EXHIBIT 10.1
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THE PORTIONS OF THIS
AGREEMENT MARKED [*]. THE OMITTED PORTIONS OF THIS AGREEMENT HAVE BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
[LOGO FOR SYMPHONIX]
Joint Development
&
Supply Agreement
Topholm & Westermann ApS
Vaerloese, Denmark
and
Symphonix Devices, Inc.
San Jose, California
January 16, 1998
1. Introduction
This document outlines a joint development and supply agreement (this
"Agreement") by, and between, Symphonix/(R)/ Devices, Inc., having a principle
place of business at 3047 Orchard Parkway, San Jose, CA, 95134, USA
("Symphonix") and Topholm & Westermann ApS, having a principle place of business
at Ny Vestergaardsvej 25, DK-3500 Vaerloese, Denmark ("T&W").
2. Scope
T&W has developed certain expertise and technology with regards to the design,
application and manufacture of digital signal processing to acoustic hearing aid
devices. Specifically, T&W has developed a technology referred to herein as the
"SENSO", a digital signal processing hybrid microelectronic circuit for hearing
aid application. In conjunction with this SENSO technology, T&W has also
developed a hand held microcontroller-based programming device referred to as
the "LP2" programmer. These devices work in conjunction to form a platform for
digital signal processing based hearing aid systems.
Symphonix has developed certain expertise and technology with regards to the
design, development and manufacture of implantable and partially implantable
hearing devices. In particular, Symphonix has developed the Vibrant/(R)/
soundbridge, a partially implantable hearing device comprising the implanted
VORP prosthesis and the external Audio Processor. The Audio Processor comprises
signal processing technology that may be directly or indirectly extrapolated
from standard acoustic hearing aid devices.
Symphonix desires to obtain access to the SENSO hybrid technology as well as the
LP2 programmer technology for use in particular Vibrant soundbridge products.
T&W desires to supply such technology and T&W expertise to Symphonix along with
certain assistance and technological know-how required to implement, maintain
and support the use of said technology in Symphonix products on the terms and
conditions of this Agreement.
3. Joint Development & Transfer of Technology
Symphonix and T&W agree to the following terms and conditions with regards to:
1) the development of a SENSO digital signal processing hybrid for use in the
Symphonix Audio Processor application, and 2) the development of an LP2 hand
held programmer for use in conjunction with the SENSO hybrid developed for the
Audio Processor application.
3.1. SENSO Hybrid Development
Symphonix and T&W shall work together to develop a final SENSO hybrid circuit
specification (the "SENSO Specifications") suitable for use with the Vibrant
soundbridge products for the purposes of developing a supply agreement,
including the purchase requirements, testing and inspection requirements of
hybrid circuits, and overall quality
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assurance provisions for the purchase of these hybrids. As part of this
effort, T&W agrees to deliver fully tested hybrids that are pre-programmed
with "factory calibration" settings, in accordance with the written SENSO
Specifications.
Symphonix shall provide all necessary technical information to aide T&W to
determine the appropriate "factory calibration" settings and T&W shall provide
all necessary know-how to allow Symphonix to fine tune these settings at
Symphonix facilities.
T&W shall provide Symphonix with all specifications, schematics and other
know-how necessary to support general testing, troubleshooting and functional
analysis of the SENSO hybrid for production and general quality assurance
purposes.
3.2. LP2 Programmer Development
Symphonix and T&W shall work together to develop a final LP2 Programmer
specification (the "LP2 Specifications") suitable for use with the Vibrant
soundbridge products for the purposes of developing a supply agreement,
including the purchase requirements, testing and inspection requirements of
programmers, and overall quality assurance provisions for the purchase of
these programmers. As part of this effort, T&W agrees to deliver fully
assembled and tested programmers meeting the LP2 Specifications and labeled in
accordance with artwork provided by Symphonix. In conjunction with each
programmer, T&W shall provide a programmable read only memory chip (PROM)
programmed with a modified version of the SENSO fitting software. The
modifications shall be as agreed to and set forth in the LP2 Specification.
Symphonix shall provide all necessary technical information to aid T&W to
determine the modifications and settings for the fitting software and T&W
shall provide the necessary know-how to allow Symphonix to verify these
settings at Symphonix facilities. Symphonix further agrees to provide all
sales packaging and accessories required for use with the LP2 programmer and
to ensure that any visual resemblance of the Symphonix version of the LP2
programmer and ancillary manuals to the T&W programmer is minimized.
T&W shall provide Symphonix with all specifications, schematics and other
know-how necessary to support general testing, troubleshooting and functional
analysis of the LP2 programmer for service and repair, as well as general
quality assurance purposes.
3.3. Intellectual Property
T&W hereby grants to Symphonix a non-exclusive, royalty-free license under
T&W's interest in the SENSO hybrid and LP2 programmer (as same may be modified
and/or improved hereunder) (i) to use, import, have imported, sell and
otherwise distribute the SENSO hybrid as incorporated into Symphonix products;
(ii) to use, import, have imported, sell and otherwise distribute LP2
programmers in conjunction with the marketing, sale and distribution of
Symphonix products; and (iii) to use the SENSO hybrid and LP2 programmers for
purposes of testing of Symphonix Products and developing specifications for
Symphonix-specific SENSO hybrids and LP2 programmers as contemplated herein.
The license granted
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herein does not include the right to make or have made SENSO hybrids and LP2
programmers, and is applicable only to SENSO hybrids and LP2 programmers
supplied to Symphonix by, or on behalf of, T&W. T&W represents that it has the
right to grant the foregoing license.
T&W shall own all right, title and interest in and to all SENSO and LP2
technology and all modifications and improvements thereto; provided, however,
that T&W shall not disclose to, or use for the benefit of any third party, any
modifications and/or improvements to the SENSO and LP2 technology designed,
invented or otherwise developed as a result of the development work performed
for Symphonix hereunder without the prior written consent of Symphonix.
Hybrids purchased from T&W may never be used for air conduction hearing aids
or sold to a third party for use in air conduction hearing aids.
4. Supply Agreement
Symphonix and T&W agree to the following terms and conditions with regards to
the supply, subsequent to the development work described in the section 3, of
SENSO digital signal processing hybrids and LP2 programmers.
4.1. General Supply
In accordance with the terms and conditions of this Agreement, T&W agrees to
manufacture and supply to Symphonix, and Symphonix agrees to purchase from T&W
LP2 Programmers and SENSO hybrids during the term of this Agreement. Symphonix
and T&W agree that the supply of the SENSO hybrids and LP2 programmers
developed as part of this agreement shall be in accordance with the terms and
conditions set out in this Agreement. Symphonix will submit its orders for
LP2 Programmers and SENSO hybrids on Symphonix's purchase order forms,
specifying quantities ordered, shipping instructions, destinations and
requested delivery dates. Any additional terms and conditions included in any
such purchase order form, or in any order acknowledgment, invoice or other
similar form, shall be of no force and effect and shall form no part of the
agreement between the parties hereto unless such terms are expressly agreed by
the parties in writing.
4.1.1. Pricing
- ------ -------
The prices set forth below shall be F.O.B. point of origin. All prices are
exclusive of sales, use and other taxes, export, import and other duties,
which shall be paid by Symphonix F.O.B. point of origin. Prices shall be as
set out below for the duration of this Agreement. The pricing structure of the
SENSO and/or the LP2 may be revised if both parties mutually agree in writing
to a new pricing structure. The 12-month periods referenced will be successive
12-month periods commencing with the placement of the first purchase order by
Symphonix. Within such 12-month periods, pricing shall be based initially on
the volumes anticipated in the forecast and purchase orders placed. As soon
as it becomes evident that actual volumes are likely to indicate a different
unit price, purchases shall be at that different price and retroactive price
adjustments shall be invoiced to bring the price charged throughout the
relevant 12-month period into line with the schedule set out below.
SENSO Hybrids: [*] per hybrid, for quantities up to [*] units per 12 month
period.
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[*] per hybrid, quantities above [*] units per 12 month
period.
LP2 Programmers: [*] per programmer, minimum order size of [*] units.
4.1.2. Forecasting and Ordering
- ------ ------------------------
At least semi-annually, Symphonix shall provide to T&W a forecast of
anticipated purchases from T&W of SENSO hybrids and LP2 Programmers. Such
forecasts shall be used for planning purposes and shall not be binding
purchase commitments. Symphonix shall, during the term of this Agreement,
place its purchase orders, specifying quantities ordered, shipping
instructions, destinations and requested delivery dates. T&W will notify
Symphonix in writing promptly of acceptance or rejection of a purchase order
including an estimated shipment date. T&W's estimated shipment date shall not
be later than the requested delivery date set forth in Symphonix's purchase
order, provided that the products ordered are consistent with previously
provided forecasts. If T&W has not provided a written statement of acceptance
or rejection of a purchase order within ten (10) days after receipt thereof,
T&W shall be deemed to have accepted such purchase order. Symphonix may cancel
or reschedule purchase orders, but not within thirty (30) days prior to the
scheduled delivery date. T&W agrees to use reasonable efforts to comply with
rescheduling requests not made within the foregoing time period.
T&W will submit an invoice to Symphonix for payment for each shipment under
this Agreement and Symphonix will make payment to T&W thirty (30) days from
the invoice date, provided that invoice date shall not be earlier than the
shipment date.
4.2. Limit of Responsibility for Delivered Components
T&W's responsibility is limited to the quality of the SENSO hybrids and LP2
programmer hardware when delivered to Symphonix. T&W shall be responsible for
supplying product that conforms with the agreed SENSO Specifications and LP2
Specifications and to make right or replace any product or hardware determined
to be in nonconformance with the agreed SENSO Specifications and LP2
Specifications. Upon approval by Symphonix, T&W will have no responsibility
for any claims or problems caused by the modified fitting software when used
in or with Symphonix products, except as noted in section 5 of this agreement.
T&W agree to provide fair and reasonable technical support to Symphonix, on an
as-requested basis, in order to help resolve technical issues or problems that
may arise from time to time where Symphonix may need additional technical
know-how for components, hardware or software delivered as part of this
agreement. Symphonix agrees to remunerate T&W for this technical support at
fair and reasonable rates for non-recurring engineering time.
4.3. Returns
Symphonix shall have the right, within thirty (30) days after receipt of
products supplied by T&W, to reject any lots or units which, upon inspection,
fail to conform to the SENSO Specifications or LP2 Specifications, by
returning such nonconforming products to T&W with written explanation of the
non-conformity. Rejected lots will be shipped to T&W's manufacturing
facility, freight collect. T&W shall, at its expense, promptly replace the
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nonconforming products with conforming products within a period not to exceed
thirty (30) days from the date of rejection, or issue a full credit to
Symphonix for such defective products. Notwithstanding the foregoing, the
parties recognize that it is possible for a shipment of products to fail to
conform to the applicable Specifications in a manner which would not be
discoverable upon reasonable inspection and testing ("Latent Defects"). As
soon as either party becomes aware of a Latent Defect in any products it shall
immediately notify the other party, in which case, Symphonix may reject the
applicable products as provided in this Section until sixty (60) days after
the discovery of such Latent Defect.
4.4. Continuation of Supply & Notification
T&W agrees to supply Symphonix with the SENSO hybrids and LP2 Programmers as
developed and described in this agreement, in accordance with the requirements
of this agreement. T&W further agrees to provide Symphonix with a minimum of
180 days written notice of its intent to terminate the supply of either or
both of the SENSO hybrid or LP2 Programmer as developed herein. During the
180 day period, Symphonix may place purchase orders in accordance with this
Agreement. In addition, as a result of such notification of termination of
supply, Symphonix may place and T&W shall accept a "one-time" purchase order
in quantities adequate to cover Symphonix's reasonably anticipated
requirements during the twelve (12) month period following the expiry of the
180-day notice period. Such order shall be delivered on a mutually agreed
schedule over the twelve (12) month period following placement by Symphonix of
the "one-time" purchase order.
5. Indemnification
In the event that a claim, suit or proceeding is instituted against T&W seeking
damages as a result of actual or alleged malfunction of any Symphonix product
containing products, components or software supplied by T&W, Symphonix shall,
upon request by T&W and at Symphonix's expense, defend or (at Symphonix's
option) settle such claim, suit or proceeding, except as provided in the next
paragraph. Symphonix shall have sole control of the defense of any such claim,
suit or proceeding and/or settlement negotiations and Symphonix, agrees, subject
to the limitations set forth below, to pay any final judgement entered pursuant
thereto.
If Symphonix fails to maintain reasonable control over such lawsuit or
proceeding in a manner which does or will significantly affect the outcome of
such lawsuit or proceeding, and Symphonix has not cured or commenced to cure
such failure within forty-five (45) days after written notice thereof by T&W,
T&W may, upon written notice to Symphonix, assume control of such lawsuit or
proceeding until such time as Symphonix notifies T&W in writing of its intent to
resume control thereof. If T&W assumes control of a lawsuit or proceeding
pursuant to the foregoing sentence, T&W shall at all times act in good faith,
using reasonable business judgement and shall use reasonable efforts to refrain
from actions, statements or admissions which do or will adversely affect
Symphonix or incur unnecessary or unreasonable expense.
T&W agrees that Symphonix shall be relieved of the foregoing obligations unless
T&W (i) notifies Symphonix promptly in writing of any such claim, suit or
proceeding, (ii) gives
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Symphonix written authorization to proceed as contemplated by this paragraph and
(iii) gives Symphonix (at Symphonix expense) such information and assistance as
Symphonix shall reasonably require in connection with the defense and/or
settlement of such claim, suit or proceeding. T&W further agrees that Symphonix
shall have no indemnification obligations hereunder in the event that the actual
or alleged malfunction that is the subject of a claim for which indemnification
hereunder is sought was caused by the gross negligence, recklessness or willful
misconduct of T&W or its employees, agents or contractors, and in such event T&W
shall refund to Symphonix any and all amounts paid by Symphonix pursuant to its
indemnification obligations hereunder.
6. Mutual Non-disclosure Agreement & Confidentiality
T&W and Symphonix agree to abide by the Mutual Non-disclosure Agreement provided
for in Appendix A.
T&W and Symphonix further agree that, except as necessary to comply with legal
requirements, both parties shall keep as confidential the existence and terms of
this Agreement. Neither party shall use the name, logos or trademarks of the
other, or disclose the existence of this Agreement for marketing or promotional
purposes without the express written consent of the other party.
7. Assignment
Symphonix may assign its rights under this Agreement in whole or in part to any
subsidiary or subsidiaries, which may be substituted directly for it. Either
party may assign this Agreement to the successor of all or substantially all of
its business assets related hereto. Neither party shall have any right to
assign this Agreement except as expressly provided in this Section. It is
expressly understood and agreed, however, that the assignor of any rights shall
remain bound by all of the obligations of this agreement.
8. Payments
In return for the engineering and development provided by T&W for purposes of
developing the components, hardware and software described in sections 3.1 and
3.2 of this agreement, Symphonix agrees to pay a non-recurring engineering (NRE)
charge of [*]. This NRE charge includes all development work, prototypes and
documentation necessary to support this effort. Payment shall be made in the
following manner: [*] payable upon execution of this agreement, and (ii) balance
of US [*] upon final approval by Symphonix of SENSO hybrid prototypes, LP2
programmer hardware and modified fitting software (PROM).
Symphonix further agrees to pay all reasonable and necessary travel expenses for
T&W engineers to travel to Symphonix facilities in San Jose, CA, USA to support
the development and implementation of the components, hardware and software
described in this agreement. Such travel shall be pre-approved in writing by
Symphonix prior to incurring any associated costs.
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Payments shall be made for actual costs incurred and in no case without the
submission of appropriate receipts or documentation for all reimbursable
expenses.
The payments and schedules for production shipments of SENSO hybrids and LP2
programmers shall be in accordance section 4.
9. Effective Date, Term and Termination
This agreement shall become effective on the date indicated in Section 13. The
term of this agreement, for the purposes of the joint development described in
section 3, shall be to the completion of the development as determined by the
written approvals for each of the SENSO and LP2 developments, or a period of 12
months, whichever comes first. The term of this agreement for purposes of the
supply agreement described in section 4 shall continue until terminated by
Symphonix with ninety (90) days written notice, or until terminated by T&W in
accordance with section 4.4. The term of the Mutual Non-disclosure Agreement in
Appendix A, shall be in accordance with that agreement.
Material failure by T&W or Symphonix to comply with any of the obligations and
conditions herein contained, unless such failure results from or is caused by
applicable laws or regulations, shall entitle the other party to give the party
in default written notice requiring it to cure such default. If such default is
not cured within ninety (90) days after the receipt of such notice, the
notifying party shall be entitled (without prejudice to any of its other rights
conferred on it by this Agreement) to terminate this Agreement by giving notice
to take effect immediately. The right of either party to terminate this
Agreement, as provided herein, shall not be affected in any way by its waiver
of, or failure to take action with respect to, any previous default. In the
event any applicable federal, state or local laws or any regulation, order or
policy issued under any such laws, is changed (or judicial interpretation
thereof is developed or changed) in a way which will have a material adverse
effect on the benefits anticipated by one or more parties to the Agreement, the
adversely affected party may notify the other party in writing of such change
and the effect of the change. Upon such notice, the parties shall enter into
good faith negotiations to revise the Agreement to compensate for such change.
10. Notices
Any notice or report required or permitted to be given or made under this
agreement by one of the parties hereto to the other shall be in writing and
shall be deemed to have been sufficiently given or made for all purposes if
mailed by registered international mail, postage prepaid, addressed to such
other party at its respective address as follows:
For Symphonix: Symphonix Devices, Inc.
3047 Orchard Parkway
San Jose, CA 95134
USA
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For T&W: Topholm & Westermann ApS
Ny Vestergaardsvej 25
DK-3500 Vaerloese
Denmark
11. Entire Agreement & Amendments
This Agreement together with the Mutual Non-disclosure Agreement (Appendix A)
constitutes a final written expression of all the terms of the Agreement among
the parties, and is a complete and exclusive statement of the terms. Any
representations, promises, warranties, or statements made by the parties that
differ in any way from the terms of this Agreement shall have no force or
effect. The parties specifically represent that there are no additional or
supplemental agreements among them. No addition to or modification of any
provision of this Agreement shall be binding unless made in writing and signed
by all parties.
12. Governing Law
This Agreement shall be construed in accordance with the laws of the State of
California, United States of America, without reference to conflict of laws
principles.
13. Approval
Agreed to and effective this day January 16, 1998 by and between Symphonix
Devices, Inc. and Topholm &Westermann, ApS.
For Symphonix Devices, Inc.; For Topholm & Westermann ApS;
/s/ Harry S. Robbins /s/ Jan Topholm
- ----------------------------------- -----------------------------------
Harry S. Robbins, President and CEO Name and Title
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Appendix A
Mutual Non-disclosure Agreement
Page 10 of 14
MUTUAL NONDISCLOSURE AGREEMENT
THIS MUTUAL NONDISCLOSURE AGREEMENT is made and entered into as of January
16, 1998 by and between Symphonix Devices, Inc., a California corporation and
Topholm & Westermann, ApS, a corporation organized under the laws of the country
of Denmark.
1. Purpose. The parties have entered into that certain Development and
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Supply Agreement dated January 16, 1998 (the "Development Agreement") and in
connection therewith, each party may disclose to the other certain confidential
technical and business information which the disclosing party desires the
receiving party to treat as confidential.
2. "Confidential Information" means any information disclosed by either
------------------------
party to the other party, either directly or indirectly, in writing, orally or
by inspection of tangible objects (including without limitation documents,
prototypes, samples, plant and equipment), which is designated as
"Confidential," "Proprietary" or some similar designation. Confidential
Information shall include without limitation the items set forth in the Appendix
attached hereto, whether or not so designated upon disclosure. Information
communicated orally shall be considered Confidential Information if such
information is confirmed in writing as being Confidential Information within a
reasonable time after the initial disclosure. Confidential Information may also
include information disclosed to a disclosing party by third parties.
Confidential Information shall not, however, include any information which (i)
was publicly known and made generally available in the public domain prior to
the time of disclosure by the disclosing party; (ii) becomes publicly known and
made generally available after disclosure by the disclosing party to the
receiving party through no action or inaction of the receiving party; (iii) is
already in the possession of the receiving party at the time of disclosure by
the disclosing party as shown by the receiving party's files and records
immediately prior to the time of disclosure; (iv) is obtained by the receiving
party from a third party without a breach of such third party's obligations of
confidentiality; (v) is independently developed by the receiving party without
use of or reference to the disclosing party's Confidential Information, as shown
by documents and other competent evidence in the receiving party's possession;
or (vi) is required by law to be disclosed by the receiving party, provided that
the receiving party gives the disclosing party prompt written notice of such
requirement prior to such disclosure and assistance in obtaining an order
protecting the information from public disclosure.
3. Non-use and Non-disclosure. Each party agrees not to use any
--------------------------
Confidential Information of the other party for any purpose other than the
purposes contemplated by the Development Agreement. Each party agrees not to
disclose any Confidential Information of the other party to third parties or to
such party's employees, except to those employees of the receiving party who are
required to have such information in order to perform in accordance with the
Development Agreement. Neither party shall reverse engineer, disassemble or de-
compile any prototypes, software or other tangible objects which embody the
other party's Confidential Information and which are provided to the party
hereunder.
4. Maintenance of Confidentiality. Each party agrees that it shall take
------------------------------
reasonable measures to protect the secrecy of and avoid disclosure and
unauthorized use of the Confidential
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Information of the other party. Without limiting the foregoing, each party shall
take at least those measures that it takes to protect its own most highly
confidential information and shall ensure that its employees who have access to
Confidential Information of the other party have signed a non-use and non-
disclosure agreement in content similar to the provisions hereof, prior to any
disclosure of Confidential Information to such employees. Neither party shall
make any copies of the Confidential Information of the other party unless the
same are previously approved in writing by the other party. Each party shall
reproduce the other party's proprietary rights notices on any such approved
copies, in the same manner in which such notices were set forth in or on the
original.
5. No Obligation. Nothing herein shall obligate either party to proceed
-------------
with any transaction between them, and each party reserves the right, in its
sole discretion, to terminate the discussions contemplated by this Agreement
concerning the business opportunity.
6. No Warranty. ALL CONFIDENTIAL INFORMATION IS PROVIDED "AS IS". EACH
-----------
PARTY MAKES NO WARRANTIES, EXPRESS, IMPLIED OR OTHERWISE, REGARDING ITS
ACCURACY, COMPLETENESS OR PERFORMANCE.
7. Return of Materials. All documents and other tangible objects
-------------------
containing or representing Confidential Information which have been disclosed by
either party to the other party, and all copies thereof which are in the
possession of the other party, shall be and remain the property of the
disclosing party and shall be promptly returned to the disclosing party upon the
disclosing party's written request.
8. No License. Except as provided in the Development Agreement nothing
----------
in this Agreement is intended to grant any rights to either party under any
patent, mask work right or copyright of the other party, nor shall this
Agreement grant any party any rights in or to the Confidential Information of
the other party except as expressly set forth herein.
9. Term. The obligations of each receiving party hereunder shall survive
----
until such time as all Confidential Information of the other party disclosed
hereunder becomes publicly known and made generally available through no action
or inaction of the receiving party.
10. Remedies. Each party agrees that any violation or threatened
--------
violation of this Agreement may cause irreparable injury to the other party,
entitling the other party to seek injunctive relief in addition to all legal
remedies.
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11. Miscellaneous. This Agreement shall bind and inure to the benefit of
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the parties hereto and their successors and assigns. This Agreement shall be
governed by the laws of the State of California, without reference to conflict
of laws principles. This document contains the entire agreement between the
parties with respect to the subject matter hereof, and neither party shall have
any obligation, express or implied by law, with respect to trade secret or
proprietary information of the other party except as set forth herein. Any
failure to enforce any provision of this Agreement shall not constitute a waiver
thereof or of any other provision. This Agreement may not be amended, nor any
obligation waived, except by mutual agreement in writing signed by both parties
hereto.
SYMPHONIX DEVICES, INC. TOPHOLM & WESTERMANN, ApS.
By: /s/ Harry S. Robbins By: /s/ Jan Topholm
------------------------- -------------------------
Name: Harry S. Robbins Name: Jan Topholm
----------------------- -----------------------
Title: President & CEO Title: President
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APPENDIX A
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Symphonix:
----------
Confidential Information disclosed by Symphonix shall include all
information disclosed by Symphonix relating to implantable hearing
devices and products.
Topholm & Westermann:
--------------------
Confidential Information disclosed by Topholm & Westermann shall
include all information disclosed by T&W relating to the SENSO
digital signal processing technology and the LP2 programmer
technology.
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