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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
May 7, 1997
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Date of Report
(Date of earliest event reported)
ELECTROPHARMACOLOGY, INC.
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(Exact Name of Registrant as Specified in Charter)
DELAWARE 0-25828 95-4315412
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(State or other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
2301 N.W. 33RD COURT, SUITE 102
POMPANO BEACH, FLORIDA 33069
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(Address of Principal Executive Offices) (Zip Code)
(954) 975-9818
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
Electropharmacology, Inc. (the "Registrant") announced on May 7, 1997 the
execution of a multi-year distribution agreement for the sale and rental of
SofPulse /TM/ devices for selected applications in the United States with
National Patient Care Systems, Inc. ("NPCS"), a privately held company
specializing in distribution, lease and rental of specialty medical devices to
hospitals, nursing homes, physicians' offices and home care. Under the
agreement, NPCS will purchase from Registrant specified minimum quotas of
SofPulse /TM/ devices in exchange for exclusive distribution rights to three
selected market applications of SofPulse /TM/. The parties may agree to
renegotiate the minimum purchase quotas and the exclusivity of distributorship
in each market application based on prospective market demand for SofPulse /TM/
to be evaluated and developed during the first eight months of the agreement.
NPCS also will assume responsibility for the growth and operation of
Registrant's current fleet of rental devices including Registrant's sales and
marketing group, make monthly payments to Registrant for five years and pay
royalties to Registrant on NPCS' rental revenues. The cumulative revenue to
Registrant through the term of the agreement could exceed $25 million, provided
that NPCS meets substantially the minimum purchase quotas for all of the market
applications, for which there can be no assurance.
Exhibits:
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Exhibit
Number Exhibit
------ -------
1 Strategic Alliance Agreement dated as of May 1, 1997 between
Electropharmacology, Inc. and National Patient Care
Services, Inc.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Electropharmacology, Inc.
By: /s/ Arup Sen
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Arup Sen
President and Chief Executive Officer
May 7, 1997
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EXHIBIT 1
STRATEGIC ALLIANCE AGREEMENT/*/
This strategic alliance agreement ("Agreement") made as of the 1st day of
May, 1997 by and between Electropharmacology, Inc. having its offices in Pompano
Beach, Florida ("EPi") and National Patient Care Services, Inc. having its
offices in South Hackensack, New Jersey ("NPC"), sets forth the terms and
conditions for a Strategic Alliance between the parties for the development,
manufacturing, distribution and marketing of pulsed radiofrequency medical
devices.
RECITALS
EPi has developed, and it manufactures, distributes and markets pulsed
electromagnetic stimulation devices under its trademark name(s) MRT sofPulse/TM/
and SofPulse/TM/ ("PEMS Devices") for use as an adjunct in the palliative
treatment of postoperative pain and edema in superficial soft tissues.
NPC operates an established business renting, leasing and/or selling
medical equipment and supplies to nursing homes, hospitals and other clientele.
The parties desire to form a Strategic Alliance, whereby NPC will add PEMS
Devices to its product distribution for lease and/or for sale and EPi will
manufacture PEMS Devices for NPC's distribution and thereby will derive
benefits.
NOW THEREFORE, the parties agree as follows:
1. THE FLEET
EPi has developed a market niche for its PEMS Devices and has
manufactured and released for lease/rental an inventory of 530 devices
that are either under rental contract or dedicated for rental use
(hereinafter, the "Fleet"). EPi shall transfer to NPC the operational
control for the Fleet and EPi shall provide certain support functions
as further described hereinbelow:
1.1 As of the date of this Agreement (the "Effective Date") and for a
term of five years thereafter (the "Term"), NPC will be in
"control" of the use of the Fleet and be responsible for "all
activities" relating to the operation of the Fleet. "Control" as
used herein shall mean all decisions relating to the location,
utilization, billing and collection of revenue from rental of the
Fleet. "All activities" as used herein shall mean activities
related to customer sales and/or marketing and
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/*/ Confidential portions of this Exhibit have been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
under the Securities Exchange Act of 1934, as amended.
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distribution tasks, customer education, customer service and
training (in-service) as reasonably necessary to promote the
utilization of the Fleet in order to grow the revenue realized
from rental and/or leasing of PEMS Devices.
1.2 For the Term of this Agreement, EPi agrees to continue to provide
its customary warranty services (as stated in Schedule A),
technical maintenance services, replacement of defective
equipment parts, repair and calibration of equipment in the Fleet
at no additional cost to either of NPC, the lessees or other end
users to whom NPC markets the PEMS Devices. EPi shall maintain
technical personnel on call during regular business hours to
provide advice, instruction and guidance by telephone, and to
respond, no later than the following business day, for service,
repairs, maintenance and replacement as may be reasonably
required for the Fleet either at the end user's premises or at
EPi's facility.
1.3 As of the Effective Date and by appropriate instruments of
assignment and assumption, EPi shall transfer to NPC and NPC will
accept EPi's entire right, title and interest in and NPC will
assume (except as otherwise expressly set forth herein) all of
EPi's obligations under the rental business including all
rental/lease agreements (attached hereto as Exhibit 2) and the
sole right for the placement of those devices in the Fleet that
are not under an active rental/lease agreement as of the
Effective Date. All rental revenue receivables produced by the
Fleet on and after the Effective Date shall belong to NPC and
rental revenue receivables billed prior to the Effective Date
shall belong to EPi. EPi and NPC will jointly invoice for all
revenues for the month of April and collect all receivables for
credit to EPi. NPC shall be responsible and collect receivables
for invoices to customers of the Fleet for the month of May, 1997
and thereafter.
1.4 During the Term of this Agreement and any mutually agreed upon
extension thereof, EPi will grants to NPC the freedom to use, in
the US, any and all of EPi's rights, tangible or intangible,
under trademarks, tradenames and patents it now owns or hereafter
obtains (collectively, "Intellectual Property") that relate to
the rental or lease of the Fleet by NPC. All ownership rights to
Intellectual Property shall remain solely in EPi and except for
the license granted to NPC herein, no right to sublicense is
granted hereby and NPC hereby agrees that it will not in any way
contest or assist in challenging EPi's ownership of and rights in
Intellectual Property. EPi agrees to promptly notify NPC of any
developments with respect to Intellectual Property and NPC will
reasonably cooperate with EPi with respect to the identification
of PEMS Devices with trademarking or patent protection marking.
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1.5 In consideration of the rights granted and services to be
provided by EPi pursuant to Sections 1.1, 1.2, 1.3 and 1.4 above,
NPC agrees to pay to EPi the following:
(i) Sixty monthly payments each in the sum of [OMISSION]
with the first eight payments (May through December, 1997) being
due on the first day of the respective months and subsequent
payments being due on or before the fifteenth day of the
subsequent fifty-two months; and
(ii) A royalty in an amount equal to [OMISSION] of the gross
rental/lease revenue collected by NPC from rental/lease of PEMS
Devices that are currently in the Fleet as well as those that are
to be purchased by NPC in the future and used for rental/lease as
described hereinafter in Section 2.2. Royalty payments shall be
made to EPi on or before the twentieth business day after the
close of each calendar quarter and shall be calculated based on
the gross revenue collected by NPC for such quarter. No royalty
shall be owed to EPi on PEMS Devices that are purchased by NPC
from EPi and directly sold to an end user and with respect to
which rental or lease payments are not received by NPC.
At the end of the Term and subject to NPC having made all
payments provided hereunder, NPC shall have the option to acquire
full ownership and title to all of the PEMS Devices in the Fleet
for a total consideration of [OMISSION] to EPi. NPC may exercise
this option prior to the end of the Term upon prepaying the total
payments remaining unpaid based on the aggregate of all sixty
payments under 1.5 (i) herein. Upon exercise of the option, EPi
shall execute and deliver such instruments as may be required to
assign, unconditionally, all of EPi's right, title and interest
in and to the Fleet, its goodwill, operations and equipment free
and clear of any liens of EPi as of the date of exercise of such
option; provided, however EPi shall have no obligation with
respect to any encumbrances arising out of NPC's operation of the
Fleet after the Effective Date.
NPC's obligation to pay a royalty to EPi on NPC's rental/lease
revenue pursuant to 1.5 (ii) shall survive the exercise of the
option granted hereunder and continue for twenty four months
beyond the term of this Agreement or any mutually agreed upon
extension thereof.
1.6 Attached hereto are the following Exhibits related to the Fleet:
Exhibit 1: A true and complete list, including the serial
numbers and other identifying marks, of all PEMS
Devices in the Fleet and the location and status,
rented or not (in trial or otherwise) of each PEMS
Device as of the Effective Date.
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Exhibit 2: Copies of all active rental/lease agreements as
of the Effective Date.
Exhibit 3: A true and complete record of revenues with respect
to the Fleet for the fifteen month period from
January 1, 1996 through March 31, 1997, on a monthly
basis and any additional detailed breakdown available
to EPi with respect to revenues from specific
geographic territory within US.
Exhibit 4: Copies of issued US Patents assigned to EPi that
claim any feature related to PEMS Devices.
Exhibit 5: Copy of the Section 510(k) premarket notification
with the US Food and Drug Administration (FDA) for
commercial marketing of EPi's current PEMS Device,
SofPulse/TM/.
1.7 As of the Effective Date, EPi agrees to release the services of
the personnel listed in Schedule B attached hereto and NPC agrees
to negotiate in good faith an employment arrangement that is
mutuufacturing and distribution, for outright sale as well as for
rental/lease to hospitals, homes and wound care centers, of PEMS
Devices in the United States for selected applications based on
the detailed terms and conditions provided in this Section 2.
2. EXCLUSIVE DISTRIBUTORSHIP
As of the effective Date, EPi and NPC agree to enter into a
distributorship agreement whereby the parties will work exclusively
with each other in the manufacturing and distribution, for outright
sale as well as for rental/lease to hospitals, homes and wound care
center, of PEMS Devices in the United States for selected applications
based on the detailed terms and conditions provided in this Section 2.
2.1 Subject to NPC purchasing the minimum number of PEMS Devices on a
monthly basis for each of the partial calendar year of 1997 and
each full calendar year thereafter as provided below, EPi agrees
not to sell or rent PEMS Devices, in the United States, on its
own or in conjunction with a third party in the applications
specifically listed in Section 2.3 below.
2.2 The minimum quota for purchase by NPC that may be modified as set
forth in Section 2.4, which minimum quotas shall be allocated
one-third each to each of the three specific market applications
set forth in Section 2.3, are as follows:
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Year Period Minimum Quota
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1997 May - December [OMISSION] devices each month
Year Period Minimum Quota
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1998 January - June [OMISSION] devices each month
July - December [OMISSION] devices each month
1999 January - June [OMISSION] devices each month
July - December [OMISSION] devices each month
2000 January - June [OMISSION] devices each month
July - December [OMISSION] devices each month
2001 January - June [OMISSION] devices each month
July - December [OMISSION] devices each month
NPC will purchase and EPi will sell the PEMS Devices to NPC at
the following prices: (i) a price per unit equal to [OMISSION],
excluding sales and other applicable taxes, for PEMS Devices that
are sold by NPC to an end user and for which NPC does not receive
any rental/lease revenue and (ii) a price per unit of [OMISSION]
for each PEMS Device for which NPC enters a rental/lease
agreement with a customer and based upon which NPC also pays EPi
the royalty payments as set forth in Section 1.5(ii). The prices
recited in the preceding sentence are subject to adjustment by
the Consumer Price Index for orders placed by NPC during the year
1999 and thereafter. For new devices developed pursuant to
Section 2.5, the price per unit shall be [OMISSION] of EPi's
manufacturing cost (as calculated based on customary basis for
determining manufacturing cost for medical devices). NPC agrees
to provide to EPi a six month projection at the beginning of each
of the periods indicated in the table above and the parties agree
to cooperate with each other if minor reductions (plus or minus
five devices for any month) to the monthly numbers indicated
above is requested by NPC, so long as the minimum quota for the
six month period is met. At the beginning of each month, NPC
shall pay EPi a down-payment in the amount of twenty percent of
the total purchase price for the number of devices ordered for
that month. EPi will deliver the finished PEMS Devices within
fifteen days (or on a delivery schedule that is mutually agreed
upon) of the receipt of the order and the down-payment recited in
the preceding sentence from NPC. NPC will pay the remainder of
the purchase price within ten business days of the receipt of the
PEMS Devices; provided, however that NPC may
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withhold the payment for any PEMS Device that is found defective
by NPC and only pay such amount when EPi repairs or replaces such
defective PEMS Devices at no additional cost to NPC.
2.3 [OMISSION]
2.4 [OMISSION]
2.5 EPi intends to pursue the design and development of one or more
PEMS Devices that would produce tissue heating and meet the
criteria for a class II designation by the US FDA, although EPi
cannot guarantee whether it will be successful in completing the
development and receiving clearance for commercial marketing of
such a device. During the Term of the Agrement, EPi will offer
NPC the first right to negotiate the marketing and distribution
rights in the areas of NPC's application for improvements to and
derivatives of PEMS Devices developed by EPI; provided, however,
if the parties fail to enter into an agreement with respect to
such a product improvement or derivative within three months of
notification by EPi to NPC then EPi shall be free to pursue
comercialization of such a device without any further obligation
to NPC. During the Term of this Agreement, NPC grants EPi the
exclusive option to develop and manufacture for NPC's markets any
product that utilizes pulsed radiofrequency or pulsed
electromagnetic fields regardless of whether such a product
produces tissue heating (thermal diathermy); provided, however,
that (i) if EPi is unable or unwilling to offer a marketable form
of a device within six months of EPi's receipt of notice from NPC
requesting EPi to develop and manufacture a device that at the
time of NPC's request is cleared for commercial marketing in the
U.S. by the FDA (or within eighteen months for a device that is
not cleared for commercial marketing in the U.S. by the FDA at
the time of NPC's request), then NPC will be free to purchase the
same from an unaffiliated third party and (ii) NPC will, if
necessary to protect market position, be free to purchase such a
device during the period from the time of NPC's request to EPi
and such time when EPi starts delivering the device to NPC for
commercial marketing.
3. REPRESENTATIONS & WARRANTIES OF EPi:
3.1 EPi represents and warrants that it has the clear ownership right
and title to the Fleet, free of any encumbrances and liens, other
than those specified in the rental/lease agreements attached as
Exhibit 2.
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3.2 EPi represents and warrants that it is the assignee of the two US
Patents attached hereto as Exhibit 4 without any licenses granted
thereunder to a third party. EPi has not received any notice
asserting any infringement, nor claiming any interest in either
of the patents or other intellectual property right of EPi that
is related to the PEMS Devices. Other than the disclosures made
in its Form 10K-SB filing with the Securities and Exchange
Commission dated as of April 15, 1997, EPi has not received any
notice of unfair trade practice or other wrongdoing with respect
to the PEMS Devices or the Fleet or its operations.
3.3 EPi represents and warrants that as of the Effective Date it
maintains and at all times during the Term of this Agreement will
maintain, in effect, manufacturers' and designers' liability
insurance coverage with respect to the PEMS Devices that are in
the Fleet and that are to be purchased by NPC pursuant to Section
2 of this Agreement. NPC agrees that EPi's obligation with
respect to such liability insurance shall be limited to
manufacturers' liability that is customary in the industry, as
NPC will have the sole control of the operation of the Fleet and
the use of all PEMS Devices purchased by NPC pursuant to Section
2 of this Agreement.
3.4 EPi represents and warrants that it received the right to
commercially market PEMS Devices, in the Fleet and the devices to
be sold to NPC pursuant to Section 2 of this Agreement, pursuant
to the Section 510(k) premarket notification attached hereto as
Exhibit 5 for the indications described in the notification. EPi
received no communication from the US Food and Drug
Administration revoking or limiting EPi's rights to commercially
market its PEMS Devices that is inconsistent with the provision
of the notification in Exhibit 5.
3.5 EPi represents that it will provide, at no additional cost to NPC
or its customers, EPi's customary warranty and technical support
services for its PEMS Devices that are in the Fleet and those
that are sold to NPC pursuant to Section 2 of this Agreement.
4. REPRESENTATIONS & WARRANTIES OF NPC:
4.1 NPC represents and warrants that it has the right and the
authority to enter into this Agreement and that it intends to
pursue the rental/lease and the sale of PEMS Devices to the
applications segments recited in Section 2.3. NPC agrees that it
will comply with applicable regulatory guidelines in marketing
PEMS Devices.
4.2 NPC represents and warrants that as of the Effective Date it has,
and at all times during the Term of this Agreement will maintain,
adequate
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insurance as may be necessary or proper to conduct medical
equipment rental/lease business; provided, however, that NPC
shall not be liable for product defects or defects of workmanship
that are attributable to manufacture of medical devices. NPC will
indemnify and hold harmless EPi, its officers, directors,
employees and agents and hold them harmless against any liability
or damage arising out of NPC's sales and marketing rights and the
right to control the operation of the Fleet granted under the
Agreement.
4.3. NPC represents and warrants that until the expiration of the
Term of this Agreement, it will use its best efforts to maintain
and grow the rental/lease of PEMS Devices in the market niche
developed by EPi and will not sell or distribute, directly or
indirectly, other devices that utilize pulsed radiofrequency
energy in the areas of application recited in Section 2.3.
5. TERMINATION:
5.1 Termination by NPC: NPC may terminate this Agreement, prior to
the end of the Term, upon the occurrence of any of the following:
(i) an order by the US Food and Drug Administration that PEMS
Device marketing rights by EPi is adversely affected, (ii) a
policy by Health Care Financing Administration that is actually
implemented by the fiscal intermediaries with whom NPC and its
customers are dealing at the time of such policy change and that
denies reimbursement for treatment by pulsed radiofrequency
energy or (iii) a breach by EPi of any material provision of this
Agreement that is not cured within thirty days of notification by
NPC to EPi in writing that the breach has occurred. The parties
agree to reasonably cooperate in the event that reimbursement for
the use of PEMS Devices, in the currently allowed indications for
use, falls below the current levels. Such cooperation may
include an adjustment in the monthly payment recited in Section
1.5 (i), an adjustment in the minimum quota, or the purchase
price per unit to be paid by NPC to EPi.
5.2 Termination by EPi: EPi may terminate this Agreement prior to
the end of the Term upon the occurrence of any of the following:
(i) a failure on the part of NPC to make the required payments or
purchase the minimum quota as set forth in Section 2.2 at the
required time, or (ii) a breach by NPC of any material provision
of the Agreement which breach is not cured within thirty days of
notification by EPi to NPC in writing that the breach has
occurred.
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5.3 Termination by NPC or EPi pursuant to Section 5.1 or 5.2
above prior to the end of the Term shall relieve both parties of
any future obligation to each other; provided, however, that each
of NPC and EPi shall meet their unfulfilled obligations incurred
up to the date of such termination including any payments owed by
NPC to EPi and the delivery of devices by EPi to NPC for which an
order and down-payment had been tendered by NPC. Upon such early
termination, (i) the rights and obligations under all then
existing rental/lease agreement relating to the Fleet shall
revert back to EPi, (ii) the license granted to NPC under EPi
technologies and patents shall terminate and (iii) all revenue
collected from the Fleet from the date of such early termination
shall belong solely to EPi. NPC agrees to reasonably cooperate
with EPi with respect to facilitating the transfer of billing and
collection of such rental/lease revenue.
5.4 If NPC terminates the Agreement prior to the end of the Term for
reasons other than those set forth in Section 5.1 above, then all
remaining payments (i.e., sixty minus the number of payments made
as of that date) under Section 1.5 (i) shall become immediately
due and payable in full, the license granted to NPC under any EPi
technology or patent shall immediately cease (except with respect
to the PEMS Devices purchased by NPC until such date) and EPi
shall no longer be bound by any restriction set forth in Section
2.3 or be required to supply further products as set forth in
Section 2.2. If EPi terminates this Agreement prior to the end
of the Term for reasons other than those set forth in Section 5.2
above, then NPC shall no longer have any obligation to meet the
minimum quota and be given a royalty-free, non-exclusive license
under Epi patents and technologies related to the Fleet and any
equipment purchased as of the date of that termination and NPC,
at its sole discretion, may either (i) surrender to EPi all of
its rights and obligations relating to the Fleet and the rental
business to EPi or (ii) remain in control of the Fleet and after
the date of such termination only pay the monthly payments
recited in Section 1.5 (i) and not be required to pay any further
royalty payment provided in Section 1.5 (ii); provided, however,
that NPC shall make any royalty payments that have accrued but
are unpaid as of the date of such termination.
6. RECORDS
6.1 NPC, upon reasonable notice to EPi and during normal business
hours, shall have the right, at NPC's expense, to inspect EPi's
books and records with respect to compliance with applicable
regulations for manufacture of PEMS Devices and communications of
EPi with the regulatory agency with respect to changes, if any,
in indications for use of PEMS Devices; provided, however, that
facility inspections may be conducted only once
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during any calendar year and the inspection of regulatory and
quality control records may be conducted only four times a year.
6.2 NPC shall provide EPi with monthly reports describing the monthly
revenues from the rental business and from the direct sale of
PEMS Devices by NPC to end users, such reports to be furnished
within thirty days from the end of the prior month. NPC, upon
reasonable notice by EPi and during normal business hours, shall
permit EPi and its authorized representative to inspect and
review, at the expense of EPi, the books and records and work
papers of NPC to verify the accuracy of NPC's calculations of
rental/lease revenues and royalties owed to EPi pursuant to
Section 2 hereof and all information underlying such
calculations; provided, however, that such inspection may only be
requested only four times during any calendar year.
7. CONFIDENTIALITY
Each of EPi and NPC will hold, and will cause its officers, directors,
employees, independent contractors, and agents (collectively,
"Representatives") to hold in strict confidence, all Confidential
Information concerning the other in its possession or furnished by the
other or the other's Representatives pursuant to this Agreement;
provided, however, that such confidentiality obligation shall not
apply to information that (i) is or comes to the public domain through
no fault of the disclosing party or (ii) is lawfully acquired by one
party from an independent third party who is not under any obligation
with the other party. Neither party will release or disclose such
Confidential Information to any other person except to its auditors,
attorneys, financial advisors, bankers and other consultants or
advisors, and only on terms and conditions substantially the same as
the terms and conditions on which such party releases its own
Confidential Information, unless compelled to disclose such
Confidential Information by judicial or administrative processes or as
advised by its counsel, by other requirements of law. The party
disclosing pursuant to the preceding sentence shall notify the other
party of its intent to disclose such Confidential Information prior to
such disclosure if practical and if not practical, as soon after such
disclosure as possible. For purposes of this Agreement, "Confidential
Information" is defined as all information, whether or not reduced in
writing, relating to the whole or any portion or phase of any
scientific or technical information, design, processes, procedures,
formula, improvement, confidential business or financial or marketing
information, listing of names, addresses or telephone numbers, or
other information relating to such party's business which is secret
and of value.
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8. INDEMNIFICATION
8.1 Indemnification by EPi. EPi shall indemnify, defend and hold
harmless NPC and its directors, officers, employees, agents and
representatives from and against any and all losses, claims,
damages, liabilities, demands, suits and actions, including all
reasonable attorneys' fees and disbursements and other costs and
expenses incurred in connection therewith (collectively,
"Indemnifiable Losses"), relating to, resulting from or arising
out of any of the following:
(A) any actual or alleged infringement by a PEMS Device of any
patent or copyright that is the subject of this Agreement;
provided, however, that EPi, at its option and expense, may,
in lieu of so indemnifying, defending or holding harmless
NPC or any other person entitled to indemnification
hereunder, (i) procure on behalf of NPC the right to
continue using the PEMS Device or (ii) replace or modify the
PEMS Device to eliminate the alleged infringement while
providing functionally equivalent performance; and provided
further that EPi will have no obligation to indemnify,
defend or hold harmless NPC or any other person if the
alleged infringement results from (i) a correction or
modification of the PEMS Device not provided by EPi or (ii)
the failure to promptly install any update or modification
of a PEMS Device provided to NPC by EPi;
(B) any damages actually incurred by NPC resulting from the
failure of EPi to notify NPC or any change in U.S. Food and
Drug Administration rules or regulations that would prohibit
or materially restrict further end use of PEMS Devices;
provided, however, that EPi shall have no obligation to
indemnify NPC for any damages so incurred in the event that
EPi provides NPC timely notification of any such regulatory
change and NPC fails to take reasonable corrective action
that would have prevented or substantially mitigated the
damages incurred by NPC; or
(C) EPi's breach of any provision of this Agreement.
8.2. Indemnification by NPC. NPC shall indemnify, defend and hold
harmless EPi and its respective directors, officers, employees,
agents and representatives from and against any and all
Indemnifiable Losses relating to, resulting from or arising out
of (i) any negligent act or omission by, or willful misconduct
of, NPC's employees or agents, (ii) any rental/lease agreement it
enters relating to PEMS Devices, (iii) any warranty, condition,
representation, indemnity or guarantee made or granted by NPC
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or provided by law with respect to the PEMS Devices licensed by
NPC, in addition to or in lieu of the warranties specified in
Section 4 of this Agreement, (iv) any omission or inaccuracy in
NPC's advertisements and promotional materials that relate to the
PEMS Devices, (v) any modification of or addition to the PEMS
Devices by NPC not provided or approved by EPi or (vi) NPC's
breach of any provision of this Agreement.
8.3. Notice of Claims. If any person entitled to indemnification
under this Agreement (an "Indemnitee") receives notice of the
assertion of any claim or of the commencement of any action or
proceeding by any person that is not a party to this Agreement (a
"Third party Claim") against such Indemnitee, the Indemnitee
shall promptly provide written notice thereof (including a
description of the Third Party Claim) and an estimate of any
Indemnificable Losses (which estimate shall not be conclusive as
to the final amount of such Indemnifiable Losses) to the party
required to provide indemnification under this Agreement (the
"Indemnifying Party") within 10 business days after the
Indemnitee's receipt of notice of such Third Party Claim. Any
delay by the Indemnitee in providing such written notice shall
not relieve the Indemnifying party of any liability for
indemnification hereunder except to the extent that the rights of
the Indemnifying Party are materially prejudiced by such delay.
8.4. Defense of Claim. The Indemnifying Party shall have the right
to participate in or, by giving written notice to the Indemnitee,
to assume the defense of any Third Party Claim at such
Indemnifying Party's expense and by such Indemnifying Party's own
counsel (which shall be reasonably satisfactory to the
Indemnitee), and the Indemnitee will cooperate in good faith in
such defense. The Indemnifying Party shall not be liable for any
legal expenses incurred by the Indemnitee after the Indemnitee
has received notice of the Indemnifying Party's intent to assume
the defense of a Third Party Claim; provided, however, that if
the Indemnifying Party fails to take steps reasonably necessary
to diligently pursue the defense of such Third Party Claim within
10 business days of receipt of notice from the Indemnitee that
such steps are not being taken, the Indemnitee may assume its own
defense and the Indemnifying Party shall be liable for the
reasonable costs thereof.
8.5. Settlement of Claim. The Indemnifying Party may settle any
Third Party Claim which it has elected to defend so long as the
written consent of the Indemnitee to such settlement is first
obtained (which consent shall not be reasonably withheld). The
Indemnified Party shall not settle any Third Party Claim without
the written consent of the Indemnifying Party (which consent
shall not be unreasonably withheld).
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8.6 Cooperation. In the event that a Third Party Claim involves a
proceeding as to which both EPi and NPC may be Indemnifying
Parties, the parties hereto agree to cooperating in good faith in
a joint defense of such Third Party Claim.
9. NOTICES
All notices given in connection with this Agreement shall be in
writing. Service of such notices shall deemed to be complete (i) if
hand delivered, on the date of delivery, (ii) if by mail, on the
fourth business day following the day of deposit in the United States
mail, by certified or registered mail, first class postage prepaid, or
(iii) if sent by Federal Express or other equivalent courier service,
on the next business day. Such notices shall be addressed to the
parties at the following addresses or at such other address for a
party as shall be specified by like notice (except that notices of
change of address shall be effective upon receipt):
If to EPi: Electropharmacology, Inc.
2301 NW 33rd Court; Suite 102
Pompano Beach, Florida 33069
Attention: President
Telephone No.: (954) 975-9818
If to NPC: National Patient Care Services, Inc.
23 Empire Boulevard
So. Hackensack, New Jersey 07606-1895
Attention: President
Telephone No.: (201) 641-7400
10. GOVERNING LAW
The validity, interpretation, construction and performance of this
Agreement will be governed by and construed in accordance with the
laws of the state of New York, without giving effect to its conflict
of law principles of such state.
11. FORCE MAJEURE
Neither party will be liable for any failure or delay in performing an
obligation under this Agreement (including payments) that is due to
causes beyond its reasonable control, such as natural catastrophes,
government acts or omissions, laws or regulations, labor strikes or
difficulties, transportation stoppage or slowdowns, or the inability
to procure parts. If any of these causes continue to
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delay or prevent performance for more than ninety days, then either
party may terminate this Agreement, effective immediately, upon notice
to the other.
12. SEVERABILITY
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under any present or future law, in whole or in part,
such holding will not affect the validity of any other provision of
this Agreement and will be fully separable and this Agreement shall be
construed and enforced if such illegal, invalid or unenforceable
provision had never comprised a part hereof. The remaining provisions
of this Agreement will remain in full force and effect and will not be
affected by the illegal, invalid or unenforceable provision. However,
if one party deems the unenforceable provision or a legally
enforceable modification thereof to be essential for its performance
under this Agreement, then the party may terminate this Agreement,
effective immediately, upon written notice to the other.
13. ASSIGNMENT
This agreement may not be assigned or delegated by either party
without the written consent of the other except to a party who
acquires all or substantially all of the assets of such party;
provided, however, that NPC shall not, under any event, have the right
to assign its rights under this Agreement during the Evaluation Period
without the prior written consent of Epi.
14. ENTIRE AGREEMENT
This Agreed its Exhibits constitute the complete and entire statement
of all terms, conditions and representations of the agreement between
NPC and EPi with respect to this subject matter and supersedes all
previous verbal, written or other understandings and agreements.
15. DISPUTE RESOLUTION
In the event of any action or proceeding between the parties arising
out of or related to this Agreement, the prevailing party in such
action or proceeding shall be entitled to recover from the other
party, in addition to other recoveries, its reasonable attorneys' fees
and expenses.
16. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which will be deemed an original but all of which together constitutes
one and the same agreement.
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IN WITNESS WHEREOF, the parties hereof have executed this Agreement as of
the day and year first above written.
ELECTROPHARMACOLOGY, INC.
By: /s/ Arup Sen
-----------------------------------
Arup Sen, Ph.D.
Chairman & Chief Executive Officer
NATIONAL PATIENT CARE SERVICES, INC.
By: /s/ Glenn Edwards
-----------------------------------
Glenn Edwards
Chairman & Chief Executive Officer
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SCHEDULE A
WARRANTY BY EPI
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SCHEDULE B
David Saloff (certain specific obligations)
Carolyn Delaney, P.T.
Joseph D'Antonio
Glen Magloff
Darryl Wheatly
Robert Watts
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