Document:

exhibit-10_2.htm

Exhibit 10.2

 

CONFIDENTIAL TREATMENT

** Confidential treatment requested on certain portions of this agreement.  An unredacted version of this agreement has been filed separately with the Securities and Exchange Commission.

 

 

AMENDMENT

TO

TOLL MANUFACTURING AGREEMENT

 

This Amendment  (this “Amendment”) to the Toll Manufacturing Agreement, effective as of  April 1st, 2009 (hereinafter referred to as the “Amendment Effective Date”), is made by and between KCI Manufacturing (hereinafter referred to as “KCI”) and Avail Medical Products, Inc.(hereinafter referred to as “Avail”).  Avail and KCI are referred to herein collectively as the “Parties” and individually as “Party”.

RECITALS

WHEREAS, KCI and Avail are party to that certain Toll Manufacturing Agreement by and between KCI and Avail entered into as of December 14, 2007 and as amended thereafter (hereinafter referred to as the “Toll Agreement”); and

WHEREAS, the Parties wish to amend the Toll Agreement as set forth herein.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties do agree as follows:

	
1.  

	
The Parties agree that the scheduled KCI order commitment levels for the 2009 calendar year procurement services and processing services under the Toll Agreement shall be as set forth in Appendix A, attached to this Amendment and incorporated herein by reference.

 

	
2.  

	
The Parties agree that the pricing for each KCI order shall be made pursuant to the discounts as indicated on the aforementioned Appendix A to the pricing which is currently in place as of the Amendment Effective Date, and which is attached hereto as Appendix B and incorporated by reference herein.  Such pricing and the discounts provided for under this Paragraph 2 shall remain in effect for the remainder of the 2009 calendar year.

 

	
3.  

	
KCI shall have the right to appoint a quality assurance representative located on site at Avail’s Tijuana, Mexico facility, upon reasonable notice, to accomplish pre-communicated tasks. The Parties recognize and agree that the time requirements for the visits may vary but they are expected to average approximately 30% (thirty per cent) of the workweek for the duration of the Toll Agreement.  Avail agrees to make available reasonable access available to KCI’s representative for the expected time requirements to perform such quality assurance functions as may be agreed by the Parties

 

	
4.  

	
Avail covenants and agrees that the procurement and processing services provided by Avail under the Toll Agreement from and after the Amendment Effective Date shall be conducted in accordance with the agreed S&OP Plan between the Parties, which said plan may be amended as Parties deem fit from time to time.

	
5.  

	
KCI agrees that it will give Avail due consideration for participation in future development projects as it relates to development and production.

 

Except as expressly amended by this Amendment, the Toll Agreement shall remain in full force and effect.  This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, The parties have duly executed this Amendment effective as of the Amendment Effective Date set forth herein.

 

 

	 KCI MANUFACTURING	 	 AVAIL MEDICAL PRODUCTS, INC.
	 	 	 	 	 
	
By:

	
/s/ John Elwood

	  	
By:

	
/s/ Daniel C. Croteau

	
Name:

	
John Elwood

	  	
Name:

	
Daniel C. Croteau

	
Title:

	
Director

	  	
Title:

	
President

 

 

  

  

  

 

CONFIDENTIAL TREATMENT

** Confidential treatment requested on certain portions of this agreement.  An unredacted version of this agreement has been filed separately with the Securities and Exchange Commission.

 

 

APPENDIX A

	
2009 Production Schedule

	
Minimum Volume Commitment * ($)

	
Discount from Appendix B

	
[***]

	
[***]

	
[***]

* Each order by KCI shall be made by purchase order pursuant to the terms of the Toll Agreement.

 

  

  

  

 

CONFIDENTIAL TREATMENT

** Confidential treatment requested on certain portions of this agreement.  An unredacted version of this agreement has been filed separately with the Securities and Exchange Commission.

 

 

APPENDIX B

PROCESSING AND PROCUREMENT SERVICES PRICING

	
KCI Part

	
Avail Part

	
Description

	
2009 RM Sell Price

	
2009 Tolling Fee

	
2009 Total Price

[***]

	
KCI P/N

	
Description

	
Avail P/N

	
2009 Sell Price

	
KCI P/N

	  	  	  	  	  

[***]

	
2009 Mold Pricing

	  	  
	
KCI P/N

	
Avail P/N

	
2009 Sell Price

	
Where used

[***]exhibit-10_3.htm

Exhibit 10.3

 

CONFIDENTIAL TREATMENT

** Confidential treatment requested on certain portions of this agreement.  An unredacted version of this agreement has been filed separately with the Securities and Exchange Commission.

 

 

 

 

THIRD AMENDMENT

TO

TOLL MANUFACTURING AGREEMENT

 

This Third Amendment (this “Amendment”) to the Toll Manufacturing Agreement, effective as of January 1, 2010 (the “Amendment Effective Date”), is made by and between KCI Manufacturing (“KCI”) and Avail Medical Products, Inc. (“Avail”).  Avail and KCI are referred to herein as the “Parties.”

RECITALS

WHEREAS, KCI and Avail are party to that certain Toll Manufacturing Agreement by and between KCI and Avail entered into as of December 14, 2007 and as amended by that certain Amendment to Toll Manufacturing Agreement dated as of July 31, 2008 and that certain Second Amendment to Toll Manufacturing Agreement effective as of April 1, 2009 (the “Toll Agreement”); and

WHEREAS, the Parties wish to further amend the Toll Agreement as set forth herein.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

	
1.  

	
As of the Amendment Effective Date, Exhibit A of the Toll Agreement is hereby deleted in its entirety and Exhibit A, Procurement Services Fees, attached hereto, shall be substituted in lieu thereof.  As of the Amendment Effective Date, Exhibit B of the Toll Agreement is hereby deleted in its entirety and Exhibit B, Processing Services Fees, attached hereto, shall be substituted in lieu thereof.

 

	
2.  

	
Avail shall issue to KCI a quarterly rebate [***] as applicable.

 

Except as expressly amended by this Amendment, the Toll Agreement shall remain in full force and effect.  This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

IN WITNESS WHEREOF, the Parties have duly executed this Amendment effective as of the Amendment Effective Date set forth herein.

 

 

  

  

  

 

CONFIDENTIAL TREATMENT

** Confidential treatment requested on certain portions of this agreement.  An unredacted version of this agreement has been filed separately with the Securities and Exchange Commission.

 

 

	KCI MANUFACTURING	 	 AVAIL MEDICAL PRODUCTS, INC.
	 	 	 	 	 
	
By:

	
/s/ John Elwood

	  	
By:

	
/s/ Daniel C. Croteau

	
Name:

	
John Elwood

	  	
Name:

	
Daniel C. Croteau

	
Title:

	
V.P. Global Marketing

	  	
Title:

	
President

 

 

 

  

  

  

 

CONFIDENTIAL TREATMENT

** Confidential treatment requested on certain portions of this agreement.  An unredacted version of this agreement has been filed separately with the Securities and Exchange Commission.

 

 

	
  

	
EXHIBIT A

	
  

	
PROCUREMENT SERVICES FEES

	
KCI P/N

	
DESCRIPTION

	
AVAIL PART NO.

	
SELL PRICE

	
  

	
[***]

 

 

  

  

  

 

CONFIDENTIAL TREATMENT

** Confidential treatment requested on certain portions of this agreement.  An unredacted version of this agreement has been filed separately with the Securities and Exchange Commission.

 

 

 

	
  

	
EXHIBIT B

	
  

	
PROCESSING SERVICES FEES

	
KCI PART NO. 

	
AVAIL PART NO.

	
DESCRIPTION

	
RM SELL PRICE

	
TOLLING FEE

	
TOTAL PRICE

	
  

	
[***]

 

 

  

  

  

 

CONFIDENTIAL TREATMENT

** Confidential treatment requested on certain portions of this agreement.  An unredacted version of this agreement has been filed separately with the Securities and Exchange Commission.

 

 

EXHIBIT C

REBATE SCHEDULE

	
2010 Annual Projected

Order Volume

	
Rebate Rate

	
[***]

	
[***]ex1078.htm

May 19, 2010

 

Louis P. (Dan) Valente

44 Concord Road

Weston, MA 02493

 

Dear Mr. Valente:

 

Reference is made to your employment agreement with Palomar Medical Technologies, Inc. (the “Company”), dated July 1, 2001 (the “Agreement”).  In all respects, the Agreement shall remain in full force and effect, provided, however, that:

 

	
1.  

	
It is agreed that Section 1 is hereby amended and restated to delete the last sentence in its entirety and to delete the first sentence in its entirety and replace the first sentence with the following: “The Company agrees to employ Executive as its Executive Chairman, with the responsibilities normally associated with such position (the “Executive Position”) from the date hereof until the termination of the Executive’s employment (the “Term”)”.

 

	
2.  

	
It is further agreed that Section 10(a) is hereby amended and restated in its entirety to read as follows:

 

(a)  For Cause; and Death. Subject to Section 30, in the event of termination of this Agreement (i) by the Company for Cause, or (ii) by reason of the death of the Executive, the Company shall pay Executive (or Executive’s beneficiary in the event of the Executive’s death), in a lump sum within thirty (30) days after termination under this Section 10(a), any base salary or other compensation earned (and a pro rata portion of the bonus payable with respect to the year in which termination occurred) but not paid to Executive prior to the effective date of such termination and, in the case of termination by reason of death, the Company shall pay Executive’s beneficiary, (i) the base salary that Executive would have earned for a period of one (1) year following his death, in a lump sum within thirty (30) days after termination under this Section 10(a), plus (ii) a pro rata portion of any bonuses or other incentive compensation that Executive would have earned if he had been employed for the full fiscal year in which he died payable at the time of payment of similar bonuses made to other Executives of the Company, plus (iii) any death benefits that Executive is entitled to under the Company’s policies in effect on Executive’s date of death.

 

 

  

  

  

 

 

	
3.  

	
It is further agreed that Section 10(b) is hereby amended and restated in its entirety to read as follows:

 

(b)  Without Cause; For Good Reason. Subject to Section 30, in the event of (i) termination of this Agreement by the Company other than for Cause, or (ii) termination of this Agreement by Executive for Good Reason without a Change in Control, the Company shall pay Executive, in a lump sum within thirty (30) days after termination under this Section 10(b), the sum of (A) the amount described in Section 10(a) of this Agreement (other than the payments to be paid in case of termination by death), and (B) the amount equal to two times (2x) the Executive’s Annual Compensation in effect at the time of termination under this Section 10(b), and the Company shall continue all of the benefits and perquisites set forth in Section 5 for a period of two (2) years each payable in accordance with regular payroll practices, notwithstanding the fact that Executive may no longer be an employee eligible to participate in one or more of the employee benefit plans maintained by the Company.

 

	
4.  

	
It is further agreed that Section 10(c) is hereby amended and restated in its entirety to read as follows:

 

(c)  Change in Control. Subject to Section 30, in the event of termination of this Agreement by Executive or the Company within one (1) year after a Change in Control, the Company shall pay Executive, in a lump sum payment within thirty (30) days after termination under this Section 10(c), the sum of (A) the amount described in Section 10(a) of this Agreement (other than the payments to be made in case of termination by death), and (B) the amount equal to three (3x) times Executive’s Annual Compensation, and the Company shall continue for a period of two (2) years all of the benefits and perquisites set forth in Section 5, each payable in accordance with regular payroll practices, notwithstanding the fact that Executive may no longer be an employee eligible to participate in one or more of the employee benefit plans maintained by the Company.

 

	
5.  

	
It is further agreed that Section 10(d) is hereby amended and restated in its entirety to read as follows:

 

(d)  Disability. Subject to Section 30, in the event of termination of this Agreement by reason of disability pursuant to Section 8, the Company shall pay Executive, in a lump sum within thirty (30) days of termination under this Section 10(d), the amount equal to one (1x) times Executive’s Annual Compensation at the time of such termination, reduced by the maximum amount of salary which may be insured under the Company’s Long Term Disability Plan at the time of disability.

 

	
6.  

	
It is further agreed that Section 11(b), (c) and (d) are hereby amended and restated to delete the parenthetical clauses located therein in their entirety.

 

	
7.  

	
It is further agreed that Section 12 is hereby amended and restated to add the following sentence at the end of the Section: “Notwithstanding the foregoing, any such Gross-Up Payment must be paid by the end of the Executive’s taxable year next following the Executive’s taxable year in which the Excise Tax is paid.”

 

 

  

  

  

 

 

 

	
8.  

	
It is further agreed that Section 30 is hereby added to read as follows:

 

30.           Payments Subject to Section 409A.

 

(a)           Subject to the provisions in this Section 30, any severance payments or benefits under this Agreement shall begin only upon the date of the Executive’s “separation from service” (as determined below), which occurs on or after the date of the Executive’s termination of 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 this Agreement:

 

(i)           It is intended that each installment of the severance payments and benefits provided under this Agreement shall be treated as a separate “payment” for purposes of Section 409A of the Code and the guidance issued thereunder (“Section 409A”).  Neither the Executive nor the Company 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.

 

(ii)           If, as of the date of the Executive’s “separation from service” from the Company (within the meaning of Section 30(a)(iv) below), the Executive is not a “specified employee” (within the meaning of Section 409A), then each installment of the severance payments and benefits shall be made on the dates and terms set forth in this Agreement.

 

(iii)           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:

 

       (A)         Each installment of the severance payments and benefits due under this Agreement that, in accordance with the dates and terms set forth herein, will in all circumstances, regardless of when the 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

 

 

         (B)           Each installment of the severance payments and benefits due under this Agreement that is not described in Section 30(a)(iii)(A) above 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 severance 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 Section 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.

 

 

  

  

  

(iv)           The determination of whether and when the Executive’s separation from service from the Company has occurred shall be made 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 Section 30(a)(iv), “Company” shall include all persons with whom the Company would be considered a single employer as determined under Treasury Regulation Section 1.409A-1(h)(3).  For purposes of this Agreement, a “termination” of the Executive’s employment shall mean a “separation from service” as defined under Treasury Regulation Section 1.409A-3(a)(1).

 

(b)           Unless as otherwise indicated, all terms used in this Agreement shall be interpreted to comply with the requirements of Section 409A of the Code.  The Company makes no representation or warranty and shall have no liability to the Executive or any other person if any provisions of this Agreement are determined to constitute deferred compensation subject to Section 409A and do not satisfy an exemption from, or the conditions of, Section 409A.

 

(c)           The Agreement and the payments hereunder are intended to comply with or be exempt from Section 409A, and the Agreement shall be interpreted consistent with the provisions of Section 409A.

 

 

[Remainder of Page Intentionally Left Blank]

 

  

  

  

By execution of this letter, you hereby agree to the foregoing amendment of the Agreement and reaffirm your obligations under the Agreement.

 

Very truly yours,

 

Palomar Medical Technologies, Inc.

 

 

By:           ____________________________________

Joseph P. Caruso, CEO

 

 

 

Acknowledged and Agreed:

 

 

________________________________________

 

Louis P. (Dan) Valente

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