EXHIBIT 10.3
AMENDMENT NUMBER THREE AND ASSIGNMENT OF
RESEARCH, DEVELOPMENT AND EXPERIMENTAL COST SHARING AGREEMENT
This AMENDMENT NUMBER THREE AND ASSIGNMENT OF RESEARCH, DEVELOPMENT AND
EXPERIMENTAL COST SHARING AGREEMENT, dated as of August 27, 2002 (the
"Amendment"), is entered into by and among VISX, Incorporated, a Delaware
corporation ("VISX"), Medjet Inc., a Delaware corporation ("Medjet"), and VISX,
a Cayman corporation ("Affiliate").
BACKGROUND
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A. VISX and Medjet are parties to that certain Research, Development
and Experimental Cost Sharing Agreement, dated as of August 17, 2001, as amended
to date (the "R&D Agreement"). Capitalized terms used herein but not defined
shall have the meanings set forth in the R&D Agreement.
B. Pursuant to Section 1 of the R&D Agreement, VISX has provided
certain funding to Medjet in order to support Medjet's R&D Activities.
C. Pursuant to Section 4 of the R&D Agreement, VISX and Medjet will
jointly own all intellectual property and any resulting patents developed under
the R&D Agreement.
D. As of the date of this Amendment, Medjet's research and development
efforts have not achieved the development goals established by the parties and
accordingly the parties wish to extend the term of the R&D Agreement by an
additional two months, with an option for VISX to elect to extend the term for a
subsequent nine month period, to allow Medjet additional time to pursue the R&D
Activities.
E. Furthermore, the parties to the R&D Agreement wish to have the R&D
Agreement constitute a Qualified Cost Sharing Arrangement under Treasury
Regulation section 1.482-7 from August 27, 2002 onwards.
F. In addition, VISX now wishes to assign all of its rights and
obligations under the R&D Agreement to Affiliate, which is a wholly-owned
subsidiary of Parent.
G. Section 7.8 of the R&D Agreement permits the R&D Agreement to be
amended by a writing executed by VISX and Medjet, and Section 7.3 of the R&D
Agreement permits a party to assign the R&D Agreement with the prior written
consent of the other party.
AGREEMENT
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NOW THEREFORE, in consideration of the foregoing, and the conditions set
forth below, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. AMENDMENT TO BACKGROUND. The Background of the R&D Agreement is hereby
amended by:
(a) Inserting "14 month" in place of "12 month" in each place it appears
in the paragraph;
(b) Inserting the definition "("Initial Term")" at the end of the
third sentence in the paragraph; and
(c) Adding the following new sentences at the end of the paragraph:
"Before the expiration of the Initial Term, VISX may, in its sole
discretion, elect by giving notice to Medjet in writing to extend
the term of this Agreement for an additional nine month period. As
of August 27, 2002, the parties intend, pursuant to the terms of
this Agreement, to pool their respective resources for the purpose
of conducting research and development with respect to the Products
and to share the costs and risks of research and development
activity and the intangible property that may be developed therefrom
on or after August 27, 2002 ("Covered Intangibles") as participants
in a qualified cost sharing arrangement as described in Treasury
Regulation section 1.482-7."
2. AMENDMENT TO SECTION 1. Section 1 of the R&D Agreement is hereby amended
by adding the following as new sentences at the end of the paragraph:
"For purposes of this Agreement, costs and expenditures shall mean
the costs described in Treas. Reg. section 1.482-7(d)(1). In the
event that either party acquires or has acquired on or after August
27, 2002 any intangible property rights relating to the Covered
Intangibles from a non-related party, that intangible property right
may be added to the scope of R&D Activities upon the mutual written
agreement of the parties."
3. AMENDMENT TO SECTION 1.1(A). Section 1.1(a) of the R&D Agreement is
hereby amended by deleting such section in its entirety and replacing it with
the following:
"For the first six months, the minimum monthly payment will be no
less than $150,000 per month. For the balance of the Initial Term
and during the Extension Period (as defined below), the minimum
monthly payment will be no less than $100,000 per month. The first
payment will be due on the Effective Date. Subsequent minimum
monthly payments will be paid by the first day of each calendar
month during the term of this Agreement. The first and last payments
will be prorated if for partial calendar months."
4. AMENDMENT TO SECTION 1.2. Section 1.2 of the R&D Agreement is hereby
amended by deleting such section in its entirety and replacing it with the
following:
"Additional/Total Funding. VISX may, at its sole discretion, provide
additional funding above the minimums set forth in Section 1.1(a).
Such additional funding, if any, will be provided based on the
forecast of future R&D Activities and expenditures contained in the
Monthly Report. The parties estimate that funding after the initial
six months of this Agreement will exceed $100,000 per month if
progress is made as anticipated."
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5. AMENDMENT TO SECTION 1. Section 1 of the R&D Agreement is hereby amended
by adding the following sentences as new Section 1.3:
"1.3 Cost Allocation. For the period starting August 27, 2002, and
thereafter for duration of this Agreement (the "R&D Period"), VISX
and Medjet intend that all costs related to the R&D Activities shall
be borne by VISX and Medjet in accordance with the relative benefits
anticipated to be derived by VISX and Medjet, respectively, from the
use of the Covered Intangibles, provided, however, Medjet will in no
event bear any financial costs related to the R&D Activities if VISX
does not acquire on or before July 17, 2003 one hundred percent of
the equity interests of Medjet. Any financial costs related to the
R&D Activities to be borne by Medjet shall merely accrue until such
time, if ever, that VISX, in its sole discretion, acquires one
hundred percent of the equity interests of Medjet. The costs to be
borne by each party for the R&D Period shall be that party's "Cost
Share" in accordance with Internal Revenue Code Section 482 and the
Treasury Regulations thereunder.
(a) VISX and Medjet believe that reasonably anticipated
benefits are best measured by the ratio by which (i) Net Sales of
Products by a party bears to (ii) the Net Sales of Products by both
the parties. For this purpose, "Net Sales" means gross sales less
returns and allowances.
(b) The estimate of reasonably anticipated benefits to
be derived by each party as a result of the exploitation of the
Covered Intangibles and used to determine the cost sharing ratio
shall be based upon projections which shall include a determination
of the time period between the inception of the research and
development and the receipt of benefits, a projection of the time
over which the benefits will be received, and a projection of the
benefits anticipated for each year in which it is anticipated that
the Covered Intangibles will generate benefits.
(c) To the extent projections anticipate a significant
variation among the parties in the timing of their receipt of
benefits from the exploitation of the Covered Intangibles, the
anticipated benefits shall be based upon the present discounted
value of such projected benefits to each party.
(d) Projections shall, to the extent required, be based
upon underlying factors such as a projection of sales, all as of the
date of this Agreement, as first amended, and at the beginning of
each R&D year.
(e) As necessary and appropriate, VISX and Medjet shall
review the projections, and shall update the cost sharing allocation
as necessary on a prospective basis to reflect changes in the
reasonably anticipated benefits to be derived by VISX and Medjet
from the Covered Intangibles. In determining whether revisions to
the cost sharing allocation are necessary, VISX and Medjet shall
take into account changes in economic conditions, their business
operations and practices, and the ongoing development of the Covered
Intangibles.
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(f) Subject to the provisions in Section 1.3, each party
shall bear its Cost Share regardless whether any Covered Intangibles
are in fact developed by the R&D Activities, and regardless whether
that party realizes any profit or other benefit from any Covered
Intangible.
(g) Within a reasonable time after the termination of
this Agreement or the close of any R&D year, the parties will
determine their respective Cost Shares and, to the extent one party
has incurred more costs than its Cost Share, the other party shall
make payment in the amount of the difference to the party incurring
more costs than its Cost Share, provided, however, Medjet will in no
event bear any financial costs related to the R&D Activities if VISX
does not acquire on or before July 17, 2003 one hundred percent of
the equity interests of Medjet. Any financial costs related to the
R&D Activities to be borne by Medjet shall merely accrue until such
time, if ever, that VISX, in its sole discretion, acquires one
hundred percent of the equity interests of Medjet."
6. AMENDMENT TO SECTION 2. Section 2.1 of the R&D Agreement is hereby
amended by adding the following as a new proviso at the end of the paragraph:
"; provided, however, as of August 1, 2002, VISX and Medjet will
together direct the R&D Activities."
7. AMENDMENT TO SECTION 6.
(a) The first sentence of the introduction to Section 6 of the R&D
Agreement is hereby amended by deleting such sentence in its entirety and
replacing it with the following:
"Unless earlier terminated as provided below, this Agreement will
remain in effect for 14 months following the Effective Date, subject
to VISX's right to elect, in its sole discretion, by giving notice
to Medjet in writing before the expiration of the Initial Term to
extend the Agreement for an additional nine month period beyond the
Initial Term (the "Extension Period")."
(b) Section 6 of the R&D Agreement is hereby amended by inserting the
following as a new Section 6.1.1 of the R&D Agreement:
"6.1.1 Termination by VISX During the Extension Period. VISX may
terminate this Agreement at any time during the Extension Period
upon 15 days written notice to the Company, provided that VISX shall
have previously terminated the Merger Agreement pursuant to Section
7.1 thereof. All VISX monthly payment obligations under Section 1.1
of this Agreement will cease upon the end of the 15 day notice
period set forth in the prior sentence except for amounts due and
owing, if any, for periods prior to the effective date of
termination."
8. AMENDMENT TO SECTION 6.3. Section 6.3 of the R&D Agreement is hereby
amended by inserting "Section 1.3," after "The provisions of" in the third
sentence.
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9. AMENDMENT TO SECTION 7.3. Section 7.3 of the R&D Agreement is hereby
amended by deleting such section in its entirety and replacing it with the
following:
"Assignment. Neither party may assign this Agreement without the
prior written consent of the other party; provided, however, that
either party may assign this Agreement without such consent to an
entity that acquires all or substantially all of the business or
assets of such party pertaining to the subject matter hereof,
whether by merger, reorganization, acquisition, sale or otherwise;
and provided further, that VISX or any assignee of VISX may assign
this Agreement without such consent to any subsidiary of VISX
provided that VISX guarantees to Medjet the full payment and
performance by such entity (including any subsequent assignees) of
all of its obligations under this Agreement, including its
obligations to make payments under Section 1 of this Agreement, and
provided that VISX agrees to remain bound by Sections 5 and 7.3 of
this Agreement. An assignee that is an affiliate of VISX may assign
this Agreement back to VISX without the consent of Medjet. VISX and
each assignee will enter into an agreement providing appropriate
compensation to VISX for VISX's guarantee, provided, however, that
the lack of such agreement will in no way impact the guarantee
provided by VISX to Medjet. Any other attempted assignment of this
Agreement will be void. Subject to the foregoing, this Agreement
will be binding upon and inure to the benefit of the parties and
their successors, heirs and assigns."
10. ASSIGNMENT. VISX hereby assigns, and Affiliate hereby accepts the
assignment of and assumes, all rights, obligations and liabilities of VISX set
forth in the R&D Agreement, as amended by this Amendment (the "Amended R&D
Agreement"). Affiliate hereby agrees to perform all obligations of VISX under
the Amended R&D Agreement, as if Affiliate were a party thereto. Medjet hereby
consents to the foregoing assignment of the Amended R&D Agreement from VISX to
Affiliate. VISX hereby guarantees to Medjet the payment and performance of
Affiliate of all of its obligations under this Amended R&D Agreement, including,
without limitation, its obligations to make payments under Section 1 of the
Amended R&D Agreement. VISX and Affiliate agree to enter into an agreement
providing appropriate compensation to VISX for such guarantee, provided,
however, that the lack of such agreement will in no way impact the guarantee
provided by VISX to Medjet. Notwithstanding the assignment, VISX agrees to be
deemed a party to and be bound by the provisions of Sections 5 and 7.3 of the
Amended R&D Agreement. Except as expressly provided for in this Amendment, the
parties agree that as of the date hereof, VISX has no further rights,
obligations or liabilities under the Amended R&D Agreement.
11. MISCELLANEOUS.
(a) Waivers and Amendments. Any provision of this Amendment may be
amended, waived or modified only upon the written consent of VISX, Medjet and
Affiliate.
(b) Governing Law. This Amendment and all actions arising out of or in
connection with this Amendment shall be governed by and construed in accordance
with the laws of the State of California, without regard to the conflicts of law
provisions of the State of California or of any other state.
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(c) Entire Agreement. This Amendment and the R&D Agreement constitute
and contain the entire agreement among VISX, Medjet and Affiliate, whether
written or oral, respecting the subject matter hereof.
(d) Notices. All notices, requests and other communications hereunder
will be in writing and will be personally delivered or sent by telecopy or other
electronic facsimile transmission or by registered or certified mail, return
receipt requested, postage prepaid, in each case to the respective address
appearing below each party's signature, or such other address as may be
specified in writing to the other party hereto.
(e) Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall be deemed to constitute one instrument.
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IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed and delivered by their proper and duly authorized officers as of the
date and year first written above.
VISX, INCORPORATED VISX
By: /s/ Derek Bertocci By: /s/ Derek Bertocci
--------------------------------- ----------------------------------
Derek Bertocci Derek Bertocci
Vice President, Controller Vice President, Chief Financial
Officer
Notices to: Notices to:
3400 Central Expressway 3400 Central Expressway
Santa Clara, CA 950351 Santa Clara, CA 950351
Phone: (408) 635-8400 Phone: (408) 635-8400
Facsimile: (408) 635-8470 Facsimile: (408) 635-8470
Attention: Chief Financial Officer Attention: Chief Financial Officer
MEDJET INC.
By: /s/ Eugene I. Gordon
---------------------------------
Eugene I. Gordon
Chief Executive Officer
Notices to:
1090 King Georges Post Road
Edison, NJ 08837
Phone: (732) 738-3990
Facsimile: (732) 738-3984
Attention: Chief Executive Officer
[SIGNATURE PAGE TO AMENDMENT NUMBER THREE AND ASSIGNMENT OF
RESEARCH, DEVELOPMENT AND EXPERIMENTAL COST SHARING AGREEMENT]