THIS AGREEMENT is
made as of 20 January 2005 (the “Effective Date”)
by and between Restore Medical, Inc., a Minnesota corporation
having its principal place of business at 2800 Patton Road,
Roseville, Minnesota 55113 USA (“Restore”) and Sonomed
Ltd., a company organized under the laws of Israel and having its
principal place of business at 40/42 Hatizmoret Str., Rishon Le
Zion, Zip 75562, Israel (“Distributor”).
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A.
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Restore has developed a proprietary
implantable medical device as more fully described in
Exhibit A (the “Products”).
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B.
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Restore wishes to appoint
Distributor, and Distributor wishes to be appointed, as a
distributor of the Products in the territory set forth in
Exhibit A (the “Territory”).
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1.1 Scope .
Subject to the terms and conditions of this Agreement, Restore
hereby appoints Distributor, and Distributor hereby accepts
appointment, as Restore’s exclusive distributor of the
Products listed in Exhibit A in the Territory. So long as
Distributor is Restore’s exclusive distributor of the
Products in the Territory under the terms of this Agreement, and
subject to the laws and regulations applicable in the Territory,
Restore agrees that it will not sell or distribute the Products in
the Territory, directly or through third parties.
1.2
Subdistributors . Distributor may appoint subdistributors
that are duly licensed in the Territory to promote and/or
distribute Products within the Territory, provided that Distributor
obtains Restore’s prior written approval to such appointment,
which approval Restore may grant or withhold in its sole
discretion. In no event shall any such subdistributor be allowed to
promote, market or distribute products which compete with the
Products without Restore’s prior written consent. Distributor
shall at all times remain fully liable for and shall indemnify and
hold Restore harmless for the performance of its
subdistributors.
1.3 Sales
Outside the Territory . Distributor shall not sell the Products
to customers outside the Territory.
1.4 Competitive
Products . During the term of this Agreement, Distributor shall
not, either directly or indirectly, through subdistributors or
otherwise, develop, manufacture, promote, market or distribute
products that are competitive with the Products.
2.
OBLIGATIONS OF DISTRIBUTOR.
2.1 Marketing
Efforts . Distributor shall have the following obligations with
respect to the marketing and distribution of the
Products:
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(a)
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To
use its best efforts to further the promotion, marketing, sales,
and distribution of the Products in the Territory, and to maintain
adequate sales and service facilities in the Territory;
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(b)
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To
promptly respond to all inquiries or complaints from purchasers of
the Products, and to maintain and support the Products;
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(c)
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To
provide adequate and appropriate training to its sales and support
personnel, approved agents and subdistributors, and clinicians
concerning the Products, and to make available such persons for
training;
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(d)
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To
provide for Restore’s approval a reasonably detailed business
plan for the marketing and distribution of the Products within
thirty (30) days of the Effective Date (including pricing
strategies and promotional activities) and thereafter to update for
Restore’s approval such business plan at least once per
year;
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(e)
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To
provide Restore with reports of Distributor’s activities, the
market for the Products, customer prospects and other information
regarding sales of the Products once per quarter in such detail as
reasonably requested by Restore;
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(f)
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To
provide Restore on a timely basis for each calendar quarter during
the term of this Agreement a rolling quarterly forecast of orders
for the Products for the next 12 months;
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(g)
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To
prepare and print advertising and marketing materials for the
Products, which materials must be approved in writing by Restore
prior to their first use, as described in Section 3.1
below;
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(h)
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To
conduct its business in a professional manner which will reflect
positively upon Restore and its Products; and
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(i)
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To
comply with all laws and regulations of the Territory.
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2.2 Minimum
Purchase Requirement . Distributor agrees to purchase and take
delivery of a quantity of Products that, at a minimum, meets the
Minimum Purchase Requirements specified in Exhibit A. No less
than three (3) months before the end of each twelve
(12) month period (the first of which shall commence on the
Effective Date) during the initial term hereof, and any renewal
term, new Minimum Purchase Requirements shall be agreed by the
parties. Distributor understands and agrees that achievement of the
Minimum Purchase Requirements is of the essence of this Agreement
and if at the end of the initial term or any renewal term:
(a) Distributor and Restore fail to agree upon Minimum
Purchase Requirements for the Products for the following year, or
(b) Distributor fails to meet the Minimum Purchase
Requirements, Restore, at its sole option, shall have the right to
(1) terminate this Agreement pursuant to
Section 9.2(c)(i) hereof with no liability to Distributor, or
(2) appoint other distributors of the Products in all or part
of the Territory (i.e., so that Distributor is Restore’s
nonexclusive distributor of the Products in the Territory) during
the remaining term of this Agreement notwithstanding any contrary
terms herein.
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2.3 Expired
Products . Distributor shall not sell any Products beyond their
stated expiration date.
2.4 Returned
Products Policy . All returns must be authorized in writing by
Restore and an authorization number given to Distributor prior to
the return of any Product, freight pre-paid. Product returned must
be unopened and undamaged, and must be received within 30 days
of the invoice date for full replacement or credit. Product
returned after 30 days may be subject to a restocking fee.
Returns after 90 days from the invoice date may not be
accepted. For Product returns because of defective product or under
warranty, see the warranty provision in
Section 5.1.
2.5 Reverse
Engineering; Alteration of Products . Except as may be
permitted by applicable law, Distributor shall not reverse engineer
or disassemble the Products and shall not knowingly allow any other
person to do so. Distributor shall not alter the Products or any
Product packaging or labeling except with the prior written consent
of Restore.
2.6
Inventory . Distributor shall at all times maintain an
inventory of the Products sufficient to meet anticipated demand but
calculated to result in the minimum possible return of Products
under Section 2.4.
2.7
Governmental Requirements; Registrations . Except as
otherwise agreed by Restore in writing, Distributor shall be
responsible for compliance with all governmental requirements for
importing the Products into the Territory, including but not
limited to all customs requirements. Distributor shall obtain any
necessary import licenses at its own expense. Restore shall be
responsible for obtaining all governmental approvals for the
Products, and Distributor shall provide Restore with assistance in
obtaining all governmental approvals as Restore may reasonably
request, unless the parties agree otherwise or unless otherwise
required by law in the Territory. In the event that Distributor
obtains the necessary registrations or approvals by agreement of
the parties or because required by the law of the Territory,
Distributor shall provide Restore with copies of filings and
correspondence with regulatory authorities relating to the Products
or such registrations or approvals and, upon termination or
expiration of this Agreement, Distributor shall promptly execute
and deliver all documents reasonably requested by Restore to
Restore or any third party designated by Restore to transfer such
registrations or approvals to Restore or its designee. If
Distributor obtains such registrations or approvals in its own name
without Restore’s prior written consent, Distributor agrees
that such registrations and approvals shall be the property of
Restore and Distributor shall cooperate as requested by Restore in
connection therewith.
2.8 Product
Claims . Distributor shall make no representations, warranties
or other claims concerning the Products except as authorized by
Restore in writing or as are contained in any of Restore’s
marketing materials that may be provided to Distributor. Without
prior written consent of Restore, no studies concerning the
Products conducted by or for Distributor shall be deemed clinical
studies of the Products or shall be used to market or promote the
Products. Restore shall be the sole owner of, and Distributor
hereby assigns to Restore all right, title and interest in, the
Products and any information or data concerning the Products that
result from such studies or clinical trials. Distributor shall take
any actions and execute any documents requested by Restore to
perfect Restore’s ownership rights in such information or
data.
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2.9 Notice of
Intellectual Property Infringement . Distributor shall promptly
notify Restore in writing of any patent, copyright infringement or
unauthorized use of Restore’s trade secrets in the Territory.
Restore reserves the right in its sole discretion to institute any
proceedings against such third party infringers, and Distributor
shall refrain from doing so. Distributor shall cooperate fully with
Restore in any legal action taken by Restore against such third
parties, provided that Restore shall pay all expenses of such
action and all damages which may be awarded or agreed upon in
settlement of such action shall accrue to Restore.
2.10 Laws of
the Territory . Distributor shall promptly inform Restore of
any legal requirements in the Territory relating to the use or
distribution of the Products, marketing materials or Product
packaging and labeling.
2.11
Insurance . Distributor shall maintain in force, during the
term of this Agreement and for as long thereafter as a practical
need exists, one or more policies of liability insurance with an
insurer reasonably acceptable to Restore which shall cover all
liabilities of Distributor, whenever arising, attributable to the
Products and in an amount of at least One Million Dollars
($1,000,000). Restore shall be designated as an additional named
insured under each such policy and shall be provided with a
certificate of insurance within thirty (30) days after the
issuance and each renewal thereof.
2.12 Adverse
Reactions . Distributor shall advise Restore within twenty four
(24) hours of any adverse reaction, injury or death resulting from
any use of the Products (“Adverse Reaction”) of which
it becomes aware. Distributor shall also, within five (5) days
thereafter, provide Restore with a written report stating the full
facts known to it about the Adverse Reaction, including but not
limited to customer name, address, telephone number and Product,
lot or serial number. Restore shall from time to time provide
Distributor with written procedures regarding the information
required by Restore in the event of any Adverse Reaction. At all
times during the term of this Agreement, Distributor shall have
appropriate written procedures established for processing any
Adverse Reaction, and shall provide the same to Restore upon
request. As part of such procedures, Distributor shall establish a
means for properly (a) tracking delivery of Products to
customers (including all customers who receive Products from
subdistributors), including, without limitation, tracking which
customers have received Products from particular lot numbers, and
(b) maintaining its distribution records for the Products for
a reasonable time period. All information related to any Adverse
Reaction shall be the Confidential Information of Restore, and
shall not be disclosed by Distributor to any third party or used by
Distributor except as required by applicable laws.
2.13
Distributor Expenses . Distributor assumes full
responsibility for all its own costs and expenses incurred in
carrying out its obligations under this Agreement, including but
not limited to all rents, salaries, commissions, and advertising,
demonstration, travel and accommodation expenses.
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(a)
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Notification. If either party
believes that a recall of any Products in the Territory is
desirable or required by law in the Territory or elsewhere, it
shall immediately notify the other party. The parties shall then
discuss reasonably and in good faith
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whether such
recall is appropriate or required and the manner in which any
mutually agreed recall shall be handled. This Section 2.14
shall not limit the obligations of either party under law with
respect to recall of Products required by law or properly mandated
by any governmental authority.
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(b)
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Corrective Action. If any
governmental agency having jurisdiction in the U.S. or the
Territory shall request or order any corrective action with respect
to Products supplied hereunder, including any Product recall,
customer notice, restriction, change, corrective action or market
action or any Product change, the parties shall cooperate fully to
effectuate such corrective action.
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(c)
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Correspondence. Each party shall
promptly provide the other with copies of correspondence to or from
governmental authorities relating to corrective action in the
Territory concerning the Products.
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(d)
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Records, Adverse Event Reports and
Recalls. Distributor shall maintain complete and accurate records
of all Products imported into and resold by Distributor in the
Territory, which records may be examined at any time by Restore
upon reasonable notice to Distributor.
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(a)
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Distributor shall employ or retain
an adequate organization of well-trained and qualified personnel to
effectively perform its obligations under this Agreement in the
Territory.
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(b)
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Distributor shall comply fully with
its obligations under labor, tax, social welfare and other laws
relating to its personnel. In addition, Distributor undertakes that
it shall not knowingly hire any personnel in violation of any
restrictive covenants contained in any agreement with a third party
or any other obligations owed to any third party, and Distributor
shall procure that none of its subdistributors, agents, officers,
directors, employees or representatives shall do so. Distributor
shall also assure that any and all subdistributors, agents,
officers, directors, employees or representatives engaged or
employed by it are not subject to any such obligations.
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3.
OBLIGATIONS OF RESTORE
3.1 Sales and
Technical Literature . Restore shall provide to Distributor
reasonable quantities of such sales and technical literature and
materials as Restore may have prepared and shall make available
copies of promotional artwork it may have prepared. At its option,
Restore may provide the same to Distributor in electronic format.
Distributor shall use such materials solely as provided under this
Agreement. Distributor shall not alter such materials or use any
other materials in connection with the marketing and distribution
of Products hereunder without Restore’s prior written
consent. Notwithstanding the above, Distributor shall translate all
materials into the language or languages required by law or
appropriate to the Territory, and shall provide Restore with copies
of such translations for approval prior to their first use. Restore
retains all right, title and interest in and to such materials and
to all translated versions thereof.
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3.2 Marketing
and Technical Support . Restore will provide Distributor with
such other marketing support as the parties may mutually agree,
including providing training with respect to the Products to
Distributor’s employees at Distributor’s
expense.
3.3 Export of
Products . Restore shall be responsible for obtaining U.S.
export licenses for the Products. Distributor shall cooperate with
Restore with respect to export licenses, including supplying
Restore on a timely basis with such information and documentation
as Restore shall request in connection therewith.
3.4 Special
Programs . Restore may, in its sole discretion from time to
time during the term of this Agreement, offer to Distributor
certain promotional items related to the Products and discounts
from the then-current prices for the Products, in order to support
certain time- and volume-limited promotional and sales programs
instituted by Restore. Special programs offered by Restore as of
the Effective Date are set forth in Exhibit C, which may be
modified by Restore from time to time during the term of this
Agreement upon notice to Distributor. In no event shall Restore be
obligated to offer, or continue to offer, any special programs
under this Agreement.
4.
PURCHASES AND PAYMENT TERMS
4.1 Orders
. Distributor shall submit orders pursuant to Restore procedures as
communicated to Distributor from time to time. Distributor shall
confirm all oral orders in writing (preferably by e-mail or
facsimile). All orders from Distributor are subject to acceptance
in writing by Restore, which acceptance may be delivered by reply
e-mail or facsimile. No accepted order may be modified or canceled
except as agreed in writing by the parties. Distributor’s
orders or mutually agreed change orders shall be subject to all
provisions of this Agreement. Any terms or conditions of such order
or change order which conflict with the terms or conditions of this
Agreement shall be deemed excluded.
4.2 Fulfillment
of Orders . Distributor’s purchase orders shall include
shipping instructions and shipping address and, if applicable, any
relevant export control information or documentation to enable
Restore to comply with applicable U.S. export control laws. Restore
shall use its best efforts to fill orders that are within
Distributor’s forecast within fourteen (14) business days.
Restore shall use reasonable efforts to fill orders to the extent
they exceed Distributor’s forecast.
4.3 Delivery
Terms . Distributor shall insure each shipment of the Products
with a reputable insurer for the full invoice price of such
shipment. Such insurance shall provide for coverage from delivery
of the Products at the Free Carrier point, Restore’s facility
in St. Paul, Minnesota, U.S.A.
4.4 Acceptance
of Products . In the event of any shortage, damage or
discrepancy in or to a shipment of Products, Distributor shall
promptly report the same to Restore and furnish such written
evidence or other documentation as Restore may deem appropriate.
Restore shall not be liable for any such shortage, damage or
discrepancy unless Restore has received notice and evidence thereof
from Distributor within ten (10) days after delivery of the
Products. If such evidence demonstrates to Restore’s
satisfaction that Restore is responsible for such shortage, damage
or discrepancy, Restore shall promptly deliver additional or
substitute Products to
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Distributor,
but in no event shall Restore be liable for any additional costs,
expenses or damages incurred by Distributor directly or indirectly
as a re
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