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Proc-Type: 2001,MIC-CLEAR
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Originator-Name: [email protected]
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<SEC-DOCUMENT>/in/edgar/work/0000897101-00-000959/0000897101-00-000959.txt : 20001009
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<SEC-HEADER>0000897101-00-000959.hdr.sgml : 20001009
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ACCESSION NUMBER: 0000897101-00-000959
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CONFORMED SUBMISSION TYPE: 10-K/A
15
PUBLIC DOCUMENT COUNT: 2
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CONFORMED PERIOD OF REPORT: 20000630
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FILED AS OF DATE: 20001006
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FILER:
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COMPANY DATA:
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COMPANY CONFORMED NAME: LECTEC CORP /MN/
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CENTRAL INDEX KEY: 0000805928
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STANDARD INDUSTRIAL CLASSIFICATION: [3845
25
] IRS NUMBER: 431301878
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STATE OF INCORPORATION: MN
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FISCAL YEAR END: 0630
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</COMPANY-DATA>
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FILING VALUES:
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FORM TYPE: 10-K/A
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SEC ACT:
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SEC FILE NUMBER: 333-72569
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FILM NUMBER: 736171
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</FILING-VALUES>
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BUSINESS ADDRESS:
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STREET 1: 10701 RED CIRCLE DR
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CITY: MINNETONKA
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STATE: MN
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ZIP: 55343
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BUSINESS PHONE: 6129332291
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</BUSINESS-ADDRESS>
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MAIL ADDRESS:
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STREET 1: 10701 RED CIRCLE DRIVE
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STREET 2: 10701 RED CIRCLE DRIVE
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CITY: MINNETONKA
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STATE: MN
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ZIP: 55343
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</MAIL-ADDRESS>
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</FILER>
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</SEC-HEADER>
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<DOCUMENT>
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<TYPE>10-K/A
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<SEQUENCE>1
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<FILENAME>0001.txt
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<TEXT>
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
63
WASHINGTON, D.C. 20549
64
65
-------------
66
67
FORM 10-K/A-1
68
69
-------------
70
71
(Mark One)
72
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
73
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30, 2000.
74
75
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
76
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _______.
77
78
Commission File Number: 0-16159
79
80
LECTEC CORPORATION
81
(Exact name of registrant as specified in its charter)
82
83
MINNESOTA 41-1301878
84
(State or other jurisdiction of (I.R.S. Employer Identification No.)
85
incorporation or organization)
86
87
10701 RED CIRCLE DRIVE, MINNETONKA, MINNESOTA 55343
88
(Address of principal executive offices) (Zip Code)
89
90
Registrant's telephone number, including area code: (952) 933-2291
91
92
-------------
93
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Securities registered pursuant to Section 12(b) of the Act: None
95
96
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par
97
value $0.01 per
98
share.
99
100
-------------
101
102
Indicate by check mark whether the Registrant (1) has filed all reports
103
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
104
1934 during the preceding 12 months (or for such shorter period that the
105
Registrant was required to file such reports), and (2) has been subject to such
106
filing requirements for the past 90 days. Yes [X] No [ ]
107
108
Indicate by check mark if disclosure of delinquent filers pursuant to
109
Item 405 of Regulation S-K is not contained herein; and will not be contained,
110
to the best of the Registrant's knowledge, in the definitive proxy statement
111
incorporated by reference in Part III of this Form 10-K, or any amendment to
112
this Form 10-K. [ ]
113
114
The aggregate market value of the Common Stock held by non-affiliates
115
of the Registrant as of September 20, 2000 was $6,513,235 based upon the last
116
reported sale price of the Common Stock at that date by the Nasdaq Stock Market.
117
118
The number of shares outstanding of the Registrant's Common Stock as of
119
September 20, 2000 was 3,904,465 shares.
120
121
----------------------------
122
123
DOCUMENTS INCORPORATED BY REFERENCE
124
125
Part III of this Annual Report on Form 10-K incorporates by reference
126
information from the Registrant's Proxy Statement for its Annual Meeting of
127
Shareholders to be held November 16, 2000.
128
129
<PAGE>
130
131
132
On September 28, 2000, LecTec Corporation (the "Company") filed its
133
Annual Report on Form 10-K for the Fiscal Year Ended June 30, 2000 (the "Form
134
10-K"). The sole purpose of this Amendment 10-K/A-1 is to file an additional
135
Exhibit 10.16.
136
137
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
138
139
(a) Financial Statements, Schedules and Exhibits
140
141
1. Financial Statements
142
143
The following consolidated financial statements of the Company
144
and its subsidiaries are filed as a part of this Form 10-K in
145
Part II, Item 8:
146
147
(i) Report of Independent Certified Public Accountants
148
(ii) Consolidated Balance Sheets at June 30, 2000 and 1999
149
(iii) Consolidated Statements of Operations for the years
150
ended June 30, 2000, 1999 and 1998
151
(iv) Consolidated Statements of Comprehensive Loss for the
152
years ended June 30, 2000, 1999 and 1998
153
(v) Consolidated Statements of Shareholders' Equity for
154
the years ended June 30, 2000, 1999 and 1998
155
(vi) Consolidated Statements of Cash Flows for the years
156
ended June 30, 2000, 1999 and 1998
157
(vii) Notes to the Consolidated Financial Statements
158
159
2. Financial Statement Schedules
160
161
(i) Schedule II - Valuation and Qualifying Accounts, for
162
each of the three years in the period ended June 30,
163
2000
164
165
(ii) Other Schedules - All other schedules have been
166
omitted because of the absence of the conditions
167
under which they are required or because the required
168
information is included in the financial statements
169
or the notes thereto.
170
171
3. Exhibits
172
173
Method of
174
Filing
175
---------
176
177
3.01 Articles of Incorporation of Registrant, as
178
amended (1)
179
180
3.02 By-laws of Registrant (1)
181
182
10.01 Service Agreement dated July 1, 1986,
183
between LecTec International, Inc., a U.S.
184
Virgin Islands corporation, and LecTec
185
Corporation, relating to the sale, lease or
186
rental of certain property outside the
187
United States (1)
188
189
10.02 Distribution and Commission Agreement dated
190
July 1, 1986, between LecTec International,
191
Inc., a U.S. Virgin Islands corporation,
192
and LecTec Corporation, relating to the
193
sale, lease or rental of certain property
194
outside the United States (1)
195
196
197
-1-
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<PAGE>
199
200
201
202
10.03 Certificate of Secretary pertaining to
203
Resolution of Board of Directors of LecTec
204
Corporation, dated October 30, 1986,
205
implementing a Profit Sharing Bonus Plan (1)
206
207
**10.04 LecTec Corporation 1989 Stock Option Plan (2)
208
209
**10.05 LecTec Corporation 1991 Directors' Stock
210
Option Plan (2)
211
212
10.06 Building lease dated May 24, 1991 between
213
LecTec Corporation and Sierra Development
214
Co. for the lease of the manufacturing and
215
warehouse facility located in Edina,
216
Minnesota (2)
217
218
10.07 First amendment dated May 5, 1997 between
219
LecTec Corporation and Rushmore Plaza
220
Partners Limited Partnership for the
221
extension of the previous lease of the
222
manufacturing and warehouse facility
223
located in Edina, Minnesota (2)
224
225
10.08 Articles of Merger of Pharmadyne
226
Corporation into LecTec Corporation dated
227
December 31, 1997, whereby Pharmadyne, a
228
wholly-owned subsidiary, is merged into
229
LecTec Corporation (3)
230
231
**10.09 Change In Control Termination Pay Plan
232
adopted May 27, 1998, for the benefit of
233
certain employees of LecTec Corporation in
234
the event of a Change in Control (3)
235
236
**10.10 LecTec Corporation Employee Stock Purchase
237
Plan (4)
238
239
**10.11 LecTec Corporation 1998 Stock Option Plan (5)
240
241
10.12 LecTec Corporation 1998 Directors' Stock
242
Option Plan (5)
243
244
10.13 Letter of Intent dated April 19, 1999
245
between LecTec Corporation and Johnson &
246
Johnson Consumer Companies, Inc., whereby
247
the parties agree to certain milestones
248
leading to the development of a skin care
249
product (6)
250
251
10.14 Credit and Security Agreement by and
252
between LecTec Corporation and Wells Fargo
253
business Credit, Inc. dated November 22,
254
1999 and First Amendment To Credit and
255
Security Agreement and Waiver of Defaults
256
dated February 9, 2000, whereby the parties
257
agree to the terms and amended terms
258
regarding a line of credit (7)
259
260
*10.15 Supply Agreement dated as of May 15, 2000
261
by and between LecTec Corporation and
262
Novartis Consumer Health, Inc., whereby the
263
parties agree to terms for the sale of
264
product from LecTec Corporation to Novartis
265
Consumer Health, Inc. (8)
266
267
*10.16 Supply Agreement dated as of March 21, 2000
268
by and between LecTec Corporation and
269
Johnson & Johnson Consumer Companies, Inc.
270
and Neutrogena Corporation, whereby the
271
parties agree to terms for the sale of
272
product from LecTec Corporation to Johnson
273
& Johnson Consumer Companies, Inc. and
274
Neutrogena Corporation (9)
275
276
277
-2-
278
<PAGE>
279
280
281
21.01 Subsidiaries of the Company (8)
282
283
23.01 Consent of Grant Thornton LLP (8)
284
285
27.01 Financial Data Schedule (8)
286
287
- -------------------------------------------------------
288
289
* Confidential treatment has been requested for portions of this
290
Exhibit pursuant to Rule 24b-2 under the Securities Exchange
291
Act of 1934 as amended. The confidential portions have been
292
deleted and filed separately with the United States Securities
293
and Exchange Commission together with a confidential treatment
294
request.
295
296
** Management contract or compensatory plan or arrangment
297
required to be filed as an exhibit to this Form 10-K.
298
299
300
(1) Incorporated herein by reference to the Company's Form S-18
301
Registration Statement (file number 33-9774C) filed on October
302
31, 1986 and amended on December 12, 1986.
303
304
(2) Incorporated herein by reference to the Company's Annual
305
Report on Form 10-K for the year ended June 30, 1997.
306
307
(3) Incorporated herein by reference to the Company's Annual
308
Report on Form 10-K for the year ended June 30, 1998.
309
310
(4) Incorporated herein by reference to the Company's Registration
311
Statement on Form S-8 (file number 333-72571) filed on
312
February 18, 1999.
313
314
(5) Incorporated herein by reference to the Company's Registration
315
Statement on Form S-8 (file number 333-72569) filed on
316
February 18, 1999.
317
318
(6) Incorporated herein by reference to the Company's Annual
319
Report on Form 10-K for the year ended June 30, 1999.
320
321
(7) Incorporated herein by reference to the Company's Quarterly
322
Report on Form 10-Q for the quarter ended December 31, 1999.
323
324
(8) Incorporated herein by reference to the Company's Annual
325
Report on Form 10-K previously filed for the year ended June
326
30, 2000.
327
328
(9) Filed herewith.
329
330
331
(b) 1. Reports on Form 8-K.
332
333
None.
334
335
336
-3-
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<PAGE>
338
339
340
SIGNATURES
341
342
Pursuant to the requirements of Section 13 or 15(d) of the Securities
343
Exchange Act of 1934, the Registrant has duly caused this amendment to its
344
annual report on Form 10-K to be signed on its behalf by the undersigned,
345
thereunto duly authorized, on the 6th day of October, 2000.
346
347
348
LECTEC CORPORATION
349
350
351
352
/s/ Rodney A. Young
353
--------------------------------------------
354
Rodney A. Young
355
Chairman, Chief Executive Officer and President
356
(Principal Executive Officer)
357
358
359
-4-
360
<PAGE>
361
362
363
EXHIBIT INDEX
364
365
Exhibits
366
- --------
367
368
3.01 Articles of Incorporation of Registrant, as amended (Note 1).
369
370
3.02 By-laws of Registrant (Note 1).
371
372
10.01 Service Agreement dated July 1, 1986, between LecTec International,
373
Inc., a U.S. Virgin Islands corporation, and LecTec Corporation,
374
relating to the sale, lease or rental of certain property outside
375
the United States (Note 1).
376
377
10.02 Distribution and Commission Agreement dated July 1, 1986, between
378
LecTec International, Inc., a U.S. Virgin Islands corporation, and
379
LecTec Corporation, relating to the sale, lease or rental of certain
380
property outside the United States (Note 1).
381
382
10.03 Certificate of Secretary pertaining to Resolution of Board of
383
Directors of LecTec Corporation, dated October 30, 1986,
384
implementing a Profit Sharing Bonus Plan (Note 1).
385
386
**10.04 LecTec Corporation 1989 Stock Option Plan (Note 2).
387
388
**10.05 LecTec Corporation 1991 Directors' Stock Option Plan (Note 2).
389
390
10.06 Building lease dated May 24, 1991 between LecTec Corporation and
391
Sierra Development Co. for the lease of the manufacturing and
392
warehouse facility located in Edina, Minnesota (Note 2).
393
394
10.07 First amendment dated May 5, 1997 between LecTec Corporation and
395
Rushmore Plaza Partners Limited Partnership for the extension of the
396
previous lease of the manufacturing and warehouse facility located
397
in Edina, Minnesota (Note 2).
398
399
10.08 Articles of Merger of Pharmadyne Corporation into LecTec Corporation
400
dated December 31, 1997 , whereby Pharmadyne, a wholly-owned
401
subsidiary, is merged into LecTec Corporation (Note 3).
402
403
**10.09 Change In Control Termination Pay Plan adopted May 27, 1998, for the
404
benefit of certain employees of LecTec Corporation in the event of a
405
Change in Control (Note 3).
406
407
**10.10 LecTec Corporation Employee Stock Purchase Plan (Note 4).
408
409
**10.11 LecTec Corporation 1998 Stock Option Plan (Note 5).
410
411
**10.12 LecTec Corporation 1998 Directors' Stock Option Plan (Note 5).
412
413
10.13 Letter of Intent dated April 19, 1999 between LecTec Corporation and
414
Johnson & Johnson Consumer Companies, Inc., whereby the parties
415
agree to certain milestones leading to the development of a skin
416
care product (Note 6).
417
418
10.14 Credit and Security Agreement by and between LecTec Corporation and
419
Wells Fargo business Credit, Inc. dated November 22, 1999 and First
420
Amendment To Credit and Security Agreement and Waiver of Defaults
421
dated February 9, 2000, whereby the parties agree to the terms and
422
amended terms regarding a line of credit (Note 7).
423
424
425
-5-
426
<PAGE>
427
428
429
*10.15 Supply Agreement dated as of May 15, 2000 by and between LecTec
430
Corporation and Novartis Consumer Health, Inc., whereby the parties
431
agree to terms for the sale of product from LecTec Corporation to
432
Novartis Consumer Health, Inc (Note 8).
433
434
*10.16 Supply Agreement dated as of March 21, 2000 by and between LecTec
435
Corporation and Johnson & Johnson Consumer Companies, Inc. and
436
Neutrogena Corporation, whereby the parties agree to terms for the
437
sale of product from LecTec Corporation to Johnson & Johnson
438
Consumer Companies, Inc. and Neutrogena Corporation . . . . . . .
439
440
21.01 Subsidiaries of the Company (Note 8).
441
442
23.01 Consent of Grant Thornton LLP (Note 8).
443
444
27.01 Financial Data Schedule (Note 8).
445
446
447
448
NOTES:
449
450
* Confidential treatment has been requested for portions of this
451
Exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of
452
1934 as amended. The confidential portions have been deleted and
453
filed separately with the United States Securities and Exchange
454
Commission together with a confidential treatment request.
455
456
** Management contract or compensatory plan or arrangment required to
457
be filed as an exhibit to this Form 10-K.
458
459
(1) Incorporated herein by reference to the Company's Form S-18
460
Registration Statement (file number 33-9774C) filed on October 31,
461
1986 and amended on December 12, 1986.
462
463
(2) Incorporated herein by reference to the Company's Annual Report on
464
Form 10-K for the year ended June 30, 1997.
465
466
(3) Incorporated herein by reference to the Company's Annual Report on
467
Form 10-K for the year ended June 30, 1998.
468
469
(4) Incorporated herein by reference to the Company's Registration
470
Statement on Form S-8 (file number 333-72571) filed on February 18,
471
1999.
472
473
(5) Incorporated herein by reference to the Company's Registration
474
Statement on Form S-8 (file number 333-72569) filed on February 18,
475
1999.
476
477
(6) Incorporated herein by reference to the Company's Annual Report on
478
Form 10-K for the year ended June 30, 1999.
479
480
(7) Incorporated herein by reference to the Company's Quarterly Report
481
on Form 10-Q for the quarter ended December 31, 1999.
482
483
(8) Incorporated herein by reference to the Company's Annual Report on
484
Form 10-K previously filed for the year ended June 30, 2000.
485
486
487
-6-
488
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</TEXT>
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</DOCUMENT>
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<DOCUMENT>
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<TYPE>EX-10.16
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<SEQUENCE>2
494
<FILENAME>0002.txt
495
<DESCRIPTION>SUPPLY AGREEMENT
496
<TEXT>
497
498
499
EXHIBIT 10.16
500
501
502
SUPPLY AGREEMENT
503
504
SUPPLY AGREEMENT, dated as of March 21, 2000, by and between JOHNSON &
505
JOHNSON CONSUMER PRODUCTS COMPANY, a Division of Johnson & Johnson Consumer
506
Companies, Inc., a company with its principal offices at 199 Grandview Road,
507
Skillman, New Jersey 08558-9481 and NEUTROGENA CORPORATION, a company with its
508
principal offices at 5760 West 96th Street, Los Angeles, California 90045
509
(collectively designated as ("Buyer"), and LECTEC Corporation, a Minnesota
510
corporation with its principal offices at 10701 Red Circle Drive, Minnetonka,
511
Minnesota 55343("Seller").
512
513
WHEREAS, Seller is in the business of making and selling the Product (as
514
defined below), and Buyer would like to purchase the Product from Seller
515
pursuant to the terms of this Agreement;
516
517
NOW, THEREFORE, in consideration of the mutual promises, covenants and
518
agreements hereinafter set forth, the parties hereto agree as follows:
519
520
ARTICLE 1
521
522
DEFINITIONS
523
524
As used throughout this Agreement, each of the following terms shall have
525
the respective meaning set forth below:
526
527
1.01 "Product" shall mean a hydrogel patch containing ( * ) for use
528
in the treatment of acne, as more fully described on Schedule 1.01 to this
529
Agreement, manufactured and packaged in accordance with the Specifications
530
(hereinafter defined), along with any
531
532
533
534
* Denotes confidential information that has been omitted from the exhibit and
535
filed separately, accompanied by a confidential treatment request, with the
536
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
537
Exchange Act of 1934.
538
539
540
1
541
<PAGE>
542
543
544
Improvements thereto. Reference to Product in this Agreement shall include a
545
reference to Product A and B, as defined in Schedule 1.02 attached hereto.
546
547
1.02 "Specifications" shall mean the specifications for the design,
548
composition, product safety assurance, manufacture, packaging, and/or quality
549
control of the Product, as set forth on Schedule 1.02 attached hereto and made a
550
part hereof, as the same may hereafter be modified by mutual agreement of the
551
parties in writing.
552
553
1.03 "Raw Materials" shall mean the materials, components, and
554
packaging required to manufacture and package the Product in accordance with the
555
Specifications.
556
557
1.04 "Improvement" shall mean any change, improvement, modification
558
or development to the Product, the Specifications, the Raw Materials or the
559
method or process of manufacture or production of the Product.
560
561
1.05 "Territory" shall mean worldwide.
562
563
1.06 "Supply Year" shall mean each consecutive 365-day period (or
564
366-day period in the event of a leap year) during the term hereof, commencing
565
on the date on which Seller first delivers Product to Buyer under this
566
Agreement.
567
568
1.07 "Affiliate" of a party shall mean any entity which directly or
569
indirectly controls, is controlled by or is under common control with such
570
entity.
571
572
1.08 "First Commercial Sale" shall mean the date on which Buyer
573
sells the first Product to a third party pursuant to this Agreement.
574
575
ARTICLE 2
576
577
SUPPLY OF PRODUCT
578
579
During the term of this Agreement, Seller shall supply Buyer with
580
those quantities of Product A and Product B as ordered by Buyer pursuant to this
581
Agreement, subject to the
582
583
584
2
585
<PAGE>
586
587
588
ordering procedures set forth in Article 4 below. Each Product sold
589
hereunder will conform to the Specifications for such Product. Buyer shall
590
purchase a minimum purchase quantity of the Products the ("Minimum Purchase
591
Quantities") in each Supply Year of the term of this Agreement, as specified in
592
Schedule 2.00 in this Agreement. Purchases of Products, if any, by Buyer during
593
the four (4) months prior to the date of First Commercial Sale shall be counted
594
towards these Minimum Purchase Quantities. ( * ) Buyer shall not be considered
595
as having failed to meet the Minimum Purchase Quantities in the event such
596
failure is a result of Seller's failure to supply Product, or in the event of a
597
recall or government initiated action with respect to a Product, or in the event
598
an infringement claim or suit is lodged with respect to the Product in an
599
applicable territory.
600
601
ARTICLE 3
602
603
PRICES FOR PRODUCT
604
605
3.01 Transfer Prices. The prices for Product A and B shipped by
606
Seller during the term of this Agreement shall be as set forth on the price list
607
that appears as Schedule 3.01 to this Agreement, subject to adjustment only as
608
expressly provided herein. The prices charged by Seller to Buyer as set forth on
609
such Schedule, or as may subsequently be determined, are F.C.A. Seller's
610
manufacturing facility in Minnetonka or Edina, Minnesota and shall exclude all
611
delivery
612
613
614
615
* Denotes confidential information that has been omitted from the exhibit and
616
filed separately, accompanied by a confidential treatment request, with the
617
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
618
Exchange Act of 1934.
619
620
621
3
622
<PAGE>
623
624
625
costs. Buyer shall provide Seller with a list of required carriers and shall pay
626
the associated product freight charges directly to these carriers.
627
628
3.02 ( * )
629
630
3.03 ( * )
631
632
3.04 Payment Terms. Payment terms on all orders shall be thirty (30)
633
days net of invoice date.
634
635
3.05 ( * )
636
637
3.06 ( * )
638
639
640
641
642
* Denotes confidential information that has been omitted from the exhibit and
643
filed separately, accompanied by a confidential treatment request, with the
644
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
645
Exchange Act of 1934.
646
647
648
4
649
<PAGE>
650
651
652
( * )
653
654
ARTICLE 4
655
656
FORECASTS, ORDERS
657
658
4.01 Forecasts. Two months prior to the start of each Supply Year
659
during the term of this Agreement, Buyer shall provide Seller with a non-binding
660
written forecast of Buyer's expected requirements for Product during the
661
following Supply Year, and shall thereafter update such forecast on a rolling
662
monthly basis.
663
664
4.02 Orders. Buyer shall place any binding orders for Product by
665
written or electronic purchase order (or by any other means agreed to by the
666
parties) to Seller, which shall be placed at least 90 days prior to the desired
667
date of delivery. The parties acknowledge that Buyer is not obligated to buy any
668
specific amount of Product under this Agreement, except for the Minimum Purchase
669
Quantities and such quantities which Buyer shall actually order through such
670
binding purchase orders.
671
672
4.03 Obligations. Buyer shall at all times be obligated to purchase
673
the quantity of the Products ordered in such purchase orders. Seller shall be
674
obligated to supply such Products as ordered by Buyer to the extent the purchase
675
orders are, collectively, no greater than ( * ) of the
676
677
678
679
680
* Denotes confidential information that has been omitted from the exhibit and
681
filed separately, accompanied by a confidential treatment request, with the
682
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
683
Exchange Act of 1934.
684
685
686
5
687
<PAGE>
688
689
690
monthly forecast provided pursuant to Section 4.01 no less than ninety (90) days
691
prior to delivery of such purchase order provided, however, that Seller shall
692
not be deemed to be in breach of this Agreement as long as it supplies at least
693
( * ) of each particular Product which is ordered by Buyer for each calendar
694
quarter in accordance with this Agreement. Failure of Seller to deliver at least
695
( * ) of any Product which is ordered by Buyer for each calendar quarter in
696
accordance with this Agreement shall be considered an Event of Default pursuant
697
to this Agreement, the occurrence of which shall entitle Buyer to the remedies
698
set out in Section 8.03.
699
700
4.04. Conflicts. To the extent of any conflict or inconsistency
701
between this Agreement and any purchase order, purchase order release,
702
confirmation, acceptance or any similar document, the terms of this Agreement
703
shall govern. Parties agree that purchase orders shall contain the Year 2000
704
Compliance provision. The term "Year 2000 Compliant" shall mean the services
705
will be scheduled and performed in a timely manner without interruptions caused
706
by the date in time on which the product is ordered or is actually delivered or
707
the services are scheduled or actually performed under normal procedures in the
708
ordinary course, whether before, on or after January 1, 2000.
709
710
ARTICLE 5
711
712
ADDITIONAL UNDERSTANDINGS OF THE PARTIES
713
714
5.01 Most Favored Customer. In consideration of the arrangements
715
provided in this Agreement for the Buyer to purchase Product from Seller, Seller
716
agrees that Buyer shall be treated with "most favored nation" status in
717
connection with pricing and allocation of Product, and Seller shall not provide
718
any other customer (which customer is similarly situated or purchases equivalent
719
or less volume of products from Seller than Buyer in the aggregate) with
720
721
722
723
724
* Denotes confidential information that has been omitted from the exhibit and
725
filed separately, accompanied by a confidential treatment request, with the
726
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
727
Exchange Act of 1934.
728
729
730
6
731
<PAGE>
732
733
734
preferential or more favorable treatment with respect to pricing or allocation
735
of Product.
736
737
5.02 Other Affiliates. If any other Affiliate of Buyer desires to
738
purchase the Product from Seller under the terms of this Agreement, then, upon
739
the execution of a copy of this Agreement by such Affiliate, Seller shall accord
740
such Affiliate all of the benefits hereof and treat such affiliate as a "Buyer"
741
for the purposes of this Agreement. Any of Buyer's non-U.S. Affiliates must
742
order Products in economical run transaction sizes and reimburse Seller for
743
Quality System Development and regulatory support required on a time and
744
materials basis. Lead times for such runs are ninety (90) days from vendor ready
745
artwork. Product is subject to minimum run sizes, and J&J affiliate orders will
746
be batched together to satisfy minimum run quantities. Each Product will have a
747
unique packaging specification and part number.
748
749
5.03 Exclusive Rights. During the term of this Agreement, provided
750
that Buyer is purchasing the Minimum Purchase Quantities and is commercializing
751
the Product, Seller shall supply Buyer, on an exclusive basis, with the Product
752
for sale in the Territory and neither Seller nor any of its Affiliates shall
753
market, sell or distribute, or allow the marketing, sale or distribution by any
754
third party of, the Product (or any improvement or Product line extension or any
755
other product using the same technology (hereinafter "Technology", i.e., a
756
hydrogel coated ( * ) within the Territory.
757
758
5.04 Right of First Negotiation. During the term of this Agreement,
759
Seller hereby grants Buyer (and its Affiliates) the right of first negotiation
760
as to any new acne products, product ideas or inventions making use of the same
761
Technology (a hydrogel coated ( * ) which are developed, designed or invented by
762
or on behalf of Seller (collectively, "New Products"). Buyer shall have sixty
763
(60) days from the time it receives from Seller material information about any
764
765
766
767
* Denotes confidential information that has been omitted from the exhibit and
768
filed separately, accompanied by a confidential treatment request, with the
769
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
770
Exchange Act of 1934.
771
772
773
7
774
<PAGE>
775
776
777
New Product to notify Seller in writing if it is interested in discussing terms
778
for Buyer to purchase, license or otherwise have access to such New Product. If
779
Buyer so notifies Seller of its interest in any New Product, it shall negotiate
780
in good faith with Seller with respect to an appropriate agreement to access
781
such New Product. The Buyer shall have a period of nine (9) months to complete
782
this agreement ("Negotiation Period"), unless extended by mutual consent. During
783
this Negotiation Period, in no event shall Seller enter into an agreement with a
784
third party to sell, assign, license, transfer or otherwise make available such
785
New Product. If the parties fail to agree on the terms of such an agreement by
786
the end of the Negotiation Period. Seller shall have the right to enter into an
787
agreement with a third party with respect to such new Products, provided that
788
the terms of such agreement are not, in the aggregate, materially more favorable
789
to such third party than such material terms and conditions which Seller last
790
offered in good faith to Buyer in connection therewith.
791
792
5.05 Equipment. In the event that Buyer has, or will, make available
793
certain equipment, tools or dies for Seller to use in manufacturing or otherwise
794
producing Product, reference is made to Appendix 4.00, annexed hereto and made a
795
part hereof.
796
797
5.06 Competing Products. Seller recognizes and acknowledges that
798
Buyer and its Affiliates have been, and will continue to be, actively involved
799
in the field in which the Product is sold. Seller acknowledges that Buyer and
800
its Affiliates market, sell and distribute products which compete directly with
801
the Product, and may continue to market, sell and distribute these and other
802
competing products throughout the term of this Agreement.
803
804
ARTICLE 6
805
806
IMPROVEMENTS AND CHANGES TO THE PRODUCT
807
808
6.01 Improvements. From time to time during the term of this
809
Agreement, either
810
811
812
8
813
<PAGE>
814
815
816
party may submit to the other written proposals for the adoption, implementation
817
or development of any change, improvement or modification to the Product. In no
818
event shall any such change, improvement or modification (or any change or
819
modification to the Specifications) be implemented or made without the prior
820
written approval of the Buyer. If the parties agree on any such change,
821
improvement or modification, they shall modify the Specifications to reflect the
822
same and shall revise the price to be charged for the Product, subject to the
823
terms of Article 3 [and this Article 6]. In the event the Seller is unable to
824
supply Product that meets any changes to the Specifications proposed by Buyer,
825
and agreed to by the Seller then Buyer shall have the right to terminate this
826
Agreement, upon 90 day's prior written notice, without payment of any penalty or
827
other amount, except for those amounts due and owing to Seller at such time.
828
Seller further agrees that no significant changes or modifications to the method
829
or process of manufacture or production of the Product or the Raw Materials
830
shall be made without prior written notification to and approval of Buyer and
831
any such change or modification shall be made at Seller's sole cost and expense;
832
and in no event shall any change or modification be made to the method or
833
process of manufacture or production of the Product or the Raw Materials, which
834
change or modification shall have the effect of modifying or changing the
835
Specifications, without the express written consent of Buyer. In the event of
836
any change, each Buyer shall establish an appropriate qualification protocol,
837
and Buyer and Seller shall determine an appropriate inventory level for the
838
pre-change Product in order to cover on-going requirements during the
839
qualification process.
840
841
6.02 Buyer Initiated. Buyer may at any time suggest Improvements,
842
which shall be approved by the Seller and implemented by the Seller as soon as
843
reasonably possible; provided that (a) none of such Improvements give rise to
844
any claim of infringement of any third party patent or other proprietary right
845
and (b) it is reasonably feasible for Seller to affect such Improvements without
846
requiring any capital investment or major process changes on the part of
847
848
849
9
850
<PAGE>
851
852
853
Seller. Cost and expenses are to be prepaid by the Buyer. If ( * ).
854
855
6.03 Seller Initiated. ( * ).
856
857
6.04 Specifications. Seller shall make no changes to the
858
Specifications or to the Products without the prior written approval of Buyer.
859
In addition, any changes to the Product, the Specifications or the manufacturing
860
process which may require the submission of any amendment, filing or other
861
documentation with any regulatory authority shall be identified, reviewed and
862
require the approval of Buyer through a document control system. To the extent
863
reasonably practicable, Buyer shall provide a response to any such proposed
864
change within five (5) business days after receipt.
865
866
ARTICLE 7
867
868
TERM
869
870
7.01 Initial Term. The initial term of this Agreement (the "Initial
871
Term") shall commence on the date hereof and remain in effect for a period of
872
two (2) years from the date of the first purchase order issued by Buyer, unless
873
sooner terminated as expressly provided under the term of this Agreement.
874
875
7.02 Optional Extension. Buyer, at its sole option, may extend this
876
Agreement for up to two (2) additional one-year terms after the expiration of
877
the Initial Term by giving Seller at least 90 days' prior written notice for
878
each such additional term, ( * )
879
880
881
882
883
* Denotes confidential information that has been omitted from the exhibit and
884
filed separately, accompanied by a confidential treatment request, with the
885
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
886
Exchange Act of 1934.
887
888
889
10
890
<PAGE>
891
892
893
( * ).
894
895
ARTICLE 8
896
897
TERMINATION
898
899
8.01 Termination. Notwithstanding anything to the contrary in
900
Article 7 above, Buyer may terminate this Agreement at any time during the
901
additional one year terms mentioned in Article 7 or any date thereafter, by
902
giving Seller 6 months prior written notice thereof. Any of the aforementioned
903
extensions or terminations (in Article 7 and 8.01) can be for either Product A
904
or B or both.
905
906
8.02 Breach. This Agreement may be terminated for either Product A
907
or Product B or both, as applicable, prior to the expiration of its term, by
908
either party by giving written notice of its intent to terminate and stating the
909
grounds therefor if the other party or parties, as applicable shall materially
910
breach or materially fail in the observance or performance of any
911
representation, warranty, guarantee, covenant or obligation under this
912
Agreement. The party receiving the notice shall have 60 days from the date of
913
receipt thereof to cure the breach or failure. In the event such breach or
914
failure is cured, the notice shall be of no effect. In the event the Agreement
915
is terminated only with respect to one party of the Buyer, all obligations under
916
this Agreement can be amended and/or revised as mutually agreed upon (including
917
with respect to Minimum Purchase, pricing, and exclusivity). If the remaining
918
Buyer and Seller cannot agree on acceptable amendment or revision, the remaining
919
Buyer or Seller can terminate this agreement without further obligation.
920
921
922
923
924
* Denotes confidential information that has been omitted from the exhibit and
925
filed separately, accompanied by a confidential treatment request, with the
926
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
927
Exchange Act of 1934.
928
929
930
11
931
<PAGE>
932
933
934
8.03 Certain Rights After a Breach. In addition to those rights
935
which may be available at law or equity, the following additional rights shall
936
be available upon the occurrence of a breach under this Agreement:
937
938
(a) If the breach is caused by Buyer or one of the parties of Buyer and
939
upon termination of this Agreement by Seller, Buyer or the party of Buyer
940
affected by the termination shall have one hundred eighty (180) days in
941
which to sell out its stock of any Products it possesses or has committed
942
to purchase under this Agreement. (b) If the breach is caused by Seller,
943
Buyer may, in its discretion, either (A) terminate this Agreement in its
944
entirety or (B) terminate its purchase obligations and any related
945
obligations of this Agreement, in which event (1) Buyer shall be entitled
946
to manufacture or have manufactured the Products under a ( * ), the terms
947
to which shall be mutually agreed in writing. Buyer shall have all rights
948
to use the process descriptions and any other relevant data and know-how
949
in Seller's possession, and (2) Seller shall provide such assistance and
950
other information as shall be necessary in order for Buyer to manufacture
951
or have manufactured the Products.
952
953
8.04 Insolvency, Etc. This Agreement may be terminated, prior to the
954
expiration of its term, upon fifteen (15) days written notice by either party:
955
(i) in the event that the other party hereto shall (1) apply for or consent to
956
the appointment of, or the taking of possession by, a receiver, custodian,
957
trustee or liquidator of itself or of all or a substantial part of its property,
958
(2) make a general assignment for the benefit of its creditors, (3) commence a
959
voluntary case under the United States Bankruptcy Code, as now or hereafter in
960
effect (the "Bankruptcy Code"), (4) file a petition seeking to take advantage of
961
any law (the "Bankruptcy Laws") relating to bankruptcy, insolvency,
962
reorganization, winding-up, or composition or readjustment of debts, (5) fail to
963
controvert in a timely and appropriate manner, or acquiesce in writing to, any
964
petition filed
965
966
967
968
* Denotes confidential information that has been omitted from the exhibit and
969
filed separately, accompanied by a confidential treatment request, with the
970
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
971
Exchange Act of 1934.
972
973
974
12
975
<PAGE>
976
977
978
against it in any involuntary case under the Bankruptcy Code, or (6) take any
979
corporate action for the purpose of effecting any of the foregoing; or (ii) if a
980
proceeding or case shall be commenced against the other party hereto in any
981
court of competent jurisdiction, seeking (1) its liquidation, reorganization,
982
dissolution or winding-up, or the composition or readjustment of its debts, (2)
983
the appointment of a trustee, receiver, custodian, liquidator or the like of the
984
party or of all or any substantial part of its assets, or (3) similar relief
985
under any Bankruptcy Laws, or an order, judgment or decree approving any of the
986
foregoing shall be entered and continue unstayed for a period of 60 days; or an
987
order for relief against the other party hereto shall be entered in an
988
involuntary case under the Bankruptcy Code.
989
990
8.05 Effect of Termination Not withstanding the termination of the
991
Agreement for any reason, each party hereto shall be entitled to recover any and
992
all Damages which such party shall have sustained by reason of the breach by the
993
other party hereto of any of the terms of this Agreement, subject to Section
994
20.12 with respect to Seller and subject to the same limits with regard to the
995
Buyer's liability as are applicable to Seller's liability at any point in time
996
during this Agreement. Termination of this Agreement for any reason shall not
997
release either party hereto from any liability which at such time has already
998
accrued or which thereafter accrues from a breach or default prior to such
999
expiration or termination, nor affect in any way the survival of any other
1000
right, duty or obligation of either party hereto which is expressly stated
1001
elsewhere in this Agreement to survive such termination.
1002
1003
8.06 Upon termination or expiration of the Agreement, Seller shall
1004
have the right to commercialize a product using the same Technology for acne
1005
treatment provided: (i) Seller does not make use of any of the confidential
1006
information provided by Buyer and its Affiliates and (ii) the product attributes
1007
in terms of shape and color shall be "different" from those of Product. In terms
1008
of product attributes, "different" means that ( * )
1009
1010
1011
1012
* Denotes confidential information that has been omitted from the exhibit and
1013
filed separately, accompanied by a confidential treatment request, with the
1014
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
1015
Exchange Act of 1934.
1016
1017
1018
13
1019
<PAGE>
1020
1021
1022
( * )
1023
1024
ARTICLE 9
1025
1026
DELIVERY; INVENTORY.
1027
1028
9.01 Delivery. Charges for transportation to point of delivery are
1029
not included in the transfer price unless otherwise agreed to by the parties.
1030
All shipments must be accompanied by a packing slip which describes the
1031
articles, states the purchase order number and shows the shipment's destination.
1032
Seller agrees to promptly forward the original bill of lading or other shipping
1033
receipt for each shipment in accordance with Buyer's instructions. Seller
1034
further agrees to promptly render, after delivery of goods or performance of
1035
services, correct and complete invoices to Buyer, and to accept payment by check
1036
or at Buyer's discretion, other cash equivalent (including electronic transfer
1037
of funds).
1038
1039
9.02 Title and Risk of Loss. Title and risk of loss for all Product
1040
shall pass to Buyer upon delivery of the Product to Buyer 's designated carrier.
1041
All freight charges and all subsequent storage, handling, insurance and other
1042
charges relating to the Product so sold shall be for the account of Buyer.
1043
1044
9.03 Inventory. Seller will maintain inventory of Products on a
1045
first-in, first-out basis. Seller and Buyer agree to cooperate to improve the
1046
process for ordering Product with the mutual objectives of expediting the supply
1047
process to a just-in-time process and reducing inventory costs.
1048
1049
1050
1051
* Denotes confidential information that has been omitted from the exhibit and
1052
filed separately, accompanied by a confidential treatment request, with the
1053
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
1054
Exchange Act of 1934.
1055
1056
1057
14
1058
<PAGE>
1059
1060
1061
ARTICLE 10
1062
1063
INSPECTION
1064
1065
Seller shall manufacture Products in facilities known and approved
1066
by Buyer. Any subcontracting of the manufacturing of Products or part thereof
1067
shall be subject to the prior written approval of Buyer. Buyer shall have the
1068
right, upon reasonable notice to Seller (not less than three weeks for routine
1069
audits and 48 hours for audits relating to non-compliance, such as, but not
1070
limited to, FDA concerns, consumer complaints, etc.) and during regular business
1071
hours, to inspect and audit the facilities being used by Seller (or any third
1072
party approved by Buyer) for production and storage of the Product to assure
1073
compliance by Seller(and its suppliers) with GMP and applicable FDA and other
1074
rules and regulations and with other provisions of this Agreement to the extent
1075
that any cost review applies to Sections 3.02 and 3.03. Seller shall within
1076
thirty (30) days remedy or cause the remedy of any deficiencies which may be
1077
noted in any such audit or, if any such deficiencies can not reasonably be
1078
remedied within such thirty (30) day period, present to Buyer a written plan to
1079
remedy such deficiencies as soon as possible; and the failure by Seller to
1080
remedy or cause the remedy of any such deficiencies within such thirty (30) day
1081
period or to present such a plan within such thirty (30) day period and then use
1082
its best efforts to remedy or cause the remedy of such deficiencies in
1083
accordance with such written plan, as the case may be, shall be deemed a
1084
material breach of this Agreement. Seller acknowledges that the provisions of
1085
this Article 10 granting Buyer certain audit rights shall in no way relieve
1086
Seller of any of its obligations under this Agreement, nor shall such provisions
1087
require Buyer to conduct any such audits.
1088
1089
1090
15
1091
<PAGE>
1092
1093
1094
ARTICLE 11
1095
1096
QUALITY/DEFECTIVE PRODUCT/INSPECTIONS/TESTING
1097
1098
11.01 Product Warranty. Seller warrants to Buyer that the Product
1099
sold to Buyer hereunder shall (a) comply in all respects with the Specifications
1100
therefor and b) be manufactured in accordance with all applicable laws,
1101
ordinances and regulations relating to the manufacture and supply of the Product
1102
being supplied hereunder, including without limitation, those enforced by the
1103
United States Food and Drug Administration (including compliance with good
1104
manufacturing practices) and International Standards Organization Rules 9,000 et
1105
seq.
1106
1107
11.02 Disposition of Defective Product. Within thirty (30) days of
1108
receipt by Buyer of any shipment of Product hereunder (or if later, within
1109
thirty (30) days after discovery of any latent defect by Buyer), Buyer shall
1110
inspect such Product and shall notify Seller of any Product that does not comply
1111
with the warranty set forth in Section 11.01. At Seller's option, Buyer shall
1112
ship the defective Product to Seller, or shall dispose of such Product in
1113
accordance with Seller's instructions. Seller shall reimburse the shipping or
1114
disposition costs incurred by Buyer. Seller shall replace at its own cost and
1115
expense Product that fails to comply with the warranty set forth in Section
1116
11.01 or shall refund the amounts paid by Buyer for such Product, at Seller's
1117
option. Such replacement or refund constitutes Buyer's sole remedy, and Seller's
1118
sole obligation with respect to such defective Product. Seller shall have a
1119
reasonable opportunity, not to exceed fourteen (14) days from receipt of
1120
notification from Buyer to inspect such defective Product and provide Buyer with
1121
detailed written instructions to return or dispose of such defective Product.
1122
Buyer shall have no obligation to pay for any Product that does not comply with
1123
the warranty set
1124
1125
1126
16
1127
<PAGE>
1128
1129
1130
forth in Section 11.01. If Seller fails to so inspect and instruct Buyer as to
1131
the disposition of such defective Product, Buyer may dispose of such defective
1132
Product as it sees fit and Seller shall promptly (1) reimburse Buyer for all
1133
direct, out-of-pocket costs incurred by Buyer in such disposition (not to exceed
1134
$100,000 without Sellers agreement), and (2) replace such defective Product at
1135
its own cost and expense. If the cost exceeds $100,000, Seller remains
1136
responsible to take back the defective Product.
1137
1138
11.03 Independent Testing. If, after Seller's inspections of such
1139
Product, the parties disagree as to the Product's conformance to the warranty,
1140
either party may deliver the Product to an independent third-party laboratory,
1141
mutually and reasonably acceptable to both parties, for analytical testing to
1142
confirm the Product's conformance to the warranty. All costs associated with
1143
such third-party testing shall be at Buyer's expense unless the tested Product
1144
is deemed by such third-party to be defective or not in compliance with the
1145
Specifications, in which case all such costs, including reimbursement of freight
1146
and disposition costs, shall be promptly paid by Seller. No inspection or
1147
testing of or payment for Product by Buyer or any third-party agent of Buyer
1148
shall constitute acceptance by Buyer thereof, nor shall any such inspection or
1149
testing be in lieu or substitution of any obligation of Seller for testing,
1150
inspection and quality control as provided in the Specifications or under
1151
applicable local, state, or federal laws, rules, regulations, standards, codes
1152
or statutes.
1153
1154
11.04 Corrective Action. In the event any governmental agency having
1155
jurisdiction shall request or order, or if Buyer shall determine to undertake,
1156
any corrective action with respect to any Product (or any finished product
1157
containing or contained in any Product), including any recall, corrective action
1158
or market action, and the cause or basis of such recall or action is
1159
attributable to a breach by Seller of any of its warranties, guarantees,
1160
representations, obligations or covenants contained herein, then Seller shall be
1161
liable, and shall reimburse Buyer for the
1162
1163
1164
17
1165
<PAGE>
1166
1167
1168
reasonable costs of such action including the cost of any Product (or any
1169
finished product containing or contained in any Product) which is affected
1170
thereby whether or not such particular Product shall be established to be in
1171
breach of any warranty by Seller hereunder. Notwithstanding the foregoing,
1172
Seller's liability hereunder shall be limited to the replacement of product,
1173
credit for purchased product, or out of pocket expenses limited to $100,000.
1174
1175
11.05 DISCLAIMER. SELLER MAKES NO WARRANTIES EXCEPT FOR THOSE
1176
EXPRESSLY SET FORTH IN SECTION 11.01 AND 17.01. ALL OTHER WARRANTIES, EXPRESS OR
1177
IMPLIED, ARE HEREBY DISCLAIMED AND EXCLUDED BY SELLER, INCLUDING WITHOUT
1178
LIMITATION ANY WARRNATY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
1179
OR USE.
1180
1181
11.06 Quality System and Regulatory Affairs Control System
1182
Maintenance: Buyer will be charged a fee for any services required which are not
1183
part of product processing activities. Seller will identify the fees for this
1184
service and Buyer will agree in writing to the fee for service.
1185
1186
ARTICLE 12
1187
1188
FAILURE TO SUPPLY; FORCE MAJEURE
1189
1190
12.01 Failure to Supply. In the event that Seller shall be unable or
1191
unwilling or shall fail to supply any Product in such quantities as Buyer shall
1192
request and in compliance with the delivery periods set forth in Section 4.02,
1193
and has failed to cure such failure within sixty (60) days of written notice
1194
from Buyer, then Buyer may and shall be permitted (with no obligation or
1195
liability to Seller) to obtain such Product from another supplier pursuant to
1196
( * ). Such inability, unwillingness or failure shall be deemed a material
1197
breach of this Agreement.
1198
1199
1200
1201
* Denotes confidential information that has been omitted from the exhibit and
1202
filed separately, accompanied by a confidential treatment request, with the
1203
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
1204
Exchange Act of 1934.
1205
1206
1207
18
1208
<PAGE>
1209
1210
1211
12.02 Force Majeure Events. If either party is prevented from
1212
performing any of its obligations hereunder due to any cause which is beyond the
1213
non-performing party's reasonable control, including fire, explosion, flood, or
1214
other acts of God; acts, regulations, or laws of any government; war or civil
1215
commotion; strike, lock-out or labor disturbances; or failure of public
1216
utilities or common carriers (a "Force Majeure Event"), such non-performing
1217
party shall not be liable for breach of this Agreement with respect to such
1218
non-performance to the extent any such non-performance is due to a Force Majeure
1219
Event. Such non-performance will be excused for three months or as long as such
1220
event shall be continuing (whichever occurs sooner), provided that the
1221
non-performing party gives immediate written notice to the other party of the
1222
Force Majeure Event. Such non-performing party shall exercise all reasonable
1223
efforts to eliminate the Force Majeure Event and to resume performance of its
1224
affected obligations as soon as practicable.
1225
1226
12.03 Other Arrangements. Notwithstanding the provisions of Section
1227
12.02, in the event that due to the occurrence of a Force Majeure Event, Seller
1228
shall be unable to supply any Product in such quantities as Buyer shall request
1229
and in compliance with the delivery periods set forth in Section 4.02 and in the
1230
event such Force Majeure Event continues for at least sixty (60) days, then
1231
Buyer shall be permitted (with no obligation or liability to Seller) to obtain
1232
such Product from another supplier and/or to manufacture Products itself under
1233
( * ). In the event Buyer shall so obtain Product from another Supplier pursuant
1234
to this Section 12.03 or Section 12.01, then Buyer shall thereafter have no
1235
obligation to purchase Products from Seller until any contractual obligations
1236
that Buyer has assumed in connection with obtaining a substitute supply of
1237
Products shall have terminated. Buyer shall have no obligation
1238
1239
1240
1241
* Denotes confidential information that has been omitted from the exhibit and
1242
filed separately, accompanied by a confidential treatment request, with the
1243
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
1244
Exchange Act of 1934.
1245
1246
1247
19
1248
<PAGE>
1249
1250
1251
to affirmatively terminate any such contractual arrangements. In ( * ).
1252
1253
ARTICLE 13
1254
1255
INSURANCE
1256
1257
Seller agrees to procure and maintain in full force and effect
1258
during the term of this Agreement valid and collectible insurance policies in
1259
connection with its activities as contemplated hereby which policies shall
1260
provide for appropriate insurance in a reasonable amount of coverage. Upon
1261
Buyer's request, Seller shall provide to Buyer a certificate of coverage or
1262
other written evidence reasonably satisfactory to Buyer of such insurance
1263
coverage.
1264
1265
ARTICLE 14
1266
1267
LABELING; ARTWORK; PROPRIETARY RIGHTS
1268
1269
14.01 Packaging. Buyer shall have the right to determine the
1270
appearance and text of any labeling and packaging used in connection with the
1271
Product or any finished product containing or contained in the Product.
1272
1273
14.02 Intellectual Property. Seller acknowledges that Buyer is the
1274
exclusive owner of and has all rights and owns and will own all goodwill
1275
relating to the trademarks, tradedress, copyrights, slogans, artwork and all
1276
other intellectual property that appear on or are otherwise used in connection
1277
with the sale and use of the Product within the Territory.
1278
1279
1280
1281
1282
* Denotes confidential information that has been omitted from the exhibit and
1283
filed separately, accompanied by a confidential treatment request, with the
1284
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
1285
Exchange Act of 1934.
1286
1287
1288
20
1289
<PAGE>
1290
1291
1292
ARTICLE 15
1293
1294
CONFIDENTIALITY
1295
1296
As used herein, "Confidential Information" shall include all
1297
confidential or proprietary information given to one party by the other party,
1298
or otherwise acquired by such party in its performance of this Agreement,
1299
relating to such other party or any of its Affiliates, including information
1300
regarding any of the products of such other party or any of its Affiliates,
1301
information regarding its advertising, distribution, marketing or strategic
1302
plans or information regarding its costs, productivity, manufacturing processes
1303
or technological advances. Neither party shall use or disclose to third parties
1304
any Confidential Information of the other (except to comply with its obligations
1305
under this Agreement) and each party shall insure that its and its Affiliates'
1306
employees, officers, representatives and agents shall not use or disclose to
1307
third parties any Confidential Information and upon the termination of this
1308
Agreement shall return to the other or destroy all Confidential Information in
1309
written form. Confidential Information shall not include information that (i)
1310
was already known to receiving party at the time of its receipt thereof or is
1311
independently developed by receiving party, as evidenced by its written records,
1312
(ii) is disclosed to receiving party after its receipt thereof by a third party
1313
who, receiving party in good faith believes, has a right to make such disclosure
1314
without violating any obligation of confidentiality or (iii) is or becomes part
1315
of the public domain through no fault of receiving party.
1316
1317
ARTICLE 16
1318
1319
PUBLIC ANNOUNCEMENTS
1320
1321
16.01 Publicity. The parties hereto covenant and agree that, except
1322
as provided for herein below, each will not from and after the date hereof make,
1323
issue or release any public announcement, press release, statement or
1324
acknowledgment of the existence of, or reveal
1325
1326
1327
21
1328
<PAGE>
1329
1330
1331
publicly the terms, conditions and status of, the transactions contemplated
1332
herein, without the prior written consent of the other party as to the content
1333
and time of release of and the media in which such statement or announcement is
1334
to be made; provided, however, that in the case of announcements, statements,
1335
acknowledgments or revelations which either party is required by law to make,
1336
issue or release, the making, issuing or releasing of any such announcement,
1337
statement, acknowledgment or revelation by the party so required to do so by law
1338
shall not constitute a breach of this Agreement if such party shall have given,
1339
to the extent reasonably possible, at least seven (7) business days prior notice
1340
to the other party, and shall have attempted, to the extent reasonably possible,
1341
to clear such announcement, statement, acknowledgment or revelation with the
1342
other party. Seller shall not use the name of Buyer or any of its Affiliates for
1343
advertising or promotional purposes without the prior written consent of Buyer.
1344
In furtherance of the foregoing, Seller shall not originate any publicity or
1345
other announcement, written or oral, whether to the public, the press, the
1346
trade, Buyer's or Seller's customers or otherwise, relating to this Agreement or
1347
the existence of an arrangement between the parties, without the prior written
1348
approval of Buyer, except as expressly provided in this Section 16.01.
1349
1350
ARTICLE 17
1351
1352
REPRESENTATIONS AND WARRANTIES
1353
1354
17.01 Execution and Performance of Agreement. Seller and Buyer each
1355
represents to the other that it has full right, power and authority to enter
1356
into and perform its obligations under this Agreement. Seller further represents
1357
and warrants to Buyer that the performance of Buyer's obligations under this
1358
Agreement will not result in a violation or breach of any patent or other
1359
intellectual property right of Seller or third party, and will not conflict with
1360
or constitute a default under any agreement, contract, commitment or obligation
1361
to which Seller or any of its
1362
1363
1364
22
1365
<PAGE>
1366
1367
1368
Affiliates is a party or by which it is bound.
1369
1370
ARTICLE 18
1371
1372
COMPLIANCE
1373
1374
18.01 Compliance with Certain Laws & Policies. Seller agrees to
1375
comply with the applicable provisions of any Federal or state law and all
1376
executive orders, rules and regulations issued thereunder, whether now or
1377
hereafter in force, including Executive Order 11246, as amended, Chapter 60 of
1378
Title 41 of the Code of Federal Regulations, as amended, prohibiting
1379
discrimination against any employee or applicant for employment because of race,
1380
color, religion, sex or national origin; Section 60-741.1 of Chapter 60 of 41
1381
Code of Federal Regulations, as amended, prohibiting discrimination against any
1382
employee or applicant for employment because of physical or mental handicap;
1383
Section 60.250.4 of Chapter 60 of 41 Code of Federal Regulations, as amended,
1384
providing for the employment of disabled veterans and veterans of the Vietnam
1385
era; Chapter 1 of Title 48 of the Code of Federal Regulations, as Amended,
1386
Federal Acquisition Regulations; Sections 6, 7 and 12 of the Fair Labor
1387
Standards Act, as amended, and the regulations and orders of the United States
1388
Department of Labor promulgated in connection therewith; and any provisions,
1389
representations or agreements required thereby to be included in this Agreement
1390
are hereby incorporated by reference. If any Product is ordered by Buyer under
1391
U.S. government contracts, Seller agrees that all applicable federal statutes
1392
and regulations applying to Buyer as a contractor are accepted and binding upon
1393
Seller insofar as Seller may be deemed a subcontractor. Seller shall comply with
1394
the J&J Child Labor Policies, as applicable, copy of which Seller declares to
1395
have received.
1396
1397
1398
23
1399
<PAGE>
1400
1401
1402
ARTICLE 19
1403
1404
INDEMNIFICATION
1405
1406
19.01 Indemnification by Seller. Seller shall indemnify and hold
1407
harmless Buyer (and its Affiliates) from and against any and all damages,
1408
liabilities, claims, costs, charges, judgments and expenses (including
1409
reasonable attorneys' fees) (collectively "Damages") that may be sustained,
1410
suffered or incurred by Buyer (or its Affiliates), resulting from a third party
1411
claim arising directly from or by reason of the breach by Seller of any
1412
warranty, representation, covenant or agreement made by Seller in this Agreement
1413
or any third party claim that any Product purchased from Seller hereunder or the
1414
use or sale thereof infringes any patent of any third party; provided that
1415
Seller shall not be liable for any product liability or personal injury claims
1416
by third parties arising from the sale, distribution or use of any Product which
1417
meets the Specifications and is not otherwise defective.
1418
1419
19.02 Indemnification by Buyer. Buyer shall indemnify and hold
1420
harmless Seller (and its Affiliates) from and against any and all Damages, that
1421
may be sustained, suffered or incurred by Seller (or its Affiliates) arising
1422
directly from or by reason of the breach by Buyer of any warranty,
1423
representation, covenant or agreement made by Buyer in this Agreement.
1424
1425
19.03 Claims. Each indemnified party agrees to give the indemnifying
1426
party prompt written notice of any matter upon which such indemnified party
1427
intends to base a claim for indemnification (an "Indemnity Claim") under this
1428
Article 19. The indemnifying party shall have the right to participate jointly
1429
with the indemnified party in the indemnified party's defense, settlement or
1430
other disposition of any Indemnity Claim. With respect to any Indemnity Claim
1431
relating solely to the payment of money damages and which could not result in
1432
the indemnified party's becoming subject to injunctive or other equitable relief
1433
or otherwise adversely affect the business of the indemnified party in any
1434
manner, and as to which the indemnifying party shall
1435
1436
1437
24
1438
<PAGE>
1439
1440
1441
have acknowledged in writing the obligation to indemnify the indemnified party
1442
hereunder, the indemnifying party shall have the sole right to defend, settle or
1443
otherwise dispose of such Indemnity Claim, on such terms as the indemnifying
1444
party, in its sole discretion, shall deem appropriate; provided that the
1445
indemnifying party shall provide reasonable evidence of its ability to pay any
1446
damages claimed and with respect to any such settlement shall obtain the written
1447
release of the indemnified party from the Indemnity Claim. The indemnifying
1448
party shall obtain the written consent of the indemnified party prior to ceasing
1449
to defend, settling or otherwise disposing of any Indemnity Claim if as a result
1450
thereof the indemnified party would become subject to injunctive or other
1451
equitable relief or the business of the indemnified party would be adversely
1452
affected in any manner.
1453
1454
ARTICLE 20
1455
1456
MISCELLANEOUS
1457
1458
Controversies and differences between the parties arising directly
1459
or indirectly from this Agreement or any transaction contemplated hereby or
1460
thereby or in connection herewith or therewith shall be resolved by arbitration.
1461
Arbitration shall be held before three arbitrators in New York, New York
1462
pursuant to the Commercial Arbitration Rules then obtaining of the American
1463
Arbitration Association, which arbitration shall be binding on all parties and
1464
shall constitute the final resolution of such dispute. No party shall commence
1465
any action against another to resolve any such dispute in any court except to
1466
confirm such an arbitrators' award. Judgment upon any such award rendered may be
1467
entered by any court having jurisdiction thereof. The arbitrators (i) shall not
1468
have any power or authority to add to, alter, amend or modify the terms of this
1469
Agreement; (ii) shall interpret and construe this Agreement in accordance with,
1470
and shall be bound by, the laws of the State of New York (except that this
1471
1472
1473
25
1474
<PAGE>
1475
1476
1477
Section shall be governed by the Federal Arbitration Act); (iii) shall have no
1478
power or authority to grant or award punitive damages; (iv) shall establish and
1479
enforce appropriate rules to ensure that the proceedings, including the
1480
decision, be kept confidential and that all Confidential Information of the
1481
parties be kept confidential and be used for no purpose other than the
1482
arbitration and (v) shall have the power to enforce specifically this Agreement
1483
and the terms and conditions hereof in addition to any other remedies at law or
1484
in equity. The parties shall be deemed to have waived any rights to punitive
1485
damages. (The parties consent to the exclusive jurisdiction of the Federal and
1486
State courts located in the State of New York for the resolution of any dispute
1487
or controversies between the parties hereto which are not subject to the
1488
arbitration provisions of this Section.)
1489
1490
20.02. Relationship of the Parties. The relationship of Buyer and
1491
Seller established by this Agreement is that of independent contractors, and
1492
nothing contained herein shall be construed to (i) give either party any right
1493
or authority to create or assume any obligation of any kind on behalf of the
1494
other or (ii) constitute the parties as partners, joint venturers, co-owners or
1495
otherwise as participants in a joint or common undertaking.
1496
1497
20.03 Entire Agreement. It is the mutual desire and intent of the
1498
parties to provide certainty as to their respective future rights and remedies
1499
against each other by defining the extent of their mutual undertakings as
1500
provided herein. The parties have, in this Agreement, incorporated all
1501
representations, warranties, covenants, commitments and understandings on which
1502
they have relied in entering into this Agreement, and, except as provided for
1503
herein, neither party makes any covenant or other commitment to the other
1504
concerning its future action. Accordingly, this Agreement (i) constitutes the
1505
entire agreement and understanding between the parties with respect to the
1506
subject matter hereof and there are no promises, representations, conditions,
1507
provisions or terms related thereto other than those set forth in this Agreement
1508
and
1509
1510
1511
26
1512
<PAGE>
1513
1514
1515
(ii) supersedes all previous understandings, agreements and representations
1516
between the parties, written or oral. No modification, change or amendment to
1517
this Agreement shall be effective unless in writing signed by each of the
1518
parties hereto.
1519
1520
20.04 Headings. The Article and Section headings contained in this
1521
Agreement are for reference purposes only and shall not affect in any way the
1522
meaning and interpretation of this Agreement.
1523
1524
20.05 Notices. All notices and other communications hereunder shall
1525
be in writing. All notices hereunder of an Indemnity Claim, a Force Majeure
1526
Event, default or breach hereunder, or, if applicable, termination or renewal of
1527
the term hereof, or any other notice of any event or development material to
1528
this Agreement taken as a whole, shall be delivered personally, or sent by
1529
national overnight delivery service or postage pre-paid registered or certified
1530
U.S. mail, and shall be deemed given: when delivered, if by personal delivery or
1531
overnight delivery service; or if so sent by U.S. mail, three business days
1532
after deposit in the mail, and shall be addressed:
1533
1534
If to Seller: President
1535
LecTec Corporation
1536
10701 Red Circle Drive
1537
Minnetonka, MN 55343
1538
1539
If to Buyer: President
1540
Johnson & Johnson Consumer Products Company
1541
199 Grandview Road
1542
Skillman, New Jersey 08558-9418
1543
1544
President
1545
Neutrogena Corporation
1546
5760 West 96th Street
1547
Los Angeles, California 90045
1548
1549
With a copy to: Johnson & Johnson
1550
Office of General Counsel
1551
1552
1553
27
1554
<PAGE>
1555
1556
1557
One Johnson & Johnson Plaza
1558
New Brunswick, NJ 08933
1559
1560
or to such other place as either party may designate by written notice to the
1561
other in accordance with the terms hereof.
1562
1563
20.06 Failure to Exercise. The failure of either party to enforce at
1564
any time for any period any provision hereof shall not be construed to be a
1565
waiver of such provision or of the right of such party thereafter to enforce
1566
each such provision, nor shall any single or partial exercise of any right or
1567
remedy hereunder preclude any other or further exercise thereof or the exercise
1568
of any other right or remedy. Except as expressly provided herein, remedies
1569
provided herein are cumulative and not exclusive of any remedies provided at
1570
law.
1571
1572
20.07 Assignment. This Agreement may not be assigned by either party
1573
without the prior written consent of the other, except that either party may
1574
assign its rights and/or obligations hereunder to any of its Affiliates or to a
1575
successor to its business. Subject to the foregoing sentence, this Agreement
1576
shall bind and inure to the benefit of the parties hereto and their respective
1577
successors and assigns. If as a result of such assignment by Seller, there is an
1578
increase in the cost to Buyer with regard to the supply, transport, sale,
1579
distribution or any other activity of Buyer under this Agreement, such increase
1580
in cost shall be for the account of Seller.
1581
1582
20.08 Severability. In the event that any one or more of the
1583
provisions (or any part thereof) contained in this Agreement or in any other
1584
instrument referred to herein, shall, for any reason, be held to be invalid,
1585
illegal or unenforceable in any respect, then to the maximum extent permitted by
1586
law, such invalidity, illegality or unenforceability shall not affect any other
1587
provision of this Agreement or any other such instrument. Any term or provision
1588
of this Agreement which is invalid, illegal or unenforceable in any jurisdiction
1589
shall, to the extent the
1590
1591
1592
28
1593
<PAGE>
1594
1595
1596
economic benefits conferred by this Agreement to both parties remain
1597
substantially unimpaired, not affect the validity, legality or enforceability of
1598
any of the terms or provisions of this Agreement in any other jurisdiction.
1599
1600
20.09 Counterparts. This Agreement may be executed in one or more
1601
counterparts, each of which shall be deemed an original, but all of which
1602
together shall constitute one and the same instrument.
1603
1604
20.10 Expenses. Each party shall pay all of its own fees and
1605
expenses (including all legal, accounting and other advisory fees) incurred in
1606
connection with the negotiation and execution of this Agreement and the
1607
arrangements contemplated hereby.
1608
1609
20.11 Survival. Sections 8.05, 20.01 20.11 and 20.12and Articles 14,
1610
15, 16 and 19 shall survive the termination of this Agreement in accordance with
1611
the respective terms thereof.
1612
1613
20.12 LIMITATION ON LIABILITY. IN NO EVENT SHALLTHE SELLER BE LIABLE
1614
TO BUYER UNDER THIS AGREEMENT FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR
1615
CONSEQUENTIAL LOSS OR DAMAGES. UNLESS CAUSED BY INTENTIONAL MISCONDUCT OR GROSS
1616
NEGLIGENCE, IN NO EVENT SHALL SELLER'S LIABILITY HEREUNDER EXCEED THE LIMITS OF
1617
THE SELLER'S LIABILITY INSURANCE POLICIES, WHICH POLICIES SHALL MAINTAIN
1618
COVERAGE AMOUNTS OF AT LEAST $1,000,000.
1619
1620
1621
29
1622
<PAGE>
1623
1624
1625
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
1626
executed by their duly authorized respective representatives as of the day and
1627
year first above written.
1628
1629
1630
LECTEC CORPORATION
1631
1632
1633
By: /s/ Rodney A. Young Date 3/20/00
1634
------------------------------- ---------------------
1635
Name: Rodney A. Young
1636
Title: Chairman, CEO, and President
1637
1638
1639
1640
1641
JOHNSON & JOHNSON CONSUMER PRODUCTS COMPANY,
1642
a Division of Johnson & Johnson Consumer Companies, Inc.
1643
1644
1645
By: /s/ Sharon D'Agostino Date 4/5/00
1646
------------------------------- ---------------------
1647
Name: Sharon D'Agostino
1648
Title: President Adult Skin Care
1649
1650
1651
1652
1653
NEUTROGENA CORPORATION
1654
1655
By: /s/ Manuel Scates Date 4/4/00
1656
------------------------------- ---------------------
1657
Name: Manuel Scates
1658
Title: Director, Contract Site Management
1659
1660
1661
30
1662
<PAGE>
1663
1664
1665
SCHEDULE 1.01
1666
PRODUCT
1667
1668
1669
The patches are composed of a hydrogel on a ( * ) that is worn on a pimple
1670
overnight. The hydrogel contains a water-based adhesive and the active
1671
ingredient ( * ), along with excipient ingredients. The hydrogel composition is
1672
covered under the following patents:
1673
1674
US Patent Number 5,536,263
1675
Canadian Patent Numbers 1,206,095 and 2,133,598
1676
European Patents 0,072,251 and PCT Number 0674,913A2
1677
Mexican Patent Number 187,839
1678
Australian Patent Number 676,623
1679
1680
1681
1682
* Denotes confidential information that has been omitted from the exhibit and
1683
filed separately, accompanied by a confidential treatment request, with the
1684
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
1685
Exchange Act of 1934.
1686
1687
1688
<PAGE>
1689
1690
1691
Schedule 2.00
1692
MINIMUM PURCHASE QUANTITIES
1693
1694
1695
Minimum Purchase Quantities for each contract year shall be as follows:
1696
1697
( * )
1698
1699
( * )
1700
1701
1702
1703
1704
1705
* Denotes confidential information that has been omitted from the exhibit and
1706
filed separately, accompanied by a confidential treatment request, with the
1707
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
1708
Exchange Act of 1934.
1709
1710
<PAGE>
1711
1712
1713
Schedule 3.01
1714
INITIAL TRANSFER PRICES
1715
1716
1717
Pricing for Product A: Clean and Clear Bulk Packed Product
1718
- ----------------------------------------------------------
1719
1720
Minimum Order Size ( * )
1721
1722
Price per pouch: ( * )
1723
1724
1725
Pricing for Product B: Neutrogena Product Pure Buy
1726
- --------------------------------------------------
1727
1728
Minimum Order size ( * )
1729
1730
Price per pouch: ( * )
1731
1732
1733
1734
This pricing assumes LecTec inspection and AQL levels are accepted.
1735
1736
Orders of smaller quantities are subject to a set up charges of ( * ) per run.
1737
The smallest run size is ( * ) pouches.
1738
1739
Different languages ( * ) plate charge and ( * ) charge for printer set up for
1740
the foil. Minimum Run of ( * ) pouches and ( * ) set up charge.
1741
1742
1743
1744
1745
* Denotes confidential information that has been omitted from the exhibit and
1746
filed separately, accompanied by a confidential treatment request, with the
1747
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
1748
Exchange Act of 1934.
1749
1750
</TEXT>
1751
</DOCUMENT>
1752
</SEC-DOCUMENT>
1753
-----END PRIVACY-ENHANCED MESSAGE-----
1754
1755