Tenon Medical, Inc 8-K, filed Oct 11, 2022
Tenon Medical, Inc. (TNON)
About this 8-K
Tenon Medical, Inc filed this 8-K on October 11, 2022, reporting on events of October 6, 2022.
Items reported
- Item 1.01: Entered into a material agreement
- Item 1.02: Ended a material agreement
- Item 2.03: New debt or off-balance-sheet obligation
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Exhibit No. |
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Description |
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Date: October 11, 2022 |
TENON MEDICAL, INC. |
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By: |
/s/ Steven M. Foster |
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Name: |
Steven M. Foster |
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Title: |
Chief Executive Officer and President |
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Exhibit 10.1
[CERTAIN INORMATION IN EXHIBIT A AND EXHIBIT B TO THIS EXHIBIT 10.1 HAS BEEN EXCLUDED FROM THESE EXHIBITS BECAUSE IT IS BOTH NOT MATERIAL AND IS THE TYPE THAT TENON MEDICAL, INC. TREATS AS PRIVATE AND CONFIDENTIAL]
CONSULTING AGREEMENT
between
TENON MEDICAL, INC.
and
SPINESOURCE, INC.
This Consulting Agreement (the “Consulting Agreement”) is entered into among and between Tenon Medical, Inc., a Delaware corporation having a place of business at 104 Cooper Court, Los Gatos, CA 95032 (“Company”), and SpineSource, Inc., a Missouri corporation having a place of business at 17826 Edison Avenue, Chesterfield, MO 63005 (“SpineSource”) (each herein referred to by name or individually, as a “Party,” or collectively, as the “Parties”). This Agreement shall become effective on the last date on which the Agreement is signed by all Parties (“Effective Date”).
WHEREAS, Company and SpineSource previously entered into an “Exclusive Sales Representative Agreement,” dated April 27, 2020, as amended on December 15, 2020 (the “Sales Agreement”), and an Amended and Restated Exclusive Sales Representative Agreement (the “Restated Sales Agreement”), dated May 20, 2021 (together, the “Prior Agreements”), under which SpineSource received exclusive rights to market, promote and distribute the Company’s “Catamaran” product in the United States and Puerto Rico.
WHEREAS, Company and SpineSource have come into an agreement to terminate the Prior Agreements by entering into the Agreement Terminating Amended and Restated Exclusive Sales Representative Agreement (“Termination Agreement”), which shall be executed simultaneously with this Consulting Agreement, and to enter into this Consulting Agreement;
WHEREAS, Company seeks to retain SpineSource to provide services requiring specific skills and expertise relating to Company’s sacroiliac joint fusion business line and SpineSource seeks to provide such services to Company;
WHEREAS, SpineSource employees, Tom Mitchell and Alec Mitchell (each a “Consultant” and together the “Consultants”), have unique skills and expertise relating to Company’s sacroiliac joint fusion business line; and
WHEREAS, Company seeks to enter into this Consulting Agreement under which SpineSource and Consultants agree to provide, and Company agrees to retain, the services, as set forth in this Consulting Agreement.
NOW THEREFORE, in consideration of the mutual covenants and promises set forth below and for good and valuable consideration, sufficiency of which is acknowledged, the Parties agree as follows:
1. Consulting Relationship. The Parties agree that Consultants shall provide certain consulting services to the Company as described generally in Exhibits A and B attached to this Consulting Agreement and incorporated by reference (the “Services”). Consultants shall use Consultants’ best efforts to perform the Services in a professional manner and in accordance with the degree of skill, care and diligence normally exercised by recognized professional person or firms that supply services of similar nature. The Parties further agree that SpineSource will be responsible for the delivery of services provided by Consultants and will ensure Consultants’ compliance with the terms and conditions of this Consulting Agreement including any provisions that survive termination of this Consulting Agreement for any reason.
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2. Fees. As consideration for the Services to be provided Consultant on behalf of SpineSource, the Company will compensate SpineSource as described in Exhibits A and B to this Consulting Agreement (“Compensation”). The Parties acknowledge and agree that the Compensation set forth in Exhibits A and B represents the fair market value of the Services provided by SpineSource to the Company negotiated in an arms-length transaction.
3. Expenses. Company agrees to reimburse SpineSource for actual, documented and reasonable travel and related out-of-pocket expenses incurred by Consultants in connection with the performance of the Services that require travel (e.g. reasonable meals, accommodations, economy airfare, transportation, client meals & entertainment and other similar expenses required to perform the Services) as described in more detail in Exhibits A and B; provided, however, that Consultants shall not be authorized to incur on behalf of the Company any other expenses, without the prior written consent of the Company’s President or the supervisor designated in Section 6 below. As a condition of receipt of reimbursement, Consultants shall be required to submit to the Company reasonable evidence that the amount involved was expended and related to Services provided under this Consulting Agreement within thirty (30) days of Consultants’ incurrence of any such expenses.
4. Term and Termination.
(a) Initial Term and Renewal Terms. The Term of this Consulting Agreement shall commence on the Effective Date and shall continue in full force and effect for twelve (12) months from the Effective Date (“Initial Term”), unless sooner terminated as provided herein. The Parties may mutually agree in a signed writing to extend this Consulting Agreement for additional one-year terms (“Renewal Terms”) unless the Consulting Agreement is otherwise earlier terminated in accordance with any other provision herein. The Initial Term and any Renewal Term shall be referred to herein collectively as the “Term.”
(b) Right to Immediately Terminate by Notice. Upon the occurrence of any of the following events, Company shall have the right to terminate this Consulting Agreement immediately by giving written notice of such action to SpineSource:
(i) SpineSource and/or either Consultant is terminated or suspended from Medicare, Medicaid, or any state or federally funded program;
(ii) Either Consultant is convicted of or pleads guilty or nolo contendere to any crime, including, without limitation, a felony, or any other misdemeanor involving moral turpitude;
(iii) Either Consultant abuses any chemical substance, including prescription medication, that affects Consultant’s performance of the Services;
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(iv) Either Consultant violates any of the protocols, policies, and procedures of the Company provided the protocols, policies, and procedures have been provided by the Company to the Consultant in writing, and acknowledged in writing;
(v) Either Consultant dies or is adjudicated incompetent;
(vi) Either Consultant becomes a Sanctioned Person; and/or
(vii) Either Consultant is unable to perform substantially all of the duties set forth hereunder due to any physical or mental illness, physical injury or impairment for ninety (90) continuous days.
(c) Right to Termination upon Occurrence of Certain Events.
(i) If Company believes in good faith that material damage or harm is occurring to its reputation or goodwill by reason of SpineSource and a Consultant’s continued performance of Services hereunder, Company may give written notice of its intent to terminate based on such breach. Such written notice shall specify in detail the nature of the offending action or inaction so that SpineSource can take corrective action. The notice will be effective to terminate this Consulting Agreement on the date specified in such notice, provided that such date is at least thirty (30) days after the date of delivery of such notice and SpineSource has not cured the specified breach by the end of such period.
(ii) If Company believes in good faith that SpineSource and/or either Consultant have violated any of its protocols, policies, and procedures that Company has previously provided to SpineSource in writing and material damage or harm is occurring by reason of SpineSource and/or Consultants’ continued performance hereunder, Company may give written notice of its intent to terminate based on such breach. Such written notice shall specify in detail the nature of the offending action or inaction so that Company can take corrective action. The notice will be effective to terminate this Consulting Agreement on the date specified in such notice, provided that such date is at least thirty (30) days after the date of delivery of such notice and SpineSource has not cured the specified breach by the end of such period.
(iii) If Company believes in good faith that SpineSource and/or either of the Consultants have violated any obligation of Consultants hereunder regarding confidentiality, assignment of inventions, non-competition, or non-solicitation, Company may give written notice of its intent to terminate based on such breach. Such written notice shall specify in detail the nature of the offending action or inaction so that SpineSource can take corrective action. The notice will be effective to terminate this Agreement on the date specified in such notice, provided that such date is at least thirty (30) days after the date of delivery of such notice and SpineSource has not cured the specified breach by the end of such period.
(d) SpineSource agrees to provide prompt written notice to the Company of the occurrence of any events specified in this Section 4(b)(i), Section 4(b)(ii) or 4(b)(v).
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(e) In the event that Company provides notice of termination pursuant to this Section 4 (b)4, Company may, in its sole discretion, at any time after Company’s notice before the actual termination date, notify Consultants that Consultant’s Services under this Consulting Agreement will no longer be required and Consultants will immediately cease the provision of such Services (“Service Termination”), provided, however, that Company shall remain obligated to pay SpineSource the amount of Compensation that would have been paid to SpineSource by Company for the Services provided by Consultants, from the date of the Service Termination through the actual termination date of this Consulting Agreement. Such final payments shall be made within ten (10) calendar days following the date of the Service Termination.
(f) Furthermore, upon such termination, SpineSource and Consultants shall immediately return to Company all personal property of the Company in SpineSource and Consultants’ possession. Moreover, upon termination of this Consulting Agreement, SpineSource and Consultants shall cooperate fully with Company in all matters relating to the completion of pending work on behalf of Company and the orderly transfer of such work to other another service provider as directed by the Company for a period not to exceed ten (10) calendar days following the date of the Service Termination.
5. Indemnification.
(a) General Indemnification Obligation. Each Party shall indemnify, defend and hold harmless the other Party against any losses, claims, demands, damages, liabilities, causes of action, costs, expenses, judgments, and proceedings, including but not limited to, all reasonable attorneys’ fees, costs and expenses (“Claims”), with respect to third party claims to the extent caused by such Party’s: (i) material breach of this Agreement; (ii) failure to perform its obligations hereunder; (iii) negligence, recklessness, or gross negligence; or (iv) fraud or willful misconduct.
(b) Indemnification. As additional consideration for entering into this Agreement, each Party shall indemnify, defend and hold harmless the other Party, its successors and assigns, directors, officers, employees, agents and representatives (“Indemnified Parties”) from and against any losses, claims, demands, damages, liabilities, causes of action, costs, expenses, judgments, and proceedings, including but not limited to, all reasonable attorneys’ Claims regarding or related to allegations of infringement or misappropriation of any intellectual property rights of any third party, including, without limitation, any copyrights, mask work rights, United States patent rights, trademark rights, trade secret rights or confidentiality rights, resulting from anything provided under this Agreement.
(c) Written Notice Requirement. To be entitled to any indemnification under this Section 5, the requesting Party shall give the other Party prompt written notice of any Claim with respect to which the requesting Party might bring a claim for indemnification hereunder, and in all events must supply such written notice to the other Party within the applicable period of defense of such Claim. The indemnification obligations in this Section 5 shall survive the expiration or termination of this Consulting Agreement.
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6. Independent Contractor. Consultants’ relationship with the Company will be that of independent contractors and not that of employee or agent. Consultants will not be eligible for any employee benefits, nor will the Company make deductions from payments made to Consultants for taxes, all of which will be SpineSource and Consultants’ responsibility. SpineSource and Consultants agrees to indemnify and hold the Company harmless from any liability for, or assessment of, any such taxes imposed on the Company by relevant taxing authorities. SpineSource and Consultants will have no authority to enter into contracts and other arrangements written or oral that bind the Company or create any obligations on the part of the Company without the prior written authorization of the Company.
7. Representations, Warranties and Covenants of Consultants. SpineSource and Consultants hereby represent, warrant, and covenant, as of the Effective Date, and during the term of this Consulting Agreement, that SpineSource and Consultants, as applicable:
(a) has the power and authority to enter into this Consulting Agreement;
(b) has not been convicted of any crime, including, without limitation, any felony, nor made an admission of guilt of, or plead nolo contendere with respect to, such conduct, which is a matter of record;
(c) will abide by and perform Services in accordance with this Consulting Agreement, in a diligent, competent manner;
(d) will perform Services in accordance with Exhibit A and B, as may be amended or modified, from time to time by the Company;
(e) is not currently the target or subject of any investigation, inquiry or audit, nor have SpineSource and/or Consultants received any written notice nor are SpineSource and/or Consultants otherwise aware of any pending or threatened investigation, inquiry or audit by any federal, state or local governmental authority;
(f) are not currently subject, nor in the last ten (10) years have been subject, to any sanctions pursuant to any federal, state or local governmental authority, nor are SpineSource and/or Consultants a Sanctioned Person. Sanctioned Person shall mean a person whom:
(i) has been convicted of: (i) any offense related to the delivery of an item or service under the Medicare or Medicaid programs or any program funded under Title V or Title XX of the Social Security Act (the Maternal and Child Health Services Program or the Block Grants to States for Social Services Program, respectively), (ii) a criminal offense relating to neglect or abuse of patients in connection with the delivery of a health care item or service, (iii) fraud, theft, embezzlement, or other financial misconduct in connection with the delivery of a health care item or service, (iv) obstructing an investigation of any crime referred to in above, or (v) unlawful manufacture, distribution, prescription, or dispensing of a controlled substance;
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(ii) has been required to pay any civil monetary penalty under 42 U.S.C. § 1320a-7a, regarding false, fraudulent, or impermissible claims under, or payments to induce a reduction or limitation of health care services to beneficiaries or, any state or federal health care program which may result in such payment; or
(iii) has been excluded, disbarred, suspended, or otherwise declared ineligible from participation in the Medicare, Medicaid, or Maternal and Child Health Services (Title V) Program, or any program funded under the Block Grants to States for Social Services (Title XX) Program.
(g) will act in compliance with all applicable federal, state and local laws, ordinances, rules and regulations;
(h) will act in compliance with all policies, bylaws, rules and regulations of the Company, provided in advance by Company in writing, which may change from time to time; and
(i) SpineSource and Consultants’ obligations under this Section 7 will survive any termination of this Consulting Agreement with respect to any event specified in this Section 7 if such event relates in any way to the Services.
8. Company Representations and Warranties. Company represents and warrants that:
(a) its entry into this Consulting Agreement is rightful and does not violate any other agreement to which it is a party,
(b) its conduct in performing its obligations under this Consulting Agreement shall conform to all Applicable Laws, general and local industry and medical standards and good commercial practices;
(c) it has and will maintain all the necessary licenses, authorizations, approvals, registrations, permissions, and the like to perform its obligations under this Agreement, including all necessary intellectual property rights to manufacture and sell the Products in the Territory.
9. Compliance. The Services to be provided by SpineSource and Consultants and the obligations and responsibilities of Company pursuant to this Consulting Agreement shall be provided in compliance with: (i) all applicable federal and state laws and regulations; and (ii) any other applicable guidelines and protocols as may be adopted by the Company.
10. Regulatory Requirements.
(a) Nothing in this Consulting Agreement shall be construed to require any Party or any other person or entity to refer patients to any other Party, affiliate of any Party, or any healthcare facility. Notwithstanding the unanticipated effect of any of the provisions herein, the Parties intend to comply with 42 U.S.C. § 1320a-7b(b) (commonly known as the Anti-Kickback Statute), 42 U.S.C. § 1395nn (commonly known as the Stark Law), and any other federal or state law provision governing fraud and abuse or self-referrals with respect to the provision of healthcare items or services, as such provisions may be amended from time to time.
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(b) This Consulting Agreement shall be construed in a manner consistent with compliance with the Anti- Kickback Statute, the Stark law, and similar such statutes and regulations, whether state or federal, and the Parties shall take such actions necessary to construe and administer this Agreement therewith. The Parties solely intend that all amounts paid to Consultants are commercially reasonable, reflect fair market value, based on arm’s length bargaining, reflect the value of similar services in the community and are not intended to influence Consultants or any healthcare professional with regard to any referrals of patients to any other Party, its affiliates, or any healthcare facilities. In the event any court or administrative agency of competent jurisdiction determines this Agreement violates any of such statutes or that the Compensation hereunder exceeds reasonable compensation, then the Parties shall take such actions as may be necessary to amend this Consulting Agreement to comply with the applicable statutes or regulations.
11. Nondisclosure and Trade Secrets.
(a) During the Term of this Consulting Agreement, SpineSource and Consultants may receive confidential and proprietary information relating to Company’s business. Such confidential and proprietary information may include, but not be limited to, confidential and proprietary information supplied to SpineSource and Consultants, Company’s algorithms of care, marketing strategies, financial information, Company’s internal organization, third party payor lists, customer lists, patient lists, technology, processes, hardware/software design and/or formulas, methods, product know-how and show how, and all derivatives, improvements and enhancements to any of the above which are created or developed by SpineSource and Consultants under this Consulting Agreement and information of third party payors as to which Company has an obligation of confidentiality (collectively referred to as “Information”). SpineSource and Consultants agree that the Information is confidential and is the sole, exclusive and extremely valuable property of Company. SpineSource and Consultants agree not to reproduce any of the Information without the applicable prior written consent of Company, not to use the Information except in the performance of this Agreement, and not to disclose all or any part of the Information in any form to any third party, either during or after the Term of this Consulting Agreement.
(b) SpineSource and Consultants understand that Company has received and will in the future receive from third parties confidential or proprietary information, including, but not limited to, personal, medical, or other information relative to patients (collectively, “Third Party Information”) subject to a duty on Company’s part to maintain the confidentiality of such information and use it only for certain limited purposes. SpineSource and Consultants agrees to hold Third Party Information in confidence and not to disclose to any third party (exclusive of Company personnel) or to use, except in connection with SpineSource and Consultants’ work for Company, unless expressly authorized in writing by the Company, or as required by law.
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(c) SpineSource and Consultants will not disclose to Company, will not bring into Company’s facilities, and will not induce Company to use any confidential or proprietary information of any third party, which is provided to SpineSource and Consultants, other than as required in connection with the Services.
(d) Upon termination of this Consulting Agreement for any reason, including expiration of the Term, or upon request by the Company, SpineSource and Consultants agree to cease using and to return to Company all whole and partial copies and derivatives of the Information and Third-Party Information, whether in SpineSource and Consultants’ possession or under SpineSource and Consultants’ direct or indirect control. Notwithstanding any contrary terms regarding Information, SpineSource and Consultant are not obligated to immediately destroy computer files that are stored as a result of automated back-up procedures at the time of termination. Any Information referenced in the preceding sentence that is not returned or destroyed will remain subject to the confidentiality obligations provided in this Consulting Agreement and such confidentiality obligations shall survive the termination or expiration of this Consulting Agreement until the same are destroyed as part of SpineSource’s back-up procedures, and shall not be accessed by SpineSource and Consultants during such period of archival or back-up storage other than as might be permitted herein.
(e) This Section 11 shall survive the termination of this Consulting Agreement for any reason, including expiration of the Term.
(f) For the avoidance of any doubt, nothing contained in this Consulting Agreement limits SpineSource and Consultants’ ability to communicate with any federal, state or local governmental agency or commission, including to provide documents or other information, without notice to the Company. Further, pursuant to the federal Defend Trade Secrets Act of 2016, SpineSource and Consultants shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
(g) The obligations set forth in this Section 11 shall not apply to any Information which: (1) is in or becomes part of the public domain by means other than SpineSource and Consultants’ breach of SpineSource and Consultants’ obligations under this Consulting Agreement; (2) was already known to SpineSource and Consultants at the time of disclosure by the Company as evidenced by written records of SpineSource and Consultants; (3) has been rightfully received by SpineSource and Consultants from a third party who is authorized to make such disclosure. Nothing in this Consulting Agreement shall be read to limit any obligation of confidentiality SpineSource and Consultants may have had by virtue of SpineSource and Consultants’ relationship or confidentiality agreements with the Company under any other agreement.
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12. Supervision of Consultants’ Services. With reasonable advanced notice and mutually agreeable dates and times, the Parties shall meet periodically to discuss specific Services to be performed by Consultants. Company shall designate a manager, from time to time, to coordinate such efforts with Consultants. The initial supervisor designated by the Company shall be Steven Moscaret. Consultants will periodically provide status reports to the acting supervisor concerning the Services performed under this Consulting Agreement. Additionally, SpineSource and Consultants shall be solely responsible for supervising, controlling, and directing the details and manner of the completion of the Services. Nothing in this Agreement shall give Company the right to instruct, supervise, control, or direct the details and manner of the completion of the Services, although the Service may be subject to Company’s final approval.
13. Ownership of Intellectual Property.
(a) As used in this Agreement, the term “Inventions” means designs, drawings, formulae, processes, manufacturing techniques, trade secrets, discoveries, inventions, improvements, developments, ideas or copyrightable works, including all rights to obtain, register, perfect and enforce these proprietary interests applicable to sacroiliac joint fusion.
(b) Without further compensation, SpineSource and Consultants agree promptly to disclose to the Company, and hereby assign and agree to assign to the Company or its designee, SpineSource and Consultants’ entire right, title, and interest in and to all Inventions which SpineSource and/or Consultants may, solely or in collaboration with others, conceive, make, develop or reduce to Company during the Term of this Consulting Agreement in connection with the scope of or during the performance of any Services under this Consulting Agreement, whether or not during working hours. Any copyrightable work, whether published or unpublished, created by SpineSource and Consultants regarding sacroiliac joint fusion in connection with the scope of or during the performance of any Services, shall be deemed “works made for hire” as that term is defined in the United States Copyright Act, and all right, title and interest therein, including without limitation, worldwide copyrights, shall be the property of the Company as the party specially commissioning such work. In the event that any such copyrightable work or portion thereof shall not be legally qualified as a work made for hire, or shall subsequently be so held to not be a work made for hire, SpineSource and Consultants agree to assign, and do hereby so assign to the Company, SpineSource and Consultants’ entire right, title and interest in and to such work or portion thereof, including, but not limited to, the worldwide rights to reproduce the copyrighted work, to prepare derivative works based on the copyrighted work, to distribute copies of the copyrighted work, to perform and to display the copyrighted work publicly, and to register the claim of copyright therein.
(c) SpineSource and Consultants agree to perform, during and after termination of this Agreement, all acts deemed reasonably necessary or desirable by the Company to permit and assist it, at Company’s expense, in obtaining and enforcing the full benefits, enjoyment, rights and title throughout the world in the Inventions assigned to the Company as set forth in this Section 13 above. Such acts may include, but are not limited to, execution of documents, assignments, provision of all necessary information, records, materials or testimony, and assistance or cooperation in legal proceedings. Company shall bear all costs of such actions as may be reasonably incurred by SpineSource and Consultants. The Parties agree that all obligations of this Section 13 shall survive termination of this Agreement for any reason.
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(d) Section 2870. This Agreement does not apply to an Invention which qualifies fully under the provisions of Section 2870 of the Labor Code, a copy of which is attached hereto as Exhibit B. SpineSource and Consultants agree to disclose promptly any and all Inventions that may reasonably be subject to this Section 13 in confidence to the Company to permit a determination as to whether or not the Inventions should be the property of the Company.
14. Conflicts with this Consulting Agreement.
(a) SpineSource and Consultants represent and warrant that SpineSource and Consultants shall, at all times during the Term of this Consulting Agreement, act in the best interest of the Company. SpineSource and Consultants further represent and warrant that SpineSource and Consultants are not under any pre-existing obligation in conflict or in any way inconsistent with the provisions of this Consulting Agreement, and SpineSource and Consultants are not a party to any other agreement which will interfere with SpineSource and Consultants full compliance with this Consulting Agreement. Additionally, SpineSource and Consultants agree during the Term not to enter into any written or oral agreements or obligations that conflict during the Term with any of the provisions of this Consulting Agreement.
(b) SpineSource and Consultants represent and warrant that SpineSource and Consultants’ performance of all the terms of this Consulting Agreement and as Consultants to the Company do not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired by SpineSource and Consultants in confidence or in trust prior to becoming Consultants of the Company, and SpineSource and Consultants will not disclose to the Company, or induce the Company to use, any confidential or proprietary information or material belonging to any former clients, employer or third parties. SpineSource and Consultants further represent and warrant that SpineSource and Consultants have the right to disclose or use all ideas, processes, techniques and other information, if any, which SpineSource and Consultants have gained from third parties, and which SpineSource and Consultants disclose to the Company in the course of performance of this Consulting Agreement, without liability to such third parties. SpineSource and Consultants represent and warrant that SpineSource and Consultants have not granted any rights or licenses to any intellectual property or technology that would conflict with SpineSource and Consultants’ obligations under this Consulting Agreement. SpineSource and Consultants will not, at any time, knowingly infringe upon any copyright, patent, trade secret or other property right of any former client, employer or third party in the performance of the Services required by this Consulting Agreement.
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15. Non-Solicitation of Employees, Consultants and Other Parties. Each of the Parties agrees that during the term of this Consulting Agreement and for a period of two (2) years following the termination of the Consulting Agreement for any reason, it will not directly or indirectly solicit, induce, recruit or encourage any of the other Party’s employees or Consultants to terminate their relationship with the other Party, or attempt any of the foregoing, either for the Party or any other person or entity, without such other Party’s consent with the exception of the individuals listed on Exhibit D to this Consulting Agreement.
16. Miscellaneous.
(a) Amendments and Waivers. Any term of this Consulting Agreement may be amended or waived only with the prior written consent of the Parties.
(b) Sole Agreement. This Consulting Agreement, including the Exhibits hereto, constitutes the sole agreement of the Parties and supersedes all oral negotiations and prior writings with respect to the subject matter hereof.
(c) Notices. Any notice required or permitted by this Consulting Agreement shall be in writing and shall be deemed sufficient upon receipt, when delivered personally or by courier, overnight delivery service or confirmed facsimile, or forty-eight (48) hours after being deposited in the regular mail as certified or registered mail (airmail if sent internationally) with postage prepaid, if such notice is addressed to the party to be notified at such party’s address or facsimile number as set forth below, or as subsequently modified by written notice.
(d) Choice of Law. The validity, interpretation, construction, and performance of this Consulting Agreement shall be governed by the laws of the State of California, without giving effect to the principles of conflict of laws.
(e) Severability. If one or more provisions of this Consulting Agreement are held to be unenforceable under applicable law, the Parties agree to renegotiate such provision in good faith. In the event that the Parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Consulting Agreement, (ii) the balance of the Consulting Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Consulting Agreement shall be enforceable in accordance with its terms.
(f) Counterparts. This Consulting Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument and which shall be provided to the other Party.
(g) Assignment. Neither this Consulting Agreement nor any right hereunder or interest herein may be assigned or transferred by SpineSource and Consultants without the express prior written consent of the Company.
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(h) Arbitration. Any dispute or claim arising out of or in connection with any provision of this Consulting Agreement, excluding Sections 12-13 hereof, will be finally settled by binding arbitration in Denver, Colorado in accordance with the rules of the American Arbitration Association by one arbitrator appointed in accordance with said rules. The arbitrator shall apply California law, without reference to rules of conflicts of law or rules of statutory arbitration, to the resolution of any dispute. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Notwithstanding the foregoing, SpineSource and Consultants agree that it would be impossible or inadequate to measure and calculate the Company’s damages from any breach of the covenants set forth in Sections 12-13, therefore the Company may apply to any court of competent jurisdiction for preliminary or interim equitable relief, for example, injunction restraining such breach or threatened breach, or specific performance of any such provision.
(i) Advice of Counsel. ALL PARTIES ACKNOWLEDGES THAT, IN EXECUTING THIS CONSULTING AGREEMENT, SUCH PARTY HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL AND HAS READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT. THIS CONSULTING AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have executed this Consulting Agreement as of the Effective Date of this Agreement.
| TENON MEDICAL, Inc. | ||
| By: | Steven Foster | |
| Title: | President & CEO | |
| Date: | ||
| SPINESOURCE, iNC. | ||
| By: | Susan L. Mitchell | |
| Title: | Corporate Secretary | |
| Date: | ||
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EXHIBIT A
DESCRIPTION OF CONSULTING SERVICES AND COMPENSATION
TOM MITCHELL
Consultant’s duties under this Agreement shall be to provide Services as directed by Steve Moscaret, and/or his designee, in the areas set forth in this Exhibit A.
Existing Distributor Contractual Transition:
| 1. | Identify and summarize key terms and conditions for all existing SpineSource independent distribution agreements involving Tenon Medical products with designated Tenon executive and commercial leadership. |
| 2. | Contact each Tenon independent distribution principal with notification of transition and propose Tenon Medical Distribution Agreement. Facilitate introductions of Tenon Senior leadership to distribution principals during Consultant’s discussions with the distribution principals Work to close. |
| 3. | Conduct independent distributor / team training session on Tenon story, products, procedures, etc., at mutually agreeable dates and locations. |
| 4. | Conduct independent distributor / team Catamaran Consultants targeting session to identify qualified spine surgeon and interventional pain Consultants targets utilizing Tenon SI Joint targeting claims data. |
New Independent Distributor Identification:
| 5. | Leverage Consultant’s network alongside Tenon network to identify qualified distribution resources across national geographies and aligned with Consultant’s targets. Set priorities in a mutually agreed upon manner. |
New Independent Distributor Interface:
| 6. | Work with Tenon executive and commercial leadership to set face to face (or virtual, if necessary) sessions with principal to tell the Tenon story and compel engagement. Align on the provisions of a contractual arrangement. Track and manage all progress. |
New Independent Distributor Contractual Arrangement:
| 7. | Facilitate the execution of the Tenon Medical Independent Distribution Agreement contract. Track and manage all progress. |
New Independent Distributor Team Training:
| 8. | Schedule and facilitate person-to-person team training for entirety of contracted independent distribution teams utilizing agreed upon curriculum, synthetic model trainers and other sales education resources as defined. |
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Independent Distributor Team Targeting:
| 9. | As part of the team training session, include a targeting workshop to facilitate proper priorities for qualified targeted Consultants. |
Physician Education Program:
| 10. | Design and organize specific curriculum for model based and cadaveric workshop for physicians. This includes faculty, didactic content, lab content and all other aspects of physician workshops. |
| 11. | Assess need and demand for model based and cadaveric sessions – and the mix of these programs required to meet customer needs. |
Sales Education:
| 12. | Design and organize specific curriculum for sales training – including clinical prowess as well as selling / messaging. |
Compensation:
| 13. | Compensation: |
| a. | Annual/Monthly Consulting Base: $500,000 over twelve (12) months; payable in monthly payments of $41,666.66 on the 15th day of each month following the month of Services rendered. |
| b. | Variable Opportunity: $50,000 per quarter for four (4) quarters calculated on Net Sales payable on the 15th day of the month following the close of the quarter as follows: |
For purpose of the above chart, Net Sales means Product sales actually invoiced by Company for the sale of the Product, less deductions for: (i) credits, allowances, discounts, refunds and rebates; (ii) trade, quantity or cash discounts; (iii) retroactive price reductions; and (iv) sales, value-added and other taxes (including customers, duties and other government charges) paid by Company.
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TOM MITCHELL
TOTAL QUARTERLY CONSULTING VARIABLE PAYMENT=$50K
Quarterly consulting variable payout based on achievement of:
| 1. | Quarterly Revenue Sales (Maximum quarterly payout = $50K at plan) |
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Expenses: The Company will reimburse SpineSource, in accordance with Company policy, for all reasonable travel expenses incurred by Consultants in performing the Services pursuant to this Agreement and submits receipts for such expenses to the Company in accordance with Company policy and Paragraph 3 hereto.
| a. | All reimbursements for properly submitted expenses shall be made within ten (10) business days of receipt of the applicable expense report/documentation. |
Non-Competition: SpineSource and Tom Mitchell agree that Tom Mitchell will not, during the term of this Consulting Agreement, and for a period of two (2) years after termination of the Consulting Agreement for any reason, perform any consulting services, engage in any business or activity, accept work or enter into a contract or agreement, or otherwise become associated with any company, person or entity whose business or proposed business in any way involves products or services which could reasonably be determined to be competitive with the products or services or proposed products or services of the Company within and/or outside of the United States. Areas considered to be competitive with the Company include, but are not limited to, those involving sacroiliac joint fusion.
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EXHIBIT B
DESCRIPTION OF CONSULTING SERVICES AND COMPENSATION
ALEC MITCHELL
Consultant will be tasked with organizing, recruiting, training, and coordinating the Clinical Specialist program, Physician Education program and Sales Education program. Consultant’s duties under this Consulting Agreement shall be to provide services as directed by Steve Moscaret, VP Sales & Marketing, and/or his designee, in the areas set forth in this Exhibit B.
Clinical Specialist Program:
| 1. | Clinical Specialists shall be field based and recruited per a profile of self-motivated, OR experienced, travel capable personnel. |
| 2. | Clinical Specialists, to the degree possible, will be assigned to a Regional Sales Director to remain in sync with strategic and tactical sales within the region. |
| 3. | The role is focused on engaging physicians to training/workshop setting, executing workshop, and assisting with early surgeries to ensure successful adoption of Tenon technology. |
| 4. | The role will also include independent distributor / rep clinical training activities. |
Physician Education Program:
| 5. | Assist Tom Mitchell to design and organize specific curriculum for model based and cadaveric workshop for physicians. This includes faculty, didactic content, lab content and all other aspects of physician workshops. |
| 6. | Assess need and demand for model based and cadaveric sessions – and the mix of these programs required to meet customer needs. |
Sales Education:
| 7. | Assist Tom Mitchell to design and organize specific curriculum for sales training – including clinical prowess as well as selling / messaging. |
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Compensation:
| 8. | Compensation: |
| a. | Monthly Consulting Base: $200,000 per twelve (12) months or $16,667 per month |
| b. | Quarterly Consulting Variable: $50,000 per year or $12,500 per quarter |
TOTAL QUARTERLY CONSULTING VARIABLE PAYMENT=$12.5K
Quarterly consulting variable payout based on achievement of:
1. Quarterly Revenue Sales (Maximum quarterly payout -$6.25K at plan)
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Expenses: The Company will reimburse SpineSource, in accordance with Company policy, for all reasonable travel expenses incurred by Consultants in performing the Services pursuant to this Agreement and submits receipts for such expenses to the Company in accordance with Company policy and the relevant terms in this Consulting Agreement.
a. All reimbursements for properly submitted expenses shall be made within ten (10) business days of receipt of the applicable expense report/documentation.
Non-Competition: SpineSource and Alec Mitchell agree that Alec Mitchell will not, during the term of this Consulting Agreement, and for a period of one (a) year after termination of the Consulting Agreement for any reason, perform any consulting services, engage in any business or activity, accept work or enter into a contract or agreement, or otherwise become associated with any company, person or entity whose business or proposed business in any way involves products or services which could reasonably be determined to be competitive with the products or services or proposed products or services of the Company within and/or outside of the United States. Areas considered to be competitive with the Company include, but are not limited to, those involving sacroiliac joint fusion.
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EXHIBIT C
Section 2870 of the California Labor Code is as follows:
“(a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either:
(1) Relate at the time of conception or reduction to Company of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer.
(2) Result from any work performed by the employee for the employer.
(b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.”
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EXHIBIT D
EXCLUSIONS FROM NON-SOLICITATION
The Parties agree that the following Company and SpineSource employees are excluded from scope of Non-Solicitation of Employees, Consultants and Other Parties, as set forth in Section 15 of the Consulting Agreement, are as follows:
Robert DeSantis
Steve Allegaert
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Exhibit 10.2
AGREEMENT TERMINATING AMENDED AND RESTATED
EXCLUSIVE
SALES REPRESENTATIVE AGREEMENT
This Agreement Terminating Amended and Restated Exclusive Sales Representative Agreement (this “Agreement”) is entered into among and between Tenon Medical, Inc., a Delaware corporation having a place of business at 104 Cooper Court, Los Gatos, CA 95032 (“Company”), and SpineSource, Inc., a Missouri corporation having a place of business at 17826 Edison Avenue, Chesterfield, MO 63005 (“SpineSource”) (each herein referred to by name or individually, as a “Party,” or collectively, as the “Parties”). This Agreement shall become effective on the last date on which the Agreement is signed by all Parties (“Effective Date”).
WHEREAS, Company and SpineSource previously entered into that certain Exclusive Sales Representative Agreement, dated April 27, 2020, as amended on December 15, 2020 (the “Sales Agreement”), under which, among other things, SpineSource received exclusive rights to market, promote and distribute Company’s “Catamaran” product – known as the Catamaran Sacroiliac Joint Fusion System – in the United States and Puerto Rico under the terms of the Sales Agreement;
WHEREAS, Company and SpineSource previously entered into that certain Amended and Restated Exclusive Sales Representative Agreement, effective May 20, 2021 (the “Restated Sales Agreement”), which amended, restated and superseded the Sales Agreement, and under which SpineSource received, among other things, exclusive rights to market, promote and distribute Company’s “Catamaran” product – known as the Catamaran Sacroiliac Joint Fusion System – in the United States and Puerto Rico under the terms of the Restated Sales Agreement (together with the Sales Agreement, the “Prior Agreements”); and
WHEREAS, Company and SpineSource have engaged in discussions and negotiations regarding the Prior Agreements to address the evolving nature of the business model, and have decided to terminate the Restated Sales Agreement and enter into this Agreement in an effort to move forward in a mutually beneficial manner.
NOW, THEREFORE, in consideration of the mutual promises, covenants and warranties set forth below, and for other good and valuable consideration, the receipt and sufficiency of which the Parties hereby acknowledge, the Parties hereby agree as follows:
1. Termination of the Restated Sales Agreement; Effect of Termination. The Parties hereby agree and acknowledge that on May 20, 2021, the Sales Agreement was amended, restated and superseded by the Restated Sales Agreement, and the Parties hereby agree to terminate the Restated Sales Agreement effective as of the Effective Date of this Agreement. By terminating the Restated Sales Agreement, the Parties agree that they shall have no further rights or obligations thereunder except for those expressly provided to survive termination, including the indemnification obligations set forth in Sections 11 and 12 of the Restated Sales Agreement, and the payment obligations contemplated in Section 14.3.1 for commissions payable under the Restated Sales Agreement which became due prior to the Effective Date of this Agreement.
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2. Consideration. In lieu of rights to any compensation or other amounts that may have become due to SpineSource after the Effective Date had the Restated Sales Agreement not been terminated, and in consideration of entering into this Agreement, the Parties hereby acknowledge and agree that, as of the Effective Date: (a) except as expressly contemplated under Section 1 above, any prior terms regarding compensation or other amounts intended to be paid to SpineSource under the Restated Sales Agreement have been terminated, and any terms regarding compensation or other amounts to be paid to SpineSource by Company hereafter shall be as provided for in this Agreement; and (b) no further compensation or other amounts shall become due and owing from Company to SpineSource under or in connection with the Prior Agreements.
3. Obligations Resulting from Termination of Restated Sales Agreement.
a. Initial Termination Payment. Within three (3) business days after the Effective Date, Company shall pay SpineSource, via wire transfer in immediately available funds to a designated SpineSource bank account to be provided by SpineSource to Company, referencing this Agreement and this Section 4.a, the total amount of one million United States dollars ($1,000,000).
b. Transition Period Payments. During the six (6) calendar month period immediately following the Effective Date (the “Transition Period”), as further consideration for terminating the Restated Sales Agreement, Company shall pay to SpineSource an amount equal to five hundred ten thousand United Stated dollars ($510,000), payable in equal installments of eighty-five thousand United States dollars ($85,000) per month on the last business day of each calendar month commencing on the last business day of the first (1st) calendar month following the Effective Date of this Agreement. For clarity, no additional amounts shall be due or payable as consideration under the terms of this Agreement following the end of such Transition Period, unless otherwise mutually agreed to in writing by the Parties.
c. Additional SpineSource Obligations During Transition Period. During the Transition Period SpineSource shall:
(i) use its best efforts and devote as much time as necessary to transfer to Company all Work Product (as defined below), including all Work Product described on Exhibit A;
(ii) assist Company in obtaining assignments of all agreements in effect as of the Effective Date of this Agreement and all open negotiations, in each case, relating to the Product (as defined below), including, without limitation, all distribution agreements, customer pricing agreements and any other agreements in effect as of the Effective Date of this Agreement set forth on Exhibit B, attached hereto, and incorporated herein by reference;
(iii) provide such other summaries or information as set forth on Exhibit B hereto; and
(iv) train Company personnel at mutually agreed upon dates and time, and transfer related training materials to Company.
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d. Assignment of Work Product. SpineSource hereby assigns to Company all of SpineSource’s right, title and interest in and to the Work Product. Further, SpineSource shall assist Company, or its designee, at the Company’s expense, as reasonably necessary to secure the Company’s rights to the Work Product, including the disclosure to the Company of pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments and all other instruments that the Company may deem necessary in order to apply for, register, obtain, maintain, defend, and enforce such rights, and in order to deliver, assign and convey to the Company, its successors, assigns and nominees the sole and exclusive right, title, and interest in and to all Work Product and testifying in a suit or other proceeding relating to such Work Product. As used herein, “Work Product” means any works of authorship, promotional materials, notes, records, drawings, designs, inventions, improvements, developments, discoveries, feedback, suggestions, and trade secrets conceived, discovered, authored, invented, developed, made or reduced to practice by or on behalf of SpineSource, solely or in collaboration with others, arising out of, or in connection with, the Product or within the scope of performing its obligations under the Prior Agreement and any copyrights, patents, trade secrets, mask work rights or other intellectual property rights relating to the foregoing.
e. Return of Documents and Records. Promptly following the payment of the lump sum payment under Section 3.a. (Initial Termination Payment), SpineSource shall return to Company all documents and other tangible objects containing or representing confidential or proprietary information of Company. Notwithstanding any contrary terms regarding confidential or proprietary information, SpineSource is not obligated to immediately return or destroy computer files that are stored as a result of automated back-up procedures for archival purposes only prior to the Effective Date. Any such information referenced in the preceding sentence that is not returned will remain subject to confidentiality obligations and such confidentiality obligations shall survive the termination of the Restated Sales Agreement until the same are destroyed as part of SpineSource’s back-up destruction procedures, and shall not be accessed by SpineSource during such period of archival or back-up storage for any other purpose. For the purpose of clarity, information on SpineSource or its employees or owners of social media accounts shall not be considered as confidential or proprietary information of Company to be returned.
f. Advertising. To the extent within SpineSource’s possession or control, promptly following the Effective Date, but in any event no later than the subsequent issue of the applicable advertisement or listing, SpineSource shall remove any advertisement or listing by SpineSource that: (i) includes Company’s name used in conjunction with SpineSource’s name or that otherwise suggests a business relationship between the two Parties; and (ii) appears in any telephone book, directory, public record or like publication, unless agreed to otherwise in writing by the Parties. For the purpose of clarity, information on SpineSource or its employees’ or owners’ social media accounts showing prior relationship history shall not be subject to the terms of this Section.
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g. Indemnification by Company. As additional consideration for entering into this Agreement, Company shall indemnify, defend, and hold harmless SpineSource, its successors and assigns, directors, officers, employees, agents and representatives (“SpineSource Indemnified Parties”) from and against any losses, claims, demands, damages, liabilities, causes of action, costs, expenses, judgments, and proceedings, including but not limited to, all reasonable attorneys’ fees, costs and expenses (“Claims”) regarding or related to (i) allegations of infringement or misappropriation of any intellectual property rights of any third party, including, without limitation, any copyrights, mask work rights, United States patent rights, trademark rights, trade secret rights or confidentiality rights, resulting from anything provided under this Agreement, and (ii) any action or claim, including the investigation or defense of such action or claim in respect thereof, to which any SpineSource Indemnified Party may become subject under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, because of the actions of the Company or its agents. To be entitled to such indemnification, SpineSource shall give Company prompt written notice of any Claim with respect to which SpineSource might bring a claim for indemnification hereunder, and in all events must supply such written notice to Company within the applicable period of defense of such Claim.
h. Indemnification by SpineSource. As additional consideration for entering into this Agreement, SpineSource shall indemnify, defend, and hold harmless Company, its successors and assigns, directors, officers, employees, agents and representatives (“Company Indemnified Parties”) from and against any losses, claims, demands, damages, liabilities, causes of action, costs, expenses, judgments, and proceedings, including but not limited to, all Claims regarding or related to allegations of infringement or misappropriation of any intellectual property rights of any third party, including, without limitation, any copyrights, mask work rights, United States patent rights, trademark rights, trade secret rights or confidentiality rights, resulting from anything provided under this Agreement. To be entitled to such indemnification, Company shall give SpineSource prompt written notice of any Claim with respect to which Company might bring a claim for indemnification hereunder, and in all events must supply such written notice to SpineSource within the applicable period of defense of such Claim.
i. SpineSource Post Termination Commission.
(i) Definitions. As used herein:
(A) “Applicable Laws” means all laws, ordinances, rules and regulations of any governmental entity or Regulatory Authority that apply to the Product in the Territory or otherwise to the activities contemplated under this Agreement, including without limitation (i) all applicable federal, state and local laws, rules and regulations; (ii) the U.S. Federal Food, Drug and Cosmetic Act; and (iii) regulations and guidelines of the U.S. Food and Drug Administration (“FDA”) and other Regulatory Authorities.
(B) “Acquisition” means (i) the acquisition of Control of Company, whether in one or a series of related transactions, by a Third Party by way of merger, consolidation or other business combination; (ii) the acquisition by a Third Party of more than fifty percent (50%) of the capital stock of Company in one or a series of related transactions; (iii) the acquisition by a Third Party of all or substantially all of the business, assets, and/or liabilities of Company; and/or (iv) any other transaction or series of related transactions in which Control of Company is acquired by a Third Party. Notwithstanding the forgoing, the term Acquisition shall not include: (a) any sale or assignment for the benefit of creditors, such as in connection with a plan of liquidation or dissolution adopted by the Company’s Board of Directors; or (b) an equity financing or any other transaction in which the stockholders that Control Company as of the date prior to the closing date of such transaction possess Control of the surviving entity in such transaction immediately after the closing of such transaction; or (c) the Company’s issuance of shares of its common stock in a registered initial public offering on any public exchange for the sole purpose for working capital of the Company. The term “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the Company whether through ownership of voting securities, by contract or otherwise.
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(C) “Customer” means an end customer that (i) is licensed under Applicable Laws to use the Product in the treatment of patients within the Territory and (ii) purchases a Product for its own use in such manner; such as hospitals and physicians, but not individual patients, not another product manufacturer or supplier, and not any distributor, reseller, or the like.
(D) “Net Sales” means Product sales actually invoiced by Company for the Sale of the Product, less deductions for: (i) credits, allowances, discounts, refunds and rebates; (ii) trade, quantity or cash discounts; (iii) retroactive price reductions; and (iv) sales, value-added and other taxes (including customers, duties and other government charges) paid by Company.
(E) “Proceeds” means the total amount of cash, and any publicly traded stock, in each case actually received by the Company and/or the stockholders of Company in connection with an Acquisition, all to the extent set forth in a written agreement entered into by Company or its stockholders during the Acquisition Period. For clarity, such cash and stock shall be included in Proceeds only at the time received and owned by Company or such stockholders without restriction on liquidation and other disposition. Company may, in its sole discretion, elect to treat the fair market value of the publicly traded stock (determined as of the date the Acquisition is consummated) as Proceeds, rather than the actual shares. Proceeds shall not include the value of any loans or any other consideration.
(F) “Product” means the Company’s product(s) set forth on Exhibit C, attached hereto and incorporated herein by reference, and does not include any other Company product(s) or service(s).
(G) “Regulatory Authority(ies)” means any federal, state, or local regulatory agency, department, bureau or other governmental entity involved in regulating any aspect of the conduct, development, manufacture, market approval, sale, promotion, distribution, packaging or use of the Product, including without limitation the FDA.
(H) “Sale” with respect to a unit of the Product means and shall be considered complete only after all of the following have occurred: (i) a purchase order has been received by Company from a Customer in the Territory for the unit of the Product; (ii) Company and such Customer have agreed upon the terms and conditions under which such unit of the Product shall be sold by Company to the Customer; (iii) the purchase order has been accepted by Company for such unit in writing and the purchase order is no longer subject to revocation or cancellation; and (iv) the unit of the Product has been delivered to and accepted by the Customer and Company may invoice the Customer.
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(I) “Territory” means the United States and Puerto Rico.
(ii) Commission Calculation. Company shall pay to SpineSource a commission in an amount equal to 20% of the Net Sales of the Product sold in the Territory by Company from the Effective Date of this Agreement through December 31, 2023. Thereafter, Company shall pay SpineSource a commission in an amount equal to 10% of Net Sales of the Product sold in the Territory by Company after December 31, 2023 until such time as the total aggregate amount of $3.6 million has been paid to SpineSource under this Section 4(c)(ii) by Company. In the event of an Acquisition of Company, Company shall pay SpineSource an amount equal to $3.6 million less the total aggregate amount already paid by Company to SpineSource under this Section 3.i(ii) through the date of such Acquisition. Payment of any Bonus Calculation under Section 3.j (Bonus Calculation) below shall not affect any payment under this subsection regarding commissions.
(iii) Commission Payments. Payments under this Section 3.i(iii), along with a report detailing the Commissions calculation, commission payments to date, and units sold, shall be made on or before the fifteenth (15th) day of each calendar month for Sales in the Territory invoiced by Company during the prior calendar month. In the event a Product is returned, whether voluntary or under legal obligation, for which Company has previously paid SpineSource a commission in accordance with Section 4.c., then Company may deduct from any future amounts owed to SpineSource hereunder, the amount paid to SpineSource with respect to such returned Product. In the event a Customer does not pay an invoice for a Product to the Company withing one hundred twenty (120) days after the invoice due date, and Company has provided SpineSource with thirty (30) days written notice of the past due and unpaid invoice, then Company may deduct the amount paid to SpineSource with respect to such Product from any future amounts owed SpineSource hereunder. If Company later collects such unpaid balance with respect to a Product, then the amounts so deducted with respect to such Product shall be paid to SpineSource on the 15th day of the calendar month following the calendar month in which it was collected.
j. Bonus Calculation. In the event of an Acquisition of the Company during the two hundred seventy (270) day period immediately following the Effective Date of this Agreement (the “Acquisition Period”), Company shall pay a bonus to SpineSource (the “Acquisition Bonus”), equivalent in amount and method to the Acquisition Bonus which had previously been agreed to in the Restated Sales Agreement. For clarity, the Acquisition Bonus contemplated in this Section 3.j is not in addition to, but in lieu of the “Acquisition Bonus” contemplated in the Restated Sales Agreement. SpineSource shall not be entitled to any compensation under this Section 3.j as a result of any decision not to sell or consider the sale of Company, regardless of the reason. The Acquisition Bonus contemplated herein shall be paid within ten (10) calendar days after Company’s or its stockholder’s receipt of Proceeds from such Acquisition.
k. Consulting Agreements. Company agrees to execute consulting agreements with SpineSource, a copy of which is attached hereto as Exhibit D, concurrently with the execution of this Agreement, and such consulting agreement shall be effective as of the Effective Date of this Agreement.
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l. SpineSource agrees that Company may at Company’s sole discretion, but is not required to, hire, retain or employ SpineSource’s office-based employees who were employed by SpineSource on the Effective Date of this Agreement after the Transition Period, provided it first gives SpineSource prior written notice of the same.
m. The Parties agree that Company will offer, promptly following the Effective Date, to hire, retain or employ SpineSource’s regional sales managers, on terms similar to their current employment with SpineSource and agreeable to Company at its sole discretion.
n. Notwithstanding anything contained in this Agreement, this Agreement does not affect any rights of SpineSource regarding its equity interest in Company.
4. Alternative Dispute Resolution. The Parties hereby agree that any dispute arising out of or relating to, in whole or in part, directly or indirectly, the terms and conditions of this Agreement or performance under this Agreement, including without limitation the interpretation, construction or enforcement of the Parties’ respective rights, duties or obligations under this Agreement, shall be submitted to binding arbitration in Denver, Colorado, before a single arbitrator, to be selected from a list of arbitrators proposed by JAMS. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures and in accordance with the Expedited Procedures in those Rules. The costs of the arbitration including the arbitrators’ fees shall be shared equally by the Parties. Judgment on the award may be entered by any court having jurisdiction. This clause shall not preclude the Parties from filing a claim to compel arbitration, seeking preliminary relief, and enforcing any arbitration award entered pursuant hereto from a court of appropriate jurisdiction. The Parties shall maintain the confidential nature of any arbitration proceeding, award, or hearing, except as may be necessary to prepare for or conduct the arbitration hearing on the merits, or except as may be necessary in connection with a court application for a preliminary remedy, a judicial challenge to an award or its enforcement, or unless otherwise required by law or judicial decision. In any arbitration arising out of or related to this Agreement, the arbitrators shall award to the prevailing party, if any, the actual, reasonable, documented out-of-pocket costs and attorneys’ fees reasonably incurred by the prevailing party in connection with the arbitration. If the arbitrator determines a party to be the prevailing party under circumstances where the prevailing party won on some but not all of the claims and counterclaims, the arbitrator may award the prevailing party an appropriate percentage of the costs and attorneys’ fees reasonably incurred by the prevailing party in connection with the arbitration.
5. Confidentiality. Each Party shall treat as confidential the other Parties’ non- public information, business and operations, and the terms and existence of this Agreement and the Prior Agreements, including content of discussions and negotiations related to this Agreement and the Prior Agreements, and all related hearings, transcripts, evidence, rulings, and testimony (collectively, “Confidential Information”). The term “Confidential Information” does not include information that (a) is or becomes generally available to the public other than as a result of a disclosure by a Party in violation of this Agreement, (b) was available to a Party on a non confidential basis prior to its disclosure to such Party, (c) becomes available to a Party from a source other than another Party or its affiliates, provided, however, that such source is not actually known by such Party to be bound by a confidentiality obligation, or (d) is independently discovered, learned or obtained by a Party or its affiliates without reference to the Confidential Information. Except only to the extent necessary to enforce this Agreement, or as may otherwise be required by law, or by a court or other similar competent authority, and except for disclosures by a Party to any person who is an officer, director, manager, member, employee, attorney, accountant, consultant, agent or representative of such Party who is under confidentiality obligations at least as restrictive as those contained herein, each Party shall keep confidential and not disclose the Confidential Information of the other Party to any third party. Notwithstanding the foregoing Company may disclose the terms of this Agreement and the Prior Agreements to its actual or potential underwriters, investment bankers, investors, lenders, other financing sources, licensees, sublicensees, strategic partners, acquirers, or assignees, provided that such disclosure is under written obligations of confidentiality and non-use at least as stringent as the obligations contained herein (but of shorter duration if customary).
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6. Publicity. Neither Party shall issue any press release or other public announcement related to this Agreement, the Prior Agreements, or the relationship or activities of the Parties hereunder, written or oral, without the prior written consent of the other Party, except as maybe required to be disclosed by applicable law or for the purposes of enforcing this Agreement.
7. Audit Rights; Agreement to Maintain Records. Until a period of time ending Two (2) years after all amounts under this Agreement have been paid in full, each Party shall maintain in reasonable detail records of all books, records, documents and other materials relating to this Agreement and the Prior Agreements. During such same period, each Party shall have the right, at reasonable times, for reasonable cause and without undue disruption of the other Party’s normal business, to conduct audits with respect to the books, records, and all other documents and materials in the possession or under the control of the other Party relating to this Agreement for the purpose of auditing compliance with the terms of this Agreement. The requesting Party shall bear the cost of any audits performed pursuant to this Section 7, provided, however, that if any audit discloses a negative discrepancy in amounts owed greater than five percent (5%), the audited Party shall promptly pay the full out-of-pocket cost of the audit, including cost of auditors for travel and actual working time.
8. Binding on Successors and Heirs. This Agreement is binding upon and for the benefit of each of the Parties and each of the Parties’ respective successors, heirs, and assigns.
9. Authority to Execute Agreement. Each Party executing this Agreement in a representative capacity on behalf of an entity represents that he or she is duly authorized by such entity to execute this Agreement on its behalf, and to bind it to the terms and conditions hereof. Each such entity has full power and authority to enter into this Agreement and the attachments hereto and to consummate the transactions contemplated therein. No other actions or proceedings on the part of such entity are necessary to authorize this Agreement, or the transactions contemplated therein. This Agreement constitutes (assuming, in each case, due execution and delivery by the counter-parties) a legal, valid and binding obligation of each entity, enforceable in accordance with this Agreement’s terms.
10. Negotiation of this Agreement. This Agreement shall be deemed to have been written jointly by the Parties. Ambiguities shall not be construed against the interest of any Party by reason of it having drafted all or any part of this Agreement.
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11. Careful Consideration After Advice. The Parties hereby acknowledge that each has read this Agreement carefully and understands the terms and conditions set forth herein and that each is agreeing to them voluntarily and without coercion. The Parties further acknowledge that each was given sufficient time within which to consider the releases contained in this Agreement and was given the opportunity to consult with an attorney of its own choosing concerning the same, that each has done so to the extent deemed necessary by it, that each has been represented by counsel in connection with the negotiations leading up to this Agreement, and that the releases and waivers made herein are knowing, conscious and with full appreciation that each Party is forever foreclosed from pursuing any of the rights so waived.
12. Severability. If any provision or portion of this Agreement is held by a court or arbitration panel of competent jurisdiction to be invalid or unenforceable, the remaining provisions shall nevertheless continue in full force and effect without being impaired or invalidated in any way.
13. Entire Agreement. This Agreement is concurrently entered into by the Parties without reliance on any statement, representation, inducement, or agreement not expressly contained within this Agreement. This Agreement constitutes the entire agreement between the Parties and supersede all prior oral or written agreements between the Parties.
14. No Admission of Liability. This Agreement is the result of a compromise among the Parties and shall never, at any time or for any purpose, be considered as an admission of liability and/or responsibility by any Party.
15. Governing Law. This Agreement is made and entered into in the State of California and shall in all respects be interpreted, enforced, and governed by and under the laws of the State of California.
16. No Assignment. Each of the Parties represents and warrants that it has not heretofore assigned or transferred, or purported to assign or transfer, to any person or entity any claim, demand, debt, liability, obligation, account, or cause of action, or any part or portion thereof, involved or referred to herein. Each of the Parties does, jointly and severally, agree to indemnify and hold harmless the remaining Parties against any claim, demand, debt, liability, obligation, account, or cause of action, including, but not limited to, the payment of reasonable attorneys’ fees or costs, whether or not litigation be commenced, based on, arising out of, or in connection with any such transfer or assignment.
17. Mutual Non-Disparagement. SpineSource agrees to refrain from any disparagement, defamation, libel, or slander of Company or any of its officers, directors, employees, managers or agents and agrees to refrain from any tortious interference with the contracts and relationships of Company. Company agrees to refrain from any disparaging statements about SpineSource or any of its officers, directors, employees, managers or agents.
18. Attorneys’ Fees. Each of the Parties agrees to bear its own costs and attorneys’ fees in connection with this Agreement and the Prior Agreements, and shall not seek reimbursement of any such costs and fees from any other Party.
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19. Modifications. The Parties further agree that any amendments or modifications to this Agreement must be in writing and signed by authorized representatives of each Party to be valid. No other modifications shall be valid.
20. Counterparts. This Agreement may be executed in two or more counterparts and by facsimile or in electronic (e.g., “pdf” or “tif”) format, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
[Signature page follows.]
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THE SIGNATORIES HAVE CAREFULLY READ THIS ENTIRE AGREEMENT. ITS CONTENTS HAVE BEEN FULLY EXPLAINED TO THEM BY THEIR ATTORNEYS. THE SIGNATORIES FULLY UNDERSTAND THE FINAL AND BINDING EFFECT OF THIS AGREEMENT. THE ONLY PROMISES MADE TO ANY SIGNATORY ABOUT THIS AGREEMENT ARE CONTAINED IN THIS AGREEMENT. THE SIGNATORIES ARE SIGNING THIS AGREEMENT VOLUNTARILY.
IN WITNESS HEREOF, the Parties have executed this Agreement on the dates indicated below.
| DATED: | TENON MEDICAL, INC. | |||
| By: | ||||
| Its: | ||||
| DATED: | SPINESOURCE, INC. | |||
| By: | ||||
| Its: | ||||
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Exhibit A
Work Product
Leads and Targets: any and all documented leads from trade show or other activities relating to the Product, with detailed status of each.
Product Literature: any and all printed and reprinted Product literature including clinical notes, biomechanical assessments and related materials and documents.
Invoice History: all invoices and invoice history for the Product with detail. (SpineSource may retain copies for its internal accounting records.)
Pricing Agreements (local): all local written agreements relating to the Product. Summary and status of all ongoing negotiations at the local level relating to the Product, with detail.
Pricing Agreements (national and GPO): all national and GPO agreements relating to the Product. Status of all ongoing negotiations at the national level relating to the Product, with detail.
Physician Training History: Records regarding all attendees, faculty, certifications and other detail related to cadaveric or synthetic model training workshops.
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Exhibit B
List of Agreements and Open Negotiations
Pricing Agreements (local): all local agreements and ongoing negotiations relating to the Product.
Pricing Agreements (national and GPO): all national and GPO agreements and ongoing negotiations relating to the Product.
Independent Distributor Agreements: all independent rep or distributor agreements relating to the Product including commission rates, territory definitions and related matters. All ongoing targeting and/or negotiations with independent distribution resources relating to the Product.
Any other contract or other written agreement specific to Tenon Medical activities
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Exhibit C
Product
Company’s “Catamaran” product – known as the Catamaran Sacroiliac Joint Fusion System, including all of the following items relating to the same, and any new Company product that replaces, improves or modifies such product and other items set forth on this Exhibit C:
| · | Sales Samples, including implants and models |
| · | Instrument Sets for Surgery |
| · | Replenishment Implant Inventory |
| · | Replenishment Inventory including guidewires and Single-Use items |
| · | Workshop Training Instrument Sets, Implants, Single-Use |
| · | Synthetic Training Models, Inserts |
| · | Training Instrumentation |
| · | Shipping Cases (Benson and Pelican) |
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Exhibit D
SpineSource Form of Consulting Agreement
[To be attached]
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Exhibit 99.1
Tenon Medical Accelerates Commercial Scale with Own Infrastructure to Support Top Line Growth, Terminates National Distribution Agreement for Company’s Catamaran™ SI Joint Fusion System
~ Tenon reaches amicable termination with exclusive distributor partner, SpineSource ~
~ SpineSource to support transition over 6-month period ~
LOS GATOS, Calif. – October 11, 2022 - Tenon Medical, Inc. (“Tenon” or the “Company”) (NASDQ: TNON), a company transforming care for patients suffering with certain sacroiliac disorders, today announced the termination of its national distribution agreement with distribution partner, SpineSource, for the Company’s Catamaran™ SI Joint Fusion System. The termination of the exclusive partnership comes following the Company’s April Initial Public Offering (“IPO”) and supports acceleration of its commercial scale and investment to achieve its revenue growth targets. Due to the evolving nature of the business model, both parties have decided to terminate the current legacy distribution agreement in an effort to move forward in a mutually beneficial manner, as of October 6, 2022. Effective immediately, Tenon has assumed control of all commercial distribution activities.
With the full support of SpineSource, Tenon has begun developing its own commercial infrastructure and sales management team that will partner with current independent spine distributors procured by SpineSource to represent the Company’s Catamaran SI Joint Fusion System. SpineSource will continue to provide logistical services, sales expertise, and support to Tenon over the next six months to help facilitate a seamless transition.
“The Catamaran is one of the most impressive new technologies we have been a part of in our 18-year history. Modifying this business model is in the best interest for everyone involved,” states Tom Mitchell, President and CEO of SpineSource
“We are extremely appreciative of the partnership and effort that SpineSource has provided to Tenon, representing our Catamaran SI Joint Fusion System to physicians and medical institutions across the country,” states Steven M. Foster, President and CEO of Tenon. “This is a truly exciting time for Tenon as we move rapidly to scale our own commercial organization, positioning ourselves for sustainable growth throughout the coming quarters and years, ultimately returning value to our shareholders. Our participation at this week’s North American Spine Meeting in Chicago is targeted as our national launch of our Catamaran SI Joint Fixation Device.”
About Tenon Medical, Inc.
Tenon Medical, Inc., a medical device company formed in 2012, has developed The Catamaran™ SI Joint Fusion System that offers a novel, less invasive Inferior-Posterior approach to the SI joint using a single, robust titanium implant. The system features the Catamaran™ Trans-Fixation Device which passes through both the axial and sagittal planes of the ilium and sacrum, transfixing the SI joint along its longitudinal axis. With an entry that mimics SI joint injection, the surgical approach is direct to the joint and inferior to the wide and variable dorsal recess. The angle and trajectory of the Inferior-Posterior approach is designed to provide a pathway away from critical neural and vascular structures and into the strongest cortical bone. Tenon is preparing a national launch of this system to address the greatly underserved market opportunity that exists in this space. For more information, please visit https://www.tenonmed.com/.
The Tenon Medical logo and Tenon Medical, are registered trademarks of Tenon Medical, Inc. Catamaran is a trademark of Tenon Medical, Inc.
Safe Harbor
This press release contains "forward-looking statements," which are statements related to events, results, activities or developments that Tenon expects, believes or anticipates will or may occur in the future. Forward-looking often contain words such as "intends," "estimates," "anticipates," "hopes," "projects," "plans," "expects," "seek," "believes," "see," "should," "will," "would," "target," and similar expressions and the negative versions thereof. Such statements are based on Tenon's experience and perception of current conditions, trends, expected future developments and other factors it believes are appropriate under the circumstances, and speak only as of the date made. Forward-looking statements are inherently uncertain and actual results may differ materially from assumptions, estimates or expectations reflected or contained in the forward-looking statements as a result of various factors. For details on the uncertainties that may cause our actual results to be materially different than those expressed in our forward-looking statements, please review our Registration Statement on Form S-1 on file with the Securities and Exchange Commission at www.sec.gov, particularly the information contained in the section entitled "Risk Factors". We undertake no obligation to publicly update or revise any forward-looking statements to reflect new information or future events or otherwise unless required by law.
IR Contact:
Shannon Devine: 203-741-8811
MZ North America
tenon@mzgroup.us