Distributor Agreement
Exhibit 10.26
This Distributor Agreement (“Agreement”) is made as of September 20, 2002 between Sutura, Inc.
(“Supplier”) a California corporation, having its principal place of business at 00000 Xxxxxxx
Xxxxxx, Xxxxxxxx Xxxxxx, XX 00000 and Xxxx Bros. & Co., Inc. (“Distributor”) a Delaware
corporation, located at 000 Xxxx Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, XX 00000.
In consideration of the mutual promises contained herein, Supplier and Distributor agree as
follows:
| 1. | Definitions: | |
| (a) “Products” means those products listed in Exhibit A attached hereto, as that Exhibit may be amended to include any and all new products manufactured or distributed by Supplier within the field of vascular closure and also to exclude those products as may be discontinued by Supplier. | ||
| (b) “Territory” means Australia, New Zealand, China, Hong Kong, Taiwan, Korea, Singapore, Malaysia, Philippines, Thailand, India, Indonesia, Sri Lanka, Pakistan, Vietnam, Cambodia, Laos, Bangladesh and Myanmar. | ||
| 2. | Appointment and Authority of Distributor: | |
| (a) Appointment: Subject to the terms and conditions of this Agreement, Supplier hereby appoints Distributor, and Distributor accepts that appointment, as Supplier’s exclusive distributor of the Products in the Territory. | ||
| (b) Independent Contractors: Distributor and Supplier are independent contractors and are engaged in the operation of their own businesses. Neither party is to be considered the agent of the other party for any purpose whatsoever, and neither party has any authority to enter into any contracts or assume any obligations for the other party or make any warranties or representations on behalf or the other party unless agreed to in writing by the other party. | ||
| 3. | Obligations of Distributor: | |
| (a) Registration and Marketing of Products: Distributor agrees, at its expense, to use its best efforts to investigate, obtain government approval for, promote, and distribute the Products, in the Territory as soon as feasible after the date of this Agreement, using generally the same channels and methods, exercising the same diligence and adhering to the same standards which it employs for other medical application products sold by Distributor, as well as any of Distributor’s own products. |
(b) Minimum Performance Levels: Distributor agrees to purchase the number
of units of Products per calendar year during the term of this Agreement that is set
forth on Exhibit C; provided, however, that such minimum performance levels shall
be appropriately adjusted by Supplier and Distributor if: (i) one or more events of
force majeure affect Distributor’s ability to meet such levels; (ii) Supplier is unable
or refuses to sell Products to Distributor when Distributor orders them;
(iii) Products are deleted from this Agreement, (iv) Product registrations are
delayed or denied by local governing agencies through no fault of Distributor, (v)
Supplier is unable or refuses to supply reasonable data or information to comply
with local governing agencies, (vi) approval for Product reimbursement is delayed
or denied by local governing agencies, or (vii) Product reimbursement levels
established by government regulatory authorities in the Territory do not allow
Distributor to realize a minimum gross profit (defined as revenues from sales of
Products less Product costs, as well as taxes and shipping expenses incurred in
connection therewith) of forty (40) percent based on existing Supplier pricing.
After the years listed in Exhibit C, Distributor and Supplier shall agree on the
minimum performance level for each country for each calendar year. If Distributor
and Supplier do not agree on acceptable minimum performance levels for any
given year or country in the Territory prior to the commencement of such year,
Supplier shall have the right to terminate Distributor’s distribution rights hereunder
for any country where the parties do not agree to minimum performance levels;
provided, however, the percentage increase in minimum performance levels for any
year or country in the Territory will not be greater than seven (7) percent over the
previous year’s minimum performance level unless mutually agreed upon. All
other rights, terms and conditions in the Agreement for the remaining parts of the
Territory would survive the termination of any country.
(c) Reports: Distributor agrees to submit regular reports to Supplier on a
quarterly basis (unless otherwise agreed) accurately describing sales of the
Products by Distributor for the previous period (including prices, unit sales, and
other information as may be reasonably requested by Supplier from time to time).
(d) Product Complaints. Distributor agrees to report to Supplier all available
information concerning any product complaints that it is aware of. This
information will be reported in order to assist Supplier in monitoring the quality
and safety of its Products, and to allow Supplier to meet its reporting obligations
under the United States Medical Device Reporting regulations (21 CFR 803,24)
and Medical Device Vigilance Guidelines. Information concerning product
complaints may be reported to the Supplier in either verbally or in writing. A
“product complaint’ is any written or oral expression of dissatisfaction as to the
identity, quality, durability, reliability, safety, effectiveness, or performance of a
Product. Product complaints associated with a death or serious injury, or a
malfunction that could reasonably be expected to result in a death or serious injury
if the malfunction recurs, will be reported to Supplier immediately upon
Distributor’s knowledge of that information.
(e) Prohibited Sales: Distributor agrees not to sell, and agrees to use
reasonable efforts to ensure that Distributor’s subdistributors, agents and
customers do not sell or use, any of the Products outside the Territory.
(f) Product Presentation: Distributor agrees to present the Products fairly to
potential customers, not to disparage the Products, any Product trademarks or
Supplier and to do all things reasonable to promote the reputation of the Products
and the value of any Product trademarks.
(g) Advance Payment: Distributor agrees to provide Supplier with an
advanced payment of two hundred fifty thousand dollars ($250,000) fully
creditable against Distributor’s future purchases of Products.
(h) Non-Compete: Distributor agrees not to license, manufacture, sell, or distribute any
product, which competes with Supplier’s Products. Notwithstanding, Distributor reserves
the right to distribute percutaneous closer devices manufactured by Perclose, Inc. (an
Xxxxxx Laboratories company) in the Territory until Distributor sells any remaining
inventory, provided however, Distributor sells any remaining inventory within ninety (90)
days from the first date of this Agreement.
| 4. | Obligations of Supplier: | |
| (a) Requirements of Distributor: Supplier agrees to supply Distributor’s requirements for the Products in the Territory consistent with Distributor’s non-binding forecasts of its expected requirements for the Products. If Supplier believes it will not be able to satisfy Distributor’s requirements for the Products, it must promptly notify Distributor, specifying the reasons for and duration of the expected delay and its duration at the time Product order is placed. | ||
| (b) Registration and Marketing Support: To assist Distributor in registering and marketing the Products in the Territory, Supplier agrees to: |
(i) Provide Distributor with materials necessary to obtain health registrations.
Supplier will supply to Distributor the required quantity of samples, at a price
equal to Supplier’s cost of goods, to obtain registration approval.
(ii) Provide Distributor with information on marketing and promotional plans of
Supplier for the Products as well as copies of marketing advertising, sales,
technical training manuals, and available audiovisual teaching and marketing aides
and promotional literature concerning the Products.
(iii) Provide Distributor with certain certificates of analysis concerning the
Products purchased by Distributor, certificates of free sale, trademark
authorizations and any other documents which Distributor may require for
registration purposes.
| 5. | Trademark License: Supplier grants to Distributor the right and license to use Supplier’s trademarks and any trademark registrations which Supplier obtains and designates for the Products in the Territory, but only in connection with sales of the Products purchased from Supplier in the Territory. This trademark license shall continue in effect for each jurisdiction in the Territory only while Distributor retains its distribution rights in each jurisdiction. Distributor agrees not to remove or obscure any Product label affixed by Supplier. | |
| 6. | Terms and Conditions of Sale: | |
| (a) Terms of Orders: All purchases of the Products by Distributor from Supplier during the term of this Agreement will be subject to the terms and conditions of this Agreement. | ||
| (b) Packaging: All quantities of the Products purchased from Supplier by Distributor will be in the form of labeled, standard unit packages and in a form and formulation consistent with the Products sold by Supplier for use in the United States, unless otherwise agreed by Supplier and Distributor in writing. | ||
| (c) Price and Payment: The prices for the Products to Distributor are set forth in Exhibit A attached hereto. The prices are valid for a minimum period of twelve (12) months, unless mutually agreed otherwise in writing. Ninety (90) days advance written notification is required for price increases by Supplier. | ||
| (d) Resale Price: Distributor may resell Products at any price that Distributor in its sole discretion determines. | ||
| (e) Expenses: All expenses for importation, promotion, sales and distribution, as well as Distributor’s administrative and overhead expenses, will be borne solely by Distributor. | ||
| (f) Credit: Distributor assumes all credit and other risks involved in its sales under this Agreement. All collection expenses on sales made by Distributor will be at Distributor’s expenses. | ||
| (g) Payment Terms: Basic payment terms are net sixty (60) days. | ||
| 7. | Product Warranty; Insurance: Supplier warrants that all Products: (a) will conform with all specifications and descriptions thereof provided by Supplier, (b) will be free of defects in material, workmanship, and design, (c) will be of |
merchantable quality, suitable for the purposes for which they are intended to be used, and
(d) will comply with all applicable laws and regulations. Supplier will have the right to exchange
or accept existing inventory if Products do not meet requirements (a) to (d). All warranties
shall survive any inspection, delivery, acceptance, or payment. Supplier will provide, when
requested by Distributor, certification that to the best of its knowledge it is
in compliance with U.S. laws, statutes, rules, regulations, and relevant orders relating to the
manufacture, use, distribution, and sale of each Product. Distributor will use its best efforts to
afford the Supplier the reasonable opportunity to inspect the allegedly defective Product at the
location of its use or storage. Distributor will, or will cause, upon request and in accordance
with Supplier’s instruction, return of any defective Product to Supplier at Supplier’s cost. Any
replacement of Products may be made by substitution upon mutual agreement.
Supplier shall maintain in full force, and shall continue to maintain in full force for the term
of this Agreement and five years thereafter, public and products liability insurance, naming
Distributor as an additional insured, against bodily injury, death or property damage in any way
arising out of the design, manufacture, sale, distribution, or use of any Product in an amount of
not less than US$5,000,000 per occurrence and annually in the aggregate. Said liability insurance
shall:
| (a) | be written by an insurance company licensed to do business in the Territory, reasonably satisfactory to Distributor; | ||
| (b) | include (i) products liability coverage insuring 911 of the Products covered by this Agreement, as amended, and (ii) contractual liability coverage insuring the indemnification provisions of this Agreement; | ||
| (c) | include a duty to defend and cover legal and defense costs as well as indemnity costs; | ||
| (d) | include a separation of interests or cross liability clause such that the policy will respond on behalf of Distributor as if a separate policy had been issued, except for the policy limits; | ||
| (e) | include the Territory within the territory covered by the insurance policy. |
Supplier shall furnish Distributor with a copy of the insurance policy or a Certificate of
Insurance evidencing such insurance upon request of Distributor, provided that Supplier shall
provide such policy or such certificate upon execution of this Agreement and at least annually
thereafter. Said policy, or said certificate shall provide that the insurance evidenced thereby,
shall not be canceled, terminated or materially reduced in coverage without at least thirty days
prior
written notice to Distributor. Failure to maintain the required insurance shall
constitute a material breach of this Agreement.
| 8. | Indemnification: | |
| (a) Supplier agrees to indemnify Distributor and defend its employees, agents, representatives, and subdistributors harmless from and against, and to assume all costs and expenses (including attorney’s fees) for: |
(i) claims or suits for bodily injury, including death, or property damage
arising out of the design, manufacture, sale, distribution, resale, or use
of any Product;
(ii) any product recalls or replacements, whether required or recommended
by any government or other authority or organization or otherwise deemed
appropriate by Supplier and Distributor, or
(iii) any product liability claims arising from the Product Warranty
provided by Supplier in Section 7,
except if such injury, damage, cost, or expense is caused by the sole negligence of
Distributor.
(b) Supplier agrees to further indemnify, defend, and hold Distributor, and its
employees, agents, representatives, and subdistributors, harmless from and against,
and shall assume all costs and expenses (including attorney’s fees) for any claim
that any Product infringes or violates any patent, copyright, trademark, trade
name, trade secret, or other intellectual property right.
(c) Supplier and Distributor each agree to indemnify and hold the other
harmless from and against any and all claims made by any person or entity arising
out of the processing, marketing, distribution, and sale of the Products, where and
to the extent damages are alleged to have been caused by the fault of the
indemnifying party or its employees or agents.
| 9. | Confidential Information: Each party agrees to keep confidential and not to publish or otherwise divulge or use for its own benefit or for the benefit of any third party any information of a proprietary nature furnished to it by the other party without the prior written approval of the disclosing party, except as required by law or court order or as necessary for the marketing of the Products. The confidential information includes (but is not limited to) information concerning Products, proposed products, marketing plans, methods of manufacture, customers and any other information or materials in whatever form. This obligation does not extend to information which: (i) is already known by recipient at the time of its |
| disclosure to recipient; (ii) is publicly available or later becomes publicly available through no fault of the recipient; or (iii) is disclosed to recipient by a third party having no similar confidentiality obligation. This obligation shall terminate two years after termination of this Agreement. | ||
| 10. | Term and Termination: | |
| (a) Term and Renewal: This Agreement commences on the date first set forth above and will continue in force for an initial term of five (5) years. The parties will be required to give notice to the other of its intention to terminate this Agreement at least six (6) months prior to the expiration of the initial term hereof or of any renewal term. | ||
| (b) Termination of Agreement: Either party may at its option, terminate this Agreement by giving to the other party not less than one-hundred twenty (120) days prior written notice, as applicable, if the other party at any time commits a material breach of any of its obligations hereunder and fails to correct any breach during such 120-day notice period. This agreement also may be terminated by either party if the other party becomes insolvent, makes or seeks to make an arrangement with or an assignment for the benefit of creditors, or if proceedings in voluntary or involuntary bankruptcy are instituted by, on behalf of or against such other party, or if a receiver or trustee of the other party’s property is appointed. | ||
| (c) Termination of Agreement for Noncompliance with Minimum Performance Levels: If the Distributor fails to purchase the required minimum number of units of Products during any calendar year during the term of this Agreement, Supplier may, if Distributor fails to cure such failure within six (6) months after receipt of notice thereof from Supplier, terminate this Agreement upon terms and conditions to be agreed upon between the parties; provided, however, Supplier can only terminate Distributor’s distribution rights for any country which fails to cure such failure. All other rights, terms and conditions in the Agreement for the remaining Territory would survive the termination of any country. | ||
| (d) Effect of Termination of Agreement: Upon termination of this Agreement, Supplier may elect to (i) buy back all inventory on hand within sixty (60) days at Distributor’s “fully loaded cost” (defined as total cost incurred to import, register and warehouse the Products, plus product promotion expenses) to Distributor or (ii) will allow the Distributor, and Distributor shall be authorized, to continue to sell the remaining inventory; provided, that in no event shall Distributor be required to continue to sell or distribute Products after the termination of the Agreement. In addition, Distributor agrees to deliver to Supplier or destroy, upon request, all Product materials supplied by Supplier and all Product marketing materials of any kind. Distributor agrees to promptly assign or otherwise transfer to Supplier or its designees all of Distributor’s rights, title and interest to |
| registrations, regulatory approvals, licenses and/or pending applications for Supplier’s Products. Supplier agrees to repay any remaining balance of the original Advanced Payment. The obligations of Supplier and Distributor pursuant to Sections 7 (Product Warranties), 8 (Indemnification), 9 (Confidential Information), 10 (Term and Termination) and 11 (General Provisions) of this Agreement will survive any termination of this Agreement. Nothing herein will limit any remedies which a party may have for the other’s default, except as expressly provided herein. Neither party shall be liable to the other for any damage in connection with that party’s termination of this Agreement by notice. | ||
| 11. | General Provisions: | |
| (a) Governing Law: This Agreement is to be governed by and interpreted in accordance with the laws of the State of California, without regard to its rules on conflicts of laws. | ||
| (b) Jurisdiction and Venue: Each party submits to the exclusive jurisdiction of any state or federal court located in Xxxx County, Illinois, U.S.A., over any suit, action or proceeding (“Action”) arising out of or relating to this Agreement or the relationship between the parties. Each party waives any objection to the venue of any Action brought in such court and any claim that the Action has been brought in an inconvenient forum. Each party agrees that a final judgment in any Action brought in such court shall be conclusive and binding upon it and may be enforced in any other courts to whose jurisdiction it may be subject. | ||
| (c) Dispute Resolution: The parties agree to use their best efforts to resolve any claim or dispute arising out of this Agreement through negotiation or, upon failure of such negotiations, through such alternative dispute resolution (“ADR”) techniques as they may deem appropriate. However, nothing shall prohibit either party from terminating its participation in ADR if it believes the dispute is not suitable for ADR, or if ADR does not produce results satisfactory to it. If any claim or dispute is not resolved by negotiation or ADR, either party may, upon giving the other party at least fifteen (15) days prior written notice, initiate litigation to resolve the dispute. | ||
| (d) Entire Agreement: This Agreement and subsequent agreements for the Territory represent the entire agreement and understanding of Supplier and Distributor with respect to distribution of the Products, supersedes all previous agreements and understandings related thereto and may only be amended or modified in writing signed by authorized representatives of Distributor and Supplier. | ||
| (e) Assignment: |
(i) Neither Supplier nor Distributor may assign any of its rights or obligations pursuant
to this Agreement without the prior written consent of the other party, except to a
successor to substantially all of the business of either party by merger, sale of assets,
or other form of reorganization.
(ii) Distributor may resell the Products to, and appoint as its subdistributor(s) within
the Territory, any majority owned subsidiaries or affiliates of Distributor’s corporate
parent. The appointment of any subdistributor is conditioned upon:
(A) Subdistributor expressly acknowledging that its
Subdistributor Agreement with Distributor is subject to and
subordinate in all respects to the terms and conditions of this
Agreement, and the Subdistributor further acknowledging that it is
familiar with and will comply with all applicable terms of this
Agreement;
(B) Distributor remaining directly responsible to Supplier for the
due performance of all obligations imposed on Distributor by this
Agreement, including payment for all purchases of Product; and
(C) Prior written approval by Supplier.
| (iii) | Supplier agrees to accept orders for shipment of Products into the Territory only from Distributor or any Subdistributor. |
(f) Notices: All notices under this Agreement must be in writing and will be deemed given if sent
by facsimile, telex, telecopier, or telegram (except for legal process in each case), certified or
registered mail or commercial courier (return receipt or confirmation or delivery requested), or
by personal delivery to the party to receive the notice or other communications called for by this
Agreement at the following addresses (or at another address for a party as specified by a party by
like notice):
| Supplier | Distributor | |
| Xxxx Bros. & Co., Inc. | ||
00000 Xxxxxxx Xx.
|
000 X. Xxxxxxxxxx Xx., Xxxxx 0000 | |
Xxxxxxxx Xxxxxx, XX 00000
|
Xxxxxxx, XX 00000 | |
Attn: President & CEO
|
Attn: President, Medical Group |
(g) Non-Hire: Without the prior written consent of the other party, neither party shall,
during the term of this Agreement or for twelve months thereafter, either directly or indirectly,
hire or otherwise engage, or cause, aid or assist any other person or entity (including its
subsidiaries, parents or other affiliates) to hire
or otherwise engage, any current or former employee of other party for a period of
twelve months after the termination of such individual’s employment relationship with
the other party. This provision shall survive the termination of this
Agreement.
(h) Force Majeure: Each of the parties hereto will be excused from its performance of
its obligations hereunder if the performance is prevented by force majeure, and that
excuse will continue so long as the condition constituting that force majeure continues
plus thirty days after the termination of the condition. For the purposes of this
Agreement, “force majeure” is defined to include causes beyond the control of
Distributor of Supplier, including without limitation acts of God, acts, regulations or
laws of any government, war, civil commotion, destruction of production facilities or
materials by fire, earthquake or storm, labor disturbances, or
medical epidemics.
| SUTURA, INC. | XXXX BROS. & CO., INC. | |||||||||
By:
|
By: |
|||||||||
| (printed name) | (printed name) | |||||||||
Title:
|
Title: | |||||||||
EXHIBIT A
Products are defined as vascular closure products including but not limited to all and any new
products developed within the field of vascular closure during the course of the exclusive
distribution agreement. The initial Products are:
| Product | Unit Price (US$) | |||
SuperStitch 6F
|
$ | 85.00 | ||
SuperStitch 8F
|
$ | 85.00 | ||
KnotPusher 6F
|
To be agreed upon by the parties. | |||
KnotPusher 8F
|
To be agreed upon by the parties. | |||
KwiKnot Tying Device
|
To be agreed upon by the parties. | |||
EXHIBIT B
MARKETING PLAN/DATE REGULATORY PROCESS & APPROVAL/DATE
To be agreed upon by the parties.
EXHIBIT C
SALES TARGET AND FORECAST
Minimum Performance Levels
| Year l | Year 2 | Year 3 | ||||
| 4,500 units | 5,500 units | 6,500 units |
Country-by-country minimum performance levels to be agreed upon by the parties.
