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EXHIBIT 10.14A
DEVELOPMENT AND LICENSE AGREEMENT
This Agreement is entered into and made effective as of this 2nd day of
December, 1994, by and between Boehringer Mannheim Corporation, an Indiana
corporation having a principal place of business at 9115 Hague Road,
Indianapolis, Indiana 46250 ("BMC"); and SpectRx, Inc., a Delaware corporation
having a principal place of business at 6025 A Unity Drive, Norcross, Georgia
30071 ("SI").
RECITALS:
A. BMC is in the medical diagnostics business and has experience and
expertise in the areas of testing and marketing of medical diagnostics products.
B. Pursuant to a License Agreement dated as of May 7, 1991, between
Georgia Tech Research Corporation ("GTRC") and Laser Atlanta Optics, Inc.
("LAO"), which was assigned to SI on January 16, 1993, and amended on October
19, 1993 (the "GTRC License"), SI is the exclusive licensee of GTRC for certain
know-how relating to a method and apparatus using non-invasive instrumentation
to measure molecular changes in human lenses for the purpose of detecting
diabetes.
C. SI has developed a device to detect diabetes in humans and has built
prototype devices and is conducting clinical trials of such devices.
D. BMC has expressed an interest in participating as a member of SI's
project team during the building of prototype devices and the execution of
definitive clinical trials; as well as in acquiring worldwide, exclusive
marketing rights to such device.
THEREFORE, in consideration of the premises and mutual agreements
expressed herein, the parties agree as follows:
1. DEFINITIONS
1.1 "Affiliate" shall mean, with respect to either party, any
corporation, partnership or other business entity that now or in the future
controls, is controlled by, or is under common control with, such party.
"Control" shall mean the direct or indirect ownership of fifty percent (50%) or
more of the voting interest in, or a fifty percent (50%) or more interest in the
income of, such corporation or other business entity, or such other relationship
as, in fact, constitutes actual control.
1.2 "Device" shall mean any non-invasive instrument and improvements
thereto developed by, for or with SI using the Know-How (defined below) that
measures changes in human lenses for the qualitative detection of diabetes for
screening purposes.
1.3 "Know-How" shall mean all knowledge of SI, regardless of its
source, relating to a method of using non-invasive instrumentation to measure
molecular changes in living human lenses
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for the purpose of detecting diabetes, including, but not limited to,
information not in the public domain obtained by way of the GTRC License.
2. RIGHTS GRANTED BY SI
2.1 Effective upon payment in full to SI of the development payments
described in Section 3, SI hereby grants to BMC a license to sell and market the
Device on a world-wide and exclusive basis, subject to the terms set forth in
this Agreement (the "Marketing License"). SI may not, during the term of the
Marketing License, sell, market or distribute, or give any third party rights to
sell, market or distribute, any non-invasive instrument developed by, for or
with SI using the Know-How that measures changes in human lenses for the
qualitative detection of diabetes for screening purposes. The Marketing License
gives BMC the right to market the device for screening for diabetes. The term of
the Marketing License, unless sooner terminated pursuant to the terms and
conditions of this Agreement, shall be coincident with the term of the GTRC
License, a copy of which is attached to this Agreement as Exhibit A. The
Marketing License shall remain exclusive for so long as BMC meets the minimum
volume requirements set forth in the Supply Agreement (defined below) (or, in
the event BMC acquires the Manufacturing License (described below), for so long
as BMC pays the Annual Minimum Royalty (defined below)). Should the minimum
volumes set forth in the Supply Agreement not be met (or, in the event BMC has
acquired the Manufacturing License, the Annual Minimum Royalty not be
maintained), the Marketing License (and, in the event BMC has acquired the
Manufacturing License, the Manufacturing License) shall become nonexclusive. In
such event, BMC agrees to cooperate with SI in enabling SI to obtain any
government approvals necessary for SI to sell the Device.
2.2 While the Marketing License is in effect, and during the term of
the Supply Agreement, should BMC determine pursuant to the terms and conditions
of the Supply Agreement, to itself manufacture or otherwise provide for the
manufacture of the Device, a further license shall be deemed issued in respect
of the manufacture of the Device (the "Manufacturing License"). The
Manufacturing License shall constitute the right to manufacture or have
manufactured the Device, in accordance with SI's specifications and such other
modifications as the parties may have agreed upon, on a world-wide and exclusive
basis. The Manufacturing License will issue, and be deemed in place and
effective, upon the determination by BMC to manufacture the Device, upon and
after the termination of the Supply Agreement by notice by BMC in accordance
with its terms and the payment to SI of all sums payable thereunder. The term of
the Manufacturing License, unless sooner terminated pursuant to the terms and
conditions hereof, shall be coincident with the term of the Marketing License.
Neither the Marketing License nor the Manufacturing License, nor any rights
thereunder, may be assigned or sublicensed by BMC to any person (other than an
Affiliate of BMC) without the express prior written consent of SI, which may not
be unreasonably withheld.
2.3 No royalty will be due or payable in respect of the Marketing
License. During the term of the Manufacturing License, BMC shall pay, on a
quarterly basis, on or before the sixtieth (60th) day following the end of each
calendar quarter, royalties equal to five percent (5%) of the total
consideration paid or payable to BMC upon the sale of all Devices provided such
sale is made on an arms-length basis to a purchaser unaffiliated to BMC. In
addition, during the term of the
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Manufacturing License BMC agrees to pay to GTRC any royalties attributable to
BMC's manufacture and sale of the Device under the GTRC License. If a Device is
sold or given to a purchaser on a non-arms-length basis, or if the Device is
provided to a purchaser as an accommodation, the royalties shall be equal to
five percent (5%) of the fair salable value of such Devices. If the parties
hereto cannot agree as to the fair salable value of any Devices so sold, the
issue shall be submitted to commercial arbitration under the rules of the
American Arbitration Association for the determination of same by an expert
appointed for such purposes. A Device shall be considered sold for purposes of
this Agreement when it is billed out to a third party, or when not billed out,
when it is delivered, otherwise conveyed or paid for, whichever occurs first. It
is intended that the foregoing royalty shall be paid in respect of and computed
on the basis of the sales price to parties who are not Affiliates of BMC, and
that inter-company transfers shall not be considered as sales. Contemporaneously
with each royalty payment, BMC shall furnish to SI complete statements certified
to be accurate by BMC, showing the number, country in which manufactured,
country in which sold to or to which shipped and description and sales price in
respect of each Device sold during the preceding calendar quarter. Such
statements shall be furnished to SI whether or not any Devices have been sold
during the calendar quarter to which such statement refers. BMC's books and
records relating to such royalty payments shall be open during business hours
for reasonable inspection by a certified public accountant appointed by SI and
reasonably acceptable to BMC to determine the accuracy of such royalty
statements and payments, but for no other purpose. If such audit reveals that
the royalties reported by BMC are understated by ten percent (10%) or greater,
BMC shall pay for the full cost of the audit; otherwise SI shall pay for the
audit. In any event, any underpayment of royalties revealed by such audit shall
be promptly corrected by BMC, and any overpayment shall be creditable against
future royalties. BMC shall keep, maintain and preserve, during the term of the
Manufacturing License and for at least two (2) years following the termination
or expiration of such license, complete and accurate records of account in
respect thereof, including, without limitation, invoices, correspondence and
other records. BMC shall require its affiliates and other sublicensees to
maintain similar records necessary for the accurate computation and payment of
the royalties payable hereunder. Notwithstanding the foregoing, within sixty
(60) days of the end of each calendar year during the term of the Manufacturing
License, BMC shall pay to SI a sum equal to the difference between $100,000 (the
"Minimum Annual Royalty") and the earned royalties paid to SI with respect to
such year. (If BMC obtains the Manufacturing License on a date other than
January 1 of any calendar year, the Minimum Annual Royalty for the year in which
BMC obtains such license shall be prorated.) If, during the term of the
Manufacturing License, BMC fails to pay the minimum Annual Royalty with respect
to any calendar year, the Marketing License and the Manufacturing License shall
become nonexclusive (and BMC shall cooperate with SI in obtaining necessary
approvals for SI to sell the Device, as set forth in Section 2.1).
3. DEVELOPMENT PAYMENTS
3.1 As consideration for the Marketing License and the option to obtain
the Manufacturing License, BMC shall assist SpectRx in funding the development
of the Device. BMC's development funding shall be as described in this Article
3.0.
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3.2 Within fifteen (15) days of the execution of this Agreement, BMC
shall [*]. These funds shall be expended by SI to initiate Alpha Development
(defined below).
3.3 Within thirty days of successful completion of the Top Level Design
Review (defined below), anticipated to be [*], BMC and SI shall execute a supply
agreement, which shall be in the form set forth in Exhibit B (subject to
completion of schedules, amounts, and other issues left open in Exhibit B, which
the parties agree to negotiate in good faith to complete) (the "Supply
Agreement"). Upon execution of the Supply Agreement, BMC shall pay [*], which
shall be expended by SI to complete Alpha Development.
3.4 Upon successful completion of Alpha Development and delivery of an
Alpha Prototype to BMC, anticipated to be [*] Agreement, BMC shall pay SI [*],
to be expended by SI to commence Beta Development (defined below).
3.5 Upon completion of Beta Development and delivery of [*] Prototypes
(defined below), BMC shall pay SI [*].
4. DEVELOPMENT ACTIVITY, CLINICAL TRIALS AND TECHNICAL ASSISTANCE
4.1 BMC shall participate as a member of SI's project development team
during the building of prototype Devices and during the execution of clinical
trials with respect to the Device. BMC shall give technical, clinical and
marketing input to the project team during these phases. BMC will pay the cost
of obtaining clearance from the Food and Drug Administration and its foreign
counterparts necessary for BMC to sell the Device.
4.2 SpectRx shall, with BMC's assistance, file applications for patents
in all major markets of the world and shall diligently prosecute such patent
applications and maintain any patents when issued.
4.3 As used herein, "Alpha Development" means the engineering
development necessary to design and fabricate a working prototype of the Device
that meets the performance specifications in all functional aspects, but does
not necessarily meet the final size, weight or environmental specifications (the
"Alpha Prototype"). The Alpha Prototype will be hand built and not suitable for
sale or production.
4.4 As used herein, "Top Level Design Review" means a design review
meeting held between SI and BMC in which the instrument design approach is
presented for review and approval. The design will be evaluated to ensure that
it meets the market requirements. Major subassemblies will be identified and all
major design tradeoffs completed. The Top Level Design Review should allow [*].
After review BMC and SI will reach mutual agreement on a system specifications
document.
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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4.5 As used herein "Beta Development" means the design process that
results in a prototype suitable for testing by an end user that meets the
agreed-upon system specifications document, including size, weight and
environmental requirements (the "Beta Prototype"). The Beta Prototype will not
be fabricated on production tooling, however it will be substantially identical
in form, fit and function to the final production Device.
5. CONFIDENTIALITY
5.1 It is contemplated that the parties may wish to transmit to each
other confidential information. Each party agrees to receive such confidential
information, if it is in writing or other tangible form and clearly marked as
being confidential and agrees not to disclose such confidential information to
any third party for a period of five years from the date of receipt thereof
unless the information (a) was known to the receiving party prior to the time of
disclosure, (b) is obtained from a third party having an apparent right to
disclose the information, (c) was or becomes available to the public through no
fault of the receiving party or (d) was independently developed by employees of
the receiving party who have not had access to the Confidential Information.
Each party agrees not to use the confidential information of the other for any
purpose other than those set forth in this Agreement. In the event a party
considers certain information which has been marked confidential to be excluded
from the above obligations of confidence and non-use and intends to make
disclosure of such information to a third party, thirty days written notice of
such intent and the reasons therefor shall be given to the other party. It is
also understood that confidential information may be transmitted orally between
the parties if it is promptly confirmed in writing or other tangible form by the
disclosing party and marked as being confidential.
5.2 It is understood that disclosure of any information by one party to
the other under this Agreement shall in no way be considered as a grant of any
fight or license to the receiving party to use such information except for the
purposes set forth in this Agreement.
6. JOINT OBLIGATIONS
6.1 BMC and SI each agree to cooperate with the other in the building
of prototypes and execution of clinical trials for the Device.
6.2 SI agrees to make reasonable efforts to keep BMC informed
promptly of:
(a) all improvements relevant to the Device, if any;
(b) all technical information relating to the Know-How
as such data and information are acquired or developed by SI, if any;
(c) all data or information concerning the clinical
evaluations or studies made by or for SI relating to the Device for diabetes;
and
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(d) all publications coming to the attention of SI
relating to the Device, if any for diabetes.
7. RELATIONSHIP OF THE PARTIES
This Agreement is not intended to create nor shall it be deemed to
constitute, partnership, agency, employer-employee, or joint venture
relationship between the parties. The respective activities by the parties
hereunder shall be provided as independent contractors. Neither party shall
incur any debts or make any commitments for the other, except to the extent, if
at all, specifically provided herein.
8. GOVERNMENT REGULATIONS AND GUIDELINES
Each party shall use its best efforts to assure that all further work
conducted hereunder shall be in accordance with the laws, rules and guidelines
applicable to the parties carrying out such work, in particular, so far as
applicable, the present and future guidelines for Good Laboratory Practices and
Good Manufacturing Practices set forth, as amended from time to time, in the
Code of Federal Regulations of the United States of America and the
corresponding local law of such other country in the Territory as may be
applicable to such work.
9. TERM AND TERMINATION
9.1 This Agreement shall remain in effect until the end of the term of
the Marketing License, unless extended by the parties in writing or unless
terminated earlier in accordance with Paragraph 9.2, 9.3 or 9.4.
9.2 This Agreement may be terminated at any time by BMC upon written
notice thereof to SI provided, however, that in the event of termination
pursuant to this section, all sums paid or payable shall remain the property of
SI and shall not be refundable.
9.3 This Agreement may be terminated by BMC upon written notice to SI
in the event Top Level Design Review is not completed. In such event, [*] upon
execution of this Agreement shall be promptly [*], less actual severance
expenses incurred by SI up to a maximum [*]. In the event BMC terminates this
Agreement for the reason set forth in this Section, and SpectRx grants the right
to market the Device to any party unaffiliated with SpectRx within two years of
the date of such termination, all payments made by BMC to SpectRx shall be
immediately refunded; provided, however, that in no event will SI's refunds of
payments to BMC exceed the amounts paid to SI by such unaffiliated parties.
9.4 Either party may terminate this Agreement (and the Manufacturing
License if then in effect) (i) by written notice in the event the other party
materially breaches this Agreement and does not cure such breach within thirty
(30) days of written demand for cure, or (ii) by written notice upon the
liquidation or bankruptcy of, or an assignment for the benefit of creditors of,
or a declaration of insolvency by, the other party.
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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9.5 Upon termination of this Agreement pursuant to this Article 9, BMC
will use its reasonable best efforts to cause to be transferred to SI any
governmental approvals obtained by BMC and necessary for SI to market the
Device.
10. MISCELLANEOUS PROVISIONS
10.1 This Agreement constitutes and contains the entire Agreement of
the parties and supersedes any and all prior negotiations, correspondence,
understandings and agreements between the parties respecting the subject matter
hereof. This Agreement may be amended or modified or one or more of the
provisions thereof waived only by written instrument signed on behalf of the
parties.
10.2 Any notice required to be given hereunder shall be sent by first
class registered or certified mail addressed to the party to whom it is to be
given as follows:
To BMC: Boehringer Mannheim Corporation
Attn.: President
9115 Hague Road
Indianapolis, Indiana 46250
To SI: SpectRx, Inc.
Attn.: President
6025 A Unity Drive
Norcross, Georgia 30071
All notices shall be deemed given when sent by registered or certified mail,
postage prepaid, to the addresses listed above. The date of postmark shall be
the date of such notice.
10.3 SI warrants and represents that, as of the date of this Agreement,
it has the right to grant to BMC the rights granted herein and that there are no
outstanding agreements, assignments or encumbrances inconsistent with this
Agreement. SI further represents and warrants to BMC that it has given BMC
access to all technical and clinical data thus far generated with respect to the
Device and that all such data is accurate and complete in all material respects.
10.4 This Agreement shall be construed according to the laws of the
State of Georgia. Venue for any litigation under this Agreement shall be state
court, Gwinnett County, Georgia.
10.5 During the term of this Agreement or any extension thereof none of
the parties hereto will make any publications relating to the details of the
business arrangement between them contemplated hereunder, including business
plans, without the approval of the other; provided, however, that such approval
shall not be unreasonably withheld.
10.6 Dispute Resolution. (a) The parties shall attempt in good faith to
resolve any dispute arising out of or relating to this agreement promptly by
negotiations between representatives who have authority to settle the
controversy. Either party may give the other party written notice of any
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dispute not resolved in the normal course of business. Within thirty days after
delivery of such notice, representatives of both parties shall meet at a
mutually acceptable time and place, and thereafter as often as they reasonably
deem necessary, to exchange relevant information and to attempt to resolve the
dispute. If the matter has not been resolved within sixty days of the disputing
party's notice, or if the parties fail to meet within thirty days, either party
may initiate mediation of the controversy or claim as provided in clause (b) of
this section. All negotiations pursuant to this clause are confidential and
shall be treated as compromise and settlement negotiations for purposes of the
Federal Rules of Evidence and state rules of evidence. (b) If the dispute has
not been resolved by negotiation, the parties shall endeavor to settle the
dispute by mediation, non-binding arbitration, or other appropriate means for a
period of at least sixty days before resorting to litigation. The procedures
specified in this Section 10.6 must be followed before either party may seek
judicial relief, provided, however, that a party may seek a preliminary
injunction or other provisional judicial relief if in its judgment such action
is necessary to avoid irreparable damage or to preserve the status quo. Despite
such action, the parties will continue to participate in good faith in the
procedures specified in this Section 10.6. All applicable statutes of limitation
and defenses based upon the passage of time shall be tolled while the procedures
specified in this Section 10.6 are pending, and the parties shall take such
action, if any, required to effectuate such tolling.
10.7 All payments made pursuant to this Agreement shall be net of
withholding and other taxes (except for taxes that are due on the net income of
SpectRx) that may be due on such payments.
10.8 This Agreement shall not be assignable by either party without the
prior written consent of the other; provided, however, that BMC may assign this
Agreement to any entity under wholly-owned, wholly-owning, or under common
control with BMC.
10.9 Until such time as the Marketing License issues or this Agreement
is terminated, whichever occurs first, SI agrees that it will not discuss or
negotiate with any third party to grant any rights to develop or market the
Device.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have duly executed this Agreement as of the date first above written.
SPECTRX, INC.
By: /s/ Mark A. Samuels
-------------------------------------
Title: CEO
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BOEHRINGER MANNHEIM CORPORATION
By: /s/ F. Blobel
-------------------------------------
Title: Senior Vice President of DMQ
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EXHIBIT A
GTRC LICENSE
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LICENSE AGREEMENT
THIS AGREEMENT is made as of the 7th day of May, 1991, by and between
GEORGIA TECH RESEARCH CORPORATION, a nonprofit Georgia corporation with offices
in the Centennial Research Building, Georgia Institute of Technology, Atlanta,
Georgia, ("GTRC"); and LASER ATLANTA OPTICS, INC., a company incorporated under
the laws of the State of Georgia, and having its registered office in that state
at 6015D Unity Drive, Norcross, Georgia 30071, ("LASER").
W I T N E S S E T H:
WHEREAS, this Agreement is intended to cancel that certain License
Agreement between the parties hereto, dated April 10, 1990; and
WHEREAS, GTRC entered into an agreement with Joslin Diabetes Center
whereby GTRC obtained the exclusive right to market know--how related to a
method of using non-invasive instrumentation to quantitatively measure molecular
changes in living human lenses for the purpose of diagnosing diabetes and
precataractous conditions (the "Know-How") For the purpose of this Agreement,
Know-How includes, among other things, information not in the public domain,
including Confidential Information and Trade Secrets forwarded or transmitted to
LASER by GTRC, Dr. Nai-Teng Yu, Dr. Sven Bursell and Joslin Diabetes Center. The
system covered by the Know-How employs low power illuminations of different
optical wavelengths of the lens of the eye. The spectral content of the
resulting emitted light from specific sites in the lens is then acquired and
analyzed providing information that can be used to detect diabetes and
precataractous conditions.
WHEREAS, GTRC desires the further commercial development of the
Know-How and for such purpose has accepted the offer of LASER to collaborate
with GTRC upon the terms and conditions herein contained; and
WHEREAS, LASER desires to acquire an exclusive license, with the right
to grant sublicenses to others, to commercialize products incorporating the
Know-How (the "Products") and to operate and use such Products and to
manufacture, having manufactured, use, market, have marketed, sell and have sold
the Products; and
WHEREAS, GTRC and LASER have agreed that in connection with such
collaboration GTRC shall grant to LASER an exclusive license throughout the
world (the "Territory") to manufacture, have manufactured, use, market, have
marketed, sell and have sold Products incorporating the Know-How.
NOW THEREFORE, for and in consideration of the sum of one Hundred
($100.00) Dollars and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, GTPC and LASER do hereby warrant
and agree as follows:
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1. EXCLUSIVE LICENSE
GTRC hereby grants to LASER the exclusive, worldwide, right and license
to commercialize, use and exploit the Products; to make, assemble, and use
apparatus machinery, auxiliaries, and all devices for carrying such Products
into practice; and to manufacture, have manufactured, use, market, have
marketed, sell and have sold the Products.
(a) GTRC hereby grants to LASER the right to grant sublicenses on such
terms as are consistent with the provisions of this Agreement.
(b) The exclusive rights and licenses herein granted shall include all
inventions, improvements to, enhancements of and modifications of the Know-How
and Products thereto made or conceive during the term of this Agreement which
GTRC owns or controls or hereafter owns or controls and all patent applications
and patents based on or covering the same which the GTRC now owns or hereafter
owns or controls.
2. REPRESENTATIONS BY GTRC
(a) Much of the Know-How is secret, and to the best of GTRC's
knowledge and belief has not been revealed to anyone except
Joslin Diabetes Center and Dr. Sven Bursell, and shall not be
revealed to anyone without the prior approval of LASER.
(b) GTRC shall communicate to LASER all information and data,
which may come into its possession, relating to the Know-How,
but no information prominently marked "Confidential" so
communicated or otherwise acquired by LASER from GTRC, save
such information which is in the public domain, shall be
divulged to any third party (except to employees or
consultants of LASER and its sublicensees) without the prior
consent of GTRC.
(c) GTRC's and LASER' a obligations set out in this section shall
survive the termination of this Agreement to the extent that
such information has not entered the public domain.
(d) GTRC has an agreement with Joslin Diabetes Center (the
subcontractor) concerning the "Know-How" which provides for
the sharing of royalties.
3. PATENTS
(a) Should LASER at any time seek and obtain Letters Patent or
equivalent protection for any development arising from its use
of the Know-How not in the public domain, any products covered
by such Letters Patent or equivalent protection shall be
deemed to be Products within the terms of this Agreement and
be subject to the terms and conditions herein.
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(b) LASER shall advise GTRC within fourteen (14) days of lodging
an application for such Letters Patent or equivalent
protection, and shall keep GTRC advised of the prosecution and
maintenance of such Letters Patent or equivalent protection.
4. OWNERSHIP OF PATENTS
All patents regarding "the Know-How" shall be the sole exclusive
property of GTRC, subject to the exclusive license hereby granted GTRC shall,
upon demand, execute and deliver to LASER such documents as may be deemed
necessary or advisable by counsel for LASER for filing in the appropriate patent
offices to evidence the granting of the exclusive license hereby granted.
5. ROYALTIES
LASER shall pay to GTRC:
(a) Where the products are the subject of a Patent Application,
Letters Patent or equivalent protection, a [*] price ("Net
Selling Price) for each Product manufactured and sold anywhere
in the world.
Net Selling price shall mean LASER's gross selling price for the Products less
any of the following:
1) sales or excise taxes paid directly or indirectly to
LASER;
2) any shipping costs separately itemized by LASER;
3) normal and customary trade discounts, returns and
allowances.
(b) In all other cases, a [*].
(c) It shall be the obligation of LASER to pay all royalties due
hereunder to GTRC and GTRC shall not be required to look to
any other seller to recover any monies.
(d) The obligations of LASER with respect to the payment of
royalties in accordance with this Agreement shall apply with
respect to all sales in any country of the Territory,
notwithstanding that no letters Patent or equivalent
protection shall have been obtained or be in force in that
country.
6. ACCOUNTS
(a) LASER shall not later than the First day of March in each year
furnish to GTRC a statement showing the total net sales by
LASER and any approved sub-licensees during the immediately
preceding calendar year, and the royalties payable thereon
calculated in accordance with this Agreement.
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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(b) LASER shall keep at its usual place of business true and
particular accounts of all matters connected with the use of
the Know-How and the manufacture and sale of all Products and
shall, if so requested by GTRC make available books of account
relating to royalties payable hereunder containing true
entries complete in every particular as may be necessary or
proper for enabling the amount of such royalties to be
conveniently ascertained.
7. ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the
successors and assigns of the parties hereto, but shall not otherwise be
assigned by either party without the written consent of the other party; EXCEPT
THAT GTRC shall have the right to assign this Agreement to the Georgia Institute
of Technology or the Board of Regents of the University System of Georgia.
8. NO WARRANTY
GTRC does not nor will it assert or warrant that the Know-How or any
improvement thereto is not an infringement of the rights of third parties nor
that under the law of any country it will be possible to grant an exclusive
license.
9. NEW INVENTIONS
If during the term of this Agreement GTRC, individually or
collectively, makes any further improvements in such Products or Know-How or the
mode of using them or becomes the owners of any new improvements either through
patents or otherwise, then it shall communicate such improvements to LASER and
LASER shall have the right to include the same in this Agreement without
additional compensation. Provided, however, that this paragraph shall not apply
to any situation in which GTRC has a contrary contractual commitment as a third
party.
10. NOTICE
Any notice under this Agreement shall be addressed as follows:
(a) Georgia Tech Research Corporation
Centennial Research Building
Georgia Institute of Technology
Atlanta, Georgia
(b) Laser Atlanta Optics, Inc.
6015D Unity Drive
Norcross, Georgia 30071
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With a copy to:
Thornton W. Morris & Co., P.C.
1950 North Park Place
Suite 400
Atlanta, Georgia 30339
11. FORCE MAJEURE
Neither party shall be held in breach of this Agreement for any reason
for acts or omissions caused by any act of God or other cause beyond the control
of the parties, including, but not limited to, fire, floods, labor disputes, or
other unforeseen circumstances.
12. INDEMNITY
Notwithstanding anything herein contained, LASER shall indemnify and
save GTRC harmless with respect to any claims by any third party against GTRC
alleging loss, damage or injury as a result only of the use by LASER or by such
third party of the Products. The obligation of Indemnity shall survive
Termination.
13. TERM OF LICENSE
Subject to Clauses 14 and 15 herein, this Agreement and the license
granted hereunder shall continue in force for Fifteen (15) years from the date
hereof.
14. TERMINATION BY LASER
LASER may terminate this Agreement by giving to GTRC at least Three (3) months
notice in writing of any breach by GTRC of this Agreement which causes damage to
LASER, specifying the particulars of the breach and requiring that it be
rectified or made good and by a further notice if at the expiration of that
period of three months, the relevant breach has not been rectified or made good
WITHOUT PREJUDICE however to the right of GTRC to sue for and recover any moneys
due to GTRC with respect to any previous breach by LASER of any of the
provisions of this Agreement.
15. TERMINATION BY GTRC
GTRC may terminate this Agreement by Thirty (30) days notice in writing
to LASER on the happening of any of the following events:
(a) If LASER shall commit or allow to be committed a breach of any
of the terms and conditions on its part here in contained; or
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16
(b) If LASER makes any assignment for the benefit of its
creditors, provided, however, that this provision shall not
apply to the assignment of any rights made as collateral for
new loans; or
(c) If a receiver, liquidator or official manager is appointed
with respect to LASER indicates its consent, approval of or
acquiescence in any proceedings for the appointment of any
such receiver, liquidator or official manager; or
(d) If LASER ceases to carry on its business;
WITHOUT PREJUDICE HOWEVER to the right of GTRC to sue for and recover
any money then due and to the rights of GTRC with respect to any
previous breach by LASER of any of the provisions contained in this
Agreement.
16. SEVERABILITY
A holding that a Clause of this Agreement is invalid or unenforceable
shall not effect any other provisions of this Agreement.
17. USE OF NAMES
LASER shall not use the names of GTRC, the Georgia Institute of
Technology or any affiliate or entity in any advertisement or sales material
without the prior written consent of the entity or entities name in such
material.
18. INTERPRETATION
(a) In the interpretation of this Agreement, unless the context
otherwise requires, words importing the singular or plural
number shall be deemed to import the plural and singular
number respectively, words denoting gender shall include all
genders, and references to persons shall include corporations
or other bodies or vice versa.
(b) The headings in this Agreement are included for convenience
only and are not to be construed as forming part of the text
or as in any way affecting the interpretation of this
Agreement.
(c) Nothing herein shall be construed as forming any sort of
partnership or joint venture between GTRC and LASER. The
relationship between the parties is that of licensor and
licensee.
(d) This Agreement shall be interpreted and governed in all
respects by the laws of the State of Georgia.
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17
19. ENTIRE AGREEMENT
This Agreement embodies the entire Agreement between GTRC and LASER
respecting the subject matter hereof and may not be modified or amended except
in a writing signed by GTRC and LASER.
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18
IN WITNESS WHEREOF the parties have hereunto signed this Agreement on
the day hereinbefore referred to.
GEORGIA TECH RESEARCH LASER ATLANTA OPTICS, INC.
CORPORATION
By: /s/ J.W. Dees By: /s/ Mark A. Samuels
------------------------------------- --------------------------------
Typed Name: J.W. Dees Typed Name:
----------------------------- --------------------------
Title: Assistant Secretary Title:
---------------------------------- -------------------------------
Date: May 7, 1991 Date:
----------------------------------- --------------------------------
By: /s/ R.M. Bell
-------------------------------------
Typed Name: R.M. Bell
-----------------------------
Title: Vice President/General Manager
----------------------------------
Date: May 7, 1991
-----------------------------------
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19
FIRST AMENDMENT TO LICENSE AGREEMENT
THIS FIRST AMENDMENT TO LICENSE AGREEMENT (hereinafter referred to as
"First Amendment") is made and entered into this 19th day of October, 1993 by
and between GEORGIA TECH RESEARCH CORPORATION, a non-profit corporation
organized and existing under the laws of the State of Georgia and with offices
at the Georgia Institute of Technology, Centennial Research Building, Atlanta,
Georgia 30332-0415 (hereinafter referred to as "GTRC") and SPECTRX, INC., a
Delaware corporation and with offices at 6025 Unity Drive, Norcross, Georgia
(hereinafter referred to as "Spectrx").
W I T N E S S E T H:
WHEREAS, GTRC and Laser Atlanta Optics, Inc. (hereinafter referred to
as "Laser Atlanta") entered into a License Agreement, dated the 7th day of May,
1991, for an invention entitled "Laser Scanner for Early Cataract" (hereinafter
referred to as "Technology") which is the subject of GTRC Identification Number
1041 (hereinafter referred to as "License Agreement"). Spectrx, Inc. and Laser
Atlanta later entered into an Assignment and Bill of Sale, dated the 16th day of
January 1993, in which all of Laser Atlanta's right, title and interest in and
to the License Agreement was assigned to Spectrx.
WHEREAS, Spectrx and GTRC wish to amend the License Agreement to extend
the termination date.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and the sum of $1.00 paid by Spectrx to GTRC, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound,
Spectrx and GTRC do mutually agree to amend the License Agreement as follows:
1. Paragraph 14 of the License Agreement is hereby deleted and
the following paragraph 14 is inserted in place thereof:
"14. TERM OF LICENSE
Subject to Paragraphs 14 and 15 herein, this Agreement and the
license granted hereunder shall continue in full force and
effect until the expiration date of the last expiring Patent
covering any of the Technology licensed hereunder, provided a
Patent is issued. In the event that no Patent is issued, the
disclosure in any Patent Application shall remain a Trade
Secret and this Agreement shall continue as a license of said
Trade Secret for a period of fifteen years from the date of
execution of this Agreement. Notwithstanding the foregoing,
the obligations of the parties herein relating to
confidentiality of Trade Secrets and Confidential Information
shall survive any termination of this Agreement."
20
2. Except as amended by this First Amendment, the License
Agreement shall remain in full force and effect pursuant to
the terms and provisions thereof.
IN WITNESS WHEREOF, Spectrx and GTRC have caused this First Amendment
to be executed by their duly authorized officers on the day and year first above
written.
SPECTRX, INC. GEORGIA TECH RESEARCH
CORPORATION
By: /s/ Mark A. Samuels By: /s/ R.G. Shackelford
----------------------------- ----------------------------------------
Typed Name: Mark A. Samuels Typed Name: R.G. Shackelford
--------------------- --------------------------------
Title: President Title: Assistant Secretary
-------------------------- -------------------------------------
Date: 10/19/93 Date: 10/19/93
--------------------------- --------------------------------------
By: /s/ Michael T. Lee
----------------------------------------
Typed Name: Michael T. Lee
--------------------------------
Title: Manager, Intellectual Property Mark
-------------------------------------
Date: October 19, 1993
--------------------------------------
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21
EXHIBIT B
SUPPLY AGREEMENT
22
AGREEMENT
This Agreement dated as of _____________ (the "Effective Date"), by and
between Boehringer Mannheim Corporation, an Indiana corporation, having a
principal place of business at 9115 Hague Road, Indianapolis, Indiana 46250,
(hereinafter referred to as "BMC"), and SpectRx, Inc., 6025A Unity Drive,
Norcross Georgia, 30071, (hereinafter referred to as "SI");
WITNESSETH:
WHEREAS, BMC and its affiliates are in the business of making and
selling throughout the world diagnostics management products including blood
chemistry monitoring systems for diabetes, and
WHEREAS, SI is engaged in the business of development and manufacturing
and marketing of equipment according to specifications developed by others,
developed by itself or developed jointly with others, and
WHEREAS, BMC desires to purchase, market & sell and SI desires to
supply a non-invasive diabetes screening device that is, or will be defined in
specifications contained in Appendix A, which is attached hereto and
incorporated herein be reference.
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties agree as follows:
1.0 Definitions.
1.1 "Instrument(s)" shall mean the instrument for detecting
diabetes as described in Appendix A and known to the parties at the time of
execution of this Agreement.
1.2 "Affiliates(s)" shall mean, with respect to either party,
any corporation, partnership or other business entity that now or in the future
controls, is controlled by, or is under common control with, such party.
"Control" shall mean the direct or indirect ownership of fifty percent (50%) or
more of the voting interest in, or a fifty percent (50%) or more interest in the
income of, such corporation or other business entity, or such other relationship
as, in fact, constitutes actual control.
1.3 "Manufacturing Documentation" shall mean a package of
specifications, drawings and manufacturing instructions [including detailed
training by SI] which enable SI or a third party to manufacture the Instrument
including, as applicable, software, all software source codes in printout or
magnetic media form, software assembly, linkage and validation protocols and
Software, validation results, manufacturing specifications or the Instrument,
(service and training information and a set of quality control parameters
suitable for use in acceptance testing of the Instrument), as
23
well as all preliminary or working drafts of all such materials, and
documentation developed by SI in order to produce such materials by a Preferred
Supplier [as defined in BMC's Quality Partners Manual-- which manual shall be
forwarded by BMC to SI prior to October 1,1993] who has demonstrated achievement
in certain key capabilities as defined in said manual.
1.4 "Development Services" shall mean the redesign and
development effort by SI in so far as it is relative to manufacturing equipment,
manufacturing processes, goods and services contracted by SI, and associated
Manufacturing processes and associated Manufacturing Documentation which may be
necessary in order to bring the Instrument into commercial production.
1.5 "Date of Market Introduction" shall mean the later of (a)
the receipt and acceptance by BMC of [preproduction quantity to be determined]
Instruments meeting the specifications described in Appendix A and approved by
BMC, or (b) the sale and shipment of Instruments to an end-user by BMC.
2.0 Supply Services.
2.1 SI shall manufacture and sell the Instrument exclusively
to BMC and Affiliates for worldwide marketing and selling and at prices
established by the parties pursuant to paragraph 3.1. Nothing in this Agreement
prevent BMC from manufacturing or have manufactured, market, sell or otherwise
supply other non-invasive devices on a world-wide basis.
2.2 During the term of this Agreement SI (or a mutually
approved contract manufacturer] shall be BMC's sole and exclusive source for the
Instrument, provided that (a) SI provides an adequate and timely supply of the
Instrument to BMC in accordance with Purchase Orders issued by BMC and accepted
by SI, (b) SI agrees to maintain the quality assurance level as stated in BMC's
Quality Partners Manual and or as may be otherwise agreed to by the parties, in
writing, and (c) SI employs reasonably sound cost management practices. SI
warrants that it will apply all reasonable resources to its operation in order
to become ISO 9000 registered and attain a certification rating [as defined in
BMC's Quality Partners Manual] within twenty four [24] months of the start of
producing the Instrument for sale by BMC. SI further agrees to make available to
BMC for purchase, spare parts and or replacement / repair parts for a period of
not less than seven [7] years from end of market sales by BMC.
2.3 SI represents that it has or will have, prior to the date
of Market Introduction at its Norcross, Georgia facility-- or other
manufacturing facility as may be jointly approved by the parties-- manufacturing
capacity to produce the instrument in the following minimum annual quantities:
DATE UNITS PER ANNUM
- --------------------------------------- --------------------------------------
Market Introduction Date BMC's Annual Forecast Volumes, + 35%
One year after Market Introduction Date BMC's Annual Forecast Volumes, + 50%
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NOTE: The quantities stated herein are estimated and are the result of
a review of the current business conditions and other information available to
BMC at the time the estimate is prepared. BMC shall not be obligated to purchase
any Instruments except pursuant to purchase orders as described in Section 2.5.
2.4 In order to facilitate SI's planning of production, and to
assist SI in making certain decisions relative to inventory of long lead items,
BMC shall submit to SI a non-binding estimate of its requirements of Instruments
quarterly covering a forward period of not less than four (4) quarters. Upon
receipt of BMC's estimate, if SI determines that it has insufficient capacity to
meet the quantities stated in the estimate, it shall notify BMC within fifteen
(15) days of the date of receipt of BMC's estimate that such condition exists,
and will present recommendations regarding capacity changes to meet BMC's
estimate. BMC shall promptly review SI's notice and schedule a meeting with SI
to review the recommendations and reach agreement on a course of action.
The parties agree that a short delivery lead time and a high
degree of flexibility is very important to BMC in servicing the market in which
the Instrument will be sold. In an effort to reduce lead time, and in accordance
with production forecasts provided by BMC under this Agreement, SI agrees to
establish an inventory level at its facility [financed by BMC for only the first
twelve months of production by SI] on Instrument component parts which have long
lead times. The inventory mix and levels will be reviewed quarterly by the
parties, and the parties, by mutual agreement, may make changes to the level and
mix. The details of this activity will be negotiated by the parties and will be
contained in the blanket order for the first year's supply of Instruments. Also
included will be the details of SI's refunding plan employing price discounts on
subsequent purchases of Instruments for said financing by BMC.
2.5 During the term of this Agreement, BMC shall issue
purchase orders, containing specific instructions concerning quantity, delivery
schedule, invoicing, etc., from time to time for the supply of Instruments. The
parties agree that this Agreement will supersede all conflicting terms and
conditions contained in or attached to said purchase orders.
The parties recognize the dynamic nature of the marketplace
and customer demand. Certain changes to established purchase orders may be
required from time to time and the parties shall [recognizing that time and
flexibility are paramount to business success] negotiate said changes in good
faith. SI recognizes and will use its best efforts to meet the customer demand
changes as communicated by BMC. Notwithstanding the foregoing, BMC may request
and SI shall have the ability to respond to changes in existing forecast as
follows:
Current month +30%
30-60 days +60%
In the event a change in a purchase order causes a significant increase
or decrease in SI's costs or time for performance, the parties agree to
negotiate in good faith to reach an agreement on an equitable adjustment in the
price and time for performance and this Agreement [subsequent purchase
-3-
25
order(s)] shall be supplemented in writing accordingly. BMC agrees to be
responsible for all components purchased by SI in response to said purchase
orders.
2.6 During the term of this Agreement, BMC agrees to purchase
the Instrument exclusively from SI. SI agrees to provide the necessary
manufacturing capacity to meet BMC's annual requirements. Each month, BMC will
provide a non-binding twelve month rolling forecast to assist SI in establishing
and maintaining adequate stocking levels and/or to apply effective production
control techniques. Shipments by SI will be authorized only by specific Purchase
Order against this Agreement issued by BMC and containing [among other items]
the following:
1. Purchase order number and date.
2. Quantity, Price and delivery instructions
3. FOB point and mode of shipment.
4. Name and address of the person representing
Seller and Purchaser.
Prior to releasing the Instrument for production, BMC shall have the
right to purchase (at a price negotiated by the parties) from SI up to [ ]
pre-production units in order to approve the quality thereof, which approval
shall not be unreasonably withheld.
2.7 After BMC has notified SI in writing that the
pre-production Instruments manufactured by SI are approved, the Instrument,
components, manufacturing process, documentation, sources of supply to SI, etc.
shall be frozen. SI shall obtain the written approval of BMC [which approval
shall not be unreasonably withheld] prior to making any changes, substitutions,
or modifications whatsoever to the Instrument, components, manufacturing
process, or Manufacturing Documentation and shall provide notice and perform
activities in accordance with Change Notification Protocol which is attached as
Appendix "B".
2.8 The Instruments shall be supplied and labeled in
accordance with BMC-approved packaging specifications. BMC shall prepare the
artwork necessary for printing the labels and shall deliver it to SI at mutually
agreed upon time intervals prior to the scheduled delivery from SI of the first
shipment ordered by BMC. BMC agrees to reasonably recognize SI's efforts with
respect to producing the instrument by placing verbiage such as : "Developed by
SpectRx, Inc for Boehringer Mannheim Corporation by". BMC at its sole discretion
shall set the criteria for said labeling.
3.0 Price.
3.1 The parties to this Agreement because the Instrument has
yet to be designed and approved cannot accurately calculate the price of the
Instrument. Until said design / requirements specification and the manufacturing
process have been identified and agreed to, the parties at this point in time
agree on a formula for calculating the Instrument price.
The price for the Instrument will be established in accordance
with Appendix "C", SI & BMC agree that the volume of Instruments purchased by
BMC in a given year influences the
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26
manufacturing cost. Instead defining minimum purchase volumes, both parties
agree, that using the formula for calculating the price [Appendix "C"], BMC
intends to generate sales of the Instrument in sufficient quantity to generate
over a [*] of sales into the market. This applies assuming regular manufacture
by SI and does not include/compensate SI relevant problems, rework, returns,
etc. If BMC fails to meet this requirement, it can either a] pay the difference
between the minimum and what was purchased, or b] permit SI to manufacture and
sell the Instrument to third parties.
3.2 SI, as long as it is the manufacturer of the device, and
then successor manufacturers, whether they be BMC or other parties arranged for
by BMC pursuant to the Manufacturing License provided for in the Development and
License Agreement, will pay, as a cost of manufacturing, to GTRC the license fee
provided for in SI's patent license with GTRC.
3.3 In addition, where an improvement is generated and
implemented which provides a cost reduction, the savings will be split as
follows:
Party generating the idea/improvement = 60% of annual
savings;
balance to other
party
Both parties generate the idea/improvement = Split evenly
between the
parties.
3.4 Terms of payment shall be Net 30 except that during the
first year of manufacture of the Instruments, BMC agree to pay on a Net Cash
basis upon receipt and approval of each shipment.
4. Inspection and Quality Control.
4.1 Each shipment of Instruments to BMC shall be accompanied
by a certificate of SI's Quality Control Department indicating that the
Instruments, identified by their serial numbers, contained in the shipment have
passed the quality control parameters developed by SI, agreed to in writing by
BMC and contained in the Manufacturing Documentation. BMC reserves the right --
at such frequency that BMC feels appropriate and upon providing SI with
reasonable notice-- to visit SI's facility [or other third party manufacturer of
the Instrument] for the purpose of confirming that SI's quality system and
process is in conformance to agreed upon parameters.
SI shall keep complete reproducible records of all data
pertaining to SI's performance under this Agreement and as it relates to
individual Instruments for the life of the Instrument. BMC agrees to implement
its current warranty card tracking system for the Instruments sold by BMC
pursuant to this Agreement.
4.2 Within one (1) month after receipt of Instruments, BMC may
conduct its own acceptance inspection thereof in which random samples of the
Instruments will be compared with the specifications and Quality Control
Procedures, which are a part of the Manufacturing Documentation
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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27
and shall inform SI of the results of such inspection. In the event such
inspection by BMC reveals unacceptable variances from the Quality Control
Procedures in the Manufacturing Documentation, BMC shall promptly notify SI
(which notice shall specify the manner in which the defective Instruments fail
to meet the specifications), and SI shall have thirty (30) days in which to
verify the variances. Upon the earlier of (a) verification by SI or (b) the
expiration of thirty (30) days from the date of said notice, BMC shall have the
right to refuse acceptance of the defective or deficient lots of Instruments and
to require, at the option of SI, that said lot(s) be immediately replaced or
corrected free of charge. SI reserves the right to cure the defect at BMC or
request return of the Instrument to SI facility. SI maintains an option to - at
its own expense - make a one hundred percent (100%) inspection of the lots with
respect to the defective function. However said activity shall not delay the
shipment of replacement Instruments to BMC or place BMC in a position of not
being capable responding to the demand its customers. If SI's inspection results
in a finding that the Instruments are not defective or deficient, SI shall
immediately notify BMC of the same and shall resubmit the lots for acceptance.
The remedies of this paragraph accruing to BMC prior to acceptance of
Instruments shall be in lieu of rights accruing under Article 5 (WARRANTIES),
which shall accrue to BMC after acceptance of Instruments. Failure of BMC to
complete the acceptance inspection with respect to a lot within the one (1)
month period shall constitute acceptance by BMC of the lot.
5.0 Warranties.
5.1 SI warrants to BMC that all Instruments to be supplied
hereunder will upon shipment meet the agreed upon specifications therefor and
will be free from defects in materials and workmanship, and will be properly
packed and labeled; provided, however, in respect of defects in materials and
workmanship, and in respect of packaging and labeling, should a matter be
covered by the specifications, the specifications will control. This warranty
shall apply for a period of twenty-four (24) months after the date of shipment
by SI, or twelve [12] months from date of installation with end user, whichever
occurs first SI, shall satisfy this warranty requirement by replacing [at no
charge to BMC] each defective instrument or parts returned to it prior to the
expiration of the warranty period. The parties have the option to establish a
loaner pool of Instruments [details of which to be agreed upon] Appendix "E"
designed to provide BMC's customer with an Instrument while warranty services
are performed on Customer's Instrument SI shall not be liable for loss or
damages arising out of misuse of the Instrument by BMC, its agents or customers.
5.2 SI shall conduct a failure analysis as required by U.S.
Food and Drug Administration ("FDA") regulations, i.e. 21 CFR parts 820.115 and
820.198 (b) with respect to defective Instruments returned to it under paragraph
5.1. Such analysis shall be conducted promptly upon receipt by SI of the subject
Instruments and a results report shall be returned to BMC no later than
forty-five (45) days after SI's receipt of the defective Instrument(s).
5.3 SI shall be liable for and shall indemnify, defend and
hold BMC harmless against any and all claims, suits, proceedings, recoveries,
and damages, including but not limited to costs and expenses of total or partial
Instrument recall, whether initiated voluntarily by BMC and agreed to by SI
[said agreement shall not be unreasonably withheld], or at the direction of the
FDA, (collectively "Claims") arising out of, based on, or caused by defects in
material, workmanship, but in
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28
no event shall [i] SI be liable for warranty product design or be required to
indemnify BMC for or hold it harmless from any claims arising in whole or in
part from or based on, or caused by defects or deficiencies in any features of
the Instrument designed by BMC or its affiliates, any component of the
Instrument designed by BMC or the literature supplied by BMC for use with the
Instrument, or claims made by BMC or its agents, [ii] SI be liable to BMC or any
person for any loss or damage to the extent caused by any misuse of the
Instrument or reliance upon the Instrument in respect of the issuance of any
medical opinion, [iii] SI be liable to BMC or any person for any implied
warranties for merchantability of fitness for a particular purpose or any
express warranties other than those provided for in this Agreement. ["Excluded
Claims"]. BMC agrees to incorporate in its documentation to its customers that
its warranty for product liability will not exceed the repair or replacement of
the Instrument - or the return of the price thereof, SI shall promptly notify
BMC of any situation which may affect a decision to recall the Instrument,
however, BMC shall have the final authority to institute a voluntary recall,
which authority shall not be exercised unreasonably. Notwithstanding the
foregoing, in no event shall SI be liable to BMC or any other person for any
incidental or consequential damages arising from or in any way connected with
the purchase or use of product
Except for Excluded Claims [as defined herein], SI shall
indemnify, defend and hold BMC harmless from any and all claims, demands,
actions and causes of action against BMC in connection with any and all
injuries, damages or liabilities of any kind whatsoever directly or indirectly
attributed to manufacture of the Instrument or component deficiencies or
defects. This indemnification obligation shall include, without limiting the
generality of the foregoing reasonable attorney's fees, and other costs or
expenses incurred in connection with the defense or settlement of any and all
such claims, demands, actions or causes of actions.
5.4 SI will indemnify and hold BMC harmless from and against
any claims, actions or demands (including, without limitation, attorney's fees,
interest and penalties) based upon the alleged infringement of any patent or
other intellectual property rights now or hereafter existing, provided, however
SI shall have no such obligation with respect to Excluded Claims. SI shall have
the right to defend at its expense any suits other than Excluded Claims alleging
that the manufacturing process infringes any patent, copyright or other
intellectual property rights. If action is commenced or a claim is made against
BMC with respect to alleged infringement, BMC shall, if a claim in respect
thereof is to be made against SI under this paragraph 5.4, notify SI in writing
of the commencement thereof, in which case (a) SI shall be entitled to
participate therein in the name of BMC and shall be entitled to assume the
defense thereof with counsel who shall be reasonably satisfactory to BMC, and
(b) BMC shall on request of SI cooperate in the defense of such action. SI shall
notify BMC promptly in writing of its intention not to defend a claimed
infringement and BMC may at its option and expense proceed to defend said
infringement. Further, in response to notification by BMC to SI that said claim
or action is commence, SI shall promptly initiate efforts to:
1] secure permission to continue the manufacture and
supply of Instruments to BMC, or
2] provide an Instrument which is non-infringing yet
still meets the agreed upon BMC requirement as
contained in this Agreement, or
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3] provide BMC with other suitable alternatives which
permits BMC to sustain product support and supply in
the marketplace.
5.5 BMC will indemnify and hold SI harmless from any and all
claims, demands, actions or causes of action against SI, in connection with any
and all injuries, losses damages or liability of any kind whatsoever directly or
indirectly attributed to features of the Instrument designed according to BMC's
or its Affiliates' instructions or directions or any omission or misstatement in
the literature supplied by BMC for use with the Instrument. This indemnification
obligation shall include, without limiting the generality of the foregoing,
reasonable attorney's fees and other costs or expenses incurred in connection
with the defense or settlement of any such claim, demand, actions, or causes of
action. Notwithstanding the foregoing, in no event shall BMC be liable to SI or
any other person for any incidental or consequential damages arising from or in
any way connected with the purchase or use of product.
5.6 BMC & SI agree in conjunction with their obligations under
this Agreement to avoid knowingly designing and/or developing any item that
infringes any patent of a third party. If either party becomes aware of any such
infringement during the course of performing hereunder, it will notify the other
party promptly in writing.
6. Confidentiality Representation Concerning Employees.
6.1 All information identified as confidential and received by
one party from the other under this Agreement shall be subject to the
obligations of confidentiality set out in the Development and License Agreement
between SpectRx, Inc. and BMC.
It is understood that disclosure of any information
by one party to the other under this Agreement shall in no way be considered as
a grant of any right or license to the receiving party to use such information
except for assistance in developing the Device and the evaluation of the Device
undertaken by BMC during the term of this option and any extension hereof.
6.2 No news release, advertisement, public announcement,
denial or confirmation of same, of any kind regarding any part of the subject
matter of this agreement shall be made by one party without the prior written
approval of the other party.
6.3 Upon termination or expiration of this Agreement, the
parties agree to promptly return all written or descriptive matter, including
but not limited to drawings, blueprints, descriptions, or other papers,
documents, tapes, or any other media which contains such Confidential
Information which is the property of and or proprietary to the other party. In
the event of a loss of any item containing such Confidential Information, the
party claiming said loss will promptly notify the other party in writing.
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30
7. Employees.
7.1 Personnel assigned by SI to perform services under this
Agreement will be employees of SI and will not for any purpose be considered
employees or agents of BMC. SI assumes full responsibility for the actions of
such personnel while performing services hereunder and shall be solely
responsible for their supervision, daily direction and control, payment of
salary (including withholding of income taxes and social security), worker's
compensation, disability benefits and the like.
7.2 Personnel assigned by BMC to perform services under this
Agreement will be employees of BMC and will not for any purpose be considered
employees or agents of SI. BMC assumes full responsibility for the actions of
such personnel while performing services under this agreement as well as
promotion, distribution and any sales activities with respect to the Instrument
and BMC shall be solely responsible for their daily supervision, daily direction
and control, payment of salary (including withholding of income taxes and social
security), worker's compensation, disability benefits and the like. Both SI and
BMC agree, during the term of this Agreement and for a period of two (2) years
after the termination of the Agreement, not to engage in any activity whether
express or implied which would reasonably be interpreted as soliciting or
employment specific personnel of the other party. Nothing in this provision
prevents either party from placing an employment ad in general business
publications or local newspapers which are or may become available in the
geographic area where either party has a facility.
8. Changes.
8.1 Either party may request, in writing, changes to the work
scope or to the manufacturing or design specifications for the Instrument. The
party receiving the request for the change shall submit within a reasonable time
a report to the other party setting forth its best judgment as to the probable
effect on the supply services and their costs. Neither party shall proceed with
any changes without the prior written consent of the other.
8.2 Cost reduction activity: The parties agree to adopt and
implement TOM and continuous improvement tenets designed to reduce costs, lead
times and improve response times. The parties agree to cooperate in an ongoing
effort designed to reduce the total cost of the Instrument. Such efforts include
but are not limited to: supply route efficiencies, cycle time reduction,
economies of scale, process improvements (properly approved by the parties),
etc. Action may be initiated by either party, but cannot be implemented without
the approval of the other party. The extent to which cost reduction benefits are
to be shared by the parties shall be the result of good faith negotiations
between the parties. Further, SI shall implement a continuous improvement
process which will enable SI to eliminate waste and reduce cost.
9.0 Term, Termination and Cancellation.
9.1 Unless terminated pursuant to the terms hereof, the term
of this Agreement shall be coincident with the term of the Development and
License Agreement between BMC and SI
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dated as of December, 1994. Upon termination of this Agreement, the status of
all purchase orders outstanding at the date of termination shall be reviewed and
the parties shall resolve any termination costs through good faith negotiations.
BMC shall purchase from SI, at SI's cost, any components purchased by SI in
response to purchase order releases issued by BMC if SI is unable to use such
components. The parties further agree that in the event of termination of this
Agreement, all confidential information, documents, materials, tools, etc. which
are the property of either party shall be promptly returned to such party.
9.2 Either party may terminate this Agreement by written
notice in the event (i) the other party materially breaches this Agreement and
does not cure such breach within thirty (30) days of written demand for cure;
"material breach" includes, but is not limited to, a breach of covenants
contained in Section 2.2 of this Agreement, or (ii) by written notice upon the
liquidation or bankruptcy of, or an assignment for the benefits of creditors of,
or a declaration of insolvency by, the other party. Termination of this
Agreement pursuant to this Section 9.2 shall not constitute a termination of the
Development and License Agreement nor of the Marketing License granted
thereunder. In the event of termination of this Agreement by BMC pursuant to
this Section, BMC shall be deemed to have acquired the Manufacturing License
described in the Development and License Agreement effective upon such
termination.
9.3 Notwithstanding the foregoing and as part of risk
management practices, SI shall place a complete and updated set of Manufacturing
Documentation and know-how in escrow in accordance with the provisions of
Appendix "F". Said escrowed documentation and know-how shall be sufficient such
as to maintain BMC as an alternative source of Instruments capable of supplying
the Instruments to meet BMC's needs.
In the event this Agreement is terminated and BMC retains the
Manufacturing License, or in the event SI cannot manufacture for ninety [90]
days because of an event of force majeure, BMC shall have full, complete and
unrestricted access to [including physical possession of] the said Manufacturing
Documentation residing in escrow; all in accordance with the terms and
conditions of the escrow documentation. SI agrees to provide all reasonable
resources to render BMC fully qualified in all respects to supply Instruments
with the same specifications, and manufacturing criteria and under the same
regulatory and quality standards as if manufactured by SI. BMC will receive from
SI a maximum of five hundred [500] hours of training and BMC will supply
reasonably competent manufacturing and technical personnel who will be trained
by SI to support production of the Instrument.
10.0 General Provisions.
10.1 The rights and obligations of Articles 5 (WARRANTIES),
and 10 (GENERAL PROVISIONS) shall survive any termination of this Agreement and
shall bind the parties and their legal representatives, successors and assigns.
Neither party may assign this Agreement (except to an Affiliate) without the
consent of the other, which consent shall not be unreasonably withheld.
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32
10.2 SI and BMC shall do all things necessary to comply with
all applicable Federal, State and local laws, regulations and ordinances,
including but not limited to the Regulations of the United States Department of
Commerce relating to the export of Technical Data, insofar as they relate to the
services to be performed under this Agreement. BMC will conduct clinicals and
submit applications for FDA and other national regulatory approvals which are
required to market and sell the Instruments worldwide. SI shall obtain any
required government documents and approvals in the event of SI export of
Instruments manufactured for BMC affiliates hereunder and for any technical data
disclosed to SI by BMC. SI will not be the exporter of record for exports to BMC
customers. SI agrees to maintain or contract with [as provided herein] an FDA
approved facility which is operated in compliance with Good Manufacturing
Practices, to be found in 21 CFR 820. SI will provide documentation that such
facility complies with FDA published guidelines (as defined in 21 CFR 10.90b)
and upon request by BMC demonstrate compliance.
10.3 Each of the parties hereto shall be excused from the
performance of its obligations hereunder in the event such performance is
prevented by force majeure and such excuse shall continue as long as the
condition constituting such force majeure continues, plus fifteen (15) days
after the termination of such condition. For purposes of this Agreement, force
majeure is defined as follows: Causes beyond the control of SI or BMC including,
without limitation, regulations, laws or acts of any government, delays by
exporting agency, destruction of production facilities or material by fire, or
failure of public utilities or common carriers or embargo.
10.4 This Agreement, its appendices and the Development and
License Agreement embody the entire understanding and agreement among the
parties and supersede all previous negotiations, representations, writings and
agreements, written or oral, with respect to the development and sale of the
Instrument. This Agreement shall in no way preclude SI or BMC (or any of their
affiliates) from entering into any agreements in the future which are not
specifically limited or precluded hereunder.
10.5 All notices, demands and communications provided for in
this Agreement shall be in writing and shall be deemed effective by a party upon
hand delivery or when mailed, postage prepaid, by registered or certified mail,
to the other party or its copy designee at the respective addresses listed
below, unless and until such address is changed by giving written notice thereof
in like manner.
To BMC: Boehringer Mannheim Corporation
9115 Hague Road
Indianapolis, IN 46250
Attn.: President, Diabetes Care Division
To SI: SpectRx, Inc.
6025A Unity Drive
Norcross, Georgia 30071
Attn.: Contracts Administration*
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10.6 This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia. Dispute Resolution. (a) The
parties shall attempt in good faith to resolve any dispute arising out of or
relating to this agreement promptly by negotiations between representatives who
have authority to settle the controversy. Either party may give the other party
written notice of any dispute not resolved in the normal course of business.
Within thirty days after delivery of such notice, representatives of both
parties shall meet at a mutually acceptable time and place, and thereafter as
often as they reasonably deem necessary, to exchange relevant information and to
attempt to resolve the dispute. If the matter has not been resolved within sixty
days of the disputing party's notice, or if the parties fail to meet within
thirty days, either party may initiate mediation of the controversy or claim as
provided in clause (b) of this section. All negotiations pursuant to this clause
are confidential and shall be treated as compromise and settlement negotiations
for purposes of the Federal Rules of Evidence and state rules of evidence. If
the dispute has not been resolved by negotiation, the parties shall endeavor to
settle the dispute by mediation, non-binding arbitration, or other appropriate
means for a period of at least sixty days before resorting to litigation. The
procedures specified in this Section 10.6 must be followed before either party
may seek judicial relief; provided, however, that a party may seek a preliminary
injunction or other provisional judicial relief if in its judgment such action
is necessary to avoid irreparable damage or to preserve the status quo. Despite
such action, the parties will continue to participate in good faith in the
procedures specified in this Section 10.6. All applicable statutes of limitation
and defenses based upon the passage of time shall be tolled while the procedures
specified in this Section 10.6 are pending, and the parties shall take such
action, if any, required to effectuate such tolling.
10.7 In the case of conflict between the general terms and
conditions of a BMC issued purchase order, or of an SI acceptance of a BMC
purchase order, and this Agreement the terms and conditions of this Agreement
shall take precedence unless otherwise agreed in writing by the parties.
10.8 SI shall make its records and facilities involved in the
performance of this Agreement available to BMC personnel at reasonable and
mutually convenient times during normal business hours for audit purposes and
shall take any reasonable actions required by BMC to facilitate such audit.
10.9 No modification, amendment, extension or waiver of this
Agreement or any provision hereof shall be binding or effective unless in
writing and signed by duly authorized representative of each of the parties.
10.10 SI agrees that, during the term of the Agreement, it
will not enter into any agreement to develop or manufacture a non-invasive
diabetes screening instrument using the same or similar technology as employed
in the Instrument for measuring and collecting data on glucose in human blood
other than with BMC Affiliate(s).
Further, SI represents and warrants that it is under no
obligation, nor will it assume any obligation, which would in any way interfere
with or be inconsistent with or present a conflict or interest with the services
to be furnished by SI under this Agreement.
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10.11 This Agreement shall be construed according to the laws
of the State of Georgia. Venue for any litigation under this Agreement shall be
state court, Gwinnett County, Georgia.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives.
BOEHRINGER MANNHEIM CORPORATION SpectRx, INC.
- ----------------------------------------- --------------------------
Robert J. Daley, C.P.M.
Head; Commercial Contracts/Negotiations
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APPENDIX "A"
1. Non Invasive Diabetes Screening Instruments.
The instrument will have the ability to detect diabetes and is
intended to be used for screening for Diabetes. The SI diabetes screening
instrument will present data useful for screening in a qualitative manner. The
presentation of data will not compromise the quantitative data presentation of
the SI instrument. The SI screening instrument will not be used, nor can the
data be presented in such a manner that it could be used to evaluate long-term
glucose control in a manner similar to the HbAlc test that the SI monitoring
instrument is designed to replace.
2. Product Specifications.
Details to follow
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APPENDIX "B"
CHANGE NOTIFICATION PROTOCOL
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APPENDIX "C"
PRICING:
In accordance with the provisions of Section 3.0 of this Agreement, the
parties agree that the unit price for the Instrument shall be fixed for twelve
[12] month periods and shall be calculated using the below indicated tabulation.
(1994 Dollars)
COST OF GOODS SOLD GROSS MARGIN UNIT PRICE
------------------------ ------------------ ----------------
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
If the Cost of Goods Sold exceeds [*], then SI & BMC will renegotiate
the Gross Margins.
Price for the Instrument shall not exceed [__________]**
** estimated until the final specifications and manufacturing
process/costs are defined.
The Cost of Goods Sold figures provided for above, and in turn the
corresponding Unit Prices, are subject to adjustment at the end of each twelve
month period (referred to above) for increases in the Producers Price Index
wherein the Cost of Goods Sold, as previously adjusted in accordance herewith,
shall be increased on the date of each such adjustment by an amount equal to the
product obtained by multiplying the figures provided for in the foregoing
tabulation for Cost of Goods Sold by the percentage increase, if any, in the
then applicable Producers Price Index from the Producers Price Index applicable
at the commencement of such twelve month period. "Producers Price Index" with
respect to a particular date means the most recently published Producers Price
Index, by the United States Department of Labor, Bureau of Labor Statistics.
Should publication of such index cease, such term shall mean such alternative
index as the parties shall reasonably determine most closely approximates said
Producers Price Index.
[*] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
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BOEHRINGER
MANNHEIM
Diabetes Care
CONTROL PROCEDURE
DESCRIPTION
APPROVED: CN 17204 Diabetes Care Manufacturing
08/16/94 Partner Notification/Approval Procedure
SUPERSEDES: CN 16458 CONTROL PROCEDURE 348
03/05/93
MANUFACTURING PARTNER NOTIFICATION/APPROVAL PROCESS
Purpose The purpose of this procedure is to establish the methods and
requirements for communication of product, process, or
precedural changes between BM Diabetes Care and the
manufacturing partners, whether the change is initiated by
Diabetes Care or the manufacturing partner
Scope This procedure covers the following product categories:
- licensed products from BM GmbH,
- licensed products manufacturing for BM affiliates,
- finished and semi-finished products developed and
manufactured by an external organization.
Only products which are licensed or contracted from external
sources are covered in this procedure.
Change Types Changes are designated as either major or minor changes
according to the associated matrix listed in this procedure.
NOTE: Major changes to the process or product configuration
are subject to joint approval prior to implementation. Minor
changes may be implemented upon notification without joint
approval. The site originating the change has the authority to
designate a change as major or minor. This decision may be
challenged upon notification to the receiving partner.
Continued on next page
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39
MANUFACTURING PARTNER NOTIFICATION/APPROVAL PROCESS, Continued
Definitions This table defines terms used throughout this procedure.
----------------------------------------------------------------------------------
TERM DEFINITION
----------------------------------------------------------------------------------
Manufacturing Those suppliers who have either licensed a product
Partners to BM for manufacture and sale, or manufactures a
product for BM where BM has designed or owns the
design of the product. This also includes those
manufacturers who have designed and manufactured OEM
products for BM distribution.
----------------------------------------------------------------------------------
Minor change Corrections to process deviations to restore original
process specifications or enhancements to process flow
----------------------------------------------------------------------------------
Major change Changes which potentially affect form, fit, function,
or labeling of the product
----------------------------------------------------------------------------------
LICENSED OR STRATEGICALLY CRITICAL PRODUCTS
PRODUCT EXAMPLE The following is an example of a licensed or
strategically critical product to be used as an aid
in understanding the major/minor designation:
- Chemstrip bG(R): Diabetes Care licenses
manufacturing rights for the product from
Boehringer Mannheim GmbH, and Corange
International performs the final processing
and packaging of the product from Diabetes
Care-sub-assemblies.
Continued on next page
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MANUFACTURING PARTNER NOTIFICATION/APPROVAL PROCESS, Continued
LICENSED OR STRATEGICALLY CRITICAL PRODUCTS, CONTINUED
GUIDELINE MATRIX Following are examples of major/minor designations
for types of process changes:
bG MANUFACTURING AGREEMENT MATRIX
--------------------------------------------------------------------------------
PROCESS-RELATED CHANGE BM TO CI TO
BM GMBH BM
--------------------------------------------------------------------------------
1. Compounding
--------------------------------------------------------------------------------
a. Mixing time/speed Minor Minor
--------------------------------------------------------------------------------
b. CO2 blanket Minor Minor
--------------------------------------------------------------------------------
c. Centrifugation Minor Minor
--------------------------------------------------------------------------------
d. Filtration Minor Minor
--------------------------------------------------------------------------------
e. Equipment modification/repairs Minor Minor
--------------------------------------------------------------------------------
2. Coating
--------------------------------------------------------------------------------
a. Compounding start/coating end time Minor Minor
--------------------------------------------------------------------------------
b. Coating thickness Major Major
--------------------------------------------------------------------------------
c. Blade change/refinishing Minor Minor
--------------------------------------------------------------------------------
d. Equipment modification/repairs Minor Minor
--------------------------------------------------------------------------------
3. Drying
--------------------------------------------------------------------------------
a. Web speed Major Major
--------------------------------------------------------------------------------
b. Drying temperature Major Major
--------------------------------------------------------------------------------
c. Air flow/exhaust Major Major
--------------------------------------------------------------------------------
d. Room environment Minor Minor
--------------------------------------------------------------------------------
e. Equipment modification/repairs Minor Minor
--------------------------------------------------------------------------------
4. Slitting
--------------------------------------------------------------------------------
a. Time after coating/drying Minor Minor
--------------------------------------------------------------------------------
b. Room environment Minor Minor
--------------------------------------------------------------------------------
c. Storage of rolls (packaging and time) Minor Minor
--------------------------------------------------------------------------------
d. Equipment modification/repairs Minor Minor
--------------------------------------------------------------------------------
5. Sealing
--------------------------------------------------------------------------------
a. Temperature Minor Minor
--------------------------------------------------------------------------------
b. Pressure Minor Minor
--------------------------------------------------------------------------------
c. Room environment Minor Minor
--------------------------------------------------------------------------------
d. Storage of rolls (packaging and time) Minor Minor
--------------------------------------------------------------------------------
e. Equipment modifications/repairs Minor Minor
--------------------------------------------------------------------------------
6. Cutting
--------------------------------------------------------------------------------
a. Aging time Minor Minor
--------------------------------------------------------------------------------
b. Room environment Minor Minor
--------------------------------------------------------------------------------
c. Equipment modifications/repairs Minor Minor
--------------------------------------------------------------------------------
Continued on next page
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MANUFACTURING PARTNER NOTIFICATION/APPROVAL PROCESS, Continued
LICENSED OR STRATEGICALLY CRITICAL PRODUCTS, continued
bG MANUFACTURING AGREEMENT MATRIX
--------------------------------------------------------------------------------
BM TO CI TO
FORMULATION-RELATED CHANGE BM GMBH BM
---------------------------------------------------------------------------------
1. Alternate raw material suppliers Minor Minor
(chemical/non-chemical)
--------------------------------------------------------------------------------
2. Raw materials additions/deletions Major Major
--------------------------------------------------------------------------------
3. Raw materials concentrations (out of Major Major
specification)
--------------------------------------------------------------------------------
4. Raw material specification change Major Major
--------------------------------------------------------------------------------
PRIMARY PACKAGING
--------------------------------------------------------------------------------
1. Primary Packaging Major Major
--------------------------------------------------------------------------------
SPECIFICATION-RELATED CHANGE
--------------------------------------------------------------------------------
1. Raw material Minor Minor
--------------------------------------------------------------------------------
2. In-process Minor Minor
--------------------------------------------------------------------------------
3. Final (vials, stoppers, bar code) Major Major
--------------------------------------------------------------------------------
4. Artwork (final packaging) Minor Major
--------------------------------------------------------------------------------
CLEANING OF PRODUCT CONTACT SURFACES/AREAS
--------------------------------------------------------------------------------
1. Compounding Minor Minor
--------------------------------------------------------------------------------
2. Coating Minor Minor
--------------------------------------------------------------------------------
3. Drying Minor Minor
--------------------------------------------------------------------------------
4. Slitting Minor Minor
--------------------------------------------------------------------------------
5. Sealing Minor Minor
--------------------------------------------------------------------------------
6. Cutting Minor Minor
--------------------------------------------------------------------------------
CODE ASSIGNMENT CHANGES
--------------------------------------------------------------------------------
1. Code Assignment Changes Minor Major
--------------------------------------------------------------------------------
Note: Products manufactured for BM affiliates should
be handled as those above.
PRODUCTS MANUFACTURED FOR BOEHRINGER MANNHEIM
PRODUCT EXAMPLE Examples of products which are designed or owned by
Boehringer Mannheim are:
- Products designed by R&D,
- Products designed jointly by R&D and an external
supplier under contract or
- Products designed by an external contract supplier
for sale by Boehringer Mannheim.
Continued on next page
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MANUFACTURING PARTNER NOTIFICATION/APPROVAL PROCESS, Continued
PRODUCTS MANUFACTURED FOR BOEHRINGER MANNHEIM, continued
MATRIX GUIDELINE The following matrix is used to aid in determining
whether a proposed change should be designated as
major or minor.
TYPE OF CHANGE CLASSIFICATION EXAMPLES
-----------------------------------------------------------------------------------------
Any change to existing Minor 1. Any change in
product where design, manufacturing
labeling, performance, procedures to enhance
function reliability, manufacturability where
appearance, formulation, or the stated criteria are not
configuration remain affected (e.g., process
unchanged or where the sequencing)
change is to implement a
previously approved revision
which has been formally
approved by BM
- Process validation may be
required
-----------------------------------------------------------------------------------------
Any change affecting form, Major 1. Component or circuit
fit, function, or labeling modifications
where the change could
possibly affect the 2. Labeling or packaging
appearance or performance changes
of the product
3. Case modifications
- BM evaluation is required
4. Change in consumable
After BM approval has been materials used during
obtained, the date of manufacturing (e.g.,
implementation and the solder paste, flux,
initial identifying criteria cleaning solvents, etc.)
(e.g., lot or serial number)
must be provided to BM for
effectiveness monitoring
-----------------------------------------------------------------------------------------
Continued on next page
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MANUFACTURING PARTNER NOTIFICATION/APPROVAL PROCESS, Continued
PRODUCTS MANUFACTURED FOR BOEHRINGER MANNHEIM, continued
PROCESS The following tables define the areas responsible for
RESPONSIBILITIES specific activities concerning approval and
notification between BM Diabetes Care and the
Manufacturing Partner.
MANUFACTURING PARTNER-ORIGINATED CHANGE
-------------------------------------------------------------------------------------
DEPARTMENT/ RESPONSIBILITY
INDIVIDUAL
-------------------------------------------------------------------------------------
Designated department 1. Originates change request and designates as
(Partner) major/minor.
2. Obtains internal approval.
3. Forwards documentation to designated BM
authority.
-------------------------------------------------------------------------------------
Designated authority 1. Forwards change request to Supplier Quality
(BM) Engineering for review and approval.
-------------------------------------------------------------------------------------
Supplier Quality 1. Receives partners' change request and reviews
Engineering (BM) major/minor designation.
2. Processes for review and approval/rejection.
-------------------------------------------------------------------------------------
Supplier Quality 1. Notifies partner of approval when formal Change
Engineering (BM) Notice is not required.
2. Initiates formal Change Notice where appropriate.
-------------------------------------------------------------------------------------
Quality Documentation 1. Obtains CN approvals.
(BM) 2. Notifies manufacturing partner as
appropriate and BM Supply Coordination Team
of approved change for implementation.
-------------------------------------------------------------------------------------
Designated authority 1. Receives/implements change.
(Partner)
-------------------------------------------------------------------------------------
Continued on next page
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MANUFACTURING PARTNER NOTIFICATION/APPROVAL PROCESS, Continued
PROCESS BM-ORIGINATED CHANGE
RESPONSIBILITIES,
continued
---------------------------------------------------------------------------------
DEPARTMENT/ RESPONSIBILITY
INDIVIDUAL
---------------------------------------------------------------------------------
Originator(BM) 1. Obtains approval signature from
manufacturing partner on cross-functional
review, DCN, or pECN copy.
2. Assigns major/minor designation.
---------------------------------------------------------------------------------
Designated authority 1. Reviews and approves/rejects change and
(Partner) returns to BM originator.
---------------------------------------------------------------------------------
Originator (BM) 1. Prepares Change Notice documentation and
forwards to Quality Documentation for
processing.
---------------------------------------------------------------------------------
Quality Documentation 1. Reviews major/minor designation.
(BM) 2. Obtains CN approvals.
3. Notifies manufacturing partner as applicable
and BM Supply Coordination Team of approved
change for implementation.
---------------------------------------------------------------------------------
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