EXHIBIT 10.28
PORTLYN CORPORATION
MANUFACTURING AND SALES AGREEMENT
This agreement dated June 23, 1997 is between Portlyn Corporation (the
"Company"), a New Hampshire corporation with an address of RFD ▇, ▇▇▇ ▇▇▇, ▇▇▇▇▇
▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and SpectraScience, Inc. (the "Purchaser"), a
Minnesota corporation with an address of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
The parties agree as follows:
1. Definitions: The following terms shall be defined as provided below
for purposes of this agreement.
1.1 Products. "Product" means a flexible biopsy forceps with
one or more lumens, or holes, which are designed to accommodate optical
componentry that will assist in the identification of tissue types. The parties
agree to develop a more specific description of the Product which will be set
forth on Exhibit A. The specifications on Exhibit A may be altered by the
Purchaser, subject to the terms of this agreement, including without limitation,
subsections 3.2(a) and 3.4.
1.2 Nonoptic Product. "Nonoptic Product" means biopsy forceps
with one or more lumens, or holes, which is designed to accommodate elements,
instruments, or devices (such as needles, scopes, or fluids) other than optical
componentry.
1.3 Purchaser Proprietary Assets. "Purchaser Proprietary
Assets" means the development and design of a biopsy forceps with a one or more
lumens designed to accommodate various elements, instruments, or devices,
including fiber optic cables, needles, fluids and other devices, all as
described in U.S. Patent Applications numbered 08/643,912 and 08/644,080 both
dated May 7, 1996, filed in the U.S. Patent Office, and related patent
application(s) filed within six months from the date of this agreement, trade
secrets, trademarks, documents, information, and ideas.
1.4 Company Proprietary Assets. "Company Proprietary Assets"
means the development and design of the Company's biopsy forceps, and all
related patents (including, without limitation, U.S. Patent #5,571,129), trade
secrets, trademarks, documents, information and ideas.
1.5 Six Month Purchase Period. "Six Month Purchase Period"
means the first period of six consecutive calendar months for which the
Purchaser issues purchase orders for Products under subsection 3.2 and each
successive
period of six consecutive calendar months thereafter during the term of this
agreement.
1.6 Binding Date. "Binding Date" means the last day of the
fourth calendar month in any Six Month Purchase Period.
1.7 "Grace Period" means the first six months following the
date of this agreement.
2. Agreement to Manufacture and Purchase; Licenses.
2.1 Purchase and Sale. During the term of this agreement and
subject to its terms and conditions, the Company agrees to manufacture and
provide Products to Purchaser pursuant to purchase orders placed with the
Company as provided in Section 3, and Purchaser agrees to purchase from the
Company all of its requirements for Products. The Purchase hereby grants the
Company a non-exclusive royalty free license for the term of this agreement (as
it may be extended) to use the Purchaser's Proprietary Assets to manufacture the
Products for sale hereunder to the Purchaser.
2.2 License for Nonoptic Sales by the Company. Upon the
Company's request, the Purchaser hereby agrees to grant the Company a
non-exclusive world-wide license to use the Purchaser's Proprietary Assets to
manufacture, market and sell Nonoptic Products to end-users of the Nonoptic
Products and to businesses or entities for resale to others. Under such license,
the Company shall pay a royalty to the Purchaser of no less than 3% and no more
than 5% of the gross revenues (after discounts, allowances, and returns)
actually received by the Company from such purchasers of Nonoptic Products. The
parties agree to work together in good faith to generate a license agreement
between them providing for such license at the Company's request.
2.3 Nonissuance of Patent. If the Purchaser does not obtain
U.S. patent protection for the design of the lumens in Purchaser Proprietary
Assets within two years from the date of this agreement, then the Company may
manufacture and sell Nonoptic Products to any person or entity without the
necessity of any approval or license from the Purchaser, although the Company
agrees that, in that event, the Company will not sell Products to any purchaser
which, to the Company's knowledge, intends to insert a fiber optic cable into
the Product. The Purchaser reserves the right to inform the Company in writing
immediately in the event that the Purchaser discovers that certain companies are
using Nonoptic Products manufactured by the Company or its agents in the optical
field. Upon receipt of such notice, Company shall have ninety (90) days to
disengage from manufacturing Nonoptic Products for such companies in the optical
field only.
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3. Purchaser Orders.
3.1 Purchase Orders During Grace Period. From time to time
during the Grace Period, the Purchaser shall place binding purchase orders for
its requirements for Products. The pricing and delivery times for Products
ordered under these Purchase Orders shall be subject to the mutual agreement of
the parties.
3.2 Purchase Orders for Six Month Purchase Periods. After the
Grace Period, the Purchaser shall purchase Products from the Company by issuing
binding purchase orders for the Purchaser's requirements for Products over Six
Month Purchase Periods as described in this section. The first Six Month
Purchase Period shall begin with the first calendar month in which the Purchaser
chooses to issue a purchase order for Products after the Grace Period. With this
first purchase order the Purchaser must submit binding purchaser orders for its
requirements for Products for the entire first Six Month Purchase Period. The
ship date for any purchase order issued for the first Six Month Purchase Period
shall not be earlier than sixty (60) days after the date the purchase orders for
the first Six Month Purchase Period are received by the Company. The Purchaser
shall issue binding purchase orders for its requirements for Products for each
Six Month Purchase Period following the first one, on or before the Binding Date
in the immediately preceding Six Month Purchase Period. Once the Purchaser has
issued purchase orders for any Six Month Purchase Period as described above, the
Purchaser shall be bound to purchase the Products ordered in such Purchaser
Orders, subject only to the following:
(a) the Purchaser may vary specifications for the Products
ordered so long as the Purchaser and the Company can agree on revisions to the
delivery date of such Products, failing which agreement the original purchase
orders shall stand;
(b) the Purchaser may change the number of Products ordered
for any given month within the Six Month Purchase Period so long as the gross
number of Products ordered in the Six Month Purchase Period stays the same and
so long as the Company and the Purchaser can agree on revisions to the delivery
dates for the Products affected, failing which agreement the original purchase
orders shall stand;
(c) the Purchaser may increase the number of Products ordered
in any Six Month Purchase Period by up to 20% so long as the Purchaser provides
written notice to the Company of such increase no later than ninety (90) days
before the delivery date for the additional Products; and
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(d) the Purchaser may increase the number of Products ordered
in any Six Month Purchase Period by up to 50%, so long as the Purchaser provides
written notice to the Company of such increase no later than one hundred twenty
(120) days before the delivery date for the additional Products.
3.3 Terms of Purchases. All Products ordered by Purchaser
under this agreement shall be delivered F.O.B. Seller's factory, Moultonboro,
New Hampshire, U.S.A. All costs of transportation shall be borne by the
Purchaser and all risk of loss shall pass to the Purchaser when the Products are
delivered to the carrier. To the extent they are not inconsistent with this
agreement, the terms of the Company's sales orders, invoices and related
documents shall govern the sale of Products to the Purchaser. Any additional or
conflicting terms in the Purchaser's purchase orders or other related documents
shall be inapplicable.
3.4 Price and Payments. During the Grace Period, the parties
shall develop a price for the Products that may be ordered during the Six Month
Purchase Periods and such pricing shall be set forth on Exhibit B, provided that
if the Purchaser changes the specifications for Products from those shown on
Exhibit A, the price shown on Exhibit B may be adjusted by the Company for those
Products. In addition, the price may be increased by the Company as of any
anniversary date of this agreement by giving written notice of such increase to
the Purchaser within the ninety days preceding each anniversary date, provided
that each increase in price may not exceed 5% of the price in effect just prior
to the change. The Purchaser shall make all payments for Products within thirty
(30) days after the date of the Company's invoice for such Products.
3.5 Failure by Company to Fill Orders.
(a) Beginning with the first day of the first Six Month
Purchase Period, if, during any period of three consecutive calendar months, the
Company fails to ship at least 80% of the Products due to be shipped during such
period pursuant to binding purchase orders, then the Purchaser may, as its sole
recourse, obtain up to 50% of its requirements for Products after such three
month period from other sources. The Purchaser shall provide written notice to
the Company of its intent to obtain Products from other sources at least ten
(10) days prior to placing its first purchase order from such other sources, and
shall, promptly after ordering Products from other sources, inform the Company
in writing of the number of Products ordered from other sources and the
scheduled ship dates.
(b) Beginning with the first day of the first Six Month
Purchase Period, if, during any period of three consecutive calendar months, the
Company fails to ship at least 50% of the Products due to be shipped during such
period pursuant to binding purchase orders, then the Purchaser may, as its sole
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recourse, either obtain the balance of its requirements for Products after such
three month period from other sources (with the same notice and information as
provided in section (a) above) or terminate this agreement by giving thirty (30)
days prior written notice to the Company.
4. Warranty and Related Matters.
4.1 Warranty. The Company warrants to the Purchaser that the
Products will be free from defects in workmanship and materials.
4.2 Term. The term of this warranty begins on the date of
invoice to the Purchaser and continues for a period of ninety (90) days. Parts
used for replacement are warranted for the remainder of the original warranty
period.
4.3 Remedy. The Purchaser's exclusive remedy for any defects
covered by this warranty is repair or replacement of the defective Product or
parts. All Products or parts claimed to be defective must be shipped to the
Company at the Purchaser's cost within a reasonable period of time. The Company
or its authorized agent will, at the Company's option, repair or replace the
Product or part within a reasonable period of time, and reship it to the
Purchaser at the Purchaser's expense. The Company's acceptance of any returned
Product or part is not an admission by the Company that the Product or part is
defective.
4.4 Exclusions. This warranty does not apply to problems not
caused by defects in workmanship or materials, including but not limited to
problems caused in whole or in part by:
(a) Use, handling, operation, maintenance or storage that is
not in accordance with either the Company's instructions for use or standard
industry practice;
(b) Alteration;
(c) Negligence;
(d) Repair or modifications performed by anyone other than the
Company or a party authorized in writing by the Company;
(e) Use in any manner or procedure other than that for which
it is labeled; and
(f) Use by any person other than trained medical personnel
under order of a physician.
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4.5 DISCLAIMERS. THE WARRANTY PRINTED ABOVE IS THE ONLY
WARRANTY APPLICABLE TO THIS PURCHASE. ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE, ARE DISCLAIMED. THE COMPANY WILL UNDER NO
CIRCUMSTANCES BE LIABLE FOR ANY PUNITIVE, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL
DAMAGES, INCLUDING, BUT NOT LIMITED TO, PERSONAL INJURY AND PROPERTY DAMAGE,
EQUIPMENT DAMAGE, LOSS OF PROFITS OR REVENUES OR BUSINESS, COST OF CAPITAL, COST
OF PURCHASE OR COST OF REPLACEMENT GOODS.
5. Indemnity.
5.1 Injuries and Damages. The Purchaser will defend, indemnify
and hold the Company harmless from and against any and all losses, damages,
expenses (including reasonable attorneys' fees and court costs), fines, suits,
proceedings, claims, demands, or actions of any kind or nature arising form any
charge, complaint or assertion that any Product, or any medical device of which
the Product is a component, sold by the Purchaser is responsible for any injury
to person or damage to property unless such injury is caused by a negligent act
on the part of the Company. The Company will provide reasonable assistance to
the Purchaser at the Purchaser's expense, in the defense of any such claim or
lawsuit.
5.2 Infringement. The Purchaser will defend, indemnify and
hold the Company harmless from and against any and all losses, damages, expenses
(including reasonable attorneys' fees and court costs), fines, suits,
proceedings, claims, demands, or actions of any kind or nature arising from any
charge, complaint or assertion that any Product, or any medical device of which
the Product is a component, sold by the Purchaser infringes or wrongly uses any
patent, trademark, copyright, or other intellectual property of any third party.
The Company will provide reasonable assistance to the Purchaser at the
Purchaser's expense, in the defense of any such claim or lawsuit.
6. Confidentiality. The parties have previously signed Evaluation and
Non-Disclosure Agreements dated January 7, 1997 and January 16, 1997, provided
by the Company, and a Confidentiality Agreement dated January 15, 1997, provided
by the Purchaser, in which certain Confidential Information was disclosed by the
Purchaser to the Company. The parties further agree that during the course of
this agreement confidential and proprietary information may be exchanged. The
information which the Company or the Purchaser deems confidential and
proprietary will be marked "CONFIDENTIAL" ("Confidential Information"). Each
will provide to the other only such Confidential Information
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as is required by the other to perform under this agreement. Neither will
disclose such Confidential Information to any third party, or use any such
Confidential Information other than for the purposes of this agreement for a
period of five (5) years after the expiration or termination for any reason of
this agreement, unless or until:
(a) Confidential Information shall become publicly known
through no fault of the receiving party, or
(b) Confidential Information was already in the receiving
party's possession, as evidenced in writing, prior to the disclosure of
Confidential Information, or
(c) Confidential Information shall be subsequently disclosed
to the receiving party by a third party who is not under any obligation of
confidentiality to the disclosing party, or
(d) the receiving party can establish by written documentation
its independent development of such Confidential Information.
7. Proprietary Matters.
7.1 The Company. The parties agree that the Company
Proprietary Assets and any improvements thereto developed by either party during
the term of this agreement are the sole property of the Company.
7.2 The Purchaser. The parties agree that the Purchaser
Proprietary Assets and any improvements thereto developed by either party during
the term of this agreement are the sole property of the Purchaser.
7.3 Further Assurances. Each party (the "Inventing Party")
agrees to disclose promptly to the other party (the "Owning Party") any
improvements developed by the Inventing Party that are the property of the
Owning Party under subsection 7.1 or 7.2, as the case may be. The Inventing
Party shall promptly transfer and assign all rights to such improvements to the
Owning Party. In addition, the Inventing Party agrees to provide the Owning
Party, at the Owning Party's expense, with such assistance and cooperation as
reasonably requested by the Owning Party to enable the Owning Party to perfect
ownership in, protect and use the properties belonging to the Owning Party as
provided in subsections 7.1 and 7.2 above.
8. Term and Termination.
8.1 Expiration and Renewal. This agreement shall be in full
force and effect from the date hereof through the date three years from the
first day of
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the first calendar month in the first Six Month Purchase Period, unless sooner
terminated as provided in subsection 8.2 below. The term of this agreement may
be renewed by the Company for a period not to exceed two years from the
expiration date so long as the Company is in substantial compliance with the
terms and conditions of this agreement at such time. Such renewal shall be
effected by written notice from the Company to the Purchaser at least six (6)
months prior to the expiration date, specifying the length of the renewal term.
8.2 Early Termination. This agreement may be terminated prior
to its expiration (including any renewal term) as follows:
(a) each party shall have the option upon three (3) months
prior written notice to terminate this agreement if any proceeding, suit or
action relating to bankruptcy, reorganization, arrangement of debt, insolvency,
adjustment of debt, receivership, liquidation or dissolution under law or
statute shall be filed by or against the other party, if such action, proceeding
or suit is not terminated within such three (3) month period;
(b) each party shall have the option to terminate this
agreement, upon three (3) months written notice to the other, for material
breach of any material provision of this agreement by the other which breach is
not corrected within such three (3) month period;
(c) the Company shall have the option to terminate this
agreement upon ten (10) days prior written notice to the Purchaser, if the
Purchaser fails to pay any invoice from the Seller within sixty (60) days after
the date of the invoice; and
(d) the Purchaser may terminate this agreement pursuant to
subsection 3.5(b).
8.3 Effect of Expiration or Termination; Survival. Upon
expiration or termination of this agreement for whatever reason, each party
shall return to the other all data, drawings, materials and Confidential
Information belonging to the other. No termination of this agreement shall
affect the right of the Company to continue to receive payments due and owing to
it for all Products subject to Purchase Orders which have been issued pursuant
to section 3. In addition, the provisions of sections 1, 2.2, 2.3, 4, 5, 6, 7,
9, and 10 shall survive the termination or expiration of this agreement.
9. Arbitration. All controversies, disputes or claims arising between
the parties and which are not resolved within thirty (30) days after either
party notifies the other in writing of such controversy, dispute or claim, may
be submitted for arbitration on demand of either party. Such arbitration
proceedings shall be
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conducted before a single arbitrator in the City of Boston, Massachusetts, in
accordance with the then current Commercial Rules of the American Arbitration
Association; the award and decision of the arbitrator shall be conclusive and
binding upon both parties; shall be non-appealable; and judgment upon the award
may be entered in any court of competent jurisdiction.
10. Miscellaneous.
10.1 Force Majeure. Neither party shall be responsible for the
fulfillment of any obligation or any losses resulting if the fulfillment of any
term of this agreement is hindered, delayed or prevented by revolutions or other
civil disorders, wars, governmental prescription, acts of enemies, strikes,
labor disputes, fires, explosions, floods, natural catastrophe, delays from
suppliers or subcontractors, or by any other similar cause not within the
control of the party whose performance is interfered with, and which, by the
exercise of reasonable diligence, such party is unable to prevent, provided that
any such event was not reasonably foreseeable as of the date of this agreement.
The performance of the party hindered, delayed or prevented shall be resumed at
a reasonable time after cessation of the event if reasonably possible. Any party
claiming the benefit of this section shall give notice of the commencement and
cessation of any such event if reasonably possible.
10.2 Notice. All notices, requests, demands, consents or other
communications given hereunder or in connection herewith shall be in writing and
sent by hand delivery, overnight courier, or certified or registered mail,
return receipt requested, postage prepaid, addressed to the parties at the
addresses shown in the first paragraph of this agreement or such other address
as one party may notify the other in accordance with the foregoing.
10.3 Successors and Assigns. This agreement shall be binding
upon and enure to the benefit of the respective representatives, successors, and
assigns of the Purchaser and the Company. The rights under this agreement may
not be assigned by either party without the prior written consent of the other
party.
10.4 Entire Agreement. This agreement constitutes the entire
agreement among the parties concerning the subject matter hereof and supersedes
all other prior agreements and understandings relating to the subject matter
hereof. No amendment or modification hereof will be effective, unless it is in
writing and signed by both parties.
10.5 Headings. The headings for the Sections of this agreement
have been inserted for convenience of reference only and shall in no way effect
the construction or interpretation of this agreement.
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10.6 Governing Law. This agreement shall in all respects be
construed and interpreted in accordance with and governed by the laws of the
State of New Hampshire, U.S.A.
10.7 Representations. Each party represents that his agreement
has been duly authorized by it by all necessary corporate or other entity
action, that his agreement is a valid and binding obligation of such party,
enforceable against such party in accordance with its terms, that the execution,
delivery and performance of this agreement does not violate or conflict with any
law or regulation applicable to such party and that no approval of any
governmental authority or agency is required for the execution, delivery and
performance of this agreement by such part.
10.8 Cumulative Remedies; Waivers in Writing. All rights and
remedies of the parties are cumulative and not exclusive of any other rights and
remedies. No waiver of any right or remedy of a party shall be effective unless
it is in writing an designed by such party.
IN WITNESS WHEREOF, the parties have executed this document as of the
date first written above.
PORTLYN CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
Its: President
Duly Authorized
SPECTRASCIENCE, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Its: President and CEO
Duly Authorized
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EXHIBIT A
Products
The Product description will be determined jointly by the parties as
provided in subsection 1.1.
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EXHIBIT B
Pricing for Products
The pricing for the Products will be determined during the Grace Period
and finalized before the first Six Month Purchase Period as provided in
subsection 3.4.
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