EXHIBIT 99.5
CONFIDENTIAL TREATMENT REQUESTED
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT ("Agreement") is made, entered into and is
effective as August 15, 2002, by and between LASERSIGHT TECHNOLOGIES, INC., a
Delaware corporation ("LaserSight"), and SHENZHEN NEW INDUSTRIES MEDICAL
DEVELOPMENT CO., LTD., a Chinese corporation ("Distributor").
RECITALS:
A. LaserSight is in the business of manufacturing or arranging for the
manufacture of refractive laser systems and related products.
B. LaserSight desires to engage Distributor as a distributor of the
Products (as herein defined) to customers in the Territory (as herein defined)
on the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the recitals and mutual promises
and covenants contained in this Agreement, the parties agree as follows:
1. Engagement of Distributor, Exclusivity.
(a) LaserSight hereby engages Distributor as a
distributor of the products described on Exhibit A attached hereto (the
"Products") in the territory described on Exhibit B attached hereto
(the "Territory") during the Term (as defined herein), and Distributor
hereby accepts such appointment. In accordance with the terms of this
Agreement, LaserSight hereby grants to Distributor the right to
promote, market, distribute and sell the Products within the Territory.
Distributor agrees not to promote, market, distribute or sell the
Products outside the Territory without LaserSight's prior written
consent, which consent may be withheld in LaserSight's sole discretion.
Except as may be specifically provided for herein, Distributor will not
be an agent of LaserSight and will have no authority to contract for,
or act on behalf of, LaserSight.
(b) During the Term and in the Territory Distributor
agrees not to promote, market, distribute or sell any device or product
that is directly or indirectly competitive with or similar to the
Products.
2. Agreements Regarding Distribution and Sale of Products.
During the Term LaserSight agrees that it will not engage any other distributor
in the Territory. Notwithstanding the foregoing, nothing contained in this
Agreement shall limit or preclude LaserSight from marketing, displaying or
selling the Products at any trade show or exhibition.
3. Term and Renewal. The term of this Agreement (the "Term")
and Distributor's engagement hereunder shall begin on the date which is the
first to occur of (such date to be referred to as the "Effective Date"): (i) the
one year anniversary of the date of this Agreement, or (ii) the date on which
LaserSight notifies Distributor, in writing, that LaserSight has ended its
relationship with the party currently promoting the Products in a portion of the
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** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS DOCUMENT. THE
REDACTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE COMMISSION PURSUANT TO
AN APPLICATION FOR CONFIDENTIAL TREATMENT.
Territory, and shall continue for the five year period immediately following the
Effective Date, unless sooner terminated as provided herein.
4. Pricing of Products; Order and Delivery.
(a) LaserSight and Distributor have agreed to the per
unit transfer price (the "Transfer Price") for each of the Products and
standard payment terms (the "Payment Terms") for each of the Products
all as set forth on Exhibit C attached hereto. After consultation with
LaserSight, from time to time Distributor will establish a per unit
purchase price (the "Purchase Price") that Distributor will utilize for
marketing and selling the Products to end-users.
(b) As provided for herein, LaserSight shall ship
Products to the location or locations designated by Distributor in
order to allow Distributor to fill orders solicited by Distributor.
If LaserSight receives orders for Products from parties located in the
Territory, then LaserSight shall forward such orders to Distributor.
(c) The parties have also entered into that certain
Product Purchase Agreement dated as of the date hereof (the "Product
Purchase Agreement") that contains certain terms and conditions related
to Products to be purchased by Distributor during the twelve month
period immediately following the date of this Agreement; if the terms
of the Product Purchase Agreement conflict with the terms of this
Agreement the terms of the Product Purchase Agreement will control.
5. LaserSight's Duties.
(a) LaserSight will be responsible for obtaining all
applicable regulatory approvals necessary for offering the Products for
sale in the Territory.
(b) LaserSight agrees to provide technical support to
Distributor's sales staff in order to support an aggressive sales
effort and to facilitate Distributor's fulfillment of its obligations
under this Agreement.
(c) Upon Distributor's request, LaserSight shall
participate in Distributor planning and training activities related to
the marketing and sale of the Products. LaserSight shall make a good
faith effort to have appropriate sales personnel participate, at
LaserSight's sole cost and expense, in such activities, if any.
(d) LaserSight shall communicate to Distributor
representatives all sales information related to the Products as
reasonably requested by Distributor.
6. Distributor's Duties and Restrictions.
(a) During the Term, Distributor agrees to purchase for
Distributor's own use or for resale, on a quarterly basis, at least
that number of Products as is set forth on Exhibit D attached hereto
(the "Purchase Minimums"). Products purchased pursuant to the Product
Purchase Agreement shall not be considered when determining if
Distributor satisfies the Purchase Minimums.
(b) Distributor shall notify all parties that purchase
Products from Distributor that the Products may not be resold outside
of the Territory. If Distributor becomes aware that a party is
reselling the Products outside of the Territory, Distributor shall
immediately notify LaserSight and immediately cease soliciting orders
for the Products from such party.
(c) Distributor agrees to develop the market for the
Products in an attempt to obtain as large a sales volume as
commercially practicable in the Territory. Distributor will develop
annual and quarterly sales forecasts when requested by LaserSight and
shall provide LaserSight with monthly reports listing active leads that
are being monitored and planned promotional activities.
(d) Distributor shall, train and maintain a sales staff
which is adequate to support an aggressive sales effort and would
reasonably be expected to facilitate Distributor's fulfillment of its
obligations under this Agreement.
(e) Distributor shall install Products at the
customer's location and shall train the customer in the use and care of
the Products. Training provided by Distributor shall be in accordance
with the training protocols agreed to by Distributor and LaserSight.
Distributor shall provide all necessary follow-up and post-sales
assistance to purchasers of Products if requested by LaserSight or any
customer. Distributor shall not be entitled to additional compensation
for such follow-up service as such service is deemed part of duties
hereunder.
(f) Distributor shall hire and train one or more
qualified technicians (hereinafter "Maintenance Engineer(s)"), at its
sole cost, to diagnose and repair problems with and/or defects in the
Products.
(g) Distributor shall ensure that all Maintenance
Engineers are trained in accordance with training protocols developed
by LaserSight and communicated to Distributor. ___ Based on such
protocols LaserSight may establish and communicate to Distributor
minimum performance standards for Maintenance Engineer(s). If the
Maintenance Engineer(s) do not satisfy such minimum performance
standards, Distributor shall promptly replace such engineers with
engineers that do satisfy the minimum performance standards.
(h) Distributor shall communicate customer complaints,
including failure to meet contractual requirements and patient
injury/potential safety hazards in writing to LaserSight as soon as
identified. The correspondence will be in sufficient detail including
system serial number and specific situation to allow an adequate
investigation.
(i) Distributor shall maintain accessible and complete
records of the location of installed product by serial number including
laser heads, software version and complete service history files. Such
service history files will detail when service is performed, on what
Product the service is performed and what was done on each service
call. Distributor shall provide copies of such records to LaserSight
upon request.
(j) Distributor agrees to actively promote the Products and
display and demonstrate the Products at the trade shows and
exhibitions.
(k) Upon LaserSight's request, Distributor shall
participate in any LaserSight planning and training activities related
to the marketing and sale of the Products. Distributor shall make a
good faith effort to have appropriate sales personnel participate, at
Distributor's sole cost and expense, in such activities, if any.
(l) Distributor shall communicate to Distributor's customers
all sales information related to the Products as reasonably requested
by LaserSight.
(m) Distributor shall not take any action which will
cause LaserSight to be in violation of any law of any jurisdiction in
the Territory including, but not limited to antitrust laws, the U.S.
Foreign Corrupt Practices Act of 1977, the U.S. Export Control laws and
the U.S. Anti-Boycott laws.
7. Advertising Materials; Trademarks; Indemnification.
(a) Both LaserSight and Distributor shall produce and supply
advertising materials in quantities agreed to by the parties.
(b) During the Term, LaserSight hereby agrees to allow
Distributor the use of copyrighted promotional material and the
trademarks and trade names owned by LaserSight relating to the Products
that are reasonably necessary in promoting and selling the Products;
provided, however, that none of such copyrights, trademarks and trade
names owned by LaserSight shall be used directly or indirectly in
connection with the promotion or sale of any goods other than those of
LaserSight. Distributor agrees to obtain LaserSight's prior written
approval before utilizing LaserSight's copyrights, trademarks or trade
names in any manner or form which was not prepared or supplied by
LaserSight. LaserSight and Distributor agree that all such LaserSight
copyrights, trademarks and trade names are and shall remain the
exclusive property of LaserSight and LaserSight has the sole and
exclusive right to use, and to grant licenses to others to use, such
copyrights, trademarks or trade names. Upon termination of this
Agreement, Distributor shall immediately cease utilizing or associating
itself with LaserSight's copyrights, trademarks and trade names unless
otherwise permitted under the terms and conditions of a written
agreement executed by an authorized representative of LaserSight and
Distributor.
(c) During the Term and continuing thereafter,
Distributor shall not, directly or indirectly, (i) infringe upon,
initiate or use LaserSight's patents, copyrights, trademarks or trade
names except as expressly provided herein; or (ii) contest, challenge
or assist in contesting the validity or ownership of any of
LaserSight's patents, copyrights, trademarks or trade names. In the
event that the infringement of any patent, copyright, trademark, trade
name, or brand name comes to Distributor's attention, Distributor
agrees to promptly notify LaserSight of such infringement.
(d) LaserSight shall defend, at its expense, any claim
or action brought against Distributor which is based on (i) a claim
that the Products infringe a patent, trademark, trade name or copyright
of a third party, or (ii) claims of product liability related to the
design or manufacture of the Products (collectively a "Claim"), and
LaserSight shall indemnify Distributor against the liabilities and
reasonable costs, if any, incurred by Distributor with respect to any
Claim, provided that Distributor notifies LaserSight in writing of the
Claim within 10 business days after receiving notice thereof,
LaserSight is permitted to control fully the defense in any litigation
or settlement of such Claim, and Distributor shall cooperate fully in
such defense. If Distributor continues to promote and sell any of the
Products after LaserSight has notified Distributor that any of the
Products should not be promoted or sold pursuant to this Section, then
LaserSight shall not be responsible for defending Distributor from any
Claim brought against Distributor relating to Products sold after the
date of such notice.
(e) From time to time, LaserSight may make available to
Distributor certain proprietary and confidential information.
Distributor shall treat all proprietary and confidential information
LaserSight provides to Distributor in the same manner and Distributor
shall exercise the same care as it would in handling its own
proprietary and confidential information. Upon termination or
cancellation of this Agreement, Distributor shall immediately return
all such information to LaserSight. Unless required by law, Distributor
specifically agrees not to disclose to anyone, at any time, without the
prior written authorization of LaserSight, any inventions, proprietary
developments, trade secrets, customer lists, price lists, cost data,
marketing or manufacturing techniques or other confidential information
of or regarding LaserSight. Distributor agrees to notify all of its
officers, directors, employees and agents of the terms of this
Agreement and shall require all such parties to be bound by the terms
of this Agreement. If Distributor breaches the terms and conditions of
this Section, LaserSight will be able to seek any and all legal and
equitable remedies to which it may be entitled.
8. Inability to Perform. Neither party shall be liable to the
other for any failure to perform any obligation hereunder by reasons of events
outside the reasonable control of such party, including without limitation, acts
of God, litigation commenced against such party that relates to the production,
distribution or sale of the Products, regulations or laws of any government,
war, civil commotion, destruction or production facilities or materials by fire,
earthquake or storm, labor disturbances, epidemic and general failure of public
utilities or common carriers. The party claiming the benefit of this Section
shall give immediate written notice to the other party, shall use its best
efforts to avoid or remove such cause or causes of non-performance, and shall
otherwise continue to perform hereunder. Either party may terminate this
Agreement upon 10 days advance written notice given to the other party, if the
other party has invoked this Section to excuse its performance for a continuous
period of at least 30 days. Suspension of a party's performance for such cause
as described herein shall not affect the running of the term of this Agreement.
In the event of a shortage of supply of any of the Products the Purchase
Minimums are suspended during the time of such shortage and LaserSight hereby
expressly reserves the right without liability to Distributor to determine the
proportion of the available supply thereof to be allocated to any of its
distributors and other agents and representatives. LaserSight agrees to exercise
good faith in making such allocations.
9. Termination. During the Term, this Agreement may be terminated as
follows:
(a) Either party may terminate this Agreement upon the
occurrence of a default or material breach of the terms hereof by the
other party, provided that such right to terminate may not be exercised
unless such default or breach has not been cured within 10 business
days after written notice of such default or breach has been supplied
to the defaulting or breaching party.
(b) If either party goes into liquidation, has a
receiver appointed for all or any portion of its property or estate
files a voluntary petition or insolvency or makes an assignment for the
benefit of its creditors, and whether any such event is the outcome of
the voluntary act of such party or otherwise, the other party, at its
option, may terminate this Agreement immediately by providing notice of
such termination.
(c) LaserSight may terminate this Agreement if Distributor
fails to satisfy the Purchase Minimums.
10. Miscellaneous Provisions.
(a) This Agreement shall be binding on the parties
hereto, their successors and assigns including, without limitation, any
purchaser or other successor of all or substantially all of either
party's assets as a going business.
(b) Distributor hereby agrees to indemnify and save
LaserSight harmless against any and all claims, losses, demands,
liabilities and expenses, including, without limitation, reasonable
attorney's fees, resulting directly from claims made by third parties
based upon (i) advertising or representations by Distributor which
warrant performance of the Products beyond the written representations
of the Products supplied by LaserSight to Distributor, (ii) advertising
or representations by Distributor which warrant performance of the
Products beyond LaserSight's standard written warranty, or (iii)
business or trade practices engaged in by Distributor.
(c) Distributor acknowledges and agrees that neither
Distributor nor any person acting on behalf of Distributor is or shall
be considered an employee of LaserSight for any reason whatsoever.
Except as may be specifically provided for herein, neither Distributor
nor any person acting on behalf of Distributor is or shall be deemed to
be the legal representative or agent of LaserSight for any purpose
whatsoever, and Distributor is not authorized by LaserSight to transact
business, incur obligations, express or implied, or otherwise act in
any manner, in the name of or on behalf of LaserSight, or to make any
promise, warranty, or representation with respect to the Products or
any other matter in the name of or on behalf of LaserSight. No
manufacturing or licensing rights or rights of use of any patent are
granted by this Agreement. Nothing contained in this Section 10(c)
shall alter LaserSight's obligations under LaserSight's standard
written warranty.
(d) Any notice or other communication required or
permitted hereunder shall be deemed given on the date delivered if
delivered personally or by facsimile with proper evidence of
transmission, or five days after deposit in the United States mail, by
registered or certified mail, postage prepaid, addressed:
if to Distributor: Shenzhen New Industries Medical
Development Co., Ltd.
Rm: 2308 ShenZhen Science & Technology Building,
No. 1001, Shangbu Zhong Road, ShenZhen, China
Attention: Xxxxxx Xxx
Facsimile: (0000) 00000000
if to LaserSight: LaserSight Technologies, Inc.
0000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
or at such other address as any party may designate by 10 days advance
written notice to the other party.
(e) This Agreement and the exhibits hereto which are
incorporated herein by this reference, supersede and replace any and
all previous working agreements, understandings, policies, and
practices whether or not in writing between LaserSight and Distributor
concerning the subject matter hereof, and contains the entire
understanding between the parties hereto with respect to the subject
matter hereof. If the terms of this Agreement conflict with the terms
of any purchase order or invoice issued by either party the terms of
this Agreement shall control. Unless otherwise specifically provided in
this Agreement, no amendment, modification or waiver hereof shall be
made or be binding unless in writing and signed by both parties hereto.
Neither party may assign or delegate its rights, obligations or
responsibilities hereunder without the other party's prior written
consent.
(f) If any provision of this Agreement shall be deemed
invalid or unenforceable in whole or in part due to U.S. or any foreign
law, statute, regulation or judicial decision, such provision shall be
limited to the extent necessary to render the same valid, or shall be
excised from this Agreement, as the circumstances require, and this
Agreement shall be construed in all respects as if said provision had
been incorporated herein as so limited, or as if said provision had not
been included herein, as the case may be.
(g) This Agreement is to be governed by and construed
in accordance with the laws of the State of Florida, without regard to
any conflict of law principles to the contrary.
(h) Any action brought under this Agreement by
LaserSight may only be brought in a court of competent jurisdiction
sitting in the State of Florida. The parties irrevocably submit to the
personal jurisdiction of any federal court sitting in the State of
Florida over any suit, action or proceeding arising out of or relating
to this Agreement which is brought by LaserSight. The parties
irrevocably waive, to the extent permitted by law, any objection which
they may now or hereafter have to the laying of the venue of any such
suit, action or proceeding brought in such a court and any claim that
any such suit, action or proceeding has been brought in an inconvenient
forum. In the event that either party incurs costs or fees, including
reasonable attorney's fees, in enforcing its rights under this
Agreement, the party substantially prevailing in any suit or action,
including any appeal, shall be entitled to recover from the other such
costs and reasonable attorney's fees.
(i) This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original.
(j) This Agreement and the terms and transactions contemplated
hereby shall be kept confidential until the parties hereto mutually
agree upon the language and timing of a press release or until such
time as one such party determines, based on the advice of counsel, that
a public announcement is required by law, in which case the parties
hereto shall use reasonable best efforts to agree on any public
announcements or public statements with respect thereto. If the parties
are unable to so agree, a party will not be deemed in violation of this
Section for subsequent public announcements or public statements.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
SHENZHEN NEW INDUSTRIES MEDICAL LASERSIGHT TECHNOLOGIES, INC.
DEVELOPMENT CO., LTD.
By: /s/ Xxxxxx Xxx By: /s/ Xxxxxxx X. Xxxxxx
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Its: President Its: President & CEO
-------------------------------------- ------------------------------
EXHIBIT A
Description of the Products
1. LaserScan LSX Excimer Laser System Part #66040015
2. AstraMax Integrated Diagnostic Workstation Part #B01003
3. UltraShaper Keratome - Starter Kit Part #A99100
4. UltraEdge Keratome Blades (box of 10 blades) Part #A98022
EXHIBIT B
Territory
1. Mainland China
2. Macao
3. Hong Kong
4. Taiwan
EXHIBIT C
Transfer Price and Payment Terms
1. Transfer Price.
Initial 12 Months of Agreement
During the initial twelve month period immediately following the date
of this Agreement, the Transfer Price for the Products shall be as
follows:
LaserScan LSX Excimer Laser System **
AstraMax Integrated Diagnostic Workstation **
UltraShaper Keratome **
UltraEdge Keratome Blades (box of 10 blades) **
LaserSight agrees that if it sells Products to any party in Asia that
is at a price that is lower than the price listed above then the above
listed price shall be reduced to the price charged to such party in
Asia.
During the initial twelve month period immediately following the date
of this Agreement, if a laser head on a Product purchased by
Distributor pursuant to this Agreement must be replaced then LaserSight
shall provide such laser head to Distributor at **, the Transfer Price
for all other parts purchased by Distributor from LaserSight shall be
equal to **. Parts purchased pursuant to this paragraph shall only be
used to repair Products purchased during the twelve month period
immediately following the date of this Agreement. LaserSight shall
supply Distributor other parts at a price equal to **.
Following Initial 12 Months of Agreement
After the twelve month period immediately following the date of this
Agreement, the Transfer Price for all Products (other than parts
purchased by Distributor for use in maintaining and repairing the
Products) shall be equal to ** (the "Transfer Percentage") of
LaserSight's Manufacturing Costs (as defined herein) for such Products.
For purposes hereof, the term "Manufacturing Costs" shall mean those
costs determined in accordance with generally acceptable accounting
principles that relate to the manufacture of the applicable Products.
On an annual basis, LaserSight shall calculate its Manufacturing Costs
and shall communicate such amounts to Distributor and the Transfer
Price will be updated as of the date of such notice.
If after the twelve month period immediately following the date of this
Agreement Distributor determines that the market price for Products in
the Territory has materially declined then Distributor and LaserSight
shall meet and discuss in good faith adjustments to the Transfer
Percentage. Adjustments to the Transfer Percentage shall be documented
by a written document signed by both parties.
After the twelve month period immediately following the date of this
Agreement, the Transfer Price for all parts purchased by Distributor
from LaserSight shall be equal to **.
2. Payment Terms.
The purchase price for all Products and parts sold to Distributor shall
be paid via irrevocable letters of credit that provide for partial
shipment and payment at sight (e.g., LaserSight's presentation of
shipping documents). Such letters of credit would be confirmed by a
financial institution designated by LaserSight and the costs of such
letter of credit shall be borne by Distributor.
Except as set forth in the following sentence, during the twelve month
period immediately following the date of this Agreement LaserSight
shall be responsible for shipment and insurance costs associated with
all Products and parts purchased by Distributor from LaserSight. During
the initial twelve month period immediately following the date of this
Agreement Distributor shall be responsible for all shipment and
insurance costs associated with laser heads supplied to Distributor
from LaserSight and Distributor shall be responsible for all applicable
taxes and duties associated with all Products and parts purchased by
Distributor from LaserSight.
After the twelve month period immediately following the date of this
Agreement, Distributor shall be responsible for all applicable taxes,
duties, insurance, shipment, maintenance and repairs associated with
all Products and parts purchased by Distributor from LaserSight.
EXHIBIT D
Purchase Minimums
1. For Mainland China, Macao and Hong Kong
Years 1, 2 and 3
After the Effective Date No. of Lasers to be Sold No. AstraMax to be Sold
------------------------ ------------------------ -----------------------
1st Quarter ** **
2nd Quarter ** **
3rd Quarter ** **
4th Quarter ** **
Years 4 and 5
After the Effective Date
Based on actual number of Products sold in each of years 1, 2 and 3
of this Agreement, the parties will negotiate in good faith to
establish purchase minimums for years 4 and 5 of the Agreement. If
the parties are unable to agree on such purchase minimums, then
this Agreement will remain in full force and effect but LaserSight
will not be precluded from appointing another distributor in the
Territory or from selling products directly into the Territory.
2. For Taiwan
Year 1 After
the Effective Date
**
Years 2, 3, 4 and 5
After the Effective Date
The parties will negotiate in good faith to establish purchase
minimums for years 2, 3, 4 and 5 of the Agreement. If the parties
are unable to agree on such purchase minimums, then this Agreement
will remain in full force and effect but LaserSight will not be
precluded from appointing another distributor in the Territory or
from selling products directly into the Territory.
