ETHICON ENDO-SURGERY, INC. LETTERHEAD]
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[ETHICON ENDO-SURGERY, INC. LETTERHEAD]
December 13,2002
By Federal Express and Certified Mail
Xxxxxxx
Imaging Corporation
Attention: Vice President Sales, Marketing & Service
00000 Xxxxx Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Dear Sir
- Re:
- European Distributor Agreement
As you know, in April, 2002, Ethicon Endo-Surgery, Inc. exercised its option to renew for an additional two-year period the DISTRIBUTOR AGREEMENT dated December 9, 1998, between Ethicon-Endo Surgery, Inc. and Xxxxxxx Imaging Corporation, as amended by Amendment No. 1 to Distributor Agreement dated December 9, 2000 (the DISTRIBUTOR AGREEMENT as amended, the "Agreement"). Subsequently the parties entered into good faith negotiations to determine transfer pricing and related terms during the renewal period.
Attached please find the proposed pricing and related terms during the renewal period. All other terms and conditions of the Agreement remain the same subject to any further amendments in accordance with the terms of the Agreement. Kindly confirm you accept and agree to the attached pricing and related terms during the renewal period by signing, dating and returning to me a copy of this letter.
If you have any questions, please do not hesitate to contact the undersigned at (000) 000-0000.
| Very Truly Yours Ethicon Endo-Surgery, Inc. |
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/s/ XXXX XXX |
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Xxxx Xxx Director, Business Development |
- Cc:
- Office of Corporate Secretary, Xxxxxxx Imaging Corporation
ATTACHMENT
DISTRIBUTOR AGREEMENT between Ethicon Endo-Surgery, Inc. (EES) and Xxxxxxx Imagining Corporation (Xxxxxxx)
Summary of Transfer Price and Related Terms for the renewal period from October 10, 2002 through October 10, 2004:
- 1.
- Transfer Price (T.P.) Schedule:
| Product |
Original T.P. |
Tier I T.P. |
Tier 2 T.P. |
|||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Mammotest Plus/S | $ | [**** | ] | $ | [**** | ] | $ | [**** | ] | |
| Mammotest "Select" | N/A | $ | [**** | ] | $ | [**** | ] | |||
| Extended Warranty (Annual) | $ | [**** | ] | $ | [**** | ] | $ | [**** | ] | |
****Represents material which has been redacted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
Note: Extended warranty terms & conditions to be specified on a separate attachment.
- •
- Above
prices will be effective for the period Oct 10, 2002 through Dec 31, 2003 inclusive. Prices for the period January 1 through October 9, 2004 are subject
to negotiation and agreement, such negotiation to commence at the October 2003 business review meeting specified below.
- •
- All
prices are FOB Denver.
- •
- Above
prices are based on EES "target" purchase volume of 50 tables in the period 10/10/02—12/31/03.
- •
- Each
party agrees to hold business reviews at the following periods during the contract: April 2003, July 2003, October 2003.
- •
- If
EES fails to purchase an average of 8 tables in any calendar quarter (e.g. Jan 1 to Mar 31), then Xxxxxxx may elect to increase prices to the "Tier 2 T.P." level
indicated above for the following quarter. The first opportunity for such a pricing review will be at the April 2003 business review.
- •
- Xxxxxxx
may not apply any retrospective pricing increases under this agreement.
- •
- In the event that Xxxxxxx decides to increase the Transfer Price to the Tier 2 T.P., prices will revert to the Tier 1 T.P. once Ethicon purchases sufficient additional tables to equal the "contract to date target" as specified in the Target Pricing matrix below. The new Tier 1 T.P. will be effective immediately from that point forward.
Target Pricing matrix:
| Calendar Quarters |
Target Purchase Quantities |
Contract to date target (80%) |
||
|---|---|---|---|---|
| Q4'02 | 10 | 8 | ||
| Q1'03 | 10 | 16 | ||
| Q2'03 | 10 | 24 | ||
| Q3'03 | 10 | 32 | ||
| Q4'03 | 10 | 40 |
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- 2.
- Target Product Mix:
- •
- Both
parties desire that the Mammotest "Select" product will come to represent the majority of the product mix. To this end, following commercial launch of the "Select"
product in Europe and mutual agreement on the key product features, EES agrees to promote this product as the preferred stereotactic prone table product within the countries of Italy, Germany, France
and the United Kingdom. The Mammotest Plus/S product will continue to be offered to customers in all countries.
- •
- If,
6 months after launch of the "Select" product in Europe, the product mix (sales and/or customer orders) has not achieved at least 70% "Select" /30% Plus/S,
Xxxxxxx may elect to increase prices to the "Tier 2 T.P." level indicated above for the following quarter.
- •
- Xxxxxxx
may not apply any retrospective pricing increases under this section of the agreement.
- •
- If
the average product mix reaches at least 70% "Select" in any subsequent quarter then Transfer Prices will immediately revert to the "Tier 1 T.P." level above, and these
prices will be applied retroactively for all EES purchases during this quarter.
- 3.
- Field Sales Cooperation:
- •
- Xxxxxxx Imaging and EES sales personnel in Europe shall endeavor to support sales of each others' products by conducting such activities as sharing sales leads, making joint sales calls, and so forth.
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ACCEPTED AND AGREED TO: |
||||
XXXXXXX IMAGING CORPORATION |
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Name: |
/s/ XXXXXXX XXXXX |
|||
| Title: | CFO & EVP FINANCE | |||
Ethicon Endo-Surgery, Inc. |
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Name: |
/s/ XXXXX XXXXXXX FOR XXXXXXX X. XXXXXX Xxxxxxx X. Xxxxxx |
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| Title: | Vice President New Business Development |
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| Date: | 2-21-03 | |||
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