Amendment No. 3 to Distribution Agreement
Exhibit 10.5
Amendment No. 3 to Distribution Agreement
This Amendment No, 3 to Distribution Agreement (this “Amendment”) is effective
on July 11, 2008 (“Amendment Date”), and is entered into between Inverness
Medical Innovations North America, Inc., a Delaware corporation
(“Inverness”) having a place of business at 00 Xxxxx Xxxxxx Xxxx. Xxxxxxx, Xxxxxxx 00000 (as
successor by assignment from Biosite Corporation effective April 1, 2008), and
Xxxxxx HealthCare, a Division of Xxxxxx Scientific Company, L.L.C.
(“FHC”), having a place of business at 0000 Xxxxxxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxx 00000 and
amends the Distribution Agreement between the parties dated
January 1, 2006 (as amended, the “2006 Distribution
Agreement”).
The
parties mutually agree that the 2006 Distribution Agreement shall be
amended through this Amendment on the terms and conditions below as follows:
1.
Defined Terms. Any defined terms in this Amendment shall have the same meaning
designated in
the 2006 Distribution Agreement unless otherwise expressly provided
herein.
2.
Term of Amendment. The first sentence of Section 6(a) and Section 6(a)(i) shall
be amended and
replaced in their entirety by the following:
This Agreement shall commence on the Effective Date and shall expire on December
31, 2010 (“Initial Term”). Except as otherwise set forth in this Agreement, (i)
unless either party (in such party’s sole discretion) gives to the other party
notice of non-renewal not less than six (6) months prior to the
exploration of the Initial Term, this Agreement shall be automatically extended for a period
of one (1) year following the expiration of the Initial Term (the “First
Extended Term”), and
3. Guaranteed Selling Margin
Rate (“GSMR”). The parties acknowledge and agree that
Section 5(f)(i),5(f)(ii) and 5(f)(iii) shall pe replaced in their entirety with the following:
Beginning on January 1, 2009 and continuing for the remaining duration of the
Initial Term, the-parties acknowledge and agree to the following GSMR for each
Product category as follows:
| Product Category | GSMR | |||
Triage® BNP Test (excluding the BNP
Tests for Xxxxxxx Systems) |
11.0 | % | ||
D-Dimer Products |
11.0 | % | ||
Triage® TOX Drug Screen Products |
10.5 | % | ||
DOA Products (excluding Triage® TOX
Drug Screen Products) |
16.0 | % | ||
Cardiac Products |
5 | % | ||
For the
purpose of determining the applicable GSMR
a “hospital” shall
mean a building or real estate improvement and not a group of affiliated
entities. Both parties agree (that this GSMR section shall apply exclusively to
the Hospital Medical Segment. Both parties acknowledge and agree that the above
categories shall include the sales of calibrations and controls for each
respective testing category.
The parties agree to negotiate in
good faith additional incentive programs
designed to provide FHC with an increased GSMR if specific sales targets are
met for the D-dimer and Triage TOX Drug Screen Products.
4. Direct Distribution of
BNP Tests for Xxxxxxx Systems. As of the Amendment Date and
continuing for the remaining duration of the initial Term, Inverness may promote,
market sell and distribute the BNP Tests far Xxxxxxx Systems (the “ Xxxxxxx BNP”)
directly to customers within the Territory on its own or through an
affiliated entity or subsidiary of Inverness. From the Amendment Date
and for six (6) months thereafter, Inverness and FHC agree to use good faith
commercially reasonable
efforts to transition all Xxxxxxx BNP customers, excluding FHC contracted Xxxxxxx BNP
customers on FHC paperwork (“FHC Contracted Xxxxxxx BNP Customers”), from FHC to
Inverness for direct distribution and Inverness agrees that, during this
transition period, FHC will continue to receive a (GSMR of 11.0% on those Xxxxxxx BNP
accounts that it is still handling. Both parties agree that FHG shall not renew or
extend the term through an amendment, or fail to give notice of non-renewal or
otherwise of any FHC Contracted Xxxxxxx BNP Customer beyond the existing term in effect
as of the Amendment Date, and FHC may continue to promote, market, sell and distribute
Xxxxxxx BNP to FHC Contracted Xxxxxxx BNP Customers until the natural expiration of
their agreements. FHC agrees to take no action which would interfere with Inverness’
direct distribution efforts with Xxxxxxx BNP customers or with Invremess’s efforts to
develop and maintain the reputation of and goodwill with respect to
the Xxxxxxx BNP.
FHC will cease all sales and distribution of Xxxxxxx BNP during the Initial Term as
soon as the transition to Inverness is complete.
5. End
User Sales Performance Criteria If FHC’s aggregate end user sales for existing
Triage®
BNP Products (excluding end user sales of the Xxxxxxx BNP), DOA Products,
Triage® TOX Drug Screen Products and D-Dimer Product lines falls below the Minimum FHC
End User Sales for Co-Exclusivity for the applicable calendar year as identified in the
table below as determined by an end of year calendar review, then Inverness reserves
the right to give 180 days notice of its intention to terminate
FHC’s co-exclusive
distributor status following such annual review. If Inverness elects to terminate
FHC’s co-exclusivity under this clause and if Inverness subsequently elects to appoint
an additional distributor for the Products other than Inverness itself or its
affiliates, then Inverness agrees that any such distributor’s GSMR for the Products
shall not exceed the GSMR received by FHC in the 2006 Distribution Agreement for as
long as FHC’s purchases of the Products are equal to or superior than those made
by any such additional distributor. Whether or not the distributor status
of FHC is exclusive or co-exclusive, both parties acknowledge and agree that the
Non-Compete provision in Section 3(b) shall be effective without modification (unless
the parties mutually agree to an amendment) for as long as the 2006 Distribution
Agreement is in effect.
| Minimum FHC End User Sales for | ||||
| Calendar Year | Co-Exclusivity | |||
2009 |
$124,500,000 | |||
2010
|
$114,100,000 | |||
If FHC’s aggregate end user sales for existing Triage® BNP Products (excluding end
user sales of the Xxxxxxx BNP), DOA Products, Triage® TOX Drug Screen Products and
D-Dimer Product lines falls below the Minimum FHC End User Sales for Inverness
Termination for the applicable calendar year as identified in the table below and as
determined by an end of year calendar review, then Inverness reserves the right to
give 180 days notice of its intention to terminate the 2006 Distribution Agreement
following such annual review.
| Minimum FHC End User Sales For | ||||
| Calendar Year | Inverness Termination | |||
2009 |
$121,600,000 | |||
2010 |
$108,900,000 | |||
2
Inverness agrees that should it enter into any
new GPO contract for the Products, then the minimum
sales levels defined above shall be reduced in proportion by any price discounts to products that
Inverness has elected to provide in any such contract.
6.
Limitation of Liability. Under no circumstances shall either party be liable to the other for
indirect or consequential damages, including lost profits, in
connection with this Amendment.
7. GSMR for “Uniquely New Products” and “Improved Products” Inverness and FHC acknowledge
and agree that the GSMR for Uniquely New Products and Improved Products shall be negotiated in good
faith between the parties at least thirty (30) days prior to the commercial release of any Uniquely New
Product or Improved Products. Inverness and FHC agree to delete any reference to “Increased Margin
Products” in the 2006 Distribution Agreement.
8.
Miscellaneous. Except as otherwise expressly modified by this
Amendment, the 2006 Distribution
Agreement shall remain in full force and effect in accordance with its existing terms. This Amendment
may be executed in two or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument. In witness of their agreement to the
foregoing terms, the authorized representatives of each party have executed this Amendment effective as of
the Amendment Date.
INVERNESS MEDICAL INNOVATIONS |
||
NORTH AMERICA, INC.
|
Xxxxxx Healthcare, a | |
| division of Xxxxxx Scientific | ||
| Company, L.L.C. | ||
By  Title President 11 July 2008 |
By  Title President 11 July 2008 |
|
By  Title Senior Vice President |
