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EXHIBIT 10.10
DISTRIBUTORSHIP AGREEMENT
This Agreement ("Agreement") is dated as of and effective as of
November 18, 1996 (the "Effective Date"), by and between Endocare, Inc., a
Delaware corporation having its principal place of business at 00 Xxxxxxxxxx
Xxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000 ("Company"), and Boston Scientific
Corporation, a Delaware corporation having its principal place of business at
Xxx Xxxxxx Xxxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 ("Distributor").
BACKGROUND
A. Company develops, manufactures and markets surgical products,
including Cryocare Systems.
B. Distributor desires to market and distribute Company's
Cryocare Systems.
C. Company desires to grant Distributor, and Distributor desires
to obtain from Company, exclusive rights to market and distribute the Cryocare
Systems upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth in this Agreement, Company and Distributor hereby agree as
follows:
AGREEMENT
1. Definitions.
Accessory Products shall mean the accessory products as
described in Section 14.2.
Confidential Information shall mean any proprietary
information, documents or other materials, in whatever form, including, but not
limited to, business records, sales reports, marketing materials, customer
lists, supplier lists, methods of operation, product information, policies and
procedures, information relating to trademarks, tradenames, symbols, service
marks, designs, operating manuals, patents, processes and all other business
information currently existing, developed in the future or maintained by a
party, and any other Proprietary Rights of a party; provided, however,
Confidential Information shall not include information which (a) is or becomes
generally available to the public other than as a result of a disclosure by a
party to this Agreement, (b) was available to a party on a nonconfidential
basis prior to its disclosure to a party to this Agreement, (c) becomes
available to a party on a nonconfidential basis from a source other than a
party to this Agreement or (d) is independently developed by a party without
reference to any disclosed information.
Cryocare Systems shall mean Company's cryosurgical device
systems in the Field including up to eight cryosurgical probe outputs with the
technical specifications and the components set forth in Exhibit A attached
hereto, including the Eight Probe System and the Two Probe System, and any
Product Improvements.
Eight Probe System shall mean Company's eight probe
cryosurgical device system for urological applications (Cryo-18).
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FDA shall mean the United States Department of Health and
Human Services, Food and Drug Administration, or any successor agency.
Field shall mean the medical application of a Product for
urology and, unless the Minimum Purchase Requirements for the Two Probe System
are not agreed upon in accordance with Section 4.4 and Exhibit C with respect
to the Two Probe System, gynecology and general surgery, but excluding breast
tumor and non-medical applications.
Laws shall mean all laws, statutes, rules, regulations and
ordinances of any federal, state, local, foreign or other jurisdictional
government or agency.
Medicare Reimbursement for the Prostate Procedure shall mean
the time of notification by the United States Health Care Financing Agency, or
successor thereto, that it will provide reimbursement under the Medicare
program for cryosurgical ablation of the prostate.
Minimum Purchase Requirements shall mean the minimum dollar
amount of each Product to be purchased by Distributor from Company in the
applicable time periods in accordance with Sections 4.4 and 12.3 and as set
forth in Exhibit C.
Net Sales shall mean the sales price actually charged to
customers by or on behalf of Distributor (excluding sales by Distributor to
affiliates of Distributor) for the applicable Product or Accessory Product
(including any installation costs charged to customer) less sales and use
taxes, V.A.T. or other governmental taxes or charges imposed on or at the time
of manufacture or sale of the applicable Product or Accessory Product, but
excluding any income taxes, and less the actual amount of credit given to
customers for returns or replacements of defective Products or Accessory
Products, as applicable.
Products shall mean the Cryocare Systems, including the Two
Probe System and the Eight Probe System and the Accessory Products.
Product Improvement shall mean any improvement, redesign or
modification of a Product for use in the Field or any cryosurgery product
developed or manufactured by Company for use in the Field during the term of
this Agreement.
Proprietary Rights shall mean any and all secret or
confidential information, trade secrets, specifications, tests results,
analyses, data, inventions, methods, processes, formulae, compositions,
designs, techniques, applications, ideas or concepts, whether or not reduced to
practice relating, directly or indirectly, to a Product, including, without
limitation, technology that is or could be the subject matter of a foreign or
domestic patent or patent application, whether or not reduced to writing in a
patent application; any and all copyright, trademark, patent and other
applications filed or to be filed in respect to the subject matter to which
such rights relate; any and all copyright and trademark registrations and
patent and any other registrations obtained and to be obtained with respect
thereto and any and all other rights and privileges provided under the
copyright, trademark, unfair competition and other laws of the United States,
the individual
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states thereof and jurisdictions foreign thereto with respect to the foregoing;
the material objects in which such rights and privileges are embodied; the
goodwill associated with the foregoing; and the right to secure any and all
renewals, reissues and extensions of the foregoing.
Specifications shall mean the Specifications for the Products
as set forth on Exhibit A, as may be modified by the mutual written consent of
Company and Distributor from time to time during the term of this Agreement.
Territory shall mean any county, possession and territory
throughout the world, excluding Canada until Company's existing distribution
contract for Canada is terminated or expires, and thereafter shall include
Canada; provided, however, that as long as Distributor is not in breach of this
Agreement and has met the Minimum Purchase Requirements, Company shall not
amend, renew or extend such distribution contract for Canada and shall
terminate such contract in accordance with its terms if the minimum purchase
requirements set forth therein are not met.
Transfer Prices shall mean the prices to be paid by
Distributor to Company for the Products as determined in accordance with
Sections 4.1 and 4.2 and as set forth on Exhibit B.
Two Probe System shall mean Company's two probe cryosurgical
device system for gynecological and general surgical applications (Cryo-12).
2. Appointment and Consideration.
2.1 Subject to the terms and conditions contained in this
Agreement, Company hereby appoints Distributor, and Distributor hereby accepts
appointment by Company, as Company's exclusive distributor of the Products in
the Field in the Territory during the term of this Agreement. Notwithstanding
the foregoing, no licenses or other rights to own or otherwise use any of
Company's Proprietary Rights, Confidential Information or any rights to
manufacture are granted to Distributor by this Agreement. Nothing in this
Agreement shall prohibit Company from marketing, selling or otherwise
distributing, in any manner Company elects any of the Products outside the
Field in the Territory, provided Company takes reasonable steps to assure that
Products are not sold or promoted for use inside the Field in the Territory by
any party other than Distributor.
2.2 Distributor shall use reasonable commercial efforts
to market, distribute and sell the Products in the Field in the Territory,
including, but not limited to, advertising, creating promotional materials,
maintaining sufficient sales, marketing and distribution personnel and
otherwise promoting the sale of the Products as Distributor deems appropriate.
Distributor shall be responsible for all costs, expenses and liabilities
incurred in connection with Distributor's marketing, distribution and sale of
the Products. Distributor shall comply with all applicable FDA clearances,
approved marketing and labeling and all applicable Laws related to the
marketing, advertising, promotion, sale or other distribution of the Products.
Distributor shall use its normal marketing and distribution personnel to
distribute the Products; provided, however,
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Distributor shall appoint distributors in such countries outside the United
States when Distributor determines in its discretion not to maintain its own
sales and marketing employees. Notwithstanding the foregoing, in no event
shall Distributor permit any party known to Distributor to be an actual or
potential competitor of Company or any of their respective subsidiaries or
affiliates, to market, sell or distribute any Product.
2.3 As consideration for the appointment and grant of
exclusive rights to Distributor pursuant to this Agreement, Distributor shall
pay to Company the following amounts: (a) two hundred fifty thousand dollars
($250,000) upon execution of this Agreement; (b) an additional two hundred
fifty thousand dollars ($250,000) upon receipt by Company of FDA clearance for
the Eight Probe System for use in oncology, urology and removal of prostate
tissue; (c) an additional two hundred fifty thousand dollars ($250,000) at the
time of the sale of the twentieth (20th) Product by Distributor to customers;
and (d) an additional two hundred fifty thousand dollars ($250,000) at the time
of Medicare Reimbursement for the Prostate Procedure.
3. Orders, Shipping and Acceptance.
3.1 Company shall manufacture and sell to Distributor the
Products in accordance with the terms and conditions in this Agreement. The
Products shall conform to the Specifications as set forth in Exhibit A in
effect at the time of shipment.
3.2 No later than thirty (30) days prior to the beginning
of each calendar quarter during the term of this Agreement, Distributor shall
provide to Company a forecast of purchases by Distributor for each Product for
the following three calendar quarters (a "Forecast"). The first quarter of
each Forecast shall be a binding obligation of Distributor to purchase each of
the Products in the quantities set forth for such first quarter in the Forecast
and a binding obligation of Company to manufacture and sell to Distributor the
Products in such quantities during such first quarter. The second and third
quarters of each Forecast shall be non-binding.
3.3 Purchases of Products by Distributor shall be made
pursuant to written purchase orders submitted by Distributor to Company by mail
or facsimile at the address specified in Section 18.8 (with confirmation by
mail if faxed) from time to time during the term of this Agreement.
Distributor shall submit all orders to Company on Distributor's standard
purchase order, in the form attached hereto as Exhibit D. Purchase orders
shall identify the Products ordered, the quantities of Products, the requested
shipping date, designated shipping carrier, shipping destination and other
instructions. If any of the terms or conditions contained in such purchase
order are inconsistent or contrary to the terms and conditions of this
Agreement or the purchase order attached to this Agreement as Exhibit D, then
the terms of this Agreement shall govern; provided, however, the only
warranties and indemnities given by Company are set forth in this Agreement
notwithstanding anything contained in the purchase order attached to this
Agreement as Exhibit D or other purchase order delivered by Distributor to
Company. If the purchase order is in excess of the Forecast provided in
Section 3.1, then Company shall be obligated to deliver only up to one hundred
twenty-five percent (125%) of the Forecast during the applicable time period.
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3.4 All Products shall be shipped to Distributor F.O.B.
the Company at 00 Xxxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000.
Distributor shall designate the shipping address, shipping method and shipping
carrier on all purchase orders and will be responsible for all freight and
shipping costs and for all claims, damages or other liabilities arising from
the shipment or delay in shipment of the Products by the carrier.
3.5 Distributor shall have the right to reject any
Product which fails to meet the Specifications set forth in Exhibit A by
notifying Company in writing, in reasonable detail, the basis for such
rejection within thirty (30) days after receipt of the Product and returning
such rejected Product to Company within forty-five (45) days after receipt of
the Product. All Products not properly rejected in accordance with the terms
hereof shall be deemed accepted by Distributor and conforming to the
Specifications. Company shall credit Distributor's account for the full amount
of any purchase price which Distributor may have paid to Company with respect
to such rejected Products if the rejected Products fail to meet the
Specifications.
4. Transfer Pricing and Payment Terms.
4.1 In addition the amounts payable under Section 2.3,
Distributor shall pay Company the Transfer Prices set forth on Exhibit B for
each Product. The Transfer Prices shall be effective for one (1) year
following the Effective Date of this Agreement. Within a reasonable time
before each anniversary date of the Effective Date of this Agreement, Company
and Distributor shall negotiate in good faith and mutually agree upon new
Transfer Prices to be effective for the following twelve (12) month period. If
Distributor and Company shall not agree on new Transfer Prices within fifteen
(15) days into such new year, then the Transfer Prices for such new year shall
be the Transfer Prices for the prior year as adjusted by the increase or
decrease in the Consumer Price Index - All Urban Consumers, U.S. city average,
for the prior year as reported by the U.S. Department of Labor, Bureau of Labor
Statistics, or successor agency thereto. Exhibit B shall be revised to reflect
any such change in the Transfer Prices. If market conditions for a Product
substantially change due to competitive products, the parties shall negotiate
in good faith and mutually agree upon a new Transfer Price for such Product.
Exhibit B shall be revised to reflect such mutually agreed upon price.
4.2 Company shall sell to Distributor up to one hundred
(100) probes per year at a price of sixty dollars ($60.00) each, and after
January 1, 1998, up to five (5) Eight Probe Systems and five (5) Two Probe
Systems per year for the Demo Transfer Prices listed on Exhibit B, solely to be
used by Distributor for demonstration purposes. Company and Distributor shall
mutually agree upon the number, but in no event fewer than ten (10), of each of
the Eight Probe Systems and the Two Probe Systems, which Distributor may
purchase during the period prior to January 1, 1998 for the Demo Transfer
Prices listed on Exhibit B, solely to be used by Distributor for demonstration
purposes.
4.3 The purchase price for Products shall be paid by
Distributor to Company as follows: (a) until January 1, 1998 twenty percent
(20%) upon receipt of a purchase order from Distributor by Company and the
remaining eighty percent (80%) net thirty (30) days from
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delivery of the Product and (b) on and after January 1, 1998, one hundred
percent (100%) of purchase price net thirty (30) days from delivery of the
Product.
4.4 Distributor shall purchase the Minimum Purchase
Requirements of each Product from Company in the applicable time periods as set
forth in Exhibit C. If and when there are a lack of sales of Products by
Distributor solely as a result of unforeseen regulatory (including lack of
Medicare Reimbursement for the Prostate Procedure) or clinical circumstances
relating to a Product or failure of Company to timely deliver Products in
compliance with Specifications (provided, however, Company shall only be
obligated to deliver up to one hundred twenty-five percent (125%) of the
Forecast during the applicable time period), the parties shall negotiate in
good faith and mutually agree upon new Minimum Purchase Requirements for the
Product for the relevant period. Exhibit C shall be revised to reflect any
mutually agreed upon changes.
5. Installation, Service and Warranty.
5.1 All Products delivered by Company under this
Agreement shall be installed by Distributor; provided, however, Distributor
shall not charge any customer for installation of any Products unless
installation charges are included in Net Sales. Distributor shall maintain
sufficient personnel as it deems commercially reasonable to install all
Products. Company shall provide assistance, at the cost of Distributor, to
train Distributor's personnel in such installation of the Products.
5.2 Nothing in this Agreement shall prohibit Company from
offering any service, repair, replacement, maintenance or similar contract (a
"Service Contract"), and/or having a qualified third party contract service
company fulfill all or part of manufacturer's obligations under Service
Contracts with any customer possessing a Product. Distributor agrees to
provide Company with information to permit Company to offer Service Contracts
to persons possessing a Product pursuant to this Section.
5.3 Distributor shall have the right to sell Service
Contracts on behalf of Company on terms reasonably acceptable to Company.
Company shall pay to Distributor a commission equal to ten percent (10%) of the
sales price received by Company for each Service Contract sold by Distributor.
5.4 If Company fails to render adequate service, repair,
replacement or maintenance to any customer of Distributor under a Service
Contract at competitive rates, Distributor may, if Company does not cure such
failure within thirty (30) days after written notice from Distributor to
Company specifying in detail such failure, assume such Service Contract and
provide such service, repair, replacement or maintenance under such Service
Contract to such customer of Distributor. In the event that Distributor
assumes such Service Contract, Company shall provide a one-year warranty to
Distributor from the date of shipment of the Product on all parts for the
Products covered by the applicable Service Contract. Company will provide
replacement parts to Distributor at no charge to replace any defective parts in
a
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Product covered by the applicable Service Contract, except for disposables for
a period of twelve (12) months from the date of shipment of the Product.
Defects or breakage due to negligence, tampering, abuse of the Product,
unauthorized entry or intrusion of the Product shall not be covered. Company
shall also not be liable for any damage arising from normal wear and tear or
exposure to contaminated environments. Disposable items shall only be
replaceable if the original packaging from Company has not been torn, broken or
otherwise compromised and the sterilization period has not expired.
5.5 Company shall provide a warranty to the original
customer who purchased a Product from Distributor covering all parts and labor
for the Product from defects in materials or workmanship under normal usage
(excluding disposables) for a one (1) year period from the date of shipment of
the Product. Company will provide replacement parts to customers at no charge
to replace any defective parts in a Product during such one (1) year period.
Defects or breakage due to negligence, tampering or abuse of the Product or
unauthorized entry or intrusion of the Product by other than Company personnel
or their authorized representative shall not be covered. Company shall also
not be liable to customer for any damage arising from normal wear and tear or
exposure to contaminated environments. Contamination includes, but is not
limited to, dust, graphite, soot, lint, dew (city water below dewpoint),
tobacco smoke, oils (including fingerprints) and condensible vapors.
Disposable items shall only be replaceable if the original packaging from
Company has not been torn, crushed, broken or otherwise compromised and the
sterilization period has not expired. In order to return a Product to Company,
customer shall notify Company in writing describing such damage in reasonable
detail within ten (10) days, and shall return the damaged part or Product to
Company within fifteen (15) days, of discovery of such damage. Upon receipt of
such written notice and return of the part or Product, Company shall promptly
repair or issue a replacement part or Product to customer at no charge.
Damaged disposables must be returned to Company within fifteen (15) days of
discovery of damage by customer of the Product to receive replacement. All
other guaranties, warranties, conditions and representations to customer,
either express or implied, whether arising under any Law, commercial usage or
otherwise, including implied warranties of merchantability and fitness for a
particular purpose, shall be excluded and in no event shall Company be liable
to customer for any special or consequential damages. Distributor shall notify
each customer of the terms and conditions of this warranty.
5.6 This Section 5 shall survive the termination of this
Agreement.
6. Research and Development and Product Improvements.
6.1 Company shall, at its sole expense, engage in
research and development projects in the ordinary course of business to sustain
and maintain its engineering projects and the Products. Company and
Distributor shall mutually agree at the beginning of each year during the term
of this Agreement on the research and development projects and budgets to be
undertaken by Company outside the scope of the foregoing sentence to continue
the development of the Products and enhance the application of the Products.
Distributor shall reimburse
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Company quarterly for fifty percent (50%) of all amounts expended by Company in
accordance with such projects and budgets outside the scope of the first
sentence of this Section 6.1.
6.2 If a Product Improvement results during the term of
this Agreement from the research and development conducted in accordance with
Section 6.1, Distributor shall have the right to distribute the Product
Improvement on an exclusive worldwide basis under the terms of this Agreement.
Distributor and Company shall negotiate in good faith and mutually agree upon
the Transfer Price to be paid by Distributor to Company (which shall be
consistent with other prices being charged under this Agreement) and the
Minimum Purchase Requirements of Distributor for the Product Improvement (which
shall be consistent with other Minimum Purchase Requirements under this
Agreement). If Distributor elects not to distribute the Product Improvement or
if it does not notify Company in writing of its intention to distribute the
Product Improvement within sixty (60) days after receipt of documentation
reasonably acceptable to Distributor from Company concerning the Product
Improvement, Company shall have the right to market, distribute and sell the
Product Improvement in any manner it elects.
6.3 If any product is developed by Company which is not a
Product Improvement or is for use outside the Field, Company shall have the
right to market, distribute and sell such product in any manner it elects.
7. Manufacturing.
7.1 Company shall manufacture the Products in compliance
with, and shall use its reasonable commercial efforts to cause all third
parties which manufacture or assemble any of the Products or components thereof
to comply with, all applicable regulations promulgated by the FDA, including,
but not limited to, good manufacturing practices as are in effect during the
term of this Agreement. The Products manufactured by or on behalf of Company
shall comply with the Specifications set forth in Exhibit A, as amended from
time to time by mutual agreement of the parties, and shall be free from
material defects. Without the written consent of Distributor, Company shall
not make any change in the design, materials, manufacturing procedures or
process which would alter the Specifications for the Product. The Products
will not be adulterated or misbranded at the time of delivery by Company within
the meaning of the Federal Food, Drug and Cosmetic Act of 1938, as amended (the
"Act"). All labels, packages, shipping containers and marketing materials
shall comply with all applicable FDA clearances, approved labeling and other
applicable Laws.
7.2 Distributor shall have the right during business
hours upon advance written notice to Company to have qualified employees of
Distributor inspect Company's and its subcontractors' manufacturing facilities
where the Products are manufactured to assure compliance by Company with
quality assurance procedures and good manufacturing practices. All information
obtained during such reviews shall be treated as Confidential Information of
Company.
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8. Catastrophic Event. If Company elects to discontinue or is
unable to continue to manufacture or deliver any Product ordered by Distributor
for any reason other than the occurrence of any event specified in Section 16,
and such failure to deliver such Product continues for at least one hundred
twenty (120) consecutive days after receipt of written notice to Company from
Distributor describing in reasonable detail such failure (a "Catastrophic
Event"), Distributor may obtain that Product from a toll manufacturer
reasonably acceptable to Company or require Company to establish another source
to manufacture the Product, or permit Distributor to manufacture the Product.
Company shall provide the alternative manufacturer with all technical
assistance and licenses reasonably necessary to manufacture the Product for the
period of time that such condition causing the Catastrophic Event continues
and, unless otherwise agreed to by Distributor, not less than one (1) year from
the occurrence of the Catastrophic Event. During such period of time that
Distributor is obtaining a Product from a source, including itself, other than
Company, Distributor shall pay to Company a royalty payment on the sale of each
Product equal to eight percent (8%) of the amount of Net Sales for such Product
for such time. Such royalty payment shall be payable by Distributor to Company
on a quarterly basis for sales of Products made in the prior quarter. In such
event and for such period of time, no Transfer Prices will be owed and Minimum
Purchase Requirements shall be inapplicable.
9. Regulatory Compliance.
9.1 Company shall, after consultation with Distributor,
use its reasonable commercial efforts to promptly obtain all regulatory
approvals and registrations necessary to manufacture and sell the Products in
the United States. Distributor shall, after consultation with Company, use its
reasonable commercial efforts to promptly obtain all regulatory approvals and
registrations that Distributor deems necessary and commercially reasonable to
distribute and market the Products in the Territory, other than the United
States. Each party shall cooperate as reasonably requested by the other party
to carry out the terms of this Section.
9.2 Each party shall provide the other party with a copy
of any reported adverse experience involving any Product promptly after such
occurrence. Any death, serious injury, potential for occurrence of the same or
change in the frequency or occurrence in field experiences required to be
reported by either party to the FDA shall be reported to the other party in a
manner and time which will enable such other party to comply with such
regulations in a timely manner.
9.3 If the FDA or any other regulatory agency, Company or
other applicable Law requires any recall, field corrective action or other
similar action of a Product, each party shall notify the other party in writing
of such recall, field corrective action or similar action required. The
parties shall cooperate with each other in determining the response to the
regulatory authority, the content and timing of all press releases, advisory
letters or other publicity and in taking all steps to make such recall or other
corrective action. If such recall or corrective action is based upon a
manufacturing or design defect or similar manufacturing failure, Company shall
reimburse Distributor for its reasonable expenses in connection with such
recall or corrective action. If the recall or corrective action is based upon
any marketing, distribution,
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sale, use or promotion of the Product, Distributor shall reimburse Company for
its reasonable costs in connection with such recall and corrective action.
10. Trademarks.
10.1 The Products shall be labelled as instructed by
Distributor in accordance with FDA requirements and other applicable Laws. The
Products may include a trademark selected by Company and affixed to the Product
by Company prior to the delivery of the Product to Distributor in a manner and
location reasonably acceptable to Distributor. Such a trademark shall be filed
by Company and shall remain the property of Company.
10.2 Distributor shall have the right to market and sell
the Products, alone or together with other Products of the Distributor, under
trademarks selected by Distributor, which trademarks shall be filed by
Distributor and shall remain property of Distributor until termination of this
Agreement for any reason, in which case, Distributor shall transfer, assign and
convey to Company all rights, title and interest in, to and under such
trademarks; provided, however, Distributor shall not transfer to Company any
trademarks which are the names of companies affiliated with Distributor.
Neither party shall have any rights to any Proprietary Rights or other
Confidential Information of the other party, whether during the term of this
Agreement or thereafter, except as expressly set forth in this Agreement.
10.3 Each party shall promptly notify the other party in
writing in reasonable detail if it becomes aware of any (a) person infringing
on any trademarks or other Proprietary Rights relating to any Product, (b)
person alleging infringement of any trademark or other Proprietary Right of
such person relating to any Product by Company, Distributor or any of their
respective agents, (c) unauthorized disclosure of Confidential Information or
(d) other claim made by any other person with respect to any Product.
11. Indemnification and Insurance.
11.1 Excluding matters for which Distributor is
responsible under Section 11.2, Company shall indemnify and hold Distributor,
its affiliates, subsidiaries, subdistributors, officers, directors and
employees, harmless from any and all claims, damages, losses, liabilities,
costs and expenses (including reasonable attorneys' fees and costs) which
Distributor may incur or suffer arising out of, based upon or caused by, (a)
any alleged defect in the design, materials, workmanship or manufacture of a
Product, failure to conform to Specifications or a malfunction of any Product
manufactured by or on behalf of Company, (b) any alleged infringement of
intellectual property rights related to the Products or (c) any material
misrepresentation or breach of any material warranty or covenant hereunder by
Company.
11.2 Excluding matters for which Company is responsible
under Section 11.1, Distributor shall indemnify and hold Company, its
affiliates, subsidiaries, submanufacturers, officers, directors and employees,
harmless from any and all claims, damages, losses, liabilities, costs and
expenses (including reasonable attorneys' fees and costs) which Company may
incur
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or suffer arising out of, based upon or caused by, (a) any alleged negligent
handling, alteration or change by or on behalf of Distributor of any Product,
(b) any promotional claims, advertising, sales, marketing or other distribution
methods made by or on behalf of Distributor relating to any Product not
included in labels or directions for use provided by Company which comply with
FDA requirements and applicable Laws, (c) any use made by or on behalf of
Distributor of any Product in violation of this Agreement or (d) any material
misrepresentation of any representation, or breach of any material warranty or
covenant hereunder by Distributor.
11.3 Promptly after receipt by an indemnified party
pursuant to this Agreement of any claim for damages covered by the
indemnification set forth in this Section 11, such indemnified party shall
promptly notify the indemnifying party in writing of such claim. If prompt
notice of such claim is not given, the indemnified party shall have no right to
indemnification hereunder. Notwithstanding the foregoing, no indemnifying
party shall be liable for the payment of any settlement entered into without
its prior written consent.
11.4 Each party shall, at its own expense, maintain
insurance (from an insurance company reasonably satisfactory to the other
party) for negligent, willful or unlawful acts or omissions to cover the types
of claims for which each party is providing indemnification under Section 11,
in an amount not less than $1,000,000 per occurrence. Each party shall name
the other party as an additional insured under such insurance policy and
require the insurance company to notify such additional insured within thirty
(30) days of any termination or change in coverage. Each party shall provide
the other party with a certificate evidencing compliance with the insurance
obligations under this Section.
11.5 This Section 11 shall survive the termination of this
Agreement.
12. Term and Termination.
12.1 This Agreement shall be effective from the Effective
Date and shall remain effective for eight (8) years from the Effective Date,
unless earlier terminated pursuant to this Section 12.
12.2 This Agreement may be terminate prior to the end of
the term of this Agreement as follows:
(a) By either party, in the event that the other
party (i) files a petition in bankruptcy or similar proceeding, (ii) has a
petition in bankruptcy or similar proceeding filed against it and such
proceeding is not dismissed within sixty (60) days after filing, (iii) has a
receiver appointed for its assets which is not withdrawn within sixty (60) days
or (iv) makes a general assignment for the benefit of its creditors;
(b) By either party, in the event the other party
breaches a material provision of this Agreement, which breach is not cured
within sixty (60) days after receiving
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written notice of the breach in reasonable detail; provided, however, that all
payment defaults must be cured within thirty (30) days after written notice;
(c) By Company in accordance with Section 12.3;
and
(d) By Distributor in accordance with Section
17.2.
In the event of a termination under this Section 12.2, each
party shall fulfill all obligations existing as of the effective date of the
termination, and all indebtedness of each party to the other party shall become
immediately due and payable.
12.3 Subject to Section 4.4 and Exhibit C, if Distributor
fails to meet the Minimum Purchase Requirements for any Product in the
applicable time period as set forth in Exhibit C, Company shall have the
option, exercisable in its sole discretion, to terminate this Agreement with
respect to the Product which Distributor did not meet the Minimum Purchase
Requirements or may elect to terminate the exclusive distribution rights of
Distributor with respect to the Product and sell the Product to Distributor on
a non-exclusive basis. Company shall exercise such option by giving written
notice to Distributor specifying such failure. Distributor shall have thirty
(30) days following receipt of such notice to cure the failure to meet the
Minimum Purchase Requirements for such Product by either submitting purchase
orders to Company for any deficiency amount, together with payment of one
hundred percent (100%) of the purchase price for such purchase orders, or
paying to Company the difference between Company's cost of goods sold for the
Product determined in accordance with generally accepted accounting principles,
consistently applied, and the Transfer Price payable under this Agreement
relating to the deficiency amount. If such amount is paid to Company by
Distributor within such thirty (30) day period, neither this Agreement nor the
exclusivity with respect to the Product shall be terminated by Company. For
purposes of calculating the Minimum Purchase Requirements, all components
constituting the applicable Product purchased by Distributor during the
applicable period shall be included in the calculation of the Minimum Purchase
Requirements for the applicable Product.
13. Purchase Right.
13.1 Distributor shall have the option, exercisable in its
sole discretion, by giving Company written notice of its election to exercise
this option within thirty (30) days from the applicable Purchase Date, to
purchase the assets and intellectual property owned by Company relating to the
Cryocare Systems, provided that the Minimum Purchase Requirements have been met
by Distributor (or waived by Company in writing) for all periods prior to the
applicable Purchase Date for each Product and Distributor is not in breach of
this Agreement, at twenty-four (24) months, thirty-six (36) months and
forty-eight (48) months from the date of Medicare Reimbursement for the
Prostate Procedure (each, a "Purchase Date") as follows:
(a) On the Purchase Date twenty-four (24) months
from the date of Medicare Reimbursement of the Prostate Procedure, provided
that the Purchase Date is not later
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than January 1, 2003, for a purchase price equal to the greater of $40 million
or 1.7 multiplied by the amount of Net Sales of the Products by or on behalf of
Distributor during the twelve (12) month period immediately prior to such
Purchase Date;
(b) On the Purchase Date thirty-six (36) months
from the date of Medicare Reimbursement of the Prostate Procedure, provided
that the Purchase Date is not later than January 1, 2004, for a purchase price
equal to the greater of $50 million or 1.5 multiplied by the amount of Net
Sales of the Products, by or on behalf of Distributor for the twelve (12) month
period immediately prior to such Purchase Date; or
(c) On the Purchase Date forty-eight (48) months
from the date of Medicare Reimbursement of the Prostate Procedure, provided
that the Purchase Date is not later than October 1, 2005, for a purchase price
equal to the greater of $60 million or 1.3 multiplied by the Net Sales of the
Products, if applicable, by or on behalf of Distributor for the twelve (12)
month period immediately prior to such Purchase Date.
The purchase price under this Section 13.1 shall be payable in
cash, unless Company agrees, in its sole discretion, to accept stock, notes or
other consideration. The purchase price shall be payable by Distributor at a
closing of such sale which shall occur within sixty (60) days of the exercise
of the purchase option by Distributor. On the closing date, Company shall
assign, sell and transfer all of the assets and intellectual property relating
to the Cryocare Systems to Distributor free and clear of all liens, charges,
mortgages, security interests or other encumbrances and Distributor shall pay
to Company the applicable purchase price.
13.2 In addition to the purchase right set forth in
Section 13.1, if Company receives a bona fide offer from any third party to
purchase all or substantially all of the assets related to the Cryocare
Systems, Company shall promptly give written notice to Distributor of the
material terms of such offer. Distributor shall have the option to purchase
such assets for the purchase price, the type of consideration and the terms
specified in the notice. Distributor shall give written notice to Company on
or before thirty (30) days after receipt of such notice, indicating its
election to purchase such assets on such terms. If notice from Distributor of
its election to purchase is not received by Company within such thirty (30) day
period, Distributor shall be deemed to have waived its right to purchase.
14. Non-Competition.
14.1 During the term of this Agreement, and for an
additional eighteen (18) months after termination of this Agreement in the
event Company terminates this Agreement under Section 12.2 or 12.3 (subject to
Section 4.4 in the case of a termination pursuant to Section 12.3), Distributor
shall not, directly or indirectly, without Company's prior written consent
which it may withhold for any reason, develop, market, sell, distribute or
otherwise produce cryomedical or cryosurgical products in the Field competitive
with any Product.
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14.2 Notwithstanding the foregoing, Company shall give
Distributor the option to manufacture and market the Cryosurgical Drape Pack
(CRYO-51) and the Percutaneous Access Kit (CRYO-52) as accessory products to
the Products (an "Accessory Product"); provided, however, that Distributor
shall pay Xxxx Xxxxx, M.D. a royalty payment on the sale of each Accessory
Product equal to five percent (5%) of Net Sales for such Accessory Product or
such other amount and on such terms as mutually agreed upon between Distributor
and Xxxx Xxxxx, M.D.
14.3 Distributor shall maintain copies of written books,
records and sufficient documentation relating to Net Sales of the Products and
Accessory Products made by Distributor, which books, records and documents
shall be available to authorized representatives of Company for inspection and
audit during normal business hours upon advance notice to Distributor for
purposes of verifying the amounts payable by Distributor under Sections 8, 13.1
and 14.2.
15. Confidential Information. Each party represents, warrants and
covenants that it has not, directly or indirectly, disclosed and agrees that it
shall not, directly or indirectly, disclose to any third persons during the
term of this Agreement or thereafter, any Confidential Information or the terms
or substance of this Agreement, except as required to be disclosed by Law or
legal process. Except as required by Law or legal process, without the prior
written consent of the other party, no party shall (a) release, disseminate or
otherwise disclose any Confidential Information, in whole or in part, to any
third person; (b) permit the use or appropriation of any Confidential
Information by any third person; (c) use or evaluate any Confidential
Information for any purpose other than as expressly provided in this Agreement;
or (d) commercially or otherwise exploit any Confidential Information in any
way or allow any third person to do so. If and when this Agreement is
terminated for any reason, each of the parties shall promptly deliver to the
other party any and all Confidential Information obtained during the term of
this Agreement, and all copies (except for one archival copy) shall be returned
to Company or destroyed.
16. Force Majeure. If either party is prevented from performing
any of its obligations under this Agreement due to any cause which is beyond
the non-performing party's reasonable control, including, but not limited to,
fire, explosion, flood, other acts of God, acts, regulations or ordinances of
any government, war, riots, civil commotions, embargoes, strikes, blackouts,
boycotts, labor dispute, shortages of materials or energies or other failure of
public utilities or common carriers, or other unforeseeable causes beyond the
control of such party, such non-performing party will promptly give notice
thereof to the other party and use reasonable commercial efforts to cure such
non- performance and resume performance and such delay in performance shall not
constitute a breach of this Agreement.
17. Patent Opinion.
17.1 If during the term of this Agreement, Distributor
shall receive an opinion from patent counsel, reasonably acceptable to Company,
to the effect that Distributor should suspend sales of a Product since further
sales will infringe in a material respect on the intellectual
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property rights of a third party and subject Distributor to material liability,
then Distributor shall have the option, exercisable in its sole discretion, to
terminate this Agreement with respect to the Product covered by such patent
opinion. Distributor shall exercise such option by giving written notice to
Company with the patent opinion. Company shall have one hundred twenty (120)
days following receipt of such patent opinion to cure the alleged infringement
with respect to such Product. If Company cures such infringement within such
one hundred twenty (120) day period, this Agreement with respect to the Product
shall not be terminated by Distributor.
17.2 If, within thirty-six (36) months from the Effective
Date of this Agreement, Distributor is prohibited from selling a Product for a
period of at least one hundred and twenty (120) consecutive days because of an
infringement by Company of the intellectual property rights of any other party,
Company shall pay to Distributor any amounts received by Company from
Distributor under Sections 2.3(b), 2.3(c) and 2.3(d).
18. Miscellaneous.
18.1 Entire Agreement. This Agreement constitutes the
entire Agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous negotiations,
understandings and agreements.
18.2 Amendment. This Agreement may not be modified or
amended by the parties hereto except by a written instrument executed by both
parties.
18.3 Waiver. Any waiver of any term, covenant or
condition of this Agreement by any party hereto shall not be effective unless
set forth in a writing signed by the party granting such waiver, and in no
event shall any such waiver be deemed to be a continuing waiver or a waiver of
any other term, covenant or condition.
18.4 Assignment. No party shall assign this Agreement or
any part of it without the prior written consent of the other party.
Notwithstanding the foregoing, if either party sells or otherwise transfers all
or substantially all of its business to another person, subject to Section
13.2, whether by way of an asset sale, merger or consolidation, such party may,
without consent from the other party, assign, sell or otherwise transfer this
Agreement in connection with such sale of such party. Any such assignee shall
assume all obligations under this Agreement; provided, however, no such
assignment shall relieve any party of responsibility for the performance of any
obligation which such party had prior to such assignment.
18.5 Successors. Subject to Section 18.4, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors.
18.6 Relationship of Parties. Each party agrees to
perform this Agreement solely as an independent contractor and shall not hold
itself out as an employee, agent, joint venturer or partner of the other party.
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18.7 Severability. If any one or more of the terms,
conditions or provisions of this Agreement or the application thereof to any
person or circumstance shall be adjudged to any extent invalid, unenforceable,
void or voidable for any reason whatsoever by a court of competent
jurisdiction, such provision shall be construed as narrowly as possible, and
each and all of the remaining terms, provisions and conditions of this
Agreement and their application to other persons or circumstances shall not be
affected thereby and shall be valid and enforceable to the fullest extent
permitted by law.
18.8 Notices. Any notices or other communications given
by either party under this Agreement shall be in writing and shall be (a)
delivered personally, (b) transmitted by facsimile machine with confirmation in
writing mailed first class, (c) sent by a nationally recognized overnight
courier or overnight mail that guarantees overnight delivery or (d) sent by
registered or certified United States mail with return receipt requested,
postage prepaid, addressed as follows:
If to Company: Endocare, Inc.
00 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: President
Facsimile No.: (000) 000-0000
With a copy to: Xxxxxx X. Xxxxx
Xxxxxxx & XxXxxxxx
000 Xxxx Xxxxxx Xx., Xxxxx 0000
Xxxxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
If to Boston Scientific Corporation
Distributor: Xxx Xxxxxx Xxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: President
Facsimile No.: (000) 000-0000
With a copy to: Xxxxx Xxxxxxx
Xxxxxxx, Xxxx & Xxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Any such notice shall be effective (a) upon receipt if
personally delivered, (b) on the date of the facsimile transmission (which date
is indicated by the facsimile machine of the party) if sent by facsimile and
confirmed by mail, (c) on the first business day if sent by a nationally
recognized overnight courier or overnight mail that guarantees overnight
delivery and (d) on the third business day following the date of mailing if
sent by registered or certified mail.
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Each party may change the address to which notices are to be delivered by
giving notice as provided in this Section.
18.9 Section Headings. Sections headings are inserted
herein and solely for the purpose of convenience of reference and shall not
construed as part of this Agreement.
18.10 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same Agreement.
18.11 Arbitration. The parties hereby consent to the
resolution by binding arbitration of all claims or controversies in any way
arising out of, relating to or associated with this Agreement. Any arbitration
required by this Agreement shall be conducted before a single arbitrator,
knowledgeable in the field, in Orange County, California in accordance with the
commercial arbitration rules of the American Arbitration Association then
existing, and any award, order or judgment pursuant to such arbitration may be
enforced in any court of competent jurisdiction. The arbitrator shall apply
rules of Delaware law. All such arbitration proceedings shall be conducted on
a confidential basis. Notwithstanding the foregoing, either party may seek
injunctive or other equitable relief in a court of law without proceeding
through arbitration. In the event either party to this Agreement shall bring
any action to enforce any provision of this Agreement, the prevailing party in
such action shall be entitled to recover all costs and expenses, including
reasonable attorneys' fees, incurred by such party in connection with such
action.
18.12 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized corporate officers as of the date first above
written.
"COMPANY" "DISTRIBUTOR"
ENDOCARE, INC., BOSTON SCIENTIFIC CORPORATION,
a Delaware corporation a Delaware corporation
By: /s/ XXXX X. XXXXX By: /s/ XXXXXXXX X. BEST
----------------------------- ----------------------------------
Name: Xxxx X. Xxxxx Name: Xxxxxxxx X. Best
Title: President Title: Chief Financial Officer
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