Exhibit 10(b)
EXECUTION COPY
DISTRIBUTION AGREEMENT
by and among
XXXXXX HEALTHCARE CORPORATION
as Supplier
and
VWR CORPORATION
as Distributor
September 15, 1995
TABLE OF CONTENTS
1. Definitions......................................................... 1
2. Distribution Rights................................................. 3
3. Term................................................................ 5
4. Minimum Purchase Requirements....................................... 5
5. Prices.............................................................. 7
6. Distributor's Duties................................................ 9
7. Supplier's Duties................................................... 12
8. Trademarks.......................................................... 16
9. Termination......................................................... 17
10. Procedures on Expiration or Termination............................. 18
11. Force Majeure....................................................... 19
12. Confidentiality..................................................... 19
13. Third Party Claims.................................................. 20
14. Miscellaneous Provisions............................................ 22
15. Assignment.......................................................... 24
16. Counterparts........................................................ 25
LIST OF EXHIBITS
Exhibit A Products and Prices
Exhibit B Distributor's Minimum Purchase Requirements for U.S. Sales
Exhibit C Distributor's Minimum Purchase Requirements for International
Incremental Sales
Exhibit D VWR's Purchase Goals
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DISTRIBUTION AGREEMENT
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This DISTRIBUTION AGREEMENT ("Agreement"), dated as of September 15,
1995, by and among XXXXXX HEALTHCARE CORPORATION, a Delaware corporation with
its principal offices at Xxx Xxxxxx Xxxxxxx, Xxxxxxxxx, Xxxxxxxx 00000
(hereinafter called the "Supplier") and VWR CORPORATION, a Pennsylvania
corporation with its principal office at 0000 Xxxxxx Xxxxxxx, Xxxx Xxxxxxx,
Xxxxxxxxxxxx 00000 (hereinafter called "Distributor").
RECITALS
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1. Distributor, Supplier, and EM Laboratories, Incorporated, a New
York corporation ("EM"), have entered into an Asset Purchase Agreement dated as
of May 24, 1995, as amended on September 15, 1995, pursuant to which Supplier
has sold to Distributor, and Distributor has purchased from Supplier, certain of
the assets and business of Supplier's "Industrial Distribution Business," as
defined in the Asset Purchase Agreement.
2. This Agreement is a condition to the consummation of the
transactions contemplated by the Asset Purchase Agreement.
AGREEMENT
---------
In consideration of the Asset Purchase Agreement and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Supplier and
Distributor agree as follows:
1. Definitions.
1.1 "Affiliate" shall mean any person, firm or corporation controlling,
controlled by or under direct or indirect common control with a party hereto.
For the purpose of this definition, the term "control" means the power to direct
the management or policies of a party, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
1.2 "Contract Year" shall mean the period commencing on October 1 and
ending on September 30 in each year during the Term, provided that there shall
be a "Stub Period" beginning on the date hereof and ending on September 30,
1995.
1.3 "Industrial Customers" shall mean customers who purchase the Products
for use in laboratories, production plants, and other facilities in all cases
not involved in the care of
human patients or the diagnosis of disease or defect for the purpose of care of
human patients, including, without limitation, analytical, research and
development laboratories, educational institutions, environmental testing
laboratories, clean room facilities, biotechnology and pharmaceutical research
and production facilities, medical device manufacturers, electronic and
semiconductor manufacturers, and government research facilities.
1.4 "Minimum Purchase Requirement" shall mean the aggregate minimum dollar
volume of the Products purchased by Distributor during each Contract Year
determined in accordance with Section 4 herein, including any orders placed but
not filled at least 30 days prior to the end of any such Contract Year.
1.5 "Person" shall mean an individual, corporation, partnership,
unincorporated syndicate, unincorporated organization, trust, trustee, executor,
administrator or other legal representative, governmental authority or agency,
or any group or combination thereof.
1.6 "Products" shall mean the products and accessories listed in Exhibit A
hereto together with the parts and components necessary for the repair and
replacement thereof, provided that Supplier may, upon 30 days written notice to
Distributor: (a) add the Products to Exhibit A which have uses or applications
similar to any Products set forth in Exhibit A; or (b) delete from Exhibit A and
this Agreement any Product, the manufacture and sale of which has been generally
discontinued by Supplier. Exhibit A shall be deemed to be amended to reflect any
such Product additions or deletions without any further act by any party hereto.
Exhibit A, as amended and supplemented from time to time, is incorporated by
reference herein and forms part of this Agreement.
1.7 "Term" shall mean the period of time specified in Section 3 hereof,
including any and all renewals thereof.
1.8 "Territory" shall mean the world (excluding Canada and Japan).
1.9 "United States" shall mean the United States, excepting Puerto Rico
and other territories and possessions of the United States.
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2. Distribution Rights.
2.1 During the Term, as defined herein, Supplier hereby grants to
Distributor, and Distributor accepts the right to sell and distribute the
Products only to Industrial Customers in the Territory for non-patient use
subject to the terms and conditions stated herein. Distributor may grant to EM
or its Affiliates the rights to distribute the Products outside the United
States, provided that with respect to such distribution, EM shall be subject to
all of Distributor's duties and obligations hereunder (except for the Minimum
Purchase Requirements) and Distributor shall remain fully liable for EM's
performance of such duties and obligations. During the Term, except as
otherwise provided in Section 2.3, Supplier and its Affiliates shall distribute
the Products to Industrial Customers in the United States only through
Distributor pursuant to this Agreement. This Agreement shall in no way limit
the right of Supplier and its Affiliates to distribute Products to Industrial
Customers outside the United States, provided that any sales by Supplier or its
Affiliates to Industrial Customers within the Territory but outside the United
States shall be credited against the Minimum Purchase Requirements for
incremental international sales for the applicable Contract Year or Stub Period.
2.2 Distributor hereby accepts such grant of distribution rights.
Distributor represents and warrants that it shall not sell or distribute the
Products other than as provided for herein. Distributor hereby agrees that
during the Term:
2.2.1 none of Distributor or its respective Affiliates, or any
other Person on its or their behalf, shall sell, solicit
orders for or otherwise distribute any Product, directly or
indirectly through distributors, agents or otherwise, to or
from any customer or any Affiliate of any customer: (a)
located outside of the Territory; (b) that is not an
Industrial Customer; or (c) for any use other than non-
patient use;
2.2.2 Distributor may distribute Products in the Territory through
sub-distributors provided that the dollar volume of Products
sold to sub-distributors in the United States in any
Contract Year does not exceed 15% of the dollar volume of
all Products sold by Distributor during such Contract Year
in the United States;
2.2.3 Distributor may distribute Products in the Territory through
EM acting as a sub-
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distributor provided that the dollar volume of Products sold
to EM in the United States shall not be counted as sales to a
sub-distributor for purposes of the calculation described in
Section 2.2.2 regarding the percentage dollar volume of
Products sold to sub-distributors in the United States in a
given Contract Year; and
2.2.4 Supplier shall not be responsible to the extent Distributor
grants any warranty, service contract or similar right with
respect to the Products that is different from or additional
to the warranty set forth in Section 7.7 herein without the
prior written consent of Supplier, which consent may be
withheld by Supplier in its sole discretion. To the extent
that Distributor or any of its Affiliates grants, or is
deemed to have granted, any such warranty or right,
Distributor shall be solely responsible therefor, it being
understood that the purpose of this sentence is to allocate
responsibility between Distributor and Supplier and not with
respect to any other party.
2.3 Distributor acknowledges and agrees that:
2.3.1 this Agreement shall not prohibit Supplier or its Affiliates
from distributing the Products to Industrial Customers within
the United States otherwise than through Distributor to the
extent that Distributor shall be unable to so distribute the
Products by reason of any matter referred to in Section 11 or
if Distributor is otherwise prohibited from selling, or
unable to sell, the Products to any customer or class of
customers, provided that such sales shall be credited against
the Minimum Purchase Requirements for the applicable Contract
Year or Stub Period;
2.3.2 Supplier may continue to distribute the Products in the
United States to Industrial Customers during the Term: (a) by
any means by which Supplier distributed the Products, other
than through the Industrial Distribution Business, prior to
the date of this Agreement; or (b) through sub-distributors
used by Supplier prior to the date of this Agreement; and
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2.3.3 Supplier may: (a) continue to sell and distribute the
Products in the United States via any means to customers
other than Industrial Customers; (b) sell and distribute the
Products to any customer in the United States for non-patient
use if such customer conditions any sale or distribution of
the Products by Supplier for patient treatment on the sale or
distribution of the Products for non-patient use, provided
that any such sales shall be credited against the Minimum
Purchase Requirements for the applicable Contract Year or
Stub Period; (c) sell and distribute the Products to its
Affiliates provided that such sale and distribution is for
internal use only and not for resale, and Distributor shall
assist Supplier in connection with such sales and
distribution; (d) continue to sell and distribute the
Products to third parties who will include such Products as
components of kits used to perform any test or procedure; and
(e) continue to sell and distribute any Product to any
Industrial Customer in the United States to the extent
necessitated by Supplier's inability to assign to Distributor
any contract or agreement with an Industrial Customer
pursuant to the Asset Purchase Agreement, provided that such
sales shall be credited against Distributor's Minimum
Purchase Requirements in the applicable Contract Year or Stub
Period.
3. Term.
The initial term ("Term") of this Agreement shall begin on the date
of this Agreement and end on September 30, 2000; provided that the Term shall be
automatically renewed for additional and successive periods of one year each,
unless and until such initial or additional Term is terminated as provided in
Section 9 of this Agreement.
4. Minimum Purchase Requirements.
4.1 Supplier and Distributor acknowledge and agree that the Minimum
Purchase Requirements for Products for the Stub Period and the first five
Contract Years are set forth in Exhibits B and C. The total Minimum Purchase
Requirement for Distributor's U.S. sales for each Contract Year and the Stub
Period shall be the sum of the Base amount plus the Incremental amount listed on
Exhibit B for each such Contract Year or Stub Period. The total Minimum
Purchase Requirement for Distributor's
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international sales for each Contract Year and the Stub Period is the
incremental amount listed on Exhibit C.
4.2 The Minimum Purchase Requirements for each Contract Year after the
fifth Contract Year, if any, shall be reviewed and established by Distributor
and Supplier on an annual basis through good faith negotiations which shall
begin six months prior to the beginning of each such Contract Year and be
completed at least 60 days prior to the beginning of the applicable Contract
Year, provided that in no event shall any Minimum Purchase Requirement for any
Contract Year be less than such Minimum Purchase Requirement for the previous
Contract Year.
4.3 In the event that the actual dollar amount of the Products purchased
by Distributor in any Contract Year or the Stub Period (the "Actual Purchase
Amount") is less than any Minimum Purchase Requirement for such Contract Year or
Stub Period, Distributor shall, within 30 days after the end of such Contract
Year or Stub Period, either: (a) pay to Supplier as liquidated damages the
difference between the Minimum Purchase Requirement and the Actual Purchase
Amount (the "Purchase Shortfall"); or (b) order and pay for Products in a dollar
amount equal to such Purchase Shortfall.
4.4 Notwithstanding anything to the contrary contained herein, the
parties agree that if, at the end of the third Contract Year, Supplier
determines, in its sole and absolute discretion, that there has been a
significant change in manufacturing processes in clean room environments since
the date of this Agreement, Supplier shall propose revised Minimum Purchase
Requirements for the fourth and fifth Contract Years to address such change.
4.5 If with respect to Distributor's international sales: (a)
Distributor's actual sales during any Contract Year are greater than or less
than (b) the Minimum Purchase Requirement for such Contract Year as set forth in
Exhibit C, the Minimum Purchase Requirement for the following Contract Year
shall be adjusted upward (in the event such sales are greater) or downward (in
the event such sales are less) by the percentage of such shortfall or overage.
4.6 During the first Contract Year and the Stub Period, the mix of
Distributor's purchases of Products shall be of similar proportion to the mix of
such Products sold by the Industrial Distribution Business in 1994. After the
first Contract Year, the mix of Distributor's purchases of Products shall be of
similar proportion to the mix of such Products purchased by Distributor during
the immediately preceding Contract Year. Twice during each Contract Year, the
parties shall meet to determine whether the mix of Distributor's
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purchases of Products varies by more than 10% of the mix from the period against
which such Contract Year is measured. If Supplier's margin is adversely
affected by such mix, Supplier shall have the right to revise and adjust margins
in order to eliminate any detrimental effect from such mix on future sales.
4.7 During the Stub Period and the first Contract Year, Distributor
shall use good faith efforts to achieve the purchase goals specified in Exhibit
D, provided, however, that Distributor shall incur no liability for its failure
to achieve any such purchase goals in excess of any Minimum Purchase
Requirements.
4.8 Within 30 days after the Stub Period and on or prior to the end of
each Contract Year, Supplier shall provide to Distributor a report containing
any credits which should reduce Distributor's Minimum Purchase Requirements
hereunder arising from sales by Supplier or any of its Affiliates to Industrial
Customers during such Stub Period or the first eleven months of the Contract
Year and an estimate of the credits for the twelfth month of such year. Within
30 days after the end of each Contract Year, Supplier shall provide to
Distributor a final report covering the Contract Year and appropriate
adjustments shall be made.
5. Prices.
5.1 The prices for each Product sold by Supplier to Distributor under
this Agreement shall be the price set forth opposite such Product in Exhibit A.
Supplier may increase or decrease the price of any Product upon not less than 60
days written notice to Distributor effective on the first day of any calendar
year, provided that such price increase shall be based upon the constant volume
"standard to standard" cost change for Supplier's manufacturing units producing
the Pharmaseal and Convertors Products. Any such notice shall contain the
specific price change for each Product affected by the notice. Upon the first
day of the calendar year immediately following the expiration of such 60 day
period, Exhibit A shall be deemed to be amended to reflect the price increases
and/or decreases contained in such notice without any further act by any party
hereto. Supplier shall honor Distributor's purchase orders received by Supplier
prior to Distributor's receipt of any such notice at the prices in effect when
such orders were received. Distributor agrees that the dollar volume of its
Product purchases during the 60 days prior to the effective date of a price
change shall not exceed 20% of the dollar volume of Distributor's Product
purchases during the preceding 10 months, except that such 20% limit shall not
apply to purchases made by Distributor for the sole purpose of achieving any
Minimum Purchase Requirement.
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5.1.1 If Distributor exceeds the Minimum Purchase Requirement for
the Stub Period listed on Exhibit B, Supplier shall pay
Distributor a rebate of 5.9% times the net purchase price of
all Products purchased during such Stub Period in excess of
such Minimum Purchase Requirement.
5.1.2 Beginning on October 1, 1995, if at any time during any of
the first three calendar quarters of any Contract Year,
Distributor purchases from Supplier more than $12,000,000 of
Products, Supplier shall pay Distributor a rebate of 5.9%
times the net purchase price of all Products purchased during
such quarter in excess of $12,000,000 subject to Section
5.1.3.
5.1.3 After the end of each Contract Year Supplier shall calculate
Distributor's total net purchases of Products and Distributor
shall be entitled to a rebate of 5.9% times the net purchase
price of all Products purchased during such Contract Year in
excess of $48,000,000. If the rebates due Distributor for
such Contract Year exceed the rebates paid to Distributor
during the Contract Year, pursuant to Section 5.1.2 Supplier
shall pay Distributor such remaining rebate due Distributor.
To the extent rebates paid for the Contract Year pursuant to
Section 5.1.2 exceed the total due to Distributor for such
Contract Year, Distributor shall repay to Supplier the rebate
overpayment. If Distributor's total net purchases of
Products during such Contract Year totalled less than
$48,000,000, Distributor shall repay all rebates paid by
Supplier for the Contract Year pursuant to Section 5.1.2.
5.1.4 All rebates due Distributor shall be paid within fifteen (15)
days after the end of the applicable quarter. All rebate
repayments due to Supplier shall be paid within fifteen (15)
days after the date of Supplier's invoice for any repayments
due.
5.2 Distributor shall have the exclusive right to establish and control
prices on the Products sold to its customers.
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5.3 The prices for the Products sold by Supplier to Distributor shall
not include any transportation expenses, customs duties, sales tax, goods and
services tax or any other sales, use, inventory, delivery, value added or like
taxes of any federal, state or local government in the Territory or anywhere
else, however imposed. Distributor shall be responsible for all such expenses,
duties and taxes and shall pay Supplier any and all taxes which Supplier is
required to collect or pay with respect to the sale to Distributor, of the
Products pursuant to this Agreement.
6. Distributor's Duties.
During the Term, Distributor shall maintain the facilities and personnel
necessary to distribute the Products as provided for hereunder, including
without limitation the facilities and personnel necessary to:
6.1 continue to supply the Products to existing customers of the
Industrial Distribution Business in the Territory pursuant to all contracts,
commitments, and other arrangements between Supplier and Industrial Customers in
effect as of the date of execution of this Agreement.
6.2 submit its orders for the Products on its standard purchase order
form, provided that notwithstanding any terms or provisions of such purchase
order, the terms and conditions of this Agreement shall apply to each such
purchase order;
6.3 pay for such orders on Supplier's terms of payment net 30 days from
the date of invoice;
6.4 actively advertise, promote and distribute the Products by methods
which in Distributor's reasonable judgment are best suited for the sale of such
Products, including, without limitation, the following:
6.4.1 promptly respond to customer requests for Product
information and samples and promptly deliver demonstration
equipment to customers' facilities and redeliver such
equipment to Supplier in accordance with Supplier's
reasonable instructions;
6.4.2 provide instruction to customers in the use and routine
handling of the Products;
6.4.3 promptly replace any Products whose expiration date has
expired, in each case at Distributor's cost and expense
unless the replacement was necessary because of a breach
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by Supplier of any of Supplier's duties hereunder;
6.4.4 promptly and courteously resolve billing disputes;
6.4.5 highlight the Products in Distributor's catalogues and other
promotional materials;
6.4.6 display the Products at trade shows and at Distributor's
national and regional sales meetings;
6.4.7 promptly share with Supplier all information in Distributor's
possession about the Products and their ability to compete
and customer's needs; and
6.4.8 provide sales, marketing and promotional support with respect
to the Products that is no less extensive than the support
provided by Distributor with respect to any other similar
product line.
6.5 use trademarks and trade names connoting Supplier only in connection
with the Products sold in the Territory and subject to all terms of this
Agreement, including but not limited to Section 8 hereof;
6.6 provide appropriate training with respect to the Products for
Distributor's sales representatives;
6.7 after the expiration of the Services Agreement between the parties
dated as of the date hereof with respect to any Region, as defined therein,
stock inventories of the Products in quantities which are sufficient to achieve
a fulfillment rate acceptable to customers in the Territory;
6.8 deliver Products that have an expiration date to customers with a
minimum shelf life acceptable to customers;
6.9 store Products only in a manner consistent with applicable
manufacturer's specifications in order to prevent damage to or deterioration of
the Products;
6.10 give Supplier 30 days written notice of any and all proposed returns of
Products and Distributor shall not return any Products without Supplier's prior
written approval, provided that during any Contract Year, Distributor may
exchange with Supplier up to $100,000 of Products (provided that if any such
Product has an expiration date such return shall be made at least 60 days
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prior to such expiration date) for $100,000 of alternate Products;
6.11 offer to its sales representatives incentives with respect to the
Products that are no less favorable to such personnel than the incentives
offered to such personnel with respect to any other similar product line;
6.12 obtain and maintain during the Term and for one year after the
expiration or termination of this Agreement product liability insurance
(containing either a vendor's endorsement or contractual liability coverage
referencing the indemnification provisions contained in Section 6.15 hereof) on
all Products with insurers reasonably satisfactory to Supplier with minimum
limits of $1,000,000/$3,000,000 for bodily injury and $300,000 for property
damage and immediately furnish to Supplier a certificate of insurance issued by
the insurance carrier evidencing the foregoing endorsements, coverages and
limits and that such insurance shall not be cancellable without at least 30 days
prior written notice to Supplier;
6.13 comply (or cause compliance) with all existing and future federal,
state and other laws and regulations in the Territory applicable to the conduct
of Distributor's business or the possession, use and sale to its customers of
Products pursuant to this Agreement, including, without limitation, the
following:
6.13.1 give prompt written notice to Supplier if Distributor should
become aware of any defect or condition (actual or alleged)
which may alter the quality of the Products in any material
respect or may render any of the Products in violation of any
applicable law or regulation of the Territory, including,
without limitation, any violation which could require any
alteration of the specifications of any Product, affect the
sale of any Product, cause revocation of any regulatory
approval with respect to any Product or its sale hereunder,
or give rise to a claim against Supplier by any person, and
Distributor shall promptly notify Supplier upon becoming
aware of any changes in any laws or regulations in the
Territory applicable to the manufacture, sale, packaging,
labelling, possession or use of the Products;
6.13.2 keep appropriate records of all lot coded and serial numbered
Products sold to customers,
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including without limitation particle testing data and
sterility information;
6.13.3 make prompt return of any and all Products affected by
holds or recalls, if so requested by Supplier;
6.13.4 not alter, remove or otherwise modify the packaging,
labelling or product insert sheets furnished by Supplier
for the Products; and
6.13.5 grant to Supplier the right to audit Distributor's
customer sales information to verify that Products have
not been sold to any customers other than Industrial
Customers;
6.14 not repackage or relabel any Products;
6.15 shall indemnify and hold harmless Supplier, its Affiliates and: (a)
their respective directors, officers, employees, agents and counsel; and (b) the
successors, assigns, heirs and personal representatives of any of the foregoing
(all of the foregoing being collectively referred to in Section 13 as
"Indemnified Persons") with respect to all claims, liabilities, damages, and
expenses, including reasonable attorneys' fees and expenses, arising out of
claims by third parties caused by any wrongful or negligent act or omission by
Distributor (or its employees or other agents) in its performance of the terms
of this Agreement; provided that Section 13 shall apply to any claim,
arbitration proceeding or suit made or brought by any third party as to which
any Indemnified Person intends to claim indemnification under this Section 6.15;
and
6.16 provide Supplier with a rolling six month forecast of Distributor's
planned purchases of Products, provided that the forecast for the first four
months of the forecast period shall constitute firm orders for the Products
forecasted for purchase in such months.
7. Supplier's Duties.
Supplier:
7.1 shall ship all Products from sources determined by Supplier in its
sole discretion on the following basis:
7.1.1 all Products shipped to Distributor by Supplier shall be
shipped F.O.B. Origin Xxxxxx Replenishment Center, Prepaid
and Add, to Distributor's facility in the Territory as
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designated pursuant to the relevant Purchase Order; and
7.1.2 in cases of emergency or at Distributor's request, Products
may be shipped directly to Distributor's customers ("drop
shipments"), in which event such Products shall be shipped
F.O.B. Destination, Prepaid and Add, with Supplier adding the
actual freight charges incurred for such shipments to the
relevant invoices to Distributor.
Title and risk of loss of all Products shall pass to Distributor, or, in
emergency situations or at Distributor's request as indicated above, to its
customers, as the case may be, upon Supplier's delivery of such Products to the
carrier;
7.2 shall adequately package and deliver the Products to the carrier;
7.3 shall, subject to Section 2.3, promptly refer all Product inquiries
from Industrial Customers in the Territory to Distributor;
7.4 shall obtain and maintain during the Term and for one year after the
expiration or termination of this Agreement product liability insurance
(containing either a vendor's endorsement or contractual liability coverage
referencing the indemnification provisions contained in Section 7.8 hereof) on
all Products with insurers reasonably satisfactory to Distributor with minimum
limits of $1,000,000/$3,000,000 for bodily injury and $300,000 for property
damage and immediately furnish to Distributor a certificate of insurance issued
by the insurance carrier evidencing the foregoing endorsements, coverages and
limits and that such insurance shall not be cancellable without at least 30 days
prior written notice to Distributor; provided, however, that Supplier may
satisfy its obligations under this Section 7.4 through its self-insurance
program;
7.5 7.5.1 shall furnish Distributor, at no cost to Distributor,
reasonable quantities of the following materials that Supplier has prepared for
the Products and considers appropriate for release to Distributor and its
customers (as determined by Supplier in its sole discretion): sales literature,
product insert sheets and customer instruction manuals for each Product or
versions or summaries thereof and, upon Distributor's written request,
photographs or copies thereof and camera-ready artwork included in such
materials;
7.6 shall comply (or cause compliance) with all existing and future laws
and regulations in the Territory applicable to
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the conduct of Supplier's business or the manufacture, packaging, labelling and
sale to Distributor of Products pursuant to this Agreement, including, without
limitation, the following:
7.6.1 give prompt written notice to Distributor if Supplier should
become aware of any defect or condition (actual or alleged)
which may alter the quality of the Products in any material
respect or may render any of the Products in violation of any
applicable law or regulation of the Territory, including,
without limitation, any violation which could require any
alteration of the specifications of any Product, affect the
sale of any Product, cause revocation of any federal, state
or other regulatory approval with respect to any Product or
its sale hereunder or give rise to a claim against
Distributor by any person; and
7.6.2 give prompt written notice to Distributor of any and all
Products affected by holds or recalls and, if Supplier
requests Distributor to return any of such Products to
Supplier, promptly reimburse Distributor for the price of
such returned Products paid by Distributor under this
Agreement and the direct cost of returning such Products to
Supplier;
7.7 warrants to Distributor that: (a) all Products sold to Distributor or
its customers pursuant to this Agreement shall not be adulterated or misbranded
and the packaging or labelling thereof shall not be misleading within the
meaning of applicable legislation relating thereto in the Territory; (b) each of
such Products shall conform to the descriptions and uses set forth in the
labelling and product insert sheets for such Product approved by Supplier; and
(c) Supplier shall have good and marketable title to all such Products free and
clear of all liens or encumbrances (other than any created by Distributor or its
customers). The foregoing warranty shall commence on the date of delivery of
each Product to Distributor or a customer, as the case may be, and expire 6
months thereafter (the "Warranty Period"), except that the Warranty Period for
each Product the use of which is subject to an expiration date shall expire on
the applicable expiration date. The foregoing warranty does not apply to any
Product which has been modified, improved or refurbished other than by Supplier
and does not cover any defect, malfunction or damage due to: (i) accident,
neglect or willful mistreatment of any Product; (ii) failure to properly store
or handle any Product; (iii) failure to use, operate, service or maintain any
Product in accordance with Supplier's applicable operating and service manuals;
or (iv) failure to use or apply
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proper reagents or chemicals in or to any Product. Any Product which proves not
to be in conformity with the foregoing warranty during the applicable Warranty
Period shall be repaired or replaced at the option and expense of Supplier. At
Supplier's option, Supplier shall pay the transportation and other costs
incurred by Distributor with respect to any Products returned to Supplier for
repair or replacement under these warranties, or reimburse Distributor for any
such costs.
7.7.1 THE FOREGOING WARRANTY CONTAINS THE SOLE REMEDY FOR ANY
DEFECT IN THE PRODUCTS. THE FOREGOING WARRANTY IS EXCLUSIVE
AND IN LIEU OF ALL OTHER WARRANTIES OF ANY KIND, WHETHER
STATUTORY, WRITTEN, ORAL, EXPRESS OR IMPLIED, INCLUDING ANY
WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE AND
MERCHANTABILITY. IN NO EVENT, WHETHER AS A RESULT OF BREACH
OF CONTRACT, TORT LIABILITY (INCLUDING NEGLIGENCE) OR
OTHERWISE, SHALL SUPPLIER BE LIABLE TO DISTRIBUTOR FOR ANY
SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES; and
7.7.2 ANY LIABILITY OF SUPPLIER TO DISTRIBUTOR UNDER THE WARRANTY
CONTAINED IN SECTION 7.7 SHALL BE LIMITED TO THE TOTAL PRICE
PAID BY DISTRIBUTOR FOR THE PRODUCTS WHICH ARE THE SUBJECT OF
SUCH LIABILITY PLUS ALL COSTS FOR TRANSPORTATION AND OTHER
DIRECT EXPENSES INCURRED BY DISTRIBUTOR WITH RESPECT TO SUCH
PRODUCTS.
7.8 shall indemnify and hold harmless Distributor, its Affiliates and: (a)
their respective directors, officers, employees, agents and counsel; and (b) the
successors, assigns, heirs and personal representatives of any of the foregoing
(all of the foregoing being collectively referred to in Section 13 as
"Indemnified Persons") with respect to all claims, liabilities, damages, and
expenses, including reasonable attorney's fees and expenses, arising out of
claims by third parties caused by:
7.8.1 any actual or alleged patent, copyright or trademark
infringement, or violation of any other proprietary right,
arising out of the purchase, sale or use of the Products
pursuant to this Agreement;
7.8.2 any actual breach of Section 7.7 (subject to the limitations
in Section 7.7); and
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7.8.3 any wrongful or negligent act or omission by Supplier (or its
employees or agents) in its performance of the terms of this
Agreement;
provided that Section 13 shall apply to any claim, arbitration proceeding or
suit made or brought by any third party as to which any Indemnified Person
intends to claim indemnification under this Section 7.8; and
7.9 represents to Distributor that: (a) for the first calendar quarter of
1995 domestic net sales of the Products to unaffiliated third parties by the
Industrial Distribution Business were at least $12,000,000; and (b) for the
first calendar quarter of 1995 International net sales (excluding sales in the
United States and Japan) of Products to unaffiliated third parties by the
Industrial Distribution Business were at least $2,000,000.
8. Trademarks.
8.1 Supplier acknowledges that Distributor is the owner or licensee of the
trademarks and trade names connoting Distributor which Supplier may elect to use
in the promotion and sale of the Products and that Supplier has no right or
interest in such trademarks and trade names. Before commencing any use of the
trademarks or trade names connoting Distributor in connection with any catalog,
promotional, packaging, or other material, which use has not been previously
approved in writing by Distributor, Supplier agrees to provide Distributor with
proposed specimens of use of such trademarks or trade names and to obtain
Distributor's written approval of such proposed use.
8.2 Distributor acknowledges that Supplier is the owner or licensee of the
trademarks and trade names connoting Supplier which Distributor may elect to use
in the promotion and sale of the Products hereunder, and the Distributor has no
right or interest in such trademarks or trade names. Before commencing any use
of the trademarks or trade names connoting Supplier in connection with any
catalog, promotional, packaging, or other materials, which use has not been
previously approved in writing by Supplier, Distributor agrees to provide
Supplier with proposed specimens of use of such trademarks or trade names and to
obtain Supplier's written approval of such proposed use.
8.3 Supplier and Distributor shall each notify the other party promptly of
any and all infringements or improper use by any third party of the trademarks
and trade names connoting such other party, should such Supplier or Distributor
discover reasonable cause for believing that such infringement or improper use
is taking place, and provide to such other party all information which Supplier
or Distributor has available thereon.
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Supplier and Distributor shall each have sole discretion and control with regard
to any proceedings relating to infringement or improper use of its trademarks
and trade names. Either party may choose to be represented by its own counsel
in any such proceedings but such representation shall be at such other party's
sole expense.
8.4 Supplier and Distributor each acknowledge that the other party would
not have any adequate remedy at law for the breach by the other party of any one
or more of the covenants contained in this Section 8 and agrees that, in the
event of such breach, the other party may, in addition to the other remedies
which may be available to it, file a suit in equity to enjoin the breaching
party from any further breach of any of the terms of this Section 8.
9. Termination.
9.1 Supplier and Distributor shall each have the right to terminate this
Agreement effective upon delivery of written notice to the other party if the
other party: (a) makes an assignment for the benefit of creditors, or becomes
bankrupt or insolvent, or is petitioned into bankruptcy, or takes advantage of
any state, federal or foreign bankruptcy or insolvency act, or if a receiver or
receiver/manager is appointed for all or any substantial part of its property
and business and such receiver or receiver/manager remains undischarged for a
period of 30 days, or if the corporate existence of the other party is
terminated by voluntary or involuntary dissolution; or (b) defaults in the
performance of any of its covenants or obligations contained in this Agreement
and such default is not remedied to the non-defaulting party's reasonable
satisfaction within 30 days after written notice to the defaulting party of such
default, or if such default is not capable of rectification within 30 days, if
the defaulting party has not promptly commenced to rectify the default within
such 30 day period, and thereafter proceeds diligently to rectify same.
Notwithstanding the foregoing provisions of this Section 9, Supplier may suspend
its performance under this Agreement if Distributor has not made any uncontested
payment due under Section 6.3 within 30 days following the date on which such
payment is due until such payments have been received by Supplier and any such
failure to pay within such 30 day period shall be considered a default under
this Agreement.
9.2 In the event that Distributor fails to achieve the Minimum Purchase
Requirements for any two successive Contract Years, Supplier shall have the
option, upon written notice to Distributor, to terminate this Agreement 90 days
after the end of the second such Contract Year.
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9.3 In the event that Distributor does not pay any Purchase Shortfall in
accordance with Section 4.3, Supplier shall have the option to either: (a)
terminate this Agreement in its entirety within 90 days after the end of the
Contract Year for which such Purchase Shortfall was due; or (b) continue to
perform pursuant to the terms of this Agreement provided that notwithstanding
anything to the contrary contained herein, Supplier may, directly or indirectly,
distribute the Products in the Territory to any Industrial Customers without
limitation beginning on the day after the Purchase Shortfall is due to Supplier.
Notwithstanding the foregoing, Distributor shall remain liable to Supplier for
any Purchase Shortfall.
9.4 In the event that after good faith negotiations pursuant to Section
4.2, the parties cannot agree on any Minimum Purchase Requirement for any
Contract Year after the fifth Contract Year, this Agreement shall automatically
terminate at the end of the fifth Contract Year.
9.5 In the event that this Agreement is terminated pursuant to this
Section 9, Supplier and Distributor shall comply fully with this Agreement and
use their best efforts to adequately service existing customers of the Products
until such termination becomes effective.
10. Procedures on Expiration or Termination.
10.1 On the expiration or termination of this Agreement for any reason: (a)
Supplier shall continue to honor Distributor's orders for Products placed up to
the effective date of termination and for a period of 60 days thereafter and
Distributor shall pay for such Products on the terms and conditions set forth in
this Agreement; and (b) if a pro rata amount of the Minimum Purchase
Requirements for the Contract Year during which such expiration or termination
occurs has not been purchased at the time such expiration or termination occurs,
Distributor shall pay to Supplier a pro rata amount of the Purchase Shortfall
that would have been due at the end of such Contract Year pursuant to the terms
of Section 4.3.
10.2 Within 30 days after termination of this Agreement by Supplier, upon
written request from Distributor, Supplier shall have the option to repurchase
for cash Distributor's inventory of the Products for which Distributor has good
and marketable title free of all liens and encumbrances and that are in good,
resalable condition in their original packaging and are not obsolete. The
purchase price of such inventory shall be equal to the purchase price thereof
paid by Distributor to Supplier, less any reserves for over-stocked or slow-
moving inventory maintained by Distributor in the ordinary course of business
and a restocking fee equal to 10% of Distributor's purchase price
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thereof, provided that Supplier may deduct from any amount owed by Supplier for
inventory repurchase any amount owed by Distributor to Supplier for any Volume
Difference. Notwithstanding the foregoing provisions of this Section 10.2, if,
on the date of expiration or termination of this Agreement, Distributor shall be
in default in the performance of any of its covenants or obligations contained
in this Agreement, or if this Agreement shall be terminated by Supplier in
accordance with Section 9 hereof, Supplier shall have no obligation to purchase
any of Distributor's inventory of Products under this Section 10.2, but Supplier
shall have the option, exercisable by written request to Distributor, to
repurchase such inventory on the terms and conditions specified herein.
10.3 Notwithstanding any provision of this Agreement or any other
agreement between Supplier, Distributor and/or their respective Affiliates,
Supplier and its Affiliates and successors shall have the unrestricted right to
sell or otherwise dispose of the Products within the Territory from and after
the effective date of the expiration or termination of this Agreement.
11. Force Majeure.
The obligations of either party to perform under this Agreement
shall be excused during each period of delay caused by matters (not including
lack of funds or other financial causes) such as strikes, supplier delays,
shortages of raw materials, government orders or acts of God, which are
reasonably beyond the control of the party obligated to perform. Any delay
occasioned thereby shall not constitute a default under this Agreement, and the
obligations of the parties shall be suspended during the period of delay so
occasioned.
12. Confidentiality.
12.1 Supplier agrees that, pursuant to this Agreement, valuable marketing
information of a confidential nature pertaining to the marketplace in the
Territory may be disclosed by Distributor to Supplier; that such information
shall be retained by Supplier in confidence; and that Supplier shall not, either
during the term of this Agreement or thereafter, publish or disclose or cause
anyone else to publish or disclose any marketing information supplied to
Supplier by Distributor. Notwithstanding the foregoing provisions of this
Section 12, the above restrictions on disclosure and use shall not apply to any
information which Supplier can show by written evidence was known to it at the
time of receipt thereof from Distributor or which may subsequently be obtained
from sources other than Distributor who are not bound by a confidentiality
agreement with Distributor.
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12.2 Distributor agrees that, pursuant to this Agreement, valuable
marketing, sales or technical information of a confidential nature may be
disclosed by Supplier to Distributor; that such information shall be retained by
Distributor and its respective Affiliates in confidence; that the transmittal of
such technical information by Supplier to Distributor is upon the express
condition that it is to be used solely for the purpose of effectuating this
Agreement; and that Distributor and its respective Affiliates shall not, either
during the term of this Agreement or thereafter, publish or disclose or cause
anyone else to publish or disclose any marketing or sales information supplied
to Distributor by Supplier, or publish, disclose or use or cause anyone else to
publish, disclose or use, any technical information supplied to Distributor by
Supplier. Notwithstanding the foregoing provisions of this Section 12.2, the
above restrictions on disclosure and use shall not apply to any information
which Distributor can show by written evidence was known to it at the time of
receipt thereof from Supplier or which may subsequently be obtained from sources
other than Supplier who are not bound by a confidentiality agreement with
Supplier.
12.3 Each party acknowledges that the other party would not have any
adequate remedy at law for the breach by either party of any one or more of the
covenants contained in this Section 12 and agrees that, in the event of such
breach, the other party may, in addition to the other remedies which may be
available to it, file a suit in equity to enjoin the breaching party from any
further breach of any of the terms of this Section 12.
13. Third Party Claims.
If any third party shall make any claim or commence any arbitration
proceeding or suit against any one or more of the Indemnified Persons with
respect to which an Indemnified Person intends to make any claim for
indemnification against Distributor under Section 6.15 or against Supplier under
Section 7.8, such Indemnified Persons shall promptly give written notice to
Distributor or Supplier, as the case may be, of such third party claim,
arbitration proceeding or suit and the following provisions shall apply;
13.1 Subject to Section 13.2, such Indemnified Persons shall have the
right to conduct and control, through counsel of their choosing, the defense of
any third party claim, arbitration proceeding or suit, and such Indemnified
Persons may settle the same; provided that such Indemnified Persons shall give
the indemnifying party advance notice of any proposed settlement. Such
Indemnified Persons shall permit the indemnifying party to participate in the
defense of any such action or suit through counsel chosen by it, provided that
the fees and expenses of such counsel shall be borne by the indemnifying party.
Any settlement
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with respect to a claim for money damages effected by such Indemnified Persons
after the indemnifying party has notified such Indemnified Persons in writing of
the indemnifying party's disapproval of such settlement, shall discharge the
indemnifying party from liability with respect to the subject matter thereof
under this Agreement, and no claim for indemnification therefor shall be claimed
by such Indemnified Persons under Section 6.15 or Section 7.8, as the case may
be.
13.2 Notwithstanding Section 13.1, if the remedy sought in any claim,
arbitration proceeding or suit referred to in this Section 13 is solely money
damages, the indemnifying party shall have 15 business days after receipt of the
notice referred to above in this Section 13 to notify such Indemnified Persons
that it elects to conduct and control the defense of such claim, proceeding or
suit. If the indemnifying party does not give the foregoing notice, such
Indemnified Persons shall have the right to defend or settle such claim,
proceeding or suit in the exercise of their exclusive discretion, and the
indemnifying party shall, upon request from any of such Indemnified Persons,
promptly pay to them in accordance with Section 6.15 or Section 7.8, as the case
may be, the amount of any liabilities, damages, losses and expenses, including
reasonable attorney's fees, resulting from such claim, proceeding or suit. If
the indemnifying party gives the foregoing notice, the indemnifying party shall
have the right to undertake, conduct and control, through counsel of its own
choosing and at the sole expense of the indemnifying party, the conduct and
control of the defense and any settlement of such claim, proceeding or suit, and
such Indemnified Persons shall cooperate with the indemnifying party in
connection therewith; provided that: (a) the indemnifying party shall not
thereby permit to exist any lien, encumbrance or other adverse charge upon any
asset of any of such Indemnified Persons; (b) the indemnifying party shall
permit such Indemnified Persons to participate in such defense or settlement
through counsel chosen by such Indemnified Persons, but the fees and expenses of
such counsel shall be borne by such Indemnified Persons except as provided in
clause (c) below; and (c) the indemnifying party shall agree to reimburse
promptly under Section 6.15 or Section 7.8, as the case may be, such Indemnified
Persons for the full amount of any liabilities, damages, losses and expenses,
including reasonable attorneys' fees, resulting from such claim, proceeding or
suit, except in each case for any fees and expenses of counsel for such
Indemnified Persons incurred after the assumption of the conduct and control of
such claim, proceeding or suit by the indemnifying party. So long as the
indemnifying party is contesting any such claim, proceeding or suit in good
faith, such Indemnified Persons shall not pay or settle any such claim,
proceeding or suit; provided, however, that such Indemnified Persons shall have
the right to pay or settle any such claim, proceeding or suit; provided,
further,
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that in such event such Indemnified Persons shall be deemed to have waived any
right to indemnity therefor by the indemnifying party under Section 6.15 or
Section 7.8, as the case may be.
14. Miscellaneous Provisions.
14.1 All notices and other communications required under this Agreement
shall be in writing and shall be deemed to have been given if delivered by hand,
or sent by courier or facsimile transmission (provided that in the case of
facsimile transmission, a confirmation copy of the notice shall be delivered by
hand or sent by courier within 2 days of transmission), addressed:
if to Supplier to:
Xxxxxx Healthcare Corporation
Xxx Xxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
(facsimile number: (000) 000-0000)
with copies to:
Xxxxxxx X. Xxxxxxx, Esq.
Assistant General Counsel
MPN-02
U.S. Healthcare/Law
Xxxxxx Healthcare Corporation
0000 Xxxxxxxx Xxxx
XxXxx Xxxx, Xxxxxxxx 00000
(facsimile number: (000) 000-0000)
and
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. X'Xxxx
(facsimile number: (000) 000-0000)
if to Distributor to:
VWR Corporation
0000 Xxxxxx Xxxxxxx
Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: President
(facsimile number: (000) 000-0000)
with a copy to:
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Drinker Xxxxxx & Xxxxx
0000 Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxx
(facsimile number: (000) 000-0000)
until notice of a change is given as provided in this Section 14.1. All notices
given in accordance with this Section 14.1 shall be effective, if delivered by
hand or by courier, at the time of delivery, and, if communicated by facsimile
transmission, at the time of transmission.
14.2 This Agreement is the entire agreement between the parties hereto with
respect to the subject matter hereof, there being no prior written or oral
promises or representations not incorporated herein or therein.
14.3 This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Illinois and the federal laws of the
United States of America applicable therein. Any lawsuit arising from or
related to this Agreement shall be brought before the United States District
Court for the Northern District of Illinois or the Eastern District of
Pennsylvania or an Illinois state court sitting in Lake County, Illinois, or any
Commonwealth Court sitting in Xxxxxxx County, Pennsylvania. The parties hereby
consent to the jurisdiction of such courts.
14.4 No amendment or modification of the terms of this Agreement shall be
binding on either party unless reduced to writing and signed by an authorized
officer of the party to be bound. The waiver by either party of any particular
default by the other party shall not affect or impair the rights of the party so
waiving with respect to any subsequent default of the same or a different kind;
nor shall any delay or omission by either party to exercise any right arising
from any default by the other affect or impair any rights which the non-
defaulting party may have with respect to the same or any future default.
14.5 Each party represents and warrants that the terms of this Agreement do
not violate any existing obligations or contracts of, or any law, rule,
regulation, judgment or order binding on, such party. Each party shall
indemnify and hold harmless the other party from and against any and all
liabilities, damages, losses and expenses (including reasonable attorney's fees)
resulting from any third party claim, arbitration proceeding or suit which is
hereafter made or brought against the other party and which alleges any such
violation, all as provided in Section 13 herein with respect to the
indemnification provided in Section 6.15 and Section 7.8.
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14.6 Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall be ineffective to the extent of such prohibition or
unenforceability without affecting, impairing or invalidating the remaining
provisions or the enforceability of this Agreement.
14.7 By virtue of this Agreement, neither party constitutes the other as
its agent, partner, joint venturer, or legal representative and neither party
has express or implied authority to bind the other in any manner whatsoever.
15. Assignment.
15.1 This Agreement shall be binding upon and enure to the benefit of the
parties hereto and their respective successors and assigns, provided, however,
that neither party shall have the right to transfer or assign its interest in
this Agreement without the prior written consent of the other party, which
consent shall not be unreasonably withheld.
15.2 Notwithstanding the foregoing provisions of this Section 15,
Supplier may assign its rights and obligations under this Agreement to any
corporation or other entity that shall acquire all or substantially all of
Supplier's business and assets and who shall assume in writing all of Supplier's
obligations hereunder and deliver a signed copy of such assumption instrument to
Distributor; provided, further, that upon Distributor's receipt of such
assumption instrument, Supplier shall be fully released and discharged from its
obligations under this Agreement.
15.3 Notwithstanding the foregoing provisions of this Section 15, to the
extent that any corporation or other entity shall acquire all or substantially
all of Supplier's business and assets relating to any of the Products, Supplier
may assign a corresponding portion of its rights hereunder to such corporation
or entity, provided that any such corporation or entity shall assume in writing
all of Supplier's obligations hereunder which correspond to the portion of
rights assigned, and shall deliver a signed copy of such assumption instrument
to Distributor; provided further that upon Distributor's receipt of such
assumption instrument, Supplier shall be fully released and discharged from all
of the obligations under this Agreement that are assumed by such a corporation
or entity. Notwithstanding anything to the contrary set forth in this Section
15.3, if any such assignee of Supplier does not, in any material respect,
produce Products of the same quality as produced by Supplier, Distributor shall
have the right, upon 60 days prior notice, to unilaterally terminate its
obligations under Section 4 of this Agreement.
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16. Counterparts.
For convenience of the parties hereto, this Agreement may be executed
in one or more counterparts, each of which shall be deemed an original for all
purposes.
* * * * * *
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IN WITNESS WHEREOF, the parties have by their duly authorized officers
executed this Agreement as of the date first above written.
SUPPLIER: DISTRIBUTOR:
-------- -----------
XXXXXX HEALTHCARE CORPORATION VWR CORPORATION
By:/s/ Xxxxx X. Xxxxx By:/s/ Xxxxxxx X. Xxxxxx
-------------------------- ----------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxxx
Title: Vice President Title: President and Chief
Strategic Initiatives Executive Officer
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