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EXHIBIT 10.9
DISTRIBUTION AGREEMENT
This Distribution Agreement (the "Agreement") is entered as of March 31,
1998, by and between CardioDynamics International Corporation ("Supplier"), a
California corporation, with its registered office and/or place where business
is actually carried out at 0000 Xxxxx Xxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx,
Xxxxxxxxxx and CARDIOMEDICS, Inc. ("Distributor"), with its registered office
and/or place where business is actually carried out at 00000 Xxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxx.
1. Appointment; Territory; Products.
Supplier hereby appoints Distributor for the term of this Agreement as, and
Distributor agrees to act as, Supplier's external counterpulsation distributor
of the Products (as hereinafter defined) in the external counterpulsation market
for the Territory specified in Attachment A, subject to all the terms and
conditions hereof. So long during the term of this Agreement as Distributor
remains in full compliance with this Agreement, Supplier will not appoint
another external counterpulsation company to act as the distributor for the
Products in the external counterpulsation market in the Territory. Supplier's
Territory Managers and medical distributor's (that do not sell external
counterpulsation devices) will be allowed to sell Supplier's Products in the
external counterpulsation market. Distributor shall refrain from establishing or
maintaining any branch, warehouse or distribution depot for the Products outside
the Territory, and shall not engage in any advertising or promotional activities
relating to the Products directed primarily to customers located outside the
Territory. Furthermore, Products distributed by Distributor for further
distribution may be distributed only through sub-distributors who are bound in
writing to all the restrictions on Distributor contained in this Agreement.
"Product" shall mean the selected Supplier products, which are expressly set
forth in Attachment B. Any enhancement or improvement of a Product that is made
generally available by Supplier, that is substantially similar to such Product,
and that is marketed under the same product number and nomenclature as such
Product shall be added to Attachment B as a Product. Supplier reserves the right
to change, modify or discontinue any Product at any time. Supplier may add
Products to Attachment B and may remove any discontinued Product therefrom.
2. Payment and Supply Terms.
a. Products are delivered F.O.B. Supplier's applicable warehouse or place
of production. Purchase prices payable by Distributor are Supplier's then
current Territory Manager list prices less the discounts specified in Attachment
B. Supplier shall have the right, in its sole discretion, from time to time or
at any time to change such list prices with thirty (30) days written notice. New
prices will apply to all shipments made after such notice period. In addition,
Distributor will pay all charges, including without limitation freight,
shipping, customs charges and expenses, cost of special packaging or handling
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and insurance premiums, and shall be responsible for all taxes, including but
not limited to sales, value added and use taxes, duties and other governmental
assessments. Once shipped, Product is non-returnable. Payment is net thirty days
from date of invoice and shall be made in U.S. dollars in the United States.
b. During the term of this Agreement:
i. Supplier shall provide Distributor, at Supplier's expense, with
Samples of any applicable printed marketing materials that Supplier may in its
discretion produce for the Products, however, Supplier will not distribute them
unless approved in advance by Supplier in writing.
Distributor will prepare and produce similar and any additional materials needed
to promote the Products in the Territory. Distributor shall provide all such
materials (together with English translations) to Supplier and will not
distribute them unless approved in advance by Supplier in writing.
ii. Subject to the other terms and conditions of this Agreement,
Supplier shall use its reasonable efforts to promptly fill Distributor's written
purchase orders for Products after the purchase order is received by Supplier.
Should Supplier fail to supply Distributor with the Products ordered, the
purchase quotas for such period shall be reduced in direct proportion to the
extent of the shortfall. Supplier shall ship Products as specified in the Price
List and Distributor shall be responsible at its expense for any modifications
to the packaging, labeling or otherwise required to sell the Products in the
Territory.
iii. Supplier will provide Distributor with, and Distributor will
accept, such training as Supplier deems appropriate at locations specified by
Supplier, each party will bear its own expenses in connection with such
training.
c. Product will be deemed accepted if not rejected by written notice and
returned to Supplier in accordance with the warranty return procedure (Section
5) within ten (10) days of delivery. Otherwise distributor has no right of
return.
3. License, Trademarks and Trade Names.
a. The Distributor shall not use Supplier's name or any other trademark or
trade name used or claimed by Supplier (all of which names or marks shall
hereinafter be referred to as the "Marks") in connection with any business
conducted by the Distributor other than dealing with the Products.
b. Supplier hereby grants to the Distributor a royalty free non-exclusive
license to use the Marks, but only with respect to the sales of the Products.
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c. Distributor shall include and shall not alter, obscure or remove any
trademark or trade name used or claimed by Supplier, or any markings, colors or
other insignia which are contained on or in or affixed to Product at the time of
shipment.
d. Any advertising or promotional literature or announcement to the press
by Distributor regarding its relationship with Supplier or otherwise utilizing
Supplier's name or trademarks must be approved by Supplier in advance in
writing.
e. Distributor agrees that it will not use, without Supplier's prior
written consent, any xxxx which is likely to be similar to or confused with the
Marks.
f. Distributor agrees that it has not and will not register the name
"CardioDynamics International Corporation (CDIc)" or any forms thereof for use
in connection with any business entity without the prior written approval of
Supplier. Distributor also agrees not to use or contest during or after the term
of this Agreement any name, xxxx or designation used by Supplier anywhere in the
world (or any name, xxxx or designation similar thereto) and to promptly
register at Distributor's expense all Marks throughout the Territory in the name
of and for the sole benefit and ownership of Supplier.
g. The Distributor agrees that its use of the Marks shall not create in
its favor any right, title or interest therein and acknowledges Supplier's
exclusive right, title and interest in the Marks.
h. The Distributor hereby acknowledges and agrees that any and all
rights, title and interest in any and all trademarks and other proprietary
rights that are related in any way to the production, manufacture or sale of the
Initial Products, or form the basis for the development of the Initial Products
are owned solely and exclusively by Supplier, and Supplier may, in its
discretion, seek to secure and maintain any such rights. In the event that
Supplier seeks to secure or maintain or initiate any infringement action
regarding such rights, the Distributor agrees to cooperate with Supplier in any
way reasonably requested.
4. Distributor Covenants and Representations.
Except as expressly and unambiguously provided herein, Distributor
represents, warrants and agrees:
a. To use its best efforts to successfully market (including, without
limitation, conducting periodic promotions and market research, maintaining a
well staffed sales force and adequate inventory, and prompt inclusion of the
Products in all applicable trade shows and in Distributor's catalogs and other
promotional materials), distribute and support (including training and other
support) the Products on a continuing basis and to comply with good business
practices and all laws and regulations relevant to
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this Agreement or the subject matter hereof. In its distribution efforts,
Distributor will use Marks (but will not represent or imply that it is Supplier
or is a part of Supplier). However, all advertisements, promotional materials,
packaging and anything else bearing a Xxxx shall identify Supplier as the Xxxx
owner and Product manufacturer and shall be subject to prior written approval of
Supplier, which approval shall not be unreasonably withheld.
b. To keep Supplier informed of relevant market trends, customer needs,
competitive activity, economic and regulatory conditions and Distributor's sales
and inventory by Product. Distributor will also provide Supplier with a written
quarterly report with respect to these matters.
c. That it does not currently represent or promote any lines or products
that compete with the Products. Distributor will conduct its business in a
manner that reflects favorably on the Products and shall not, without Supplier's
prior written consent, represent, promote or otherwise try to sell within the
Territory any lines or products that, in Supplier's judgment, compete with the
Products covered by this Agreement.
d. That neither this Agreement (or any term hereof) nor the performance
of or exercise of rights under this Agreement, is restricted by, contrary to, in
conflict with, ineffective under, requires registration or approval or tax
withholding under, or affects Supplier's proprietary rights (or the duration
thereof) under, or will require any termination payment or compulsory licensing
under, any law or regulation of any organization, country, group of countries or
political or governmental entity located within or including all or a portion of
the Territory.
e. That Distributor will purchase the quota of Product specified in
Attachment C during the periods specified therein. If Distributor fails during
any period specified in Attachment C to purchase from Supplier the sales quota
of Product for that period, Supplier shall have the right to convert the
Distributor's rights in the Territory to non-exclusive (or terminate this
Agreement).
f. To ascertain and comply with, at Distributor's sole expense, all
applicable laws and regulations.
g. To ascertain and comply with all applicable laws and regulations and
standards of industry or professional conduct, including without limitation,
those applicable to product claims, labels, instructions, packaging or the like,
which consent shall not be unreasonably withheld.
h. To use best efforts, at its sole expense, to obtain and maintain any
applicable approvals, registrations, notifications or the like with regard to
marketing, using, selling, labeling or otherwise promoting or making claims
regarding the Products or their uses or reimbursement therefore in the
Territory. This includes, without limitation, conducting any necessary clinical
studies and preparing and filing any
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necessary applications or documents. Distributor shall not file any such
application or document or conduct any study without Supplier's prior written
consent, which shall not be unreasonably withheld. To the extent allowed by law
all approvals, registrations, notifications and the like (and all documents,
applications and information related thereto) and all rights thereunder or
thereto shall be for the sole benefit of and shall be solely owned by and in the
name of Supplier. Distributor will provide Supplier with any information
regarding the foregoing that Supplier may request (with English translations);
Supplier may use such information in its discretion.
i. To immediately notify Supplier of any adverse or unexpected results or
any actual or potential government action relevant to a Product and, if and to
the extent requested by Supplier in writing to suspend distribution of that
Product.
j. To report on a monthly basis the names and addresses of customers who
purchase the Products with their serial numbers. To keep for five years after
termination of this Agreement records of all Product sales and customers
sufficient to adequately administer a recall of any Product and to fully
cooperate in any decision by Supplier to recall, retrieve and/or replace any
Product.
l. To keep Supplier informed as to any problems encountered with the
Products and any resolutions arrived at for those problems, and to communicate
promptly to Supplier any and all modifications, design changes or improvements
of the Products suggested by any customer, employee or agent. Distributor
further agrees that Supplier shall have any and all right, title and interest in
and to any such suggested modifications, design changes or improvements of the
Products, without the payment of any additional consideration therefore either
to Distributor, or its employees, agents or customers. Distributor will also
promptly notify Supplier of any infringement of any trademarks or other
proprietary rights relating to the Products.
5. Compliance with United States Laws.
a. Distributor acknowledges that the export from the United States of the
Products may be subject to regulation by the U.S. Export Administration Act of
1979, as amended, and the rules and regulations promulgated thereunder, which
restrict exports and re-exports of any Products or direct product thereof.
Distributor agrees to comply with U.S. Export Administration Regulations as in
effect from time to time (including, without limitation, all record-keeping
requirements imposed thereunder), and will not re-export the Products in
violation of such Regulations.
b. Without limitation of the foregoing, Distributor agrees to commit no
act which, directly or indirectly, would violate any United States law,
regulation, or treaty, or any other international treaty or agreement, relating
to or applicable to the export or re-export of the Products, to which the United
States adheres or with which the United States complies.
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c. Distributor shall obtain, at its expense, any necessary licenses
and/or exemptions with respect to the export from the U.S. of all material or
items deliverable by Supplier and shall demonstrate to Supplier its compliance
with all applicable laws and regulations prior to delivery thereof by Supplier.
d. Distributor agrees to comply with the U.S. Foreign Corrupt Practices
Act of 1977, as amended, and the Regulations promulgated thereunder. Without
limiting the foregoing, Distributor will not pay or give anything of value
directly or indirectly to any officer, employee, or agent of a political party
or government, or candidate for public office, for the purpose of obtaining or
retaining business.
e. Distributor agrees to indemnify and hold harmless Supplier from any
and all fines, damages, losses, costs and expenses (including reasonable
attorneys' fees) incurred by Supplier as a result of the breach of this Section
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6. Confidentiality.
Distributor agrees that all inventions, know-how and ideas it obtains from
Supplier and all other business, technical and financial information it obtains
from Supplier are the confidential property of Supplier ("Proprietary
Information"). Except as expressly and unambiguously allowed herein, Distributor
will hold in confidence and not use or disclose any Proprietary Information and
shall similarly bind its employees in writing. Distributor's nondisclosure
obligation shall not apply to information it can document has entered the public
domain and is generally available to the public. Distributor will promptly
report to Supplier any actual or suspected violation of the terms of this
Section 6, and will take all reasonable further steps requested by Supplier to
prevent, control or remedy any such violation. Distributor shall, upon the
termination of the Agreement or the request of Supplier at any time, return to
Supplier all tangible manifestations of confidential information received by
Distributor pursuant to this Agreement (and all copies and reproductions
thereof).
7. Warranty and Disclaimer.
Supplier warrants only to Distributor that the Products will be free from
manufacturing and material defects for thirteen (13) months from date of
shipment to Distributor. Products purchased from Supplier which do not comply
with the warranty and are returned (by Distributor only) to Supplier during such
period (with proof of the date of purchase) will be repaired or replaced,
provided Distributor bears the cost of freight and insurance for return of good
to Distributor. Distributor must return any such Products in the original
container, which shall conspicuously bear the Return Material Authorization
(RMA) number Distributor obtains from Supplier prior to return. If Supplier
cannot, or determines that is not practical to, repair or replace the returned
Product, the purchase price therefore will be refunded. Supplier MAKES NO OTHER
WARRANTIES WITH RESPECT TO THE PRODUCTS OR ANY SERVICES AND DISCLAIMS ALL OTHER
WARRANTIES, INCLUDING WARRANTIES OF
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MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT. The above
warranty does not extend to any Product that is modified or altered, is not
maintained to Supplier's maintenance recommendations, is operated, handled or
stored in a manner other than that specified by Supplier, has its serial number
removed or altered or is treated with abuse, negligence or other improper
treatment (including, without limitation, use outside the recommended
environment). Distributor's sole remedy with respect to any warranty or defect
is as stated above. Distributor is fully responsible for satisfaction of its
customers and will be responsible for all claims, damages, settlements, expenses
and attorneys fees incurred by Supplier with respect to Distributor's customers
or their claims beyond Supplier's above warranty obligation to Distributor.
8. Limited Liability.
NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR OTHERWISE, Supplier WILL
NOT BE LIABLE UNDER ANY SECTION OF THIS AGREEMENT OR UNDER ANY CONTRACT,
NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY (A) FOR ANY
AMOUNTS IN EXCESS IN THE AGGREGATE OF THE AMOUNTS PAID TO Supplier HEREUNDER
DURING THE TWELVE MONTH PERIOD PRIOR TO DATE THE CAUSE OF ACTION AROSE OR (B)
FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES. (C) FOR COST OF PROCUREMENT OF
SUBSTITUTE GOODS, TECHNOLOGY OR SERVICES, OR (D) DAMAGES ARISING FROM THE LOSS
OF PROFITS OR LOSS OF BUSINESS. Supplier SHALL HAVE NO LIABILITY FOR ANY FAILURE
OR DELAY DUE TO MATTERS BEYOND ITS REASONABLE CONTROL. DISTRIBUTOR SHALL
INDEMNIFY Supplier AGAINST ALL CLAIMS ASSERTED BY ITS CUSTOMERS OR OTHER THIRD
PARTIES AS A RESULT OF DISTRIBUTOR'S ACTS OR OMISSIONS.
9. Relationship of Parties.
The parties hereto expressly understand and agree that Distributor is an
independent contractor in the performance of each and every part of this
Agreement, is not an agent, and is solely responsible for all its employees and
agents and its labor costs and expenses arising in connection therewith and is
responsible for an will indemnify Supplier from any and all claims, liabilities,
damages, debts, settlements, costs, attorneys' fees, expenses and liabilities of
any type whatsoever that may arise on account of Distributor's activities or
omissions, or those of, its employees or agents, including without limitation,
providing unauthorized representations or warranties (or failing to effectively
disclaim all warranties and liabilities on behalf of Supplier) to its customers
or breaching any term, representation or warranty of this Agreement. Supplier is
in no manner associated with or otherwise connected with the actual performance
of this Agreement on the part of Distributor, nor with Distributor's employment
of other persons or incurring of other expenses. Except as expressly provided
herein, Supplier shall have
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no right to exercise any control whatsoever over the activities or operations of
Distributor.
10. Assignment.
This Agreement and the rights hereunder are not transferable or assignable
by a party without the prior written consent of the other party, except for
rights to payment and except to a person or entity who acquires all or
substantially all of the assets or business of Supplier, whether by sale, merger
or otherwise.
11. Term and Termination.
Unless terminated earlier as provided herein, this Agreement shall have a
term extending from the date of this Agreement to May 30, 1999. Distributor
understands that after the date specified above or earlier termination, it shall
have no right whatsoever to purchase Products or continue as a dealer or
distributor or otherwise regardless of any undocumented continuation of the
relationship with Supplier.
a. This Agreement may be terminated by a party for cause immediately by
written notice upon the occurrence of any of the following events:
i. If the other ceases to do business, or otherwise terminates its
business operations; or
ii. If the other shall fail to secure or renew any license, registration,
permit, authorization or approval for the conduct of its business in the manner
contemplated by this Agreement or if any such license, registration, permit,
authorization or approval is revoked or suspended; or
iii. If the other breaches any provision of this Agreement and falls to
fully cure such breach within 30 days (10 days in the case of a failure to pay)
of written notice describing the breach; or
iv. If the other seeks protection under any bankruptcy, receivership,
trust deed, creditors arrangement, composition or comparable proceeding, or if
any such proceeding is instituted against the other.
b. Supplier may immediately terminate this Agreement upon notice if
Distributor or Distributors' assets or business is acquired by a third party.
Additionally, the Supplier may terminate this Agreement upon two years written
notice if Supplier or Suppliers' assets or business is acquired by a third
party. "Acquired" for purposes of this provision means that the third party has
obtained 50% or more of the capital shares or voting power.
Either party may terminate this Agreement at any time with or without cause upon
60 days written notice.
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c. Each party understands that the rights of termination hereunder are
absolute. Neither party shall incur any liability whatsoever for any damage,
loss or expenses of any kind suffered or incurred by the other arising from or
incident to any termination of this Agreement by such party which complies with
the terms of the Agreement whether or not such party is aware of any such
damage, loss or expenses.
d. In the event of any termination, Supplier may elect to continue or
terminate any purchase order then pending.
e. In addition to any provisions that survive termination according to
their terms and any restrictions on Distributor's distribution of Products, the
following sections shall survive termination of this Agreement: Sections 2.a; 3
through 10.
f. Upon termination, if Distributor has any right, title or interest in
any Xxxx (as defined in Section 3.b) or any registration related thereto or in
anything referred to in Section 3.h, it will immediately assign all such right,
title and interest to Supplier and take all necessary action to ensure that
Supplier obtains the full benefit thereof or, if Supplier so requests in writing
with respect to any such item, take any necessary action to surrender and cancel
such item and the related rights, title and interest.
g. Termination is not the sole remedy under this Agreement and, whether
or not termination is effected, all other remedies will remain available.
12. Duties of Distributor Upon Termination.
Upon the termination of this Agreement for any reason whatsoever,
Distributor shall:
a. Pay to Supplier, in full within thirty (30) days of such termination,
all amounts owed to Supplier. Supplier shall be entitled to set off and deduct
from any money due Distributor, whether or not arising under this Agreement, any
and all amounts due Supplier from Distributor.
b. Promptly return to Supplier any and all Supplier-owned Product or
other materials, documentation or data, including without limitation all
promotional material, in the possession of Distributor for whatever reason or
purpose, such Product, material, documentation and data to be in the same
condition as when delivered to Distributor.
c. Cooperate with Supplier in completing all outstanding obligations to
customers, including the fulfillment, at Distributor's expense, of each warranty
term and condition.
d. Within seven (7) days after notice of termination by either
Distributor or Supplier, prepare a statement listing all active and prospective
customers and the type and amount of orders of Product expected to be sold to
such customers by Distributor during the sixty (60) day period following the
date of termination of this Agreement. Distributor
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shall also deliver to Supplier within such seven (7) day period all orders for
Product received by Distributor on or prior to the date of the notice of
termination.
13. General.
a. Amendment and Waiver -- Except as otherwise expressly provided herein,
any provision of this Agreement may be amended and the observance of any
provision of this Agreement may be waived (either generally or any particular
instance and either retroactively or prospectively) only with the written
consent of the parties. However, it is the intention of the parties that this
Agreement be controlling over additional or different terms of any purchase
order, confirmation, invoice or similar document, even if accepted in writing by
both parties, and that waivers and amendments shall be effective only if made by
non-preprinted agreements clearly understood by both parties to be an amendment
or waiver.
b. Governing Law and Legal Actions -- This Agreement shall be governed by
and construed under the laws of the State of California and the United States
without regard to conflicts of laws provisions thereof and without regard to the
United Nations Convention on Contracts for the International Sale of Goods.
Unless otherwise elected by Supplier for the particular instance (which Supplier
may do at its option), the sole jurisdiction and venue for actions related to
the subject matter hereof shall be the California state and U.S. federal courts
having within their jurisdiction of such courts and agree that process may be
served in the manner provided herein for giving of notices or otherwise as
allowed by California or federal law. In any action or proceeding to enforce
rights under this Agreement, the prevailing party shall be entitled to recover
costs and attorney's fees.
c. Headings and Language -- Headings and captions are for convenience
only and are not to be used in the interpretation of this Agreement. The
official text of this Agreement shall be the English language, and such English
text shall be controlling in all respects, notwithstanding any translation
hereof required under the laws or regulations of any other country. The parties
undertake to translation hereof required under the laws or regulations of any
other country. The parties undertake to use the English language in respect of
all documents and communications contemplated hereby, except where another
language must be used under the laws and regulations of another country. In any
such case, a certified English translation shall be supplied to the other party
by the party using such document or making such communication.
d. Notices -- For purposes of this Agreement, and for all notices and
correspondence hereunder, the addresses of the respective parties have been set
out at the beginning of this Agreement, and no change of address shall be
binding upon the other party hereto until written notice thereof is received by
such party at the address shown herein. All notices shall be deemed received
when personally delivered or two (2) days
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after being sent via telecopy, or three (3) after being sent by overnight
courier, return receipt requested.
e. Entire Agreement -- This Agreement supersedes all proposals, oral or
written, all negotiations, conversations or discussions between or among parties
relating to the subject matter of this Agreement and all past dealing or
industry custom. This Agreement does not contain or constitute any express or
implied license to make, have made or modify any Product under any
circumstances.
f. Severability -- If any provision of this Agreement is held to be
illegal or unenforceable, that provision shall be limited or eliminated to the
minimum extent necessary so that this Agreement shall otherwise remain in full
force and effect and enforceable.
SUPPLIER DISTRIBUTOR
CardioDynamics International Corporation CARDIOMEDICS, Inc.
a California corporation
BY /s/ Xxxxxxx Xxxxxxx BY /s/ Xxxxxxx X. Xxxxxx
------------------------------------- --------------------------------
Name: Xxxxxxx Xxxxxxx Name: Xxxxxxx X. Xxxxxx
Title: Chief Operating Officer Title: President, C.O.O.
Date: 4-10-98 Date: 4-8-98
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