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EXHIBIT 10.1
DISTRIBUTION AGREEMENT BETWEEN CHROMAVISION MEDICAL SYSTEMS
AND
SIGMA DIAGNOSTICS, INC.
This Distributorship Agreement (hereinafter the "Agreement") is entered
into as of the 22nd day of October, 1997 between CHROMAVISION MEDICAL SYSTEMS,
Inc., San Juan Capistrano, California (hereinafter "CHROMAVISION"), a
corporation existing under the laws of Delaware, and Sigma Diagnostics, Inc.
(hereinafter "SIGMA"), a corporation existing under the laws of Missouri.
WHEREAS, CHROMAVISION has developed an automated intelligent microscope
system which uses imaging technology for diagnosis and research applications
(the "Instrument");
WHEREAS, SIGMA is in the business of developing, manufacturing,
marketing and distributing medical diagnostic kits and is developing a
diagnostic kit using urea-resistant neutrophil alkaline phosphotase ("UR-NAP")
as a marker for the diagnosis of Down's syndrome (the "Kit") to be used with the
Instrument; and
WHEREAS, the parties hereto desire to have SIGMA market and distribute
the Instrument in connection with medical diagnostic kits and have entered into
a UR-NAP Application Development Agreement and Right of First Offer of New
Applications ("UR-NAP Agreement") contemporaneously with this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and certain other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledge, the parties do hereby agree as
follows:
1. Instrument(s). The Instrument(s) of CHROMAVISION covered by this
Agreement the MDx 2000 Digital Analyzer and any other automated
intelligent microscope system which uses imaging technology for
diagnosis and research disclosed or claimed in either Patent Application
titled System and Method For Cellular Specimen Grading Method and Patent
Application titled Method and Apparatus for Automated Image Analysis of
Biological Specimens filed with the U.S. Patent Office or any
improvements thereof which CHROMAVISION elects to make available
commercially. As used herein, improvements of the Instrument means all
modifications, variations and revisions and new models of the Instrument
which relate or have consequence in any of the following ways: (1)
improve the Instrument performance; (2) reduce the cost of materials or
components for the Instrument; (3) reduce production, manufacturing or
associated costs of the Instrument; (4) increase the durability or
continuous performance characteristics of the Instrument; (5) expand the
application to which the Instrument may be put; (6) increase or enhance
the marketability or commercial aspect of the Instrument; or (7) replace
or displace the Instrument in one or more material commercial markets
for the
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Instrument. Improvements of the Instrument may be patentable or
unpatentable and, if patentable, need not be patented. Nothing in this
Agreement shall require CHROMAVISION to make available any version of
the Instrument which has been superseded by an improved version that
CHROMAVISION has elected to make commercially available.
Kits covered by this agreement include any improvements to the Kit.
"Improvements" means all modifications, variations, revisions and new
models of the Kit which SIGMA elects to make available commercially.
Improvements of the Kit may be patentable or unpatentable and, if
patentable, need not be patented. Nothing in this Agreement shall
require SIGMA to make available any version of the Kit which has been
superseded by an improved version that SIGMA has elected to make
commercially available.
2. Appointment and Acceptance. CHROMAVISION hereby appoints SIGMA as the
exclusive distributor of the Instrument(s) for use with the Kits and
grants SIGMA the right and license to import, use, possess, market and
sublease (but not sell) the Instrument(s) for use with the Kits in the
United States and outside the United States (the "Territory") and the
right to extend to Affiliates and sub-distributors rights of the same
scope as granted herein to import, use, possess, market and sublease
Instrument(s) for use with the Kits in the Territory. SIGMA's right to
use the Instrument is limited to use incidental to marketing the
Instrument to others pursuant to this Agreement. If SIGMA uses the
Instrument to perform medical diagnostic tests for which it is
compensated, such use shall be subject to all of the terms and
provisions of this Agreement and the form of sublease to be entered into
with customers, including without limitation the obligation to pay to
CHROMAVISION the entire amount of the Per Click Charge referred to in
Paragraph 4(b) (not ***%. thereof).
The parties acknowledge their understanding that CHROMAVISION will have
to finance the production of the Instruments and that the terms and
structure of such financing have not yet been determined. The parties
presently contemplate that CHROMAVISION will sell the Instruments to a
leasing company, that the leasing company will lease the Instruments to
SIGMA and that SIGMA will sublease the Instruments to its customers. The
terms and provisions of any such sublease (and any variations therefrom
for particular customers) will have to be satisfactory to CHROMAVISION's
financing source, SIGMA and reasonably satisfactory to CHROMAVISION. In
the event that, by March 31, 1998, (i) CHROMAVISION has not entered into
an agreement with its financing source to provide such financing using
the leasing and subleasing arrrangments set forth above, (ii) the
parties fail to reach agreement on an alternative arrangement (including
agreement on appropriate amendments to this Agreement) that is approved
in writing by the financing source with whom CHROMAVISION has entered
into an agreement and (iii) CHROMAVISION has not entered an agreement
with an alternative source of financing that has approved arrangements
referred to in (i) or (ii), then either party will have the right to
terminate this Agreement by delivering written notice to the other of
its election to do so. CHROMAVISION shall keep SIGMA apprised of the
status of its efforts to enter into such an agreement with a financing
source.
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SIGMA agrees to market, sell and distribute the Kits exclusively for use
with the Instrument, and it shall not modify any Kit to be usable with
any competing instrument or technology or distribute any medical
diagnostic kit that is competitive with the Kit. Nothing in this
Agreement shall limit or otherwise affect the right of SIGMA to market,
sell or distribute any medical diagnostic test being commercially
distributed by it on the date of this Agreement.
3. Term and Renewal. The term of this Agreement shall be for a period of
three (3) years, commencing on the Effective Date (the "Initial Term").
"Effective Date" means the date on which CHROMAVISION gives SIGMA notice
that CHROMAVISION has either received clearance or pre-market approval
from the United States Food and Drug Administration for either the use
of the Kit with the Instrument or clearance or approval for use of the
Instrument with the Kit. If the Development Agreement being entered into
by the parties concurrently with this Agreement is terminated as to
collaboration on the Kit (and not necessarily as to Section 7 thereof)
in accordance with its terms before the Effective Date, this Agreement
shall automatically terminate concurrently with the termination of that
Agreement. Except as provided in Paragraph 4(f)(iii), this Agreement
shall automatically renew for additional and successive terms of one (1)
year unless either party provides written notice of non-renewal at least
six (6) months prior to the close of the Initial Term or any anniversary
date thereafter.
4. Distribution of Instruments and Kits. After such time as the Instrument
has been cleared or approved for commercial use with the Kit by the FDA
and/or or comparable governmental authorities in foreign countries,
CHROMAVISION shall provide SIGMA with such Instruments as SIGMA may
require for the purchasers of such Kits in the Territory. The Instrument
and the Kit shall be marketed together as a package by SIGMA.
(a) Lease Amount. Such Instruments shall be leased by SIGMA from
CHROMAVISION or CHROMAVISION's financing source referred to in
Paragraph 2. (All references to payment to CHROMAVISION shall
refer to payment to CHROMAVISION's financing source if
CHROMAVISION so elects. The rental under the lease (the "Lease
Amount") payable by SIGMA to CHROMAVISION shall be equal to
***% of the actual amount paid by customers to SIGMA for each
slide examined using the Instrument with the Kit. The remaining
***% of the amount paid by customers shall be retained by
SIGMA.
(b) Per Click Charge. "Per Click Charge" is defined as the amount
payable by SIGMA to CHROMAVISION or by a customer to SIGMA for
each slide examined using the Instrument with the Kit. All
subleases between SIGMA and its customers will provide for Per
Click Charges. No Per Click Charges will be imposed on customers
for examination of slides in connection with training personnel
and testing of the Instrument prior to the customer's Acceptance
of the Instrument, except that Per Click Charges will be imposed
with respect to all tests
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for which the customer is to receive payment (whether or not such
tests are performed prior to Acceptance of the Instrument).
"Acceptance" shall be deemed to occur at the time the Instrument
has been installed, adjusted and tested and is operational and
training of the customer's personnel in the operation of the
Instrument is completed. The parties contemplate that the Per
Click Charge will be the only amount payable by the customer for
use of the Instrument with the Kit and that SIGMA will not
receive any additional consideration for the sale or use of the
Kit or for servicing the Kit (other than payment for replacement
parts after the Warranty Period (as defined in Paragraph 10(j)).
In the event SIGMA does receive any additional consideration for
selling or otherwise providing the Kit and/or leasing or
servicing the Instrument, ***% of the additional amount paid by
the customer shall be payable by SIGMA to CHROMAVISION pursuant
to (a) above, except that nothing in this Paragraph 4(b) is
intended to require SIGMA to account to CHROMAVISION for any
reasonable amounts it receives for replacement parts for the
Instruments or for service calls not made during normal business
hours.
(c) Minimum Per Click Charge. SIGMA will be entitled to charge its
customers any amount as the Per Click Charge and, if it so
elects, any additional amount for selling or otherwise providing
the Kit with the Instrument. However, the amount payable by SIGMA
to CHROMAVISION for each test pursuant to (a) above shall be
based upon not less than ***% of the Reimbursement Price
determined as provided in Paragraph 6. Until such time as the
Reimbursement Price can be determined pursuant to Paragraph 6,
the minimum Per Click Charge for purposes of determining the
amount payable by SIGMA pursuant to (a) above shall be $*** for
the basic Instrument. In the case of customers receiving a
supporting package of additional equipment (the "Enhancement
Equipment") with the basic Instrument (such as equipment for
slide preparation and auto staining), the Reimbursement Price and
the minimum Per Click Charge used to determine the amount payable
by SIGMA to CHROMAVISION shall be increased by such amounts as
are determined by ChromaVision and approved by SIGMA, which
approval will not be unreasonably denied or delayed. (Such
increase in the Reimbursement Price and such increase in the
minimum Per Click Charge are each referred to in this Agreement
as the "Enhancement Premium".)
In the case of customers who have agreements with SIGMA providing
for a Per Click Charge of $*** or more at the time the
Reimbursement Price can be determined, the minimum Per Click
Charge payable by SIGMA to CHROMAVISION shall be based upon the
price set by the customer agreement except that any such
agreement providing for prices effective after September 30, 2000
(i) shall not provide for a Per Click Charge lower than $***
adjusted as provided below and
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(ii) the period of time from the date any such prices became
effective until they cease to be effective shall not
exceed five (5) years.
The adjustment referred to in (i) above shall be made by
multiplying $*** by a fraction in which the numerator is the
Producer Price Index for the month in which the prices became
effective and the denominator is the Producer Price Index for
September 1998. "Producer Price Index" is defined as the U.S.
Department of Labor, Bureau of Labor Statistics, Producer Price
Index for in vitro diagnostic substances, or, if such Index is no
longer being published, such other comparable generally accepted
index as may then be available and selected by CHROMAVISION.
(d) Minimum Reimbursement Price. If, when or at any time after the
Reimbursement Price can by determined pursuant to Paragraph 6,
(i) ***% of the Reimbursement Price is less than $*** for the
basic Instrument or, for customers receiving Enhancement
Equipment, an amount equal to $*** plus the Enhancement Premium
for the minimum Per Click Charge referred to in (c) above and
(ii) the parties fail to otherwise agree within thirty (30) days
after the date the Reimbursement Price is determined to be below
either such amount, then either party will have the right to
terminate this Agreement by providing the other party with
60-days prior written notice. Also, if at any time after the
Reimbursement Price can be determined SIGMA determines that it
cannot market the Instrument and the Kit to a particular customer
because the average amount of revenue per test that the customer
would receive for performing tests with the Kit would be less
than the Reimbursement Price, CHROMAVISION will consider, on a
case by case basis, reducing the minimum Per Click Charge payable
by SIGMA for Instrument to be subleased to the customer, but
nothing in the Agreement shall obligate CHROMAVISION to agree to
any such reduction.
(e) Minimum Number of Clicks Per Customer. The form of sublease used
by SIGMA with its customers will require that the customer pay a
minimum of *** Per Click Charges per month commencing on the
date of Acceptance of the Instrument (as defined in Paragraph
4(b)), whether or not the number of tests actually performed
equals or exceeds that amount.
(f) Minimum Distribution of Instruments. Subject to the provisions of
(ii) below, SIGMA shall be required to distribute the minimum
number of Instruments set forth in Exhibit A to this Agreement
during each of the periods of the Initial Term of this Agreement
set forth in Exhibit A (the "Performance Periods"). An Instrument
will be deemed to have been "distributed" when Acceptance by the
customer (as defined in Paragraph 4(b)) has occurred. If SIGMA
does not distribute such minimum number of Instruments in any
Performance Period, then CHROMAVISION shall have the right to
convert this Agreement to a non-exclusive agreement by giving
SIGMA sixty (60) days prior written notice. After any such
conversion all of the provisions of this Agreement shall remain
in full
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force and effect except that SIGMA's rights under Paragraph 2 to
distribute the Instrument in the Territory shall be non-exclusive
(i.e., CHROMAVISION will have the right to grant such
distribution rights to others as well as SIGMA or distribute the
Instrument itself), and SIGMA will no longer be obligated under
Paragraph 2 to market, sell and distribute the Kits exclusively
for use with the Instrument (i.e., SIGMA will have the right to
market, sell and distribute the Kit or competing medical
diagnostic kits for use with competing instruments and
technologies). CHROMAVISION will have the right to convert this
Agreement to a non-exclusive agreement as provided above only if
it does so by delivery of written notice of its election to do so
to SIGMA within 90 days after CHROMAVISION's receipt of SIGMA's
report pursuant to (g) below for the last month in the
Performance Period in which SIGMA has failed to distribute the
minimum number of Instruments required or, in the case of a
deficit which can be cured pursuant to (ii) below, within 90 days
after receipt of SIGMA's report for the last month in the next
succeeding Performance Period. In the event SIGMA has failed to
provide a report for any month in any such Performance Period by
the date required for that report to be delivered, CHROMAVISION
will have the right to convert this Agreement as provided above
if the minimum number of Instruments required to be distributed
has not been met, and the period of time to exercise that right
shall be extended by the number of days after the end of the six
month period that SIGMA is delinquent in delivering the report.
(i) The requirement to distribute such minimum number of
Instruments shall be applicable to the twelve month period
beginning on the first day of the second month following
FDA clearance or approval to market the Instrument with
the Kit and shall continue for each six month period
thereafter throughout the Initial Term of the Agreement.
For the last fractional six month period (consisting of
four months), the amount set forth in Exhibit A shall be
reduced by 33.33%. All references in this Paragraph (f) to
Performance Period shall be deemed to include such
fractional period.
(ii) If the number of Instruments actually distributed by SIGMA
in any such Performance Period after the initial twelve
month performance period is less than the minimum referred
to above for that period but is 80% or more of the
minimum, then CHROMAVISION will not have the right to
convert this Agreement as provided above unless such
deficit is not made up in the immediately following six
month period by the distribution of the minimum amount
required for that six month period plus the deficit amount
for the preceding six month period. If the immediately
following period is the fractional six-month period
referred to in (i) above the amount to be made up shall be
reduced by 33.33%.
(iii) The minimum number of Instruments to be distributed set
forth in Exhibit A applies only to the Initial Term of
this Agreement. Unless
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(a) the parties have agreed in writing as to a
minimum number of Instruments required to be
distributed for the one-year period after the
Initial Term or any succeeding one-year period
for which this Agreement may be automatically
renewed pursuant to Paragraph 3 and
(b) such agreement is reached at least six months
prior to the end of the Initial Term or at
least six months prior to the end of any such
one-year period after the Initial Term,
either party can terminate this Agreement by delivery of
written notice to the other of its election to do so at
least six months prior to the end of the Initial Term or
at least six months prior to the end of any such one-year
period after the Initial Term. Any such Termination shall
be effective upon the expiration of the Initial Term or
upon the expiration of any such additional one-year
period, as the case may be.
(iv) The minimum number of Instruments required to be
distributed within any Performance Period shall be
increased by the number of Instruments returned by a
customer to CHROMAVISION or SIGMA during the preceding
Performance Period, except (A) to the extent that the
number of Instruments distributed during such preceding
Performance Period exceeds the minimum requirement for
that period reduced by the number of Instruments returned
during that Period and (B) this clause (iv) shall not
apply to Instruments returned upon the expiration of the
term for which they were leased.
(g) Billing and Remittance of Per Click Charges. SIGMA shall invoice
its customers at least monthly for all amounts payable for use of
the Instrument and for purchase or use of the Kit, and said
amounts shall be payable within 30 days after receipt of the
invoice. SIGMA shall remit payment to CHROMAVISION of ***% of
all amounts collected during any calendar month not later than
the tenth day of the next succeeding calendar month. Each such
payment shall be accompanied by a report setting forth the
calculation of the amounts remitted and setting forth the number
of Instruments distributed during the month to which the report
relates and during the relevant six month period referred to in
Exhibit A or portion thereof that includes the month being
reported on as well as the number of Instruments, if any,
returned to CHROMAVISION or SIGMA by customers during that month
and six month period or portion thereof. CHROMAVISION will have
the right at all reasonable times and upon reasonable notice to
inspect the books and records of SIGMA relating to the number of
Instruments distributed and returned and amounts paid and payable
by the customer to SIGMA and to cause an audit thereof at
CHROMAVISION's own expense upon reasonable notice and no more
frequently than twice in any calendar year.
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5. Recourse for Non-Payment by SIGMA Customers. Concurrently with the
execution and delivery of this Agreement CHROMAVISION is delivering to
SIGMA a letter from Xxxxx X'Xxxxx, Vice President and Chief Financial
Officer of CHROMAVISION, setting forth the credit-worthiness standards
for customers to be used throughout the term of this Agreement. Without
the prior written approval of CHROMAVISION, SIGMA shall not distribute
an Instrument to any customer who has not provided to SIGMA reasonable
documentation to demonstrate that such customer satisfies the
credit-worthiness standards. If a SIGMA customer is in default of
payment for using Instrument(s) with the Kit for over one hundred twenty
(120) days, then SIGMA shall use all commercially reasonable efforts
(including litigation where commercially reasonable) to recover the
amount due and the Instrument from the customer and cause the Instrument
to be delivered to CHROMAVISION. All reasonable direct out-of-pocket
costs and expenses of recovering the Instrument and/or the amount due
shall be borne ***% by CHROMAVISION and ***% by SIGMA. Such amounts
shall be reflected in the monthly reports referred to in Paragraph 4(g),
and SIGMA will have the right to deduct from amounts otherwise payable
to CHROMAVISION CHROMAVISION's share of any such costs and expenses
which have been paid by SIGMA. The shipping costs incurred to return the
Instrument shall be paid by SIGMA. SIGMA shall keep CHROMAVISION
informed of its collection efforts, and CHROMAVISION will have no right
to recover such payments in default from SIGMA. If at any time
CHROMAVISION requests that SIGMA assign to it the right to collect any
such payments in default and/or to recover the Instrument, SIGMA shall
promptly assign such rights to CHROMAVISION. Thereafter, CHROMAVISION
will pay over to SIGMA ***% of any delinquent amount collected from
the customer less ***% of CHROMAVISION's reasonable direct
out-of-pocket costs and expenses incurred in connection with such
efforts to collect delinquent amounts and/or recover the Instrument. The
right to recover such delinquent amounts collected by SIGMA and the
right to recover Instrument(s) as provided in this paragraph 5 is the
only recourse CHROMAVISION has against SIGMA for non-payment by SIGMA
customers unless SIGMA fails to observe the credit-worthiness standards
referred to above.
6. Calculation of Reimbursement Price. The "Reimbursement Price" shall be
determined by taking the average of the amount of reimbursement payable
to the customer by Aetna, Cigna and Transamerica Occidental (the
"Standard Setting Companies") for each test performed with the Kit and
Instrument. If one or more of such Standard Setting Companies shall not
have established such a reimbursement amount, there shall be substituted
for such Company in arriving at the Reimbursement Price, the amount of
reimbursement of another insurance company which has designated such a
reimbursement amount that has the highest volume of health insurance
policies in effect, determined as of the most recent date for which such
information is available. For customers receiving Enhancement Equipment,
(as defined in Paragraph 4(c)) the Reimbursement Price for all purposes
of this Agreement shall be increased by the Enhancement Premium
applicable to the Reimbursement Price referred to in Paragraph 4(c).
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7. New Applications. Paragraph 7 of the UR-NAP Applications and Development
Agreement being entered into by the parties concurrently with this
Agreement contemplates that future agreements may be entered into under
which SIGMA would distribute additional diagnostic kits which are
developed by either SIGMA ("SIGMA New Applications") or third parties
("Third Party New Applications") for use with the Instrument. If any
Third Party New Application not distributed by SIGMA is used on an
Instrument distributed by SIGMA, SIGMA shall be reimbursed by
CHROMAVISION, or entitled to withhold from the amount due from SIGMA to
CHROMAVISION, an amount of maintenance costs attributed to such Third
Party New Application equal to the monthly service contract rate
determined in accordance with Exhibit B for such Instrument multiplied
by the percent of all tests performed on the Instrument represented by
Third Party New Application(s). If any customer requires an additional
Instrument as a result of additional volume of testing caused by the
availability of Third Party New Application(s), CHROMAVISION will supply
the Instrument, subject to the right of CHROMAVISION or any third party
through which the Third Party New Application is being distributed to
require that the Instrument be returned if volume requirements with
respect to the Third Party New Application that have been imposed on the
customer by CHROMAVISION or such third party distributor are not met.
Such additional Instrument(s) to be provided by CHROMAVISION shall be
provided pursuant to Paragraph 11(a). SIGMA shall not be required to
maintain such additional Instrument(s) unless SIGMA is paid the portion
of the monthly service contract rate for such maintenance referred to
above.
8. Reciprocal Termination Rights. This Agreement may be terminated by
either CHROMAVISION or SIGMA for cause immediately by written notice
upon the occurrence of any of the following events:
(a) If the other ceases to do business or otherwise terminates its
business operations;
(b) If the other shall fail to promptly secure or renew any license,
registration, permit, authorization or approval that is material
to the performance of its obligations under this Agreement or if
any such license, registration, permit, authorization or approval
is revoked or suspended and not reinstated within thirty (30)
days;
(c) If the other is in material breach of this Agreement and fails to
cure such breach within sixty (60) days of receipt of notice of
the breach, except that the period to cure any failure to make
any payment under this Agreement shall be fifteen (15) days;
(d) If a material representation or warranty of the other is
discovered to be false or misleading to any material extent; or
(e) If it is discovered that the use of the Instrument with the Kit
infringes any third party rights and such potential infringement
could result in a material loss or liability to the terminating
party; or
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(f) If (i) either party receives a claim in writing from a third
party that the use of the Instrument with the Kit infringes any
third party rights, (ii) such claimed infringement would result
in a material loss or liability to the terminating party if it
were found to be valid by a court of competent jurisdiction and
(iii) the terminating party delivers to the other party the
written opinion of independent patent counsel of recognized
standing in customary form addressed to the non-terminating party
and stating that such counsel has performed a careful
investigation of the claim and the existing and prior art related
to the claim and that on the basis of that investigation, in the
opinion of such counsel, it is more likely than not that the
asserted claim would be found to be valid by a court of competent
jurisdiction and, if so found to be valid, would result in a
material loss or liability to the terminating party. For this
purpose "independent" counsel means counsel who has no direct or
indirect ownership interest in either party or their affiliates,
has no family relationship with any director, officer or record
or beneficial owner of 5% or more of the outstanding securities
of any class of either party or their affiliates and has never
performed legal services or had any other business relationship
with either party or their affiliates or any of their respective
directors, officers or such 5% security holders. An "affiliate"
of a party is a person or entity controlling, controlled by or
under common control with the party, directly or indirectly by
any means whatsoever, within the meaning of Rule 405 of the
Securities and Exchange Commission adopted under the Securities
Act of 1933. "Counsel" means not only the firm of lawyers but
each lawyer who is a present or retired partner or is presently
an associate or otherwise performs or has performed legal work
for the firm. The opinion letter of any such counsel shall state
that such counsel is independent within the meaning of this
Paragraph 8(f).
9. Rights Upon Termination. Any termination or expiration of the Agreement
shall not release CHROMAVISION or SIGMA from paying any amount that may
then be owing from any obligation at the date of termination hereunder.
Each party understands that the rights of termination hereunder are
absolute. Neither party shall incur any liability whatsoever for any
damage, loss or expenses of any kind suffered or incurred by the other
(or for any compensation to the other) arising from or incident to any
termination of this Agreement in accordance with the terms hereof,
whether or not such party is aware of any such damage, loss or expenses.
Termination is not the sole remedy under this Agreement and, whether or
not termination is effected, all other remedies will remain available.
(a) Instruments. CHROMAVISION agrees that during the period between
the notice of termination and the effective date thereof, it will
honor SIGMA's orders for Instrument(s). Notwithstanding
termination of this Agreement, SIGMA shall continue to service
all Instruments distributed to SIGMA customers under this
Agreement and CHROMAVISION shall supply Instrument parts to SIGMA
at the prices outlined in Exhibit C for up to five years from the
date of manufacturing discontinuance or the effective date of
termination of this Agreement whichever is sooner;
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(b) SIGMA agrees to continue to supply CHROMAVISION with Kits to be
distributed with the Instrument at a price to be established by
SIGMA on or before March 31, 1998. If the established price is
not acceptable to CHROMAVISION and the parties are not able to
reach agreement on a different price by April 30, 1998, either
party will have the right to terminate this Agreement by delivery
of written notice of its election to do so prior to April 30,
1998.
The provisions of (a) and (b) shall apply to any termination or expiration of
this Agreement, whether or not as a result of default.
10. SIGMA's Duties. SIGMA shall:
(a) use reasonable commercial efforts in good faith to advertise and
promote the distribution of the Instruments in a manner
calculated by SIGMA to yield the benefit to the parties hereto
contemplated by this Agreement in light of the prevailing
circumstances and to the extent to which any Instrument(s), are
at the relevant time competitive with other instruments.
(b) submit to CHROMAVISION a twelve (12) month forecast of the number
of Instruments SIGMA shall place with customers in a format to be
mutually determined by the parties. Said forecast shall be
submitted by SIGMA to CHROMAVISION thirty (30) days after the
Effective Date of this Agreement and on a rolling calendar
quarterly basis thereafter.
(c) obtain advance written authorization and a Returned Material
Authorization ("RMA") prior to returning any of the Instruments.
(d) maintain a properly trained sales force of adequate size to
represent and promote the distribution of the Instruments and
provide instructions to customers in the use of the Instruments.
SIGMA shall be responsible for developing and implementing its
own marketing plan and system for distributing the Instruments.
(e) apply for and obtain all necessary licenses, permits and other
authorizations required by applicable law or regulation in
relation to the promotion, marketing, distribution and supply of
the Instrument(s) with the Kit or the Kit with the Instrument(s)
in any jurisdiction in which SIGMA distributes the Instrument(s)
with the Kit; provided however, CHROMAVISION shall apply for 510K
clearance or PMA for use of the Instrument with the Kit or use of
the Kit with the Instrument.
(f) maintain separate and detailed accurate and complete records of
all transactions in respect of the Instruments and Kits,
including, but not limited to, such records as identify all
customers receiving Instruments and serial and/or lot number of
Instrument(s) and Kits, and possess the capability to notify all
purchasers in the event of an Instrument recall or corrective
action. SIGMA shall provide
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CHROMAVISION upon request with such summaries and reports as
SIGMA may prepare for its own purposes and will provide
CHROMAVISION with such other information in SIGMA's possession as
to transactions involving one or more Instruments as CHROMAVISION
may reasonably request.
(g) make no contracts or commitments on behalf of CHROMAVISION or
make any promises or representations or give any warranties or
guarantees with respect to the Instrument or otherwise incur any
liability on behalf of CHROMAVISION without CHROMAVISION's prior
written consent.
(h) comply with all laws and regulations and requirements applicable
to a seller of in-vitro diagnostics products, and with all laws
and regulations and requirements of governmental agencies having
jurisdiction within the Territory.
(i) provide all Instrument installations and customer training and be
responsible for all in-field product demonstrations. Installation
and customer training services shall include giving operating and
maintenance instructions, installing Instruments, performing all
service necessary at the time of delivery and making installation
inspection and necessary adjustments at the time of delivery to
ensure proper and efficient operation.
(j) except as provided for in paragraph 11, provide all labor,
transportation and related expenses for after-sales service for
the maintenance and repair of Instrument(s) within the Territory
during the Warranty Period (as defined below). CHROMAVISION will
provide a customer warranty with each Instrument under which, in
lieu of all other warranties, CHROMAVISION will agree, for a one
year period from the date of Acceptance (as defined in Paragraph
4(b)) of the Instrument (the "Warranty Period"), to repair or
replace any defective Instrument, subject to certain exceptions
which are commonly included in customer warranties of medical
instruments. In addition, for the life of the Instrument
CHROMAVISION shall correct any design flaw which materially
affects the results of tests performed with the Instrument or, at
CHROMAVISION's option and expense, it will accept a return of the
Instrument and cancellation of all lease obligations arising
after the date of the Instrument is returned. Warranty services
shall include servicing all warranty claims and making
adjustments from time to time as may be necessary to ensure
proper and efficient operation.
SIGMA shall purchase from CHROMAVISION an inventory of spare
parts ("Trunk Stock") consisting of such quantities as SIGMA may
reasonably determine is necessary for providing such warranty
service. The prices of such parts shall be as provided in Exhibit
C. Sigma shall not purchase such parts from any other party
except that SIGMA will also have the right to purchase such parts
from third party vendors approved by CHROMAVISION to the extent
set forth in Exhibit C. SIGMA shall deliver to CHROMAVISION any
original part purchased from or provided by CHROMAVISION for
repair or replacement
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within fourteen (14) days of receipt of a replacement part from
CHROMAVISION as provided in paragraph 11(k) hereof. SIGMA shall
pay the cost to ship parts from the customer's site to
CHROMAVISION for repair or replacement by CHROMAVISION.
After the Warranty Period, SIGMA shall maintain and repair the
Instruments at SIGMA's expense and shall maintain Trunk Stock to
service SIGMA customers as is reasonably determined by SIGMA to
be necessary or appropriate to handle the maintenance and repair
claims of customers using the Instrument during the term hereof
and as required by paragraph 9 hereof. SIGMA shall maintain a
separate, detailed, accurate and complete service record and
customer comments/complaint record for each Instrument
distributed by it. It shall provide copies of such records to
CHROMAVISION upon request.
(k) provide CHROMAVISION with copies of current package material for
the Kits, copies of documents describing specifications for the
Kits, and copies of all current and future correspondence with
the FDA pertaining to the Kits. SIGMA will comply with all
applicable GMP regulations in the manufacture of all Kits. If
needed to comply with any change in the law or FDA's GMP
regulations or policies, CHROMAVISION shall be given the right to
inspect SIGMA's manufacturing facilities and GMP records
pertaining to the manufacture of the Kits. If any action is taken
by the FDA to restrict or prevent the distribution of the Kits
for more than thirty (30) days in any material respect, and such
restriction is not due to the negligence of CHROMAVISION, then
upon notice to SIGMA, CHROMAVISION shall have the right to
terminate this Agreement. If, however, the FDA action relates
only to particular Kits in inventory or in the possession of
customers and not to all Kits as developed and manufactured by
SIGMA, then CHROMAVISION will not have the right to terminate
this Agreement and SIGMA shall promptly replace those Kits.
(1) comply with the Federal Food, Drug, and Cosmetic Act. The Kits
comprising each shipment or other delivery hereafter made by
SIGMA to SIGMA customers, as of the date of such shipment or
delivery, shall be, on such date, not adulterated or misbranded
within the meaning of the Federal Food, Drug, and Cosmetic Act.
(m) SIGMA shall pay for all marketing expenses related to the
distribution of the Instrument for use with the Kit.
11. CHROMAVISION's Duties. CHROMAVISION shall:
(a) make reasonable commercial efforts, in good faith, to ship
SIGMA's orders for Instruments within seventy-five (75) days from
date of order receipt. SIGMA shall specify the method of shipment
and insurance and CHROMAVISION shall make reasonable commercial
efforts, in good faith, to comply with such specifications. If no
such specification is made, or if the specification cannot be
reasonably complied with after notice to SIGMA and an opportunity
to resolve
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the issues surrounding CHROMAVISION's alleged inability to
comply, CHROMAVISION may select a reasonable manner of shipment
and insurance.
(b) comply with all laws and regulations and requirements applicable
to CHROMAVISION and relating to the performance of its
obligations under this Agreement.
(c) except as authorized in writing by SIGMA, refrain absolutely from
using the trademark or trade name and logo of SIGMA in connection
with the marketing and distribution of any Instrument.
(d) provide reasonable technical assistance to SIGMA's personnel
necessary for the marketing of the Products.
(e) at CHROMAVISION's expense, provide SIGMA with written drafts of
material relating to the Instrument's use, and with such
amendments thereto as subsequently become available.
(f) provide necessary documentation to assist SIGMA in meeting
requirements to register Instruments in the Territory and comply
with all laws and regulations, and requirements applicable to
SIGMA as a distributor of in-vitro diagnostics products, and
where possible, allow SIGMA to utilize prior registrations by
CHROMAVISION.
(g) provide SIGMA with copies of the notifications submitted for the
Instrument for use with the Kit and/or the Kit for use with the
Instrument, copies of current package material for the
Instrument, copies of documents describing specifications for the
Instrument, and copies of all current and future correspondence
with the FDA pertaining to the Instrument. CHROMAVISION will
comply with all applicable GMP regulations in the manufacture of
all Instruments. If needed to comply with any change in the law
or FDA's GMP regulations or policies, SIGMA shall be given the
right to inspect CHROMAVISION's manufacturing facilities and GMP
records pertaining to the manufacture of the Instruments. If any
action should be taken by the FDA to restrict or prevent the
distribution of the Instrument for more than thirty (30) days,
and such restriction is not due to the negligence of SIGMA, then
upon notice to CHROMAVISION, SIGMA shall have the right to
terminate this Agreement. If, however, the FDA action relates
only to particular Instruments in inventory or in the possession
of customers and not to the basic Instrument as developed and
manufactured by CHROMAVISION, then SIGMA will not have the right
to terminate this Agreement if the Warranty Period has expired or
if CHROMAVISION undertakes to and does in fact replace or
otherwise correct all affected Instrument(s). Any such
replacement of Instruments by CHROMAVISION shall be in accordance
with Paragraph 11(a).
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(h) comply with the Federal Food, Drug, and Cosmetic Act. The
Instruments comprising each shipment or other delivery hereafter
made by CHROMAVISION to, or on the order of, SIGMA, as of the
date of such shipment or delivery, shall be, on such date, not
adulterated or misbranded within the meaning of the Federal Food,
Drug, and Cosmetic Act.
(i) provide technical training, at CHROMAVISION's cost and expense,
except for travel costs, for two (2) of SIGMA's technical service
personnel upon the terms described below:
(1) The initial training will occur at CHROMAVISION's offices
within six (6) months of the Effective Date of this
Agreement and will consist of forty (40) hours of
training. The training will include operation procedures,
theory of operations, installation procedures, diagrams,
adjustment and calibration procedures and troubleshooting.
CHROMAVISION shall, at its expense, provide additional
training with respect to enhancements or upgrades in the
Instrument for the specially trained technical service
personnel. CHROMAVISION shall have no obligation with
respect to training made necessary as a result of turnover
or expansion in the numbers of personnel.
(2) Each of SIGMA's technical service personnel that receives
the technical training described above shall also receive
one (1) copy of CHROMAVISION's service/operator manuals
with respect to the Instrument which shall include: (i)
product specifications and performance data; (ii) quality
control specifications including testing methods and (iii)
other information which CHROMAVISION deems necessary. The
first five (5) copies of each of the service/operator
manuals shall be printed and distributed at CHROMAVISION's
cost and any additional copies shall be printed and
distributed at SIGMA's cost.
(3) Any additional training for the Instrument shall be at a
time, at a place, and with costs allocated as may be
agreed upon by the parties.
(j) provide all parts for the maintenance and repair of Instrument(s)
within the Territory during the Warranty Period free of charge to
SIGMA except for SIGMA's home office inventory and Trunk Stock.
(k) maintain sufficient inventories of spare parts for each
Instrument in such quantities as necessary and appropriate to
provide SIGMA with adequate Trunk Stock as is necessary or
appropriate to handle the maintenance and repair claims of
SIGMA's customers by SIGMA during the term hereof and as required
by Paragraph 9 hereof. Such parts shall be purchased by SIGMA at
the prices set forth in Exhibit C, except that SIGMA will have
the right to purchase such parts from third party vendors
approved by CHROMAVISION to the extent set forth in Exhibit C. If
SIGMA orders a spare part from CHROMAVISION,
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CHROMAVISION shall deliver to SIGMA the part within one week of
receipt of SIGMA's order. SIGMA shall deliver to CHROMAVISION the
original part (if purchased from or otherwise provided by
CHROMAVISION) for repair or replacement within 14 days of receipt
of the new part. If, however, CHROMAVISION has not received the
original part within twenty-one days or the original part was not
purchased from or otherwise provided by CHROMAVISION or if the
Warranty Period has expired with respect to the Instrument,
CHROMAVISION shall xxxx SIGMA for the part at its then current
rates and SIGMA shall be obligated to pay for the part within 30
days of receipt of the xxxx. The prices to be charged by
CHROMAVISION for spare parts are set forth in Exhibit C hereto.
12. Performance Standards.
(a) Quality Specifications and Characteristics. CHROMAVISION shall
deliver to SIGMA Instruments having the quality specification
agreed upon by the parties as set forth in the Instrument
Specifications ("Quality Specifications") dated as of the date of
this Agreement and delivered to SIGMA under cover of a letter
dated as of the date of this Agreement from Xxxxx X'Xxxxx, Vice
President and Chief Financial Officer of CHROMAVISION.
(b) Certificate of Analysis. Concurrent with shipment, CHROMAVISION
shall fax to SIGMA a Certificate of Analysis, in the form set
forth in Exhibit D, for each Instrument sold to SIGMA, confirming
that the Instrument meets the Specifications.
(c) Product Acceptance. Within twenty (20) working days of receipt of
each Instrument, SIGMA shall take and conduct analysis of the
Instrument delivered by CHROMAVISION. Should the result of an
analysis deviate from the Quality Specifications, SIGMA shall
notify CHROMAVISION and immediately thereafter provide
CHROMAVISION with the results of the test. If, following a review
of the test results, CHROMAVISION confirms that such Instrument
does not conform to the Quality Specifications, CHROMAVISION
shall provide SIGMA, free of any additional charge, with new
deliveries of the same quantity of the Instrument(s) as do not
conform to the Quality Specifications, or, in CHROMAVISION's
discretion and at its cost, CHROMAVISION may promptly reprocess
the nonconforming Instrument(s) to meet the Quality
Specifications. In either event, SIGMA shall return, at
CHROMAVISION's expense, the particular Instrument(s) which do not
comply with the Quality Specifications if requested to do so by
CHROMAVISION.
13. Product Recall.
(a) CHROMAVISION and SIGMA shall each maintain an appropriate record
of all claims made or to be made regarding the Instrument
performance.
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(b) Each party shall keep the other informed of any formal action
relating to any specific Instrument distributed by SIGMA
hereunder by any regulatory agency of any state, national
government, or government agency having jurisdiction.
(c) Should any remedial action be required with respect to
Instrument(s) provided by CHROMAVISION to SIGMA, SIGMA shall bear
the reasonable, direct costs and expenses of the remedial action
if it the result of any fault or omission attributable to SIGMA
and CHROMAVISION shall bear the reasonable and direct costs and
expenses of the remedial action if it is the result of any fault
or omission attributable to CHROMAVISION. Should such remedial
action result from the fault of neither or both parties, the
parties shall share the costs and expenses equally. A "remedial
action" is any action, other than routine maintenance or
servicing, including recall, field correction, repair,
modification, adjustment, relabeling, destruction, inspection,
patient monitoring, notification, or any other corrective action
relating to a device that is initiated by SIGMA or CHROMAVISION
in response to information that it receives or otherwise becomes
aware of that reasonably suggests that one of the Instruments is
in violation of the Federal Food, Drug and Cosmetic Act or
otherwise presents an unreasonable risk of injury to the public
health.
14. Product Complaints.
(a) Should either party experience any quality problem involving a
remedial action or Medical Device Report reportable event with
respect to any specific Instruments supplied to SIGMA by
CHROMAVISION, such party will notify the other in writing by
facsimile within twenty-four (24) hours of such remedial action
or event. Each party retains the right to correct field problems
arising out of its fault or omission as it deems appropriate with
the concurrence of the other. All information about Instrument
complaints shall be considered "Confidential Information" under
the terms of this Agreement.
(b) Either party shall immediately notify the other party in writing
should it become aware of any defect or condition that renders
any Instrument supplied by CHROMAVISION to SIGMA in violation of
the Federal Food, Drug and Cosmetic Act, or of a similar law of
any jurisdiction or country where the Instrument is distributed
against which the pertinent regulatory agency might act. The
parties shall share with each other all data on confirmed lot
specific instrument complaints including, but not limited to,
complaints or information regarding performance and/or
allegations or reports of any negative effect from the use or
misuse of such affected lot of Instruments as soon as such data
is available. However, SIGMA shall have the primary
responsibility to interact directly with SIGMA's customers in the
resolution of such complaints.
(c) CHROMAVISION shall evaluate and investigate all customer
complaints in connection with the Instruments which may be
brought to its attention, in writing,
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by SIGMA, provided SIGMA's field engineer shall first have
evaluated and attempted to solve the problem and such complaints
have been confirmed by SIGMA's QA/QC or technical service
personnel using the same standards for confirmation which SIGMA
uses for products other than the CHROMAVISION Instruments. Within
twenty (20) calendar days following receipt from SIGMA of the
original notification of each such complaint, CHROMAVISION agrees
to provide SIGMA with a written interim or final complaint
investigation report. All such Instrument complaints reported to
CHROMAVISION by SIGMA shall be reviewed weekly by CHROMAVISION
until closure, and a summary report thereof will be provided by
CHROMAVISION to SIGMA. In the event CHROMAVISION is asked to
respond to a customer complaint in the field and the complaint is
of such nature that SIGMA'S field engineer has been trained to
handle, CHROMAVISION shall xxxx SIGMA for it services in
responding to the complaint at the rates set forth in Exhibit C,
and SIGMA shall pay the amount billed within 30 days of receipt
of the xxxx.
(d) Remedial action with respect to the Instruments, or any of them,
shall be the responsibility of the party whose fault or omission
necessitated such action, as described in paragraph 13(c) hereof.
(e) Should there be a difference of opinion between CHROMAVISION and
SIGMA regarding a remedial action, SIGMA will notify its
customers without delay of any remedial action required by any
governmental authority.
15. Warranties.
(a) CHROMAVISION warrants that the Instrument(s) which are the
subject of either 510(k) premarket notifications or PMA have not
been significantly changed or modified in design, components,
method of manufacture or intended use from the Instrument(s) as
described in those 510(k) premarket notifications or PMA, and
will notify Sigma in advance of any changes that require
submission of a new 510(k) premarket notification or PMA
supplement.
(b) CHROMAVISION warrants that all Instruments manufactured and
supplied under this Agreement shall at the time of shipment meet
the Quality Specifications. CHROMAVISION further warrants that
prior to shipment to SIGMA, all of its standard tests and quality
control procedures have been carried out in relation to each
Instrument with satisfactory results.
(c) Upon its verification of any claim of defect or nonconformity of
any unit of the Instrument arising out of a fault or omission
attributable to CHROMAVISION during the Warranty Period,
CHROMAVISION will provide SIGMA with a replacement unit or part
to the extent necessary to honor CHROMAVISION's warranties
referred to in Paragraph 10(j), or make good any shortages or
non-completed deliveries and shall pay all associated freight and
insurance associated therewith.
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(d) Except as provided in paragraph 18 hereof, CHROMAVISION's
liability under any legal or equitable theory to any person with
respect to the Instrument and/or the relationship described in
this Agreement shall be limited to the repair or replacement of
the Instrument as contemplated by Paragraph 10(j).
(e) As of the date hereof, CHROMAVISION warrants that it has no
knowledge that the manufacture, use or sale of all or any of the
Instruments under this Agreement, nor any method of using such
Instruments infringes on any patent or other intellectual
property right of a third party. CHROMAVISION further warrants
that there are no unresolved controversies between CHROMAVISION
and any third party alleging that the manufacture, use or sale of
any such Instrument does or would infringe any patent or other
intellectual property except for the claim of IDEA Research which
is referred to in the Company's Prospectus dated July 1, 1997.
CHROMAVISION shall disclose to SIGMA all information of which it
is or becomes aware relating to the infringement of patent or
other intellectual property rights of others resulting from the
manufacture, marketing or use of the Instrument with the Kit and
will notify SIGMA of all claims of such infringement.
Except as warranted in this Paragraph 15, CHROMAVISION makes no
representations or warranties, express or implied, and SIGMA is not
authorized to make any representations or warranties to its customers on
behalf of CHROMAVISION.
16. Packaging and Intellectual Property. CHROMAVISION shall be responsible
for packaging and labeling the Instruments. SIGMA will distribute the
Instruments only with all appropriate labeling, packaging, and
literature and only under CHROMAVISION's applicable trademarks and trade
names together with SIGMA's applicable trademarks and trade names.
CHROMAVISION shall xxxx each Instrument with both CHROMAVISION's
trademark or trade name and SIGMA's trademark or trade name, and such
SIGMA xxxx shall be provided by SIGMA to CHROMAVISION. SIGMA recognizes
CHROMAVISION's right, title and interest in its patents, trademarks,
trade names and copyrights, trade secrets and proprietary information in
connection with the Instruments, and SIGMA shall not claim any ownership
right thereto inconsistent with this Agreement, or dispute the validity
thereof. In the event any third party shall contest CHROMAVISION's
rights to its patents, trademarks, trade names or copyrights, trade
secrets or propriety rights, SIGMA shall, at CHROMAVISION's sole
expense, render reasonable assistance to CHROMAVISION in defending such
claims.
17. Compliance with Other Agreements. Each party represents and warrants as
to itself that the execution and delivery by it of this Agreement and
the performance by it of its obligations under this Agreement will not,
with or without the giving of notice or the passage of time, violate any
judgment, writ, injunction or order of any court, arbitration or
governmental agency or conflict with, result in the breach of any
provisions of, or the termination of, or constitute a default under, any
agreement to which CHROMAVISION or SIGMA is a party or by which it is or
may be bound.
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18. Indemnity.
(a) Except as limited by the remainder of this paragraph,
CHROMAVISION hereby agrees to indemnify SIGMA against claims of
third parties for injuries to their persons (including death)
arising from the use of Instruments supplied by CHROMAVISION to
SIGMA hereunder. This indemnity shall not apply to, and
CHROMAVISION shall not be liable for, claims for injuries caused
by or arising from:
(1) any act or failure to act on the part of SIGMA, its
employees, representatives, agents, or subsidiaries in
packaging, handling, storing or otherwise distributing
such Instruments; or
(2) any representation or warranty concerning the
Instrument(s) made by or on behalf of SIGMA and not
specifically authorized by CHROMAVISION; or
(3) claims where the use of the Instruments by any customer
was not in accordance with the use prescribed by
CHROMAVISION, or
(4) SIGMA's failure to disseminate to purchasers or end-users
any Instrument information which CHROMAVISION has made
available to SIGMA; or
(5) any actual or alleged injuries caused by a Kit or any
defect in a Kit.
SIGMA shall promptly notify CHROMAVISION of any such claim of
which it becomes aware and in any event shall notify CHROMAVISION
thereof within twenty (20) days of SIGMA's first notice of the
claim. In addition, SIGMA shall fully cooperate with CHROMAVISION
in defending any such claim and shall furnish to CHROMAVISION all
relevant evidence in its possession. The failure of SIGMA to give
such notice and to cooperate shall not excuse CHROMAVISION's
obligation to indemnify SIGMA except to the extent that
CHROMAVISION is prejudiced by such failure.
(b) CHROMAVISION shall also indemnify SIGMA against any claims of
patent infringement relating to an Instrument subject to this
Agreement provided SIGMA gives CHROMAVISION notice within twenty
(20) days after SIGMA's first notice of the claim and permits
CHROMAVISION to assume the sole defense of the claim at
CHROMAVISION's expense; provided, however, that the claim is not
based on: (i) the sale or use of any Instrument in combination
with any other product which is not specifically authorized by
CHROMAVISION in writing; or (ii) the application of any
Instrument in any manner not specifically authorized by
CHROMAVISION in writing. CHROMAVISION may at its option elect to
defend any such claim, settle the claim, obtain a license under
the claimed infringed patent, modify the Instrument so as not to
infringe or recall the Instrument and refund all amounts paid
therefor, or do any combination of the
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foregoing. CHROMAVISION acknowledges that the pending claim by
IDEA Research is covered by this Paragraph 18(b) and that SIGMA
has no obligation to give notice of the claim. CHROMAVISION will
have the right to assume the full defense of the claim without
further permission from SIGMA.
(c) Except as limited by the remainder of this paragraph, SIGMA
hereby agrees to indemnify CHROMAVISION against claims of third
parties for injuries to their persons (including death) arising
from the use of Kits supplied by SIGMA hereunder. This indemnity
shall not apply to, and SIGMA shall not be liable for, claims for
injuries caused by or arising from:
(1) any act or failure to act on the part of CHROMAVISION, its
employees, representations or agents (excluding SIGMA) or
subsidiaries in packaging, handling, storing or otherwise
distributing such Kits;
(2) any representation or warranty concerning the Kit(s) made
by or on behalf of CHROMAVISION and not specifically
authorized by SIGMA; or
(3) claims where the use of the Kits by any customer was not
in accordance with the use prescribed by SIGMA, or
(4) any actual or alleged injuries caused by an Instrument or
any defect in an Instrument.
CHROMAVISION shall promptly notify SIGMA of any such claim of
which it becomes aware and in any event shall notify SIGMA
thereof within twenty (20) days of CHROMAVISION's first notice of
the claim. In addition, CHROMAVISION shall fully cooperate with
SIGMA in defending any such claim and shall furnish to SIGMA all
relevant evidence in its possession. The failure of CHROMAVISION
to give such notice and to cooperate shall not excuse SIGMA's
obligation to indemnify CHROMAVISION except to the extent that
SIGMA IS prejudiced by such failure.
(d) SIGMA shall also indemnify CHROMAVISION against any claims of
patent infringement relating to any Kit subject to this Agreement
provided CHROMAVISION gives SIGMA notice within twenty (20) days
after CHROMAVISION's first notice of the claim and permits SIGMA
to assume the sole defense of the claim at SIGMA's expense;
provided, however, that the claim is not based on: (i) the sale
or use of any Kit in combination with any other product
(excluding the Instrument) which is not specifically authorized
by SIGMA in writing; or (ii) the application of any Kit in any
manner not specifically authorized by SIGMA in writing. SIGMA may
at its option elect to defend any such claim, settle the claim,
obtain a license under the claimed infringed patent, modify the
Kit so as not to infringe or recall the Kit and refund all
amounts paid therefor, or do any combination of the foregoing.
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(e) In the event of a claim subject to an indemnification obligation
in this Paragraph 18, except as provided in (f) below, the party
obligated to indemnify (the"indemnifying party") will have the
right to assume and control the defense of the claim and the
other party (the"indemnified party") will have the right to
participate in the defense using separate counsel at its own
expense. If, however, the attorney provided by the indemnifying
party has a conflict of interest in representing both parties,
then the fees and expenses of the indemnified party's separate
counsel shall be paid by the indemnifying party. The indemnified
party shall not settle any such claim without the prior written
consent of the indemnifying party unless the indemnifying party
has failed to assume the defense of the matter and has failed to
acknowledge its obligation to indemnify the indemnified party
with respect to the specific claim asserted.
(f) In the event of a claim against either SIGMA or CHROMAVISION or
both as to which both parties have indemnification obligations
under this Agreement, each party shall be entitled to be
represented by its own counsel at its own expense and to control
it own defense, except that if a court of competent jurisdiction
ultimately determines that such claim is valid, in whole or in
part, each party shall indemnify the other against all damages
and loss from the claim to the extent of its indemnification. In
addition each party will indemnify the other for that portion of
its attorneys' fees and other costs attributable to the defense
of the claim which is subject to such party's indemnification
obligation.
19. Fees. SIGMA acknowledges that it has not and will not pay any fee to
CHROMAVISION in connection with this Agreement or any prior agreement,
undertaking or arrangement between them except for payments expressly
provided for herein or the Development Agreement.
20. Force Majeure. Neither party shall be responsible for any failure to
perform due to causes beyond its control. These causes shall include,
but not be limited to, fire, storm, flood, earthquake, explosion, wars,
riots, civil disorder, sabotage, quarantine restrictions, labor
disputes, labor shortages, transportation embargoes, or failure or
delays or disruption in manufacturing process, curtailment of or failure
in obtaining fuel or electrical power, or the acts of any governmental
authority, or instrumentalities, orders of any court or tribunal whether
foreign or domestic, exchange restrictions, acts of God, acts of the
Federal Government or any agency thereof, acts of any foreign, state or
local government or agency thereof, or shortage of materials or any
similar or dissimilar occurrence beyond the reasonable control of the
party which is prevented, interrupted or delayed in the performance of
its obligations hereunder. In no event shall CHROMAVISION be under any
obligations to purchase Instrument(s) or similar products from any third
party in order to supply same to SIGMA hereunder. Any force majeure
event shall not excuse performance by the party but shall delay
performance, unless such force majeure continues for a period in excess
of ninety (90) days. In such event, the party seeking performance, as
its sole and exclusive remedy, many cancel its
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obligations under this Agreement. Nothing in this Paragraph 20 shall
excuse the failure of any party to make any payment of money required
under this Agreement.
21. Insurance. Each party shall keep in force during the term of this
Agreement product liability insurance in such amounts as may be
customary for like sized businesses undertaking like responsibilities to
those contemplated by this Agreement. Each party shall submit a
certificate of insurance to the other evidencing such coverage upon
written request therefor.
22. Confidentiality. With respect to any Information, designated by the
parties as its confidential Information by a written notice to the
non-owning party within thirty (30) days after the first written
disclosure of that Information by either party to the other, the
non-owning party shall: (a) take all reasonable steps to prevent
disclosure of such Information to any third party and (b) not utilize
any of such Information for any purpose other than the purposes
contemplated by this Agreement and the Development Agreement being
entered into by the parties concurrently with this Agreement; provided,
however, that the foregoing obligations of confidentiality and non-use
shall not preclude disclosure of such information in a patent
application or in the prosecution of a patent application or extend to
any of such Information which a non-owing party can show:
(i) by the non-owning party's prior written records was already in
the non-owning party's possession prior to date hereof;
(ii) such Information became generally available to the public through
issuance or publication of a patent application in which the
information is disclosed pursuant to this Paragraph 22;
(iii) such Information otherwise is or becomes generally available to
the public through no fault of the non-owning party;
(iv) such Information is received by the non-owning party in good
faith from a third party on a non-confidential basis without
violating any obligation of secrecy to the owner party relating
to the Information disclosed; or
(v) written consent to disclose such Information was given by the
owning party.
"Information" is defined to include all plans, specifications,
calculations, formulae, models, sketches, software, clinical, scientific
engineering or other test results, financial information, projections,
business plans, memoranda, notes and other documents, recordings, films,
photographs and all other information or every kind and nature, whether
recorded on paper, electronic media or otherwise, but only to the extent
that any such information is not generally lawfully available to the
public or the medical diagnostic industry generally. The provisions of
this Paragraph 22 shall not preclude the disclosure of Information which
is or, in the written opinion of counsel for either party may be,
required to be disclosed by law or the requirements of any stock
exchange or other market where the securities of either party or its
direct or indirect parent company
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are traded or (except as provided in Section 14 of the Development
Agreement being entered by the parties concurrently with this Agreement)
to any information required to be disclosed to the FDA or any other
governmental authority to obtain and keep in effect clearance or
approval of the Instrument for use with the Kit or any New Application
or the Kit or any New Application for use with the Instrument.
The provisions of this Paragrpah 22 shall survive any termination or
expiration of this Agreement, whether for default or otherwise. The
obligations of the parties under this Paragraph 22 shall continue in
effect for five (5) years after the latest of (i) the expiration or
earlier termination of the term of this Agreement, (ii) the expiration
or earlier expiration of the term of the Development Agreement or (iii)
the expiration or earlier termination of the term of any agreement
entered into by the parties pursuant to the Development Agreement with
respect to a New Application, except that the obligations shall not
expire as to any Information included in any patent application or
constituting a trade secret, in each case to the extent the Information
relates to the development, design, function, use, or method of use of,
or any process relating to, the Kit or the Instrument or otherwise
constituting technology relating to any of the foregoing. The
obligations of the parties shall not expire as to any item of such
Information until such item of Information becomes generally available
to the public through no fault of the non-owning party.
All CHROMAVISION confidential disclosures shall be sent to SIGMA to the
attention of Vice President of Administration. All SIGMA confidential
disclosure shall be sent to CHROMAVISION to the attention of Vice
President of Business Development. The failure of a party to send
confidential disclosures as provided in this Paragraph 22 and the
failure to designate confidential Information as provided herein shall
not excuse the obligations of the other party with respect to such
Information pursuant this Paragraph 22 if the person or persons
receiving the Information or disclosing it to a third party knew or
should have known that the Information was confidential. The parties
agree that Information designated confidential shall be disclosed to a
restricted number of employees and such employees shall be made aware of
the confidential nature of the Information. The parties shall use
efforts fully commensurate with those employed for the protection of its
own confidential information to protect the Information disclosed
pursuant to this Paragraph 22.
23. Appointment of Sub-Distributors. SIGMA may assign, sublicense, delegate,
or otherwise transfer the performance of the rights and obligations
hereunder to qualified and reputable sub-distributors, provided,
however, that: (i) SIGMA shall be liable to CHROMAVISION for the errors,
negligent acts and omissions of its sub-distributor's as if such errors,
negligent acts and omissions were its own, including any breach of any
provision of this Agreement by the sub-distributors; (ii) SIGMA shall
have and retain full control of any sub-distributors utilized, and shall
be responsible for the performance by any sub-distributor; and (iii)
SIGMA shall not be relieved of the responsibility for the proper
performance and completion of the sub-distributed portions of its
obligations hereunder.
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24. Assignability. Neither this Agreement nor any agreement incorporated
herein nor any rights or obligations hereunder or thereunder may be
assigned by either party without prior written consent of the other
party, and any attempted assignment without prior written consent shall
be void and of no effect. The decision of a party to withhold any such
consent shall be final and not subject to challenge on the basis that
the reasons for the decision were not adequate or that there were no
reasons. Notwithstanding the foregoing, either party will have the right
to assign this Agreement without consent in connection with a transfer
of its business substantially as a whole (or that portion thereof
relating to the Instrument, in the case of CHROMAVISION, or relating to
medical diagnostic kits, in the case of SIGMA), whether by merger,
consolidation, sale of assets, sale of stock or otherwise. This
Agreement shall be binding upon and inure to the benefit of the
successor or assign of the assigning party.
25. Notices. Any notices or report or other communication permitted or
required under this Agreement shall be in writing and sent by certified
mail, express mail, Federal Express, postage paid, return receipt
requested, addressed to the party to whom the notice, report or other
communication is to be given or by telephone facsimile to the telephone
facsimile number of the party to whom the notice, report or other
communication is to be given. All such notices, reports or other
communications sent by mail, postage prepaid, return receipt requested,
shall be deemed to have been given on the date postmarked. All other
such notices, reports or other communications shall be deemed to have
been given when actually received. Changes in address shall be
accomplished by a notice in compliance with this Paragraph 25. The
current address and telephone facsimile number for each party is as
follows:
CHROMAVISION SIGMA DIAGNOSTICS, INC.
33171 Paseo Cerveza 000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx Xxxxxxxxxx, XX 00000 Xx. Xxxxx, Xxxxxxxx 00000
Attn: Vice-President and Chief Attn: Vice President,
Financial Officer Administration
Facsimile No.: (000) 000-0000 Facsimile No.: (000) 000-0000
26. Entire Agreement. This Agreement and the Development Agreement between
the parties executed contemporaneously herewith represent the entire
understanding between the parties as of the date hereof with respect to
the subject matter hereof, and supersede all prior agreements,
negotiations, understandings, representations, statements, and writings,
between the parties relating thereto. No modification, alteration,
waiver or change in any of the terms of this Agreement shall be valid or
binding upon the parties hereto unless made in writing and specifically
referring to this Agreement and duly executed by each of the parties
hereto.
27. Waiver. Waiver by either party of a default or breach or a succession of
defaults or breaches, or any failure to enforce any right hereunder
shall not be deemed to constitute a waiver of any subsequent default or
breach with respect to the same or any other
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provision hereof, and shall not deprive such party of any right to
terminate this Agreement arising by reason of any subsequent default or
breach.
28. Severability. If any provision of this Agreement is or becomes or is
deemed invalid, illegal or unenforceable in any jurisdiction in which
the Agreement is sought to be enforced: (a) such provision shall be
deemed and amended to conform to applicable laws of such jurisdiction so
as to be valid and enforceable or, if it cannot be so amended without
materially altering the intention of the parties, it shall be stricken;
(b) the validity, legality and enforceability of such provision will not
in any way be affected or impaired thereby in any other jurisdiction;
and (c) the remainder of this Agreement shall remain in full force and
effect.
29 Arbitration. All disputes or controversies arising under or in
connection with this Agreement shall be settled exclusively by final and
binding arbitration in accordance with Commercial Arbitration Rules of
the American Arbitration Association then in effect, provided that the
arbitrator or arbitrators shall decide the dispute or controversy in
accordance with Missouri law as applied to this Agreement. Either party
can commence an arbitration by delivering written notice of its election
to do so to the other party setting forth with reasonable specificity
the issue or issues to be arbitrated. If the parties fail to agree on a
single arbitrator within thirty (30) days after delivery of such notice,
each of them shall appoint a single arbitrator and the two arbitrators
shall appoint a third arbitrator within ten days after the later of the
two appointments. If any party fails or the two arbitrators fail to
appoint an arbitrator within the time periods specified, such arbitrator
shall be appointed by the American Arbitration Association upon the
request of either party. No arbitrator shall have an existing or
pre-existing business, family or social relationship with either party
or with any affiliate of either party or with any officer, director or
employee of either party or its affiliates. An "affiliate" of a party is
a party controlling, controlled by, or under common control with, the
party directly or indirectly by any means whatsoever. The arbitration
shall be conducted in the city (or, if none, the county) where the
principal executive office of the party who did not commence the
arbitration is then located, except that in the case of CHROMAVISION
that may include the City of Los Angeles or any portion of Orange County
north of San Xxxx Capistrano. If such principal executive office is not
in the United States, then the arbitration may be held in the city (or,
if none, the county) where the principal office of the party commencing
the arbitration is located. All decisions of the arbitrators shall be by
majority vote. In the course of the arbitration the parties shall be
entitled to such discovery as would be permitted by the Federal Rules of
Civil Procedure. The arbitrators or any chairman of the arbitration
panel selected by the arbitrators, if there are to be three arbitrators,
will have the authority to determine all discovery disputes between the
parties. The arbitrators will also have the power to grant provisional
remedies such as temporary restraining orders and preliminary
injunctions pending the outcome of the arbitration. Any final decision
by the arbitrators shall be accompanied by written findings of fact and
conclusions of law. Judgment may be entered on the arbitration award in
any court having jurisdiction.
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30 Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State
of Missouri applicable to the agreements between residents of Missouri
to be performed entirely within Missouri.
31 Attorneys' Fees. In the event of any litigation or arbitration arising
out of or relating to this Agreement, the prevailing party shall be
entitled to recover its reasonable attorneys' fees incurred in
connection therewith.
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32. Headings. The headings of this Agreement are included only for ease of
reference and shall not affect the interpretation of this Agreement in
any manner.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duty authorized officers or authorized representatives
CHROMAVISION MEDICAL SYSTEMS, INC.
By: /s/ Xxxxx X. X'Xxxxx
---------------------------
Title: VP and CFO
------------------------
Date: October 17, 1997
SIGMA DIAGNOSTICS, INC.
By: /s/ Xxxxxxx Xxxxxxx
---------------------------
Title: CEO
------------------------
Date: October 22, 1997
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EXHIBIT A
MINIMUM REQUIREMENTS
Minimum No. of Instruments Required to be Distributed
Performance Period* No.
------------------ ---
1st (12 months) ***
2nd ***
3rd ***
4th ***
5th ***
* The first Performance Period is the twelve-month period referred to in
Paragraph 4(f)(i) of the Agreement, and each of the other Performance Periods
consists of six months as provided in Paragraph 4(f)(i).
*** Confidentiality Requested
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EXHIBIT B
MONTHLY SERVICE CONTRACT RATE
The monthly service rate will be established by SIGMA on or before March
31, 1998. If the rate established is not acceptable to CHROMAVISION and the
parties are not able to agree on the rate by April 30, 1998, either party will
have the right to terminate this Agreement by delivering written notice of its
election to do so prior to April 30, 1998.
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EXHIBIT C
SPARE PARTS PRICE LIST
*** Confidentiality Requested
QUANTITY. EXCHANGE
Item Description Part # PER UNIT UNIT COST CREDIT
---------------- ------ -------- --------- ------
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EXHIBIT D
CERTIFICATE OF ANALYSIS
SHIPPING FROM: CUSTOMER:
ChromaVision Medical Systems, Inc. Xxxx Xxx
00000 Xxxxx Xxxxxxx
Xxx Xxxx Xxxxxxxxxx, XX 00000
---------------------------------------------------------------------------------------------
DATE PURCHASE ORDER NUMBER DATE OF ORDER RECEIPT SHIPPING DATE
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
QTY. ITEM NUMBER DESCRIPTION SERIAL NUMBER
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
1 XXXX Dx2000 Automated Intelligent Microscopy 1000131
System
---------------------------------------------------------------------------------------------
Includes:
---------------------------------------------------------------------------------------------
1 XXXX Microscope XXXX
---------------------------------------------------------------------------------------------
1 XXXX Tower XXXX
---------------------------------------------------------------------------------------------
1 XXXX 21" Monitor XXXX
---------------------------------------------------------------------------------------------
1 XXXX Keyboard XXXX
---------------------------------------------------------------------------------------------
1 XXXX Track Ball XXXX
---------------------------------------------------------------------------------------------
1 XXXX UPS XXXX
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
NOTE:
The Dx2000 Automated Intelligent Microscope System with serial numbers listed
above is certified for performance based on Qualifying Test procedures at point
of manufacture in San Juan Capistrano, California, USA.
---------------------------------------- ---------------------------
Signature (Quality / Regulatory Manager) Date
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