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