DISTRIBUTION AGREEMENT
Exhibit 10.26
THIS DISTRIBUTION AGREEMENT (the “Agreement”) is made and entered into as of the 15th day of
February, 2006 2005, by and between Uroplasty, Inc., 0000 Xxxxxx Xxxxxx X.X., Xxxxxxxxxxx,
Xxxxxxxxx 00000 (“Uroplasty”), and CL Medical SARL, Le Pré Center 2, 00 xxxxxx Xxxxxxx xx Xxxxxx,
X-00000 Xxxxxx Xxx Xxx Xxxx, Xxxxxx (“CL”).
R E C I T A L:
WHEREAS, Uroplasty manufactures and currently markets in the United States a family of
injectable implant products used for soft-tissue augmentation for specific indications in urology,
urogynecology, colon and rectal, otolaryngology and plastic surgery markets;
WHEREAS, CL has obtained regulatory clearance from the FDA (510(k) Application Number K051533, with
regulatory clearance date of August 11, 2005) to introduce into commerce its tension-free vaginal
tape for the treatment of female urinary incontinence, currently being marketed in Europe under the
brand name “I-Stop” (the “CL Product”);
WHEREAS, subject to FDA rules and regulations, Uroplasty desires to market the CL Product in the
United States and purchase its requirements of the CL Product from CL, and CL desires to
manufacture the CL Product for Uroplasty and make it the exclusive distributor of the CL Product in
the United States;
WHEREAS, on September 2, 2004, Uroplasty and CL entered a Manufacturing and Distribution Agreement
setting forth each party’s responsibilities with respect to the manufacturing and marketing of the
CL Product for distribution in the United States (the “Manufacturing Agreement”), the parties
desire to terminate the Manufacturing Agreement of September 2, 2004 and have this Agreement govern
all of the terms and conditions of the parties’ relationship with respect to the CL Product;
THEREFORE, IT IS AGREED AS FOLLOWS:
1. Exclusive Distributorship. During the term of this Agreement, CL appoints Uroplasty as
CL’s exclusive distributor in the United States of the CL Product. In return, Uroplasty agrees
during the term of this Agreement to purchase its entire requirements of CL Product components from
CL, as further detailed below.
2. CL’s Responsibilities. During the term of this Agreement, CL will:
(a) Regulatory Compliance. Supply Uroplasty with (i) worldwide regulatory status
changes relative to the CL Product market clearances, (ii) worldwide clinical adverse event
experience (including investigational notes), (iii) all FDA correspondence, inspection
results, enforcement action information and other regulatory information concerning the CL
Product or the quality system used to manufacture the CL Product, (iv) assistance as
Uroplasty requests to investigate and resolve CL Product complaints and/or clinical adverse
events and (v) assistance in responding to FDA requests for information about the CL
Product;
(b) Supply of CL Product. Supply Uroplasty in a timely manner with its entire
requirements, sterilized, packaged, labeled and ready for sale, all as manufactured in
accordance with FDA laws and regulations.
(c) Marketing Assistance. Use its best efforts to assist Uroplasty in the marketing
of the CL Product by sharing (without cost) all of CL’s current and future marketing
materials, including product photographs and graphics, I-Stop trademark logos and designs,
brochures and website designs and information.
(d) Device Changes. Inform Uroplasty in advance of any changes to the CL Product
(including design, manufacturing, packaging or labeling) to ensure accurate marketing
programs, claims, and representations in the U.S. market. CL will provide previous
generation product at Uroplasty’s request for a maximum of 3 months to allow adequate time
to transition to the new design (i.e., marketing preparation, training, etc.).
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3. Uroplasty’s Responsibilities. During the term of this Agreement, Uroplasty will:
(a) Appointment as US Agent. Accept appointment as US Agent for CL, the duties of
“US Agent” being limited to those described in FDA regulations and 21 USC 360(i) and 21 CFR
807.40 as including responsibility for facilitating, as needed, communications between CL
and the FDA, responding to questions concerning the CL Product, and scheduling inspections
of CL by FDA auditors;
(b) Regulatory Compliance. Comply with all applicable national, state, regional and
local laws and regulations in performing its duties hereunder, apprise CL with respect to
any changes in such laws and regulations as may affect the CL Product, and promptly notify
CL of any complaints and/or reported adverse health effects potentially related to the use
of the CL Product, or any regulatory developments in the United States regarding CL Product;
(c) Marketing. Use its best efforts to market and sell the CL Product in the United
States at such prices, and on such terms, as Uroplasty shall determine in its sole
discretion, and aid CL in obtaining a U.S. trademark for the CL Product brand name to be
used; and
(d) Customer Support. Uroplasty will provide prompt pre- and post-sales service and
support for all units of the CL Product in the United States, including timely response to
customers’ general questions, customer assistance in the diagnosis and correction of
problems encountered in using the CL Product, and, only upon request by CL, will return a CL
Product to CL for investigation of an alleged problem.
4. Forecasting, Order Acceptance, and Product Delivery. At minimum, Uroplasty will provide
CL with rolling forecasts, quarterly, beginning January 1, 2006, for expected orders over the next
ninety (90) days, and with a preliminary forecast for one hundred eighty (180) days thereafter. CL
will make reasonable good faith efforts to meet the projected ninety (90) day forecasts of demand
in each quarter. ON or before January 1 of each subsequent year, Uroplasty also shall confer with
CL and provide what it reasonably believes is a month-by-month forecast for CL Product for the
calendar year. All purchase orders issued by Uroplasty to CL shall be subject to written acceptance
by CL at CL’s corporate offices. All CL Product shall be shipped to Uroplasty at its designated
location ExWorks (Incoterms 2000) from CL’s production facility. If for any reason CL is
prohibited from exporting CL Product from France into the United States, CL agrees this Agreement
is hereby terminated. CL will cease manufacturing the CL Product and Uroplasty will begin
manufacturing the CL Product for the US market. CL shall supply to Uroplasty components necessary
to manufacture, package, and label the CL Product, under the applicable terms and conditions of the
previous September 2, 2004 Manufacturing Agreement, as amended and agreed to reflect outdated terms
and conditions.
5. Product Pricing and Payment. Exhibit B is a schedule of CL’s pricing in Euros to
Uroplasty for CL Products. Uroplasty will pay 30% of the purchase price for CL Products in Euros,
at the time Uroplasty places its purchase order. As to products that Uroplasty does not reject for
defects, Uroplasty shall pay CL, in Euros, the remaining 70% balance, net of returns, in net 60
days after receipt. For defects other than those in packaging and labeling discovered by Uroplasty
after full payment has been made, Uroplasty shall be entitled to a credit or refund in the amount
of the purchase price, shipping expenses and all applicable other costs paid by Uroplasty under
this Agreement.
6. Minimum Purchase Requirements. Despite the above provisions, Uroplasty agrees during the
term of this Agreement to purchase a minimum number of CL Products as described on the attached
Exhibit C.
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7. Intellectual Property Matters.
(a) License Grant. To the extent required, CL hereby grants, and Uroplasty hereby
accepts, an exclusive (subject to the fulfillment of the other provisions), nontransferable
right and license of the specified CL intellectual property to market, demonstrate and
distribute the CL Product to end-users and to use the CL Medical “I-Stop” trademark and
logo, in the United States, during the term of this Agreement, solely for the purpose of
exercising the rights granted herein. This license does not grant, and Uroplasty shall
not have, any right or license to (a) manufacture the CL Product or component
thereof for any purpose, (b) use the CL Product for any purpose other than marketing,
demonstration and/or distribution to end users, (c) modify any unit of the CL Product in any
manner, or (d) possess or retain any rights to CL’s intellectual property.
(b) Patents. Uroplasty agrees to assign and transfer to CL the entire right, title
and interest, for the United States of America and its possessions and territories and for
all foreign countries, in and to any U.S. or foreign patents issued in connection with the
CL Product, including methods of use thereof, or any improvements thereupon, including any
and all additions, alterations, modifications, design changes, and other improvements to the
CL Product, including methods of use thereof, which are jointly developed by CL and
Uroplasty at any time during the term of this Agreement, and regardless whether CL owns or
holds any proprietary rights therein or thereto.
(c) Use During Agreement. Uroplasty agrees not to attach any additional trademarks,
trade names, logos or designations to the CL Product without the prior written consent of
CL, which shall be conditioned on CL’s approval of location, content and appearance of any
proposed attachment, and further agrees not to use any CL trademark in connection with any
product other than the CL Product.
(d) No Acquired Proprietary Rights. Uroplasty has paid no consideration for the use
of CL’s trademarks, trade names, logos, designations or copyrights, and nothing in this
agreement will give Uroplasty any right, title or interest in any of them.
(e) No Continuing Rights. Upon expiration or termination of this Agreement,
Uroplasty will immediately cease all display, advertising and use of CL trademarks, trade
names, logos and designations and will not thereafter use similar or confusing trademarks,
trade names, logos and designations.
(f) Obligation to Protect. Uroplasty agrees to use reasonable efforts to protect
CL’s proprietary rights and to cooperate in CL’s efforts to protect its proprietary rights.
Uroplasty agrees to promptly notify CL of any known or suspected breach of CL’s proprietary
rights that comes to Uroplasty’s attention.
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8. Indemnification
(a) IP Indemnity. CL will defend, indemnify and hold Uroplasty, Uroplasty’s
customers who have purchased the CL Product, and each of their respective directors,
officers, employees and agents, harmless for any and all losses, claims, damages, awards,
costs and expenses including reasonable attorney’s fees which arise from any claim by any
third party that any of CL Intellectual Property infringes such third party’s patent,
copyright or other intellectual property rights. This indemnity shall survive the
termination of this agreement. NO LIMITATION OF LIABILITY SET FORTH ELSEWHERE IN THIS
AGREEMENT IS APPLICABLE TO THIS INDEMNIFICATION. The provisions of this section set forth
the entire liability of CL and the sole remedies of Uroplasty with respect to infringement
and allegations of infringement of intellectual property rights or other proprietary rights
of any kind in connection with the use of CL Intellectual Property.
(b) By CL. CL shall indemnify, protect, defend, and hold Uroplasty, its
sub-licensees, parents, subsidiaries, and affiliates, and the respective officers,
directors, shareholders, agents, and employees of all of the foregoing, harmless from and
against any and all costs, claims, suits, losses, damages, liabilities, and expenses
(including reasonable attorney’s fees) arising out of or resulting from (i) product, design
and manufacturing defects in the CL Product, (ii) the breach by CL of any representation,
warranty, covenant or obligation contained in this Agreement, (iii) the marketing,
manufacture, distribution or use of the CL Product in the United States, and the activities
of CL related thereto, prior to the Effective Date or (iv) any marketing, manufacture,
distribution or other exploitation of the CL Product by CL outside the United States. NO
LIMITATION OF LIABILITY SET FORTH ELSEWHERE IN THIS AGREEMENT IS APPLICABLE TO CLAIMS
ARISING UNDER ITEMS (i) (iii) (iv) OF THIS SECTION 9.2. AND TO CLAIMS ARISING UNDER ITEM
(ii) OF THIS SECTION 9.2 IF CL’S BREACH WAS WILLFUL OR GROSSLY NEGLIGENT.
(c) By Uroplasty. Uroplasty shall indemnify, protect and save CL, which term
shall include all officers, directors, employees and agents thereof (hereinafter referred to
as “Indemnitees”) harmless from all claims, demands, suits or actions (including attorneys’
fees incurred in connection therewith) arising out of or resulting from the breach by
Uroplasty of any representation, warranty, covenant or obligation contained in this
Agreement.
(d) Product Liability and Property Insurance. During the term of this Agreement,
each party shall maintain product liability insurance covering the CL Product and, including
without limitation, each party’s contractual liability to the other pursuant to the
indemnification provided in this Section 9, with combined single limits of liability in the
amount of Two Million U.S. Dollars ($2,000,000). This insurance coverage must be provided
by a carrier with an A.M. Best rating of A- or better. Prior to, or upon execution of this
Agreement, and at such other times as either party may request during the term of this
Agreement, each party shall provide, as a condition to the other’s obligations under this
Agreement, a certificate of insurance issued by the carrier (admitted to conduct business in
the United States of America), evidencing the insurance required under this Section 9.4.
Property insurance shall be maintained by each party for potential physical damage or loss
of shipment while in transit. This provision is applicable for each shipment until the
transfer of rights under this agreement.
9. Warranties and Limited Liabilities
(a) CL Product Warranty. CL warrants to Uroplasty and end-users that the CL Product
Components will be manufactured in accordance with FDA laws and regulations and free of all
defects in workmanship and material. At Uroplasty’s option, CL will, at its sole cost and
expense, repair, replace or accept return for credit of any CL Product Components that
Uroplasty determines not to meet product specifications and this warranty.
(b) Disclaimer of Warranties. CL MAKES NO WARRANTIES OR REPRESENTATIONS AS TO
PERFORMANCE OF THE CL PRODUCT EITHER TO UROPLASTY OR TO END-USERS, AND HEREBY DISCLAIMS ALL
WARRANTIES TO UROPLASTY REGARDING THE CL PRODUCT, EXPRESS AND IMPLIED, INCLUDING BUT NOT
LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEMENT.
(c) Uroplasty Warranty. Uroplasty will make no warrant, guarantee or representation
whether written or oral, on CL’s behalf.
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(d) Liability Limitations and Exclusions. REGARDLESS OF WHETHER ANY REMEDY
SET FORTH HEREIN OR IN CL’S END-USER WARRANTY FAILS OF ITS ESSENTIAL PURPOSE OR OTHERWISE,
NEITHER PARTY WILL BE LIABLE FOR ANY LOST PROFITS OR FOR ANY INDIRECT, INCIDENTAL,
CONSEQUENTIAL, PUNITIVE OR OTHER SPECIAL DAMAGES SUFFERED BY UROPLASTY, ITS CUSTOMERS OR
OTHERS ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE CL PRODUCT, FOR ALL CAUSES OF
ACTION OF ANY KIND (INCLUDING TORT, BREACH OF CONTRACT, NEGLIGENCE, STRICT LIABILITY AND
BREACH OF WARRANTY) EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
10. Non-competition by Uroplasty. In consideration of the exclusive arrangements provided
in this Agreement, Uroplasty agrees that, during the term of this Agreement and, if this Agreement
expires pursuant to the opening paragraph of Section 12 upon the end of the initial or any
successive term hereof, for one year after such expiration, it will not manufacture its own, or
market any other party’s, tension-free vaginal tape product for the treatment of female SUI.
11. New or Improved CL Products. As further consideration for this Agreement, if CL
develops any improvements or modifications to the CL Product or the CL Product Components during
the term hereof, CL will provide such improvements or modifications to Uroplasty without additional
charge for use under this Agreement as Uroplasty so determines in its discretion, subject to FDA
regulatory approval. In addition, if CL develops any new medical devices or procedures during the
term hereof, it will offer Uroplasty the right of first refusal for the exclusive distribution
rights as to such devices or procedures in the United States.
12. Term and Termination. The initial term of this Agreement runs through six years from
the date of this Agreement. Uroplasty may renew this Agreement for successive five-year terms upon
written notice to CL given not later than six months prior to the end of the initial or any
successive term.
Despite the foregoing, this Agreement may terminate early as follows:
Despite the foregoing, this Agreement may terminate early as follows:
(a) by
mutual written agreement of the parties;
(b) by either party upon written notice to the other of a material breach of this Agreement,
but only if the other party does not cure the breach within 30 days after receipt of such
written notice;
(c) by either party upon written notice to the other if the other party (i) files a
bankruptcy or other similar petition relating to its debts (or has an involuntary petition
filed against it that is not dismissed within 30 days), (ii) becomes insolvent or (iii)
makes an assignment for the benefit of creditors; or
(d) engages in conduct in the marketplace which results in serious criminal charges being
brought against Uroplasty or its principal officers in connection with said conduct, which,
in the reasonable judgment of CL, may harm the economic interests or commercial reputation
of CL.; or
(e) engages in conduct in the marketplace which results in serious criminal charges being
brought against CL or its principal officers in connection with said conduct, which, in the
reasonable judgment of Uroplasty, may harm the economic interests or commercial reputation
of Uroplasty.
(f) by CL at any time, upon CL’s decision to stop the distribution of the CL Products for
more than 12 months in the US.
(b) by either party upon written notice to the other of a material breach of this Agreement,
but only if the other party does not cure the breach within 30 days after receipt of such
written notice;
(c) by either party upon written notice to the other if the other party (i) files a
bankruptcy or other similar petition relating to its debts (or has an involuntary petition
filed against it that is not dismissed within 30 days), (ii) becomes insolvent or (iii)
makes an assignment for the benefit of creditors; or
(d) engages in conduct in the marketplace which results in serious criminal charges being
brought against Uroplasty or its principal officers in connection with said conduct, which,
in the reasonable judgment of CL, may harm the economic interests or commercial reputation
of CL.; or
(e) engages in conduct in the marketplace which results in serious criminal charges being
brought against CL or its principal officers in connection with said conduct, which, in the
reasonable judgment of Uroplasty, may harm the economic interests or commercial reputation
of Uroplasty.
(f) by CL at any time, upon CL’s decision to stop the distribution of the CL Products for
more than 12 months in the US.
Upon any termination, Uroplasty may dispose of all CL Products and CL Product Components in its
remaining inventory in the normal course of business.
Provided, further, in the event that Uroplasty fails to reach its minimum target for sales in any
one year period commencing on and after the first year of this Agreement, CL shall have the right
to terminate in whole or part CL’s grant to Uroplasty of exclusivity within the United States as
CL’s sole distributor.
13. Force Majeure. Neither party shall not be responsible for any failure to perform due
to unforeseen circumstances or to causes beyond CL’s reasonable control, including but not limited
to acts of God, war, riot, embargoes, acts of civil or military authorities, fire, floods,
accidents, strikes or shortages of transportation,
facilities, fuel, energy, labor or materials. In the event of any such xxxxx, XX may defer the
delivery date of orders for the CL Products, and Uroplasty may stop ordering CL Product, for a
period equal to the time of such delay.
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14. Confidentiality. Each party agrees to keep confidential all proprietary and
confidential information (written and oral) concerning the other’s business, financial, operational
and acquisition plans and projections. Each agrees to use this information only to further this
Agreement. Neither party will disclose any of this information to any person, firm or entity,
except on a need-to-know basis to its respective employees, agents, attorneys and advisors who
agree to maintain the confidentiality of this information.
A party is not responsible to keep confidential any information that (i) is or becomes public other
than as a result of acts by or through such party, (ii) it can demonstrate is already known by such
party at the time of the other’s disclosure, (iii) it independently obtains from a third party
having no duty of confidentiality to the other, (iv) it independently develops without using
confidential information from the other or (v) it must disclose pursuant to applicable laws or
court order. CL acknowledges that Uroplasty may be required to disclose regulatory and other data
of CL to the FDA in connection with Uroplasty’s duties as US Agent and that Uroplasty may file this
Agreement with the U.S. Securities and Exchange Commission as part of Uroplasty’s periodic filings.
15. Assignment. This Agreement is binding upon, and will inure to the benefit of, the
parties hereof and their respective permitted successors and assigns. Uroplasty may assign this
Agreement to any person, firm or entity that acquires all or substantially all of Uroplasty’s
assets or acquires Uroplasty by stock acquisition or merger.
16. Entire Agreement. This Agreement constitutes the entire agreement between the parties
with respect to the CL Product and supersedes all prior agreements and understandings between the
parties, whether written or oral, and any other communications between the parties relating to the
CL Product, including the September 2, 2004 Manufacturing Agreement, which is hereby terminated
with this Distribution Agreement.
16. Dispute Resolution. All disputes arising out of or in connection with this Agreement
shall be settled exclusively under the Rules of Arbitration of the International Chamber of
Commerce. The arbitration shall be before three arbitrators to be nominated by the International
Chamber of Commerce. One arbitrator shall be selected by each party and the third arbitrator (who
shall be the Chairperson) shall be selected by the first two arbitrators. The arbitrators shall be
fluent in written and spoken English, with expertise in the field of medical devices, either as
attorneys, accountants or corporate officers of medical device companies. Each party will pay its
own expenses and share all common expenses. Provided further, however, if the dispute in question
has the reasonable likelihood of resulting in a reward of less than US $One Million, the parties
agree that such a dispute will be heard and decided by a single arbitrator meeting the above
expertise and language qualifications, either agreed upon by the parties within fourteen (14) days
of the notice by one party to the other of intent to arbitrate, or selected by the International
Chamber of Commerce. The arbitration shall be in English and held in Lyon, France (or in such other
place as the parties may agree). This Agreement will be governed by the laws of France and
specifically excludes the United Nations Convention on Contracts for the International Sales of
Goods (“CISG”).
IN WITNESS WHEREOF, the undersigned, who warrant and represent that they are duly authorized by
their respective parties to execute this Agreement, hereunto affix their signatures on behalf of
their respective parties as of the date first above written.
| Uroplasty, Inc. | CL Medical SARL | |||||||
By:
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By: | |||||||
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