Distribution Agreement - Celsion Corp. and Boston Scientific Corp.
DISTRIBUTION AGREEMENT
BETWEEN
CELSION CORPORATION
AND
BOSTON SCIENTIFIC CORPORATION
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Defined Terms.................................1
SECTION 1.02 Definitions...........................................5
ARTICLE II
MARKETING AND DISTRIBUTION
SECTION 2.01 Grant of Rights.......................................6
SECTION 2.02 Performance...........................................6
SECTION 2.03 Competitive Products..................................6
SECTION 2.04 Exclusivity...........................................6
SECTION 2.05 Services Provided by BSC..............................7
SECTION 2.06 Training Advice and Assistance........................7
SECTION 2.07 Development Efforts...................................7
SECTION 2.08 Service Capability....................................7
SECTION 2.09 Manufacturing Costs...................................7
ARTICLE III
TERMS OF SUPPLY
SECTION 3.01 Supply Forecasts......................................8
SECTION 3.02 Orders................................................8
SECTION 3.03 Product Specifications; Packaging and Labeling........8
SECTION 3.04 Obligation to Supply..................................8
SECTION 3.05 Pricing and Payment...................................9
SECTION 3.06 Samples...............................................12
SECTION 3.07 Shipping..............................................12
SECTION 3.08 Acceptance............................................12
SECTION 3.09 Changes...............................................13
SECTION 3.10 Product Returns.......................................13
ARTICLE IV
REGULATORY APPROVALS AND COMPLIANCE
SECTION 4.01 General...............................................13
SECTION 4.02 Data..................................................14
SECTION 4.03 Traceability Program..................................14
SECTION 4.04 Recalls...............................................14
SECTION 4.05 Notices...............................................15
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SECTION 4.06 Compliance with Laws..................................15
SECTION 4.07 Manufacturing Requirements............................16
SECTION 4.08 BSC Inspection Rights.................................16
SECTION 4.09 Regulatory Audit......................................16
SECTION 4.10 Clinical Trials.......................................17
SECTION 4.11 Complaints............................................17
ARTICLE V
INTELLECTUAL PROPERTY
SECTION 5.01 License...............................................17
SECTION 5.02 License to Sublicensed Technology.....................18
SECTION 5.03 Trademark License.....................................18
SECTION 5.04 Maintenance of Intellectual Property..................18
SECTION 5.05 Infringement of Owned Licensed Technology.............19
SECTION 5.06 Infringement of Sublicensed Technology................20
SECTION 5.07 License Fee; Escrow Amount............................20
ARTICLE VI
CONFIDENTIALITY
SECTION 6.01 Confidentiality.......................................21
SECTION 6.02 Release from Restrictions.............................21
SECTION 6.03 Public Announcements and Publications.................21
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.01 Mutual Representations and Warranties.................22
SECTION 7.02 Celsion Representations and Warranties................23
SECTION 7.03 DISCLAIMER............................................23
SECTION 7.04 Celsion Indemnity.....................................24
SECTION 7.05 BSC Indemnity.........................................24
SECTION 7.06 SPECIAL DAMAGES.......................................24
SECTION 7.07 Celsion Insurance.....................................24
SECTION 7.08 Intellectual Property Infringements...................24
SECTION 7.09 Third Party Claims....................................25
ARTICLE VIII
TERM AND TERMINATION
SECTION 8.01 Term..................................................25
SECTION 8.02 Extension.............................................25
SECTION 8.03 Termination...........................................26
SECTION 8.04 Effect of Termination.................................26
SECTION 8.05 Force Majeure.........................................27
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ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Expenses..............................................27
SECTION 9.02 Notices...............................................27
SECTION 9.03 Headings..............................................28
SECTION 9.04 Severability..........................................28
SECTION 9.05 Entire Agreement......................................29
SECTION 9.06 Further Action........................................29
SECTION 9.07 Assignment............................................29
SECTION 9.08 Amendment.............................................29
SECTION 9.09 Governing Law and Venue...............................29
SECTION 9.10 Counterparts..........................................29
SECTION 9.11 Waiver................................................30
SECTION 9.12 No Third Party Beneficiaries..........................30
SECTION 9.13 Independent Contractor................................30
SECTION 9.14 Specific Performance..................................30
SECTION 9.15 WAIVER OF JURY TRIAL..................................31
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DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT is entered into as of January 21, 2003, by
and between CELSION CORPORATION, a Delaware corporation having a principal place
of business at 10220-I Old Columbia Road, Columbia, Maryland 21046 ("Celsion"),
and BOSTON SCIENTIFIC CORPORATION, a Delaware corporation having a principal
place of business at One Boston Scientific Place, Natick, Massachusetts 01760
("BSC").
WHEREAS, Celsion and BSC have entered into a certain Transaction
Agreement, dated as of January 20, 2003 (the "Transaction Agreement"), pursuant
to which BSC shall, on the terms and conditions contained therein, purchase
shares of capital stock (the "Shares") of Celsion; and
WHEREAS, to induce BSC to purchase the Shares, BSC and Celsion have
agreed to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, agreements and covenants set forth herein, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Celsion and BSC hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Defined Terms.
As used in this Agreement, the following terms shall have the following
meanings:
"Act" means the United States Food, Drug and Cosmetic Act and similar
Laws in foreign jurisdictions, all as may be amended from time to time.
"Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person. For purposes of this definition, "control" (including the terms
"controlled by" and "under common control with"), with respect to the
relationship between or among two or more Persons, means the possession,
directly or indirectly or as trustee, personal representative or executor, of
the power to direct or cause the direction of the affairs or management of a
Person, whether through the ownership of voting securities, as trustee, personal
representative or executor, by contract, credit arrangement or otherwise.
"Average Fully Absorbed Costs" means the amount equal to the total cost
of manufacturing the Control Units supplied to BSC, calculated on a monthly
basis, including all direct, indirect and overhead expenses incurred by Celsion
on a per unit basis (calculated by dividing such total amount of costs by the
number of Control Units manufactured during
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such month) expressed in US dollars using the average rate of currency exchange
reported by Bloomberg L.P. for such month.
"BPH" means benign prostatic hyperplasia.
"BPH 800" means the Microwave BPH 800 System, consisting of the Control
Unit and the Catheter Kit.
"Business Day" means any day that is not a Saturday, a Sunday or other
day on which banks are required or authorized by Law to be closed in Columbia,
Maryland or Boston, Massachusetts.
"Catheter Average Sales Price" means, for sales in the United States,
the amount initially set by BSC which shall be reset each January 1st and July
1st to be equal to the total amount of gross sales of Catheter Kits for the
preceding six month period (or such shorter period in the case of the first
reset), less the amount equal to (i) trade and/or quantity discounts actually
allowed, (ii) sales, value added or other excise taxes and import duties of a
similar nature paid and invoiced to customers, (iii) amounts repaid or credited
by reason of purchase chargebacks or rebates, and (iv) charges for freight,
insurance, handling and transportation separately invoiced, on a per unit basis
(calculated by dividing such total amount of gross sales by the number of
Catheter Kits sold during such period).
"Catheter Kit" means the single-use disposable components of the
Product.
"Commercially Reasonable Efforts" means (a) with respect to BSC's
obligations under this Agreement, the level of efforts required to carry out
such obligations in a sustained manner consistent with the efforts BSC devotes
to a product of similar market potential, profit potential or strategic value
resulting from its own research efforts, based on conditions then prevailing,
and (b) with respect to Celsion's obligations under this Agreement, the level of
efforts required to carry out such obligations in a sustained manner consistent
with the efforts medical device companies devote to a product of similar market
potential, profit potential or strategic value resulting from their own research
efforts, based on conditions then prevailing.
"Confidential Information" means all nonpublic proprietary information
and materials (whether or not patentable), disclosed by Celsion or BSC (the
"Disclosing Party" to the other (the "Receiving Party"), irrespective of the
manner in which the Disclosing Party disclosed such information, in furtherance
of this Agreement, including, but not limited to, substances, formulations,
techniques, methodology, software, equipment, data, reports, correspondence,
know-how, manufacturing documentation and sources of supply, as well as the
existence of this Agreement.
"Control Unit" means the reusable capital equipment component of the
Product.
"Copyrights" means copyrights in works of authorship of any type owned
by or licensed to Celsion as of the date hereof and/or obtained during the term
of this
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Agreement, including mask works, computer software, programs and databases,
registrations and applications for registrations thereof throughout the world,
all rights therein provided by international treaties and conventions, all moral
and common law rights thereto, and all other rights associated therewith.
"Distribution Term" means the period of seven years commencing on the
Launch Date.
"Escrow Agreement" means the escrow agreement to be entered into by
Celsion, BSC and an escrow agent mutually agreed by Celsion and BSC,
substantially in the form of Exhibit A.
"Excluded Markets" means China, Taiwan, Hong Kong, Macao, Mexico and
Central and South America.
"FDA" means the United States Food and Drug Administration, or any
successor entity.
"Foreign Regulatory Authority" means a Regulatory Authority other than
the FDA.
"Improvements" means any additions, developments, enhancements, updates
and other changes in the Products or any components thereof, including any
extensions of the label claims for any Products and any new designs for any
Product.
"Intellectual Property" means all intellectual property rights,
including (i) United States and non-United States patents and patent
applications, divisions, continuations, continuations-in-part, reissues or
extensions thereof, (ii) trademarks, whether registered or unregistered and
applications for registration thereof, (iii) copyrights, whether registered or
unregistered and applications for registration thereof, and (iv) trade secrets,
know-how, technology, proprietary information and data, including, without
limitation, formulae, procedures, plans, methods, processes, specifications,
models, protocols, techniques and experimentation, and design, testing and
manufacturing data, and products, compositions and procedures.
"Launch Date" means the date of the first shipment of the Product to
BSC's customer or designated delivery point, as applicable, but in no event
shall the Launch Date be later than the ninetieth (90th) day after Celsion (a)
can demonstrate its ability to deliver the Products in the quantity and of the
quality set forth in Article 3 and Section 4.07 of this Agreement and (b) has
satisfied the requirements of Section 2.08 of this Agreement.
"Law" means any United States or non-United States federal, national,
supranational, state, provincial, local or similar statute, law, ordinance,
regulation, rule, code, order, requirement or rule of law.
"Owned Licensed Technology" means Licensed Technology owned by Celsion.
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"Patents" means all United States and non-United States patents and
patent applications, divisions, continuations, continuations-in-part, reissues,
or extensions thereof owned by or licensed to Celsion as of the date hereof
and/or obtained during the term of this Agreement, including but not limited to
those patents and applications relating to the Product set forth in Exhibit B.
"Person" shall mean an individual, partnership, joint venture,
corporation, limited liability company, trust, unincorporated organization or
other entity.
"Product" means BPH 800, any of its component products (including,
without limitation, the Control Unit and the Catheter Kit) and all Improvements
or substitutes for any of the foregoing.
"Product Approvals" means, for any country or other jurisdiction in the
Territory, those regulatory approvals required for importation, exportation,
promotion, pricing, marketing and sale of the Products in such country or other
jurisdiction.
"Product Specifications" means, for a Product, the specifications and
performance requirements set forth on Exhibit C attached hereto, as such
specifications may be amended or supplemented from time to time in accordance
herewith.
"Proprietary Rights" means all proprietary rights and interests of every
nature, whether now existing or hereafter arising, including Copyrights,
Trademarks, Trade Secrets and Patents, in, to, related to or covering or
incorporated into any Product, including those relating to their manufacture,
sale, use or design.
"Regulatory Authority" means any national, supra-national, regional,
state or local regulatory agency, department, bureau, commission, council or
other governmental entity.
"Sublicensed Technology" means all Licensed Technology that is not Owned
Licensed Technology but instead licensed to Celsion from another Person,
including as scheduled in Exhibit D.
"Territory" means worldwide other than in the Excluded Markets.
"Trademarks" means the trademarks used with respect to the Product
described on Exhibit E attached hereto, and any additional trademarks owned or
controlled by Celsion that may be used from time to time with respect to the
Products.
"Trade Secrets" means trade secrets, know-how and other confidential or
proprietary technical, business and other information owned by or licensed to
Celsion as of the date hereof and/or obtained during the term of this Agreement,
including manufacturing and production processes and techniques, research and
development information, technology, drawings, specifications, designs, plans,
proposals, scientific, clinical and technical data, financial, marketing and
business data, pricing and cost information, business
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and marketing plans, customer and supplier lists and information, and all rights
in any jurisdiction to limit the use or disclosure thereof.
"Year" means the one-year period beginning on the first day of the
Distribution Term and ending on the anniversary thereof, and each successive
one-year period thereafter during the term of this Agreement.
SECTION 1.02 Definitions.
The following terms have the meanings set forth in the Sections set
forth below:
Definition Location
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"Average Sales Price"............................ 3.05(k)
"BSC"............................................ Preamble
"BSC Indemnified Parties"........................ 7.04
"Bundled Product"................................ 3.03
"Catheter Transfer Price"........................ 3.05(b)
"Celsion"........................................ Preamble
"Celsion Indemnified Parties".................... 7.05
"Control Unit Transfer Price".................... 3.05(a)
"Disclosing Party"............................... 1.01 in definition of
"Confidential Information"
"Escrow Amount".................................. 5.07(b)
"GMP"............................................ 4.07
"Licensed Technology"............................ 5.01
"Loss"........................................... 7.04
"*"(1)........................................... 5.07(b)
"*".............................................. 5.07(b)
"Proceeding"..................................... 5.05(b)
"Product Marks".................................. 5.03(c)
"QSR"............................................ 4.07
"Receiving Party"................................ 1.01 in definition of
"Confidential Information"
"Shares"......................................... Recitals
"Transaction Agreement".......................... Recitals
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(1) *Material has been omitted and filed separately with the Commission.
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ARTICLE II
MARKETING AND DISTRIBUTION
SECTION 2.01 Grant of Rights.
Subject to the terms and conditions set forth in this Agreement, Celsion
hereby grants to BSC the sole and exclusive right, license and privilege to
market and distribute the Products within the Territory during the Distribution
Term.
SECTION 2.02 Performance.
During the Distribution Term, BSC shall use Commercially Reasonable
Efforts at its sole cost to market and distribute the Products within each
country or jurisdiction in the Territory for which there are Product Approvals.
BSC shall consult with Celsion with respect to business decisions concerning the
marketing in the Territory of the Products, including the price, other terms,
kitting practices and promotion thereof and BSC shall in good faith give due
consideration to comments received from Celsion and will promptly provide
Celsion with a copy of the final marketing plan as soon as it is available;
provided, however, that all final business decisions regarding the marketing and
distribution of the Products shall be within the sole discretion of BSC.
SECTION 2.03 Competitive Products.
BSC agrees that, during the Distribution Term, BSC shall not market,
sell or otherwise distribute in the Territory any thermal therapy based product
for treatment of BPH; provided, however, that if BSC has provided a notice of
termination to Celsion under Section 8.03(a)(ii), then BSC will cease to be
bound by this Section 2.03 during the last nine months of such 12-month notice
period.
SECTION 2.04 Exclusivity.
Notwithstanding anything in this Agreement to the contrary, during the
term of this Agreement, Celsion may not enter into any development,
distribution, license or similar agreement with respect to the Product, the
application of any of the Proprietary Rights or any thermal therapy based
product for treatment of BPH with Persons, other than BSC, in the Territory;
provided, however, that if BSC has provided a notice of termination to Celsion
under Section 8.03(a)(ii), then Celsion will cease to be bound by this Section
2.04 during the last nine months of such 12-month notice period. Celsion may
enter into such an agreement in any Excluded Market if such agreement (a) has a
maximum term of five years or less and (b) provides Celsion with the right to
terminate such agreement, in its sole discretion, either upon (i) advance notice
of one year or less or (ii) failure to achieve performance-based milestones set
forth in such agreement.
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SECTION 2.05 Services Provided by BSC.
BSC shall be responsible for installing the Control Unit at its
customers' sites, training its customers' staff to operate and use the Products
and servicing the Control Unit on an on-going basis after the warranty period
for such Control Units has expired.
SECTION 2.06 Training Advice and Assistance.
Celsion shall provide reasonable technical assistance, materials and
training regarding the Products for BSC's representatives in order for BSC to
provide the services set forth in Section 2.05 to assist BSC in marketing the
Products, including such information as is necessary or appropriate for BSC to
prepare such other manuals, promotional materials and warning labels deemed
necessary or appropriate by BSC.
SECTION 2.07 Development Efforts.
During the term of this Agreement, Celsion shall use its Commercially
Reasonable Efforts to initiate, pursue and advance (including, without
limitation, through continuing research and development) the Products and the
Proprietary Rights. Celsion shall keep BSC regularly informed of Celsion's
development plans and manufacturing activities (including, without limitation,
providing BSC with the right to review Celsion's development plans with respect
to Products and Improvements on a quarterly basis), and shall consult with BSC
in good faith regarding such plans and activities.
SECTION 2.08 Service Capability.
Prior to the Launch Date, Celsion shall establish internally, or enter
into an outsourcing agreement for, a service capability to support any warranty
claims with respect to the Control Units.
SECTION 2.09 Manufacturing Costs.
Within 24 months of the Launch Date, Celsion shall have reduced the
total manufacturing costs of the Catheter Kits by * percent of the total
manufacturing costs of the Catheter Kits incurred by Celsion as of the Launch
Date.(2) If Celsion shall not have reduced such costs by * percent within 24
months of the Launch Date, the Catheter Transfer Price shall be reduced from *
percent of the Catheter Average Sales Price to * percent of the Catheter Average
Sales Price until Celsion reduces the total manufacturing costs of the Catheter
Kits incurred by Celsion as of the Launch Date by * percent; provided that, if
Celsion fails to reduce such cost by * percent within 36 months of the Launch
Date, the
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(2)* Material has been omitted and filed separately with the Commission.
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Catheter Transfer Price shall be reduced to * percent of the Catheter
Average Sales Price until Celsion reduces such costs by * percent.(3)
ARTICLE III
TERMS OF SUPPLY
SECTION 3.01 Supply Forecasts.
During the Distribution Term, BSC shall provide to Celsion, on a monthly
basis, a six-month forecast of expected orders of Products beginning with the
month following the month in which the forecast is delivered. With the exception
of the first month of the initial forecast delivered to Celsion, such forecasts
shall not constitute binding orders.
SECTION 3.02 Orders.
All orders of Products shall be on BSC's standard form of purchase order
used by BSC from time to time, and Celsion shall deliver the Products in
accordance therewith. BSC may send an initial stocking order for a Product prior
to receipt of FDA approval to market such Product; provided, however, that such
initial stocking order shall not exceed BSC's forecast for the first three
months of the Distribution Term. The provisions of this Agreement shall prevail
over any inconsistent statements or additional statements or provisions, rights
and obligations contained in any document related to this Agreement passing
between the parties hereto including, but not limited to, any order,
acknowledgment, confirmation or notice.
SECTION 3.03 Product Specifications; Packaging and Labeling.
All Products delivered by Celsion hereunder shall be in full compliance
with the Product Specifications and shall be ready for use and operation by the
end-user, including all packaging, labeling, instructions-for-use and
sterilization as approved by BSC. Subject to all applicable Regulatory Authority
requirements, all Products shall be labeled (including bar coding/UPN numbers)
in accordance with the procedures specified from time to time by BSC, and BSC
shall have final approval over all packaging and labeling for Products;
provided, however, that the reasonable cost of implementing all requests for
changes (other than changes required by Law) to the packaging and labeling of
the Products subsequent to BSC's initial requests with respect to the packaging
and labeling of the Products shall be borne by BSC. BSC maintains the right to
overlabel Products as it deems necessary but shall not utilize Trademarks except
in accordance with Article V, and shall provide Celsion with copies of any
additional labels used by BSC. BSC may, at its option, include any Product as a
component in any kit or collection of products (a "Bundled Product").
SECTION 3.04 Obligation to Supply.
(a) Celsion shall manufacture and supply Products to BSC in accordance
with this Agreement and the related orders on the date specified for delivery in
each order (which date shall not be
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(3)* Material has been omitted and filed separately with the Commission.
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earlier than 30 days after the date of the order) or, if no such date is
specified, within 30 days of receipt by Celsion of each order.
(b) If Celsion fails to supply at least * percent of BSC's monthly
orders for three consecutive months, then Celsion shall use its best efforts to
remedy the problem or secure an alternative source of supply within an
additional one month period, at no additional cost to BSC, and any such
alternative source of supply shall be on terms substantially identical to, and
no less favorable to BSC than, the terms of this Agreement.(4) If Celsion is
unable to remedy the problem to BSC's satisfaction or secure an alternative
source of supply acceptable to BSC within such one-month period after its
initial failure to supply, then at BSC's request Celsion shall transfer
manufacturing to another Person designated by BSC and provide BSC or such other
Person with a license to use all Proprietary Rights necessary to manufacture the
Products, at no additional cost to BSC or such other Person. In such event,
Celsion agrees to use its best efforts to take, or cause to be taken all
appropriate action, do or cause to be done all things necessary, proper or
advisable and execute and deliver such documents and other papers, as may be
required, for such transfer. For the purposes of this Section 3.04(b), Celsion
shall not have failed to supply at least * percent of BSC's monthly order for
any one month unless such failure results in BSC going into back-order during
such month (i.e., results in BSC having insufficient stock of the Product to
meet BSC's customer orders for such month).
(c) If Celsion fails to deliver at least * percent of the required
amount of Products for a consecutive 75 day period, the prices paid by BSC for
Products delivered hereunder shall be reduced by ten percent until such failure
has been cured for at least two consecutive months.
(d) Celsion shall make available at least * Control Units in the first
18 months of the Distribution Term, unless BSC's forecasts during such 18-month
period provide for a lesser number in which case, Celsion shall only be required
to make available such lesser amount.
SECTION 3.05 Pricing and Payment.
(a) With respect to the Control Units, BSC shall pay Celsion, for sales
in the United States, * percent of the amount equal to the product of (i) the
result of (A) the monthly gross sales of Control Units by BSC and, if
applicable, its sub-distributors, less the amount equal to (1) trade and/or
quantity discounts actually allowed, (2) sales, value added or other excise
taxes and import duties of a similar nature paid and invoiced to customers, (3)
amounts repaid or credited
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(4)* Material has been omitted and filed separately with the Commission.
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by reason of purchase chargebacks or rebates, and (4) charges for freight,
insurance, handling and transportation separately invoiced, on a per unit basis
(calculated by dividing such total amount of gross sales by the number of
Control Units sold during such month), less (B) Average Fully Absorbed Costs (or
as may be otherwise negotiated, the "Control Unit Transfer Price"), multiplied
by (ii) the number of Control Units sold during such month. The Control Unit
Transfer Price for sales outside the United States shall be negotiated by
Celsion and BSC in good faith on a country by country basis.
(b) With respect to Catheter Kits, BSC shall pay Celsion an amount equal
to the product of (i) * percent of the Catheter Average Sales Price (or as may
be otherwise negotiated, the "Catheter Transfer Price"), multiplied by (ii) the
number of Catheter Kits sold per month.(5) If at any time, BSC's margin on the
sale of Catheter Kits falls below * percent or the list price of the Catheter
Kit is reduced to less than $*, Celsion and BSC shall immediately renegotiate
in good faith the percentage of the Catheter Average Sales Price payable to
Celsion. The Catheter Transfer Price for sales outside the United States shall
be negotiated by Celsion and BSC in good faith on a country by country basis.
(c) By the tenth (10th) Business Day of each month, BSC shall furnish to
Celsion (i) a statement setting forth its gross sales of Control Units (by
product number and customer) less insurance, shipping, taxes, discounts and
rebates separately invoiced in the previous month, (ii) a statement setting
forth the total number of Catheter Kits (by product number and customer) sold in
the previous month, and (iii) a report certifying the inventory of unsold and
"unplaced" Control Units and Catheter Kits as at the end of the previous month,
together with a reconciliation of the opening inventory for such month,
inventory movements by category (receipts, shipments, samples, returns,
rejections and other categories to be mutually agreed upon by Celsion and BSC)
and the closing inventory for such month.
(d) By the fifteenth (15th) Business Day of each month, Celsion shall
invoice BSC for all Control Units sold and shipped to BSC's customers (at the
Control Unit Transfer Price) and all Catheter Kits shipped to BSC's designated
delivery points (at the Catheter Kit Transfer Price), in each case during the
previous month. BSC shall pay each invoice within 90 days after the date of such
invoice. If payment is made within ten (10) Business Days after receipt of an
invoice, BSC shall receive a two percent discount from the total price owed
pursuant to such invoice.
(e) Each of Celsion and BSC shall promptly notify the other of any
disputed charges on any invoice or report, and the parties shall thereafter
promptly cooperate with each other to resolve such dispute.
(f) BSC's monthly gross revenues from the sale of Control Units and the
Catheter Average Sales Price shall be calculated based on the management
accounts of BSC maintained in accordance with United States generally accepted
accounting principles consistently applied. BSC shall maintain accurate records
and books of account sufficient to substantiate these calculations, including
records of the quantities of Control Units and Catheter Kits sold. Upon
reasonable notice to BSC, Celsion shall have the right to conduct
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(5)* Material has been omitted and filed separately with the Commission.
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an audit, (i) not more than once per Year, through its auditor, Stegman &
Company (or, if such firm shall decline or is unable to act, such other
accounting firm mutually acceptable to Celsion and BSC), of the calculation of
BSC's monthly gross revenues from the sale of Control Units and the Catheter
Average Sales Price, and to examine the records and books of account of BSC in
connection therewith and (ii) not more than twice per Year, through an
independent accounting firm, of the inventory and inventory reports and records
of the Control Units and Catheter Kits. Celsion shall bear the full cost and
expense of such audit, unless a discrepancy in excess of ten percent in favor of
Celsion is discovered, in which event BSC shall bear the full cost and expense
of such audit.
(g) Average Fully Absorbed Costs shall be calculated based on the
management accounts of Celsion maintained in accordance with United States
generally accepted accounting principles consistently applied. Celsion shall
maintain accurate records and books of account sufficient to substantiate this
calculation, including records of the quantities of Control Units supplied. Upon
reasonable notice to Celsion, BSC shall have the right to conduct an audit, not
more than once per Year, through its auditor, Ernst & Young LLP (or, if such
firm shall decline or is unable to act, such other accounting firm mutually
acceptable to Celsion and BSC), of the calculation of Average Fully Absorbed
Costs, and to examine the records and books of account of Celsion in connection
therewith. BSC shall bear the full cost and expense of such audit, unless a
discrepancy in excess of ten percent in favor of BSC is discovered, in which
event Celsion shall bear the full cost and expense of such audit.
(h) Prior to the launch of BPH 800, the parties shall consult with one
another in good faith regarding the placement of Control Units (other than
Control Units sold to customers) at customer sites and the terms and conditions
thereof, including, without limitation, through any exchange, leasing, purchase
or trial program; provided, however, that any Control Units (other than Control
Units sold to customers) and the placement thereof, shall be at no cost to BSC.
(i) With respect to Catheter Kits sold as part of a Bundled Product, the
Catheter Transfer Price for each Catheter Kit shall be equal to the product of
(i) the sales price of the Bundled Product, multiplied by (ii) the quotient
obtained by dividing the Catheter Average Sales Price (for the relevant six
month period) by the sum of the stand-alone Average Sales Price for all products
in the Bundled Product (for the corresponding six month period); provided,
however, that if any product in the Bundled Product was not sold on a
stand-alone basis in the relevant six month period, then the fair market value
of the relevant product, as mutually determined by BSC and Celsion, shall be
used in lieu of the Average Sales Price of that product.
(j) With respect to Control Units sold as part of a Bundled Product, the
Control Unit Transfer Price for each Control Unit shall be equal to the product
of (i) the sales price of the Bundled Product, multiplied by (ii) the quotient
obtained by dividing the Control Unit Transfer Price (for the relevant month) by
the sum of the stand-alone Average Sales Price for all products in the Bundled
Product (for the relevant month); provided, however, that if any product in the
Bundled Product was not sold on a stand-alone basis in
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the relevant month, then the fair market value of the relevant product, as
mutually determined by BSC and Celsion, shall be used in lieu of the Average
Sales Price of that product.
(k) For purposes of Sections 3.05(i) and (j), the "Average Sales Price"
means the total amount of gross sales of a product for the relevant period, less
the amount equal to (i) trade and/or quantity discounts actually allowed, (ii)
sales, value added or other excise taxes and import duties of a similar nature
paid and invoiced to customers, (iii) amounts repaid or credited by reason of
purchase chargebacks or rebates, and (iv) charges for freight, insurance,
handling and transportation separately invoiced, on a per unit basis (calculated
by dividing such total amount of gross sales by the number of products sold
during such period).
(l) If, in the reasonable opinion of BSC, it becomes necessary for BSC
to pay any Person, other than Celsion, royalties or license fees under any
patent license by such Person to BSC existing as of the date hereof in respect
of patents covering Products, Celsion shall reimburse BSC for all such royalties
and fees, and BSC may, at its option, set off and deduct from payments due to
Celsion pursuant to this Section 3.05, the royalties and fees paid by BSC. As of
the date hereof, BSC represents and warrants to Celsion that it is not a party
to any patent license under which BSC is required to pay any Person, other than
Celsion, royalties or license fees in respect of patents covering Products,
except as disclosed to Celsion by BSC in writing.
SECTION 3.06 Samples.
Upon BSC's request, Celsion shall provide to BSC, free of charge, such
number of Catheter Kits in sterile, human-use form for use as samples, with such
labeling as specified by BSC, and such number of Catheter Kits in non-sterile
form and Control Units, for use in sales demonstrations and trade shows, as BSC
may reasonably request; provided that no such Catheter Kits or Control Units are
sold or otherwise distributed to BSC's customers; provided further that such
Catheter Kits and Control Units shall not be included in the calculation of
Catheter Average Sales Price and Control Unit Transfer Price, respectively.
SECTION 3.07 Shipping.
Celsion shall ship Products ordered by BSC hereunder in accordance with
the orders therefor via common carrier selected by BSC, at Celsion's expense,
FOB to BSC's customers for the Control Unit and to BSC's designated delivery
point for the Catheter Kits. Risk of loss or damage shall pass to BSC only upon
the arrival of the Products at such destinations.
SECTION 3.08 Acceptance.
(a) Each shipment of Products from Celsion to BSC shall contain such
quality control certificates reasonably requested by BSC certifying that the
Products are in conformity with the Product Specifications and all Product
Approvals. Notwithstanding any
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prior inspection or payments, all Products shall be subject to final inspection
and acceptance at BSC's designated destination point within 60 days after
delivery. BSC shall notify Celsion within 60 days after delivery of any apparent
defective material or workmanship or non-conformity of any Product to the
Product Specifications, Product Approvals or order. If BSC fails to so notify
Celsion, BSC shall be deemed to have accepted the Products; provided that the
warranty set forth in Section 7.02(a) shall survive acceptance of the Product by
BSC.
(b) Without prejudice to any other right or remedy of BSC, in case any
item is defective in material or workmanship, or otherwise not in conformity
with the Product Specifications, Product Approvals or the requirements of BSC's
order, BSC shall have the right to reject it. Any item that has been rejected
must be replaced by and at the expense of Celsion promptly after notice. BSC
shall not be required to pay for any rejected item, or its shipping costs or any
other costs related thereto. BSC shall return all rejected Products to Celsion
at Celsion's expense.
SECTION 3.09 Changes.
Celsion shall not make any changes to any Product (including its
manufacturing process or labeling) or to the Product Specifications, unless
approved by BSC in writing in advance, except to the extent required by Law.
Celsion shall, to the extent possible, notify BSC not less than 30 days in
advance of any change to the Product Specifications to be made as required by
Law.
SECTION 3.10 Product Returns.
Celsion shall accept returns of any Product shipped by Celsion hereunder
(and not resaleable to BSC's customers) if: (i) the request to return such
Product is received within 90 days of invoice date (or, if later, the date that
shipment is received); and (ii) the Product is returned in good condition and in
its original packaging. Nothing express or implied in this Section 3.10 shall be
deemed to modify or diminish the right of BSC to reject any Products in
accordance with the provisions of Section 3.08.
ARTICLE IV
REGULATORY APPROVALS AND COMPLIANCE
SECTION 4.01 General.
Celsion shall be responsible, at its expense, for obtaining, maintaining
and complying with all regulatory requirements and approvals (including all
Product Approvals) that Celsion and BSC mutually agree are necessary or useful
to promote and sell the Products in the Territory and shall pursue all such
requirements and approvals necessary and useful to promote and sell the Products
in the Territory. Celsion shall promptly notify BSC and provide to BSC a copy or
transcription, if available, of any communication from the
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FDA and any Foreign Regulatory Authority relating to the Products, the marketing
thereof or any related matter (including copies of all Product Approvals),
whether inside or outside the Territory. Celsion shall consult with BSC in
pursuing all regulatory requirements and approvals (including all Product
Approvals), and shall permit BSC to review and comment upon Celsion's regulatory
and clinical trial plans for the Territory. Unless the parties otherwise agree,
all regulatory approvals shall be obtained in the name of Celsion. BSC may from
time to time agree to assist Celsion in obtaining any regulatory approval
(including any Product Approval) and if BSC so agrees, it shall use its
Commercially Reasonable Efforts to obtain such regulatory approval; provided
that Celsion shall reimburse BSC for all reasonable costs and expenses
(including the cost of personnel occupied) in obtaining such regulatory
approval.
SECTION 4.02 Data.
Celsion shall, to the extent permitted by Law, provide to BSC copies of
its existing scientific, medical, technical and other data related to the
Products to support BSC's marketing activities. Celsion shall update the data
submissions it makes under this Section 4.02 and provide BSC with all new data
promptly after the same is developed, assembled or comes to the attention of
Celsion. Celsion shall also periodically (and in any event, no less frequently
than once per calendar quarter) provide BSC with a written report summarizing
the progress of all clinical trials with respect to any Product.
SECTION 4.03 Traceability Program.
BSC shall be responsible for maintaining medical device vigilance
systems in the Territory as required of a distributor of products such as the
Products by local regulations, and shall provide Celsion with reasonable access
to such records. Each party shall inform the other promptly if it becomes aware
of any medical complaint required to be reported to any regulatory authority in
the Territory.
SECTION 4.04 Recalls.
(a) Notwithstanding anything in this Agreement to the contrary, BSC
shall have the right to manage any recall within the Territory and the
obligations of the parties in Sections 4.04(b) and (c) are subject to such
right.
(b) If, in the judgment of Celsion or BSC, any Product defect or any
government action requires a recall of, or the issuance of an advisory letter
regarding, any Product, either party may undertake such recall or issue such
advisory letter after consultation with the other party. Each party shall notify
the other party in a timely manner prior to making any recall or issuing any
advisory letter. The parties shall endeavor to reach an agreement prior to
making any recall or issuing any advisory letter regarding the manner, text and
timing of any publicity to be given such matters in time to comply with any
applicable legal or regulatory requirements, but such agreement shall not be a
precondition to any action that either party deems necessary to protect users of
the Products or to comply with any applicable governmental orders or mandates.
The parties agree to provide
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reasonable assistance to one another in the event of any recall or issuance of
any advisory letter. Celsion shall promptly pay or reimburse BSC for the
reasonable costs of effecting such recall or issuing such advisory letter,
including costs related to return of recalled Products and refunding to BSC the
purchase price paid by BSC for recalled Products, including Products in BSC's
inventory; provided, however, that to the extent such recall or the issuance of
such advisory letter results from an act or omission of BSC, BSC shall be
responsible for the costs of effecting such recall or issuing such advisory
letter, including costs related to return of recalled Products, to the extent
such recall or the issuance of such advisory letter results from the act or
omission of BSC.
(c) In the event of a recall of any Product, Celsion shall correct any
deficiency relating to its manufacturing, packaging, testing, labeling, storing
or handling of such Product, if applicable, and shall, at BSC's option, either,
at its cost replace each unit of the Product recalled (including units held in
inventory by BSC or its customers) with a corrected Product within a reasonable
period of time, or refund the purchase price therefor. Celsion shall reimburse
BSC for all costs and expenses (including shipping, quality control testing,
notification and restocking costs) incurred by BSC as a result of any recall.
SECTION 4.05 Notices.
Each of Celsion or BSC shall notify the other immediately if it becomes
aware of any issue with a Product, including its testing, manufacture, labeling,
packaging or use, occurring within the Territory or outside of the Territory,
including any issue relating to regulatory compliance, unusual or unexpected
reactions or events, malfunctions, safety or efficacy of or attributable to any
Product. Without limiting the generality of the foregoing, each of Celsion or
BSC shall notify the other immediately if it becomes aware of any death or
bodily injury caused by a Product (or suspected to be caused by a Product) or
any malfunction of a Product occurring within the Territory or outside of the
Territory.
SECTION 4.06 Compliance with Laws.
(a) Celsion shall comply with all applicable Laws pertaining to the
testing, manufacture, labeling or packaging of the Products and in any other
manner pertaining to the performance by Celsion of its obligations under this
Agreement, including the maintenance of ongoing quality assurance and testing
procedures to comply with applicable regulatory requirements. Without limiting
the generality of the foregoing, Celsion shall (i) report to the FDA and every
applicable Foreign Regulatory Authority within any relevant time periods all
events that are required to be reported (including any death or serious bodily
injury caused by a Product); and (ii) deliver, within the permitted time
periods, all annual or other periodic reports required to be delivered to the
FDA and every applicable Foreign Regulatory Authority.
(b) Each of Celsion and BSC shall comply with all applicable Laws
pertaining to its respective obligations under this Agreement with respect to
the import, export, distribution, sales and marketing of the Products.
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SECTION 4.07 Manufacturing Requirements.
(a) Celsion shall have all Products manufactured by a third party
acceptable to BSC and on such terms and conditions acceptable to BSC.
(b) All Products supplied to BSC under this Agreement shall be
manufactured in accordance with (a) the Product Specifications, (b) applicable
regulations relating to Good Manufacturing Practices and similar protocols
required by the Act ("GMP"), quality system regulations of the FDA ("QSR"),
including master device and lot history records, and ISO 9001 and EN 46001
requirements, (c) other pertinent rules and regulations of the FDA and any
Foreign Regulatory Authorities in other applicable jurisdictions and (d) BSC's
quality assurance requirements. Upon the request of BSC, Celsion shall provide
BSC with written evidence of compliance with the criteria set forth in the
preceding sentence. During the term of this Agreement, Celsion shall maintain or
cause to be maintained registration of each facility in which any Product is
manufactured as a certified medical device manufacturing facility and shall
maintain such facility registration with all applicable Regulatory Authorities
or cause such facility to be maintained such that the facility would comply with
GMP and QSR.
SECTION 4.08 BSC Inspection Rights.
(a) BSC shall have the right to have its representatives present at the
plants and production facilities relating to or used in connection with the
manufacture of the Products during normal business hours to conduct an initial
inspection and periodic inspections of such plants and facilities and the
manufacturing procedures for compliance with GMP and QSR, the Product
Specifications and BSC's quality assurance requirements and to inspect Celsion's
inventory of Products, work-in-process, raw materials to be used for the
Products, production records and such other matters as may be pertinent to
proper quality assurance of the Products to be delivered hereunder. BSC agrees
to give Celsion a minimum of two Business Days' prior notice of any such
inspection. Celsion shall promptly use its best efforts to take such action as
is required to correct any deficiencies identified by BSC relating to the
production of any Product.
(b) Celsion agrees to assist BSC in arranging visits and inspection of
the plants or production facilities at which Celsion's vendors manufacture any
component, material, sub-assembly or service for any Product. Celsion may not
outsource manufacturing of any Product or any sub-components of any Product, or
change any supplier, including engaging a new supplier or changing an existing
supplier, for any component material, sub-assembly or service relating to any
Product without the prior written consent of BSC (which consent shall not be
unreasonably withheld).
SECTION 4.09 Regulatory Audit.
Celsion shall permit authorized representatives of any Regulatory
Authority to inspect Celsion's plant and production facilities relating to or
used in connection with the manufacture of the Products and shall promptly
notify BSC when Celsion receives notice of
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any such inspection. Celsion shall advise BSC of the findings of any regulatory
inspection and shall take the steps necessary to correct promptly any compliance
deficiencies found by the Regulatory Authority relating to the manufacture of
the Products. Celsion further agrees to use its best efforts to provide to BSC
such documentation or conduct such analyses as BSC may reasonably request in
connection with any regulatory submission or audit.
SECTION 4.10 Clinical Trials.
Celsion shall review with BSC the selection of clinical sites of any
clinical trial to be conducted with respect to the Products. Celsion shall, at
its own expense, be responsible for conducting and managing all clinical trial
programs in the Territory necessary or desirable in order to fulfill Celsion's
obligations under this Article IV.
SECTION 4.11 Complaints.
Celsion shall perform complaint evaluations in order to investigate the
cause of any complaints with respect to any aspect of the Product or its
performance and to determine any required corrective actions. BSC shall perform
complaint evaluations to investigate the cause of any complaints with respect to
the services provided by BSC pursuant to Section 2.05 and to determine any
required corrective action. Celsion and BSC shall each maintain records of such
investigations as required by GMP. Each party shall, within seven days from the
time it receives a request from the other party, perform a complete
investigation in response to any complaint including a root cause analysis, and
formulate corrective action recommendations to address the issues raised by such
complaint. Each party shall also maintain a cross reference system from its
complaint handling system to the other party's complaint handling system.
Celsion and BSC shall complete all corrective actions (including corrective
actions requested by the other party), within 90 days of such corrective actions
being identified or requested, as the case may be.
ARTICLE V
INTELLECTUAL PROPERTY
SECTION 5.01 License.
Subject to the terms and conditions of this Agreement and, with respect
to Sublicensed Technology, subject to limitations contained in the license
agreements pursuant to which Celsion was granted rights in the Sublicensed
Technologies, Celsion hereby grants BSC a royalty-free, exclusive,
sub-licensable license under the Patents, Copyrights and Trade Secrets,
including all Intellectual Property therein, solely to market, distribute, have
distributed, import, export, use, sell and offer to sell Products in the
Territory, subject only to Celsion's rights to distribute, have distributed and
sell Products to BSC pursuant to the terms of this Agreement and to Celsion's
rights under Section 2.04 with respect to Products to be distributed in an
Excluded Market (the "Licensed Technology"). BSC shall not sub-
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license the rights or obligations granted pursuant to this Section 5.01 without
providing prior written notice thereof to Celsion.
SECTION 5.02 License to Sublicensed Technology.
Celsion shall obtain, at its expense, all necessary consents and
approvals to effectuate the licenses granted pursuant to Section 5.01 with
respect to Licensed Technology that is in the form of Sublicensed Technology.
SECTION 5.03 Trademark License.
(a) Celsion hereby grants BSC a fully paid up, royalty-free,
sub-licensable license to use the Trademarks solely in connection with the
marketing, distribution, import, export, use, offer to sell and sale of the
Products in the Territory during the term of this Agreement. Celsion shall take
such actions as are reasonably required to maintain the Trademarks in effect,
and shall inform BSC of any changes in or additions to the Trademarks. BSC
acknowledges that Celsion is the owner of the Trademarks and agrees that BSC
shall not at any time do, cause to be done, or permit any act or thing
inconsistent with, contesting or in any way impairing or tending to impair such
ownership. BSC agrees that all use of the Trademarks by BSC shall inure to the
benefit of and be on behalf of Celsion and that nothing in this Agreement shall
give BSC any right, title or interest in the Trademarks other than the right to
use the Trademarks in accordance with this Agreement. BSC agrees that it will
not challenge the title or ownership of Celsion to the Trademarks or attack or
contest the validity of the Trademarks.
(b) BSC shall not be obligated to use the Trademarks in connection with
the marketing, distribution, import, export, use, offer to sell and sale of any
Product; provided, however, that if BSC does not use a Trademark, then Celsion
shall have the right to approve the product name and trademark(s) to be used
with respect to the Products, which approval shall not be unreasonably withheld
or delayed. Without limiting the foregoing, BSC shall be entitled to use its own
trademarks in connection with the marketing, distribution, import, export, use,
offer to sell and sale of Products. BSC shall provide to Celsion for review and
comment copies of its promotional and marketing materials prior to their public
release and shall reasonably consider all comments made by Celsion regarding the
use of the Trademarks or the BSC product name and trademark(s) to be used with
respect to the Products.
(c) In the event that BSC requests Celsion to use any marks (not
including the name "Boston Scientific Corporation", "BSC" or any marks related
to such names or other marks used by BSC with respect to other products and/or
services offered by BSC) solely and exclusively in connection with the
promotion, marketing, sale or distribution of the Products (the "Product
Marks"), Celsion shall comply with such request, and such Product Marks shall be
owned by Celsion and included in the grant of license under Section 5.03(a) and
(b).
SECTION 5.04 Maintenance of Intellectual Property.
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Celsion shall perform all filings, recordings and other acts, and pay
all required fees and taxes, to maintain and protect its interest in each item
of Licensed Technology. Celsion shall not permit any item of Owned Licensed
Technology and shall use its Commercially Reasonable Efforts to not permit any
item of Sublicensed Technology to become abandoned, dedicated to the public,
disclaimed or to lapse without the prior written consent of BSC. Celsion shall
not sell, assign or grant any security interest in or to any item of Owned
Licensed Technology or Sublicensed Technology without the prior written consent
of BSC, other than agreed pursuant to the arrangements referred to in Section
3.05(h).
SECTION 5.05 Infringement of Owned Licensed Technology.
(a) In the event that either party obtains knowledge of any actual or
threatened infringement or misappropriation by another Person of any of the
Owned Licensed Technology, such party shall notify the other party in writing
promptly of such actual or threatened infringement or misappropriation and
provide the other party with any available evidence of such actual or threatened
infringement or misappropriation.
(b) Celsion, at its expense, shall have the first right to commence,
prosecute and settle or otherwise compromise any dispute, action, suit or
proceeding ("Proceeding") involving or against any other Person believed to have
infringed or misappropriated any Owned Licensed Technology. In the event that
Celsion institutes a Proceeding in the Territory with respect to infringement or
misappropriation, BSC shall have the right to join or intervene, at BSC's sole
cost and expense, in such Proceeding. No settlement, consent judgment or other
voluntary final disposition of any Proceeding brought pursuant to this Section
5.05(b) may be entered into by either party without the consent of the other
party, which consent shall not be unreasonably withheld or delayed.
(c) In the event Celsion does not institute a Proceeding to obtain a
discontinuance of or remedy for any actual or threatened infringement or
misappropriation of the Owned Licensed Technology (whether in or outside the
Territory) within 60 days of the date of receipt by Celsion of a written demand
from BSC, then BSC, may institute a Proceeding with respect to the actual or
threatened infringement or misappropriation at BSC's sole cost and expense. If
required by Law, Celsion shall permit any action under this Section 5.05(c) to
be brought in its name, including being joined as party-plaintiffs.
(d) In the event a party brings an infringement action pursuant to this
Section 5.05, the other party shall cooperate fully, including, if required to
bring such action, the furnishing of a power of attorney.
(e) With respect to any Proceeding instituted by Celsion under this
Section 5.05(b), any recovery shall first be applied in satisfaction of
Celsion's out-of-pocket expenses and fees, including attorneys' fees and
expenses, then Celsion shall be entitled to retain all punitive damages and the
remainder shall be divided equally between Celsion and BSC; provided that, where
recovery includes both punitive and compensatory damages, the satisfaction of
Celsion's out-of-pocket expenses and fees shall be paid 50 percent from
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punitive damages and 50 percent from compensatory damages. With respect to any
Proceeding instituted by BSC under Section 5.05(c), any recovery shall belong to
BSC.
SECTION 5.06 Infringement of Sublicensed Technology.
In the event that any party obtains knowledge of any actual or
threatened infringement or misappropriation by another Person of any of the
Sublicensed Technology, such party shall notify the other party in writing
promptly of such actual or threatened infringement or misappropriation and
provide the other party with any available evidence of such actual or threatened
infringement or misappropriation. Celsion shall use its Commercially Reasonable
Efforts to obtain a discontinuance of or remedy for any actual or threatened
infringement or misappropriation, including promptly informing the owner of the
relevant Sublicensed Technology and working with such owner to obtain a
discontinuance of or remedy for any actual or threatened infringement or
misappropriation.
SECTION 5.07 License Fee; Escrow Amount.
(a) Within five Business Days following the Launch Date, BSC shall pay
Celsion an amount equal to $* million by wire transfer of immediately available
funds to an account designated by Celsion.(6)
(b) Within five Business Days following the earlier of (i) the Launch
Date and (ii) the commencement of any *, but in any event not before the date of
receipt of FDA approval to market BPH 800, BSC shall deliver to an escrow
account an amount equal to $* million (the "Escrow Amount") to be held in escrow
pursuant to the Escrow Agreement, for a period of 36-months from the Launch
Date, for payment of any * incurred by Celsion or BSC in connection with any *
related to the * of third party * by the manufacture, use or sale of the
Products ("*").
(c) Unless otherwise mutually agreed by the parties or as directed by a
final and nonappealable order, decree or judgment of a court of competent
jurisdiction, in accordance with the terms of the Escrow Agreement, the Escrow
Amount shall only be released (i) upon receipt by the escrow agent of a
certification reflecting * (including a copy of the first page of any invoices),
and (ii) on the last day of the 36-month period referred to in Section 5.07(b)
on which date the remaining Escrow Amount plus any interest or earnings thereon
shall be delivered to Celsion.
(d) All * exceeding the Escrow Amount shall be borne by Celsion.
------------------
(6)* Material has been omitted and filed separately with the Commission.
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ARTICLE VI
CONFIDENTIALITY
SECTION 6.01 Confidentiality.
During the term of this Agreement and for the period of five years
thereafter, the Receiving Party shall maintain Confidential Information in
confidence, and shall not disclose, divulge or otherwise communicate such
Confidential Information to others, or use it for any purpose, except pursuant
to, and in order to carry out, the terms and objectives of this Agreement. The
Receiving Party hereby shall exercise every reasonable precaution to prevent and
restrain the unauthorized disclosure of such Confidential Information by any of
its directors, officers, employees, consultants, subcontractors, or agents. Upon
termination of this Agreement, Celsion and BSC hereby shall return to the other,
upon demand, all Confidential Information in its possession or, upon demand, to
destroy such Confidential Information and provide a certificate to the other of
such destruction.
SECTION 6.02 Release from Restrictions.
The provisions of Section 6.01 shall not apply to any Confidential
Information disclosed hereunder that:
(a) is lawfully disclosed to the Receiving Party by an independent,
unaffiliated Person rightfully in possession of the Confidential Information and
under no confidentiality or fiduciary obligation not to make disclosure;
(b) becomes published or generally known to the public through no fault
or omission on the part of the Receiving Party;
(c) is developed independently by the Receiving Party without access to
the Confidential Information of the Disclosing Party;
(d) is legally required to be disclosed to the FDA; or
(e) a Receiving Party is legally compelled to disclose; provided,
however, that the Receiving Party shall provide prompt written notice of such
requirement to the Disclosing Party so that the Disclosing Party may seek a
protective order or other remedy or waive compliance with Section 6.01; and
provided further that in the event that such protective order or other remedy is
not obtained or the Disclosing Party waives compliance with Section 6.01, the
Receiving Party shall be permitted to furnish only that portion of such
Confidential Information that is legally required to be provided and the
Receiving Party shall exercise its Commercially Reasonable Efforts to obtain
assurances that confidential treatment shall be accorded such information.
SECTION 6.03 Public Announcements and Publications.
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Except as required by Law or by the requirements of any securities
exchange on which the securities of Celsion or BSC are listed, neither Celsion
nor BSC shall make, or cause to be made, any press release or public
announcement in respect of this Agreement or the transactions contemplated
hereby or otherwise communicate with any news media without the prior written
consent of the other, and Celsion and BSC shall cooperate as to the timing and
contents of any such press release or public announcement.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.01 Mutual Representations and Warranties.
Each of Celsion and BSC hereby represents and warrants to the other as
of the date hereof as follows:
(a) the execution, delivery and performance of this Agreement by such
party have been duly authorized by all necessary action on the part of such
party;
(b) this Agreement has been duly executed and delivered by such party
and, assuming due authorization, execution and delivery by the other party,
constitutes a legal, valid and binding obligation of such party, enforceable
against such party in accordance with its terms, subject to (i) applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and
other laws relating to or affecting the rights of creditors generally
(including, without limitation, fraudulent conveyance laws) and (ii) the
exercise of judicial discretion in accordance with general principles of equity,
regardless of whether such enforceability is considered in a proceeding at law
or in equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance, or injunctive relief;
(c) such party's execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby and thereby do not
and will not (i) violate, conflict with or result in the breach of any provision
of the certificate of incorporation or by-laws of such party, (ii) conflict with
or violate any Law or governmental order applicable to such party or its assets,
properties or businesses, or (iii) conflict with, result in any breach of,
constitute a default (or event which with the giving of notice or lapse of time,
or both, would become a default) under, require any consent under, or give to
others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of, or result in the creation of any encumbrance on
any of its outstanding shares of common stock or preferred stock or any of the
assets or properties of such party pursuant to, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise or
other instrument or arrangement to which it is a party or by which any of such
party's shares of common stock or preferred stock or any of the party's assets
or properties is bound or affected; and
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(d) it is not a party to any litigation relating to, or that could
reasonably be expected to affect, its ability to perform its obligations under
this Agreement.
SECTION 7.02 Celsion Representations and Warranties.
Celsion hereby represents and warrants to BSC as of the date hereof and
as of the date of each delivery of Product as follows:
(a) all products supplied to BSC hereunder shall: (i) conform to the
appropriate Product Specifications, (ii) with respect to the Control Unit, be
free from defects in design, materials and workmanship for one year from the
date of delivery to the end-user and, with respect to the Catheter Kit, be free
from defects in design, materials and workmanship until the stated expiration
date on each Catheter Kit, (iii) at all times be merchantable and fit for
intended uses, and (iv) be free and clear of all liens and encumbrances, other
than agreed pursuant to the arrangements referred to in Section 3.05(h);
(b) the manufacture, use, import and sale of Products supplied to BSC
under this Agreement do not infringe, misappropriate, dilute or otherwise
violate the Intellectual Property of any Person;
(c) the use of the Licensed Technology and Trademarks does not infringe,
misappropriate, dilute or otherwise violate the Intellectual Property of any
Person;
(d) to Celsion's knowledge, after due inquiry, the Licensed Technology
includes all of the Intellectual Property necessary to develop, manufacture,
distribute, sell, use and export the Products;
(e) the Licensed Technology and Trademarks are valid and enforceable and
not subject to any outstanding consent, settlement, decree, order, injunction,
judgment or ruling that would impair the validity or enforceability of any such
Licensed Technology or Trademarks;
(f) Celsion is the exclusive owner of the entire and unencumbered right,
title and interest in and to the Owned Licensed Technology, and is entitled to
use and license the Owned Licensed Technology and Sublicensed Technology subject
only to the terms of license agreements with respect to the Sublicensed
Technology and copies of all such license agreements have been provided to BSC;
(g) Celsion has not granted any Person, other than BSC, a license to or
under any of the Licensed Technology; and
(h) no event has occurred with respect to Celsion which, if having
occurred after the date hereof would allow termination of this Agreement by BSC
pursuant to Section 8.03(c).
SECTION 7.03 DISCLAIMER.
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EXCEPT AS EXPRESSLY PROVIDED HEREIN, NEITHER PARTY MAKES ANY
REPRESENTATIONS OR WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING,
BUT NOT LIMITED TO, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR ANY OTHER MATTER WITH RESPECT TO ANY FINAL PRODUCT, WHETHER USED
ALONE OR COMBINED WITH OTHER DEVICES, OR OTHERWISE.
SECTION 7.04 Celsion Indemnity.
Celsion shall indemnify, defend and hold BSC and its Affiliates,
officers, directors, employees, agents, successors and assigns (the "BSC
Indemnified Parties") harmless from any and all suits, claims, actions, demands,
liabilities, interest, awards, judgments, penalties, expenses, costs, damages or
losses (including, without limitation, reasonable attorneys' fees and expenses)
actually suffered or incurred (each, a "Loss") by any BSC Indemnified Party
arising out of or resulting from:
(a) the breach of any representation or warranty, covenant or agreement
by Celsion contained in this Agreement; or
(b) any alleged injury, illness and/or death of any Person resulting
from any product supplied to BSC hereunder (except to the extent resulting from
the performance by BSC of its obligations under Sections 2.02 and 2.05).
SECTION 7.05 BSC Indemnity.
BSC shall indemnify, defend and hold Celsion and its Affiliates,
officers, directors, employees, agents, successors and assigns (the "Celsion
Indemnified Parties") harmless from any and all Losses by any Celsion
Indemnified Party arising out of or resulting from the breach of any
representation or warranty, covenant or agreement by BSC contained in this
Agreement or resulting from the performance by BSC of its obligations under
Sections 2.02 and 2.05.
SECTION 7.06 SPECIAL DAMAGES.
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR SPECIAL, INCIDENTAL,
INDIRECT OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT.
SECTION 7.07 Celsion Insurance.
Celsion shall maintain comprehensive general liability insurance,
including products liability, with a minimum liability coverage limit of $1
million dollars per occurrence.
SECTION 7.08 Intellectual Property Infringements.
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Notwithstanding anything in this Agreement to the contrary, in the event
an Intellectual Property infringement or misappropriation suit is brought
against BSC where BSC's marketing, use, sale, offer to sell, import, export
and/or distribution of Products is alleged to be infringing or misappropriating
any third party's Intellectual Property, BSC may retain its own counsel and
defend itself in such action; provided, however, (a) BSC shall not enter into
any settlement or consent agreement without the prior written consent of
Celsion, which consent shall not be unreasonably withheld and (b) BSC shall be
reimbursed, on a quarterly basis, for Losses incurred by BSC in connection
therewith. In order to enable BSC to exercise its rights pursuant to the
foregoing sentence, Celsion shall grant BSC access to any information that
relates to or may be useful in connection with any such suit and prompt and
immediate access on a priority basis to any relevant personnel of Celsion which
personnel have useful or relevant knowledge of or have been involved in the
handling of any such suit and to secure any cooperation of such personnel,
including their cooperation with respect to access to documents, depositions
(preparation for and the conduct of), verifications, affidavits and statements,
signing of pleadings and responses to discovery requests, testimony or
interviews in the course of or in relation to any such suit.
SECTION 7.09 Third Party Claims.
In the event that Celsion is conducting the defense with respect to
Losses arising from claims of any third party which are subject to the
indemnification provided for in Section 7.04, Celsion shall (a) consult with BSC
in good faith with respect to the choice of counsel and with respect to all
non-privileged aspects of the defense strategy and (b) not settle any such third
party claim without the prior written consent of BSC, which consent shall not be
unreasonably withheld, unless such settlement does not subject the Indemnified
Party to any monetary liability and includes a complete, unconditional release
of the Indemnified Party from all liabilities with respect to such claim or
demand. Nothing contained in the foregoing sentence shall be construed as to
release Celsion from its obligations under Section 7.04.
ARTICLE VIII
TERM AND TERMINATION
SECTION 8.01 Term.
This Agreement shall take effect as of the date hereof and shall remain
in full force and effect until the end of the Distribution Term, unless sooner
terminated in accordance herewith.
SECTION 8.02 Extension.
The Distribution Term shall be automatically extended for additional
successive one-year periods unless notice of non-extension is delivered by
either Celsion or BSC to the other no later than 90 days prior to the expiration
of the then-current term.
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SECTION 8.03 Termination.
(a) Subject to Section 8.05, this Agreement may be terminated:
(i) by mutual written consent of Celsion and BSC;
(ii) during the Distribution Term, by BSC upon 12 months' written
notice to Celsion;
(iii) by BSC, if Celsion (i) files in any court pursuant to any Law in
any country a petition in bankruptcy or insolvency or for
reorganization or for an arrangement or for the appointment of a
receiver or trustee of Celsion or of its assets, (ii) proposes a
written agreement of composition for extension of its debts,
(iii) is served with an involuntary petition against it, filed
in any insolvency proceeding, and such petition shall not be
dismissed within 60 days after filing thereof, (iv) is party to
any dissolution or liquidation, or (v) makes a general
assignment for the benefit of its creditors;
(iv) by Celsion or BSC upon 60 days written notice to the other party
in the event that the other party shall have materially breached
any of its obligations, representations or warranties hereunder
and shall not have cured such breach to the reasonable
satisfaction of the other party prior to the expiration of such
60-day period. Without limiting the foregoing, failure by
Celsion to supply at least 80 percent of BSC's monthly purchase
orders for three consecutive months or for an aggregate of 120
days in any Year shall be deemed to be a material breach of an
obligation by Celsion hereunder; provided, however, that for the
purposes of this Section 8.03(a)(iv), Celsion shall not have
failed to supply at least 80 percent of BSC's monthly order for
any one month unless such failure results in BSC going into
back-order during such month (i.e., results in BSC having
insufficient stock of the Product to meet BSC's customer orders
for such month).
(b) This Agreement shall terminate automatically if the Transaction
Agreement is terminated by either party for any reason.
SECTION 8.04 Effect of Termination.
Notwithstanding anything to the contrary contained herein, Celsion shall
continue to comply with all of its duties and obligations hereunder necessary or
appropriate, including Celsion's obligation to fill BSC's orders, to permit BSC
to fulfill its obligations to deliver Products pursuant to customer orders
outstanding at the time of such termination or expiration until such customer
orders have expired and to sell or otherwise distribute all or any portion of
BSC's inventory of Products. Termination of this Agreement shall not affect
rights and obligations of either party that may have accrued prior to the
effective date of
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termination or any obligation that by its nature or express terms survives
termination. Without limiting the foregoing, the provisions of Articles VI, VII
and IX shall survive any expiration or termination of this Agreement. At any
time during the six months immediately following termination or expiration of
this Agreement, BSC shall, in addition to its other rights hereunder, have the
right to require Celsion to repurchase all or any portion of BSC's inventory of
Products at cost and with the cost of shipping such inventory to Celsion to be
borne by BSC.
SECTION 8.05 Force Majeure.
Subject to the last sentence of this Section 8.05, any delay in the
performance of any of the duties or obligations of either Celsion or BSC
hereunder (except for payment obligations) shall not be considered a breach of
this Agreement and the time required for performance shall be extended for a
period equal to the period of such delay, provided that such delay has been
caused by or is the result of any of the following: acts of God; acts of the
public enemy; insurrections; riots; embargoes; labor disputes, such as strikes,
lockouts or boycotts; fires; explosions; floods; earthquakes; and mud slides,
provided that any of such events must be (a) beyond the reasonable control of
the party declaring a force majeure event and (b) not owing to the negligence or
willful misconduct of the party declaring a force majeure event. The party
declaring a force majeure event shall give prompt notice to the other party of
such cause, and shall take whatever reasonable steps are necessary to relieve
the effect of such cause as rapidly as possible. If the force majeure event
continues for a consecutive 90-day period, the delay in the performance of any
of the duties or obligations of the party declaring the force majeure event
shall cease to be protected by this Section 8.05 and the other party may
terminate this Agreement immediately upon notice to the party declaring the
force majeure event.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Expenses.
Except as otherwise specified in this Agreement, all costs and expenses,
including, without limitation, fees and disbursements of counsel, financial
advisors and accountants, incurred in connection with this Agreement and the
transactions contemplated by this Agreement shall be paid by the party incurring
such costs and expenses.
SECTION 9.02 Notices.
All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given or made (and shall be deemed to
have been duly given or made upon receipt) by delivery in person, by an
internationally recognized overnight courier service, by telecopy or registered
or certified mail (postage prepaid, return receipt requested)
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to the respective parties at the following addresses (or at such other address
for a party as shall be specified in a notice given in accordance with this
Section 9.02):
(a) if to Celsion:
Celsion Corporation
10220-I Old Columbia Road
Columbia, Maryland 21046-1705
Attention: President and Chief Executive Officer
Facsimile No: (410) 290-5394
with a copy to:
Venable, Baetjer and Howard, LLP
Two Hopkins Plaza, Suite 1800
Baltimore, Maryland 21201
Attention: Michael J. Baader, Esq.
Facsimile No.: (410) 244-7742
if to BSC:
Boston Scientific Corporation
One Boston Scientific Place
Natick, MA 01760-1537
Attention: John Pedersen, President Microvasive Urology
Facsimile No: (508) 650-8956
with a copy to:
Boston Scientific Corporation
One Boston Scientific Place
Natick, MA 01760-1537
Attention: General Counsel
Facsimile No: (508) 650-8956
SECTION 9.03 Headings.
The descriptive headings contained in this Agreement are for convenience
of reference only and shall not affect in any way the meaning or interpretation
of the Agreement.
SECTION 9.04 Severability.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any Law or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full force and effect
for so long as the economic or legal substance of the transactions contemplated
by this Agreement is not affected in any manner materially
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adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in an acceptable manner in order that the
transactions contemplated by this Agreement are consummated as originally
contemplated to the greatest extent possible.
SECTION 9.05 Entire Agreement.
This Agreement, together with the Transaction Agreement, constitute the
entire agreement of the parties with respect to the subject matter thereof and
supersede all prior agreements and undertakings, both written and oral, among
the parties with respect to the subject matter thereof.
SECTION 9.06 Further Action.
Each of the parties hereto shall use reasonable best efforts to take, or
cause to be taken, all appropriate action, do or cause to be done all things
necessary, proper or advisable under applicable Law, and execute and deliver
such documents and other papers, as may be required to carry out the provisions
of this Agreement and consummate and make effective the transactions
contemplated by this Agreement.
SECTION 9.07 Assignment.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigned. Neither
party may assign this Agreement without the prior written consent of the other
party, provided that BSC may assign its rights and obligations under this
Agreement without the approval of Celsion to an Affiliate of BSC. No assignment
by either party permitted hereunder shall relieve the applicable party of its
obligations under this Agreement.
SECTION 9.08 Amendment.
This Agreement may not be amended or modified except (a) by an
instrument in writing signed by, or on behalf of, BSC and Celsion or (b) by a
waiver in accordance with Section 9.11.
SECTION 9.09 Governing Law and Venue.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware. The parties unconditionally and irrevocably
agree and consent to the exclusive jurisdiction of the courts located in the
State of Delaware and waive any objection with respect thereto, for the purpose
of any action, suit or proceeding arising out of or relating to this Agreement
or the transactions contemplated hereby, and further agree not to commence any
such action, suit or proceeding except in any such court.
SECTION 9.10 Counterparts.
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This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties in
separate counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by facsimile shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 9.11 Waiver.
Either party to this Agreement may (a) extend the time for the
performance of any of the obligations or other acts of the other party, (b)
waive any inaccuracies in the representations and warranties of the other party
contained herein or in any document delivered by the other party pursuant hereto
or (c) waive compliance with any of the agreements of the other party or
conditions to such party's obligations contained herein. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by
the party to be bound thereby. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent waiver of the
same term or condition, or a waiver of any other term or condition of this
Agreement. The failure of any party to assert any of its rights hereunder shall
not constitute a waiver of any of such rights. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 9.12 No Third Party Beneficiaries.
This Agreement shall be binding upon and inure solely to the benefit of
the parties and their permitted assigns and nothing herein, express or implied,
is intended to or shall confer upon any other Person any legal or equitable
right, benefit or remedy of any nature whatsoever.
SECTION 9.13 Independent Contractor.
In performing under this Agreement, each party shall be acting as an
independent contractor and shall not be considered or deemed to be an agent,
employee, joint venturer, or partner of the other party. Each party shall at all
times maintain complete control over its personnel and operations. Neither party
shall have, or shall represent that it has any power, right or authority to bind
the other party to any obligation or liability, or to assume or create any
obligation or liability on behalf of the other party.
SECTION 9.14 Specific Performance.
The parties hereto agree that irreparable damage would occur in the
event any provision of this Agreement was not performed in accordance with the
terms hereof and that the parties shall be entitled to specific performance of
the terms hereof, in addition to any other remedy at law or equity.
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SECTION 9.15 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE
PARTIES HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THAT FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO
THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 9.15.
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IN WITNESS WHEREOF, Celsion and BSC have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
CELSION CORPORATION
By: /s/ Daniel S. Reale
-----------------------------------
Name: Daniel S. Reale
Title: Executive Vice President
BOSTON SCIENTIFIC CORPORATION
By: /s/ Lawrence C. Best
-----------------------------------
Name: Lawrence C. Best
Title: Chief Financial Officer
<PAGE>
EXHIBIT A
ESCROW AGREEMENT
<PAGE>
EXHIBIT B
PATENTS
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EXHIBIT C
PRODUCT SPECIFICATIONS
<PAGE>
EXHIBIT D
SUBLICENSED TECHNOLOGY
<PAGE>
EXHIBIT E
TRADEMARKS