Exhibit 10.2
DISTRIBUTION AGREEMENT
Between
Lumenis Inc.
And
Eclipse Medical, Ltd.
for the territory of
"Texas"
This Distribution Agreement (this "Agreement") is entered into and is
effective as of the 31st day of December, 2001 (hereinafter "Effective Date") by
and between Lumenis Inc., a Massachusetts company, with its principal place of
business located at 0000 Xxxxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx, XXX (the
"Company"), and Eclipse Medical, Ltd., a Texas limited partnership (successor by
statutory conversion to Eclipse Medical, Inc.) with its principal place of
business located at 0000 Xxxxxx Xxxx, Xxxxxxx, Xxxxx, XXX (hereinafter the
"Distributor").
In consideration of the undertakings and obligations hereinafter set
forth, it is mutually agreed as follows:
1. DISTRIBUTORSHIP
A. Appointment. Subject to the terms and conditions of this
Agreement, the Company hereby appoints the Distributor as an exclusive
distributor and service provider in the Territory of Texas, as detailed in
Exhibit F attached hereto (the "Territory") of the Company's products
listed in Exhibit A attached hereto and made a part hereof subject to the
terms of this Agreement (the "Product" or "Products"). For purposes of
clarification, the Distributor shall not have (i) distribution rights
pursuant to this Agreement for any of the Company's products not listed in
Exhibit A; nor (ii) servicing rights to (v) the Coherent line of products,
including, without limitation, any products manufactured in the past by
Coherent Medical Group (until such time as the Distributor has completed
training with respect to such products, to the reasonable satisfaction of
the Company), (w) any outstanding service contracts which, at the
Effective Date, customers may have with the Company or any third party,
(x) services rendered by the Company as part of warranties offered by the
Company prior to the Effective Date, (y) repairs and services not rendered
on-site at the end user customer's premises ("depot" services), and (z)
any renewals of such arrangements. The Distributor does hereby accept this
appointment as exclusive distributor of the Products in the Territory
subject to the terms of this Agreement.
B. Price List. The Company may revise the products listed in
Exhibit A, by written notice to the Distributor, as it deems appropriate,
but shall fulfill any outstanding orders accepted by it prior to the date
of such notice; provided that any such revision shall not remove any
Products listed thereon unless the Company ceases to manufacture, market
or distribute such Product in the United States, or unless unavailability
of such Product or component thereof is due to governmental regulation.
For all purposes of this Agreement "List Price" shall
mean the retail price for Products as published from time to time by the
Company in the U.S. Price List.
C. Exclusivity. The Company shall not designate any other
Person as its representative or distributor of Products in the Territory,
and the Company shall not sell or otherwise deliver the Products in or to
the Territory except through the Distributor, except as provided in
Exhibit A. "Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust,
a joint venture, an unincorporated organization, a governmental entity (or
any department, agency, or political subdivision thereof) or any other
entity.
2. DUTIES OF THE DISTRIBUTOR
A. Sales and Expertise. The Distributor agrees to use all its
best commercial efforts to employ qualified sales and technical personnel
familiar with the Products for the purposes of the marketing and service
requirements as set forth herein.
B. Performance of Service. The Distributor will look after the
general interests of the Company in connection with performing the
services set forth in this Agreement. The Distributor shall use its best
commercial efforts to fully and actively introduce and promote the
purchase and use of the Products and obtain orders therefor. The
Distributor shall also have the following responsibilities:
(i) maintain active contacts with all potential and
actual customers and users of the Products.
(ii) keep the Company fully informed of all governmental,
commercial, and industrial activities and plans which do or are reasonably
likely to affect the sale of Products in the Territory.
(iii) provide technical liaison between the Company and
customers in the development and analysis of specifications and in
language interpretation of tenders and bids.
(iv) achieve a sufficient level of understanding of the
Products to enable the Distributor to provide technical information to
customers and effectively sell the Products.
The Distributor shall maintain during the terms of the
Agreement, a complete record of all sales of the Products, showing
customer name, date of sale, shipping date, instrument model, serial
number, and sales order acknowledgement and invoices for all Products
covered by this Agreement as well as of the furnishing of the Company's
standard limited warranty and special terms of the sale, including
warranty, installation date and other appropriate information. This
information shall be promptly supplied to the Company on a monthly basis
or the product warranty shall be void. The Distributor shall notify the
Company on each purchase order of the name and address of the customer and
the sales price. The Distributor shall also keep the Company informed
about competitive/market information through Win/Loss reports using the
format shown in Exhibit E.
C. Training.
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(i) Within 90 days after date of signature of this Agreement,
the Distributor undertakes to send at least one or more suitably qualified
technician(s) (as reasonably determined by the Company) to the Company's
place of manufacture, or to such other place as the Company shall
designate, for instruction by the Company in the installation and full
servicing of the Company's Products and to be certified as a Company
certified technician. The curriculum of instruction shall be determined by
the Company and shall be written and conducted in English.
(ii) The Company will provide this training free of
charge, on a technical level similar to instruction given to the Company's
service and maintenance personnel.
(iii) The Distributor shall bear and pay all travel,
salary, insurance and living expenses of its personnel incurred in the
course of such instruction. Thereafter, the Distributor shall, at the
Company's request, send at least one technician during each two year
period subsequent to the first two years hereunder for refresher
instruction to the Company's place of manufacture or such other place as
the Company shall designate, subject to all terms and conditions mentioned
above.
(iv) The material failure of the Distributor to comply
with the provisions of this Section 2.C. shall be considered a material
default under the terms of this Agreement.
(v) The Distributor will be deemed to comply with the
provision of this Section 2.C in the event it employs a suitably qualified
technician who has visited the Company's place of manufacture and who has
been instructed by the Company in the past two (2) years.
D. Distributor Cooperation. The Distributor agrees to
continuously keep the Company informed of its marketing efforts by
furnishing, on a monthly and/or quarterly basis, as the Company may
request, detailed market analysis and reports concerning the Distributor's
sales strategy, sales forecasts, visits to prospective customers,
competition, inventory, customers' data, sales volume and other facts
relating to sales of Products as the Company may from time to time
reasonably request. In addition, the Distributor shall provide to the
Company the names, addresses, telephone and fax numbers of the
Distributor's end user customers, as well as the Part Number, Serial
Number and date of installation for the Products sold. The Distributor,
upon request, undertakes to provide the Company's duly authorized
representative with copies of quotations or invoices relating to sales in
the Territory.
E. Advertising. The Distributor shall provide the Company,
free of charge, with copies of all of the Distributor's advertising and
promotional materials, including audio visual aids, as they become
available, shall consult with the Company prior to their distribution to
the market, and such materials shall be subject to veto by the Company
(upon which veto the Distributor will not use such advertising and
promotional materials).
F. Warranty. The Distributor shall provide to each purchasing
customer a copy of the Company's standard limited warranty.
3. DUTIES OF THE COMPANY
A. Materials. The Company shall, from time to time, upon the
Distributor's request, provide the Distributor with advertising and
promotional materials,
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including sales and technical brochures when available in such reasonable
quantities and in such form as it normally furnishes to distributors in
similar markets. Additional quantities may be ordered at the Company's
prices then in effect. During each semi-annual (January-June) period
throughout the Term (as defined in Section 6.A), the Distributor shall be
entitled to purchase from the Company one demonstration unit (such model
as shall be specified by the Distributor) from each major Product line of
the Company for a price equal to 50% of List Price. Any such demonstration
units sold by the Distributor to any customer shall be clearly marked by
the Distributor as a "Demonstration Unit." Any equipment or any
audio-visual aids loaned to the Distributor for promotional or advertising
purposes shall remain the exclusive property of the Company, and shall be
returned by the Distributor to the Company upon written demand of the
Company, or upon termination of this Agreement, reasonable wear and tear
excepted.
B. Documents. The Company will furnish to the Distributor upon
request, at no charge, drawings, manuals, Spare Parts and Tools Lists,
servicing documentation, shipping and packing specifications and
instructions, in such reasonable quantities and in such form as it
normally furnishes to distributors in similar markets.
C. Response to Inquiries. The Company shall promptly respond
to all inquiries from the Distributor concerning matters pertaining to
this Agreement.
D. Delivery Time. The Company shall minimize delivery time as
much as possible and use all reasonable efforts to fulfill delivery
obligations as committed by the Company in acceptances.
E. Quotations to Exporters. The Company shall refrain from
giving quotations to exporters for Products to be shipped to the
Territory, unless otherwise agreed to in writing by the Distributor.
F. New Developments. The Company will inform the Distributor
of new product developments within a reasonable time after such
developments are publicly announced.
G. Training. The Company will provide sales and service
training for the Distributor's personnel from time to time as more
particularly discussed above in Section 2.C. It is required for
Distributor's personnel to attend these seminars. All expenses, other than
tuition, for Distributor's personnel to attend these seminars will be
borne by the Distributor.
H. Loan. The Company agrees to make to the Distributor, at the
Effective Date, a cash loan by wire transfer to a Distributor account
designated by the Distributor in the amount of One Million Two Hundred
Fifty Thousand dollars ($1,250,000) (hereinafter "Loan") to be evidenced
by a promissory note substantially in the form attached hereto as Exhibit
G (hereinafter "Note"), provided that the Company may defer disbursement
of said loan until the earlier of January 11, 2002 or the Business Day
following its receipt of the written consent of its bank lender under the
Company's outstanding bank credit agreement. As used in this Agreement,
"Business Day" shall mean a day on which Banks are open in New York and
Texas. The Note will be personally guaranteed, jointly and severally, as
to the initial fifty percent (50%) thereof by the principals of the
Distributor: Xxxxxx, Xxxx and Xxxxx X'Xxxxx (the "Principals"), and as to
the entire principal amount thereof by O'Brien Medical Ltd. and O'Brien
Holdings LLC.
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4. TERMS AND CONDITIONS OF SALE
A. Purchase Price
(i) The Distributor shall pay the prices set forth in
Exhibit A. In case the Distributor orders Products or quantities of
Products which are not listed in the Product price list, then the price
shall be as quoted by the Company. The Company reserves the right to
increase prices in its Product price list upon 60 days written notice to
the Distributor. All prices shall remain firm for at least 90 days.
(ii) All sales are FOB factory. All costs of delivering
the Products to the Distributor (including, but not limited to, costs for
land, air and/or ocean freight, insurance, port, customs and forwarding
fees, if any) shall be paid by the Distributor. All prices include cost of
packing and crating for air shipment.
B. Orders and Payment of Purchase Price. The Distributor shall
submit its orders for Products in writing to Company. Orders shall not be
deemed accepted until confirmed in writing by the Company. The placing by
the Distributor of a purchase order and The Company's acceptance thereof
under and in accordance with this Agreement shall create a contract of
sale between the Company and the Distributor on the terms of such purchase
order and of this Agreement. In the event of a discrepancy between the
terms of this Agreement and the terms of any purchase order, the terms of
this Agreement shall prevail. The Distributor will provide a three month
rolling forecast on a monthly basis of predicted sales and purchases by
product and such additional sales data as is needed to effectively plan
sales and shipments in the Territory by the Company. Payment by the
Distributor to the Company of the net purchase price, and reimbursement
for costs of delivery, if any, and other charges hereunder, shall be made
by cash or by wire transfer of immediately available funds within 30 days
(except in the case of any undelivered purchase orders placed prior to
January 1, 2002, for which payment shall be made prior to March 20, 2002)
after the shipment date. Notwithstanding any other remedies available to
the Company under this Agreement, the Company shall be entitled to
immediately suspend and/or cancel deliveries of any of its Products to the
Distributor upon any nonpayment. Any payment not received within five
Business Days of the due date shall accrue interest at the rate of 12% per
annum from the due date. In addition, upon such failure to make a payment
for Product purchases when due, all amounts outstanding to the Company
from the Distributor shall become immediately due and payable regardless
of their scheduled payment date. Any Product payments aggregating $10,000
or more (including accrued but unpaid interest and default interest, if
any) not received by the Company within five Business Days after the
earlier of (i) Distributor's receipt from the Company of a monthly
statement showing amounts due and their respective due dates (including in
respect of such payments not received) and (ii) notice from the Company of
such non-payment, shall constitute a payment default by the Distributor
for which the Company may immediately deliver a Termination Notice
pursuant to Section 6.D. The provisions of Section 6.D regarding required
notice and a period to cure shall not apply to default due to nonpayment
by the Distributor.
C. Passage of Title, Delivery. Deliveries of Products to the
Distributor shall be according to the Company commitments made from time
to time in response to the Distributor's forecasts of need, firm orders
and consistency with the Company's delivery commitments to other
customers.
Title to the Products purchased hereunder shall pass to
Distributor and all risk of loss or damage to such Products shall be borne
by the Distributor from the time such Products are given over to the first
common carrier. Unless otherwise specified in the
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purchase order accepted by the Company, the Company shall arrange for
shipment of the Products from the place of manufacture or storage to the
port or point of destination set forth in the order. The Company shall
arrange for freight and insurance coverage on Products, at the
Distributor's request and cost, of the type and in the amounts specified
by the Distributor, or, if unspecified, that which in the Company's
judgment may be proper, provided that the Distributor shall cover the
Company's actual cost for such coverage.
All Products shall be inspected upon receipt from the
carrier, and claims should be filed with the carrier immediately in the
event there is evidence of damage. As used in the clauses appearing herein
or attached hereto, "delivery" shall occur when Products are shipped to
the point of destination.
D. Acceptance. Each Product furnished by the Company shall be
deemed accepted by the Distributor unless notice of defect or
nonconformity is received within thirty (30) days of delivery or within
five (5) days of installation, whichever occurs sooner.
E. Proprietary Rights. The Distributor undertakes to promptly
inform the Company of any possible infringement by third parties of the
Company's proprietary rights including any duplication of the Products,
and to participate with the Company regarding any legal action against
such infringement which, in the Company's judgment, should be necessary.
In the event that the Distributor notifies the Company
of a claim it has received that the Products or part thereof purchased by
the Distributor hereunder infringes a third party's proprietary rights in
the Territory, then the Company agrees, at its discretion, either to (a)
defend the claim at its expense, with the cooperation of the Distributor
or (b) make changes in the Product or part thereof to avoid the claim, or
(c) purchase the right to use such proprietary right or (d) refund to the
purchaser the purchase price of the Product upon the Company taking
possession of such Product. The foregoing states the entire liability of
Company with respect to infringement of patents or other proprietary
rights by the Products or part thereof, or by their operation.
F. Spare Subassemblies, Spare Parts, Supplies and Tools. The
Distributor shall maintain an inventory of spares, subassemblies, spare
parts and supplies (referred to collectively as "Spares and Tools"). The
Distributor shall maintain sufficient inventory of Spares and Tools to
enable the Distributor to maintain Products in use in Distributor's
Territory, provided that during the Term the Company shall make available
for purchase by the Distributor reasonable quantities of Spares and Tools,
at prices in effect on the date any purchase order for such Spares and
Tools is received by the Company.
G. Warranty.
(i) The Company warrants that the systems included in
Exhibit A shall be free from defects for a period of one year from the
date of the first installation, provided however, that in no event shall
any warranty extend more than 15 months from the date of shipment of the
Product. This warranty shall be valid and available only to the original
purchaser of a Product from Distributor, and not to any subsequent
purchaser, assignee or user of such Product.
This warranty does not apply to any demonstration units
provided to or purchased by Distributor, nor to certain parts and
subassemblies which have a defined limited
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life, and other accessories as defined by the Company. A complete list of
such parts and subassemblies may be obtained directly from the Company.
This warranty shall not cover consumable components or
accessories.
The liability of the Company under this warranty is
limited to the repair by the Company or replacement (at the Company's
option) of any allegedly defective part or parts under warranty at its
expense, at either a Company authorized service center, or, at the
Company's option, at user's place of business. Defective parts replaced by
the Company as mentioned above, shall be returned to the Company and the
Company shall have title to such parts.
It is a condition precedent to the Company's undertakings
under this warranty that the Distributor notifies the Company promptly,
but not later than 30 days after delivery or occurrence of any alleged
defect. Such notice shall describe the full extent and nature of the
problem.
(ii) This warranty shall not apply to a Product which has
been repaired or altered not in accordance with the Company's
instructions, nor shall it apply to a Product which has been subject to
misuse, unauthorized use, negligence, accident (including fire, water,
explosion, smoke, vandalism, etc.), or which has been operated contrary to
the Company's instructions. The warranty is void, if at any time:
(a) anyone other than Company authorized personnel
removes a Product casing and/or attempts to make or makes any internal
changes, removals, attachments or additions to the Product or components
thereof;
(b) the power supplied to the Product or any part
thereof differs from the rated value, or any external device attached by
user creates conditions exceeding the tolerance of the Product; or
(c) Products are repaired using electronic
components (other than standard passive electronic components not of
unique design) not supplied by the Company unless the Company has first
consented to such repair in writing.
(iii) The Company makes no warranty in respect to
accessories and other parts made by other manufacturers, whether or not
warranted by such manufacturers, which have been attached or connected to
the Product after installation, unless such accessories and other parts
have been supplied and attached or installed by the Company.
Products or parts thereof may be returned for repair,
replacement or adjustment only with the Company's prior written consent.
No credit allowances will be given or replacements shipped unless defects
are verified by the Company or Company-authorized personnel.
EXCEPT AS OTHERWISE SET FORTH HEREIN, THE FOREGOING
WARRANTY IS THE DISTRIBUTOR'S SOLE AND, EXCLUSIVE REMEDY TOWARD THE
COMPANY, AND IS IN LIEU OF ANY AND ALL OTHER WARRANTIES, GUARANTEES,
PROMISES, OR REPRESENTATIONS WHETHER WRITTEN, ORAL OR IMPLIED, INCLUDING
WARRANTIES OF MERCHANTABILITY, SATISFACTORINESS OR FITNESS FOR ANY
PARTICULAR PURPOSE OR USE. IN NO EVENT SHALL THE COMPANY BE LIABLE FOR
LOSS OF
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USE, LOSS OF PROFITS, OR OTHER COLLATERAL, SPECIAL OR CONSEQUENTIAL
DAMAGES.
(iv) It shall be the responsibility of the Distributor,
at its sole expense, to install Products, service its customers and
perform in-warranty service at end-user's site. the Company's
responsibility shall be limited to replacing or repairing defective parts
and materials under warranty and to provide backup technical support to
the Distributor.
The Distributor shall have its personnel certified by the
Company (pursuant to Section 2.C. (i) above) perform all maintenance and
repair service of Products purchased hereunder. Performance of maintenance
and repair service by Distributor's personnel certified by the Company
shall not void the Warranty referenced above.
H. Product Labeling, Trademarks and Tradenames
(i) Product Labeling. Products shall be labeled and
identified at point of manufacture. The Distributor shall be responsible
for compliance with all local laws and regulations relating to labeling.
Such labeling and identification shall be only as acceptable to the
Company and may be altered or added to by the Distributor only as
previously agreed upon in writing by the Company. The failure of the
Distributor to comply with these provisions shall be considered a material
default under the terms of this Agreement.
(ii) Trademarks and Tradenames. The Distributor
acknowledges the validity and proprietary value of the Company trademarks
and tradename including, but not limited to, the name "LUMENIS." The
Company shall retain sole ownership of all goodwill associated with the
Products, as represented and symbolized by the trademarks and tradenames,
and the Distributor shall not register any of the Company's trademarks or
tradenames in its name. The Distributor undertakes to display the
Company's trademarks and tradenames solely in connection with identifying
the Company in the sale and marketing of Products hereunder. The
Distributor shall not remove copyright notices or any trademarks from the
products. The Distributor shall not be entitled to use said trademarks and
tradenames in conjunction with the Distributor's own trademarks and
tradenames etc. except in the manner authorized by the Company, which
authorization will not be unreasonably withheld and in compliance with
distribution standards and specifications established by the Company. In
the event that the Company determines that the Distributor is not meeting
such standards and specifications, the Distributor shall immediately, at
the Company's instructions, take all steps necessary to ensure that such
standards and specification are met or cease all further use and display
of the trademarks and tradenames. In the event of expiration or
termination of this Agreement, the Distributor shall immediately
discontinue all use of the Company's trademarks or tradenames except as
may be required for the sale of the Distributor's inventory of Products.
5. COVENANTS
A. Territorial Limitations and Competitive Lines
(i) Territorial Limitations. During the Term and the
Non-Competition Period (as defined in Section 6.C), neither the
Distributor, the Distributor's Affiliates nor the Principals shall solicit
orders from or make deliveries to end-users or third parties, or establish
distribution outlets outside the Territory, in each case without the
Company's express prior written consent.
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(ii) Competitive Lines. During the Term and the
Non-Competition Period, neither the Distributor, the Distributor's
Affiliates nor the Principals shall, directly or indirectly, engage in the
manufacture, assembly, development, sale, distribution or service of
products which are competitive to the Products sold hereunder without the
express prior written consent of the Company. In case of doubt or
disagreement, the Company shall have the power to reasonably determine if
a product is competitive to the Products sold hereunder. In the event that
the Company notifies the Distributor of its determination that the
Distributor, Distributor's Affiliates or any of the Principals is or are
engaged in a violation of this provision; then at the option of the
Company at any time thereafter; (a) this Agreement may be terminated
forthwith by the Company or (b) the Company may cancel the exclusivity
provisions herein and either appoint one or more distributors or
representatives to sell, lease or otherwise market and service the
Products in the Territory on such terms as the Company, in its sole
discretion may determine, or sell the Products directly in the Territory.
B. Use of Technical Data. During the Term the Distributor
shall be entitled to use, subject to its obligations of non-disclosure
imposed by Section 5.C. below, the Company's technical data and other
know-how relating to the Products supplied by the Company for the sole and
limited purposes of performing installation, maintenance or adjustment
service and repair of Products.
C. Distributor Obligations with Respect to the Company's
Technology
(i) The Distributor agrees to receive in confidence any
information disclosed by the Company to the Distributor, including, but
not limited to, the Company's inventions or technical information,
surgical data or processes (hereinafter "Confidential Information") and
not to disclose any of the Confidential Information to any other person,
firm or corporation, and to use the Confidential Information only for the
Distributor's own use in order to fulfill its obligations under this
Agreement.
The Distributor agrees that the Confidential Information
received from the Company shall be disclosed only to such of its employees
and sales or service representatives as have a need to know about such
Confidential Information for a use authorized by this Agreement.
(ii) For the purposes of this Section 5.C., Confidential
Information shall not include any information disclosed by the Company
hereunder which (a) is already known to the Distributor and which the
Distributor had in its possession in written or physical embodiment from
prior to the disclosure, unless such Confidential Information was
previously disclosed by the Company, (b) is rightfully received by the
Distributor in the routine course of business from a third party who
acquired such Confidential Information and the right to disclose same from
the Company; (c) is approved for release or publication by written
authorization of the Company; or (d) is published by an established
publisher (other than the Distributor) in a printed publication of which
copies have been disseminated publicly to more than fifty (50) parties in
a country wherein the Company has sold a substantial quantity of Products.
(iii) The obligations respecting Confidential Information
imposed on the Distributor shall continue during the term of this
Agreement and for a period of three (3) years after the expiration or
termination of this Agreement. The Distributor shall return all
Confidential Information, including all copies thereof, to the Company
upon expiration, termination or cancellation of this Agreement or at such
earlier time upon the Company's request.
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(iv) The Distributor undertakes to bind its employees,
officers, sales, technical, maintenance and service representatives, and
other third parties to whom Confidential Information is disclosed as
permitted hereunder, to the terms and conditions contained herein.
(v) Unless otherwise specifically stated herein, this
Agreement does not grant the Distributor any manufacturing, assembly,
production or licensing rights, or any rights in any patents, patent
applications, trademarks, and tradenames, copyrights or know-how of the
Company.
(vi) The Distributor hereby acknowledges and agrees that
in the event of any violation hereof, the Company shall also be authorized
and entitled to obtain from any court of competent jurisdiction,
preliminary and permanent injunctive relief as well as an equitable
accounting of all profits or benefits and past, present and future losses
to the Company arising out of such violation, which rights and remedies
shall be cumulative and in addition to any other rights or remedies to
which the Company shall be entitled under law or under this Agreement.
D. Indemnification.
(i) The Distributor shall be liable for and shall
indemnify, defend, and hold the Company harmless against any costs,
liability, damages, or loss from any claims, actions, suits, judgments,
proceedings, demands, recoveries or expenses, including, but not limited
to, attorneys' fees, arising out of, based on, or caused by (a) product
claims, representations, or warranties, whether written or oral, made or
alleged to be made by the Distributor or the Distributor's employees,
agents or independent contractors, in its advertising, publicity,
promotion, or sale of any of the Products where such product claims,
representations, or warranties were not provided by or approved by the
Company, (b) labeling of the Products which was not provided by or
approved by the Company, (c) negligent handling of the Products by the
Distributor or the Distributor's employees, agents or independent
contractors, (d) negligent installation, demonstration, service or testing
of the Products by the Distributor or the Distributor's employees, agents
or independent contractors or (e) any modifications by the Distributor or
the Distributor's employees, agents or independent contractors, to the
Products. The foregoing indemnification obligations shall relate to
Products whether sold under this Agreement or prior thereto.
(ii) The Company agrees to indemnify, defend, and hold
harmless the Distributor, its employees or agents against any claims,
suits, or judgments for personal injury, property damage, or death to any
third party made or instituted against the Distributor to the extent that
they are caused by the failure, malfunction, or defect of the Products not
caused by actions of the Distributor. This indemnification is conditioned
upon the Distributor notifying the Company as soon as it becomes aware of
any such claim or action and the Distributor's cooperation with and
authorization of the Company to carry out the sole management and defense
of any such claim or action. This indemnification is also conditioned upon
the Distributor having complied with Section 2.F hereof. To the extent a
claim for indemnification arises under this provision, the Company agrees,
at its own expense, to pay the cost to defend against any such claim or
action, including the cost of defense counsel up to a maximum aggregate
amount of $10 million for all claims relating to Products. The Distributor
shall not negotiate, compromise or settle any claim, action, suit, or
judgment without the Company's prior written consent. The foregoing
indemnification obligations shall relate to Products whether sold under
this Agreement or prior thereto.
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(iii) The parties agree that the Company shall assume and
exclusively control, and the Company hereby assumes, the defense of all
present and future litigations and proceedings brought against the
Distributor which relate to the Company Products previously or hereafter
sold by the Distributor, with counsel of the Company's choice, provided
that (x) the Distributor and its affiliates will be responsible for their
share of the judgments or settlements, as appropriate, such share to be in
accordance with the apportionment of liability in the settlement, verdict
or arbitration, or if there is no such apportionment, such share to be as
agreed upon by the parties; or, if they fail to agree promptly, as
determined by arbitration in accordance with Section 9.I and (y) if the
Company determines that there may be a conflict of interest in the
defenses of the Company and the Distributor, the Company may engage
separate counsel for itself and the Distributor. The Distributor
represents and warrants to Company that attached hereto as Schedule
5.D.(iii) is a true and correct list (prepared by the Distributor) of all
such present litigation and proceedings. The Distributor agrees to
cooperate with the Company and its counsel in the defense of such claims
and to realize the maximum benefit from any insurance coverage the
Distributor has with respect thereto, and the Distributor agrees to make
available to the Company and its counsel Distributor's -personnel and
provide any testimony and access to its books and records in connection
with any such present or future litigation or proceeding. The parties
agree not to assert any cross claims against each other in any third party
litigation, and to reserve those claims for resolution among the parties
or, if they cannot resolve the matter, then to submit the matter to
arbitration pursuant to Section 9.I. Notwithstanding the foregoing but
subject to any judgment or order rendered by a court of competent
jurisdiction, the Distributor shall not be obligated to enter into any
settlement agreement pursuant to which the Distributor is (A) required to
take or refrain from taking any action or (B) required to accept any
liability, in each case, without the Distributor's express written
consent, which consent may not be unreasonably withheld; provided that if
the Distributor refuses to enter into a settlement agreement worked out by
the Company, then (even if the matter is one for which the Company has an
indemnification obligation under Section 5.D.(ii)) the fairness of
requiring the Company to pay (and the Company's obligation to pay) further
counsel fees or other defense costs for the benefit of the Distributor in
such matter or any amounts in excess of what the matter could have been
settled for may be submitted by either party for arbitration in accordance
with Section 9.I.
(iv) The Distributor expressly disclaims its statutory
indemnification rights.
(v) Claims by indemnification under Section 5D(i) and
(ii) shall be brought within one year after resolution of the underlying
claim (pursuant to Section 5.D(iii) or otherwise).
E. Reinstatement. The Company shall be entitled to an offset
against any liabilities otherwise payable to the Distributor if, at any
time before, on or after the Termination Date, an additional amount is
required to be paid to or on behalf of the Distributor, or its successors
or assigns, or to any other claimant or representative of the Distributor,
because of the transactions occurring pursuant hereto, whether on or after
the Effective Date, including, without limitation, pursuant to Section 7,
in the event of the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Distributor, or upon or as a result of the
appointment of a custodian, receiver, intervenor or conservator of, or
trustee or similar officer for the Distributor or for any substantial part
of its property, or upon any settlement or compromise of any claim
effected by the Distributor with any claimant (including, without
limitation, the Distributor) in connection with any such insolvency,
bankruptcy, dissolution, liquidation or reorganization.
-11-
6. Term, Default and Termination
A. Term. This Agreement shall continue in full force and
effect until the earliest of (hereinafter the "Term") (i) sixty (60)
months from the Effective Date, i.e. up to the 31st day of December, 2006;
(ii) the FM Termination Date (as defined in Section 9.C hereof) following
a Force Majeure (as defined in Section 9.C); (iii) termination pursuant to
Section 6.E or the final sentence of Section 9.B hereof; or (iv) a
permitted termination by either party, upon written notice to the other
party, pursuant to the following:
(x) Either party may terminate this Agreement in its sole
discretion (notwithstanding that the other party is not in default) after
December 31, 2002 upon 60 days prior written notice to the other party
(which notice may be given prior to December 31, 2002); and (y) either
party may terminate this Agreement pursuant to Section 6.D following a
default by the other party.
The date this Agreement terminates pursuant this Section 6.A
is the "Termination Date." The provisions of Section 5.C, 5.D, 5.E, 6.B,
6.C., 7 and 9 shall survive the termination of this Agreement.
B. Transition. Upon termination of this Agreement, the
Distributor shall diligently cooperate with the Company to effect a smooth
and orderly transition in the sale of the Products in the Territory. From
the time that a notice of termination is received by either party until
the effective termination date, the Distributor shall refer all Product
inquiries to the Company, shall support the Company' existing customers in
the Territory and shall cooperate, as much as reasonably possible, with
any newly appointed distributor after the termination period.
C. Covenant Not to Compete. During the Term and for the
twenty-four (24) months following the Termination Date (the
"Non-Competition Period"), none of the Distributor, the Distributor's
Affiliates, Principals or holders of any direct or indirect ownership
interest in the Distributor will engage, directly or indirectly, in the
Territory, in the manufacture, assembly, development, sale, distribution
or service of products which are competitive to the Products which had
been sold hereunder. In case of doubt or disagreement, the Company shall
have the power to reasonably determine if a product is competitive to the
Products which had been sold hereunder. During the Term and for the
twenty-four (24) months following the Termination Date, none of the
Distributor, the Distributor's Affiliates, Principals or holders of any
direct or indirect ownership interest in the Distributor at any time on or
after the date hereof shall directly or indirectly: (i) cause, induce or
attempt to cause or induce any customer, supplier, licensee, licensor,
franchisee, employee, consultant or other business relation of the
Company, Lumenis or any of their Affiliates to cease doing business with
the Company, Lumenis Ltd., an Israeli corporation ("Lumenis"), or their
respective Affiliates, to deal with any competitor of the Company, Lumenis
or their respective Affiliates that is engaged in the laser or light
technology business or in any way interfere with any third party's
relationship with the Company, Lumenis or their respective Affiliates;
(ii) hire, retain or attempt to hire or retain any employee or independent
contractor of the Company, Lumenis or their respective Affiliates; or
(iii) disparage the Company, Lumenis or any of their respective Affiliates
or any of their shareholders, directors, officers, employees or agents.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms, "controlling,"
"controlled by" and "under common control with"), as used with respect to
any Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the
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direction of the management or policies of such Person, whether through
the ownership of voting securities, by agreement or otherwise.
Notwithstanding the foregoing, this Section 6.C shall not apply if this
Agreement is terminated by the Distributor as a result of the Company's
default.
D. Default. Subject to Section 4.B hereof, in the event of any
default in the performance of any of its covenants or obligations under
this Agreement by either party hereto, the non-defaulting party may send a
written "Default Notice" explaining the nature of the default to the
defaulting party, which notice shall be mailed in accordance with the
notice provisions of Section 9.J hereof; provided that if after the giving
of a Default Notice and prior to the Termination Date an FM Notice is
given pursuant to Section 9.C within seven (7) days after receipt of the
Default Notice, the Default Notice will be deemed superceded by the FM
Notice, and the parties shall proceed pursuant to Section 9.C and not this
Section 6.D.
If any default is not fully cured within 45 days (there
is no period to cure for a payment default for Products pursuant to the
final two sentences of Section 4.B) after mailing such default notice, the
non-defaulting party may mail a Termination Notice terminating the
distributorship under this Agreement, provided that the Company may
immediately deliver a Termination Notice for a payment default by the
Distributor pursuant to Section 4.B if all such defaulted amounts exceed
in the aggregate $10,000 (including accrued and unpaid interest and
default interest, if any). Such Termination Notice shall become effective
immediately upon mailing except that this Agreement shall continue in
force for the purpose of adjusting the rights of the parties hereto which
may be accrued prior to termination, and with respect to those provisions
hereof (such as, without limitation, in Sections 5, 6, 7 and 9) which are
intended to remain in effect after the Termination Date.
For purposes of this Section 6.D., any default by any of
the Distributor's Affiliates or the Principals shall be deemed a default
by the Distributor.
E. Bankruptcy. In the event either party voluntarily files a
petition in bankruptcy or liquidation, or has such a petition
involuntarily filed against it, which is not discharged within 45 days
after filing, or is placed in receivership, or in the hands of a trustee
for the benefit of creditors or enters into any analogous situation or
position under the law of any relevant jurisdiction or ceases doing
business in the marketing, distribution, manufacture, sale or lease of
Products, the other party may terminate this Agreement by mailing a
Termination Notice effective immediately upon mailing.
7. TERMINATION PAYMENT AND ASSETS ACQUISITION
A. Acquisition. Upon termination of this Agreement, on the
Termination Date (the "Purchase Date"), the Company shall purchase the
Distributor's Lumenis Business Assets (as defined below) and pay to the
Distributor the Purchase Price therefor, provided that the Company shall
not be entitled to acquire the Distributor's Lumenis Business Assets and
the Company shall not be obligated to pay the Purchase Price (or any part
thereof) to the Distributor in the event the Company terminates this
Agreement (i) as a result of default by the Distributor under Section 6.D
or (ii) pursuant to Section 6.E or the final sentence of Section 9.B.
B. Purchase Price. (i) The price to be paid for the purchase
of the Distributor's Lumenis Business Assets (as may be adjusted as
provided in this Section 7.B., the "Purchase Price") shall be equal to 90%
of the product of (x) average quarterly gross revenues determined in
accordance with U.S. generally accepted accounting principles
-13-
("GAAP") and actually collected by the Distributor and its affiliated
service business, O'Brien Medical, Ltd. ("OB Medical"), from the sales and
servicing of the Products made or performed during the twelve full
calendar quarters (before or after the date hereof) ending prior to the
Purchase Date, net (for each such quarter) of sales or use (or similar)
taxes received from customers and net of rebates, refunds, chargebacks or
any other amounts directly or indirectly returned to customers in any
manner or otherwise repaid, refunded or netted from revenues of the
Distributor or OB Medical (which relate to Products sold or serviced
during such quarter) ("Quarterly Net Revenue"), multiplied by (y) four;
provided that: (1) amounts collected during the three months following
such twelfth calendar quarter (the "Tail Period") for Products sold or
serviced during such prior calendar quarters, net of the aforesaid, shall
be included in Quarterly Net Revenues for the calendar quarter to which
such revenues related; (2) if the Distributor terminates this Agreement
pursuant to Section 6.A.(x), then if the Termination Date is in 2003 the
Purchase Price shall be reduced by 50% and if the Termination Date is in
2004 the Purchase Price shall be reduced by 25%; (3) if Company terminates
this Agreement pursuant to Section 6.A(x) or the Distributor terminates
this Agreement pursuant to Section 6.A.(y) following a default by the
Company, then if the Termination Date is in 2003 the Purchase Price shall
be increased by 50% and if the Termination Date is in 2004 the Purchase
Price shall be increased by 25%; and (4) if the Agreement is terminated by
reason of Force Majeure pursuant to Section 9.C, then if the Force Majeure
event occurred during 2002, the Purchase Price shall be $2,500,000, and if
the Force Majeure event occurred after 2002, then the Purchase Price shall
be determined pursuant to the provisions of this Section 7.B which precede
the proviso, but the calculation of the Average Quarterly Net Revenues
shall exclude all calendar quarters in which such Force Majeure event
occurred or was continuing, and the resulting Purchase Price shall be
reduced by 25%.
(ii) Quarterly Net Revenue shall be determined by the
Distributor's outside accounting firm (the "Auditor") within 30 days after
the end of such calendar quarter (the "Quarterly Determination") at the
Distributor's expense. The Distributor's annual financial statements shall
be audited by the Auditor at the Distributor's expense. The Auditor shall
determine the Purchase Price within 30 days after the end of the Tail
Period. The Auditor's report setting forth the computation of the
Quarterly Determination and the Purchase Price, as the case may be, shall
be submitted in writing to the Distributor and the Company. The Company
and its representatives, including, without limitation, a "Big Five"
auditing firm selected by Company (the "Reviewing Auditor") shall have
access to the books and records of the Distributor during regular business
hours to verify the determination and computations made by the Auditor.
After receipt of the Auditor's report of the Purchase Price, it shall be
promptly reviewed by the Reviewing Auditor, who shall make a determination
of the Purchase Price at the Company's expense. Unless either the
Distributor or the Company notifies the other within thirty (30) days
after receipt of the Reviewing Auditor's report that it objects to the
computation of the Purchase Price set forth in the Reviewing Auditor's
report, the Reviewing Auditor's determination and report shall be binding
and conclusive for the purposes of this Agreement. If either the
Distributor or the Company notifies the other in writing within thirty
(30) days after receipt of the Reviewing Auditor's report that it objects
to the computation set forth therein, then the Purchase Price shall be
determined by negotiation between the Company and the Distributor. If the
Company and the Distributor are unable to reach agreement within thirty
(30) days after such notification, the determination of the Purchase Price
shall be submitted to a mutually agreeable third-party firm of independent
certified public accountants ("Special Accountants") for determination,
whose determination shall be binding and conclusive on the parties. If the
Special Accountants determine that the Purchase Price as determined by the
Reviewing Auditor has been understated by 3% or more, then the Company
shall pay the Special Accountants' fees, costs and expenses. If the
Purchase Price as determined by the Reviewing Auditor has not been
understated or understated by less
-14-
than 3%, then the Distributor shall pay the Special Accountants' fees,
costs and expenses. If the Company and the Distributor cannot agree on the
Special Accountants, the matter shall be submitted to arbitration in
accordance with Section 9.I.
-15-
C. Provisions Relating to Distributor's Lumenis Business
Assets. (i) As used herein, the Distributor's Lumenis Business Assets
consist of the following:
(x) all of the Distributor's records relating to
customers who have purchased the Company's products from the Distributor
at any time, whether before or after the Effective Date of this Agreement;
(y) all service contracts entered into by the Distributor
or OB Medical under which the Distributor or OB Medical performs
maintenance and other services on the Company's Products and all of the
records relating thereto (the "Service Agreements");
(z) the names "Eclipse" and "O'Brien Medical" and any
trademarks, tradenames, internet domain names or other intellectual
property relating thereto.
(ii) Distributor, OB Medical and O'Brien Holdings LLC
hereby agree to amend their limited partnership and limited liability
company certificates, respectively, and agreements within five days after
the Purchase Date to change their names to eliminate "Eclipse" and
"O'Brien" therefrom. The Company agrees to grant back to the Principals a
royalty-free, non-exclusive license of the names "Eclipse" and "O'Brien
Medical" for uses which do not compete with the business of the Company or
its affiliates, on terms to be agreed upon by the Company and the
Principals.
D. Purchase Price Payment. If the Purchase Price is $1,250,000
or less, it shall be payable in a single installment payable on the later
of the last day of the month following the month in which the Purchase
Price is finally determined pursuant to Section 7.B or the first Business
Day in 2005 (the "First Installment Date"), which amount will be offset as
set forth in the Note and subject to offset against any then outstanding
accounts receivable from the Distributor (or any other amounts owing by
the Distributor) to the Company or its Affiliates. If the Purchase Price
exceeds $1,250,000, then $1,250,000 shall be payable on the First
Installment Date, and the balance of the Purchase Price shall be paid to
the Distributor in five (5) equal installments over a period of
approximately 30 months following the First Installment Date (the
"Installments"), in the case of the first and subsequent installments
subject to the above-mentioned offsets. Notwithstanding the preceding two
sentences, if the Company voluntarily terminates this Agreement pursuant
to Section 6.A(x) then 50% of the Purchase Price (subject to the
above-mentioned offsets and in the manner set forth herein), but not more
than $1,250,000 shall be payable on the last day of the month following
the month in which the Purchase Price is finally determined pursuant to
Section 7.B and the balance of the Purchase Price shall be paid as set
forth in the preceding two sentences. The second Installment is payablein
six months after the First Installment Date, and another Installment is
payable every six months thereafter (on the last day of each such sixth
month) until full payment of the Purchase Price . The Company, at its sole
discretion, may, upon notice to the Distributor on or prior to any
scheduled Installment payment date (including the First Installment Date),
elect to make payment, in part or in whole, of the Installment due on such
date, and/or some or all of the future installments either in cash or by
causing a publicly traded affiliate of the Company (or of a permitted
assignee pursuant to Section 9.B) ("Issuer") to issue to the Distributor
shares of common stock (in the case of Lumenis, currently called "ordinary
shares") of Issuer ("Issuer Shares"); the number of Issuer Shares to be
issued is to be determined by dividing the cash amount of such Installment
payment being satisfied with Issuer Shares by the closing price of the
Issuer Shares of common stock on the Business Day immediately preceding
the date such Installment payment is due; provided that the Distributor,
by written notice to the Company not less than 15 days prior to an
Installment payment date,
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may require the Company to pay up to twenty percent (20%) of such and up
to 20% of future Installment payments in cash (the "Cash Portion"), the
exact percentage of the Cash Portion to be specified in such notice; and
provided further that in no event shall the aggregate Cash Portion
payments elected by the Distributor exceed twenty percent (20%) of the
Purchase Price.. The Company will use its best efforts to have Issuer
cause its transfer agent to deliver to the Distributor within ten Business
Days after the scheduled Installment payment date certificates for the
aggregate number of Issuer Shares being delivered in satisfaction, in part
or in whole, of such Installment of the Purchase Price. Said certificates
will bear a restrictive transfer legend referring to the Securities Act of
1933, as amended (the "Securities Act"), as set forth in Section 7.G. Any
Installment due on a day which is not a Business Day shall be paid on the
next business day.
E. Acquisition Closing Deliverables. On the Purchase Date, (i)
the Distributor and OB Medical will (A) assign, transfer and convey the
Distributor's Lumenis Assets to the Company, together with an indemnity
reasonably satisfactory to the Company and its counsel from the
Distributor and OB Medical with respect to any pre-transfer defaults or
liabilities under the Service Agreements, (B) execute such instruments of
sale, transfer, conveyance, and assignment as the Company and its counsel
reasonably may request; and (C) deliver all authorizations, consents, and
approvals of governments and governmental agencies necessary to consummate
the purchase; (ii) the Company will execute and deliver to the Distributor
and OB Medical an assumption of the post-Purchase Date obligations of the
Distributor or OB Medical under the Service Agreements.
F. Allocation. The Distributor and the Company agree to
cooperate to achieve a proper allocation of the Purchase Price (and all
other capitalizable costs) for all purposes (including financial
accounting and tax purposes).
G. Securities Laws Representations and Restrictions on
Transfer.
(i) The Distributor represents and warrants to the
Company that the Distributor (i) understands that the Issuer Shares to be
issued have not been, and will not be, registered under the Securities
Act, or under any state securities laws, and are being offered and sold in
reliance upon federal and state exemptions for transactions not involving
any public offering, (ii) is acquiring such shares solely for its own
account for investment purposes, and not with a view to the distribution
thereof, (iii) is a sophisticated investor with knowledge and experience
in business and financial matters, (iv) has received certain information
concerning Lumenis and has had the opportunity to obtain additional
information as desired in order to evaluate the merits and the risks
inherent in acquiring and holding the Issuer Shares, and (v) is able to
bear the economic risk and lack of liquidity inherent in holding the
Issuer Shares.
(ii) The Distributor acknowledges and agrees that the
Issuer Shares (or any right to receive Issuer Shares) may not be
Transferred (as hereinafter defined) without registration under the
Securities Act and any applicable state securities laws, except pursuant
to an exemption from such registration under the Securities Act and such
laws. Accordingly, the Distributor will refrain from Transferring or
otherwise disposing of any of the Issuer Shares, or any interest therein,
without registration under the Securities Act and any applicable state
securities laws, except pursuant to an exemption from such registration
under the Securities Act and such laws, as evidenced by an opinion of
counsel satisfactory to Lumenis which the Distributor shall procure and
provide to Lumenis prior to any such Transfer. "Transfer" means any direct
or indirect offer, sale, transfer, assignment, other disposition,
exchange, gift, assignment, pledge or grant of any security interest.
-17-
(iii) The certificates representing the Issuer Shares to
be delivered to the Distributor, and any certificates subsequently issued
with respect thereto or in substitution therefor (including any shares
issued or issuable in respect of any such shares upon any stock split,
stock dividend, recapitalization or similar event or upon a Transfer (if
permitted pursuant to the preceding subparagraph (ii)) shall bear the
following legend:
THE SECURITIES EVIDENCED HEREBY WERE ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE SECURITIES ACT OF 1933
(THE "SECURITIES ACT") AND APPLICABLE STATE LAW, AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM (IN EACH CASE BASED UPON AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER THAT REGISTRATION UNDER THE SECURITIES
ACT IS NOT REQUIRED).
8. ADDITIONAL EFFECTIVE DATE TRANSACTIONS; CERTAIN REPRESENTATIONS
OF THE DISTRIBUTOR
A. Service Fees. Within fifteen (15) days after the Effective
Date, the Company will pay the Distributor a one time fee, equal to ten
percent (10%) of the Company's net revenues on all sales of new equipment
in the Territory from August 1, 2001 until the Effective Date, as full
payment for servicing by the Distributor of Products in the Territory
during such period for which the Distributor has not yet been reimbursed
by the Company. If the parties cannot agree on the amount of this payment,
it shall be settled by arbitration in accordance with Section 9.I.
B. Delinquent Receivables. The Company hereby agrees to cancel
on the Effective Date all outstanding past due accounts receivable from
the Distributor. On the Effective Date, the Company will provide the
Distributor with a cancellation of the delinquent receivables in
substantially the form of Exhibit I hereto.
C. Mutual Releases. As a condition precedent to the
effectiveness of this Agreement, the Company, the Distributor, OB Medical
and the Principals will enter into the Release, attached hereto as Exhibit
H, whereby each party releases the other party from all claims such party
has or may have against such other party.
D. Outstanding Commissions. Within five days after the
Effective Date, the Company shall pay the Distributor all accrued but
unpaid commissions in respect of sales of Products by the Distributor
during November 2001 and an estimated amount for such commissions for
December 2001, with the latter to be trued up by January 31, 2002.
E. Solvency Representation. The Distributor represents and
warrants to the Company as follows:
(i) On the Effective Date after consummation of the
transactions set forth in this Section 8, the Distributor will not be
insolvent. As used in this section, "insolvent" means that the sum of the
debts and other probable liabilities of the Distributor exceeds the
present fair saleable value of the Distributor's assets.
(ii) Immediately after the Effective Date: (i) the
Distributor will be able to pay its liabilities as they become due in the
usual course of its business; (ii) the Distributor will not have
unreasonably small capital with which to conduct its present or
-18-
proposed business; (iii) the Distributor will have assets (calculated at
fair market value) that exceed its liabilities; and (iv) taking into
account all pending and to the best of the Distributor's knowledge
threatened litigation, final judgments against the Distributor in actions
for money damages are not reasonably anticipated to be rendered at a time
when, or in amounts such that, the Distributor will be unable to satisfy
any such judgments promptly in accordance with their terms (taking into
account the maximum probable amount of such judgments in any such actions
and the earliest reasonable time at which such judgments might be
rendered) as well as all other obligations of the Distributor. The cash
available to the Distributor, after taking into account all other
anticipated uses of the cash, will be sufficient to pay all such debts and
judgments promptly in accordance with their terms.
9. MISCELLANEOUS TERMS
A. Amendments and Waivers. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and
signed by the parties. No waiver by any party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent
such occurrence.
B. Assignment. Unless the Company consents in writing, this
Agreement and the rights and obligations granted hereunder shall not be
assigned or otherwise transferred, directly or indirectly, by the
Distributor. The Company, may, upon written notice to the Distributor,
assign or otherwise transfer this Agreement and/or the rights and
obligations arising hereunder to: (i) any Person, provided the Company
remains liable for payment of the Purchase Price; (ii) any Person (other
than an Affiliate of the Company) upon such Person's direct or indirect
acquisition of all or substantially all of the assets of the aesthetics
business of the Company; or (iii) any Person or affiliated group of
Persons (other than an Affiliate of the Company) that acquires, directly
or indirectly, beneficial ownership of more than 50% of the outstanding
shares of capital stock of the Company or Lumenis having ordinary voting
power or with or into which the Company or Lumenis is merged or
consolidated. In addition, in the event of any transfer of intellectual
property of or relating to the Company to an Affiliate of the Company,
this Agreement will automatically be assigned to such Affiliate to the
extent of such intellectual property and solely for said purpose, with the
Company to remain liable for the Purchase Price. Unless otherwise agreed
by the parties, in the event that control (whether by shares or otherwise)
or ownership of the Distributor is, directly or indirectly, sold, or being
sold or transferred to a third party, the Company, in its sole discretion,
may terminate this Agreement upon written notice of 90 days.
C. Force Majeure. If by reason of causes beyond the control of
either party hereto, including, but not limited to, labor problems
strikes, failure of major subcontractors, fire, acts of God, accidents,
act of war or terrorism, civil unrest, governmental, legal or judicial
restrictions, or inability to obtain power, material, equipment or
transportation, a party is delayed in its performance in whole or in part
of its obligations as set forth herein (other than payment for Products),
then such party shall be excused for such delay and such delay will not
make the party liable in damages to the other party. The party delayed
shall immediately notify the other party of the reasons for the delay and
its estimated duration (the "FM Notice"), and shall take all steps
necessary to minimize such delay. Upon delivery of the FM Notice the
obligations of the parties under this Agreement shall be suspended until
the earlier of (i) the cessation of the disrupting event or occurrence or
(ii) six calendar months after the delivery of the FM Notice, but no later
than six months and ten days after the date of the disrupting event or
occurrence (the "Disrupted Period").
-19-
As soon as practicable after the delivery of the FM Notice,
the parties shall cooperate to address any problem that may then exist and
to modify this Agreement, or determine new practicable working conditions
and terms, to maintain the relationship of the parties under this
Agreement during the Disrupted Period (the "Interim Agreement").
Should the parties fail to reach an Interim Agreement, either
party may terminate this Agreement after the close of the Disrupted Period
by delivering written notice to the other party (the "FM Termination
Notice"), such termination to take effect immediately upon receipt of the
FM Termination Notice (the "FM Termination Date").
D. Relationship of the Parties. Nothing in this Agreement, nor
anything to be done pursuant to its terms and conditions, is intended to,
nor shall it create a partnership, joint venture or principal-agent
relationship between the parties. This Agreement is intended to establish
a supplier-distributor relationship. The Distributor shall not represent
itself other than as an authorized distributor of the Company and shall
save and hold harmless the Company from damages, losses, indemnities and
liabilities, including cost of litigation arising from or in connection
with any representation not authorized by this Agreement.
E. Specific Performance. Each of the parties acknowledges and
agrees that in the event of any breach under Sections 5.A.(ii), 5.C. or
6.C. the other party or its Affiliates would be damaged irreparably in the
event any of the provisions of this Agreement are not performed in
accordance with their specific terms or otherwise are breached.
Accordingly, each of the parties agrees that the other party or its
Affiliates shall be entitled to an injunction or injunctions to prevent
breaches of such provisions of this Agreement and to enforce specifically
such provisions of this Agreement and the terms and provisions hereof in
any action instituted in any court of the United States or any state
thereof having jurisdiction over the parties and the matter in addition to
any other remedy to which it may be entitled, at law or in equity.
F. Rights and Remedies. The rights and remedies provided each
of the parties herein shall be cumulative and in addition to any other
rights and remedies provided by law or otherwise. Any failure in the
exercise by either party of its rights to terminate this Agreement or to
enforce any provision of this Agreement for any default or violation by
the other party shall not prejudice such party's right of termination or
enforcement for such or any other default or violation.
G. Severability. The parties agree that it is not the
intention of either party to violate any public policy, statutory or
common law and that if any provision herein violates the applicable law of
any jurisdiction where it is unlawful, such part will be severable and
will not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending term
or provision in any other situation or in any other jurisdiction. The
parties agree that with respect to any part of this Agreement which is
held to be unenforceable or void, that they will attempt to renegotiate
such part in a manner consistent with the intention of the parties.
H. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of New York
without giving effect to any choice or conflict of law provision or rule
(whether of the State of New York or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State
of New York.
-20-
I. Arbitration and Jurisdiction.
(i) General. All disputes under this Agreement, all
claims of breach or default hereunder, and all matters relating thereto
shall be determined by arbitration in New York, New York by the majority
decision of three arbitrators (the "Arbitrators"), one of whom shall be
designated by the Company, the second of whom shall be designated by the
Distributor and the third of whom shall be selected by the Arbitrators
appointed by the Company and the Distributor, or in the event of failure
to agree on a third arbitrator by such means, by the American Arbitration
Association. Except as otherwise provided in this Agreement, the
Commercial Arbitration Rules of the American Arbitration Association shall
govern any arbitration under this Agreement. The Arbitrators shall have
full power to award any remedy which they deem appropriate in the
circumstances, including without limitation, damages or specific
performance or other injunctive relief. Any determination by the
Arbitrators shall be enforceable in any court having proper jurisdiction.
All expenses of the arbitration shall be borne in such manner as the
Arbitrators determine.
(ii) Arbitration Schedule. Any arbitration hereunder
shall be conducted in accordance with the following schedule:
(a) The Company or the Distributor may serve on the
other a notice demanding arbitration, which notice shall specify all
claims that it wishes to have resolved through arbitration. This notice
shall include the name of the Arbitrator appointed by the party submitting
the notice.
(b) Within twenty (20) days after receipt of a
notice of claim, the party so served shall serve an answer, which shall
include (if the party has not itself filed a notice and specifications
under subsection A above), the name of the Arbitrator appointed by that
party. All claims and any answers thereto shall be consolidated and
arbitrated together.
(c) Within five (5) business days after both the
Company and the Distributor have received notice of the name of the
Arbitrator appointed by the other, the third Arbitrator will be selected
or his selection committed to the American Arbitration Association in New
York, New York upon the application of either the Distributor or the
Company.
(d) On the request of either the Company or the
Distributor, the Arbitrators shall permit such reasonable discovery as
they deem appropriate, on such terms and within such time as they shall
allow.
(e) All claims and any evidence in support of those
claims shall be submitted to the Arbitrators in such manner as they shall
direct within such time period as they shall determine. The Arbitrators
shall promptly issue a decision resolving all disputes and claims and
awarding such relief as they deem appropriate in the circumstances,
including, if the Arbitrators deem appropriate, an award of attorneys'
fees.
(iii) Jurisdiction. The Parties agree that any judicial
action, suit or proceeding brought against any Party hereto authorized
pursuant to the provisions of this Agreement, or to enforce any decision
of the arbitrators rendered pursuant to this Section 8.I, may be brought
in the Federal District Court of the Southern District of New York, and by
execution and delivery of this Agreement the parties each (i) accepts,
generally and unconditionally, the nonexclusive jurisdiction of such court
and any related appellate court,
-21-
and irrevocably agrees to be bound by any judgment rendered thereby in
connection with this Agreement, (ii) irrevocably waives any objection it
may now or hereafter have as to the venue of any such action, suit or
proceedings brought in such a court on the grounds that such a court is an
inconvenient forum. The Parties each hereby waive its personal service of
process, provided that service of process upon it is made by certified or
registered mail, return receipt requested, at its address specified or
determined in accordance with the provisions of Section 8.K of this
Agreement, and service so made shall be deemed completed on the third
business day after such service is deposited in the mail. Nothing herein
shall affect the right to serve process in any other manner permitted by
law.
J. Entirety of Agreement. This Agreement sets forth the entire
understanding and agreement between the parties herein concerning the
subject matter covered herein, and supersedes and cancels any prior,
contemporaneous, oral or written agreement or representation, if any,
between the parties. This Agreement may be modified only by a subsequent
agreement or undertaking duly executed by the parties.
K. Notices. Any notices or demand required or permitted to be
given hereunder shall be in writing and deemed to be given and received
when mailed as described herein; a notice or demand is deemed to have been
mailed when (i) it has been deposited in the official mail of the country
from which it is being sent, by certified or registered mail, return
receipt requested and mail postage prepaid or (ii) is received, if mailed
otherwise. The following are the addresses of the parties for the purpose
of notice:
If to the Company:
Lumenis Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx Xxxxxxx, Senior Financial Officer - Americas
with a copy to:
Xxxxxxx Xxxxxxx, Esq.
Vice President and General Counsel
Lumenis Inc.
000 Xxxx Xxxxxx (00xx Xxxxx)
Xxx Xxxx, Xxx Xxxx 00000
XXX
If to the Distributor or the Principals:
Eclipse Medical, Ltd.
0000 Xxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
XXX
Attention: Xxxx X'Xxxxx
Any change of address shall be given by written notice.
-22-
[signature page follows immediately]
-23-
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by the duly authorized officers as of the date first written
above.
LUMENIS INC. ECLIPSE MEDICAL, LTD.
By: /s/ Xxxx Xxxxxx By: /s/ O'Brien Holdings, LLC
----------------------------- ---------------------------
Name: Xxxx Xxxxxx Name: /s/Xxxx X'Xxxxx
Title: Chief Operating Officer Title: Manager
For the purposes of signifying agreement to
Sections 5.C. and 6.C. hereof:
/s/ Xxxxxx X. X'Xxxxx
------------------------------------
Xxxxxx X. X'Xxxxx
/s/ Xxxx X'Xxxxx
------------------------------------
Xxxx. O'Brien
/s/ Xxxxx X'Xxxxx
------------------------------------
Xxxxx. O'Brien
O'BRIEN MEDICAL, LTD.
By: XXXXXX HOLDINGS, LLC
By: /s/ Xxxx X'Xxxxx
---------------------------------
Name: Xxxx X'Xxxxx
Title: Manager
O'BRIEN HOLDINGS, LLC
By: /s/ Xxxx X'Xxxxx
---------------------------------
Name: Xxxx X'Xxxxx
Title: Manager
-24-
EXHIBIT A
I. Products. All the Company products and accessories listed in the U.S. Price
List for:
U.S. Aesthetic Laser Products and Accessories
U.S. Aesthetic IPL Products and Accessories
Specifically excluded from the Distributor's appointment are sales and
service of all products sold exclusively through U.S. national distributors, and
sales and service of ophthalmic and surgical products, surgical lasers for
dental applications and all present and future GyneLase products and any future
products for gynecological applications.
II. A. The Distributor Direct Purchases from The Company
The Distributor is responsible for purchasing from the Company and payment
to the Company for all Company products the Distributor resells to its customers
in its assigned territory. The Distributor prices are:
Product: 72% of the Company's retail list prices for such Product.
No additional discounts apply unless approved in advance in writing
by the Company.
Accessories/supplies: 72% of the Company's retail list prices for
such Product accessories and supplies. No additional discounts apply
unless approved in advance in writing by the Company.
Service Spare Parts: Those prices for service parts in the Price
List for service spare parts. No additional discounts apply unless
approved in advance in writing by the Company.
B. The Distributor's customer buys directly from the Company. Should a
customer in the Territory decide to purchase or require purchases directly from
the Company, the following will apply:
a. The Company must quote the customer directly. The
Distributor cannot quote on the Company' behalf. Prices quoted will
be off USA Direct List. In the event of a hospital or government
tender, the Distributor must provide a copy. If a Company quote
leads to a customer sale and subsequent customer payment, then the
Distributor will receive a commission equal to 28% of the sale price
of products and accessories sold to customer and such sales price
(when received) shall be included in gross revenues of the
Distributor for the applicable calendar quarter for the purposes of
Section 7.B of the Distribution Agreement (subject to the netting
provisions thereof). Any discount pricing to
customer will be shared equally between the Distributor and the
Company.
b. The Distributor's customer purchase order payment must be
made out to the Company.
III. Minimum orders. A minimum order value per the Distributor purchase order is
outlined below:
Product: $5,000 USD
Accessories: $ 200 USD
Service Parts: $ 200 USD
The Distributor will pay a $25.00 handling charge for any orders placed
for amounts less than those outlined above.
- 2 -
EXHIBIT B
[Intentionally left blank]
EXHIBIT C
[Intentionally left blank]
EXHIBIT D
[Intentionally left blank]
EXHIBIT E
Win/Loss Report
Order/Lost Business Report
Sales Representative __________________________________ Date __________________
Customer/Prospect, Name:______________________________Institution
Name:______________________________Key Individuals
Address:__________________________________________________
Private Practice |_|
Institution |_|
Product__________________________________Configuration_________________________
Sale Price_________________________
o Demo done Yes |_| No |_|
o Formal presentation done Yes |_| No |_| If so, what?____________________
o Name and title of decision maker________________________________________
o Name and title of major influencer______________________________________
o Number of contacts required to close sale_______________________________
o Will customer purchase future Lumenis products? Yes |_| No |_|
o What was the source of the initial lead?________________________________
o Competition present at initial contact Yes |_| No |_|
o Was there a competitive demo? Yes |_| No |_|
Presentation Yes |_| No |_|
o Competitive product price_______________________________________________
o Competitive product configuration_______________________________________
o Competitive info________________________________________________________
o Reason you won |_| Lost |_| the sale____________________________________
-2-
EXHIBIT F
EXHIBIT G
EXHIBIT H
RELEASE
Reference is made to the Distribution Agreement, dated as of December 31,
2001 (the "Distribution Agreement"), by and among Lumenis Inc. (the "Company")
and Eclipse Medical, Ltd., a Texas limited partnership (the "Distributor") , as
distributor. Capitalized terms used herein and not otherwise defined shall have
the meanings ascribed to such terms in the Distribution Agreement.
NOW THEREFORE:
The Distributor and each of the undersigned Principals and Affiliates of
the Distributor (each a "Distributor Releasor"), on behalf of itself and its
respective parents, affiliates, direct and indirect subsidiaries, directors,
officers, stockholders, heirs, executors, administrators, predecessors,
successors and assigns, fully and unconditionally releases and forever
discharges the Company, together with its direct and indirect parents,
affiliates (including, without limitation, sister corporations), direct and
indirect subsidiaries, successors and assigns and all their present and former
directors, officers, stockholders, employees, representatives, contractors,
consultants, agents, attorneys, heirs, executors and administrators
(collectively, the "Company Releasees") from all actions, causes of action,
suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, extents, executions, claims,
liabilities, and demands whatsoever, in law, admiralty or equity (collectively,
"Claims"), which any Distributor Releasor, any Distributor Releasor's parents,
affiliates, direct and indirect subsidiaries, directors, officers,
stockholders, heirs, executors, administrators, predecessors, successors and
assigns ever had, now have or hereafter can, shall or may have against any
Company Releasee, for, upon, or by reason of any matter, cause or thing
whatsoever from the beginning of time to the Effective Date, including, but not
limited to, (x) any Claims relating to or arising out of any distribution
agreement between the Company or any Company Releasee and the Distributor,
O'Brien Medical, Ltd. ("O'Brien") or any other Distributor Releasor, and (y) any
other business, course of dealing or other relationship between any Distributor
Releasor and any Company Releasee, but excluding claims under or pursuant to the
Distribution Agreement (including, without limitation, for indemnification
pursuant to Section 5.D thereof) or documents executed pursuant thereto; and
The Company ("Company Releasor") on behalf of itself and its parents,
affiliates, direct and indirect subsidiaries, directors, officers, stockholders,
predecessors, successors and assigns, fully and unconditionally releases and
forever discharges the Distributor and each of the undersigned Principals and
Affiliates of the Distributor, together with its direct and indirect parents,
affiliates (including, without limitation, sister corporations), direct and
indirect subsidiaries, heirs, executors, administrators, predecessors,
successors and assigns and all their present and former directors, officers,
stockholders, employees, representatives, contractors, consultants, agents,
attorneys, heirs, executors and administrators (collectively, the "Distributor
Releasees") from all actions, causes of action, suits, debts, dues, sums of
money, accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, damages, judgments,
extents, executions, claims, liabilities, and demands whatsoever, in law,
admiralty or equity (collectively, "Claims"), which the Company Releasor,
-2-
the Company Releasor's parents, affiliates, direct and indirect subsidiaries,
directors, officers, stockholders, predecessors, successors and assigns ever
had, now have or hereafter can, shall or may have against any Distributor
Releasee, for, upon, or by reason of any matter, cause or thing whatsoever from
the beginning of time to the Effective Date, including, but not limited to, (x)
any Claims relating to or arising out of any distribution agreement between the
Company Releasor and Eclipse, O'Brien or any other Distributor Releasee, and (y)
any other business, course of dealing or other relationship between the Company
Releasor and any Distributor Releasee, but excluding Claims under or pursuant to
the Distribution Agreement (including, without limitation, for indemnification
pursuant to Section 5.D thereof) or documents executed pursuant thereto.
Each Distributor Releasor signing this Release warrants that he or it has
the full authority of the Distributor Releasor to sign on behalf of such
Distributor Releasor, and that such Distributor Releasor has not conveyed,
assigned or transferred any Claims which such Distributor Releasor has against
any Company Releasee.
The Company warrants that it has full authority to sign this Release, and
has not conveyed, assigned or transferred any Claims which the Company has
against any Distributor Releasee.
This Release may not be changed orally.
[signature page follows immediately]
-3-
IN WITNESS WHEREOF, each of the undersigned has executed this Release in
his individual capacity or has caused this Release to be executed by its duly
authorized officer as of this 31st day of December, 2001.
ECLIPSE MEDICAL, LTD.
By:_____________________
Name:
Title:
O'BRIEN MEDICAL, LTD.
By: O'BRIEN HOLDINGS, LLC
By:_____________________
Name:
Title:
-----------------------------
Xxxxxx X. X'Xxxxx
-----------------------------
Xxxx X'Xxxxx
-----------------------------
Xxxxx X'Xxxxx
LUMENIS INC.
By:_____________________
Name:
Title:
-4-
EXHIBIT I
LUMENIS INC.
as of December 31, 2001
Eclipse Medical, Ltd.
0000 Xxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Gentlemen:
This will confirm that as of the date hereof we have cancelled on our
books and records an aggregate of $____________ of past receivables due from
Eclipse Medical, Ltd., which receivables are described on Schedule A attached
hereto.
This receivables cancellation confirmation is being delivered pursuant to
Section 8.B of the Distribution Agreement, dated the date hereof, between you
and us.
LUMENIS INC.
By:__________________________
Name:
Title:
SCHEDULE 5.D.(iii)
1. Xxxxxx Xxxxxx, M.D., Austin, TX - Vasculight H.R.
2. Xxxx Xxxxxx, M.D., Dallas, TX - Epilight
3. Ungaro Mancuci, M.D., Beaumont, TX - Epilight
4. Smooth Contours (Mr. Xxxx Xxxxx), Dallas, TX - Epilight
All claims relate to alleged misrepresentations as to product effectiveness and
performance.
-2-
