Strategic Supply Agreement
[Confidential
Treatment Requested. Confidential portions of this document have been
redacted
and
have been separately filed with the Securities and Exchange
Commission]
Execution
Copy
This
Strategic
Supply
Agreement
(this “Agreement”) is
entered into as of July 24, 2009 (the “Effective Date”) by
and between ▇▇▇▇▇▇ Molecular Inc., a Delaware corporation (“Abbott”), and
NeoGenomics Laboratories, Inc., a Florida corporation (“NeoGenomics”).
Recitals
A. NeoGenomics
operates a genetic testing laboratory that offers a variety of diagnostic tests
for cancer and other diseases, including tests developed by NeoGenomics and
tests developed by others.
▇. ▇▇▇▇▇▇
manufactures and sells certain ASR probes that are useful for analyzing nucleic
acids through a process commonly known as FISH.
C. NeoGenomics
desires to develop and offer a FISH-based test for the diagnosis of melanoma,
and to potentially develop and offer diagnostic tests for other
cancers.
D. NeoGenomics
desires to purchase all of its requirements of Products from Abbott, and Abbott
desires to supply and sell all of NeoGenomics’
requirements for such Products to NeoGenomics, which NeoGenomics intends
to incorporate into its diagnostic test, on the terms and conditions set forth
in this Agreement.
Now,
Therefore,
in consideration of the promises and the mutual covenants contained herein, the
parties agree as follows:
Article
1
Definitions
“Abbott IVD” means an
In-Vitro Diagnostic test for melanoma developed by Abbott for aid in diagnosis
of malignant melanoma in skin biopsy specimens (excluding
subtyping).
“Act” shall mean the
United States Food, Drug and Cosmetic Act and all regulations promulgated
thereunder.
“Affiliate” shall mean
any entity which directly or indirectly controls, is controlled by, or is under
common control with, another entity. For purposes of this Agreement, an entity
shall be deemed to be in control of another entity if the former owns, or the
partners of the former own, directly or indirectly, more than fifty percent
(50%) of the outstanding voting equity (or other equity or ownership interest in
the event that such entity is other than a corporation) of the
latter.
“Agreement” has the
meaning set forth in the introductory paragraph.
“Annual Forecast” has
the meaning set forth in Section 3.4(a)(ii).
“ASR” means analyte
specific reagent.
“Base Price” has the
meaning set forth in Section 4.1(a).
“Calendar Quarter”
means each three (3) month period during the term of this Agreement which ends,
respectively, on March 31, June 30, September 30 and December 31 of each
Calendar Year, except for the initial Calendar Quarter of the first Calendar
Year, which will begin on the Effective Date and end on September 30,
2009.
“Calendar Year” shall
mean each twelve (12) month period during the term of this Agreement which
begins on January 1, and ends on December 31, except for the first Calendar Year
which will begin on the Effective Date and end on December 31,
2009.
“Change of Control”
means: (a) the sale of all or substantially all of NeoGenomics’ assets that are
used in designing, developing, validating, marketing, selling, performing or
billing for the Melanoma LDT to a Third Party in a single transaction or series
of related transactions; (b) any merger, consolidation, sale of stock or other
transaction that results in any “person” or “group” (each as defined in the
Securities Exchange Act of 1934, as amended) either becoming the “beneficial
owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended), directly or indirectly, of NeoGenomics’ voting securities(or
securities converted into or exchangeable for such voting securities)
representing fifty percent (50%) or more of the combined voting power of all
of NeoGenomics’ voting securities(on a fully diluted basis); or (c) any other
event that results, by contract or otherwise, in such person or group obtaining
the ability, directly or indirectly, to elect a majority of the board of
directors of or otherwise direct the management and policies of
NeoGenomics.
“Change of Control Base
Revenue Amount” has the meaning specified in Section 14.4.
“Commencement Date”
has the meaning set forth in Section 9.5(b).
“Confidential
Information” has the meaning set forth in Section 12.1.
“Conversion Date” has
the meaning set forth in Section 3.4(d).
“Decision Period” has
the meaning set forth in Section 9.5.
“Effective Date” has
the meaning set forth in the introductory paragraph.
“Escalated Negotiation
Period” has the meaning set forth in Section 9.5.
“Estimated Premium
Price” has the meaning set forth in Exhibit E
hereto.
“Evaluation Products”
has the meaning set forth in Section 2.1.
“Exclusive Products”
means the ASRs, if any, described in Section 3.2 and identified in Exhibit A as
Exclusive Products.
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“Existing Customer
Election” has the meaning set forth in Section 3.4(d).
“FDA” shall mean the
United States Food and Drug Administration and any successor agency
thereto.
“FISH” means a
fluorescent in situ hybridization assay.
“Initial Annual
Forecast” has the meaning set forth in Section 3.4(a)(i).
“Initial Negotiation
Period” has the meaning set forth in Section 9.5.
“Intellectual
Property” means any and all: (a) methods, techniques, trade secrets,
designs, know-how, discoveries, inventions, data, information, documentation,
regulatory submissions, formulations, methodologies, processes, specifications,
trademarks, trade dress and other intellectual property of any kind (whether or
not protected under patent, trademark, copyright or similar law); and (b)
trademark registrations, copyrights, United States and foreign patents and
patent applications covering or claiming any of the foregoing.
“IVD Agreement” has
the meaning set forth in Section 9.4(c).
“IVD Opportunity” has
the meaning set forth in Section 9.4(b).
“LDT” means a
laboratory developed test that is independently designed, developed and
validated by a clinical service laboratory.
“Melanoma LDT” means a
specific LDT that is anticipated to be independently designed, developed and
validated by NeoGenomics using the Products for use as an aid in diagnosing
malignant melanoma in skin biopsy specimens (excluding subtyping).
“Model Forecast” has
the meaning set forth in Section 3.4(a)(iii).
“Negotiation Period”
means the Initial Negotiation Period and the Escalated Negotiation
Period.
“Non-Conforming
Product” shall have the meaning set forth in Section 7.6.
“Pre-Existing
Customer” A customer of NeoGenomics that purchases the Melanoma LDT prior
to the Conversion Date.
“Premium Price” has
the meaning set forth in Section 4.1(b).
“Products” shall mean
the analyte specific reagent probes identified by NeoGenomics and set forth on
Exhibit A,
including the Exclusive Products.
“Purchase Price” for
each unit of Product shall mean the sum of the Base Price and Premium Price
applicable for such unit at any given time.
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“Quality Systems and GMP
Requirements” shall mean the current and any future quality system and
good manufacturing practices regulations under 21 C.F.R. Part 820 to the extent
that such regulations are applicable to the Product, as such regulations are
promulgated by the FDA. The applicable Quality Systems and GMP Requirements for
any lot of Product shall be those regulations in effect when such lot is
manufactured for NeoGenomics.
“Quarterly Forecast”
has the meaning set forth in Exhibit
E.
“Quarterly Report” has
the meaning set forth in Exhibit
E.
“Quarterly Unit
Purchases” shall mean the number of units of Products ordered by
NeoGenomics and shipped by Abbott pursuant to such order in a given Calendar
Quarter, where one (1) unit of Product constitutes the amount of such Product
necessary for NeoGenomics to perform the Melanoma LDT for one (1) patient. For
purposes of this definition, “unit” refers to one
ASR probe at the concentration and volume to be used in the validated Melanoma
LDT, which information will be provided to Abbott by NeoGenomics in writing
promptly following validation of the Melanoma LDT or any modification of the
Melanoma LDT. For example, if NeoGenomics uses four (4) ASR probes designated as
Products under this Agreement to perform the Melanoma LDT then such four (4) ASR
probes would represent four (4) units of Products.
“SEC” shall mean the
United States Securities and Exchange Commission and any successor agency
thereto.
“Service Revenue”
means the revenue recognized by NeoGenomics related to performing the Melanoma
LDT for Third Parties, as calculated in accordance with generally accepted
accounting principles and reported by NeoGenomics’
parent company in its financial statements, as filed with the
SEC.
“Specifications” shall
mean ▇▇▇▇▇▇’▇ internal manufacturing specifications as well as technical
specifications and test protocols relating to the characterization of the
Products identified in Exhibit A, which
Specifications will be included in Exhibit A when the
Products are identified pursuant to Section 2.2 and which may from time to time
be amended by written agreement of the parties including but not limited to
purchased standard control procedure (pscp) changes or an equivalent document
control process.
“Subsequent Annual
Forecast” has the meaning set forth in Section 3.4(a).
“Subsequent Development
Agreement” has the meaning set forth in Section 9.5(b).
“Termination Date Revenue
Amount” has the meaning set forth in Section 14.4(b).
“Threshold Amount” has
the meaning set forth in Section 3.4(a)(v).
“Territory” shall mean
the United States and Puerto Rico.
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“Third Party” shall
mean a party other than Abbott or NeoGenomics, or their respective
Affiliates.
“Unaudited Report” has
the meaning set forth in Section 3.4(a)(iv).
“Unaudited Revenue”
has the meaning set forth in Section 3.4(a)(iv).
Article
2
Product
Identification
2.1 Evaluation Products.
Abbott will supply NeoGenomics with ▇▇▇▇▇▇’▇ ASRs that may be requested from
time to time by NeoGenomics for purposes of NeoGenomics’ evaluation and
determination as to which ASRs to include in its Melanoma LDT, and for design,
development and validation of the Melanoma LDT (“Evaluation
Products”). Abbott will supply NeoGenomics with Evaluation Products in
quantities that are reasonably sufficient for evaluating the ASRs and designing,
developing and validating the Melanoma LDT. NeoGenomics shall not use the
Evaluation Products for any other purposes. Unless otherwise directed by Abbott,
NeoGenomics will destroy any unused quantities of Evaluation Products.
NeoGenomics will not ▇▇▇▇ or seek reimbursement from any Third Party payor for
Evaluation Products.
2.2 Product
Identification. As promptly as reasonably practicable, but within one
hundred twenty (120) days after the Effective Date, NeoGenomics will determine
which ASRs it desires to purchase under this Agreement for inclusion in its
Melanoma LDT. Once the ASRs are identified and agreed upon in writing by the
parties, Exhibit
A will be modified (without necessitating an amendment to this Agreement)
to include such ASRs and their Specifications, and such ASRs will thereafter
constitute the Products for purposes of this Agreement. Notwithstanding the
foregoing, if, during the term of this Agreement, Abbott develops new ASRs
utilizing in situ hybridization to a chromosomal target that Abbott reasonably
believes may be of interest to NeoGenomics for use with the Melanoma LDT or a
successor thereto, Abbott will notify NeoGenomics in writing of such new
products with a description of each such product and exclusively offer to
NeoGenomics the right to evaluate such products for a period of one hundred
eighty (180) days from the date of such written notice for possible inclusion in
the Melanoma LDT or a successor thereto. In the event that NeoGenomics decides
during such evaluation period that any such new product would be appropriate to
include in its Melanoma LDT or any successor thereto, and so notifies Abbott in
writing, then Exhibit
A will be further modified (without necessitating an amendment to this
Agreement) to include such new product and its specifications, and thereafter
such new product will be included in the definition of Exclusive Products for
the purposes of this Agreement. If NeoGenomics elects not to use the new product
in the Melanoma LDT or a successor thereto, it shall not constitute a Product
for purposes of this Agreement and NeoGenomics shall have no rights with respect
thereto.
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2.3 Non-Abbott ASRs. The
parties acknowledge and agree that NeoGenomics will be free to identify which
ASRs it desires to include in the Melanoma LDT, and that it may include ASRs
that are not currently manufactured by Abbott. If NeoGenomics elects to include
in its Melanoma LDT one or more ASRs that are not currently manufactured by
Abbott, it will so notify Abbott, and Abbott may elect to manufacture the ASR
and supply it to NeoGenomics as a Product under this Agreement. If Abbott
chooses not to manufacture the ASR, Abbott and NeoGenomics will negotiate in
good faith to determine whether: (a) Abbott will obtain the ASR from a Third
Party and supply it to NeoGenomics as a Product under this Agreement; or (b)
NeoGenomics will obtain the ASR directly from a Third Party that is reasonably
acceptable to Abbott and that has a valid license from Abbott to manufacture the
ASR, if applicable. If none of the ASRs selected by NeoGenomics are manufactured
by Abbott at the time of the initial selection of such ASRs for inclusion in the
Melanoma LDT by NeoGenomics, and Abbott elects not to manufacture any of such
ASRs selected by NeoGenomics so that no ASRs have been identified as Products
pursuant to Section
2.2 within the time periods permitted therein, and the parties are unable
to reach a mutually acceptable alternative arrangement, then Abbott may
terminate this Agreement upon thirty (30) days prior written notice to
NeoGenomics without further obligation or liability. Abbott represents and
warrants that, as of the Effective Date, it currently manufactures all of the
ASRs previously disclosed to NeoGenomics or listed in any Abbott product catalog
that is current as of the Effective Date.
Article
3
Supply
Terms
3.1 Supply. During the
term of this Agreement, and subject to the terms and conditions contained
herein, NeoGenomics shall purchase all of its requirements of the Products from
Abbott, and Abbott shall supply, or shall cause its Affiliates to supply, to
NeoGenomics such quantities of the Products as may be ordered by NeoGenomics
hereunder. Except for ▇▇▇▇▇▇’▇ failure to supply
Products as described in Section 5.5, NeoGenomics will not obtain from
any Third Party, or manufacture for itself, any Products (or other ASRs that are
substantially similar to the Products).
3.2 Exclusivity. If,
pursuant to Section 2.2, NeoGenomics identifies for inclusion in the Melanoma
LDT one or more ASRs that are not currently marketed or sold commercially by
Abbott as individual stand-alone products, each such ASR will be designated as
an “Exclusive
Product” and will be so identified on Exhibit ▇. ▇▇▇▇▇▇
will supply the Exclusive Product(s) to NeoGenomics exclusively in the Territory
and, subject to Section 3.3(b) below, Abbott will not sell the Exclusive
Products to any Third Party in the Territory. Any Products that are not
expressly designated in Exhibit A as
Exclusive Products shall be supplied to NeoGenomics on a non-exclusive basis.
Abbott will use commercially reasonable efforts to ensure that any Products that
are sold by Abbott to customers outside the Territory will be subject to
restrictions prohibiting the further resale or distribution of such Products in
the Territory. For the avoidance of doubt, once an ASR has been
identified as an “Exclusive Product” on Exhibit A it shall
not cease to be an Exclusive Product due to the marketing or sale of such ASR by
Abbott outside the Territory.
3.3 Exclusivity
Exceptions.
(a) Abbott
may sell Exclusive Products to Third Parties outside the Territory; provided, that Abbott will
use commercially reasonable efforts to ensure that such Exclusive Products are
not resold or distributed in the Territory.
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(b) Abbott
may supply Exclusive Products to the academic collaborators identified in Exhibit B in
quantities sufficient for the collaborators’ research and development purposes.
In addition, Abbott may supply the identified academic collaborators, in the
aggregate, with quantities of Exclusive Products sufficient to perform no more
than one thousand two hundred (1,200) patient tests per Calendar Year
(increasing six percent (6%) per Calendar Year).
3.4 Maintenance of
Exclusivity.
(a) Annual Forecast and
Review.
(i) At
least ninety (90) days prior to the end of the 2010 Calendar Year, NeoGenomics
will provide to Abbott a written reasonable good faith forecast of the Service
Revenue it expects to realize in each of the following two (2) Calendar Years
from sales of the Melanoma LDT (the “Initial Annual
Forecast”). If Abbott does not object to the Initial Annual Forecast
within forty-five (45) days of its receipt of the Initial Annual Forecast, it
shall be deemed accepted by Abbott. If Abbott objects to the Initial Annual
Forecast within such forty-five (45) day period, the parties will negotiate in
good faith to develop an Initial Annual Forecast that is mutually acceptable to
both parties, subject to subparagraph (iii) below.
If the parties are unable to agree upon a mutually acceptable Initial
Annual Forecast within fifteen (15)
days after beginning negotiations, the matter will be escalated to the President
of NeoGenomics (currently ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇) and the President of Abbott
(currently ▇▇▇▇▇▇▇▇ ▇’▇▇▇▇▇) for resolution, and if such individuals are unable
to agree upon a mutually acceptable Initial Annual Forecast within an additional fifteen (15) days, the
matter will be resolved in accordance with Section 15.11.
(ii) At
least ninety (90) days prior to the end of the 2012 Calendar Year and at least
ninety (90) days prior to the end of each third Calendar Year thereafter during
the term of this Agreement (i.e., 2015, 2018, etc.),
NeoGenomics will provide to Abbott a written reasonable good faith forecast of
the Service Revenue it expects to realize in each of the following three (3)
Calendar Years from sales of the Melanoma LDT (each, a “Subsequent Annual
Forecast” and together with the Initial Annual Forecast, the “Annual Forecast”). If
Abbott does not object to a Subsequent Annual Forecast within forty-five (45)
days of its receipt of such Subsequent Annual Forecast, it shall be deemed
accepted by Abbott. If Abbott objects to a Subsequent Annual Forecast within
such forty-five (45) day period, the parties will negotiate in good faith to
develop a Subsequent Annual Forecast that is mutually acceptable to both
parties, subject to subparagraph (iii) below;
provided
however, that unless otherwise mutually
agreed by the parties:
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(A)
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if NeoGenomics’ maintains exclusivity pursuant to
Section 3.4(b), then the Service Revenue projected in each Calendar Year
forecast included within the applicable Subsequent Annual Forecast shall
not be lower than the actual Service Revenue realized by NeoGenomics in
the last Calendar Year of the immediately preceding forecast period;
or
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(B)
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if NeoGenomics does not maintain exclusivity
pursuant to Section 3.4(b) and Abbott does not convert this Agreement to a
non-exclusive agreement pursuant to Section 3.4(c), then the Service
Revenue projected in each Calendar Year forecast included within the
applicable Subsequent Annual Forecast shall not be lower than the actual
Service Revenue realized by NeoGenomics in the last Calendar Year of the
immediately preceding forecast period, divided by seventy-five one
hundredths (0.75).
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If the
parties are unable to agree upon a mutually acceptable Subsequent Annual
Forecast within fifteen (15) days after beginning negotiations, the matter will
be escalated to the President of
NeoGenomics (currently ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇) and the President of Abbott (currently
▇▇▇▇▇▇▇▇ ▇’▇▇▇▇▇) for resolution, and if such individuals are unable to agree
upon a mutually acceptable Subsequent Annual Forecast within an additional fifteen (15) days, the
matter will be resolved in accordance with Section 15.11.
(iii) Notwithstanding
anything in this Agreement to the contrary, unless otherwise expressly agreed by
both parties, neither the Initial Annual Forecast nor any Subsequent Annual
Forecast will be (A) higher than the model forecast for the corresponding
Calendar Year(s) as shown in the model forecast attached hereto as Exhibit C (the “Model Forecast”) or
(B) so long as Abbott has
not exercised its rights pursuant to Section 3.4(c) hereof to convert
NeoGenomics to a non-exclusive arrangement, lower than thirty-five percent (35%)
of the model forecast for the corresponding Calendar Year as shown in the Model
Forecast.
(iv) NeoGenomics
hereby agrees that it will hire the number of sales people, make the marketing
expenditures and otherwise make the commercial investments that NeoGenomics
reasonably believes are necessary to achieve each Annual Forecast. NeoGenomics
and Abbott agree to meet periodically to review and discuss NeoGenomics’ sales
and marketing activities with respect to the Melanoma LDT.
(v) On
or before February 15, 2012, and thereafter as soon as figures are available,
but in no event more than forty-five (45) days, after the end of each Calendar
Year during the term of this Agreement, NeoGenomics will provide Abbott with a
written report showing NeoGenomics’ revenue related to performing the Melanoma
LDT for Third Parties, as calculated in accordance with generally accepted
accounting principles (the “Unaudited Revenue”),
during the previous Calendar Year, which the parties acknowledge shall be based
on unaudited financial information for such
Calendar Year (the “Unaudited Report”).
Within ninety (90) days after the end of such Calendar Year during the term of
this Agreement, NeoGenomics will provide Abbott with a written report showing
its Service Revenue during the previous Calendar Year (the “Audited Report”), but
only if the Service Revenue in the Audited Report would differ from NeoGenomics’
Unaudited Revenue as reported in the Unaudited Report. If the Unaudited Report
shows that NeoGenomics’ Unaudited Revenue during the previous Calendar Year was
less than ninety percent (90%) of the applicable Threshold Amount (as defined
below), then the Unaudited Revenue will constitute the Service Revenue for such
Calendar Year for purposes of determining whether Abbott may exercise its rights
under Section 3.4(c) or Section 3.4(d), as applicable. If the Unaudited Report
shows that NeoGenomics’ Unaudited Revenue during the previous Calendar Year is
equal to or greater than 90% of the applicable Threshold Amount, then the
parties will wait until the Audited Report is issued and the actual Service
Revenue, as reported in the Audited Report, will be used for purposes of
determining whether Abbott may exercise its rights under Section 3.4(c) or
Section 3.4(d), as applicable. As used in this paragraph: (A) If Abbott has not exercised its rights
pursuant to Section 3.4(c) or Section 3.4(d), the “Threshold Amount” is
the amount of Service Revenue that NeoGenomics must realize in a given Calendar
Year in order to maintain exclusivity pursuant to Section 3.4(b); or (B) if
Abbott has exercised
its rights pursuant to Section 3.4(c), the “Threshold Amount”
means the amount of Service Revenue that NeoGenomics must realize in a given
Calendar Year in order to avoid Abbott having the right to make the Existing
Customer Election pursuant to Section 3.4(d).
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(b) Maintenance of
Exclusivity. Beginning with Calendar Year 2011, if NeoGenomics’ Service
Revenue in a Calendar Year equals or exceeds seventy-five percent (75%) of the
Service Revenue forecasted in the Annual Forecast for such Calendar Year, then
NeoGenomics will retain the right to purchase the Exclusive Products from Abbott
on an exclusive basis pursuant to Section 3.2.
(c) Conversion to
Non-Exclusivity. Beginning with Calendar Year 2011, if NeoGenomics’
Service Revenue in a Calendar Year is less than seventy-five percent (75%) but
at least thirty-five percent (35%) of the Service Revenue forecasted in the
Annual Forecast for such Calendar Year, then Abbott may, in its discretion, upon
written notice to NeoGenomics within ninety (90) days following NeoGenomics’
submission of a written report showing the previous year’s Service Revenue to
Abbott, irrevocably discontinue selling the Exclusive Products to NeoGenomics on
an exclusive basis and begin selling them to NeoGenomics on a non-exclusive
basis. In such event, the Exclusive Products will cease being Exclusive Products
for purposes of this Agreement and Abbott will be free to sell any Products,
including the Exclusive Products, to one or more of its Affiliates or Third
Parties for any purpose; provided, however, that
before exercising its right to convert NeoGenomics to a non-exclusive
arrangement, Abbott will first consult with NeoGenomics regarding the reasons
for the Service Revenue shortfall and will consider in good faith a reasonable
modification to the Annual Forecast to permit NeoGenomics to maintain
exclusivity; provided,
further, that Abbott will have no obligation to agree to such a
modification. Abbott agrees that to the extent it does not exercise its rights
under this Section 3.4(c) within ninety (90) days of being notified of
NeoGenomics’ Service Revenue for the previous Calendar Year, then Abbott will be
deemed to have waived its right to convert this Agreement to a non-exclusive
agreement as a result of any shortfalls in Service Revenue for such Calendar
Year.
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(d) Existing Customer
Election. If (i) NeoGenomics’ Service Revenue in a Calendar Year is less
than thirty-five percent (35%) of the Service Revenue forecasted in the Annual
Forecast for such Calendar Year (if Abbott has not converted this
Agreement to a non-exclusive agreement pursuant to Section 3.4(c)); or (ii)
NeoGenomics’ Service Revenue in a Calendar Year is less than forty-five percent
(45%) of the Service Revenue forecasted in the Annual Forecast for such Calendar
Year (if Abbott has
converted this Agreement to a non-exclusive agreement pursuant to Section
3.4(c)); then, in either such event, Abbott may, in its discretion, upon written
notice to NeoGenomics within nine (9) months following NeoGenomics submission of
a written report showing the previous Calendar Year’s Service Revenue to Abbott
(the date which is thirty (30 days after NeoGenomics’ receipt of such notice
being the “Conversion
Date”), elect to sell the Exclusive Products to NeoGenomics only to the
extent necessary for NeoGenomics to service its Pre-Existing Customers (the
“Existing Customer
Election”); provided,
however, that before making such election, Abbott will first consult with
NeoGenomics regarding the reasons for the Service Revenue shortfall and will
consider in good faith a reasonable modification to the Annual Forecast to
permit NeoGenomics to continue to purchase the Exclusive Products on the
non-excusive basis set forth under Section 3.4(c); provided, further, that
Abbott will have no obligation to agree to such a modification. From and after
the Conversion Date, NeoGenomics will have no right to purchase, and Abbott will
have no obligation to sell, Products in excess of the quantities necessary for
NeoGenomics to provide the Melanoma LDT to its Pre-Existing Customers (including
increases in volume requested by Pre-Existing Customers). Upon reasonable prior
written notice, ▇▇▇▇▇▇’▇ independent third party accounting firm, at ▇▇▇▇▇▇’▇
expense, will have the right to audit NeoGenomics’ books and records (but no
more than once every twelve (12) months and only at reasonable times and under
reasonable conditions) to verify that Products sold to NeoGenomics are being
used solely to service Pre-Existing Customers. Prior to any such audit, ▇▇▇▇▇▇’▇
independent third party accounting firm shall be required to execute a separate
confidentiality agreement with NeoGenomics, in form and substance reasonably
acceptable to NeoGenomics, that, among other things, shall prohibit such
accounting firm from disclosing the identities of any of NeoGenomics’ customers
to Abbott, any Affiliate of Abbott or any Third Party. If NeoGenomics
intentionally and materially exceeds its rights under this Section 3.4(d),
Abbott shall have the right to terminate this Agreement pursuant to Section
14.2. Abbott agrees that if it does not make the Existing Customer Election
within nine (9) months of being notified of NeoGenomics’ Service Revenue for the
previous Calendar Year, then Abbott will be deemed to have waived its right to
make the Existing Customer Election for such Calendar Year.
(e) Lowest
Price.
(i) If
Abbott converts this Agreement to a non-exclusive agreement pursuant to Section 3.4(c), Abbott will
continue to sell the Products to NeoGenomics on the terms and conditions set
forth in this Agreement, except for terms related to exclusivity; provided, however, that if, following such conversion, Abbott sells
Products to any Third Party (other than academic collaborators) for a price that
is lower than the Purchase Price payable by NeoGenomics hereunder, then
NeoGenomics will be entitled to such lower price for all quantities of such
Products delivered to it for as long as such lower price is effective for any
other buyer; provided,
further, that, if the lower price payable
by a Third Party is based on tiered pricing or other volume discount,
NeoGenomics will be required to commit to at least the same purchase volume as
the Third Party in order to be entitled to the lower price.
(ii) If
Abbot makes the Existing Customer Election pursuant to Section 3.4(d), Abbott
will continue to sell the Products to NeoGenomics on the terms and conditions
set forth in this Agreement, except for terms related to exclusivity and subject
to the limitations set forth in Section 3.4(d); provided, however, that if,
following such election, Abbott sells Products to any Third Party (other than
academic collaborators) for a price that is lower than the Purchase Price
payable by NeoGenomics hereunder, then NeoGenomics will be entitled to purchase
the Products for a price that is one hundred ten
percent (110%) of such lower price for all quantities of such Products
delivered to it for so long as such lower
price is effective for any other buyer;
provided,
further, that, if the lower price payable
by a Third Party is based on tiered pricing or other volume discount,
NeoGenomics will be required to commit to at least the same purchase volume as
the Third Party in order to be entitled to the lower price.
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(f) Changes to Annual
Forecast. If (i) Abbott converts this Agreement to a non-exclusive
agreement pursuant to Section 3.4(c); (ii) the average national reimbursement
rate for automated FISH testing using CPT Code 88367 declines by greater than
five percent (5.0%) from one Calendar Year to the next; (iii) a Third Party
begins marketing an LDT incorporating any of the Products that is reasonably
anticipated to compete in a material way with the Melanoma LDT; or (iv) Abbott
is successful in developing and obtaining FDA approval or clearance for the
Abbott IVD; then Abbott and NeoGenomics will negotiate in good faith to revise
the Annual Forecast currently in effect pursuant to Section 3.4(a) and/or the
performance thresholds set forth in Sections 3.4(b), 3.4(c) and 3.4(d) to
reflect the anticipated impact of such event on NeoGenomics’ Service Revenue. If
Abbott makes the Existing Customer Election, then NeoGenomics will no longer be
required to provide Annual Forecasts pursuant to this Section 3.4, but will
still comply with the forecasting and ordering procedures set forth in Article
5.
(g) Examples. Examples
illustrating the potential application of the provisions set forth in this
Section 3.4 under various scenarios are attached hereto as Exhibit D. Such
examples are provided for illustrative purposes only and are not binding on
either party.
3.5 Sole Remedies. The
rights to convert this Agreement to a non-exclusive agreement, or to make the
Existing Customer Election, pursuant to Sections 3.4(c) and 3.4(d) above shall
constitute ▇▇▇▇▇▇’▇ sole and exclusive remedies with respect to NeoGenomics’
failure to meet the Service Revenue levels forecasted in the Annual Forecast,
except to the extent such failure is due to NeoGenomics’ fraud or willful
misconduct.
3.6 Compliance. Products
manufactured by Abbott for NeoGenomics under this Agreement shall be
manufactured and tested by Abbott in accordance with the Specifications, Quality
System and GMP Requirements, and all applicable national, state and local laws,
regulations and guidelines.
3.7 Specifications. The
Specifications for the Products will be included in Exhibit A when the
Products are identified pursuant to Section 2.2. The parties may from time to
time amend said Specifications for any Product by mutual written agreement;
provided, that if
Abbott is required by applicable law, rule or regulation to modify the Products
or the Specifications, it will be free to do so, but will provide NeoGenomics
with as much advance notice of such modification as practicable under the
circumstances. In the event that an amendment to the Specifications for a
Product affects the price for such Product, the parties shall, prior to amending
the Specifications, agree in writing upon any price adjustments and ordering and
delivery schedules for such Product.
3.8 Use of Products.
NeoGenomics will not: (a) resell or distribute any Evaluation Products or
Products obtained from Abbott under this Agreement to any Third Party; (b) use
any Evaluation Products or Products past their stated expiration date; (c) use
any Evaluation Products in any manner inconsistent with their intended use; or
(d) use any Evaluation Products or Products outside the Territory.
11
3.9 Books and Records; Audit
Rights. NeoGenomics will keep books and records that accurately show
the Service
Revenue. Such books
and records shall be preserved for three (3) years from the last day of each
Calendar Year in which such Service Revenue was realized and shall be open to
audit by an independent accounting firm reasonably acceptable to NeoGenomics and
Abbott, no more frequently than once in any twelve (12) month period, at
reasonable times and under reasonable conditions and upon at least thirty (30)
days prior written notice to NeoGenomics. All information contained in
NeoGenomics’ books and records shall constitute Confidential Information for
purposes of Article 12 of this Agreement and the independent accounting firm
will be required to execute a separate confidentiality agreement reasonably
acceptable to NeoGenomics that, among other things, shall prohibit such
accounting firm from disclosing the identities of any of NeoGenomics’ customers
to Abbott, any Affiliate of Abbott or any Third Party. Abbott will use the
reports of the independent accounting firm only for the purpose of verifying
NeoGenomics’ Service Revenue for the applicable period. Once audited, the books
and record shall be closed for the applicable Calendar Year(s) and may not be
audited again pursuant to this Section 3.9. The costs of such an audit shall be
borne by Abbott; provided,
however, that, if such audit determines that the Service Revenue reported
by NeoGenomics for the audited Calendar Year(s) is at least ten percent (10%)
more than the Service Revenue determined by the auditor for such Calendar
Year(s), then NeoGenomics will promptly reimburse Abbott for the costs of such
audit. ▇▇▇▇▇▇’▇ right to audit a specific Calendar Year will terminate three (3)
years after the last day of such Calendar Year.
Article
4
Purchase
Price And Terms
4.1 Purchase Price. The
purchase price (“Purchase Price”) for
the Products shall consist of a base component and a premium
component.
(a) Base Purchase Price.
The base component of the Purchase Price (the “Base Price”) shall be
as set forth on Exhibit E
hereto.
(b) Premium Purchase
Price. The premium component of the Purchase Price (the “Premium Price”) shall
be as set forth on Exhibit E
hereto.
(c) Books and Records; Audit
Rights. NeoGenomics will keep books and records that accurately show
the Quarterly Unit
Purchases. Such
books and records shall be preserved for three (3) years from the last day of
each Calendar Quarter in which such Quarterly Unit Purchases were made and shall
be open to audit by an independent accounting firm reasonably acceptable to
NeoGenomics and Abbott, no more frequently than once in any twelve (12) month
period, at reasonable times and under reasonable conditions and upon at least
thirty (30) days prior written notice to NeoGenomics. All information contained
in NeoGenomics’ books and records shall constitute Confidential Information for
purposes of Article 12 of this Agreement and the independent accounting firm
will be required to execute a separate confidentiality agreement reasonably
acceptable to NeoGenomics that, among other things, shall prohibit such
accounting firm from disclosing the identities of any of NeoGenomics’ customers
to Abbott, any Affiliate of Abbott or any Third Party. Abbott will use the
reports of the independent accounting firm only for the purpose of determining
the accuracy of the Quarterly Reports and ensuring proper payment of the Premium
Price. Once audited, the Quarterly Reports and the Premium Price payments shall
be closed for the applicable Calendar Quarter(s) and may not be audited again.
Except as provided below, within sixty (60) days after notice from Abbott
following completion of the independent accounting firm’s audit covering a given
Calendar Quarter, NeoGenomics will pay to Abbott the amount of any Premium Price
determined by such audit to be outstanding. The costs of such an audit shall be
borne by Abbott; provided,
however, that, if such audit determines that the aggregate Premium Price
paid by NeoGenomics for the audited Calendar Quarter(s) to be at least ten
percent (10%) less than the Premium Price determined by the auditor to be due
and payable, then NeoGenomics will promptly reimburse Abbott for the costs of
such audit. If such audit determines that NeoGenomics overpaid the amount of
Premium Price otherwise determined by the auditor to be due and payable for the
audited Calendar Quarter(s), then Abbott will credit the amount of such
overpayment to NeoGenomics against future amounts payable by NeoGenomics under
this Agreement. ▇▇▇▇▇▇’▇ right to audit a specific Calendar Quarter or the
Premium Price payments owed with respect thereto, will terminate three (3) years
after ▇▇▇▇▇▇’▇ receipt of the Quarterly Report relating to such Calendar
Quarter.
12
4.2 Evaluation Products.
Abbott shall provide NeoGenomics with reasonable quantities of Evaluation
Products at no cost to NeoGenomics.
Article
5
Orders
And Forecasting
5.1 Forecasting and
Ordering. Within thirty (30) days following identification of the
Products in Exhibit
A, NeoGenomics shall provide Abbott with a written good faith forecast
for quantities of Products required by NeoGenomics for the subsequent twelve
(12) month period. The forecast shall be a rolling annual forecast and it shall
be updated by NeoGenomics at least ten
(10) days before the end of each Calendar
Quarter and shall provide NeoGenomics’ forecasted requirements of Products for
the subsequent twelve (12) month period. The first three (3) months of each such
forecast shall constitute a firm purchase order for Products. The last nine (9)
months of each forecast shall not be binding on either party and shall be used
for planning purposes and safety stock building. In any Calendar Year,
NeoGenomics will not issue a forecast for, or order, a greater quantity of
Products than NeoGenomics reasonably believes will be necessary to fulfill its
anticipated needs for the Melanoma LDT during such Calendar Year. If Abbott
reasonably believes that NeoGenomics has ordered Products in excess of the
foregoing limitation, Abbott reserves the right to adjust the applicable
purchase order to withhold shipment of such excess quantities.
5.2 Purchase Orders. Firm
purchase orders shall be placed at the end of each Calendar Quarter detailing
the exact quantities of Product which NeoGenomics requires to be delivered in
the following Calendar Quarter, consistent with the forecast provided pursuant
to Section 5.1. Orders shall be placed upon NeoGenomics’ purchase order forms,
specifying quantities of Products ordered and the initial requested delivery
dates, which will be no less than three (3) days after ▇▇▇▇▇▇’▇ receipt of the
purchase order. NeoGenomics will not be required to specify all delivery dates
for the entire Calendar Quarter on each such advance purchase order, but rather
only those delivery dates reasonably anticipated to meet NeoGenomics’ needs for
the first thirty (30) days of such Calendar Quarter. For all other delivery
dates during the Calendar Quarter, NeoGenomics will give Abbott at least two (2)
days written notice before any such requested delivery date; provided, however, that
NeoGenomics will not specify such subsequent delivery dates more frequently than
two (2) times per month during the remainder of the Calendar Quarter. In all
other respects, the obligations and rights of the parties shall be governed by
the terms and conditions of this Agreement. None of the general terms and
conditions set forth in any purchase order form used by NeoGenomics or any
acknowledgement form used by Abbott shall be applicable. If, as of the last day
of any Calendar Quarter, NeoGenomics has not specified delivery dates for all of
the Products ordered pursuant to its firm purchase order for such Calendar
Quarter, as placed pursuant to this Section 5.2, then Abbott may ship the
remaining undelivered quantities of Products specified in such purchase order to
NeoGenomics during the fifteen (15) day period after such Calendar Quarter, and
Abbott may invoice NeoGenomics for such shipped Products pursuant to Section
6.2.
13
5.3 Excess Quantities. If
NeoGenomics orders quantities of Product in any Calendar Quarter in excess of
one hundred ten percent (110%) of the
quantities set forth in the applicable forecast for such Calendar Quarter,
Abbott will first supply such excess quantities from the safety stock
established pursuant to Section 5.4 below. To the extent the excess quantities
ordered by NeoGenomics exceed the safety stock, Abbott will not be obligated to
supply the excess quantities, but Abbott will use commercially reasonable
efforts to supply such excess quantities within thirty (30) days after its
receipt of the applicable purchase order(s).
5.4 Safety Stock. Within
sixty (60) days after the Effective Date, Abbott will establish and at all times
during the term of this Agreement maintain a safety stock of Products
exclusively available to NeoGenomics in quantities sufficient to satisfy
NeoGenomics’ requirements for Products for the succeeding sixty (60) days based
on NeoGenomics’ most recent Quarterly Forecast. Deliveries by Abbott to
NeoGenomics of Products may be taken from the safety stock. ▇▇▇▇▇▇’▇ safety
stock shall be rotated with its regular inventory of Products to maintain shelf
life. Abbott shall keep NeoGenomics reasonably informed of the level of safety
stock. If the safety stock drops below a sixty (60) day supply, Abbott will use
commercially reasonable efforts to replenish the safety stock as quickly as
practicable. In the event that Abbott terminates this Agreement pursuant to
Section 14.2, Section 14.3 or Section 14.4, NeoGenomics will be obligated to
purchase the unsold portion of said safety stock from Abbott at the price in
effect as of the effective date of termination of this Agreement, provided such
safety stock Products comply with the then current Specifications.
14
5.5 Failure to Supply;
Resumption. In the event that Abbott fails or will fail, for any reason
(including an event of force majeure), to supply a Product in accordance with
the quantities and/or delivery dates specified by NeoGenomics in a firm purchase
order, and before exhausting the safety stock of such Product, Abbott will
promptly notify NeoGenomics and shall have a period of forty five (45) days to
cure such failure. During such forty-five (45) day cure period, if Abbott is
able to supply some but not all of its other customers’ demands and elects to do
so, then NeoGenomics may require Abbott to equitably allocate its manufacturing
capacity among NeoGenomics’ requirements for Products and all other customers’
demands (based on relative percentages of total sales for the three (3) months
immediately preceding the onset of ▇▇▇▇▇▇’▇ failure). If ▇▇▇▇▇▇’▇ failure to
timely supply continues, or is reasonably
expected to continue, for more than forty-five (45) days, NeoGenomics may, at
its discretion and upon written notice to Abbott: (a) continue to receive an
allocated portion of the quantities of Products; (b) require Abbott to supply
the undelivered Products at a future date agreed upon by the parties in writing;
or (c) obtain the quantity of Products that Abbott is unable to supply from a
Third Party mutually agreed upon by the parties and who has a valid license from
Abbott to manufacture the Products. If NeoGenomics chooses clause (c) and no
Third Party has such a license for the Products, Abbott agrees that it will use
its commercially reasonable efforts to negotiate such a license as expeditiously
as practicable and that it will not unreasonably withhold granting such a
license in order that NeoGenomics can continue to receive Products without
interruption. For avoidance of doubt, notwithstanding the foregoing, Abbott will
have no obligation to grant a license to a Third Party on commercially
unreasonable terms or if granting such a license would result in any material
adverse consequences to Abbott under any agreement between Abbott and any of its
licensors. NeoGenomics shall have the right to
adjust the Annual Forecast under Article 3 of this Agreement in the event Abbott
is unable to supply a Product in accordance with the quantities or delivery
dates specified by NeoGenomics in a firm purchase order. If NeoGenomics
elects under clause (c) above to obtain Products from a Third Party, and Abbott
is thereafter able to demonstrate, to NeoGenomics’ reasonable satisfaction, that
Abbott is again able to consistently supply such Products to NeoGenomics, then
NeoGenomics will resume purchasing the Products from Abbott for the remainder of
the term of this Agreement within ninety
(90) days after ▇▇▇▇▇▇’▇ demonstrated
capabilities to resume supply; provided, that such time
period will be extended to the extent of NeoGenomics’ pre-existing contractual
purchase commitments with the Third Party (if any), but not to exceed an
additional one hundred eighty (180) days.
Article
6
Delivery
And Invoicing
6.1 Delivery Terms.
Abbott will ship Products ordered by NeoGenomics, FCA (Incoterms 2000), ▇▇▇▇▇▇’▇
manufacturing facility, in accordance with the quantities, delivery dates, and
delivery and shipping instructions specified in NeoGenomics’ purchase orders. If
the carrier noted on the purchase order is not available, or if the purchase
order does not designate a carrier, then Abbott shall contact NeoGenomics for
instructions regarding the mode of shipment. Unless otherwise directed by
NeoGenomics, Abbott will obtain insurance for all shipments of Products, at
NeoGenomics’ expense. ▇▇▇▇▇▇’▇ responsibility shall be to deposit the ordered
Products with the designated carrier within the shipping periods specified, and
Abbott shall not be liable for late delivery if so accomplished. Title and risk
of loss shall pass to NeoGenomics upon delivery to the designated carrier for
shipment. Abbott will inform the carrier of any temperature, pressure or other
special storage or handling instructions for the Products.
6.2 Invoices and Payment.
Abbott shall invoice NeoGenomics for Products (and shipping and insurance costs)
upon shipment of the Products ordered by NeoGenomics. Such invoices shall be
paid in full within thirty (30) days of the date such invoice is received by
NeoGenomics. All payments hereunder shall be sent via check or wire transfer as
follows:
15
If by
check:
▇▇▇▇▇▇
Laboratories Inc.
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ #▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
If by
wire transfer:
Northern
Trust Company
Chicago,
Illinois
ABA:
▇▇▇▇▇▇▇▇▇
Swift
Code: ▇▇▇▇▇▇▇▇
Acct
Name: ▇▇▇▇▇▇ Molecular Inc.
Acct
Number: 31599333
6.3 Currency. All
invoices under this Agreement shall be stated and paid in United States
dollars.
6.4 Taxation. The prices
quoted herein do not include the costs of any taxes, licenses, permits, fees or
tariffs which may be levied by any government or governmental agency on the sale
or transport of Products. Any such taxes, licenses, permits, fees or tariffs
which are paid by Abbott (excluding taxes on ▇▇▇▇▇▇’▇ net income) shall be
included in the invoices issued to NeoGenomics.
Article
7
Manufacturing
And Quality Assurance
7.1 Manufacture. Abbott
shall manufacture the Products in accordance with: (a) the Specifications; (b)
applicable Quality Systems and GMP Requirements; and (c) all pertinent rules and
regulations of the FDA, as the same may be amended from time to
time.
7.2 Testing. Abbott shall
test or cause to be tested each lot of Product in accordance with standard
operating procedures to be set forth in Exhibit F upon
identification of the Products pursuant to Section 2.2 (“Release
Testing”).
7.3 Certificate of
Analysis. Abbott will deliver all Products with a certificate of analysis
(“CoA”)
verifying their compliance with the current Specifications. The CoA will be lot
specific and conform to the requirements in the Specifications. The CoA must
show a summary of the physical inspection, Release Testing, and performance
testing results, and have ▇▇▇▇▇▇’▇ quality representative’s signature and date
of approval. Abbott will send a CoA to NeoGenomics with each delivery of
Products. NeoGenomics is entitled to rely on such CoA for all purposes of this
Agreement. Nothing in this Agreement shall be construed to require NeoGenomics
to perform any incoming testing, analytical or otherwise, on any Products
received from Abbott.
7.4 Product Dating. Each
Product shall have at least twelve (12) months of remaining shelf life on the
date of delivery to NeoGenomics’ designated carrier.
16
7.5 Manufacturing Site.
During the term of this Agreement, Abbott shall manufacture Product using
▇▇▇▇▇▇’▇ facilities located in Des Plaines, Illinois, or wherever Abbott may
relocate its manufacturing facilities; provided, however, Abbott
must give at least ninety (90) days prior written notice to NeoGenomics of any
such relocation. ▇▇▇▇▇▇’▇ new facility shall be subject to one (1) additional
site inspection by NeoGenomics quality assurance personnel, in accordance with
Section 8.2, and Abbott shall use commercially reasonable efforts to have the
new manufacturing site become acceptable to NeoGenomics’ quality policies within
nine (9) months of relocating Product manufacture.
7.6 Non-Conforming
Product. Within forty-five (45) days of NeoGenomics’ receipt thereof,
NeoGenomics may reject any Product supplied hereunder which does not conform to
the Specifications (“Non-Conforming
Product”), provided that such Non-Conforming Product has not become
non-conforming due to any failure by NeoGenomics or its agents or
representatives to handle, maintain or store such Product as required by the
labeling or the Specifications. NeoGenomics shall provide written notice to
Abbott specifying the reason for such rejection. If NeoGenomics does not reject
any Product supplied hereunder within forty-five (45) days of NeoGenomics’ receipt thereof, the
Product shall be considered accepted, and all claims with respect to Product not
conforming with Specifications shall be deemed waived by NeoGenomics, except as
to latent defects which are not reasonably discoverable within such forty-five (45) day period. At the request and expense of
Abbott, NeoGenomics shall return the defective Product, or a representative
sample thereof, to Abbott for testing. Should such test results reasonably
confirm the Product is a Non-Conforming Product, as promptly as practicable (but
in no event more than thirty (30) days) after such determination, Abbott shall
send conforming replacement Products to NeoGenomics at no cost to NeoGenomics.
At ▇▇▇▇▇▇’▇ direction, NeoGenomics will either return all Non-Conforming
Products to ▇▇▇▇▇▇’▇ facilities, at ▇▇▇▇▇▇’▇ expense, or destroy all
Non-Conforming Products and certify such destruction in writing.
7.7 Product Retains.
Abbott will provide, at no additional charge, three (3) samples of each lot of
Products supplied to NeoGenomics under this Agreement, and NeoGenomics will
retain such samples for at least one (1) year beyond the expiration date of such
lot. In the event of a dispute regarding any Non-Conforming Product that Abbott
and NeoGenomics are unable to resolve in a timely manner, a sample of the
alleged Non-Conforming Product and two (2) of the retained samples from such lot
of such Product, along with a reference batch which has previously been accepted
by NeoGenomics as conforming to the Specifications, together with the testing
methodologies agreed upon by the parties, shall be submitted by NeoGenomics to
an independent laboratory reasonably acceptable to both parties for testing
against the Specifications. The laboratory’s determination of the Product’s
conformance or non-conformance to the Specifications shall be binding upon the
parties. If the laboratory determines that the Product is conforming,
NeoGenomics will pay all independent laboratory costs, as well as any shipping
costs incurred by Abbott in connection with the laboratory’s determination. If
the laboratory determines that the Product is non-conforming, Abbott will pay
all independent laboratory costs, as well as any shipping costs incurred by
NeoGenomics in connection with the laboratory’s determination.
17
7.8 Quality System.
Abbott will maintain a quality system to ensure that the Products are
manufactured in accordance with: (a) applicable Quality Systems and GMP
Requirements; and (b) all pertinent rules and regulations of the FDA, as the
same may be amended from time to time.
7.9 Product Safety. Each
party will be solely responsible for implementing and maintaining its own
environmental, health and safety procedures for the handling, storage and use of
the Products and any other materials or hazardous waste which may be used or may
arise in connection with the use of the Products. The parties will cooperate
reasonably and in good faith to ensure employee and public safety.
Article
8
Regulatory
Matters
8.1 Notice of Regulatory Agency
Action. Each party shall, as promptly as practicable (but in any event
within ten (10) days) inform the other party of any formal or informal inquiry,
notice, warning or other communication from any regulatory authority relating to
any Products or the Melanoma LDT.
8.2 Site Inspections.
Upon at least five (5) days prior notice, Abbott shall, from time to time during
the term of this Agreement, but no more frequently than once per Calendar Year,
allow representatives of NeoGenomics to tour and inspect all facilities utilized
by Abbott in manufacturing, testing, packaging and shipment of Products sold to
NeoGenomics under this Agreement for the purposes of verifying compliance with
quality control regulations. During such visits, Abbott shall provide reasonable
access to its manufacturing quality control documentation and shall cooperate
with such representatives in every reasonable manner. NeoGenomics shall also
have the right at any time, upon reasonable prior written notice to Abbott (as
dictated by applicable regulatory authorities’ requirements), to conduct any
audits that are specifically mandated by any regulatory authority or that are
reasonably required to permit NeoGenomics to respond to specific questions from
any regulatory authority.
8.3 Regulatory Agency
Compliance. Each party shall comply with any applicable laws and
regulations that require such party to: (a) allow representatives of the FDA or
any other regulatory authority with jurisdiction over the manufacture or
marketing the Products or the Melanoma LDT, as applicable, to tour and inspect
all facilities utilized by Abbott in the manufacture, testing, packaging,
storage and shipment of Products sold under this Agreement or by NeoGenomics in
the design, development, validation or performance of the Melanoma LDT; or (b)
respond to requests for information from the FDA or any other regulatory
authority having jurisdiction over the manufacture or marketing of the Products
or the Melanoma LDT. Each party shall notify the other party as promptly as
practicable (but in any event within ten (10) days) whenever such party receives
notice of a pending inspection by any United States regulatory agency of any
facility that is used in the manufacturing, packaging, storage or shipment of
Products, or the design, development, validation and performance of the Melanoma
LDT, as applicable.
18
Article
9
Melanoma
LDT, Abbott IVD,
Other
Tests, Third Party Proposals
9.1 Development of Melanoma
LDT. If NeoGenomics elects to develop the Melanoma LDT as contemplated,
it shall be solely responsible for designing, developing and validating the
Melanoma LDT in accordance with all applicable laws, including without
limitation the Act, the Clinical Laboratory Improvement Amendments (“CLIA”) and any rules,
regulations or guidance promulgated thereunder, and it shall use commercially
reasonable efforts to do so as quickly as possible. Without limiting the
foregoing, NeoGenomics will also be solely responsible for determining which
ASRs to include in the Melanoma LDT. Abbott will not participate or be involved
in any way with the design, development or validation of the Melanoma LDT, or
with determining which ASRs to include in the Melanoma LDT. Solely as may be
requested and directed by NeoGenomics, and as permitted by applicable law, rules
and regulations, Abbott may agree to optimize or customize existing ASRs, or to
develop new ASRs, for NeoGenomics’ use in connection with the Melanoma LDT;
provided, however, that
Abbott may do so only in accordance with NeoGenomics’ independently developed
technical requests or instructions. Such customized, optimized or new ASRs would
then constitute Evaluation Products, Products, and/or Exclusive Products for
purposes of this Agreement.
9.2 Failure to Develop.
If NeoGenomics does not develop and launch the Melanoma LDT within six (6)
months after the date on which Abbott first supplies Products (as identified on
Exhibit A and
excluding Evaluation Products) to NeoGenomics under this Agreement, and if such
failure or delay is due to causes beyond NeoGenomics’ reasonable control or to
new or changed circumstances not anticipated by the parties, then Abbott will
consult with NeoGenomics regarding the reasons for such failure or delay and
will consider in good faith a reasonable extension of time for NeoGenomics to
complete development and launch of the Melanoma LDT; provided, however, that
Abbott will have no obligation to grant such an extension of time. If, after
fifteen (15) days of such consultation and good faith consideration, Abbott does
not agree to an extension of time, then it may, in its sole discretion, upon
written notice to NeoGenomics, either: (a) convert this Agreement to a
non-exclusive agreement pursuant to Section 3.4(c); or (b) terminate this
Agreement. Notwithstanding the foregoing, in the event that NeoGenomics, due to
factors beyond its reasonable control, encounters delays in receiving patient
samples with the appropriate patient consents beyond sixty (60) days from the
Effective Date, then the six (6) month deadline in the first sentence of this
Section 9.2 shall be extended day for day for up to an additional sixty (60)
days.
9.3 Marketing of Melanoma
LDT. NeoGenomics will be solely responsible for marketing, promoting,
offering, selling, performing and billing customers and/or Third Party payors
for the Melanoma LDT in accordance with applicable law, rules and regulations.
Abbott and its Affiliates will not participate in any way, directly or
indirectly, in the foregoing activities and will not engage in any co-promotion
or other similar activities intended to promote or otherwise create demand for
the Melanoma LDT.
19
9.4 Abbott
IVD.
(a) Right to Continue Developing
Abbott IVD. Nothing in this Agreement will prevent or restrict Abbott
from continuing to develop and seeking FDA approval or clearance for the Abbott
IVD, which may include ASRs that are similar or identical to the Products,
including the Exclusive Products. To the extent permitted by, and subject to,
all applicable laws and regulations, including those relating to data privacy,
if requested by Abbott, NeoGenomics will provide Abbott with data generated in
clinical studies conducted in connection with the Melanoma LDT for the purpose
of supporting ▇▇▇▇▇▇’▇ regulatory submissions for the Abbott IVD; provided, that NeoGenomics
shall have no obligation to provide such data if Abbott has terminated this
Agreement for any reason.
(b) Co-Exclusive Rights.
If Abbott is successful in developing and obtaining FDA approval or clearance
for the Abbott IVD, Abbott will offer to NeoGenomics the co-exclusive right to
purchase the Abbott IVD and offer it as a service to its customers through its
laboratories (the “IVD
Opportunity”). Such right will be co-exclusive with Abbott, and Abbott
would agree not to sell the Abbott IVD, or sell or license the technology
underlying the Abbott IVD, to Third Party laboratories (other than academic
collaborators for research purposes) during the term of the IVD Agreement (as
defined below), so long as NeoGenomics maintains co-exclusivity in accordance
with subparagraph (d) below.
(c) IVD Agreement. Abbott
and NeoGenomics both acknowledge and agree that if Abbott is successful in
developing and obtaining FDA approval or clearance for the Abbott IVD and if
NeoGenomics elects to purchase and offer the Abbott IVD, the parties will use
their commercially reasonable best efforts and will negotiate in good faith to
enter into a separate written agreement (the “IVD Agreement”)
setting forth pricing and other terms and conditions substantially similar to the terms and conditions in this Agreement, modified as appropriate to reflect
the different types of products, provided, that the effective price of the ▇▇▇▇▇▇ IVD will not
materially change from the aggregate Purchase Price paid under this Agreement by
NeoGenomics for the Products used in its Melanoma LDT (calculated on a per test
basis). Notwithstanding the foregoing:
|
|
(i)
|
if ▇▇▇▇▇▇ utilizes ASRs in the ▇▇▇▇▇▇ IVD which
are different than the Products utilized in the Melanoma LDT and the ASRs
used in the ▇▇▇▇▇▇ IVD are subject to licensing and/or royalty payments
for the intellectual property underlying such ASRs that are higher in the
aggregate than the licensing and/or royalty payments incurred for the
Products used in the Melanoma LDT, then, after conferring with NeoGenomics
and outlining the differences in royalties and licensing fees underlying
the ASRs, ▇▇▇▇▇▇ shall have the right to pass through solely the effects
of such incremental royalty/licensing costs to NeoGenomics in the
effective pricing for the ▇▇▇▇▇▇ IVD;
and/or
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20
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(ii)
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if the ▇▇▇▇▇▇ IVD includes a greater number of
ASRs (i.e., probes) than NeoGenomics uses in its Melanoma
LDT, the price for the ▇▇▇▇▇▇ IVD will be increased proportionately (but
taking into account manufacturing costs for such additional ASR(s) used in
the ▇▇▇▇▇▇ IVD to the extent such manufacturing costs are greater than the
manufacturing costs for the Products used in the Melanoma LDT) to reflect
such greater number of ASRs.
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In addition, in connection with entering into the IVD
Agreement, ▇▇▇▇▇▇ and NeoGenomics will use their commercially reasonable best
efforts and negotiate in good faith to agree upon new annual forecasts pursuant
to the IVD Agreement to reflect the anticipated impact to NeoGenomics of the
▇▇▇▇▇▇ IVD which new annual forecasts will not be materially higher than the
Annual Forecasts for the Melanoma LDT. At least ninety (90) days prior to
▇▇▇▇▇▇’▇ anticipated submission of a Pre-Market Approval application (PMA) for
the ▇▇▇▇▇▇ IVD, ▇▇▇▇▇▇ will provide NeoGenomics with written notice offering it
the IVD Opportunity. If NeoGenomics elects to commence negotiations relating to
the IVD Opportunity, it will so notify ▇▇▇▇▇▇ in writing within ten (10) days
after its receipt of such notice. If NeoGenomics does not elect to
purchase and offer the ▇▇▇▇▇▇ IVD within ten (10) days after its receipt of such
notice, or if the parties are unable to reach agreement as to the terms of the
IVD Agreement within sixty (60) days of good faith negotiations consistent with
this paragraph (c) after NeoGenomics elects to enter into negotiations with
respect to the IVD Opportunity, the matter will be escalated to the President of
NeoGenomics (currently ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇) and the President of ▇▇▇▇▇▇ (currently
▇▇▇▇▇▇▇▇ ▇’▇▇▇▇▇) for resolution.
(d) Maintenance of
Co-Exclusivity; Termination. Without limiting the foregoing, the parties
agree that the IVD Agreement will contain provisions substantially similar to
those set forth in Section 3.4 of this Agreement requiring annual forecasts and
annual reviews thereof with respect to NeoGenomics’ sales of the ▇▇▇▇▇▇ IVD, and
its maintenance of its co-exclusive rights. The parties agree that the IVD
Agreement will permit ▇▇▇▇▇▇, in its sole discretion to: (i) in a manner
consistent with Section 3.4(c) of this Agreement, convert the IVD Agreement to a
non-exclusive agreement if NeoGenomics’ actual sales of the ▇▇▇▇▇▇ IVD in a
given Calendar Year are less than seventy-five percent (75%) of the agreed upon
annual sales forecast for such Calendar Year; and (ii) in a manner consistent
with Section 3.4(d) of this Agreement, limit purchases of the ▇▇▇▇▇▇ IVD to
pre-existing customers if NeoGenomics’ actual sales of the ▇▇▇▇▇▇ IVD in a given
Calendar Year are less than thirty-five percent (35%) of the agreed upon annual
sales forecast for such Calendar Year.
21
9.5 Other Tests. Abbott hereby grants to NeoGenomics a first right to
develop two (2) additional LDTs using Abbott ASRs, other ▇▇▇▇▇▇ products and/or
Abbott Intellectual Property relating to the disease states identified in
Exhibit
G (each, an “Additional Test”). NeoGenomics will notify ▇▇▇▇▇▇ in writing within
ninety (90) days after the Effective Date if it elects to commence negotiations
relating to the first Additional Test described in Exhibit G (the “Initial Decision
Period”). ▇▇▇▇▇▇ will notify NeoGenomics in
writing when ▇▇▇▇▇▇ believes that its products or intellectual property relating
to other potential Additional Tests are ready to be commercialized, which notice
will describe the applicable products and/or intellectual property in reasonable
detail; provided, that ▇▇▇▇▇▇ will not deliver such notice to
NeoGenomics prior to the earlier of June 30, 2010, or the date which is thirty
(30) days after the parties have executed a Subsequent Development Agreement (as
defined below) regarding the first Additional Test described in Exhibit G. If NeoGenomics elects to commence negotiations
relating to an Additional Test other than the first Additional Test described in
Exhibit
G, it will so notify ▇▇▇▇▇▇ in writing
within thirty (30) days after its receipt of notice from ▇▇▇▇▇▇ relating to such
Additional Test (the “Additional Decision
Period” and together with the Initial
Decision Period, each a “Decision Period”). Subject to the terms hereof, until the
expiration of both the applicable Decision Period and Negotiation Period with
respect to an Additional Test, ▇▇▇▇▇▇ shall not pursue negotiations with, nor
negotiate with or furnish information regarding such Additional Test to any
Third Party (except academic collaborators for research purposes). Each date on which NeoGenomics provides written notice
of its desire to commence negotiations regarding an Additional Test is referred
to herein as a “Commencement
Date.” For a period of ninety (90) days
following a Commencement Date (an “Initial Negotiation
Period”), the parties will negotiate
exclusively and in good faith to enter into a definitive agreement (a
“Subsequent
Development Agreement”) providing for the
development and commercialization of the applicable Additional Test;
provided,
however, that neither party will be
obligated to enter into such a Subsequent Development Agreement except on
mutually acceptable terms and conditions. The parties intend and agree that each
Subsequent Development Agreement shall be negotiated in good faith based upon
the same guiding principles and economic models that were the basis for this
Agreement, and each Subsequent Development Agreement will, to the extent
applicable in light of the different products and intellectual property at
issue, contain terms and conditions that are similar to the terms and conditions
in this Agreement. If, for any reason, the parties do not execute a Subsequent
Development Agreement for a particular Additional Test, the parties rights and
obligations under this Section 9.5 shall continue with respect to the other
Additional Tests. If the parties execute Subsequent Development Agreements
relating to any two (2) of the Additional Tests, the parties’ respective rights
and obligations under this Section 9.5 shall terminate with respect to the other
Additional Tests. If NeoGenomics does not notify ▇▇▇▇▇▇ of its election to
commence negotiations for an Additional Test within the above thirty (30) day
or ninety (90) day period, as applicable, ▇▇▇▇▇▇ will be free to enter into one or more
agreements with one or more Third Parties regarding the development and
commercialization of such Additional Test. If the parties do not execute a
Subsequent Development Agreement within ninety (90) days after the Commencement
Date for an Additional Test, the matter will be escalated to the
President of NeoGenomics (currently ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇) and the President of
▇▇▇▇▇▇ (currently ▇▇▇▇▇▇▇▇ ▇’▇▇▇▇▇) for resolution, and such individuals shall
have an additional fifteen (15) days (the “Escalated Negotiation
Period”) in which to negotiate in good faith the terms of such Subsequent
Development Agreement. If such individuals are unable to agree upon the terms of
such Subsequent Development Agreement within such additional fifteen (15) day
period, ▇▇▇▇▇▇ will be free to enter into one or
more agreements with one or more Third Parties regarding the development and
commercialization of the applicable Additional Test, and NeoGenomics will have
no further rights with respect thereto.
22
9.6 Third Party Proposal.
If at any time during the term of this Agreement, there is a Third Party
Proposal, then NeoGenomics will notify ▇▇▇▇▇▇ in writing of such Third Party
Proposal thirty (30) days prior to
acceptance of such Third Party Proposal, such notice to include a
reasonably detailed description of such Third Party Proposal including the
identity of the Third Party involved to the extent not precluded by a
confidentiality agreement with such Third Party and a description of the
relevant terms of such Third Party Proposal including the name of the Third
Party if such Third Party is one of the parties listed on Exhibit I. As used
herein, “Third Party
Proposal” means: any written offer with
respect to any: (i) merger, consolidation, other business combination or
similar transaction involving NeoGenomics or any of its subsidiaries; (ii) sale,
lease, license or other disposition, directly or indirectly, whether by merger,
consolidation, business combination, share exchange, joint venture or otherwise,
of assets of NeoGenomics (including equity interests of any of its subsidiaries)
or any subsidiary of NeoGenomics representing fifty percent (50%) or more of the consolidated assets, revenues
or net income of NeoGenomics and its subsidiaries; (iii) sale, lease, license or
other disposition, directly or indirectly, of all or substantially all of
NeoGenomics’ assets that are used in designing, developing, validating,
marketing, selling, performing or billing for the Melanoma LDT; (iv) issuance or
sale or other disposition (including by way of merger, consolidation, business
combination, share exchange, joint venture or similar transaction) of equity
interests representing fifty percent (50%) or more of the voting power of NeoGenomics;
(v) transaction or series of transactions in which any Third Party would acquire
beneficial ownership or the right to acquire beneficial ownership, or any group
(each as defined in Section 13(d) of the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder) has been formed
which beneficially owns or has the right to acquire beneficial ownership, of
equity interests representing fifty percent
(50%) or more of the voting power of
NeoGenomics; or (vi) any combination of the foregoing.
Article
10
Representations
And Warranties
10.1 ▇▇▇▇▇▇ Representations and
Warranties. ▇▇▇▇▇▇ represents and warrants to NeoGenomics
that:
(a) it
has the full power and right to enter into this Agreement and it is not
currently a party to any other agreements that are inconsistent with the
provisions of this Agreement;
(b) the
Products will be manufactured in accordance with the Specifications, Quality
Systems and GMP Requirements, as required by the Act, all pertinent rules and
regulations of the FDA, and all other applicable national, state and local laws,
regulations, and guidelines;
(c) the
Products will not be adulterated or misbranded within the meaning of the
Act;
(d) ▇▇▇▇▇▇
owns or has the exclusive right to grant licenses and sublicenses to the patents
and patent applications listed in Exhibit H;
and
(e) ▇▇▇▇▇▇
has not granted any licenses or sublicenses to any Third Party under the patents
and patent applications listed in Part 2 of Exhibit H.
10.2 NeoGenomics Representations
and Warranties. NeoGenomics represents and warrants to ▇▇▇▇▇▇
that:
23
(a) it
has the full power and right to enter into this Agreement and it is not
currently a party to any other agreements that are inconsistent with the
provisions of this Agreement; and
(b) the
Melanoma LDT will be designed, developed, validated, marketed, sold, performed
and billed by NeoGenomics in strict compliance with all applicable laws and
regulations.
10.3 Disclaimers.
(a) ▇▇▇▇▇▇
makes no representation or warranty of any kind relating to the Melanoma LDT or
any analytical or clinical performance claims concerning the Products (including
the Evaluation Products), including without limitation any claim that the
Products (including the Evaluation Products) are appropriate or suitable for use
in the Melanoma LDT.
(b) Except
as expressly set forth in this Agreement, ▇▇▇▇▇▇ makes no representations or
warranties of any kind, either express or implied, including, but not limited
to, implied warranties of merchantability, fitness for a particular purpose or
non-infringement.
Article
11
Intellectual
Property
11.1 ▇▇▇▇▇▇ Intellectual
Property. ▇▇▇▇▇▇ (or its Affiliate) will be and remain the sole and
exclusive owner of all right, title and interest in and to any and all
Intellectual Property that is owned or developed by ▇▇▇▇▇▇ or its
Affiliates.
11.2 NeoGenomics Intellectual
Property. NeoGenomics (or its Affiliate) will be and remain the sole and
exclusive owner of all right, title and interest in and to any and all
Intellectual Property that is: (a) owned or developed by NeoGenomics or its
Affiliates prior to the Effective Date; or (b) developed by NeoGenomics (or its
Affiliate) on or after the Effective Date and does not arise or result from use
or incorporation of the Products in any way.
11.3 Joint Intellectual
Property. Any Intellectual Property developed by NeoGenomics after the
Effective Date that arises or results from, or that uses or incorporates the
Products in any way (including the Melanoma LDT) shall be jointly owned by
NeoGenomics and ▇▇▇▇▇▇. Neither party shall license such jointly owned
Intellectual Property without the prior written consent of the other party,
which shall not be unreasonably withheld.
11.4 No New License
Grants. After the Effective Date, ▇▇▇▇▇▇ will not grant to any Third
Party any license or sublicense under the patents and patent applications listed
in Part 2 of Exhibit
H for practice in the Territory in the field of melanoma
diagnosis.
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Article
12
Confidential
Information
12.1 Confidential
Information. It is contemplated that in the course of the performance of
this Agreement each party may, from time to time, disclose certain trade secrets
and other non-public, proprietary and/or confidential information to the other
(“Confidential
Information”). Each party (the “Receiving Party”)
agrees that it will not disclose Confidential Information received from the
other party (the “Disclosing Party”)
and that it will not use Confidential Information disclosed to it by the
Disclosing Party for any purpose other than to fulfill its obligations under
this Agreement. Confidential Information includes, without limitation: (a)
information constituting trade secrets of either party; (b) information relating
to existing or contemplated products, services, technology, designs, processes,
formulae and research and development (in whatever stage) of either party; (c)
information relating to technology, patent rights or products of either party;
(d) information relating to business plans, methods of doing business, sales or
marketing methods, customer lists, customer usages or requirements of either
party; and (e) any other information disclosed hereunder that is either
identified as confidential or, from the nature of the information or the
circumstances surrounding its disclosure, should reasonably be considered to be
confidential.
12.2 Exclusions.
Confidential Information does not include information that:
(a) was
already known to the Receiving Party, other than under an obligation of
confidentiality to the Disclosing Party, at the time of disclosure by the other
party;
(b) is
or becomes generally available to the public or otherwise part of the public
domain other than through the Receiving Party’s breach of this
Agreement;
(c) was
disclosed to the Receiving Party, other than under an obligation of
confidentiality, by a Third Party who, to the Receiving Party’s knowledge, had
no obligation to the Disclosing Party not to disclose such
information;
(d) was
developed by the Receiving Party independently and without reference to
Confidential Information received from the Disclosing Party as evidenced by the
Receiving Party’s own written records;
(e) was
disclosed to the Receiving Party pursuant to the last sentence of Section
9.4(a), solely to the extent used for the purposes described therein;
or
(f) was
disclosed to the Receiving Party for purposes of prosecuting Intellectual
Property rights arising under Section 11.3, solely to the extent used for the
purposes described therein.
12.3 Term of Confidentiality;
Safeguarding. Except as otherwise agreed in writing, during the term of
this Agreement and for a period of five (5) years following the expiration or
termination of this Agreement for any reason, the Receiving Party shall take at
least the same measures to protect the confidentiality of the Disclosing Party’s
Confidential Information as it takes to protect its own proprietary and
confidential information of like kind and sensitivity, but in no event shall the
Receiving Party use less than reasonable care.
25
12.4 Disclosure
Required by Law. In the
event that a Receiving Party is required by applicable law, rule or regulation or by judicial or administrative
process to disclose the Disclosing Party’s Confidential Information, the
Receiving Party will notify the Disclosing Party as promptly as practicable and
allow the Disclosing Party to oppose such process and/or seek protective order
to limit exposure to and dissemination of said Confidential Information. The
Receiving Party will cooperate with the Disclosing Party (at the Disclosing
Party’s expenses) in opposing such process or seeking a protective order. If the
Disclosing Party is unsuccessful, the Receiving Party may disclose the requested
Confidential Information to the minimum extent required by
law.
12.5 Publicity. Neither party shall use the name or
trademarks of the other party in any publicity, advertising or in any written,
verbal or any other form of public disclosure without the express written
consent of the other party. Notwithstanding the foregoing, ▇▇▇▇▇▇ agrees that it
will work in good faith with NeoGenomics to develop a standard set of talking
points about the nature of this Agreement that NeoGenomics can use to answer
investor questions related to its relationship with ▇▇▇▇▇▇ and that once such
talking points have been approved, NeoGenomics will not be required to seek the
written consent of ▇▇▇▇▇▇ to utilize such talking points with investors. ▇▇▇▇▇▇
further agrees that it will work with NeoGenomics to develop a mutually
acceptable written description of this Agreement and the relationship with
▇▇▇▇▇▇ contemplated by this Agreement which can be utilized in NeoGenomics’
parent company’s periodic filings with the SEC, and that once such written
description has been approved by ▇▇▇▇▇▇, NeoGenomics will not need to obtain
further approvals from ▇▇▇▇▇▇ to utilize such written description in
NeoGenomics’ parent company’s filings with the SEC, unless there are material
changes to such description.
12.6 Existence of
the Agreement. The
existence of and the relationship created under this Agreement is confidential
and shall be treated as Confidential Information pursuant to the terms of this
Agreement.
12.7 Required
Securities Disclosure.
Notwithstanding anything to the contrary in this Agreement, if NeoGenomics is
required to file a copy of this Agreement with the Securities and Exchange
Commission, it shall provide ▇▇▇▇▇▇ with as much notice as possible and allow
▇▇▇▇▇▇ a reasonable opportunity to review and comment on any redacted version of
this Agreement before it is filed by NeoGenomics, provided that NeoGenomics will
bear the sole responsibility of ensuring its own compliance with applicable
securities laws.
Article 13
Indemnification And
Liability
13.1 Indemnification
by ▇▇▇▇▇▇. ▇▇▇▇▇▇ will
indemnify, defend and hold harmless NeoGenomics and its Affiliates, employees,
officers, directors and agents (collectively, the “NeoGenomics
Indemnitees”) from and
against any suit, proceeding, claim, liability, loss, damage, fines, penalties,
costs or expense, including reasonable attorneys’ fees (collectively,
“Losses”) that any of the NeoGenomics
Indemnitees may hereinafter incur, suffer, or be required to pay arising out of
or resulting from: (a) any breach by ▇▇▇▇▇▇ of the terms of this Agreement; or
(b) ▇▇▇▇▇▇’▇ negligence or willful misconduct. The foregoing indemnity shall not
apply to the extent that any Losses arise or result from the negligence or
willful misconduct of the NeoGenomics Indemnitees.
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13.2 Indemnification
by NeoGenomics. NeoGenomics
will indemnify, defend and hold harmless ▇▇▇▇▇▇ and its Affiliates, employees,
officers, directors and agents (collectively, the “▇▇▇▇▇▇
Indemnitees”) from and
against any Losses that any of the ▇▇▇▇▇▇ Indemnitees may hereinafter incur,
suffer, or be required to pay arising out of or resulting from: (a) the design,
development, validation, marketing, sale, performance or billing of the Melanoma
LDT; (b) any breach by NeoGenomics of the terms of this Agreement; or (c)
NeoGenomics’ negligence or willful misconduct. The foregoing indemnity shall not
apply to the extent that any Losses arise or result from the negligence or
willful misconduct of the ▇▇▇▇▇▇ Indemnitees.
13.3 Cooperation
and Notice Requirements.
With respect to any claim for which a party seeks indemnification from the other
hereunder, the party seeking indemnification will: (a) provide prompt notice to
the other of the claim for which indemnification is sought and tender to it the
defense of such claim; and (b) provide reasonable cooperation and assistance to
the indemnifying party in the defense of such claim. Neither party will be bound
by any settlement agreement entered into without such party’s prior written
consent, which shall not be unreasonably withheld.
13.4 Termination
of Indemnification Obligations. All obligations for indemnification on
the part of parties hereto shall expire three (3) years from the date of
termination of this Agreement, except with respect to claims already notified to
the other party prior to the end of such three (3) year
period.
13.5 Insurance.
(a) NeoGenomics will obtain and maintain
during the term of the Agreement and for a period of two (2) years after
expiration or termination of this Agreement product liability and general
comprehensive liability insurance covering bodily injury and property damage in
an amount of not less than $1.0 million per occurrence and $5.0 million in the
aggregate.
(b) ▇▇▇▇▇▇ represents that it is
self-insured for product liability and general liability, and that it has and
will maintain such coverage for the term of this Agreement and for a period of
two (2) years after the expiration or termination of this Agreement. Such
self-insurance is in an amount which is reasonable and customary in the global
pharmaceutical and medical products industry for companies of comparable size
and activities.
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13.6 Limitation
of Liability. In no event
shall either party be liable to the other party for any indirect, incidental,
punitive, special, exemplary or consequential damages, whether based upon a
claim or action of contract, warranty, negligence, strict liability or other
tort, a product claim, or otherwise that arises out of or is related to this
Agreement. In addition, except for liability arising from any intentional breach
of this Agreement, fraud, gross negligence or willful misconduct on the part of
▇▇▇▇▇▇, ▇▇▇▇▇▇’▇ maximum liability to NeoGenomics under this Agreement will
not exceed
Fifteen Million Dollars ($15,000,000). The forgoing
limitations will not apply: (a) to breaches of the parties’ confidentiality
obligations under Article 12; or (b) where such indirect, incidental, punitive,
special, exemplary or consequential damages are payable to a Third Party and
subject to indemnification pursuant to this Article 13. The allocations of
liability in this paragraph represent the agreed and bargained-for understanding
of the parties and the Purchase Price for the Products reflects such
allocations.
Article 14
Term And
Termination
14.1 Term. This Agreement shall become
effective on the Effective Date, and unless sooner terminated in accordance with
the terms herein, this Agreement shall remain in effect until December 31, 2019
(the “Initial
Term”). Thereafter this Agreement shall automatically renew and continue
in effect for successive renewal terms of two (2) years each (each a
“Renewal Term”)
unless twelve (12) months prior to the termination of the Initial Term of the
Agreement or any Renewal Term thereof, either party provides written notice to
the other party that it will not renew the Agreement at the end of said Initial
Term or Renewal Term. Notwithstanding the foregoing, ▇▇▇▇▇▇ agrees that if
NeoGenomics has continued to meet the threshold for exclusivity defined in
Section 3.4(b) for the Calendar Year immediately preceding the year in which the
Initial Term or any Renewal Term comes due, ▇▇▇▇▇▇ will renew this Agreement at
the end of the Initial Term or such Renewal Term, as the case may be, pursuant
to this Section 14.1; provided, however, nothing in
the section shall obligate ▇▇▇▇▇▇ beyond two (2) renewal terms of two (2) years
each.
14.2 Breach. In the event that either party commits
a material breach or default of any of its obligations hereunder (excluding NeoGenomics’ failure to meet
the Annual Forecast), the
other party may give the breaching party written notice of such material breach
or default, and shall request that such material breach or default be cured as
soon as reasonably practicable. In the event that the breach or default is not
cured within ninety (90) days after the date of the non-breaching party’s notice
thereof, the non-breaching party may terminate this Agreement immediately upon
written notice to the breaching party.
14.3 Insolvency. Either party may terminate this
Agreement on the liquidation, bankruptcy or insolvency of the other party or the
appointment of a receiver or trustee for the property of the other party, or if
the other party makes an assignment for the benefit of creditors, whether any of
the aforesaid events are the outcome of a voluntary act or otherwise. In the
event that a party files for bankruptcy and such party’s trustee rejects this
Agreement, the other party may elect to retain its rights under this Agreement
upon appropriate written notification to said trustee.
28
14.4 Change of
Control.
(a) ▇▇▇▇▇▇ may terminate this Agreement upon
ninety (90) days written notice to NeoGenomics following a Change of Control
involving NeoGenomics (or its permitted successors or assigns) and any of the
companies set forth in Exhibit
I, or their successors or
assigns. ▇▇▇▇▇▇’▇ right to terminate this Agreement pursuant to this Section
14.4 will continue until the earlier of (i) five (5) years following a Change of
Control involving NeoGenomics (or its permitted successors or assigns) and any
of the companies set forth in Exhibit
I, or their successors or
assigns and (ii) the date that is ninety (90) days after the ▇▇▇▇▇▇ IVD is first
available for commercial sale in the United States.
(b) If ▇▇▇▇▇▇ terminates this Agreement
pursuant to this Section 14.4, as NeoGenomics’ sole and exclusive remedy for
such termination, ▇▇▇▇▇▇ will pay to NeoGenomics (or its successor) a
termination payment equal to the greater of: (i) all of the reasonable direct costs
actually incurred by NeoGenomics (and subject to verification and audit by
▇▇▇▇▇▇ or its independent accounting firm) in designing, developing, validating,
marketing, and performing the Melanoma LDT through the date of termination, not
to exceed Seven Million Five Hundred Thousand Dollars ($7,500,000); or (ii) the
sum of:
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(A)
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two and three tenths (2.3)
multiplied by the Unaudited Revenue realized by NeoGenomics for the twelve
(12) month period immediately preceding the effective date of the Change
of Control (the “Change
of Control Base Revenue Amount”);
plus
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(B)
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one and five tenths (1.5)
multiplied by an amount equal to: (1) the Unaudited Revenue realized by
NeoGenomics and/or NeoGenomics’ successor or acquirer, as the case may be,
for the twelve (12) month period immediately preceding the date on which
▇▇▇▇▇▇ elects to terminate this Agreement pursuant to this Section 14.4
(the “Termination
Date Revenue Amount”), less (2) the Change of Control
Base Revenue Amount.
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(c) Notwithstanding the foregoing, if the
Termination Date Revenue Amount is less than the Change of Control Base Revenue
Amount, then the termination payment payable by ▇▇▇▇▇▇ pursuant to this Section
14.4 shall be an amount equal to two and three tenths (2.3) multiplied by
the Termination Date Revenue Amount.
29
(d) If ▇▇▇▇▇▇ terminates this Agreement and
pays the foregoing termination payment, within thirty (30) days thereafter, NeoGenomics will
transfer to ▇▇▇▇▇▇ all of the dedicated equipment (i.e., greater than fifty percent (50%)
usage), supplies, customer lists, sales aids, marketing materials and other
relevant sales, marketing and promotional materials related to the Melanoma LDT,
and ▇▇▇▇▇▇ will have the right (but not the obligation) to hire any of
NeoGenomics’ salespeople who are dedicated (on a full time equivalent basis) to
promoting and selling the Melanoma LDT. If a Change of Control does not involve
any of the companies set forth in Exhibit
I, then this Agreement will
continue in full force and effect and be binding upon ▇▇▇▇▇▇ and NeoGenomics (or
its successor in interest following the Change of Control) in accordance with
its terms. If a Change of Control involves any of the companies set forth in
Exhibit
I, but ▇▇▇▇▇▇ elects not to
terminate this Agreement pursuant to this Section 14.4, then this Agreement will
continue in full force and effect and be binding upon ▇▇▇▇▇▇ and NeoGenomics (or
its successor in interest following the Change of Control) in accordance with
its terms; provided,
however, that in such
event, NeoGenomics (or its successor) will no longer have the rights, and ▇▇▇▇▇▇
will no longer have the obligations, set forth in Section 9.5, except to the
extent that NeoGenomics exercised such rights and ▇▇▇▇▇▇’▇ obligations accrued
under such sections prior to termination pursuant to this Section
14.4.
14.5 Change in
Law. If, in the reasonable opinion of
▇▇▇▇▇▇’▇ legal counsel (taking into account all of ▇▇▇▇▇▇’▇ and its Affiliates’
various businesses and the legal and regulatory risks facing such businesses),
there is a change in applicable law (whether by statute, regulation, judicial or
administrative decision, informal policy guidance, warning letters or otherwise)
that prohibits the manufacture, marketing, promotion or sale of the Products or
the design, development, validation, marketing, performance or sale of the
Melanoma LDT or LDTs in general and NeoGenomics has received an opinion of
▇▇▇▇▇▇’▇ counsel that the manufacture, marketing, promotion or sale of the
Products or the design, development, validation, marketing, performance or sale
of the Melanoma LDT or LDTs are prohibited, then Abbott and NeoGenomics will
negotiate in good faith to amend this Agreement to reflect the anticipated
impact of such events; provided, however, that if
the parties are unable to reach agreement regarding such an amendment within
ninety (90) days of good faith negotiations, Abbott will have the right to
terminate this Agreement upon written notice to NeoGenomics.
14.6 Force
Majeure. Either party may
terminate this Agreement upon written notice to the other party if the other
party’s performance of its obligations hereunder is prevented for more than one
hundred eighty (180) days due to a force majeure condition, as further described
in Section 15.1.
14.7 IVD
Agreement. This Agreement
will terminate automatically on the date that the IVD Agreement is executed
between the parties.
14.8 Other
Provisions. In addition to
the termination provisions set forth in this Article 14, this Agreement may be
terminated in accordance with any other provision hereof that expressly gives
either party a right to terminate.
14.9 Post
Termination. Following the
expiration or termination of this Agreement according to its terms (unless
terminated automatically pursuant to Section 14.7 or by Abbott pursuant to
Section 14.2, 14.3 or 14.4), Abbott and NeoGenomics agree to use commercially
reasonable efforts to ensure that NeoGenomics can continue to meet its
customers’ requirements for the Melanoma LDT.
14.10 Survival. Termination of this Agreement shall
not relieve either party of any obligations accrued prior to termination.
Articles 1, 10, 11, 12, 13, 14 and 15, and Sections 3.5, 7.6 (subject to the
time periods contained therein), 7.7, 8.1, 8.3 and 9.3 shall survive termination
or expiration of this Agreement for any reason.
30
Article 15
Miscellaneous
15.1 Force
Majeure. Neither party
shall be liable to the other party for damages or losses on account of failure
of performance (other than a failure to make payments when due) if such failure
is occasioned by government action, war, terrorism, fire, explosion, flood,
epidemic, strike, lockout, embargo, shortage of materials or utilities, vendor
failure to supply, act of God or any other cause beyond the affected party’s
reasonable control, provided that the affected party uses commercially
reasonable efforts to avoid the force majeure condition and to remedy the
condition as quickly as possible. The affected party will give the other party
prompt written notice of the occurrence of any force majeure condition, the
nature thereof, and the extent to which the affected party will be unable to
perform its obligations under this Agreement. Such excuse will continue as long
as the force majeure condition continues. Upon cessation of such condition, the
affected party will promptly resume performance under this
Agreement.
15.2 Assignment. This Agreement shall inure to the
benefit of and be binding upon and enforceable by the parties and their
successors and permitted assigns. However, neither party may assign or delegate
any of its rights or obligations under this Agreement without the prior written
consent of the other party, which will not be unreasonably withheld.
Notwithstanding the foregoing, without the other party’s consent: (a) either
party may assign or delegate its rights or obligations, in whole or in part, to
one or more Affiliates of such party, provided that such assignment will not
relieve the assigning party of any obligations under this Agreement; and (b)
either party may assign or delegate its rights or obligations, in whole but not
in part, under this Agreement to a Third Party in connection with a Change of
Control, subject to Section 14.4.
15.3 Waiver. Any waiver by either party of a breach
or a default of any provision of this Agreement by the other party must be
in writing and will not be
construed as a waiver of any succeeding breach of the same or any other
provision, nor shall any delay or omission on the part of either party to
exercise or avail itself of any right, power or privilege that it has or may
have hereunder operate as a waiver of any
right, power or privilege by such party.
15.4 Severability. If any part of this Agreement is
declared invalid or unenforceable by any court of competent jurisdiction, such
declaration shall not affect the remainder of the Agreement and the invalidated
provision shall be revised in a manner that will render such provision valid
while preserving the parties’ original intent to the maximum extent
possible.
15.5 Independent
Contractors. The parties
are independent contractors
and nothing in this Agreement is intended to, or shall be construed to,
constitute a partnership, joint venture or agency relationship between the
parties. Neither party shall have the authority to make any statements,
representations or commitments of any kind, or to take any action, which
shall be binding on the other, without the prior written consent of the other
party. All persons employed by a party shall be employees of such party and not
of the other party and all costs and obligations incurred by reason of any such employment shall
be for the account and expense of such party.
31
15.6 Entire
Agreement. This Agreement,
together with any exhibits hereto, constitutes the entire agreement between the
parties relating to the subject matter hereof and all previous agreements or
arrangements between the parties, written or oral, relating to the subject
matter hereof are superseded.
15.7 Amendment. No amendment, alteration or
modification of any of the provisions of this Agreement will be binding
unless made in writing and
signed by the parties.
15.8 Compliance
with Law. In performing
this Agreement, each party shall comply with all applicable laws, rules and
regulations and shall not be required to perform or omit to perform any act
required or permitted under
this Agreement if such performance or omission would violate the provisions of
any such law, rule or regulation.
15.9 Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed an original but both of
which together shall
constitute one and the same instrument.
15.10 Governing
Law. This Agreement shall
be governed by and construed in accordance with the laws of the State of Illinois, without regard to its
conflicts of laws principles.
15.11 Alternative
Dispute
Resolution. The parties
agree that any dispute that arises in connection with this Agreement shall be
settled by binding Alternative Dispute Resolution in the manner described in
Exhibit
J.
15.12 Notices. All notices required or permitted
under this Agreement must
be in writing and sent to the address or facsimile number identified below.
Notices must be given: (a) by personal delivery, with receipt acknowledged; (b)
by facsimile followed by hard copy delivered by the methods under (c) or (d);
(c) by prepaid certified or registered
mail, return receipt requested; or (d) by prepaid reputable overnight delivery
service. Notices will be effective upon receipt. Either party may change its
notice address by providing the other party written notice of such change. Notices shall be delivered as
follows:
|
If to
Abbott:
|
▇▇▇▇▇▇ Molecular
Inc.
|
|
Attention: Senior Director,
Business Development & Licensing
|
|
|
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
|
|
|
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇
|
|
|
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
|
32
|
with a copy
to:
|
▇▇▇▇▇▇
Laboratories
|
|
Attention: DVP, Commercial Legal
Operations
|
|
|
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇
|
|
|
▇▇▇▇. 32MP, Bldg.
▇▇▇▇-▇
|
|
|
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇
|
|
|
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
|
|
|
If to
NeoGenomics:
|
NeoGenomics Laboratories,
Inc.
|
|
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President
|
|
|
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇
|
|
|
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇
|
|
|
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
|
|
|
copy to:
|
K&L Gates
LLP
|
|
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Esq.
|
|
|
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
|
|
|
▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇
|
|
|
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
|
15.13 Expenses. All costs and expenses incurred with
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party which shall have incurred the same, and the other party shall
no liability thereto.
15.14 Headings. The titles of the Articles and Sections
contained in this Agreement are for convenience only and shall not be considered
in construing this Agreement.
* * *
Signature page
follows.
33
In Witness
Whereof, the parties have
caused this Agreement to be executed as of the Effective
Date.
|
▇▇▇▇▇▇ Molecular
Inc.
|
NeoGenomics Laboratories,
Inc.
|
|||
|
By:
|
/s/▇▇▇▇▇▇▇▇ ▇’▇▇▇▇▇
|
By:
|
/s/▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
|
|
|
▇▇▇▇▇▇▇▇ ▇’▇▇▇▇▇
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▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
|
|||
|
President
|
Chairman and Chief Executive
Officer
|
|||
34
Exhibit A
Products
To be identified within one hundred
twenty (120) days
after the Effective Date pursuant to
Section 2.2.
Exclusive Products
To be designated pursuant to Section
3.2.
Exhibit B
Academic
Collaborators
[***]
[***]
[***]
[***]
[***]
Information redacted pursuant to a confidential treatment request. An unredacted
version of this Agreement has been filed separately with the Securities and
Exchange Commission.
Exhibit C
Model Forecast
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
||||||||||||||||||||||||||||||||||
|
Service
Revenue ($,000s)
|
$ | 240 | $ | 7,740 | $ | 23,100 | $ | 45,462 | $ | 73,476 | $ | 102,900 | $ | 127,980 | $ | 146,724 | $ | 159,132 | $ | 168,636 | $ | 178,140 | ||||||||||||||||||||||
Exhibit D
Section 3.4 Examples
Example
1
Abbott
and NeoGenomics agree to an Annual Forecast for 2011 and 2012. NeoGenomics’
Service Revenue is 79% of the forecasted Service Revenue in 2011 and 70% of the
forecasted Service Revenue in 2012. Using Model Forecast numbers as an
example:
|
2011
|
2012
|
|||||||
|
Forecasted
Service Revenue ($M)
|
$ | 23,100 | $ | 45,462 | ||||
|
Service
Revenue ($M)
|
$ | 18,249 | $ | 31,823 | ||||
|
Achievement
|
79 | % | 70 | % | ||||
Because
NeoGenomics’ Service Revenue in 2011 is above 75% of the forecasted Service
Revenue for 2011, pursuant to Section 3.4(b), NeoGenomics will maintain
exclusivity for 2012.
Because
NeoGenomics’ Service Revenue in 2012 is below 75% of the forecasted Service
Revenue for 2012, at the beginning of ▇▇▇▇ ▇▇▇▇▇▇ has two options:
(1)
Abbott may, pursuant to Section 3.4(b), in its sole discretion, allow
NeoGenomics to maintain exclusivity despite its 70% performance in 2012. In this
event, pursuant to Section 3.4(a)(ii)(B), the Annual Forecast for 2013, 2014 and
2015 must be at least equal to the actual Service Revenue from the prior year
(i.e., 2012)(in this
case $31,823), divided by
0.75. Accordingly, the Service Revenue forecasted in the 2013 Annual Forecast
would (at a minimum) be as follows:
|
2013
|
||||
|
Forecasted
Service Revenue ($M)
|
$ | 42,431 | * | |
*$31,823/0.75
= $42,431
To
maintain exclusivity in 2014, NeoGenomics must achieve at least 75% of the
forecasted Service Revenue ($42,431 x 75% =
$31,823).
(2)
Abbott may, pursuant to Section 3.4(c), convert the Agreement to a non-exclusive
agreement. In this event, exclusivity will no longer available to NeoGenomics
for the remaining term of the Agreement. Accordingly, there will be only two
status levels going forward: non-exclusivity or limitation to Pre-Existing
Customers.
If Abbott
elects to convert the Agreement to a non-exclusive agreement pursuant to Section
3.4(c), then in 2013 NeoGenomics’ Service Revenue must be 45% or more of the
Service Revenue forecasted in the 2013 Annual Forecast in order for NeoGenomics
to maintain its non-exclusive rights.
If
NeoGenomics’ Service Revenue is less than 45% of Service Revenue forecasted in
2013, Abbott has two options: (a) Abbott may, pursuant to Section 3.4(c) in its
sole discretion, allow NeoGenomics to maintain non-exclusivity despite its less
than 45% performance in 2013; or (b) Abbott may, pursuant to Section 3.4(d),
make the Existing Customer Election, in which case NeoGenomics will be entitled
to continue purchasing Products only to the extent necessary to serve its
Pre-Existing Customers.
Example
2
Abbott
and NeoGenomics agree to an Annual Forecast for 2013, 2014 and 2015. For
purposes of this example, assume NeoGenomics has maintained its exclusivity so
far pursuant to Section 3.4(b).
NeoGenomics’
Service Revenue is 65% of the forecasted Service Revenue in 2013 Using Model
Forecast numbers as an example:
|
2013
|
2014
|
2015
|
||||||||||
|
Forecasted
Service Revenue ($M)
|
$ | 73,476 | $ | 102,900 | $ | 127,980 | ||||||
|
Service
Revenue ($M)
|
$ | 47,759 | ||||||||||
|
Achievement
|
65 | % | ||||||||||
Because
NeoGenomics’ Service Revenue in 2013 is below 75% of the forecasted Service
Revenue for 2013, at the beginning of ▇▇▇▇ ▇▇▇▇▇▇ has two options:
(1)
Abbott may, pursuant to Section 3.4(b), in its sole discretion, allow
NeoGenomics to maintain exclusivity despite its 65% performance in 2013. In this
event, the 2014 and 2015 Annual Forecasts would not change.
(2)
Abbott may, pursuant to Section 3.4(c) convert the Agreement to a non-exclusive
agreement. In this event, exclusivity will no longer available to NeoGenomics
for the remaining term of the Agreement. Accordingly, there will be only two
status levels going forward: non-exclusivity and limitation to Pre-Existing
Customers.
Assume
that, pursuant to Section 3.4(c), Abbott converts the Agreement to a
non-exclusive agreement and, pursuant to Section 3.4(f), Abbott and NeoGenomics
agree to lower the 2014 and 2015 Annual Forecasts as follows:
|
2014
|
2015
|
|||||||
|
Forecasted
Service Revenue ($M)
|
$ | 72,000 | $ | 98,900 | ||||
In 2014,
NeoGenomics’ Service Revenue must be at least 45% of the Service Revenue
forecasted in the 2014 Annual Forecast (i.e., $72,000 x 45%
= $32,400) for NeoGenomics to maintain its non-exclusive
rights. If NeoGenomics’ Service Revenue for 2014 is less than $32,400, Abbott may make the
Existing Customer Election.
D-2
Assuming
Abbott does not make the Existing Customer Election for 2014, in 2015,
NeoGenomics’ Service Revenue must be at least 45% of the Service Revenue
forecasted in the 2015 Annual Forecast (ie., $98,900 x 45% =
$44,505) for NeoGenomics to maintain its non-exclusive rights. If
NeoGenomics’ Service Revenue for 2015 is less than $44,505, Abbott may make the
Existing Customer Election.
D-3
Exhibit E
Purchase Price And
Terms
Base
Purchase Price.
The Base
Price shall be as
follows:
|
Year
|
Base Price
(per unit of
Product)
|
|||
|
[***]
|
[***] | |||
|
[***]
|
[***] | |||
|
[***]
|
[***] | |||
|
[***]
|
[***] | |||
|
[***]
|
[***] | |||
|
[***]
|
[***] | |||
The Base Prices stated above assume that
NeoGenomics will identify [***] Products for inclusion in the Melanoma
LDT. If NeoGenomics elects at any time and for any reason to use a different
number of Products in the Melanoma LDT then the parties will renegotiate the
Base Prices in good faith.
Premium
Purchase Price.
The Premium
Price will be paid per unit
of Product and will vary each Calendar Quarter depending on NeoGenomics’ actual
Quarterly Unit Purchases in accordance with the following
table:
|
Actual
Quarterly
Unit
Purchases
|
Premium Price
(per unit of
Product)
|
|||
|
[***]
|
[***]
|
|||
|
[***]
|
[***]
|
|||
|
[***]
|
[***]
|
|||
|
[***]
|
[***]
|
|||
|
[***]
|
[***]
|
|||
|
[***]
|
[***]
|
|||
The Premium Prices stated above assume
that NeoGenomics will identify [***] Products for inclusion in the Melanoma
LDT. If NeoGenomics elects at any time and for any reason to use a different
number of Products in the Melanoma LDT, then the parties will renegotiate the
Premium Prices listed above in good faith.
[***]
Information redacted pursuant to a confidential treatment request. An unredacted
version of this Agreement has been filed separately with the Securities and
Exchange Commission.
At least [***] prior to the end of each Calendar
Quarter, NeoGenomics will submit to Abbott a written good faith estimate of its
anticipated Quarterly Unit Purchases of Products based on the volume of Melanoma
LDTs it expects to perform for the following Calendar Quarter (the “Quarterly
Forecast”). The estimated
Premium Price payable by NeoGenomics for all Products ordered by NeoGenomics
during each Calendar Quarter (the “Estimated
Premium Price”) will be
determined, invoiced and paid, in accordance with the above table based on the
estimated Quarterly Unit Purchases shown in the Quarterly Forecast for that
Calendar Quarter. Within [***] after the end of each Calendar Quarter,
NeoGenomics will submit to Abbott a written report setting forth NeoGenomics’
actual Quarterly Unit Purchases for the previous Calendar Quarter (the
“Quarterly
Report”). If the Premium
Price based on the actual Quarterly Unit Purchases for such quarter (as shown in
the Quarterly Report) is greater than the Estimated Premium Price, then within
[***] business days of delivery of the
Quarterly Report, NeoGenomics will remit a payment to Abbott for the difference
between the amount that was paid for all Products ordered during the previous
Calendar Quarter at the Estimated Premium Price and the amount that would have
been payable for all such Products at the Premium Price. If the Premium Price is
lower than the Estimated Premium Price, then Abbott will credit NeoGenomics for
the difference between the amount that was paid for all Products ordered during
the previous Calendar Quarter at the Estimated Premium Price and the amount that
would have been payable for all such Products at the Premium Price. If Abbott
converts this Agreement to a non-exclusive agreement pursuant to Section 3.4(c)
or makes the Existing Customer Election pursuant to Section 3.4(d), then
NeoGenomics will no longer be required to provide Quarterly Forecasts pursuant
to this paragraph, but will still comply with the forecasting and ordering
procedures set forth in Article 5.
Examples.
The following examples are provided for
illustration purposes only:
|
|
(i)
|
For the second Calendar Quarter of
2011, the Quarterly Forecast shows estimated Quarterly Unit Purchases of
[***]. All Products ordered during that
second Calendar Quarter will be at a Purchase Price consisting of a Base
Price of [***] and an Estimated Premium Price of
[***]. The Quarterly Report for the
second Calendar Quarter of 2011 shows actual Quarterly Unit Purchases of
[***] for the second Calendar Quarter.
The Premium Price is still [***] so no additional amounts are
owed.
|
|
|
(ii)
|
For the third Calendar Quarter of
2012, the Quarterly Forecast shows estimated Quarterly Unit Purchases of
[***]. All Products ordered during that
third Calendar Quarter will be at a Purchase Price consisting of a Base
Price per Product of [***] and an Estimated Premium Price
per Product of [***]. The Quarterly Report for the
third Calendar Quarter of 2012 shows actual Quarterly Unit Purchases of
[***] for the third Calendar Quarter.
Based on the actual Quarterly Unit Purchases shown in the Quarterly
Report, the Premium Price per Product would have been [***]. NeoGenomics owes Abbott an
additional [***] per Product ordered during the
third Calendar Quarter of
2012.
|
[***]
Information redacted pursuant to a confidential treatment request. An unredacted
version of this Agreement has been filed separately with the Securities and
Exchange Commission.
E-2
|
|
(iii)
|
For the fourth Calendar Quarter of
2013, the Quarterly Forecast shows estimated Quarterly Unit Purchases of
[***]. All Products ordered during that
fourth Calendar Quarter will be at a Purchase Price consisting of a Base
Price per Product of [***] and an Estimated Premium Price
per Product of [***]. The Quarterly Report for the
fourth Calendar Quarter of 2013 shows actual Quarterly Unit Purchases of
[***] for the fourth Calendar Quarter.
Based on the actual Quarterly Unit Purchases shown in the Quarterly
Report, the Premium Price per Product would have been [***]. Abbott will credit NeoGenomics
for [***] per Product ordered during the
fourth Calendar Quarter of
2013.
|
Purchase
Price Adjustments.
[***]
[***]
Information redacted pursuant to a confidential treatment request. An unredacted
version of this Agreement has been filed separately with the Securities and
Exchange Commission.
E-3
Exhibit F
Release Testing
To be provided upon
identification of Products
pursuant to Section 2.2.
Exhibit G
Additional Tests
[***]
[***]
[***]
[***]
[***]
Information redacted pursuant to a confidential treatment request. An unredacted
version of this Agreement has been filed separately with the Securities and
Exchange Commission.
Exhibit H
Patents and Patent
Applications
Part 1 – FISH Platform
patents
|
United States Application Number or
United States Patent Number
|
Filing or Issue Date
|
|
|
Patent
No. 5,491,224
|
Issued
February 13, 1996
|
|
|
Patent
No. 5,663,319
|
Issued
September 2, 1997
|
|
|
Patent
No. 5,776,688
|
Issued
July 7, 1998
|
|
|
Patent
No. 5,789,161
|
Issued
August 4, 1998
|
|
|
Patent
No. 6,277,569
|
Issued
August 21, 2001
|
|
|
Patent
No. 6,569,626
|
Issued
May 27, 2003
|
|
|
Patent
No. 5,447,841
|
Issued
September 5, 1995
|
|
|
Patent
No. 5,756,696
|
Issued
May 26, 1998
|
|
|
Patent No. RE 40,494 (of US 6,344,315)
|
Issued February 5, 2002
|
|
|
Patent
No. 6,596,479
|
Issued
July 22, 2003
|
|
|
Patent
No. 6,607,877
|
Issued
August 19, 2003
|
|
|
Patent
No. 7,115,709
|
Issued
October 3, 2006
|
|
|
Patent
No. 6,203,977
|
Issued
March 20,
2001
|
Part 2 – Melanoma Patents
|
United States Application Number or
United States Patent Number
|
Filing or Issue Date
|
|
|
Patent
No. 6,465,180
|
Issued
10/15/2002
|
|
|
Patent
No. 7,470,508
|
Issued
12/30/2008
|
|
|
Application
No. 60/859,408
|
Filed
11/15/2006 (Abandoned)
|
|
|
Application
No. 11/941,002
|
Filed
11/15/2007
|
|
|
Application
No. 60/713,799
|
Filed
09/02/2005 (Abandoned)
|
|
|
Application
No. 11/515,505
|
Filed
09/01/2006
|
|
|
Patent
No. 6,261,775
|
Issued
07/17/2001
|
|
|
Patent
No. 6,455,258
|
Issued
09/24/2002
|
|
|
Patent
No. 6,783,944
|
Issued
08/31/2004
|
Exhibit I
Change of Control
Parties
[***]
[***]
[***]
[***]
Information redacted pursuant to a confidential treatment request. An unredacted
version of this Agreement has been filed separately with the Securities and
Exchange Commission.
Exhibit J
Alternate Dispute Resolution
(ADR)
The parties recognize that from time to
time a dispute may arise relating to either party’s rights or obligations under
this Agreement. The parties agree that any such dispute shall be resolved by the
Alternative Dispute Resolution (“ADR”) provisions set forth in this Exhibit,
the result of which shall be binding upon the parties.
To begin the ADR process, 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 designees) 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 after the written 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 at any stage of the ADR
process.
1. To begin an ADR proceeding, a party
shall provide written notice to the other party of the disputed matter(s) 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 disputed matter(s) to be resolved within the same
ADR.
2. Within twenty-eight (28) days following
the initiation of the ADR proceeding, the parties shall select a mutually
acceptable independent, impartial and conflicts-free neutral to preside over the
resolution of the parties’ disputes in this ADR proceeding. If the parties are
unable to agree on a mutually acceptable neutral within such period, within
thirty-five (35) days following the initiation of the ADR proceeding, each party
will select and notify the other party of one independent, impartial and
conflicts-free neutral and those two neutrals will select a third independent,
impartial and conflicts-free neutral within fourteen (14) days thereafter. None
of the neutrals selected may be current or former employees, officers or
directors of either party, its subsidiaries or affiliates.
3. No earlier than twenty-eight (28) days
or later than eighty-four (84) days after selection, the neutral(s) shall hold a
hearing to resolve each of the disputed matters identified by the parties. The
ADR proceeding shall take place at a location mutually agreed upon by the
parties. If the parties cannot agree, the neutral(s) shall designate a location
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(s):
(a) a copy of all exhibits on which such
party intends to rely in any oral or written presentation to the
neutral(s);
(b) a list of any witnesses, including
expert witnesses, such party intends to call at the hearing, and a short summary
of the anticipated testimony of each witness. No witness will be heard at the
hearing unless identified at least seven (7) days prior to the hearing, and no
witness’ testimony will be accepted by sworn declaration or affidavit. Witnesses
must make themselves available for cross-examination by the opposing
party;
(c) a proposed ruling on each disputed
matter to be resolved, together with a request for a specific damage award or
other remedy for each disputed matter. 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 unless the parties, with the consent of the
neutral(s), otherwise agree. The parties agree that neither side shall seek
as part of its remedy any punitive damages.
(d) a brief in support of such party’s
proposed rulings and remedies, provided that the brief shall not exceed twenty
(20) pages unless the parties, with the consent of the neutral(s), otherwise
agree.
Except as expressly set forth in
subparagraphs 4(a) - 4(d), and unless otherwise agreed by the parties, no
discovery shall be required or permitted by any means, including depositions,
interrogatories, requests for admissions, or production of
documents.
5. Unless otherwise agreed by the parties,
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(s) 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 the disputed matters it raised but also any disputed matters raised by the
responding party. The responding party, if it chooses to make an opening
statement, also shall address all disputed matters 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) Each party may designate a single
corporate representative to be present for the entirety of the hearing. Except
when testifying, witnesses other than the designated corporate representatives,
shall be excluded from the hearing until closing arguments.
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(e) Settlement negotiations, including any
statements made therein, shall not, under any circumstances, be admissible
during the hearing. As to all other matters, the neutral(s) shall have sole
discretion regarding the admissibility of any evidence.
6. Within fourteen (14) days following
completion of the hearing, each party may submit to the other party and the
neutral(s) 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,
unless otherwise agreed by the parties, shall not exceed ten (10)
pages.
7. The neutral(s) shall provide a written
ruling on each disputed matter within thirty (30) days following completion of
the hearing. The ruling shall not contain any recitation of the facts or any
legal rationale or otherwise explain the basis of the
ruling.
8. The neutral(s) 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(s) rule(s) in favor of
one party on all disputed issues in the ADR proceeding, the losing party shall
pay 100% of the prevailing party’s legal fees and expenses.
(b) If the neutral(s) rule(s) in favor of
one party on some matters and the other party on other matters, the neutral(s)
shall include in their ruling a written determination as to how the parties’
legal fees and expenses shall be allocated between the parties. The neutral(s)
shall allocate legal fees and expenses in a way that bears a reasonable
relationship to the outcome of the ADR proceeding, with the party prevailing on
more matters, or on matters of greater value or gravity, recovering a relatively
larger share of its legal fees and expenses.
9. The
rulings of the neutral(s) 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 neutral(s)’ rulings
shall be deemed Confidential Information. The neutral(s), during the pendency of
the ADR proceeding, shall have the authority to impose sanctions for
unauthorized disclosure of Confidential Information.
11. All
ADR hearings shall be conducted in the English language.
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