Joint
Steering Committee. The initial representatives of each Party are as
set forth in Exhibit E. Subject to the foregoing, replacement
representatives maybe appointed by either Party on written notice to
the other Party. All decisions of the Joint Steering Committee shall
be taken by a majority vote of all of the representatives on the Joint
Steering Committee and in the event of deadlock after ninety (90)
days, either Party may refer that decision in question to settlement
by the presidents of the Parties. In the event the presidents are
unable to agree within a period of ninety (90) days after being
presented with the question, a Party may elect to take the matter to
arbitration on the terms set out in Section 15 or otherwise as
mutually agreed in writing by the parties. The Joint Steering
Committee shall not meet or take any actions unless at least one
representative of each Party is in attendance.
3.1.2 Responsibilities. Each Party's representative to the Joint Steering
Committee will act reasonably and in good faith. The Joint Steering
Committee will oversee the Parties' performance in accordance with
Agreement including, without limitation:
14
3.1.2.1 coordinating the Parties' activities and responsibilities under the
Agreement;
3.1.2.2 encouraging and facilitating ongoing cooperation between the Parties;
3.1.2.3 subject to the guidelines set forth in Section 9.1.2, determining the
regulatory strategy and timetable in respect of the Daughter Products
and allocating responsibilities for effecting the same between the
Parties;
3.1.2.4 determining the development strategy and timetable in respect of the
Daughter Products and the Daughter Product Specifications, and
allocating responsibilities for effecting the same between the Parties;
3.1.2.5 subject to the provisions of Exhibit A and Section 9.1.2, determining
the regulatory strategy and timetable in respect of the Compatible
CARTO System and, where applicable, the Compatible NIOBE System, and
allocating responsibilities for effecting the same between the Parties;
3.1.2.6 subject to the guidelines set forth in Exhibit A, determining the
development strategy and timetable in respect of the Compatible CARTO
System and consulting with Stereotaxis as to the development strategy
and timetable for the Compatible NIOBE System, and allocating
responsibilities for affecting the same between the Parties;
3.1.2.7 discussing with Biosense once per quarter Biosense's then current sales
forecasts (whether finalized or preliminary) for the Daughter Products
and in respect of the placement of Compatible NIOBE--CARTO Systems for
each quarter in the next 12 months, and where available, the next 24
months. Biosense agrees to reasonably cooperate in this regard, but
will be under no obligation to take account of input from the Joint
Steering Committee in relation to any such forecasts; and
3.1.2.8 Where appropriate requesting Biosense to provide relevant information
to the Joint Steering Committee in respect of the issue of whether a
Technical Failure has occurred.
3.1.3 Meetings. The Joint Steering Committee will hold its first meeting
within thirty (30) days of the Effective Date. Thereafter, the Joint
Steering Committee will determine its meeting schedule, provided that
it will meet at least monthly by teleconference and semi-annually with
personal attendance of representatives (where reasonably practicable).
3.2 Development of the Compatible CARTO System and Compatible NIOBE System.
3.2.2. Development.
3.2.2.1 Biosense will use reasonable commercial efforts to develop the
Compatible CARTO System in accordance with the Compatible CARTO
Specifications and the Milestones and four development stages
("Development Stage") described in Exhibit A and otherwise in the
manner determined by the Joint Steering Committee pursuant to Section
3.1.2.6 and in this
15
regard Biosense will be responsible for providing all development
engineers and other personnel, facilities, Biosense IP and Biosense
Intellectual Property Rights and relevant regulatory resources required
for the development of the Compatible CARTO System. Stereotaxis will be
responsible for coordinating with and providing such information to
Biosense in respect of the such development as may be reasonably
required and further will make payments contributing to the costs of
the development of the Compatible CARTO System in accordance with the
terms of this Section 3.2 and with the terms and payment schedule set
forth in Exhibit A. Stereotaxis's contribution to funding of
development of the Compatible CARTO System will not exceed a maximum of
[***]. All payments will be made in US Dollars ($). Subject to Section
3.1.2.6, Stereotaxis will be responsible for developing the Compatible
NIOBE System.
3.2.2.2 Parties also agree to use reasonable commercial efforts to cooperate
(but without obligation) to consider the development of a hybrid
Compatible NIOBE System utilizing Biosense mapping and software and
Stereotaxis Localization System hardware for the purpose of providing
expedited entry to human clinical procedures by key common physician
customers. In the event of Technical Failure that leads to the
termination of the Development Program prior to the Critical Design
Review milestone outlined in Exhibit A, Biosense will bear no risk of
loss, but in any case, any unused portion of the finds provided to
Biosense will be refunded to Stereotaxis.
3.2.2.3 In the event of Technical Failure that leads to the termination of the
Development Program after the Critical Design Review milestone outlined
in Exhibit A, Biosense will promptly refund to Stereotaxis and unused
portion of its contribution to development funding of the Compatible
CARTO System (which will be calculated by crediting to Stereotaxis
amounts in the same manner as set out in Section 3.2.3 below) and also
promptly refund to Stereotaxis one half of Stereotaxis' aggregate
contribution for the period beyond the Critical Design Review milestone
outlined in Exhibit A, to development funding of the Compatible CARTO
System not otherwise repaid to Stereotaxis pursuant to Section 323
below.
3.2.3 Invoicing of Expenditures. Within ten (10) days of completion of each
Development Stage, Biosense will provide Stereotaxis a written invoice
stating the approximate the sum and breakdown of the following
development expenditures ("Expenditures") incurred by Biosense in such
stage:
3.2.3.1 [***]
3.2.3.2 [***]
3.2.3.3 [***]
[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]
16
3.2.3.4 [***]
3.2.3.5 [***]
3.2.4 Diligence. Each Party will complete its responsibilities hereunder in
respect of the Milestones set forth in Exhibit A and bring about
completion of such Milestones on a timely basis. Each Party will
promptly inform the other Party if it reasonably believes that there
will be a delay in meeting any Milestone, and keep the other Party
apprised of its progress in completing its responsibilities in respect
of such Milestone.
3.3 Development of the Daughter Products and Consulting. Biosense agrees to
coordinate with and provide information to Stereotaxis to an extent
reasonably required to allow Stereotaxis to develop the Daughter
Products in accordance with the Daughter Products Specifications, the
Milestones described in Exhibit A and otherwise as determined by the
Joint Steering Committee pursuant to Section 3.1.4 and will use
diligent efforts in this regard to complete its responsibilities and
bring about completion of such Milestones on a timely basis. Each Party
will promptly inform the other Party if it reasonably believes that
there will be a delay in meeting any Milestone, and keep the other
Party apprised of its progress in completing its responsibilities in
respect of such Milestone. At Stereotaxis' election, Biosense will
provide Stereotaxis with consulting on development and manufacturing of
non-localized disposable devices on a reasonable consulting fee basis
(to be mutually agreed upon).
3.4 Additional Daughter Products. Biosense agrees to coordinate with and
provide information to Stereotaxis to an extent reasonably required to
allow Stereotaxis to develop such additional Daughter Products
("Additional Daughter Products", which will be deemed to include any
Localized devices developed or to be developed by Stereotaxis and
having no corresponding Parent Products (but only products developed
based on Stereotaxis IP and not including any products developed in
concert with or based on the intellectual property of third parties))
as are reasonably nominated in writing by either Party, and to complete
such development and relevant regulatory filings for clinical or
commercial use (as the case may be) within a maximum period of one (1)
year from the date of such nomination. Biosense will have the right to
decline to distribute any such Additional Daughter Product, provided
that in such event, Stereotaxis will have the right to distribute such
product directly, through contract sales or
[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]
17
through other third party distribution but not through a Restricted
Party. Development, manufacture by Biosense and purchase by Stereotaxis
from Biosense of any such Additional Daughter Products will be
accomplished in accordance with the provisions of this Agreement.
3.5 Major Delays. In the event Biosense fails to meet a Milestone on
Exhibit A within six (6) calendar months after the Target Completion
Date for such Milestone, or in aggregate the period of delay in meeting
Target Completion Dates exceeds nine (9) months, Stereotaxis will have
the right to terminate this Agreement immediately upon written notice.
3.6 Failure to Obtain Approval. In the event that the Parties fail to
obtain applicable 510K, PMA and CE Xxxx regulatory approvals or
clearances required by U.S. FDA or the relevant Notified Body in
Europe, in respect of the Compatible NIOBE-CARTO System or components
thereof prior to April 30, 2005, or in respect of the Initial Daughter
Products, on April 30 2005, have not obtained or do not have prospects
for obtaining such approvals or clearances in the near term (and
thereafter do not obtain such approvals or clearances in the near
term), then either Party may terminate this Agreement immediately upon
written notice.
4 MARKETING, DISTRIBUTION AND MANUFACTURE
4.1 Biosense as Manufacturer. Daughter Products used for clinical trials
and research in respect of the Daughter Products will be manufactured
and supplied by Stereotaxis unless otherwise determined by the Joint
Steering Committee. The Parties agree that Biosense will serve as
manufacturer of the Daughter Products for commercial sale. To the
extent required, the Parties agree to fully cooperate in the transfer
of manufacturing know-how in respect of Daughter Products from
Stereotaxis to Biosense in advance of commercialization thereof.
4.2 Marketing and Promotions, Distribution Obligations.
4.2.1 Daughter Products.
4.2.1.1 Biosense will Distribute and conduct Marketing and Promotions in
respect of the Daughter Products and will use all reasonable commercial
efforts in this regard to maximize the dollar sales volume of the
Daughter Products. Biosense will be solely responsible for all costs
and expenses related to the Marketing and Promotions and Distribution
of Daughter Products and for performing its obligations and exercising
its rights hereunder. Biosense agrees to provide at least the same
economic incentives to its sales force to distribute Daughter Products
as apply to comparable Biosense products.
4.2.1.2 Stereotaxis will have the right (at its own expense unless otherwise
determined by the Joint Steering Committee), to conduct supplementary
Marketing and Promotions in respect of the, Daughter Products. In
exercising this right, Stereotaxis will consult in advance, to the
extent permissible under relevant law, and thereafter on a regular
basis, with the Joint Steering Committee to ensure that such
Stereotaxis' Marketing and Promotions activities are sufficiently
coordinated with Biosense' Marketing and Promotions activities in
respect of the Daughter Products to avoid creating customer confusion
or other negative effects.
18
Stereotaxis will be solely responsible for all costs and expenses
related to performing its obligations and exercising its rights
hereunder.
4.2.2 Compatible Stereotaxis NIOBE-CARTO Systems.
4.2.2.1 Biosense will be solely responsible for all costs and expenses related
to the Marketing and Promotions and Distribution the Compatible CARTO
System.
4.2.2.2 Stereotaxis will be solely responsible for all costs and expenses
related to the Marketing and Promotions and Distribution of the
Compatible NIOBE System.
4.2.2.3 The Parties further agree to cooperate in a commercially reasonable
manner in respect of optimizing the number Compatible Stereotaxis
NIOBE-CARTO Systems installed at hospital sites.
4.2.3 Biosense will provide commercially reasonable written proposals for
sales of Compatible CARTO Systems to customers nominated by Stereotaxis
within 45 days of such request. Such written proposals will be preceded
or followed by at least the reasonable and customary level of Biosense
sales force interaction with the prospective customer site as is
typically required to secure sale of a CARTO System.
4.2.4 Biosense Distribution of Products. The parties recognize that in the
event that Biosense is permitted to distribute any products under this
Agreement, Biosense will be the Party solely responsible for setting
price on products it distributes.
4.2.5 Stereotaxis Distribution of Products. In the event Stereotaxis has the
right to distribute products under this Agreement (for instance, as
specifically provided for, or by agreement of the Parties) Stereotaxis
herein agrees that it shall not distribute any such products through a
Restricted Party, except in the event where Stereotaxis is acquired by
such Restricted Party. The parties recognize that in the event that
Stereotaxis permitted to distribute any products under this Agreement,
Stereotaxis will be the Party solely responsible for setting price on
products it distributes.
4.2.6 Placement of Compatible CARTO Systems. In the event that the Compatible
CARTO Installation Ratio is [***], Biosense agrees that it will sell
Compatible CARTO Systems to Stereotaxis at [***] per system for resale
to prior users of any CARTO system, and at [***] per system for resale
to new users of the CARTO System, until such time as a [***] is
reached.
4.3 Forecast. Ninety (90) days prior to the beginning of each calendar
quarter, Biosense will provide Stereotaxis with a non-binding twelve
(12) month rolling forecast (for the period commencing at the beginning
of such calendar quarter) of Biosense's anticipated unit and dollar
volume sales of Daughter Products in respect of each month and quarter
during the such twelve month period. Additionally, in the event that
Stereotaxis Distributes Daughter Products in accordance with the terms
of this Agreement, Stereotaxis will provide a non-binding twelve
[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]
19
(12) month rolling forecast to Biosense in the same manner. Biosense
will consult with the Joint Steering Committee in respect of
preparation of such forecasts.
4.4 Identification of Stereotaxis and Biosense.
4.4.1 The packaging and package insert for the Daughter Products will
incorporate Stereotaxis's name and logo (which will be in a form as
provided by Stereotaxis to Biosense from time to time). The size,
prominence, location and other aspects of the incorporation of the
Stereotaxis name and logo into such packaging and package insert will
be at least of the size and prominence as is reasonable and customary
for arrangements of this type and in any event will be co-located with
the relevant Biosense' name and logo and not less than seventy-five
percent (75%) of the size of such Biosense' name and logo.
4.4.2 Each Party agrees to incorporate the name and logo of the other Party,
where reasonably practicable, into the visual and written output of its
Compatible NIOBE System and Compatible CARTO System (at the case may
be) in respect of electrophysiological procedures for which such
systems are utilized together as an Compatible NIOBE System CARTO
System. The size, prominence, location and other aspects of the
incorporation of such other Party's name and logo into such output will
be at least of the size and prominence as is reasonable and customary
for arrangements of this type and in any event will be co-located with
the relevant first Party's name and logo and not less than seventy-five
percent (75%) of the size of such first Party's name and logo.
4.4.3 Each Party will submit all materials of any kind containing the other
Party's Trademarks to the other Party before release to the public for
inspection, and such other Party will have the right to approve such
material prior to its distribution, and in absence of prompt approval
will be deemed to have provided approval. Each Party agrees that their
respective products and/or services that are associated with the other
Party's Trademarks shall meet the same general level of quality as is
provided by the other Party in connection with its own Trademarks.
Except as set forth in this Section, nothing in this Agreement shall
grant or shall be deemed to grant to one Party any right, title or
interest in or to the other Party's Trademarks. All use by each Party
of the other Party's Trademarks (including any goodwill associated
therewith) shall inure to the benefit of the Party that owns such
Trademarks.
4.5 Product Labeling. Biosense will be responsible for developing all
product packaging and labeling, including without limitation,
Instructions for Use which will comply with all applicable laws for all
Daughter Products. Biosense will include Stereotaxis patent and patent
pending labeling on the Daughter Products or Compatible CARTO System as
applicable. Stereotaxis will include Biosense patent and patent pending
labeling on the Compatible NIOBE System as applicable.
20
5 STEREOTAXIS COMPONENT SUPPLY
5.1 Manufacture of Components. Stereotaxis, at the direction of the Joint
Steering Committee, will manufacture and supply to Biosense such
Components as are specified by the committee provided that Biosense
will have the option to source directly from relevant vendors.
5.2 Forecasts. Ninety (90) days prior to the beginning of each calendar
quarter, Biosense will provide Stereotaxis with a non-binding twelve
(12) month rolling forecast of Biosense's anticipated requirements for
delivery of Components in each respective quarter ("Component
Forecast").
5.3 Pricing. Biosense will pay Stereotaxis a transfer price for each
Stereotaxis Component equal to the Stereotaxis's Cost of Goods for such
Components (including packaging) plus [***] in respect of delivery
costs ("Component Transfer Price").
5.4 Vendor Requirements. Stereotaxis will conform to Biosense's vendor
requirements set forth in Exhibit C.
5.5 Purchase Orders. Stereotaxis will accept all Biosense Purchase Orders
that comply in all material respects with the terms of this Agreement.
Stereotaxis will deliver a written acknowledgment of such a Purchase
Order within ten (10) Business Days of receipt of the Purchase Order.
No Biosense Purchase Order may modify or changes the terms set forth
herein and any such terms changing or purporting to change the terms
hereof are hereby rejected.
5.6 Terms. All prices set forth in this Section 5 will be F.O.B. Irwindale,
California ("Biosense Delivery Point"). All Components delivered under
this Agreement will be suitably packed for shipment, marked for
shipment to the address specified in Biosense's written purchase order
("Purchase Order"), and delivered at the Delivery Point to a carrier or
forwarding agent chosen by Biosense, at which time risk of loss and
title pass to Biosense. Should Biosense fail to designate a carrier,
forwarding agent or type of conveyance, Stereotaxis will make such
designation in conformance with its standard shipping practices. All
freight, insurance and other shipping expenses, as well as any special
packing expenses, incurred prior to delivery at the Biosense Delivery
Point will be incurred by Stereotaxis, and after delivery to the
Biosense Delivery Point will be borne by Biosense. Stereotaxis will use
reasonable efforts to ship all Components within the same calendar
month as the Biosense Delivery Date as defined in Section 5.5.1.
5.7 Taxes. Biosense will be responsible for the payment of any excise,
sales, use, value added, withholding or other taxes, tariffs or duties
that may be applicable on the transfer of Components to Biosense at the
Delivery Point, all of which will be Biosense's responsibility, and the
amounts owing to Stereotaxis hereunder will be paid without deduction
for, or with respect to, any of the foregoing.
[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]
21
5.8 Conflicting Terms. In ordering and delivering the Components, Biosense
and Stereotaxis may use their standard forms, but nothing in such forms
will be construed to amend or modify the terms of this Agreement and in
case of conflict herewith, the terms of this Agreement will control. No
Biosense Purchase Order may modify or changes the terms set forth
herein and any such terms changing or purporting to change the terms
hereof are hereby rejected.
5.9 Annual Stereotaxis Reports and Audits.
5.9.1 Reports. Within forty-five (45) days after the close of each
Stereotaxis fiscal year, Stereotaxis will provide a report to Biosense
which sets forth the Cost of Goods for Components, including a
breakdown of the components and assumptions used to calculate such Cost
of Goods and a schedule of the number of Components sold to Biosense
during the applicable period.
5.9.2 Audits. Stereotaxis will keep accurate records in sufficient detail to
enable the Cost of Goods for the Components to be determined. Upon the
request of Biosense, Stereotaxis will permit an independent certified
public accountant selected by Biosense to have access, once in each
Biosense fiscal year during regular business hours and upon reasonable
notice to Stereotaxis, to such of the records of Stereotaxis as may be
necessary to verify the accuracy of the reports made during the
previous Biosense fiscal year. The fees and expense of such accountant
will be paid by Biosense; provided that if the audit reveals that the
Cost of Goods reported by Stereotaxis are more than one-hundred and
five percent (105%) of the actual Cost of Goods, such fees and expenses
will be paid by Stereotaxis. The records from which the reports are
prepared will be retained by Stereotaxis in keeping with Stereotaxis's
document retention policy, but in no event less than three (3) years
after preparation thereof. In the event an adjustment is made to the
Cost of Goods that results in an adjustment to the applicable Component
Transfer Price, Biosense will promptly pay Stereotaxis any
underpayments resulting from such adjustment.
6. STEREOTAXIS MARKETING AND DISTRIBUTION
6.1 Right to Distribute. If Stereotaxis exercises its right to distribute
the Daughter Products pursuant to this Agreement, Biosense will fulfill
Stereotaxis' order for the Daughter Products in a timely manner as set
forth in this Section 6, subject to a minimum order of at least 60
catheters per type per month for each year, to be transferred to
Stereotaxis at Biosense's cost plus [***].
6.2 Forecast. Ninety (90) days prior to the beginning of each calendar
quarter, Stereotaxis will provide Biosense with a non-binding twelve
(12) month rolling forecast of Stereotaxis' anticipated requirements
for delivery of Daughter Products in each respective quarter ("Daughter
Product Forecast").
6.3 Pricing. Stereotaxis will pay Biosense a transfer price for each
Daughter Product equal to [***] of the Cost of Goods (provided that in
calculating the transfer price for the Daughter Product as a whole, the
cost for Components will be deemed equal to their actual
[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]
22
transfer price to Biosense from Stereotaxis) for a unit of such
Daughter Product ("Daughter Product Transfer Price").
6.4 Purchase Orders.
6.4.1 Each delivery of the Daughter Products will be initiated by a written
or electronic Stereotaxis Purchase Order in accordance with Section
6.4.2 below. All Purchase Orders will state unit quantities, unit
descriptions, Purchase Order coverage dates, and shipping instructions;
and all Purchase Orders will also state the requested delivery date for
the Daughter Products ("Delivery Date").
6.4.2 Stereotaxis will accept all Stereotaxis Purchase Orders that comply in
all material respects with the terms of this Agreement. Stereotaxis
will deliver a written acknowledgment of such a Purchase Order within
ten (10) Business Days of receipt of the Purchase Order.
6.5 Terms. All prices set forth in this Section 6 will be F.O.B. Irwindale
CA ("Biosense Delivery Point"). All Daughter Products delivered under
this Agreement will be suitably packed for shipment, marked for
shipment to the address specified in Stereotaxis' written purchase
order ("Purchase Order"), and delivered at the Biosense Delivery Point
to a carrier or forwarding agent chosen by Stereotaxis, at which time
risk of loss and title pass to Stereotaxis. Should Stereotaxis fail to
designate a carrier, forwarding agent or type of conveyance, Biosense
will make such designation in conformance with its standard shipping
practices. All freight, insurance and other shipping expenses, as well
as any special packing expenses, incurred prior to delivery at the
Biosense Delivery Point will be incurred by Biosense, and after
delivery to the Biosense Delivery Point will be borne by Stereotaxis.
Biosense will use reasonable efforts to ship all Daughter Products
within the same calendar month as the Delivery Date as defined in
Section 6.4.1.
6.6 Taxes. Stereotaxis will be responsible for the payment of any excise,
sales, use, value added, withholding or other taxes, tariffs or duties
that may be applicable on the transfer of Daughter Products to
Stereotaxis at the Delivery Point, all of which will be Stereotaxis'
responsibility, and the amounts owing to Stereotaxis hereunder will be
paid without deduction for, or with respect to, any of the foregoing.
6.7 Conflicting Terms. In ordering and delivering the Daughter Products,
Biosense and Stereotaxis may use their standard forms, but nothing in
such forms will be construed to amend or modify the terms of this
Agreement and in case of conflict herewith, the terms of this Agreement
will control. No Stereotaxis Purchase Order may modify or changes the
terms set forth herein and any such terms changing or purporting to
change the terms hereof are hereby rejected.
6.8 Annual Stereotaxis Reports.
6.8.1 Reports. Within sixty (60) days after the close of each Biosense fiscal
year, Biosense will provide a report to Stereotaxis which sets forth
the average Cost of Goods for a unit of each of the Daughter Products,
including a breakdown of the components and assumptions used to
23
calculate such average Cost of Goods and a schedule of the number of
Daughter Products sold to Stereotaxis during the applicable period.
6.8.2 Audits. Biosense will keep accurate records in sufficient detail to
enable the average Cost of Goods for the Daughter Products to be
determined. Upon the request of Stereotaxis, Biosense will permit an
independent certified public accountant selected by Stereotaxis to have
access, once in each Biosense fiscal year during regular business hours
and upon reasonable notice to Biosense, to such of the records of
Biosense as may be necessary to verify the accuracy of the reports made
during the previous Stereotaxis fiscal year. The fees and expense of
such accountant will be paid by Stereotaxis; provided that if the audit
reveals that the Cost of Goods reported by Stereotaxis are more than
one-hundred and five percent (105%) of the actual Cost of Goods, such
fees and expenses will be paid by Biosense. This audit right may not be
exercised more than once in any one Stereotaxis fiscal year. Biosense
will retain the records from which the reports are prepared for a
length of time in keeping with its document retention policy, but in no
event less than three (3) years after preparation thereof. In the event
an adjustment is made to the average Cost of Goods for the Daughter
Products that results in an adjustment to the applicable Daughter
Product Transfer Price, Biosense will promptly pay Stereotaxis any
underpayments resulting from such adjustment.
7 REVENUE SHARE
7.1 Daughter Product Sales. In respect of each quarter in each calendar
year of the Term, Biosense will pay Stereotaxis a revenue share upon
the sales of Daughter Products according to the following ("Revenue
Share"):
7.1.1 [***]
7.1.2 [***]
7.2 Compatible NIOBE System.
7.2.1 [***]
[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]
24
7.2.2 [***]
7.2.3 [***]
7.2.4 [***]
7.2.5 [***]
7.2.6 [***]
7.3 Discounting. Biosense agrees that for computations made under
Paragraphs 7.1 and 7.2 hereunder, the average discount applied to the
list price for the sale of all Daughter Products in any given year will
not exceed the average discount to the list price for corresponding
Parent Products during the same period.
7.4 Exchange Rates. If any currency conversion is required to calculate the
sales applied against the Net Revenue for Daughter Products, such
conversion will be made by using the exchange rates used by Biosense in
calculating Biosense's own revenues for financial reporting purposes in
the United States in accordance with U.S. GAAP. If any currency
conversion is required to calculate the Cost of Goods for Daughter
Products, such conversion will be made by using the exchange rates used
by Stereotaxis in calculating Stereotaxis's own costs for financial
reporting purposes in the U.S. accordance with U.S. GAAP.
7.5 Payment. Biosense will pay Stereotaxis the applicable Revenue Share on
a quarterly basis within thirty (30) days of the end of each quarter.
With each such payment Biosense will include a report that sets forth
in sufficient detail. the manner in which Biosense calculated the
Revenue Share for the applicable quarter. All payments will be made in
US Dollars($).
7.6 Annual Biosense Reports and Audits.
7.6.1 Reports. Within sixty (60) days after the end of each calendar year,
Biosense will provide a report to Stereotaxis which sets forth: the
Gross Profits and Cost of Goods, for Daughter Products sold (including
the calculation thereof), and any difference in the Revenue Share
[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]
25
payments actually made to Stereotaxis pursuant to Section 7.5 and the
amounts due per the calculation. The Parties will review such report
and agree upon the differences in amounts due. In the event the amounts
of Net Revenue paid by Biosense to Stereotaxis during such fiscal year
are less than the amounts due, Biosense will pay such difference to
Stereotaxis within forty-five (45) days of submitting such report to
Stereotaxis. In the event the amounts paid by Biosense in Revenue Share
during such fiscal year are greater than the amounts due, Biosense can
apply such amount to future Revenue Share amounts or, at Stereotaxis
election, Stereotaxis will pay such difference to Biosense within sixty
(60) days of receiving such report from Biosense.
7.6.2 Audits. Biosense will keep accurate records in sufficient detail to
enable the aforesaid payment due under this Agreement to be determined.
Upon the request of Stereotaxis, Biosense will permit a "big five"
independent certified public accountant selected by Stereotaxis to have
access, once in each Biosense fiscal year during regular business hours
and upon reasonable notice to Biosense, to such of the records of
Biosense and its Affiliates as may be necessary to verity the accuracy
of the reports made during the previous Biosense fiscal year as
provided for under Section 6.8.2.
8 MANUFACTURING QUALITY AND ACCEPTANCE
8.1 Conformance with Specifications. Biosense will manufacture or have
manufactured Daughter Products, and Stereotaxis will manufacture or
have manufactured the Components in a competent and workmanlike manner.
8.1.1 All Daughter Products delivered by Biosense to Stereotaxis, if any, and
Components delivered by Stereotaxis, if any, hereunder will conform in
all respects to the Daughter Product Specifications or Component
Specifications, as the case may be, and to all applicable manufacturing
specifications and all manufacturing processes.
8.1.2 All Daughter Products and Components will comply with all relevant
provisions of the FDC Act, including without limitation, wherever
applicable, the FDA QSR and other regulatory agency requirements.
8.1.3 All Daughter Products and Components will be CE-marked and ISO 9001
certified and not adulterated or misbranded under FDA guidelines.
8.2 Manufacturing Specifications. In the event that Stereotaxis exercises
its rights to market and distribute the Daughter Products under Section
4.5, prior to the first delivery to Stereotaxis of Daughter Products,
Biosense will provide to Stereotaxis a detailed manufacturing
specification (the "DP Manufacturing Specifications") for the Daughter
Products. Such DP Manufacturing Specifications will be consistent with
the Daughter Product Specifications agreed upon by the Parties, and
will be sufficient in all events to ensure that Daughter Products meet
all criteria and specifications set forth in the applicable Daughter
Product Specifications (including without limitation, performance
specifications). At Biosense's direction, such DP Manufacturing
Specifications will contain a level of detail necessary to make such
products. Stereotaxis will
26
provide similar Manufacturing Specifications to Biosense for the
Components prior to Stereotaxis' first shipment of commercial
quantities of the Components to Biosense ("Component Manufacturing
Specifications"). From and after the delivery of such Manufacturing
Specifications, the Daughter Products and Components will mean for all
purposes of this Agreement those certain Daughter Products and
Components reflected by and defined in the Manufacturing
Specifications. Biosense, in the case of the DP Manufacturing
Specifications, and Stereotaxis, in the case of the Component
Manufacturing Specifications, will have the right to modify and will
modify such Manufacturing Specifications from time to time to reflect
modifications made by Biosense to the Daughter Products and by
Stereotaxis to the Components, and in all cases, one party shall
communicate such changes to the other party. Such modifications will in
all cases be consistent with all applicable Daughter Product
Specifications and Component Specifications. Any modifications not
consistent with such specifications will require the unanimous approval
of the Joint Steering Committee.
8.3 Packaging of Lots and Lot Sizes. The Daughter Products, in the case of
Biosense, and Components, in the case of Stereotaxis, will be packaged
and shipped in lots in accordance with the Daughter Product
Specifications and the Component Specifications. Biosense will be
solely responsible for all packaging of Daughter Products and
Stereotaxis will be solely responsible for packaging of Components.
8.4 Quality Guidelines.
8.4.1 All Components supplied to Biosense by Stereotaxis will meet the
requirements of the Component Specifications and the Component
Manufacturing Specifications and the requirements of any applicable
health regulatory agency.
8.4.2 All Daughter Products supplied by Biosense will be manufactured in
accordance with the FDC Act, including, without limitation, the FDA QSR
requirements at Biosense's plant located at Irwindale CA or other
plants established by Biosense from time to time, including plants of
Biosense's suppliers, if applicable (the "Facility"). It is understood
that for all purposes of this Agreement "health regulatory agency" will
include, without limitation, the European Commission.
8.5 Quality Control. Prior to each shipment of Daughter Products or
Components, Stereotaxis or Biosense, as the case may be, will perform
quality control procedures set forth in Section 8.4, to verify that
such Daughter Products or Components, as the case may be, meet such
Quality Guidelines and will provide the other Party with a certificate
of compliance with each lot delivered to it.
8.6 Rejection. Biosense and Stereotaxis will have thirty (30) days
following its receipt of a shipment of Daughter Products or Components,
as the case may be, to reject Daughter Products or Components which
fail to conform to the Quality Guidelines set forth in Section 8.4,
which rejection will be accomplished in accordance with the provisions
of Section 8.8 below. Each Party will have the right to reject shipment
in lots based on prior agreed standards of statistically significant
rejection rates of samples of such lot in accordance with the
procedures
27
set forth in Section 8.7 below. If a Party rejects a shipment before
the date on which payment therefore is due, it may withhold payment
for such shipment or the rejected portion thereof. The limited
warranties given by each of the Parties in Section 10 will survive
any failure to reject by the other Party under this Section 8.6.
Each Party will use commercially reasonable efforts to replace the
quantities of Daughter Products or Components returned by the other
Party within the shortest possible time, but no later than sixty
(60) days from the return of such quantities.
8.6.1 If a Party fails to replace returned Daughter Products or
Components, as the case may be, within ninety (90) days from the
date such Daughter Products or Components are returned, the
purchasing Party will have the right to:
8.6.1.1 cancel such replacement shipment by written notice; and
8.6.1.2 reclaim immediately the Daughter Product Transfer Price paid to
Biosense or the Component Transfer Price paid to Stereotaxis, as the
case may be, with respect to the Daughter Products or Components
that were returned but not replaced, if payment for such Daughter
Products or Components had already been made to Stereotaxis or
Biosense.
8.7 Rejection by Lot. In the event that Biosense or Stereotaxis rejects
an entire lot pursuant to Sections 8.6 and 8.8 (the "Rejecting
Party"), the Parties will take the following actions. The rejecting
Party will ship back to supplier an agreed upon sample size from
such lot with written notice setting forth the reason for such
rejection. Within fifteen (15) Business Days of receipt of the
sample, Biosense or Stereotaxis, (the "Supplier"), will test the
sample and provide notice of its determination to Rejecting Party.
If, after testing the sample, Supplier determines that the lot was
improperly rejected, the Supplier will so notify the rejecting
Party. If the Parties cannot resolve the discrepancies within
fifteen (15) Business Days, the Supplier will dispatch a quality
assurance representative to the Rejecting Party's location. Such
quality assurance representative will work with the Rejecting Party
to determine the discrepancy in the finding with regards to the lot.
If the Supplier representative and the Rejecting Party
representative cannot come to agreement on the disposition of the
lot within ten (10) days, then the matter will be submitted to an
independent lab for determination.
8.8 Rejection Procedure. With respect to Daughter Products and
Components which a Party intends to reject pursuant to Sections 8.6
or 8.7 above, the Rejecting Party will, within thirty (30) days
following receipt of such Daughter Products or Components, as the
case may be, give written notice to the Supplier specifying the
manner in which such Daughter Products of Components, as the case
may be, fail to conform to the Quality Guidelines set forth in
Section 8.4 and in conjunction with such notice, the Rejecting Party
will request authorization from the supplier prior to the return of
each lot of such Daughter Products or Components, as the case may
be. Upon such request, the Supplier will provide the Rejecting Party
with an RMA tracer number to be prominently displayed on the
shipping container for the returned Daughter Products or Components,
as the case may be. The foregoing thirty (30) day period may be
extended for up to an additional thirty (30) days upon written
request by the Rejecting Party to the supplier if received prior to
the expiration of the original notice period and stating a
legitimate reason for such request for extension. If returned
Daughter Products or Components,
28
as the case may be, are determined by the Supplier to conform to the
applicable Quality Standards set forth in Section 8.4 the Rejecting
Party will reimburse the Supplier's shipping costs associated with
the return of such conforming or out-of-warranty Daughter Products
or Components, as the case may be, and, at the request of the
Rejecting Party, the Supplier will return such Daughter Products or
Components, as the case may be, to the Rejecting Party at the
Rejecting Party's expense. Biosense's and Stereotaxis's sole
liability and the other Party's exclusive remedy in connection with
rejected Daughter Products or Components under this Section 8 will
be replacement of the rejected Daughter Products or Components.
8.9 Presence At Facility. Upon reasonable notice given by one party to
the other and at reasonable frequency (not more than once per
calendar year unless the party can demonstrate a reason for more
frequent audits), such party will have the right to assign no more
than two employees or consultants of such party to inspect and audit
the Facility at which a product is manufactured during normal
business hours; provided, however that:
8.9.1 such employees or consultants will not unreasonably interfere with
other activities being carried out at the Facility;
8.9.2 such employees or consultants will observe all rules and
regulations applicable to visitors and to individuals employed at
the Facility; and
8.9.3 such employees or consultants will be bound by Section 16 hereof.
8.10 Exchange of Information. In the event that Stereotaxis markets and
distributes the Daughter Products, Biosense agrees to provide
technical information regarding Daughter Products as needed by
Stereotaxis for packaging, labeling, package inserts, and customer
support.
9 REGULATORY MATTERS
9.1 Regulatory Approvals.
9.1.1 Manufacturing. Biosense will obtain and maintain all regulatory
licenses, permits and registrations necessary to manufacture the
Daughter Products and Compatible CARTO System and Stereotaxis will
obtain and maintain such regulatory licenses, permits and
registrations as are necessary to manufacture the Components, in
each case to supply them for sale in the United States and such
other countries as are mutually agreed upon in writing-by the
Parties.
9.1.2 U.S. 510K and/or PMA Clearance/Approval. Biosense will be
responsible for obtaining 510K Clearance or, where applicable, PMA
approval the Compatible CARTO System in the United States and, at
Stereotaxis expenses, for the Daughter Products in the United States
and Stereotaxis will be responsible for obtaining any such approvals
required in respect of the Compatible NIOBE System; provided that
the Parties agree to fully cooperate and coordinate their activities
in order to achieve the most expeditious regulatory mechanisms
reasonably available in respect of the Daughter Products, the
Compatible NIOBE System and the
29
Compatible CARTO System, including coordinating with one another so
as to jointly manage clinical and regulatory activities including
without limitation protocol selection and site selection and so as
to jointly participate, where practicable, in communications with
FDA, provided that in case of disagreement in any respect, the final
decision will be made by the sponsor of the relevant regulatory
submission
9.1.3 Foreign Approvals. Subject to the direction of the Joint Steering
Committee or as mutually agreed by the Parties, the Parties will
file for and pursue applications for regulatory approval to sell the
Daughter Products (at Stereotaxis expense) and Compatible CARTO
System and Compatible NIOBE System in countries outside the United
States comprising at least the filing and pursuing a CE Xxxx in
Europe for such products.
9.2 Cooperation to Obtain and Maintain Approvals. The Parties agree to
maintain all information regarding the Daughter Products and
Compatible CARTO System and the Compatible NIOBE System filed with
the FDA and other regulatory bodies current and reflective of
current manufacturing practices and product specifications and to
update this information as required. From time to time dining the
term of this Agreement, Stereotaxis and Biosense will provide such
further letters of authorization, instruments and/or documents, and
take such other actions, as the other may reasonably request for
purposes of obtaining regulatory approvals, in accordance with this
Article 9, to Distribute the Daughter Products.
9.3 Exchange of Information. Each Party will keep appropriate records
relating to its activities with respect to regulatory approvals
hereunder and will report to the other Party on the status of such
activities on a regular basis.
9.4 Inspections. The Parties will permit (and will use commercially
reasonable efforts to cause its vendors to permit) the FDA and other
regulatory agencies to conduct such inspections of the facilities at
which the products are manufactured pursuant to this Agreement upon
request by such agencies and will cooperate with the FDA or such
other regulatory agencies with respect to such inspections and any
related matters. Each Party will give the other Party prompt written
notice of any such inspections and will keep such other Party
informed about the results and conclusions of each such regulatory
inspection, including actions taken by the relevant Party or Parties
to remedy conditions cited in such inspections. Each Party will
provide the other Party with copies of any written inspection
reports issued by such agencies and all correspondence between it
and the agency involved pertaining to such inspections or products.
10 REPRESENTATIONS AND WARRANTIES
10.1 Stereotaxis. Stereotaxis represents and warrants that:
10.1.1 it has full power to enter into the Agreement and to perform its
obligations hereunder,
10.1.2 it has obtained all necessary corporate approvals to enter and
execute into this Agreement;
30
10.1.3 it is the owner or licensee of the Intellectual Property Rights in
and to the Stereotaxis IP and has the right to grant to Biosense the
rights granted herein;
10.1.4 to the best of Stereotaxis' knowledge, use, manufacture, sale, offer
for sale or importation of the NIOBE System does not infringe any
patent rights, trade secrets or other proprietary rights of any
third party;
10.1.5 it has not previously granted and, subject to Sections 2.4 and 4.4,
will not grant in the future, any rights that conflict with the
rights and licenses granted to Biosense herein;
10.1.6 all Components sold by Stereotaxis to Biosense will be free from
Defects in construction, materials, processing and workmanship until
the end of the applicable warrant period specified by the Joint
Steering Committee pursuant to this Agreement when used in and
maintained in accordance with the specifications, instructions and
packaging therefor.
10.2 Biosense.
10.2.1 General. Biosense represents and warrants that:
10.2.1.1 it has full power to enter into the Agreement and to perform its
obligations hereunder; and
10.2.1.2 it has obtained all necessary corporate approvals to enter and
execute into this Agreement.
10.2.2 Ownership. Biosense further represents, warrants and covenants that:
10.2.2.1 it is the owner or licensee of the Intellectual Property Rights in
and to the Parent Products and CARTO System and has the right to
grant to Stereotaxis the rights granted herein; and
10.2.2.2 to the best of Biosense's knowledge, use, manufacture, sale, offer
for sale or importation of the Daughter Products and the CARTO
System does not infringe any patent rights, trade secrets or other
proprietary rights of any third party.
10.2.3 Process and Product Warranties. The parties represent, warrant and
covenant:
10.2.3.1 all products sold by one party to the other hereunder will be free
from Defects in construction, materials, processing and workmanship
until the expiration date affixed thereto which date will be
determined;
10.2.3.2 all products sold by one party to the other hereunder will comply in
all material respects with the Specification, Manufacturing
Specifications, the FDC Act including, without limitation, all FDA
QSR requirements, for the products, and any other regulatory agency
requirements agreed to by the Parties in accordance with Section 9
above;
10.2.3.3 all of the products sold by one party to the other hereunder will
have been manufactured, packaged stored and shipped in conformance
with the FDC Act including, without limitation, all applicable
current FDA QSR or similar regulations which are hereinafter
31
adopted by the FDA or any successor agency thereto and any other
regulatory agency requirements agreed to by the Parties in
accordance with Section 9 above; and
10.2.3.4 title to all products sold by one party to the other hereunder will
pass to such party as provided herein free and clear of any security
interest, lien, or other encumbrance.
10.3 Sole Remedy. The foregoing warranties will survive inspections,
acceptance and payment by Biosense and Stereotaxis. Subject to
Section 12, each Party's sole and exclusive remedy for breach of the
warranty in this Section 10 will be:
10.3.1 to have replaced products which are the subject of the warranty
claim in accordance with the provisions of Section 10.4; and
10.3.2 return and have replaced unused Daughter Products and Components,
as the case may be, with respect to which Biosense or Stereotaxis
has discovered Defects upon inspection in accordance with the
provisions of Section 10.4, as applicable.
10.3.3 Each Party will use its commercially reasonable efforts to provide
replacement products within the shortest possible time, but no later
than sixty (60) days from return.
10.4 Warranty Procedures.
10.4.1 The following warranty procedures will apply with respect to a
product or component of a product sold by one party to the other:
first, a party will provide the other with written notice of such
claims. After receiving such notice, the receiving party will
provide the reporting party with a Return Materials Authorization
("RMA") number, after which the reporting party will return the
defective product or component to the manufacturing party. The
returning party will display the RMA number prominently on the
packaging, and must return the product or component in its original
packaging, with shipping charges prepaid. The parties will not
accept collect shipments. The receiving party in its sole discretion
may refuse any product or component not returned in accordance with
the terms of this Agreement.
10.4.1.1 In the event that the party determines that a returned product or
component is defective, the party will have the right, at its sole
option, to either:
10.4.1.2 repair or remedy the Defects; or
10.4.1.3 replace with conforming product or component. The foregoing sets
forth the parties' sole remedy and sole liability, for any breach of
the warranty set forth in this Section 10.
10.4.2 Daughter Products. The following warranty procedures will apply with
respect to Daughter Products marketed and sold by Stereotaxis that
are the subject of a customer complaint under the applicable
Daughter Product warranty. Stereotaxis will notify Biosense of such
Daughter Products to be replaced in response to customer complaints
(and return of product) and
32
Biosense will replace all such products without charge to
Stereotaxis or the customer and will bear all costs associated with
such replacement.
10.5 Recalls.
10.5.1 In the event that any recall of Daughter Products supplied
by Biosense hereunder is
10.5.1.1 required by the US FDA; or
10.5.1.2 mutually agreed upon, in writing, by Biosense and Stereotaxis, which
agreement will not be unreasonably withheld by either Party,
10.5.1.3 the Parties will confer for the purpose of determining how to
conduct the recall in an efficient and economic manner prior to
commencement of such recall.
10.5.2 The costs of any such recall will be allocated as follows:
10.5.2.1 to the extent that such recall is due to Biosense's failure to meet
the Quality Guidelines set forth in Section 8.1.5 in manufacturing
Daughter Products, the manufacture or sale of such products by
Biosense, or the design of the Parent Product despite modification
thereof to create the Daughter Product, Biosense will be responsible
for all of the reasonably incurred costs of effecting such recall
and will use commercially reasonable efforts to replace the
defective Daughter Products within the shortest possible time, but
no later than sixty (60) days following such recall;
10.5.2.2 to the extent that such recall is due to Stereotaxis' mislabeling,
mishandling, modification or promotion of any Daughter Product sold
hereunder (except if caused by incorrect information provided by
Biosense), or the design of the Daughter Products, Stereotaxis will
be responsible for the costs of such recall; or
10.5.2.3 if neither 10.5.2.1 nor 10.5.2.2 above is applicable:
10.5.2.3.1 in the event of a mutually agreed upon recall, the Parties will
share equally in the costs of such recall (including, without
limitation, the cost of replacement Daughter Products and Biosense's
normal and customary catheter replacement and communications
costs); or
10.5.2.3.2 in the event that either Party does not agree that a recall should
be conducted, the other Party may trigger the recall at its own
expense.
10.5.2.4 The Parties will cooperate and mutually agree upon the manner in
which the recall is conducted; provided that in all cases, Biosense
will have the first right to conduct the recall.
10.6 Correction of Flaws. Biosense will on a regular basis provide to
Stereotaxis a summary of its customer error reports highlighting the
most regularly occurring concerns reported by customers regarding
Daughter Products
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10.7 LIMITATION OF WARRANTIES. NEITHER PARTY MAKES ANY REPRESENTATIONS OR
WARRANTIES OTHER THAN THOSE EXPRESSLY STATED IN THIS SECTION 10,
AND EACH PARTY SPECIFICALLY DISCLAIMS ALL OTHER EXPRESS OR IMPLIED
WARRANTIES OF NONINFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. STEREOTAXIS EXPRESSLY DISCLAIMS ANY AND ALL
WARRANTIES REGARDING THE PARENT PRODUCTS, CARTO SYSTEM, DAUGHTER
PRODUCTS AND COMPATIBLE CARTO SYSTEM.
11 INDEMNIFICATION
11.1 Indemnity. Biosense will indemnify, defend and hold harmless
Stereotaxis, its directors, officers, employees and agents (each a
"Stereotaxis Indemnitee") from and against any liabilities
(including without limitation damages awarded to third parties),
expenses or costs (including reasonable attorneys' and professional
fees) ("Liabilities") resulting from any claim(s) brought by a third
party against a Stereotaxis Indemnitee relating to the manufacture,
marketing, promotion, sale or use of the Daughter Products,
Compatible CARTO System or Biosense IP.
11.2 Procedure. In connection with indemnification under Section 11.1
Stereotaxis will:
11.2.1 provide Biosense with prompt notice of any such claim, demand or
cause of action;
11.2.2 give Biosense sole control of the defense and all related settlement
negotiations at Biosense's expense (which expenses will be included
in the calculation of Liabilities hereunder); and
11.2.3 provide Biosense, at Biosense's reasonable expense, all assistance,
information, and authority reasonably requested by Biosense to
perform the foregoing.
11.3 Remedy. In the event the use, sale or manufacture of Daughter
Products is enjoined, the indemnifying Party will use diligent
efforts to either:
11.3.1 procure a license to allow the indemnified Party or to enjoy the
rights granted under this Agreement, or
11.3.2 modify the Daughter Products to make them non-infringing.
11.4 Indemnity. Stereotaxis will indemnify, defend and hold harmless
Biosense, its directors, officers, employees and agents (each a
"Biosense Indemnitee") from and against any liabilities (including
without limitation damages awarded to third parties), expenses or
costs (including reasonable attorneys' and professional fees)
("Liabilities") resulting from any claim(s) brought by a third party
against a Biosense Indemnitee relating to the manufacture,
marketing, promotion, sale or use of the Compatible NIOBE System or
Stereotaxis IP.
11.5 Procedure. In connection with indemnification under Section 11.4,
Biosense will:
34
11.5.1 provide Stereotaxis with prompt notice of any such claim, demand or
cause of action;
11.5.2 give Stereotaxis sole control of the defense and all related
settlement negotiations at Stereotaxis' expense (which expenses will
be included in the calculation of Liabilities hereunder); and
11.5.3 provide Stereotaxis, at Stereotaxis' reasonable expense, all
assistance, information, and authority reasonably requested by
Stereotaxis to perform the foregoing.
11.6 Remedy. In the event the use, sale or manufacture of Components is
enjoined, the indemnifying Party will use diligent efforts to
either:
11.6.1 procure a license to allow the indemnified Party or to enjoy the
rights granted under this Agreement; or
11.6.2 modify the Components to make them non-infringing.
12 PROPRIETARY RIGHTS
12.1 Stereotaxis. The Parties agree that, as between them, Stereotaxis
retains all right, title, and interest in and to the Technology and
Intellectual Property Rights that Stereotaxis owned prior to the
commencement of this Agreement, including, without limitation, the
Stereotaxis NIOBE System and all Intellectual Property Rights in or
arising from such Technology and to all Technology and Intellectual
Property Rights that which are created or made during the term of
this Agreement by Stereotaxis, its employees, agents or other third
parties acting under the authority from Stereotaxis working on
matters relating to this Agreement ("Stereotaxis Personnel") (all
such Technology and Intellectual Property Rights collectively
"Stereotaxis IP").
12.2 Biosense. The Parties agree that, as between the Parties, Biosense
retains all right, title, and interest in and to the Technology and
Intellectual Property Rights that Biosense owned prior to the
commencement of this Agreement, including, without limitation, the
CARTO System, the Parent Products and all Intellectual Property
Rights in or arising from such Technology and to all Technology and
Intellectual Property Rights which are created or made during the
term of this Agreement by Biosense, its employees, agents or other
third parties acting under the authority from Biosense working on
matters relating to this Agreement ("Biosense Personnel") (all such
Technology and Intellectual Property Rights collectively "Biosense
IP").
12.3 Joint Ownership.
12.3.1 Joint IP. The Parties will own jointly any Technology or
Intellectual Property Rights made or created jointly by Biosense
Personnel and Stereotaxis Personnel ("Joint IP"). For the purposes
of the foregoing, a Patent will be considered to have been jointly
created if at least one employee of Stereotaxis and Biosense are
named inventors on such Patent as issued and a copyrighted work will
be considered to be jointly created if it is a joint work within the
35
meaning of the United States Copyright Act. Except as set forth in
this Section 12.3.1, the Parties intend that each Party hereto will
have an equal and undivided joint ownership interest in the Joint IP
related thereto. Each Party will have the right to use and exploit
such Joint IP subject to the provisions of Sections 2.3, 2.4 and 4.5
and subject to each Party's obligations of confidentiality under
Section 13. Neither Party will have any duty of accounting to the
other Party with respect to such joint ownership interest. Each
Party hereby unconditionally and irrevocably assigns to the other
Party the joint ownership interest set forth in this Section 12.3.1
with respect to the portions of the Joint IP developed by such
Party.
12.3.2 Licenses.
12.3.2.1 Stereotaxis hereby grants Biosense a non-exclusive, irrevocable,
worldwide, non-transferable (except as set forth in Section 16.2),
fully paid up, royalty-free, perpetual and sub-licensable right and
license under all of its Intellectual Property Rights in and to its
equal and undivided interest in the Joint Technology, to use,
manufacture, have manufactured, sell, have sold and import products
in the Biosense Field.
12.3.2.2 Biosense hereby grants Stereotaxis a non-exclusive, irrevocable,
worldwide, non-transferable (except as set forth in Section 16.2),
fully paid up, royalty-free, perpetual, and sub-licensable right and
license under all of its Intellectual Property Rights in and to its
equal and undivided interest in the Joint Technology, to use,
manufacture, have manufactured, sell, have sold and import products
in the Stereotaxis Field.
12.3.3 Applications and Registrations. To the extent that an application,
registration, or other governmental procedure (collectively, a
"Procedure") is required to obtain, perfect, or protect any
Intellectual Property Right in the Joint Technology that the Parties
may jointly own pursuant to Section 12.3.1 and either Party desires
to pursue such Procedure, such Party will first consult with the
other Party. If the other Party desires to participate in such
Procedure, the Parties will then jointly and cooperatively pursue
such Procedure, in which event they will bear all costs equally and
jointly own any rights thereby obtained. If a Party declines to
participate in such Procedure, the other Party will then have the
right to pursue such Procedure alone, in which case such other Party
will bear all costs of and, notwithstanding Section 12.3.1,
exclusively own all rights resulting from, such Procedure.
12.3.4 Actions Against Third Party Infringers. Each Party will promptly
notify the other Party if such former Party becomes aware of any
possible infringement or misappropriation by a third Party of any of
the Joint IP in which the Parties share a joint ownership interest
under this Section 12. If either Party desires to take any action
against such an infringing or misappropriating third Party, such
Party will first notify the other Party hereto and consult with such
other Party regarding such action. If the other Party desires to
participate in such action, the Parties will then jointly and
cooperatively pursue such action, in which event they will bear all
costs equally and share in any damages or other recoveries equally.
Either Party may at any time decide not to participate further in
any such action, in which case any further costs will be borne by
and all damages and other recoveries will be received by the Party
that
36
continues to pursue such action. If a Party declines to participate
in any such action, the other Party will then have the right to
pursue such action alone, and will bear all costs of and receive all
damages and other recoveries from such action. Notwithstanding the
foregoing, if a Party declines to participate in such an action or
withdraws from such an action, such Party will nevertheless, at the
request of the other Party, cooperate with the other Party, at the
cost of the other Party and subject to any reasonable conditions
(including indemnification against counterclaims by the third
party), to the extent necessary to enable the other Party to pursue
such action effectively.
12.3.5 Cooperation. Each Party will execute all documents and take such
further actions as may be reasonably required to evidence, perfect,
or enforce any assignment of rights set forth in this Section 12.
12.4 Developed Intellectual Property.
12.4.1 Subject to the provisions in this Agreement, Biosense hereby grants
to Stereotaxis a fully paid, irrevocable, nonexclusive license under
any Biosense Improvement Patents, to make, use, sell, offer to sell
and import any product (or component for a product) that is
substantially similar to the Stereotaxis NIOBE System.
12.4.2 "Biosense Improvement Patents" will mean any Patent rights of any
kind that cover an invention made by Biosense Personnel that would
infringe any Stereotaxis Intellectual Property Rights or an
improvement based on any Stereotaxis IP during the term of this
Agreement.
12.4.3 The license granted to Stereotaxis hereunder will include the right
to grant and authorize sublicenses, but only in connection with the
grant by Stereotaxis of a right to make, use and/or sell any product
(or component for a product) that is substantially similar to the
Stereotaxis NIOBE System. It is understood that the foregoing
restriction on sublicensing will not impair Stereotaxis' rights
under the license grant to have products or components thereof
manufactured for Stereotaxis.
12.4.4 Subject to the provisions in this Agreement, Stereotaxis hereby
grants to Biosense a fully paid, irrevocable, nonexclusive license
under any Stereotaxis Improvement Patents, to make, use, sell, offer
to sell and import any product (or component for a product) that is
substantially similar to the CARTO System.
12.4.5 "Stereotaxis Improvement Patents" will mean any patent rights of any
kind that cover an invention made by Stereotaxis Personnel that
would infringe any Biosense Intellectual Property Rights or an
improvement based on any Biosense IP or Intellectual Property Rights
during the term of this Agreement.
12.4.6 The license granted to Biosense hereunder will include the right to
grant and authorize sublicenses, but only in connection with the
grant by Biosense of a right to make, use and/or sell any product
(or component for a product) that is substantially similar to the
CARTO
37
System. It is understood that the foregoing restriction on
sublicensing will not impair Biosense's rights under the license
grant to have products or components thereof manufactured for
Biosense.
13 CONFIDENTIALITY
13.1 Definition.
13.1.1 "Confidential Information" as used herein will include:
13.1.1.1 written, recorded, graphical or other information in tangible form
disclosed, during the term of this Agreement, by one Party to the
other Party which is stamped "Proprietary," "Confidential," or with
a similar legend denoting the proprietary interest therein of the
disclosing Party,
13.1.1.2 oral information which is disclosed by one Party to the other Party
to the extent it is identified as "Proprietary" or "Confidential" at
the time of oral disclosure, is reduced to written or other tangible
form within thirty (30) days of oral disclosure, and such written or
tangible form is stamped "Proprietary", "Confidential", or with a
similar legend denoting the proprietary interest therein of the
disclosing Party;
13.1.1.3 the following information, whether or not marked "Proprietary" or
"Confidential": any reports or forecasts provided hereunder;
13.1.1.4 information, data, or know-how derived from any information
contained in items this Section 13.1.1 ("Derivative Information").
13.1.2 Notwithstanding the above, Confidential Information will not include
information:
13.1.2.1 In the possession of the receiving Party prior to its disclosure by
the disclosing Party and not subject to other restrictions on
disclosure;
13.1.2.2 is or later becomes part of the public domain through no fault of
the recipient Party;
13.1.2.3 independently developed by the receiving Party;
13.1.2.4 publicly disclosed by the disclosing Party;
13.1.2.5 rightfully received by the receiving Party from a third party
without restrictions on disclosure; or
13.1.2.6 approved for unrestricted release or unrestricted disclosure by the
disclosing Party.
38
13.2 Protection of Information.
13.2.1 Period of Protection. The Parties agree to comply with the
obligations set forth herein regarding the other Party's
confidential information for a period of ten (10) years from the
date of disclosure.
13.2.2 Method of Protection. To protect the other Party's Confidential
Information each Party agrees:
13.2.2.1 that it will not disclose to any third party, any Confidential
Information of the disclosing Party without the disclosing Party's
prior written consent;
13.2.2.2 to limit dissemination of the other Party's Confidential Information
to only those of the receiving Party's officers, directors, agents
and employees who require access thereto to perform their functions
regarding the purposes of this Agreement;
13.2.2.3 to ensure that each person (including without limitation all
individuals (excluding employees who are, as a condition to their
employment, required to maintain the confidentiality of third party
confidential information), corporations, partnerships and other
entities) who receives or has access to Confidential Information has
previously executed a written nondisclosure agreement containing
terms substantially similar to those contained herein; and
13.2.2.4 to return to the disclosing Party, or destroy, all Confidential
Information of the disclosing Party upon receipt of a written
request therefor from the disclosing Party, without retaining any
copy thereof, with the exception of documents containing Derivative
Information which a receiving Party has a right to retain.
13.2.3 Standard of Care. The standard of care to be exercised by the
receiving Party to meet these obligations will be the standard
exercised by the receiving Party with respect to its own proprietary
information of a similar nature, but in no event less than due care.
13.2.4 Exceptions. Nothing contained in this Section 13 will prevent
either Party from disclosing any Confidential Information of the
other Party:
13.2.4.1 to regulatory agencies for the purpose of obtaining approval to
distribute and market Daughter Products and Compatible CARTO System
which are the subject of this Agreement; provided, however, that all
reasonable steps are taken to maintain the confidentiality of such
Confidential Information to be disclosed;
13.2.4.2 to accountants, banks, or another financing source (or their
advisors) or in connection with a merger, acquisition or securities
offering, subject in each case to the recipient entering into an
confidentiality agreement containing terms substantially similar to
those contained herein to protect such Confidential Information from
disclosure; or
39
13.2.4.3 it is required by law or regulation to be disclosed; provided,
however, that the Party subject to such disclosure requirement has
provided written notice to the other Party promptly upon receiving
notice of such requirement in order to enable the other Party to
seek a protective order or otherwise prevent disclosure of the other
Party's Confidential Information.
13.2.5 Proprietary Notices. Any reproduction of any Confidential
Information by the receiving Party to the extent permitted under
this Agreement will contain any and all confidential or proprietary
notices or legends, which appear on the original.
13.2.6 Biosense IP. In order to ensure that the Biosense IP is not
disseminated unintentionally or otherwise by Stereotaxis to any
permitted Localization contract developer, Stereotaxis agrees that
during the Term:
13.2.6.1 In respect of material communications, it will communicate with the
developer only in writing.
13.2.6.2 All such written communications will be copied to Biosense. and
13.2.6.3 Any such communication that contains, or could reasonably be
interpreted as disclosing information comprised in the Biosense IP
or Biosense Intellectual Property will be submitted for pre-approval
by Biosense (which approval will not be unreasonably withheld and
which will be provided within twenty-four (24) hours of written
request from Stereotaxis to Biosense' such employee or employees as
nominated by Biosense from time to time for the purpose of
responding to such requests) before being sent to such Localization
contractor. Email will comprise written communication for the
purposes hereof.
14 TERM AND TERMINATION
14.1 Term. This Agreement will become effective on the Effective Date and
will remain in force and effect for seven (7) years or until
terminated pursuant to the terms hereof, including pursuant to the
provisions of Sections 2.3,4 and 14.2 (such period to be referred to
as the "Term").
14.2 Termination.
14.2.1 For Breach. Either Party may terminate this Agreement effective upon
written notice to the other if the other Party materially breaches
any provision herein in any or fails to make any payment when due
(provided such payment is not subject to bona fide dispute of which
prior written notice has been given), which breach is not cured
within thirty (30) days from the non-defaulting Party stating its
intention to terminate this Agreement by reason of that default or
failure or, provided that the defaulting Party has taken significant
steps toward remedying the default, such longer period of time as is
reasonably necessary defaulting Party to cure.
40
14.2.2 Change of Control to Restricted Party. In the event of a Change of
Control of Stereotaxis to a Restricted Party, either Party may
terminate this Agreement effective upon written notice to the other
Party within ninety (90) days of the Change of Control becoming
effective. In the event that one Party exercises the provisions of
this Section 14.2.2, the Termination shall become effective one year
after the Change of Control. In the event that Stereotaxis exercises
its right under this Section 14.2.2, then Stereotaxis will pay a
one-time cash termination fee to Biosense of five percent (5%) of
the total equity valuation of Stereotaxis in the Change of Control
transaction, up to a maximum of Ten Million Dollars (US)
($10,000,000).
14.2.3 For Commercial Failure, Technical Failure, Delay or Expiration of
the Term and Certain Change of Control. In the event there has not
been a termination according to Section 14.2.2 above, and this
Agreement is terminated in accordance with the provisions of
Sections 2.3.4 and Section 3.7 (in respect of Technical Failure,
Commercial Failure, expiration of the Term, or Delay) or where
terminated by Stereotaxis for breach pursuant to Section 14.2.1
above, the Localization License granted herein will continue for a
period of three (3) years as provided for in Section 2.4.3, provided
that where a Change of Control of Stereotaxis to a Restricted Party
occurs within such three (3) year period, such license will continue
until the earlier of one (1) year after such Change of Control or
the expiration of such three (3) year period. For the avoidance of
doubt, such license is, as provided herein, limited only to the
Stereotaxis Localization System and not to any third party system.
Thereafter, at its option, each Party will continue to have the
right to distribute Daughter Products on a non-exclusive basis.
14.3 Effect of Termination or Expiration - Survival. The respective
rights and obligations of the Parties under the provisions of
Sections 2.4.3 , 3.2.2.3, 7.6, 10.4, 10.5, 12.3.2, 14.2.3 and all of
Articles 11, 13 and 15 will survive any termination or expiration of
this Agreement In addition, in case of termination by either Party,
Biosense will have the right to continue to Distribute then
commercially available Daughter Products to customers, for use with
Compatible NIOBE -- CARTO Systems installed or purchased prior to
such termination, on reasonable commercial terms (and, where
applicable, on terms consistent with its then commercial practice in
respect of like products) during the commercial life of such
systems.
15 DISPUTE RESOLUTION
Any controversy or claim arising out of or relating to this Agreement or the
validity, inducement, or breach thereof, shall be settled by arbitration before
a single arbitrator in accordance with the Commercial Arbitration Rules of the
American Arbitration Association ("AAA") then pertaining, except where those
rules conflict with this provision,- in which case this provision controls. The
decision of such arbitrator will be final and binding and will not be subject to
appeal except in the case of substantive evidence that such decision was tainted
by Wand. The parties hereby consent to the jurisdiction of the Federal District
Court for the District of Delaware for the enforcement of these provisions and
the entry of judgment on any award rendered hereunder. Should such court for any
reason lack jurisdiction, any court with jurisdiction shall enforce this clause
and enter judgment on any award. The arbitrator shall be an attorney
specializing in business litigation who has at least 15
41
years of experience with a law firm of over 25 lawyers or was a judge of a court
of general jurisdiction. The arbitration shall be held in Chicago IL, and the
arbitrator shall apply the substantive law of Illinois, except that the
interpretation and enforcement of this arbitration provision shall be governed
by the Federal Arbitration Act. Within 30 days of initiation of arbitration, the
parties shall reach agreement upon and thereafter follow procedures assuring
that the arbitration will be concluded and the award rendered within no more
than six months from selection of the arbitrator. Failing such agreement, the
AAA will design and the parties will follow such procedures. Each party has the
right before or during the arbitration to seek and obtain from the appropriate
court provisional remedies such as attachment, preliminary injunction, replevin,
etc., to avoid irreparable harm, maintain the status quo or preserve the subject
matter of the arbitration. THE ARBITRATOR SHALL NOT AWARD ANY PARTY PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES, AND EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT TO SEEK SUCH DAMAGES.
16 ASSIGNMENT
Neither Party may assign this Agreement without the prior written consent of the
other Party, except that each Party may assign this Agreement to a person or
entity into which it has merged or which has otherwise succeeded to all or
substantially all of its business or assets and which has assumed in writing or
by operation of law its obligations under this Agreement. Each Party agrees that
in any merger in which it is not the surviving company, the surviving company
will assume, in writing or by operation of law, such Party's obligations under
this Agreement. Any purported assignment in violation of the foregoing will be
null and void. Subject to the foregoing, the provisions of this Agreement will
apply to and bind the successors and permitted assigns of the Parties. Upon a
permitted assignment of this Agreement, all references to the assigning Party
herein will be deemed references to the assignee.
17 GENERAL
17.1 Force Majeure. Either Party will be excused from any delay or
failure in performance hereunder, caused by reason of any occurrence
or contingency beyond its reasonable control, including but not
limited to, acts of God, earthquake, floods, lightning, labor
disputes and strikes, other labor or industrial disturbances, riots,
war, acts of the public enemy, insurrections, embargoes, blockages,
regulations or orders of any government, agency or subdivision
thereof, shortage of materials, rationing, utility or communication
failures, casualty, and governmental requirements. The obligations
and rights of the Party so excused will be extended on a day-to-day
basis for the period of time equal to that of the underlying cause
of the delay; provided that such Party will give notice of such
force majeure event to the other Party and cure such delay as soon
as reasonably possible. In the event such force majeure event does
result or would result in an inability of Stereotaxis to supply
Components to Biosense or Biosense to supply the Daughter Products
to Stereotaxis for a period greater than ninety (90) days, the
Parties agree to discuss in good faith alternate solutions to
restore supply to Biosense or Stereotaxis as the case may be.
42
17.2 Insurance. During the Term, Stereotaxis will maintain liability
insurance of not less than one million dollar ($1,000,000) per
occurrence and five million dollars ($5,000,000) in aggregate.
17.3 Notices. All notices, payments, reports and other communications
required or permitted hereunder will be in writing and will be
mailed by first class, certified mail, postage prepaid, or otherwise
delivered by hand, by messenger (including express mail courier
services) or by facsimile, addressed to the addresses first set
forth above or at such other address furnished with a notice in
manner set forth herein. Such notices will be deemed to have been
served when delivered or, if delivery is not accomplished by reason
of some fault of the addressee, when tendered. Notices will be
addressed as follows:
If to Stereotaxis:
Stereotaxis, Inc.
0000 Xxxxxx Xxxx Xxxxxx
Xx. Xxxxx, XX, 00000
Attn.: Chief Executive Officer
With copy to: Chief Financial Officer, at the same address.
If to Biosense:
Biosense Xxxxxxx, Inc.
0000 Xxxxxxx Xxxxxx Xx.
Xxxxxxx Xxx XX 00000
Attn.: Vice President, New Business Development
With copy to:
Office of General Counsel
Xxxxxxx & Xxxxxxx
0 Xxxxxxx & Xxxxxxx Xxxxx
Xxx Xxxxxxxxx XX 00000
17.4 Entire Agreement. This Agreement sets forth the entire agreement and
understanding between the Parties as to the subject matter hereof
and merges all prior discussions between them, and neither of the
Parties will be bound by any conditions, definitions, warranties,
understandings or representations with respect to such subject
matter other than as expressly provided herein or as duly set forth
on or subsequent to the Effective Date in writing and signed by a
proper and duly authorized representative of the Party to be bound
thereby. No provision appearing on any
43
form originated by either Party will be applicable unless such
provision is expressly accepting in writing by the other Party.
17.5 Captions and Section Headings. The captions and section and
paragraph headings used in this Agreement are inserted for
convenience only and will not affect the meaning or interpretation
of this Agreement.
17.6 Partial Invalidity. If any paragraph, provision, or clause thereof
in this Agreement will be found or be held to be invalid or
unenforceable in any jurisdiction, in which this Agreement is being
performed, the remainder of this Agreement will be valid and
enforceable and the Parties will negotiate, in good faith, a
substitute, valid and enforceable provision that most nearly
reflects the Parties' intent in entering into this Agreement.
17.7 Presumptions. In construing the terms of this Agreement, no
presumption will operate in either Party's favor as a result of its
counsel's role in drafting the terms or provisions hereof.
17.8 Waiver. The failure of either Party to enforce at any time the
provisions of this Agreement, or the failure to require at any time
performance by the other Party of any of the provisions of this
Agreement, will in no way be construed to be a present or future
waiver of such provisions, nor in any way affect the right of
either Party to enforce each and every such provision thereafter.
The express waiver by either Party of any provision, condition or
requirement of this Agreement will not constitute a waiver of any
future obligation to comply with such provision, condition or
requirement.
17.9 Cumulative Remedies. The remedies under this Agreement will be
cumulative and not alternative and the election of one remedy for a
breach will not preclude pursuit of other remedies unless as
expressly provided in this Agreement.
17.10 Independent Contractors. In performing their respective services
hereunder, each of the Parties will operate as, and have the status
of, an independent contractor and will not act as or be an agent,
partner, co-venturer or employee of the other Party. Neither Party
will have the right or authority to assume or create any
obligations or to make any representations or warranties on behalf
of any other Party, whether express or implied, or to bind the
other Party in any respect whatsoever.
17.11. Confidentiality of Agreement. Each Party agrees that the terms and
conditions of this Agreement will be treated as confidential
information and that neither Party will disclose the terms or
conditions to any third party without the prior written consent of
the other Party; provided, however, that each Party may disclose
the terms and conditions of this Agreement, to the extent
necessary;
17.11.1 as required by any court or other governmental body;
17.11.2 as otherwise required by law;
44
17.11.3 to legal counsel of the Parties, accountants, and other
professional advisors;
17.11.4 in confidence:
17.11.4.1 to banks, investors and other financing sources and their
advisors, or
17.11.4.2 to Parties with whom the disclosing Party has or is proposing to
enter into a business relationship not prohibited by the terms
of this Agreement and only to the extent such Parties have a
need to know such terms and conditions in order to conduct or
assess such business relationship.
17.11.5 in connection with the enforcement of this Agreement or rights
under this Agreement; or
17.11.6 in confidence, in connection with an actual or prospective
merger or acquisition or similar transaction
17.11.7 With respect to disclosure required by a court order, the
disclosing Party will provide prior notification of such
impending disclosure to the non-disclosing Party. All reasonable
efforts to preserve the confidentiality of the terms of this
Agreement will be expended by the disclosing Party in complying
with such an order, including obtaining a protective order to
the extent reasonably possible. The Parties will cooperate in
preparing and releasing an announcement or other form of
publicity, if any, relating to this Agreement.
17.12 Authority. Each Party represents that all corporate action
necessary for the authorization, execution and delivery of this
Agreement by such Party and the performance of its obligations
hereunder has been taken.
17.13 Counterparts. This Agreement may be executed in two (2) or more
counterparts, all of which, taken together, will be regarded as
one and the same instrument.
IN WITNESS WHEREOF, the Parties hereto have caused this Development and
Supply Agreement to be signed by duly authorized officers or
representatives.
STEREOTAXIS, INC. BIOSENSE XXXXXXX, INC.
By: /s/ XX XXXX By: /s/ XXX XXXXXX
------------------------------- -------------------------------
Print Name: XX Xxxx Print Name: Xxx Xxxxxx
----------------------- -----------------------
Title: CEO Title: WW President
---------------------------- ----------------------------
Date: May 9, 2002 Date: May 9, 2002
----------------------------- -----------------------------
45
EXHIBIT A
GUIDELINES FOR COMPATIBLE CARTO SYSTEM DEVELOPMENT
AND DEVELOPMENT PAYMENT SCHEDULE
[***]
[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]
A-1
[***]
[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]
A-2
[***]
[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]
A-3
[***]
[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]
A-4
EXHIBIT B
DEFINITION OF GROSS PROFIT AND COST OF GOODS
The default calculation of Gross Profits and/or Costs of Goods, will be
according to the following formulas:
[***]
[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]
B-1
[***]
[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]
B-2
EXHIBIT C
BIOSENSE VENDOR REQUIREMENTS
The following requirements must be achieved and maintained in order for
Stereotaxis to become and remain an Approved Supplier for Products.
1. Quality System Requirements
1.1 Assessment: Biosense Xxxxxxx will perform a Quality System Audit of
Stereotaxis' quality systems to determine that the requirements of this
section have been satisfied. Once the Biosense Xxxxxxx auditor has
performed the audit with satisfactory results, Biosense Xxxxxxx will
notify Stereotaxis in writing that the supplier approval process is
complete. Minor deficiencies or non-conformances identified during these
audits that are not indicative of a lack of control and will not preclude
Stereotaxis from supplier approval. However, such observations will be
brought to the attention of Stereotaxis and Biosense Xxxxxxx and
Stereotaxis will identify actions that will be taken to correct these
items and agree upon a time schedule in which these actions will be
implemented.
1.2 Stereotaxis will attain a general state of compliance with the FDA and
international medical device requirements.
1.3 Stereotaxis will have, or will develop, quality systems which comply with
current GMP QSR (CFR 820), ISO9000, ISO14001, and EN46001, as determined
by Biosense Xxxxxxx and or FDA or EC Notified Body assessment. However,
the development of appropriate quality systems will occur in a timely
fashion so as to permit commercialization of Products as soon as other
factors permit.
1.4 Written requirements, including but not limited to specifications,
drawings, test methods and procedures, will be utilized by Stereotaxis for
all Products manufactured for Biosense Xxxxxxx. All requirements will be
mutually developed and agreed upon by Stereotaxis and Biosense Xxxxxxx.
1.5 Stereotaxis will not make any changes to components, processes, systems
(e.g. quality, measurement, testing) which are relevant to the admission
of the products or suppliers used to produce, test and or release Products
manufactured for Biosense Xxxxxxx without prior written approval from
Biosense Xxxxxxx Quality Assurance management.
1.6 Stereotaxis will establish and implement a system that ensures Device
History Records (DHR) for each batch, lot, or unit are created to
demonstrate that the Product is manufactured in accordance with all
applicable specifications and requirements.
1.6.1 DHR's will contain adequate information to provide traceability of all
components and manufacturing aids (if any) used in the manufacture of a
finished Product.
C-1
1.6.2 DHR's will contain adequate information to identify the processing methods
and personnel involved in the manufacture of a finished Product.
1.6.3 DHR's will contain adequate information to demonstrate that the
manufactured Product was evaluated (tested and/or inspected) and found to
meet the appropriate specifications.
1.7 Stereotaxis will establish written requirements, including specifications
and drawings, for purchased materials and components and will implement a
system to ensure that the materials and components supplied meet these
specifications.
1.8 Stereotaxis will obtain agreements with suitable suppliers for all
components, materials and services used in the manufacture of Products and
that no changes in the goods or services supplied will be made without
adequate notification to Stereotaxis.
1.9 Stereotaxis will have a system for assisting Biosense Xxxxxxx with
handling customer complaints.
1.9.1 All complaints involving Products supplied to Biosense Xxxxxxx will be
initially reported to Biosense Xxxxxxx customer service. Stereotaxis will
be promptly informed if the complaint involves a product supplied by
Stereotaxis, and within seven (7) calendar days, provide a written
preliminary investigation report to Biosense Xxxxxxx Quality Assurance.
This preliminary report will include an initial assessment of device
reporting under MDR or Vigilance reporting requirements.
1.9.2 Stereotaxis will cooperate fully and promptly in the investigation of
complaints involving supplied Products. All complaints should be
investigated and a written response provided to Biosense Xxxxxxx Quality
Assurance within thirty (30) days of receipt. All correspondence with the
complainant will be handled by Biosense Xxxxxxx, unless other arrangements
are made by Stereotaxis with Biosense Xxxxxxx on a case-by-case basis.
1.9.3 Biosense Xxxxxxx will be responsible for filing any device report under
MDR or Vigilance reporting requirements.
1.9.4 In the event that corrective actions are warranted as the result of
customer complaints for the supplied Products, these corrective actions
will be incorporated and tracked as part of the Biosense Xxxxxxx
Corrective Action system.
1.10 If a problem that potentially affects the safety, efficacy or reliability
of the Products is identified by either Stereotaxis or Biosense Xxxxxxx,
the problem and all known facts will be brought to the attention of both
company's Quality Assurance management as soon as possible, but within 24
hours of the identification of the problem. In the event that a field
action is contemplated, Biosense Xxxxxxx and Stereotaxis will work
together to determine whether a field action should take place; however,
the final decision to implement a field action will be made by the
Biosense Xxxxxxx Quality Management. Biosense Xxxxxxx will be responsible
for implementing any
C-2
field action, including informing customers and defining the logistics of
the field action. Stereotaxis will cooperate fully in the implementation
of any field action.
1.11 Stereotaxis will establish a document retention procedure to ensure that
all documents required to meet the quality requirements herein set forth,
including distribution records, are retained for a minimum of 5 years
from the date of Product, including but not limited to Design History
Files and Complaint Files will be retained for a minimum of 10 years.
1.12 Biosense Xxxxxxx may provide assistance to conduct interim audits of
Stereotaxis' quality systems to ensure that those systems are being
developed in accordance with Biosense Xxxxxxx'x supplier qualification
requirements.
1.13 Stereotaxis will maintain 97% on time delivery and 99% quality acceptance
of Products.
2 PRODUCT REQUIREMENT
Assessment. Biosense Xxxxxxx will conduct Design Validation, Design Verification
and Product Performance Qualification (PPQ) testing to determine if the Current
Products or Modified Products meet their pre-established specifications and
quality attributes. Once the Products have successfully met all requirements of
the Design Validation Verification and PPQ testing, and all Quality Systems
Requirements stated above have been met, Stereotaxis will be considered a
Qualified Supplier and added to the Biosense Xxxxxxx QSIL (Qualified Supplier
Items List).
C-3
EXHIBIT D
DESCRIPTION OF STEREOTAXIS LOCALIZATION SYSTEM
1 Hardware
The Stereotaxis Localization System (currently being developed by a Stereotaxis
subcontractor) is designed to use AC magnetic fields to localize single coil
receivers, and provides five degree-of-freedom Localization for up to six coils.
The sample rate is 50 samples per second per channel.
2 Applications currently targeted
2.1 Expected to be in the clinic (i.e. human clinical trials) by Q3 2002: User
interface for electrophysiology navigation in which the system changes the
magnet field in real-time in response to input from the user, via a 3D
input device. The catheter advancer will also be fully compatible into the
user interface to provide telemetric control to the physician. Other
features include three dimensional (3D) point capture and tissue contact
estimation.
2.2 Expected to be in the clinic by Q4 2002: This phase adds 3D visualization
and target-based navigation. A pre-operative CT will be imported to the
system and registered, such that the localized EP catheter can be
graphically rendered within the 3D CT heart chamber rendering. This
enables the physician to visualize precisely where the catheter lies,
relative to the complex anatomy he/she is trying to ablate. Additionally
the physician will be able to point-and-click on 3D anatomic targets
within the image, and the system will, via the magnet field.
D-1
EXHIBIT E
INITIAL JOINT STEERING COMMITTEE REPRESENTATIVES
Biosense:
1. Xxxxxx Xxxxxxx,
2. Uri Yaron
3. Xxxxxxx Xxxxx
Stereotaxis:
1. Xxxx Xxxxx, Senior Vice President, Research & Development
2. Xxxx Xxxxxxxxxx, Vice President, Product Development
3. Xxxxxx Xxxxx, Chief Financial Officer
E-1
