AMENDED AND RESTATED EXCLUSIVE DISTRIBUTION AGREEMENT
BETWEEN
HEMASURE INC.
AND
COBE LABORATORIES, INC.
Amended and Restated Exclusive Distribution Agreement (this
"Distribution Agreement") dated as of May 3, 1999, between HEMASURE INC., a
corporation organized under the laws of Delaware ("HemaSure"), and COBE
LABORATORIES, INC., a corporation organized under the laws of the State of
Colorado ("COBE").
RECITALS
A. HemaSure manufactures and distributes certain medical products and
supplies, together with parts necessary for repair and replacement and including
all devices now or hereafter manufactured or designed by HemaSure that filter
blood and its components. HemaSure's current Products are identified in the list
attached as Exhibit 1 (collectively, the "Products"), and such list may be
updated with mutual agreement from time to time to reflect additional Products
as described above (the "Product List").
B. HemaSure and COBE BCT, Inc. ("COBE BCT") entered into an Exclusive
Distribution Agreement on August 14, 1998 (the "Former Distribution Agreement")
whereby (1) COBE BCT became the exclusive distributor, and HemaSure became the
exclusive supplier to COBE BCT, in each case, during the term of the Former
Distribution Agreement, for the Products throughout the world except for China
and the United States, for a term commencing on August 14, 1998, and (2)
HemaSure would supply to COBE BCT certain Products to be incorporated into
medical devices manufactured by COBE BCT for sale to Affiliates of COBE BCT and
to third parties (the "COBE Products").
C. The parties hereto desire to amend and restate the Former
Distribution Agreement in its entirety, as provided herein.
D. The parties hereto desire that (1) COBE be the exclusive
distributor, and that HemaSure be the exclusive supplier to COBE, pursuant to
this Distribution Agreement for the Products throughout the Territory (as
defined below) for a term commencing on the date hereof (the "Commencement
Date") and continuing throughout the term of this Distribution Agreement set
forth in Article X hereof and (2) HemaSure supply to COBE and its Affiliates
certain Products to be incorporated into the COBE Products.
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In consideration of these premises and the mutual promises
made herein by the parties to each other, they agree as follows:
ARTICLE 1 - APPOINTMENT
1.1 Except as otherwise specifically provided herein, HemaSure hereby
appoints COBE as its exclusive distributor for the Products with the right to
appoint sub-distributors, in the Territory and for the term of this Distribution
Agreement, and COBE hereby accepts this appointment. In return, COBE appoints
HemaSure as its sole and exclusive supplier of the Products, for the term of
this Distribution Agreement, and HemaSure accepts this appointment. For purposes
of this Distribution Agreement, the "Territory" shall be, subject to the
provisions of Sections 10.7 and 10.8, the entire world. Notwithstanding any
provision of this Distribution Agreement to the contrary, HemaSure shall
maintain the exclusive right to distribute products (including, but not limited
to, the Products) made by HemaSure or its Subsidiaries to the American Red Cross
and its Affiliates solely as end-users (subject to COBE's right to sell OEM (as
defined in Section 3.2) products to the American Red Cross and its Affiliates).
1.2 All Products shall meet specifications set forth in Exhibit 1;
provided, however, that HemaSure, upon thirty (30) days' prior written notice
specifying the nature of and reasons for such changes, shall have the right to
make any changes in the specifications of the Products to the extent necessary
to satisfy regulatory requirements or to avoid a material adverse affect on the
quality or performance of the Products.
1.3 If COBE requests additional Products from HemaSure, or additional
development with respect to a Product, the parties agree to negotiate in good
faith the terms of a development agreement (a "Development Agreement") for the
additional Products or development services. Product development shall be
conducted in accordance with mutually agreed upon plans setting forth the
estimated cost and expense, the proposed specifications for and uses of the
Products and the requirements for and timing of the design, performance, quality
and manufacturability validation, regulatory approval and manufacturing
requirements.
1.4 In connection with any development pursuant to a Development
Agreement, if COBE pays for the complete development of any additional Products
or portions thereof, any improvements to HemaSure's Owned Intellectual Property
resulting therefrom (the "Improvements") shall be COBE's Owned Intellectual
Property, but HemaSure shall have a perpetual, non-exclusive, world-wide,
royalty-free license under such Improvements and Intellectual Property outside
the field of devices that filter blood and its components. If HemaSure's Owned
Intellectual Property existing on the date of any such Development Agreement is
required to practice any such COBE's
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Owned Intellectual Property, COBE shall have a perpetual non-exclusive,
world-wide, royalty-free license under such HemaSure Owned Intellectual Property
for the term of this Distribution Agreement (as such term may be extended),
limited to the field of devices that filter blood and its components.
Additionally, after the term of this Distribution Agreement, the provisions of
Section 10.10 shall apply to any product sales by COBE utilizing such HemaSure
Owned Intellectual Property, and HemaSure shall be entitled to the 12% royalty
contemplated in Section 10.10. Notwithstanding the above, any final Development
Agreement may set forth terms and conditions which are different than those set
forth in this Section 1.4.
1.5 COBE's sole compensation under this Distribution Agreement shall be
the profit it may realize from the resale of the Products.
1.6 If Sections 10.7 and 10.8 become applicable, COBE shall not,
without the written consent of HemaSure: (i) seek customers or establish any
branch or maintain any distribution depot for the Products outside the Territory
or (ii) knowingly sell the Products to any customer for use outside the
Territory.
1.7 COBE shall be fully responsible for the acts and conduct of its
employees, agents, sub-agents and sub-distributors and shall indemnify and hold
HemaSure harmless from all claims, liabilities and damages arising out of any
negligence or misconduct of COBE or its employees, agents, sub-agents or
sub-distributors.
1.8 Neither COBE nor HemaSure shall disclose to any third party any
trade secrets of the other party or any Confidential Information (as such term
is defined in the Confidentiality Agreement) concerning the other party, its
Products or its business. The terms of the Confidentiality Agreement are
incorporated herein by reference thereto in Exhibit 2, as amended in such
Exhibit 2. When this Distribution Agreement terminates, except as otherwise
agreed, each party shall promptly return to the other party all trade secret and
Confidential Information of said other party and shall not disclose or otherwise
use such information for a period of three years after the date of termination.
1.9 The following definitions shall apply to this Distribution
Agreement:
(a) "Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
(b) "Change in Control" means the occurrence of any of the following
events: (i) any Person, other than a trustee or other fiduciary holding
securities under an employee benefit plan of HemaSure or any subsidiary of
HemaSure or any stockholder
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(and such stockholder's affiliates) as of the date hereof and direct transferees
thereof, becomes, after the date hereof, the "beneficial owner" (as defined in
Rule 13d-3 of the Securities Exchange Act of 1934, as amended), directly or
indirectly, of securities of HemaSure representing 50.1% or more of the total
voting power represented by HemaSure's then outstanding securities on a fully
diluted basis that vote generally in the election of directors ("Voting
Securities"); or (ii) the merger or consolidation of HemaSure with any other
corporation, other than a merger or consolidation in which the Voting Securities
of HemaSure outstanding immediately prior thereto continue to represent (either
by remaining outstanding or by being converted into Voting Securities of the
surviving entity) at least a majority of the total voting power of the surviving
entity; or (iii) the sale or transfer (in one transaction or a series of
transactions) of all or substantially all of the assets of HemaSure, other than
to a subsidiary of HemaSure.
(c) "Intellectual Property" of COBE or HemaSure, as the case may be,
means (i) inventions, whether or not patentable, whether or not reduced to
practice, and whether or not yet made the subject of a pending patent
application or applications, (ii) ideas and conceptions of potentially
patentable subject matter, including, without limitation, any patent
disclosures, whether or not reduced to practice and whether or not yet made the
subject of a pending patent application or applications, (iii) national
(including the United States) and multinational statutory invention
registrations, patents, patent registrations and patent applications (including
all reissues, divisions, continuations, continuations-in-part, extensions and
reexaminations) and all rights therein provided by international treaties or
conventions and all improvements to the inventions disclosed in each such
registration, patent or application, (iv) trademarks, service marks, trade
dress, logos, trade names and corporate names, whether or not registered, and
all rights therein provided by international treaties or conventions, (v)
copyrights (registered or otherwise) and registrations and applications for
registration thereof, and all rights therein provided by international treaties
or conventions, (vi) computer software, including, without limitation, source
code, operating systems and specifications, data, data bases, files,
documentation and other materials related thereto, data and documentation, (vii)
trade secrets and confidential, technical and business information (including
ideas, formulas, compositions, inventions, and conceptions of inventions whether
patentable or unpatentable and whether or not reduced to practice), (viii)
whether or not confidential, technology (including know-how and show-how),
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, plans, proposals, technical
data, copyrightable works, financial, marketing and business data, pricing and
cost information, business and marketing plans and customer and supplier lists
and information, (ix) copies and tangible embodiments of all the foregoing, in
whatever form or medium, (x) all rights to obtain and rights to apply for
patents, and to register trademarks and copyrights, and (xi) all rights to xxx
or recover and retain damages and costs and attorneys' fees for present and past
infringement of any of the foregoing.
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(d) "Licensed Intellectual Property" means all Intellectual Property
licensed or sublicensed to COBE or HemaSure, as the case may be, from a third
party.
(e) "Owned Intellectual Property" means all Intellectual Property,
other than the Licensed Intellectual Property, in and to which COBE or HemaSure,
as the case may be, holds, or has a right to hold, any right, title or interest.
(f) "Person" means an individual, corporation, partnership,
association, trust, joint venture, unincorporated organization, other entity or
group (as defined in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended).
ARTICLE 2 - DUTIES OF COBE
During the term of this Distribution Agreement, COBE shall:
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2.1 Use commercially reasonable efforts to market and sell the Products
and develop a profitable market for them in the Territory.
2.2 Maintain and utilize such personnel, organization and facilities as
will be competent and adequate to enable COBE to satisfy its obligations under
this Distribution Agreement.
2.3 At least thirty days before the end of each calendar quarter,
prepare and furnish to HemaSure a proposed annual purchase forecast by month for
the following four calendar quarters, specifying the quantities of the Products
which COBE forecasts will be purchased for delivery during each month of that
year; provided, however, that in no event may HemaSure be required to deliver
quantities of any Product during a month which exceed 110% of the maximum
deliveries of such Product to COBE during any earlier calendar month. All orders
for shipment of Products within 30 days from the order shall be deemed to be
firm and non-cancelable.
2.4 Purchase from HemaSure and at all times maintain the minimum
inventories of Products to provide adequate service and delivery to customers in
the Territory. COBE shall meet the minimum purchase requirement set forth in
Exhibit 3, attached hereto, unless Exhibit 4 shall be applicable pursuant to the
provisions of Sections 10.7 and 10.8 in which case COBE shall meet the minimum
purchase requirements set forth therein, as the same shall be amended from time
to time. In the event that Exhibit 4 is applicable, the parties shall meet at
least three months before the end of each calendar year with respect to the
matters set forth in Exhibit 4 and negotiate in good faith the minimum purchase
requirements for the following calendar year, provided, that if they fail to
agree by the beginning of the year the aggregate
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minimum purchase requirements for all Products during that year shall equal 110%
of such aggregate minimum requirements for the preceding year.
2.5 Advise HemaSure of inquiries which COBE or any Affiliates receive
from potential customers for the Products outside the Territory, if applicable,
and shall use its commercially reasonable efforts to transfer to HemaSure all
customers who are reasonably likely to use the Products outside the Territory,
if applicable.
2.6 Except as otherwise agreed by the parties in writing, obtain all
regulatory approvals, registrations, and listing of Products required (Food and
Drug Administration (the "F.D.A."), C.E., C.S.A., etc.) in the Territory to make
and sell Products incorporated into COBE Products, or certify that such
approvals and registrations have been obtained or are not required, and comply
with all applicable laws, standards, rules and regulations.
2.7 Not modify or alter the Products in any way without the prior
written approval of HemaSure.
2.8 Indemnify and hold harmless HemaSure and its Affiliates and
customers, and their officers, directors, agents and employees, from and against
losses, claims and damages (including reasonable fees and expenses of counsel)
("Losses") as they are incurred, but solely to the extent such Losses arise out
of or are related to any claim by a third party that any Product modifications
or specifications requested by COBE on Products sold by COBE conflict with or
infringe upon Intellectual Property owned or licensed by the third party. An
exception to the above is that COBE will not indemnify and hold harmless
HemaSure and its Affiliates for any additional Losses arising from a
determination of willful infringement.
2.9 Indemnify and hold harmless HemaSure and its Affiliates and
customers, and their officers, directors, agents and employees, from and against
Losses as they are incurred, solely to the extent such Losses arise out of or
are related to any claim by a third party that any Product has caused personal
injury or other loss to the third party, and only to the extent such actual or
alleged personal injury or loss arises from willful misconduct, gross
negligence, failure to follow HemaSure's written instructions, or alterations of
a Product or Products without HemaSure's written approval. COBE shall maintain
product liability insurance with reputable insurers in such amounts and covering
such risks and on such terms and conditions as are in accordance with normal
industry practice.
2.10 In connection with the promotion and marketing of the Products,
(i) make clear in all dealing with customers that it is acting as a distributor
of the Products and not as an agent of HemaSure, (ii) comply with all material
legal requirements with respect to the storage and sale of the Products, (iii)
provide, at the reasonable request
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of HemaSure, copies of its price lists and copies of promotional aids and
literature, (iv) permit HemaSure's representatives to visit during normal
business hours, upon reasonable advance notice, any premises of COBE used in
connection with the sale of the Products, and (v) use only those advertising,
promotional and other selling materials approved by HemaSure (which approval
shall not be unreasonably withheld).
2.11 Provide full traceability of the Products to its customers. COBE
agrees that at all times it will be able to know its customer for each
individual Product lot for all Products delivered by HemaSure to COBE.
2.12 Be responsible (when applicable) for obtaining any necessary
import licenses, or other requisite documents, with respect to the importation
of the Products into the Territory and their resale in the Territory.
2.13 Provide information to HemaSure on Product complaints received. A
complaint is considered to be any oral or written expression of dissatisfaction
with the identity, quality, durability, reliability, safety, effectiveness, or
performance of a product. Any complaint involving injury or death will be
reported immediately to HemaSure. COBE will be responsible for follow-up
communication with the customer.
2.14 Cause its warehouses and distribution networks to be maintained
and operated (i) in a manner that will protect the integrity and quality of the
Products, maintaining safety and efficacy at all times; (ii) to ISO 9000
standards with respect to traceability and complaints; and (iii) to conform to
all national regulatory and other requirements.
2.15 Purchase from HemaSure all of its requirements for Products from
HemaSure and any and all devices and products substantially identical to the
Products for sale in the Territory, or that have uses or intended uses
substantially identical to the Products.
ARTICLE 3 - DUTIES OF HEMASURE
During the term of this Distribution Agreement, HemaSure shall:
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3.1 Manufacture each Product in sufficient quantities to permit timely
delivery of the quantities of the Product provided for in COBE's forecast.
3.2 Package and xxxx the Products under COBE's name, in such manner as
COBE may reasonably direct, provided that Products sold to an original equipment
manufacturer ("OEM") unaffiliated with COBE for incorporation into devices
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manufactured by the OEM may be labeled with HemaSure's trademarks upon
HemaSure's receipt from COBE of its written consent regarding the same.
3.3 Advise COBE of inquiries which HemaSure or its other distributors,
if any, receive from potential customers for the Products within the Territory
and shall use its commercially reasonable efforts to transfer to COBE all
customers for the Products who are located within the Territory.
3.4 Except as otherwise agreed by the parties, obtain all regulatory
approvals, registrations, and listing of Products required (F.D.A., C.E.,
C.S.A., etc.) to sell the Products in the Territory (other than for Products
incorporated into COBE Products), or certify that such approvals and
registrations have been obtained or are not required, and comply with all
applicable laws, standards, rules and regulations.
3.5 Perform any investigations required with respect to Product
complaints and similar events and take necessary corrective action, keeping COBE
informed of such investigations and corrective action. HemaSure will conduct any
field actions which may be necessary, including Product recalls, modifications
and upgrades, as determined by HemaSure in its reasonable discretion. Any
extraordinary costs of conducting a field action, such as replacement of Product
and return of Product, shall be borne by HemaSure.
3.6 Notify COBE at least 90 days in advance of any changes in the
Products.
3.7 Comply with the Good Manufacturing Practices (GMP) regulations of
the F.D.A. and similar requirements of other jurisdictions within the Territory,
making HemaSure's records and documents available and cooperating with COBE
should COBE audit HemaSure for compliance with regulatory requirements.
3.8 Replace all defective Products at HemaSure's expense, including all
reasonable delivery, handling and related costs of the replacement.
3.9 Subject to Article 5, take such commercially reasonable actions as
may be needed in order to protect its rights in HemaSure's Owned Intellectual
Property against infringement, and to maintain its proprietary interest in its
Owned Intellectual Property in full force and effect.
3.10 Indemnify and hold harmless COBE and its Affiliates and customers,
and their officers, directors, agents and employees, from and against Losses as
they are incurred, arising out of or related to any claim by a third party that
any Product conflicts with or infringes upon Intellectual Property owned or
licensed by
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the third party. An exception to the above is that HemaSure will not indemnify
and hold harmless COBE and its Affiliates for any additional Losses arising from
a determination of willful infringement.
3.11 Indemnify and hold harmless COBE and its Affiliates and customers,
and their officers, directors, agents and employees, from and against Losses as
they are incurred, arising out of or related to any claim by a third party that
any Product has caused personal injury or other loss to the third party.
HemaSure shall maintain product liability insurance with reputable insurers in
such amounts and covering such risks and on such terms and conditions as are in
accordance with normal industry practice.
3.12 Warrant the Products to COBE and its customers under its standard
product warranty as set forth in Exhibit 5 hereto; provided, however, that the
representations, warranties and indemnification given by HemaSure herein are
subject to the conditions that HemaSure shall not be under liability in respect
of any defect in the Products:
(i) to the extent such defect arises solely from any
modifications made by COBE or its customers and not
approved by HemaSure in writing, or
(ii) to the extent such defect arises solely from willful
misconduct, gross negligence, failure to follow
HemaSure's written instruction, or alteration of the
Products without HemaSure's approval.
3.13 Have the right to sell Products to other manufacturers (other than
COBE or its Affiliates) to be included in said manufacturer's products to be
sold to end-users.
ARTICLE 4 - TRADEMARKS
4.1 COBE may use HemaSure's names and marks (the "Trademarks") in
advertising, or marketing and information materials, on COBE's letterheads or at
its place of business, to indicate that the Product is manufactured for COBE by
HemaSure (but not that COBE is otherwise associated with HemaSure). COBE may not
otherwise use HemaSure's Trademarks, trade names, or company name in connection
with the promotion or sale of any goods or services, except with HemaSure's
prior written approval. Upon termination of this Distribution Agreement for any
reason, COBE will immediately stop using HemaSure's Trademarks and trade or
company names and will
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stop advertising or otherwise indicating that COBE is a distributor of the
Products. COBE hereby acknowledges that HemaSure has the sole rights to such
trade names, company names and Trademarks.
4.2 COBE shall not:
(i) make any modifications to the Products or their
packaging, except on specific instructions from
local, state or federal authorities (any
modifications for purposes of enhancing the product
sales is to be submitted to HemaSure for approval
and said approval shall not be unreasonably
withheld);
(ii) alter, remove or tamper with any Trademarks, number,
or other means of identification used on or in
relation to the Products;
(iii) use any of the Trademarks in any way which might
prejudice their distinctiveness or validity or the
goodwill of HemaSure;
(iv) use in relation to the Products any trademarks other
than the Trademarks without obtaining the prior
written consent of HemaSure; or
(v) use in the Territory any trademarks or trade names
in any way similar to any Trademark or trade names
of HemaSure or which would be likely to cause
confusion to customers or potential customers;
provided that Section 4.2(i), (ii) and (iv) shall not apply to COBE Products.
4.3 COBE shall, at the expense of HemaSure, take all such reasonable
steps as HemaSure may reasonably require to assist HemaSure in maintaining the
validity and enforceability of the Trademarks of HemaSure during the term of
this Distribution Agreement. COBE shall at the request of HemaSure execute such
registered user agreements or licenses in respect of the use of the Trademarks
in the Territory as HemaSure may reasonably require, provided that the
provisions of any such agreement or license are not more onerous or restrictive
than the provisions of this Distribution Agreement.
4.4 COBE shall promptly notify HemaSure in writing of any actual or
threatened (in writing) infringement in the Territory of any Trademarks of
HemaSure which comes to COBE's actual notice and of any claim by any third party
so coming to its notice that the importation of the Products into the Territory,
or their sale therein, infringes any rights with respect to trademarks of any
other person, and COBE shall at
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the request and expense of HemaSure do all such reasonable things as may be
reasonably required to assist HemaSure in taking or resisting any proceedings in
relation to any such infringement or claim.
4.5 HemaSure may seek to register its Trademarks, trade names and
company names in the Territory, and do whatever it deems desirable to prevent
their unauthorized use by others.
4.6 To the extent necessary to fulfill HemaSure's obligations under
Section 3.2, HemaSure is hereby licensed by COBE to apply COBE's trademarks and
trade names to Products to be sold by COBE. COBE shall at all times have control
of the quality of goods bearing COBE's trademarks and trade names and may reject
any products not meeting COBE's quality requirements. Such quality requirements
shall be comparable to the quality requirements established by COBE for goods
manufactured by COBE. HemaSure may not otherwise use COBE's trademarks, trade
names, or company names in connection with the promotion of sale of any goods or
services, except with COBE's prior written approval. Upon termination of this
Distribution Agreement for any reason, HemaSure will immediately stop using
COBE's trademarks and trade or company names. HemaSure hereby acknowledges that
COBE has the sole rights to such trademarks and trade and company names.
4.7 COBE may seek to register its trademarks and trade and company
names for use in connection with its sale of the Products in the Territory, and
do whatever XXXX xxxxx desirable to prevent their use by others.
ARTICLE 5 - EXPENSES FOR NEW PATENT LITIGATION
5.1 The parties hereby agree to jointly appoint counsel in connection
with any new patent infringement litigation proceeding (including, without
limitation, any declaratory judgment action and specifically the action
commenced on April 5, 1999 against Pall Corporation in the United States
District Court for the District of Colorado and any other related action) and,
to the extent the parties agree on the appointment of counsel, COBE shall pay
all of the expenses incident thereto, including the fees and expenses of such
counsel (even in the event of an unsuccessful action). COBE's obligation to pay
expenses incident to the new patent infringement litigation proceeding does not
include an obligation to pay any damages that may be assessed against HemaSure
and/or COBE or any of their Affiliates in such new proceeding. HemaSure may, at
its own sole expense, appoint its own counsel at any time to advise and
represent HemaSure.
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5.2 Such appointed counsel will represent both COBE and HemaSure. Both
parties will consult and use best efforts to mutually agree on the litigation
strategy and related decisions.
5.3 Either party shall have the right to settle any such patent
infringement litigation on its own behalf. If XXXX xxxxxxx such patent
infringement litigation without the prior written consent of HemaSure, then
HemaSure shall not be obligated to indemnify COBE pursuant to this Distribution
Agreement or to pay any damages or other award that COBE agrees to pay as part
of such a settlement. Either party who settles any such patent infringement
litigation without the prior written consent of the other party shall indemnify
the other non-settling party for any damages, prejudice or adverse effect caused
by such settlement on the non-settling party. With respect to any such
settlement, neither party shall, without the consent of the other party (which
consent shall not be unreasonably withheld), admit that the Product infringes
the intellectual property rights of another or expressly admit that a third
party's patent is valid or enforceable.
5.4 Subject to Section 6.5 below, all rights and obligations of the
parties with respect to the matters described under this Article 5 (other than
with respect to the payment of fees and expenses) shall terminate upon
termination of any portion of this Distribution Agreement.
ARTICLE 6 - CONFIDENTIAL LITIGATION INFORMATION
In addition to each of the parties' rights and obligations pursuant to
the Confidentiality Agreements listed, and incorporated by reference, on Exhibit
2 to this Distribution Agreement, COBE and HemaSure shall each have the
following rights and obligations in connection with the confidential
information:
6.1 It may be necessary during the course of any new patent
infringement litigation for COBE and HemaSure to share litigation confidential
information. For purposes of this Article 6, litigation confidential information
refers to information that a producing party claims in writing to be its trade
secret or other confidential research, development, or commercial information
within the meaning of Rule 26(c)(7) of the Federal Rules of Civil Procedure, as
may be amended from time to time.
6.2 Other than pursuant to a court order or similar order
from a governmental or regulatory authority, the party receiving litigation
confidential information agrees to maintain all such information in confidence,
the receiving party will limit access to the litigation confidential information
on a need-to-know basis, and
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the receiving party agrees not to release the litigation confidential
information outside the company without the prior written approval of the
disclosing party.
6.3 All documents and litigation confidential information remain the
sole property of the disclosing party. The receiving party agrees to return all
documents and any copies to the disclosing party at the disclosing party's
request.
6.4 The obligations of the parties under this Article 6 are in addition
to any other obligations of the parties under this Distribution Agreement and
the Confidentiality Agreements listed, and incorporated by reference, in Exhibit
2 hereto, with respect to Confidential Information.
6.5 Notwithstanding Section 5.4 above, the provisions contained in this
Article 6 shall govern the relationship of the parties with respect to the
exchange of litigation confidential information in the context of any new patent
infringement litigation and shall remain in full force and effect
notwithstanding termination of this Distribution Agreement.
ARTICLE 7 - PRIVILEGED INFORMATION
In addition to each of the parties' rights and obligations pursuant to
the Confidentiality Agreements listed, and incorporated by reference, on Exhibit
2 to this Distribution Agreement, COBE and HemaSure shall each have the
following rights and obligations in connection with the privileged information:
7.1 It may be necessary during the course of any new patent
infringement litigation for COBE and HemaSure to share privileged information.
Privileged information is information that is subject to a claim of
attorney-client privilege or work-product immunity as defined under applicable
law.
7.2 Subject to Section 4 of the Confidentiality Agreement, (a) the
party receiving privileged information agrees to maintain such privilege; (b)
the receiving party will limit access to the privileged information on a
need-to-know basis, and the receiving party agrees not to release the privileged
information beyond its own officers, directors, employees and counsel without
the prior written approval of the disclosing party; and (c) the receiving party
agrees that privileged information will not be used in testimony at trial, at
any motion hearing, and at depositions and will not be offered into evidence at
trial or at any motion hearing without the prior written approval of the
disclosing party.
7.3 The receiving party will not assert waiver or estoppel based upon
its receipt of the privileged information.
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7.4 Notwithstanding Section 5.4 above, the provisions contained in this
Article 7 shall remain in full force and effect notwithstanding termination of
this Distribution Agreement.
ARTICLE 8 - TERMS OF SALES
8.1 Subject to the terms of Exhibit 3 hereto, if applicable, COBE shall
pay the prices determined as specified in Exhibit 1 for the Products. The prices
set forth in Exhibit 1 will remain in effect until December 31, 1999.
Thereafter, HemaSure and COBE shall negotiate annually in good faith to
establish annual price changes to remain in effect for each annual period
following 1999. Unless otherwise agreed, prices for each Product shall increase
or decrease each year by a percentage equal to any percentage increase or
decrease in the standard manufacturing cost for the Product (as determined by
HemaSure in accordance with generally accepted accounting principles and
HemaSure's historical accounting practices) during HemaSure's preceding fiscal
year, provided that in no event shall such percentage change exceed the
percentage change in COBE's average selling price for the Product during the
preceding fiscal year.
8.2 Unless otherwise agreed in writing, all prices for the Products
shall be F.O.B. HemaSure's factory, freight collect, and shall be inclusive of
all taxes, duties and other governmental charges assessed or assessable prior to
passage of title to COBE. Title to the Products and risk of loss shall pass to
COBE on delivery of the Products to the destination specified by COBE in its
purchase orders. Products shall be shipped against COBE purchase orders
specifying shipment dates, transportation requirements and quantities of
Products.
8.3 Unless otherwise agreed in writing, all payments for the Products
shall be made in U.S. dollars, payable within 30 days after delivery, by check
drawn on a U.S. bank.
8.4 The Products will be packaged for shipping in packaging labeled as
provided in Section 3.2, substantially comparable in all other respects to
HemaSure's standard packaging, which shall be appropriate for shipment by the
means/carrier specified by COBE in its purchase orders.
8.5 Other terms of sale shall be as agreed to by the parties.
ARTICLE 9 - TRAINING; MARKETING
9.1 To the extent deemed reasonably necessary by COBE and HemaSure,
HemaSure will provide COBE's service personnel with reasonable technical
15
training for the proper maintenance of the Products, at a mutually agreed upon
location and date. For this purpose, HemaSure will pay for the expenses of its
personnel and, unless the parties have agreed otherwise in advance, COBE shall
bear all expenses of its personnel associated with this training.
9.2 To the extent deemed reasonably necessary by COBE and HemaSure,
HemaSure will provide marketing and sales training and product information to
COBE's sales personnel at a mutually agreed upon location and date. For this
purpose, HemaSure will pay the expenses of its personnel and, unless the parties
have agreed otherwise in advance, COBE shall bear all expenses of its personnel
associated with the training.
9.3 At COBE's reasonable request HemaSure will make technical visits
and presentations to COBE customers, at such times and places as COBE may
reasonably request and subject to the availability of appropriate HemaSure
personnel. COBE will reimburse HemaSure for its reasonable out-of-pocket costs
for such visits and presentations, including per diem charges based on
HemaSure's actual costs for the employees involved. HemaSure may also initiate
such visits and presentations with COBE's prior approval and at the expense of
HemaSure.
9.4 HemaSure shall supply COBE with standard product information in the
English language and such other English language advertising material, sales
literature and instructions as HemaSure and XXXX xxxx appropriate to assist COBE
in the promotion, sale and service of the Products in the Territory. Additional
quantities of such materials may be purchased by COBE at prices quoted by
HemaSure from time to time. Unless otherwise agreed, any other advertising and
promotional expenses shall be paid by COBE. COBE may modify, adapt or reproduce
any such information provided by HemaSure to the extent XXXX xxxxx appropriate
to fulfill its obligations under this Distribution Agreement, subject to the
approval of HemaSure, which will not be withheld unreasonably.
ARTICLE 10 - TERM OF AGREEMENT
10.1 This Distribution Agreement shall become effective as of the
Commencement Date and, unless earlier terminated in accordance with its
provisions, shall remain in effect for a period of five (5) years from the date
of receipt of 510(k) approval from the F.D.A. for the r/LS Leukoreduction Filter
(the "Approval Date"). At any time in the next to last year of a term either
party may give written notice to the other party of its intent to terminate this
Distribution Agreement at the end of the then-current term. If neither party
gives such notice to the other party, this Distribution Agreement shall be
extended automatically for an additional term of three (3) years.
16
10.2 Either party may terminate this Distribution Agreement for a
material breach of this Distribution Agreement by the other party, by notifying
the other party in writing of such breach and, except as otherwise provided in
Sections 10.3, 10.4 and 10.5, allowing sixty (60) days within which to cure the
breach. If the breach is not cured within the sixty (60) day period, the
complaining party may terminate this Distribution Agreement at any time
thereafter by giving written notice of termination to the defaulting party.
Failure to exercise this right of termination in any instance of breach shall
not be a waiver of this right as to any subsequent breach.
10.3 This Distribution Agreement shall terminate automatically, upon
written notice by one party to the other party, without any further notice,
summons or process whatever, if one of the following circumstances occurs:
(a) An event of bankruptcy occurs with respect to the other party; or
(b) Either party ceases to engage in the business or activities which
are the subject of this Distribution Agreement.
10.4 COBE may, at its discretion, terminate this Distribution Agreement
for cause immediately upon written notice if:
(a) HemaSure has failed to supply any Products in quantities greater
than 85% of the minimum amounts forecasted for two of any six consecutive
calendar quarters.
(b) HemaSure violates the provisions of Section 1.1.
10.5 Notwithstanding the foregoing, HemaSure's sole remedy in the event
COBE fails to meet the minimum purchase requirements of (a) Exhibit 3, if
applicable, shall be as set forth under the heading "Consequences of Exceeding
or Failure to Meet Minimum Volume Targets" in Exhibit 3, or (b) Exhibit 4, if
applicable, shall be the remedies set forth in such Exhibit 4; provided, that
with respect to Exhibit 4 COBE may cure any such breach within the sixty (60)
day notice period by ordering sufficient Products to fulfill the minimum for the
quarter during which the sixty (60) day period ends.
10.6 Neither HemaSure nor COBE owns or shall be deemed to own any right
of property in this Distribution Agreement.
10.7 HemaSure shall have the right to terminate this Distribution
Agreement with respect to the United States of America in the event of a Change
in Control of HemaSure, and, in the event of such termination, the definition of
the "Territory" and the minimum volume purchase requirements of COBE shall be
revised
17
as provided in Section 10.8 below. In the event that HemaSure desires to
terminate this Distribution Agreement in the United States of America pursuant
to the preceding sentence, HemaSure shall deliver written notice to COBE setting
forth (i) a description of the Change in Control and (ii) the date the
termination process (as contemplated below) shall commence; provided that in no
event shall the date of the commencement of such termination process be less
than 18 months after the Approval Date. The termination process shall be
completed by, and the date of termination of this Distribution Agreement with
respect to the United States of America pursuant to this Section 10.7 shall be,
the first-year anniversary of the date of commencement of the termination
process (as specified in HemaSure's termination notice to COBE). During the
period of the termination process and prior to the termination date with respect
to the United States of America, (i) HemaSure may, by itself or through other
distributors, distribute or co-distribute Products under its own brand name or
any other brand name (other than COBE's brand names) or no brand name to any
Person, (ii) COBE shall not solicit any new customers for Products, other than
such customers as COBE shall have identified to HemaSure in a written schedule
(which schedule shall consist of customers that COBE is then currently in
negotiations with for the sale of Products) delivered to HemaSure not later than
10 business days after COBE's receipt of such notice of termination, (iii) each
of COBE and HemaSure will use their respective best efforts to facilitate an
orderly transition of COBE's business for the sale of Products in the United
States of America on the date of delivery of such termination notice by HemaSure
and (iv) COBE shall not be bound by the second sentence of Section 1.1 and
Section 2.15 with respect to the United States of America.
10.8 In the event HemaSure exercises its rights under Section 10.7,
upon the effective date of the termination contemplated thereby, (i) the
Territory shall be the entire world other than the United States of America and
(ii) the minimum purchase requirement shall be as set forth on Exhibit 4, not
Exhibit 3.
10.9 In the event of termination of this Distribution Agreement for any
reason, the provisions of Articles 6 and 7 and Sections 1.4, 1.7, 1.8, 2.8, 2.9,
3.8 through 3.12, 10.7 through 10.13 and 13.5 through 13.8 shall nevertheless
remain in effect.
10.10 If this Distribution Agreement expires by its terms, or is
terminated for any reason, including pursuant to Section 10.7, other than
willful default by COBE, COBE shall have and is hereby granted a non-exclusive,
world-wide perpetual license of HemaSure's Owned Intellectual Property (but only
to the extent such Owned Intellectual Property exists and is in effect as of the
date of the termination) to make, have made, use and sell devices for filtration
of blood and its components, for a royalty, as to any Product (but only in the
Territory) and/or COBE Product (on a world-wide basis) incorporating such
HemaSure Owned Intellectual Property, equal to 12% of the most recent net
purchase price paid by COBE to HemaSure for that Product. The
18
indemnification by HemaSure set forth in Section 3.10 of this Distribution
Agreement shall not apply to the activities of COBE done pursuant to a license
granted under this Section 10.10.
10.11 Notwithstanding Section 10.10, above, if termination or
expiration happens solely as a result of COBE's providing HemaSure notice of
termination at the end of the then-current term under Section 10.1 above, then
the COBE license provided for in Section 10.10 will be a limited time period
license for all Products (except those Products used as a component of COBE's
own products, which shall remain a perpetual license), so as to allow a
commercially reasonable market transition by COBE to other suppliers or
distributors.
10.12 Notwithstanding any other provision contained in this
Distribution Agreement, including, without limitation, Section 10.7 of this
Distribution Agreement, upon Termination of this Distribution Agreement for any
reason, in whole or in part, HemaSure shall continue to supply all Products
required by COBE (i) in order to permit COBE to fulfill its obligations under
COBE's then existing third party contracts and (ii) with respect to all of
COBE's existing and future OEM arrangements and products. In the event that
HemaSure should deliver its notice of termination with respect to the United
States of America portion of the Territory pursuant to Section 10.7, COBE shall
not, after receipt of such notification and except as permitted by Section 10.7,
enter into any new contracts for the supply of Products in the United States of
America which would extend beyond the date of the expiration of the termination
process contemplated by Section 10.7.
10.13 Within sixty days following the expiration or termination of this
Distribution Agreement, HemaSure shall repurchase from COBE at the original
purchase price any Products delivered to COBE in the sixty days prior to the
expiration or termination of this Distribution Agreement, which remain in COBE's
inventory and which have remaining shelf life and are in good re-sellable
condition.
ARTICLE 11 - ASSIGNMENT
11.1 HemaSure shall not take any action that would result in the
assignment of this Distribution Agreement, in whole or in part, without the
express written consent of COBE, which consent shall not be unreasonably
withheld or delayed. In addition, subject to the terms of this Distribution
Agreement, including, without limitation, Sections 10.7 and 10.8, HemaSure shall
not sell or transfer, in one transaction or a series of transactions, all or
substantially all of the assets of HemaSure unless the acquiror of such assets
agrees to be bound by the provisions of this Distribution Agreement. This
Distribution Agreement shall not be assignable by COBE without the prior written
consent of HemaSure, which consent shall not be
19
unreasonably withheld or delayed, except that COBE may assign this Distribution
Agreement to an Affiliate and, subject to HemaSure's rights of termination in
Article 10, COBE may assign this Distribution Agreement as a part of the sale of
substantially all of its assets related to its blood filtration products
business.
ARTICLE 12 - LIMIT OF LIABILITY
12.1 The parties shall not be liable for any breach of this
Distribution Agreement resulting from any cause beyond their control including,
without limitation, acts of God, fire, flood, strike, lockout, factory shutdown,
act of civil or military authority, priority request, order of any government or
any department or agency thereof, insurrection, riot, war, embargo, or a party's
inability to obtain labor or materials from its usual sources. Any suspension of
a party's performance by reason of this Section shall be limited to the period
during which the cause of such suspension exists, but shall not affect or extend
the running of the term of this Distribution Agreement.
12.2 HemaSure shall maintain its current comprehensive general and
product liability insurance in effect for the term of this Distribution
Agreement. The insurance shall name COBE on the list of distributors subject to
vendor's coverage. Upon receiving COBE's prior written instruction, HemaSure
shall provide COBE proof of the continued maintenance of the insurance annually.
12.3 COBE assumes all risk and liability for loss, damage or injury to
any person or property arising from repair, alteration, misuse, mishandling, or
negligence in storing or handling, of any Products by COBE, including its agents
and employees. COBE's product liability insurance shall cover Products
incorporated into COBE Products.
ARTICLE 13 - MISCELLANEOUS
13.1 The parties shall comply with all governmental rules and
regulations in force within the Territory relating to this Distribution
Agreement, including without limitation any registration or approval required
for the import and sale of the Products, except where non-compliance would not
have a material adverse effect on either party. HemaSure shall comply with all
governmental rules and regulations to the extent necessary for the performance
of HemaSure's obligations under this Distribution Agreement.
13.2 All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by telecopy or by
registered or certified
20
mail (postage prepaid, return receipt requested) to the respective parties at
the following addresses (or at such other address for a Party as shall be
specified by like notice):
(a) if to COBE:
COBE Laboratories, Inc.
0000 Xxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx
Telecopier: (000) 000-0000
with copies to:
Legal Department
COBE Laboratories, Inc.
0000 Xxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Telecopier: (000) 000-0000
and to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq. and
Xxxxxxx X. Xxxxxxxxxxxx, Esq.
(b) if to HemaSure:
HemaSure Inc.
000 Xxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopier: (000) 000-0000
21
with a copy to:
Battle Xxxxxx LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx, III, Esq.
Telecopier: (000) 000-0000
13.3 The failure of either party to exercise any rights hereunder shall
not be deemed to be a waiver of such right.
13.4 No modification or amendment to this Distribution Agreement
shall be binding unless in writing, duly executed by both parties. In the event
of any inconsistent term or condition of a purchase order, invoice or other
document utilized by the parties in connection with matters contemplated under
this Distribution Agreement, the terms and conditions of this Distribution
Agreement shall be deemed to govern.
13.5 In the event that either party initiates any action under either
Section 13.6 or Section 13.7 of this Distribution Agreement, this Distribution
Agreement shall be governed by and construed under the laws of the State of New
York, without reference to its conflicts of laws provisions.
13.6 If a dispute arises from or relates to this Distribution Agreement
or the breach thereof, whether of law or fact, of any nature whatsoever, and
such dispute cannot be settled through direct discussions between the parties,
the parties agree to endeavor first to settle the dispute in an amicable manner
by mediation administered by the American Arbitration Association under its
Commercial Mediation Rules before resorting to litigation. The parties agree
that the mediator shall be a person who is, or has served as, a senior vice
president of a medical products company for at least five (5) years. Mediation
shall take place in New York, New York. If the dispute cannot be resolved within
60 days of the initiation thereof by either party, either party may initiate
arbitration in accordance with the provisions of Section 13.7 of this
Distribution Agreement.
13.7 All disputes arising under this Distribution Agreement that cannot
be amicably resolved under Section 13.6, shall be settled by binding
arbitration. Judgment upon the award rendered may be entered in any court in the
New York, New York metropolitan area.
(a) Any party requesting arbitration shall serve a written demand for
arbitration on the other party. The demand shall set forth in reasonable detail
a statement of the nature of the dispute, the amount involved and the remedies
sought.
22
No later than twenty (20) calendar days after a demand for arbitration is
served, the parties shall jointly select and appoint a retired judge of the
Courts of the State of New York to act as the arbitrator. In the event that the
parties do not agree on the selection of an arbitrator, the party seeking
arbitration shall apply to the United States District Court for the Southern
District of New York for appointment of a retired judge to serve as arbitrator.
(b) No later than ten (10) calendar days after appointment of an
arbitrator, the parties shall jointly prepare and submit to the arbitrator a set
of rules for the arbitration. In the event that the parties cannot agree on the
rules for the arbitration, the arbitrator shall establish the rules. No later
than ten (10) calendar days after the arbitrator is appointed he shall arrange
for a hearing to commence on a mutually convenient date. The hearing shall
commence no later than one hundred twenty (120) calendar days after the
arbitrator is appointed and shall continue from day to day until completed.
(c) The arbitrator shall issue his or her award in writing no later
than twenty (20) calendar days after the conclusion of the hearing. The
arbitration award shall be final and binding regardless of whether any party
fails or refuses to participate in the arbitration. The arbitrator is empowered
to hear and determine all disputes between the parties hereto concerning the
subject matter of this Distribution Agreement, and the arbitrator may award
money damages (but specifically not punitive damages), injunctive relief,
rescission, restitution, costs, and attorneys' fees. The arbitrator shall not
have the power to amend this Distribution Agreement in any respect.
(d) In the event that any party serves a proper demand for arbitration
under this Distribution Agreement, all parties may pursue discovery in
accordance with the Rules of Civil Procedure of the State of New York, the
provisions of which are incorporated herein by reference, with the following
exceptions: (x) the parties hereto may conduct all discovery, including
depositions for discovery purposes, without leave of the arbitrator; and (y) all
discovery shall be completed no later than the commencement of the arbitration
hearing or one hundred twenty (120) calendar days after the date that a proper
demand for arbitration is served, whichever occurs earlier, unless upon a
showing of good cause the arbitrator extends or shortens that period.
13.8 If any provision of this Distribution Agreement is held by any
Court, or other authority having jurisdiction, to be invalid or unenforceable
under the law applicable thereto, the provision shall be deemed modified or
deleted to the extent necessary to result in compliance with such applicable
legal provision and this Distribution Agreement, as so modified or amended,
shall continue in full force and effect in all other respects.
23
13.9 Any waiver by either party of a breach of any provision of this
Distribution Agreement shall not be considered as a waiver of any subsequent
breach of the same or any other provision.
13.10 As of the date hereof, the Former Distribution Agreement is
amended and restated hereby in its entirety and is no longer in effect, and by
its execution of this Distribution Agreement, each of HemaSure and COBE BCT
agrees that the Former Distribution Agreement is so amended and restated in its
entirety and is no longer in effect.
24
IN WITNESS WHEREOF, the undersigned have executed this Distribution
Agreement as of the date first written above.
COBE LABORATORIES, INC.
By: /s/ Xxxxxx X. Xxxx, Xx.
-------------------------------
Xxxxxx X. Xxxx, Vice President
COBE BCT, INC.
By: /s/ Xxxxxx X. Xxxx, Xx.
-------------------------------
Xxxxxx X. Xxxx, President
HEMASURE INC.
By: /s/ Xxxx X. XxXxxxx, III
-------------------------------
Xxxx X. XxXxxxx III, President
