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E XHIBIT
10.7
AMENDED AND RESTATED
DISTRIBUTION AGREEMENT
This AGREEMENT is made as of March
1 st 2005 (the “ Effective Date
”), by and between HemoSense, Inc., (hereafter referred to as
“ HemoSense ”), a California Corporation, and
Quality Assured Services, Inc. (aka, QAS), with its principal place
of business 1506 N Orange Blossom Trail, Orlando, Florida, 32804
(hereafter referred to as “ Distributor ”). As
used in this Agreement, HemoSense and Distributor are each referred
to as a “ Party ” and collectively as “the
Parties .” This Agreement amends, supercedes and
restates in its entirety the Distribution Agreement by and between
the Parties dated March 31, 2003 (the “ Original
Agreement ”).
WITNESSETH:
WHEREAS HemoSense manufactures products,
which include instrumentation and reagents designed for testing
various blood analytes.
WHEREAS, Distributor desires to
distribute and market the devices and related test supplies subject
to the conditions set forth herein.
NOW, THEREFORE, in consideration of the
premises hereof and the mutual covenants and conditions hereinafter
set forth and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties
hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE 1 –
APPOINTMENT
HemoSense hereby appoints Distributor
and Distributor hereby accepts appointment as a non-exclusive
distributor of the HemoSense products listed or described on
Exhibit A (the “ Products ”), commencing on the
date that the Original Agreement was executed by both
Parties.
When new products as part of the product
line become available, HemoSense will notify Distributor and
Distributor will have the right to purchase these new products from
HemoSense under the terms of this Agreement.
ARTICLE 2 – TERMS OF
AGREEMENT
| 2.1 |
The initial term of this Agreement commences upon the Effective
Date and ends February 28, 2007 (the “ Initial Term
”). Upon the expiration of the Initial Term, and each Renewal
Term thereafter (if any), this Agreement shall be automatically
renewed for a one-year term (each, a “ Renewal Term
”) unless terminated by either Party in writing and in
accordance to Article 19 of the Agreement. |
| *** |
Confidential treatment requested pursuant to a request for
confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the
Commission. |
Page 1 of 15
| 2.2 |
No modification of this Agreement is effective or binding
unless in writing and signed by the Parties. This Agreement
consists of thirteen (13) pages, including exhibits. |
| 2.3 |
Distributor’s authority under this Agreement is limited
to directly distributing the Products solely to the end-user
customers within the markets and channels identified on Exhibit B
(the “ Permitted Markets/Channels ”) solely in
the territory identified on Exhibit B (the “ Territory
”). |
| 2.4 |
DISTRIBUTOR has no authority or right, either legal or
apparent, expressed or implied, to bind HemoSense in any
contractual, financial, or legal obligation. |
| 2.5 |
Both Parties agree to hold harmless and indemnify the other for
any loss or damage sustained by the other as a direct result of
their malfeasance or action which exceed their rights or authority
in this Agreement. |
ARTICLE 3 – OBLIGATIONS OF THE
DISTRIBUTOR
| 3.1 |
The Distributor will develop adequate numbers of suitably
qualified personnel as well as suitable equipment and
infrastructure for efficient warehousing, distribution and sale,
and other services related to the Products throughout the
Territory. |
| 3.2 |
The Distributor will provide appropriate and professional
installation and application advice (within [***] business days of
delivery to its customers), follow-up services and advice, 24-hour
on-call support, insurance reimbursement services, regulatory
requirements advice and guidance, technical support,
training/help/support and, at their option, data management
programs to purchasers of Products when so requested by the
purchaser at no charge to HemoSense. |
| 3.4 |
The Distributor will inform HemoSense on a timely basis of any
claims, complaints, adverse events or deficiencies concerning the
Products in the Territory and shall provide reasonable assistance
to HemoSense in handling such claims and events within a 48 hour
period |
| 3.5 |
The Distributor will maintain stocks of all the Products at an
appropriate level determined by HemoSense and Distributor having
regard to the monthly sales thereof in the Territory and will ship
product to purchasers the same business day it is requested, when
orders are received by 3:00 p.m. EST on normal business
days. |
| 3.6 |
Within three weeks of the Effective Date, the Distributor will
provide HemoSense with its unit per month Product sales forecast
for the six (6) month period commencing with the first day of the
month following the Effective Date (the “ Initial
Forecast ”). The Initial Forecast will be categorically
itemized by the |
| *** |
Confidential treatment requested pursuant to a request for
confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the
Commission. |
Page 2 of 15
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various components of the
Product, (i.e. projected monthly purchases of meters, strips and
other INRatio disposables). By the first ( 1 st
) day of the
month after the Effective Date, and on the 1 st
day of each
month thereafter, the Distributor will provide updated twelve (6)
month rolling forecasts (the “ Rolling Forecast
”).
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| 3.7 |
Distributor shall, at its own expense, and in a manner
consistent with the sales policies of HemoSense: |
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(a) |
place the Product in Distributor’s catalogues as soon as
possible, attend such the appropriate trade shows and display the
Product in any applicable trade show that it attends; |
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(b) |
provide adequate contact with existing and potential customers
within the Permitted Markets/Channels and Territory on a regular
basis, consistent with good business practice; |
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(c) |
assist HemoSense in assessing customers’ requirements for
the Product, including modifications and improvements thereto, in
terms of quality, design, functional capability, and other
features; and |
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(d) |
submit market research information, as reasonably requested by
HemoSense, regarding competition and changes in the market within
the Territory. |
| 3.8 |
If requested by HemoSense, Distributor shall develop an annual
business plan for the Product which shall include, without
limitation, promotion strategy and tactics, and sales and other
marketing plans (“ Business Plan ”). Any such
Business Plan shall be provided to HemoSense for prior review and
approval, which approval shall not be unreasonably withheld. The
Business Plan for the first year of this Agreement shall be
provided to HemoSense within one (1) month after the Effective
Date, and no request therefore need be made by HemoSense.
Thereafter, if requested, Distributor shall provide Business Plans
to HemoSense for review and approval not later than sixty (60) days
before January 1 of the Calendar Year to which such Business Plan
pertains. |
ARTICLE 4 – OBLIGATIONS OF THE
COMPANY
| 4.1 |
HemoSense will use commercially reasonable efforts to maintain
stocks of all the Products at an appropriate level having regard to
the monthly sales thereof in the Territory. HemoSense will inform
the Distributor of the available stock of the Products and will
provide the Distributor feedback on product deliveries (e.g. order
confirmation including availability of product and shipping
schedules within 24 hours of receipt of the order). |
| 4.2 |
HemoSense will use good faith commercial efforts to process and
ship all orders in accordance with requested delivery dates subject
to availability and mutual agreement on delivery dates. However, no
Distributor purchase orders for Products are binding on HemoSense
unless accepted by HemoSense in writing. |
| *** |
Confidential treatment requested pursuant to a request for
confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the
Commission. |
Page 3 of 15
| 4.3 |
The delivery date requested in a Distributor purchase order
shall be considered the date Distributor requests shipment by
HemoSense. HemoSense will determine, in its sole discretion, the
shipping origin of the Product. The shipping confirmation will be
provided to the Distributor by fax and/or by e-mail. Products
shipped by HemoSense under this Agreement will, at the time of
shipment, have a remaining shelf life of at least [***] ([***])
months. |
| 4.4 |
HemoSense will provide to the Distributor reasonable Product
support and marketing support including training in demonstration
and use of the Products. HemoSense will also supply the Distributor
with price lists, literature and support materials, advertising and
support of sales programs, as well as after sales service and
technical support. HemoSense will establish a [***] that will be
funded by [***]% of gross product sales from HemoSense to
Distributor. These funds will be utilized exclusively on marketing
programs specifically for Distributor. For purposes of this Section
4.4, “Target Sales” means, for each calendar year
during the term of this Agreement, the following: |
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Calendar Year
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Target Sales
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2005
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$[***] |
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2006
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$[***] |
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2007 (and each
calendar year
thereafter)
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As
determined by agreement of the Parties, as necessary to provide
appropriate incentives for increase sales |
In addition, within sixty (60) days
after the end of each calendar year during the term of this
Agreement, HemoSense will determine if the gross product sales from
HemoSense to Distributor exceeded the Target Sales for such
calendar year. Where such Target Sales were exceeded, HemoSense
will add to the [***] an additional amount equal to [***] percent
([***]%) of the overall gross product sales from HemoSense to
Distributor in the just-completed calendar year. If at such time
(that is, within sixty (60) days after the end of each calendar
year during the term of this Agreement) the marketing co-op fund
includes a surplus funding balance that HemoSense has not utilized,
and does not reasonably anticipate utilizing, on marketing programs
specifically for Distributor as contemplated under this Section
4.4, HemoSense will issue a credit to Distributor for the surplus
amount.
| *** |
Confidential treatment requested pursuant to a request for
confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the
Commission. |
Page 4 of 15
ARTICLE 5 – RECORD
KEEPING
The Distributor shall track and record a
reasonable level of traceable detail of product sold to the
Distributor’s customers under this Agreement. These records
will include, but not be limited to customer name, address, Product
# detail, price, lot number (for reagents) and serial number (for
instruments). Distributor agrees to maintain these records during
the term of the Agreement. These records will include monthly sales
tracing reports by Product, Product number, sales, and/or account
or zip code that will be sent to HemoSense no later then 30 days
from the end of a calendar month. These tracings are to be used to
provide commission and sales reporting to the HemoSense sales
force.
The Parties agree to meet no less than
twice yearly for half to full-day reviews of their mutual business.
These reviews will be conducted in alternating locations (i.e.
alternating between Distributor’s offices and
HemoSense’s offices).
ARTICLE 6 –
CONFIDENTIALITY
For the purposes of this Article 6, the
term “Confidential Information” shall be any
information embodying a whole or any portion or phase of any
business, scientific or technical information, design, process,
procedure, formula, improvement, concept, idea, technique,
know-how, market data, and accounting data which both:
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(a) |
is disclosed by one Party hereto to the other; and |
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(b) |
is secret, confidential, and proprietary to the disclosing
Party at the time of disclosure and is marked as such |
During the period this Agreement remains
in effect and for a period of five (5) years following termination
thereof, each Party (except as is explicitly otherwise required,
permitted or consistent with the terms hereby) shall keep
confidential, shall not use for itself or the benefit of others,
and shall not copy or allow to be copied, in whole or in part, any
Confidential Information disclosed to such Party by the
other.
The obligations of confidentiality
imposed upon the Parties by the foregoing Paragraph shall not apply
with respect to any al
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