<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>dex101.txt
<DESCRIPTION>DISTRIBUTION AGREEMENT DATED 08/21/2002
<TEXT>
<PAGE>
Distribution Agreement
This Distribution Agreement is made as of the 21st day of August, 2002
by and between Photoelectron Corporation, a Massachusetts corporation
("Photoelectron"), and Carl-Zeiss-Stiftung, dba Carl Zeiss, a body corporate, a
trust foundation organized and existing under the laws of Germany ("Zeiss").
BACKGROUND
A. Photoelectron is a medical device company that has developed and
commercialized the Photon Radiosurgery System (as defined below), a
proprietary x-ray delivery system for the treatment of tumors and other
clinical conditions, the INTRABEAM(TM) system (as defined below) for
the delivery of intra-operative radiation therapy, and all related
Photoelectron Products (as defined below).
B. Zeiss is a medical device company which (i) using its proprietary
technology and know-how, has developed and will continue to develop, on
its own or in collaboration with third party vendors, medical devices,
and (ii) has developed and maintains a world-wide marketing and sales
force for the promotion, marketing, sales, distribution, installation
and support of medical devices.
C. Photoelectron desires to engage Zeiss to promote, market, sell,
distribute, install, service and support the Photoelectron Products (as
defined below) in the Territory (as defined below) in the Field (as
defined below), all in accordance with the terms and provisions of this
Agreement, and Zeiss desires to be so engaged.
In consideration of the mutual covenants, agreements and
representations set forth in this Agreement, the parties hereto agree as
follows:
ARTICLE I. DEFINITIONS
Capitalized terms not otherwise defined herein shall have the following
meanings in this Agreement:
"Affiliate" with respect to any Person shall mean any entity (including without
limitation any other Person) controlled by, controlling or under common
control with such Person, and any director, officer, agent or employee
of such person or such entity. For the purposes hereof, "control" shall
mean direct or indirect ownership of 20% or more of the voting stock or
other class of equity interest in any entity, or the power to elect or
appoint a majority of the board of directors or other governing body of
such entity, or the power to otherwise manage or direct the business
affairs of such entity.
"Effective Date" means the date first set forth above.
"Field" means radiosurgery and radiotherapy.
"Intellectual Property" means all patents, copyrights, designs and drawings,
engineering and manufacturing documents, technical manuals, patterns,
processes, formulae, know-how, trade secrets, trademarks, service
marks, trade names, inventions and discoveries (whether patentable or
not), computer software, and other similar rights, and all applications
therefor and registrations thereof and all rights to sue for past,
present and future infringement or other violations of any of the
foregoing.
"INTRABEAM(TM) System" means the Photoelectron intra-operative radiosurgery
system that combines the Photon Radiosurgery System with a
counterbalanced surgical support stand and a set of applicators.
"Marks" means any and all trademarks, service marks, names, and designs used by
Photoelectron in connection with the Photoelectron Products.
<PAGE>
"PeC System" shall mean either a Photon Radiosurgery System or an INTRABEAM(TM)
System.
"Person" shall mean a natural person, corporation, association, trust,
(including a business trust), partnership, limited liability company,
joint stock company, organization, entity, company, foundation or
proprietorship or any similar entity.
"Photoelectron Intellectual Property" has the meaning set forth in Section 3.2.
"Photoelectron Products" means the Photon Radiosurgery System, the INTRABEAM(TM)
system, any improvements, redesigns, successor models and other
developments thereto, and any device, component, part, accessory or
consumable in or intended for use with any such product.
"Photoelectron Limited Warranty" has the meaning set forth in Section 2.10(a).
"Price List" has the meaning set forth in Section 2.4.
"Photon Radiosurgery System" means Photoelectron Products applied for use in
radiosurgery, including without limitation the PRS 400 device, and any
improvements, redesigns, successor models and other developments
thereto.
"PRS Unit" means any medical device that contains as components parts the
control unit and x-ray source manufactured by Photoelectron as
component parts of the Photon Radiosurgery System.
"Reference Site" has the meaning set forth in Section 2.3(b).
"Service Contract" has the meaning set forth in Section 2.11.
"Sublicensee" means a party other than Photoelectron, Zeiss or their respective
Affiliates that is licensed or subcontracted by Zeiss to sell one or
more of the Photoelectron Products in a certain country or countries in
the Territory during the Term.
"Term" shall have the meaning set forth in Section 7.1.
"Territory" means the world, excluding Japan, except as may otherwise be
specifically agreed upon in writing by the parties subsequent to the
date of this Agreement.
ARTICLE II. DISTRIBUTION
2.1 Appointment of Distributor.
(a) Photoelectron hereby appoints Zeiss as the exclusive
distributor of the Photoelectron Products in the Territory for use in the Field.
The list of Photoelectron Products is attached as Schedule 2.1 to this
Agreement. Zeiss shall have the right to appoint third-party distributors or
sales representatives in addition to its existing distributors and sales
representatives for any Photoelectron Product with the prior approval of
Photoelectron, which approval shall not be unreasonably withheld. The
Development and Distribution Agreement dated as of August 21, 1999 is hereby
terminated.
(b) If and to the extent Photoelectron's obligations under
exclusive distributorship arrangements now in effect with a Japanese distributor
are terminated, Photoelectron shall so notify Zeiss, and Zeiss shall have the
right, exercisable within thirty (30) days after receipt of such notice from
Photoelectron, to expand the Territory to include Japan.
-2-
<PAGE>
(c) No rights or licenses with respect to the Photoelectron
Products are granted or deemed granted under this Agreement or in connection
herewith, other than those rights expressly granted in this Agreement.
2.2 Sales Forecasts and Minimum Sales Objectives.
(a) Rolling Sales Forecasts. Zeiss agrees to provide
Photoelectron, commencing thirty (30) days following the Effective Date, a
rolling six-month forecast of Zeiss's purchase of the Photoelectron Products,
specifying quantities and shipping dates. Such forecast shall be updated by
Zeiss on a bi-annual basis and delivered to Photoelectron no later than sixty
(60) days prior to the first day of each succeeding six-month period. Such
rolling forecasts by Zeiss shall be used Photoelectron for planning purposes and
meeting the lead times required by certain of Photoelectron's suppliers, but
they are not legally binding on Zeiss or Photoelectron in any manner.
(b) Minimum Purchase Requirements.
(i) During the 2002 calendar year, Zeiss will purchase
from Photoelectron a minimum of * PeC Systems, which may include a maximum of
three (3) Reference Site customers (as defined in Section 2.3(b)). The failure
of Zeiss to satisfy this minimum purchase requirement will constitute a breach
of a material term or condition within the meaning of Section 8.2 of this
Agreement. If, during the month of December, 2002, Zeiss elects to satisfy its
obligation under this Section 2.2(b)(i) by purchasing a PeC System from
Photoelectron without a binding backup order from an end user customer, PeC
agrees that Zeiss will not be required to pay for such PeC System until (A)
ninety (90) days from the date of shipment, or (B) thirty (30) days from the
date such PeC System is sold to an end user customer, whichever first occurs.
(ii) During the twelve (12) month period commencing
with the Effective Date, Zeiss will purchase from PeC a minimum of * PeC
Systems, which will include the * PeC Systems referenced in Section 2.2 (b)(i)
above. Thereafter, no later than thirty (30) days prior to the second and each
subsequent anniversary of the Effective Date, Photoelectron and Zeiss will
establish a new annual sales objective for the following twelve (12) month
period, which shall meet the following criteria: Each annual sales objective (A)
shall not be less than * PeC Systems, and (B) shall establish separate annual
sales objectives for each of the following geographical regions: North America
(including the United States, Canada and Mexico), Asia (including Korea, China,
Australia and New Zealand), and Europe. If, during the twelve (12) month period
commencing with the Effective Date, Zeiss fails to satisfy the annual sales
objective, Photoelectron will have the right, exercisable by written notice to
Zeiss no later than sixty (60) days following the end of the initial twelve (12)
month period, to remove Zeiss's exclusive right to distribute the Photoelectron
Products on a worldwide basis. If, during any subsequent twelve (12) month
period commencing with first anniversary of the Effective Date, Zeiss fails to
satisfy the annual sales objective in any of the three (3) geographical regions
designated above, Photoelectron will have the right, exercisable by written
notice to Zeiss no later than sixty (60) days following the end of such twelve
(12) month period, to remove Zeiss's exclusive right to distribute the
Photoelectron Products in that geographical region.
2.3 Sales to Zeiss.
(a) Processing of Zeiss' Orders. Each order for any
Photoelectron Product (whether purchased by Zeiss as the Photon Radiosurgery
System, an INTRABEAM(TM) System or as a component of any other Photoelectron
Product) will be submitted by Zeiss to Photoelectron in writing and will be
processed by Photoelectron in a timely fashion. In the event of any conflict,
the express terms of this Agreement shall supersede any contrary provisions in
any purchase order, invoice, agreement or other document used by either party.
Photoelectron is the sole authorized source for new, used or remanufactured
Photoelectron Products.
-3-
<PAGE>
(b) Reference Sites. Photoelectron and Zeiss agree that it is
in their mutual interest to sell up to six (6) PeC Systems on favorable terms to
customers who will agree to serve as reference sites for the PeC System
installed at their site (the "Reference Sites"). Photoelectron and Zeiss will
negotiate in good faith with respect to the purchase and financing terms for
each Reference Site, but the parties agree to share equally the costs of
financing each Reference Site sale.
(c) Shipment and Delivery.
(i) Title to and risk of loss of any Photoelectron
Product shipped to Zeiss shall pass from Photoelectron to Zeiss when Zeiss'
shipper picks up such Photoelectron Product from Photoelectron's loading
platform in Massachusetts. Zeiss shall use all reasonable efforts to accept
shipment on the fulfillment date of each order.
(ii) Photoelectron shall use all reasonable efforts to
fulfill each order for any Photoelectron Product submitted by Zeiss within
forty-five (45) days of Photoelectron's acceptance of the order from Zeiss.
(iii) Photoelectron shall, at Photoelectron's expense,
pack each ordered Photoelectron Product in accordance with Photoelectron's then
current standard packing procedure, which shall be suitable to permit shipment
of the Photoelectron Product to the location of the customer or Zeiss (as may be
indicated by Zeiss); provided, however, that if Zeiss requests a modification of
those procedures, Photoelectron shall make the requested modification and Zeiss
shall bear all reasonable expenses incurred by Photoelectron in complying with
such modified procedures which are in excess of the expenses which Photoelectron
would have incurred in following its standard packing procedures (except where
the requested modification arises from the inadequacy of Photoelectron's packing
procedures).
(iv) Upon installation of any Photoelectron Product by
Zeiss, Zeiss shall examine the Photoelectron Product to determine whether any
item or items included in the Photoelectron Product are in short supply,
defective or damaged. Within ten (10) business days of such installation, Zeiss
shall notify Photoelectron in writing of any shortages, defects or damage which
Zeiss claims existed at the time of such installation. Within ten (10) business
days of receipt of such notice, Photoelectron will investigate the claim of
shortage, defects or damage, and inform Zeiss of its findings. If Photoelectron
determines that a shortage, defect or damages exists in such shipment,
Photoelectron will promptly, in Photoelectron's reasonable discretion, either
(A) deliver to Zeiss a replacement for the Photoelectron Product or (B) repair
the Photoelectron Product. Unless notice is given as provided in this Section
2.2(c)(iv), Zeiss shall be deemed to have accepted any delivered Photoelectron
Products and to have waived all claims for shortages, defects or damage other
than latent defects or damages.
(d) Labeling. Zeiss shall not, without the prior written
consent of Photoelectron, remove, deface, alter, cover, mask, shield or
otherwise modify any label or other information affixed, painted, inscribed or
otherwise appearing on any Photoelectron Product purchased from Photoelectron
(including as incorporated in any Photoelectron Product), nor shall Zeiss,
without the prior written consent of Photoelectron, affix, paint, inscribe or
otherwise place any markings upon any Photoelectron Product (including as
incorporated in any Photoelectron Product). Photoelectron shall not unreasonably
withhold consent to any modifications to information placed by Photoelectron on
any Photoelectron Product, to the extent such modification is required by
applicable law regarding disclosure of the identity of the distributor of such
Photoelectron Product.
(e) Updates. Photoelectron further agrees to provide Zeiss
with all current information of the kind which is generally made available by
manufacturers of medical devices to their sales and service personnel concerning
hardware and software modifications or upgrades to any Photoelectron Product.
(f) Discontinuance of and Changes in the Photon Radiosurgery
System, the INTRABEAM(TM)System and Other Photoelectron Products. If
Photoelectron elects to discontinue any
-4-
<PAGE>
model or version of the Photon Radiosurgery System, the INTRABEAM(TM) System or
any other Photoelectron Product, Photoelectron shall notify Zeiss in writing one
hundred eighty (180) days in advance of such discontinuation. Photoelectron
shall endeavor to continue to supply service parts for the discontinued model or
version for a reasonable period of time (but not less than three years) from the
date of discontinuation, unless such service parts become unavailable from
Photoelectron's suppliers.
2.4 Prices, Terms and Fees. The prices and other terms applicable
to sales of the Photoelectron Products, and any training, support, maintenance
and repair services applicable thereto, during the Term are set forth in the
Price List attached as Schedule 2.4 to this Agreement ( the "Price List"). The
Price List will remain unchanged during the initial twelve (12) month period
commencing with the Effective Date. The Price List will be reviewed thereafter
on an annual basis by the parties in light of then current market conditions. If
the parties are unable to agree on modifications to the Price List for any
subsequent twelve (12) month period, the dispute resolution process set forth in
Article IX of this Agreement will be followed. Any change in the Price List will
not apply to any order from Zeiss accepted in writing by Photoelectron prior to
the effective date of such change. All amounts under this Agreement shall be
calculated and paid in U.S. Dollars.
2.5 Sales and Sales Support Activities
(a) By Zeiss. Throughout the Term Zeiss agrees to:
(i) no later than three (3) months following the
Effective Date, to hire and/or retain an experienced
medical device sales and marketing professional to
provide marketing, sales and support of the Photoelectron
Products in each of the United States and Europe;
(ii) as soon as reasonably practical, to hire and
retain additional sales and marketing professionals to
provide marketing, sales and support of the Photoelectron
Products throughout the Territory;
(iii) use commercially reasonable efforts to sell the
Products to customers in the Territory;
(iv) promote, through Zeiss' own advertising and sales
promotion activities, the purchase and use of the
Photoelectron Products by customers located in the
Territory; and
(v) ensure representation of and sales support for the
Products at major neurosurgical and radiosurgical
meetings and conferences throughout the Territory,
including without limitation the CNS and AANS
conferences. Zeiss will also provide sales personnel to
provide sales support to Photoelectron with respect to
the Photoelectron Products at other conferences from time
to time that address clinical activities other than
neurosurgery and radiosurgery. Each party shall bear its
own expenses at such conferences and meetings.
(b) By Photoelectron. Throughout the Term, Photoelectron
agrees to:
(i) for a period of three (3) months following the
Effective Date, to provide sales and marketing support to
Zeiss;
(ii) provide training at Photoelectron's headquarters
in Massachusetts, U.S.A. or at Zeiss locations worldwide
for such representatives of Zeiss as Photoelectron and
Zeiss shall agree, in order for them to become proficient
in the use, maintenance and repair of the Photoelectron
Products sold pursuant to this Agreement (Zeiss shall be
responsible for all out of pocket travel expenses
-5-
<PAGE>
(meals, airfare, hotel, local transportation, etc.) incurred by
the representatives of Zeiss in connection with any training
provided by Photoelectron in accordance with this Section
2.5(b)(ii));
(iii) provide technical back-up for the Zeiss sales process by
making available senior Photoelectron staff with at reasonable
times at Photoelectron's headquarters in Massachusetts, U.S.A. or
at Zeiss locations worldwide (Zeiss shall be responsible for all
out of pocket travel expenses (meals, airfare, hotel, local
transportation, etc.) incurred by the representatives of Zeiss in
connection with any technical backup provided by Photoelectron in
accordance with this Section 2.5(b)(iii)); and
(iv) if available, provide sales personnel for sales support to
Zeiss with respect to the Photoelectron Products.
2.6 Marketing Literature/Customer Training Material/Promotional Material.
Zeiss shall prepare promotional material and training material for use in sales,
marketing and promotion of the Photoelectron Products, and Photoelectron shall
provide reasonable assistance to Zeiss in the preparation of such materials. A
copy of all marketing and promotional material and customer training material
prepared by Zeiss in connection with the marketing of any Photoelectron Product
shall be furnished to Photoelectron for approval, which shall not be
unreasonably withheld, prior to its first commercial use. Any translation of
marketing materials or customer training materials into any language other than
English shall be the responsibility of Zeiss. It is agreed that Zeiss may affix
its own name, logos and trademarks on sales materials and customer training
materials, identifying Zeiss as an authorized distributor, and, where
applicable, the exclusive distributor of the Products in the Territory.
2.7 Customer Training. Zeiss shall offer and actively market customer
training services as part of its sales and marketing for the Photoelectron
Products. Photoelectron shall be responsible for providing customer training
with respect to any Photoelectron Product sold pursuant to this Agreement at a
location or locations to be determined by Photoelectron at the fee set forth on
the Price List.
2.8 Installation. Zeiss shall be responsible for and shall conduct all
necessary on-site installation services in connection with the Photoelectron
Products. Upon Zeiss's reasonable request, Photoelectron shall provide on-site
installation services (and supervision and training in installation procedures
for Zeiss representatives both on-site and at Photoelectron's headquarters) for
the first six (6) Photon Radiosurgery Systems and/or INTRABEAM(TM) Systems sold
during the Term and as requested from time to time by Zeiss, in exchange for a
fee per installation (or per hour of training) payable to Photoelectron as set
forth in the Price List.
2.9 Maintenance and Support.
(a) Service Organization. Zeiss shall, at Zeiss' expense, engage and
maintain a service and parts handling organization in the Territory, staffed
with such experienced personnel as are necessary to enable Zeiss to perform its
obligations under this Agreement. Zeiss shall, at its expense, maintain
facilities and personnel in the Territory that will enable it promptly and
satisfactorily to perform, at a reasonable fee, all inspection, maintenance and
other necessary servicing of the Photoelectron Products sold by Zeiss.
Photoelectron shall maintain an adequate supply of consumables and spare parts
of critical components for Photoelectron Products sold to Zeiss pursuant to this
Agreement at a location suitable to deliver consumables and replacement parts on
loan to Zeiss customers within two (2) business days following notice by Zeiss.
Zeiss agrees to store at no charge to Photoelectron any Photoelectron Product to
be provided to a Zeiss customer as a loan pending service or repair of any other
Photoelectron Product.
(b) Repairs and Service. Repair and service to any Photoelectron
Product (including as any such Photoelectron Product incorporated in any other
Product) shall be conducted as follows:
-6-
<PAGE>
(i) Zeiss agrees to provide prompt, efficient, courteous,
workmanlike and quality service to all customers who purchase
Photoelectron Products from Zeiss. To the extent any
Photoelectron Product is then subject to the Photoelectron
Limited Warranty, the costs of any service provided by Zeiss to
such Photoelectron Product shall be reimbursed by Photoelectron
to Zeiss at the rate of eighty percent (80%) of the applicable
rate that would otherwise be charged to the customer therefor by
Zeiss.
(ii) If Zeiss is required to replace any defective
Photoelectron Product, Photoelectron will provide such
Photoelectron Product, to be sent via U.S. airmail or UPS
Expedited or equivalent reputable service, to Zeiss at no expense
to Zeiss if the Photoelectron Product is subject to either the
Photoelectron Limited Warranty or a Service Contract and
otherwise at the rates set forth therefor on the Price List plus
actual shipping costs incurred.
(iii) Any factory repair by Photoelectron shall be conducted at
no expense to Zeiss if the Photoelectron Product is subject to
either the Photoelectron Limited Warranty or a Service Contract
and otherwise at the rates set forth therefor on the Price List.
(iv) Zeiss shall provide each customer for whom repairs or
adjustments are performed a copy of the repair order reflecting
all services performed. A copy of all such repair orders shall be
sent to Photoelectron on a monthly basis.
(v) If, after reasonable effort and consultation with
Photoelectron, Zeiss is unable to repair any Photoelectron
Product, Photoelectron will send a technical representative to
the customer site to effect the repairs. If the Photoelectron
Product is under either the Photoelectron Limited Warranty or a
Service Contract, Photoelectron shall be responsible for the
expenses related to the service call by the Photoelectron
technical representative. If the Photoelectron Product is not
under either the Photoelectron Limited Warranty or a Service
Contract, Zeiss shall bear the full expense of the service call,
including payment to Photoelectron for the technician's time in
accordance with the Price List and for any replacement parts in
accordance with the prices set forth on the Price List.
(c) Operator and Service Manuals. Photoelectron shall provide two
sets of operator and service manuals with each PeC System sold to Zeiss and will
make additional sets of manuals available at a reasonable price.
(d) Field Service Problem Reports. Zeiss shall provide field service
problem reports to Photoelectron and Photoelectron shall respond to these
reports in writing and in a timely manner.
(e) Mandatory Upgrades. Photoelectron shall provide to Zeiss all
required parts for mandatory upgrades at no charge to Zeiss. Zeiss shall provide
labor for installation, and Photoelectron shall reimburse Zeiss therefor at a
rate equal to eighty percent (80%) of the standard Zeiss customer service rate
applicable to the location of service delivery, unless such service may be
provided in connection with a regularly scheduled service call in which case
such rate shall be equal sixty percent (60%) of such standard customer service
rate.
(f) Sales and Service Records and Estimates. It is the responsibility
of Zeiss to maintain complete and up-to-date records covering sales and service
of any Photoelectron Product. Such records will be retained for at least five
(5) years.
-7-
<PAGE>
2.10 Warranty.
(a) Limited Warranty. Photoelectron warrants each Photoelectron
Product (excluding consumables such as sheaths and other limited use components)
sold to Zeiss and sold by Zeiss to any customer of Zeiss (whether as a
stand-alone Photoelectron Product or as incorporated in any other Photoelectron
Product) as set forth on Schedule 2.10(a) to this Agreement (such warranty is
hereinafter referred to as the "Photoelectron Limited Warranty").
(b) Warranty Limitation. THE WARRANTY OBLIGATIONS SET FORTH IN THIS
SECTION 2.10 ARE EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES WITH RESPECT TO
THE PHOTOELECTRON PRODUCTS, EXPRESSED OR IMPLIED, INCLUDING BUT NOT LIMITED TO
THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR
ANY IMPLIED WARRANTY ARISING OUT OF A COURSE OF DEALING OR OF PERFORMANCE,
CUSTOM OR USAGE IN THE TRADE. ZEISS' EXCLUSIVE REMEDY FOR A DEFECT IN ANY
PHOTOELECTRON PRODUCT SHALL BE THAT AS STATED IN SECTION 2.10(a).
2.11 Limitation of Liability. Any provision herein to the contrary
notwithstanding, in no event shall either party be liable to the other party,
the other party's employees or agents or to any other third party for any
indirect, special, exemplary, incidental or consequential damages (whether such
liability arises from a claim based on contract, warranty, tort or otherwise),
including but not limited to damages resulting from loss of use, loss of profits
or any harm or damage to persons or property arising out of or in connection
with any Photoelectron Products or services.
2.12 Post-Warranty Period Service Contract. At any time, Zeiss may
purchase from Photoelectron a service contract covering a specific Photoelectron
Product (a "Service Contract") at the price set forth on the Price List, which
service contract shall (i) become effective one (1) year after installation of
the applicable Photoelectron Product, and (ii) will include the services set
forth on Schedule 2.12.
2.13 Legal Compliance. Photoelectron shall be responsible for obtaining
and maintaining, at its own expense, any regulatory authorization necessary for
importation to and sale in the Territory of any Photoelectron Product to be sold
by Zeiss, and Photoelectron agrees to use reasonable efforts to obtain any such
regulatory or other governmental approvals and clearances in a timely manner.
Except as expressly provided in the foregoing sentence, Zeiss shall be
responsible for obtaining, at its own expense, any other authorization necessary
for importation to and sale in the Territory of the Photoelectron Products and
Zeiss agrees to use Zeiss' reasonable efforts to obtain any such governmental
approvals and clearances in a timely manner. Without limitation of the
foregoing, Photoelectron and Zeiss shall mutually cooperate in a manner
consistent with their respective resources to ensure that the Photoelectron
Products comply with all local laws, standards and regulations applicable to
sale or use of the Photoelectron Products in the Territory. Photoelectron shall
provide to Zeiss all documentation and assistance which is reasonably necessary
for Zeiss in connection with the foregoing. Zeiss shall use commercially
reasonable efforts to ensure that all permits, approvals, licenses and other
rights necessary to permit the importation, sale, use and reimbursement of the
Photoelectron Products in the Territory shall be in the name of and shall be
owned by (or assigned by Zeiss to) Photoelectron or Photoelectron's designee.
ARTICLE III. DEVELOPMENT EFFORTS
3.1 Photoelectron Development Efforts. During the Term, Photoelectron
will make reasonable efforts to continue development of the Photoelectron
Products in accordance with market assessments and product reviews conducted by
Zeiss. Any such development efforts will be consistent with business and
development plans agreed to from time to time by Photoelectron and Zeiss.
3.2 Photoelectron Intellectual Property. Except to the extent
specifically provided in this Agreement, Photoelectron shall at all times own
and retain any and all rights in, to and under Intellectual
-8-
<PAGE>
Property associated with the Photoelectron Products, whether created, developed
or enhanced by Photoelectron, or by Zeiss ("Photoelectron Intellectual
Property"). To the extent that Zeiss develops or enhances any Photoelectron
Intellectual Property, Zeiss hereby irrevocably and exclusively assigns, and
hereby agrees to execute and deliver any other documents Photoelectron may
require in order to vest in Photoelectron, all right, title and interest therein
to Photoelectron, so that all such Photoelectron Intellectual Property shall
belong exclusively to Photoelectron with Photoelectron having the right to
obtain and hold in Photoelectron's own name, all copyrights, registrations,
patents, patent rights, trademarks, service marks or such other protections as
may be appropriate to the subject matter, and any extensions or renewals
thereof.
3.3 Licenses to Zeiss. Photoelectron hereby grants to Zeiss for the Term
an exclusive, fully-paid, world-wide, royalty-free license to the Photoelectron
Intellectual Property solely for the purpose of marketing and distributing the
Photoelectron Products in accordance with this Agreement.
3.4 Trademarks and Service Marks. Without limitation of the foregoing
Section 3.2, Photoelectron hereby grants to Zeiss a non-exclusive right to
display the Marks in the Territory in connection with performing Zeiss'
obligations under this Agreement. The Marks may be used as part of the name
under which Zeiss' business is conducted only with the prior written approval of
Photoelectron. Zeiss will change or discontinue the use of any Mark upon the
written request of Photoelectron. Upon termination or expiration of the Term of
this Agreement, Zeiss will immediately discontinue or cause to be discontinued
at its expense, all use of Marks. Thereafter, Zeiss will not use, either
directly or indirectly, any Marks or any other confusingly similar marks in a
manner likely to cause confusion or mistake or to deceive the public.
3.5 Intellectual Property Covenant. Zeiss hereby covenants that Zeiss and
its Affiliates and its Sublicensees will not at any time utilize, practice,
publish or otherwise use any of the Photoelectron Intellectual Property except
as expressly permitted under this Agreement.
ARTICLE IV. ADDITIONAL TERMS AND CONDITIONS
4.1 Sales Incentives. Upon the completion of each sale by Zeiss of a PeC
System (not including discounted sales to Reference Site customers) and
transmittal by Zeiss to Photoelectron of full payment for such PeC System,
Photoelectron shall issue to Zeiss a nontransferable stock purchase warrant for
the acquisition of * shares of Common Stock of Photoelectron at a price per
share equal to the closing market price per share on the day full payment for
the PeC System is received by Photoelectron, but in no event shall the
conversion price of the warrant be less than $3.25 per share unless it is
adjusted after the date the warrant is issued in accordance with the provisions
of the warrant. The form of warrant is attached hereto as Schedule 4.1.
4.2 Nonsolicitation. During the Term and for two (2) years after the
termination or expiration of this Agreement, neither party nor any of their
Affiliates will offer employment to or hire any employee of the other party or
its Affiliates without the prior written consent of the employing party. For
purposes of the preceding sentence, the terms, "employment" and "employee" shall
include any form of employment, consulting, contract relationship, or other
arrangement pursuant to which such individual will, directly or indirectly,
perform services for the other party.
4.3 Confidentiality and Non-Disclosure.
(a) Except as expressly provided in this Agreement, neither party,
without the prior written consent of the other, shall disclose to any third
party (i) any information regarding the terms of this Agreement or exchanged in
connection with the negotiation of this Agreement or regarding the transactions
contemplated hereby (such information the "Agreement-Specific Information"), or
(ii) any information regarding the actual or anticipated business or technology
of the other party, in either case to the extent disclosed by the other party in
connection with the transactions contemplated hereby or the performance by the
other party of such party' obligations hereunder, including, without limitation,
information regarding or which includes customers, business practices, business
prospects, financial condition, pricing policies,
-9-
<PAGE>
processes, technical data or specifications, source code or any other
proprietary information (such information is, the "Proprietary Information").
(b) Notwithstanding the foregoing, each party may (i) disclose the
Proprietary Information of the other party to such party's employees, directors,
advisers, consultants, and representatives with a "need to know" and who agree
to be subject to the confidentiality restrictions set forth in this Section 4.3
disclose all or such portion of the Agreement-Specific Information or the
Proprietary Information of the other party as such party shall be ordered to
disclose to a judicial or administrative agency of competent jurisdiction,
provided that such party shall give the disclosing party reasonable notice of
such order and a timely opportunity to attempt to preclude or limit such
production, (iii) disclose the terms hereof to the extent necessary to comply
with any applicable securities laws; and (iv) disclose the existence, general
terms and the length of term of this Agreement with such party's current and
prospective business partners and investors.
(c) The obligations in this Section 4.3 shall not apply to any
information disclosed by either party to the other party hereunder to the extent
that, and after such time as, such information (i) becomes publicly available
other than by a breach of this Agreement, (ii) is rightfully received by the
non-disclosing party from a third party who is not under an obligation of
confidentiality with respect thereto, (iii) can be demonstrated to have been
independently developed by the non-disclosing party without access to or use of
any of the Proprietary Information of the other party, or (iv) is known to the
non-disclosing at the time of disclosure, provided that the non-disclosing party
shall have promptly delivered to the other party written notice of such prior
knowledge.
(d) Each party agrees (except to the extent the such party has rights
to such Proprietary Information in accordance with this Agreement) to (i) cease
using the Proprietary Information of the other party upon the expiration or
termination of this Agreement and (ii) promptly return to the other party all
materials embodying the Proprietary Information of the other party upon the
expiration or termination of this Agreement and, at any time prior thereto,
promptly upon the written request of the other party (except to the extent the
non-disclosing party has rights to such Proprietary Information in accordance
with this Agreement).
4.4 Announcements. Public announcements regarding this Agreement and/or
the transactions contemplated hereby, including any use, reproduction,
distribution or display of the respective trademarks, tradenames, service marks
or logos of the other party, shall not be made by either party to this Agreement
without the prior written approval of the other, unless otherwise required by
applicable law or the rules of the American Stock Exchange. In addition, neither
party shall use the trademarks, tradenames, service marks or logos of the other
party in any public advertising or promotional materials or campaigns without
the prior written approval of the other.
4.5 Cooperation and Reasonableness. The parties hereto acknowledge and
agree that this Agreement is intended to address a complex series of rights and
relationships, and that in the course of activity pursuant to this Agreement
many matters may arise that require further clarification or memorialization and
the parties hereto agree to negotiate in good faith with respect to such matters
and to execute and deliver any and all documents and instruments reasonably
necessary to effectuate such good faith negotiation.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties by Photoelectron.
(a) General. Photoelectron represents and warrants to Zeiss that: (i)
Photoelectron is a corporation duly organized and validly existing under the
laws of the Commonwealth of Massachusetts; (ii) Photoelectron has the requisite
corporate power and authority to execute and deliver, and to perform
Photoelectron's obligations under, this Agreement; (iii) neither the execution
and delivery of this Agreement by Photoelectron nor the performance by
Photoelectron of Photoelectron's obligations
-10-
<PAGE>
hereunder will violate or conflict with (A) the provisions of any agreement to
which Photoelectron is a party, or (B) the provisions of any law, statute, rule,
regulation, judgment, order, or decree of any domestic or foreign governmental,
administrative, or judicial authority which, if violated, would have a material
adverse effect on the ability of Photoelectron to perform Photoelectron's
obligations hereunder, (iv) there are now outstanding no products liability
claims or actions against Photoelectron, and (v) the Photoelectron Products are
in compliance with all applicable regulations and standards in the United States
and the European Community.
(b) Regarding Photoelectron Intellectual Property. Photoelectron
represents and warrants that each element of the Photoelectron Intellectual
Property does not and will not (with Photoelectron's knowledge): (a) violate any
law or regulation, including without limitation, the laws and regulations
governing export control, (b) be defamatory or trade libelous; (c) production,
distribution, modification, exhibition and exploitation of the Photoelectron
Intellectual Property in connection with the sale and distribution of the
Products will not violate any copyright, patents, trade secrets or other
intellectual or proprietary rights of any third party.
5.2 Representations and Warranties by Zeiss. Zeiss represents and warrants
to Photoelectron that: (i) Zeiss is a trust foundation duly organized and
validly existing under the laws of Germany; (ii) Zeiss has the requisite
corporate power and authority to execute and deliver, and to perform Zeiss'
obligations under, this Agreement; and (iii) neither the execution and delivery
of this Agreement by Zeiss nor the performance by Zeiss of Zeiss' obligations
hereunder will violate or conflict with (A) the provisions of any agreement to
which Zeiss is a party, or (B) the provisions of any law, statute, rule,
regulation, judgment, order, or decree of any domestic or foreign governmental,
administrative, or judicial authority which, if violated, would have a material
adverse effect on the ability of Zeiss to perform Zeiss' obligations hereunder.
ARTICLE VI. INDEMNIFICATION
6.1 Indemnification.
(a) Indemnification by Photoelectron.
(i) Photoelectron agrees to indemnify, hold harmless and
defend Zeiss and its Affiliates and Sublicensees, and their respective agents,
representatives, employees and direct customers (the "Zeiss Group") from and
against any and all claims, demands, suits, actions, or proceedings
(hereinafter, collectively "Claims") brought by any third party (i) arising out
of personal injury, death and/or property damage in connection with the use of
any Photoelectron Product (excluding any uses by Zeiss or its customers of the
Photoelectron Product for purposes other than those approved by Photoelectron),
or (ii) which is based on any claim that any part of any Photoelectron Product
or the sale or use thereof by Zeiss under this Agreement infringes any patent,
any copyright, trade secret, any trade name, any trademark or intellectual
property of any third party, or (iii) arising out of a violation by
Photoelectron of any of the provisions of this Agreement (including, without
limitation, breach of any of Photoelectron's representations or warranties in
Article V hereof), and all damages, costs, and expenses (including, without
limitation, reasonable attorneys' fees and settlement costs, as applicable)
sustained or incurred by the Zeiss Group in relation thereto, provided, in each
case, that Photoelectron shall have no liability hereunder unless the applicable
member of the Zeiss Group shall give Photoelectron prompt written notice upon
discovery of each Claim and except to the extent such Claim occurs as a result
of the negligent or willful acts or omissions of any member of the Zeiss Group.
(ii) Notwithstanding the foregoing, Photoelectron shall have no
liability under this Section 6.1(a) for any claim by a third party that the
manufacture, sale or use of any Photoelectron Product (whether or not
incorporated in any other Product) caused personal injury, death or property
damage or infringes any patent, copyright, trade secret or other intellectual
property right in any of the following circumstances: (A) such Photoelectron
Product was altered or modified by any member of the Zeiss Group or any third
party without prior written authorization of Photoelectron and such alteration
-11-
<PAGE>
or modification resulted in or is the basis for the third party claim; (B) any
member of the Zeiss Group failed to use the most current version of such
Photoelectron Product following a mandatory upgrade when and if available and
offered to Zeiss by Photoelectron if the use of such current model, as upgraded,
would have avoided such claim, except in the case in which the Photoelectron
Product at issue had been already installed at the customer's site; (C) any
member of the Zeiss Group or any third party used such Photoelectron Product in
combination with any consumables, component, apparatus or software not
furnished, authorized or whose use should not have been reasonably anticipated
by Photoelectron pursuant to this Agreement and such combination resulted in or
is the basis for the third party claim; (D) such Photoelectron Product was used
in a manner for which it was not designed or specified; or (E) any member of the
Zeiss Group owns an intellectual property right or has a license which precludes
it from being held responsible for the claim of infringement.
(b) Indemnification by Zeiss. Zeiss agrees to indemnify and defend
Photoelectron and its Affiliates, and their respective agents, representatives,
employees and direct customers (the "Photoelectron Group") from and against any
and all claims, demands, suits, actions, or proceedings (hereinafter,
collectively "Claims") brought by any third party arising out of a violation by
Zeiss of any of the provisions of this Agreement (including, without limitation,
breach of any of Zeiss' representations or warranties in Article V hereof), and
all damages, costs, and expenses (including, without limitation, reasonable
attorneys' fees and settlement costs, as applicable) sustained or incurred by
the Photoelectron Group in relation thereto, provided, in each case, that Zeiss
shall have no liability hereunder unless Photoelectron shall have given Zeiss
prompt written notice upon discovery of each Claim and except to the extent such
Claim occurs as a result of the negligent or willful acts or omissions of any
member of Photoelectron Group.
6.2 Claim Procedure. Any party (in any case, an "Indemnitee") entitled or
potentially entitled to indemnification under this Article VI shall give notice
to the indemnitor of a claim or other circumstances likely to give rise to a
request for indemnification, promptly after such Indemnitee becomes aware of the
same. Any applicable indemnitor shall be afforded the opportunity to undertake
the defense of and to settle by compromise or otherwise any claim for which
indemnification is available under this Article VI, with legal counsel approved
by the Indemnitee (which approval shall not unreasonably be withheld). If an
indemnitor so assumes the defense of any claim, the Indemnitee may participate
in such defense with legal counsel of the Indemnitee's selection and at the
expense of the Indemnitee. If the indemnitor, prior to the expiration of fifteen
(15) days after the giving of notice of a claim by the Indemnitee under this
Section 6.2, has not assumed the defense thereof, the Indemnitee may thereupon
undertake the defense thereof on behalf of, and at the risk and expense of, the
indemnitor, with all reasonable costs and expenses of such defense to be paid by
the indemnitor. No compromise or settlement of any such claim shall be made
without the prior consent in writing of the Indemnitee.
6.3 Insurance.
(a) Policies. Each party shall procure and maintain, at its own
expense, in full force and effect at all times during which Products are being
sold pursuant to this Agreement, product liability insurance with respect to the
Products written by a responsible insurance carrier or carriers, Best Rated A,
with a combined single limit of not less than Five Million Dollars ($5,000,000)
with a maximum deductible or self-insurance retention amount of $5,000 per
occurrence and $100,000 in the aggregate. Such insurance policy shall name both
parties hereto as additional insureds and will provide for at least thirty (30)
days prior written notice to the other party of the cancellation or substantial
adverse modification thereof. Each party hereto shall deliver a certificate of
such insurance to the other party promptly upon issuance of the policy and
shall, from time to time as reasonably requested by such other party, furnish
such other party with evidence of the maintenance thereof. If any of the
insurance policies described in this of this Section 6.3 are written on a claims
made basis, the applicable party maintaining such insurance agrees either to (i)
continue to purchase such coverage or (ii) purchase an extended reporting period
endorsement ("tail" insurance), in either instance for the entire Term of this
Agreement (and any extensions of such Term), and for a period of five (5) years
after the end of such Term.
-12-
<PAGE>
(b) Waiver. Each party hereby waives any claims against the other
(whether founded upon the indemnification provisions contained in this Agreement
or otherwise) to the extent any such claim is covered by, and loss proceeds are
paid to and received by such waiving party, from the insurance either carried by
or for the benefit of such waiving party, and provided such waiver: (i) is not
in violation of the policies of insurance under which such loss proceeds are so
paid; (ii) does not invalidate such insurance; and (iii) does not
disproportionately increase the premiums thereof.
-13-
<PAGE>
ARTICLE VII. TERMINATION
7.1 Term of Agreement. The term of this Agreement shall be for the period
commencing on the Effective Date and, unless this Agreement is terminated
earlier as provided in Section 7.2, ending on the third anniversary of the date
hereof (such term, together with any extensions or renewals thereof is, the
"Term"). Prior to expiration of the Term, PeC and Zeiss will enter into good
faith negotiations with respect to a successor agreement.
7.2 Termination. This Agreement may be terminated
(a) By either party upon thirty (30) days prior written notice in the
event the other party shall breach any material term or condition of this
Agreement and such breach is not cured within said thirty (30) day period.
(b) By Zeiss upon (i) the filing by or with respect to Photoelectron,
either voluntarily or involuntarily, of any Chapter 7 bankruptcy petition, or
Chapter 11 reorganization, in either case in accordance with the U.S. Bankruptcy
Code, provided, however, that Zeiss may not so terminate this Agreement upon
such an involuntary filing if Photoelectron successfully contests any such
involuntary filing within ninety (90) days following such filing; or (ii) a
change in "control" of Photoelectron, meaning a change in the direct or indirect
ownership of more than 50% of the voting stock of Photoelectron or the power to
elect or appoint a majority of the Board of Directors of Photoelectron but only
if such voting stock or such power is acquired by a direct or indirect
competitor of Zeiss in the Field. Prior to any termination of this Agreement
pursuant to this Section 7.2, the parties hereto shall exercise commercially
reasonable efforts to negotiate in good faith acceptable terms for continuing
this Agreement without such termination.
(c) By Photoelectron upon (i) the filing by or with respect to Zeiss,
either voluntarily or involuntarily, of any bankruptcy or reorganization
petition under the laws of Germany, provided, however, that Photoelectron may
not so terminate this Agreement upon such an involuntary filing if Zeiss
successfully contests any such involuntary filing within ninety (90) days
following such filing; or (ii) a change in "control" of Zeiss, meaning a change
in the direct or indirect ownership of more than 50% of the stock of Zeiss or
the power to elect or appoint a majority of the controlling board of Zeiss but
only if such voting stock or such power is acquired by a direct or indirect
competitor of Photoelectron. Prior to any termination of this Agreement pursuant
to this Section 7.2, the parties hereto shall exercise commercially reasonable
efforts to negotiate in good faith acceptable terms for continuing this
Agreement without such termination.
(d) By either party upon (i) the discovery of a material design
defect in any PeC System if Photoelectron does not provide a written notice of
intent to cure such defect within sixty (60) days after it receives written
notice from Zeiss of the existence of such design defect and Photoelectron does
not cure such design defect within one hundred eighty (180) days after
Photoelectron furnished to Zeiss a written notice of intent to cure such defect;
(ii) if the U.S. Food and Drug Administration ("FDA") issues a "cease to sell"
order with respect to any PeC System and either Photoelectron elects not to
modify the PeC System to comply with such order or Zeiss elects not to sell a
PeC System that has been materially modified to comply with the FDA order; or
(iii) the FDA shuts down Photoelectron and prohibits Photoelectron from selling
PeC Systems in the marketplace.
(e) By Photoelectron, if Zeiss fails to meet the minimum purchase
requirement set forth in Section 2.2(b)(i) of this Agreement.
(f) By either party during a period commencing on the second
anniversary of the Effective Date and ending thirty (30) days thereafter if (i)
Zeiss fails to meet the minimum purchase requirement set forth in Section
2.2(b)(ii) for the twelve month periods ending on the first and second
anniversaries of the Effective Date, and (ii) the party exercising such right of
termination has fulfilled all of its obligations under this Agreement through
the date of termination.
-14-
<PAGE>
7.3 Survival. Termination of this Agreement will not release Zeiss or
Photoelectron from the obligation to pay any amounts owing the other, nor
release Zeiss from the obligation to pay for orders accepted by Photoelectron
prior to the effective date of termination, nor Photoelectron's obligation to
deliver any Photoelectron Product whose order has been accepted prior to the
date of such termination. In addition, and without limiting the foregoing, both
parties agree to negotiate in good faith with respect to how to maintain the
Photoelectron Products delivered to locations in the Territory (or orders for
which have been accepted by Photoelectron) prior to the date of such
termination. Without limitation of the foregoing, the provisions of Sections
2.10(b), 2.11, 3.2, 3.5, 4.2, 4.3, 6.1, 6.2, 6.3, 7.2, 7.3, 7.4, 9.1, 9.2, 9.3,
9.6, 9.7, 9.8 and 9.9 shall survive any expiration or termination of this
Agreement.
7.4 Escrow of Technical Information. Contemporaneous with the execution of
this Agreement, Photoelectron and Zeiss shall enter into the Technical
Information Escrow Agreement in the form attached as Schedule 8.4 to this
Agreement.
ARTICLE VIII. DISPUTE RESOLUTION
8.1 In the event of any dispute with respect to any provision of this
Agreement, either party hereto may give written notice to other of such dispute
(a "Dispute Notice") and the parties shall thereafter proceed as follows:
(a) Photoelectron Product Manager on behalf of Photoelectron and the
Zeiss Product Manager on behalf of Zeiss, or such other
representatives as may be designated by each party from time to
time shall negotiate in good faith with respect to such dispute
and shall be authorized to bind the respective parties with
respect to the resolution of such dispute.
(b) If the dispute is not resolved in accordance with the foregoing
(i) within ten (10) days following the transmission of the
Dispute Notice, a representative from senior management of each
party shall negotiate in good faith with respect to such dispute.
(c) If the dispute is not resolved in accordance with the foregoing
(i) or (ii) within twenty (20) days following the transmission of
the Dispute Notice, the parties shall in god faith attempt to
identify an individual (a "Conciliator") to be appointed for the
purpose of resolving the dispute by determining the course of
action in the best interest of the parties. Any conciliation
conducted pursuant to this subsection (iii) shall be conducted in
accordance with such procedures as may be agreed upon by the
parties or as may be established by the Conciliator. A decision
of the Conciliator shall have the same force and effect as an
arbitral award rendered pursuant to Section 8.2 hereof.
(d) If the dispute is not resolved in accordance with the foregoing
(a), (b) or (c) within forty (40) days following the transmission
of the Dispute Notice, the shall be settled by binding
arbitration in accordance the following Section 8.2.
8.2 Arbitration.
(a) The party desiring to invoke the process set forth herein (the
"Initiating Party") shall initiate the proceedings for such determination by
notice to the other party (the "Responding Party") and by designating the name
and address of an arbitrator willing to act. Within ten (10) days after receipt
by the Responding Party of such notice, the Responding Party shall, by notice to
the Initiating Party, designate the name and address of another arbitrator
willing so to act. If the Responding Party does not designate such an arbitrator
within said ten (10) day period, the arbitrator designated by the Initiating
Party shall alone conduct the arbitration. Any arbitrator designated by either
party hereto must have significant experience in the medical device industry.
-15-
<PAGE>
(b) If two arbitrators have been designated as aforesaid, such
arbitrators shall appoint an additional arbitrator (the "Additional Arbitrator")
who is willing so to act, and notice of such designation shall be given to the
Initiating Party and to the Responding Party. If the two arbitrators appointed
do not, within a period of ten (10) days after the appointment of the latter of
them, agree upon and designate an Additional Arbitrator willing so to act,
either arbitrator may request the American Arbitration Association ("AAA") to
designate a third arbitrator willing so to act, or, in the absence of such
designation by the AAA after an additional ten (l0) day period, a court of
competent jurisdiction, and an arbitrator so appointed shall, for all purposes,
have the same standing and powers as though seasonably appointed by the
arbitrators first appointed. Each arbitrator appointed hereunder shall have
significant experience in the medical device industry.
(c) In case of the inability or refusal to serve of any person
designated as an arbitrator or in case any arbitrator for any reason ceases to
be such, an arbitrator to fill such vacancy shall be appointed by the Initiating
Party, Responding Party, Additional Arbitrator, AAA or court of competent
jurisdiction, as the case may be, whichever made the original appointment, and
any arbitrator so appointed to fill such vacancy shall have the same standing
and powers as though originally appointed.
(d) The arbitrators shall, forthwith upon their appointment, (a) hear
the Initiating Party and Responding Party and their witnesses, (b) examine such
documents and records as may, in their judgment, be necessary and (c) render a
written award resolving the dispute.
(e) Any resolution by the sole arbitrator, if there be only one, or
by a majority of the arbitrators, shall be final and binding upon the parties
or, if a majority of the arbitrators are unable to agree, the average of the two
closest arbitrators shall be final and binding upon the parties. Judgment may be
entered on the arbitrators award in any court of competent jurisdiction in
accordance with the laws of the State of New York governing the enforcement of
arbitration awards.
(f) Each party shall be entitled to reasonable notice of the time and
place of hearings to be held by the arbitrators (but only such hearings held for
the purpose of hearing the parties and witnesses), to be present at such
hearings and to be represented by counsel at such hearings. However, if a party
shall fail, refuse or neglect to appear at a hearing, having been afforded such
notice, the arbitrators may act in the absence of such party at such hearing.
Further, the arbitrators shall permit and facilitate discovery by the parties as
the arbitrators shall deem appropriate, taking into account the needs of the
parties and the desirability of making discovery expenditures cost effective.
The arbitrators shall also issue orders to protect the confidentiality of trade
secrets and other sensitive or confidential information.
8.3 Implementation.
(a) The parties hereto agree to cooperate with one another in causing
an conciliation or arbitration to be held in as efficient and expeditious a
manner as practicable and in that connection to furnish such documents and make
available such of their respective personnel as the Conciliator or arbitrator
may request.
(b) The costs, other than counsel fees, of any dispute resolution,
conciliation or arbitration pursuant to this Article VIII shall be borne equally
by the parties hereto.
(c) The parties hereto agree to take whatever steps may be necessary
to implement the decision of any Conciliator, pursuant to Section 8.1, or
arbitrator or arbitrators, pursuant to Section 8.2. Unless such failure is
waived in writing by the other party, any party's failure to cooperate with or
abide by a Conciliator's or arbitrator's decision pursuant to this Article VIII
shall be deemed to be a default under this Agreement by such party.
-16-
<PAGE>
ARTICLE IX. MISCELLANEOUS
9.1 No Agent or Legal Representative Status. This Agreement does not make
either party the agent or legal representative of the other for any purpose
whatsoever, nor does it grant either party any authority to assume or to create
any obligation on behalf of or in the name of the other. Neither party owes the
other any fiduciary obligation. The parties expressly acknowledge that no
franchise, partnership or joint venture relationship exists or is intended to
exist between the parties hereto during the term of this Agreement.
9.2 Parties' Responsibility for Their Own Operations. Except as provided
otherwise in this Agreement, each of the parties hereto shall have no liability
in connection with the establishment or conduct of the other party hereto,
including without limitation with respect to expenditures, liabilities and
obligations incurred or assumed by such other party in connection with such
other party's responsibilities under this Agreement.
9.3 Taxes. Each party hereto shall pay all applicable taxes and will file
required tax returns related to such party's operations and activities pursuant
to this Agreement and will hold the other party hereto harmless from any claims
or demands made by any taxing authority with respect thereto.
9.4 Excused Performance. Neither party shall be liable for, or be
considered to be in breach of or default on account of, any delay or failure to
perform as a result of any cause or condition beyond such party's reasonable
control (including, but not limited to: fire, casualty, storms, flood and acts
of God or the elements; court orders; acts, delays and failures to act by civil,
military or other governmental authority; strikes, lockouts, labor disputes,
riots, insurrections, sabotage and war; breakdown or destruction of, or damage
or casualty to, any equipment, facilities or other property; unavailability of
materials, supplies, parts, equipment personnel or other necessary items;
interruption, suspension, curtailment or other disruption of utilities and/or
network or similar facilities; and acts or omissions of persons or entities
other than the parties hereto, as applicable).
9.5 Entire Agreement; Modification. This Agreement constitutes the entire
agreement of the parties hereto, and supersedes any and all prior or
contemporaneous documents, correspondence, proposals, representations, and
agreements, written or oral, between the parties hereto with regard to the
matters addressed herein. No amendment, modification or waiver of any of the
provisions of this Agreement shall be valid unless set forth in a written
instrument signed by the party or parties to be bound thereby.
9.6 Assignment of Rights or Delegation of Duties. Neither this Agreement,
nor the rights or obligation of either party hereunder, may be sold, assigned or
otherwise transferred without the prior written approval of the other party.
9.7 No Third Party Beneficiaries. The provisions of this Agreement are for
the sole and exclusive benefit of the parties hereto, their respective
successors and permitted assigns, in each case as their respective interests may
appear. No provision of this Agreement shall be deemed for the benefit of any
other person or entity, including, without limitation, any third party.
9.8 Notices. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed sufficiently given (a) the
following business day after having been timely sent by reputable overnight
courier service for priority, next day delivery, (b) upon confirmation of
receipt by the recipient after having been sent by electronic mail or fax, in
each case to the applicable party's street address, e-mail address, or fax
number as set forth below (as the same may be amended by such party upon written
notice to the other), or by such other means as the parties may hereafter agree
in writing, and shall only be effective if delivered to all addressees indicated
as follows:
If to Photoelectron: If to Zeiss:
-17-
<PAGE>
<TABLE>
<S> <C>
9 Executive Park Drive Carl Zeiss
North Billerica, Massachusetts 01862- D - 73446 Oberkochen, Germany
1318 Attention: President Attn: Vice President Surgical Products Division
Facsimile Number: 978-670-0879 Facsimile Number: ++49 (73 64)20-2117
</TABLE>
9.9 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, U.S.A., applicable to
contracts made, accepted and performed wholly within such state, without
application of principles of conflicts of laws.
9.10 Official Language. The official language of this Agreement shall be
English.
9.11 No Waiver. No waiver by either party to this Agreement of any
provision hereof, and no failure by either party to exercise any of such party's
rights or remedies hereunder, shall be deemed to constitute a waiver of such
provision, right, or remedy in the future, or of any other provision, right, or
remedy hereunder, unless such waiver shall be set forth in a written instrument
signed by the party against whom such waiver is sought to be enforced.
9.12 Headings. The headings used in this Agreement are for convenience only
and shall in no way affect the scope or construction of any provision hereof.
9.13 Severability. If any provision of this Agreement shall be held by a
court of competent jurisdiction to be invalid, void, or unenforceable, such
provisions shall be construed in all respects as if such invalid or
unenforceable provision were replaced with a valid and unenforceable provision
as similar as possible to the one replaced, and the remainder of this Agreement
shall continue in full force and effect and shall not be invalidated impaired or
otherwise affected.
9.14 Remedies Cumulative. The rights and remedies of the parties set forth
herein are in addition to and not in lieu of any other right or remedy afforded
to the parties under any other provision of this Agreement, by law, or
otherwise.
9.15 Counterparts. This Agreement may be executed in one or more
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement under seal
as of the date first written above.
-18-
<PAGE>
PHOTOELECTRON CORPORATION CARL ZEISS
By: /s/ Timothy W. Baker By: /s/ ppa. Dr. Ludwin Monz
-------------------- ------------------------
Title: President Title: Vice President and General Manager
duly authorized hereunto Surgical Products Division
By: /s/ ppa Karl Heinz-Raffin
-------------------------
Title: Senior Vice President, Finance
Medical Systems Group
Schedule 2.1: Photoelectron Products
Schedule 2.4: Price List
Schedule 2.10(a): Photoelectron Limited Warranty
Schedule 2.12: Service Contract
Schedule 4.3(a): Price List
Schedule 4.1: Form of Warrant
* Omitted pursuant to request for confidential treatment and filed separately
with the Commission.
-19-
<PAGE>
Schedules
Schedule 2.1: Photoelectron Product Line
PHOTOELECTRON RADIATION THERAPY PRODUCT LINE
(August 2002)
--------------------------------------------------------------------------------
PeC
Catalog # Part# Description
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(See selection Matrix) PRS-400 Core System Including:
--------------------------------------------------------------------------------
47000*** Control Console - Set
PRS-400 control console with operator's
manual
47000009 X-Ray Source - Set
Miniature x-ray source with cable,
sterilization tray
47000004 External Radiation Monitor, ERM-Set
Cables and sterilization tray
46000060 X-Ray Accessory-Set
Photodiode Array, Probe Adjuster,
Cables, sterilization Tray
47000*** Ion Chamber - Set
Electrometer, Ion Chamber, Ion chamber
holder cables and instructions
46000062 PTS Accessory
V-Block
--------------------------------------------------------------------------------
Treatment Delivery Options:
--------------------------------------------------------------------------------
47000288 47000288 INTRABEAM System
--------------------------------------------------------------------------------
- INTRABEAM surgical support stand for
delivery of Intraoperative radiation
therapy. System includes: Support
Stand, Cables, Operators Manual and XRS
interface adapter
--------------------------------------------------------------------------------
Stereotactic Frame Adapters:
--------------------------------------------------------------------------------
46000056 46000056 CRW Frame Adapter - Set, Includes:
CRW frame adapter,biopsy guide,
sterilization tray and operator's
manual
--------------------------------------------------------------------------------
Accessories:
--------------------------------------------------------------------------------
46000049 46000049 Sterile Sheaths, box of 10
46000051 46000051 Dilators - Set
Dilators, dilator guide, sterilization
tray and operator's manual
<PAGE>
46000348 46000348 Spherical Applicator- Set
- Set of 8 spherical applicators
(1.5-5.0 cm diameter)
Sterilization Tray and Operator's Manual
--------------------------------------------------------------------------------
Warranty & Service Contract
--------------------------------------------------------------------------------
98000012 2 year extended warranty
(Only available at time of core system
purchase)
98000011 Standard Service Contract
--------------------------------------------------------------------------------
-----------------------------------------
***Control Console - Sets
47000206 Control Console - Germany
47000207 Control Console - Italy
47000209 Control Console - UK
47000307 Control Console - France
47000007 Control Console - USA
***Ion Chamber - Sets
47000268 Ion Chamber - Germany
47000269 Ion Chamber - Italy
47000271 Ion Chamber - UK
47000305 Ion Chamber - France
47000059 Ion Chamber - USA
-----------------------------------------
<PAGE>
Schedule 2.4: Price List
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
Catalog # PeC Part# Description CZ xfer CZ xfer
-------------------------------------------------------------------------------------------------------------------------------
USA Europe
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(See selection Matrix) PRS-400 Core System Including: $* $*
-------------------------------------------------------------------------------------------------------------------------------
47000*** Control Console - Set
PRS-400 control console with operator's manual
47000009 X-Ray Source - Set
Miniature x-ray source with cable, sterilization tray
47000004 External Radiation Monitor, ERM-Set
Cables and sterilization tray
46000060 X-Ray Accessory-Set
Photodiode Array, Probe Adjuster, Cables,
sterilization Tray
47000*** Ion Chamber - Set
Electrometer, Ion Chamber, Ion chamber holder cables and
instructions
46000062 PTS Accessory
V-Block
-------------------------------------------------------------------------------------------------------------------------------
Treatment Delivery Options:
-------------------------------------------------------------------------------------------------------------------------------
47000288 47000288 INTRABEAM System $* $*
-------------------------------------------------------------------------------------------------------------------------------
- INTRABEAM surgical support stand for delivery of
Intraoperative radiation therapy. System includes:
Support Stand, Cables, Operators Manual and XRS
interface adapter
-------------------------------------------------------------------------------------------------------------------------------
Stereotactic Frame Adapters: $* $*
-------------------------------------------------------------------------------------------------------------------------------
46000056 46000056 CRW Frame Adapter - Set, Includes:
CRW frame adapter,biopsy guide, sterilization tray and
operator's manual
-------------------------------------------------------------------------------------------------------------------------------
Accessories:
-------------------------------------------------------------------------------------------------------------------------------
46000049 46000049 Sterile Sheaths, box of 10 $* $*
46000051 46000051 Dilators - Set $* $*
Dilators, dilator guide, sterilization tray and operator's
manual
46000348 46000348 Spherical Applicator- Set $* $*
- Set of 8 spherical applicators (1.5-5.0 cm diameter)
Sterilization Tray and Operator's Manual
-------------------------------------------------------------------------------------------------------------------------------
Warranty & Service Contract
-------------------------------------------------------------------------------------------------------------------------------
98000012 2 year extended warranty * $*
(Available only at time of core system purchase)
</TABLE>
<PAGE>
98000011 Standard Service Contract $* $*
--------------------------------------------------------------------------------
-----------------------------------------
***Control Console - Sets
47000206 Control Console - Germany
47000207 Control Console - Italy
47000209 Control Console - UK
47000307 Control Console - France
47000007 Control Console - USA
***Ion Chamber - Sets
47000268 Ion Chamber - Germany
47000269 Ion Chamber - Italy
47000271 Ion Chamber - UK
47000305 Ion Chamber - France
47000059 Ion Chamber - USA
-----------------------------------------
-----------------------------------------------------------------------------
Training, Installation, Service and Repair
------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
A. Customer Training (Photoelectron Components)*
-----------------------------------------------------------------------------
Training for one physicist* $ *
-----------------------------------------------------------------------------
Training for additional physicist* $ *
-----------------------------------------------------------------------------
Hourly Training Rate*
$ *
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
B. Installation
-----------------------------------------------------------------------------
Installation Rate (per PRS Unit)* $ *
-----------------------------------------------------------------------------
Installation Training Rate (per hour)* $ *
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
C. Service Rates (no Service Contract; on-site hours
are for hours actually on-site, minimum 2 hours per
service call)
-----------------------------------------------------------------------------
Base Hourly Rate* $*
-----------------------------------------------------------------------------
Overtime (per then current Zeiss policies) $*
Hourly Rate*
-----------------------------------------------------------------------------
Double Overtime (per then current Zeiss policies) $*
Hourly Rate*
-----------------------------------------------------------------------------
*In addition to any such rates, Zeiss shall also reimburse Photoelectron for
reasonable out of pocket travel expenses incurred by Photoelectron's
representatives (meals, airfare - economy class, hotel, local transportation,
etc.) in providing the services.
* Omitted pursuant to request for confidential treatment and filed separately
with the Commission
<PAGE>
Schedule 2.10(a): Photoelectron Limited Warranty
Photoelectron warrants that each Photoelectron Product (excluding consumables
such as sheaths and other limited use components) sold to Zeiss pursuant to this
Agreement will be free of defects in design, material or workmanship for a
period of twelve (12) months from the date of installation. If the equipment
fails to satisfy this warranty, Zeiss will promptly notify Photoelectron of such
failure within the warranty period. At Photoelectron's option Photoelectron will
repair or replace the defective equipment. Zeiss will not return any equipment
or component to Photoelectron without Photoelectron's prior written
authorization. If Photoelectron is unable to repair or replace the equipment
after reasonable efforts, Photoelectron will, as Zeiss' exclusive remedy, refund
the portion of the purchase price previously paid by Zeiss that is attributable
to the defective equipment. Notwithstanding the foregoing provisions,
Photoelectron shall have no obligation or responsibility to repair or replace
any defective equipment if the defect was caused by: (a) Zeiss' or Zeiss'
customer's failure to properly operate, sterilize or maintain the equipment in
accordance with Photoelectron's written instructions; (b) any attempted repair
or modification of the equipment that is not performed or authorized in writing
by Photoelectron; (c) any power failure, power surge, fire, water damage, Act of
God or other circumstance or event not within Photoelectron's reasonable
control; (d) any damage resulting from transporting or improperly handling the
equipment; (e) normal wear and tear; or (f) any other act or omission of Zeiss,
Zeiss' agents or any other third party except as provided in this Agreement.
<PAGE>
Schedule 2.12: Service Contract
A Service Contract purchased with respect to any Core Photon Radiosurgery System
purchased by Zeiss from Photoelectron includes the following services:
(i) full parts and labor coverage on all Photoelectron Components sold to
Zeiss for the Product in which such Core Photon Radiosurgery System is
incorporated;
A one (1) time source replacement during the contract period (1 year)
should the device not perform for any reason. Replacement will be made
only after a complete assessment of the unit and a reasonable attempt
to repair the device has been made.
A one(1) time replacement (or upgrade) to the control console during
the covered period, should the device not perform for any reason. This
includes any and all software upgrades. Replacement will be made only
after a complete assessment of the unit and a reasonable attempt to
repair the device has been made.
(ii) one on-site preventative maintenance inspection per year;
(iii) software maintenance on the control console;
(iv) training of Zeiss service personnel according to a schedule to be
mutually agreed between Zeiss and Photoelectron, and
(v) travel costs and expenses in connection with the foregoing throughout
the United States at no charge with a flat additional fee of $2,500 per
contract year, if any, in which travel outside the United States is
necessary.
(vi) a periodic check of the XRS unit (once per year). The device may be
shipped to PeC and a complete QA check will be conducted on the unit,
including Anisotropy check and output check.
Loaner equipment is provided to the customer if they need to send their
equipment back to PeC for service.
<PAGE>
Schedule 4.1: Form of Warrant
NEITHER THIS WARRANT NOR ANY SECURITIES PURCHASABLE UPON EXERCISE HEREOF HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS.
NEITHER THIS WARRANT NOR ANY SECURITIES PURCHASABLE UPON EXERCISE HEREOF MAY BE
SOLD OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR
SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE
SECURITIES LAWS, OR EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND LAWS.
Photoelectron Corporation
9 Executive Park Drive
North Billerica, Massachusetts 01862
STOCK PURCHASE WARRANT
Date of Issuance: _________, ____ Right to Purchase ________
Shares of Common Stock
(subject to adjustment)
Warrant # __
For value received, Photoelectron Corporation, a Massachusetts corporation
(the "Company"), hereby grants to Carl Zeiss Oberkochen, a trust foundation
organized and existing under the laws of Germany, or its registered assigns (the
"Registered Holder"), the right to purchase from the Company ______ shares of
the Company's Common Stock (subject to adjustment pursuant to Section 3 hereof)
at a price of $____ per share (as adjusted pursuant to Section 3 hereof, the
"Exercise Price"). The amount and kind of securities purchasable pursuant to the
rights granted under this Warrant and the purchase price for such securities are
subject to adjustment pursuant to the provisions contained in this Warrant.
This Warrant is subject to the following provisions:
1. Definitions. As used in this Warrant, the following terms have the
meanings set forth below:
"Commission" means the Securities and Exchange Commission, or any
other Federal agency at the time administering the securities laws of the United
States.
"Common Stock" means the Company's Common Stock, $.01 par value per
share.
"Date of Issuance" shall have the meaning specified in Section 10 of
this Warrant.
"Market Price" is defined as the average of the daily closing prices
for the 20 consecutive trading days, immediately preceding the date of
computation. The closing price for each day shall be (i) if the shares of Common
Stock are listed or admitted to trading on a principal national securities
exchange or the Nasdaq National Market, the last reported sales price on the
principal national securities exchange on which the shares of Common Stock are
listed or admitted to trading or on the Nasdaq National Market or (ii) if the
shares of Common Stock are not listed or admitted to trading on any such
exchange or the Nasdaq National Market, the average of the highest bid and lower
asked prices, as reported on the Automated Quotation System of the National
Quotations Bureau, Incorporated or an equivalent, generally accepted reporting
service. If at any time such security is not listed on any domestic securities
exchange or quoted in
<PAGE>
the Nasdaq System or the domestic over-the-counter market, the "Market Price"
will be the fair value thereof determined by the Board of Directors in good
faith.
"Nasdaq System" means the Nasdaq Inter-Dealer Quotation System or such
other similar inter-dealer quotation system as may in the future be used
generally by members of the National Association of Securities Dealers, Inc.,
for the over-the-counter transactions in securities.
"Registrable Securities" means the shares of Warrant Stock, and any
other shares of capital stock of the Company issued in respect of the Warrant
Stock (because of stock splits, stock dividends, reclassifications,
recapitalizations, mergers, consolidations, or similar events), provided,
however, that any shares of Warrant Stock previously sold by the Registered
Holder to the public pursuant to a registered public offering or Rule 144 under
the Securities Act shall cease to be Registrable Securities.
"Registration Statement" means a registration statement (other than
with respect to a registration statement relating to a Rule 145 transaction, an
offering solely to employees or any other registration which is not appropriate
for the registration of Registrable Securities) filed by the Company with the
Commission under the Securities Act for a public offering and sale of securities
of the Company.
"Person" means an individual, a partnership, a corporation, a limited
liability company, a trust, a joint venture, an unincorporated organization or
any other entity or a government or any department or agency of a government.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Commission issued
under that Act, as they each may, from time to time, be in effect.
"Warrant" or "Warrants" means this Warrant and all stock purchase
warrants issued in exchange therefor pursuant to the terms thereof.
"Warrant Stock" means shares of the Company's authorized but unissued
Common Stock; provided that if there is a change such that the securities
issuable upon exercise of the Warrant are issued by an entity other than the
Company or there is a change in the class of securities so issuable, then the
term "Warrant Stock" will mean one share of the security issuable upon exercise
of the Warrant if such security is issuable in shares, or will mean the smallest
unit in which such security is issuable if such security is not issuable in
shares.
2. Exercise of Warrant.
2.1 Exercise Period. The Registered Holder may exercise this Warrant,
in whole or in part (but not as to a fractional share of Warrant Stock), at any
time and from time to time prior to the fifth anniversary of the Date of
Issuance of the Warrant (the "Exercise Period").
2.2 Exercise Procedure.
(a) This Warrant may be exercised by the Registered Holder in
whole or in part (but not as to fractional shares of Warrant Stock) by the
surrender of this Warrant and delivery of an executed Notice of Exercise in the
form appended hereto duly executed by the Registered Holder to the Company at
its principal office at any time or times during the Exercise Period accompanied
by payment for the Warrant Stock as to which this Warrant is being exercised by
wire transfer to an account designated by the Company or by certified or bank
check. In the event of a partial exercise of this Warrant, this Warrant will be
canceled and the Company will deliver a new Warrant of like tenor representing
the balance of the shares of Warrant Stock purchasable hereunder. Alternatively,
the Registered Holder may elect to exercise the rights represented by this
Warrant in whole or in part (but not as to fractional shares of Warrant Stock)
by the surrender of this Warrant and delivery of an executed Notice of Exercise
specifying that the value (as determined below) of this Warrant shall be the
consideration for the shares of Warrant
<PAGE>
Stock, in which event the Company shall issue to the Registered Holder a number
of shares of Warrant Stock computed using the following formula:
X = Y (A-B)
-------
A
Where: X = the number of shares of Warrant Stock to be issued to the Registered
Holder.
Y = the number of shares of Warrant Stock issuable upon exercise of the Warrant
on the date of delivery of the Notice of Exercise.
A = the Market Price of one share of Warrant Stock.
B = the Exercise Price.
This Warrant will be deemed to have been exercised at such time (the "Exercise
Date") as the Company has received the Notice of Exercise accompanied by this
Warrant and either (1) a wire transfer to an account designated by the Company
or a certified or bank check in the amount of the Exercise Price multiplied by
the number of shares of Warrant Stock for which the Warrant is being exercised
or (2) a written election on the Notice of Exercise to use the alternative
method set forth above.
(b) Certificates for shares of Warrant Stock purchased upon
exercise of this Warrant will be delivered by the Company to the Purchaser
within ten days after the Exercise Date. Unless this Warrant has expired or all
of the purchase rights represented hereby have been exercised, the Company will
prepare a new Warrant, substantially identical hereto, representing the rights
formerly represented by this Warrant which have not expired or been exercised.
The Company will, within such ten-day period, deliver such new Warrant to the
Person designated for delivery in the Notice of Exercise.
(c) The Warrant Stock issuable upon the exercise of this
Warrant will be deemed to have been issued to the Purchaser on the Exercise
Date, and the Purchaser will be deemed for all purposes to have been the record
holder of such Warrant Stock on the Exercise Date.
(d) The issuance of certificates for shares of Warrant Stock
upon exercise of this Warrant will be made without charge to the Registered
Holder or the Purchaser for any issuance tax in respect thereof or any other
cost incurred by the Company in connection with such exercise and the related
issuance of shares of Warrant Stock. The Company shall not, however, be required
to pay any tax which may be payable in respect of any transfer, in whole or in
part, of this Warrant (including the issuance of new Warrants in connection
therewith) or the delivery of stock certificates in a name other than that of
the Registered Holder of this Warrant presented for exercise, and any such tax
shall be paid by such Registered Holder at the time of presentation.
2.3 Notice of Exercise. The Notice of Exercise will be substantially
in the form set forth in Exhibit I hereto, except that if the shares of Warrant
Stock are not to be issued in the name of the Registered Holder of this Warrant,
the Notice of Exercise will also state the name of the Person to whom the
certificates for the shares of Warrant Stock are to be issued, and if the number
of shares of Warrant Stock to be issued does not include all the shares of
Warrant Stock purchasable hereunder, it will also state the name of the Person
to whom a new Warrant for the unexercised portion of the rights hereunder is to
be delivered.
3. Exercise Price and Adjustments for Certain Events.
3.1 General. The initial Exercise Price will be $___, subject to
adjustment as set forth below.
3.2 Stock Splits, etc. In case the Company shall at any time
subdivide its outstanding shares of Common Stock into a greater number of
shares, whether by way of a stock dividend or otherwise, the Exercise Price in
effect immediately prior to such subdivision shall be proportionately reduced,
and the number of shares of Common Stock issuable upon exercise of this Warrant
shall be proportionately increased; and conversely, in case the outstanding
shares of Common Stock of the
<PAGE>
Company shall be combined into a smaller number of shares, the Exercise Price in
effect immediately prior to such combination shall be proportionately increased
and the number of shares of Common Stock issuable upon exercise of this Warrant
shall be proportionately reduced.
3.3 Adjustments for Capital Reorganization or Reclassification. If
any capital reorganization or reclassification of the capital stock of the
Company is effected (other than an Acquisition, as defined below), then, as a
condition of such capital reorganization or reclassification, lawful and
adequate provision shall be made whereby the Registered Holder shall thereafter
have the right to purchase and receive upon the basis and upon the terms and
conditions specified in this Warrant, in lieu of shares of Warrant Stock
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby, those shares of stock, securities or assets which
would have been issued or payable with respect to or in exchange for the Warrant
Stock issuable upon exercise of this Warrant had this Warrant been exercised
immediately prior to the record date (or the effective date, as the case may be)
for such capital reorganization or reclassification.
3.4 Acquisition Transaction. If the Company is to be consolidated
with or acquired by another Person in a merger or otherwise, or in the event of
a sale of all or substantially all of the Company's assets (an "Acquisition"),
the Company may take such action with respect to this Warrant as the Company's
Board of Directors may deem to be equitable and in the best interests of the
Company, its stockholders and the Registered Holder under the circumstances,
including, without limitation, (i) making appropriate provision for the
continuation of the Warrant by substituting on an equitable basis for the shares
then subject to the Warrant either the consideration payable with respect to the
outstanding shares of Warrant Stock in connection with the Acquisition or
securities of any successor or acquiring entity or (ii) giving the Registered
Holder reasonable advance notice of the pendency of the Acquisition and
canceling the Warrant effective upon the Acquisition if it is not exercised
prior to the Acquisition.
4. Notice of Adjustments. Immediately upon any adjustment of the Exercise
Price or increase or decrease in the number of shares of Common Stock
purchasable upon exercise of this Warrant, the Company will send written notice
thereof to all Registered Holders, stating the adjusted Exercise Price and the
increased or decreased number of shares purchasable upon exercise of this
Warrant and setting forth in reasonable detail the method of calculation for
such adjustment and increase or decrease.
5. Reservation Of Common Stock. The Company will at all times reserve and
keep available for issuance upon the exercise of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants, and upon such issuance such
shares of Common Stock will be validly issued, fully paid and nonassessable.
6. No Voting Rights. This Warrant will not entitle the holder hereof to
any voting rights or other rights as a stockholder of the Company.
7. Piggyback Registration Rights.
(a) If at any time the Company shall decide to register any of its
securities under the Securities Act, (other than with respect to a registration
statement relating to a Rule 145 transaction, an offering solely to employees or
any other registration which is not appropriate for the registration of
Registrable Securities), the Company will promptly give written notice thereof
to the Registered Holder. Upon the written request of the Registered Holder
given within 30 days after receipt of any such notice from the Company, the
Company will, except as herein provided, cause all such Registrable Securities
which the Registered Holder has requested to be registered to be included in
such Registration Statement, all to the extent requisite to permit the sale or
other disposition of the Registrable Securities. Nothing herein shall prevent
the Company from at any time abandoning or delaying any registration.
(b) If any registration pursuant to this Section 7 shall be
underwritten in whole or in part, the Company may require that the Registrable
Securities requested for inclusion pursuant to this Section 7 be included in the
underwriting on the same terms and conditions as the securities otherwise being
sold through the underwriters. If in the good faith judgment of the managing
underwriter of such
<PAGE>
public offering the inclusion of all of the Registrable Securities originally
covered by a request for registration would reduce the number of shares to be
offered by the Company or interfere with the successful marketing of the shares
of stock offered by the Company, then the number of Registrable Securities
otherwise to be included in the underwritten public offering may be reduced pro
rata among the Registered Holder requesting such registration and any other
selling security holder (based on the number of Registrable Securities for which
registration is requested expressed as a percentage of the total number of
shares being registered on behalf of selling security holders (including the
Registered Holder)).
8. Transfer of Warrant.
(a) Subject to the transfer conditions referred to in paragraph (b),
below, this Warrant and all rights hereunder may not be assigned or transferred,
in whole or in part, without the prior written consent of the Company, which
consent not to be unreasonably withheld. Any assignment or transfer shall
require the surrender of this Warrant with a properly executed Assignment (in
the form of Exhibit II hereto) at the principal office of the Company.
(b) Each Registered Holder of this Warrant acknowledges that this
Warrant has not been registered under the Securities Act of 1933, as amended
(the "Securities Act"), and agrees not to sell, pledge, distribute, offer for
sale, transfer or otherwise dispose of this Warrant or any Warrant Stock issued
upon its exercise in the absence of (i) an effective registration statement as
to this Warrant or such Warrant Stock under the Securities Act (or any similar
statute then in effect), or (ii) an opinion of counsel for the Company to the
effect that such registration is not, under the circumstances, required.
9. Warrant Exchangeable for Different Denominations. This Warrant is
exchangeable, upon the surrender hereof by the Registered Holder at the
principal office of the Company, for new Warrants of like tenor representing in
the aggregate the purchase rights hereunder, and each of such new Warrants will
represent such portion of such rights as is designated by the Registered Holder
at the time of such surrender. The date the Company initially issues this
Warrant will be deemed to be the "Date of Issuance" of this Warrant regardless
of the number of times new certificates representing the unexpired and
unexercised rights formerly represented by this Warrant are issued.
10. Representations, Warranties and Covenants of the Registered Holder.
(a) The Registered Holder represents, warrants, acknowledges and agrees as
follows: (i) the Registered Holder is an "accredited investor" within the
meaning of that term in Rule 501 under the Securities Act; (ii) the Registered
Holder is acquiring this Warrant and, has a present intention of acquiring the
Warrant Stock issuable upon exercise of this Warrant, for its own account for
investment and not with a view to any distribution thereof, and will not
transfer this Warrant or any shares of the Warrant Stock in violation of the
provisions of any applicable securities law; (iii) the Registered Holder has
been granted access to information and materials concerning the Company, this
Warrant and the Warrant Stock sufficient to permit it to evaluate the merits and
risks of an investment in this Warrant and the Warrant Stock and has had the
opportunity to its satisfaction to question and to receive answers from officers
and other representatives of the Company concerning the Company, this Warrant
and the Warrant Stock; (iv) the Registered Holder has taken full cognizance of
and understands all of the risks associated with an investment in this Warrant
and the Warrant Stock, including those described in documents filed by the
Company with the Securities and Exchange Commission the ("SEC"); (v) the
Registered Holder has not relied upon any representations or warranties made by
the Company or any of its officers or other representatives or agents except as
set forth in publicly available documents filed by the Company with the SEC;
(vi) this Warrant and the Warrant Stock issuable upon exercise of this Warrant
have not been registered under the Securities Act, or registered or qualified
under any state securities law, and they must be held indefinitely unless they
are subsequently registered under the Securities Act and registered or qualified
under any applicable state securities law or an exemption from such registration
or qualification is available; and (vii) neither the SEC nor any state
securities commission has approved or disapproved of this Warrant or the Warrant
Stock purchasable upon exercise of this Warrant and the Registered Holder
understands that any representation to the contrary is a criminal offense.
<PAGE>
(b) The Registered Holder further represents and warrants to, and
covenants with, the Company that the Registered Holder has full right, power,
authority and capacity to enter into this Warrant and to consummate the
transactions contemplated hereby.
11. Miscellaneous.
11.1 Amendment and Waiver. The provisions of the Warrants may be
amended and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company has
obtained the written consent of the Registered Holders of Warrants representing
at least 50% of the shares of Warrant Stock obtainable upon the exercise of the
Warrants outstanding at the time of such consent.
11.2 Notices. All notices and other communications under this Warrant
shall be (a) in writing (which shall include communications by fax), (b) (i)
delivered by hand, (ii) delivered by a nationally recognized air courier, or
(iii) sent by fax. Notices and other communications hereunder shall be effective
or deemed delivered or furnished (1) if given by fax, when such communication is
transmitted and the appropriate answer back is received or receipt is otherwise
acknowledged and (2) if given by hand delivery or sent by air courier, when
received. Any notices or other communications to be given to a Registered Holder
will be given to the address or fax number of such Registered Holder shown on
the books of the Company. Any notices or other communications to be sent to the
Company will be sent or delivered to the Company at:
Photoelectron Corporation
9 Executive Park Drive
North Billerica, Massachusetts 01862-1318
Attention: Timothy W. Baker, President
Fax: 978-670-0879
11.3 Descriptive Headings; Governing Law. The descriptive headings of
the paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. The construction, validity and interpretation
of this Warrant will be governed by the laws of the Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, the Company and the Registered Holder have caused this
Warrant to be executed by their duly authorized officers.
PHOTOELECTRON CORPORATION
By:_______________________________
Timothy W. Baker
President
Accepted and agreed to by the Registered
Holder:
CARL ZEISS OBERKOCHEN
By:_______________________________
By:_____________________________
<PAGE>
By:____________________________
Title:
duly authorized hereunto
<PAGE>
EXHIBIT I
NOTICE OF EXERCISE
(To be Executed by
the Registered Holder
in Order to Exercise the Warrant)
The undersigned hereby irrevocably elects to exercise the right to
purchase ______________________________ (_________) shares of the common stock
of Photoelectron Corporation according to the conditions thereof and herewith
makes payment of the Exercise Price of such shares in full.
Specify method of exercise by check mark:
1. Such payment is hereby made in the amount of $________ by wire transfer
or by certified or bank check.
2. The holder elects to receive shares net of shares having a value (as
determined pursuant to Section 2.2 of the Warrant) equal to the Exercise
Price of the Warrant.
Printed Name
of Registered Holder: _______________________
Signature: ____________________________
Title (if signing
on behalf of a
Registered Holder): _______________________
Address: ________________________
__________________________
__________________________
Dated:__________________
<PAGE>
Schedule 7.4. Form of Technical Information Escrow Agreement
Technical Information Escrow Agreement
This Technical Information Escrow Agreement is made as of the 21st day of
August, 2002 (the "Effective Date") by and among Photoelectron Corporation, a
Massachusetts corporation ("Photoelectron"), Carl Zeiss Oberkochen, a trust
foundation organized and existing under the laws of Germany ("Zeiss"), and
Goulston & Storrs, P.C., a Massachusetts professional corporation (the "Escrow
Agent").
WHEREAS, this is the Technical Information Escrow Agreement referred to
Section 7.4 of the Distribution Agreement dated as of August 21, 2002 between
Photoelectron and Zeiss (the "Distribution Agreement), providing for, among
other things, the sale of the Photoelectron Products (as defined in the
Distribution Agreement) by Photoelectron to Zeiss (a form of this Escrow
Agreement is attached to the Purchase Agreement as Schedule 7.4, and all terms
used herein have the same meaning as defined in the Distribution Agreement
unless specifically defined otherwise herein);
WHEREAS, certain design documentation, manufacturing documentation, test
documentation, proprietary technical information, and other information and
documentation (hereinafter referred to as the "Technical Information") are
required to manufacture the Photoelectron Products; and
WHEREAS, in order to protect its proprietary interest in the products,
Photoelectron has maintained the Technical Information in strict confidence as
proprietary information, and will not disclose the Technical Information to
Zeiss except on the terms and conditions hereinafter provided;
NOW, THEREFORE, for the mutual covenants and conditions contained herein
and for other good and valuable consideration, the parties hereto agree as
follows:
1. DEPOSIT IN ESCROW
(a) No later than forty five (45) days after Effective Date,
Photoelectron will deposit with Escrow Agent the Technical Information,
consisting of copies of all drawings and technical programming and coding
information necessary for Zeiss to manufacture, test, install, operate,
maintain, and application engineer the Photoelectron Products. Photoelectron
also agrees from time to time to deposit with Escrow Agent all additional and
replacement items needed to keep current the Technical Information, which items
shall be deposited as soon as they become available and shall, upon deposit, be
considered as Technical Information. Simultaneously with making any additional
deposits of Technical Information with Escrow Agent, Photoelectron shall give
written notice to Zeiss of such additional deposits and will include a general
description of the contents of such additional deposits. All Technical
Information provided by Photoelectron shall be copies of the original Technical
Information, which shall be retained by Photoelectron.
(b) No later than sixty (60) days after Photoelectron deposits the
Technical Information with the Escrow Agent, a technical representative employed
by Zeiss will review the Technical Information to determine whether the
Technical Information contains the information necessary for Zeiss to
manufacture, test, install, operate, maintain, and application engineer the
Photoelectron Products. Upon reasonable notice by Zeiss to Photoelectron,
Photoelectron will make a Photoelectron technical representative available to
participate in such review and to respond to questions from the Zeiss technical
representative. Photoelectron shall assume full responsibility for monitoring
any review of the Technical Information conducted by a Zeiss technical
representative and Escrow Agent shall have no liability in the event a Zeiss
technical representative misappropriates any Technical Information, or any part
thereof, during any review of the Technical Information pursuant to this Section
1(b).
<PAGE>
(c) Escrow Agent shall have no responsibility with respect to
accuracy or completeness of the Technical Information deposited with it.
(d) Escrow Agent agrees to prohibit any person, other than
employees of Escrow Agent, from gaining access to the Technical Information
deposited by Photoelectron (including employees of Photoelectron) except (1) as
provided by the terms of this Agreement, or (2) as otherwise directed by court
order. Except as permitted by this Agreement, Escrow Agent shall maintain the
Technical Information in strict confidence and shall not use the same for its
own benefit or the benefit of any third person.
(e) Escrow Agent agrees to accept the deposit of the Technical
Information and to act as custodian thereof as long as this Agreement shall be
in effect and so long as Escrow Agent has not deposited the Technical
Information with a successor escrow agent pursuant to Section 8. such Technical
Information may, but need not be, maintained or located on the premises of
Escrow Agent.
2. CAUSE OF RELEASE OF INFORMATION AND PROCEDURES
(a) Upon the occurrence of any one of the following events:
(i) the adjudication of Photoelectron as a bankrupt by
any court of competent jurisdiction;
(ii) the appointment of a trustee or receiver (or similar
official) of all or a substantial part of the property of Photoelectron under
the U.S. Bankruptcy Code or any state court receivership proceedings, whether
voluntary or involuntary, which appointment, if involuntary, is not removed
within ninety (90) days;
(iii) the liquidation of Photoelectron or its failure to
continue in business (except to the extent that such business has been acquired
or assumed by another entity), or the filing by Photoelectron of a voluntary
petition in bankruptcy, or the consent to, or failure to dismiss within the time
prescribed by law, of any bankruptcy proceedings instituted against it; or
(iv) the discontinuance by Photoelectron of the
manufacture of the Photoelectron Products during the Term;
Escrow Agent agrees and is hereby specifically authorized to provide to Zeiss,
provided that Zeiss so requests in writing, a copy of all of the Technical
Information delivered to Escrow Agent. Zeiss's written request shall contain an
affidavit setting forth the facts indicating that the Distribution Agreement
remains in full force and effect, that one of the events described above has
occurred and is continuing to occur, that Zeiss is entitled to a copy of the
Technical Information held in escrow and that the Technical Information shall be
used solely by Zeiss only to manufacture or have the Photoelectron Products (as
defined in the Distribution Agreement) manufactured. Simultaneously, Zeiss shall
send a copy of such written request and affidavit to Photoelectron. Unless
within thirty (30) days after Escrow Agent receives the written request and
affidavit from Zeiss, Photoelectron shall file with Escrow Agent an affidavit
executed by an executive officer of Photoelectron that no such event has
occurred, or that the circumstances of the event no longer exist, Escrow Agent
shall thereupon deliver to Zeiss in accordance with its instructions the
Technical Information then being held by Escrow Agent, and this Agreement shall
thereupon terminate. If Photoelectron shall file such an affidavit, then Escrow
Agent shall not deliver the Technical Information to Zeiss until directed to do
so by Photoelectron and Zeiss jointly, or until Escrow Agent is ordered to do so
by a court of competent jurisdiction. Following Escrow Agent's delivery of all
or any portion of the Technical Information to Zeiss, in the event Photoelectron
evidences to the reasonable satisfaction of Zeiss that the circumstances leading
to such delivery have been remedied or no longer exist, Zeiss shall immediately
return all of the Technical Information package, including all copies,
reproductions and duplications thereof, into escrow hereunder, provided that
Photoelectron shall reimburse Zeiss for any reasonable cancellation charges that
Zeiss may incur from persons engaged by it to manufacture the
<PAGE>
products as a result of any required redelivery of the Technical Information,
which charges Zeiss shall use its best efforts to avoid.
(b) Upon the earlier to occur of (i) receipt by the Escrow
Agent of joint written notice from Photoelectron and Zeiss setting forth that
the Distribution Agreement has terminated or (ii) August 25, 2005 Escrow Agent
shall thereupon deliver to Photoelectron the Technical Information then being
held by Escrow Agent. Notwithstanding the foregoing, Escrow Agent may release
the Technical Information earlier upon the receipt of, and pursuant to, joint
written instructions by Photoelectron and Zeiss or a court order.
3. TITLE TO TECHNICAL INFORMATION; USE OF TECHNICAL INFORMATION
(a) The Technical Information and other items deposited with
Escrow Agent by Photoelectron pursuant to this Agreement shall, as between them,
remain the exclusive property of Photoelectron. Copies of the Technical
Information may be produced and made available by Escrow Agent to Zeiss only in
accordance with the provisions of Section 2 of this Agreement.
(b) If the Technical Information is delivered by Escrow Agent
to Zeiss pursuant to Section 2, Zeiss shall be considered to possess and use the
Technical Information under a nonexclusive royalty-free license from
Photoelectron entitling Zeiss to possess and use the Technical Information
solely for the purpose of manufacturing or having the Photoelectron Products
manufactured and for no other purpose whatsoever.
4. TERMINATION OF AGREEMENT
When all of the Technical Information has been distributed
pursuant to the provisions of this Escrow Agreement, this Escrow Agreement,
except for the provisions of Sections 5 and 7 hereof, shall terminate, and be of
no further force or effect.
5. PAYMENT OF AGENT'S FEES AND EXPENSES
Photoelectron and Zeiss agree that each shall be jointly and severally
liable to the Escrow Agent for all fees and expenses, including reasonable
attorneys' fees (including fees for attorneys employed by Escrow Agent), charged
by Escrow Agent for its activities pursuant to this Agreement. Notwithstanding
the foregoing, as between Zeiss and Photoelectron such fees and expenses shall
be borne equally by Zeiss and Photoelectron, except that any such fees and
expenses, including reasonable attorneys' fees, charged by the Escrow Agent in
connection with any dispute between Photoelectron and Zeiss with respect to this
Agreement shall be borne by the nonprevailing party as between Photoelectron and
Zeiss. If either Zeiss or Photoelectron should pay to Escrow Agent an amount in
excess of its share of such fees and expenses as provided in the foregoing
sentence, then it shall be entitled to be reimbursed by the other for such
excess. Photoelectron and Zeiss shall each be solely responsible for their own
expenses incurred in connection with their respective performances hereunder.
6. PROPRIETARY INFORMATION
Zeiss understands that the Technical Information is proprietary
information of Photoelectron. Zeiss agrees that it (i) will not disclose the
Technical Information to any third party; (ii) will not use the Technical
Information for activities other than those expressly permitted by Section 3(b);
(iii) will not duplicate or reproduce the Technical Information except as might
reasonably be required under the scope of Section 3(b); and (iv) will take all
steps necessary to protect the confidentiality of the Technical Information, to
prevent it from entering the public domain, and to ensure that it is not
disclosed, reproduced, duplicated, or used for any unauthorized purpose,
including having each of its employees execute and deliver an undertaking to
hold the Technical Information in strictest confidence.
<PAGE>
7. AGENT'S RIGHTS AND RESPONSIBILITIES
To induce Escrow Agent to act hereunder, Photoelectron and Zeiss agree
that
(a) Escrow Agent shall not be under any duty to give the
property held hereunder any greater degree of care than it gives its own highly
confidential property.
(b) Escrow Agent shall not be responsible for the genuineness
of any signature or for the genuineness of the Technical Information deposited
with it hereunder and may rely conclusively and shall be protected in relying
upon, and shall have no duty or obligation to investigate, ascertain the
correctness or status of, any judgment, order, decree, certificate, affidavit,
notice, request, consent, statement, or other instrument delivered to it in
connection with its activities hereunder.
(c) In no event shall Escrow Agent be liable for any act
performed or omitted to be performed by it hereunder in the absence of willful
and wanton misconduct, and in no event shall it be liable or responsible for any
act performed or failed to be performed by any other party to this Agreement.
(d) Photoelectron and Zeiss hereby jointly and severally
indemnify and hold Escrow Agent harmless from any damage, costs, liability, or
expense (including, but not limited to, legal fees either paid to retained
attorneys or representing the fair value of legal services rendered by Escrow
Agent) which Escrow Agent may incur by reason of its acting hereunder, without
prejudice to any right which Photoelectron and Zeiss may have to recover from
the other for any such damage, cost, liability or expense. Without limiting the
generality of the foregoing, in no event shall Escrow Agent be required to take
any action unless and until it has been indemnified by the party requesting such
action.
(e) It is acknowledged that Escrow Agent is counsel for
Photoelectron, and Zeiss hereby consent that Escrow Agent may continue to act as
counsel for Photoelectron generally or in the event that any controversy arises
with respect to this Agreement or the Technical Information deposited for escrow
hereunder.
(f) With respect to Zeiss, Escrow Agent may act in reliance
upon any written instrument signed by Zeiss's Vice President, Surgical Products
Division or an authorized delegate. Any writing to Escrow Agent by that officer
shall be accompanied by a Certificate of Incumbency by the Secretary or
Assistant Secretary of Zeiss which shall state that the officer signing the
writing holds the office of Vice President, Surgical Products Division as of
that current date, and any writing to Escrow Agent by an authorized delegate
shall contain a certification by such person that he is an authorized delegate
and shall also contain a statement as to the name and office of the person from
whom such authority was delegated.
(g) With respect to Photoelectron, Escrow Agent may act in
reliance upon any written instrument signed by Photoelectron's President or an
authorized delegate. Any writing to Escrow Agent by that officer of
Photoelectron shall be accompanied by a Certificate of Incumbency by the
Secretary or Assistant Secretary of Photoelectron, which shall state that the
officer signing the writing holds the office of President as of that date, and
any writing to Escrow Agent by an authorized delegate shall contain a
certification by such person that he is an authorized delegate and shall also
contain a statement as to the name and office of the person from whom such
authority was delegated.
(h) Escrow Agent may act relative hereto upon advice of counsel
(which may include attorneys employed by Escrow Agent) in reference to any
matter connected herewith and shall not be liable for any mistake of fact, error
of judgment, or any acts or omissions of any kind, unless caused by its willful
misconduct or gross negligence.
(i) This Agreement sets forth the exclusive duties of Escrow
Agent with respect to any and all matters pertinent hereto and no implied duties
or obligations of Escrow Agent shall be read into this Agreement.
<PAGE>
(j) Escrow Agent shall not be called upon to advise any party
as to its rights and obligations hereunder.
(k) Escrow Agent does not have and will not have any interest
in the Technical Information or any part thereof held hereunder in that Escrow
Agent is serving only as escrow holder and has only possession of the Technical
Information.
(l) The rights created by this Agreement shall inure to the
benefit of, and the obligations created shall be binding upon, the successors
and assigns of Escrow Agent and all other parties to this Agreement; provided,
however, that the rights of Zeiss hereunder shall not be sold, assigned or
transferred without the prior written consent of Photoelectron.
(i) Notwithstanding any term or provision of this Agreement to
the contrary, Escrow Agent shall be entitled to act or fail to act in compliance
with any order of a court of competent jurisdiction that relates to the
Technical Information or this Escrow Agreement, and shall have no liability to
either Zeiss or Photoelectron on account of such act or failure to act.
8. RESIGNATION
The Escrow Agent, or the Escrow Agent's successor hereinafter appointed,
may at any time resign by giving notice in writing to Photoelectron and Zeiss.
Such resignation may also appoint a successor Escrow Agent to serve in place of
the resigning Escrow Agent, and unless within 20 days (the "Appointment
Objection Period") of receiving such resignation either Photoelectron or Zeiss
object in writing to the then current Escrow Agent (with a copy to the other) to
the appointment of the successor, then the resigning Escrow Agent may thereafter
turn over the Technical Information to the successor Escrow Agent. Any such
successor Escrow Agent shall deliver to Photoelectron and Zeiss a written
certificate accepting such appointment hereunder, and thereupon it shall succeed
to all the rights and duties of the Escrow Agent hereunder and shall be entitled
to receive the benefit of the provisions set forth herein. Upon turning over the
Technical Information to the successor Escrow Agent, the resigning Escrow Agent
shall be discharged of all further duties hereunder (although it shall remain
entitled to indemnification hereunder pursuant to Paragraph 7(d) hereof and to
payment of all fees and costs and expenses owing to it hereunder). If the
resigning Escrow Agent does not appoint a successor Escrow Agent, or if during
the Appointment Objection Period either Zeiss or Photoelectron objects to the
successor Escrow Agent, Photoelectron and Zeiss shall jointly appoint in writing
a successor Escrow Agent; however, if they are unable to agree on a successor
escrow agent, either of such parties may petition a court of competent
jurisdiction to appoint one. From the date upon which the Escrow Agent sends
notice of any resignation until the acceptance by a successor Escrow Agent
appointed as provided herein, the Escrow Agent shall be entitled (although not
obligated), notwithstanding any provision of Section 2 to the contrary, to
continue to hold the Technical Information in its possession and not release it
to either party, and shall not incur any liability to either Zeiss or
Photoelectron on account thereof.
9. NOTICE
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent by
a nationally-recognized overnight courier or by registered or certified mail,
postage prepaid, return receipt requested addressed as follows:
If to Escrow Agent:
Goulston & Storrs, P.C.
400 Atlantic Avenue
Boston, Massachusetts 02110
Attn: Lester J. Fagen, Esq.
If to Photoelectron:
Photoelectron Corporation
<PAGE>
9 Executive Park Drive
North Billerica, Massachusetts 01862-1318
Attn: President
If to Zeiss:
Carl Zeiss
D - 73446 Oberkochen, Germany
Attn: Vice President Surgical Products Division
or to such other address as the party to whom notice is to be given may
have furnished to all of the other parties in writing in accordance herewith.
All such notices or communications shall be deemed to be received (a) in the
case of personal delivery, on the date of such delivery, (b) in the case of a
nationally-recognized overnight courier, on the next business day after the date
when sent, and (d) in the case of mailing, on the third business day following
the date on which the piece of mail containing such communication was posted.
10. TIME OF ESSENCE
Time is of the essence in all terms and conditions hereof. In determining
any time period herein, the day upon which action is taken to start the period
shall not be counted, and the period shall end on the last designated day of the
period.
11. GOVERNING LAW
This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts, without giving effect to the conflict of law principles thereof
12. AGREEMENT CHANGES
This Agreement shall not be revoked, rescinded, or modified as to any of
its terms and conditions except by consent in writing signed by all parties
hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
effective as of the date first above mentioned.
CARL ZEISS OBERKOCHEN
By: _________________________
Title: _________________________
Date: _________________________
PHOTOELECTRON CORPORATION
By: _________________________
Title: _________________________
Date: _________________________
ESCROW AGENT
By: _________________________
Title: _________________________
Date: _________________________
</TEXT>
</DOCUMENT>