AMENDMENT TO MARKETING AND DISTRIBUTION AGREEMENT
The effective date of this Amendment will be July 12, 2000.
For good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged and confessed, the parties to that certain Marketing and
Distribution Agreement, effective date December 31, 1997, and its associated
extensions and amendments (hereinafter collectively called the Agreement),
between the ORTHOLOGIC CORP. (OrthoLogic) and CHRYSALIS BIOTECHNOLOGY, INC.
(Chrysalis), hereby agree to amend the Agreement in the following respects,
to-wit.
WHEREAS, it is the desire of OrthoLogic and Chrysalis to expand the territory
for OrthoLogic marketing and distribution of Chrysalin(TM) for fracture healing
to worldwide and to license worldwide marketing and distribution rights for use
of Chrysalin(TM) in other orthopedic hard tissue applications, and
WHEREAS, it is the desire of Chrysalis to grant and of OrthoLogic to acquire an
Option to license orthopedic soft tissue applications for worldwide marketing
and distribution,
NOW THEREFORE, the parties hereby agree to amend the Agreement as follows with
reference to specific numbered items within the Agreement:
I. BACKGROUND AND PARTIES
1.1 CHRYSALIS. Chrysalis BioTechnology, Inc. ("CHRYSALIS") is a Delaware
corporation, having a principal place of business at ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
1.2 ORTHOLOGIC. OrthoLogic Corp. ("ORTHOLOGIC") is a Delaware corporation,
having a principal place of business at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
PARAGRAPH 2.7 OF THE AGREEMENT IS HEREBY REPLACED WITH THE FOLLOWING:
II. ADDITIONAL DEFINITIONS
2.7 "FIELD OF USE" shall mean the use of the Technology Rights in one or
more of the indications described in paragraphs 2.7.1-2.7.3 below under
the terms and conditions of this Amendment.
2.7.1 "ORTHOPEDIC FRACTURE INDICATION" shall be limited to the human use of
the Technology Rights in connection with the treatment of fractures.
2.7.2 "ORTHOPEDIC HARD TISSUE INDICATIONS" shall be limited to the human use
of the Technology Rights in connection with repair, grafting, or filling
************Text has been omitted pursuant to a confidentiality request. Omitted
text has been filed with the Securities & Exchange Commission.
Page 1
of gaps in bone that may result from trauma, non-unions, surgical
removal of bone, or need to fuse two or more bone segments. Thus, these
indications will include treatment of segmental bone defects and spine
fusion. Excluded uses of the Technology Rights shall include, but shall
not be limited to, dental and oral applications.
2.7.3 "ORTHOPEDIC SOFT TISSUE INDICATIONS" shall be limited to the human use
of the Technology Rights in connection with treatment and repair of
damage to meniscus, cartilage, tendons and ligaments, coating or
preparation of bone or joint implants, and to treatment aimed to
directly affect disk repair.
PARAGRAPHS 2.11 AND 2.12 ARE ADDED AS FOLLOWS:
2.11 "TERRITORY" Worldwide for (1) currently licensed Orthopedic Fracture
Indications, (2) Orthopedic Hard Tissue Indications, and (3) Orthopedic
Soft Tissue Indications. OrthoLogic's right to market products outside
of the United States ("International Rights") is based on OrthoLogic
meeting the following conditions. Failure to meet the following
conditions would lead to forfeiture of all International Rights for all
applications within the Field of Use.
2.11.1. OrthoLogic shall elect a "Marketing Partner" based on the Marketing
Partner's qualifications, to include significant international marketing
and sales capability to orthopedic products along with the ability and
resources to rapidly initiate clinical trials in Europe and Asia.
2.11.2. ************
2.12 "RIGHTS"shall mean the rights described in paragraphs 2.12.1 to 3.12.3
below.
2.12.1 "RIGHT TO MARKET AND DISTRIBUTE" OrthoLogic and its Marketing Partner
shall have the Right to Market and Distribute products within the Field
of Use in the Licensed Territory. 2.12.2 "RIGHT TO LIMITED END-PRODUCT
MANUFACTURE" OrthoLogic and its Marketing Partner shall have the Right
to undertake Limited End-product Manufacturing as per the Agreement, but
not the right to manufacture Chrysalis peptides (except for the
allowances in Section IX). 2.12.3 "RIGHT TO DISTRIBUTE THROUGH 3RD
PARTIES" OrthoLogic or their Marketing Partner shall have the right to
distribute products for use in Field of Use in the Territory through
third party distributors subject to the terms of 2.11. As per Agreement,
all sales and distributions by Marketing Partner or 3rd Party
distributors will be treated for royalty purposes as if they were sold
directly by OrthoLogic.
PARAGRAPH IV OF THE AGREEMENT IS HEREBY MODIFIED AS FOLLOWS:
************Text has been omitted pursuant to a confidentiality request. Omitted
text has been filed with the Securities & Exchange Commission.
Page 2
IV. OPTION GRANTS AND PAYMENTS
(e)(i-iii)-Unchanged.
(e)(iv) Within 3 days of the Effective Date of this Agreement, OrthoLogic will
pay $2 million by direct wire transfer to Chrysalis for the exclusive Rights to
Chrysalin(TM) for Orthopedic Hard Tissue Indications within the Territory,
subject to the conditions in Sections 2.11.1 and 2.11.2 and payment of the
milestone payments herein.
(e)(v) Upon execution of this Amendment, OrthoLogic will initiate an aggressive
development program for Chrysalin(TM) use in segmental bone defect filling and
spine fusion indications in collaboration with Chrysalis. OrthoLogic shall
pursue the following milestones with Reasonable Efforts, and make the following
payments to Chrysalis upon the occurrence of the events set forth below or to
extend the time for achieving the events, so long as OrthoLogic, one of its
Affiliates, or a sublicensing partner, is still proceeding with the license or
licenses contemplated by each such payment.
SPINE FUSION MILESTONES:
1) ************
2) ************
3) ************
OTHER ORTHOPEDIC HARD TISSUE INDICATION MILESTONES:
4) ************
5) ************
(e)(vi) Upon execution of the Amendment, Chrysalis will grant OrthoLogic a
************ option for rights to Orthopedic Soft Tissue Indications. OrthoLogic
will have the right to execute its Option at any time within ************ of the
Effective Date of this Amendment by making a ************ payment to Chrysalis.
************ Upon exercise of the option for Orthopedic Soft Tissue Indications,
OrthoLogic will initiate an aggressive development program for at lease one of
the Orthopedic Soft Tissue Indications in collaboration with Chrysalis.
If OrthoLogic exercises its option for the rights to Orthopedic Soft Tissue
Indications, then it shall be responsible for the payment of the following
milestones to Chrysalis:
1) ************
2) ************
3) ************
(e)(vii) If OrthoLogic retains its International Rights, subject to the terms of
2.11, OrthoLogic and its Marketing Partner will pursue with Reasonable Efforts
the initiations of clinical trials in Europe
************Text has been omitted pursuant to a confidentiality request. Omitted
text has been filed with the Securities & Exchange Commission.
Page 3
and Asia and other steps required to obtain regulatory approval to market
products for Fracture healing, Orthopedic Hard Tissue, and (if exercising its
option) Orthopedic Soft Tissue Indications in Europe, Asia, and other major
markets within the Territory. The following milestones will be paid upon
achievement of such marketing approvals.
a) ************
b) ************
c) ************
(f) unchanged.
(g) deleted.
(h);(i) unchanged.
(j) OrthoLogic will not promote and will use reasonable efforts to discourage
the use of any Chrysalis Product for Indications outside of the licensed Field
of Use. It will also use reasonable efforts to insure that commercial
embodiments or formulations using Chrysalis Product will be so formulated to
focus the product use for the licensed Indication. Chrysalis will have input
into all formation decisions whether or not Chrysalis is involved in the
manufacturing of the final formation.
PARAGRAPH 5.2 IS ADDED AFTER ROYALTY RATE TABLE AS FOLLOWS:
5.2 CATEGORIES OF NET SALES. For the purpose of calculating royalties due to
Chrysalis if OrthoLogic exercised its option for Rights to Orthopedic Soft
Tissue Indications all sales of products for Orthopedic Soft Tissue Indications
shall be separated from sales of Fracture and Orthopedic Hard Tissue
Indications. ************
************
In the event that a given product is sold for indications in both categories,
its sales will be calculated in total in the category that has the lower total
Net Sales for the royalty period.
PARAGRAPH 5.2 BECOMES 5.3:
SECTION "VI" IS AMENDED AS FOLLOWS:
6.1 REPORTS. Last sentence to end . . . . specified by Sections 5.1 through 5.3.
PARAGRAPH 8.2 IS AMENDED TO ADD:
************Text has been omitted pursuant to a confidentiality request to the
Securities and Exchange Commission. Omitted text has been filed with the
Securities and Exchange Commission.
Page 4
a) If OrthoLogic or its Marketing Partners chooses to have Chrysalis
provide Chrysalin in a commercial formulation that includes a
matrix, encapsulation, or specific delivery vehicle for
Fractures, hard Orthopedic Tissue or Soft Orthopedic Tissue
Indications, an additional component to the transfer cost will be
added to cover the additional manufacturing cost of the new
formulation,************.
PARAGRAPH XVI "GENERAL" IS RENUMBERED AS PARAGRAPH XVII. THE NEW
PARAGRAPH XVI IS AS FOLLOWS:
XVI. INTELLECTUAL PROPERTY
It is anticipated that development programs may result in the creation of
intellectual property (IP) based on usage, dose, and/or specific formulations of
Chrysalin(TM) or related peptides or Technology Improvements. Chrysalis will
retain rights to any and all patents resulting from development programs using
TP508 or related peptides regardless of inventorship. Where such patents extend
the exclusive right to manufacture, sell, or use TP508or related peptides for
Orthopedic Indications in the Field, the additional patent protection will
likewise extend the term of the original and amended agreement and obligations
of OrthoLogic, its partners or successors, to purchase TP508 and related
peptides from Chrysalis and pay Royalties to Chrysalis. In addition, Chrysalis
will retain the following rights:
1. SOLE OR JOINTLY DEVELOPED IP. Any and all patents resulting from IP jointly
developed by Chrysalis (or Chrysalis/UTMB) personnel and OrthoLogic or
OrthoLogic Partner scientists will be assigned to Chrysalis (or UTMB)
without fee and will be filed and prosecuted either by or in consultations
with Chrysalis IP Counsel.
2. ORTHOLOGIC (OR PARTNER) IP (NO CHRYSALIS/UTMB INVENTORSHIP). All inventions
related to the Chrysalin(TM)/TO508 technology will be promptly reported to
Chrysalis. Any resulting patents related to or contributing to products for
Licensed Indications will be assigned to Chrysalis without fee. Any patents
resulting from IP that uses the Chrysalin(TM)/TP508 technology, but is
specific to applications outside of the Licensed Indications may be owned
and patented by OrthoLogic or Partner, but right of first refusal for
licensing such new IP will be granted to Chrysalis. The assignment of
patents alone under this condition would not give Chrysalis use of
OrthoLogic or Partner proprietary matrix or delivery products without
additional license agreements.
************Text has been omitted pursuant to a confidentiality request to the
Securities and Exchange Commission. Omitted text has been filed with the
Securities and Exchange Commission.
Page 5
All of the terms and conditions of the Agreement shall remain unchanged except
as specified above.
SIGNED in multiple originals this the __ day of __________, 2000.
ORTHOLOGIC CORP.
By:
------------------------------------
▇▇▇ ▇▇▇▇▇▇▇, President
CHRYSALIS BIOTECHNOLOGY, INC.
By:
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
************Text has been omitted pursuant to a confidentiality request to the
Securities and Exchange Commission. Omitted text has been filed with the
Securities and Exchange Commission.
Page 6