The Medicines Company
requests that the marked portions of the agreement be granted
confidential treatment under
Rule 24b-2 of the Securities Exchange Act of 1934.
AMENDED AND RESTATED DISTRIBUTION
AGREEMENT
This Amended and
Restated Distribution Agreement (together with its schedules and
exhibits, the “ Agreement ”) is entered into by
The Medicines Company, a Delaware corporation with offices at 8
Campus Drive, Parsippany, NJ 07054 (“ TMC ”),
and Integrated Commercialization Solutions, Inc., a California
corporation with offices at 4006 Belt Line Road, Suite 100,
Addison, TX 75001 (the “ Distributor ”),
effective as of February 28, 2007 (the “ Effective
Date ”).
WHEREAS ,
TMC and Distributor are parties to a Commercial Outsourcing
Services Agreement dated September 1, 2002, as amended by the
First Amendment thereto dated September 1, 2004 (as amended,
the “3PL Agreement”), under which Distributor provides
distribution and other account management services for TMC with
respect to ANGIOMAX® (bivalirudin) (the “Product”);
and
WHEREAS ,
the Parties are also parties to that certain Distribution Agreement
dated February 28, 2007 (the “Existing Agreement”),
under which Distributor purchases the Product from TMC and provides
distribution and other related services to TMC; and
WHEREAS ,
the Parties desire to amend and restate the Existing Agreement in
its entirety effective as of the Effective Date.
NOW ,
THEREFORE , in consideration of the above recitals, the
terms and conditions hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which are
acknowledged, and for their mutual reliance, the Parties agree as
follows:
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1.1
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“ Applicable Law
” means all applicable ordinances, rules, regulations, laws,
requirements and court orders of any kind whatsoever of any United
States or state government regulatory authority as may be amended
from time to time.
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1.2
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“ Bill-To Customer(s
)” means (i) under the Drop Ship Channel, the
Wholesalers, and (ii) under the Direct Channel, the Ship-To
Customer.
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1.3
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“ Continuing Guaranty
” means the Continuing Guaranty and Indemnification Agreement
dated October 8, 2002, executed and delivered by TMC in favor
of Distributor’s parent corporation, AmerisourceBergen
Corporation, a copy of which is attached hereto as
Schedule B .
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1.4
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“ Direct Channel
” shall be the method of distribution of the Product under
which the Ship-To Customer orders the product directly from the
Distributor and the Distributor ships and sells the Product to, and
invoices, the Ship-To Customer directly.
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1.5
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“ Distributor
Indemnitees ” has the meaning set forth in
Section 11.1.
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1.6
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“ Drop Ship Channel
” shall be the method of distribution of the Product under
which the Ship-To Customer orders the Product from a Wholesaler and
the Distributor sells the Product to, and invoices, the Wholesaler
and ships the Product to the Ship-To Customer.
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1.7
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“ Parties ” means
TMC and Distributor together, and “Party” means either
of them as the context requires.
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1.8
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“ Product(s )”
has the meaning given to it in the Recitals, as more fully set
forth in the Commercial Price List attached hereto as
Exhibit B , which may be amended from time to time by
TMC.
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1.9
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“ Records ” has
the meaning set forth in Section 7.
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1.10
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“ Ship-To Customers
” means the hospitals or other acute care facilities who are
the end users of the Product.
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1.11
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“ Territory ”
means the United States; the Commonwealth of Puerto Rico; and the
territories of Guam, American Samoa, and the Virgin
Islands.
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1.12
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“ TMC Contracts ”
means those contracts between TMC and certain Ship-To Customers,
group purchasing organizations that contract on behalf of their
members to purchase the Product, and TMC’s government-managed
pricing arrangements.
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1.13
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“ TMC Indemnitees
” has the meaning set forth in Section 10.2.
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1.14
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“ Wholesaler ”
means those customers identified in Section 8 in the Operating
Guidelines attached hereto as Exhibit A , which may be
amended by mutual agreement of the Parties.
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2.0
APPOINTMENT AS AUTHORIZED DISTRIBUTOR OF RECORD
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2.1
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Exclusive Distributor
. TMC hereby appoints
Distributor, and Distributor hereby accepts appointment, as the
exclusive authorized distributor of record for the Products in the
Territory during the term of this Agreement. During the term of
this Agreement, so long as Distributor is not in default under this
Agreement, TMC shall not sell Product to any person or entity in
the Territory, other than Distributor.
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2.2
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Coordination with 3PL
Agreement .
The 3PL Agreement will continue in effect following the Effective
Date, subject to an amendment thereto dated as of the Effective
Date that provides for coordination with this Agreement and
continued services being provided by Distributor thereunder with
respect to, among other things, shipment of Product outside the
Territory.
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2.3
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Implementation Dates
. The Parties intend for
Distributor to be able to (i) accept and fulfill orders under
the Direct Channel on or before the Effective Date, and
(ii) accept and fulfill orders under the Drop Ship Channel on
or before March 15, 2007.
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2.4
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Development Fees and Stand-Ready
Fees . Within
10 days after the Effective Date, TMC shall pay Distributor an
Expedited Development Fee of $[**] and a Development Fee of $[**]
in connection with the start-up of the distribution services
described in this Agreement. In addition, TMC shall pay Distributor
a stand-ready fee in the amount of $[**] per month (or pro-rated
for any portion thereof) in the event that TMC elects to delay the
launch of the distribution models contemplated by this Agreement
past March 15, 2007. The foregoing fees shall be in addition
to any other fees set forth in this Agreement.
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3.0
DISTRIBUTION SERVICES AND OBLIGATIONS OF DISTRIBUTOR
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3.1
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Product Ordering
. Distributor will place
orders for Products with TMC or its designee by EDI or by faxing
(866) 860-3566 or such other number as TMC may
designate.
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Distributor will place such orders
on Monday of each week or the following business day if Monday is a
holiday. Distributor will place orders for such quantities of
Product as are necessary to maintain an appropriate level of
inventory based on customers’ historical purchase volumes.
Any purchase order not rejected in whole or in part by TMC within
two (2) business days after receipt will be deemed
accepted.
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3.2
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Inspection, Storage, and Handling of
Product .
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3.2.1
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Distributor shall examine Product
shipments upon delivery and shall notify TMC (a) no later than
fifteen (15) days following receipt of goods with defects
reasonably discoverable upon visual inspection without unloading
individual shipping units; or (b) for defects not reasonably
discoverable by visual inspection, no later than fifteen
(15) days after Distributor learns or is notified of such
defect. Along with notice of any defects, Distributor shall furnish
to TMC a description of the nature of the defect. Upon receipt of
notice of any defect, TMC, at its option, shall issue a return
authorization and replace any defective Product unit or issue
Distributor a credit in the full amount of the purchase price.
Distributor will, at TMC’s request and expense, follow
TMC’s instructions to return to TMC or TMC’s third
party disposal company any Product unit delivered to Distributor
that contains a defect. Distributor shall reasonably cooperate with
TMC in investigating the cause of any defect in a Product
unit.
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3.2.2
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Distributor agrees to store the
Product, at all times, in accordance with Exhibit A and
with the storage requirements set forth in the current approved
product labeling for the Product. Distributor will store the
Product at its distributor centers located at 345 International
Boulevard, Brooks, KY 40109 and/or 5360 Capital Court, Reno, NV
89502. Distributor will not store Product at any other facility
without notifying TMC.
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3.3
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Product Distribution
.
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3.3.1
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Distributor will use commercially
reasonable efforts to distribute the Product in the Territory, in
accordance with the standards and procedures set forth in
Exhibit A . Such efforts will include:
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(a)
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providing a dedicated customer
service team;
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(b)
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setting up accounts for all Bill-To
Customers;
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(c)
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approving or denying business
applications for potential customers;
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(d)
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taking and processing orders on a
daily basis (Monday — Friday only);
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(e)
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validating active DEA licenses for
Ship-To Customers to whom Product is being shipped; and
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(f)
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picking, packing and arranging for
delivery of Product on the next business day for orders placed
prior to Distributor’s normal order cut-off time.
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3.3.2
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Distributor will comply with
Exhibit A , Operating Guidelines, in all material
respects in its performance of the distribution
services.
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3.3.3
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Distributor will sell Product to
Bill-To Customers upon approval of Distributor’s then-current
business application.
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3.3.4
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Ship-To Customers may purchase the
Product through the Direct Channel or the Drop Ship Channel. Under
the Direct Channel, the Ship-To Customer will order
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and purchase
Product directly from Distributor and will be both the Bill-To
Customer and the Ship-To Customer. Under the Drop Ship Channel, the
Ship-To Customer will order and purchase Product from a Wholesaler
and the Distributor will ship Product only to the Ship-To Customer
that purchased such Product and will sell Product to and invoice
the Wholesaler Bill-To Customer. Distributor will be responsible
for ensuring that each Ship-To Customer to whom the Product is
shipped by Distributor will be, at the time of shipment, eligible
under Applicable Law to receive such shipments.
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3.3.5
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Distributor will have sole
responsibility for determining the prices at which it sells the
Product to its customers; provided, however, that such prices will
not exceed Distributor’s wholesale acquisition cost (WAC), as
determined at the time of sale to Bill-To Customer.
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3.3.6
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In
the event of a shortage of the Product, Distributor will allocate
available supplies of Product among its Ship-To Customers in a
reasonable manner in accordance with such Ship-To Customers’
utilization of the Product during the preceding twelve-month
period.
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3.4
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Distributor Personnel
. Distributor will
provide a dedicated team of representatives to deal with customers.
Distributor will be responsible for ensuring that all personnel
dealing with customers are properly trained to perform their
duties. TMC and Distributor will work together to develop an
orientation program and training materials for Distributor
personnel to use.
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3.5
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Maintenance and Transfer of
Data .
Distributor will maintain current and accurate records for the
Product. Distributor will make available to TMC detailed Product
activity (inventory), Product transfer (sales/returns), order and
shipment data (“Data”) as described in
Exhibit C . TMC will compensate Distributor according
to the fee schedule set forth in Exhibit D for
additional Data not described in Exhibit A or
Exhibit C . Distributor will not provide Data to any
third party without TMC’s prior written approval, except that
Distributor may provide Data to First DataBank, Wolters Kluwer, IMS
Health, Inc., NDCHealth Corporation or other third party data
aggregators without the approval of TMC.
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3.6
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TMC Contracts
. Distributor will
recognize and administer TMC Contracts, under which TMC and certain
Ship-To Customers and/or group purchasing organizations have
established prices and may purchase the Product, as well as
TMC’s government-managed pricing arrangements, subject to the
continued validity of TMC Contracts in accordance with Applicable
Law, including without limitation the Federal Anti-kickback
Statute, 42 U.S.§ 1320a-7b. Distributor will administer TMC
Contracts under this Agreement in accordance with the chargeback
procedures set forth in Exhibits A and E.
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3.7
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Disaster Recovery
. Distributor will
maintain a disaster recovery plan for its warehouse premises, which
will include, at a minimum, a back-up warehouse facility, and plans
for maintaining customer services, Product ordering, Data
maintenance and transfer, and other systems
capabilities.
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3.8
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Returns .
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3.8.1 Distributor will have the
right to return to TMC and receive credit for (a) Product dated
less than 6 months before, and less than 12 months after
stated expiration date, and (b) damaged or defective products,
without incurring a TMC restocking fee/charge.
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3.8.2
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Distributor will notify TMC of its
intent to return Product in order to obtain return authorization
from TMC.
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3.8.3 In the event that
TMC changes its return policy in a manner limiting returns,
Distributor may return Product in accordance with the terms of
TMC’s returns policy in effect at the time Distributor
purchased the Product.
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4.1
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Shipments: Title and Risk of
Loss . There
shall be no charge to TMC for Distributor transferring Product from
its 3PL facility to its distribution centers. Title to and risk of
loss to each order of Product shipped to Distributor hereunder
shall pass to Distributor upon receipt of Product at the
distribution center.
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4.2
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Invoicing . TMC will invoice Distributor for
Product on the same day that Product orders are shipped and will
use its commercially reasonable efforts to fill Distributor’s
Product orders within two (2) business days of order receipt.
Distributor shall be permitted to cancel any order of Product that
has not been delivered within two (2) business days of an
accepted purchase order.
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5.1
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Payment by Distributor for Product
Orders .
Distributor agrees to pay for each Product unit based on the
purchase price schedule in Exhibit B , which may
be amended from time to time at TMC’s sole discretion.
Distributor’s terms of payment shall be (a) [**]. Should TMC
discontinue the Drop Ship Channel and implement a Direct Channel
model for all customers, the [**]%/30 days terms will be
discontinued to the Distributor. Distributor shall be entitled to
four (4) float days for all payments made by electronic fund
transfers to the TMC lockbox account.
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The Medicines
Company
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JP Morgan Chase
Bank
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New York, NY
01004
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[**]
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[**]
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5.2
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Penalties . Distributor will be liable for
late fees equal to 1.5% per month (or any portion thereof) on all
amounts not paid within thirty (30) days of the date of
billing, except for any portion of any bill that is the subject of
any dispute raised by Distributor in good faith. If any dispute is
resolved in favor of TMC, Distributor will pay the applicable late
fee on such amount from the original due date.
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5.3
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Payment by TMC for Distribution
Services .
Distributor will submit on a monthly basis an invoice for its
distribution services in accordance with the fee schedule attached
as Exhibit D . This amount represents fair market value
for the services performed hereunder and was negotiated in an
arms-length transaction. The fees for distribution services may be
adjusted no more than [* *] by Distributor, provided that
such
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adjustment shall not exceed [* *]
percent ([* *]%) of the distribution services fees for the
preceding [* *]. Terms of payment are net 30 days. TMC will be
liable for late fees equal to [* *] % per month (or any portion
thereof) on all amounts not paid within thirty (30) days of
the date of billing, except for any portion of any bill that is the
subject of any dispute raised by TMC in good faith. If any dispute
is resolved in favor of Distributor, TMC will pay the applicable
late fee on such amount from the original due date.
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5.4
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Chargeback Reconciliation
Payment .
Distributor will submit chargeback data in accordance with Exhibits
A and C for reconciliation and reimbursement by TMC. Distributor
will submit invoices for chargebacks on a monthly basis, and TMC
will pay such invoices in full within thirty (30) days of the
date an invoice is received. With respect to sales of Product under
TMC Contracts, Distributor shall submit invoices to TMC, and TMC
shall pay such invoices, equal to the difference between
(a) the current WAC at the time of the sale under the
applicable TMC Contract, and (b) the sales price under the
applicable TMC Contract. Similarly, TMC may request Distributor,
from time to time, to issue credits related to certain patient
discounts, in which case Distributor shall submit invoices to TMC
for payment of the discounted amount, and TMC shall pay such
invoices, in the same manner as invoices are submitted and paid
with respect to TMC Contracts. Terms of payment for the foregoing
obligations are net 30 days. TMC will be liable for late fees equal
to 1.5% per month (or any portion thereof) on all amounts not paid
within thirty (30) days of the date of billing, except for any
portion of any bill that is the subject of any dispute raised by
TMC in good faith. If any dispute is resolved in favor of
Distributor, TMC will pay the applicable late fee on such amount
from the original due date.
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6.1
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Food and Drug Administration
Clearance .
TMC represents and warrants that during the term of this Agreement,
(a) the Product has been approved by the United States Food
and Drug Administration (“FDA”) to be marketed in the
Territory: (b) all federal and state approvals and permits for
the manufacture, importation, design, testing, inspection,
labeling, and instructions for use, sale and distribution of the
Product in the Territory have been obtained; and (c) the
Product will be the subject of a duly approved NDA or ANDA (New
Drug Application or Abbreviated NDA) and may be legally transported
or sold under Applicable Law. TMC will be solely responsible for,
and shall comply with, all applicable federal and state laws
governing the regulation of the manufacture, importation, design,
testing, inspection, labeling, sale, and instructions for use of
the Product in the Territory.
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6.2
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Inspections .
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6.2.1
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Distributor agrees to cooperate with
any inspection of Product shipments conducted by a governmental
agency.
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6.2.2
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Distributor shall notify TMC
promptly of any inspection by any federal, state or local
regulatory or governmental representative concerning the Product
and shall provide TMC with a summary of the results of such
inspection and such actions, if any, taken to remedy conditions
cited in such inspections.
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6.3
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Complaints, Adverse Reactions,
Recalls .
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6.3.1
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Distributor will inform TMC promptly
of any information concerning complaints involving the Product or
adverse drug experiences (as defined in 21 CFR § 314.80),
injury, toxicity, sensitivity reaction associated with the clinical
use of the Product by any Ship-To Customer or other third party
.
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6.3.2
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If
there is a recall, withdrawal or replacement of the Product imposed
by TMC or the FDA (“Recall”), Distributor will stop
shipping recalled Product lots after Distributor receives written
notification of such Recall. TMC will notify Distributor of any
proposed Recall as soon as possible and, in any event, will do so
within forty-eight (48) hours of initiating a Recall.
Distributor shall cooperate fully in any such Recall.
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6.3.3
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TMC
will reimburse Distributor for any documented reasonable costs or
expenses that Distributor actually may incur due to a Recall. For
all Product held by Distributor, such Recall costs and expenses
include TMC’s reimbursement to Distributor of its original
acquisition cost or, if higher, at the then-current purchase price
in the Commercial Price List. Each Party will use best efforts to
minimize Recall costs and expenses. Distributor shall prepare a
detailed invoice of such costs or expenses, which invoice shall be
paid by TMC within thirty (30) days of its receipt of such
invoice. TMC will be liable for late fees equal to 1.5% per month
(or any portion thereof) on all amounts not paid within thirty
(30) days of the date of billing, except for any portion of
any bill that is the subject of any dispute raised by TMC in good
faith. If any dispute is resolved in favor of Distributor, TMC will
pay the applicable late fee on such amount from the original due
date.
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6.4
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Compliance with Law
. Each Party shall at
all times during the term of this Agreement comply with all
Applicable Laws, including, without limitation, the Federal
Anti-kickback Statute, 42 U.S.C. § 1320(a)-7b, the Federal
Self-Referral Law, 42 U.S.C. § 1395nn, and the Medicare
Prescription Drug, Improvement, and Modernization Act of
2003.
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6.5
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Compliance with Fee, Rebate and
Discount Laws . Distributor shall disclose all
fees and/or discounts required to be disclosed under any state or
federal program that provides cost or charge based reimbursement to
Distributor for the Product provided under this Agreement as may be
required by Applicable Laws. Distributor further represents and
warrants that it, and any of its affiliates who perform services
under this Agreement, are in compliance with, and during the term
of this Agreement covenants that it and its affiliates shall remain
in compliance with, any federal or state laws applicable to the
fees, rebates or discounts paid by TMC pursuant to this Agreement,
including any laws requiring the proper disclosure and/or reporting
of fees, rebates or discounts.
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6.6
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[*
*] The Parties agree that a modification of
Exhibit
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B under this Section 6.6 will be
commercially equivalent to Exhibit B as of the
Effective Date of this Agreement. If the Parties are unable to
agree to a modification of the terms of Exhibit B , the
Agreement will terminate pursuant to
Section 12.2.2(d).
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7.0 RECORDS
AND ACCOUNTING
During the term
hereof and for seven (7) years thereafter, or such longer
period as may be required by Applicable Law, Distributor shall
maintain accurate records as required to meet Applicable Law, as
well as all records, data and documentation required to verify the
accuracy of the information underlying any Data described in
Section 3.5 (“Records”). The Records shall be
maintained in a secure area reasonably protected from fire, theft
and destruction. For the same period, except as otherwise required
by any such laws or regulations, Distributor shall provide TMC,
upon reasonable advance notice and during reasonable business
hours, access to any requested documentation related to the
performance of this Agreement or to verify the accuracy of Data.
Any access to Records shall be conducted at TMC’s expense and
in a manner that does not unreasonably interfere with
Distributor’s normal business operations.
The terms and
conditions of the Mutual Non-Disclosure Agreement set forth on
Schedule A are incorporated by reference
herein.
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9.1
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TMC . In addition to and not in lieu of
the Continuing Guaranty, TMC warrants that upon delivery to
Distributor: (a) the Product will be in compliance with
Applicable Laws and all regulatory requirements of the FDA;
(b) no Product will be adulterated, misbranded or otherwise
prohibited within the meaning of Sections 501 and 502 of the
Food Drug and Cosmetics Act (“FDCA”), or within the
meaning of other Applicable Law; (c) the Product will not be
merchandise which may not be introduced into interstate commerce
pursuant to the requirements of Sections 404, 505, 514, 515,
516 or 520 of the FDCA; (d) the Product will be manufactured
in accordance with current FDA Good Manufacturing Practices as
required by 21 C.F.R. §§ 210 and 820; (e) the
Product will be free from material defects in materials and
workmanship; and (f) the Product will not violate or infringe
upon the intellectual property rights of any third
parties.
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9.2
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Distributor . Distributor warrants that
(a) it possesses and will maintain all federal, state and
territory licenses and permits necessary to its performance of this
Agreement and agrees to comply, in all material respects, with all
Applicable Laws; and (b) it has not been debarred, nor is it
subject to a pending debarment proceeding, and that it shall not
use in any capacity in connection with performance of this
Agreement any person who has been debarred pursuant to section 306
of the FDCA, 21 U.S.C. § 335a, or who is subject to a pending
debarment proceeding. Distributor agrees to inform TMC promptly if
Distributor or any of its employees or agents engaged in the
performance of this Agreement is debarred or is the subject of a
pending debarment proceeding. Notwithstanding anything in this
Agreement to the contrary, if Distributor fails to discover that an
employee or agent used in connection with the performance of this
Agreement is the subject of a pending debarment proceeding, despite
its good faith efforts to do so, TMC’s sole and exclusive
remedy will be to terminate the Agreement.
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10.1
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TMC . In addition to the indemnification
obligations set forth in the Continuing Guaranty, TMC will
indemnify, defend, and hold harmless Distributor, its affiliates,
parents, subsidiaries, directors, officers, agents and employees
(collectively, “Distributor Indemnitees”) from and
against, and reimburse Distributor Indemnitees for, any and all
claims, demands, actions, causes of action, losses, judgments,
damages, costs and expenses (including, but not limited to,
reasonable attorneys’ fees, court costs and costs of
settlement) (“Claims”) against Distributor Indemnitees
to the extent arising out of: (a) TMC’s manufacture of
the Product; (b) the death of, or bodily injury to, any person, or
property damage resulting from the use of the Product or any defect
in its design, workmanship or manufacture; (c) any recall or
withdrawal of the Product, other than as a result of
Distributor’s gross negligence or willful misconduct;
(d) TMC’s violation of any Applicable Law; (e) any
breach by TMC of any of its representations, warranties, covenants
or agreements in this Agreement; or (f) any negligent act or
omission of TMC. The foregoing indemnification will not apply to
the extent any Claims result from the negligence or willful
misconduct of Distributor.
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10.2
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Distributor . Distributor will indemnify,
defend, and hold harmless TMC, its affiliates, parents,
subsidiaries, directors, officers, agents and employees
(collectively “TMC Indemnitees”) from and against, and
reimburse TMC Indemnitees for, any and all Claims against TMC
Indemnitees to the extent arising out of: (a) the death of, or
bodily injury to, any person or property damage resulting from the
use of a Product that is caused by Distributor’s negligence
or willful misconduct; (b) any recall or withdrawal of the
Product as a result of
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