Oem Supply Agreement

OEM SUPPLY AGREEMENT


This OEM SUPPLY AGREEMENT ("Agreement") is made and entered into as of September 1, 2005 (the "Effective Date"), by and between Medtronic Inc. ("MDT"), a Minnesota corporation with a place of business at 7611 Northland Drive, Brooklyn Park, MN 55428, and ThermoGenesis Corp. ("TGC"), a Delaware corporation with its principal place of business at 2711 Citrus Road, Rancho Cordova, CA 95742.


RECITALS


A. WHEREAS, TGC sells thrombin processing disposables and reagent and is in the process of obtaining United States Food and Drug Administration (FDA) approval for a thrombin product as a component of its CryoSeal(R) FS product;


B. WHEREAS, MDT distributes and sells medical device products around the world and desires to distribute an OEM Product (as defined below) that is manufactured by TGC, and


C. WHEREAS, TGC desires to allow MDT to distribute an OEM version of a product that it manufactures solely for use and sale in conjunction with MDT Magellan Product (as defined herein).


NOW, THEREFORE, in consideration of the above recitals and in consideration of the mutual agreements and undertakings set forth below, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:


Section 1. Certain Definitions


1.1 Affiliate. For purpose of this Agreement, "Affiliate" means any company, corporation, or business in which MDT owns or controls at least fifty percent (50%) of the voting stock.


1.2 Confidential Information. For purposes of this Agreement, "Confidential Information" means all non-public information, whether in written, oral or any other form, including, without limitation, data, documentation, specifications, know-how, technical information, designs, drawings, plans, blueprints, business plans, customer lists, pricing information, forecasts, projections, analyses, and manufacturing processes that the disclosing party (the "Disclosing Party") disclosed to the other party (the "Receiving Party") or allowed the Receiving Party to observe, in the course of the activity under this Agreement. All Confidential Information must be marked at the time of disclosure or observation as being "Confidential", "Proprietary" or in some other manner to indicate its confidential nature; provided, however, that if such information is not or cannot be so marked at the time of disclosure or observation, the information shall still qualify as Confidential Information if the Disclosing Party designates such information as confidential to the Receiving Party in writing within thirty (30) days of disclosure or observation. Notwithstanding the foregoing, Confidential Information shall not include information that the Receiving Party can demonstrate (a) was known to the Receiving Party on a non-confidential basis prior to the disclosure by the Disclosing Party, (b) has become publicly available without fault of the Receiving Party; or (c) was independently developed without the use of Confidential Information by the Receiving Party.


In addition to the other requirements contained in this Section 1.2, all disclosures of Confidential Information by TGC to MDT made after the date of this Agreement shall be made only upon the specific request of MDT made to TGC and only to the person identified by MDT in writing to TGC as the designated


recipient of Confidential Information from TGC. Following the date of this Agreement, any information provided to MDT by TGC other than as required by this Section 1.2 shall not be deemed Confidential Information.


1.3 First Article. For purposes of this Agreement, "First Article" means that TGC (i) has prepared and delivered to its notified body a completed technical file for Thrombin Processing Device (TPD) Device (as defined below) to meet CE Mark certification requirements, and (ii) manufactured and delivered the first production article of the OEM Product.


1.4 Improvement. "Improvement" means (a) for copyrightable or copyrighted material relating to the OEM Product, any translation, abridgment, revision or other form in which an existing work may be recast, transformed or adapted, (b) for patentable or patented material, claims and any technology relating to the OEM Product, any improvement, addition or continuation thereon, and (c) for material which is protected by trade secret or technology relating to the OEM Product, any new material or other technology derived from such existing trade secret material, including new material which may be protected under copyright, patent and/or trade secret laws; provided however, that for purposes hereof, "Improvement" shall not include a means of producing thrombin from a source material that is different from plasma.


1.5 Intellectual Property Rights. "Intellectual Property Rights" means, collectively, Patents, Trade Secrets, Copyrights, Trademarks, trade names, rights in trade dress and all other intellectual property rights and proprietary rights, whether arising under the laws of the United States or any other state, country or jurisdiction in the world, including all rights or causes of action for infringement or misappropriation of any of the foregoing. For purposes of this Agreement: (a) "Patents" shall mean all patent rights and all right, title and interest in all letters patent or equivalent rights and applications, including provisional applications, for letters patent or rights, industrial and utility models, industrial designs, petty patents, patents of importation, patents of addition, certificates of invention and other government issued or granted indicia of invention ownership, including any reissue, extension, division, continuation or continuation-in-part applications throughout the world; (b) "Trade Secrets" shall mean all right, title and interest in all trade secrets and trade secret rights arising under common law, state law, federal law or laws of foreign countries; (c) "Copyrights" shall mean all copyrights, and all other literary property and authorship rights, and all right, title, and interest in all copyrights, copyright registrations, certificates of copyright and copyrighted interests throughout the world; and (d) "Trademarks" shall mean all right, title and interest in all trademark, service mark, trade name and trade dress rights arising under the common law, state law, federal laws and laws of foreign countries, and all right, title, and interest in all trademark, service mark, trade name and trade dress applications and registrations interests throughout the world.


1.6 OEM Product. "OEM Product" means the version of the Thrombin Processing Device (TPD) manufactured and sold to MDT by TGC under this Agreement and that meets the performance specification according to section 3.1, which incorporates the modifications more fully described in Section 3.1. The OEM Product shall be manufactured and sterilized for MDT by TGC under this Agreement.


1.7 Person. "Person" means any natural person or any corporation, partnership, limited liability company, business association, joint venture or other entity.


1.8 MDT Magellan Product. "MDT Magellan Product" means MDT's Magellan Product as more fully described and set forth in Exhibit A.


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1.9 Thrombin Technologies. "Thrombin Technologies" means TGC's thrombin disposables and reagent and related processes, know-how, documentation, patents, patents pending , and Confidential Information.


1.10 Territory. "Territory" means Worldwide.


1.11 TGC Point of Shipment. "TGC Point of Shipment" as defined in the Uniform Commercial Code refers to TGC's manufacturing facilities.


1.12 Thrombin Processing Device. Thrombin Processing Device "TPD Device" means the Thrombin Processing Device designed, manufactured, sterilized, and sold by TGC, including both the syringes and the reagent, for which TGC currently holds a CE Mark.


Section 2. Grant of Rights


2.1 Terms and Conditions of Sale.


During the term of this Agreement and subject to all of the terms and conditions hereof, TGC shall supply OEM Product and MDT shall purchase OEM Product at the transfer price according to the terms and conditions of sale set forth below for use and sale in conjunction with the MDT Magellan Product. Nothing contained in this Agreement shall prevent MDT from distributing any other products rightfully manufactured or obtained by MDT on its own or from third parties. Nothing herein shall constitute a grant of any license or rights of any kind to either party for the use, manufacture, or sale of any of the other party's Intellectual Property Rights except as specifically set forth herein.


2.2 Right to Improvements. As part of this agreement, and subject to the provisions of Section 6.2, TGC will provide to MDT any Improvements to the current Thrombin Processing Device, if and when they occur; provided, however, in the event such Improvements materially alter the performance and/or cost of the OEM Product TGC and MDT shall mutually agree upon the purchase price of such Improvements to MDT.


2.3 Rights Upon a Change of Control. During the term of this Agreement, if there is a Change of Control (as defined below), TGC hereby covenants and agrees that it shall ensure that the rights of MDT shall continue unaffected on the terms and conditions contained herein, and TGC shall issue to MDT a written statement confirming such continuing rights within ten (10) business days of the effective date of the Change of Control. For purposes hereof, a Change in Control shall mean (i) the direct or indirect sale or other disposition (in one or more related transactions to one or more parties) of all or substantially all of the assets of TGC, or (ii) the direct or indirect transfer of more than 50% of the outstanding voting interests of TGC, whether in a single transaction or series of related transactions.


Section 3. OEM Product Design


3.1 MDT Responsibilities.


(a) MDT shall create or specify the product information data sheet
(PIDS for the OEM Product.


(b) MDT shall be responsible for preparing and approving the final
instructions for use of the OEM Product with the MDT Magellan Product.


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(c) MDT shall not use the name THERMOGENESIS CORP., or its product
names, including "Thrombin Processing Device", "CryoSeal" in any
advertising, promotional, or sales literature without the prior written
consent obtained from TGC, in each case, except that MDT shall mark the OEM
product as "Manufactured by Thermogenesis for Medtronic".


3.2 TGC Responsibilities.


(a) At the request of MDT, TGC shall review and make recommendations
on any of MDT's PIDS, labels, and packaging for MDT products as prepared
pursuant to Section 3.1(a) and (b).


(b) Subject to MDT's prior approval and agreement to pay for
non-recurring engineering charges, material testing, and lab costs, TGC may
purchase, implement, and validate as needed, all new components necessary
or desirable for the manufacture of the OEM Product under TGC's quality
control system and policies.


(c) TGC shall assist MDT, as reasonably requested by MDT and at MDT's
cost, with MDT's efforts to incorporate the OEM Product and MDT Magellan
Product delivery systems, as referenced in Section 3.1(b) above.


(d) Upon request of Medtronic, TGC shall use its best efforts to
prepare and deliver to appropriate regulatory authorities all parts of the
technical file necessary for the approval or clearance by such regulatory
authorities for marketing and sale of the OEM Product when sold in
connection with the MDT Magellan Product in any country within the
Territory. MDT will compensate TGC its reasonable costs for any regulatory
information that is above and beyond what would be required for approval or
clearance for countries outside of those compliant under the CE Mark
certification. TGC is currently conducting a clinical study in the U.S.
that incorporates the use of the Thrombin Processing Device in Liver
Resection and a clinical study in Japan that incorporates the use of the
Thrombin Processing Device in the Surgical Application of CryoSeal. TGC
will make the clinical data from those two studies available to Medtronic,
at no cost to MDT, for use by MDT in its regulatory activities related to
the OEM Product.] Any Confidential Information provided directly to
regulatory authorities by TGC under this Section 3.2(d) will not be
disclosed to MDT unless otherwise agreed to and documented in writing by
the parties.


(e) TGC shall deliver to MDT the First Article on or before a date
that is thirty (30) days from the Effective Date.


(f) TGC shall be responsible for manufacturing the OEM Product in
accordance with Quality System Regulation, 21 CFR Part 820 (Medical
Devices), any applicable pharmaceutical/biologics regulations, and all
other applicable regulatory requirements.


(g) TGC shall not use the name Medtronic, or any Medtronic product
names or trademarks, or any adaptation thereof in any press release,
advertising, promotional, or sales literature without the prior written
consent obtained from MDT in each case.


Section 4. Certain Obligations of the Parties


4.1 Promotional Materials. MDT shall be responsible for any sales literature and promotional materials associated with the OEM Product, including the translation thereof as needed. MDT's use of any TGC trademarks or trade names shall be in compliance with the requirements of Section 3.1(c), above. Notwithstanding the foregoing, TGC consents to, and licenses MDT for the use of TGC's "Thrombin Processing Device (TPD)" trademark for use solely in conjunction with the OEM Product during the term of this Agreement.


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4.2 Standard of Operations. MDT agrees that it shall be solely responsible, at its expense, for the validation, and qualification of the OEM Product as part of MDT's technical file and regulatory approvals connected with the MDT Magellan Product. Upon MDT's request TGC will provide to MDT or MDT's designated representative, all documents, protocols, and testing fixture designs which it has in its possession to assist MDT in its qualification efforts on the manufactured products.


4.3 Cooperation of Parties. Promptly following the Effective Date, the parties shall cooperate in good faith with each other in order to enable TGC to deliver the First Article pursuant to Section 3.2(e).


Section 5. Supply and Purchase of the OEM Product


5.1 Supply and Pricing.


(a) All prices for the OEM Product purchased by MDT hereunder shall be
F.O.B., TGC Point of Shipment. The fixed, volume based pricing to MDT for
the OEM Product is set forth in Exhibit B. There are no minimum annual
volume requirements.


(b) Notwithstanding anything to the contrary contained herein, in the
event TGC sells or distributes, directly or indirectly, a product
substantially equivalent in cost, operation and performance to the OEM
Product during the term of this Agreement to any third party at a price
which is then less than what MDT is paying to TGC (based on like volumes),
then TGC shall adjust MDT's purchase price for the OEM Product to a level
equal to the third party's pricing level based on like volumes, such
adjustment to be retroactive to the first day TGC offered such lower
pricing (based on like volumes) to the third party.


(c) Within thirty (30) days of the Effective Date, MDT shall provide
TGC with a non-binding, rolling twelve (12) month forecast and, on a
quarterly basis thereafter, an estimated three month delivery schedule.


5.2 Certain Taxes. The parties acknowledge that the purchase prices set forth in Exhibit B do not include any sales, excise, use, value added or other government taxes or duties that may be applicable to the export, import or purchase of the OEM Product, which taxes shall be the sole responsibility of MDT and MDT agrees that it will bear all such taxes and duties. When TGC has the legal obligation to collect and/or pay such taxes or duties, the appropriate amount shall be added to MDT's invoice and paid by MDT to TGC, unless MDT provides TGC with a valid tax exemption certificate authorized by the appropriate governmental taxing authority, or provides proof of payment.


5.3 Order. All orders for OEM Product and parts shall be by means of a signed written purchase order, which shall be submitted to TGC at TGC's address for notice purposes set forth in Section 13.1, and shall request a delivery date. Orders may be placed by telephone, facsimile transmission or, upon the parties' agreement, on TGC's Web-Site or by e-mail; provided, however, that a signed confirming purchase order is received by TGC ten (10) business days after such order. It is understood that MDT and TGC may use their standard purchase order and sales agreement forms during the performance of this Agreement. Any purchase order, sales agreement or other form used by MDT or TGC shall be for convenience only and any terms or provisions contained therein which are in addition to or inconsistent with those contained herein shall have and be of no force and effect; provided, however, that the terms on such documents shall be effective to the extent they set forth quantities, scheduled delivery dates and, as applicable, mode of shipment.


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5.4 Acceptance and Fulfillment of Purchase Order. TGC shall timely and accurately fill and deliver all MDT orders for OEM Products; provided that such order quantities are reasonably within the latest forecasts supplied by MDT.


5.5 Invoicing; Payment. TGC shall submit an invoice to MDT upon each shipment of the OEM Product ordered by MDT. Except as otherwise specified in a purchase order, payment terms will be net thirty (30) after the date of invoice. All invoices shall be sent to MDT's accounting department, without regard to the actual shipping address for the OEM Product. Each such invoice shall state MDT's aggregate and unit purchase price for OEM Product in the relevant shipment, plus any freight, taxes or other costs incident to the purchase or shipment initially paid by TGC and to be borne by MDT hereunder. MDT shall make all payments to TGC under this Agreement in United States dollars by check. MDT shall not take any credits or offsets against amounts billed to MDT by TGC without TGC's prior written consent. Any disputes shall be resolved in good faith. To that end, a senior representative appointed by each party shall meet and confer in good faith to amicably resolve the alleged dispute over the invoice. If they are unable to agree to a resolution after thirty (30) business days, the parties may elect to proceed with arbitration as provided for in Section 13.4(b). In no event shall MDT withhold payments for undisputed invoices.


5.6 Shipping; Risk of Loss.


(a) All OEM Product delivered by TGC pursuant to this Agreement shall
be suitably packed for surface or air shipment, in MDT's sole discretion,
in TGC's standard shipping cartons, marked for shipment to such location or
locations as MDT may designate, and delivered to MDT or its carrier,
F.O.B., TGC Point of Shipment. Title and risk of loss of OEM Product shall
pass to MDT upon delivery to the carrier at the F.O.B., TGC Point of
Shipment.


(b) TGC shall ship all OEM Product in accordance with MDT's delivery
instructions specified in MDT's purchase orders; provided, however, that if
MDT does not provide delivery instructions with respect to the carrier to
be used, TGC may use its customary carrier. All freight, insurance and
other shipping expenses, as well as any special packing expenses, shall be
paid by MDT. MDT shall also bear all applicable taxes and duties that may
be assessed against the OEM Product and parts after delivery to the carrier
F.O.B., TGC Point of Shipment.


(c) TGC shall use its best efforts to ship the OEM Product on or
before the date reasonably specified in MDT's purchase order for the OEM
Product and consistent with TGC's shipping procedures. TGC will provide MDT
at least 30 days advance notice of any material changes to it shipping
procedures. All shipments of OEM Product shall be deemed to conform to the
relevant purchase order with respect to quantity ordered unless TGC
receives from MDT, no later than thirty (30) days after the receiving date
of a given shipment, written notice specifying the shipment, the purchase
order number and exact nature of the discrepancy between the shipment and
the order.


(d) TGC shall include in each shipment to MDT a certification that the
lot has been inspected and tested pursuant to the agreed upon criteria, and
that such lot meets the manufacturing sp ...