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Exh. 10.7
Amendment No. 1 to Distribution and Supply Agreement
This Amendment No. 1, dated as of July 15, 2004, by and between
Omrix
Biopharmaceuticals, Inc., a corporation organized under the laws of
Delaware
("Omrix"), and Ethicon, Inc., a corporation organized under the
laws of New
Jersey, acting by and through its Johnson & Johnson Wound
Management division
("Ethicon," and together with Omrix, the "Parties" and each
individually a
"Party"), amends that certain Distribution and Supply Agreement,
dated as of
September 22, 2003 (as amended, the "Agreement"), by and between
the Parties.
Capitalized terms which are used herein but not defined herein,
shall have the
meaning assigned to such in the Agreement.
WHEREAS, pursuant to the Agreement Ethicon was appointed Omrix's
exclusive
distributor of, among other Products, Quixil (i.e., a biologic
surgical adhesive
in the form of a frozen liquid fibrin sealant) and FS2 (i.e., a
second
generation fibrin sealant) in, respectively, the Quixil Territory
and the FS2
Territory for use in the Field.
WHEREAS, the Parties desire, among other things, to expand (I) the
Quixil
Territory and (II) the FS2 Territory as contemplated by Section
2.8(b) of the
Agreement to include, in each case, the United States and Canada
(and their
respective territories and possessions).
WHEREAS, pursuant to terms of a Series B Convertible Preferred
Stock Purchase
Agreement, dated as of the date hereof, between Omix
Biopharmaceuticals, Inc.,
as issuer, and Johnson & Johnson Development Corporation, as
investor, Johnson &
Johnson Development Corporation is acquiring on the date hereof
for
consideration consisting of $5,000,000 in cash certain capital
stock and
warrants of the issuer.
WHEREAS, The American National Red Cross ("ARC"), which served as
Omrix's
exclusive distributor in the US, Canada (and their respective
territories and
possessions) of Quixil under the name CROSSEAL(TM), recently
terminated its
distribution arrangement with Omrix and (i) executed a termination
agreement, a
redacted copy of which is attached hereto as Exhibit A-1 (the
"Termination
Agreement") and (ii) agreed to execute trademark assignment
agreements, in the
forms attached hereto as Exhibits B-1 and B-2, within thirty (30)
days of
Omrix's request, and Omrix agrees to make such request no later
than August 1,
2004.
NOW THEREFORE, in consideration of the mutual covenants and
consideration set
forth herein, the Parties hereto agree as follows:
1. Expansion of the FS2 Territory; Up-Front Consideration.
(a)
"FS2 Territory", as defined in Section 2.3(a)(ii) of the Agreement,
is
hereby amended to include after "Switzerland" the following "and
the United
States of America and Canada and all their territories and
possessions
(including Puerto Rico)." Furthermore, references to "FS2" shall be
deleted from
the first and fourth lines of Section 1.43 "Restricted Countries"
of the
Agreement.
(b)
In connection with the FS2 Territory expansion and as expressly
contemplated in Section 2.8(b) of the Agreement as in existence
prior to the
date of this Amendment No. 1: (i) Ethicon shall pay Omrix, within
three business
days after the date of this amendment, a fee equal to the Up Front
Difference
(i.e., US$***); and (ii) the parties will execute an amendment to
the
Development Agreement in the form attached hereto as Exhibit
C-1.
PORTIONS
OF THIS EXHIBIT MARKED BY AN *** HAVE BEEN OMITTED PURSUANT
TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
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2. Expansion of the Quixil Territory; Up-Front Consideration.
(a)
"Quixil Territory", as defined in Section 2.3(a)(i) of the
Agreement,
is hereby amended to include after "Switzerland" the following "and
the United
States of America and Canada and all their territories and
possessions
(including Puerto Rico)." Furthermore, references to "the United
States" and
"Canada" are hereby deleted from clause (i) of Section 1.43
"Restricted
Countries" of the Agreement.
(b)
In connection with the Quixil Territory expansion, Ethicon shall
pay
Omrix, within three business days after the date of this amendment,
a fee equal
to *** U.S. DOLLARS (US$***).
3. Amendments to Carve Out Provisions.
(a)
Section 2.8(a) of the Agreement is deleted in full and replaced
with
the following:
"(a) Carve Out. For the avoidance of any doubt, and
notwithstanding
anything to the contrary herein or the Development Agreement,
Ethicon
shall have rights in the Field in the United States, Canada and
all
their territories and possessions (including Puerto Rico) to (i)
FS2,
(ii) Improved Products arising from Covered Improvements to FS2,
and
(iii) Improvements to Quixil, on the terms and conditions set
forth
herein and in the Development Agreement."
(b)
Section 2.8(b) of the Agreement is deleted in full and replaced
with
the following:
"Reserved".
(c)
Section 2.8(c) of the Agreement is deleted in full and replaced
with
the following:
"(c) Improvements to Quixil and Commercialization Thereof. For
the
avoidance of doubt, notwithstanding anything to the contrary herein
or
in the Development Agreement, Omrix shall be free to develop
Improvements (as defined in the Development Agreement) to Quixil,
but
may not commercialize such Improvements in the Field in the
Quixil
Territory (including, the United States, Canada and their
territories
and possessions) without including Ethicon as its exclusive
distributor in the Field for all products resulting from such
Improvements on the terms and conditions substantially identical
to
those in the Agreement applicable to Quixil. For the avoidance of
any
doubt, Improvements to Quixil shall include, without
limitation,
improvements to Quixil which are (A) modifications to the
delivery
device accompanying Quixil and/or (B) variations to Quixil required
by
a Regulatory Agency."
4. Improvements to Quixil. Given the above mentioned changes to
Section 2.8 of
the Agreement, Section 2.1 of the Agreement is hereby amended by
adding after
the phrase "Quixil in the Quixil Territory," the following phrase:
"Improvements
to Quixil in the Quixil Territory,". Further, Section 1.33
"Products" of the
Agreement is hereby amended by adding after the phrase "Quixil,"
the following
phrase: "Improvements to Quixil,".
5. Section 3.2 of the Agreement is hereby amended by adding to the
end thereof
the following as clause (f):
"(f)
Ethicon shall use reasonable commercial efforts (i) to conduct
the
peripheral vascular surgery study for Quixil to be initiated in the
United
Kingdom, subject to the requirements of the relevant Regulatory
Agency and
subject to reasonable prudent medical and commercial practices,
(ii) to expand
the study (if required by FDA in order to permit the commercial
distribution of
Quixil in the United States
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for an indication (e.g., peripheral vascular surgery,
cardiovascular surgery or
other) in addition to the current liver indication) to include up
to three
additional sites in the United States and (iii) to deliver to Omrix
by December
31, 2005 the results obtained from such clinical study. Ethicon
will also agree
to discuss the study protocol with the FDA and Ethicon shall bear
the costs of
such clinical trial and at its sole discretion in a manner
consistent with
Ethicon's normal standards and practices, may discontinue the study
for safety
and efficacy concerns. Omrix shall be responsible for preparing and
filing by
November 1, 2004 the necessary IND (investigational new drug)
filings related to
such clinical trial with the FDA."
6. Milestone Payments.
(a)
Section 4.l(b) of the Agreement is hereby amended by adding to the
end
thereof the following sentence: "If the requisite marketing
authorization
for
Quixil have been received in France, Germany, Italy and the
United
Kingdom but not in Spain, this milestone shall be deemed
satisfied,
notwithstanding the definition of EU Marketing Clearance."
(b)
Section 4.1 "Fibrin Sealant Milestone Payments" of the Agreement
is
hereby amended to include the following clauses:
"(c) In accordance with the terms and conditions of Section 5(c)
of
the Development Agreement, *** dollars (US$***) upon the
earlier of (i) First Commercial Sale of FS2 in the US or (ii)
forty-five (45) days after US Marketing Clearance of FS2. The
milestone refers to the milestone specified in, and payable
under,
Section 5(c) of the Development Agreement, as amended; it is
not
payable in addition to the $*** milestone payable under Section
5(c) of the Development Agreement, as amended.
(d) *** Dollars (US$***) if on or before the last day of
Fiscal Year 2007 (i) Omrix receives from the FDA a BLA letter or
BLA
supplement letter and conforms with all regulatory terms and
conditions permitting the commercial distribution of Quixil in the
US
to support the use of Quixil in humans for an indication in
addition
to the liver indication and (ii) Ethicon's (and its
Affiliates')
aggregate volume of Quixil sold in Fiscal Year 2006 or Fiscal
Year
2007 to third parties who are not Affiliates of Ethicon equals
or
exceeds (A) *** milliliters in Fiscal Year 2006 or Fiscal Year
2007 and (B) an average of *** milliliters per calendar month in
a
ten consecutive month period of Fiscal Year 2006 or 2007;
provided,
that, if Ethicon does not meet its obligations under Section 3.2(f)
of
the Agreement, then Omrix will not be required to satisfy clause
(i)
and the milestone payment payable under this Section 4.l(d) will
be
payable after satisfaction only of clause (ii). For the avoidance
of
any doubt, (I) in calculating whether or not Ethicon's and its
Affiliates' sales reached or exceeded *** milliliters in a
given
Fiscal Year and an average of *** milliliters per calendar
month
for ten consecutive months of a given Fiscal Year, only the sales
of
Quixil made during such single Fiscal Year will be tallied and (II)
if
the milestone events are satisfied, Ethicon shall not be required
to
pay Omrix more than once under this clause (d). In the event
clauses
(i) and (ii)(B) above are satisfied but Ethicon's and its
Affiliates'
aggregate volume of Quixil sold in Fiscal Year 2006 or 2007 to
third
parties who are not Affiliates of Ethicon is less than *** ml
but
equal to or greater than *** ml, Omrix shall be entitled to
receive a pro rata percentage of the $*** milestone. By way of
example, if all the milestone events were satisfied, sales of
***
ml would result in a milestone payment equal to $***, i.e.,
(*** / ***) X $***.
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(e) *** Dollars (US$***) if Ethicon's (and its Affiliates')
aggregate
volume of Fibrin Sealant Products sold in Fiscal Year 2008 or
Fiscal
Year 2009 or Fiscal Year 2010 to third parties who are not
Affiliates
of Ethicon equals or exceeds (A) *** milliliters in Fiscal Year
2008
or Fiscal Year 2009 or Fiscal Year 2010 and (B) an average of
***
milliliters per calendar month in a ten consecutive month period
of
Fiscal Year 2008, 2009 or 2010. For the avoidance of any doubt, (I)
in
calculating whether or not Ethicon's and its Affiliates'
aggregate
sales reached or exceeded *** units in a given Fiscal Year and
an
average of *** milliliters per calendar month for ten
consecutive
months of a given Fiscal Year, only the sales of Fibrin Sealant
Products made during s
