Document:

ex_142542.htm

Exhibit 10.1

 

Certain identified information has been excluded from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

 

AMENDED AND RESTATED

 

MANUFACTURING AND SUPPLY AGREEMENT

 

 

 

This Amended and Restated Manufacturing and Supply Agreement (the “Agreement”), effective as of April 26, 2019 (the “Effective Date”), is made by and between Isoray Medical, Inc., a Delaware corporation with offices at 350 Hills St., Suite 106, Richland, WA 99354 (“Isoray”), and GT MEDICAL TECHNOLOGIES, INC., a Delaware corporation, having its principal place of business at 1809 S. Holbrook Lane, Suite 107, Tempe, AZ 85281 (“GT MED TECH”). Isoray and GT MED TECH may be referred to herein individually as a “Party”, and collectively as the “Parties”.

 

RECITALS

 

A.     Isoray and GT MED TECH entered into a Manufacturing and Supply Agreement, dated January 3, 2018 relating to the manufacture and supply of certain brachytherapy product incorporating Isoray’s Cesium-131 sources for use and/or sale for the treatment of certain tumors, as amended December 28, 2018 (the “Original Supply Agreement”).

 

B.     As Isoray and GT MED TECH have gained experience working together under both the Collaborative Development Agreement, dated as of March 13, 2017 (the “Development Agreement”) and the Original Supply Agreement, the Parties desire to amend specific terms and conditions of the Original Supply Agreement.

 

C.     The Parties now wish to amend and restate in its entirety the Original Supply Agreement in the manner set forth in this Agreement.

 

NOW THEREFORE, in consideration for the covenants set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as set forth below.

 

AGREEMENT

 

	
			1.

				
			Definitions.

			

 

1.1     “Affiliate” means, with respect to a Party, any corporation or other business entity controlling, controlled by or under common control with such Party. The term “controlling” (with correlative meanings for the terms “controlled by” and “under common control with”) as used in this definition means either (a) possession of the direct or indirect ownership of more than fifty percent (50%) of the voting or income interest of the applicable corporation or other business entity, or (b) the ability, by contract or otherwise, to control the management of the applicable corporation or other business entity.

 

1.2     “Applicable Law” means all applicable international, national, federal, state, and local laws, ordinances, and regulations applicable to the manufacture, supply, marketing, sale and use of Products hereunder, including without limitation any applicable FDA and other Regulatory Authority requirements.

 

1.3     “Certificate of Analysis” means a document issued by Isoray verifying adherence to Product Specification and may also include the patient ID, quantity of Products, activity level, and implant date.

 

 

 

 

1.4      “Claim” has the meaning set forth in Section 11.1.

 

1.5     “Confidential Information” has the meaning set forth in Section 9.1.

 

1.6     “Control” means, with respect to any patent or other intellectual property, that the applicable Party owns or has a license to such patent or other intellectual property and has the ability to grant to the other Party access to and a license (or sublicense, as applicable) under same without violating the terms of any agreement with a Third Party.

 

1.7     “Defective Product” has the meaning set forth in Section 4.3(a).

 

1.8     “Disclosing Party” has the meaning set forth in Section 9.1.

 

1.9     “FDA” means the United States Food and Drug Administration or any successor thereto.

 

1.10     “Forecast” has the meaning set forth in Section 3.2.

 

1.11     “Foreground IP” has the meaning set forth in Section 7.1.

 

1.12     “GammaTiles” means the square or rectangular customizable tile carriers used to manufacture Product (as defined below).

 

1.13     “GT MED TECH Change Request” has the meaning set forth in Section 3.9.

 

1.14     “GT MED TECH Indemnitees” has the meaning set forth in Section 11.1.

 

1.15     “GT MED TECH Technology” means all patents, patent applications or other intellectual property rights (including without limitation know-how or trade secrets) that are Controlled by GT MED TECH as of the Effective Date or during the Term and that are necessary or useful to manufacture and supply the Products hereunder.

 

1.16     “Indemnified Party” has the meaning set forth in Section 11.3.

 

1.17     “Indemnifying Party” has the meaning set forth in Section 11.3.

 

1.18     “Isoray Indemnitees” has the meaning set forth in Section 11.2.

 

1.19     “Losses” has the meaning set forth in Section 11.1.

 

1.20     “Pricing Schedule” has the meaning set forth in Section 5.1.

 

1.21     “Product” means (a) GammaTiles incorporating Seeds developed by the Parties under the Development Agreement, sterilized and packaged in accordance with Specification (Exhibit A); and/or (b) general accessories, in each case for the limited purpose of aiding in the use of the Product described in subsection (a) for brachytherapy for brain cancer treatments. The specifics of the general accessories for Products identified in subsection (b), including price, shall be mutually agreed by the Parties from time to time, as set forth in this Agreement.

 

 

 

 

1.22     “Quality Agreement” has the meaning set forth in Section 4.1.

 

1.23     “Recall” has the meaning set forth in Section 8.5(a).

 

1.24     “Receiving Party” has the meaning set forth in Section 9.1.

 

1.25     “Regulatory Approval” means any and all approvals, including supplements and amendments, licenses, registrations or authorizations of any Regulatory Authority that are necessary for the manufacture, distribution, use, marketing or sale of the Product in a regulatory jurisdiction.

 

1.26     “Regulatory Authority” means any governmental authority, including without limitation the FDA, or any other national, supra-national, regional, state or local regulatory agency, department, bureau, commission, or council, with responsibility, jurisdiction and authority to grant licenses or Regulatory Approvals or grant pricing and/or reimbursement approvals necessary for the manufacture, use, importation, packaging, labeling, marketing, or sale of medical devices in any country or group of countries.

 

1.27     “Regulatory Filings” means all applications, filings, dossiers and the like submitted to a Regulatory Authority for the purpose of obtaining Regulatory Approval from such Regulatory Authority.

 

1.28     “Seed” means Isoray’s Cesium-131 source model CS-1

 

1.29     “Specifications” means the product characteristics, processing, labeling and packaging requirements, and quality standards pertaining to the commercial manufacture of Product, which is set forth in Exhibit A. The Specification for a Product may be amended from time to time in accordance with Section 3.9 or otherwise upon mutual written agreement of the Parties.

 

1.30     “Term” has the meaning set forth in Section 12.

 

1.31     “Third Party” means any entity or individual other than the Parties and their respective Affiliates.

 

1.30     “Trade Secret” means information, including a formula, pattern, compilation, program, device, method, technique, or process, that derives independent economic value, actual or potential, from not being generally known to or readily ascertainable through appropriate means by other persons who might obtain economic value from its disclosure or use; and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

 

2.     Exclusivity For the Term of this Agreement, Isoray shall supply exclusively to GT MED TECH the Seeds as used for the Product in application of brachytherapy in brain cancer and shall not sell or otherwise provide the Product to any third-party for brachytherapy in brain tumors. GT MED TECH shall purchase exclusively from Isoray for the Term of this Agreement the Seeds for application of brachytherapy in brain cancer. Nothing in this Agreement prohibits Isoray from continuing to manufacture and supply the Seeds, alone or in configurations other than the Product, for brain cancer treatments.

 

 

 

 

	
			3.

				
			Manufacture & Supply of Product.

			

 

3.1     Manufacture and Supply; Territory. Subject to the provisions herein, Isoray shall, manufacture and supply Product through drop-shipments to end users designated by GT MED TECH. For clarity, Isoray may use Third Party subcontractors or vendors for certain aspects of the manufacturing process, such as sterilization. GT MED TECH shall purchase such Products from Isoray, all in quantities to be set forth on purchase orders submitted from time to time by GT MED TECH in accordance with the provisions of Section 3.3. In the event (a) Isoray is unwilling or unable to supply, in compliance with the terms set forth in this Agreement, quantities of Product ordered by GT MED TECH in accordance with Section 3.3 and (b) GT MED TECH is at such time in full compliance with this Agreement, then GT MED TECH shall be permitted to obtain from a Third-Party manufacturer (or manufacture itself) those quantities of Product that Isoray is unwilling or unable to supply. At all times during the Term, any and all of Isoray’s and GT MED TECH’s obligations under this Agreement shall be subject to and in accordance with the provisions, limitations and conditions imposed by FDA in respect of the Products. On an “as needed basis" as the Product is launched in countries outside the United States, the Parties shall negotiate in good faith an amendment to this Agreement to include such additional terms as the Parties shall deem necessary to ensure compliance with applicable laws in such countries. Notwithstanding this Section 3.1, if GT MED TECH elects to have the Product manufactured at a non-Isoray facility then GT MED TECH shall give Isoray six (6) months written notice that GT MED TECH intends to have the Product manufactured at another facility and shift its purchase to the Seeds, so that Isoray can have sufficient time to reallocate resources as needed of its staff and facility. The Seeds shall be sold at prices and pricing adjustments as provided in Article 5. GT MED TECH shall have sole responsibility for and pay, or cause to be paid, all costs related to ensure that the new manufacturing facility has a proper radioactive materials license allowing for the receipt of Isoray’s Seeds.

 

3.2     Forecasts. GT MED TECH shall submit to Isoray, no later than the 45 days before the beginning of every calendar month during the Term, a rolling forecast of which the first calendar month will constitute a binding purchase order for Product (“Binding Forecast”) and of which the remaining eleven calendar months will constitute a non-binding forecast (“Non-Binding Forecast”) setting forth an estimate of the total quantity of Product GT MED TECH reasonably believes it will purchase during such twelve calendar months. For the avoidance of doubt, only the first calendar month will be a Binding Forecast and the remaining eleven calendar months are Non-Binding Forecasts of quantity of Product which is to be used by Isoray for manufacturing planning purposes. At the end of each calendar quarter, GT MED TECH will compare the Binding Forecasts for each of the previous three months with the invoices for actual Products shipped for each of the prior calendar months. In the event of a “shortfall” in any given month, that is fewer actual Products were shipped as compared to the Binding Forecast for that calendar month, then no later than the 15th day of the second month following the end of a calendar quarter GT MED TECH shall pay Isoray the equivalent of the price of the Seeds times the shortfall in Product units shipped.

 

 

 

 

3.3     Purchase Orders. GT MED TECH shall provide to Isoray written ‘blanket’ purchase order for Product(s) for the current calendar month with each Binding Forecast, and then from time to time throughout the calendar month, Isoray shall be provided specific GammaTileTM product order form from an end user, each of which shall specify the quantity of each Product to be delivered, the anticipated implant date, the loading configuration for the Product, the date of delivery and one or more delivery locations (each of which must be an end user facility with an appropriate license for receiving the Product). Within one (1) business day after its receipt of a specific purchase order that complies with the foregoing requirements, Isoray shall acknowledge in writing its receipt and acceptance of such order, and shall confirm the date(s) for delivery of Product; provided, however, that Isoray shall not be obligated to supply any quantities of Products hereunder to the extent (a) the amount ordered in any calendar quarter exceeds 120% of the quantity forecasted for such calendar quarter in the most recent Forecast; or (b) the delivery date is less than five (5) business days after the date of Isoray’s receipt of the order, but in either case ((a) or (b)), Isoray shall use good faith efforts to attempt to fill such orders to the extent it is reasonably able to do so. In addition, Isoray shall not be obligated to accept an order if the delivery location is not appropriately licensed for receiving the Product. Any purchase orders submitted hereunder shall reference this Agreement and shall be governed exclusively by the terms contained herein. Any term or condition in any purchase order, confirmation, or other document furnished by GT MED TECH or Isoray that is in any way inconsistent with the terms and conditions set forth in this Agreement is hereby expressly rejected.

 

3.4     Order Cancellations.  GT MED TECH may cancel any purchase order prior to shipment of the Product; provided, however, that GT MED TECH shall be obligated to pay the price per the Pricing Schedule for any such cancelled order, along with any shipping costs (both outbound and inbound), if applicable.

 

3.5     Storage and Handling. Isoray shall store and handle the Products as required by the Specifications, Applicable Law, and all established safety practices for the Products and in accordance with all Quality Control Procedures.

 

3.6     Packaging and Labeling. All Products manufactured by Isoray shall be packaged and labeled in accordance with the Specifications and Applicable Law. Any changes to the label and/or the text of any written inserts for the Product will require the prior written consent of GT MED TECH.

 

3.7     Delivery. Isoray shall promptly report to GT MED TECH the occurrence of any event within or beyond its control which is likely to affect delivery of any ordered Products. Isoray shall deliver the ordered Product directly to the end user at the delivery location specified by GT MED TECH in its purchase order, along with the following documentation: (a) the batch number and order number of the delivered Product(s); (b) a Certificate of Analysis, as described in Section 1.3; (c) any information and documentation set forth in the Specifications or reasonably requested by GT MED TECH or the end user; and (d) any documentation that Isoray customarily includes in shipments of Seed-type products that it manufactures. The Parties acknowledge all shipments of Product will be routed from Isoray to a Third-Party sterilization facility as an intermediate destination prior to delivery to end user(s).

 

 

 

 

3.8     Shipping; Risk of Loss. All shipments of Products will be EXW (Incoterms 2010) Isoray’s manufacturing facility with GT MED TECH’s selected shipping carrier (which carrier shall be reasonably acceptable to Isoray). GT MED TECH agrees to separately pay expenses incurred by Isoray in the shipment and delivery of ordered Products, including without limitation freight charges, import duties and insurance premiums, provided such expenses are listed individually in Isoray’s invoice to GT MED TECH. Except as provided herein with respect to Defective Products, risk of loss as to Products shipped shall pass to GT MED TECH or the recipient designated by GT MED TECH (as applicable) upon delivery of such Products to GT MED TECH’s carrier at Isoray’s manufacturing facility.

 

3.9     Changes/Engineering Change Orders. If Isoray finds it necessary or desirable to change Specifications (including packaging, labeling and written insert) for a Product, or to change manufacturing process, raw materials, or components used by Isoray in the manufacture of Products in a manner that affects the Specifications or the form, fit, function, or performance of a Product, Isoray will deliver notice to GT MED TECH and will not implement any such change without GT MED TECH’s prior written consent. If GT MED TECH finds it necessary or desirable to change Specifications for any Product, GT MED TECH may deliver a request for such change to Isoray (“GT MED TECH Change Request”), Isoray shall promptly inform GT MED TECH of any changes to the Commercial Pricing Schedule that would result from implementing such change. Subject to pricing adjustments (under Section 5.1), Isoray shall use commercially reasonable efforts to make any change identified in a GT MED TECH Change Request that is in response to a regulatory, sterilization methods or safety issue pertaining to the applicable Product, and will consider in good faith any other reasonable change identified in a GT MED TECH Change Request. In the event a GT MED TECH Change Request includes a major design change in the sterilization method of the Product (a “Major Sterilization Change Request”) and requires investment in Isoray’s operation, GT MED TECH has agreed to cover the cost of such investment. Isoray will consider making such adjustments in its operation to accommodate such Major Sterilization Change Request. In the event Isoray does not agree to a Major Sterilization Change Request proposed by GT MED TECH reasonably and in good faith, GT MED TECH may seek a Third Party manufacturer of the Product under the Major Sterilization Change Request without further liability to Isoray. Unless the Parties otherwise agree in writing, capital equipment purchased by Isoray in order to implement a Major Sterilization Change Request that is paid for by GT MED TECH investment shall be GT MED TECH’s sole property and shall not be encumbered or disposed of in any way by Isoray, except with GT MED TECH’s written consent. Isoray shall, at its expense, maintain such capital equipment in accordance with its typical practices.

 

3.10     Process Improvement Projects. GT MED TECH has established and is working toward specific process improvement projects to improve various aspects of the manufacture and delivery of the Product (Exhibit E). For each process improvement project, GT MED TECH will provide a scope of work including desired personnel qualifications, estimated hours, and timeline. Isoray will review the scope of work and notify GT MED TECH of either its acceptance or proposed modifications based on Isoray’s understanding of the work being requested and Isoray’s availability of resources. Once agreed upon by the Parties, any scope changes to a project will be agreed to by both Parties in writing, prior to the work relative to the scope change being performed. The work on each process improvement project will be billed each month on a time and materials basis. GT MED TECH will revise its process improvement projects on a yearly basis.

 

 

 

 

3.11     Key Performance Indicators. GT MED TECH has established specific key performance indicators (“KPIs”) related to the manufacture and delivery of the Product (Exhibit F).

 

3.12     Obsolete Materials. As a result of a requested design change by GT MED TECH, certain materials may become obsolete, meaning that such materials are no longer used to manufacture Products and/or cannot be cost-effectively reworked to be used under the design change. At mutually-agreeable times, Isoray shall provide GT MED TECH with an invoice for the purchase costs of such obsolete materials, and GT MED TECH shall pay such invoice within sixty (60) days after receipt thereof. At GT MED TECH’s option, Isoray shall either return or destroy such obsolete materials at GT MED TECH expense.

 

3.13     Reporting.   Following the format shown in Exhibit C, Isoray shall provide a monthly report summarizing inventory of components, work-in-progress and scrap rates of Product manufacturing.

 

	
			4.

				
			Quality Control; Acceptance and Rejection.

			

 

4.1     Quality Control. Isoray and GT MED TECH shall concurrently with this Agreement enter into a quality agreement to designate the roles and responsibilities of the Parties relative to a quality control process (the “Quality Agreement”). 

 

4.2     Licensure and Standards. At its own expense, Isoray represents and warrants it shall maintain throughout the Term of this Agreement, registered facilities, appropriate licensure and/or certifications, and applicable controls in connection with the manufacture and supply of Product hereunder, all in compliance with Applicable Laws and those quality standards as specified in the Quality Agreement. Isoray shall notify and keep GT MED TECH informed of any government or regulatory inspections of Isoray’s facilities that are relevant to the manufacture and supply of the Products hereunder. Other obligations relative to such inspections will be specified in the Quality Agreement.

 

4.3     Acceptance and Rejection of Product.

 

(a)     GT MED TECH may reject any Product delivered under this Agreement that does not comply with the warranties set forth in Section 10.2(a) (in all cases, a “Defective Product”) by giving written notice of such Defective Product to Isoray within seventy two (72) hours after receipt of the Product shipment, which notice shall specify in reasonable detail the grounds for such rejection.

 

(b)     GT MED TECH shall return Defective Products to Isoray at Isoray’s expense using Isoray’s then-standard return material authorization (“RMA”) procedures. Exhibit D describes Isoray’s RMA procedures as of the Effective Date, and Isoray shall provide GT MED TECH with written notice of any modifications to such RMA procedures. Subject to Section 4.3(c), Isoray shall replace any returned Defective Products as quickly as possible, and GT MED TECH shall pay Isoray for such replacement Product in accordance with Section 4.1, or in the event that GT MED TECH has already paid for the returned Defective Products, Isoray shall replace such Defective Products at its own expense.

 

 

 

 

(c)     If Isoray disagrees with GT MED TECH’s determination that certain units of Product are Defective Product, the Parties will first use good faith efforts to settle such dispute within thirty (30) days of GT MED TECH’s notice of such alleged defects. If the Parties are unable to resolve such dispute within this thirty (30) day period, such Product shall be submitted to a mutually acceptable Third Party testing service. Such Third Party testing service shall determine whether such Product meets the Specifications, and the Parties agree that such testing service’s determination shall be final and binding on the Parties. The Party against whom the Third Party laboratory rules shall bear all costs of the Third Party testing.

 

(d)     A warranty from the manufacturer is in place for the collagen products which states that it shall be in compliance with the collagen product specifications. If it is determined that the collagen product does not meet acceptance criteria during visual inspection, a non-comformance report (NCR) shall be initiated and the collagen product lot shall be quarantined as appropriate. During this time, the collagen product shall remain in the sealed packaging. GT MED TECH shall be notified within 24 hours in order to determine how to best handle the non-conforming collagen product and Isoray will work with GT MED TECH in order to appropriately return product back to the manufacturer.

 

	
			5.

				
			Prices and Payment.

			

 

5.1     Supply Price. The price for the Seeds and the Products manufactured by Isoray and supplied to GT MED TECH shall be as set forth in Exhibit B (the “Pricing Schedule”). Such pricing shall be periodically adjusted in accordance with Sections 5.1(a)-(c) and reflected in a written amendment to the Agreement, signed by authorized representatives of both Parties.

 

(a)     Open Book Pricing Formula. The price(s) for the Products and Seeds shall be set using the open-book pricing formula as set forth in Exhibit B. Initial pricing shall be based on: (i) best-available bill of material ("BOM") cost data by volume, (ii) current labor standards including assembly as developed during pilot builds of the Products, (iii) estimated scrap rates, (iv) overhead and (v) gross profit margin. Pricing may be adjusted up or down annually as a result of fluctuations in materials costs, or as a result of deviations in actual labor, scrap or warranty costs, if any, provided that any annual adjustment for costs of the Product or the Seeds is limited to a maximum increase of three percent (3%). Any engineering change order (“ECO”) occurring during the Manufacturing Term which impacts the BOM costs or the manufacturing process will be reviewed, and pricing shall be adjusted accordingly upon implementation of the ECO as mutually agreed upon by Isoray and GT MED TECH.

 

(b)     Quantity Dependence. The open-book pricing formula described above shall be based on a package of 3 or 6 GammaTiles configurations, and the price shall be based on the quantity of Products manufactured and supplied under GT MED TECH’s purchase orders. Isoray shall allocate direct and indirect labor resources and negotiate supply agreements with vendors for material quantities to meet such quantity purchase orders of GT MED TECH.

 

(c)     Price for the Product. Notwithstanding anything to the contrary set forth herein, Isoray shall have no obligation to provide to GT MED TECH any details of its costs associated with production of Seeds. The price for Product shall be equal to the sum of (i) the Seed price and (ii) the pricing for the assembly of the Seed into the GammaTile and other steps in the Product manufacturing process (in the case of subsection (ii), as determined and included in accordance with the open-book process above).

 

 

 

 

5.2     Audit. From time to time, but with at least thirty (30) business days advanced written notice and not more than once per calendar year, GT MED TECH may, at its sole expense, conduct an audit of Isoray’s books and records relative to the manufacture, shipment, purchase price, and open book pricing formula for the Product as reflected in Exhibit B (but excluding all books and records relative to the production costs of Seeds or other Isoray business not related to the Product).

 

5.3     Invoice and Payment. Upon shipment of Product, Isoray shall issue to GT MED TECH a written invoice for such shipment. If applicable, costs and expenses incurred by Isoray with such shipment, and agreed to be paid by GT MED TECH under this Agreement, shall be included as line-items on such invoice. All undisputed payments due to Isoray shall be paid in U.S. Dollars not later than forty-five (45) days following the receipt of the invoice, which shall be no earlier than the date on which the applicable Product is delivered to GT MED TECH’s carrier by Isoray. Unless otherwise agreed by the Parties, all payments under this Agreement shall be paid by wire transfer or electronic funds transfer of immediately available funds to a U.S.-based account designated in writing by Isoray.

 

5.4     Taxes. Any taxes now or hereafter imposed with respect to the transactions contemplated under this Agreement (with the exception of income taxes or other similar taxes imposed upon Isoray and measured by the gross or net income of Isoray) shall be the responsibility of GT MED TECH, and if paid or required to be paid by Isoray, the amount thereof shall be added to the applicable invoice and become a part of the amounts payable by GT MED TECH for such shipment.

 

6.     Tooling. Tools for the manufacture of Products shall be paid for or furnished by GT MED TECH, shall be GT MED TECH’s sole property, and shall not be encumbered or disposed of in any way by Isoray (“Tools”). The Tools shall be marked in such a way to clearly identify GT MED TECH’s ownership and shall be separated from property that does not belong to GT MED TECH. GT MED TECH shall be responsible for purchasing new Tools specifically required in connection with manufacture of the Product(s), upon request. Isoray, at its expense, shall maintain such Tools in good working condition subject to normal wear and tear and when requested shall provide GT MED TECH copies of all repair and maintenance records for such Tools. The Tools shall be used exclusively for Isoray’s performance of its obligations under this Agreement.

 

	
			7.

				
			Intellectual Property.

			

 

7.1     Ownership. Each Party (and its Affiliates or subcontractors) will retain all right, title and interest in any inventions, ideas, concepts, know-how, work product, and other intellectual property owned or controlled by such Party prior to or independent of the Parties’ activities under this Agreement. It is not anticipated that any new intellectual property will be created in the course of activities under this Agreement. However, in the event that a Party or its respective employees or agents develop, invent, or conceive any inventions, ideas, concepts, know-how, work product, or other intellectual property in the course of their activities under this Agreement (“Foreground IP”), such Foreground IP shall be owned by Isoray if invented solely by employees or agents of Isoray, and by GT MED TECH if invented solely by employees or agents of GT MED TECH or if jointly invented by employees or agents of Isoray and GT MED TECH.

 

 

 

 

7.2     License to Isoray. GT MED TECH hereby grants to Isoray a non-exclusive, royalty-free license to use and practice the GT MED TECH Technology and if appropriate, GT MED TECH Foreground IP solely and exclusively to manufacture the Product exclusively for GT MED TECH during the Term and in accordance with the provisions of this Agreement. For the avoidance of doubt, this license permits Isoray to manufacture the Products as square or rectangular Gamma Tiles with Seeds solely for GT MED TECH. No other use of this license by Isoray is permitted.

 

7.3     License to GT MED TECH. Isoray hereby grants to GT MED TECH a non-exclusive, royalty-free license to use and practice any intellectual property related to the Product and Controlled by Isoray including any Isoray Foreground IP, solely to the extent necessary for GT MED TECH to sell and offer for sale Product manufactured by Isoray during the Term and in accordance with the provisions of this Agreement. For the avoidance of doubt, this license permits GT MED TECH to sell the Products manufactured by Isoray. No other use of this license by GT MED TECH is permitted.

 

7.4     Trademarks. GT MED TECH shall be responsible for the selection, registration, maintenance, and defense of all trademarks for use in connection with GT MED TECH’s sale or marketing of the Products, as well as all expenses associated therewith. As between the Parties, GT MED TECH shall exclusively own all such trademarks.

 

7.5     No Implied Licenses.  Neither Party grants (or agrees to grant) to the other Party any right or license to use any of its intellectual property, know-how or other proprietary information, materials or technology, or to practice any of its patent, trademark or trade dress rights, except as expressly set forth in this Agreement.

 

	
			8.

				
			Regulatory.

			

 

8.1     Regulatory Approvals. Ownership of the Regulatory Approval of the Product in the United States, as well as the ownership of related regulatory data and regulatory documents, is governed by terms and conditions of Article 5 of the Development Agreement. Maintenance of the Regulatory Approval for the Product in the United States shall be the responsibility of the Party that owns such Regulatory Approval, at such Party’s sole cost, unless the Parties otherwise agree.

 

8.2     Inspections; Regulatory Action.  The transfer of the 510(k) Clearance from Isoray to GT MED TECH as contemplated under the Original Agreement has been completed. During the Term of this Agreement, GT MED TECH may periodically (but no more frequently than once per calendar year absent an inspection ‘for cause’) conduct an audit of Isoray’s manufacturing facility for the Product and quality systems relating to the manufacture of the Product in order to verify the adherence of Isoray to the Quality Agreement and this Agreement. Any such audit shall be during normal business hours and at GT MED TECH’s cost and expense, and GT MED TECH shall provide a minimum of thirty (30) days written notice prior to scheduling of any such audit. Additionally, Isoray shall cooperate with any inspection by a Regulatory Authority relating to the Products and, to the extent practicable, shall give GT MED TECH advance notice of any such inspection. Each Party shall notify the other Party promptly in writing in the event such Party learns that any action has been taken or threatened by a Regulatory Authority relating to the use, sale, manufacture or storage of Products. To the extent permitted by applicable law, Isoray shall provide GT MED TECH copies of communications with any Regulatory Authority relating to the Products; provided, however, Isoray may redact from such copies proprietary information not yet disclosed to GT MED TECH. To the extent permitted by applicable law, GT MED TECH shall provide Isoray copies of communications with any Regulatory Authority relating to the Products, solely to the extent such communications relate to Seeds or manufacturing activities undertaken by or on behalf of Isoray; provided, however, GT MED TECH may redact from such copies any proprietary information relating to GT MED TECH products other than the Product.

 

 

 

 

8.3     Compliance with Laws. Isoray shall supply Products that are manufactured in compliance with all Applicable Laws, including without limitation all Applicable Laws relating to the transportation, storage, use, handling and disposal of hazardous materials. Isoray represents and warrants to GT MED TECH that Isoray shall obtain and maintain all site licenses and government permits, including without limitation health, safety and environmental permits, necessary for the conduct of the actions and procedures undertaken to manufacture the Products in accordance with Applicable Laws and the Quality Control Procedures.

 

8.4     Records and Samples. Isoray shall keep, or cause to be kept, complete, accurate and authentic accounts, notes, data and records pertaining to the manufacture, processing, testing, labeling, storage, and distribution of the Products, including without limitation master production and control records, in accordance with applicable laws and regulations. Isoray shall retain, or cause to be retained, such records for a period of five (5) years following the date of manufacture, or longer if required by law, and upon request, shall make available to GT MED TECH copies of such records. After such time period, Isoray shall notify GT MED TECH prior to the destruction of any records retained under this Section 8.4 and, at GT MED TECH’s request, shall transfer such records to GT MED TECH.

 

8.5     Recalls.

 

(a)     In the event GT MED TECH should be required or should voluntarily decide to initiate a product recall, product withdrawal, field correction, or advisory notice with respect to any of the Products manufactured by Isoray pursuant to this Agreement (in each case, a “Recall”), GT MED TECH shall notify Isoray. In conjunction with such Recall, and at GT MED TECH’s request, Isoray shall assist in the investigation of Recalls to determine the cause and extent of the problem and the Parties shall cooperate with each other concerning the necessity and nature of such action. Recalls shall be the responsibility of GT MED TECH and GT MED TECH shall bear all expenses connected therewith, except to the extent such Recall results from manufacturing defects on the part of Isoray, and Isoray shall bear the expenses of the Recall to the extent the Recall results from manufacturing defects on the part of Isoray. For the purposes of this Agreement, the expenses of the Recall will include, without limitation, all expenses for notification of customers (and patients if required) and the destruction or return of the recalled Product, as well as all reasonable out-of-pocket costs and expenses incurred by GT MED TECH and Isoray.

 

(b)     In the event that Isoray independently believes that a Recall for any of the Products may be necessary or appropriate, Isoray shall notify GT MED TECH. The Parties shall discuss in good faith the necessity and nature of such action; however, the decision to initiate any Recall involving any of the Products shall be in GT MED TECH’s sole discretion. In the event that GT MED TECH decides to initiate under this Section 8.5(b) any Recall involving any of the Products, the coordination thereof shall be handled by GT MED TECH, whether or not such action was initially requested by Isoray. The expenses of any such Recall shall be handled as provided in Section 8.6(a).

 

 

 

 

	
			9.

				
			Confidentiality.

			

 

9.1     Confidential Information. Subject to the limitations set forth in Section 7.2, all information that is disclosed by one Party (the “Disclosing Party”) to the other Party (the “Receiving Party”) under this Agreement shall be deemed to be “Confidential Information” of the Disclosing Party. Confidential Information may include, without limitation, trade secrets, ideas, unpublished patent applications, data, processes, formulae, programs, compounds, know-how, improvements, designs, information regarding plans for research development, business plans, customer lists, marketing and sales strategies, financial records, and budgets, whether disclosed in oral, written, graphic, or electronic form.

 

9.2     Exceptions to Confidential Information. The term “Confidential Information” shall not be deemed to include information that: (a) is in the public domain or comes into the public domain through no fault of the Receiving Party; (b) is furnished to the Receiving Party on a non-confidential basis by a third party rightfully in possession of such information and not subject to a duty of confidentiality with respect thereto; (c) was already known by the Receiving Party prior to the time of receiving such Confidential Information, as evidenced by the Receiving Party’s prior written records; or (d) was independently developed by the Receiving Party without use of or access to the Confidential Information of the Disclosing Party.

 

9.3     Non-Disclosure and Non-Use of Confidential Information. The Receiving Party shall hold all Confidential Information confidential until such Confidential Information is no longer deemed confidential under Section 9.2 above, the Receiving Party shall maintain all Confidential Information in strict trust and confidence and shall not disclose any Confidential Information to any third party or use any Confidential Information received except as may be authorized by the Disclosing Party’s prior written consent. The Receiving Party may use Confidential Information only to the extent required to perform its obligations or exercise its rights under this Agreement, and for no other purpose. In particular, neither Party shall file any patent application containing any disclosure or patent claim, the subject matter of which is derived from the other Party’s Confidential Information. Neither Party shall use the other Party’s Confidential Information for any purpose or in any manner that would constitute a violation of any laws or regulations of the United States. Nothing in this Agreement grants either Party the right to retain, distribute, or commercialize any Confidential Information of the other Party (except that GT MED TECH has the right to distribute and commercialize Products purchased from Isoray hereunder). Each Party, prior to disclosure of any Confidential Information of the other Party to any employee, consultant or advisor shall ensure that such person is bound by confidentiality provisions that are no less stringent than those set forth in this Article 9.

 

 

 

 

9.4     Third Party Confidential Information. Neither Party shall disclose to the other Party any confidential or proprietary information that belongs to any third party unless the Disclosing Party first obtains the consent of such third party. Neither Party shall represent to the other Party as being unrestricted any designs, plans, models, samples, or other writings or products that such Party knows are covered by valid patent, copyright, or other form of intellectual property protection belonging to a third party.

 

9.5     Publicity. Except for such disclosure as is deemed necessary, in the reasonable judgment of a Party, to comply with applicable laws, rules and regulations, no announcement, news release, public statement, publication or presentation relating to the existence of this Agreement, the subject matter hereof, or either Party’s performance hereunder will be made without the other Party’s prior written approval. Such obligations are in addition to the restrictions set forth above with respect to disclosures of the other Party’s Confidential Information.

 

	
			10.

				
			Representations and Warranties.

			

 

10.1     Mutual Representations and Warranties. In addition to other warrants and representations set forth in this Agreement, each Party represents and warrants as follows:

 

(a)     Existence and Power. It is duly organized, validly existing and in good standing under the laws of the state or country in which it is organized.

 

(b)     Due Authorization and Enforcement of Obligations. It has the power and authority and the legal right to enter into this Agreement to perform its obligations under this Agreement, and has taken all necessary action on its part to authorize the performance of such obligations. This Agreement has been duly executed and delivered on behalf of such Party, and constitutes a legal, valid, binding obligation, enforceable against such Party in accordance with its terms.

 

(c)     No Conflict. The execution and delivery of this Agreement and the performance of such Party’s obligations under this Agreement (a) do not conflict with or violate any requirement of Applicable Laws and (b) do not conflict with, or constitute a default, or require any consent under any contractual obligation of such Party.

 

10.2     Isoray Representations and Warranties.

 

(a)     Product Warranty. Isoray warrants that all Products delivered under this Agreement shall, at time of delivery, (i) conform to the Specifications; and (ii) be free and clear of any and all liens or other encumbrances.

 

(b)     No Debarred Person. Isoray represents and warrants that it shall not employ, contract with, or retain any person directly or indirectly to perform activities under this Agreement if such is debarred by the FDA under 21 U.S.C. § 335a(a) or disqualified as described in 21 C.F.R. § 812.119. In addition, Isoray represents and warrants that it has not engaged in any conduct or activity which could lead to any such debarment actions. If Isoray learns during the Term that this representation needs to be amended in light of new information, Isoray shall promptly notify GT MED TECH of same and shall take prompt action to remedy the situation.

 

 

 

 

10.3     DISCLAIMER. THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE 10 ARE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES MADE BY EITHER PARTY UNDER THIS AGREEMENT, AND NEITHER PARTY MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED OR ARISING BY LAW, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTY ARISING FROM THE COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE.

 

	
			11.

				
			Indemnification.

			

 

11.1     Indemnification by Isoray. Isoray shall indemnify, defend and hold GT MED TECH, its Affiliates, and their respective directors, officers, employees and agents (“GT MED TECH Indemnitees”) harmless from and against all losses, damages, costs and expenses (including reasonable legal expenses and attorneys’ fees and expenses) (collectively, the “Losses”) incurred by GT MED TECH as a result of Third Party claims, demands, suits, or actions (each, a “Claim”) brought against GT MED TECH to the extent such Losses result from (a) the gross negligence or willful misconduct of any Isoray Indemnitee or any of Isoray’s subcontractors; or (b) any breach of Isoray’s obligations, warranties, representations, or covenants under this Agreement. Notwithstanding the foregoing, Isoray shall not be obligated to indemnify GT MED TECH to the extent any Claims or Losses are based on (i) any breach of GT MED TECH’s obligations, warranties, representations, or covenants under this Agreement; or (ii) the gross negligence or willful misconduct of any GT MED TECH Indemnitee.

 

11.2     Indemnification by GT MED TECH.  GT MED TECH shall indemnify, defend and hold Isoray, its Affiliates, and their respective directors, officers, employees and agents (“Isoray Indemnitees”) harmless from and against all Losses incurred by Isoray as a result of Claims brought against Isoray to the extent such Losses result from (a) the handling, possession, use, marketing, promotion, distribution or sale of any Product by GT MED TECH or any of its distributors following delivery of the Product by Isoray under this Agreement; (b) any personal injury (including death) or property damage resulting from the use, sale, or other disposition of the Products; (c) any breach of GT MED TECH’s obligations, warranties, representations, warranties, or covenants under this Agreement; or (d) the gross negligence or willful misconduct of any GT MED TECH Indemnitee. Notwithstanding the foregoing, GT MED TECH shall not be obligated to indemnify Isoray to the extent any Claims or Losses are based on (i) any breach of Isoray’s obligations, warranties, representations, warranties, or covenants under this Agreement, or (ii) the gross negligence or willful misconduct of any Isoray Indemnitee or any of Isoray’s subcontractors hereunder.

 

11.3     Indemnification Procedures. If either Party is entitled to indemnification under this Article 11(the “Indemnified Party”), it shall give written notice to the Party providing indemnification (the “Indemnifying Party”) of any Claim that may be subject to indemnification promptly after learning of such Claim, and the Indemnifying Party shall assume the defense of such Claim. The Indemnifying Party will not be subject to any liability for any settlement of such Claim made by the Indemnified Party without the Indemnifying Party’s consent (but such consent will not be unreasonably withheld or delayed), and will not be obligated to pay the fees and expenses of any separate counsel retained by the Indemnified Party with respect to such Claim. The Indemnifying Party shall not settle a Claim covered by indemnification without the consent of the Indemnified Party (such consent not unreasonably withheld or delayed) if such settlement would impose any monetary obligation on any Indemnified Party’s Indemnitee or require the Indemnified Party or any of the related indemnitees (GT MED TECH Indemnitees if GT MED TECH is the Indemnified Party, and Isoray Indemnitees if Isoray is the Indemnified Party) to submit to an injunction or otherwise limit the Indemnified Party’s rights under this Agreement.

 

11.4     Insurance. During the Term and for three (3) years thereafter, each Party shall maintain in effect and good standing a comprehensive general liability insurance issued by a reputable insurance company in the amount of at least $2,000,000 for claims in the aggregate, and such policy shall name the other Party as an additional insured. Each Party shall promptly notify the other Party of any actual or anticipated changes in its insurance policy that would result in such Party’s non-compliance with this Section 11.4.

 

 

 

 

	
			12.

				
			Term and Termination.

			

 

12.1     Term. This Agreement will become effective upon the Effective Date and will continue in effect for ten (10) years, unless earlier terminated in accordance with this Article 12 (the period during which this Agreement remains in effect, the “Term”).

 

12.2     Termination for Insolvency, Bankruptcy. Either Party may, at its option, terminate this Agreement immediately upon written notice to the other Party, in the event that such other Party (i) becomes insolvent or unable to pay its debts when due; (ii) files a petition in bankruptcy, reorganization or similar proceeding or has such a petition filed against it, which petition is not removed within ninety (90) days; (iii) discontinues it business; (iv) has a receiver appointed over all or a part of its assets; or (v) makes an assignment for the benefit of its creditors.

 

12.3     Termination Upon Breach. Either Party may, at its option, terminate this Agreement in the event of a material breach by the other Party. Such termination may be effected only through a written notice to the breaching Party, specifically identifying the breach or breaches on which such notice of termination is based. The breaching Party will have a right to cure such breach or breaches within sixty (60) days of receipt of such notice, and this Agreement will only terminate pursuant to this Section 12.3 in the event that such cure is not made within such sixty (60)-day period.

 

12.4     Mutual Agreement for Early Termination.     The Parties may terminate this Agreement upon mutual written agreement providing a ninety (90) days termination period.

 

12.5     Survival. The provisions of Sections 8.4, 8.5, 12.5, and 12.6, and Articles 1, 7, 9, 11, and 13 will survive the expiration or termination of this Agreement.

 

12.6     Effects of Termination. Upon termination or expiration of this Agreement, (a) each Party will return and cease use of any Confidential Information of the other Party received under this Agreement; (b) each Party will promptly pay to the other, without offset or deduction, all amounts due and remaining unpaid as of the date of such termination or expiration; (c) Isoray shall complete all work in process, fulfilling pending purchase orders as of the termination or expiration date; (d) GT MED TECH shall pay invoices for such Products shipped under such pending purchase orders; and (e) the Parties shall cooperate on the return of Tools from Isoray’s facilities to a location designated by GT MED TECH.

 

 

 

 

	
			13.

				
			Miscellaneous Provisions.

			

 

13.1     Entire Agreement. This Agreement (including the Exhibits attached, which are hereby incorporated and made part of this Agreement) sets forth the entire agreement and understanding between the Parties with respect to the subject matter of this Agreement and supersedes and merges all prior oral and written agreements, discussions and understandings between the Parties with respect to the subject matter of this Agreement, and neither of the Parties will be bound by any conditions, inducements or representations other than as expressly provided for in this Agreement.

 

13.2     Independent Contractors. In making and performing this Agreement, the Parties act and will act at all times as independent contractors, and, except as expressly set forth in this Agreement, nothing contained in this Agreement will be construed or implied to create an agency, partnership or employer and employee relationship between the Parties. Except as expressly set forth in this Agreement, at no time will either Party make commitments or incur any charges or expenses for, or in the name of, the other Party.

 

13.3     Notices. All notices and other communications provided for hereunder will be in writing and will be mailed by first-class, registered or certified mail, postage paid, or delivered personally, by overnight delivery service or by facsimile, with confirmation of receipt, addressed as follows:

 

If to Isoray:

Isoray Medical, Inc.

350 Hills St, Ste #106

Richland, WA 99354

Attn: Chief Executive Officer

 

If to GT MED TECH:

GT Medical Technologies, Inc.

1809 S. Holbrook Lane, Suite 107

Tempe, AZ 85281

Attn: President

 

 

or addressed to such other address as that Party may have given by written notice in accordance with this provision. Notices sent by facsimile will be effective upon confirmation of receipt, notices sent by mail or overnight delivery service will be effective upon receipt of delivery, and notices given personally will be effective when delivered.

 

 

 

 

13.4     Amendments; Modifications. This Agreement may not be amended or modified except in a writing duly executed by both Parties.

 

13.5     Waiver. Any waiver (express or implied) by either Party of any breach of this Agreement shall not constitute a waiver of any other or subsequent breach and shall in no way impair the rights of the Party granting such waiver in any other respect or at any other time. Any delay or forbearance by either Party in exercising any right hereunder will not be deemed a waiver of that right.

 

13.6     Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law principles that would require the application of the laws of a different jurisdiction.

 

13.7     Limitation of Liability. IN NO EVENT (OTHER THAN BREACH OF CONFIDENTIALITY, ARTICLE 9 WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, OR FOR ANY LOST PROFITS IN CONNECTION WITH THIS AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY OF THE SAME, HOWEVER CAUSED AND REGARDLESS OF THEORY OF LIABILITY, WHETHER TORT, CONTRACT, OR STRICT LIABILITY. NOTWITHSTANDING THE FOREGOING, NOTHING IN THE PRECEDING SENTENCE WILL BE CONSTRUED TO LIMIT OR MODIFY EITHER PARTY’S INDEMNITY OBLIGATIONS PURSUANT TO ARTICLE 11. ADDITIONALLY, IN NO EVENT SHALL ISORAY’S AGGREGATE LIABILITY UNDER THIS AGREEMENT EXCEED THE TOTAL OF ALL AMOUNTS ACTUALLY PAID BY GT MED TECH TO ISORAY UNDER THIS AGREEMENT DURING THE TWELVE (12) MONTHS PRECEDING THE EVENT GIVING RISE TO THE LIABILITY. The Parties agree that the foregoing liability cap shall not apply to any liabilities arising from Isoray’s gross negligence or willful misconduct or any liabilities involving personal injury or death arising from Isoray’s negligence in manufacturing the Product. The Parties acknowledge that the limitations of liability in this Section 13.7 and the allocation of risk herein are an essential element of the bargain between the Parties, without which Isoray would not have entered into this Agreement.

 

13.8     Use of Name. No right, except as expressly provided for in this Agreement, is granted by this Agreement to either Party to use in any manner the name of the other or any other trade name, logo, or trademark of the other in connection with the performance of this Agreement.

 

13.9     Headings; Interpretation. The headings in this Agreement are inserted merely for the purpose of convenience and will not affect the meaning or interpretation of this Agreement. This Agreement will be construed fairly according to its terms, without regard to the identity of the drafter of any provision in this Agreement.

 

13.10     Cumulative Remedies. Termination of this Agreement, regardless of cause or nature, will be without prejudice to any other rights or remedies of the Parties as provided for in this Agreement and will be without liability for any loss or damage occasioned thereby.

 

 

 

 

13.11     Assignment. Neither Party may assign or transfer this Agreement or any rights or obligations hereunder without the prior written consent of the other, except a Party may make such an assignment without the other Party’s consent to a successor-in-interest to substantially all of the business assets of such Party to which this Agreement relates, whether in a merger, sale of stock, sale of assets or other transaction. Any permitted assignment shall be binding on the successors of the assigning Party and any permitted successor or assignee of rights and/or obligations hereunder shall, in writing to the other Party, expressly assume performance of such rights and/or obligations. Any assignment or attempted assignment by either Party in violation of the terms of this Section 13.11 shall be null and void and of no legal effect. This Agreement shall be binding upon and shall inure to the benefit of each Party’s successors-in-interest and permitted assigns.

 

13.12     Severability. If any provision of this Agreement is invalid or unenforceable for any reason in any jurisdiction, such provision will be construed to have been amended to the minimum extent necessary to cure such invalidity or unenforceability. The invalidity or unenforceability of one or more of the provisions contained in this Agreement will not have the effect of rendering any such provision invalid or unenforceable in any other case, circumstance or jurisdiction, or of rendering any other provisions of this Agreement invalid or unenforceable whatsoever.

 

13.13     English Language. This Agreement was prepared in the English language, which language shall govern the interpretation of, and any dispute regarding, the terms of this Agreement.

 

13.14     Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed will be deemed to be an original and all of which when taken together will constitute one Agreement.

 

14.     Privacy of Patient Specific Health Information.   To the extent GammaTileTM Product order forms disclose or contain patient-specific health information (“PHI”), Isoray represents it has, and will operate under, appropriate process(es) to receive and secure the use, disclosure and retention of such PHI in accordance with applicable state and federal laws and regulations. As requested, Isoray shall cooperate and execute documentation as requested by end users of the ordered Product relative to the receipt, use, disclosure, security and retention of such PHI as included in such end users’ GammaTileTM Product order forms. Except, and unless GT MED TECH signs a Business Associates Agreement (“BBA”) with Isoray Medical, Inc. even in the event of a Product recall, other regulatory event, or at the direction of an end user, Isoray will not disclose or otherwise share PHI with GT MED TECH unless directed to by the Patient related to their PHI specific information.

 

[Remainder of page intentionally blank. Signature page follows.]

 

 

 

 

IN WITNESS WHEREOF, the Parties have caused their respective authorized representatives to execute this Agreement as of the Effective Date set forth above.

 

 

GT MEDICAL TECHOLOGIES, Inc.     Isoray Medical, Inc.

 

 

 

By (Signature): /s/ Hernan Lopez           By (Signature): /s/ Jonathan Hunt               

 

Name (Printed): Hernan Lopez                       Name (Printed): Jonathan Hunt 

 

Title: VP of Operations              Title: CFO                                                      

 

 

 

Attachments:

Exhibit A: Specifications

Exhibit B: Pricing & Open Book Pricing Formula

Exhibit C: Inventory Summary

Exhibit D: RMA Procedure

Exhibit E: Project Overviews

Exhibit F: Key Performance Indicators

 

 

 

  

 

 

Signature Page for Amended and Restated Manufacturing & Supply Agreement

 

 

 

 

Exhibit A

Specifications

 

A single GammaTileTM unit is comprised of four Cesium-131 radioactive seeds loaded into a Vicryl® (polyglactin 910) strand and embedded in collagen matrix material.

 

GT-03: A GammaTileTM 3 Pack is comprised of three GammaTileTM units, all contained in one outer pouch for aseptic presentation, labeled and sterilized.

 

GT-06: A GammaTileTM 6 Pack is comprised of two GammaTileTM 3 Packs.

 

 

 

 

 

Exhibit B

Open-Book Pricing Formula & Pricing Schedule

 

Open-Book Pricing Formula for GammaTileTM 3-pack Product

 

	
			Description

				
			Price (US$)

			
	
			Materials (excluding Duragen)

				
			111.93

			
	
			Labor

				
			[**]

			
	
			50% Profit Margin

				
			[**]

			
	
			Seeds (high activity 3.5U Cesium-131 source – assumes 4 seeds per GammaTile)

				
			[**]

			
	
			Overhead*

				
			[**]

			
	 	 
	
			Total price of each GammaTileTM 3-pack Product

				
			[**]

			

 

 

Open-Book Pricing Formula for Duragen Validation

 

	
			Description

				
			Price (US$)

			
	
			Materials (excluding Duragen)

				
			28.62

			
	
			Labor

				
			[**]

			
	
			50% Profit Margin

				
			[**]

			
	
			Simulation Seeds

				
			[**]

			
	
			Overhead

				
			[**]

			
	 	 
	
			Total price of each Duragen Validation

				
			[**]

			

 

Pass-Through Costs

	
			●

				
			Sterilization: Sterilization costs shall be billed either directly to GT MED TECH or invoiced as a separate line item as a pass-through cost by Isoray. No mark-up to sterilization or other pass-through costs for the Product will be assessed by Isoray.

			

	
			●

				
			Bacterial Endotoxin Testing: Bacterial Endotoxin Testing (“BET”) costs shall be billed either directly to GT MED TECH or invoiced as a separate line item as a pass-through cost by Isoray. No mark-up to BET or other pass-through costs for the Product will be assessed by Isoray.

			

 

*The Overhead charge is to compensate Isoray for assistance with facility radioactive materials licenses, customer support activities, quality assurance and regulatory assurance including upkeep of supplier qualifications (not including site visits and audits), risk assessments, and compliance maintenance, and general administration associated with the pass-through costs.

 

 

 

 

 

 

Exhibit C

Inventory Summary Report

 

	
			Part Number

				
			Item Description

				
			Lot No

				
			Qty (tiles)

				
			Status

				
			Comments

			
	
			3094

				
			DuraGen 4x5

				
			3167986

				
			21

				
			Released

				
			tiles cut 1/24/19

			
	 	 	 	 	 	 

 

 

 

 

 

 

 

 

Exhibit D

RMA Procedure

 

See following page

 

 

 

 

 

 

 

 

 

 

Exhibit E

Projects Overviews

 

Process Improvement Project: Cost of Goods Sold

 

Sub-lot with bioburden – Extend the shelf life of cut collagen from 7 days to 8 weeks

Collagen Yield Improvement – Update sub-lot release process to validate the process and implement in process monitoring

Packaging Phase 1 - 6 Pack – Design and implement a packaging configuration that allows for 6 tiles to be packaged within one box

Process Validation – Validate the process and remove in process monitoring

Cutter Improvement – Improve the cutter to decrease usage scrap from 34% to 10%

Needle Improvement – Improve assembly scrap by 50%

In House BET Testing – Bring BET Testing in house

Target: 50% reduction in Cost of Goods sold by Jan 2020

 

 

Process Improvement Project: Establish feasibility of alternate source collagen material

 

Project will develop and prove feasibility of an alternate carrier, ending in a Feasibility Phase exit.

Target: Successful test establishing feasibility of alternative source and collagen material by Jan 2020

 

 

 

 

 

Exhibit F

Key Performance Indicator & Scorecard 

 

 

KPI: Order Fill Rate

Order Fill Rate will be defined as a delivery of product received by end user with correct quantity & specific Product and delivered at the required delivery date noted on the Purchase Order

 

Target: 98% of all Purchase Orders delivered to GT MED TECH’s designated shipper with correct quantity and specific Product as ordered on the required shipping date as noted on the Purchase Order

 

Measure: Quarterly in a bar graph formatExhibit

Exhibit 10.1

EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the “Agreement”), is entered into as of May 29, 2017 (the “Effective Date”), by and between Pacira Pharmaceuticals, Inc., a California corporation (the “Company”), and Dennis McLoughlin (the “Executive”).
RECITALS
WHEREAS, the Company wishes to employ the Executive, and the Executive desires to be employed by the Company, for such purpose and upon the terms and conditions hereinafter provided; and 
WHEREAS, the parties wish to establish the terms of the Executive’s future employment with the Company and set out fully their respective rights, obligations and duties.
AGREEMENT
In consideration of the promises and the terms and conditions set forth in this Agreement, the parties agree as follows:
1.    Title and Capacity. The Company hereby agrees to continue to employ the Executive, and the Executive hereby accepts continued employment with the Company, under the terms set forth in this Agreement. The Executive will serve as the Vice President, Alliance Management Strategy & Corporate Development and shall perform such duties as are ordinary, customary and necessary in such role. The Executive will report directly to the Chief Strategy Officer. The Executive shall devote his full business time, skill and attention to the performance of his duties on behalf of the Company. 
2.    Compensation and Benefits.
(a)    Salary. The Company agrees to pay the Executive an annual base salary of Two Hundred Fifty Thousand Dollars ($250,000) payable in accordance with Company’s customary payroll practice (the “Base Salary”). The Executive’s Base Salary shall be reviewed periodically by the Board of Directors of the Company (the “Board”); provided, however, that any such review will not necessarily result in an adjustment to the Executive’s Base Salary. Any change in the Executive’s Base Salary must be approved by the Board. 
(b)    Bonus. The Executive is eligible to receive, in addition to the Base Salary and subject to the terms hereof and at the full discretion of the Board, a targeted incentive bonus of Thirty five percent (35%) of Base Salary (the “Targeted Incentive Bonus”). The Targeted Incentive Bonus shall be based on the Executive’s and the Company’s performance during the applicable fiscal year, as determined by the Board. The Targeted Incentive Bonus criteria or “goals” will be determined by agreement between the Board and the Executive at beginning of each fiscal year. The award of the Target Incentive Bonus may be in an amount either above or below the amount specified by the Board at the beginning of each fiscal year based on the ultimate performance assessed by the Board.
Targeted Incentive Bonuses shall be determined and approved by the Board in its sole discretion. 
All salary and bonuses shall be subject to all applicable withholdings and deductions. 
(c)    Stock Options and Restricted Stock Units. Company will grant to the Executive a stock option (“Option”) to purchase an aggregate of Ten thousand (10,000) shares of the Company’s common stock, $0.001 par value per share (along with any subsequent grants, the “Option Shares”), pursuant to the Company’s Amended and Restated 2011 Stock Option/Stock Issuance (the “Plan”). The exercise price, vesting schedule and other terms for the Option will be set forth in the notice of grant and option agreement for such Option and the Option is subject to accelerated vesting as set forth in Section 3 hereof. Additional equity incentives, if any, shall be determined by the Board (or a committee thereof) in its sole discretion. All share figures set forth herein shall be subject to adjustment for stock splits, stock dividends, stock combinations, recapitalizations and similar events. 
(d)    Benefits. The Executive (and, where applicable, the Executive’s qualified dependents) will be eligible to participate in health insurance and other employee benefit plans and policies established by the Company for its executive team from time to time on substantially the same terms as are made available to other such employees of the Company generally. The Executive’s participation (and the participation of the Executive’s qualified dependents) in the Company’s benefit plans and policies 

will be subject to the terms of the applicable plan documents and the Company’s generally applied policies, and the Company in its sole discretion may from time to time adopt, modify, interpret or discontinue such plans or policies. 
(e)    Expenses. The Company will reimburse the Executive for all reasonable and necessary expenses incurred by the Executive in connection with the Company’s business, in accordance with the applicable Company policy as may be amended from time to time.
(f)     Vacation and Holidays. The Executive shall be eligible for thirty (30) days’ paid vacation/flexible time off per calendar year subject to the applicable terms and conditions of the Company’s vacation policy and applicable law. 
(g)    Termination of Benefits. Except as set forth in Section 3 or as otherwise specified herein or in any other agreement between the Executive and the Company, if the Executive’s employment is terminated by the Company for any reason, with or without Cause (as defined below), or if the Executive resigns the Executive’s employment voluntarily, with or without Good Reason (as defined below), no compensation or other payments will be paid or provided to the Executive for periods following the date when such a termination of employment is effective, provided that any rights the Executive may have under the Company’s benefit plans shall be determined under the provisions of such plans. If the Executive’s employment terminates as a result of the Executive’s death or disability, no compensation or payments will be made to the Executive other than those to which the Executive may otherwise be entitled under the benefit plans of the Company.
3.    Compensation and Benefits Upon Termination of Employment. Upon termination of the Executive’s employment (such date of termination being referred to as the “Termination Date”), the Company will pay the Executive the compensation and benefits as described in this Section 3.
(a)    General Benefits Upon Termination. The Company will pay the Executive on or about the Termination Date all salary and vacation/personal time off pay, if any, that has been earned or accrued through the Termination Date and that has not been previously paid.
(b)     Termination without “Cause” or for “Good Reason”. In the event that the Company terminates the Executive’s employment without Cause (as defined below) or, in the event the Executive terminates his employment for Good Reason (as defined below), in each case, (i) the Executive shall be entitled to receive (A) continuing payments of the then effective Base Salary for a period of nine (9) months beginning on the Payment Commencement Date and payable in accordance with the Company’s payroll policies and (B) the benefits set forth in Section 3(e), and (ii) the Executive shall be entitled to acceleration of vesting of such number of Option Shares and time based restricted stock unit grants then held by Executive as would have vested in the nine (9) month period following the Termination Date had the Executive continued to be employed by the Company for such period, provided, however that in each case the receipt of such payments and benefits is expressly contingent upon the Executive’s execution and delivery of a severance and release of claims agreement drafted by and satisfactory to counsel for the Company (the “Release”) which Release must be executed and become effective within sixty (60) days following the Termination Date. The payments and benefits shall be paid or commence on the first payroll period following the date the Release becomes effective (the “Payment Commencement Date”). Notwithstanding the foregoing, if the 60th day following the Termination Date occurs in the calendar year following the termination, then the Payment Commencement Date shall be no earlier than January 1st of such subsequent calendar year. The provision of payments and benefits pursuant to this Section shall be subject to the terms and conditions set forth on Exhibit A.
(c)    Termination without “Cause” or for “Good Reason” Prior to or Following a Change of Control. In the event that the Company terminates the Executive’s employment without Cause (as defined below) or, in the event the Executive terminates his employment for Good Reason (as defined below), in each case, within thirty (30) days prior to, or twelve (12) months following, the consummation of a Change of Control, then (i) the Executive shall be entitled to receive (A) continuing payments of the then effective Base Salary for a period of twelve (12) months beginning on the Payment Commencement Date and payable in accordance with the Company’s payroll policies, (B) in lieu of the Targeted Incentive Bonus, a bonus payment in the amount of thirty-five percent (35%) of Executive’s then current Base Salary payable in one lump sum on the Payment Commencement Date and (C) the benefits set forth in Section 3(e), and (ii) acceleration of vesting of one hundred percent (100%) of the then unvested Option Shares and time-based restricted stock unit grants then held by Executive, provided, however that in each case: (x), the receipt of such payments and benefits is expressly contingent upon the Executive’s execution and delivery of a Release as described above drafted by and satisfactory to counsel for the Company, which Release must be executed and become effective within sixty (60) days following the Termination Date. The provision of payments and benefits pursuant to this Section shall be subject to the terms and conditions set forth in Exhibit A.

(d)    Definitions. 
(i)    “Change of Control” means (A) a merger or consolidation of either the Company or Pacira, Inc., a Delaware corporation (“Parent”) into another entity in which the stockholders of the Company or Parent (as applicable) do not control fifty percent (50%) or more of the total voting power of the surviving entity (other than a reincorporation merger); (B) the sale, transfer or other disposition of all or substantially all of the Company’s assets in liquidation or dissolution of the Company; or (C) the sale or transfer of more than fifty percent (50%) of the outstanding voting stock of the Company. In the case of each of the foregoing clauses (A), (B) and (C), a Change of Control as a result of a financing transaction of the Company or Parent shall not constitute a Change of Control for purposes of this Agreement
(ii)    “Cause” means (A) the Executive’s failure to substantially perform his duties to the Company after there has been delivered to the Executive written notice setting forth in detail the specific respects in which the Board believes that the Executive has not substantially performed his duties and, if the Company reasonably considers the situation to be correctable, a demand for substantial performance and opportunity to cure, giving the Executive thirty (30) calendar days after he receives such notice to correct the situation; (B) the Executive’s having engaged in fraud, misconduct, dishonesty, gross negligence or having otherwise acted in a manner injurious to the Company or in intentional disregard for the Company’s best interests; (C) the Executive’s failure to follow reasonable and lawful instructions from the Board and the Executive’s failure to cure such failure after receiving twenty (20) days advance written notice; (D) the Executive’s material breach of the terms of this Agreement or the Employee Proprietary Information and Inventions Assignment Agreement or any other similar agreement that may be in effect from time to time; or (E) the Executive’s conviction of, or pleading guilty or nolo contendere to, any misdemeanor involving dishonesty or moral turpitude or related to the Company’s business, or any felony. 
(iii)    “Good Reason” means the occurrence of any one or more of the following events without the prior written consent of the Executive: (A) any material reduction of the then effective Base Salary other than in accordance with this Agreement or which reduction is not related to a cross-executive team salary reduction; (B) any material breach by the Company of this Agreement; or (C) a material reduction in the Executive’s responsibilities or duties, provided that in the case of clause (C), a mere reassignment following a Change of Control to a position that is substantially similar to the position held prior to the Change of Control transaction shall not constitute a material reduction in job responsibilities or duties; provided, however, that no such event or condition shall constitute Good Reason unless (x) the Executive gives the Company a written notice of termination for Good Reason not more than ninety (90) days after the initial existence of the condition, (y) the grounds for termination (if susceptible to correction) are not corrected by the Company within thirty (30) days of its receipt of such notice and (z) the Termination Date occurs within one (1) year following the Company’s receipt of such notice. 
(e)    Benefits Continuation. If the Executive’s employment is terminated pursuant to Section 3(b) or Section 3(c) and provided that the Executive is eligible for and elects to continue receiving group health and dental insurance pursuant to the federal “COBRA” law, 29 U.S.C. § 1161 et seq., the Company will, for a twelve (12) month period following the Payment Commencement Date (the “Benefits Continuation Period”), continue to pay the share of the premium for such coverage that is paid by the Company for active and similarly-situated employees who receive the same type of coverage.  The remaining balance of any premium costs shall be paid by the Executive on a monthly basis for as long as, and to the extent that, the Executive remains eligible for COBRA continuation.  Notwithstanding the above, in the event the Executive becomes eligible for health insurance benefits from a new employer during the Benefits Continuation Period, the Company’s obligations under this Section 3(e) shall immediately cease and the Executive shall not be entitled to any additional monthly premium payments for health insurance coverage.  Similarly, in the event the Executive becomes eligible for dental insurance benefits from a new employer during the Benefits Continuation Period, the Company’s obligations under this Section 3(e) shall immediately cease and the Executive shall not be entitled to any additional monthly premium payments for dental insurance.  The Executive hereby represents that he will notify the Company in writing within three (3) days of becoming eligible for health or dental insurance benefits from a new employer during the Benefits Continuation Period
(f)    Death. This Agreement shall automatically terminate upon the death of the Executive and all monetary obligations of Company under Section 2 of this Agreement shall be prorated to the date of death and paid to the Executive’s estate. 
(g)    Disability. The Company may terminate the Executive’s employment if the Executive is unable to perform any of the duties required under this Agreement for a period of three (3) consecutive months due to a “Total and Permanent Disability”. The term “Total and Permanent Disability” shall mean the existence of a permanent physical or mental illness or injury, which renders the Executive incapable of performing any material obligations or terms of this Agreement. Any dispute regarding the existence of a Total and Permanent Disability shall be resolved by a panel of three (3) physicians, one selected by Company, one selected by the Executive, and the third selected by the other two physicians. A termination of employment pursuant to this Section 3(f) shall constitute a termination for Cause.

4.    At-Will Employment. The Executive will be an “at-will” employee of the Company, which means the employment relationship can be terminated by either the Executive or the Company for any reason, at any time, with or without prior notice and with or without cause. The Company makes no promise that the Executive’s employment will continue for any particular period of time, nor is there any promise that it will be terminated only under particular circumstances. No raise or bonus, if any, shall alter the Executive’s status as an “at-will” employee or create any implied contract of employment. Discussion of possible or potential benefits in future years is not an express or implied promise of continued employment. No manager, supervisor or officer of the Company has the authority to change the Executive’s status as an “at-will” employee. The “at-will” nature of the employment relationship with the Executive can only be altered by a written resolution approved by the Board.
5.    Non-Solicitation.
(a)    Non-Solicit. The Executive agrees that during the term of the Executive’s employment with the Company, and for a period of twelve (12) months immediately following the termination of the Executive’s employment with the Company for any reason, whether with or without Cause or Good Reason, the Executive shall not either directly or indirectly solicit, induce, recruit or encourage any of the Company’s or its affiliates’ employees or consultants to terminate such employee’s or consultant’s relationship with the Company or its affiliates, or attempt to solicit, induce, recruit, encourage or take away employees or consultants of the Company or any of its affiliates, either for the Executive or for any other person or entity. Further, during the Executive’s employment with the Company or any of its affiliates and at any time following termination of the Executive’s employment with the Company or any of its affiliates for any reason, with or without Cause or Good Reason, the Executive shall not use any confidential information of the Company or any of its affiliates to attempt to negatively influence any of the Company’s or any of its affiliates’ clients or customers from purchasing Company products or services or to solicit or influence or attempt to influence any client, customer or other person either directly or indirectly, to direct such person’s or entity’s purchase of products and/or services to any person, firm, corporation, institution or other entity in competition with the business of the Company or any of its affiliates.
(b)    Specific Performance. In the event of the breach or threatened breach by the Executive of this Section 5, the Company, in addition to all other remedies available to it at law or in equity, will be entitled to seek injunctive relief and/or specific performance to enforce this Section 5.
6.    Director and Officer Liability Insurance; Indemnification. During the term of the Executive’s employment hereunder, the Executive shall be entitled to the same indemnification and director and officer liability insurance as the Company and its affiliates maintain for other corporate officers.
7.     Proprietary Information and Inventions Assignment Agreement. The Executive has executed and delivered the Company’s standard Employee Proprietary Information and Inventions Assignment Agreement or similar agreement and the Executive represents and warrants that the Executive shall continue to be bound and abide by such Employee Proprietary Information and Inventions Assignment Agreement or similar agreement.
8.    Attention to Duties; Conflict of Interest. While employed by the Company, the Executive shall devote the Executive’s full business time, energy and abilities exclusively to the business and interests of the Company, and shall perform all duties and services in a faithful and diligent manner and to the best of the Executive’s abilities. The Executive shall not, without the Company’s prior written consent, render to others services of any kind for compensation, or engage in any other business activity that would materially interfere with the performance of the Executive’s duties under this Agreement. The Executive represents that the Executive has no other outstanding commitments inconsistent with any of the terms of this Agreement or the services to be rendered to the Company. While employed by the Company, the Executive shall not, directly or indirectly, whether as a partner, employee, creditor, shareholder, or otherwise, promote, participate or engage in any activity or other business competitive with the Company’s business. The Executive shall not invest in any company or business which competes in any manner with the Company, except those companies whose securities are listed on reputable securities exchanges in the United States or European Union. 
9.    Miscellaneous.
(a)    Severability. If any provision of this Agreement shall be found by any arbitrator or court of competent jurisdiction to be invalid or unenforceable, then the parties hereby waive such provision to the extent that it is found to be invalid or unenforceable and to the extent that to do so would not deprive one of the parties of the substantial benefit of its bargain. Such provision shall, to the extent allowable by law and the preceding sentence, be modified by such arbitrator or court so that it becomes enforceable and, as modified, shall be enforced as any other provision hereof, all the other provisions continuing in full force and effect.

(b)    No Waiver. The failure by either party at any time to require performance or compliance by the other of any of its obligations or agreements shall in no way affect the right to require such performance or compliance at any time thereafter. The waiver by either party of a breach of any provision hereof shall not be taken or held to be a waiver of any preceding or succeeding breach of such provision or as a waiver of the provision itself. No waiver of any kind shall be effective or binding, unless it is in writing and is signed by the party against whom such waiver is sought to be enforced.
(c)    Assignment. This Agreement and all rights hereunder are personal to the Executive and may not be transferred or assigned by the Executive at any time. The Company may assign its rights, together with its obligations hereunder, to any parent, subsidiary, affiliate or successor, or in connection with any sale, transfer or other disposition of all or substantially all of its business and assets; provided, however, that any such assignee assumes the Company’s obligations hereunder.
(d)    Withholding. All sums payable to the Executive hereunder shall be reduced by all federal, state, local and other withholding and similar taxes and payments required by applicable law.
(e)    Entire Agreement. This Agreement, including the agreements referred to herein (which are deemed incorporated by reference herein) constitute the entire and only agreement and understanding between the parties governing the terms and conditions of employment of the Executive with the Company and this Agreement supersedes and cancels any and all previous contracts, arrangements or understandings with governing the terms and conditions of the Executive’s employment by the Company. In the event of any conflict between the terms of any other agreement between the Executive and the Company entered into prior to the Effective Date, the terms of this Agreement shall control.
(f)    Amendment. This Agreement may be amended, modified, superseded, cancelled, renewed or extended only by an agreement in writing executed by both parties hereto.
(g) Headings. The headings contained in this Agreement are for reference purposes only and shall in no way affect the meaning or interpretation of this Agreement. In this Agreement, the singular includes the plural, the plural included the singular, the masculine gender includes both male and female referents, and the word “or” is used in the inclusive sense.
(h)    Notices. Any notices provided hereunder must be in writing and shall be deemed effective upon the earlier of personal delivery (including, personal delivery by facsimile transmission or the third day after mailing by first class mail) to the Company at its primary office location and to the Executive at his address as listed on the Company payroll (which address may be changed by written notice).
(i)    Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which, taken together, constitute one and the same agreement.
(j)     Governing Law, Forum Selection, Jury Waiver. This Agreement and the rights and obligations of the parties hereto shall be construed in accordance with the laws of the State of California without giving effect to the principles of conflict of laws. Any action, suit or other legal proceeding that is commenced to resolve any matter arising under or relating to any provision of this Agreement shall be commenced only in a court of the State of New Jersey (or, if appropriate, a federal court located within Southern District of Jersey), and the Company and the Executive each consents to the jurisdiction of such a court. Both the Company and the Executive expressly waive any right that any party either has or may have to a jury trial of any dispute arising out of or in any way related to the Executive’s employment with or termination from the Company.

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IN WITNESS WHEREOF, the Company and the Executive have executed this Executive Employment Agreement as of the date first above written.
PACIRA PHARMACEUTICALS, INC.:

By: /s/ Rich Kahr
      Vice President, Human Resources
    

EXECUTIVE:

/s/ Dennis McLoughlin

        

EXHIBIT A

Payments Subject to Section 409A

1.     Subject to this Exhibit A, any severance payments and benefits that may be due under the Agreement shall begin only upon the date of the Executive’s “separation from service” (determined as set forth below) which occurs on or after the termination of the Executive’s employment. The following rules shall apply with respect to distribution of the severance payments and benefits, if any, to be provided to the Executive under the Agreement, as applicable:

(a)    It is intended that each installment of the severance payments and benefits under the Agreement provided under shall be treated as a separate “payment” for purposes of Section 409A. Neither the Company nor the Executive shall have the right to accelerate or defer the delivery of any such payments or benefits except to the extent specifically permitted or required by Section 409A.

(b)    If, as of the date of the Executive’s “separation from service” from the Company, the Executive is not a “specified employee” (within the meaning of Section 409A), then each installment of the severance payments or benefits shall be made on the dates and terms set forth in the Agreement.

(c)    If, as of the date of the Executive’s “separation from service” from the Company, the Executive is a “specified employee” (within the meaning of Section 409A), then:

(i)    Each installment of the severance payments and benefits due under the Agreement that, in accordance with the dates and terms set forth herein, will in all circumstances, regardless of when the Executive’s separation from service occurs, be paid within the short-term deferral period (as defined under Section 409A) shall be treated as a short-term deferral within the meaning of Treasury Regulation Section 1.409A-1(b)(4) to the maximum extent permissible under Section 409A and shall be paid at the time set forth in the Agreement; and

(ii)    Each installment of the severance payments and benefits due under the Agreement that is not described in this Exhibit A, Section 1(c)(i) and that would, absent this subsection, be paid within the six-month period following the Executive’s “separation from service” from the Company shall not be paid until the date that is six months and one day after such separation from service (or, if earlier, the Executive’s death), with any such installments that are required to be delayed being accumulated during the six-month period and paid in a lump sum on the date that is six months and one day following the Executive’s separation from service and any subsequent installments, if any, being paid in accordance with the dates and terms set forth herein; provided, however, that the preceding provisions of this sentence shall not apply to any installment of payments and benefits if and to the maximum extent that that such installment is deemed to be paid under a separation pay plan that does not provide for a deferral of compensation by reason of the application of Treasury Regulation 1.409A-1(b)(9)(iii) (relating to separation pay upon an involuntary separation from service). Any installments that qualify for the exception under Treasury Regulation Section 1.409A-1(b)(9)(iii) must be paid no later than the last day of the Executive’s second taxable year following the taxable year in which the separation from service occurs.

2.    The determination of whether and when the Executive’s separation from service from the Company has occurred shall be made and in a manner consistent with, and based on the presumptions set forth in, Treasury Regulation Section 1.409A-1(h). Solely for purposes of this Exhibit A, Section 2, “Company” shall include all persons with whom the Company would be considered a single employer under Section 414(b) and 414(c) of the Code.

3.    The Company makes no representation or warranty and shall have no liability to the Executive or to any other person if any of the provisions of the Agreement (including this Exhibit) are determined to constitute deferred compensation subject to Section 409A but that do not satisfy an exemption from, or the conditions of, that section.

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