EXHIBIT 10.11
SECOND AMENDMENT TO
EXCLUSIVE DISTRIBUTION AGREEMENT
THIS SECOND AMENDMENT TO EXCLUSIVE DISTRIBUTION AGREEMENT (the "Amendment")
is effective as of this June 3, 1999 by and between XXXXXX, INC., a Delaware
corporation ("Distributor"), and ANIKA THERAPEUTICS, INC., a Massachusetts
corporation ("Company"). Reference is hereby made to that certain Exclusive
Distribution Agreement effective as of November 7, 1997, as amended by First
Amendment to Exclusive Distribution Agreement effective as of June 1, 1998,
together with all Annexes and Exhibits thereto (as so amended, the "Agreement"),
by and between Distributor and Company. All capitalized terms used herein and
not defined shall have the meanings given to them in the Agreement.
WHEREAS, Distributor and Company have previously entered into the Agreement
providing for the exclusive right of Distributor to distribute and sell the
Product in accordance with the terms set forth therein, and the Parties desire
to amend the terms of the Agreement as provided herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the Parties contained herein and in the Agreement, the Parties hereby agree as
follows:
SECTION 1. AMENDMENTS. The Agreement is hereby amended as follows:
1.1 Section 2 of the Agreement shall be amended as follows: (i) the heading
of Section 2(c) shall be changed to "(c) CERTAIN REGULATORY APPROVALS"; and (ii)
there shall be added the following additional paragraph at the end of such
Section:
"(c) (iv) DISTRIBUTOR RESPONSIBLE COUNTRIES. Notwithstanding anything
contained in this Agreement to the contrary, Distributor shall use commercially
reasonable efforts to obtain all regulatory approvals required to market, sell
and distribute the Product in the countries set forth on Annex C-1 attached
hereto marked with a + (the "Distributor Responsible Countries").
1.2 Sections 2(d.2), 2(d.3) and 2(d.4) shall be deleted in their entirety
and replaced with the following:
(d.2) Upon receipt of a Reimbursement Approval(s) for use of the
Product in the Field of Use by the appropriate governmental body
and/or private insurers representing in aggregate more than fifty
percent (50%) of the population in Germany, Distributor shall pay
Company the one-time nonrefundable sum of $500,000.
(d.3) Upon receipt of the first Reimbursement Approval(s) for use of
the Product in the Field of Use by the appropriate governmental body
and/or private insurers representing in aggregate more than fifty
percent
(50%) of the population in either of the United Kingdom or France,
Distributor shall pay Company the one-time nonrefundable sum of
$250,000, and thereafter upon receipt of such Reimbursement
Approval(s) in such other country, Distributor shall pay Company the
one-time nonrefundable sum of $125,000.
(d.4) Upon receipt of the first Reimbursement Approval(s) for use of
the Product in the Field of Use by the appropriate governmental body
and/or private insurers representing in aggregate more than fifty
percent (50%) of the population in any one of the following countries
(Italy, Sweden or the Netherlands), Distributor shall pay Company the
one-time nonrefundable sum of $125,000.
1.3 Section 3 of the Agreement shall be amended to include the following
additional paragraph at the end of such Section:
"(c) The Company grants to Distributor a right of first offer to
acquire the rights to market, distribute and sell the Product in Israel,
Turkey, Spain, Portugal and Egypt (the "Additional Territory") on the
following terms: If the Company seeks to change its current distributor in
any of the countries in the Additional Territory, the Company will notify
Distributor in writing (the date of such notification the "Notification
Date") before commencing any negotiations with any third party regarding
such rights. Distributor will have sixty (60) days from the Notification
Date to indicate its interest in acquiring the right to market, distribute
and sell the Product in any of such countries. If Distributor does not wish
to pursue negotiations for the right to market, distribute and sell the
Product in any such country, or if such sixty (60) day period expires
without Distributor notifying Company as to its interest, then Company
shall be free to enter into an agreement with another Person with respect
to such rights. If prior to the expiration of the sixty (60) day period,
Distributor expresses in writing its interest in obtaining the right to
market, distribute and sell the Product in any such country, the parties
shall enter in to good faith negotiations regarding such rights within the
ninety (90) day period immediately following the Notification Date. In any
proposal to acquire the rights to market, distribute and sell the Product
in any Additional Territory, Distributor shall produce a supplement to the
Marketing Plan with respect to such country which shall include a
reasonable incremental increase to the Territory-wide Purchase Requirement
(up to a maximum of five percent (5%) of Distributor's marketing forecast
for actual Product sales for such countries). If at the end of such ninety
(90) day period the parties are unable to reach an agreement and Company
does not wish to continue the negotiations, as Company shall determine in
its sole discretion, Company shall be free to enter into an agreement with
any other Person with respect to such rights. Notwithstanding anything
contained in this Agreement to the contrary, the Company shall have no
obligation to seek to change its current distributor in any of the
countries in the Additional Territory."
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1.4 The table comprising part of Section 4(a) of the Agreement shall be
amended by deleting such table in its entirety and replacing it with the
following:
CALENDAR TERRITORY-WIDE INCREMENTAL
YEAR UNITS REQUIREMENT* MINIMUM*
-------- ------------------ --------
1998 (Year 1) 30,000 Units 30,000 Units
1999 (Year 2) 90,000 Units 30,000 Units
2000 (Year 3) 150,000 Units 30,000 Units
2001 (Year 4) 290,000 Units 40,000 Units
2002 (Year 5) 520,000 Units 45,000 Units
2003 (Year 6) 550,000 Units 50,000 Units
2004 (Year 7) 570,000 Units 70,000 Units
2005 (Year 8) and 580,000 Units 80,000 Units
thereafter annually
* Exclusive of Samples and Demonstration Units
1.5 Section 4(b) of the Agreement shall be deleted in its entirety and
replaced with the following:
"(b) Notwithstanding the provisions of Section 4(a), Distributor shall not
be obligated to purchase more than the number of Units per year listed in the
table in Section 4(a) under the column titled "Incremental Minimum" for each
such year until the year in which the U.S. FDA approves the Product for
marketing and sale for use in the treatment of osteoarthritis by injection in
the human knee joint in the Field of Use in the United States. Upon receipt of
such FDA approval, Distributor shall be obligated to purchase in that calendar
year the prorated Year 2 annual Territory-wide Units Requirement which shall be
determined by multiplying the Year 2 annual Territory-wide Units Requirement
(90,000 Units) by a fraction, the numerator of which is the number of days
remaining in the calendar year after the date on which FDA approval is received
and the denominator of which is 365. The Year 3, Year 4, Year 5, Year 6 and Year
7 annual Territory-wide Units Requirement shall apply to the first, second,
third, fourth and fifth calendar years, respectively, immediately succeeding the
calendar year during which the FDA approval is received, and the Year 8 annual
Territory- wide Units Requirement shall apply to each calendar year thereafter
during the Term. For example: if FDA approval is received 6 months into Year 3
then for Year 3, the annual Territory-wide Units Requirement pursuant to the
calculation specified above shall be 45,000 Units (90,000 multiplied by .50);
and for Year 4, the annual Territory-wide Units Requirement shall be 150,000
Units (the Year 3 Territory-wide Units Requirement as applicable to the first
year succeeding the calendar year during which the FDA approval is received).
All purchases of Product shall have a documented delivery date assigned to
them. For purposes of determining whether or not Distributor has met the annual
Territory-wide Units Requirement for any given year, the documented delivery
date shall be determinative, not the date of actual delivery, if different."
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1.6 Annex C-1 of the Agreement shall be deleted in its entirety and
replaced by Annex C-1 attached hereto.
1.7 Table 3, (referred to therein as the "Proposed Majority Activities
Budget Summary"), comprising part of the Marketing Plan attached as Annex B to
the Agreement, and Appendix A also comprising part of the Marketing Plan shall
both be amended in the form of Exhibit 1 attached hereto.
1.8 Section 7(b) of the Agreement shall be amended so that the last two
sentences of such section shall be deleted in their entirety and replaced by the
following:
"If for any calendar year during the first three (3) years following the
earlier of (i) the First Commercial Sale of the Product by Distribution in any
country in the Territory or (ii) January 1, 1998, the actual Average Selling
Price per Unit for such calendar year exceeds the Estimated Average Selling
Price used for such calendar year, Distributor shall pay to Company within
thirty (30) days of the date the calculation of the actual Average Selling Price
per Unit is deemed final by the Parties as provided in Section 7(c) of the
Agreement, an amount equal to (X) the number of Net Units Sold during such
calendar year multiplied by (Y) thirty-five percent (35%) of the difference
between the actual Average Selling Price per Unit and the Estimated Average
Selling Price used for such calendar year. Thereafter, if for any calendar year
the actual Average Selling Price per Unit for such calendar year exceeds the
Estimated Average Selling Price used for such calendar year, Distributor shall
pay to Company within thirty (30) days of the date the calculation of the actual
Average Selling Price per Unit is deemed final by the Parties as provided in
Section 7(c) of the Agreement, an amount equal to (X) the number of Net Units
Sold during such calendar year multiplied by (Y) forty percent (40%) of the
difference between the actual Average Selling Price per Unit and the Estimated
Average Selling Price used for such calendar year. If for any calendar year
during the first three (3) years following the earlier of (i) the First
Commercial Sale of the Product by Distributor in any country in the Territory or
(ii) January 1, 1998, the Estimated Average Selling Price exceeds the actual
Average Selling Price per Unit, Company shall pay to Distributor within thirty
(30) days of the date the calculation of the actual Average Selling Price per
Unit is deemed final by the Parties as provided in Section 7(c) of this
Agreement an amount equal to (X) the number of Net Units Sold during such
calendar year multiplied by (Y) thirty-five percent (35%) of the difference
between the Estimated Average Selling Price and the actual Average Selling Price
per Unit. Thereafter, if for any calendar year the Estimated Average Selling
Price exceeds the actual Average Selling Price per Unit, Company shall pay to
Distributor within thirty (30) days of the date the calculation of the actual
Average Selling Price per Unit is deemed final by the Parties as provided in
Section 7(c) of this Agreement an amount equal to (X) the number of Net Units
Sold during such calendar year multiplied by (Y) forty percent (40%) of the
difference between the Estimated Average Selling Price and the actual Average
Selling Price per Unit."
1.9 The first paragraph of Section 17(b) of the Agreement shall be deleted
in its entirety and replaced by the following:
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"(b) Upon the tenth anniversary of the Effective Date, Distributor may, at
Distributor's sole option, choose to extend this Agreement for an additional
period of ten (10) years, which such ten (10) years shall be added to the Term
for each country in the following regions:
1. "Americas" Region = Canada, U.S., and Puerto Rico
2. "Latin America" Region = Argentina, Bolivia, Brazil, Chile, Columbia,
Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala,
Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay,
Peru, Suriname, Trinidad and Tobago, Uruguay, Venezuela
3. "Asia" Region = Xxxxxxxxx, Xxxxx, Xxxx Xxxx, Xxxxxxxxx, Xxxxx Xxxxx,
Xxxxxxxx, New Zealand, Philippines, Singapore, Taiwan, Thailand
4. "Europe" Region = Austria, Belgium, Denmark, Finland, France, Germany,
Greece, Italy, Luxembourg, The Netherlands, Norway, Sweden,
Switzerland, United Kingdom
5. "Eastern Europe" Region = Baltic Region (Estonia, Latvia and
Lithuania), Balkan Region (Romania, Bulgaria, Albania, Croatia,
Slovenia, Bosnia, Macedonia and Serbia), Czech Republic, Hungary,
Poland, Russia and other Commonwealth of Independent States
(specifically excluding Azerbaijan, Turkmenistan, Kazakhstan,
Kirghizistan, Tachcikistan)
6. "Middle East/Africa" Region = Syria, Lebanon, Jordan, Saudi Arabia,
UAE/Gulf, Africa, South Africa"
SECTION 2. MISCELLANEOUS.
2.1 Except as specifically amended by this Amendment, the Agreement shall
remain in full force and effect in accordance with its terms and all references
in the Agreement and in this Amendment to the Agreement shall mean the Agreement
as amended hereby.
2.2 This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
2.3 This Amendment shall be governed by and construed in all respects in
accordance with the laws of the State of New York, without giving effect to its
choice of law principles.
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IN WITNESS WHEREOF, the Parties have caused this Amendment to be
executed by their duly authorized representatives.
ANIKA THERAPEUTICS, INC.
By: /S/ J. XXXXXXXX XXXXX
----------------------------
Name: J. Xxxxxxxx Xxxxx
Title: Chairman, President, CEO
XXXXXX, INC.
By: /S/ J. XXXXXXX XXXXXXX
---------------------------
Name: J. Xxxxxxx Xxxxxxx
Title: President
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ANNEX C-1
COUNTRIES INCLUDED IN TERRITORY
ASIA AMERICAS
---- --------
Australia Canada
China* United States of America
Hong Kong Puerto Rico
Indonesia
Korea, South LATIN AMERICA
Malaysia -------------
New Zealand Argentina
Philippines Bolivia
Singapore Brazil
Taiwan Chile
Thailand Columbia
Costa Rica
EUROPE Dominican Republic
------ Ecuador
Austria El Salvador
Belgium Guatemala
Denmark Guyana
Finland Haiti
France Honduras
Germany Jamaica
Greece Mexico
Italy Nicaragua
Luxembourg Panama
Netherlands, The Paraguay
Norway Peru
Sweden Suriname
Switzerland Trinidad and Tobago
United Kingdom Uruguay
Venezuela
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EASTERN EUROPE+
---------------
Baltic Region (Estonia, Latvia and Lithuania)
Balkan Region (Romania, Bulgaria, Albania,
Croatia, Slovenia, Bosnia, Macedonia and
Serbia)
Czech Republic
Hungary
Poland
Russia and other Commonwealth of
Independent States countries (specifically
excluding Azerbaijan, Turkmenistan,
Kazakhstan, Kirghizistan and
Tachcikistan)
MIDDLE EAST/AFRICA+
-------------------
Syria
Lebanon
Jordan
Saudi Arabia
UAE/Gulf
Africa
South Africa
* Subject to the terms and conditions in Section 2(c)(ii)
+ Distributor Responsible Countries
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EXHIBIT 1
TABLE #3
AMENDED BUDGET SUMMARY
XXXXXX, INC./XXXXX THERAPEUTICS, INC.
SECOND AMENDMENT PROPOSAL TO
EXCLUSIVE DISTRIBUTION AGREEMENT
3) Proposed Marketing Activities Budget Summary
-----------------------------------------------
a) Table 3 comprising part of the Marketing Plan attached as Annex B to
the Agreement, and Appendix A also comprising part of the Marketing
Plan shall both be amended in the form of Exhibit 2 as follows:
COUNTRY/ YEAR 1 YEAR 2 YEAR 3 YEAR 4
REGION 12 MO. 12 MO. 12 MO. 12 MO.
-------- ------ ------ ------ ------
Canada/Australia $1,700,000 $ 700,000 $ 1,700,000 XXX
Xxxxxx Xxxxxx 10,000 4,900,000 3,880,000 TBD
Asia 5,000 10,000 1,000,000 TBD
Europe 1,170,000 4,540,000 4,300,000 TBD
Latin America 180,000 1,040,000 1,000,000 TBD
CE/ME/SA 680,000 700,000 760,000 TBD
---------- ----------- -----------
Total $3,685,000 $11,890,000 $12,640,000
Contract Contingency +/- 5% +/- 15% +/- 20% 0%
Adj. Annual Commitment $ 184,280 $ 1,785,500 $ 2,528,000 Proposed Budget
All/Shortfalls/Overspend: M $4,485.7
TBD: Budget for Year 4 has not been determined. A proposed budget will be
presented to the Steering Committee. All Adjustments will be incorporated
into Year 4 Proposal. Budget is Contingent upon Regulatory Approval in All
Markets and Countries Identified in Annex C1.
EXHIBIT 1
(CONTINUED)
AMENDED APPENDIX A
XXXXXX, INC./ANIKA THERAPEUTICS
SECOND AMENDMENT PROPOSAL TO EXCLUSIVE DISTRIBUTION AGREEMENT
b) Amended Appendix A: Field Specialist and Support Personnel
YEAR ONE YEAR TWO
PERSONNEL 12 MONTHS 12 MONTHS
--------- --------- ---------
(Field Sales Specialists)
-------------------------
Canada 5 5
United States 0 26
Xxxxxx 0 0
Xxxxx 0 0
Xxxxxxxxx 0 1
Hong Kong 1 1
Australia 1 2
New Zealand TBD
Latin America 2 5
Europe 5 24
CE/ME/SA 4 4
Total FSS 21 71
(Support Personnel)
-------------------
Europe:
-------
Product Mgr. 1 1
Sales Specialist 2 4
Sales Director 1 1
Total Europe 4 6
Latin America:
Product Mgr. 1 1
Total Support Personn 5 7
Specific Additions are predicated upon receipt of Regulatory Approval in each
Country/Region to market ORTHOVISC.
Notes:
------
1. Budgeted Specialist for the following Markets: Russia, Czech Republic,
Poland, Hungary
2. Non-Budgeted: ME/Africa/SA: Local Market distributors to hire Specialists
