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AMENDED AND RESTATED SUPPLY AGREEMENT
THIS AGREEMENT is entered into and made effective as of the 13th day of
July, 1999, by and between ROCHE DIAGNOSTICS CORPORATION, an Indiana
corporation, having a principal place of business at 9115 Hague Road,
Indianapolis, Indiana 46250, ("Roche Diagnostics"), and SPECTRX, INC., a
Delaware corporation, 6025A Unity Drive, Norcross Georgia, 30071 ("SpectRx").
WITNESSETH:
WHEREAS, SpectRx and Boehringer Mannheim Corporation, n/k/a Roche
Diagnostics Corporation, entered into a Supply Agreement dated January 5, 1996
(the "1996 Supply Agreement") to provide for certain agreements related to the
purchase and sale of a non-invasive diabetes screening instrument then under
development by SpectRx for Roche Diagnostics pursuant to a Development and
License Agreement between such parties dated December 2, 1994 (the "1994
Development Agreement");
WHEREAS, the parties wish to amend and restate the 1996 Supply
Agreement in respect of the non-invasive diabetes screening instrument developed
to date, which amended and restated agreement will supersede the 1996 Supply
Agreement;
WHEREAS, contemporaneously herewith, the parties have amended and
restated the 1994 Development Agreement (such amended and restated agreement
being referred to as "Development Agreement";
NOW THEREFORE, in consideration of these premises and of the mutual
covenants contained herein, the parties agree as follows:
1.0 DEFINITIONS
1.1 "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. Not withstanding the foregoing, Genentech, Inc.,
shall not be deemed an Affiliate of Roche Diagnostics.
1.2 "Manufacturing Documentation" shall mean specifications, drawings and
manufacturing instructions which enable SpectRx or a third party to
manufacture the Instrument including, but not limited to, software, all
software source codes in printout or magnetic media form, software
assembly, linkage and validation protocols and software validation
results, manufacturing specifications for the Instrument, (service and
training information and a set of quality control parameters suitable
for use in acceptance testing of the Instrument), as well as all
preliminary or working drafts of all such materials, and documentation
developed by SpectRx in order to produce such materials.
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1.3 "Instrument" shall mean the instrument as described in the
Specification.
1.4 "Specification" shall mean the "System Specification Document, Magnum
Diabetes Screening Instrument, Project 227" attached hereto and
incorporated by reference as Exhibit A.
2.0 SUPPLY SERVICES
2.1 During the term of this Agreement, SpectRx shall manufacture and sell
the Instrument to Roche Diagnostics and Affiliates for worldwide
marketing and selling at prices established by the parties pursuant to
Section 3.1. SpectRx shall sell the Instrument exclusively to Roche
Diagnostics for so long as the Marketing License provided for in the
Development Agreement remains exclusive. Nothing in this Agreement
shall prevent Roche Diagnostics during the term of this Agreement from
manufacturing or having manufactured, marketing, selling, or otherwise
supplying other non-invasive devices on a worldwide basis.
2.2 During the term of this Agreement, SpectRx covenants and agrees (a) to
provide an adequate and timely supply of the Instrument to Roche
Diagnostics in accordance with purchase orders issued by Roche
Diagnostics, subject to the terms and conditions contained in this
Agreement, (b) to follow the most current and pertinent Federal Food
and Drug Administration guidelines to the extent applicable, and be in
compliance in all material respects with Quality System Regulations as
found in 21 CFR ss. 820, and (c) to employ reasonably sound cost
management practices. SpectRx further agrees to make available to Roche
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
Roche. Notwithstanding the foregoing, SpectRx shall have no obligation
to make available spare and or replacement parts if the Manufacturing
License has been issued to Roche Diagnostics and for as long as it
remains in effect.
2.3 In order to facilitate SpectRx planning of production, and to assist
SpectRx in making certain decisions relative to inventory of long lead
items, Roche shall submit to SpectRx a non-binding estimate of its
requirements of Instruments monthly covering a forward period of not
less than twelve 12 months, beginning six months after the signing of
this agreement. Upon receipt of Roche's estimate, if SpectRx determines
that it has insufficient capacity to meet the quantities stated in the
estimate, it shall notify Roche within fifteen (15) days of the date of
receipt of Roche's estimate that such condition exists, and present
recommendations regarding capacity changes to meet Roche's estimate. In
the event this Agreement is terminated (other than a termination by
Roche Diagnostics pursuant to Section 9.2), Roche shall be responsible
for reasonable quantities of components purchased, or reasonably
committed to be purchased by SpectRx, at lead-time in accordance with
the non-binding estimate. In the event of such termination SpectRx
shall use commercially reasonable efforts to
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return the components while minimizing any cost associated with the
activity. Roche Diagnostics will buy from SpectRx any components which
are unable to be returned pursuant to the preceding sentence, and pay
any restocking charges that have been approved in writing by Roche
Diagnostics, such approval shall not be unreasonably withheld.
2.4 The first purchase order issued under this Agreement will cover the
first three (3) months of supply. Subsequently, Roche shall issue
purchase orders, containing specific instructions concerning quantity,
delivery schedule, invoicing, etc., from time to time for the supply of
Instruments based on a manufacturing lead-time [purchase order receipt
to delivery of Instruments] of ninety (90) calendar days.
2.5 SpectRx warrants to Roche that it has or will have a minimum installed
equipment manufacturing capacity to produce one hundred and twenty-five
(125) Instruments per month (based on a single shift) at Product Launch
(as defined in the Development Agreement). SpectRx will maintain
installed equipment manufacturing capacity (based on the number of
shifts that are currently staffed) of at least thirty percent (30%)
above the six (6) month average (adjusted monthly) order rate, which
shall be calculated by adding the forward six (6) months of purchase
order and estimated requirements and dividing the sum by six (6).
2.6 SpectRx shall not make any change to the Instrument or the manufacture
thereof that may affect the form, fit, function, reliability, or
appearance of the Instrument without the prior written consent of Roche
which shall not be unreasonably withheld.
2.7 Delivery of Instruments shall be made F.O.B. SpectRx's Norcross,
Georgia facility.
2.8 The Instruments shall be supplied and labeled in accordance with Roche
Diagnostics-approved packaging specifications. Roche Diagnostics shall
prepare the artwork necessary for printing the labels and instruction
manual and shall deliver such artwork to SpectRx at mutually agreed
upon time intervals prior to the scheduled delivery from SpectRx of the
first shipment of Instruments ordered by Roche Diagnostics. Roche
Diagnostics agrees to reasonably recognize SpectRx's efforts with
respect to producing the Instrument by placing on the Instrument
verbiage such as: Co-developed and manufactured by SpectRx Inc. for
Roche Diagnostics as shown in Exhibit G.
3.0 PRICE
3.1 The purchase price to Roche Diagnostics for the Instruments shall be
established based on the pricing formula and pricing caps set forth in
Exhibit B.
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3.2 SpectRx, as long as it is the manufacturer of the Instrument, and then
successor manufacturers, whether they be Roche Diagnostics or other
parties arranged for by Roche Diagnostics pursuant to the Manufacturing
License provided for in the Development Agreement, will pay to GTRC
("Georgia Tech Research Corporation") the royalty fee provided for in
the GTRC License (as those terms are defined in the Development
Agreement).
3.3 Terms of payment shall be net thirty (30) days, except that during the
first year after Product Launch (as defined in the Development
Agreement) Roche Diagnostics shall forward payment within ten (10) days
of receipt of Instruments and corresponding invoice.
4.0 CERTAIN PAYMENTS RE: PARTS AND TOOLING
4.1 To assist SpectRx in its initial purchase of long-lead time component
parts for the Instruments, Roche Diagnostics, coincident with, and upon
the same day as, the execution and delivery of this Agreement, shall
pay to SpectRx, by wire transfer of immediately available funds to a
bank account designated by SpectRx, the sums indicated on Exhibit C
attached hereto, and SpectRx will employ such sums to purchase the
component parts for the Instruments listed on such exhibit. Roche
Diagnostics will be repaid for this advance on the first (1st)
anniversary of the date of Product Launch (as that term is defined in
the Development Agreement).
4.2 Roche Diagnostics will, coincident with, and upon the same day as, the
execution and delivery of this Agreement, pay to SpectRx, by wire
transfer of immediately available funds to a bank account designated by
SpectRx[ * ]to compensate SpectRx in part for the purchase of certain
tooling identified on Exhibit D attached hereto, which property shall
be deemed jointly owned by Roche Diagnostics and SpectRx (with Roche
Diagnostics owning an undivided interest therein equal to a quotient,
the numerator equaling [ * ] and the denominator equaling the total
acquisition costs incurred by SpectRx in purchasing such tooling, and
with SpectRx owning the remaining undivided interest therein), but such
tooling shall remain in the possession of SpectRx unless and until the
Manufacturing License is issued pursuant to Section 10 hereof. All
other tooling and equipment necessary to manufacture the Instruments
will be purchased by and be the property of SpectRx, unless and until
conveyed to Roche Diagnostics pursuant to Section 10 hereof.
5.0 INSPECTION AND QUALITY CONTROL
5.1 Each shipment of Instruments to Roche Diagnostics shall be accompanied
by a certificate of analysis from SpectRx indicating that each
Instrument, identified by its serial number, contained in the shipment
has passed the quality control parameters developed from the
Specification by SpectRx, set forth in SpectRx
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(*) 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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document BMC3-00151-QA attached as Exhibit H ("Quality Data"), which
may be amended from time to time through the SpectRx document control
system and approved in writing by Roche Diagnostics. Said Quality Data
shall become part to the Manufacturing Documentation. Roche Diagnostics
reserves the right at such frequency that Roche Diagnostics feels
appropriate and upon providing SpectRx with reasonable notice, to visit
SpectRx's facility, or other third party manufacturer of the
Instrument, for the purpose of confirming that SpectRx's quality system
and process is in conformance to agreed upon parameters.
5.2 SpectRx shall ship Instruments to Roche customers upon written
instructions from Roche. The price for storage and handling of said
Instruments at SpectRx shall be negotiated by the parties prior to
first shipment of units to Roche Diagnostics. SpectRx shall perform one
hundred percent (100%) final inspection to verify performance and
appearance in accordance with the parameters and attributes set forth
in the Quality Data. Upon shipment the certificate of analysis and the
one hundred percent (100%) test data shall be forwarded to Roche
Diagnostics.
5.3 SpectRx shall keep complete reproducible records of all data pertaining
to SpectRx's performance under this Agreement and as it relates to
individual Instruments for the life of the Instrument. Furthermore,
SpectRx shall retain all device master records and device history
records pertaining to the manufacture of the Instrument. This data
shall include traceability of critical components and subassemblies, as
determined by SpectRx and agreed to in writing by Roche Diagnostics.
Roche Diagnostics agrees to implement its current warranty card
tracking system for the Instruments sold by Roche Diagnostics pursuant
to this Agreement.
6.0 WARRANTIES AND INDEMNIFICATION
6.1 SpectRx warrants to Roche Diagnostics that all Instruments to be
supplied hereunder will upon shipment meet the agreed upon
Specification, will be free from defects in materials and workmanship,
and will be properly packed and labeled according to the Specification;
provided, however, in respect of defects in materials and workmanship,
and in respect of packaging and labeling, should a matter be covered by
the Specification, the Specification will control. This warranty shall
apply for a period of twenty-four (24) months after the date of
shipment by SpectRx, or twelve (12) months from date of delivery to the
end user, whichever occurs first. SpectRx shall satisfy this warranty
requirement by repairing or replacing, at no charge to Roche
Diagnostics at such time, each defective Instrument that is returned to
it prior to the expiration of the warranty period. SpectRx shall not be
liable for loss or damages arising out of misuse of the Instrument by
Roche Diagnostics, its agents or customers. Such repair or replacement
will be done in accordance with Instrument Service/Loaner
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Procedure as set forth in Exhibit F attached hereto, which may be
amended from time to time upon written request by SpectRx and approval
by Roche Diagnostics which approval shall not be unreasonably withheld.
6.2 SpectRx warrants that the Instrument annualized field failure rate
based on instruments returned to SpectRx whose performance is found to
be non conforming to the Specifications other than due to misuse or
abuse for Instruments delivered to Roche Diagnostics in a given month
("Failure Rate") will be less than 30% during the first year after
Product Launch (as defined in the Development Agreement) and less than
15% after the end of the second year after Product Launch. SpectRx will
make all commercially reasonable efforts to reduce the Failure Rate, at
SpectRx's expense, to the lowest practical level. SpectRx will conduct
a failure analysis on all field failures as required by the U.S. Food
and Drug Administration ("FDA") regulations, with respect to defective
Instruments that are returned under Section 6.1 hereof by end users.
Root causes of such defects will be determined where possible, and
commercially reasonable corrective actions will be taken on the
Instrument design and/or manufacturing process as appropriate. SpectRx
will track failure rates and failure modes in respect of such
Instruments, and provide at least quarterly reports of such findings,
trends and corrective action programs as to same to Roche Diagnostics.
Provided SpectRx uses such efforts and otherwise complies with the
covenants set forth in this Section 6.2, the breach of the warranty set
forth in the first sentence of this section 6.2 will not constitute a
breach for purposes of Section 9.2 hereof or otherwise. For any monthly
period where the Failure Rate limit is exceeded, the minimum annual
volume requirements as stated in Section (1) of Exhibit B of the
Development and License Agreement will be reduced by the number of
defective Instruments returned from said monthly period in excess of
the Failure Rate limit. Nothing in this Section 6.2 shall affect
SpectRx's obligations under Sections 6.1,6.3,6.4,6.5, or 6.7.
6.3 With respect to any instruments manufactured by SpectRx, SpectRx shall
be liable for and shall indemnify, defend and hold Roche Diagnostics
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 Roche
Diagnostics or at the direction of the FDA (collectively "Recall
Claims") arising out of, based on, or caused by defects in material or
workmanship or failure of the Instrument to conform to the
Specification, although in no event will SpectRx's aggregate liability
in respect to all Recall Claims exceed [ * ]. Such recall, if initiated
by Roche Diagnostics, shall be based on the reasonable belief by Roche
Diagnostics that if no such recall action is taken at such time, the
FDA would reasonably be expected to initiate such recall action. In no
event shall (i) SpectRx be liable for or be required to indemnify Roche
Diagnostics 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
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features of the Instrument designed by Roche Diagnostics or its
Affiliates, any component of the Instrument designed by Roche
Diagnostics or the literature supplied by Roche Diagnostics for use
with the Instrument, or claims made by Roche Diagnostics or its agents,
(ii) SpectRx be liable to Roche Diagnostics 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) SpectRx be liable to Roche Diagnostics or any person for
any implied warranties for merchantability or fitness for a particular
purpose or any express warranties. Roche Diagnostics 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. SpectRx shall promptly
notify Roche Diagnostics of any situation which may affect a decision
to recall the Instrument, however, Roche Diagnostics shall have the
final authority to institute a voluntary recall, which authority shall
not be exercised unreasonably. Notwithstanding the foregoing, in no
event shall either party be liable to the other party or any other
person for any incidental or consequential damages pursuant to this
Section 6.3 or any other provision of this Agreement or otherwise
arising from or in any way connected with the purchase or use of the
Instrument.
6.4 SpectRx shall indemnify, defend and hold Roche Diagnostics harmless
from any and all claims, demands, actions and causes of action against
Roche Diagnostics 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, or
failure of the Instrument to conform to the Specification, although in
no event shall SpectRx's liability in respect of the foregoing
indemnity as to any single occurrence exceed [ * ], or in the aggregate
for all Instruments, exceed [ * ]. 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.
6.5 As of the date hereof, SpectRx warrants and represents to Roche
Diagnostics that SpectRx has no actual knowledge of any infringement of
the existing patent or other intellectual property rights of any other
party which would be caused by the manufacturing, offering for sale,
sale or use of the Instruments. SpectRx will indemnify and hold Roche
Diagnostics harmless from and against any claims, actions or demands
(including, without limitation, attorney's fees, interest and
penalties) based upon the alleged infringement by the manufacture,
offering for sale, sale, or use of the Instrument of any patent or
other intellectual property rights now or hereafter existing, provided,
and notwithstanding anything stated herein to the contrary, SpectRx's
liability pursuant to this Section 6.5 shall in no event exceed
[ * ] in aggregate. If any such claim, action or demand based upon
intellectual property infringement is made against Roche Diagnostics,
SpectRx shall promptly initiate commercially reasonable efforts to the
extent necessary:
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(*) 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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a) secure permission, with Roche Diagnostics consent,
which will not be unreasonably denied, to continue
the manufacture and supply of Instruments to Roche
Diagnostics, with one-half of any royalties payable
for any such Instrument supplied to Roche Diagnostics
added (without adjustment for margin corresponding
thereto) to the price of the Instrument, and also
such amount, on the same dollar-for-dollar basis
shall be added to the Unadjusted Maximum Price as set
forth in Exhibit B attached hereto applicable
thereto, or
b) provide an Instrument which is non-infringing yet
still meets the agreed upon Roche Diagnostics
requirement as contained in this Agreement.
Roche Diagnostics will not file an infringement claim against the
SpectRx licensed device based on existing or in licensed intellectual
property, so long as Roche has the marketing rights.
6.6 Roche Diagnostics will indemnify and hold SpectRx harmless from any and
all claims, demands, actions or causes of action against SpectRx, 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 Roche Diagnostic's or its
Affiliates' instructions or directions or any omission or misstatement
in the literature supplied by Roche Diagnostics 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 Roche Diagnostics be
liable to SpectRx or any other person for any incidental or
consequential damages arising from or in any way connected with the
purchase or use of product.
6.7 Roche Diagnostics and SpectRx 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 an issue relating to patent infringement
during the course of performing hereunder, it will promptly notify the
other party.
6.8 If Roche Diagnostics licenses third party intellectual property in
order to make, use, offer for sale and sell Instruments and any other
things supplied by SpectRx under this Agreement, then the price paid to
SpectRx for such Instruments and other things shall be reduced by one
half of the amount paid to the third party for such license.
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7.0 CONFIDENTIALITY
7.1 All information identified as confidential according to the procedure
set out in paragraph 5.1 of the Development Agreement and received by
one party from the other shall be subject to the obligations of
confidentiality provided for in the amended and restated Development
Agreement.
7.2 Upon any termination or expiration of this Agreement, the parties agree
that the receiving party shall promptly return all confidential
information to the transmitting party, except for one copy thereof that
shall be kept in a limited access file by the receiving party and used
only for monitoring its obligations hereunder. 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.
8.0 EMPLOYEES
8.1 Personnel assigned by SpectRx to perform services under this Agreement
will be employees or contractors of SpectRx and will not for any
purpose be considered employees or agents of Roche Diagnostics. SpectRx
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), workers compensation,
disability benefits and the like.
8.2 Personnel assigned by Roche Diagnostics to perform services under this
Agreement will be employees or contractors of Roche Diagnostics and
will not for any purpose be considered employees or agents of SpectRx.
Roche Diagnostics 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 Roche Diagnostics shall be solely responsible for their
daily supervision, daily direction and control, payment of salary
(including withholding of income taxes and social security), workers
compensation, disability benefits and the like.
9.0 TERM AND TERMINATION
9.1 Unless terminated pursuant to the terms hereof, the term of this
Agreement shall be coincident with the term of the Development
Agreement. The parties 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 to the
other in the event (i) the other party materially breaches this
Agreement and does not cure
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such breach with 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. Termination of this Agreement by
SpectRx pursuant to this Section 9.2 shall constitute a termination of
the Development Agreement and the Marketing License granted thereunder.
In the event of termination by SpectRx pursuant to this Section 9.2,
Roche Diagnostics shall have no further rights to the Device or the
Know-How (as defined in the License Agreement in Sections 1.2 and 1.3,
respectively), the Marketing License shall terminate and the
Manufacturing License (if then granted) shall terminate, and all sums
paid or payable shall remain the property of SpectRx and shall not be
refundable, and to the extent accrued but unpaid any such sums owed to
SpectRx shall thereupon be immediately due and payable. Termination of
this Agreement by Roche Diagnostics pursuant to this Section 9.2 shall
not constitute a termination of the Development Agreement nor the
Marketing License granted thereunder. In the event of termination of
this Agreement by Roche Diagnostics pursuant to this Section, Roche
Diagnostics shall be deemed to have acquired the Manufacturing License
described in the Development Agreement effective upon such termination,
and provisions of Section 10 of this Agreement shall survive such
termination.
10.0 PROVISIONS GOVERNING MANUFACTURING LICENSE
10.1 In the event Roche Diagnostics obtains the Manufacturing License in
accordance with the terms and conditions set forth below or pursuant to
Section 9.2, Roche Diagnostics shall have full, complete and
unrestricted access to the Manufacturing Documentation. SpectRx agrees
to provide all reasonable resources, as provided for in Section 10.2
hereof, to render Roche Diagnostics 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 SpectRx. Roche Diagnostics will receive from SpectRx a
maximum of five hundred (500) hours of training at no cost and Roche
Diagnostics will supply reasonably competent manufacturing and
technical personnel who will be trained by SpectRx to support
production of the Instrument.
10.2 The Manufacturing License shall issue only after the occurrence of a
"Material Failure" (as defined below) by SpectRx to timely deliver
Instruments purchased pursuant to Purchase Orders. "Material Failure"
constitutes the failure by SpectRx to deliver upon or before the
requested delivery dates therefor as specified in Purchase Orders: a)
at least fifty percent (50%) of the Instruments that meet the
Specification therefor (other than in immaterial respects) requested to
be delivered within the first six (6) months of production, b) or at
least seventy five (75%) of the Instruments that meet the Specification
therefor requested to be delivered within the second six (6) months of
production (the first twelve months of production beginning with the
manufacture of the "period Two Instruments" (as
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defined in Exhibit B to the Agreement) being the "Initial Manufacturing
Period") after the Initial Manufacturing Period and c) at least ninety
(90%) of the instruments that meet the specification therefor requested
to be delivered after the Initial Manufacturing Period. For purposes of
the foregoing, Instruments delivered on or prior to the requested
delivery date therefor which are thereafter replaced or corrected on a
timely basis pursuant to and in accordance with the provisions of
Section 6.1 hereof shall be deemed to have been timely delivered in
accordance with applicable Specification. Notwithstanding the
foregoing, a Material Failure will not be deemed to have occurred by
reason of the failure of SpectRx to deliver Instruments in quantities
in any month during any six (6) month period in excess of the
manufacturing capacity so stated in Section 2.5 hereof. Upon the
occurrence of a Material Failure, should Roche Diagnostics give SpectRx
written notice specifying such failure in reasonable detail, and should
SpectRx not cure such Material Failure, within ninety (90) days of
receipt of such notice, then upon a further written notice from Roche
Diagnostics, and effective as of a date indicated therein, the
Manufacturing License shall take effect and be deemed issued. Upon such
issuance, SpectRx shall cooperate with Roche Diagnostics in a
transition of manufacturing of the Instruments to Roche Diagnostics,
the tooling and equipment then used in the manufacture of the
Instruments shall be conveyed by SpectRx to Roche Diagnostics with
Roche Diagnostics reimbursing SpectRx for its acquisition costs
therefor (giving credit for the sum previously paid SpectRx by Roche
Diagnostics pursuant to Section 4.2 hereof to the extent the tooling
set forth on Exhibit D is transferred to Roche Diagnostics), and
component parts and materials on hand or committed to be purchased by
SpectRx be sold to Roche Diagnostics by SpectRx at SpectRx's cost.
Subsequent to the issuance of the Manufacturing License, but no sooner
than one (1) year from the issuance of the Manufacturing License,
manufacturing of the Instruments may revert to SpectRx upon a
demonstration in reasonable detail by SpectRx of its ability to resume
manufacturing in conformance with the provisions of this Agreement
accommodating Roche Diagnostics' volume requirements as to the
Instruments and meeting the Specification, contingent upon full
reimbursement by SpectRx to Roche Diagnostics of all reasonable costs
and expenses associated with the issuance of the manufacturing license
and subsequent commencement of manufacturing by Roche Diagnostics or a
third party chosen by Roche Diagnostics. Should SpectRx make the
showing necessary to cause the manufacturing to revert to SpectRx,
Roche Diagnostics shall cooperate with SpectRx in the transition of
manufacturing of the Instruments to SpectRx, the tooling and equipment
then used in the manufacture of the Instruments shall be conveyed by
Roche Diagnostics to SpectRx with SpectRx reimbursing Roche Diagnostics
for its acquisition costs therefor (not including the sum paid SpectRx
by Roche Diagnostics pursuant to Section 4.2 hereof to the extent the
tooling set forth in Exhibit D is transferred to SpectRx, with
ownership of such tooling to be maintained as set forth in Section 4.2
hereof), component parts and materials on hand sold to SpectRx by Roche
Diagnostics at its cost, and the provisions of this Agreement providing
for the
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purchase and supply of Instruments shall be deemed re-instituted and
shall govern the parties accordingly. A "Material Failure" shall not
include the inability of SpectRx to supply Instruments, which is the
result of component supply interruptions which are caused without
negligence on the part of SpectRx.
11.0 GENERAL PROVISIONS
11.1 The rights and obligations of Articles 6 (WARRANTIES), and 11 (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.
11.2 SpectRx and Roche Diagnostics 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. SpectRx shall obtain any required government documents and
approvals in the event of SpectRx export of Instruments manufactured
for Roche Diagnostics Affiliates hereunder and for any technical data
disclosed to SpectRx by Roche Diagnostics. SpectRx will not be the
exporter of record for exports to Roche Diagnostic's customers. SpectRx
will provide documentation that its facility and manufacturing process
complies with FDA published guidelines and upon request by Roche
Diagnostics demonstrate compliance.
11.3 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
SpectRx or Roche Diagnostics 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.
11.4 This Agreement, its appendices and the Development 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 SpectRx or Roche
Diagnostics (or any of their Affiliates) from entering into any
agreements in the future which are not specifically limited or
precluded hereunder.
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11.5 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 Roche Diagnostics: Roche Diagnostics Corporation
9115 Hague Road
Indianapolis, IN 46250
Attn: Purchasing Manager
With copy to Legal Department
at same address
To SpectRx: SpectRx, Inc.
6025A Unity Drive
Norcross, Georgia 30071
Attn: President
11.6 Dispute Resolution
11.6.1 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 subparagraph (b) of this
Section, unless the matter is governed by subparagraph (c) 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.
11.6.2 If the dispute has not been resolved by negotiation and unless the
dispute is concerning the matters described in and governed by
subparagraph (c) below, then 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
Page 13
14
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.
11.6.3 Any dispute regarding the issuance of the Manufacturing License, and
in particular the occurrence of any of the conditions listed in
Section 10.2 hereof or in any way relating to the construction or
interpretation of the rights or obligations of the parties thereunder
or in respect thereof, which is not resolved through consultation as
provided in subsection (11.6.1) of this Section, shall be resolved by
an arbitration proceeding conducted in accordance with the following:
(i) The arbitration proceeding shall be governed by the
rules of the American Arbitration Association
("AAA"), and shall take place in Atlanta, Georgia;
(ii) The arbitrator shall be qualified by education and
training to pass upon the particular matter to be
decided;
(iii) There shall be one (1) arbitrator who shall be
selected in accordance with the procedures of AAA;
(iv) The parties shall agree in advance as to the manner
in which the arbitrator shall promptly hear witnesses
and arguments, review documents and otherwise conduct
the arbitration proceedings. Both parties shall
receive notice of the subject of the arbitration and
the arbitration shall not be binding on the parties
with respect to any matters not specified in such
notice. Should the parties fail to reach an agreement
as to the conduct of such proceedings, the arbitrator
shall formulate his own procedural rules and promptly
commence the arbitration proceedings;
(v) The arbitration proceedings shall be conducted as
expeditiously as possible with due consideration for
the complexity of the dispute in question. The
arbitrator shall issue its decision in writing (with
findings of fact and conclusions of law) within
twenty (20) days from the hearing of final arguments
by the parties;
(vi) The arbitration award shall be given in writing and
shall be final and binding on the parties with
respect to the subject matter identified in the
notice called for by subsection (c)(iv) of this
Section, and not subject to any appeal and shall deal
with the question of costs of arbitration;
(vii) Judgment upon the award may be entered in any court
having jurisdiction or, application may be made to
such court for a judicial recognition of the award or
an order of enforcement thereof, as the case may be;
(viii) The parties shall not submit a dispute subject to
this subsection (b) of this Section to any federal,
state, local or foreign court or arbitration
association except as may be necessary to enforce the
arbitration procedures of this subsection (b) of this
Section or to enforce the award
Page 14
15
of the arbitration panel, and if court proceedings to
stay litigation or compel arbitration under the
Federal Arbitration Act (Title 9, U.S.C.) or similar
state or foreign legislation are necessary, the party
who unsuccessfully opposes such proceedings shall pay
all associated costs, expenses and attorneys' fees
which are reasonably and actually incurred by the
other party;
(ix) The parties shall keep confidential the arbitration
proceedings and the terms of any arbitration award,
except as may be otherwise required by law.
11.7 In the case of conflict between the general terms and conditions of a
Roche Diagnostics issued purchase order, or of an SpectRx acceptance of
a Roche Diagnostics purchase order, and this Agreement, the terms and
conditions of this Agreement shall take precedence unless otherwise
agreed in writing by the parties.
11.8 SpectRx shall make its records and facilities involved in the
performance of this Agreement available to Roche Diagnostics personnel
at reasonable and mutually convenient times during normal business
hours for audit purposes and shall take any reasonable actions required
by Roche Diagnostics to facilitate such audit.
11.9 SpectRx shall not utilize the exterior design (including the mechanical
design and the industrial design) of the Instrument for any other
purpose (device, application, etc.) without the prior written consent
of Roche Diagnostics. Roche Diagnostics acknowledges that SpectRx is
under no restriction for the use of the design of the interior of the
Instrument in any area outside of that licensed exclusively to Roche
Diagnostics.
11.10 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.
11.11 SpectRx 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 other than with Roche Diagnostics or its
Affiliate(s).
11.12 Further, SpectRx 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 SpectRx under this
Agreement.
11.13 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.
Page 15
16
11.14 Within twenty-four (24) hours of becoming aware of an inspection of its
facilities by the Federal Food and Drug Administration (FDA), SpectRx
shall notify Roche Diagnostics in writing of such inspection.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives.
SPECTRX, INC.
By:
--------------------------------
Title:
-----------------------------
ROCHE DIAGNOSTICS CORPORATION
By:
--------------------------------
Title:
-----------------------------
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17
Exhibit A
Specification:
System Specification Document, Magnum Diabetes Screening Instrument, Project
227, dated 4/5/99.
[*]
(*) 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.
Page 17
18
Exhibit B
Purchase Price
SpectRx to provide revised proposal
Page 18
19
For discussion
purposes only
Exhibit B
Purchase Price
1. The initial Instrument purchase prices shall be governed by the Volume Based
Production Cost Summary (attached hereto as Exhibit B-1) during the period from
initial product shipments until (i) Product Launch has occurred as defined in
Section 1.5 of the Development Agreement, (ii) the forecast from Roche
Diagnostics per Section 2.3 of the Supply Agreement equals or exceeds [*]
Instruments, and (iii) purchase orders issued by Roche Diagnostics for the
first [*] months of said forecast equals or exceeds [*] Instruments (the month
during which the latest to occur of (i), (ii), or (iii) above being referred to
herein as the "First Volume Pricing Month"). Instruments governed by this
Section 1 are collectively referred to as "Period One Instruments".
2. The purchase price for the [*] Instruments beyond the Period One
Instruments purchased pursuant to this Supply Agreement shall be [*] per
Instrument. Such [*] Instruments are collectively referred to herein as the
"Period Two Instruments". The price set forth hereinabove for the Period Two
Instruments shall be adjusted in the same manner and same times as the
adjustments to the Unadjusted Maximum Prices as provided in, and using the
formulae set forth in, subparagraphs (i) and (ii) of Section 4 hereof.
(*) 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.
20
3. For all other Instruments delivered during or prior to the [*] month
succeeding the First Volume Pricing Month (i.e., other than Period Two
Instruments) and subject to the adjustments provided for in Section 6 hereof,
the price for such Instruments shall be computed and invoiced by SpectRx using
the Transfer Price Formula (as defined in Section 5 below) based on costs
constituting SpectRx's then current variable "run rate," measured over a
reasonable prior period, for each of the cost components comprising the
Transfer Price Formula (which will approximate SpectRx's actual costs relating
to such Instruments but may vary slightly due to timing). Notwithstanding the
foregoing, in no event shall the price for such Instruments exceed the Maximum
Price therefor, if any (as defined in Section 4 below). In computing the "run
rate" for its costs, SpectRx may in good faith make adjustments thereto to take
into account anticipated increases or decreases in such costs. When requested
by Roche Diagnostics, SpectRx will provide Roche Diagnostics with reasonable
documentation supporting its calculations, and promptly respond to further
reasonable inquiries by Roche Diagnostics for same. Instruments governed by
this Section 3 are collectively referred to as "Period Three Instruments".
4. The maximum price for the Period Three Instruments shall be as follows:
(a) [*] per Instrument for the first [*] Period Three Instruments
and for all further Period Three Instruments, if any, in excess of
such [*] Instruments required to be delivered (or held for
Page 2 of 6
(*) 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.
21
delivery) prior to the end of the [*] month succeeding the First Volume
Pricing Month;
(b) [*] for the next [*] Period Three Instruments beyond the Instruments
described in subsection (a) and for all further Instruments, if any, in
excess of such [*] Instruments required to be delivered (or held for
delivery) during the [*] period succeeding the [*] period described in
subsection (a); and
(c) [*] for further Period Three Instruments beyond the Instruments described
in subsection (b).
The prices set forth above in subsections (a), (b) and (c) are referred to
herein as the "Unadjusted Maximum Prices" and are subject to the following
adjustments:
(i) Commencing at the end of the [*] month succeeding the month of
delivery of the first Instruments ordered by Roche Diagnostics
pursuant to Section 2.4 of this Supply Agreement (such month being
referred to herein as the "First Month"), the Unadjusted Maximum
Prices shall be increased or decreased to give effect to any increase
or decrease in the unit price for the [*] to be used in the
Instrument as follows: The Unadjusted Maximum Price for any
Instrument (or in respect of any lot of Instruments) shall be (i)
increased by a number equal to a quotient, the numerator of which is
the excess of the cost of the [*] installed in such Instrument (or in
respect of any lot
Page 3 of 6
(*) 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.
22
of Instruments, the average cost of the [*] installed in such lot of
Instruments) over [*] per [*], and the denominator is [*]; and (ii)
decreased by a number equal to a quotient, the numerator is the excess
of [*] per [*] over such cost and the denominator is [*].
(ii) The Unadjusted Maximum Prices shall be adjusted for the [*] month
period commencing at the end of the [*] month succeeding the First
Month, and for each successive [*] period, on a proportionate basis,
for changes in the [*] as such index changes during the prior [*]
months.
The price as determined by applying the foregoing adjustments to the
applicable Unadjusted Maximum Price is referred to herein as the "Maximum
Price."
5. The Transfer Price Formula shall determine price as to Instruments, subject
to adjustment as provided for in the immediately succeeding paragraph, on a
per Instrument basis by adding (a) the sum of (i) material costs, (ii)
direct assembly labor, (iii) packaging and labeling costs, (iv) cost of
instruction manuals, (v) depreciation and amortization, and (vi) factory
overhead attributable thereto, in each case using standard cost accounting
measures; (b) an amount equal to such total under subsection (a), divided
by [*], and then multiplied by [*] (so as
Page 4 of 6
(*) 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.
23
to represent a [*] margin in respect thereto); and (c) Georgia Tech
Research Corporation royalties.
6. The purchase price as computed pursuant to the Transfer Price Formula
shall be subject to increase to add a further component in respect of
improvement in costs, over current estimated costs, as follows: As costs
are improved (after giving effect to costs required to implement cost
improvement) so as to result in a price as calculated pursuant to the
Transfer Price Formula which is lower than the Maximum Price therefor (or
if there is no applicable Maximum Price, lower than the Maximum Price set
forth in Section 4(c) hereof), then [*] of the purchase price impact of
such cost improvement shall be added to the purchase price, although in no
event shall the purchase price exceed the Maximum Price therefor, if
applicable. The Maximum Prices referenced in the preceding sentence refer
to the prices after giving effect to the adjustments thereto provided for
in subparagraphs (i) and (ii) of Section 4 hereof.
7. After the [*] month succeeding the First Volume Pricing Month,
(a) There shall no longer be a Maximum Price and the purchase
price for Instruments to be delivered thereafter shall be
calculated using the Transfer Price Formula.
(b) If the purchase price as so calculated pursuant to subsection
(a) above is less than or equal to the Maximum Price in effect
immediately prior to the end of the [*] period identified
Page 5 of 6
(*) 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.
24
above multiplied by [*] of such Maximum Price, then the purchase price as
so calculated shall be the purchase price.
(c) If the condition described in subsection (b) above is not met (i.e., the
price is greater than the [*] benchmark), then the parties will meet, and,
taking into account all relevant considerations, including the margins
enjoyed by the parties during the term of the Supply Agreement to date,
shall negotiate in good faith the purchase price for Instruments to be
delivered subsequent to such 36th month. If the parties are unable to
agree as to price, the matter will be referred to arbitration for
resolution in accordance with the provisions of Section 11.6(c) of the
Supply Agreement. The arbitrator shall be required to appoint a special
master, with business experience concerning medical devices deemed
relevant by the arbitrator, to assist and advise the arbitrator with the
determination of the purchase price for the Instruments.
Page 6 of 6
(*) 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.
25
MAGNUM VOLUME-BASED PRODUCTION COST SUMMARY
[TABLE]
[*]
[*] 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.
26
Exhibit C
Long-lead Time Component Parts
SpectRx to provide list
[*]
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.
Page 19
27
Exhibit D
Certain Tooling
PLASTIC PARTS TOOLING LIST
SPECTRX PART
NO. PART DESCRIPTION ESTIMATED COST
----------- ---------------- --------------
3001336 Case, Front [ * ]
3001319 Case, Rear [ * ]
3001321 Case, Left [ * ]
3001320 Case, Right [ * ]
3001462 Case, Front Insert [ * ]
FAMILY TOOL [ * ]
3001398 Pod Base
3001399 Pod Upper
FAMILY TOOL [ * ]
3001428 Door, PCMCIA
3001463 Connector Block
3001402 Pod Feet
FAMILY TOOL [ * ]
3001333 Fixation Cover
3001332 Base, Fixation Target
3001461 Shutter
FAMILY TOOL [ * ]
3001330 Button, Sensor
300147 Base, Chin Rest
3001349 Chin Rest
TOTAL [ * ]
(*) 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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Exhibit E
Patent Evaluation
SpectRx to provide list
[*]
(*) 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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Exhibit F
SERVICE COMMITMENT:
SpectRx, Inc. will provide a loaner diabetes screening instrument to
the customer in the event of an Instrument failure during the first
year warranty period, or during the warranty extension period. The
customer's instrument will be returned to a SpectRx authorized service
center for repair. Loaner instruments will be supplied by, and shall
remain the property of SpectRx, for the following markets:
United States, Canada, and the European communities.
PROCESS:
I. ROCHE DIAGNOSTICS CORPORATION
The initial one year warranty will commence on the date of installation
as indicated on the installation report returned to the distributor or
Roche Diagnostics. Roche Diagnostics will provide "First Line"
telephone customer support in the United States, Canada, and the
European community. SpectRx will supply a "First Line" troubleshooting
guide, and train the Roche Diagnostics customer support personnel in
it's use. This guide will be utilized for failure determination prior
to requesting a loaner instrument be sent to the customer site under
the loaner/warranty exchange program. Roche Diagnostics must obtain an
RSA (Return Service Authorization) number from the SpectRx service
center prior to shipment.
II. INSTRUMENT REPAIR - SERVICE COMMITMENT - YEAR ONE
Step 1 - Roche Diagnostics receives telephone call from the customer
via a service/support "help" line. Customer support determines the
failure using the "First Line" troubleshooting guide. Customer support
then calls SpectRx to obtain an RSA number for a loaner Instrument. The
loaner instrument is shipped by SpectRx to the customer within
twenty-four (24) hours of receiving the call from Roche Customer
support.
Step 2 - The customer receives the loaner instrument and ships their
defective instrument to SpectRx, utilizing the shipping container from
the loaner.
NOTE: The shipping carton will be heavy duty and designed for
ease of use with sufficient packing for safe shipment of the
instruments. Included in the carton will be a supply of shipping
instructions, documents, and labels for the customer's use.
Step 3 - The instrument is received at the SpectRx authorized Service
Center.
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30
Step 4 - The instrument is repaired and checked for proper operation
and readied for shipment back to the customer.
Step 5 - The instrument is returned to the customer.
Step 6 - The customer receives the repaired instrument and places it
into operation. The SpectRx loaner instrument is packaged in the
shipping carton and readied for shipment
Step 7 - The customer ships the instrument back to SpectRx or to
another specified location.
NOTE: SpectRx will arrange and manage loaner instrument pick
up and delivery to/from the customer.
III. SERVICE DEPOTS
a) The main Service Center at SpectRx will repair units using new
or good-as-new exchange parts with the goal of a one day
turnaround for the United States and Canadian markets.
b) SpectRx will establish a European service depot within 6
months of product launch in Europe to support the European
community market. This depot will be furnished with new or
reworked subassemblies on an exchange basis, i.e., PC boards,
EO bench, etc..
c) All SpectRx Service Depots will support both the end user of
the instrument and the distributors authorized to sell it.
IV. WARRANTY EXTENSION AGREEMENTS
Warranty Extension Agreements will be available through SpectRx at
$750.00 U.S. per annum. If these agreements are sold "up-front" at
point of sale, a 10% discount will be applied. If the agreements are
not purchased at point of sale, they may be purchased anytime during
the initial warranty period.
V. OUT OF WARRANTY SERVICE
a) Repair time and materials used billed as incurred.
1. Customer returns the instrument to the Authorized
SpectRx Service depot at their expense.
2. Loaner units are available for [ * ]on request with
shipping billed to the requesting customer.
3. Minimum one-hour bench repair time billable at
$[ * ] Additional time will be billed at [ * ] per
hour or portion thereof. Hours will be rounded up.
4. Parts used will be billed at the standard "cost plus"
charge.
Page 23
(*) 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.
31
5. All out of warranty service repairs will carry a
minimum 90 day warranty for the same malfunction.
Certain repairs may carry a longer warranty at the
discretion of SpectRx.
6. Service pricing and policy will be reviewed by
SpectRx annually and may be adjusted based on the
previous years cost/failure data analysis.
VI. ACCESSORIES
All accessories to the instrument i.e. printers, data capture devices,
and storage peripherals from other manufacturers will be serviced by
the brand manufacturer.
VII. SECOND TIER MARKETS
SpectRx will offer to all exclusive and non-exclusive distributors
outside of the named major markets, exchange loaner instruments for
purchase. If a distributor chooses not to stock a loaner instrument(s),
the extra cost for expedited shipping of customer instruments needing
repair will be the responsibility of the distributor.
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Exhibit G
Labeling
115/230 V~ 40 VA 50/60 Hz
Fuse 5 mm x 20 mm 2.5 amp 250 Volt AC Fuse
Co-developed and manufactured by SpectRx Inc. for Roche Diagnostics
In 1/16 inch tall Font
Located above the power cord, fuse and on/off switch on the left side of the
instrument
Page 25
33
Exhibit H
BMC3-00151-QA
Page 26