Exhibit 4.3
FIRST AMENDMENT TO DISTRIBUTION AGREEMENT
This First Amendment to Distribution Agreement (the "First Amendment") is made
and entered into as of October 23, 2001 (the "Effective Date") by and between
Century Medical, Inc., a corporation duly organized and existing under the laws
of Japan with its principal place of business located at 0-0-0 Xxxxxx,
Xxxxxxxxx-Xx, Xxxxx, 000-0000, Xxxxx ("DISTRIBUTOR"), and EP MedSystems, Inc., a
New Jersey corporation with its principal place of business located at 000
Xxxxxxx Xxxxx, Xxxxx 000, Xxxxx Xxxxxxxxx, Xxx Xxxxxx 00000 XXX ("COMPANY").
R E C I T A L S
DISTRIBUTOR and COMPANY have entered into that certain Distribution Agreement
effective as of July 16, 1997 (the "Distribution Agreement") pursuant to which
COMPANY appointed DISTRIBUTOR as its exclusive distributor of certain products
of COMPANY within the Territory.
DISTRIBUTOR and COMPANY desire to amend certain provisions contained in the
Distribution Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and subject to and on the terms
and conditions herein set forth, the parties hereto agree as follows:
A. Definitions. Unless otherwise defined herein, all capitalized terms in
this Amendment shall have the respective meanings ascribed to them in the
Distribution Agreement.
B. Amendment to Definitions. The first sentence of Section 1.2 Products shall
be deleted in whole and replaced with the following:
"Products" shall mean COMPANY's current line of (1) EP Workmate(TM)
electrophysiology recording systems and EP-3 computerized cardiac
simulator; (2) Alert(TM) Companion, Alert PA/TD catheters, Alert RA/CA
catheters, ViewMate(TM), ViewMate catheters, EP-4 cardiac stimulators; and
(3) SilverFlex(TM) diagnostic catheters, conventional diagnostic catheters
and Focal Recorder catheter ("Product Category (B)"), as listed in
Schedule 1, as amended from time to time together with all line
extensions, modifications and improvements thereto.
C. Amendment of Term. Section 3 shall be deleted in whole and replaced with
the following:
3. Term of Distributorship. This Agreement and the rights and obligations
conferred on DISTRIBUTOR and COMPANY hereunder shall come into effect on
the date mentioned in the preamble hereto (or with respect to Products
added by the First Amendment, on the date
Ex.4.3 - Page 1
of said First Amendment) and shall remain in effect for a period of five
(5) years from the date on which DISTRIBUTOR has obtained both (a) the
import license (Xxxxxx) for the Alert Companion, Alert PA/TD and RA/CA
catheters, ViewMate and ViewMate catheter Products and (b) the
reimbursement approval for the Alert PA/TD, Alert RA/CA and ViewMate
catheter Products from the Japanese Ministry of Health, Labor and Welfare
(the "MHLW"), as amended, unless terminated, canceled, or renewed in
accordance with provisions of this Agreement. Notwithstanding the
foregoing, DISTRIBUTOR shall not be obligated to sell, distribute, market
or promote to sell any Product in the Product Category (B) prior to
January 1, 2003 (the "Category (B) Effective Date").
D. Amendment of DISTRIBUTOR Duties.
1. Section 4.1(v) shall be deleted in whole and replaced with the
following:
4.1(v) not to solicit the sale of, promote the sale of, sell,
exhibit for sale, distribute or manufacture any product directly
competitive with the Products; provided, however that the
restrictions in this subsection (v) shall not apply to diagnostic
catheter products of other manufacturers, that do not have internal
cardio-version capabilities.
2. Section 4.1(vi) shall be deleted in whole and replaced with the
following:
4.1(vi) to be responsible for obtaining, at its own expense,
all necessary medical device product approvals ("Xxxxxx") from the
MHLW and to conduct, when necessary, any clinical trials needed to
obtain a Xxxxxx to market the Products in the Territory. Prior to
DISTRIBUTOR actually conducting a clinical trial for any Product,
DISTRIBUTOR and COMPANY shall discuss in good faith taking into
consideration final commercial Product availability, IDE status of
the Products in the USA, the availability and feasibility of using
IDE data for a Xxxxxx application and other such factors that may
affect filing of a Xxxxxx application with the MHLW.
3. The original Section 4.1(vii) shall be renumbered as Section
4.1(viii), and a new Section 4.1(vii) shall be added as follows:
4.1(vii) to keep COMPANY informed of regulatory requirements
in the Territory and to, from time to time, provide COMPANY with
updated amendments to the Memorandum of Compliance to be executed by
the parties in the form attached hereto as Schedule 3.
D. Amendment of Duties of COMPANY.
1. Section 5.1(i) shall have added to it two new sentences as follows:
COMPANY shall further develop its catheter Product line to include a
5 French (5Fr) line of catheters (that falls under the Product
Category (B) in the definition of Products in
Ex.4.3 - Page 2
Section 1.2) to meet the reasonable needs of customers in the
Territory. COMPANY shall use its best efforts to have available to
DISTRIBUTOR such 5Fr catheters by no later than six months prior to
the Category (B) Effective Date and provide all other information
required for DISTRIBUTOR to obtain any Xxxxxx required for the 5Fr
catheters. In the event that the final products have not been made
available for sale by DISTRIBUTOR in the Territory by the date
mentioned above, DISTRIBUTOR shall have the option to terminate its
obligations with respect to any and all products in the Product
Category (B). COMPANY shall reasonably and in good faith discuss
with DISTRIBUTOR the development, technologies, challenges and
potential manufacture of a 4fr line of catheters taking into
consideration the market needs and specification requirements of the
Territory.
2. Section 5.1(iii) shall be deleted in whole and replaced with the
following:
5.1(iii) to provide DISTRIBUTOR with materials necessary to obtain
and maintain the Xxxxxx to import and sell the Products within the
Territory by furnishing to DISTRIBUTOR, at COMPANY's cost, such
technical descriptions, specifications, data, clinical data
including but not limited to IDE, PMA and 510(k) documentation,
drawings, information, service manuals, quality control audits,
facility inspection reports issued by governmental regulators or
international quality control auditors, and so forth regarding the
Products, in the English language, as DISTRIBUTOR may reasonably
request in order for DISTRIBUTOR to fulfill its obligations set
forth in Section 4.1(vi). COMPANY shall provide DISTRIBUTOR with any
Product necessary for DISTRIBUTOR to fulfill its obligations under
Section 4.1(vi) at fifty percent (50%) of the normal transfer price
which DISTRIBUTOR will pay for a commercial resale Product.
F. Amendment of Sale of Product to DISTRIBUTOR.
1. Section 8.3 Acceptance and Cancellation of Orders. The following
sentence shall be added as the third sentence:
DISTRIBUTOR's purchase order(s) for Workmate Systems, Alert Systems,
EP-3 and EP-4 stimulators shall allow for a thirty (30) day lead
time from a date of order until shipment by COMPANY.
2. Section 8.6 Distributor Obligations & Minimum Purchases. Section 8.6
shall be deleted in whole and replaced with the following:
8.6 Distributor Obligations & Minimum Purchases.
COMPANY and DISTRIBUTOR shall in good faith mutually agree upon the
minimum purchase amounts expressed in U.S. Dollars for each calendar
year during the term of this Agreement (the "Minimum Purchase
Amounts") that reflect an acceptable performance
Ex.4.3 - Page 3
of Distributor under this Agreement, and such Minimum Purchase
Amounts agreed by the parties shall be identified in Schedule 2,
attached hereto, as supplemented from time to time. The Minimum
Purchase Amounts for the calendar years 2001 and 2002 shall be as
set forth in Schedule 2. The determination of the Minimum Purchase
Amounts for each subsequent calendar year shall be made by no later
than October 1 of each preceding year upon good faith negotiation by
the parties. The premise from which COMPANY and DISTRIBUTOR shall
enter each negotiation shall be increasing year over year sales
caused by: (a) DISTRIBUTOR improving the COMPANY's market share
position, (b) introduction of new Products in the Territory, and (c)
pricing leverage; but taking into consideration DISTRIBUTOR's
initial investment to obtain approvals for and develop the market
for the Products, general market conditions in the Territory, and
the competitive position and characteristics of the Products. The
parties intend to preclude any revision or modification of the
Minimum Purchase Amounts by any tribunal and thereby avoid any
litigation or dispute over the reasonableness of these standards. If
both parties cannot agree to the Minimum Purchase Amounts as
provided herein, such disagreement shall be resolved by arbitration
in accordance with Section 14.7 of this Agreement.
In the event that DISTRIBUTOR fails to meet 80% of the Minimum
Purchase Amounts agreed by the parties as shown in Schedule 2 hereto
for any calendar year during the term of this Agreement, the
COMPANY, at its sole option, may change DISTRIBUTOR'S status under
this Agreement to non-exclusive and appoint other distributors to
import and distribute the Products in the Territory. In the event
that DISTRIBUTOR fails to meet 70% of the Minimum Purchase Amounts
agreed by the parties as shown in Schedule 2 hereto for any calendar
year during the term of this Agreement, the parties shall meet at a
mutually agreed upon place and time to discuss remedying this
situation.
Subject to COMPANY fulfilling its obligations in Section 5.1(i)
regarding a 5fr line of catheters and DISTRIBUTOR's receipt of the
Xxxxxx for the Alert System, after the Category (B) Effective Date
and so long as DISTRIBUTOR is engaged in the sale of a line of
standard fixed curve diagnostic catheters of a third party that is
competing with diagnostic catheters of COMPANY, for each Alert
catheter purchased by DISTRIBUTOR, DISTRIBUTOR shall be obligated to
purchase one standard non-defibrillation diagnostic catheter
(platinum electrode or SilverFlex(TM) electrode at DISTRIBUTOR's
option) from COMPANY. DISTRIBUTOR and COMPANY shall reconcile this
purchase obligation on quarterly basis in accordance with the
following rules:
(a) if the number of COMPANY's non-defibrillation diagnostic
catheters purchased by DISTRIBUTOR in one quarter is less than
the number of the Alert catheters purchased by DISTRIBUTOR in
the same quarter, then DISTRIBUTOR shall place a make-good
order to reconcile the account in the following quarter; and
Ex.4.3 - Page 4
(b) if the number of COMPANY's non-defibrillation diagnostic
catheters purchased by DISTRIBUTOR in one quarter is more than
the number of the Alert catheters purchased by DISTRIBUTOR in
the same quarter, then, DISTRIBUTOR may carry-forward a credit
to the following quarter.
G. Schedule 1 is hereby amended as attached hereto, and the International
Product Price List for all Products, as amended form time to time, is
attached hereto as Schedule 1.
H. Schedule 2 is hereby amended and shall be as attached hereto.
I. No Other Changes. Except as amended by this First Amendment, the
Distribution Agreement shall remain in full force and effect as originally
stated and, all references to the Distribution Agreement shall henceforth
refer to the Distribution Agreement as amended by this First Amendment.
This Amendment, including all exhibits and schedules attached hereto,
shall be deemed incorporated into, and a part of the Distribution
Agreement.
J. Conflicts. In the event of any conflict between the terms of the
Distribution Agreement and the terms of this Amendment, the terms of this
First Amendment will control.
IN WITNESS WHEREOF, the parties have caused this First Amendment to be
executed as of the Effective Date.
EP MedSystems, Inc.
By: s/ Xxxxx Xxxxxxx
Xxxxx Xxxxxxx,
President and CEO
Century Medical, Inc.
By: s/ Xxxxx Xxxxxxx
Xxxxx Xxxxxxx
President and CEO
Ex.4.3 - Page 5
Schedule 1
Products and Prices
DESCRIPTION: All existing Products as defined in Section 1.2 together with all
line extensions, modifications and improvements thereto as described in the
attached, as amended from time to time.
Prices: Shall be as listed on COMPANY'S International Product Price List,
including the attached Alert System, EP Diagnostic Catheters and accessories
price list, in effect on the date on which COMPANY accepts an order less a
minimum discount of 20%. Pricing for the 5fr catheters and ViewMate(TM) probes
shall be determined at the time COMPANY confirms that 5fr catheters and ViewMate
probes are commercially available however in no event shall the price for 5fr
catheters exceed the price for 6fr catheters on the attached price sheet and
ViewMate probes shall have a target price, depending upon ultimate production
costs, of $1,000 per probe unless future models incorporate additional features
or technology, in which case, the cost to DISTRIBUTOR shall be no more than 80%
of COMPANY's USA list price. COMPANY may also offer additional discounts
depending on the competitiveness of individual Products or give special
consideration for additional volume discounting on a case by case basis.
Specifics to be mutually discussed by the parties and agreed upon at the time of
purchase.
COMPANY shall on a case by case basis prepare price quotations for custom
made Products based upon DISTRIBUTOR'S specific inquiry, taking into
consideration expected purchase volumes.
Ex.4.3 - Page 6
Schedule 2
Minimum Annual Purchases
2001: U.S.$900,000
2002: U.S.$900,000
Note: The Minimum Purchase Amount for Year 2002 set forth above is a current
good faith estimate. COMPANY and DISTRIBUTOR agree to negotiate the actual
amount in good faith by the end of 2001, which amount shall reflect the results
of an investigation to be conducted in Japan by an engineer of COMPANY
(scheduled for October 2001) with respect to pending issues for EP Workmate,
including, without limitation, correction of Windows-bug and hardware
improvement.
Ex.4.3 - Page 7
Schedule 3
Memorandum of Compliance
In order to comply with the request from Century Medical, Inc. ("CMI"), we, EP
MedSystems, Inc. shall implement the following:
1. QC Certificate
Quality Control Certificate to be included in every shipment to CMI.
2. Sterilization Validation Data
Provide CMI with the most current and latest Sterilization Validation Data
once a year.
3. Certificate to Foreign Government and Standard Operating Procedure (SOP),
etc.
Provide CMI with the up-dated "Certificate to Foreign Government" issued
by FDA relative to manufacturing plant or the copy of certificate
certifying compliance to EN 46001. Provide CMI the following information
at least once every two years for CMI to confirm that the product
specification conforms to the contents of the Japanese Xxxxxx document,
copies of the up-dated version of product specification sheet, production
flow chart, SOP of quality control testing protocol and other necessary
document, and keep CMI update when these documents are amended or
modified. Manufacturer further agrees to allow CMI personnel to visit
manufacturer to actually confirm these points at the manufacturing plant
when necessary.
4. Advance Notice of Product Modifications and/or Improvements
To keep CMI informed in writing regarding any and all modifications and/or
improvements of the products, change in method of sterilization, change in
packaging, change in facility or factory location and changes in test
standards adequately prior to implementation of them.
5. Facility Inspections, Product Recalls
Promptly notify CMI of any actions taken with respect to manufacturer or
the products by regulators in other jurisdictions, including (i) any
facility inspection resulting in any notice of infraction, warning or
other action, (ii) voluntary or mandatory recalls or withdrawal of
products, (iii) administrative or court proceedings regarding the products
and (iv) similar matters. Manufacturer will promptly provide CMI with
copies of any correspondence with regulators regarding any of the
foregoing.
6. Transmitting information method and person responsible
Concerning the case specified items 4and 5 above, notify the method of
transmitting information and person responsible for transmission.
Differently settle the detail of information method, address, phone, fax,
e-mail, address of person in charge, and promptly inform them in case of
change.
7. Packaging
Provide for the Products to be suitably packaged and packed for export.
8. Product Complaint Handling
Manufacturer further agrees to provide CMI with a written report of
findings by manufacturer of any product complaint report submitted by CMI
in a reasonably timely manner. Where a product complaint involves a
product failure that resulted in bodily injury or death, manufacturer
shall expedite and place the highest priority possible to investigate and
report in writing manufacturer's findings to CMI.
COMPANY: _____________________________ CENTURY MEDICAL, INC.
Date: ________________________________ Date: ____________________________
Signature: ___________________________ Signature: _______________________
Name: ________________________________ Name: ____________________________
Title: _______________________________ Title: ___________________________
Company: _____________________________
Ex.4.3 - Page 8
