Published on August 7, 2009
EXHIBIT
10.1
Strategic
Supply Agreement
This
Strategic Supply Agreement (this “Agreement”) is
entered into as of July 24, 2009 (the “Effective Date”) by
and between Abbott Molecular Inc., a Delaware corporation (“Abbott”), and
NeoGenomics Laboratories, Inc., a Florida corporation (“NeoGenomics”).
Recitals
A. NeoGenomics
operates a genetic testing laboratory that offers a variety of diagnostic tests
for cancer and other diseases, including tests developed by NeoGenomics and
tests developed by others.
B. Abbott
manufactures and sells certain ASR probes that are useful for analyzing nucleic
acids through a process commonly known as FISH.
C. NeoGenomics
desires to develop and offer a FISH-based test for the diagnosis of melanoma,
and to potentially develop and offer diagnostic tests for other
cancers.
D. NeoGenomics
desires to purchase all of its requirements of Products from Abbott, and Abbott
desires to supply and sell all of
NeoGenomics’ requirements for such Products to NeoGenomics,
which NeoGenomics intends to incorporate into its diagnostic test, on the terms
and conditions set forth in this Agreement.
Now,
Therefore, in consideration of the promises and the mutual covenants
contained herein, the parties agree as follows:
Article
1
Definitions
“Abbott IVD” means an
In-Vitro Diagnostic test for melanoma developed by Abbott for aid in diagnosis
of malignant melanoma in skin biopsy specimens (excluding
subtyping).
“Act” shall mean the
United States Food, Drug and Cosmetic Act and all regulations promulgated
thereunder.
“Affiliate” shall mean
any entity which directly or indirectly controls, is controlled by, or is under
common control with, another entity. For purposes of this Agreement, an entity
shall be deemed to be in control of another entity if the former owns, or the
partners of the former own, directly or indirectly, more than fifty percent
(50%) of the outstanding voting equity (or other equity or ownership interest in
the event that such entity is other than a corporation) of the
latter.
“Agreement” has the
meaning set forth in the introductory paragraph.
“Annual Forecast” has
the meaning set forth in Section 3.4(a)(ii).
“ASR” means analyte
specific reagent.
“Base Price” has the
meaning set forth in Section 4.1(a).
“Calendar Quarter”
means each three (3) month period during the term of this Agreement which ends,
respectively, on March 31, June 30, September 30 and December 31 of each
Calendar Year, except for the initial Calendar Quarter of the first Calendar
Year, which will begin on the Effective Date and end on September 30,
2009.
“Calendar Year” shall
mean each twelve (12) month period during the term of this Agreement which
begins on January 1, and ends on December 31, except for the first Calendar Year
which will begin on the Effective Date and end on December 31,
2009.
“Change of Control”
means: (a) the sale of all or substantially all of NeoGenomics’ assets that are
used in designing, developing, validating, marketing, selling, performing or
billing for the Melanoma LDT to a Third Party in a single transaction or series
of related transactions; (b) any merger, consolidation, sale of stock or other
transaction that results in any “person” or “group” (each as defined in the
Securities Exchange Act of 1934, as amended) either becoming the “beneficial
owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended), directly or indirectly, of NeoGenomics’ voting securities(or
securities converted into or exchangeable for such voting securities)
representing fifty percent (50%) or more of the combined voting power of all
of NeoGenomics’ voting securities(on a fully diluted basis); or (c) any other
event that results, by contract or otherwise, in such person or group obtaining
the ability, directly or indirectly, to elect a majority of the board of
directors of or otherwise direct the management and policies of
NeoGenomics.
“Change of Control Base
Revenue Amount” has the meaning specified in Section 14.4.
“Commencement Date”
has the meaning set forth in Section 9.5(b).
“Confidential
Information” has the meaning set forth in Section 12.1.
“Conversion Date” has
the meaning set forth in Section 3.4(d).
“Decision Period” has
the meaning set forth in Section 9.5.
“Effective Date” has
the meaning set forth in the introductory paragraph.
“Escalated Negotiation
Period” has the meaning set forth in Section 9.5.
“Estimated Premium
Price” has the meaning set forth in Exhibit E
hereto.
“Evaluation Products”
has the meaning set forth in Section 2.1.
“Exclusive Products”
means the ASRs, if any, described in Section 3.2 and identified in Exhibit A as
Exclusive Products.
“Existing Customer
Election” has the meaning set forth in Section 3.4(d).
“FDA” shall mean the
United States Food and Drug Administration and any successor agency
thereto.
“FISH” means a
fluorescent in situ hybridization assay.
“Initial Annual
Forecast” has the meaning set forth in Section 3.4(a)(i).
“Initial Negotiation
Period” has the meaning set forth in Section 9.5.
“Intellectual
Property” means any and all: (a) methods, techniques, trade secrets,
designs, know-how, discoveries, inventions, data, information, documentation,
regulatory submissions, formulations, methodologies, processes, specifications,
trademarks, trade dress and other intellectual property of any kind (whether or
not protected under patent, trademark, copyright or similar law); and (b)
trademark registrations, copyrights, United States and foreign patents and
patent applications covering or claiming any of the foregoing.
“IVD Agreement” has
the meaning set forth in Section 9.4(c).
“IVD Opportunity” has
the meaning set forth in Section 9.4(b).
“LDT” means a
laboratory developed test that is independently designed, developed and
validated by a clinical service laboratory.
“Melanoma LDT” means a
specific LDT that is anticipated to be independently designed, developed and
validated by NeoGenomics using the Products for use as an aid in diagnosing
malignant melanoma in skin biopsy specimens (excluding subtyping).
“Model Forecast” has
the meaning set forth in Section 3.4(a)(iii).
“Negotiation Period”
means the Initial Negotiation Period and the Escalated Negotiation
Period.
“Non-Conforming
Product” shall have the meaning set forth in Section 7.6.
“Pre-Existing Customer” A
customer of NeoGenomics that purchases the Melanoma LDT prior to the Conversion
Date.
“Premium Price” has
the meaning set forth in Section 4.1(b).
“Products” shall mean
the analyte specific reagent probes identified by NeoGenomics and set forth on
Exhibit A,
including the Exclusive Products.
“Purchase Price” for
each unit of Product shall mean the sum of the Base Price and Premium Price
applicable for such unit at any given time.
“Quality Systems and GMP
Requirements” shall mean the current and any future quality system and
good manufacturing practices regulations under 21 C.F.R. Part 820 to the extent
that such regulations are applicable to the Product, as such regulations are
promulgated by the FDA. The applicable Quality Systems and GMP Requirements for
any lot of Product shall be those regulations in effect when such lot is
manufactured for NeoGenomics.
“Quarterly Forecast”
has the meaning set forth in Exhibit
E.
“Quarterly Report” has
the meaning set forth in Exhibit
E.
“Quarterly Unit
Purchases” shall mean the number of units of Products ordered by
NeoGenomics and shipped by Abbott pursuant to such order in a given Calendar
Quarter, where one (1) unit of Product constitutes the amount of such Product
necessary for NeoGenomics to perform the Melanoma LDT for one (1) patient. For
purposes of this definition, “unit” refers to one
ASR probe at the concentration and volume to be used in the validated Melanoma
LDT, which information will be provided to Abbott by NeoGenomics in writing
promptly following validation of the Melanoma LDT or any modification of the
Melanoma LDT. For example, if NeoGenomics uses four (4) ASR probes designated as
Products under this Agreement to perform the Melanoma LDT then such four (4) ASR
probes would represent four (4) units of Products.
“SEC” shall mean the
United States Securities and Exchange Commission and any successor agency
thereto.
“Service Revenue”
means the revenue recognized by NeoGenomics related to performing the Melanoma
LDT for Third Parties, as calculated in accordance with generally accepted
accounting principles and reported by
NeoGenomics’ parent company in its financial statements, as filed
with the SEC.
“Specifications” shall
mean Abbott’s internal manufacturing specifications as well as technical
specifications and test protocols relating to the characterization of the
Products identified in Exhibit A, which
Specifications will be included in Exhibit A when the
Products are identified pursuant to Section 2.2 and which may from time to time
be amended by written agreement of the parties including but not limited to
purchased standard control procedure (pscp) changes or an equivalent document
control process.
“Subsequent Annual
Forecast” has the meaning set forth in Section 3.4(a).
“Subsequent Development
Agreement” has the meaning set forth in Section 9.5(b).
“Termination Date Revenue
Amount” has the meaning set forth in Section 14.4(b).
“Threshold Amount” has
the meaning set forth in Section 3.4(a)(v).
“Territory” shall mean
the United States and Puerto Rico.
“Third
Party” shall mean a party other than Abbott or NeoGenomics, or their
respective Affiliates.
“Unaudited Report” has
the meaning set forth in Section 3.4(a)(iv).
“Unaudited Revenue” has the
meaning set forth in Section 3.4(a)(iv).
Article
2
Product
Identification
2.1 Evaluation Products.
Abbott will supply NeoGenomics with Abbott’s ASRs that may be requested from
time to time by NeoGenomics for purposes of NeoGenomics’ evaluation and
determination as to which ASRs to include in its Melanoma LDT, and for design,
development and validation of the Melanoma LDT (“Evaluation
Products”). Abbott will supply NeoGenomics with Evaluation Products in
quantities that are reasonably sufficient for evaluating the ASRs and designing,
developing and validating the Melanoma LDT. NeoGenomics shall not use the
Evaluation Products for any other purposes. Unless otherwise directed by Abbott,
NeoGenomics will destroy any unused quantities of Evaluation Products.
NeoGenomics will not bill or seek reimbursement from any Third Party payor
for Evaluation Products.
2.2 Product
Identification. As promptly as reasonably practicable, but within one
hundred twenty (120) days after the Effective Date, NeoGenomics will determine
which ASRs it desires to purchase under this Agreement for inclusion in its
Melanoma LDT. Once the ASRs are identified and agreed upon in writing by the
parties, Exhibit
A will be modified (without necessitating an amendment to this Agreement)
to include such ASRs and their Specifications, and such ASRs will thereafter
constitute the Products for purposes of this Agreement. Notwithstanding the
foregoing, if, during the term of this Agreement, Abbott develops new ASRs
utilizing in situ hybridization to a chromosomal target that Abbott reasonably
believes may be of interest to NeoGenomics for use with the Melanoma LDT or a
successor thereto, Abbott will notify NeoGenomics in writing of such new
products with a description of each such product and exclusively offer to
NeoGenomics the right to evaluate such products for a period of one hundred
eighty (180) days from the date of such written notice for possible inclusion in
the Melanoma LDT or a successor thereto. In the event that NeoGenomics decides
during such evaluation period that any such new product would be appropriate to
include in its Melanoma LDT or any successor thereto, and so notifies Abbott in
writing, then Exhibit
A will be further modified (without necessitating an amendment to this
Agreement) to include such new product and its specifications, and thereafter
such new product will be included in the definition of Exclusive Products for
the purposes of this Agreement. If NeoGenomics elects not to use the new product
in the Melanoma LDT or a successor thereto, it shall not constitute a Product
for purposes of this Agreement and NeoGenomics shall have no rights with respect
thereto.
2.3 Non-Abbott ASRs. The
parties acknowledge and agree that NeoGenomics will be free to identify which
ASRs it desires to include in the Melanoma LDT, and that it may include ASRs
that are not currently manufactured by Abbott. If NeoGenomics elects to include
in its Melanoma LDT one or more ASRs that are not currently manufactured by
Abbott, it will so notify Abbott, and Abbott may elect to manufacture the ASR
and supply it to NeoGenomics as a Product under this Agreement. If Abbott
chooses not to manufacture the ASR, Abbott and NeoGenomics will negotiate in
good faith to determine whether: (a) Abbott will obtain the ASR from a Third
Party and supply it to NeoGenomics as a Product under this Agreement; or (b)
NeoGenomics will obtain the ASR directly from a Third Party that is reasonably
acceptable to Abbott and that has a valid license from Abbott to manufacture the
ASR, if applicable. If none of the ASRs selected by NeoGenomics are manufactured
by Abbott at the time of the initial selection of such ASRs for inclusion in the
Melanoma LDT by NeoGenomics, and Abbott elects not to manufacture any of such
ASRs selected by NeoGenomics so that no ASRs have been identified as Products
pursuant to Section
2.2 within the time periods permitted therein, and the parties are unable
to reach a mutually acceptable alternative arrangement, then Abbott may
terminate this Agreement upon thirty (30) days prior written notice to
NeoGenomics without further obligation or liability. Abbott represents and
warrants that, as of the Effective Date, it currently manufactures all of the
ASRs previously disclosed to NeoGenomics or listed in any Abbott product catalog
that is current as of the Effective Date.
Article
3
Supply
Terms
3.1 Supply. During the
term of this Agreement, and subject to the terms and conditions contained
herein, NeoGenomics shall purchase all of its requirements of the Products from
Abbott, and Abbott shall supply, or shall cause its Affiliates to supply, to
NeoGenomics such quantities of the Products as may be ordered by NeoGenomics
hereunder. Except for Abbott’s failure to
supply Products as described in Section
5.5, NeoGenomics will not obtain
from any Third Party, or manufacture for itself, any Products (or other ASRs
that are substantially similar to the Products).
3.2 Exclusivity. If,
pursuant to Section 2.2, NeoGenomics identifies for inclusion in the Melanoma
LDT one or more ASRs that are not currently marketed or sold commercially by
Abbott as individual stand-alone products, each such ASR will be designated as
an “Exclusive
Product” and will be so identified on Exhibit A. Abbott
will supply the Exclusive Product(s) to NeoGenomics exclusively in the Territory
and, subject to Section 3.3(b) below, Abbott will not sell the Exclusive
Products to any Third Party in the Territory. Any Products that are not
expressly designated in Exhibit A as
Exclusive Products shall be supplied to NeoGenomics on a non-exclusive basis.
Abbott will use commercially reasonable efforts to ensure that any Products that
are sold by Abbott to customers outside the Territory will be subject to
restrictions prohibiting the further resale or distribution of such Products in
the Territory. For the avoidance of doubt, once an ASR has been
identified as an “Exclusive Product” on Exhibit A it shall
not cease to be an Exclusive Product due to the marketing or sale of such ASR by
Abbott outside the Territory.
3.3 Exclusivity
Exceptions.
(a) Abbott
may sell Exclusive Products to Third Parties outside the Territory; provided, that Abbott will
use commercially reasonable efforts to ensure that such Exclusive Products are
not resold or distributed in the Territory.
(b) Abbott
may supply Exclusive Products to the academic collaborators identified in Exhibit B in
quantities sufficient for the collaborators’ research and development purposes.
In addition, Abbott may supply the identified academic collaborators, in the
aggregate, with quantities of Exclusive Products sufficient to perform no more
than one thousand two hundred (1,200) patient tests per Calendar Year
(increasing six percent (6%) per Calendar Year).
3.4 Maintenance of
Exclusivity.
(a) Annual Forecast and
Review.
(i) At
least ninety (90) days prior to the end of the 2010 Calendar Year, NeoGenomics
will provide to Abbott a written reasonable good faith forecast of the Service
Revenue it expects to realize in each of the following two (2) Calendar Years
from sales of the Melanoma LDT (the “Initial Annual
Forecast”). If Abbott does not object to the Initial Annual Forecast
within forty-five (45) days of its receipt of the Initial Annual Forecast, it
shall be deemed accepted by Abbott. If Abbott objects to the Initial Annual
Forecast within such forty-five (45) day period, the parties will negotiate in
good faith to develop an Initial Annual Forecast that is mutually acceptable to
both parties, subject to subparagraph (iii) below. If
the parties are unable to agree upon a mutually acceptable Initial Annual
Forecast within fifteen (15) days
after beginning negotiations, the matter will be escalated to the President of
NeoGenomics (currently Robert Gasparini) and the President of Abbott (currently
Stafford O’Kelly) for resolution, and if such individuals are unable to agree
upon a mutually acceptable Initial Annual Forecast within an additional fifteen (15) days, the
matter will be resolved in accordance with Section 15.11.
(ii) At
least ninety (90) days prior to the end of the 2012 Calendar Year and at least
ninety (90) days prior to the end of each third Calendar Year thereafter during
the term of this Agreement (i.e., 2015, 2018, etc.),
NeoGenomics will provide to Abbott a written reasonable good faith forecast of
the Service Revenue it expects to realize in each of the following three (3)
Calendar Years from sales of the Melanoma LDT (each, a “Subsequent Annual
Forecast” and together with the Initial Annual Forecast, the “Annual Forecast”). If
Abbott does not object to a Subsequent Annual Forecast within forty-five (45)
days of its receipt of such Subsequent Annual Forecast, it shall be deemed
accepted by Abbott. If Abbott objects to a Subsequent Annual Forecast within
such forty-five (45) day period, the parties will negotiate in good faith to
develop a Subsequent Annual Forecast that is mutually acceptable to both
parties, subject to subparagraph (iii) below;
provided
however, that unless otherwise mutually
agreed by the parties:
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(A)
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if NeoGenomics’ maintains exclusivity pursuant to
Section 3.4(b), then the Service Revenue projected in each Calendar Year forecast included within the
applicable Subsequent Annual Forecast shall not be lower than the actual
Service Revenue realized by NeoGenomics in the last Calendar Year of the
immediately preceding forecast
period; or
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(B)
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if NeoGenomics does not maintain exclusivity
pursuant to Section 3.4(b) and Abbott does not convert this Agreement to a
non-exclusive agreement pursuant to Section 3.4(c), then the Service
Revenue projected in each Calendar
Year forecast included within the applicable Subsequent Annual Forecast
shall not be lower than the actual Service Revenue realized by NeoGenomics
in the last Calendar Year of the immediately preceding forecast period, divided
by seventy-five one hundredths
(0.75).
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If the
parties are unable to agree upon a mutually acceptable Subsequent Annual
Forecast within fifteen (15) days after beginning negotiations, the matter will
be escalated to the President of
NeoGenomics (currently Robert Gasparini) and the President of Abbott (currently
Stafford O’Kelly) for resolution, and if such individuals are unable to agree
upon a mutually acceptable Subsequent Annual Forecast within an additional fifteen (15) days, the
matter will be resolved in accordance with Section 15.11.
(iii) Notwithstanding
anything in this Agreement to the contrary, unless otherwise expressly agreed by
both parties, neither the Initial Annual Forecast nor any Subsequent Annual
Forecast will be (A) higher than the model forecast for the corresponding
Calendar Year(s) as shown in the model forecast attached hereto as Exhibit C (the “Model Forecast”) or
(B) so long as Abbott has
not exercised its rights pursuant to Section 3.4(c) hereof to convert
NeoGenomics to a non-exclusive arrangement, lower than thirty-five percent (35%)
of the model forecast for the corresponding Calendar Year as shown in the Model
Forecast.
(iv) NeoGenomics
hereby agrees that it will hire the number of sales people, make the marketing
expenditures and otherwise make the commercial investments that NeoGenomics
reasonably believes are necessary to achieve each Annual Forecast. NeoGenomics
and Abbott agree to meet periodically to review and discuss NeoGenomics’ sales
and marketing activities with respect to the Melanoma LDT.
(v) On
or before February 15, 2012, and thereafter as soon as figures are available,
but in no event more than forty-five (45) days, after the end of each Calendar
Year during the term of this Agreement, NeoGenomics will provide Abbott with a
written report showing NeoGenomics’ revenue related to performing the Melanoma
LDT for Third Parties, as calculated in accordance with generally accepted
accounting principles (the “Unaudited Revenue”),
during the previous Calendar Year, which the parties acknowledge shall be based
on unaudited financial information for such
Calendar Year (the “Unaudited Report”).
Within ninety (90) days after the end of such Calendar Year during the term of
this Agreement, NeoGenomics will provide Abbott with a written report showing
its Service Revenue during the previous Calendar Year (the “Audited Report”), but
only if the Service Revenue in the Audited Report would differ from NeoGenomics’
Unaudited Revenue as reported in the Unaudited Report. If the Unaudited Report
shows that NeoGenomics’ Unaudited Revenue during the previous Calendar Year was
less than ninety percent (90%) of the applicable Threshold Amount (as defined
below), then the Unaudited Revenue will constitute the Service Revenue for such
Calendar Year for purposes of determining whether Abbott may exercise its rights
under Section 3.4(c) or Section 3.4(d), as applicable. If the Unaudited Report
shows that NeoGenomics’ Unaudited Revenue during the previous Calendar Year is
equal to or greater than 90% of the applicable Threshold Amount, then the
parties will wait until the Audited Report is issued and the actual Service
Revenue, as reported in the Audited Report, will be used for purposes of
determining whether Abbott may exercise its rights under Section 3.4(c) or
Section 3.4(d), as applicable. As used in this paragraph: (A) If Abbott has not exercised its rights
pursuant to Section 3.4(c) or Section 3.4(d), the “Threshold Amount” is
the amount of Service Revenue that NeoGenomics must realize in a given Calendar
Year in order to maintain exclusivity pursuant to Section 3.4(b); or (B) if
Abbott has exercised
its rights pursuant to Section 3.4(c), the “Threshold Amount”
means the amount of Service Revenue that NeoGenomics must realize in a given
Calendar Year in order to avoid Abbott having the right to make the Existing
Customer Election pursuant to Section 3.4(d).
(b) Maintenance of
Exclusivity. Beginning with Calendar Year 2011, if NeoGenomics’ Service
Revenue in a Calendar Year equals or exceeds seventy-five percent (75%) of the
Service Revenue forecasted in the Annual Forecast for such Calendar Year, then
NeoGenomics will retain the right to purchase the Exclusive Products from Abbott
on an exclusive basis pursuant to Section 3.2.
(c) Conversion to
Non-Exclusivity. Beginning with Calendar Year 2011, if NeoGenomics’
Service Revenue in a Calendar Year is less than seventy-five percent (75%) but
at least thirty-five percent (35%) of the Service Revenue forecasted in the
Annual Forecast for such Calendar Year, then Abbott may, in its discretion, upon
written notice to NeoGenomics within ninety (90) days following NeoGenomics’
submission of a written report showing the previous year’s Service Revenue to
Abbott, irrevocably discontinue selling the Exclusive Products to NeoGenomics on
an exclusive basis and begin selling them to NeoGenomics on a non-exclusive
basis. In such event, the Exclusive Products will cease being Exclusive Products
for purposes of this Agreement and Abbott will be free to sell any Products,
including the Exclusive Products, to one or more of its Affiliates or Third
Parties for any purpose; provided, however, that
before exercising its right to convert NeoGenomics to a non-exclusive
arrangement, Abbott will first consult with NeoGenomics regarding the reasons
for the Service Revenue shortfall and will consider in good faith a reasonable
modification to the Annual Forecast to permit NeoGenomics to maintain
exclusivity; provided,
further, that Abbott will have no obligation to agree to such a
modification. Abbott agrees that to the extent it does not exercise its rights
under this Section 3.4(c) within ninety (90) days of being notified of
NeoGenomics’ Service Revenue for the previous Calendar Year, then Abbott will be
deemed to have waived its right to convert this Agreement to a non-exclusive
agreement as a result of any shortfalls in Service Revenue for such Calendar
Year.
(d) Existing
Customer Election. If (i)
NeoGenomics’ Service Revenue in a Calendar Year is
less than thirty-five percent (35%) of the Service Revenue forecasted in the
Annual Forecast for such Calendar Year (if Abbott has not converted this Agreement to a
non-exclusive agreement
pursuant to Section 3.4(c)); or (ii) NeoGenomics’ Service Revenue in a Calendar Year is
less than forty-five percent (45%) of the Service Revenue forecasted in
the Annual Forecast for such Calendar Year (if Abbott has converted this Agreement to a non-exclusive agreement
pursuant to Section 3.4(c)); then, in either such event, Abbott may, in its
discretion, upon written notice to NeoGenomics within nine (9) months following NeoGenomics submission of
a written report showing the previous
Calendar Year’s Service Revenue to Abbott (the date
which is thirty (30 days
after
NeoGenomics’ receipt of such notice being the
“Conversion
Date”), elect to sell the Exclusive Products
to NeoGenomics only to the extent necessary for NeoGenomics to service
its Pre-Existing Customers
(the “Existing
Customer Election”); provided,
however, that before making
such election, Abbott will first consult with NeoGenomics regarding the reasons
for the Service Revenue shortfall and will consider in good faith a
reasonable modification to
the Annual Forecast to permit NeoGenomics to continue to purchase the Exclusive
Products on the non-excusive basis set forth under Section 3.4(c);
provided,
further, that Abbott will
have no obligation to agree to such a modification. From and after the Conversion Date,
NeoGenomics will have no right to purchase, and Abbott will have no obligation
to sell, Products in excess of the quantities necessary for NeoGenomics to
provide the Melanoma LDT to its Pre-Existing Customers (including increases in volume requested by
Pre-Existing Customers).
Upon reasonable prior written notice, Abbott’s independent third party accounting
firm, at Abbott’s expense, will have the right to audit
NeoGenomics’ books and records (but no more than
once every twelve (12)
months and only at
reasonable times and under reasonable conditions) to verify that Products sold to
NeoGenomics are being used solely to service Pre-Existing Customers. Prior to any such audit,
Abbott’s independent third party accounting
firm shall be required to
execute a separate confidentiality agreement with NeoGenomics, in form
and substance reasonably acceptable to NeoGenomics, that, among other
things, shall prohibit such
accounting firm from disclosing the identities of any of NeoGenomics’ customers to Abbott, any Affiliate of
Abbott or any Third Party. If NeoGenomics intentionally and materially
exceeds its rights under
this Section 3.4(d), Abbott shall have the right to terminate this Agreement
pursuant to Section 14.2. Abbott agrees that if it does not make the Existing Customer
Election within nine (9)
months of being notified of
NeoGenomics’ Service Revenue for the previous
Calendar Year, then Abbott will be deemed to have waived its right to make the
Existing Customer Election for such Calendar
Year.
(e) Lowest
Price.
(i) If
Abbott converts this Agreement to a non-exclusive agreement pursuant to Section 3.4(c), Abbott will
continue to sell the Products to NeoGenomics on the terms and conditions set
forth in this Agreement, except for terms related to exclusivity; provided, however, that if, following such conversion, Abbott sells
Products to any Third Party (other than academic collaborators) for a price that
is lower than the Purchase
Price payable by NeoGenomics hereunder,
then NeoGenomics will be entitled to such lower price for all quantities of such
Products delivered to it for as long as such lower price is effective for any
other buyer; provided, further, that, if the lower price payable by a Third Party is
based on tiered pricing or other volume discount, NeoGenomics will be required
to commit to at least the same purchase volume as the Third Party in order to be
entitled to the lower price.
(ii) If
Abbot makes the Existing Customer Election pursuant to Section 3.4(d), Abbott
will continue to sell the Products to NeoGenomics on the terms and conditions
set forth in this Agreement, except for terms related to exclusivity and subject
to the limitations set forth in Section 3.4(d); provided, however, that if,
following such election, Abbott sells Products to any Third Party (other than
academic collaborators) for a price that is lower than the Purchase Price
payable by NeoGenomics hereunder, then NeoGenomics will be entitled to purchase
the Products for a price that is one hundred ten
percent (110%) of such lower price for all quantities of such Products
delivered to it for so long as such lower
price is effective for any other buyer;
provided, further, that, if the lower price payable by a Third Party is
based on tiered pricing or other volume discount, NeoGenomics will be required
to commit to at least the same purchase volume as the Third Party in order to be
entitled to the lower price.
(f) Changes to Annual
Forecast. If (i) Abbott
converts this Agreement to a non-exclusive agreement pursuant to Section 3.4(c);
(ii) the average national reimbursement rate for automated FISH testing using
CPT Code 88367 declines by greater than five percent (5.0%) from one Calendar
Year to the next; (iii) a Third Party begins marketing an LDT incorporating any
of the Products that is reasonably anticipated to compete in a material way with
the Melanoma LDT; or (iv) Abbott is successful in developing and obtaining FDA
approval or clearance for the Abbott IVD; then Abbott and NeoGenomics will
negotiate in good faith to revise the Annual Forecast currently in effect
pursuant to Section 3.4(a) and/or the performance thresholds set forth in
Sections 3.4(b), 3.4(c) and 3.4(d) to reflect the anticipated impact of
such event on NeoGenomics’ Service Revenue. If Abbott makes the Existing
Customer Election, then NeoGenomics will no longer be required to provide Annual
Forecasts pursuant to this Section 3.4, but will still comply with the
forecasting and ordering procedures set forth in Article 5.
(g) Examples. Examples
illustrating the potential application of the provisions set forth in this
Section 3.4 under various scenarios are attached hereto as Exhibit D. Such
examples are provided for illustrative purposes only and are not binding on
either party.
3.5 Sole Remedies. The
rights to convert this Agreement to a non-exclusive agreement, or to make the
Existing Customer Election, pursuant to Sections 3.4(c) and 3.4(d) above shall
constitute Abbott’s sole and exclusive remedies with respect to NeoGenomics’
failure to meet the Service Revenue levels forecasted in the Annual Forecast,
except to the extent such failure is due to NeoGenomics’ fraud or willful
misconduct.
3.6 Compliance. Products
manufactured by Abbott for NeoGenomics under this Agreement shall be
manufactured and tested by Abbott in accordance with the Specifications, Quality
System and GMP Requirements, and all applicable national, state and local laws,
regulations and guidelines.
3.7 Specifications. The
Specifications for the Products will be included in Exhibit A when the
Products are identified pursuant to Section 2.2. The parties may from time to
time amend said Specifications for any Product by mutual written
agreement; provided, that if Abbott is
required by applicable law, rule or regulation to modify the Products or the
Specifications, it will be free to do so, but will provide NeoGenomics with as
much advance notice of such modification as practicable under the circumstances.
In the event that an amendment to the Specifications for a Product affects the
price for such Product, the parties shall, prior to amending the Specifications,
agree in writing upon any price adjustments and ordering and delivery schedules
for such Product.
3.8 Use of Products.
NeoGenomics will not: (a) resell or distribute any Evaluation Products or
Products obtained from Abbott under this Agreement to any Third Party; (b) use
any Evaluation Products or Products past their stated expiration date; (c) use
any Evaluation Products in any manner inconsistent with their intended use; or
(d) use any Evaluation Products or Products outside the Territory.
3.9 Books and Records; Audit
Rights. NeoGenomics will keep books and records that accurately show
the Service
Revenue. Such books
and records shall be preserved for three (3) years from the last day of each
Calendar Year in which such Service Revenue was realized and shall be open to
audit by an independent accounting firm reasonably acceptable to NeoGenomics and
Abbott, no more frequently than once in any twelve (12) month period, at
reasonable times and under reasonable conditions and upon at least thirty (30)
days prior written notice to NeoGenomics. All information contained in
NeoGenomics’ books and records shall constitute Confidential Information for
purposes of Article 12 of this Agreement and the independent accounting firm
will be required to execute a separate confidentiality agreement reasonably
acceptable to NeoGenomics that, among other things, shall prohibit such
accounting firm from disclosing the identities of any of NeoGenomics’ customers
to Abbott, any Affiliate of Abbott or any Third Party. Abbott will use the
reports of the independent accounting firm only for the purpose of verifying
NeoGenomics’ Service Revenue for the applicable period. Once audited, the books
and record shall be closed for the applicable Calendar Year(s) and may not be
audited again pursuant to this Section 3.9. The costs of such an audit shall be
borne by Abbott; provided, however, that, if
such audit determines that the Service Revenue reported by NeoGenomics for the
audited Calendar Year(s) is at least ten percent (10%) more than the Service
Revenue determined by the auditor for such Calendar Year(s), then NeoGenomics
will promptly reimburse Abbott for the costs of such audit. Abbott’s right to
audit a specific Calendar Year will terminate three (3) years after the last day
of such Calendar Year.
Article
4
Purchase
Price And Terms
4.1 Purchase Price. The
purchase price (“Purchase Price”) for
the Products shall consist of a base component and a premium
component.
(a) Base Purchase Price.
The base component of the Purchase Price (the “Base Price”) shall be
as set forth on Exhibit E
hereto.
(b) Premium Purchase Price. The
premium component of the Purchase Price (the “Premium Price”) shall
be as set forth on Exhibit E
hereto.
(c) Books and Records; Audit
Rights. NeoGenomics will keep books and records that accurately show
the Quarterly Unit
Purchases. Such
books and records shall be preserved for three (3) years from the last day of
each Calendar Quarter in which such Quarterly Unit Purchases were made and shall
be open to audit by an independent accounting firm reasonably acceptable to
NeoGenomics and Abbott, no more frequently than once in any twelve (12) month
period, at reasonable times and under reasonable conditions and upon at least
thirty (30) days prior written notice to NeoGenomics. All information contained
in NeoGenomics’ books and records shall constitute Confidential Information for
purposes of Article 12 of this Agreement and the independent accounting firm
will be required to execute a separate confidentiality agreement reasonably
acceptable to NeoGenomics that, among other things, shall prohibit such
accounting firm from disclosing the identities of any of NeoGenomics’ customers
to Abbott, any Affiliate of Abbott or any Third Party. Abbott will use the
reports of the independent accounting firm only for the purpose of determining
the accuracy of the Quarterly Reports and ensuring proper payment of the Premium
Price. Once audited, the Quarterly Reports and the Premium Price payments shall
be closed for the applicable Calendar Quarter(s) and may not be audited again.
Except as provided below, within sixty (60) days after notice from Abbott
following completion of the independent accounting firm’s audit covering a given
Calendar Quarter, NeoGenomics will pay to Abbott the amount of any Premium Price
determined by such audit to be outstanding. The costs of such an audit shall be
borne by Abbott; provided,
however, that, if such audit determines that the aggregate Premium Price
paid by NeoGenomics for the audited Calendar Quarter(s) to be at least ten
percent (10%) less than the Premium Price determined by the auditor to be due
and payable, then NeoGenomics will promptly reimburse Abbott for the costs
of such audit. If such audit determines that NeoGenomics overpaid the
amount of Premium Price otherwise determined by the auditor to be due and
payable for the audited Calendar Quarter(s), then Abbott will credit the amount
of such overpayment to NeoGenomics against future amounts payable by NeoGenomics
under this Agreement. Abbott’s right to audit a specific Calendar Quarter or the
Premium Price payments owed with respect thereto, will terminate three (3) years
after Abbott’s receipt of the Quarterly Report relating to such Calendar
Quarter.
4.2 Evaluation Products.
Abbott shall provide NeoGenomics with reasonable quantities of Evaluation
Products at no cost to NeoGenomics.
Article
5
Orders
And Forecasting
5.1 Forecasting and
Ordering. Within thirty (30) days following identification of the
Products in Exhibit
A, NeoGenomics shall provide Abbott with a written good faith forecast
for quantities of Products required by NeoGenomics for the subsequent twelve
(12) month period. The forecast shall be a rolling annual forecast and it shall
be updated by NeoGenomics at least ten
(10) days before the end of each Calendar
Quarter and shall provide NeoGenomics’ forecasted requirements of Products for
the subsequent twelve (12) month period. The first three (3) months of each such
forecast shall constitute a firm purchase order for Products. The last nine (9)
months of each forecast shall not be binding on either party and shall be used
for planning purposes and safety stock building. In any Calendar Year,
NeoGenomics will not issue a forecast for, or order, a greater quantity of
Products than NeoGenomics reasonably believes will be necessary to fulfill its
anticipated needs for the Melanoma LDT during such Calendar Year. If Abbott
reasonably believes that NeoGenomics has ordered Products in excess of the
foregoing limitation, Abbott reserves the right to adjust the applicable
purchase order to withhold shipment of such excess quantities.
5.2 Purchase Orders. Firm
purchase orders shall be placed at the end of each Calendar Quarter detailing
the exact quantities of Product which NeoGenomics requires to be delivered in
the following Calendar Quarter, consistent with the forecast provided pursuant
to Section 5.1. Orders shall be placed upon NeoGenomics’ purchase order forms,
specifying quantities of Products ordered and the initial requested delivery
dates, which will be no less than three (3) days after Abbott’s receipt of the
purchase order. NeoGenomics will not be required to specify all delivery dates
for the entire Calendar Quarter on each such advance purchase order, but rather
only those delivery dates reasonably anticipated to meet NeoGenomics’ needs for
the first thirty (30) days of such Calendar Quarter. For all other delivery
dates during the Calendar Quarter, NeoGenomics will give Abbott at least two (2)
days written notice before any such requested delivery date; provided, however, that
NeoGenomics will not specify such subsequent delivery dates more frequently than
two (2) times per month during the remainder of the Calendar Quarter. In all
other respects, the obligations and rights of the parties shall be governed by
the terms and conditions of this Agreement. None of the general terms and
conditions set forth in any purchase order form used by NeoGenomics or any
acknowledgement form used by Abbott shall be applicable. If, as of the last day
of any Calendar Quarter, NeoGenomics has not specified delivery dates for all of
the Products ordered pursuant to its firm purchase order for such Calendar
Quarter, as placed pursuant to this Section 5.2, then Abbott may ship the
remaining undelivered quantities of Products specified in such purchase order to
NeoGenomics during the fifteen (15) day period after such Calendar Quarter, and
Abbott may invoice NeoGenomics for such shipped Products pursuant to Section
6.2.
5.3 Excess Quantities. If
NeoGenomics orders quantities of Product in any Calendar Quarter in excess of
one hundred ten percent (110%) of the
quantities set forth in the applicable forecast for such Calendar Quarter,
Abbott will first supply such excess quantities from the safety stock
established pursuant to Section 5.4 below. To the extent the excess quantities
ordered by NeoGenomics exceed the safety stock, Abbott will not be obligated to
supply the excess quantities, but Abbott will use commercially reasonable
efforts to supply such excess quantities within thirty (30) days after its
receipt of the applicable purchase order(s).
5.4 Safety Stock. Within
sixty (60) days after the Effective Date, Abbott will establish and at all times
during the term of this Agreement maintain a safety stock of Products
exclusively available to NeoGenomics in quantities sufficient to satisfy
NeoGenomics’ requirements for Products for the succeeding sixty (60) days based
on NeoGenomics’ most recent Quarterly Forecast. Deliveries by Abbott to
NeoGenomics of Products may be taken from the safety stock. Abbott’s safety
stock shall be rotated with its regular inventory of Products to maintain shelf
life. Abbott shall keep NeoGenomics reasonably informed of the level of safety
stock. If the safety stock drops below a sixty (60) day supply, Abbott will use
commercially reasonable efforts to replenish the safety stock as quickly as
practicable. In the event that Abbott terminates this Agreement pursuant to
Section 14.2, Section 14.3 or Section 14.4, NeoGenomics will be obligated to
purchase the unsold portion of said safety stock from Abbott at the price in
effect as of the effective date of termination of this Agreement, provided such
safety stock Products comply with the then current Specifications.
5.5 Failure to Supply;
Resumption. In the event that Abbott fails or will fail, for any reason
(including an event of force majeure), to supply a Product in accordance with
the quantities and/or delivery dates specified by NeoGenomics in a firm purchase
order, and before exhausting the safety stock of such Product, Abbott will
promptly notify NeoGenomics and shall have a period of forty five (45) days to
cure such failure. During such forty-five (45) day cure period, if Abbott is
able to supply some but not all of its other customers’ demands and elects to do
so, then NeoGenomics may require Abbott to equitably allocate its manufacturing
capacity among NeoGenomics’ requirements for Products and all other customers’
demands (based on relative percentages of total sales for the three (3) months
immediately preceding the onset of Abbott’s failure). If Abbott’s failure to
timely supply continues, or is reasonably
expected to continue, for more than forty-five (45) days, NeoGenomics may, at
its discretion and upon written notice to Abbott: (a) continue to receive an
allocated portion of the quantities of Products; (b) require Abbott to supply
the undelivered Products at a future date agreed upon by the parties in writing;
or (c) obtain the quantity of Products that Abbott is unable to supply from a
Third Party mutually agreed upon by the parties and who has a valid license from
Abbott to manufacture the Products. If NeoGenomics chooses clause (c) and no
Third Party has such a license for the Products, Abbott agrees that it will use
its commercially reasonable efforts to negotiate such a license as expeditiously
as practicable and that it will not unreasonably withhold granting such a
license in order that NeoGenomics can continue to receive Products without
interruption. For avoidance of doubt, notwithstanding the foregoing, Abbott will
have no obligation to grant a license to a Third Party on commercially
unreasonable terms or if granting such a license would result in any material
adverse consequences to Abbott under any agreement between Abbott and any of its
licensors. NeoGenomics shall have the right to adjust the Annual Forecast under
Article 3 of this Agreement in the event Abbott is unable to
supply a Product in accordance with the quantities or delivery dates specified
by NeoGenomics in a firm purchase order. If NeoGenomics elects under
clause (c) above to obtain Products from a Third Party, and Abbott is thereafter
able to demonstrate, to NeoGenomics’ reasonable satisfaction, that Abbott is
again able to consistently supply such Products to NeoGenomics, then NeoGenomics
will resume purchasing the Products from Abbott for the remainder of the term of
this Agreement within ninety (90) days after Abbott’s demonstrated capabilities
to resume supply; provided, that such time
period will be extended to the extent of NeoGenomics’ pre-existing contractual
purchase commitments with the Third Party (if any), but not to exceed an
additional one hundred eighty (180) days.
Article
6
Delivery
And Invoicing
6.1 Delivery Terms.
Abbott will ship Products ordered by NeoGenomics, FCA (Incoterms 2000), Abbott’s
manufacturing facility, in accordance with the quantities, delivery dates, and
delivery and shipping instructions specified in NeoGenomics’ purchase orders. If
the carrier noted on the purchase order is not available, or if the purchase
order does not designate a carrier, then Abbott shall contact NeoGenomics for
instructions regarding the mode of shipment. Unless otherwise directed by
NeoGenomics, Abbott will obtain insurance for all shipments of Products, at
NeoGenomics’ expense. Abbott’s responsibility shall be to deposit the ordered
Products with the designated carrier within the shipping periods specified, and
Abbott shall not be liable for late delivery if so accomplished. Title and risk
of loss shall pass to NeoGenomics upon delivery to the designated carrier for
shipment. Abbott will inform the carrier of any temperature, pressure or other
special storage or handling instructions for the Products.
6.2 Invoices and Payment.
Abbott shall invoice NeoGenomics for Products (and shipping and insurance costs)
upon shipment of the Products ordered by NeoGenomics. Such invoices shall be
paid in full within thirty (30) days of the date such invoice is received by
NeoGenomics. All payments hereunder shall be sent via check or wire transfer as
follows:
If by
check:
Abbott
Laboratories Inc.
75
Remittance Drive Suite #6809
Chicago,
IL 60675-6809
If by
wire transfer:
Northern
Trust Company
Chicago,
Illinois
ABA:
071000152
Swift
Code: CNORUS44
Acct
Name: Abbott Molecular Inc.
Acct
Number: 31599333
6.3 Currency. All
invoices under this Agreement shall be stated and paid in United States
dollars.
6.4 Taxation. The prices
quoted herein do not include the costs of any taxes, licenses, permits, fees or
tariffs which may be levied by any government or governmental agency on the sale
or transport of Products. Any such taxes, licenses, permits, fees or tariffs
which are paid by Abbott (excluding taxes on Abbott’s net income) shall be
included in the invoices issued to NeoGenomics.
Article
7
Manufacturing
And Quality Assurance
7.1 Manufacture. Abbott
shall manufacture the Products in accordance with: (a) the Specifications; (b)
applicable Quality Systems and GMP Requirements; and (c) all pertinent rules and
regulations of the FDA, as the same may be amended from time to
time.
7.2 Testing. Abbott shall
test or cause to be tested each lot of Product in accordance with standard
operating procedures to be set forth in Exhibit F upon
identification of the Products pursuant to Section 2.2 (“Release Testing”).
7.3 Certificate of
Analysis. Abbott will deliver all Products with a certificate of analysis
(“CoA”)
verifying their compliance with the current Specifications. The CoA will be lot
specific and conform to the requirements in the Specifications. The CoA must
show a summary of the physical inspection, Release Testing, and performance
testing results, and have Abbott’s quality representative’s signature and date
of approval. Abbott will send a CoA to NeoGenomics with each delivery of
Products. NeoGenomics is entitled to rely on such CoA for all purposes of this
Agreement. Nothing in this Agreement shall be construed to require NeoGenomics
to perform any incoming testing, analytical or otherwise, on any Products
received from Abbott.
7.4 Product Dating. Each
Product shall have at least twelve (12) months of remaining shelf life on the
date of delivery to NeoGenomics’ designated carrier.
7.5 Manufacturing Site.
During the term of this Agreement, Abbott shall manufacture Product using
Abbott’s facilities located in Des Plaines, Illinois, or wherever Abbott may
relocate its manufacturing facilities; provided, however, Abbott
must give at least ninety (90) days prior written notice to NeoGenomics of any
such relocation. Abbott’s new facility shall be subject to one (1) additional
site inspection by NeoGenomics quality assurance personnel, in accordance with
Section 8.2, and Abbott shall use commercially reasonable efforts to have the
new manufacturing site become acceptable to NeoGenomics’ quality policies within
nine (9) months of relocating Product manufacture.
7.6 Non-Conforming
Product. Within forty-five (45) days of NeoGenomics’ receipt thereof,
NeoGenomics may reject any Product supplied hereunder which does not conform to
the Specifications (“Non-Conforming Product”),
provided that such Non-Conforming Product has not become non-conforming due to
any failure by NeoGenomics or its agents or representatives to handle, maintain
or store such Product as required by the labeling or the Specifications.
NeoGenomics shall provide written notice to Abbott specifying the reason for
such rejection. If NeoGenomics does not reject any Product supplied hereunder
within forty-five (45) days of NeoGenomics’ receipt thereof, the
Product shall be considered accepted, and all claims with respect to Product not
conforming with Specifications shall be deemed waived by NeoGenomics, except as
to latent defects which are not reasonably discoverable within such forty-five (45) day period. At the request and expense of
Abbott, NeoGenomics shall return the defective Product, or a representative
sample thereof, to Abbott for testing. Should such test results reasonably
confirm the Product is a Non-Conforming Product, as promptly as practicable (but
in no event more than thirty (30) days) after such determination, Abbott
shall send conforming replacement Products to NeoGenomics at no cost to
NeoGenomics. At Abbott’s direction, NeoGenomics will either return all
Non-Conforming Products to Abbott’s facilities, at Abbott’s expense, or destroy
all Non-Conforming Products and certify such destruction in
writing.
7.7 Product Retains.
Abbott will provide, at no additional charge, three (3) samples of each lot of
Products supplied to NeoGenomics under this Agreement, and NeoGenomics will
retain such samples for at least one (1) year beyond the expiration date of such
lot. In the event of a dispute regarding any Non-Conforming Product that Abbott
and NeoGenomics are unable to resolve in a timely manner, a sample of the
alleged Non-Conforming Product and two (2) of the retained samples from such lot
of such Product, along with a reference batch which has previously been accepted
by NeoGenomics as conforming to the Specifications, together with the testing
methodologies agreed upon by the parties, shall be submitted by NeoGenomics to
an independent laboratory reasonably acceptable to both parties for testing
against the Specifications. The laboratory’s determination of the Product’s
conformance or non-conformance to the Specifications shall be binding upon the
parties. If the laboratory determines that the Product is conforming,
NeoGenomics will pay all independent laboratory costs, as well as any shipping
costs incurred by Abbott in connection with the laboratory’s determination. If
the laboratory determines that the Product is non-conforming, Abbott will pay
all independent laboratory costs, as well as any shipping costs incurred by
NeoGenomics in connection with the laboratory’s determination.
7.8 Quality System.
Abbott will maintain a quality system to ensure that the Products are
manufactured in accordance with: (a) applicable Quality Systems and GMP
Requirements; and (b) all pertinent rules and regulations of the FDA, as the
same may be amended from time to time.
7.9 Product Safety. Each
party will be solely responsible for implementing and maintaining its own
environmental, health and safety procedures for the handling, storage and use of
the Products and any other materials or hazardous waste which may be used or may
arise in connection with the use of the Products. The parties will cooperate
reasonably and in good faith to ensure employee and public safety.
Article
8
Regulatory
Matters
8.1 Notice of Regulatory Agency
Action. Each party shall, as promptly as practicable (but in any event
within ten (10) days) inform the other party of any formal or informal inquiry,
notice, warning or other communication from any regulatory authority relating to
any Products or the Melanoma LDT.
8.2 Site Inspections.
Upon at least five (5) days prior notice, Abbott shall, from time to time during
the term of this Agreement, but no more frequently than once per Calendar Year,
allow representatives of NeoGenomics to tour and inspect all facilities utilized
by Abbott in manufacturing, testing, packaging and shipment of Products sold to
NeoGenomics under this Agreement for the purposes of verifying compliance with
quality control regulations. During such visits, Abbott shall provide reasonable
access to its manufacturing quality control documentation and shall
cooperate with such representatives in every reasonable manner. NeoGenomics
shall also have the right at any time, upon reasonable prior written notice to
Abbott (as dictated by applicable regulatory authorities’ requirements), to
conduct any audits that are specifically mandated by any regulatory
authority or that are reasonably required to permit NeoGenomics to respond to
specific questions from any regulatory authority.
8.3 Regulatory Agency
Compliance. Each party shall comply with any applicable laws and
regulations that require such party to: (a) allow representatives of the FDA or
any other regulatory authority with jurisdiction over the manufacture or
marketing the Products or the Melanoma LDT, as applicable, to tour and inspect
all facilities utilized by Abbott in the manufacture, testing, packaging,
storage and shipment of Products sold under this Agreement or by NeoGenomics in
the design, development, validation or performance of the Melanoma LDT; or (b)
respond to requests for information from the FDA or any other regulatory
authority having jurisdiction over the manufacture or marketing of the Products
or the Melanoma LDT. Each party shall notify the other party as promptly as
practicable (but in any event within ten (10) days) whenever such party receives
notice of a pending inspection by any United States regulatory agency of any
facility that is used in the manufacturing, packaging, storage or shipment of
Products, or the design, development, validation and performance of the
Melanoma LDT, as applicable.
Article
9
Melanoma
LDT, Abbott IVD,
Other
Tests, Third Party Proposals
9.1 Development of Melanoma
LDT. If NeoGenomics elects to develop the Melanoma LDT as contemplated,
it shall be solely responsible for designing, developing and validating the
Melanoma LDT in accordance with all applicable laws, including without
limitation the Act, the Clinical Laboratory Improvement Amendments (“CLIA”) and any rules,
regulations or guidance promulgated thereunder, and it shall use commercially
reasonable efforts to do so as quickly as possible. Without limiting the
foregoing, NeoGenomics will also be solely responsible for determining which
ASRs to include in the Melanoma LDT. Abbott will not participate or be involved
in any way with the design, development or validation of the Melanoma LDT, or
with determining which ASRs to include in the Melanoma LDT. Solely as may be
requested and directed by NeoGenomics, and as permitted by applicable law, rules
and regulations, Abbott may agree to optimize or customize existing ASRs, or to
develop new ASRs, for NeoGenomics’ use in connection with the Melanoma LDT;
provided, however, that
Abbott may do so only in accordance with NeoGenomics’ independently developed
technical requests or instructions. Such customized, optimized or new ASRs would
then constitute Evaluation Products, Products, and/or Exclusive Products for
purposes of this Agreement.
9.2 Failure to Develop.
If NeoGenomics does not develop and launch the Melanoma LDT within six (6)
months after the date on which Abbott first supplies Products (as identified on
Exhibit A and
excluding Evaluation Products) to NeoGenomics under this Agreement, and if such
failure or delay is due to causes beyond NeoGenomics’ reasonable control or to
new or changed circumstances not anticipated by the parties, then Abbott will
consult with NeoGenomics regarding the reasons for such failure or delay and
will consider in good faith a reasonable extension of time for NeoGenomics to
complete development and launch of the Melanoma LDT; provided, however, that
Abbott will have no obligation to grant such an extension of time. If, after
fifteen (15) days of such consultation and good faith consideration, Abbott does
not agree to an extension of time, then it may, in its sole discretion, upon
written notice to NeoGenomics, either: (a) convert this Agreement to a
non-exclusive agreement pursuant to Section 3.4(c); or (b) terminate this
Agreement. Notwithstanding the foregoing, in the event that NeoGenomics, due to
factors beyond its reasonable control, encounters delays in receiving patient
samples with the appropriate patient consents beyond sixty (60) days from the
Effective Date, then the six (6) month deadline in the first sentence of this
Section 9.2 shall be extended day for day for up to an additional sixty (60)
days.
9.3 Marketing of Melanoma
LDT. NeoGenomics will be solely responsible for marketing, promoting,
offering, selling, performing and billing customers and/or Third Party payors
for the Melanoma LDT in accordance with applicable law, rules and regulations.
Abbott and its Affiliates will not participate in any way, directly or
indirectly, in the foregoing activities and will not engage in any co-promotion
or other similar activities intended to promote or otherwise create demand
for the Melanoma LDT.
9.4 Abbott
IVD.
(a) Right to Continue Developing
Abbott IVD. Nothing in this Agreement will prevent or restrict Abbott
from continuing to develop and seeking FDA approval or clearance for the Abbott
IVD, which may include ASRs that are similar or identical to the Products,
including the Exclusive Products. To the extent permitted by, and subject to,
all applicable laws and regulations, including those relating to data privacy,
if requested by Abbott, NeoGenomics will provide Abbott with data generated in
clinical studies conducted in connection with the Melanoma LDT for the purpose
of supporting Abbott’s regulatory submissions for the Abbott IVD; provided, that NeoGenomics
shall have no obligation to provide such data if Abbott has terminated this
Agreement for any reason.
(b) Co-Exclusive Rights.
If Abbott is successful in developing and obtaining FDA approval or clearance
for the Abbott IVD, Abbott will offer to NeoGenomics the co-exclusive right to
purchase the Abbott IVD and offer it as a service to its customers through its
laboratories (the “IVD
Opportunity”). Such right will be co-exclusive with Abbott, and Abbott
would agree not to sell the Abbott IVD, or sell or license the technology
underlying the Abbott IVD, to Third Party laboratories (other than academic
collaborators for research purposes) during the term of the IVD Agreement (as
defined below), so long as NeoGenomics maintains co-exclusivity in accordance
with subparagraph (d) below.
(c) IVD Agreement. Abbott and
NeoGenomics both acknowledge and agree that if Abbott is successful in
developing and obtaining FDA approval or clearance for the Abbott IVD and if
NeoGenomics elects to purchase and offer the Abbott IVD, the parties will use
their commercially reasonable best efforts and will negotiate in good faith to
enter into a separate written agreement (the “IVD Agreement”)
setting forth pricing and other terms and conditions substantially similar to the terms and conditions in this
Agreement, modified as appropriate to
reflect the different types of products, provided, that the effective price of the Abbott IVD will not
materially change from the aggregate
Purchase Price paid under this
Agreement by NeoGenomics for the Products used in its Melanoma LDT (calculated on
a per test basis). Notwithstanding the foregoing:
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(i)
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if Abbott utilizes ASRs in the Abbott IVD which
are different than the Products utilized in the Melanoma LDT and the ASRs
used in the Abbott IVD are subject to licensing and/or royalty payments for the intellectual property
underlying such ASRs that are higher in the aggregate than the licensing
and/or royalty payments incurred for the Products used in the Melanoma
LDT, then, after conferring with NeoGenomics and outlining the
differences in royalties and licensing fees underlying
the ASRs, Abbott shall have the right to pass through solely the effects
of such incremental royalty/licensing costs to NeoGenomics in the
effective pricing for the Abbott IVD;
and/or
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(ii)
|
if the Abbott IVD includes a greater number of ASRs (i.e., probes) than NeoGenomics uses in its Melanoma
LDT, the price for the Abbott IVD will be increased proportionately (but taking into account
manufacturing costs for such additional ASR(s) used in the Abbott IVD to
the extent such manufacturing costs
are greater than the manufacturing costs for the Products used in the
Melanoma LDT) to reflect such greater
number of ASRs.
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In addition, in connection with entering into the IVD
Agreement, Abbott and NeoGenomics will use their commercially reasonable best efforts and negotiate
in good faith to agree upon new annual
forecasts pursuant to the IVD Agreement to
reflect the anticipated impact to NeoGenomics of the Abbott IVD which new annual forecasts will not be materially higher than the Annual Forecasts for the Melanoma LDT. At
least ninety (90) days prior to Abbott’s anticipated
submission of a Pre-Market Approval application (PMA) for the Abbott IVD,
Abbott will provide NeoGenomics with written notice offering it the IVD
Opportunity. If NeoGenomics elects to
commence negotiations relating to the IVD Opportunity, it will so notify Abbott
in writing within ten (10) days after its receipt of such notice. If
NeoGenomics does not elect to purchase and offer the Abbott IVD within ten (10)
days after its receipt of such notice, or if the parties are unable to reach
agreement as to the terms of the IVD Agreement within sixty (60) days of good
faith negotiations consistent with this paragraph (c) after NeoGenomics elects
to enter into negotiations with respect to the IVD Opportunity, the matter will
be escalated to the President of NeoGenomics (currently Robert Gasparini) and
the President of Abbott (currently Stafford O’Kelly) for
resolution.
(d) Maintenance of
Co-Exclusivity; Termination. Without
limiting the foregoing, the parties agree that the IVD Agreement will contain
provisions substantially similar to those set forth in Section 3.4 of this
Agreement requiring annual forecasts and annual reviews thereof with respect to
NeoGenomics’ sales of the Abbott IVD, and its maintenance of its co-exclusive
rights. The parties agree that the IVD Agreement will permit Abbott, in its sole
discretion to: (i) in a manner consistent with Section 3.4(c) of this Agreement,
convert the IVD Agreement to a non-exclusive agreement if NeoGenomics’ actual
sales of the Abbott IVD in a given Calendar Year are less than seventy-five
percent (75%) of the agreed upon annual sales forecast for such Calendar Year;
and (ii) in a manner consistent with Section 3.4(d) of this Agreement, limit
purchases of the Abbott IVD to pre-existing customers if NeoGenomics’ actual
sales of the Abbott IVD in a given Calendar Year are less than thirty-five
percent (35%) of the agreed upon annual sales forecast for such Calendar
Year.
9.5 Other Tests. Abbott hereby grants to NeoGenomics a first right to
develop two (2) additional LDTs using Abbott ASRs, other Abbott products and/or
Abbott Intellectual Property relating to
the disease states identified in Exhibit G (each, an
“Additional Test”). NeoGenomics will
notify Abbott in writing within ninety (90) days after the Effective Date if it
elects to commence negotiations relating to the first Additional Test described in Exhibit G (the
“Initial Decision Period”). Abbott will notify NeoGenomics in writing when Abbott believes that
its products or intellectual property relating to other potential Additional Tests are ready to be
commercialized, which notice will describe the applicable products and/or
intellectual property in reasonable detail;
provided, that Abbott will not deliver such notice to
NeoGenomics prior to the earlier of June 30, 2010, or the date which is thirty
(30) days after the parties have executed a Subsequent Development Agreement (as
defined below) regarding the first
Additional Test described in Exhibit G. If NeoGenomics elects to commence negotiations
relating to an Additional Test other than
the first Additional Test described in Exhibit G, it will so notify Abbott in writing within thirty (30)
days after its receipt of notice from Abbott relating to such Additional Test
(the “Additional Decision Period” and together with
the Initial Decision Period, each a “Decision Period”). Subject to
the terms hereof, until the expiration of both the applicable Decision Period
and Negotiation Period with respect to an Additional Test, Abbott shall not
pursue negotiations with, nor negotiate with or furnish information regarding
such Additional Test to any Third Party (except academic collaborators for
research purposes). Each date on which NeoGenomics provides written notice of
its desire to commence negotiations regarding an Additional Test is referred to
herein as a “Commencement
Date.”
For a period of ninety (90) days following a Commencement
Date (an “Initial
Negotiation
Period”), the parties will
negotiate exclusively and in good faith to enter into a definitive agreement (a
“Subsequent
Development Agreement”) providing for the development and commercialization of
the applicable Additional Test; provided, however, that neither
party will be obligated to enter into such a Subsequent Development Agreement
except on mutually acceptable terms and conditions. The parties
intend and agree that each Subsequent Development Agreement shall be negotiated
in good faith based upon the same guiding
principles and economic models that were the basis for this Agreement, and each
Subsequent Development Agreement will, to the extent applicable in light of the
different products and intellectual property at issue, contain terms and
conditions that are similar to the terms and conditions in this
Agreement. If, for any reason, the parties do not execute a Subsequent
Development Agreement for a particular Additional Test, the parties rights and
obligations under this Section 9.5 shall continue with respect to
the other Additional Tests. If the parties
execute Subsequent Development Agreements relating to any two (2) of the
Additional Tests, the parties’ respective
rights and obligations under this Section 9.5 shall terminate with
respect to the other Additional Tests. If NeoGenomics does not notify Abbott of its election to
commence negotiations for an Additional Test within the above thirty (30) day
or ninety (90) day period, as applicable, Abbott will be free to enter into one or more
agreements with one or more Third Parties
regarding the development and
commercialization of such Additional
Test. If the parties do not execute a Subsequent Development
Agreement within ninety (90) days after the Commencement Date for an Additional Test,
the matter will be escalated to the President of
NeoGenomics (currently Robert Gasparini) and the President of Abbott (currently
Stafford O’Kelly) for resolution, and such individuals shall have an additional
fifteen (15) days (the “Escalated Negotiation
Period”) in which to negotiate in good faith the terms of such Subsequent
Development Agreement. If such individuals are unable to agree upon the terms of
such Subsequent Development Agreement within such additional fifteen (15) day
period, Abbott will be free to enter into one or more agreements with one or more Third
Parties regarding the development and commercialization of the applicable Additional Test, and NeoGenomics will have no further
rights with respect thereto.
9.6 Third Party Proposal.
If at any time during the term of this Agreement, there is a Third Party
Proposal, then NeoGenomics will notify Abbott in writing of such Third Party
Proposal thirty (30) days prior to
acceptance of such Third Party Proposal, such notice to include a
reasonably detailed description of such Third Party Proposal including the
identity of the Third Party involved to the extent not precluded by a
confidentiality agreement with such Third Party and a description of the
relevant terms of such Third Party Proposal including the name of the Third
Party if such Third Party is one of the parties listed on Exhibit I. As used
herein, “Third Party
Proposal” means: any written offer with
respect to any: (i) merger, consolidation, other business combination or
similar transaction involving NeoGenomics or any of its subsidiaries; (ii) sale,
lease, license or other disposition, directly or indirectly, whether by merger,
consolidation, business combination, share exchange, joint venture or otherwise,
of assets of NeoGenomics (including equity interests of any of its subsidiaries)
or any subsidiary of NeoGenomics representing fifty percent (50%) or more of the consolidated assets, revenues
or net income of NeoGenomics and its subsidiaries; (iii) sale, lease, license or
other disposition, directly or indirectly, of all or substantially all of
NeoGenomics’ assets that are used in designing, developing, validating,
marketing, selling, performing or billing for the Melanoma LDT; (iv) issuance or
sale or other disposition (including by way of merger, consolidation, business
combination, share exchange, joint venture or similar transaction) of equity
interests representing fifty percent (50%) or more of the voting power of NeoGenomics;
(v) transaction or series of transactions in which any Third Party would acquire
beneficial ownership or the right to acquire beneficial ownership, or any group
(each as defined in Section 13(d) of the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder) has been formed
which beneficially owns or has the right to acquire beneficial ownership, of
equity interests representing fifty percent
(50%) or more of the voting power of
NeoGenomics; or (vi) any combination of the foregoing.
Article
10
Representations
And Warranties
10.1 Abbott Representations and
Warranties. Abbott represents and warrants to NeoGenomics
that:
(a) it
has the full power and right to enter into this Agreement and it is not
currently a party to any other agreements that are inconsistent with the
provisions of this Agreement;
(b) the
Products will be manufactured in accordance with the Specifications, Quality
Systems and GMP Requirements, as required by the Act, all pertinent rules and
regulations of the FDA, and all other applicable national, state and local laws,
regulations, and guidelines;
(c) the
Products will not be adulterated or misbranded within the meaning of the
Act;
(d) Abbott
owns or has the exclusive right to grant licenses and sublicenses to the patents
and patent applications listed in Exhibit H;
and
(e) Abbott
has not granted any licenses or sublicenses to any Third Party under the patents
and patent applications listed in Part 2 of Exhibit H.
10.2 NeoGenomics Representations
and Warranties. NeoGenomics represents and warrants to Abbott
that:
(a) it
has the full power and right to enter into this Agreement and it is not
currently a party to any other agreements that are inconsistent with the
provisions of this Agreement; and
(b) the
Melanoma LDT will be designed, developed, validated, marketed, sold, performed
and billed by NeoGenomics in strict compliance with all applicable laws and
regulations.
10.3 Disclaimers.
(a) Abbott
makes no representation or warranty of any kind relating to the Melanoma LDT or
any analytical or clinical performance claims concerning the Products (including
the Evaluation Products), including without limitation any claim that the
Products (including the Evaluation Products) are appropriate or suitable for use
in the Melanoma LDT.
(b) Except
as expressly set forth in this Agreement, Abbott makes no representations or
warranties of any kind, either express or implied, including, but not limited
to, implied warranties of merchantability, fitness for a particular purpose or
non-infringement.
Article
11
Intellectual
Property
11.1 Abbott Intellectual
Property. Abbott (or its Affiliate) will be and remain the sole and
exclusive owner of all right, title and interest in and to any and all
Intellectual Property that is owned or developed by Abbott or its
Affiliates.
11.2 NeoGenomics Intellectual
Property. NeoGenomics (or its Affiliate) will be and remain the sole and
exclusive owner of all right, title and interest in and to any and all
Intellectual Property that is: (a) owned or developed by NeoGenomics or its
Affiliates prior to the Effective Date; or (b) developed by NeoGenomics (or its
Affiliate) on or after the Effective Date and does not arise or result from use
or incorporation of the Products in any way.
11.3 Joint Intellectual
Property. Any
Intellectual Property developed by NeoGenomics after the Effective Date that
arises or results from, or that uses or incorporates the Products in any way
(including the Melanoma LDT) shall be jointly owned by NeoGenomics and Abbott.
Neither party shall license such jointly owned Intellectual Property without the
prior written consent of the other party, which shall not be unreasonably
withheld.
11.4 No New License
Grants. After the Effective Date, Abbott will not grant to any Third
Party any license or sublicense under the patents and patent applications listed
in Part 2 of Exhibit
H for practice in the Territory in the field of melanoma
diagnosis.
Article
12
Confidential
Information
12.1 Confidential
Information. It is contemplated that in the course of the performance of
this Agreement each party may, from time to time, disclose certain trade secrets
and other non-public, proprietary and/or confidential information to the other
(“Confidential
Information”). Each party (the “Receiving Party”)
agrees that it will not disclose Confidential Information received from the
other party (the “Disclosing Party”)
and that it will not use Confidential Information disclosed to it by the
Disclosing Party for any purpose other than to fulfill its obligations under
this Agreement. Confidential Information includes, without limitation: (a)
information constituting trade secrets of either party; (b) information relating
to existing or contemplated products, services, technology, designs, processes,
formulae and research and development (in whatever stage) of either party; (c)
information relating to technology, patent rights or products of either party;
(d) information relating to business plans, methods of doing business, sales or
marketing methods, customer lists, customer usages or requirements of either
party; and (e) any other information disclosed hereunder that is either
identified as confidential or, from the nature of the information or the
circumstances surrounding its disclosure, should reasonably be considered
to be confidential.
12.2 Exclusions.
Confidential Information does not include information that:
(a) was
already known to the Receiving Party, other than under an obligation of
confidentiality to the Disclosing Party, at the time of disclosure by the other
party;
(b) is
or becomes generally available to the public or otherwise part of the public
domain other than through the Receiving Party’s breach of this
Agreement;
(c) was
disclosed to the Receiving Party, other than under an obligation of
confidentiality, by a Third Party who, to the Receiving Party’s knowledge, had
no obligation to the Disclosing Party not to disclose such
information;
(d) was
developed by the Receiving Party independently and without reference to
Confidential Information received from the Disclosing Party as evidenced by the
Receiving Party’s own written records;
(e) was
disclosed to the Receiving Party pursuant to the last sentence of Section
9.4(a), solely to the extent used for the purposes described therein;
or
(f) was
disclosed to the Receiving Party for purposes of prosecuting Intellectual
Property rights arising under Section 11.3, solely to the extent used for the
purposes described therein.
12.3 Term of Confidentiality;
Safeguarding. Except as otherwise agreed in writing, during the term of
this Agreement and for a period of five (5) years following the expiration or
termination of this Agreement for any reason, the Receiving Party shall take at
least the same measures to protect the confidentiality of the Disclosing Party’s
Confidential Information as it takes to protect its own proprietary and
confidential information of like kind and sensitivity, but in no event shall the
Receiving Party use less than reasonable care.
12.4 Disclosure
Required by
Law. In the event that a Receiving Party is required by applicable
law, rule or regulation or by judicial or
administrative process to disclose the Disclosing Party’s Confidential
Information, the Receiving Party will notify the Disclosing Party as promptly as
practicable and allow the Disclosing Party to oppose such process and/or seek
protective order to limit exposure to and dissemination of said Confidential
Information. The Receiving Party will cooperate with the Disclosing Party (at
the Disclosing Party’s expenses) in opposing such process or seeking a
protective order. If the Disclosing Party is unsuccessful, the Receiving Party
may disclose the requested Confidential Information to the minimum extent
required by law.
12.5 Publicity. Neither
party shall use the name or trademarks of the other party in any publicity,
advertising or in any written, verbal or any other form of public disclosure
without the express written consent of the other party. Notwithstanding the
foregoing, Abbott agrees that it will work in good faith with NeoGenomics to
develop a standard set of talking points about the nature of this Agreement that
NeoGenomics can use to answer investor questions related to its relationship
with Abbott and that once such talking points have been approved, NeoGenomics
will not be required to seek the written consent of Abbott to utilize such
talking points with investors. Abbott further agrees that it will work with
NeoGenomics to develop a mutually acceptable written description of this
Agreement and the relationship with Abbott contemplated by this Agreement which
can be utilized in NeoGenomics’ parent company’s periodic filings with the SEC,
and that once such written description has been approved by Abbott, NeoGenomics
will not need to obtain further approvals from Abbott to utilize such written
description in NeoGenomics’ parent company’s filings with the SEC, unless there
are material changes to such description.
12.6 Existence of the
Agreement. The existence of and the relationship created under this
Agreement is confidential and shall be treated as Confidential Information
pursuant to the terms of this Agreement.
12.7 Required Securities
Disclosure. Notwithstanding anything to the contrary in this Agreement,
if NeoGenomics is required to file a copy of this Agreement with the Securities
and Exchange Commission, it shall provide Abbott with as much notice as possible
and allow Abbott a reasonable opportunity to review and comment on any redacted
version of this Agreement before it is filed by NeoGenomics, provided that
NeoGenomics will bear the sole responsibility of ensuring its own compliance
with applicable securities laws.
Article
13
Indemnification
And Liability
13.1 Indemnification by
Abbott. Abbott will indemnify, defend and hold harmless NeoGenomics and
its Affiliates, employees, officers, directors and agents (collectively, the
“NeoGenomics
Indemnitees”) from and against any suit, proceeding, claim, liability,
loss, damage, fines, penalties, costs or expense, including reasonable
attorneys’ fees (collectively, “Losses”) that any of
the NeoGenomics Indemnitees may hereinafter incur, suffer, or be required to pay
arising out of or resulting from: (a) any breach by Abbott of the terms of this
Agreement; or (b) Abbott’s negligence or willful misconduct. The foregoing
indemnity shall not apply to the extent that any Losses arise or result from the
negligence or willful misconduct of the NeoGenomics Indemnitees.
13.2 Indemnification by
NeoGenomics. NeoGenomics will indemnify, defend and hold harmless Abbott
and its Affiliates, employees, officers, directors and agents (collectively, the
“Abbott
Indemnitees”) from and against any Losses that any of the Abbott
Indemnitees may hereinafter incur, suffer, or be required to pay arising out of
or resulting from: (a) the design, development, validation, marketing, sale,
performance or billing of the Melanoma LDT; (b) any breach by NeoGenomics of the
terms of this Agreement; or (c) NeoGenomics’ negligence or willful misconduct.
The foregoing indemnity shall not apply to the extent that any Losses arise or
result from the negligence or willful misconduct of the Abbott
Indemnitees.
13.3 Cooperation and Notice
Requirements. With respect to any claim for which a party seeks
indemnification from the other hereunder, the party seeking indemnification
will: (a) provide prompt notice to the other of the claim for which
indemnification is sought and tender to it the defense of such claim; and (b)
provide reasonable cooperation and assistance to the indemnifying party in
the defense of such claim. Neither party will be bound by any settlement
agreement entered into without such party’s prior written consent, which shall
not be unreasonably withheld.
13.4 Termination of
Indemnification Obligations. All
obligations for indemnification on the part of parties hereto shall expire three
(3) years from the date of termination of this Agreement, except with respect to
claims already notified to the other party prior to the end of such three (3)
year period.
13.5 Insurance.
(a) NeoGenomics
will obtain and maintain during the term of the Agreement and for a period of
two (2) years after expiration or termination of this Agreement product
liability and general comprehensive liability insurance covering bodily injury
and property damage in an amount of not less than $1.0 million per occurrence
and $5.0 million in the aggregate.
(b) Abbott
represents that it is self-insured for product liability and general liability,
and that it has and will maintain such coverage for the term of this Agreement
and for a period of two (2) years after the expiration or termination of this
Agreement. Such self-insurance is in an amount which is reasonable and customary
in the global pharmaceutical and medical products industry for companies of
comparable size and activities.
13.6 Limitation
of
Liability.
In no event shall either party be liable to the other party for any indirect,
incidental, punitive, special, exemplary or consequential damages, whether based
upon a claim or action of contract, warranty, negligence, strict liability or
other tort, a product claim, or otherwise that arises out of or is related to
this Agreement. In addition, except for liability arising from any intentional
breach of this Agreement, fraud, gross negligence or willful misconduct on the
part of Abbott, Abbott’s maximum liability to NeoGenomics under this Agreement
will not exceed FifteenMillion Dollars ($15,000,000). The forgoing
limitations will not apply: (a) to breaches of the parties’ confidentiality
obligations under Article 12; or (b) where such indirect, incidental, punitive,
special, exemplary or consequential damages are payable to a Third Party and
subject to indemnification pursuant to this Article 13. The allocations of
liability in this paragraph represent the agreed and bargained-for understanding
of the parties and the Purchase Price for the Products reflects such
allocations.
Article
14
Term
And Termination
14.1 Term. This Agreement
shall become effective on the Effective Date, and unless sooner terminated in
accordance with the terms herein, this Agreement shall remain in effect until
December 31, 2019 (the “Initial Term”).
Thereafter this Agreement shall automatically renew and continue in effect for
successive renewal terms of two (2) years each (each a
“Renewal Term”)
unless twelve (12) months prior to the termination of the Initial Term of the
Agreement or any Renewal Term thereof, either party provides written notice to
the other party that it will not renew the Agreement at the end of said Initial
Term or Renewal Term. Notwithstanding the foregoing, Abbott agrees that if
NeoGenomics has continued to meet the threshold for exclusivity defined in
Section 3.4(b) for the Calendar Year immediately preceding the year in which the
Initial Term or any Renewal Term comes due, Abbott will renew this Agreement at
the end of the Initial Term or such Renewal Term, as the case may be, pursuant
to this Section 14.1; provided, however, nothing in
the section shall obligate Abbott beyond two (2) renewal terms of two (2) years
each.
14.2 Breach. In the event
that either party commits a material breach or default of any of its obligations
hereunder (excluding NeoGenomics’ failure to meet
the Annual Forecast), the other party may give the breaching party
written notice of such material breach or default, and shall request that such
material breach or default be cured as soon as reasonably practicable. In the
event that the breach or default is not cured within ninety (90) days
after the date of the non-breaching party’s notice thereof, the
non-breaching party may terminate this Agreement immediately upon written notice
to the breaching party.
14.3 Insolvency. Either
party may terminate this Agreement on the liquidation, bankruptcy or insolvency
of the other party or the appointment of a receiver or trustee for the property
of the other party, or if the other party makes an assignment for the benefit of
creditors, whether any of the aforesaid events are the outcome of a voluntary
act or otherwise. In the event that a party files for bankruptcy and such
party’s trustee rejects this Agreement, the other party may elect to retain its
rights under this Agreement upon appropriate written notification to said
trustee.
14.4 Change of Control.
(a) Abbott
may terminate this Agreement upon ninety (90) days written notice to NeoGenomics
following a Change of Control involving NeoGenomics (or its permitted successors
or assigns) and any of the companies set forth in Exhibit I, or their
successors or assigns. Abbott’s right to terminate this Agreement pursuant to
this Section 14.4 will continue until the earlier of (i) five (5) years
following a Change of Control involving NeoGenomics (or its permitted successors
or assigns) and any of the companies set forth in Exhibit I, or their
successors or assigns and (ii) the date that is ninety (90) days after the
Abbott IVD is first available for commercial sale in the United
States.
(b) If
Abbott terminates this Agreement pursuant to this Section 14.4, as NeoGenomics’
sole and exclusive remedy for such termination, Abbott will pay to NeoGenomics
(or its successor) a termination payment equal to the greater of: (i) all of the
reasonable direct costs actually incurred by NeoGenomics (and subject to
verification and audit by Abbott or its independent accounting firm) in
designing, developing, validating, marketing, and performing the Melanoma LDT
through the date of termination, not to exceed Seven Million Five Hundred
Thousand Dollars ($7,500,000); or (ii) the sum of:
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(A)
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two
and three tenths (2.3) multiplied by the Unaudited Revenue realized by
NeoGenomics for the twelve (12) month period immediately preceding the
effective date of the Change of Control (the “Change of Control Base
Revenue
Amount”); plus
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(B)
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one
and five tenths (1.5) multiplied by an amount equal to: (1) the Unaudited
Revenue realized by NeoGenomics and/or NeoGenomics’ successor or acquirer,
as the case may be, for the twelve (12) month period immediately preceding
the date on which Abbott elects to terminate this Agreement pursuant to
this Section 14.4 (the “Termination Date
Revenue Amount”), less (2) the Change of Control Base Revenue
Amount.
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(c) Notwithstanding
the foregoing, if the Termination Date Revenue Amount is less than the Change of
Control Base Revenue Amount, then the termination payment payable by Abbott
pursuant to this Section 14.4 shall be an amount equal to two and three tenths
(2.3) multiplied by the Termination Date Revenue Amount.
(d) If
Abbott terminates this Agreement and pays the foregoing termination payment,
within thirty (30) days thereafter, NeoGenomics will transfer to Abbott all of
the dedicated equipment (i.e., greater than fifty
percent (50%) usage), supplies, customer lists, sales aids, marketing materials
and other relevant sales, marketing and promotional materials related to the
Melanoma LDT, and Abbott will have the right (but not the obligation) to hire
any of NeoGenomics’ salespeople who are dedicated (on a full time equivalent
basis) to promoting and selling the Melanoma LDT. If a Change of Control does
not involve any of the companies set forth in Exhibit I, then this
Agreement will continue in full force and effect and be binding upon Abbott and
NeoGenomics (or its successor in interest following the Change of Control) in
accordance with its terms. If a Change of Control involves any of the companies
set forth in Exhibit
I, but Abbott elects not to terminate this Agreement pursuant to this
Section 14.4, then this Agreement will continue in full force and effect and be
binding upon Abbott and NeoGenomics (or its successor in interest following the
Change of Control) in accordance with its terms; provided, however, that in
such event, NeoGenomics (or its successor) will no longer have the rights, and
Abbott will no longer have the obligations, set forth in Section 9.5, except to
the extent that NeoGenomics exercised such rights and Abbott’s obligations
accrued under such sections prior to termination pursuant to this Section
14.4.
14.5 Change in Law. If, in the reasonable opinion of Abbott’s legal
counsel (taking into account all of Abbott’s and its Affiliates’ various
businesses and the legal and regulatory risks facing such businesses), there is
a change in applicable law (whether by statute, regulation, judicial or
administrative decision, informal policy guidance, warning letters or otherwise)
that prohibits the manufacture, marketing, promotion or sale of the Products or
the design, development, validation, marketing, performance or sale of the
Melanoma LDT or LDTs in general and NeoGenomics has received an opinion of
Abbott’s counsel that the manufacture, marketing, promotion or sale of the
Products or the design, development, validation, marketing, performance or sale
of the Melanoma LDT or LDTs are prohibited, then
Abbott and NeoGenomics will negotiate in good faith to amend this Agreement to
reflect the anticipated impact of such events; provided, however, that if
the parties are unable to reach agreement regarding such an amendment within
ninety (90) days of good faith negotiations, Abbott will have the right to
terminate this Agreement upon written notice to NeoGenomics.
14.6 Force Majeure. Either
party may terminate this Agreement upon written notice to the other party if the
other party’s performance of its obligations hereunder is prevented for more
than one hundred eighty (180) days due to a force majeure condition, as further
described in Section 15.1.
14.7 IVD Agreement. This
Agreement will terminate automatically on the date that the IVD Agreement is
executed between the parties.
14.8 Other Provisions. In
addition to the termination provisions set forth in this Article 14, this
Agreement may be terminated in accordance with any other provision hereof that
expressly gives either party a right to terminate.
14.9 Post Termination.
Following the expiration or termination of this Agreement according to its terms
(unless terminated automatically pursuant to Section 14.7 or by Abbott pursuant
to Section 14.2, 14.3 or 14.4), Abbott and NeoGenomics agree to use commercially
reasonable efforts to ensure that NeoGenomics can continue to meet its
customers’ requirements for the Melanoma LDT.
14.10 Survival. Termination
of this Agreement shall not relieve either party of any obligations accrued
prior to termination. Articles 1, 10, 11, 12, 13, 14 and 15, and Sections 3.5,
7.6 (subject to the time periods contained therein), 7.7, 8.1, 8.3 and 9.3 shall
survive termination or expiration of this Agreement for any reason.
Article
15
Miscellaneous
15.1 Force Majeure.
Neither party shall be liable to the other party for damages or losses on
account of failure of performance (other than a failure to make payments when
due) if such failure is occasioned by government action, war, terrorism, fire,
explosion, flood, epidemic, strike, lockout, embargo, shortage of materials or
utilities, vendor failure to supply, act of God or any other cause beyond the
affected party’s reasonable control, provided that the affected party uses
commercially reasonable efforts to avoid the force majeure condition and to
remedy the condition as quickly as possible. The affected party will give the
other party prompt written notice of the occurrence of any force majeure
condition, the nature thereof, and the extent to which the affected party
will be unable to perform its obligations under this Agreement. Such excuse will
continue as long as the force majeure condition continues. Upon cessation of
such condition, the affected party will promptly resume performance under this
Agreement.
15.2 Assignment. This
Agreement shall inure to the benefit of and be binding upon and enforceable by
the parties and their successors and permitted assigns. However, neither party
may assign or delegate any of its rights or obligations under this Agreement
without the prior written consent of the other party, which will not be
unreasonably withheld. Notwithstanding the foregoing, without the other party’s
consent: (a) either party may assign or delegate its rights or obligations, in
whole or in part, to one or more Affiliates of such party, provided that such
assignment will not relieve the assigning party of any obligations under this
Agreement; and (b) either party may assign or delegate its rights or
obligations, in whole but not in part, under this Agreement to a Third Party in
connection with a Change of Control, subject to Section 14.4.
15.3 Waiver. Any waiver by
either party of a breach or a default of any provision of this Agreement by the
other party must be in writing and will not be construed as a waiver of any
succeeding breach of the same or any other provision, nor shall any delay or
omission on the part of either party to exercise or avail itself of any right,
power or privilege that it has or may have hereunder operate as a waiver of
any right, power or privilege by such party.
15.4 Severability. If any
part of this Agreement is declared invalid or unenforceable by any court of
competent jurisdiction, such declaration shall not affect the remainder of the
Agreement and the invalidated provision shall be revised in a manner that will
render such provision valid while preserving the parties’ original intent to the
maximum extent possible.
15.5 Independent
Contractors. The parties are independent contractors and nothing in this
Agreement is intended to, or shall be construed to, constitute a partnership,
joint venture or agency relationship between the parties. Neither party shall
have the authority to make any statements, representations or commitments of any
kind, or to take any action, which shall be binding on the other, without the
prior written consent of the other party. All persons employed by a party shall
be employees of such party and not of the other party and all costs and
obligations incurred by reason of any such employment shall be for the account
and expense of such party.
15.6 Entire Agreement.
This Agreement, together with any exhibits hereto, constitutes the entire
agreement between the parties relating to the subject matter hereof and all
previous agreements or arrangements between the parties, written or oral,
relating to the subject matter hereof are superseded.
15.7 Amendment. No
amendment, alteration or modification of any of the provisions of this Agreement
will be binding unless made in writing and signed by the parties.
15.8 Compliance with Law.
In performing this Agreement, each party shall comply with all applicable laws,
rules and regulations and shall not be required to perform or omit to perform
any act required or permitted under this Agreement if such performance or
omission would violate the provisions of any such law, rule or
regulation.
15.9 Counterparts. This
Agreement may be executed in two counterparts, each of which shall be deemed an
original but both of which together shall constitute one and the same
instrument.
15.10 Governing Law. This
Agreement shall be governed by and construed in accordance with the laws of
the State of
Illinois, without regard to its conflicts of laws principles.
15.11 Alternative Dispute
Resolution. The parties agree
that any dispute that arises in connection with this Agreement shall be settled
by binding Alternative Dispute Resolution in the manner described in Exhibit
J.
15.12 Notices. All notices
required or permitted under this Agreement must be in writing and sent to the
address or facsimile number identified below. Notices must be given: (a) by
personal delivery, with receipt acknowledged; (b) by facsimile followed by hard
copy delivered by the methods under (c) or (d); (c) by prepaid certified or
registered mail, return receipt requested; or (d) by prepaid reputable overnight
delivery service. Notices will be effective upon receipt. Either party may
change its notice address by providing the other party written notice of such
change. Notices shall be delivered as follows:
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If
to Abbott:
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Abbott
Molecular Inc.
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Attention:
Senior Director, Business Development & Licensing
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1300
East Touhy Avenue
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Des
Plaines, Illinois 60018-3315
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Fax:
(224) 361-7054
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with
a copy to:
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Abbott
Laboratories
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Attention:
DVP, Commercial Legal Operations
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100
Abbott Park Road
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Dept.
32MP, Bldg. AP6A-2
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Abbott
Park, Illinois 60064-6049
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Fax:
(847) 938-1206
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If
to NeoGenomics:
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NeoGenomics
Laboratories, Inc.
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Attention:
Robert Gasparini, President
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12707
Commonwealth Drive, Suite 9
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Fort
Myers, Florida 33913
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Fax:
(239)
768-0711
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copy
to:
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K&L
Gates LLP
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Attention:
Clayton E. Parker, Esq.
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200
South Biscayne Boulevard, Suite 3900
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Miami,
Florida 33131-2399
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Fax:
(305) 358-7095
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15.13 Expenses. All costs
and expenses incurred with connection with this Agreement and the transactions
contemplated hereby shall be paid by the party which shall have incurred the
same, and the other party shall no liability thereto.
15.14 Headings. The titles
of the Articles and Sections contained in this Agreement are for convenience
only and shall not be considered in construing this Agreement.
* * *
Signature
page follows.
In Witness
Whereof,
the parties have caused this Agreement to be executed as of the Effective
Date.
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Abbott
Molecular Inc.
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NeoGenomics
Laboratories, Inc.
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By:
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/s/ Stafford
O’Kelly
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By:
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/s/Douglas M.
VanOort
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Stafford
O’Kelly
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Douglas
VanOort
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President
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Chairman
and Chief Executive
Officer
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