EXHIBIT 10.42
DISTRIBUTORSHIP AGREEMENT
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THIS DISTRIBUTORSHIP AGREEMENT (the "Agreement") is entered into as of this
23rd day of September, 1998, by and between Biocontrol Technology, Inc., a
Pennsylvania corporation with principal offices at 000 Xxxxxx Xxxxxxx Xxxx,
Xxxxxxx, Xxxxxxxxxxxx 00000 ("BICO"); and Luther Medical Products, Inc., a
California corporation with principal offices at 00000 Xxxxxxxx Xxxx, Xxxxxx,
Xxxxxxxxxx 00000 ("Luther").
R E C I T A L S
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1. BICO is engaged in the manufacture and sale of implantable vascular
access medical devices and related products known as BICO's theraPORT/(R)/
product line as more fully described in Exhibit A hereto.
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2. BICO desires to enter into a non-exclusive distribution agreement with
Luther for BICO's theraPORT/(R)/ products in the United States.
3. Luther desires to undertake the marketing, distribution and sales of
BICO's theraPORT/(R)/ products on the terms and conditions contained herein.
4. The parties previously executed a Proprietary Information Agreement
(the "Information Agreement") in anticipation of the execution of this Agreement
and a Technology License Agreement (the "License Agreement"). The parties agree
that any provisions of the Information Agreement that conflict with the
provisions hereof or of the License Agreement shall be terminated hereby.
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
BICO'S THERAPORT/(R)/ PRODUCT LINE
1.1 Products. The products subject to this Agreement shall be BICO's
entire theraPORT/(R)/ line of implantable vascular access medical devices
manufactured by and sold by BICO (hereinafter the "Products"). Exhibit "A"
hereto sets forth descriptions and model numbers for the Products. If necessary
during the term of this Agreement, Exhibit "A" will be amended from time to time
to reflect new Products that will be made available to Luther pursuant to
Section 2.4 hereunder.
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ARTICLE II
APPOINTMENT AS DISTRIBUTOR AND GRANT OF NON-EXCLUSIVE RIGHTS
2.1 Appointment. BICO hereby appoints Luther as a non-exclusive
distributor of the Products during the Term (as hereinafter defined) in the
United States.
2.2 Acceptance. Luther hereby accepts such non-exclusive distributorship,
and shall use such efforts as it deems commercially reasonable during the term
of this Agreement to promote and to sell the Products on the terms and
conditions contained herein. In connection with its distribution activities,
Luther shall undertake such commercially appropriate activities which, in its
sole judgment, it deems advisable and proper for the promotion and sale of the
Products.
2.3 Non-Exclusive Rights; Mutual Cooperation. Although it is understood
that Luther shall take a role in the sale, marketing, and distribution of the
Products, Luther shall have non-exclusive rights to do so. For purposes of this
Agreement "non-exclusive" means BICO may continue its own efforts to sell,
market, and cooperate with Luther in distributing the Products throughout the
Territory. BICO may also enter into additional third-party distributor
agreements in respect of the Products.
2.4 Additions to theraPORT/(R)/ Product Line. Prior to the time BICO
proposes to introduce any additions to the theraPORT/(R)/ product line, BICO
will give Luther ninety (90) days prior written notice to allow Luther to decide
whether to distribute said product in the Territory. If Luther agrees to
distribute said product, Exhibit "A" shall be amended and said product shall be
a Product hereunder and subject to all of the terms and conditions of this
Agreement.
2.5 Termination of Information Agreement. The parties agree that their
respective rights, duties, and obligations hereunder and under the License
Agreement shall supersede any rights, duties, and obligations granted or
undertaken pursuant to the Information Agreement. Any provisions of the
Information Agreement that conflict with the provisions hereof or of the License
Agreement are hereby terminated.
ARTICLE III
INDEPENDENT CONTRACTOR
3.1 Independent Contractor; No Agency Relationship. Luther shall perform
its duties as an independent contractor and not as an agent of BICO for any
purpose whatsoever. Luther shall not have any right or authority to assume or
to create any obligation or responsibility, express or implied, on behalf of or
in the name of BICO, or to bind BICO in any manner.
3.2 Tradenames. Luther shall have the right to market and sell the
Products in the Territory under one or more trade names of its choice,
including, but not limited to such trade names as may be the common law property
of, or registered to, BICO; however, Luther shall not use any trade name which
could cause any third party to confuse Luther with BICO except to
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designate the Products purchased under the terms of this Agreement. Nothing
contained in this Article, however, shall be construed to forbid Luther from
holding itself out as BICO's authorized distributor of the Products within the
Territory.
ARTICLE IV
PRODUCT FLOW
4.1 Availability. BICO shall make the Products available to Luther at all
times during this Agreement. Luther shall not be obligated to purchase any
Products or any specific quantity of Products; however, during the initial term
of this Agreement, BICO shall make available to Luther no fewer than 350 Units.
(A "Unit" means one count of any of the Products.) All orders placed by Luther
shall be on purchase orders or like forms established by mutual agreement. All
sales to Luther shall be subject to this Agreement. Any provision that is
inconsistent with the provisions of this Agreement, or that shall impose any
greater burden upon Luther than the obligations assumed by Luther hereunder,
shall be of no effect whatsoever unless expressly accepted by Luther in a
writing that specifically refers to the inconsistency or added burden.
4.2 Orders; Confirmation. Luther shall place orders in minimum quantities
of fifty (50) Units. Purchase orders shall be confirmed by facsimile by BICO,
within two (2) business days of receipt of the order from Luther. Any
quantities ordered, which make up the first 350 units ordered during the life of
this Agreement, shall be delivered within seven (7) days of receipt of the order
from Luther. In the event that Luther orders more than 350 units and BICO
accepts such orders, then the deliveries, for such units in excess of 350 units,
shall be agreed between the parties at the time of placement of such orders.
ARTICLE V
PACKING AND DELIVERY
5.1 Packing. Products to be supplied to Luther shall be packed by BICO in
protective packages suitable for export and including a protective outer
covering for the carton itself.
5.2 Delivery. All accepted orders placed by Luther shall be filled
according to the purchase orders of Luther, as confirmed by BICO. Products will
be delivered to the overnight express carrier designated in the shipping or
routing instructions received from Luther. In the absence of such instructions,
shipping shall be arranged through an overnight express delivery common carrier,
which, on the basis of its past dealings with Luther, BICO has reasonable
grounds to believe is acceptable to Luther. BICO shall arrange for all shipping
F.O.B. Indiana, Pennsylvania.
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ARTICLE VI
QUALITY AND WARRANTIES; COMPLAINTS AND NOTICE
6.1 Standards. BICO warrants that the Products shall be inspected by it
and pass the quality standards established by BICO and such governmental
agencies that generally regulate the Products. Such standards, at a minimum,
shall conform to all performance specifications and the design and physical
characteristics set forth in BICO's printed specifications and literature for
said Products as of the date of this Agreement. BICO shall have the right to
make changes in the Products without the prior written consent of Luther only if
such changes, a) do not adversely affect the operation or performance
characteristics of the Products, or b) do not affect the appearance, size or
shape of the Products.
6.2 Defects Due to Workmanship. Luther shall inspect the Products
purchased from BICO within a commercially reasonable time following receipt. If
Luther finds any damaged or patently defective Products or any loss or damage
arising directly or indirectly from any defect, nonconformity of or defective
workmanship in the Products supplied, Luther shall notify BICO of such fact in
detail within 15 business days. Luther's sole remedy in respect of any Products
damaged during shipment, or patently defective Products, discovered within such
15-day period is limited to receiving replacement units or cash, credit or
refund, and to reimbursement for all out of pocket costs incurred thereto.
6.3 Product Liability and Warranty. BICO is solely responsible for the
integrity of all the Products and all product liability arising from use by
third-party customers or end-users. BICO warrants that the Products supplied
hereunder are merchantable, fit for the particular purpose designed, and free
from all defects in workmanship and material.
6.4 Notice of Defects; Complaints. In the event that Luther, or any third
party customer or enduser, claims that any Product supplied under this Agreement
is defective, Luther shall give prompt written notice to BICO providing detailed
information establishing the nature and extent of the claimed defect. In
addition to notifying Luther and the customer or end-user of whether BICO has
liability for the claim or defect, BICO shall inform Luther within five business
days of its receipt of such notice whether BICO at its option, shall (i) replace
the Product at its expense; or (ii) refund the purchase price therefor to Luther
plus the costs set forth in Section 6.5 below. In the event that BICO does not
elect the replacement or refund remedy herein within 5 business days after
written notice from Luther of the defect, then Luther may notify BICO of its
election of the replacement or refund remedies provided for in this section.
6.5 Costs. In addition to bearing the cost of any product liability or
end user replacement or refund remedy described in Section 6.4 above, BICO shall
reimburse Luther (after receipt of Luther's invoice) for all costs incurred by
Luther in connection with the inspection, handling and storage of Products with
established defects.
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ARTICLE VII
PRICE AND PAYMENT
7.1 Price. The purchase price for each of the 350 Units of product that
BICO shall make available hereunder shall be USD $120.00 for Models 1001 and
1601 and shall be USD $135.00 for Models 1002 and 1602. The price shall
represent the price of the Products FOB factory. The purchase price for each
Unit in excess of such 350 Units and for units of any future models will be
subject to good faith negotiations between the parties.
7.2 Payment. The purchase price of the Products shall be paid by Luther
to BICO by company check or other good cash funds, dispatched by first class
U.S. Mail within 30 calendar days of receipt of BICO's invoice at the principal
offices of Luther.
ARTICLE VIII
AVAILABLE INVENTORY; POST-TERMINATION SALES
8.1 During the term of this Agreement, BICO shall maintain and make
available to Luther an aggregate of no fewer than 350 Units of the Products.
Luther shall have the right to sell its excess inventory at any time, including
after termination of this Agreement.
ARTICLE IX
MARKETING AND INDEMNITY
9.1 Credit Risk. Luther shall assume the credit risk arising out of all
sales of the Products to its customers. Luther shall have sole responsibility
for setting the selling price to its customers.
9.2 Luther's Responsibility and Indemnity. Luther shall be responsible
for all loss or damage arising from the acts or omissions of Luther or any of
its employees, sales personnel, agents, or other representatives in connection
with the rendering of distribution services by Luther, as well as all claims for
damage to property of or injury or death of any persons directly or indirectly
resulting from its distribution services. Luther shall indemnify and hold BICO
harmless against and from any and all claims, losses, and damages, including
reasonable attorneys' fees, resulting from the acts or omissions of Luther, its
agents or employees, in relation to Luther's distribution services.
9.3 BICO's Responsibility and Indemnity. BICO shall be responsible for
all loss or damage arising from or relating to the fitness of the Products, the
acts or omissions of its employees in connection with the design, development,
regulatory status, manufacturing, quality control, or quality assurance of the
Products, and all claims for damage to property of or injury or death of any
persons therefrom. BICO shall indemnify and hold Luther harmless against and
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from any and all claims, loss, and damages, including attorneys' fees, resulting
from the acts or omissions of BICO, its agents and employees, in relation to the
Products.
9.4 Luther's Marketing Efforts. Luther shall use such efforts as it deems
commercially reasonable during the term of this Agreement to market and sell the
Products in the Territory.
9.5 Luther's Marketing Expenses. Luther shall be solely responsible for
its own expenses incurred in connection with the promotion, marketing, and sale
of the Products, including, without limitation, the wages, salaries, and
expenses of its employees, agents, and representatives and all other expenses
directly related to its promotion, marketing, and sale of the Products for its
benefit.
9.6 Luther's Rights and Customer Representations. The rights granted to
Luther hereunder are limited to the marketing and sale of the Products within
the Territory only. Luther shall not make any representations or give any
warranties or other benefits in favor of any proposed purchaser or customer
beyond those authorized by this Agreement, or those specifically approved in
writing by BICO.
9.7 BICO's Intellectual Property. During the term of this Agreement
(except as allowed by the parties' Technology Transfer and License Agreement of
even date herewith), Luther shall not make use of any of BICO's proprietary or
confidential information, trade secrets, or know-how, directly or indirectly, to
engage in manufacturing, assembling, promoting, or selling any goods,
merchandise, equipment, or devices that are the same or similar to, or that
perform the same or similar functions as, the Products. Luther shall not be
prevented from marketing and selling products that are competitive with the
Products.
ARTICLE X
TRADEMARKS
10.1 BICO's Trademarks. If Luther uses the trademarks listed in Exhibit
"B" hereto or such trademarks as may be designated from time to time by BICO
(the "Trademarks"), in advertising, marketing, or in any other manner
whatsoever, such use shall conform to the style and logo-types set forth
therein. Luther acknowledges that the Trademarks are the exclusive property of
BICO and can be lawfully employed only in connection with the advertising,
marketing, or selling of the Products or otherwise with the express written
consent of BICO. Luther shall not contest or dispute the validity thereof for
any purpose whatsoever.
10.2 Registration; Assignment. Luther shall not register, nor seek or
cause the registration of, the Trademarks, or any form thereof, nor oppose,
object, or in any other way interfere, directly or indirectly, with the
registration or use of the Trademarks by BICO, for any product or service in any
country, state, or other political entity whatsoever whether during the term of
this Agreement or thereafter. Any rights in the Trademarks acquired by Luther
anywhere in the world by reason of the use or registration of the Trademarks
shall inure to the benefit of BICO
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and shall, without any further consideration, be promptly assigned to BICO by
Luther at BICO's request.
10.3 Usage. If so requested by BICO at any time during the term of this
Agreement, whenever Luther shall use the Trademark in advertising, marketing, or
in any other manner whatsoever permitted by this Agreement, Luther shall clearly
and explicitly indicate BICO's ownership of the Trademarks, and the rights
thereto, in the manner as may hereafter from time to time be specified by
written notice from BICO to Luther. Upon request of XXXX, Xxxxxx shall provide
BICO with accurate samples of all literature, packages, labels, and other
labeling forms, devices, or materials prepared by Luther for use in connection
with Luther's sale or other distribution of the Products. Luther's use of the
Trademarks as permitted by this Agreement shall comply with all laws pertaining
to trademarks in force at any time in the county or state where the Trademarks
shall be used.
10.4 Title. Luther is not granted any right, title, or interest in or to
the Trademarks or their respective registrations, except as expressly provided
herein, and Luther shall not use the Trademarks in any way whatsoever except in
accordance with this Agreement.
ARTICLE XI
TERM AND TERMINATION
11.1 Term. The initial term of this Agreement shall be one year from the
date hereof. It shall be renewable thereafter for successive oneyear periods,
unless sooner canceled or terminated as otherwise provided herein (the "Term").
Either party may terminate this Agreement after the first anniversary hereof by
giving notice in accordance with Article XIV hereof at least 60 calendar days
prior to any such expiration date.
11.2 Termination Events. Any of the following events shall be deemed a
material breach of this Agreement:
(i) Any statement, report, certification, representation, or warranty
hereunder is materially false;
(ii) Any indebtedness of Luther to BICO not paid when due;
(iii) Either party fails in some material respect to perform any of
its respective obligations, undertakings, or agreements hereunder;
(iv) Either party is adjudicated bankrupt, becomes insolvent, executes
any assignment for the benefit of creditors, or a receiver or trustee is
appointed for any of its property under any bankruptcy or insolvency law
(provided that the appointment of any such receiver or trustee is not dismissed
within 30 days from the date of such appointment);
(v) Either party fails within 20 days to pay or otherwise discharge
any one or more judgments or attachments against it, unless such judgment is
being appealed in good faith;
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(vi) Either party for any reason suspends the operation of its
business or if Luther ceases marketing, promoting, or selling the Products, in
each case for a period in excess of 30 consecutive calendar days.
11.3 Breach. If either party commits a material breach of this Agreement
or violates or defaults in the due observance or performance of any obligation
or provision, and if such default or violation is not corrected within 30
calendar days after being called to the attention of the defaulting party by
notice from the other party hereto, then the notifying party, at its option, may
terminate this Agreement by notice given pursuant to Article XIV.
11.4 Carry-Over. In the event of termination, this Agreement shall remain
applicable to any orders for the Products which Luther has submitted in
accordance with this Agreement and which BICO has accepted prior to the
effective date of termination.
11.5 Return of Materials. On termination of this Agreement, Luther shall,
with the exception of actions required to sell all inventory of Products,
immediately cease to use the Trademarks, and shall immediately return to BICO
all stationery, advertising, and other printed material containing the
Trademarks in its possession or under its control.
11.6 Remedies Cumulative. The right of termination shall not be exclusive
of any other remedies or means of redress to which either party may be lawfully
entitled.
ARTICLE XII
PATENT INDEMNITY
12.1 Indemnity. BICO will, subject to the conditions set forth in this
Article, defend and indemnify Luther against any final award or damages awarded
in a suit, proceeding, or claim brought by a third party claiming that the sale
or other use of the Products supplied hereunder constitutes an infringement of
one or more of the patent rights of such third party, together with the actual
justifiable costs and expenses incurred by Luther in connection with such a
claim. This indemnity is conditional upon Luther giving BICO prompt written
notice of the commencement or threat of such suit, proceeding, or claim of
infringement by such third party, full authority, at the option of BICO, either
to settle or to defend such claim, suit, or proceeding and full assistance and
cooperation in case BICO decides to defend such a claim, suit or proceeding.
12.2 Expenses. It is understood that no cost or expense will be incurred
by Luther in connection with such a claim, suit, or proceeding for the account
of BICO without the prior written consent of BICO. However, in the event that
Luther is named as a party in such suit or proceeding and BICO has not settled,
is not actively engaged in settlement discussions with respect to such suit or
proceeding, and has not engaged with due diligence in the defense of such suit
or proceeding, Luther shall have the right to defend such suit or proceeding and
may incur expense in connection therewith. Any costs spent by Luther for such
defense shall be considered actual justifiable costs and shall be reimbursed by
BICO to the extent not recovered from the third party that brought such suit or
proceeding.
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12.3 Other Damages. BICO will be liable for any collateral, incidental,
or consequential damages suffered by Luther or by any other person due to
Products having been held to constitute infringement of third parties' patent
rights.
ARTICLE XIII
CONFIDENTIALITY
13.1 Each party undertakes to use its best efforts to ensure that any and
all information regarding the Products, and all designs, manufacturing
processes, know-how, marketing and sales plans, projections and similar matters
thereto, now or in the future used by the other party, and any information
regarding the business or business prospects of the other party and its
customers obtained by such party or its employees, shall be kept strictly
confidential, shall not be disclosed to third parties, and shall not be used by
either party (except as allowed by the parties' Technology Transfer and License
Agreement of even date herewith) for any purpose whatsoever other than that
party's performance under this Agreement without the express written permission
of the other party.
ARTICLE XIV
NOTICES
14.1 All notices hereunder shall be in writing and shall be deemed
received and effective five calendar days after being sent by registered or
certified mail, postage prepaid, return receipt requested, or one calendar day
after being sent by an overnight courier, fees prepaid or by confirmed facsimile
transmission. All notices, requests, or demands shall be sent to the following
addresses:
To BICO:
Biocontrol Technology, Inc.
000 Xxxxxx Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: President
To Luther:
Luther Medical Products, Inc.
00000 Xxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000-0000
facsimile: (000) 000-0000
Attention: Xx. Xxxxx Xxxxx
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Either party shall notify the other of any change of address or facsimile
number, in the manner set forth in this Article.
ARTICLE XV
DISPUTE RESOLUTION
15.1 Arbitration. Any dispute between the parties regarding the terms
and conditions of this Agreement or the interpretation or enforcement thereof
(the "Arbitration Proceeding") shall be determined by binding arbitration before
the American Arbitration Association in accordance with its rules for commercial
arbitration.
15.2 Venue. If BICO commences an Arbitration Proceeding, it shall be
held at the offices of the American Arbitration Association in Orange County,
California. If Luther commences an Arbitration Proceeding, it shall be held at
the offices of the American Arbitration Association in Pittsburgh, Pennsylvania.
15.3 Governing Law. If BICO commences an Arbitration Proceeding, this
Agreement shall be governed by the laws of the State of California. If Luther
commences an Arbitration Proceeding, this Agreement shall be governed by the
laws of the State of Pennsylvania.
ARTICLE XVI
MISCELLANEOUS
16.1 Written Amendment. This Agreement may only be modified or amended in
writing and signed by the parties hereto or their duly authorized
representatives or agents.
16.2 Waiver. No claim or right arising out of a breach of this Agreement
may be discharged in whole or in part by a waiver or renunciation of the claim
or right unless the waiver or renunciation is supported by consideration and is
in writing signed by the aggrieved party.
16.3 Assignment. No right or interest in this Agreement shall be assigned
by either party without the written consent of the other, and no delegation of
any material duty or material obligation, or of the performance of any material
duty or material obligation, owed by either party shall be made without the
written permission of the other. This prohibition against such assignment,
delegation, or performance shall not apply in the event of a business
combination transaction involving Luther or the sale of all, or substantially
all, of its assets.
16.4 Successors. This Agreement and all of its provisions and obligations
shall be binding upon and inure to the benefit of the parties and their heirs,
successors, and assigns.
16.5 Complete Agreement. This writing is intended by the parties to be a
final expression of their agreement and is intended also as a complete and
exclusive statement of the terms of their agreement. No course of prior
dealings between the parties and no usage of the trade shall be relevant to
supplement or explain any term used in this Agreement. Acceptance or
acquiescence
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in a course of performance rendered under this Agreement shall not be relevant
to determine the meaning of this Agreement even if the accepting or acquiescing
party has knowledge of the nature of the performance and opportunity for
objection.
16.6 Severability. If any provision or provisions herein are held to be
invalid, illegal, or unenforceable by a body of competent jurisdiction, the
validity, legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
16.7 Force Majeure. If the performance of this Agreement or of any
obligation hereunder, except the making of payments, is prevented, restricted,
or interfered with by reason of fire or other casualty or accident, strikes or
labor disputes, inability to procure power or supplies, war or other violence,
any law, order proclamation, regulation, ordinance, demand or requirement of any
governmental agency, or any other act or condition whatsoever beyond the
reasonable control of a party hereto, the party so affected, upon giving prompt
notice to the other party, shall be excused from such performance to the extent
of such prevention, restriction or interference provided that such party shall
use its best efforts to avoid or remove such causes for nonperformance and shall
continue performance hereunder with the utmost dispatch as and when such causes
have been removed.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
BIOCONTROL TECHNOLOGY, INC. LUTHER MEDICAL PRODUCTS, INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx Xxxxx
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Name (Print): Xxxxx X. Xxxxx Xxxxx Xxxxx, President
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By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
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Name (Print): Xxxxx X. Xxxxxx Name (Print): Xxxxxx X. Xxxxxx
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XXXX-XXXXXX
DISTRIBUTORSHIP AGREEMENT
Exhibit A
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Product shall mean BICO's theraPORT/(R)/ implantable vascular access system
products, including model number(s) 1001, 1002, 1601, and 1602., and any future
models under the same product line, to the extent that such products exist, on
the date of execution of this Agreement., or are otherwise added hereto by
mutual agreement.
Unit shall mean one count of any theraPORT/(R)/ model number 1001, 1002,
1601, 1602, or future model added to this Exhibit A.
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XXXX-XXXXXX
DISTRIBUTORSHIP AGREEMENT
Exhibit B
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BICO's Trademarks
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1. theraPORT/(R)/
2.
3.
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