1
EXHIBIT 10.10
[CONFIDENTIAL INFORMATION REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND HAVE BEEN FILED SEPARATELY WITH THE COMMISSION]
DISTRIBUTION AGREEMENT
THIS AGREEMENT, made and entered into on this 11th day of
November 1991, by and between BIOSITE DIAGNOSTICS INCORPORATED, 00000 Xxxxxxx
Xxxxxx, Xxxxx X, Xxx Xxxxx, XX 00000, a corporation organized under the laws of
the State of Delaware (hereinafter referred to as "Supplier"), and XXXXXX
XXXXXXXX SCIENTIFIC, INC., 0000 Xxxxxxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxx 00000, a
corporation organized under the laws of the State of Delaware (hereinafter
referred to as "CMS"),
W I T N E S S E T H:
Whereas Supplier desires to sell and market its Product (as
defined below), and CMS desires to purchase Supplier's Product for resale to
customers; and
Whereas the parties desire to enter into a distributorship
agreement governing the terms of their relationship:
N o w, T h e r e f o r e, in consideration of the respective
covenants of the parties herein set forth, the parties hereto agree as follows:
1. Products.
(a) The product covered by this Agreement is the TRIAGE(TM) 7
Panel for Abused Drugs manufactured by or for Supplier (the "Product"), which
includes tests for the following drugs: PCP (Phencyclidine); THC (Marijuana);
Cocaine; Amphetamines/methamphetamines; Opiates; Benzodiazepenes; and
Barbiturates.
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(b) During the term of this Agreement, Supplier shall make
available to CMS any improved or updated versions of the Product under the same
terms and conditions (other than price) as set forth herein.
(c) Supplier intends to bring to market during the term of
this Agreement additional manual, visual, rapid diagnostic methods for drug of
abuse testing which are similar or related to the Product, including, but not
limited to, proposed tests for the following abused drugs: Fentanyl; Methadone;
6AM; Cotinine; LSD; and Propoxyphene (hereinafter referred to as the "Related
Products"). The Related Products may be separate tests or combinations thereof.
Supplier shall offer to CMS in writing the right to distribute in the Territory
(as hereinafter defined) for the remainder of the term of this Agreement any
Related Products developed by Supplier during the term of this Agreement on
terms and conditions (other than price, dollar figures and quantities)
substantially similar to those set forth herein, provided that CMS has met the
minimum sales requirements, if any, with respect to the Product set forth in
Section 6(c) hereof for the six-month period prior to Supplier's announcement of
any such Related Product (such minimums shall be calculated on a pro rata basis
if the six-month period prior to the availability of such Related Product
overlaps two six-month periods set forth in Section 6(c) hereof and shall be
adjusted downward on a unit per unit basis if CMS's minimum sales requirements,
if any, are reduced in accordance with Section 5(a) and/or 6(e) hereof).
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Supplier shall include the specific terms and conditions (including the proposed
price, dollar figures and quantities) with respect to the Related Products in
its written offer to CMS. CMS shall accept distribution rights with respect to
Related Products, if at all, in writing, within sixty (60) days of receipt of
Supplier's offer; during this sixty (60) day period, both parties shall act in
good faith to attempt to reach an agreement. In the event CMS elects not to
exercise such right within such period, Supplier may not grant exclusive
distribution rights for such Related Products to third parties on terms more
favorable, when considered in their entirety, than those made available by
Supplier to CMS. Nothing contained herein shall be construed as obligating
Supplier to bring to market any Related Products, during the term of this
Agreement or otherwise.
(d) In addition to Related Products, Supplier agrees to offer
to CMS in writing the first right of refusal to distribute in the Territory (as
defined below) during the remaining term of this Agreement any new products
intended for use in diagnostic testing not referred to in Section 1(c) hereof
which are marketed by Supplier under Supplier's trademark or tradename alone
during the term of this Agreement (hereinafter referred to as the "Unrelated
Products"), provided that CMS has met the minimum sales requirements, if any,
with respect to the Product set forth in Section 6(c) hereof for the six-month
period prior to Supplier's announcement of any such Unrelated Product (such
minimums shall be calculated on a pro rata basis if the six-month period prior
to the availability of such Unrelated Product overlaps two six-month periods
set forth in Section 6(c) hereof and shall be adjusted downward on a unit per
unit basis if CMS's minimum sales requirements, if any, are reduced in
accordance with Section 6(e) hereof or reduced in accordance with Section 5(a)
hereof). It is understood and agreed that Unrelated Products for which CMS has
rights of first offer under this Section 1(d) shall not include any product
which is marketed under the trademark or tradename of any third party or which
marketed under both trademarks or tradenames of a third party and Supplier,
jointly. Upon notification by Supplier of its intent to market any Unrelated
Product, CMS and Supplier will negotiate in good faith for sixty (60) days in
an effort to agree upon the terms and conditions for an exclusive
distributorship agreement in the Territory for Unrelated Products. Nothing
contained herein shall obligate Supplier to offer CMS the right to distribute
Unrelated Products on the same or substantially similar terms as contained in
this Agreement. During the negotiation period referred to above, CMS and
Supplier will discuss whether the definition of the Territory for any Unrelated
Product should be revised for greater precision and to establish appropriate
market segments to be reserved to Supplier. In the event that CMS and Supplier
are unable to reach an agreement regarding the distribution of any Unrelated
Product during the negotiation period referred to above, Supplier may not grant
exclusive distribution rights for such Unrelated Product to third parties on
terms more favorable, when considered in their entirety, than those made
available by Supplier to CMS. Nothing contained herein shall be construed as
obligating Supplier to bring to market any Unrelated Products, during the term
of this Agreement or otherwise.
(e) During the first twelve (12) months following the date of
first Product shipment, Supplier shall promptly credit against the purchase
price of future orders by CMS (or, in the event of termination of this Agreement
during such period, refund to CMS within thirty (30) days of the termination
date) the percentage of the purchase price set forth below of any Product Kit
(as hereinafter defined) purchased by CMS whose shelf life expires prior to sale
by CMS within the time period set forth below, calculated from the date of
completion of the Kit, which is the date the Kit's expiration date is stamped on
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the outside of each completed Kit (the "Completion Date"), provided that CMS has
promptly returned such Product Kits to Supplier, freight prepaid:
Credit Due to CMS
Product Shelf Life from Supplier
------------------ -----------------
[CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION]
For purposes of the foregoing table, the product shelf life of a Kit shall be
deemed to be reduced one day for each day beyond 5 days from the Completion Date
that the Kit is first made ready for shipment by Supplier. Supplier shall give
CMS written notification of when Kits are available for shipment. Beginning in
month 13 following the date of first Product shipment Supplier shall promptly
credit against the purchase price of future orders by CMS (or, in the event of
termination of this Agreement during such period, refund to CMS within thirty
(30) days of the termination date), the percentage of the purchase price set
forth below of any Product Kits purchased by CMS whose shelf life expires prior
to sale by CMS within the time period set forth below, calculated from the
Completion Date of the Kit, provided that CMS has promptly returned such Product
Kits to Supplier, freight prepaid:
Credit Due to CMS
Product Shelf Life from Supplier
------------------ -----------------
[CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION]
For purposes of the foregoing table, the product shelf life of a Kit shall be
deemed to be reduced one day for each day beyond 5 days from the Completion Date
that the Kit is first made ready
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for shipment by Supplier. Supplier shall give CMS written notification of when
Kits are available for shipment. Supplier shall keep accurate records of the
Completion Dates of Kits by lot number and expiration date, and shall provide
such information to CMS upon written request.
(f) Supplier's obligation to provide credit for any Product
Kits described in Section 1(e) shall be limited as follows: (i) during the first
12 months following the date of first Product shipment, unlimited; (ii) during
the second year following the date of first product shipment, credit will be
limited for each lot shipped to CMS to a number of Kits not to exceed 12% of the
number of Kits in such lot; and (iii) during the third year following the date
of first Product shipment and each year thereafter, credit will be limited for
each lot shipped to CMS to a number of Kits not to exceed 10% of the number of
Kits in such lot. CMS agrees to use good faith commercial efforts appropriate
for the handling of a perishable product on a first-in-first-out basis in its
handling of Product inventories in each location where Product is inventoried.
(g) Supplier agrees to and shall provide required Material
Safety Data Sheets for any Product containing hazardous chemicals as required by
federal, state or local law.
2. Grant of Distributorship.
(a) Upon the terms and subject to the conditions hereinafter
set forth, Supplier hereby appoints CMS, and CMS accepts appointment, as the
exclusive distributor of the Product in the Territory during the term of this
Agreement. Supplier
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reserves no right to sell and distribute the Product in the Territory; however,
Supplier does reserve the right to sell and distribute the Product outside of
the Territory, as set forth below.
(b) The territory in which CMS has the rights described in
Section 2(a) hereof to distribute the Product (the "Territory") shall be limited
to the "Medical Segment" in the United States and its territories. The "Medical
Segment" is defined as and limited to: hospitals (including government,
university, military and psychiatric hospitals); reference labs; drug
rehabilitation centers that are part of a hospital facility; health maintenance
organizations; xxxxxxx xxxxxxxxxx centers; and physician group practices of
forty (40) or more physicians. Nothing herein shall be deemed to prohibit
Supplier from distributing (but not selling) the Product within the Territory
only for purposes of pre-market clinical testing or evaluation of the Product or
testing of Product improvements or enhancements prior to market introduction.
(c) The Territory shall not include, and CMS shall not be
permitted to sell the Product in, any areas or to any market segment not
described in Section 2(b) above without the prior written consent of Supplier,
which consent may be withheld at Supplier's sole discretion. CMS shall take
reasonable steps to limit the likelihood that CMS's customers in the Territory
do not purchase Product for resale in the Reserved Market Segment (as
hereinafter defined). All areas and market segments not included in the
definition of the Territory shall be hereinafter referred to as the "Reserved
Market Segments." Supplier shall retain all rights to sell (either directly or
through others) the Product in the Reserved Market Segments. Supplier shall not
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be permitted to sell the Product in the Medical Segment and shall take
reasonable steps to limit the likelihood that Supplier's customers in the
Reserved Market Segments do not purchase Product for resale into the Territory.
Specifically included in the Reserved Market Segments, and specifically excluded
from the Territory, are all market segments in countries outside of the United
States and its territories and the following customer groups in the United
States and its territories: free-standing drug rehabilitation centers; prisons
and prison hospitals; physician practices of less than forty (40) physicians;
probation and parole programs; public and private sector workplace testing;
industrial laboratories; non-hospital military on-site testing programs (i.e.,
ADCO, [this space intentionally left blank] recruiting centers); high school,
college, university and professional sports programs; government agencies;
public carriers; and veterinary clinics and animal testing. The customer groups
listed for the Reserved Market Segments are for reference only and shall not be
considered exhaustive.
3. Conduct of CMS.
(a) CMS shall use its good faith commercial efforts and
facilities to promote, market, distribute and sell the Product and to take no
action which would interfere with Supplier's efforts to develop and maintain the
reputation of and goodwill with respect to the Product within the Territory
during the term of this Agreement. CMS shall provide full-page advertising in
its primary product catalogue(s), excluding the 1992/1993 edition, and CMS shall
permit Supplier access to its sales representatives for the purpose of providing
training of CMS's sales representatives in the demonstration and use of the
Product on such dates and in such locations as may be mutually acceptable to the
parties. CMS shall provide Supplier with samples of any Product advertising and
sales literature prior to printing and distribution, and Supplier shall have the
right to
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approve the Product advertisement(s), which approval shall not be unreasonably
withheld or delayed. CMS shall use its good faith commercial efforts to inform
customers and potential customers of the availability and desirability of the
Product; to handle promptly all inquiries, quotations, correspondence and
orders; and to assist customers in the proper use of the Product and the
referral of customers to Supplier for the solution of technical application
problems.
(b) CMS shall not market, advertise, distribute or sell any
products that are directly competitive with any of Supplier's products as to
which CMS enjoys exclusive distribution rights, except that CMS shall have the
right to continue to deal in competitive products which CMS markets, advertises
or sells as of the date any product of Supplier to which CMS will enjoy
exclusive distribution rights shall become subject to the terms and conditions
of this Agreement. For purposes of this Agreement, "directly competitive"
products shall be defined as manual, visual, rapid methods for drugs of abuse
testing.
(c) CMS shall make purchases of the Product hereunder by
submitting firm purchase orders to Supplier. Notwithstanding anything to the
contrary contained herein, CMS's first order shall be made in the following
manner: CMS's first order for the Product shall be submitted to Supplier no
later than sixty (60) days after Supplier's Food and Drug Administration
(hereinafter referred to as "FDA") submission of a 510(k) premarket notification
to market the Product. Supplier shall give prompt notice to CMS of such FDA
submission. This first purchase order shall be for thirty thousand (30,000)
Product units. This order
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shall be paid in full by CMS at the time Supplier ships and invoices the first
mutually agreed allotment of Product ordered by CMS under such order which
shipment shall not occur unless and until FDA marketing clearance has been
obtained. If FDA marketing clearance for the Product is not obtained or
Supplier's pre-market clinical testing of the Product, as described in Section
2(b), above, is not satisfactorily completed within one hundred twenty (120)
days after the execution of this Agreement, the parties agree to renegotiate in
good faith CMS's first order, pricing and minimums, if any. If the parties are
unable to agree on such terms within thirty (30) days following the 120th day,
this Agreement shall terminate without liability to either party. CMS's first
purchase order shall be deemed null and void and of no force or effect if FDA
marketing clearance or Supplier's pre-market clinical testing of the Product, as
described in Section 2(b), above, is not satisfactorily completed within one
hundred twenty (120) days after the execution of this Agreement.
(d) CMS shall provide Supplier, on a monthly basis, with a
written forecast of CMS's estimated purchase requirements for each month in the
ensuing six-month period. In the first twelve (12) months following the date of
first Product shipment, such forecasts shall be non-binding estimates.
Thereafter, forecast quantities for the first and second month of each forecast
period shall be binding, subject however to a variance of plus or minus ten
percent (10%). Supplier shall use its good faith commercial efforts to sell such
quantities to CMS.
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(e) CMS may return, for full credit or replacement, any
Product for which CMS is required to give a customer credit or replacement
Product due to a defect or deficiency in the Product, provided that CMS first
obtains from Supplier a returned goods authorization which shall not be
unreasonably withheld or delayed by Supplier.
(f) Supplier shall review and advise CMS on compliance with
all FDA requirements regarding the Product contained in CMS's advertising and
sales literature.
(g) CMS hereby represents and warrants that neither CMS nor
its agents or employees will make any representations or claims with respect to
the Product which are not authorized in writing by Supplier. Subject to the
provisions of Section 6(h) hereof, CMS agrees to and shall indemnify Supplier
against, and hold Supplier harmless from, all claims, actions, costs, expenses
and damages (including without limitation reasonable attorneys' fees and
expenses) arising out of: (i) representations or claims by CMS with respect to
the Product which are not authorized by Supplier; (ii) CMS's negligent or wilful
act or omission in connection with the sale, marketing, promotion or
distribution of the Product; or (iii) any claim or failure by CMS to comply with
governmental regulatory requirements relating to the Product which are
applicable to distributors of products; provided, that in each case Supplier
gives CMS prompt notice of any such claim, permits CMS to assume sole control of
the defense thereof and provides all reasonable assistance in connection with
the defense of such claim. Supplier shall have
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the right to retain its own counsel and to participate in such defense, with the
fees and expenses to be paid by CMS, if representation of Supplier by counsel
retained by CMS would be inappropriate due to actual differing interests between
Supplier and CMS or any other party represented by such counsel in such
proceeding. The provisions of this Section shall survive termination of this
Agreement.
(h) Each shipment from Supplier shall contain numbers
identifying the manufacturing lot or lots for control purposes. CMS shall keep
accurate records that will enable CMS to determine the Product lots received by
specific customers of the Product. CMS shall make such information available to
Supplier in the event of a Product recall or Product corrective action requested
by Supplier or required by any governmental agency. CMS shall provide Supplier
with sales information (including, but not limited to, customer reports 260,
280, 385, 385A and 385B, or any equivalent reports) free of charge by the
thirtieth (30th) of each month during the term of this Agreement for the prior
month's sales. Any and all such information referred to in this Section 3(h) may
be used by Supplier for market analysis and in the course of its performance
under this Agreement and for no other purpose, subject to the provisions of
Section 9 of this Agreement.
(i) CMS shall comply with Supplier's instructions regarding
the storage and handling of the Product, and except as
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otherwise provided in this Agreement, CMS shall be solely responsible for the
cost thereof.
(j) At Supplier's request, CMS shall submit to Supplier such
other reports, free of charge, as are customarily provided by CMS to suppliers
similarly situated with Supplier.
(k) Both parties shall keep accurate records sufficient to
permit verification of sales data for the Product. Upon written request and upon
reasonable notice during regular business hours, each party shall permit an
independent certified public accountant or other acceptable representative of
the requesting party to inspect such records in order to verify any sales or
recall information reasonably required by the provisions of this Agreement,
provided that only one such inspection annually shall be permitted and the
parties shall not be required to keep such records for longer than five (5)
years.
(l) CMS shall obtain and maintain in effect during the term of
this Agreement product liability insurance with policy limits of not less than
three million dollars ($3,000,000) covering the products sold by CMS, including,
but not necessarily limited to, the Product. CMS shall provide Supplier with a
Certificate of Insurance (and all renewals or replacements thereof) with respect
to such insurance promptly following Supplier's written request therefor.
(m) In entering into this Agreement, Supplier has relied upon
CMS's representations as to its present organization
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and personnel. CMS shall promptly advise Supplier of any changes in CMS's
organization or personnel which may materially, adversely affect CMS's ability
to perform under this Agreement, as well as any material changes affecting
ownership or control of CMS; provided, however, that nothing contained in this
Section 3(m) shall obligate CMS to maintain its organization, personnel,
ownership or control as presently constituted and that such disclosure shall not
be required for a period not to exceed one month where to do so would violate
any obligation of confidentiality to which CMS may be subject.
4. Conduct of Supplier.
(a) Supplier shall ship promptly, but in any event not later
than sixty (60) days from receipt of order, CMS's orders for the Product, f.o.b.
Supplier's facility in San Diego, California (at which point title and risk of
loss shall pass from Supplier to CMS), freight and insurance prepaid, to CMS's
warehouse or to such other CMS location(s) as CMS may designate, subject to the
provisions of Section 11 hereof. Supplier shall cooperate with CMS in arranging
drop shipments of Product to customers on a case by case basis. Delivery dates
for the first purchase order under this Agreement shall be staggered during a
six-month period following such order as reasonably agreed upon in advance in
writing by the parties.
(b) Subject to the provisions of Section 5(a) hereof, Supplier
shall give at least sixty (60) days' prior written notice of any increase in
price of Products and will honor CMS's
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existing purchase orders at the prices in effect immediately prior to the
effective date of each price increase.
(c) Supplier shall notify CMS immediately in writing should
Supplier become aware of any defect or condition which may render the Product in
violation of any statute or regulation, or which in any way materially alters
the specifications or quality of the Product.
(d) Supplier shall provide to CMS's sales personnel, at CMS's
premises or such other location as the parties may agree, such training in the
demonstration and use of the Product as may be reasonably requested by CMS, and
for such training purposes shall make available at Supplier's expense, all
necessary instructors, training material and the Product for demonstration. CMS
shall provide transportation and lodging expenses for CMS personnel for the
training of CMS representatives by Supplier.
(e) Supplier shall provide technical support to CMS's sales
personnel and customers and promptly provide to CMS such additional technical
information developed or acquired by Supplier from time to time as may
reasonably be expected to be of assistance to CMS in fulfilling its obligations
hereunder. Supplier will provide, at its own expense, a toll free long distance
telephone service for technical support for CMS customers and sales
representatives.
(f) Supplier shall provide, at its expense, reasonable
quantities of such instruction manuals and point of sale literature as may from
time to time be requested by CMS for
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use in connection with the distribution of the Product. Subject to CMS's and
Supplier's prior written approval, the CMS name will be incorporated in
Supplier's advertising and literature intended for distribution in the Territory
by CMS sales representatives. If requested to do so by CMS, Supplier shall
furnish CMS with suitable copy and photographs for use by CMS in cataloging the
Product.
(g) During the period that CMS has the exclusive right to
distribute the Product in the Territory under this Agreement, Supplier shall
provide CMS upon request with a specified number of Product Kits (as hereinafter
defined) to be used in connection with the promotion, marketing, distribution
and sale of the Product. A "Kit" consists of twenty-five (25) Product units. For
months 1 through 12 of this Agreement, CMS may purchase the number of evaluation
Kits specified below for a charge of one hundred twenty-five dollars ($125) per
Kit. Such amounts paid for evaluation Kits will be credited by Supplier for
purchases by CMS in months 25 through 36 of this Agreement, pro rata on a
monthly basis. Supplier will provide the specified number of evaluation Kits in
months 13 through 36 of this Agreement and thereafter, at no charge to CMS.
Maximum
Aggregate Kits
Month Kits Per Month
----- --------- ---------
[CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION]
Such evaluation Kits may not be sold by CMS and shall be marked by Supplier with
the following legend: "FOR EVALUATION PURPOSES
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* Months 1 and 2, 250 Kits each; month 3, 100 Kits; Month 4, 75 Kits; months 5,
6, 7, 8 and 9, 50 Kits each; months 10, 11 and 12, 25 Kits each.
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ONLY - NOT FOR RESALE." Upon termination or nonrenewal of this Agreement, CMS
shall return all or any part of such unused demonstration Product to Supplier in
substantially the same condition as received and Supplier shall, within thirty
(30) days of termination or non-renewal, refund to CMS the cost of same and
additionally pay CMS the return freight therefor. Supplier shall not be required
to provide credit under Section 1(e) hereof for expired evaluation Kits.
(h) Any Products owned by CMS and rendered unsalable, in CMS's
reasonable commercial judgment, due to a change in any Product specification,
discontinuation or elimination by Supplier of any Product from its product
offering, release by Supplier of any materially improved or updated version of
any Product, or any other material change in the Product outside of CMS's
control shall be repurchased from CMS by Supplier within thirty (30) days
following CMS's request therefor at the price paid for such Product(s) by CMS.
Supplier shall additionally pay for return freight and related transportation
and insurance charges for all such Products. Supplier's release of a Product
which has a longer shelf life shall not be deemed a material improvement under
this Section 4(h).
(i) Supplier shall promptly provide CMS with leads concerning
prospective purchasers of the Product within the Territory in a format to be
mutually agreed upon between the parties.
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5. Price and Payment Terms.
(a) Supplier shall charge CMS [CONFIDENTIAL MATERIAL REDACTED
AND FILED SEPARATELY WITH THE COMMISSION] for each Product unit ordered by CMS
during the twelve (12) months from the date of first shipment of Product by
Supplier to CMS pursuant to Section 3(c) hereof. After the first anniversary of
Supplier's first shipment of the Product to CMS, such price(s) shall be subject
to change on sixty (60) days' prior written notice; provided, however, that for
each price increase, the minimum number of Product units CMS is required to
purchase, if any, under Section 6(c) for the balance of the six-month period in
which the price increase occurs and all remaining six-month periods shall be
decreased by the same percentage as the percentage by which the increased price
exceeds the prior price. Supplier shall establish a manufacturer's suggested
list price for each Product in the Territory and CMS's discount off the
manufacturer's suggested list price for the Products in the Territory shall in
no event be less than [CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH
THE COMMISSION].
(b) Other than with respect to CMS's first order, which is to
be paid for in full upon initial shipment, payments by CMS to Supplier for the
Product purchased shall be due as follows: months 1 through 9 - within 15 days
of invoice by Supplier; months 10 through 24 - within 30 days of invoice by
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Supplier; after month 24 - within 45 days of invoice.
(c) Except as otherwise provided in this Agreement, CMS shall
be entitled to resell the Product on such terms as it may, in its sole
discretion, determine, including, without limitation, price, returns, credit and
discounts.
(d) Supplier represents and warrants that the price and terms
pursuant to which the Products are and will be sold to CMS pursuant to this
Agreement shall be no less favorable than those made available to the Supplier's
most favored distributors in the United States for comparable product
quantities.
6. Term and Termination.
(a) The term of this Agreement shall be for a period of three
(3) years from the date of first shipment to CMS by Supplier of the Product,
pursuant to Section 3(c) hereof, unless terminated sooner as provided herein or
extended as provided below. Notwithstanding the foregoing, the term of this
Agreement shall not exceed five (5) years from the date of first shipment of
Product to CMS by Supplier unless agreed to in writing by the parties, or as
otherwise provided in Section 17(c) hereof.
(b) The Agreement term may be extended at the option of CMS:
(i) for one (1) year if at the end of the original three-year term CMS has
purchased an aggregate of one million four hundred ninety-three thousand
(1,493,000) or
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more Product units, net of any credits for expired products under Section 1(e)
(calculated on an equivalent-unit basis); and (ii) for one (1) additional year
if CMS purchases one million eighty-two thousand (1,082,000) or more Product
units, net of any credits under Section 1(e) (calculated on an equivalent units
basis), during the first one-year extension of this Agreement; provided,
however, that the number of Product units CMS must purchase to extend the term
of this Agreement shall be reduced on a unit per unit basis if CMS's minimum
purchase requirements, if any, are reduced in accordance with Section 6(e)
hereof and/or in accordance with Section 5(a) hereof.
(c) This Agreement shall terminate for cause, without
liability to either party, immediately if either party (i) files a voluntary
petition in bankruptcy or is adjudged a bankrupt in any involuntary proceeding,
(ii) is generally unable to pay its debts as they become due, (iii) has a
receiver or judicial trustee or custodian appointed for it, or (iv) fails to
cure any material breach in the provisions of this Agreement within thirty (30)
days after receipt of written notice of such breach. Supplier may also terminate
this Agreement for cause if CMS has not paid any invoice of Supplier outstanding
for more than sixty (60) days, other than an invoice which has been reasonably
disputed in good faith and provided that the undisputed portion of such invoice
has been paid. Furthermore, this Agreement may
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be terminated for cause by Supplier if CMS fails to purchase the following
minimum Product units (excluding evaluation Kits) in each of the six-month
periods indicated, net of any credits under Section 1(e) (calculated on an
equivalent units basis) for such periods:
Year of Six-Month
Agreement* Period Units
---------- --------- -----
1 1 30,000
2 50,000
2 3 213,000**
4 190,000
3 5 247,000
6 336,000
4 7 371,000
8 402,000
5 9 436,000
10 473,000
In the event CMS fails to purchase the specified minimum Product units in any
six-month period, Supplier may give CMS written notice of its intent to
terminate this Agreement within sixty (60) days' after the end of such six-month
period, and, thereafter, Supplier may terminate this Agreement on sixty (60)
days' written notice. In lieu of termination for cause, Supplier may, at its
option, do one or more of the following: (i) offer to make CMS a nonexclusive
distributor of the Product; (ii) offer to modify the geographical description of
the Territory; or (iii) offer to modify the definition of the Medical Segment.
Supplier shall give CMS notice of Supplier's desire to exercise one or more of
such options within sixty (60) days after the end of the relevant six-month
period, with such proposed modification to become effective, if accepted by CMS,
sixty (60) days after the notice is delivered or mailed in accordance with
Section 12 of this Agreement. The remedies provided for in this section shall be
Supplier's sole and
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* From date of first Product shipment, written notice of which shall promptly be
provided to CMS by Supplier.
** Any excess units purchased over the minimums for the first and second
six-month periods will be applied toward the minimum purchases for the
six-month period.
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exclusive remedies for CMS's failure to purchase the required minimum number of
Product units. Notwithstanding the foregoing, if CMS is unable to purchase the
required minimum number of Product units, if any, during any specific six-month
period due solely to an act or omission of Supplier, such failure shall not
constitute grounds for termination with cause pursuant to this Section with
respect to such six-month period. For the purposes of this Section 6(c), Product
shall be deemed purchased when a firm purchase order has been received by
Supplier for delivery of Product within sixty (60) days (six (6) months in the
case of CMS's first order).
(d) Supplier may also terminate this Agreement during the Agreement
term without cause if, upon termination, Supplier pays CMS a one-time payment
(the "Buy-out Amount") of [CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY
WITH THE COMMISSION] of the balance of unrealized sales on CMS's renewal
purchase requirements during the remainder of the original term of this
Agreement or CMS's last effective minimum purchase requirements (prior to any
elimination of such requirements pursuant to Section 17(c)) during the
then-current extension term, as the case may be. The buyout in each of Year 4
and Year 5, if applicable, shall be calculated on [CONFIDENTIAL MATERIAL
REDACTED AND FILED SEPARATELY WITH THE COMMISSION]. In the event CMS's minimum
purchase requirements are eliminated pursuant to Section 17(c), the Maximum
Buy-out Amount for the fourth and fifth year of this Agreement shall be
calculated on the last minimum purchase requirement in effect prior to the
termination of such minimum purchase requirements, subject to the provisions of
Section 17(d).
[CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION]
Unit price is to be based on the weighted average sales price for Product units
sold by CMS in the prior six-month period. In these examples, a sales price of
[CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION] per
Product unit was used. The Maximum Buy-out Amount at any time during Years 1
through 3 will be calculated similarly, using the aggregate renewal purchase
level for those three years.
Supplier shall only have the right to exercise the buyout option during Years 1
through 3 of this Agreement if there is a merger, reorganization, change of
control or sale of all or substantially all of the stock or assets of Supplier.
The buyout in Years 1 through 3 will be calculated as follows:
[CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION]
In the event that the Agreement is automatically extended under Section 17(c)
for a term of seven (7) years from the date of first shipment of Product to CMS,
the Maximum Buy-out Amount for a termination without cause by Supplier during
Years 6 or 7 would be calculated based upon a percentage of the difference
between [CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE
COMMISSION] of the sales in Years 5 or 6, respectively, and the actual sales in
Years 6 or 7, as the case may be. Assuming the prior year's sales of Product are
$40,000,000, the Buy-out Amount in Year 6 or 7, as the case may be, would be
calculated as follows:
[CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION]
Except as provided in Sections 1(e), 6(f) and 4(g), payment of any sums
calculated under this Section 6(d) shall constitute CMS's sole and exclusive
remedy in the event Supplier terminates this Agreement without cause.
(e) In the event that CMS is unable to meet its minimum purchase
requirements for any six-month period due to the failure of Supplier to deliver
the quantities of the Product required to meet such minimum levels, CMS's
obligation to meet such minimum will be deemed to have been met. In the event
that CMS is unable to meet its minimum purchase requirements for two consecutive
six-month periods due to Supplier's failure to deliver the quantities of Product
units required to meet such minimums, Supplier agrees to enter good faith
negotiations to establish new minimum purchase requirements that Supplier has
the ability to supply. In the event Supplier and CMS are unable to agree on new
minimum purchase requirements, the new levels will be the lower of that stated
in Section 6(c) above or the number of Product units Supplier is actually able
to supply for
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each period. Supplier's inability to meet minimum sales requirements in the
exercise of good faith commercial efforts or due to an event of force majeure
shall not be deemed to be a breach of this Agreement. In the event that Supplier
fails to deliver the quantities of Product units required by CMS to meet the
minimum purchase requirements for three consecutive six month periods for
whatever reason(s), then CMS may terminate this Agreement by giving Supplier
written notice of such termination, effective 60 days after the date notice is
delivered or mailed in accordance with Section 12. Such termination shall be
without liability to either party, except as provided in Sections 1(e), 4(g) and
6(f) hereof.
(f) Upon termination without cause by Supplier under Section 6(d) hereof
or non-renewal by Supplier or upon termination by CMS with cause or pursuant to
Section 6(e) hereof, Supplier shall repurchase, and CMS agrees to sell Supplier
at CMS's cost, CMS's unsold inventory of Products and remaining samples of
Products, the latter being repurchased pursuant to the provisions of Section
4(g), F.O.B. CMS's warehouse(s); provided, however, that Supplier shall not be
obligated to repurchase expired Product, unless otherwise required pursuant to
the provisions of Section 1(e) and 1(f) hereof. Upon termination by Supplier
with cause, Supplier may, at its option, repurchase, and CMS agrees to sell at
CMS's cost, CMS's salable inventory of the Product and any remaining Product
samples.
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(g) The rights and duties of each party under Sections 1(e), 3(e),
3(g), 4(g), 6(f), 7, 8, 9, 10, 14, 15 and 19 of this Agreement and Supplier's
obligations under the Continuing Guaranty as referred to in Section 10(a)
hereof, shall survive and be enforceable in accordance with their terms.
(h) IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY
CONTINGENT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES OF THE OTHER PARTY, OR ANY LOSS
OF PROFITS OR REVENUE OF THE OTHER PARTY, WHETHER ARISING IN CONTRACT, TORT
(INCLUDING NEGLIGENCE), WARRANTY, STRICT LIABILITY OR OTHERWISE.
7. Trademarks.
(a) All Product units sold by Supplier to CMS will bear one or
more of the trademarks or trade names (including, but not limited to, the name
Triage(TM)) relating to the Product (collectively, the "Supplier Marks"), and
CMS shall not alter, remove or modify the Supplier Marks, nor affix any other
trademark to the Product, without the prior written consent of Supplier. CMS
shall not utilize any of the Supplier Marks in connection with any promotional
brochures or advertising materials relating to the Product without the prior
written consent of Supplier. Supplier's consent to the use of the Supplier Marks
shall be conditioned upon such brochure or advertising materials clearly
indicating Supplier's ownership of the Supplier Marks.
(b) All Product units purchased by CMS hereunder shall be
marketed by it in the original packages under the original labels provided by
Supplier, and CMS shall make no
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modifications, or alterations to such Product units or labels; provided,
however, that CMS may affix labels or other indices which serve to identify CMS
as a distributor of the Product, so long as they do not cover and are not
inconsistent with any of Supplier's Product labels or markings.
(c) Nothing in this Agreement shall be construed as granting
CMS any license or interest in the Supplier Marks, and CMS acknowledges that it
has been advised by Supplier of Supplier's claim of ownership of the Supplier
Marks. CMS agrees that it will do nothing inconsistent with such ownership and
that all use of the Supplier Marks will inure to the benefit of and be on behalf
of Supplier. Specifically, CMS agrees that: it will not challenge the validity
of, or Supplier's ownership of, any of the Supplier Marks; it will not take any
action that is inconsistent with, or may impair, Supplier's right, title and
interest to the Supplier Marks; it will not represent to any third party that it
has any ownership interest in the Supplier Marks; it will not adopt any
trademarks that are confusingly or deceptively similar to the Supplier Marks;
and it will, at Supplier's sole cost and expense, execute and deliver to
Supplier any and all documents which Supplier may request to confirm in Supplier
all right, title and interest in the Supplier Marks.
(d) CMS shall make no statement to the press relating or
referring to the Product without the prior written approval of Supplier.
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(e) CMS shall promptly notify Supplier in writing of any
challenges to the validity, infringement on or unauthorized use of any of the
Supplier Marks, actual or threatened, that may come to CMS's attention. CMS
shall, at Supplier's request, provide Supplier with all reasonable assistance in
initiating and prosecuting any legal action against any infringer of any of the
Supplier Marks, it being understood that Supplier will assume all expenses in
connection with such protection.
(f) Supplier recognizes that CMS is the owner of the
trademarks and trade names denoting CMS or CMS products, which it may elect to
use in the promotion and sale of the Product, and that Supplier has no right or
interest in such trademarks or trade names; provided, however, that except as
otherwise set forth in Section 7(b) hereof, no CMS labels, package inserts or
other material shall accompany the Product without the approval of Supplier.
(g) Upon termination of this Agreement, CMS shall continue to
be entitled to utilize the Supplier Marks on the terms agreed to previously by
the parties in connection with CMS's promotion, marketing, distribution and sale
of Product units remaining in CMS's inventory and not repurchased by Supplier.
Thereafter, CMS shall terminate all use of Supplier Marks, and shall at
Supplier's request and at Supplier's expense, destroy or return to Supplier all
literature and other advertising and promotional materials bearing the Supplier
Marks. In the event of termination or expiration of this Agreement, CMS agrees
to cooperate with Supplier and to execute
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any and all documents requested by Supplier for the purpose of cancelling any
registered user or other rights with respect to Supplier's name and the Supplier
Marks that CMS may have acquired in operating hereunder, or, at Supplier's
election, in transferring such rights to Supplier or its designee. CMS also
agrees to cooperate with Supplier in transferring any appropriate rights in
connection with the Supplier Marks to Supplier and/or Supplier's designee, at
Supplier's sole cost and expense, if Supplier desires to sell or have sold
products in the Territory (other than the Products), other than by CMS.
8. Copyrights.
(a) CMS hereby acknowledges that Supplier may claim copyright
protection with respect to its package inserts and other supporting materials
which it includes with each of the Product units, and CMS further acknowledges
the validity of Supplier's right to claim the copyright protection to such
materials. CMS further acknowledges that Supplier has advised CMS that it has
the sole and exclusive right to claim the copyright protection with respect to
all of its package inserts and other supporting materials included with the
Product, and CMS shall take no action which is in any way inconsistent with
Supplier's claim of copyright protection that it expects to make with respect to
such materials.
(b) In order to protect against infringement of Supplier's
copyright through unauthorized reproduction or duplication of its copyrighted
materials, such materials included with the Product units sold by Supplier to
CMS shall
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bear appropriate copyright markings. Nothing contained in this Section 8 shall
prohibit CMS from copying and distributing to its sales representatives Product
advertising, literature and other materials prepared by or on behalf of Supplier
for the purpose of fulfilling CMS's obligations under this Agreement.
(c) CMS shall immediately notify Supplier in writing of any
infringements, whether within or without the Territory, of any of Supplier's
copyrights which come to the attention of CMS. CMS shall, at Supplier's request,
provide Supplier with all reasonable assistance in initiating and prosecuting
any legal action against any infringer of Supplier's copyrights within the
Territory; provided, however, that all costs incurred in connection with any
such copyright infringement action shall be borne solely by Supplier.
9. Trade Secrets and Confidential Information.
(a) CMS may receive various trade secrets of Supplier and
information of a confidential nature, including but not limited to specific
technical information concerning the Product. CMS agrees that it will not
disclose to anyone, directly or indirectly, any of such trade secrets or other
confidential information (including but not limited to marketing plans and
programs, market research information and sales data) or use such information
other than as reasonably required in the course of its performance under this
Agreement, or as required by law, provided that CMS shall give Supplier
reasonable notice of any such required disclosure and shall give Supplier an
opportunity to object to any such disclosure. CMS shall, at
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Supplier's option, return such information to Supplier or destroy all such data
having physical form and all copies thereof. The obligations set forth in this
Section 9(a) shall survive any termination of this Agreement for a period of
three (3) years.
(b) Supplier may receive various trade secrets of CMS and
information of a confidential nature, including, but not limited to the names of
CMS's customers and sales data. Supplier agrees that it will not disclose to
anyone, directly or indirectly, any of such trade secrets or other confidential
information or use such information other than as reasonably required in the
course of its performance under this Agreement, or as required by law, provided
that Supplier shall give CMS reasonable notice of any such required disclosure
and shall give CMS an opportunity to object to any such disclosure. Supplier
shall, at CMS's option, return such information to CMS or destroy all such data
having physical form and all copies thereof. The obligations set forth in this
Section 9(b) shall survive any termination of this Agreement for a period of
three (3) years.
(c) Notwithstanding any provision set forth in this Section 9
to the contrary, the parties' obligations regarding confidential information as
set forth herein shall not apply to the extent that: (i) the confidential
information, or any relevant part of it, can be shown to be in the public domain
prior to the date of this Agreement; (ii) the confidential information, or any
relevant part of it, becomes part of the
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public domain, other than by some unauthorized act or omission, after the date
hereof; (iii) the confidential information, or any relevant part of it, is
disclosed to such party by a third party who has the right to make such
disclosure; (iv) permission to disclose the confidential information, or any
relevant part of it, or to make use of same, is obtained from the non-
disclosing party by the disclosing party; or (v) the information is developed
independently of the confidential information by the other party based on
written records maintained in the ordinary course.
10. Supplier's Warranties; Disclaimer of Warranties.
(a) Supplier agrees that it shall execute and warrants that it
shall abide by the terms of CMS's Continuing Guaranty, a copy of which is
attached hereto as Schedule A and which guaranty is incorporated herein by
reference. The terms and provisions of the Continuing Guaranty shall survive the
termination of this Agreement. Prior to the first shipment of Product to CMS
Supplier shall provide CMS with certificates of insurance which meet the
requirements of paragraph D of the Continuing Guaranty. Supplier's insurance
carriers shall at all times during the term of this Agreement be rated by Best's
as B+ or superior. Supplier is not aware after due inquiry of any circumstance
which would prevent the issuance of such policy.
(b) In addition to the warranties of Supplier set forth in
this Agreement and in the Continuing Guaranty, Supplier warrants that each of
the Products will conform to the specifications set forth in Product literature
prepared by or on
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behalf of Supplier and that the Products will comply and be manufactured,
packaged, sterilized (if applicable), labeled and shipped in compliance with all
applicable federal, state and local laws, order, regulations and standards.
(c) Supplier and CMS shall extend to customers only the
Product Warranty embodied in Exhibit B hereto; provided that Supplier may modify
such Product Warranty with CMS's consent, which consent shall not be
unreasonably withheld. Supplier shall not modify or amend the warranty during
the term of this Agreement without providing CMS with sixty (60) days' prior
written notice. Supplier warrants and represents that the Products will perform
in accordance with Supplier's warranty.
(d) Except for the Product warranty which is described in
Section 10(c) hereof, SUPPLIER MAKES NO WARRANTIES TO CUSTOMERS AND CMS SHALL
NOT MAKE ANY OTHER WARRANTIES TO CUSTOMERS AS TO THE MERCHANTABILITY OR FITNESS
OF THE PRODUCT FOR A PARTICULAR USE.
11. Force Majeure. The obligations of either party to perform
under this Agreement shall be excused during each period of delay caused by such
matters as strikes, shortages of power or raw material, government orders or
acts of God, which are reasonably beyond the control of the party obligated to
perform. The affected party shall make best efforts to remedy the effects of
such force majeure. Any force majeure event shall not excuse performance by the
party but shall delay performance, unless such force majeure continues for a
period in excess of ninety
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(90) days. In such event, the party seeking performance may cancel its
obligations hereunder.
12. Notices. Any notice required by this Agreement shall be
deemed to have been duly given when delivered personally or by messenger, or
when mailed by registered or certified mail, return receipt requested, postage
prepaid, or when received via telecopy, telex or other electronic transmission,
with confirmation of receipt, in all cases addressed to the party for whom
intended at its address set forth below:
If to
Supplier: Biosite Diagnostics Incorporated
00000 Xxxxxxx Xxxxxx, Xxxxx X
Xxx Xxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attn: Xx. Xxx Xxxxxxxxxxxx
with a
copy to: Pillsbury Madison & Sutro
000 Xxxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attn: Xxxxxx X. Xxxxxx, Xx., Esq.
If to CMS: Xxxxxx Xxxxxxxx Scientific, Inc.
0000 Xxxxxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attn: Xx. Xxxx Xxxxxxx
with a
copy to: Xxxxx X. Xxxxxx, Esq.*
0000 Xxxxxxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
or such other address as provided in writing in the manner provided by this
Section.
--------
* Notification of Completion Dates under Section 1(e) shall
not be required to be made to Xxxxx X. Xxxxxx.
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13. Entire Agreement. This Agreement, including Schedules,
constitutes the entire Agreement between the parties relating to the subject
matter hereof and supersedes all prior agreements and understandings, whether
written or oral, between the parties with respect to such subject matter. In
ordering and delivery of the Product, the parties may employ their standard
forms, but nothing in those forms shall be construed to modify or amend the
terms of this Agreement.
14. Attorneys' Fees. In the event any claim or counterclaim is
asserted or any action is commenced to enforce any of the rights or obligations
of the parties under this Agreement, the prevailing party shall be entitled to
collect from the other party, as part of the judgment rendered with respect to
such claim or action, reasonable attorneys' fees, expenses and court costs.
15. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD
TO CALIFORNIA CHOICE OF LAW PROVISIONS.
16. Compliance With Applicable Laws. In connection with the
sale of the Product hereunder, Supplier and CMS shall comply with all applicable
laws, regulations and orders of governmental bodies having jurisdiction in
respect of activities contemplated by or covered under this Agreement, including
without limitation, obtaining all necessary permits, licenses and regulations.
CMS shall cooperate fully with Supplier, at Supplier's sole cost and expense, in
connection with securing
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and maintaining any governmental registration or other governmental permits
required with respect to marketing the Product in the Territory and CMS will
notify Supplier of any local laws affecting the Product which may come to its
attention.
17. Assignments.
(a) Subject to section 17(b) below, neither party shall assign
or transfer this Agreement, by operation of law or otherwise, in whole or in
part without the prior written consent of the other party in each and every
instance, which consent may not be unreasonably withheld. If either party wishes
to assign or otherwise transfer this Agreement, as aforesaid, in each instance
the party seeking to assign or otherwise transfer this Agreement shall submit to
the other party for such party's review and approval as soon as practicable such
information as the other party may reasonably request concerning the assignee or
transferee and the party from which consent is sought shall have thirty (30)
days following receipt of the fully responsive materials in which to review the
same and approve or reject the assignment or transfer. In any event in which the
party from which consent is sought reasonably rejects the assignment or
transfer, this Agreement shall terminate one hundred eighty (180) days following
the date on which the rejection is received by the party seeking to assign or
transfer. The parties shall make best efforts to promptly and amicably wind up
all outstanding matters concerning the subject matter of this Agreement.
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(b) Notwithstanding (a) above, a merger, reorganization, or
the sale or transfer of all or substantially all of the stock of Supplier or the
assets of Supplier to which this Agreement relates (an "Acquisition") shall not
be deemed an assignment or transfer of this Agreement to the successor to
Biosite Diagnostics Incorporated under this Agreement by virtue of such
Acquisition (the "Successor") requiring CMS's consent; provided that Supplier
shall provide CMS with prompt notice of any such Acquisition and CMS may object
to such Acquisition within 30 days of receipt of such notice on the basis that:
(i) if the Acquisition is a sale of assets, the Successor does not expressly and
unconditionally assume Supplier's obligations under this Agreement, or if the
Acquisition is by sale of stock or by merger and Supplier or other Successor, as
the case may be, expressly repudiates this Agreement or if CMS does not receive,
within thirty days of CMS's prompt request under this Section 17(b), an express
and unconditional continuance or assumption of this Agreement by Supplier or
other Successor, as the case may be; (ii) the Successor shall have a
consolidated net worth, determined in accordance with generally accepted
accounting principles applied on a basis consistent with the most recent
financial statements of the Successor of less than the consolidated net worth of
the Supplier immediately prior to the effectiveness of such transaction,
satisfaction of this requirement to be set forth in reasonable detail in an
officers' certificate delivered to CMS at the time that Supplier gives notice of
such assignment or transfer; (iii) immediately after
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giving effect to such transaction a condition or event shall exist which
constitutes a breach of the Agreement, and such condition or event continues
thirty days after the Successor has received notice of such breach from CMS;
(iv) the Successor is Boehringer-Mannheim or Xxxxxx Laboratories, Inc., or any
of their respective subsidiaries, divisions or affiliates; or (v) the Successor
is Xxxxxx International, Inc. or any of its subsidiaries, divisions or
affiliates. In the event CMS gives Supplier such notice of objection in writing,
the provisions of subparagraphs (c)and (d) hereof shall apply, as applicable.
(c) If CMS gives notice of its objection to an Acquisition on
the basis of (b)(iv) above: (i) this Agreement shall automatically be extended
for a term of seven (7) years from the date of first shipment of Product to CMS;
and (ii) the provisions of paragraph 6(c) which cover and relate to CMS's
obligation to purchase any minimum number of Product units during any year of
this Agreement, or portion thereof, shall no longer apply. In the event of any
such seven year extension, all other provisions of this Agreement will remain in
full force and effect.
(d) Notwithstanding the foregoing, in the event that CMS
provides notice of its objection to an Acquisition on the basis of (b)(i), (ii),
(iii) or (v) above, the Agreement will continue in full force and effect,
provided that CMS shall have
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the right terminate this Agreement by giving notice of termination within 30
days of the closing of such transaction, in which case this Agreement shall
terminate 180 days from the date of the closing of such transaction and Supplier
(or Biosite Diagnostics Incorporated in any Acquisition in which Biosite is not
the Successor) shall be obligated to pay CMS the applicable Buy-out Amount under
Section 6(d) hereof; provided that if CMS provides notice of its objection to an
Acquisition on the basis of (b)(v) hereof and the Acquisition occurs during the
first three years following the first shipment of the Products to CMS under this
Agreement, the Buy-out Amount shall be the lesser of (i) an amount equal to
[CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION] less
[CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION] of
the aggregate actual sales of CMS during such period, or (ii) the amount
computed under Section 6(d) hereof.
18. Amendments. No amendment or modification of the terms of
this Agreement shall be binding on either party unless reduced to writing and
signed by an authorized officer of the party to be bound.
19. Existing Obligations. Supplier represents and warrants
that the terms of this Agreement do not violate any existing obligations or
contracts of Supplier. Supplier shall defend, indemnify and hold harmless CMS
from and against any and all claims, demands, liabilities and causes of action
that are hereafter made or brought against CMS that allege any such violation.
20. Relationship of the Parties.
(a) For the purposes of this Agreement, CMS and Supplier are
deemed to be independent contractors and not the agent or employee of the other.
Neither CMS nor Supplier shall
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37
have the authority to make any statements, representations or commitments of any
kind, or take any action, which shall be binding on the other, except as
provided for herein or authorized in writing by the party to be bound.
(b) This Agreement does not grant any license from Supplier to
CMS or from CMS to Supplier except as expressly provided herein.
21. Successors and Permitted Assigns. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns.
22. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original for all purposes.
23. Approvals and Consents. Each of the parties represents to
the other that all necessary approvals of any third persons, the granting of
which are necessary for the consummation of the transactions contemplated
hereby, or for preventing the termination of any right, privilege, license or
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agreement or any right granted hereunder have been received by both parties to
this Agreement.
24. Miscellaneous. Any payment obligation under this Agreement
which shall be due from Supplier to CMS and for which no date of payment is
specified in this Agreement shall be payable on the thirtieth (30th) day
following the day on which the event occurs which triggers Supplier's obligation
to make any such payment.
IN WITNESS WHEREOF, the parties have, by their duly authorized
officers, executed this Agreement on the date first set forth above.
BIOSITE DIAGNOSTICS INCORPORATED
By /s/ Xxx X. Xxxxxxxxxxxx
----------------------------
Title President
-------------------------
Date November 11, 1991
--------------------------
XXXXXX XXXXXXXX SCIENTIFIC, INC.
By /s/ Xxxxx Xxxx
----------------------------
Title Senior Vice President,
-------------------------
Sales and Marketing
-------------------------
Date November 8, 1991
--------------------------
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EXHIBIT A
CONTINUING GUARANTY
A. BIOSITE DIAGNOSTICS INCORPORATED (hereinafter referred to as
"Seller"), having its principal office and place of business at 00000
XXXXXXX XXXXXX, XXXXX X, XXX XXXXX, XXXXXXXXXX 00000, hereby
guarantees that all Products (including their packaging, labeling and
shipping) comprising each shipment or other delivery hereinafter made
by Seller (hereinafter referred to as "Products") to or on the order
of Xxxxxx Xxxxxxxx Scientific, Inc., a Delaware corporation, having
its principal place of business at 0000 Xxxxxxxx Xxxxxxxx Xxxxx,
Xxxxxxx, Xxxxx 00000, or to any of its divisions, subsidiaries or its
affiliate, Markson Science, Inc., or any of their customers
(hereinafter collectively referred to as "CMS"), are as of the date of
such shipment or delivery, not in violation of any applicable federal,
state or local laws, nor any regulations, rules declarations,
interpretations and orders issued thereunder, INCLUDING, WITHOUT
LIMITATION, THOSE SET FORTH ON THE ATTACHED SCHEDULE 1 HERETO, and
that the Products are merchantable and fit for their intended
purpose(s).
B. With respect to Products that are privately labeled for CMS, Seller
agrees to make no change in such Products or the CMS artwork on the
label, labeling or packaging relating thereto without first obtaining
the express written consent of CMS. Seller recognizes that CMS is the
owner of the trademarks and trade names connoting CMS which it may
elect to use in the promotion and sale of the Products and that Seller
has no right or interest in such trademarks or trade names.
C. Seller hereby agrees that it will reimburse CMS for any costs and
expenses incurred by CMS associated with any product corrective action
relating to the Products requested by Seller or required by any
governmental entity.
D. Seller agrees to procure and maintain product liability insurance with
respect to the Products (Broad Form Vendors' Endorsement) and
contractual liability coverage relating to this Guaranty, naming CMS,
as defined above, as an additional insured, with minimum limits in
each case of $3,000,000 covering the products sold by Seller which
includes, but is not necessarily limited to, the Products. Seller
shall, ON OR BEFORE DELIVERY OF SUCH PRODUCTS, furnish to CMS a
certificate of insurance evidencing the foregoing coverages and limits
and referencing the provisions of this Guaranty. The insurance shall
not be cancelled or changed without providing CMS within ten (10) days
prior written notice.
E. Subject to the provisions of Section 6(h) of the Distribution
Agreement between the parties dated November 11, 1991, Seller agrees
to and shall indemnify and hold harmless CMS (and with respect to
Subparagraph E.(i) below, CMS's customers) from any and all claims,
actions, costs, expenses and damages, including reasonable attorney's
fees and expenses arising out of: (i) any actual or alleged patent,
trademark or copyright infringement in the use, sale advertising or
packaging of the Products; (ii) any breach of the warranties or
guarantees set forth in this Guaranty or in the Distribution Agreement
between the parties dated November 11, 1991; (iii) the sale or use of
the Products where such liability results from the act or omission of
Seller (whether for breach of warranty, strict liability in tort,
negligence or otherwise); provided, that in each case CMS gives Seller
prompt notice of any such claim, permits Seller to assume sole control
of the defense thereof and provides all reasonable assistance in
connection with the defense of such claim. CMS shall have the right
to retain its own counsel and to participate in such defense, with the
fees and expenses to be paid by Seller, if representation of CMS by
counsel retained by Seller would be inappropriate due to actual
differing interests between CMS and any other party represented by
such counsel in such proceeding. Seller's obligation to indemnify CMS
shall not be limited by the amount of insurance coverage provided for
in Paragraph D hereof.
F. Seller agrees to and shall provide required Material Safety Data
Sheets for any Product containing hazardous chemicals, as required by
federal, state or local law.
G. Seller agrees to and shall accept, at its facility, all of CMS's
unsold or expired Products containing hazardous chemicals for
disposal. All costs of disposal are the sole responsibility of
Seller.
H. This Guaranty shall be continuing and shall be binding upon the Seller
and his or its heirs, executors, administrators, successors and/or
assigns, whichever the case may be, and shall inure to the benefit of
CMS, its successors and assigns and to the benefit of its officers,
directors, agents and employees and their heirs, executors,
administrators, and assigns.
I. The agreements and obligations of Seller set forth in this Guaranty
are in consideration of purchases made by CMS from Seller and said
obligations are in addition to (and supersede to the extent of any
conflict) any obligations of Seller to CMS or CMS to Seller.
XXXXXX XXXXXXXX SCIENTIFIC, INC: SELLER:
/s/ Xxxxx Xxxx BIOSITE DIAGNOSTICS INCORPORATED
------------------------------- -----------------------------
Title: Senior Vice President Full Corporate Name or Name Under Which
Sales/Marketing Seller's Business is Conducted
/s/ Xxx X. Xxxxxxxxxxxx
-----------------------------------
Signature of Authorized Representative
President
-----------------------------------
Title
Xxx X. Xxxxxxxxxxxx,
President
------------------------------------
Printed Name and Title of Authorized
Representative
November 11, 1991
-------------------------------------
Date
IMPORTANT: Please sign and return original Guaranty accompanied by the
Certificate of Insurance described in Paragraph D above, to: Xxxxxx Xxxxxxxx
Scientific, Inc., X.X. Xxx 0000, Xxxxxxx, Xxxxx 00000-0000, ATTN: Insurance
Department
Seller specifically guarantees to CMS that:
1. Seller is not in violation of the Emergency Planning and Community
Right-to-Know Act of 1986 ("XXXX") or the Occupational Safety and
Health Act Hazard Communication Standard or the California Safe
Drinking Water and Toxic Enforcement Act of 1986 ("California
Proposition 65").
2. Seller is not in violation of the Xxxxxxx Act, the Xxxxxxx Act, the
Xxxxxxxx-Xxxxxx Act or the Federal Trade Commission Act with respect
to the manufacture, marketing or sale of the Products, and the
Products are properly labeled as to content as required by applicable
Federal Trade Commission Trade Practice Rules.
3. Seller is not in violation of the Foreign Corrupt Practices Act of
1977, as amended.
4. Seller is not in violation of the Immigration Reform and Control Act
of 1986, as amended, or any of the regulations promulgated pursuant
thereto.
5. The Products are not in violation of any of the provisions of the Fair
Packaging and Labeling Act.
6. The Products are not adulterated or misbranded within the meaning of
the Federal Food, Drug and Cosmetic Act, as amended (the "FFDC Act"),
or within the meaning of any applicable state or municipal law in
which the definitions of adulteration and misbranding are
substantially identical with those contained in the FFDC Act, and the
Products are not products which may not, under the provisions of the
FFDC Act, be introduced into interstate commerce or which may not
under substantially similar provisions of any state or municipal law
be introduced into commerce.
7. The Products are not in violation of the Consumer Product Safety Act,
the Poison Prevention Act or the Federal Hazardous Substances Act, in
each case as amended, and all standards and regulations thereunder,
and if the Products are hazardous substances, are not misbranded
hazardous substances or banned hazardous substances within the meaning
of the Federal Hazardous Substances Act, as amended.
8. The Products are not in violation of any of the provisions of the
Federal Insecticide, Fungicide and Rodenticide Act, as amended.
9. The Products have not been manufactured in violation of any of the
provisions of the Fair Labor Standards Act of 1938, as amended, and
the regulations and orders issued thereunder.
10. The Products are not misbranded under the provisions of the Wool
Products Labeling Act of 1939, as amended.
11. The Products have not been manufactured in violation of any applicable
provision of the Equal Employment Opportunity Act of 1972, as amended,
or any provisions of related Executive Orders.
12. The Products have not been manufactured in violation of the
Occupational Safety and Health Act of 1970 and all standards and
regulations issued thereunder, or of any applicable state laws and
regulations pertaining to job safety and health.
13. The Products are not in violation of the Toxic Substance Control Act,
or any standards and regulations issued thereunder; or
14. The Products, and any warranties made with respect thereto, are not in
violation of the Xxxxxxxx-Xxxx Warranty Federal Trade Commission
Improvement Act.
Seller, if engaged in the marketing or handling of Products, fabrics or related
materials subject to the Flammable Fabrics Act, as amended and regulations
thereunder, hereby guarantees to CMS that with regard to all the Products,
fabrics or related materials sold or to be sold to CMS by Seller for which
flammability standards have been issued, amended or continued in effect under
the Flammable Fabrics Act, as amended, reasonable and representative tests as
prescribed by the Consumer Product Safety Commission have been performed which
show that the Products, fabrics or related materials, at the time of their
shipment or delivery by Seller, conform to such of the above-mentioned
flammability standards as are applicable thereto. This Guaranty shall also
apply to any applicable codes of the National Fire Protection Association
("NFPA") and to any applicable state or local laws substantially identical to
the Flammable Fabrics Act or which adopt the tests provided for in any
applicable code of the NFPA.
The special guaranties set forth above may, where applicable, be based upon a
written guaranty received by Seller for those Products for which it is not a
manufacturer.
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EXHIBIT B
Biosite's express and implied warranties (including implied warranties of
merchantability and fitness) are conditioned upon observance of Biosite's
published directions with respect to the use of Biosite's diagnostic products.
Remedies against Biosite for breach of warranty or other duty are limited solely
to replacement or return of the purchase price of the affected products. Any
such claim against Biosite must be made in writing and promptly pursued within
one year from the date of delivery of the goods. UNDER NO CIRCUMSTANCES
WHATSOEVER SHALL BIOSITE BE LIABLE FOR ANY INDIRECT OR CONSEQUENTIAL DAMAGES.
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AMENDMENT
TO
DISTRIBUTION AGREEMENT
Date: March 7, 1994
Parties: Biosite Diagnostics Incorporated
a Delaware corporation
00000 Xxxxxxx Xxxxxx, Xxxxx X
Xxx Xxxxx, Xxxxxxxxxx 00000 ("Biosite")
Xxxxxx Xxxxxxxx Scientific, Inc.
a Delaware corporation
0000 Xxxxxxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000-0000 ("CMS")
RECITALS:
A. Biosite and CMS are parties to that certain Distribution Agreement,
dated November 11, 1991 ("Distribution Agreement ).
B. CMS and Biosite each desire to amend the Distribution Agreement, as
provided in this Amendment.
AGREEMENTS:
IN CONSIDERATION of the premises and the covenants contained herein,
and for other good and valuable consideration the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. Amendment of Section 1.(a). Section 1.(a) shall be modified to add
the Triage Plus TCA product manufactured by or for Supplier, which includes
tests for PCP (Phencyclidine); THC (Marijuana); Cocaine;
Amphetamines/methamphetamines; Opiates; Benzodiazepenes; Barbiturates; and
Tricyclic Antidepressants, to the definition of "Product" set forth in the
Distribution Agreement.
2. Amendment of Sections 1.(e) and 4.(g). Sections 1(e) and 4.(g) shall
be modified to add the Triage Plus TCA Product to the definition of "Product
Kits" and, further, to provide that CMS may purchase evaluation Kits of Triage
Plus TCA Product for a charge of [CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION] per evaluation Kit. There shall be no limitation
on the number of Triage Plus TCA evaluation Kits that CMS may purchase.
3. Amendment of Section 5(a). Section 5.(a) shall be modified to
reflect that Supplier shall charge
42
CMS $20.00 for each Triage Plus TCA Product unit ordered by CMS during the
twelve (12) months from the date of first shipment of Triage Plus TCA Product to
CMS.
Section 5.(a) shall be further modified to reflect that CMS's discount
off the manufacturer's suggested list price for the Triage Plus TCA Product in
the Territory shall be [CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH
THE COMMISSION].
4. Amendment of Section 5.(b). Section 5.(b) shall be modified to
reflect that CMS's payments to Supplier for the Triage Plus TCA Product shall be
due within thirty (30) days of invoice by Supplier until the first to occur of
January 1, 1995 or the date that Supplier shall effect a registration of any of
its securities under the Securities Act of 1933, as amended, or shall otherwise
have any securities registered under Section 12 of the Securities Exchange Act
of 1934, as amended. Thereafter, CMS's payments to Supplier for the Triage Plus
TCA Product shall be due within forty-five (45) days of invoice by Supplier.
5. Amendment of Sections 6.(b), (c) and (d). Sections 6.(b), (c) and
(d) shall be modified to reflect the Triage Plus TCA Product shall be included
in the definition of "Product unit" as used in these Sections or otherwise in
the Distribution Agreement.
6. No Other Modification. Except as expressly modified by this
Amendment, all other terms of the Distribution Agreement shall remain unchanged
and in full force and effect.
THE PARTIES HAVE EXECUTED this Amendment in the manner appropriate to
each as of the day and year first above written.
BIOSITE DIAGNOSTICS INCORPORATED
By: /s/ Xxx X. Xxxxxxxxxxxx
-------------------------------
Its: President
-------------------------------
XXXXXX XXXXXXXX SCIENTIFIC, INC.
By: /s/ Xxxx X. Xxxxxxx
-------------------------------
Its: Vice President, Marketing,
-------------------------------
Clinical
-------------------------------
43
AMENDMENT TO DISTRIBUTION AGREEMENT
THE DISTRIBUTION AGREEMENT between BIOSITE DIAGNOSTICS INCORPORATED
("Supplier") and XXXXXX XXXXXXXX SCIENTIFIC, INC. ("CMS") dated as of November
11, 1991, as amended, (the "Agreement") is hereby amended as follows:
1. Section 1(d) of the Agreement is hereby deleted.
2. The definition of the term "Medical Segment" contained in section
2(b) of the Agreement is hereby amended by the addition of the following as a
new second sentence:
Notwithstanding the foregoing, hospital-based occupational health
clinics are specifically excluded from the Medical Segment.
3. Sections 6(a) and (b) are hereby amended to read in their entirety
as follows:
(a) The initial term of this Agreement shall be through June 30, 1996
and will be automatically extended on a quarter- by-quarter basis through
December 31, 1996, if CMS achieves the purchase and cumulative sale targets for
the most recently concluded measurement period (each, a "Measurement Period")
set forth below:
Dollar Purchases Cumulative YTD Dollar
Measurement Period From Supplier Sales At Cost
------------------ ---------------- ---------------------
January 1 -
June 30, 1996 $13,000,000 $13,000,000
July 1 -
September 30, 1996 $ 7,200,000 $20,200,000
October 1 -
December 31, 1996 $ 7,800,000 $28,000,000
If CMS does not meet both the purchase and cumulative sales targets,
described above, at the end of any Measurement Period, the Agreement will
terminate automatically at the end of the following Measurement Period. Unless
terminated earlier, as set forth in the preceding sentence, the Agreement will
terminate in any event on December 31, 1996.
(b) If CMS does not meet both the purchase and cumulative sales targets
set forth in paragraph (a) above for calendar year 1996, CMS will pay Supplier
5% of CMS' Purchases (at Cost of Goods) of Products in calendar year 1996. In
the event that
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44
CMS's Sales at Cost of Products exceed the cumulative sales target of
$28,000,000 set forth in paragraph (a) above in calendar year 1996, Supplier
will rebate to CMS [CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE
COMMISSION] of the purchase price from Supplier of all Products sold by CMS in
calendar year 1996 in excess of such sales target. Payment shall be made sixty
(60) days following the termination of the Agreement.
Supplier further authorizes CMS to use its standard form contract, in
the form attached hereto as Exhibit A, for its Preferred Customer Program in
connection with the sale by CMS of Products; provided, however, that (a) such
contracts will relate only to Products covered by the Agreement, and (b) upon
the termination of the Agreement, CMS shall assign to Supplier (i) such
contracts and (ii) all right, title and interest to all equipment provided to
CMS' customers pursuant to such contracts. Nothing in this Agreement shall
prevent CMS from using its standard contracts for transactions with CMS
customers unrelated to the Products; provided that Supplier shall have no
obligation and shall derive no benefit with respect thereto.
Supplier shall reimburse CMS for one-half (1/2) of CMS's cost of any
such equipment provided to CMS' customers pursuant to such contracts, during
calendar year 1996. CMS shall deduct from payments otherwise due to Supplier
one-half (1/2) the cost of any such equipment provided to CMS' customers
pursuant to such contracts during the preceding month, together with
fully-executed copies of each such contract entered into with any CMS customer.
In the event that any CMS customer purchases from CMS the equipment
provided by CMS under its Preferred Customer Program in connection with the sale
by CMS of Products, CMS shall give prompt written notice to Supplier of such
purchase, shall give written evidence to Supplier of the price paid by such
customer therefor, and shall promptly remit to Supplier one-half (1/2) the
amount of the price paid by such customer therefor provided such amount shall in
no event exceed Supplier's one-half (1/2) share of the cost therefor. In the
event that CMS terminates any such contract with a CMS customer under its
Preferred Customer Program in connection with the sale by CMS of Products and
retakes possession of the equipment provided to such customer, CMS shall give
prompt written notice to Supplier of such termination and repossession, shall
give written evidence to Supplier of the fair market value of the repossessed
equipment, shall promptly remit to Supplier one-half (1/2) the amount of the
fair market value of the repossessed equipment.
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4. Section 6(c) of the Agreement is hereby deleted, except for the
final sentence which is hereby modified to read as follows:
"Products shall be deemed purchased when a firm purchase order
has been received by Supplier for delivery of Products within
sixty (60) days."
5. Section 6(d) of the Agreement is hereby deleted in its entirety.
6. Section 6(e) of the Agreement is hereby deleted, except for the
first sentence which is hereby modified to read as follows:
"In the event that CMS is unable to meet the purchase target
set forth in paragraph 3(a) of this Amendment for any Measurement
Period due to the failure of Supplier to deliver the quantities of the
Products required to meet such purchase target, CMS's obligation to
meet such target will bc deemed to have been met."
7. Section 17(a) of the Agreement is hereby modified to the extent that
Supplier agrees that its acknowledgement dated October 6, 1995 shall
additionally cover and apply to any merger of CMS into Xxxxxx Scientific Company
which may occur during 1996.
8. A new Section 25 shall be added to the Agreement and shall read in
its entirety:
Further Assurances. Supplier and CMS agree to perform any
further acts and execute and deliver any and all further documents
and/or instruments that may be reasonably necessary to carry out the
provisions of this Agreement.
9. Notwithstanding any provisions set forth in the Agreement to the
contrary, Supplier shall not, during 1996, increase the price of any Product to
CMS or, except as set forth in paragraph 3(b) of this Amendment, change any
discount applicable thereto as of December 26, 1995.
10. For purposes of this Amendment:
(a) "Cost" shall mean the price paid by CMS to Biosite for any Product
(as defined in this Amendment), exclusive of freight, handling, taxes and other
invoice charges.
(b) "Sales" to CMS customers shall be deemed to have occurred as of the
dates of CMS's respective invoices therefor.
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46
(c) "Sales at Cost" shall mean the Cost of any Product sold by CMS, net
of returns. For purposes of paragraph 3(a) hereof, Sales at Cost shall be
calculated by multiplying the quantity of Products sold during the relevant
Measurement Period (as reflected on CMS's SAO50AD report or any successor or
replacement therefor) by the applicable Cost.
(d) "Products" shall mean such products as were available for purchase
by CMS from Biosite as of December 26, 1995.
(e) CMS's purchases from Supplier of Evaluation Kits, shall be taken
into account for purposes of the calculation of "Dollar Purchases From Supplier"
and shall not be taken into account for purposes of calculation of the
"Cumulative YTD Dollar Sales at Cost," as set forth in paragraph 3(a) of this
Amendment.
11. Except as set forth herein, the Agreement as originally executed by
the parties hereto shall remain in full force and effect. In the event of a
conflict, the terms of this Amendment shall control.
12. As a condition precedent to the effectiveness of this amendment,
simultaneous with the execution of this Amendment to Distribution Agreement,
Supplier and CMS agree, and CMS agrees to cause Xxxxxx, to execute a Mutual
Release of Claims, in the form attached hereto as Exhibit B, relating to any
dispute arising out of the December 26, 1995 letter from Supplier purporting to
terminate the Agreement, and CMS' response thereto. The execution of this
Amendment and the Mutual Release of Claims shall supersede such purported
termination and render it null and void, and shall supersede to the extent of
any conflict any other agreement or understanding between the parties in
connection with the subject matter hereof including the January 23, 1996
CMS/Biosite contract amendment proposal.
The parties hereto have executed this Amendment to Distribution
Agreement as of March 12, 1996.
BIOSITE DIAGNOSTICS INCORPORATED
By: /s/ Xxx X. Xxxxxxxxxxxx
-----------------------------
Title: President
--------------------------
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XXXXXX XXXXXXXX SCIENTIFIC, INC.
By: /s/ Xxxx X. Xxxxxxx
--------------------------
Title: Vice President
-----------------------
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EXHIBIT B
MUTUAL RELEASE
AND COVENANTS NOT TO XXX
This Mutual Release and Covenants Not to Xxx (hereinafter referred to
as the "Mutual Release") is entered into by the following parties:
(1) Biosite Diagnostics Incorporated, a corporation, its past and
present directors, managers, officers, shareholders, agents, employees,
attorneys, successors, assigns and any subsidiaries or affiliated corporations
and each of them, separately and collectively (hereinafter "Biosite");
(2) Xxxxxx Xxxxxxxx Scientific Inc., a corporation, its past and
present directors, managers, officers, shareholders, agents, employees,
attorneys, successors, assigns and any subsidiaries or affiliated corporations,
and each of them, separately and collectively (hereinafter "CMS"); and
(3) Xxxxxx Scientific International Inc., a corporation, its past and
present directors, managers, officers, shareholders, agents, employees,
attorneys, successors, assigns and any subsidiaries or affiliated corporations,
and each of them, separately and collectively (hereinafter "Xxxxxx").
Background of Dispute
W H E R E A S, Biosite and CMS entered into a Distribution Agreement
dated as of November 11, 1991 (the "Distribution Agreement");
W H E R E A S, Biosite provided to CMS a letter dated December 26, 1995
stating, among other things, that "Biosite hereby exercises its right to
terminate the Agreement without cause effective as of today;"
W H E R E A S, Xxxxxx provided to Biosite a draft letter dated December
28, 1995 which, among other things, purports to reject Biosite's termination of
the Distribution Agreement and alleges that Biosite breached certain alleged
commitments to CMS and Xxxxxx concerning the Distribution Agreement;
W H E R E A S, Biosite denies that the termination was in any way
improper, and further denies that it has made such commitments as alleged or
that it has breached any material commitment to CMS and/or Xxxxxx (the parties'
dispute concerning the propriety and effect of Biosite's December 26, 1995
letter is hereinafter referred to as the "Dispute");
49
W H E R E A S, the parties are separately entering into a written
amendment of the Distribution Agreement which amendment will be effective
according to its terms and which is not the subject of this Mutual Release;
W H E R E A S, the parties wish resolve the Dispute without incurring
the expense and burden of litigation;
N O W T H E R E F O R E, in consideration of mutual covenants contained
herein and other good and valuable consideration, the parties hereto agree as
follows:
CMS and Xxxxxx Releases of Biosite
1. CMS and Xxxxxx, individually and collectively, hereby
release and forever discharge Biosite from:
(a) any and all claims, liens, demands, causes of action,
obligations, damages and liabilities, known or unknown, that CMS and/or Xxxxxx
have had in the past, or now have against Biosite arising directly or indirectly
out of, or related in any way to the Dispute. CMS and Xxxxxx each expressly
understand and acknowledge that it is possible that unknown losses or claims
exist or that present losses may have been underestimated in amount or severity,
and CMS and Xxxxxx explicitly took that into account in determining the amount
of consideration to be paid for the giving of this Mutual Release, and a portion
of said consideration, having been bargained for between the parties with the
knowledge of the possibility of such unknown claims, was given in exchange for a
full accord, satisfaction and discharge of all such claims. Consequently, CMS
and Xxxxxx expressly waive all rights under California Civil Code section 1542,
which provides that:
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially
affected his settlement with the debtor."
2. CMS and Xxxxxx understand that this Mutual Release includes all
claims for costs, expenses and attorneys' fees, taxable or otherwise, incurred
by it in or arising out of the Dispute.
3. CMS and Xxxxxx each acknowledge that nothing contained in this
Mutual Release constitutes an admission or concession of liability by Biosite on
account of any said claims or matters, liability for which is expressly denied.
4. CMS and Xxxxxx expressly understand that both direct and indirect
breaches of this Mutual Release are proscribed, and, therefore, CMS and Xxxxxx
covenant that they will not directly or indirectly encourage or aid, except as
required by due legal process, the commencement or prosecution of, against
Biosite, any
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50
action or other proceeding based upon any claims, liens, demands, causes of
action, obligations, damages or liabilities which are the subject of this Mutual
Release.
5. CMS and Xxxxxx each warrant that no other person or entity has
claimed or now claims any interest in the subject of this Mutual Release, and
that each has the sole right and exclusive authority to execute this Mutual
Release on its behalf and that neither has sold, assigned or otherwise set over
to any other person or entity, any claim, lien, demand, cause of action,
obligation, damage or liability covered hereby.
Biosite's Releases of CMS and Xxxxxx
6. Biosite hereby releases and forever discharges CMS and
Xxxxxx, individually and collectively, from:
(a) any and all claims, liens, demands, causes of action,
obligations, damages and liabilities, known or unknown, that Biosite has had in
the past, or now has against CMS and/or Xxxxxx arising directly or indirectly
out of, or related in any way to the Dispute. Biosite expressly understands and
acknowledges that it is possible that unknown losses or claims exist or that
present losses may have been underestimated in amount or severity, and Biosite
explicitly took that into account in determining the amount of consideration to
be paid for the giving of this Mutual Release, and a portion of said
consideration, having been bargained for between the parties with the knowledge
of the possibility of such unknown claims, was given in exchange for a full
accord, satisfaction and discharge of all such claims. Consequently, Biosite
expressly waives all rights under California Civil Code section 1542, which
provides that:
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially
affected his settlement with the debtor."
7. Biosite understands that this Mutual Release includes all claims for
costs, expenses and attorneys' fees, taxable or otherwise, incurred by it in or
arising out of the Dispute.
8. Biosite acknowledges that nothing contained in this Mutual Release
constitutes an admission or concession of liability by CMS and/or Xxxxxx on
account of any said claims or matters, liability for which is expressly denied.
9. Biosite expressly understands that both direct and indirect breaches
of this Mutual Release are proscribed, and, therefore, Biosite covenants that it
will not directly or indirectly encourage or aid, except as required by due
legal process, the commencement or prosecution of, against Biosite, any action
or other proceeding based upon any claims, liens, demands,
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51
causes of action, obligations, damages or liabilities which are the subject of
this Mutual Release.
10. Biosite warrants that no other person or entity has claimed or now
claims any interest in the subject of this Mutual Release, and that it has the
sole right and exclusive authority to execute this Mutual Release on its behalf
and that it has not sold, assigned or otherwise set over to any other person or
entity, any claim, lien, demand, cause of action, obligation, damage or
liability covered hereby.
General Provisions
11. This Mutual Release shall be binding upon and for the benefit of
the parties hereto and their respective heirs, executors, administrators,
successors, devises and assigns.
12. The parties hereto warrant that no promise, inducement or agreement
not expressed herein has been made to them in connection with this Mutual
Release, and that this Mutual Release constitutes the entire agreement between
the parties herein named. It is expressly understood and agreed that this Mutual
Release may not be altered, amended, modified or otherwise changed in any
respect whatsoever except by a writing duly executed by authorized
representatives of the parties hereto. The parties hereto hereby agree and
acknowledge that they will make no claim at any time or place that this Mutual
Release has been orally altered or modified or otherwise changed by oral
communication of any kind or character.
13. This Mutual Release is entered into by the undersigned parties
freely and voluntarily, and with and upon advice of counsel. Each party hereto
warrants that the person signing below on its behalf is authorized to sign this
Mutual Release on its behalf and to bind it to the terms of this Mutual Release.
14. Should any provision of this Mutual Release be held invalid or
illegal, such illegality shall not invalidate the whole of this agreement, but,
rather, the Mutual Release shall be construed as if it did not contain the
illegal part, and the rights and obligations of the parties shall be construed
and enforced accordingly.
15. This document may be executed in duplicate originals,
each of which is equally admissible in evidence.
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16. This Mutual Release shall be construed and enforced pursuant to the
laws of the State of California.
Biosite Diagnostics Incorporated Date: 3/12/96
----------------------
By: /s/ Xxx X. Xxxxxxxxxxxx
-----------------------------
Title: President
--------------------------
Xxxxxx Xxxxxxxx Scientific, Inc. Date: 3/19/96
----------------------
By: /s/ Xxxx Xxxxxxx
-----------------------------
Title: Vice President
--------------------------
Xxxxxx Scientific International Inc. Date: 3/19/96
----------------------
By: /s/ Xxxx Xxxxxxx
-----------------------------
Title: Vice President
--------------------------
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[LETTERHEAD OF BIOSITE DIAGNOSTICS INCORPORATED]
August 9, 1996
Xx. Xxxx Xxxxxxx
Vice President, Clinical Marketing
Xxxxxx Xxxxxxxx Scientific
0000 Xxxxxxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000-0000
Dear Xxxx:
As a result of our discussions last week in Chicago, I would like to outline our
latest amendment of CMS's Exclusive Distribution Agreement for the Biosite
Triage(R) products, dated November 11, 1991.
As you are aware, CMS was unable to achieve the sales targets outlined in the
March 12, 1996 Amendment to the Distribution Agreement. As outlined in paragraph
6(b), CMS is required to pay Biosite 5% of CMS' purchases for 1996 as a rebate
penalty (estimated to be 1.2 million).
In order to invest in the future of our relationship, we have agreed to forgive
the rebate penalty over a four year period, subject to the following terms and
conditions.
1996 REVISED TARGETS
- If CMS achieves a running rate of 4,600 kits or greater per month for
X0 0000, then Biosite will renew the contract for 1997, 1998 and 1999.
Biosite will also forgive 1/4 of the 5% rebate penalty associated
with not making the original Triage milestone by June, 1996.
- If CMS achieves a running rate of between 4,500 and 4,599 kits per
month for X0 0000, then Biosite will renew the contract through 1997
only and CMS
54
Xx. Xxxx Xxxxxxx
August 9, 1996
Page 2
will pay Biosite 1/4 of the 5% of the rebate penalty associated with
the original June, 1996 Triage goal.
- The above rebate penalties to Biosite will be considered due in January
of 1997. Additionally, a "running rate" target will be considered met
based on the following definition: The average end user shipments in
the three months of a quarter must equal or exceed the target set
forth.
- i.e. the Q4 1996 target of 4,600 kits per month will be
considered made, if the monthly end user shipments for
October, November and December average 4,600 kits or
more.
- 1996 Non-Performance: If CMS achieves a running rate of less than 4,500
kits per month for X0 0000, then CMS will pay Biosite 1/4 of the 5%
rebate penalty associated with the original June, 1996 Triage goal and
Biosite shall have the option to exercise the termination clause as of
December 31, 1996 with the effective date of June 30, 1997 without
paying a buyout. CMS shall pay Biosite the remaining balance on the
rebate associated with the original June, 1996 Triage milestone in
January of 1997.
1997, 1998 AND 1999 TARGETS
- If CMS achieves the following minimum sales targets, then Biosite will
forgive [CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE
COMMISSION] of the 5% rebate penalty associated with not making the
original Triage milestone by June, 1996 in each year the target is met.
55
Xx. Xxxx Xxxxxxx
August 9, 1996
Page 3
Aggregate
Q3 and Q4
Avg. Monthly
Year Kit Sales
---- ---------
[CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION]
If CMS does not achieve the above aggregate Q3 and Q4 average monthly kit sales,
then CMS will pay Biosite [CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY
WITH THE COMMISSION] of the 5% rebate penalty associated with the original June,
1996 Triage goal in each year the minimum sales levels are not met. Any penalty
payments will be due in January of the subsequent year in which minimum sales
are not achieved.
MINIMUM SALES TARGETS
- Assuming that CMS achieves the 4,600 kits per month run rate for X0
0000, Biosite will expect that CMS meet the following minimums in 1997
in order to maintain the Triage exclusive distribution rights in 1998
and 1999.
- Q1 minimum: [CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION] per month run rate
average for the quarter
- Q2 minimum: [CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION] per month run rate
average for the quarter
- Q3 minimum: [CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION] per month run rate
average for the quarter
- Q4 minimum: [CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION] per month run rate
average for the quarter
- In the event CMS does not achieve these minimums, then CMS will lose
the 1998 Triage distribution rights, with an effective date six months
after missing any two quarter minimums in the calendar year and without
Biosite's payment of a buyout.
- Assuming that CMS achieves the 1997 minimum sales target levels,
Biosite will expect that CMS meet the following
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August 9, 1996
Page 4
minimums in 1998 in order to maintain the Triage business
in 1999.
- Q1 minimum: [CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION] per month run rate
average for the quarter
- Q2 minimum: [CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION] per month run rate
average for the quarter
- Q3 minimum: [CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION]per month run rate
average for the quarter
- Q4 minimum: [CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION] per month run rate
average for the quarter
- In the event CMS does not achieve these minimums, then CMS will lose
the 1999 Triage distribution rights, with an effective date six months
after missing any two quarter minimums in the calendar year and without
payment of a buyout.
- Assuming that CMS achieves the 1998 minimum sales target levels,
Biosite will expect that CMS meet the following minimums in 1999.
- Q1 minimum: [CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION] per month run rate
average for the quarter
- Q2 minimum: [CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION] per month run rate
average for the quarter
- Q3 minimum: [CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION] per month run rate
average for the quarter
- Q4 minimum: [CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION] per month run rate
average for the quarter
- 1997, 1998 and 1999 Non-Performance: In the event CMS does not achieve
these minimum sales targets, CMS shall pay Biosite any remaining
balance on the rebate associated with the original June, 1996 Triage
milestone. Any remaining
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Page 5
balance(s) shall be due and payable in January of the subsequent year
following non-performance.
ADDITIONAL TERMS
- Assuming that CMS achieves the 1997 and 1998 minimum sales target
levels outlined above, Biosite agrees to negotiate in good faith an
extension of the exclusive Distribution Agreement, with similar terms
and conditions, for [CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION] beyond 1999 ([CONFIDENTIAL MATERIAL
REDACTED AND FILED SEPARATELY WITH THE COMMISSION]).
- The termination and buy out provisions from the original Distribution
Agreement shall remain in place and be calculated as applicable for all
future years as outlined in the original Distribution Agreement for
years 4 and 5.
- Minimum inventory levels for Triage products will be maintained at no
less than 30 days.
- During 1996 (only if CMS achieves its sales targets) and thereafter,
CMS agrees to maintain the Triage products in the most favorable
commission rate for sales reps and to treat them as "focus products"
during the period of CMS's exclusivity.
- Pricing to CMS for the Triage products shall remain firm [CONFIDENTIAL
MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION] or
termination of the Distribution agreement, whichever is last to occur.
Please evidence your agreement by signing below. Except as modified in this
letter agreement and the Amendment to Distribution Agreement dated March 12,
1996, the Distribution Agreement dated November 11, 1991, shall remain in full
force and effect. In the event of any conflict among the terms and
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Page 6
provisions of the agreements, the applicable term or provision of the document
later in time shall control.
Sincerely,
/s/ Xxxxx Xxxxxxx
Xxxxx Xxxxxxx
Vice President,
Sales and Marketing
Acknowledged and agreed by:
Xxxxxx Scientific Company as
successor by merger to Xxxxxx
Xxxxxxxx Scientific, Inc.
By: /s/ XX Xxxxxxx
------------------------------
Title: V.P. Marketing
---------------------------
Date: 8/9/96
----------------------------
