OEM SUPPLY AGREEMENT

 

                                                                    Exhibit 10.1

 

                              OEM SUPPLY AGREEMENT

 

     This OEM SUPPLY   AGREEMENT   ("Agreement")   is made and   entered   into as of

September 1, 2005 (the "Effective Date"), by and between Medtronic Inc. ("MDT"),

a   Minnesota   corporation   with a place of   business   at 7611   Northland   Drive,

Brooklyn Park, MN 55428, and ThermoGenesis Corp. ("TGC"), a Delaware corporation

with its principal   place of business at 2711 Citrus Road,   Rancho   Cordova,   CA

95742.

 

                                    RECITALS

 

         A. WHEREAS, TGC sells thrombin processing disposables and reagent and

is in the process of obtaining United States Food and Drug Administration (FDA)

approval for a thrombin product as a component of its CryoSeal(R) FS product;

 

         B. WHEREAS, MDT distributes and sells medical device products around

the world and desires to distribute an OEM Product (as defined below) that is

manufactured by TGC, and

 

         C. WHEREAS, TGC desires to allow MDT to distribute an OEM version of a

product that it manufactures solely for use and sale in conjunction with MDT

Magellan Product (as defined herein).

 

         NOW, THEREFORE, in consideration of the above recitals and in

consideration of the mutual agreements and undertakings set forth below, and

other good and valuable consideration, the receipt and sufficiency of which are

hereby acknowledged, the parties agree as follows:

 

                         Section 1. Certain Definitions

 

     1.1   Affiliate.   For   purpose   of this   Agreement,   "Affiliate"   means   any

company,   corporation,   or business in which MDT owns or controls at least fifty

percent (50%) of the voting stock.

 

     1.2 Confidential Information. For purposes of this Agreement, "Confidential

Information" means all non-public   information,   whether in written, oral or any

other form, including, without limitation, data, documentation,   specifications,

know-how, technical information,   designs, drawings, plans, blueprints, business

plans, customer lists, pricing information,   forecasts,   projections,   analyses,

and manufacturing   processes that the disclosing party (the "Disclosing   Party")

disclosed to the other party (the   "Receiving   Party") or allowed the   Receiving

Party to   observe,   in the   course of the   activity   under this   Agreement.   All

Confidential Information must be marked at the time of disclosure or observation

as being   "Confidential",   "Proprietary" or in some other manner to indicate its

confidential   nature;   provided,   however,   that if such   information   is not or

cannot be so marked at the time of disclosure or   observation,   the   information

shall   still   qualify   as   Confidential   Information   if   the   Disclosing   Party

designates   such   information as   confidential to the Receiving Party in writing

within   thirty   (30) days of   disclosure   or   observation.   Notwithstanding   the

foregoing,   Confidential   Information   shall not   include   information   that the

Receiving   Party   can   demonstrate   (a) was   known to the   Receiving   Party on a

non-confidential   basis prior to the disclosure by the Disclosing Party, (b) has

become   publicly   available   without   fault of the Receiving   Party;   or (c) was

independently   developed   without   the use of   Confidential   Information   by the

Receiving Party.

 

     In addition to the other   requirements   contained   in this Section 1.2, all

disclosures   of   Confidential   Information   by TGC to MDT made after the date of

this Agreement   shall be made only upon the specific   request of MDT made to TGC

and only to the person   identified   by MDT in   writing to TGC as the   designated

 

 

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recipient   of   Confidential   Information   from TGC.   Following   the date of this

Agreement, any information provided to MDT by TGC other than as required by this

Section 1.2 shall not be deemed Confidential Information.

 

     1.3 First Article.   For purposes of this   Agreement,   "First Article" means

that   TGC (i) has   prepared   and   delivered   to its   notified   body a   completed

technical file for Thrombin Processing Device (TPD) Device (as defined below) to

meet CE Mark certification requirements, and (ii) manufactured and delivered the

first production article of the OEM Product.

 

     1.4 Improvement.   "Improvement"   means (a) for copyrightable or copyrighted

material relating to the OEM Product, any translation,   abridgment,   revision or

other form in which an existing work may be recast,   transformed or adapted, (b)

for patentable or patented material,   claims and any technology   relating to the

OEM Product,   any   improvement,   addition or continuation   thereon,   and (c) for

material   which is protected by trade secret or   technology   relating to the OEM

Product,   any new material or other technology   derived from such existing trade

secret material,   including new material which may be protected under copyright,

patent and/or trade secret laws;   provided   however,   that for purposes   hereof,

"Improvement"   shall not   include a means of   producing   thrombin   from a source

material that is different from plasma.

 

     1.5   Intellectual   Property Rights.   "Intellectual   Property Rights" means,

collectively,   Patents,   Trade   Secrets,   Copyrights,   Trademarks,   trade names,

rights in trade dress and all other intellectual property rights and proprietary

rights,   whether arising under the laws of the United States or any other state,

country or jurisdiction   in the world,   including all rights or causes of action

for infringement or   misappropriation   of any of the foregoing.   For purposes of

this Agreement:   (a) "Patents" shall mean all patent rights and all right, title

and   interest   in all   letters   patent or   equivalent   rights and   applications,

including provisional applications, for letters patent or rights, industrial and

utility   models,   industrial   designs,   petty patents,   patents of   importation,

patents of addition,   certificates of invention and other   government   issued or

granted   indicia of   invention   ownership,   including   any   reissue,   extension,

division,   continuation   or   continuation-in-part   applications   throughout   the

world; (b) "Trade Secrets" shall mean all right, title and interest in all trade

secrets and trade secret rights arising under common law, state law, federal law

or laws of foreign countries;   (c) "Copyrights"   shall mean all copyrights,   and

all other literary   property and authorship   rights,   and all right,   title, and

interest in all copyrights,   copyright registrations,   certificates of copyright

and copyrighted   interests throughout the world; and (d) "Trademarks" shall mean

all right,   title and interest in all   trademark,   service mark,   trade name and

trade dress rights   arising   under the common law,   state law,   federal laws and

laws of foreign countries,   and all right, title, and interest in all trademark,

service   mark,   trade   name   and   trade   dress   applications   and   registrations

interests throughout the world.

 

     1.6 OEM Product. "OEM Product" means the version of the Thrombin Processing

Device (TPD)   manufactured   and sold to MDT by TGC under this Agreement and that

meets the performance specification according to section 3.1, which incorporates

the modifications   more fully described in Section 3.1. The OEM Product shall be

manufactured and sterilized for MDT by TGC under this Agreement.

 

     1.7   Person.    "Person"   means   any   natural   person   or   any   corporation,

partnership,   limited liability company, business association,   joint venture or

other entity.

 

     1.8 MDT Magellan   Product.   "MDT   Magellan   Product"   means MDT's   Magellan

Product as more fully described and set forth in Exhibit A.

 

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     1.9 Thrombin   Technologies.   "Thrombin   Technologies"   means TGC's thrombin

disposables and reagent and related processes, know-how, documentation, patents,

patents pending , and Confidential Information.

 

     1.10 Territory. "Territory" means Worldwide.

 

     1.11 TGC Point of   Shipment.   "TGC   Point of   Shipment"   as   defined in the

Uniform Commercial Code refers to TGC's manufacturing facilities.

 

     1.12 Thrombin   Processing Device.   Thrombin   Processing Device "TPD Device"

means the Thrombin   Processing Device designed,   manufactured,   sterilized,   and

sold by TGC,   including   both   the   syringes   and the   reagent,   for   which   TGC

currently holds a CE Mark.

 

                           Section 2. Grant of Rights

 

     2.1 Terms and Conditions of Sale.

 

During the term of this Agreement and subject to all of the terms and conditions

hereof, TGC shall supply OEM Product and MDT shall purchase OEM Product at the

transfer price according to the terms and conditions of sale set forth below for

use and sale in conjunction with the MDT Magellan Product. Nothing contained in

this Agreement shall prevent MDT from distributing any other products rightfully

manufactured or obtained by MDT on its own or from third parties. Nothing herein

shall constitute a grant of any license or rights of any kind to either party

for the use, manufacture, or sale of any of the other party's Intellectual

Property Rights except as specifically set forth herein.

 

     2.2 Right to   Improvements.   As part of this agreement,   and subject to the

provisions   of Section   6.2,   TGC will   provide to MDT any   Improvements   to the

current Thrombin Processing Device, if and when they occur;   provided,   however,

in the event such Improvements   materially alter the performance   and/or cost of

the OEM Product TGC and MDT shall mutually agree upon the purchase price of such

Improvements to MDT.

 

     2.3 Rights Upon a Change of Control.   During the term of this Agreement, if

there is a Change of Control (as defined below), TGC hereby covenants and agrees

that it shall   ensure that the rights of MDT shall   continue   unaffected   on the

terms and   conditions   contained   herein,   and TGC shall   issue to MDT a written

statement confirming such continuing rights within ten (10) business days of the

effective   date of the   Change of   Control.   For   purposes   hereof,   a Change in

Control shall mean (i) the direct or indirect sale or other   disposition (in one

or more related transactions to one or more parties) of all or substantially all

of the assets of TGC, or (ii) the direct or   indirect   transfer of more than 50%

of the outstanding   voting interests of TGC, whether in a single   transaction or

series of related transactions.

 

                         Section 3. OEM Product Design

 

     3.1 MDT Responsibilities.

 

          (a) MDT shall   create or specify   the product   information   data sheet

     (PIDS for the OEM Product.

 

          (b) MDT shall be   responsible   for   preparing   and approving the final

     instructions for use of the OEM Product with the MDT Magellan Product.

 

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          (c) MDT shall not use the name   THERMOGENESIS   CORP.,   or its   product

     names,    including   "Thrombin    Processing    Device",    "CryoSeal"   in   any

     advertising,   promotional,   or sales   literature   without the prior written

     consent obtained from TGC, in each case, except that MDT shall mark the OEM

     product as "Manufactured by Thermogenesis for Medtronic".

 

     3.2 TGC Responsibilities.

 

          (a) At the request of MDT, TGC shall   review and make   recommendations

     on any of MDT's PIDS,   labels,   and   packaging for MDT products as prepared

     pursuant to Section 3.1(a) and (b).

 

          (b)   Subject   to   MDT's   prior   approval   and   agreement   to   pay   for

     non-recurring engineering charges, material testing, and lab costs, TGC may

     purchase,   implement,   and validate as needed, all new components necessary

     or desirable   for the   manufacture   of the OEM Product   under TGC's quality

     control system and policies.

 

          (c) TGC shall assist MDT, as reasonably   requested by MDT and at MDT's

     cost,   with MDT's efforts to   incorporate   the OEM Product and MDT Magellan

     Product delivery systems, as referenced in Section 3.1(b) above.

 

          (d) Upon   request   of   Medtronic,   TGC shall use its best   efforts   to

     prepare and deliver to appropriate   regulatory authorities all parts of the

     technical file   necessary for the approval or clearance by such   regulatory

     authorities   for   marketing   and   sale   of the   OEM   Product   when   sold in

     connection   with   the   MDT   Magellan   Product   in any   country   within   the

     Territory.   MDT will compensate TGC its reasonable costs for any regulatory

     information that is above and beyond what would be required for approval or

     clearance   for   countries   outside   of those   compliant   under   the CE Mark

     certification.   TGC is currently   conducting   a clinical   study in the U.S.

     that   incorporates   the use of the   Thrombin   Processing   Device   in   Liver

     Resection and a clinical   study in Japan that   incorporates   the use of the

     Thrombin   Processing   Device in the Surgical   Application of CryoSeal.   TGC

     will make the clinical data from those two studies   available to Medtronic,

     at no cost to MDT, for use by MDT in its regulatory   activities   related to

     the   OEM   Product.]   Any   Confidential   Information   provided   directly   to

     regulatory   authorities   by TGC   under   this   Section   3.2(d)   will   not be

     disclosed to MDT unless   otherwise   agreed to and   documented in writing by

     the parties.

 

          (e) TGC shall   deliver   to MDT the First   Article   on or before a date

     that is thirty (30) days from the Effective Date.

 

          (f) TGC shall be   responsible   for   manufacturing   the OEM   Product in

     accordance   with   Quality   System   Regulation,   21 CFR   Part   820   (Medical

     Devices),   any   applicable   pharmaceutical/biologics   regulations,   and all

     other applicable regulatory requirements.

 

          (g) TGC shall not use the name   Medtronic,   or any   Medtronic   product

     names or   trademarks,   or any   adaptation   thereof   in any   press   release,

     advertising,   promotional,   or sales   literature   without the prior written

     consent obtained from MDT in each case.

 

                 Section 4. Certain Obligations of the Parties

 

     4.1   Promotional   Materials.    MDT   shall   be   responsible   for   any   sales

literature and promotional materials associated with the OEM Product,   including

the   translation   thereof as needed.   MDT's use of any TGC   trademarks   or trade

names shall be in compliance with the   requirements   of Section   3.1(c),   above.

Notwithstanding the foregoing,   TGC consents to, and licenses MDT for the use of

TGC's "Thrombin Processing Device (TPD)" trademark for use solely in conjunction

with the OEM Product during the term of this Agreement.

 

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     4.2 Standard of Operations. MDT agrees that it shall be solely responsible,

at its expense, for the validation, and qualification of the OEM Product as part

of MDT's technical file and regulatory approvals connected with the MDT Magellan

Product.   Upon   MDT's   request   TGC   will   provide   to MDT or   MDT's   designated

representative,   all documents,   protocols, and testing fixture designs which it

has   in its   possession   to   assist   MDT in   its   qualification   efforts   on the

manufactured products.

 

     4.3   Cooperation   of Parties.   Promptly   following the Effective   Date, the

parties shall   cooperate in good faith with each other in order to enable TGC to

deliver the First Article pursuant to Section 3.2(e).

 

               Section 5. Supply and Purchase of the OEM Product

 

     5.1 Supply and Pricing.

 

          (a) All prices for the OEM Product purchased by MDT hereunder shall be

     F.O.B., TGC Point of Shipment.   The fixed,   volume based pricing to MDT for

     the OEM   Product is set forth in   Exhibit   B.   There are no minimum   annual

     volume requirements.

 

          (b) Notwithstanding   anything to the contrary contained herein, in the

     event   TGC   sells   or   distributes,    directly   or   indirectly,   a   product

     substantially   equivalent   in cost,   operation and   performance   to the OEM

     Product   during the term of this   Agreement   to any third   party at a price

     which is then less than what MDT is paying to TGC (based on like   volumes),

     then TGC shall adjust MDT's   purchase   price for the OEM Product to a level

     equal to the   third   party's   pricing   level   based on like   volumes,   such

     adjustment   to be   retroactive   to the first   day TGC   offered   such   lower

     pricing (based on like volumes) to the third party.

 

          (c) Within thirty (30) days of the Effective   Date,   MDT shall provide

     TGC with a   non-binding,   rolling   twelve   (12) month   forecast   and,   on a

     quarterly basis thereafter, an estimated three month delivery schedule.

 

     5.2 Certain Taxes.   The parties   acknowledge   that the purchase   prices set

forth in Exhibit B do not include any sales,   excise,   use, value added or other

government   taxes or duties   that may be   applicable   to the   export,   import or

purchase of the OEM Product, which taxes shall be the sole responsibility of MDT

and MDT   agrees   that it will bear all such taxes and   duties.   When TGC has the

legal   obligation to collect   and/or pay such taxes or duties,   the   appropriate

amount   shall   be   added to MDT's   invoice   and paid by MDT to TGC,   unless   MDT

provides   TGC   with   a   valid   tax   exemption   certificate    authorized   by   the

appropriate governmental taxing authority, or provides proof of payment.

 

     5.3   Order.   All orders for OEM   Product   and parts   shall be by means of a

signed written purchase order,   which shall be submitted to TGC at TGC's address

for notice   purposes   set forth in Section   13.1,   and shall   request a delivery

date.   Orders may be placed by telephone,   facsimile   transmission   or, upon the

parties' agreement,   on TGC's Web-Site or by e-mail;   provided,   however, that a

signed confirming purchase order is received by TGC ten (10) business days after

such order.   It is understood   that MDT and TGC may use their standard   purchase

order and sales agreement   forms during the   performance of this Agreement.   Any

purchase   order,   sales   agreement or other form used by MDT or TGC shall be for

convenience   only and any terms or   provisions   contained   therein   which are in

addition to or inconsistent   with those contained herein shall have and be of no

force and effect;   provided,   however, that the terms on such documents shall be

effective to the extent they set forth quantities, scheduled delivery dates and,

as applicable, mode of shipment.

 

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     5.4 Acceptance   and   Fulfillment   of Purchase   Order.   TGC shall timely and

accurately fill and deliver all MDT orders for OEM Products;   provided that such

order quantities are reasonably within the latest forecasts supplied by MDT.

 

     5.5   Invoicing;   Payment.   TGC   shall   submit an   invoice   to MDT upon each

shipment of the OEM Product ordered by MDT.   Except as otherwise   specified in a

purchase order, payment terms will be net thirty (30) after the date of invoice.

All invoices shall be sent to MDT's accounting department, without regard to the

actual shipping address for the OEM Product. Each such invoice shall state MDT's

aggregate and unit purchase price for OEM Product in the relevant shipment, plus

any freight, taxes or other costs incident to the purchase or shipment initially

paid by TGC and to be borne by MDT hereunder. MDT shall make all payments to TGC

under this Agreement in United States   dollars by check.   MDT shall not take any

credits or offsets   against   amounts   billed to MDT by TGC   without   TGC's prior

written   consent.   Any disputes shall be resolved in good faith.   To that end, a

senior   representative   appointed   by each   party   shall meet and confer in good

faith to amicably   resolve the alleged   dispute   over the   invoice.   If they are

unable to agree to a resolution after thirty (30) business days, the parties may

elect to proceed   with   arbitration   as provided for in Section   13.4(b).   In no

event shall MDT withhold payments for undisputed invoices.

 

     5.6 Shipping; Risk of Loss.

 

          (a) All OEM Product   delivered by TGC pursuant to this Agreement shall

     be suitably packed for surface or air shipment,   in MDT's sole   discretion,

     in TGC's standard shipping cartons, marked for shipment to such location or

     locations   as MDT   may   designate,   and   delivered   to MDT or its   carrier,

     F.O.B., TGC Point of Shipment.   Title and risk of loss of OEM Product shall

     pass to MDT upon   delivery   to the   carrier   at the   F.O.B.,   TGC   Point of

     Shipment.

 

          (b) TGC shall ship all OEM Product in accordance   with MDT's   delivery

     instructions specified in MDT's purchase orders; provided, however, that if

     MDT does not provide delivery   instructions   with respect to the carrier to

     be used,   TGC may use its   customary   carrier.   All freight,   insurance and

     other shipping expenses, as well as any special packing expenses,   shall be

     paid by MDT. MDT shall also bear all   applicable   taxes and duties that may

     be assessed against the OEM Product and parts after delivery to the carrier

     F.O.B., TGC Point of Shipment.

 

           (c) TGC   shall   use its best   efforts   to ship the OEM   Product   on or

     before the date   reasonably   specified in MDT's   purchase order for the OEM

     Product and consistent with TGC's shipping procedures. TGC will provide MDT

     at least 30 days   advance   notice of any   material   changes to it   shipping

     procedures.   All shipments of OEM Product shall be deemed to conform to the

     relevant   purchase   order   with   respect   to   quantity   ordered   unless TGC

     receives from MDT, no later than thirty (30) days after the receiving   date

     of a given shipment,   written notice specifying the shipment,   the purchase

     order number and exact nature of the   discrepancy   between the shipment and

     the order.

 

          (d) TGC shall include in each shipment to MDT a certification that the

     lot has been inspected and tested pursuant to the agreed upon criteria, and

     that such lot meets the manufacturing specifications.

 

     5.7 Cancellation.   MDT may cancel delivery of OEM Product only upon written

notice to TGC at least   sixty   (60) days prior to   delivery   and   reschedule   or

redirect OEM Product at least thirty (30) days prior to delivery.

 

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        Section 6. Additional Regulatory and Other Duties of the Parties

 

     6.1 Regulatory Responsibilities and Approvals.

 

          (a) MDT   shall be   responsible,   at its   expense,   for   obtaining   and

     maintaining all regulatory   approvals and clearances required for marketing

     and selling the MDT Magellan   Product   together with the OEM Product in any

     countries within the Territory in which it wishes to market, distribute, or

     sell the MDT Magellan   Product   together   with the OEM   Product.   TGC shall

     provide MDT at no charge a maximum of sixty (60) hours of technical support

     per calendar   year   reasonably   necessary   to assist MDT in   obtaining   and

     maintaining   its   regulatory   approvals   and clearance for the MDT Magellan

     Product together with the OEM Product. Thereafter, all technical support to

     be provided   pursuant to this   Section   shall be at MDT's   expense at TGC's

     then standard rates and charges,   including reasonable travel expenses,   as

     necessary.   Medtronic may elect, at its discretion,   to have an independent

     party   file and   obtain   any or all   regulatory   approvals   and   clearances

     permitted   under   this   Section   6.1 (the "MDT   Representative"),   in which

     event, all information   required to file and obtain the required regulatory

     approvals    and    clearances    shall   be   provided    directly   to   the   MDT

     Representative and not disclosed to MDT.

 

          (b) Any   information   provided to MDT by TGC under Section 6.1(a) that

     TGC regards as confidential shall be identified as confidential as required

     by Section 1.2,   above,   and shall be treated as   Confidential   Information

     under the terms of this Agreement. Any Confidential Information provided to

     a MDT   Representative   under   Section   6.1(a) will not be   disclosed to MDT

     unless otherwise agreed to and documented in writing by the parties.

 

          (c) Each party will   notify the other as soon as   possible,   but in no

     event in more than three (3)   business   days,   of any   complaint or adverse

     event report that they become aware of relating to the Thrombin   Processing

     Device   as   incorporated   into   the   OEM   Product.    TGC   shall   be   solely

     responsible for establishment   and maintenance of all required   monitoring,

     vigilance,   complaint   handling,   and reporting systems for the OEM Product

     marketed or sold by MDT with its MDT Magellan   Product,   including   medical

     device reporting,   vigilance reports, field recalls, and corrective actions

     ("OEM Reports").   TGC shall take all necessary actions required for any OEM

     Report   and   shall   provide   to MDT   information   on the   status of any OEM

     Reports   (i) upon   MDT's   request   and (ii) in a   quarterly   summary of all

     complaint   and   corrective   actions   relevant to the use of the OEM Product

     with the Magellan Device.

 

          (d) The   parties   each   agree   that they   shall   keep the other   party

     informed of all efforts and issues   relating to   regulatory   approvals   and

     clearances and all product   complaints and device reporting activity as set

     forth in this Section 6.1, and shall share with the other such   information

     relating thereto as is reasonably requested.

 

     6.2 Subsequent Design