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EXHIBIT 10.104
Application for an order granting
confidential treatment pursuant to
Rule 24b-2 of the Securities Exchange
Act of 1934 has been or be timely made.
Confidential portions of this document
have been redacted and marked with an [*]
and have been filed with the Securities and
Exchange Commission separately with such
application.
COLLAGRAFT SUPPLY AGREEMENT
This SUPPLY AGREEMENT (the "Agreement"), effective as of January 1, 1998
(the "Effective Date"), is made by and between COLLAGEN CORPORATION, a Delaware
corporation ("Collagen"), and COHESION TECHNOLOGIES, INC., a Delaware
corporation formerly known as Collagen Technologies, Inc. ("Technologies").
RECITALS
1. Technologies and Collagen have entered into a relationship whereby
certain assets and liabilities are being transferred from Collagen to
Technologies, as further described in the Separation and Distribution Agreement
effective as of January 1, 1998 between Collagen and Technologies (the
"Separation Agreement") and in the Ancillary Agreements.
2. Technologies is in the business of developing products and processes
utilizing innovative collagen-based technology and novel biomaterials.
3. Collagen is in the business of developing, manufacturing and selling
human aesthetic and reconstructive medical technology products.
4. Collagen has entered into agreements with Xxxxxx, Inc. ("Zimmer") to
supply Xxxxxx'x requirements for a hydroxylapatite-collagen product, which
agreements have been or will be assigned to Technologies.
5. Technologies wishes to purchase from Collagen its requirements for
such hydroxylapatite-collagen product to fulfill its supply obligations to
Zimmer, and Collagen wishes to supply Technologies' requirements.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
Except as otherwise defined herein, capitalized terms used herein
shall have the meanings given to them in the Separation Agreement. In addition,
for the purposes of this Agreement, the capitalized terms set forth below shall
have the meanings set forth in this Article I.
1.1 "Direct Costs" shall mean the direct costs to Collagen related to
manufacturing the Product, as defined in Exhibit A hereto.
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1.2 "FDA" shall mean the United States Food and Drug Administration or
any successor agency thereof.
1.3 "Intellectual Property Rights" shall mean trade secrets, patents,
copyrights, trademarks, know-how, moral rights and similar rights of any type
under the laws of any governmental authority, domestic or foreign, including all
applications and registrations relating to any of the foregoing.
1.4 "Product" shall mean the product described in Exhibit B attached
hereto.
1.5 "Requirements" shall mean the quantity of Product required for
Technologies to meet its obligations to supply Product to Zimmer pursuant to the
Xxxxxx Agreement;
1.6 "Specifications" shall mean the intermediate and finished goods
specifications for the following product codes: [*]
1.7 "Zimmer Agreement" shall mean the Supply Agreement between
Technologies and Zimmer, with an effective date of January 18, 1985, and which
is in full force and effect as of the Effective Date of this Agreement.
ARTICLE II
SUPPLY
2.1 COLLAGEN SUPPLY OBLIGATION. Subject to the terms and conditions
herein, Collagen shall manufacture for and supply to Technologies all
Technologies' Requirements for the Product. Technologies shall be responsible
for procuring for Collagen at its sole expense any and all licenses and rights
to any Intellectual Property Rights, third party or otherwise, necessary for
Collagen to perform under the Agreement.
2.2 TECHNOLOGIES PURCHASE OBLIGATION. Subject to the terms and
conditions herein, Technologies shall purchase all Requirements for the Product
from Collagen.
2.3 RELEASE FROM REQUIREMENTS OBLIGATION. Technologies shall have no
obligation pursuant to Section 2.2 to purchase its requirements for Product from
Collagen in the event that: (i) Collagen shall fail to deliver Product within
ninety (90) days of Collagen's receipt of a firm purchase order issued by
Technologies and acknowledged by Collagen (unless the scheduled delivery date
set forth in such purchase order is more than ninety (90) days from Collagen's
receipt thereof) or shall fail on two (2) consecutive occasions or three (3)
occasions in any one hundred eighty (180) day period to deliver Product within
fifteen (15) days of the scheduled delivery date therefor as set forth in a firm
purchase order issued by Technologies and acknowledged by Collagen; (ii)
Collagen shall have manufactured any Product not in conformance with Section
4.3, except as otherwise requested by Technologies; or (iii) the quantity of
Product supplied by Collagen is not sufficient to meet Technologies'
Requirements.
[*] Application for an order granting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934 has been made. Confidential
portions of this document have been redacted and marked with an [*] and have
been filed with the Securities and Exchange Commission separately with such
application.
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ARTICLE III
TERMS OF PURCHASE
3.1 ORDER AND ACCEPTANCE. As soon as practicable, Technologies shall
pass to Collagen all purchase orders for Product received by Technologies from
Zimmer pursuant to the Xxxxxx Agreement. Upon receipt thereof, Collagen shall
promptly accept such purchase order and return a signed acceptance thereof to
Technologies. Notwithstanding anything herein to the contrary, no order shall be
binding upon Collagen until accepted by Collagen in writing. Each party may
cancel or reschedule purchase orders for Product only with prior written
approval of the other party.
3.2 FORECASTING. Technologies shall send to Collagen, a copy of all
Product forecasts received by Technologies from Zimmer pursuant to the Xxxxxx
Agreement promptly upon receipt thereof by Technologies.
3.3 PURCHASE PRICE. The purchase price to Technologies for the Product
shall be equal to [*]. The list price shall equal the greater of: (i) [*]
percent ([*]%) of Xxxxxx'x U.S. Net Selling Price for the Product as defined in
the Xxxxxx Agreement ("U.S. Net Selling Price"); or (ii) Collagen's Direct Costs
for manufacturing the Product plus [*] percent ([*]%). The parties agree that to
the extent that the purchase prices hereunder are based on Collagen's Direct
Costs, Collagen may not increase its Direct Costs by more than [*] percent
([*]%) from one fiscal year to the next. Collagen shall provide Technologies
with an updated price list upon execution of this Agreement for the fiscal year
ending June 30, 1998 and at the beginning of each fiscal year, i.e., July 1,
which shall be effective for such fiscal year. Collagen will review such updated
price list with Technologies and shall provide supporting documentation therefor
similar to those provided for the fiscal year 1998 price list. Payment by
Technologies to Collagen of the purchase prices pursuant to this Section 3.3
shall constitute payment in full for the Product, including without limitation,
payment for manufacturing, distribution, order entry and accounts receivables
services performed in connection therewith. Collagen shall use reasonable
commercial efforts to efficiently manufacture the Product and pursue
manufacturing cost reductions without compromising the quality or function of
the Product.
3.4 INVOICING. Collagen shall submit an invoice to Technologies upon
each shipment of Product ordered by Technologies based on Xxxxxx'x most recent
U.S. Net Selling Price for the Product. Technologies agrees to promptly provide
Collagen with information regarding Xxxxxx'x actual U.S. Net Selling Price for
such shipment of Product when such information is received by Technologies.
Within sixty (60) days of the receipt of information regarding Xxxxxx'x actual
U.S. Net Selling Price, Collagen will submit to Technologies an accounting of
any discrepancy between the invoiced prices and the prices pursuant to Section
3.3. Within thirty (30) days after such accounting is delivered by Collagen to
Technologies: (i) Technologies shall pay any balance owed to Collagen; or (ii)
Collagen shall pay to Technologies any overpayment based on such accounting. All
invoices and other
[*] Application for an order granting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934 has been made. Confidential
portions of this document have been redacted and marked with an [*] and have
been filed with the Securities and Exchange Commission separately with such
application.
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shipping documents shall be sent by first class mail or fax to Technologies'
address for notices hereunder,
[*] Application for an order granting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934 has been made. Confidential
portions of this document have been redacted and marked with an [*] and have
been filed with the Securities and Exchange Commission separately with such
application.
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without regard to the actual shipping address. Each such invoice shall state the
aggregate and unit invoice price for Product in a given shipment. In addition,
if Zimmer should request that Collagen procure Product packaging materials
directly, the parties agree that Collagen may submit invoices for such Product
packaging costs directly to Zimmer.
3.5 DELIVERY. Collagen shall ship Product to the address set forth in
the applicable purchase order for delivery on the scheduled delivery date
specified in the applicable purchase order; provided, however, that such
scheduled delivery date shall not be less than ninety (90) days from the date of
receipt by Collagen of such purchase order. All shipments shall be F.O.B.
Collagen's manufacturing facilities in Fremont, and Technologies shall bear the
risk of loss and cost of transportation of the Product upon delivery by Collagen
to the carrier identified by Technologies. Collagen shall suitably pack the
Product for delivery by surface or air, at Technologies' discretion, in
Collagen's standard shipping cartons. Collagen shall ship the Product using the
carrier specified in Technologies' purchase order; provided, however, that if
Technologies does not provide instructions with respect to the carrier to be
used, Collagen shall select the carrier. Collagen shall use commercially
reasonable efforts to ship Product with a shelf life no shorter than the shelf
life for such Product (as set forth in the Specifications therefor) less thirty
(30) days, unless otherwise agreed to in writing by the parties. Product shall
be deemed delivered by Collagen and accepted by Technologies upon: (i) the
receipt by Technologies of a Certificate of Analysis based on the
Specifications; and (ii) the review and approval by Technologies of the
information contained in the alert notices and deviation reports.
3.6 PAYMENT AND AUDIT. Technologies shall make payment to Collagen for
each shipment of Product within ten (10) days of receipt by Technologies of
payment from Zimmer. If payment is sent by Zimmer to Collagen, then Collagen
shall forward the amount net of the purchase price pursuant to Section 3.3 to
Technologies within ten (10) days of receipt by Collagen of payment from Zimmer.
To the extent the purchase price for Product is based upon Collagen's Direct
Costs, upon reasonable notice to Collagen, Technologies shall have the right to
have an independent certified public accountant, selected by Technologies and
reasonably acceptable to Collagen, audit Collagen's records pertaining to the
calculation of Collagen's Direct Costs during normal business hours to verify
Collagen's Direct Costs; provided, however, that such audit shall not take place
more frequently than once a year and shall not cover such records for more than
the preceding two (2) years. The accountant shall only report to Technologies as
to the accuracy of Collagen's Direct Costs, and in the event of any inaccuracy,
the correct amounts thereof. Collagen shall promptly refund to Technologies the
amount of any overpayment, and Technologies shall promptly pay to Collagen the
amount of any underpayment determined in such audit. Such audit shall be at
Technologies' expense unless such audit indicates greater than five percent (5%)
overpayment by Technologies based on invoices submitted by Collagen, in which
case such audit shall be at Collagen's expense. Collagen shall preserve and
maintain all such records and accounts required for audit for a period of two
(2) years after the calendar quarter for which the record applies.
3.7 PRODUCT PACKAGING AND LABELING. Collagen shall package and label the
Product as directed by Technologies. Technologies shall be responsible for
designing and determining the form and format of Product and packaging labels.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 BY BOTH PARTIES. Technologies (on behalf of itself and each member
of the Technologies Group) and Collagen (on behalf of itself and each member of
the Collagen Group), represents and warrants to the other that: (i) it has full
power and authority to execute, deliver and perform this Agreement; and (ii) the
execution, delivery and performance by such party of this Agreement does not
contravene any law, regulation, rules or order binding on such party and do not
contravene the provisions of or constitute a default under any contract or other
agreement binding on such party.
4.2 REGULATORY APPROVALS. Technologies represents and warrants to
Collagen that any and all required government approvals, including any approvals
under applicable health and safety laws and regulations, to import, register,
market, distribute and sell the Product pursuant to a purchase order issued by
Technologies shall have been secured for every jurisdiction into which the
Product is shipped or sold in accordance with such purchase order. The parties
agree to cooperate with each other and perform all necessary actions to obtain
and maintain any CE xxxx and ISO certification for the Product.
4.3 GMP. Except as otherwise requested by Technologies in writing,
Collagen shall manufacture the Product in accordance with: (i) GMP, as required
by the United States Food and Drug and Cosmetic Act (the "Act"); (ii) all
pertinent rules and regulations of the FDA; (iii) the laws of the United States
of America and all local laws; and (iv) all other laws, regulations and
guidelines including without limitation regulations of the European Union and
any jurisdiction herein to the extent the same are applicable; provided,
however, that nothing contained in this Agreement is intended to render
applicable any laws other than the Act, FDA regulations and United States law.
Collagen represents and warrants that no Product delivered by Collagen under
this Agreement will be adulterated or misbranded by Collagen within the meaning
of the Act, or within the meaning of any other applicable law in which the
definitions of adulteration or misbranding are substantially the same as those
contained in the Act, as such laws are constituted and effective at the time of
such shipment or delivery, or as an article which may not, under the provisions
of Section 404 or 505 of the Act, be introduced into interstate commerce.
4.4 LIMITED WARRANTY. Collagen represents and warrants that the Product
supplied by it to Technologies under this Agreement shall conform to the
Specifications and shall be free from defects in material and workmanship for
the shelf life of the Product as set forth in the Specifications of the Product
("Warranty Period"). Technologies' exclusive remedy and sole liability for
breach of the foregoing warranty shall be the remedy as set forth in this
Section 4.4.
4.4.1 RETURN OF DEFECTIVE PRODUCT. In the event that any Product
purchased by Technologies from Collagen fails to conform to the warranty set
forth in this Article 4.4, Collagen's sole and exclusive liability and
Technologies' exclusive remedy shall be to replace the Product, or if, at
Collagen's sole determination, replacement is not practicable, refund
Technologies for the amount actually paid by Technologies for any such Product;
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provided, however, that: (i) Technologies promptly notifies Collagen in writing
that such Product failed to conform, furnishes a detailed explanation of any
alleged nonconformity, and requests a return material authorization number; and
(ii) such Product is returned to Collagen by Technologies F.O.B. Collagen's
shipping location in Fremont, California, during the Warranty Period, with the
return material authorization number affixed prominently to the outside
packaging. If such Product fails to so conform, Collagen will reimburse
Technologies for shipment charges for return of the nonconforming Product.
4.4.2 RECALL; MDR; FIELD CORRECTION. Should any defect in the
Product or any governmental action require: (i) the recall, destruction or
withholding from market ("Recall"); (ii) issuance of a Medical Device Report
within the meaning of the Act ("MDR"); or (iii) institution of a field
correction ("Field Correction") for the Product, Collagen shall bear the costs
and expenses of such Recall, MDR or Field Correction to the extent such Recall,
MDR or Field Correction is the result of any non-conformance to Specifications
due to a fault or omission attributable to Collagen, and Technologies shall bear
the costs and expenses of such Recall, MDR or Field Correction to the extent
such Recall, MDR or Field Correction is the result of any fault or omission
attributable to Technologies. Should such Recall, MDR or Field Correction result
from the fault of both parties, the parties shall share such costs and expenses
in accordance with their proportionate fault. Collagen shall provide adverse
event response support for the Product consistent with its obligations under the
Services Agreement dated as of the Effective Date.
ARTICLE V
COOPERATION
Collagen shall otherwise reasonably cooperate with Technologies to
fulfill Technologies' obligations under the Xxxxxx Agreement.
ARTICLE VI
TERM AND TERMINATION
6.1 TERM. The Term shall commence on the Effective Date and continue in
full force and effect until the expiration or termination of the Xxxxxx
Agreement ("Term").
6.2 TERMINATION FOR CAUSE. Technologies may terminate this Agreement
upon a material breach or default in performance under this Agreement by
Collagen, and Collagen may terminate this Agreement upon the failure by
Technologies to make payments to Collagen in accordance with this Agreement. The
non-breaching party shall give written notice to the breaching party of such
breach or default, and unless the breaching party shall have cured the breach or
default within sixty (60) days, the non-breaching party, at its sole option, may
terminate this Agreement upon written notice to the breaching party. Termination
of this Agreement shall become effective upon receipt of such second notice by
the breaching party.
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6.3 TERMINATION BY TECHNOLOGIES. Technologies may terminate its
obligations under this Agreement with respect to the Product, by delivering to
Collagen twelve (12) month notice thereof.
6.4 EFFECT OF TERMINATION. Upon expiration under Section 6.1 or
termination under Sections 6.2 or 6.3, Collagen: (i) hereby grants to
Technologies a non-exclusive, non-transferable, royalty-free, perpetual,
irrevocable, world-wide, right and license (with the right to sublicense) to any
Manufacturing Improvements; and (ii) shall deliver to Technologies a copy of any
written materials embodying such Manufacturing Improvements as reasonably
necessary for Technologies to manufacture or have manufactured the Product. For
purposes of this Agreement, the term "Manufacturing Improvements" shall mean any
modifications, improvements, enhancements, and other revisions to manufacturing
processes or materials, solely as related to the Product, that are made by
Collagen during the Term of this Agreement. Expiration or termination of this
Agreement pursuant to the terms and conditions set forth in this Agreement shall
not relieve Technologies of any payment obligations to Collagen, accruing prior
to or upon such expiration or termination.
6.5 LIMITATION OF LIABILITY UPON TERMINATION. A PARTY SHALL NOT BE
LIABLE TO THE OTHER PARTY, OR ANY OF ITS EMPLOYEES, AGENTS, OR CUSTOMERS, FOR
DAMAGES OF ANY KIND, INCLUDING DIRECT, INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, ON ACCOUNT OF THE TERMINATION OR EXPIRATION OF THIS
AGREEMENT IN ACCORDANCE WITH THIS ARTICLE VI. EACH PARTY HEREBY WAIVES ANY
RIGHTS IT MAY HAVE TO RECEIVE ANY COMPENSATION OR REPARATIONS ON TERMINATION OR
EXPIRATION OF THIS AGREEMENT UNDER LAW OTHER THAN AS EXPRESSLY PROVIDED HEREIN.
NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY ON ACCOUNT OF TERMINATION OR
EXPIRATION OF THIS AGREEMENT FOR REIMBURSEMENT OR DAMAGES FOR THE LOSS OF
GOODWILL, PROSPECTIVE PROFITS OR ANTICIPATED INCOME, OR ON ACCOUNT OF ANY
EXPENDITURES, INVESTMENTS, LEASES OR COMMITMENTS MADE BY THE OTHER PARTY OR FOR
ANY OTHER REASON WHATSOEVER. EACH PARTY ACKNOWLEDGES THAT IT HAS NO EXPECTATIONS
AND HAS RECEIVED NO ASSURANCES FROM THE OTHER PARTY THAT ANY INVESTMENT BY IT IN
THE DISTRIBUTION, PROMOTION, OR SALE OF THE PRODUCTS WILL BE RECOVERED OR
RECOUPED OR THAT IT WILL OBTAIN ANY ANTICIPATED AMOUNT OF PROFITS BY VIRTUE OF
THIS AGREEMENT. THE PARTIES ACKNOWLEDGE THAT THIS SECTION HAS BEEN INCLUDED AS A
MATERIAL INDUCEMENT FOR THEM TO ENTER INTO THIS AGREEMENT AND THAT THEY WOULD
NOT HAVE ENTERED INTO THIS AGREEMENT BUT FOR THE LIMITATIONS OF LIABILITY AS SET
FORTH HEREIN.
6.6 SURVIVAL OF CERTAIN TERMS. The provisions of Section 3.6, 4.4, 6.4,
6.5, and 6.6 and Articles VII and VIII shall survive the expiration or
termination of this Agreement for any reason. All other rights and obligations
of the parties shall cease upon expiration or termination of this Agreement.
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ARTICLE VII
CONFIDENTIALITY
The parties agree that Information that is proprietary or confidential
to (i) Collagen prior to the Effective Date; or (ii) to one party and provided
to the other party pursuant to or in furtherance of this Agreement after the
Effective Date shall be subject to and treated in accordance with Article VII of
the Separation Agreement.
ARTICLE VIII
MISCELLANEOUS
This Agreement shall be subject to the terms and provisions of Article
XI of the Separation Agreement, which are hereby incorporated into this
Agreement to the extent applicable.
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IN WITNESS WHEREOF, the parties hereto have caused this Collagraft
Supply Agreement to be executed by their duly authorized representatives.
COLLAGEN CORPORATION
Dated: March 5, 1998 By: /s/ Xxxx X. Xxxxxxxxxxx
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Name: Xxxx X. Xxxxxxxxxxx
Title: President and CEO
COHESION TECHNOLOGIES, INC.
Dated: March 5, 1998 By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
Title: CEO
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EXHIBIT A
Direct Costs
Direct Costs shall include the following expense types incurred by the cost
centers directly involved in manufacturing the Product.
Type of expenses or costs:
[*]
Cost centers:
[*]
Direct Costs shall specifically exclude the following types of costs and
expenses:
[*]
[*] Application for an order granting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934 has been made. Confidential
portions of this document have been redacted and marked with an [*] and have
been filed with the Securities and Exchange Commission separately with such
application.
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EXHIBIT B
Product
