Exhibit 10.29
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT (this "Agreement") effective as of January 1,
2001 (the "Effective Date"), is entered into between BIOSITE DIAGNOSTICS
INCORPORATED, a corporation under the laws of the State of Delaware ("Biosite"),
having a place of business at 00000 Xxxxxxx Xxxxxx, Xxxxx X, Xxx Xxxxx,
Xxxxxxxxxx 00000, and XXXXXX SCIENTIFIC COMPANY L.L.C., a Delaware Limited
Liability Company represented by its XXXXXX HEALTHCARE division, ("FHC"), having
a place of business at 0000 Xxxxxxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxx 00000.
WITNESSETH
WHEREAS, Biosite and FHC entered into the Distribution Agreement dated as
of January 1, 1998 (as amended to date, the "1998 Distribution Agreement").
WHEREAS Biosite and FHC now desire to enter into a new agreement setting
forth the terms of their business relationship and concurrently to terminate the
1998 Distribution Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
respective covenants of the parties herein set forth, the parties hereby
terminate the 1998 Distribution Agreement effective as of December 31, 2000, and
agree as follows:
1. Products.
(a) For purposes of this Agreement, the "Products" shall mean the
*** and the ***.
(b) For purposes of this Agreement, the "***" shall mean,
collectively, the Biosite products described in Schedule B (the "***"), the ***
and the Biosite products described in Schedule C (the "***").
(c) For purposes of this Agreement, the "***" shall mean,
collectively, the Biosite products described in Schedule D (the "***"), Schedule
E (the "***") and the ***.
(d) For purposes of this Agreement, the "***" shall mean the new
Biosite point of care immunoassay diagnostic products (other than the ***), (i)
for which Biosite has received all applicable governmental approvals to sell and
use in the Territory after the date of this Agreement, (ii) which Biosite offers
for sale, and (iii) which FHC exercises its right under Section 1(g) to add to
the *** subject to this Agreement.
(e) For purposes of this Agreement, the "***" shall mean the new
Biosite point of care immunoassay diagnostic products used with the instrument
(other than the ***) for the detection of drugs of abuse, (i) for which Biosite
has received all applicable governmental approvals to sell and use in the
Territory after the date of this Agreement, (ii) which Biosite
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offers for sale, and (iii) which FHC exercises its right under Section 1(g) to
add to the *** subject to this Agreement.
(f) During the term of this Agreement, Biosite shall make available
to FHC any improved or updated versions of the Products under the same terms and
conditions (other than price) as set forth herein.
(g) If Biosite desires to offer for sale in the Territory any new
Biosite point of care immunoassay diagnostic product (***), for which Biosite
has received all applicable governmental approvals to sell and use in the
Territory after the date of this Agreement, Biosite shall offer to FHC in
writing the opportunity to add such new Biosite product to the ***, as
applicable, subject to this Agreement. If FHC gives Biosite express written
notice of FHC's acceptance of such offer for such new Biosite product within ***
after FHC receives Biosite's written offer to add such new Biosite product to
the *** subject to this Agreement, then such new Biosite product shall be added
to the *** or ***, as applicable, subject to this Agreement. If FHC fails to
give Biosite express written notice of FHC's acceptance of such offer for such
new Biosite product within *** after FHC receives Biosite's written offer to
add such new Biosite product to the ***, as applicable, subject to this
Agreement, then FHC shall have no rights in or to such new Biosite product
(or to any improved or updated versions thereof) under this Agreement or
otherwise.
(h) Biosite shall provide all required Material Safety Data Sheets,
if any, for any Product containing hazardous chemicals or otherwise as required
by federal, state or local law.
2. Grant of Distributorship.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, Biosite hereby appoints FHC, and FHC accepts such appointment, as the
exclusive distributor of the *** in the Territory (as defined below) during the
term of this Agreement. FHC may distribute the *** hereunder only through FHC or
its subdistributors existing as of the Effective Date which are listed in
Schedule G. FHC shall not appoint subdistributors hereunder, other than those
listed in Schedule G without Biosite's prior express written consent, which
shall not be unreasonably withheld. Notwithstanding the foregoing, Biosite
reserves the rights described in Section 2(e).
(b) Upon the terms and subject to the conditions set forth in this
Agreement, Biosite hereby appoints FHC, and FHC accepts such appointment, as the
*** distributor of the *** in the Territory during the term of this Agreement.
For purposes of this Agreement, "***" shall mean, with respect to any ***, that
FHC *** or any of their respective subsidiaries or affiliates, as a
subdistributor), shall have the right to promote, market, sell and distribute
the *** in each segment of the Territory. Biosite shall inform FHC prior to
initiating distribution with such third party. FHC may distribute the ***
hereunder only through FHC or its subdistributors existing as of the Effective
Date, which are listed in Schedule G. FHC shall not appoint subdistributors
hereunder, other than those listed in Schedule G without Biosite's prior express
written consent, which shall not be unreasonably withheld. Notwithstanding the
foregoing, Biosite reserves the rights described in Section 2(e).
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(c) The "Territory" consists of *** in the United States and its
***: (1) the "***", and (2) the "***." The *** shall mean: hospitals (including
nonprofit, religious, government, university, military and psychiatric
hospitals), reference laboratories, occupational health centers and clinics that
are part of a hospital facility; chest pain centers that are part of a hospital
facility; drug rehabilitation centers that are part of a hospital facility; and
xxxxxxx xxxxxxxxxx centers; and (2) The *** shall mean physician group practices
of *** or more physicians. The Territory shall not include, and FHC shall not be
permitted to sell the Products in, any areas or to any market segment not
described in this Section 2(c) ***. FHC shall take reasonable steps to limit the
likelihood that FHC's customers in the Territory purchase Products for resale in
the Reserved Market Segments (as defined below).
(d) All areas and market segments not included in the definition of
the Territory shall be hereinafter referred to as the "Reserved Market
Segments." Biosite shall retain all rights to promote, market, sell and
distribute (either directly or through others) the Products in the Reserved
Market Segments. Except as otherwise set forth in this Agreement, Biosite shall
not be permitted to sell the *** in the Territory and shall take reasonable
steps to limit the likelihood that Biosite's customers in the Reserved Market
Segments purchase Products for resale into the Territory. Included in the
Reserved Market Segments, without limitation, are all market segments in
countries *** drug rehabilitation centers and chest pain centers not part of a
hospital facility; prisons and prison hospitals; physician practices of less
than *** physicians; probation and parole programs; public and private sector
workplace testing; non-hospital based occupational health centers or clinics;
industrial laboratories; non-hospital military on-site testing programs
(i.e., ADCO, recruiting centers); high school, college, university and
professional sports programs; government agencies; public carriers; and
veterinary clinics and animal testing.
(e) Nothing herein shall prohibit Biosite from:
(i) promoting, marketing, distributing and selling the ***
without restriction;
(ii) distributing (but not selling) Products within the
Territory only for purposes of pre-market clinical testing or evaluation of
Products or testing of Product improvements or enhancements prior to market
introduction;
(iii) promoting, marketing, soliciting and receiving orders
for the sale by FHC, its subdistributors listed on Schedule G, and its ***
distributor of Products within the Territory;
(iv) promoting, marketing, selling and distributing any
Product directly to a customer, (A) which states in writing to FHC that such
customer will only buy such Product directly from Biosite, but only after
Biosite uses its reasonable good faith efforts to convince such customer to buy
such Product from FHC at the same price such Product would be sold to the
customer by Biosite, identifies the customer to FHC, specifies the reason such
customer refuses to buy from FHC, and allows FHC a reasonable period of time to
convince the customer to buy from FHC; or (B) which uses, has used or is
considering using such Product and to which FHC offers to a customer in the
Territory a competitive product to any Product hereunder; or
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(C) if Biosite has invested not less than *** in expenses directly associated
with procuring a particular order (e.g., costs of samples, sponsorships and
direct marketing expenses, *** in the effort to obtain such customer's order to
purchase such Product; or (D) if the maximum price at which such customer
requires such Product is less than *** of Biosite's then most recently published
list price for such Product and the parties mutually agree Biosite may promote,
market, sell and distribute such Product; provided, however, that (X) Biosite
shall not promote, market, sell or distribute any Product under this Section
2(d)(iv) directly to a group purchasing organization (or similar entity) with
whom FHC has a "then-current agreement" (which for the purposes of this Section,
shall mean any pricing or purchasing arrangement or agreement) for the purchase
and sale of such Product that was entered into prior to the date of such
arrangement with Biosite; (Y) if any group purchasing organization (or similar
entity) to whom Biosite sells or distributes any Product under this Section
2(d)(iv) has a member facility that has a then-current agreement with FHC for
the purchase and sale of such Product that was entered into prior to the date of
such arrangement with Biosite, then Biosite shall encourage such individual
facility to continue to purchase such Product from FHC; and (Z) any lost sales
of FHC to any facility that has a then-current agreement with FHC for the
purchase and sale of a Product that was entered into prior to the date of an
arrangement between such facility (or its group purchasing organization or
similar entity) with Biosite, that are reasonably demonstrated to result solely
from such arrangement with Biosite, shall be included within the calculation of
FHC sales solely for the purpose of the calculations under Sections 6(c) below;
and
(v) promoting, marketing, selling and distributing any Product
in the event Biosite provides notice of non-renewal as described in Section 6(a)
of this Agreement, and FHC thereafter promotes, markets or sells any directly
competitive products (other than those permitted under Section 3(b)).
(f) Notwithstanding any language to the contrary in this Agreement,
the parties agree to exercise due diligence and good faith for their mutual
benefit in jointly negotiating and entering into agreements with group
purchasing organizations (integrated delivery networks or similar entities) for
Biosite Products. Neither Biosite nor FHC shall negotiate or execute an
agreement with a group purchasing organization (integrated delivery network or
similar entity) for Biosite Products without the written consent of the other,
which shall not be unreasonably withheld. Any request for such consent shall be
answered by the other party within thirty (30) days. The language contained in
this Section 2(f) shall control over any conflicting language contained in this
Agreement.
3. Conduct of FHC.
(a) FHC shall use its good faith commercial efforts and facilities
to promote, market, distribute and sell the Products and to take no action which
would interfere with Biosite's efforts to develop and maintain the reputation of
and goodwill with respect to the Products within the Territory during the term
of this Agreement. FHC shall provide not less than an aggregate of *** of
advertising for available Products in all of FHC's General Catalogs. With
respect to each ***, FHC shall permit Biosite access to its sales
representatives for at least *** per Product for the purpose of providing
training of FHC's sales representatives in the demonstration and use of the
Products on such dates (which shall be not later *** following the launch of
such Product in the Territory) and in such locations as mutually acceptable to
the
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parties. FHC shall provide Biosite with samples of any such Product advertising
and sales literature prior to printing and distribution of same, and Biosite
shall have the right to approve the Product advertisement(s), which approval
shall not be unreasonably withheld or delayed. FHC shall use its good faith
commercial efforts to inform customers and potential customers of the
availability and desirability of the Products; to handle promptly all inquiries,
quotations, correspondence and orders; and to assist customers in the proper use
of the Products and the referral of customers to Biosite for the solution of
technical application problems.
(b) Except as otherwise set forth in this Section 3(b), FHC shall
not promote, market, advertise, sell, or distribute any products in the
Territory that are directly competitive with the Products. Notwithstanding the
foregoing, FHC shall have the right to distribute and sell (i) products of a
third party, competitive with the Products, which third party products FHC sells
or distributes as of the Effective Date, as listed on Schedule H (ii) any
products of such third party which are subsequently added by such third party to
its line of products, which are competitive with the Products, except those
products in the same or equivalent testing format of the Products that read
visually or read on a point of care instrument; (iii) any instruments that may
include competitive assays to the Products which are instruments that are based
on an automated random access instrument platform (with the exception of those
instruments manufactured by or on behalf of *** with a broad based menu of
analytes such as chemistries, fertility, thyroid function, oncology, infectious
disease, TDM, DOA, allergy, etc.; provided that all of the products referred to
in Sections 3(b)(i)-(iii) have a list price of greater than ***; and (iv)
competitive products in the event Biosite provides notice of non-renewal as
described in Section 6(a) of this Agreement. Additionally, nothing contained in
this Agreement shall restrict the activities of FHC outside the Territory with
respect to competing products.
(c) FHC shall provide Biosite, on a monthly basis, with a written
forecast of FHC's estimated purchase requirements for each month in the ensuing
three-month period for the Products (other than ***), and in the ensuing six
month period for ***. Forecasted quantities for Products for the first and
second month of each forecast period shall be binding, subject however to a
variance of plus or minus ten percent (10%) for the second month of each
forecast and provided that in the first *** following the date of first Product
shipment for any new Product, the second month forecast shall be subject to a
variance of plus or minus thirty percent (30%). Biosite shall use its good faith
commercial efforts to sell such quantities to FHC.
(d) FHC may return, for full credit or replacement, any Product for
which FHC is required to give a customer a credit or replacement Product due to
a claimed defect or deficiency in the Product, provided that FHC first obtains
from Biosite a returned goods authorization which shall not be unreasonably
withheld or delayed by Biosite.
(e) Biosite shall review and advise FHC on compliance with all FDA
requirements regarding the Products contained in FHC's advertising and sales
literature.
(f) FHC hereby represents and warrants that neither FHC nor its
agents or employees will make any representations or claims with respect to the
Products which are not authorized in writing by Biosite. Subject to the
provisions of Section 6(h) hereof, FHC agrees to and shall indemnify Biosite
against, and hold Biosite harmless from, all claims, actions, costs, expenses
and damages (including without limitation reasonable attorneys' fees and
expenses)
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arising out of: (i) representations or claims by FHC with respect to the
Products which are not authorized by Biosite; (ii) FHC's willful act or omission
in connection with the sale, marketing, promotion or distribution of the
Products; or (iii) any claim or failure by FHC to comply with governmental
regulatory requirements relating to the Products which are applicable to
distributors of products; provided, however, in each case Biosite gives FHC
prompt notice of any such claim, permits FHC to assume sole control of the
defense thereof and provides all reasonable assistance in connection with the
defense of such claim. Biosite shall have the right to retain its own counsel
and to participate in such defense, with the fees and expenses to be paid by
FHC, if representation of Biosite by counsel retained by FHC would be
inappropriate due to actual differing interests between Biosite and FHC or any
other party represented by such counsel in such proceeding.
(g) Each shipment from Biosite shall contain numbers identifying the
manufacturing lot or lots for control purposes. FHC shall keep accurate records
that will enable FHC to determine the Product lots received by specific
customers of the Product. FHC shall make such information available to Biosite
in the event of a Product recall or Product corrective action requested by
Biosite or required by any governmental agency within ten (10) days after such
request by Biosite. FHC shall use reasonable efforts to provide Biosite with
information regarding the prior month's sales ***, and shall provide Biosite
with such information in no event later than the last day of the month, during
the term of this Agreement. Any and all such information referred to in this
Section 3(g) is and shall remain the property of FHC, but may be used by Biosite
for market analysis and in the course of its performance under this Agreement
and for no other purpose, subject to the provisions of Section 9 of this
Agreement.
(h) FHC shall comply with Biosite's reasonable instructions
regarding the storage and handling of the Products, and except as otherwise
provided in this Agreement, FHC shall be solely responsible for the cost
thereof.
(i) At Biosite's request, FHC shall submit to Biosite such other
reports as are customarily provided by FHC to suppliers similarly situated with
Biosite.
(j) Both parties shall keep accurate records sufficient to permit
verification of sales data for the Products. Upon written request and upon
reasonable notice during regular business hours, each party shall permit an
independent certified public accountant reasonably acceptable to the party being
audited or other acceptable representative of the requesting party reasonably
acceptable to the party being audited to inspect such records in order to verify
any sales or recall information reasonably required by the provisions of this
Agreement, provided that only one such inspection annually shall be permitted
and the parties shall not be required to keep such records for longer than five
(5) years. All information received as a result of such inspections shall be
subject to Section 9 of this Agreement.
(k) FHC shall promptly advise Biosite of any changes in FHC's
organization or personnel which may materially, adversely affect FHC's ability
to perform under this Agreement, as well as any material changes affecting
ownership or control of FHC.
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(l) At all times during the term of this Agreement, FHC shall
maintain inventory of each Product sufficient to satisfy not less than FHC's
requirements for its reasonably forecasted sales of such Product for the
immediately following thirty (30) days.
(m) Provided that Biosite is not in default under the terms of this
Agreement, at all times during the term of this Agreement, FHC shall treat the
Products as "***," or a *** for purposes of *** of ***.
(n) Notwithstanding anything to the contrary in this Agreement, but
without limiting or avoiding the provisions of Section 2(f), if Biosite in good
faith enters into a bona fide written agreement (a "Biosite/GPO Agreement") with
a group purchasing organization, integrated delivery network or similar entity
(collectively, a "GPO") pursuant to which (i) the facilities in the Territory
having the right to purchase products under such GPO shall be obligated to
purchase one or more Products at a purchase price (the "GPO Price") specified
in, or calculated under, such Biosite/GPO Agreement, and (ii) for such Products
purchased by such facilities through FHC during the term of such Biosite/GPO
Agreement, the effective price to FHC, for such Products sold to FHC hereunder
solely for resale to such facilities, shall be not greater than *** then (A) if
FHC so elects prior to the commencement of such Biosite/GPO Agreement, during
the term of such Biosite/GPO Agreement, (1) FHC shall sell such quantities of
such Products as ordered by such facilities at a price ***, (2) the effective
price to FHC for such Products sold to FHC hereunder during the term of such
Biosite/GPO Agreement solely for resale to such facilities, shall be calculated
in accordance with Section 5(f), and (3) the Actual Selling Price (as defined in
Section 5(f) below), for purposes of calculating the amount of any rebate or
additional payments under Section 5(g), shall equal the ***; or (B) otherwise,
provided the parties first exercise good faith efforts to negotiate mutually
agreeable pricing for a period of not less than fifteen (15) days, and are
unable to reach agreement, then during the term of the GPO Agreement, Biosite
shall have the right to promote, market, sell and distribute such Products to
such GPO under the GPO Agreement.
4. Conduct of Biosite.
(a) Biosite shall ship promptly FHC's orders for Products, but in
any event not later than sixty (60) days from receipt of each order for a
Product, (other than ***). Biosite shall use its reasonable efforts to ship
FHC's orders for *** not later than *** from receipt of each order for ***.
Subject to the provisions of Section 11 hereof, Biosite shall ship FHC orders
for Products f.o.b. Biosite's facility in San Diego, California (at which point
title and risk of loss shall pass from Biosite to FHC), to FHC's warehouse or to
such other FHC location(s) as FHC may designate, insurance prepaid. Biosite
shall cooperate with FHC in arranging drop shipments of Products to customers on
a case by case basis to include Products designated by Biosite as drop ship
Products. FHC shall pay all freight costs for shipping Products by FHC's
customary means or by any other means specified by FHC in a purchase order.
Biosite shall pay all freight costs for shipping Products by any means other
than FHC's customary means or the means specified by FHC in a purchase order.
Biosite shall pay all insurance costs for shipping Products ordered by FHC
hereunder.
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(b) Biosite shall notify FHC immediately in writing should Biosite
become aware of any defect or condition which may render any Product in
violation of any statute or regulation, or which in any way materially alters
the specifications or quality of such Product.
(c) Biosite shall provide to FHC's sales personnel, at FHC's
premises or such other location as the parties may agree, at mutually convenient
times, such training in the demonstration and use of the Products as may be
reasonably requested by FHC. During such training, Biosite shall also address
market information, strategies, and tactics to assist in the achievement of
performance quotas as set forth in this Agreement. All training material,
instructors, demonstration/training products and other training costs and
expenses therefor shall be borne by Biosite; provided, however, that FHC shall,
at its expense, provide transportation and lodging for FHC personnel attending
such training.
(d) Biosite shall provide technical support to FHC's sales personnel
and customers and promptly provide to FHC such additional technical information
developed or acquired by Biosite from time to time as may reasonably be expected
to be of assistance to FHC in fulfilling its obligations hereunder. Biosite will
provide, at its own expense, a toll free long distance telephone service for
technical support for FHC customers and sales representatives.
(e) Biosite shall provide at its expense reasonable quantities of
such instruction manuals and point of sale literature as may from time to time
be requested by FHC for use in connection with the distribution of the Products.
Subject to FHC's and Biosite's prior written approval, the FHC name will be
incorporated in Biosite's advertising and literature intended for distribution
in the Territory by FHC sales representatives, at FHC's expense. If requested to
do so by FHC, Biosite shall furnish FHC with suitable copy and photographs and
other materials which the parties reasonably agree for use by FHC in cataloging
the Products.
(f) During the period that FHC has the exclusive right to distribute
the *** in the Territory under Section 2(a) of this Agreement, Biosite shall
provide FHC, upon request, with up to the number of Samples (as defined below)
of each Product set forth on Schedule F, at the reduced pricing set forth in
Schedule F, to be used by FHC solely in connection with the promotion and
marketing of such Product. A "Sample" shall mean, with respect to a Product, a
sample unit of such Product sold by Biosite to FHC solely for the purpose of
marketing and promoting such Product, and not for the purpose of commercial
resale. Such Samples may not be sold by FHC and shall be marked by Biosite with
the following legend: "FOR EVALUATION PURPOSES ONLY - NOT FOR RESALE."
(g) Any Products owned by FHC and rendered unsalable, in FHC's
reasonable commercial judgment, due to a change in any Product specification,
discontinuation or elimination by Biosite of any Product from its product
offering, release by Biosite of any materially improved or updated version of
any Product, or any other material change in the Product outside of FHC's
control shall be repurchased from FHC by Biosite within thirty (30) days
following FHC's request therefor at the price paid for such Product(s) by FHC.
Biosite shall additionally pay for return freight and related transportation and
insurance charges for all such Products. Biosite's release of a Product which
has a longer shelf life shall not be deemed a material improvement under this
Section 4(g).
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(h) Biosite shall promptly provide FHC with leads concerning
prospective purchasers of the Products within the Territory in a format to be
mutually agreed upon between the parties.
(i) Biosite shall provide full and accurate written instructions on
the Xxxx of Lading regarding the storage and handling of the Products.
(j) Biosite shall ship the Products so that *** of the shelf life of
the Products will be remaining at the time of receipt at FHC's facility, or at
FHC's customer's facility, if drop shipped. Biosite shall take back for full
credit plus shipping charges any dated Products shipped contrary to this
provision.
(k) Biosite shall indemnify and hold FHC harmless from and against
all losses, liabilities, damages and expenses (including reasonable attorneys'
fees and costs) resulting from all claims, demands, actions and other
proceedings by any unaffiliated third party to the extent resulting from (i)
representations or claims by or on behalf of Biosite with respect to the
Products that are untrue or materially misleading when made; (ii) willful act or
omission by or on behalf of Biosite in the sale, marketing, promotion or
distribution of the Products hereunder; (iii) failure by Biosite to comply in
any material respect with governmental regulatory requirements relating to the
Products; (iv) infringement of any of the Products on any intellectual property
rights of third parties; or (v) material breach of this Agreement by Biosite.
FHC shall indemnify and hold Biosite harmless from and against all losses,
liabilities, damages and expenses (including reasonable attorneys' fees and
costs) resulting from all claims, demands, actions and other proceedings by any
unaffiliated third party to the extent resulting from (i) representations or
claims by or on behalf of FHC with respect to the Products (other than those
expressly authorized in writing by Biosite); (ii) willful act or omission by or
on behalf of FHC in the sale, marketing, promotion or distribution of the
Products hereunder; (iii) failure by FHC or its subdistributors to comply in any
material respect with governmental regulatory requirements relating to the
Products; or (iv) material breach of this Agreement by FHC. A party (the
"Indemnitee") that intends to claim indemnification under this Section 4(k)
shall promptly notify the other party (the "Indemnitor") of any claim, demand,
action or other proceeding for which the Indemnitee intends to claim such
indemnification. The Indemnitor shall have the right to participate in, and to
the extent the Indemnitor so desires jointly with any other indemnitor similarly
noticed, to assume the defense thereof with counsel selected by the Indemnitor;
provided, however, that the Indemnitee shall have the right to retain its own
counsel, with the fees and expenses to be paid by the Indemnitor, if
representation of the Indemnitee by the counsel retained by the Indemnitor would
be inappropriate due to actual or potential differing interests between the
Indemnitee and any other party represented by such counsel in such proceedings.
The indemnity obligations under this Section 4(k) shall not apply to amounts
paid in settlement of any claim, demand, action or other proceeding if such
settlement is effected without the prior express written consent of the
Indemnitor, which consent shall not be unreasonably withheld or delayed. The
Indemnitor may not settle or otherwise consent to an adverse judgment in any
such claim, demand, action or other proceeding, that diminishes the rights or
interests of the Indemnitee without the prior express written consent of the
Indemnitee, which consent shall not be unreasonably withheld or delayed. The
Indemnitee, its employees and agents, shall reasonably cooperate with the
Indemnitor and its legal representatives in the investigation of any claim,
demand, action or other proceeding covered by this Section 4(k).
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(l) In the event that the total sales of any Product by FHC *** over
*** or greater as a result of the direct sales of such Product by Biosite under
the terms of this Agreement, then upon the election of FHC, in its sole
discretion, either (i)(A) any prohibition on sales of a competing product by FHC
shall thereafter be void and of no effect, and (B) the distribution rights
granted to FHC hereunder with respect to such Product line shall become
nonexclusive; or (ii) on not less than sixty (60) days prior written notice to
Biosite, this Agreement shall terminate.
(m) In the event that Biosite commences selling any Product direct
under the terms of this Agreement, as of the date such direct sales commence,
Biosite shall reimburse FHC for the cost of FHC's inventory of such Product for
which the shelf life has expired or which is otherwise unsaleable, but only to
the extent such expired or unsaleable inventory is reasonably demonstrated to
result solely from any lost sales of FHC to any facility that has an agreement
(which for purposes of this section, shall mean any pricing or purchasing
arrangement or agreement) with FHC (that is effective on the date of an
arrangement between such facility (or its group purchasing organization or
similar entity) for direct sales by Biosite) for the purchase and sale of a
Product that was entered into prior to the date of such arrangement between such
facility (or its group purchasing organization or similar entity) and Biosite,
that are reasonably demonstrated to result solely from such arrangement with
Biosite.
5. Price and Payment Terms.
(a) Biosite shall charge FHC a Transfer Price for each Sample equal
to the Sample Price (as defined below) for such Sample in effect on the date of
FHC's purchase order therefor.
(b) Biosite shall charge FHC a Transfer Price per unit for each
Product (other than Samples), equal to the List Price for such Product, less the
following discount:
(i) *** for *** sales.
(ii) *** for *** sales.
(iii) *** for *** sales.
(iv) *** for ***, *** and *** sales.
The parties shall meet yearly and attempt to reach mutually acceptable agreement
on any necessary revisions to the applicable discounts from List Price per
Product category to reflect an attempt to minimize additional payments from FHC
to Biosite and/or rebates from Biosite to FHC. If the transfer price is adjusted
on this basis, the Target Purchase Obligations (as defined below) for subsequent
calendar years shall be adjusted proportionately.
(c) Biosite shall have the right to amend the Sample Prices and the
List Prices set forth on Schedules B, C, D, and E from time to time in its sole
discretion; provided, however, that Biosite shall give at least *** prior
written notice of any such Biosite amendment. Biosite shall honor FHC's existing
purchase orders at the transfer prices in effect immediately prior to the
effective date of each amendment.
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(d) FHC's payment terms for Samples and Products purchased pursuant
to this Agreement shall be *** days from receipt of an accurate invoice from
Biosite.
(e) FHC shall be entitled to resell the Products on such terms as it
may, in its sole discretion, determine, including, without limitation, price,
returns, credit, discounts, and promotions.
(f) For purposes of this Section 5, the following definitions shall
apply:
"Actual Selling Margin" shall mean Actual Selling Price -Transfer Price.
"Actual Selling Margin Rate" or "ASMR" shall mean:
[Actual Selling Price -Transfer Price]
Actual Selling Price
"Actual Selling Price" shall mean, with respect to any Product (other than
Samples), the invoiced sales price, net of any discounts actually taken, which
FHC or its affiliate charges to an unaffiliated customer for purchase of such
Product.
"Existing Customer" means, with respect to a Product line, an individual
or entity that has purchased a Product from such Product line from FHC at any
time between *** and ***.
"Guaranteed Selling Margin Rate" or "GSMR" shall mean, with respect to any
Product (other than Samples), the margin rate that is set forth in Section 5(g)
below for such Product.
"List Price" shall mean, (a) with respect to any Product (other than
Samples, ***s and ***), the price therefor set forth on Schedule B, C, D or E
(as applicable), as amended from time to time pursuant to Section 5(c) or 5(g);
and (b) with respect to any *** or *** (other than Samples), the then current
Biosite list price therefor, as adjusted from time to time pursuant to Section
5(c) or 5(g).
"New Customer" means, with respect to a Product line, an individual or
entity that has not purchased a Product from such Product line from FHC at any
time between *** and ***.
"Sample Price" shall mean, with respect to any Sample, the price therefor
set forth on Schedule F, as amended from time to time pursuant to Section 5(c).
"Transfer Price" shall mean, with respect to any Product (other than
Samples), the price calculated pursuant to Section 5(b) above which FHC is
obligated to pay to Biosite for purchase of such Product.
Subject to the provisions of Section 5(i) below, FHC shall receive the
"Guaranteed Selling Margin Rate" on Products as set forth below for the term of
this Agreement.
Existing Customers ***
New Customers (***) ***
New Customers (***) ***
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The following examples will illustrate the application of the foregoing
Guaranteed Selling Margin Rates.
Example 1. An Existing Customer who has purchased ***, but who has
never purchased a ***, will generate for FHC a *** margin on additional
purchases of ***, a *** margin on the purchase of *** if the Customer has
*** or fewer, and an *** margin on the purchase of *** if the Customer has
more than ***.
Example 2. An Existing Customer who has purchased ***, but has not
purchased a ***, will generate for FHC a *** margin on additional
purchases of ***, and a *** margin on the purchase of a ***.
Example 3. A New Customer with fewer than *** who purchases a ***
and a *** will generate for FHC a *** margin on the *** purchase and a ***
margin on the *** purchase.
Notwithstanding the foregoing, with respect to *** sold in any calendar year,
(i) if the aggregate dollar volume of sales of such Products by FHC in such
calendar year is greater than *** of the aggregate dollar volume of sales of
such Products by FHC in the prior calendar year, then (i) the GSMR for those
sales of such Products in such calendar year that are greater than ***, but not
greater than *** of the aggregate dollar volume of sales of such Products by FHC
in the prior calendar year shall be ***; and (ii) the GSMR for those sales of
such Products in such calendar year that are greater than *** of the aggregate
dollar volume of sales of such Products by FHC in the prior calendar year shall
be ***.
Notwithstanding the foregoing, with respect to *** and *** sold in any calendar
year, (i) if the aggregate dollar volume of sales of such Products by FHC in
such calendar year is greater than *** of the aggregate dollar volume of sales
of such Products by FHC in the prior calendar year, then (i) the GSMR for those
sales of such Products in such calendar year that are greater than ***, but not
greater than ***, of the aggregate dollar volume of sales of such Products by
FHC in the prior calendar year shall be ***; and (ii) the GSMR for those sales
of such Products in such calendar year that are greater than *** of the
aggregate dollar volume of sales of such Products by FHC in the prior calendar
year shall be ***.
(g) In accordance with the payment terms set forth in Section 5(d)
above, Biosite shall receive payment of the Transfer Price for Products shipped
to FHC. Subject to the provisions of Section 5(i) below, should the Actual
Selling Margin Rate be less than the GSMR for a Product unit, FHC is entitled to
a rebate from Biosite for such Product unit. The rebate is calculated as
follows:
***
(h) Subject to the provisions of Section 5(i) below, should the ASMR
exceed the GSMR for a Product unit, FHC will make an additional payment to
Biosite for such Product unit. The additional payment is calculated as follows:
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***
(i) Within ten (10) days after the end of each calendar month, FHC
shall prepare and provide Biosite with a reasonably detailed written sales
report which shall (i) set forth on a Product-by-Product basis the sales of
Products by FHC and its affiliates to unaffiliated customers, and (ii) calculate
on a Product-by-Product basis the Actual Selling Price, the ASMR and the GSMR
therefor, and the net amount (if any) of the additional payments from FHC to
Biosite and/or the rebates from Biosite to FHC owing under Section 5(g) for such
calendar month. Such sales reports are, and shall remain the property of FHC,
and shall be subject to Section 9 of this Agreement, but may be used by Biosite
solely for the purposes of performance of its obligations and the exercise of
its rights under this Agreement. Such report shall be based on sales by FHC and
its affiliates, as reflected on FHC's Key Supplier Report, on each Product
during each calendar month. FHC shall pay to Biosite any such additional
payment, and Biosite shall pay to FHC any such rebate, owing under Section 5(g)
for each calendar month on or before the later of the fifteenth (15th) day of
the following calendar month or ten (10) days after Biosite's receipt of the
applicable sales report for such calendar month. Biosite and its agents shall
have the right, through an independent auditor chosen by Biosite and reasonably
acceptable to FHC, on reasonable notice and not more than twice in each calendar
year, to inspect and audit the relevant books and records of FHC and any of its
relevant affiliates to verify the accuracy of such sales reports. Biosite shall
pay the fees and expenses of such audit.
(j) Except as set forth below in this Section 5(j)or as the parties
otherwise mutually agree, if the Actual Selling Price of any Product unit is
less than ***, then for purposes of calculating ASMR and GSMR, and the amount of
any rebate or additional payments under Section 5(g), the Actual Selling Price
of such Product unit shall be deemed to be ***. The foregoing limitation on the
calculation of Actual Sales Price shall not apply to (i) to continuation of the
discount rate or net price to existing customers during the term of this
Agreement, (ii) any sales made pursuant to binding agreements between FHC and
unaffiliated customers entered into prior to the Effective Date, (iii) to
discounts beyond such levels approved by Biosite, or (iv) any sales made
pursuant to Section 3(n). Further, in the event FHC gives Biosite not less than
three (3) working days prior written notice of its good faith request for a
discount rate from the List Price in excess of the amount set forth above and
Biosite fails to approve the requested discount rate and, as a result, one or
more existing customers of FHC thereafter fails to purchase further Products
from FHC, FHC shall receive a credit(s) against its quarterly Target Purchase
Obligations equivalent at cost to the volume of Product sale lost for each
calendar quarter during the remaining term of this Agreement equal to the
quarterly average (based on the immediately preceding four (4) calendar quarters
or, if less than four (4) quarters, the actual sales annualized and divided by
4)) of the dollar volume of Products purchased by such customer or customers.
(k) Notwithstanding anything to the contrary in this Agreement or in
the 1998 Distribution Agreement, (i) the parties acknowledge that, as of the
Effective Date, FHC holds certain unsold inventory of Products that were
purchased by FHC pursuant to the 1998 Distribution Agreement, but were not
re-sold prior to the Effective Date, and (ii) the provisions of Sections 5(f),
5(g), 5(h) and 5(i) shall apply to the rebates from Biosite to FHC with respect
to such unsold inventory of Products.
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6. Term and Termination and Loss of Exclusivity.
(a) The initial term of this Agreement shall be for a period of ***
years ("Initial Term") from the date first set forth above, unless terminated
sooner as provided herein. Thereafter, this Agreement shall automatically renew
for an additional term of *** ("Extended Term") unless notice of non-renewal is
given by one party to the other at least one hundred fifty (150) days prior to
the expiration of the Initial Term.
(b) This Agreement shall terminate for cause, without liability to
either party, immediately if either party (i) files a voluntary petition in
bankruptcy or is adjudged bankrupt in any involuntary proceeding, (ii) is
generally unable to pay its debts as they become due, (iii) has a receiver or
judicial trustee or custodian appointed for it, or (iv) fails to cure any
material breach in the provisions of this Agreement within thirty (30) days
after receipt of written notice of such breach from the other party.
(c) In each calendar year, if FHC fails to purchase at *** of the
aggregate dollar amount of *** and *** purchased by FHC during the prior
calendar year (a "Target Purchase Obligation"), then for the balance of the term
of this Agreement, (i) FHC's exclusive distribution rights for *** and *** shall
become non-exclusive, and (ii) Biosite and FHC shall each have the right to
promote, market, sell and distribute (and to appoint other distributors to
promote, market, sell and distribute) *** and ***, free of any restrictions on
competing products. In each calendar year, if FHC fails to purchase at least ***
of the aggregate dollar amount of *** purchased by FHC during the prior calendar
year (a "Target Purchase Obligation"), then for the balance of the term of this
Agreement, (i) FHC's exclusive distribution rights for *** shall become
non-exclusive, and (ii) Biosite and FHC shall each have the right to promote,
market, sell and distribute (and to appoint other distributors to promote,
market, sell and distribute) ***, free of any restrictions on competing
products. For the purposes of calculating the *** set forth in this Section
6(c), any lost sales of FHC to any facility that has an agreement (which for
purposes of this section, shall mean any pricing or purchasing arrangement or
agreement) with FHC (that is effective on the date of an arrangement between
such facility (or its group purchasing organization or similar entity) for
direct sales by Biosite) for the purchase and sale of a Product that was entered
into prior to the date of such arrangement between such facility (or its group
purchasing organization or similar entity) and Biosite, that are reasonably
demonstrated to result solely from such arrangement with Biosite, shall be
included within the calculation of FHC sales solely for the purpose of the
calculations under this Section 6(c). FHC shall be entitled to a credit in the
amount of the direct sales made by Biosite under the provisions of this
Agreement, which would have otherwise been made by FHC, i.e., in the amount that
FHC sales are eroded by Biosite's direct sales.
(i) For purposes of the foregoing calculations, (A) as of the
last day of any calendar year, if FHC has inventory of any *** in excess of the
amount sufficient to satisfy FHC's requirements for its reasonably forecasted
sales of such *** for the immediately following thirty (30) days, then the
dollar volume of FHC's purchases of such *** for such calendar year shall be
reduced by the amount by which such inventory exceeds such thirty (30) day
forecast; and (B) as of the last day of the prior calendar year, if FHC has
inventory of any *** of less than the amount sufficient to satisfy FHC's
requirements for its reasonably forecasted sales of such *** for the immediately
following thirty (30) days, then the dollar volume of
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FHC's purchases of such *** for such prior calendar year shall be increased by
the amount by which such inventory is less than such thirty (30) day forecast.
(ii) Notwithstanding the foregoing, if any such FHC failure to
meet the Target Purchase Obligation with respect to any line *** in any calendar
year is due solely to (A) the existence of an unforeseeable significant or
extraordinary condition in the market (e.g., a material reduction in government
reimbursement rates, or the introduction of a product using a novel competing
technology that gains significant market share over the prior calendar year
solely due to the advantages of such novel technology) for at least six (6)
months during such calendar year, or (B) an act or omission of Biosite, then in
either case FHC's exclusive distribution rights for such line of *** shall
continue to be exclusive during the following calendar year should FHC so
desire. For the purposes of this Section 6(c)(ii), a Product shall be deemed
purchased when a firm purchase order has been received by Biosite for delivery
of Products within sixty (60) days.
(d) Biosite's inability to provide Product necessary for FHC to meet
the Target Purchase Obligation for any line of *** due to an event of force
majeure shall not be deemed to be a breach of this Agreement. The occurrence of
any event of force majeure shall extend the time for performance and term of
this Agreement for a period of time equal to the length of the force majeure
delay.
(e) Either party may also terminate this Agreement as to all
Products, at any time without cause if, upon termination, the terminating party
pays to the other party a one-time payment (the "Agreement Buy-out Amount")
equal to the following:
(i) if the terminating party gives not less than one hundred
eighty (180) days prior written notice of such termination, the Agreement
Buy-out Amount shall equal the ***; or
(ii) if the terminating party gives at least sixty (60) days
but less than one hundred eighty (180) days prior written notice of such
termination, the Agreement Buy-out Amount shall equal ***. In no event may a
party terminate this Agreement with less than ***.
(iii) Except as provided in Section 6(g), payment of any sums
calculated under this Section 6(e) shall constitute the terminated party's sole
and exclusive remedy in the event the terminating party terminates this
Agreement as to all Products under this Section 6(e) without cause.
(f) Either party may also terminate this Agreement as to *** only,
at any time without cause if, upon termination, the terminating party pays the
terminated party a one-time payment (the "***") equal to the following:
(i) if the terminating party gives not less *** prior written
notice of such termination, the ***; or
(ii) if the terminating party gives at least *** prior written
notice of such termination, the ***. In no event may a party terminate this
Agreement with less than sixty (60) days notice.
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Except as provided in Section 6(g), payment of any sums calculated under
this Section 6(f) shall constitute the terminated party's sole and exclusive
remedy in the event the terminating party terminates this Agreement as to ***
only under this Section 6(f) without cause.
(g) If Biosite terminates this Agreement as to all Products pursuant
to Section 6(e), upon termination, Biosite shall pay to FHC the Agreement
Buy-Out Amount and FHC shall return to Biosite all of FHC's unused Samples, in
substantially the same condition as received, and unsold inventory of Products,
f.o.b. FHC's warehouse(s); provided, however, that Biosite shall not be
obligated to repurchase expired Samples and Products. If Biosite terminates this
Agreement as to *** only pursuant to Section 6(f), upon termination, Biosite
shall pay to FHC the *** Amount and FHC shall return to Biosite all of FHC's
unused Samples, in substantially the same condition as received, and unsold
inventory of Products, f.o.b. FHC's warehouse(s); provided, however, that
Biosite shall not be obligated to repurchase expired Samples and Products.
Biosite shall refund to FHC the cost of such Samples and Products. If this
Agreement is terminated by Biosite under Section 6(e) or 6(f) Biosite shall pay
the return freight and insurance therefor.
(h) The rights and duties of each party under Sections 3(d), 3(f),
4(k), 6(g), 7, 8, 9, 10, 14, 15, 19, 24, and 25 of this Agreement and Biosite's
obligations under the Continuing Guaranty as referred to in Section 10(a) hereof
and attached hereto as Schedule A, shall survive termination of this Agreement
and be enforceable in accordance with their terms.
(i) In the event that Biosite fails for whatever reason(s) to
deliver the quantities of Product units ordered by FHC to meet the Target
Purchase Obligation for such Product for any *** in any calendar year, then FHC
may, within thirty (30) days before or after the end of such period, give
Biosite written notice of FHC's intent to sell competitive products. Biosite
must, within ten (10) days after receipt of such notice of intent, either (a)
provide information to the reasonable satisfaction of FHC that it will be back
in production at a run rate sufficient to satisfy the Target Purchase Obligation
within ninety (90) days thereafter, (b) make FHC nonexclusive as to that
Product, or (c) remove the Product from this Agreement. Notwithstanding anything
in this Agreement to the contrary, in the event Biosite fails to timely make its
election, FHC shall have the right to terminate this Agreement as to any such
Product by providing written notice thereof to Biosite, with such termination
being effective sixty (60) days after such notice to Biosite from FHC.
(j) IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY
CONTINGENT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES OF THE OTHER PARTY, OR ANY LOSS
OF PROFITS OR REVENUE OF THE OTHER PARTY, WHETHER ARISING IN CONTRACT, TORT
(INCLUDING NEGLIGENCE), WARRANTY, STRICT LIABILITY OR OTHERWISE.
7. Trademarks.
(a) Subject to the terms and conditions of this Agreement, Biosite
hereby grants to FHC a nonexclusive, nontransferable, license during the term of
this Agreement, without the right to sublicense, to use the trademarks
(including, but not limited to the trademark "Triage") and tradenames
(including, but not limited to "Biosite Diagnostics Incorporated,"
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"Biosite Diagnostics" and "Biosite") relating to the Biosite Products
(collectively, the "Biosite Marks") solely for the purpose of promoting,
marketing, selling, and distributing the Biosite Products.
(b) All right, title, and interest in and to the Biosite Marks shall
remain with Biosite. During the term of this Agreement and thereafter, FHC will
not contest Biosite's exclusive right, title and interest in and to, or the
validity of, the Biosite Marks. In addition, FHC will not in any manner
represent that it has any interest in the Biosite Marks, except for the limited
license provided herein. Use of the Biosite Marks by FHC shall inure to the sole
benefit of and be on behalf of Biosite.
(c) All Product units sold by Biosite to FHC will bear one or more
of the Biosite Marks, and FHC shall not alter, remove or modify the Biosite
Marks, nor affix any other trademark to the Product, without the prior express
written consent of Biosite. FHC shall not utilize any of the Biosite Marks in
connection with any promotional brochures or advertising materials relating to
the Products without the prior express written consent of Biosite, which consent
shall not be unreasonably withheld, delayed or conditioned. Biosite's consent to
the use of the Biosite Marks shall be conditioned upon such brochure or
advertising materials clearly indicating Biosite's ownership of the Biosite
Marks.
(d) All Product units purchased by FHC hereunder shall be marketed
by it in the original packages under the original labels provided by Biosite,
and FHC shall make no modifications, or alterations to such Product units or
labels; provided, however, that FHC may affix labels or other indices which
serve to identify FHC as a distributor of the Product, so long as they do not
cover and are not inconsistent with any of Biosite's Product labels or markings.
(e) Nothing in this Agreement shall be construed as granting FHC any
ownership interest in the Biosite Marks, and FHC acknowledges that it has been
advised by Biosite of Biosite's claim of ownership of the Biosite Marks. FHC
agrees that it will do nothing inconsistent with such ownership. Specifically,
FHC agrees that: it will not challenge the validity of, or Biosite's ownership
of, any of the Biosite Marks; it will not take any action that is inconsistent
with, or may impair, Biosite's right, title and interest to the Biosite Marks;
it will not represent to any third party that it has any ownership interest in
the Biosite Marks; and it will execute and deliver to Biosite any and all
documents which Biosite may request to confirm in Biosite all right, title and
interest in the Biosite Marks.
(f) FHC shall make no statement to the press relating or referring
to the Products without the prior express written approval of Biosite, which
shall not be unreasonably withheld.
(g) Either party shall promptly notify the other in writing of any
challenges to the validity, infringement on or unauthorized use of any of the
Biosite Marks, actual or threatened, that may come to such party's attention.
Biosite shall be responsible for and shall assume all expenses of the
enforcement of the Biosite Marks.
(h) Biosite recognizes that FHC is the owner of the trademarks and
trade names denoting FHC or FHC products (collectively, the "FHC Marks"), which
FHC may elect to
17
use in the promotion and sale of the Products, and that Biosite has no right or
interest in such FHC Marks; provided, however, that except as otherwise set
forth in Section 7(b) hereof, no FHC labels, package inserts or other material
shall accompany the Products without the prior express written approval of
Biosite.
(i) Biosite shall not utilize any FHC Marks in connection with any
promotional brochures or advertising materials relating to the Products, or
otherwise, without the prior express written consent of FHC. FHC's consent to
the use of the FHC Marks shall be conditioned upon such brochure or advertising
materials clearly indicating FHC's ownership of the FHC Marks. Nothing in this
Agreement shall be construed as granting Biosite any license or ownership or
other interest in the FHC Marks, and Biosite acknowledges that it has been
advised by FHC of FHC's claim of ownership of FHC's Marks. Biosite agrees that
it will do nothing inconsistent with such ownership and that all use of the FHC
Marks will inure to the benefit of and be on behalf of FHC. Specifically,
Biosite agrees that: it will not challenge the validity of, or FHC's ownership
of, any of the FHC Marks; it will not take any action that is inconsistent with,
or may impair, FHC's right, title and interest to the FHC Marks; it will not
represent to any third party that it has any ownership interest in the FHC
Marks; and it will execute and deliver to FHC any and all documents which FHC
may request to confirm in FHC all right, title and interest in the FHC Marks.
(j) Upon termination of this Agreement, FHC shall continue to be
entitled to utilize the Biosite Marks on the terms agreed to previously by the
parties in connection with FHC's promotion, marketing, distribution and sale of
units of Products remaining in FHC's inventory and not repurchased by Biosite.
Thereafter, FHC shall terminate all use of Biosite Marks, and shall at Biosite's
request and at Biosite's expense, destroy or return to Biosite all literature
and other advertising and promotional materials bearing the Biosite Marks. In
the event of termination or expiration of this Agreement, FHC agrees to
cooperate with Biosite and to execute any and all documents requested by Biosite
for the purpose of canceling any registered user or other rights with respect to
Biosite's name and the Biosite Marks that FHC may have acquired in operating
hereunder, or, at Biosite's election, in transferring such rights to Biosite or
its FHC designee. FHC also agrees to cooperate with Biosite in transferring any
appropriate rights in connection with the Biosite Marks to Biosite and/or
Biosite's designee, at Biosite's sole cost and expense, if Biosite desires to
sell or have sold products in the Territory (other than the Products) other than
by FHC.
8. Copyrights.
(a) FHC hereby acknowledges that Biosite may claim copyright
protection with respect to its package inserts and other supporting materials
which it includes with each of the Product units, and FHC further acknowledges
the validity of Biosite's right to claim the copyright protection to such
materials. FHC further acknowledges that Biosite has advised FHC that it has the
sole and exclusive right to claim the copyright protection with respect to all
of its package inserts and other supporting materials included with the
Products, and FHC shall take no action which is in any way inconsistent with
Biosite's claim of copyright protection that it expects to make with respect to
such materials.
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(b) In order to protect against infringement of Biosite's copyright
through unauthorized reproduction or duplication of its copyrighted materials,
such materials included with the units of Products sold by Biosite to FHC shall
bear appropriate copyright markings. Nothing contained in this Section 8 shall
prohibit FHC from copying and distributing to its sales representatives Product
advertising, literature and other materials prepared by or on behalf of Biosite
for the purpose of fulfilling FHC's obligations under this Agreement.
(c) Either party shall promptly notify the other in writing of any
infringements, whether within or without the Territory, of any of Biosite's
copyrights which come to the attention of such party. FHC shall, at the request
of Biosite, provide Biosite with all reasonable assistance in initiating and
prosecuting any legal action against any infringer of Biosite's copyrights
within the Territory; provided, however, that all costs incurred in connection
with any such copyright infringement action shall be borne solely by Biosite.
9. Trade Secrets and Confidential Information.
(a) FHC may receive various trade secrets of Biosite and other
information of Biosite (and in each such instance, at the time of disclosure to
FHC, Biosite shall provide FHC with written notice that Biosite considers such
information to be a trade secret or otherwise confidential) of a confidential
nature (including but not limited to specific technical information concerning
the Products). FHC agrees that it will not disclose to anyone, directly or
indirectly, any of such confidential information, or use such confidential
information other than as reasonably required in the course of its performance
of its obligations and the exercise of its rights under this Agreement.
Notwithstanding the foregoing, FHC may disclose such confidential information to
the extent required by applicable law, regulation or court order, provided that
FHC shall give Biosite reasonable notice of any such required disclosure and
shall give Biosite an opportunity to object to any such disclosure or to request
confidential treatment thereof. FHC shall, at Biosite's option, return such
information to Biosite or destroy all such data having physical form and all
copies thereof. The obligations set forth in this Section 9(a) shall survive any
termination of this Agreement for a period of three (3) years.
(b) Biosite may receive various trade secrets of FHC and other
information of FHC of a confidential nature (including, but not limited to the
names of FHC's customers and sales data). Biosite agrees that it will not
disclose to anyone, directly or indirectly, any of such trade secrets or other
confidential information, or use such trade secrets or other confidential
information other than as reasonably required in the course of its performance
of its obligations and the exercise of its rights under this Agreement.
Notwithstanding the foregoing, Biosite may disclose such trade secrets or other
confidential information to the extent required by applicable law, regulation or
court order, provided that Biosite shall give FHC reasonable notice of any such
required disclosure and shall give FHC an opportunity to object to any such
disclosure or to request confidential treatment thereof. Biosite shall, at FHC's
option, return such information to FHC or destroy all such data having physical
form and all copies thereof. The obligations set forth in this Section 9(b)
shall survive any termination of this Agreement for a period of three (3) years.
(c) Notwithstanding any provision set forth in this Section 9 to the
contrary, the parties' obligations under this Section 9 shall not apply to the
extent that: (i) the confidential
19
information, or any relevant part of it, can be shown to be in the public domain
prior to the date of this Agreement; (ii) the confidential information, or any
relevant part of it, becomes part of the public domain, other than by some
unauthorized act or omission, after the date hereof; (iii) the confidential
information, or any relevant part of it, is disclosed to such party by a third
party who has the right to make such disclosure; (iv) express written permission
to disclose the confidential information, or any relevant part of it, or to make
use of same, is obtained from the non-disclosing party by the disclosing party;
or (v) the information is developed independently of the confidential
information by the other party based on written records maintained in the
ordinary course.
10. Biosite's Warranties: Disclaimer of Warranties.
(a) Biosite agrees that it shall execute and warrants that it shall
abide by the terms of FHC's Continuing Guaranty, a copy of which is attached
hereto as Schedule A and which guaranty is incorporated herein by reference. The
terms and provisions of the Continuing Guaranty shall survive the termination of
this Agreement. Prior to the first shipment of Product to FHC, Biosite shall
provide FHC with certificates of insurance which meet the requirements of
paragraph D of the Continuing Guaranty. Biosite's insurance carriers shall at
all times during the term of this Agreement be rated by Best's as B+ or
superior. Biosite is not aware after due inquiry of any circumstance which would
prevent the issuance of such policy.
(b) In addition to the warranties of Biosite set forth in this
Agreement and in the Continuing Guaranty, Biosite warrants that each of the
Products will conform to the specifications set forth in Product literature
prepared by or on behalf of Biosite and that the Products will comply and be
manufactured, packaged, sterilized (if applicable), labeled and shipped in
compliance with all applicable federal, state and local laws, orders,
regulations and standards. Biosite further warrants that the Products do not
infringe upon the intellectual property rights of any third party.
(c) Biosite and FHC shall extend to customers only the Product
Warranty embodied in Schedule I hereto; provided that Biosite may modify such
Product Warranty with FHC's consent, which consent shall not be unreasonably
withheld. Biosite shall not modify or amend the warranty during the term of this
Agreement without providing FHC with sixty (60) days, prior written notice.
Biosite warrants and represents that the Products will perform in accordance
with Biosite's warranty.
(d) Except for the warranties described in Sections 10 (a)-(c)
hereof, all of which shall enure to the benefit of, and shall be enforceable by,
FHC's customers, Biosite MAKES NO WARRANTIES TO CUSTOMERS AND FHC SHALL NOT MAKE
ANY OTHER WARRANTIES TO CUSTOMERS AS TO THE MERCHANTABILITY OR FITNESS OF THE
PRODUCT FOR A PARTICULAR USE.
11. Force Majeure.
The obligations of either party to perform under this Agreement
shall be excused during each period of delay to the extent caused by such
matters as strikes, shortages of power or raw materials, government orders or
acts of God, which are reasonably beyond the control of the
20
party obligated to perform. The affected party shall make all commercially
reasonable efforts to remedy the effects of such force majeure. 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 may cancel its
obligations hereunder.
12. Notices.
Any notice required by this Agreement shall be in writing, and may
be delivered in person, by nationally recognized overnight delivery service or
by any lawful means to the party for whom intended at its address set forth
below, and shall be effective on receipt.
If to Biosite: Biosite Diagnostics Incorporated
00000 Xxxxxxx Xxxxxx, Xxxxx X
Xxx Xxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attn: Xxx Xxxxxxxxxx
with a copy to: Xxxx Xxxx Xxxx & Freidenrich LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attn: Xxxx X. Xxxxxx, Esq.
If to FHC: Xxxxxx HealthCare
0000 Xxxxxxxx Xxxxxxxx Xxxxx Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attn: General Counsel
with a copy to: Xxxxxx Scientific Company
Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxxxxxxx 00000
Telecopy: (000) 000-0000
Attn: General Counsel
or such other address as provided in writing in the manner provided by this
Section 12.
13. Entire Agreement.
This Agreement, including Schedules and Exhibits, constitutes the
entire agreement between the parties relating to the subject matter hereof and
supersedes all prior agreements, understandings and representations, whether
written or oral, between the parties with respect to such subject matter. In
ordering and delivery of the Products, the parties may employ their standard
forms, but nothing in those forms shall be construed to modify or amend the
terms of this Agreement.
21
14. Attorneys' Fees.
In the event any claim or counterclaim is asserted or action is
commenced to enforce any of the rights or obligations of the parties under this
Agreement, the prevailing party shall be entitled to collect from the other
party, as part of the judgment rendered with respect to such claim or action,
reasonable attorneys' fees, expenses and court costs.
15. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO CALIFORNIA CHOICE OF LAW
PROVISIONS.
16. Compliance With Applicable Laws.
In connection with the sale of the Products hereunder, Biosite and
FHC shall comply with all applicable laws, regulations and orders of
governmental bodies having jurisdiction in respect of activities contemplated by
or covered under this Agreement, including without limitation, obtaining all
necessary permits, licenses and regulations. FHC shall cooperate fully with
Biosite, at Biosite's sole cost and expense, in connection with securing and
maintaining any governmental registration or other governmental permits required
with respect to marketing the Products in the Territory and FHC will notify
Biosite of any local laws affecting the Products which may come to its
attention.
17. Assignment.
(a) Subject to Section 17(b) below, neither party shall assign or
transfer this Agreement, by operation of law or otherwise, in whole or in part
without the prior written consent of the other party in each and every instance,
which consent may not be unreasonably withheld. If either party wishes to assign
or otherwise transfer this Agreement, as aforesaid, in each instance the party
seeking to assign or otherwise transfer this Agreement shall submit to the other
party for such party's review and approval as soon as practicable such
information as the other party may reasonably request concerning the assignee or
transferee and the party from which consent is sought shall have thirty (30)
days following receipt of the fully responsive materials in which to review the
same and approve or reject the assignment or transfer. In any event in which the
party from which consent is sought reasonably rejects the assignment or
transfer, this Agreement shall terminate one hundred eighty (180) days following
the date on which the rejection is received by the party seeking to assign or
transfer. The parties shall make best efforts to promptly and amicably wind up
all outstanding matters concerning the subject matter of this Agreement.
(b) Notwithstanding Section 17(a) above: (i) a merger,
reorganization, recapitalization, sale or transfer of all or substantially all
of the assets, change of control, or similar transaction of a party shall not be
deemed an assignment or transfer of this Agreement subject to the provisions of
Section 17(a) above, and (ii) FHC shall be entitled to assign this Agreement to
an entity with which it is affiliated (by reason of greater than fifty percent (
50%) ownership of the voting securities thereof), without the prior written
consent of Biosite, but upon prior written notice to Biosite.
22
18. Amendments.
No amendment or modification of the terms of this Agreement shall be
binding on either party unless reduced to writing and signed by an authorized
officer of the party to be bound.
19. Existing Obligations.
Each party represents and warrants that the terms of this Agreement
do not violate any existing obligations or contracts of it. Each party shall
defend, indemnify and hold harmless the other party from and against any and all
claims, demands, liabilities and causes of action that are hereafter made or
brought against the other party that allege any such violation.
20. Relationship of the Parties.
(a) For the purposes of this Agreement, FHC and Biosite are deemed
to be independent contractors and not the agent or employee of the other.
Neither FHC nor Biosite shall have the authority to make any statements,
representations or commitments of any kind, or take any action, which shall be
binding on the other, except as provided for herein or authorized in writing by
the party to be bound.
(b) This Agreement does not grant any license from Biosite to FHC or
from FHC to Biosite except as expressly provided herein.
21. Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.
22. Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original for all purposes.
23. Approvals and Consents.
Each of the parties represents to the other that all necessary
approvals of any third persons, the granting of which are necessary for the
consummation of the transactions contemplated hereby, or for preventing the
termination of any right, privilege, license or agreement or any right granted
hereunder have been received by both parties to this Agreement.
24. Miscellaneous.
Any payment obligation under this Agreement which shall be due from
Biosite to FHC and for which no date of payment is specified in this Agreement
shall be payable on the thirtieth (30th) day following the day on which the
event occurs which triggers Biosite's obligation to make any such payment.
23
25. Further Assurances.
Biosite and FHC each shall perform any and all further acts and
execute and deliver any and all further documents and instruments that may be
reasonably necessary to carry out the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have, by their duly authorized officers,
executed this Agreement on the date first set forth above.
BIOSITE DIAGNOSTICS INCORPORATED
By: /s/___________________________
Title: President
XXXXXX SCIENTIFIC COMPANY L.L.C.
By: /s/___________________________
Title: President
24
SCHEDULE A
CONTINUING GUARANTY
[TO BE COMPLETED]
25
SCHEDULE B
***
Catalog
Number Product Size List Price
*** *** 25 tests ***
*** *** 10 tests ***
*** *** 25 tests ***
*** *** 25 tests ***
*** *** 10 tests ***
*** *** 25 tests ***
*** *** 25 tests ***
----------------------------------------------------------------------------
*** *** 6x5 mL vials ***
*** *** 6x5 mL vials ***
*** *** 6x5 mL vials ***
----------------------------------------------------------------------------
*** *** 25 each ***
*** *** 25/pkg ***
26
*** Confidential Treatment Requested
SCHEDULE C
***
Catalog
Number Product Size List Price
*** *** 20 tests ***
*** *** 20 tests ***
27
*** Confidential Treatment Requested
SCHEDULE D
***
Catalog
Number Product Size List Price
*** *** 25 tests ***
*** *** ***
*** *** ***
*** *** 1 ***
28
*** Confidential Treatment Requested
SCHEDULE E
***
Catalog
Number Product Size List Price
*** *** 25 tests ***
*** *** ***
*** *** ***
29
*** Confidential Treatment Requested
SCHEDULE F
SAMPLE QUANTITIES AND PRICES
***
30
*** Confidential Treatment Requested
SCHEDULE G
FHC SUBDISTRIBUTORS
31
SCHEDULE H
FHC'S COMPETING PRODUCTS
***
32
*** Confidential Treatment Requested
SCHEDULE I
PRODUCT WARRANTY
Biosite's express and implied warranties (including implied warranties of
merchantability and fitness) are conditioned upon observance of Biosite's
published directions with respect to the use of Biosite's diagnostic products.
Remedies against Biosite for breach of warranty or other duty are limited solely
to replacement or return of the purchase price of the affected products. Any
such claim against Biosite must be made in writing and promptly pursued within
one year from the date of delivery of goods. UNDER NO CIRCUMSTANCES WHATSOEVER
SHALL BIOSITE BE LIABLE FOR ANY INDIRECT OR CONSEQUENTIAL DAMAGES.
33
