DISTRIBUTION AGREEMENT

 

(b)            For purposes of this Agreement, the “[***]” shall mean the Biosite products described in Schedule N.

 

(c)            For purposes of this Agreement, the “[***]” shall mean the Biosite products described in Schedule B.

 

(d)            For purposes of this Agreement, the “[***]” shall mean the Biosite products described in Schedule C.

 

(e)            For purposes of this Agreement, the “[***]” shall mean the Biosite products described in Schedule D.

 

(f)             For purposes of this Agreement, the “[***]” shall mean the Biosite products described in Schedule E-1 and Schedule E-2.

 

(g)            For purposes of this Agreement, the [***] shall mean the new [***] products which FHC exercises its right under Section 1(k) to add to this Agreement.

 

(h)            For purposes of this Agreement, [***] shall mean [***] that either (i) comprise a new line of products launched after the Effective Date, or (ii) are added after the Effective Date to a line of products (e.g., the [***] line, [***] line, and [***] line) existing as of the Effective Date (other than products that merely add, remove or substitute one or more new markers to an existing product, or products that merely add one or more new features (e.g., a multi-marker index) to an existing product). [***], without limitation, will include (pending completion of clinical development and regulatory approval) the [***], [***].

 

(i)             For purposes of this Agreement, “Improved Products” shall mean all New Products other than Uniquely New Products. Improved Products, without limitation, will include (pending completion of clinical development and regulatory approval) the [***] with [***] and [***] products currently under development by Biosite.

 

(j)             For purposes of this Agreement, [***] shall mean [***], [***] and those [***] that Biosite classifies (in its sole and absolute discretion, as evidenced by express written notice to FHC) as [***]. Following [***] and [***], the [***] by Biosite shall be classified by Biosite as an [***]. If a [***] merely [***] one or more [***] to a previously launched [***], or a product that merely [***] (e.g., a [***]) to a previously launched [***], then following [***], such [***] also shall be an [***]; provided, however, for purposes of calculating the GSMR for such [***] under Section 5(f), the first sale of such [***] by Biosite to FHC hereunder shall be deemed to be either (i) the [***] of the [***] of such [***] by Biosite to FHC hereunder, or (ii) the date of the [***] of such previously launched [***] by Biosite to

 

 

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FHC hereunder, in each case as determined by Biosite in its sole discretion and set forth in a written notice to FHC.

 

(k)            If Biosite desires to offer for sale in the Territory or Physician Office Practices any new Biosite immunoassay diagnostic product (including any product improvements, updates or product line extensions) (i) for which Biosite or the applicable third party manufacturer has received all applicable governmental approvals to sell and use in the Territory and Physician Office Practices after the date of this Agreement, (ii) which Biosite is not prohibited by law or contract from selling to FHC hereunder, and (iii) which Biosite offers for sale, then Biosite shall offer to FHC in writing the opportunity to add such new Biosite immunoassay diagnostic product to this Agreement; provided, however, that (A) if at such time FHC has the right to sell or distribute any product of a third party in the Territory which is competitive with such new Biosite immunoassay diagnostic product (excluding any product that meets one or more of the exceptions described in Section 3(b)(i)(i-vi), then Biosite shall have no obligation to offer to FHC the opportunity to add such new Biosite immunoassay diagnostic product (or to any improved or updated versions thereof) to this Agreement, and (B) if either party has [***] under [***], then Biosite thereafter shall have no obligation to offer to FHC the opportunity to add any new Biosite immunoassay diagnostic product to this Agreement. Notwithstanding the preceding, in the event that Biosite desires to offer for sale in the Territory or Physician Office Practices any such new Biosite immunoassay diagnostic product as described above, and at such time, FHC has the right to sell or distribute any product of a third party in the Territory which is competitive with such new Biosite immunoassay diagnostic product (excluding any product that meets one or more of the exceptions described in Section 3(b)(i)(i-vi)), the parties shall negotiate in good faith the terms under which Biosite would offer to FHC the opportunity to add such new Biosite immunoassay diagnostic product (including any improved or updated version or product line extension thereof) to this Agreement. If the parties are unable to reach a mutually acceptable agreement for the distribution of the applicable product after such good faith negotiations, Biosite, at its sole option, shall have no obligation to offer such product to FHC for distribution (or the product improvements, updates or product line extensions thereof). Without limiting the generality of the foregoing, if as part of the negotiations described in the preceding sentence FHC agrees to discontinue the distribution of such competitive product as a condition precedent to adding such new Biosite immunoassay diagnostic product to this Agreement, Biosite shall be obligated to offer such new Biosite immunoassay diagnostic product to Fisher under the terms of this Section 1(k). If FHC gives Biosite express written notice of FHC’s acceptance of such offer for such new Biosite immunoassay diagnostic product within [***] days after FHC receives Biosite’s written offer to add such new Biosite immunoassay diagnostic product to this Agreement, then such new Biosite immunoassay diagnostic product shall be added to this Agreement (subject to Fisher’s discontinuation of the distribution of such competitive product, if applicable, as a condition precedent). If FHC fails to give Biosite express written notice of FHC’s acceptance of such offer for such new Biosite immunoassay diagnostic product within [***] days after FHC receives Biosite’s written offer to add such new Biosite immunoassay diagnostic product to this Agreement, then FHC shall have no rights in or to such new Biosite immunoassay diagnostic product (or to any improved or updated versions thereof) under this Agreement or otherwise.

 

 

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(l)             Biosite shall provide all required Material Safety Data Sheets, if any, for any Product containing hazardous chemicals or otherwise as required by federal, state or local law.

 

2.              Grant of Distributorship.

 

(a)            Upon the terms and subject to the conditions set forth in this Agreement, Biosite hereby appoints FHC, and FHC accepts such appointment, as the [***] distributor of the Products in the Territory during the Term. For purposes of this Agreement, “[***]” shall mean, with respect to any Product, that Biosite (under the terms and conditions of Section 2(e)) and FHC (on the terms and conditions in this Agreement) and [***] other third party (to be determined by Biosite, [***], [***] or [***], or any of [***] or [***], and which [***], [***] or [***], or any of [***] or [***], as a [***]), shall have the right to promote, market, sell and distribute the Products in each segment of the Territory. During the Term, Biosite shall not use [***], [***] or [***], or any of [***] or [***], as a third party logistics provider for the Products in the Territory. Any agreement between Biosite and such third party distributor allowed under this Section 2(a) shall contain language that prohibits during the Term the provision at any point in the distribution chain other than for end-use, of Product to [***], [***] or [***], or any of [***] or [***]. Biosite shall inform FHC of any such appointment in writing not less than [***] days prior to initiating distribution with any such third party. FHC may distribute the Products hereunder only through FHC or its subdistributors existing as of the Effective Date, which are listed in Schedule G. FHC shall not appoint subdistributors hereunder, other than those listed in Schedule G without Biosite’s prior express written consent, which shall not be unreasonably withheld. Notwithstanding the foregoing, Biosite reserves the rights described in Section 2(e).

 

(b)            Notwithstanding anything to the contrary set forth in this Agreement, upon the terms and subject to the conditions set forth in this Agreement, Biosite hereby appoints FHC, and FHC accepts such appointment, as the [***] distributor of the Products in the [***] (as defined below) during this Agreement. FHC may distribute the Products hereunder only through FHC or its subdistributors existing as of the Effective Date, which are listed in Schedule G. FHC shall not appoint subdistributors hereunder, other than those listed in Schedule G without Biosite’s prior express written consent, which shall not be unreasonably withheld.

 

(c)            The “Territory” consists of [***] in the United States and its territories (including without limitation, Puerto Rico): (1) the “[***]”, and (2) the “[***].” The [***] shall mean:[***]. The [***] shall mean those [***] of [***] or more [***] that have [***] from [***] any Product at any time [***], through [***], as evidenced by

 

 

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written notice provided by FHC to Biosite in accordance with the 2004 Distribution Agreement. The Territory shall not include any areas or any market segment not described in this Section 2(c) without the prior written consent of Biosite, which consent may be withheld at Biosite’s sole discretion. Other than as expressly set forth in Section 2(i) regarding [***], FHC shall not be permitted to sell the Products in any areas or to any market segment not described in this Section 2(c) without the prior written consent of Biosite, which consent may be withheld at Biosite’s sole discretion. FHC shall take reasonable steps to limit the likelihood that FHC’s customers in the Territory and [***] purchase Products for resale in the [***] (as defined below but not including the [***] of [***] or more [***]).

 

(d)            All areas and market segments not included in the definition of the Territory and [***] shall be hereinafter referred to as the “[***].” Biosite shall retain all rights to promote, market, sell and distribute (either directly or through others) the Products in the [***] and [***]. Except as otherwise set forth in this Agreement, Biosite shall not be permitted to sell the Products in the Territory and shall take reasonable steps to limit the likelihood that Biosite’s customers in the [***] and [***] purchase Products for resale into the Territory. Included in the [***], without limitation, are all market segments in countries outside of the United States and its territories (including without limitation, Puerto Rico) and the following customer groups in the United States and its territories (including without limitation, Puerto Rico): physician group practices of [***] or more physicians other than the [***]; probation and parole programs; public and private sector workplace testing; industrial laboratories; non-hospital military on-site testing programs (i.e., ADCO, recruiting centers); high school, college, university and professional sports programs; government agencies; public carriers; and veterinary clinics and animal testing. For the sake of clarity, physician group practices of [***] or more physicians other than the [***] shall be included in both the definitions of [***] and [***].

 

(e)            Nothing herein shall prohibit Biosite from:

 

(i)             promoting, marketing, distributing and selling the [***] to [***] (or its affiliates) without restriction;

 

(ii)            distributing (but not selling) Products within the Territory only for purposes of pre-market clinical testing or evaluation of Products or testing of Product improvements or enhancements prior to market introduction or distributing (but not selling) Products within the Territory for post-market research or educational purposes;

 

(iii)           promoting, marketing, soliciting and receiving orders for the sale by FHC, its subdistributors listed on Schedule G (with FHC’s consent), and its co-exclusive distributor of Products within the Territory as allowed under the terms and conditions of this Agreement;

 

(iv)           promoting, marketing, selling and distributing any Product directly to a customer (A) listed on Schedule 2(e)(iv) (B) which states in writing to FHC (either directly

 

 

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or through Biosite but that nevertheless is a writing on customer letterhead) prior to Biosite’s first sale to such customer that such customer will only buy such Product directly from Biosite (or any other Biosite distributor properly appointed under the terms and conditions of this Agreement), but only after Biosite identifies the customer to FHC’s Vice President of Marketing (or his or her designee) and specifies the reason such customer refuses to buy from FHC, or (C) who purchases not more than [***] of Products during any [***] period, but only to the extent that the aggregate amount of Products purchased by all such customers during such same twelve month period is less than [***]; and

 

(v)            promoting, marketing, selling and distributing, or permitting any third party to promote, market, sell or distribute, any Product (A) in the [***], (B) in any territory or market segment during the Extended Term (if applicable as described in Section 6(a) of this Agreement), or (C) in the event that FHC exercises the opt out right described in Section 3(b); provided, however, that the [***] shall remain a [***] Product as defined in Section 2(a) above for the Term.

 

(f)             FHC shall not negotiate or execute an agreement with a group purchasing organization (integrated delivery network or similar entity) with respect to [***] customers without the written consent of Biosite, which shall not be unreasonable withheld. FHC shall pay any group purchasing organization’s administrative fees applicable to FHC’s national contracts. Biosite shall pay any group purchasing organization’s administrative fees applicable to Biosite’s national contracts. Each of FHC and Biosite shall pay [***] of the administrative fees imposed by [***], [***] regarding the purchase of the Products through FHC, provided that neither party can amend the amount of administrative fee imposed by [***] without the other party’s prior written consent. The language contained in this Section 2(f) shall control over any conflicting language contained in this Agreement.

 

(g)            (i)             If FHC in good faith enters into a written agreement (excluding a purchase order or Multi-product Agreement (as defined below)) with a Contract Customer (as defined below) relating to the purchase and sale of Products, such written agreement shall be substantially in the form of Biosite’s then-current form written agreement for the applicable transaction (the “Form Agreement”), provided that FHC may (1) remove the Biosite logo and insert the FHC logo, (2) delete “Biosite” as the signatory, (3) insert terms concerning shipment and payment as exist between FHC and the Contract Customer, (4) expressly provide that Biosite and not FHC shall be responsible for all warranty services (in accordance with Biosite’s standard warranty terms and conditions), and product liability issues and third party intellectual property claims to the extent caused by Biosite’s negligence or intentional misconduct, and (5) insert terms and conditions limiting FHC’s liability to the applicable customer to the extent permitted by applicable law (provided that such terms and conditions shall in no event provide that Biosite shall have additional obligations or liability to the applicable customer). Subject to the immediately preceding sentence, FHC shall not revise the terms or conditions of a Form Agreement without obtaining Biosite’s prior written approval.

 

(ii)            Subject to Section 5(e) below, Biosite shall have the right to enter into written agreements with Contract Customers of FHC for distribution of Products by FHC to such Contract Customers, provided that Biosite shall not obligate FHC to: (i) provide warranty

 

 

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services or indemnity to Contract Customers regarding the Products (and each such written agreement shall contain language substantially similar to the language set forth in paragraphs A and B of Schedule J attached to this Agreement); or (ii) deliver the Products other than in accordance with FHC’s standard delivery terms and conditions unless (a) FHC fails to reject, within three (3) business days after delivery of a written request by Biosite to FHC’s Controller, Biosite’s request to include in the Contract Customer agreement delivery terms that are inconsistent with FHC’s standard delivery terms or (b) [***] agrees to be [***] for all additional [***] to the extent resulting from the [***] being [***] terms. Subject to the foregoing, the following shall apply: (1) Biosite shall use reasonable efforts to include language substantially similar to the language set forth in paragraphs A and B of Schedule J attached hereto in any agreement with a Contract Customer as described in the preceding sentence; and (2) Biosite shall provide written notice to FHC’s Legal Department in the event that Biosite desires to enter into an agreement with a Contract Customer that does not contain language substantially similar to the language set forth in paragraph B of Schedule J and Biosite shall not enter into such an agreement with such Contract Customer in the event that FHC’s Legal Department provides, within three (3) business days after delivery of a written request by Biosite, reasonable notice and reasons for rejecting such request by Biosite.

 

(iii)           The parties shall cooperate in good faith to facilitate the execution by Contract Customers of any such written agreement based on the applicable Form Agreement and as provided in this Section 2(g). Provided that the purpose of the agreement is not primarily for the distribution of Products by FHC, FHC may in good faith enter into written agreements with FHC customers relating to the distribution by FHC to such FHC customers of multiple products including Products and multiple products of third party manufacturers (a “Multi-product Agreement”).

 

(iv)           FHC shall not obligate or give the right to any FHC customer to purchase any Products beyond the Term, without the prior written consent of Biosite.

 

(v)            “Contract Customer” shall mean a [***] that purchases a Product from [***] pursuant to a [***] (excluding a [***]) between FHC and such customer whether [***] or [***]; provided, however, “Contract Customer” shall not include [***] with which [***] has entered into its [***].

 

(vi)           Notwithstanding anything to the contrary herein, if a Contract Customer’s agreement with FHC has a term that extends beyond the Term for any reason, then such Contract Customer’s agreement with FHC shall be assignable to Biosite following the termination of this Agreement, provided that Biosite provides FHC with a letter from the Contract Customer to FHC requesting the assignment of such Contract Customer’s agreement to Biosite. If any Contract Customer does not so direct FHC to assign its agreement to Biosite, FHC shall be responsible for servicing such Contract Customer for the term of the Contract Customer’s agreement, if that agreement should extend past the date of termination of this Agreement. Any request for assignment of a FHC Contract Customer’s agreement shall be subject to the provisions of Section 6(c) of this Agreement with respect to mutual agreement of the Message. In order to allow FHC to service non-assigning Contract Customers following the

 

 

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termination of this Agreement, Biosite shall, if FHC so elects, sell Products to FHC upon the terms and conditions set forth herein following the termination of this Agreement for distribution to the non-assigning Contract Customers, and the terms and conditions of this Agreement shall survive to the extent applicable to the sale by Biosite to FHC, and the subsequent distribution by FHC to the non-assigning Contract Customers (and not to any other customer), of such Products. For the avoidance of doubt, it is understood that during any such period, the relationship between FHC and Biosite shall be non-exclusive.

 

(h)            Notwithstanding anything to the contrary, upon [***] advance written notice to FHC (the “Event Notice”), Biosite may, in its sole discretion, (i) discontinue the manufacture, sale or supply of [***] into the general commercial market (but not to FHC only), and (ii) sell or transfer its [***] line of products (or such portion of Biosite’s business that pertains to the [***]). [***] days after receipt of an Event Notice, (i) FHC shall no longer have the right to distribute, and shall cease distributing, the [***] other than such [***] that are already in FHC’s inventory, and (ii) this Agreement shall terminate with respect to [***] only, subject to Section 6(c) and other than for purposes of Sections 5(g) and 5(h).

 

(i)             Notwithstanding anything to the contrary set forth in the Agreement, upon the terms and subject to the conditions set forth in this Agreement and clauses (i) through (vi) of this Section 2(i), Biosite appoints FHC, and FHC accepts such appointment, as a non-exclusive distributor of the Products in the [***].

 

(i)             At Biosite’s request, Fisher shall submit to Biosite such reports as are customarily provided by FHC to suppliers similarly situated with Biosite. All such sales reports are, and shall remain the property of FHC, and shall be subject to Section 9 of this Agreement, but may be used by Biosite solely for the purposes of performance of its obligations and the exercise of its rights under the Agreement.

 

(ii)            FHC may distribute the Products hereunder only through FHC or its subdistributors existing as of the Effective Date, which are listed in Schedule G of this Agreement. FHC shall not appoint subdistributors hereunder, other than those listed in Schedule G without Biosite’s prior express written consent, which shall not be unreasonably withheld.

 

(iii)           With respect to sales to [***], each party shall perform its obligations as set forth in Schedule M.

 

(j)             “[***]” means [***] the premises of the foregoing [***], but specifically excluding (i) the [***], (ii) [***] (including [***]), including, but not limited to the [***], (iii) [***] that are not specified above, (and (iv) the [***]. “[***]” means those [***] and [***] located within the premises of the foregoing

 

 

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[***], who prior to [***], received a [***] from or through an [***] to the customer.

 

3.              Conduct of FHC.

 

(a)            During the Term, FHC shall use its good faith commercial efforts and facilities (i) to promote, market, distribute and sell the Products within the Territory and [***], and (ii) to take no action which would interfere with Biosite’s efforts to develop and maintain the reputation of and goodwill with respect to the Products, provided that the parties acknowledge that FHC’s actions allowed by the second sentence of Section 3(b)(i) shall not constitute a breach of the foregoing obligation. During such period after the Term that FHC continues to have the right hereunder to sell Products to any customers, FHC shall use its good faith commercial efforts and facilities (i) to promote, market, distribute and sell the Products to such customers, and (ii) to take no action which would interfere with Biosite’s efforts to develop and maintain the reputation of and goodwill with respect to the Products, provided that the parties acknowledge that FHC’s promoting, marketing, distributing and selling products that are competitive with the Products during the Period after the Term shall not constitute interference with Biosite’s efforts to develop and maintain the reputation and goodwill with respect to the Products. During the Term, FHC shall provide not less than an aggregate of [***] full pages of advertising for available Products in all of FHC’s General Catalogs. With respect to each [***] and [***], FHC shall permit Biosite access to its sales representatives for at least one full day per Product for the purpose of providing training of FHC’s sales representatives in the demonstration and use of the Products on such dates (which shall be not later than [***] months following the launch of such Product in the Territory and [***]) and in such locations as mutually acceptable to the parties. FHC shall provide Biosite with samples of any such Product advertising and sales literature prior to printing and distribution of same, and Biosite shall have the right to approve the Product advertisement(s), which approval shall not be unreasonably withheld or delayed. FHC shall use its good faith commercial efforts to inform customers and potential customers of the availability and desirability of the Products; to handle promptly all inquiries, quotations, correspondence and orders; and to assist customers in the proper use of the Products and the referral of customers to Biosite for the solution of technical application problems.

 

(b)            Non-Compete .

 

(i)             Except as otherwise set forth in this Section 3(b), and except with respect to the [***], provided that Biosite supplies sufficient Products to FHC to satisfy FHC’s purchase of the Products from Biosite within FHC’s reasonable forecasted amounts pursuant to Section 3(c), FHC shall not promote, market, advertise, sell, or distribute any products in the Territory that are directly competitive with the Products, other than the [***], to which this section shall be inapplicable. Notwithstanding the foregoing, FHC shall have the right to promote, market, advertise, distribute and sell (i) products of a third party, competitive with the Products, which third party products FHC sells or distributes as of the Effective Date, as listed on Schedule H; (ii) any products of such third party which are subsequently added by such third party to its line of products listed on Schedule H, which are competitive with the Products, except those products in the same or equivalent testing format of the Products that read visually or read on a point of care instrument; (iii) any instruments that

 

 

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may include competitive assays to the Products which are instruments that are based on an automated random access instrument platform (with the exception of those instruments manufactured by or on behalf of [***], [***], [***], [***], [***] or [***] or their successors or assigns and which have a [***]) with a broad based menu of analytes such as chemistries, fertility, thyroid function, oncology, infectious disease, TDM, DOA, allergy, etc.; provided that all of the products referred to in Sections 3(b)(i)(iii) have a [***]; (iv) products of a third party which FHC sells or distributes as of the date that Biosite offers a new product to FHC under Section 1(k) of this Agreement, which products are competitive with the new product; provided, however, in each case that FHC immediately shall notify Biosite in writing of such products and if the parties mutually agree to terms under which FHC may distribute the new Biosite product, then such competitive product shall be added to Schedule H; (v) any products of such third party which are subsequently added by such third party to its line of products described in clause (iv) above, which are competitive with the Products, except those products in the same or equivalent testing format of the Products that read visually or read on a point of care instrument; provided, however, in each case that FHC immediately shall notify Biosite in writing of such products and if FHC elects to carry the new product then such competitive product shall be added to Schedule H; (vi) products (including instruments) of [***] or [***] (and any improvements, updates or extensions thereof)) marketed as of the Effective Date by [***] or [***] regardless of the list price of such instruments; and (vii) subject to Section 6(a)(i) products that are manufactured by an affiliate of FHC that are competitive with the Products. For the avoidance of doubt, notwithstanding the foregoing, except as may be permitted under Subsections (A) and (B) below and as may be permitted under Section 6(a)(ii), FHC shall not promote, market, advertise, sell, or distribute any products in the Territory for [***] other than (A) products (including instruments) of [***] or [***] (and any improvements, updates or extensions thereof)) marketed as of the Effective Date by [***] or [***] regardless of the list price of such instruments, and (B) Products. Additionally, nothing contained in this Agreement shall restrict the activities of FHC outside the Territory with respect to competing products. FHC may opt out of the requirements of this Section 3(b) at any time during the Extended Term by providing express written notice thereof to Biosite.

 

(A)                                                             In addition to the activities specifically allowed in Subsections (i) – (vii) of this Section 3(b)(i), with respect to any new Biosite product that is [***] that Biosite intends to sell as a [***] product ([***]), if Biosite is prohibited by contract from offering the [***] to FHC, then FHC shall have the right to promote, market, advertise, distribute and sell any product that [***] the same [***] but does not [***] any other of the [***] that [***] any Products.

 

(B)                                                               In addition to the activities specifically allowed in Subsections (i) – (vii) of this Section 3(b)(i), with respect to a Biosite product that is [***] of more

 

 

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than [***] (“[***]”), if Biosite is prohibited by contract from offering the [***] to FHC for distribution under this Agreement, then FHC shall have the right to promote, market, advertise, distribute and sell any product that measures any [***] that [***] the [***] other than a [***] that [***] any Products.

 

(ii)            No later than the earlier of [***] days after Biosite’s quarterly public disclosure of its financial results (“Financial Results”) or [***] days after the end of each calendar quarter (provided that Biosite has received from FHC on a timely basis any information reasonably necessary for Biosite to perform such calculation), Biosite shall calculate and provide FHC with a reasonably detailed written report calculating with respect to the applicable [***] period evidenced (or to be evidenced) in the Financial Results: (A) the sales of [***] and its affiliates [***] unaffiliated [***] in the [***] (“[***]”) and (B) the sale of [***] and its affiliates [***] unaffiliated [***] in the [***] plus [***] sales in the [***] less the applicable [***], or other similar adjustments between Biosite and FHC, for such Product sales (the sum of which shall be referred to as “[***]”), in each case net of all [***] and other [***] by [***] or its affiliates to any such [***]. If the [***] for such period exceeds [***] of the [***] for such period, then upon written notice by FHC (at the option of FHC in its sole discretion) delivered to Biosite within [***] days after the receipt from Biosite of Biosite’s written report, the provisions of Section 3(b)(i) immediately shall terminate and FHC shall have the right to sell any products that compete with the Products at its sole discretion. If FHC makes such election, then without any action by either party, (1) FHC’s distributorship shall become [***] and Biosite shall have the right to promote, market, advertise, distribute and sell Products direct to any customer or to enter into one or more distribution agreements with any third party (without restriction or obligation to FHC), and (2) either party thereafter shall have the right to terminate this Agreement on [***] days prior written notice to the other party. The provisions of Section 3(j) shall be applicable to any data necessary to verify the calculations as provided hereunder.

 

(iii)           FHC represents to Biosite that, as of October 19, 2005, , there are no products manufactured by affiliates of FHC that are competitive with the Products, except as set forth on Schedule 3(b)(iii). FHC shall immediately notify Biosite in writing if, after the Effective Date, an affiliate of FHC or FHC elects to distribute or sell any product described in clause (vii) of Section 3(b)(i). Concurrently with the execution of this Agreement, FHC shall provide Biosite a list of affiliates that manufacture, distribute or sell products in the United States as of the date of October 19, 2005. Such list shall be deemed FHC Confidential Information and subject to the provisions of Section 9.

 

(c)            FHC shall provide Biosite, on a monthly basis, with a written forecast of FHC’s estimated purchase requirements for each month in the ensuing three-month period for the Products (other than [***]), and in the ensuing six month period for [***]. Forecasted quantities for Products for the first and second month of each forecast period shall be

 

 

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binding, subject however to a variance of plus or minus [***] for the second month of each forecast and provided that in the first [***] months following the date of first Product shipment for any new Product, the second month forecast shall be subject to a variance of plus or minus [***]. Biosite shall use its good faith commercial efforts to sell such quantities to FHC. FHC shall include in each monthly forecast a good faith estimated allocation of FHC’s estimated purchase requirements for each month set forth in such report between the Territory and [***]; provided, however, that such estimated allocation is solely for informational purposes, shall not be binding on the parties and shall be used by Biosite solely for planning and administrative purposes.

 

(d)            FHC may return, for full credit or replacement, any Product for which FHC is required to give a customer a credit or replacement Product due to a claimed defect or deficiency in the Product, provided that FHC first obtains from Biosite a returned goods authorization which shall not be unreasonably withheld or delayed by Biosite.

 

(e)            Biosite shall review and advise FHC on compliance with all FDA requirements regarding the Products contained in FHC’s advertising and sales literature.

 

(f)             FHC hereby represents and warrants that neither FHC nor its agents or employees will make any representations or claims with respect to the Products which are not authorized in writing by Biosite. Subject to the provisions of Section 6(c) hereof, FHC agrees to and shall indemnify Biosite against, and hold Biosite harmless from, all claims, actions, costs, expenses and damages (including without limitation reasonable attorneys’ fees and expenses) arising out of: (i) representations or claims by FHC with respect to the Products which are not authorized by Biosite; (ii) willful act or omission by or on behalf of FHC in connection with the sale, marketing, promotion or distribution of the Products; (iii) failure by FHC to comply in any material respect with governmental regulatory requirements relating to the Products which are applicable to distributors of products; or (iv) material breach of this Agreement by FHC. Such indemnity shall be provided in accordance with the procedures set forth in Section 4(l) of this Agreement.

 

(g)            Each shipment from Biosite shall contain numbers identifying the manufacturing lot or lots for control purposes. FHC shall keep accurate records that will enable FHC to determine the Product lots received by specific customers of the Product. FHC shall make such information available to Biosite in the event of a Product recall or Product corrective action requested by Biosite or required by any governmental agency as soon as reasonably practicable but in no event later than ten (10) days after such request by Biosite. FHC shall provide Biosite with information regarding the prior month’s sales including the [***], and shall provide Biosite with such information in no event later than the last day of the month, during the Term and during any time thereafter that FHC sells any Product as permitted hereunder. Additionally, within ten (10) days after each of the Effective Date, not less than [***], and not more than [***], days prior to the commencement of the [***] and the [***] (if any), and within [***] days after the termination of this Agreement, FHC shall provide to Biosite [***].

 

 

***Confidential Treatment Requested

 

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(h)            FHC shall comply with Biosite’s reasonable instructions regarding the storage and handling of the Products, and except as otherwise provided in this Agreement, FHC shall be solely responsible for the cost thereof.

 

(i)             At Biosite’s request, FHC shall submit to Biosite such other reports as are customarily provided by FHC to suppliers similarly situated with Biosite.

 

(j)             Both parties shall keep accurate records [***] of [***] for the [***]. Upon [***] and upon [***] during [***], each party shall [***] an [***] reasonably acceptable [***] being [***] or other [***] of the [***] being [***] to [***] such records in order to [***] any [***] or [***] reasonably required by the provisions of this Agreement, provided that [***] such [***] shall be permitted and the parties shall not be required to [***] such [***] for [***]. All information received as a [***] such [***] shall be subject to Section 9 of this Agreement.

 

(k)            FHC shall promptly advise Biosite of any changes in FHC’s organization or personnel which may materially, adversely affect FHC’s ability to perform under this Agreement, as well as any material changes affecting ownership or control of FHC.

 

(l)             At all times during the Term and during any time thereafter that FHC sells any Product as permitted hereunder, FHC shall maintain inventory of each Product sufficient to satisfy not less than FHC’s requirements for its reasonably forecasted sales of such Product for the immediately following [***].

 

(m)           FHC shall treat each [***] Product as [***], “[***]” or [***] status for [***] purposes for not less than the first [***] full calendar quarters during which such Product is an [***] Product hereunder. The [***] Products shall also be included in the portfolio of products handled by FHC’s product specialists.

 

(n)            To the extent otherwise permitted under this Agreement, if Biosite in good faith enters into a bona fide written agreement (a “Biosite/GPO Agreement”) with a group purchasing organization, integrated delivery network or similar entity (collectively, a “GPO”) pursuant to which (i) the facilities in the Territory having the right to purchase products under such GPO shall be obligated to purchase one or more Products at a purchase price (the “GPO Price”) specified in, or calculated under, such Biosite/GPO Agreement, the effective price to FHC, for Products sold to FHC for resale under such Agreement hereunder solely for resale to such facilities, shall be not greater than [***]. If Fisher objects to such pricing then the parties shall exercise good faith efforts to negotiate mutually agreeable pricing for a period of not less than fifteen (15) days. If the parties are unable to reach agreement on other pricing arrangements, then during the term of the GPO Agreement, Biosite shall have the right to promote, market, sell and distribute such Products to such GPO under the GPO Agreement, if Fisher refuses to sell the Products to the GPO member(s) at the GPO Price.

 

 

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(o)            To the extent that Section 952 of the Omnibus Reconciliation Act of 1980 (the “Act”) and the regulations promulgated thereunder are applicable to the distribution or delivery of Products to a customer, during the term of any written agreement with such customer and until the expiration of four (4) years after the last sale of a Product by FHC pursuant to such customer agreement, FHC will make available, to the same extent that Biosite is required to do so under the customer agreement, upon written request of the Secretary of Health and Human Services or the Comptroller General of the United States or any of their duly authorized representatives, copies of any books, documents, records and other data of FHC that are necessary to verify the nature and extent of the costs incurred by the applicable customer in purchasing the Products.

 

4.              Conduct of Biosite.

 

(a)            Biosite shall ship promptly FHC’s orders for Products, but in any event not later than [***] days from receipt of each order for a Product, (other than [***]). Biosite shall use its reasonable efforts to ship FHC’s orders for [***] not later than [***] from receipt of each order for [***]. Subject to the provisions of Section 11 hereof, Biosite shall ship FHC orders for Products [***] (at which point title and risk of loss shall pass from Biosite to FHC), [***] or to such [***] as [***] may [***]. Biosite shall cooperate with FHC in arranging drop shipments of Products to customers on a case by case basis to include Products designated by Biosite as drop ship Products. [***]. [***].

 

(b)            Biosite shall notify FHC immediately in writing should Biosite become aware of any defect or condition which may render any Product in violation of any statute or regulation, or which in any way materially alters the specifications or quality of such Product.

 

(c)            Biosite shall provide to FHC’s sales personnel, at FHC’s premises or such other location as the parties may agree, at mutually convenient times, such training in the demonstration and use of the Products as may be reasonably requested by FHC. During such training, Biosite shall also address, in a reasonable manner, market information, strategies, and tactics to assist FHC’s performance of its obligations under this Agreement. All training material, instructors, demonstration/training products and other training costs and expenses therefor shall be borne by Biosite; provided, however, that FHC shall, at its expense, provide transportation and lodging for FHC personnel attending such training.

 

(d)            Biosite shall provide technical support to FHC’s sales personnel and customers and promptly provide to FHC such additional technical information developed or acquired by Biosite from time to time as may reasonably be expected to be of assistance to FHC in fulfilling its obligations hereunder. Biosite will provide, at its own expense, a toll free long distance telephone service for technical support for FHC customers and sales representatives.

 

(e)            Biosite shall provide at its expense reasonable quantities of such instruction manuals and point of sale literature as may from time to time be requested by FHC

 

 

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for use in connection with the distribution of the Products. Subject to FHC’s and Biosite’s prior written approval, the FHC name will be incorporated in Biosite’s advertising and literature intended for distribution in the Territory by FHC sales representatives, at FHC’s expense. If requested to do so by FHC, Biosite shall furnish FHC with suitable copy and photographs and other materials which the parties reasonably agree for use by FHC in cataloging the Products.

 

(f)             During the Term, Biosite shall provide FHC, upon request, with up to the number of Samples (as defined below) of each Product set forth on Schedule F, at the [***] set forth in Schedule F, to be used by FHC solely in connection with the promotion and marketing of such Product. A “Sample” shall mean, with respect to a Product, a sample unit of such Product [***] solely for the purpose of marketing and promoting such Product, and not for the purpose of commercial resale. Such Samples may not be sold by FHC and shall be marked by Biosite with the following legend: “FOR EVALUATION PURPOSES ONLY - NOT FOR RESALE.”

 

(g)            Any Products owned by FHC and rendered unsalable, in FHC’s reasonable commercial judgment, due to a change in any Product specification, discontinuation or elimination by Biosite of any Product from its product offering, release by Biosite of any materially improved or updated version of any Product, or any other material change in the Product outside of FHC’s control shall be repurchased from FHC by Biosite within thirty (30) days following FHC’s request therefor at the price paid for such Product(s) by FHC. Biosite shall additionally pay for return freight and related transportation and insurance charges for all such Products. Biosite’s release of a Product which has a longer shelf life shall not be deemed a material improvement under this Section 4(g).

 

(h)            Biosite shall promptly provide FHC with leads concerning prospective purchasers of the Products within the Territory in a format to be mutually agreed upon between the parties.

 

(i)             Biosite shall provide full and accurate written instructions on the Bill of Lading regarding the storage and handling of the Products.

 

(j)             Biosite shall ship the Products so that at least [***] of the shelf life of the Products will be remaining at the time of receipt at FHC’s facility, or at FHC’s customer’s facility, if drop shipped. Biosite shall take back for full credit plus shipping charges any dated Products shipped contrary to this provision, unless shipment of such short-dated Products was pre-approved in writing by FHC.

 

(k)            Biosite shall indemnify and hold FHC harmless from and against all losses, liabilities, damages and expenses (including reasonable attorneys’ fees and costs) resulting from all claims, demands, actions and other proceedings to the extent resulting from (i) representations or claims by or on behalf of Biosite with respect to the Products that are untrue or materially misleading when made; (ii) willful act or omission by or on behalf of Biosite in the sale, marketing, promotion or distribution of the Products hereunder; (iii) failure by Biosite to comply in any material respect with governmental regulatory requirements relating to the Products; (iv) infringement of any of the Products on any intellectual property rights of third parties; or (v) material breach of this Agreement by Biosite.

 

 

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(l)             A party (the “Indemnitee”) that intends to claim indemnification under Section 3(f) or Section 4(k) shall promptly notify the other party (the “Indemnitor”) of any claim, demand, action or other proceeding for which the Indemnitee intends to claim such indemnification. The Indemnitor shall have the right to participate in, and to the extent the Indemnitor so desires jointly with any other indemnitor similarly noticed, to assume the defense thereof with counsel selected by the Indemnitor; provided, however, that the Indemnitee shall have the right to retain its own counsel, with the fees and expenses to be paid by the Indemnitor, if representation of the Indemnitee by the counsel retained by the Indemnitor would be inappropriate due to actual or potential differing interests between the Indemnitee and any other party represented by such counsel in such proceedings. The indemnity obligations under Section 3(f) and Section 4(k) shall not apply to amounts paid in settlement of any claim, demand, action or other proceeding if such settlement is effected without the prior express written consent of the Indemnitor, which consent shall not be unreasonably withheld or delayed. The Indemnitor may not settle or otherwise consent to an adverse judgment in any such claim, demand, action or other proceeding, that diminishes the rights or interests of the Indemnitee without the prior express written consent of the Indemnitee, which consent shall not be unreasonably withheld or delayed. The Indemnitee, its employees and agents, shall reasonably cooperate with the Indemnitor and its legal representatives in the investigation of any claim, demand, action or other proceeding covered by Section 3(f) or Section 4(k), as applicable.

 

5.              Price and Payment Terms.

 

(a)            Biosite shall charge FHC a Transfer Price for each [***] equal to the [***] Price (as defined below) for such [***] in effect on the date of FHC’s purchase order therefor.

 

(b)            Subject to Sections 5(k) and 5(l), Biosite shall charge FHC a Transfer Price per unit for each Product (other than Samples), equal to the List Price, as defined below in Section 5(f) for such Product, less the following discount:

 

(i)             [***] for [***], except for the [***] (Catalog No. [***]) and the [***] (Catalog No. [***]) which shall be discounted [***].

 

(ii)            [***] for [***] sales.

 

(iii)           [***] for [***] sales, except for [***] (Catalog No. [***]), [***] (Catalog No. [***]) and [***] (Catalog No. [***]) which shall be discounted [***].

 

(iv)           [***] for [***] set forth on Schedule E-1.

 

(v)            [***] for [***] set forth on Schedule E-2 and [***] sales.

 

 

***Confidential Treatment Requested

 

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(vi)           Notwithstanding any provision of Section 5(b) to the contrary, the Transfer Price for the [***] Products shall equal the applicable List Price, less [***].

 

(vii)          Notwithstanding any provision of Section 5(b) to the contrary, the Transfer Price for each Product listed on Schedule K shall be as set forth on Schedule K.

 

The parties shall meet not less than yearly and attempt to reach mutually acceptable agreement on any necessary or desirable revisions to the applicable discounts from List Price per Product category (including those necessary or desirable to reflect an attempt to minimize additional payments from FHC to Biosite and/or rebates from Biosite to FHC).

 

(c)            [***] and the [***] set forth on Schedules B, C, D, E-1, E-2 and N [***]; provided, however, that [***] shall give at least [***]. [***] shall honor [***] at the [***] in effect immediately [***] the [***] of [***].

 

(d)            FHC shall pay for [***] and Products purchased pursuant to this Agreement [***] after the date of Biosite’s invoice.

 

(e)            FHC shall be entitled to resell the Products on such terms as it may, in its sole discretion, determine, including, without limitation, price, returns, credit, discounts, and promotions.

 

(f)             For purposes of this Section 5, the following definitions shall apply:

 

“Actual Selling Margin” shall mean Actual Selling Price - Transfer Price.

 

“Actual Selling Margin Rate” or “ASMR” shall mean:

 

[ Actual Selling Price - Transfer Price ]

Actual Selling Price

 

“Actual Selling Price” shall mean, with respect to any Product (other than [***]), the invoiced sales price, net of any discounts actually taken, which FHC or its affiliate charges to an unaffiliated customer for purchase of such Product.

 

“Guaranteed Selling Margin Rate” or “GSMR” shall mean, with respect to any Product (other than Samples), the margin rate that is set forth below for such Product.

 

“List Price” shall mean Biosite’s then-current list price for a Product, which list price may be adjusted only as provided in Section 5(c) above. The List Price for each Product as of the Effective Date of this Agreement (but subject to adjustment thereafter in accordance with Section 5(c)) is as set forth in the applicable exhibit attached hereto.

 

“[***] Price” shall mean, with respect to any [***], the price therefor set forth on Schedule F, as amended from time to time pursuant to Section 5(c).

 

 

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“Transfer Price” shall mean, with respect to any Product (other than [***]), the price calculated pursuant to Section 5(b) above which FHC is obligated to pay to Biosite for purchase of such Product.

 

Subject to the provisions of Section 5(i) below, FHC shall receive the “Guaranteed Selling Margin Rate” on Products as set forth below.

 

(i)             The GSMR for sales of each [***] to hospitals with [***] (excluding sales for evaluation or sample purposes) shall be as follows:

 

Through the end of the [***] after the first sale of such Product by Biosite to FHC hereunder		[***]
From the [***] after the first sale of such Product by Biosite to FHC hereunder		[***]
From the [***] after the first sale of such Product by Biosite to FHC hereunder		[***]
After the end of the [***] after the first sale of such Product by Biosite to FHC hereunder		[***]

 

(ii)            The GSMR for sales of each [***] to hospitals with [***] (excluding sales for evaluation or sample purposes) shall be as follows:

 

Through the end of the [***] after the first