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E XHIBIT
10.6
DISTRIBUTION
AGREEMENT
This AGREEMENT made as of June 30, 2004
(the “EFFECTIVE DATE”) by and between HEMOSENSE, Inc.,
(hereafter referred to as “HEMOSENSE”), a California
Corporation, and Medline Industries, Inc., an Illinois Corporation
with offices at One Medline Place, Mundelein, IL 60060 (hereafter
referred to as “MEDLINE”). Each of HEMOSENSE and
MEDLINE are referred to in this Agreement as a “PARTY”
and collectively as the “PARTIES.”
WITNESSETH:
WHEREAS, HEMOSENSE is engaged in the
business of manufacturing and marketing PT Diagnostic products,
which include but are not limited to the instrumentation and
reagents particularly identified on Exhibit A (which list of
products shall, as amended by HEMOSENSE from time to time with 60
days’ advance written notice to MEDLINE, and agreed to by
MEDLINE, to be considered the “PRODUCTS” under this
Agreement);
WHEREAS, MEDLINE is engaged in the
business of providing health care products, including
instrumentation and reagents designed for testing various blood
analytes, and desires to distribute and market the devices and
related test supplies subject to the conditions set forth
herein;
WHEREAS, MEDLINE and HEMOSENSE are
currently parties to those certain Meter Supply Agreements between
MEDLINE and HEMOSENSE for the acquisition of Products by Customers,
which arrangements include pricing commitments by HEMOSENSE and
usage commitments by MEDLINE, all in accordance with the provisions
of this agreement.
NOW, THEREFORE, in consideration of the
premises hereof and the mutual covenants and conditions hereinafter
set forth and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties
hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE 1 –
APPOINTMENT
| 1.1 |
HEMOSENSE hereby appoints and MEDLINE and MEDLINE hereby
accepts appointment as the exclusive distributor of the Products to
[***], home-health-care, free-standing-nursing-home-care
facilities, [***], (collectively, “CHANNEL END USERS”)
in the markets listed on Exhibit B (the “TERRITORY”),
commencing on the EFFECTIVE DATE. Medline will not distribute or
sell competitive POC anticoagulation products for the term of this
agreement. |
| 1.2 |
MEDLINE’s authority under this Agreement is limited to
distributing Products directly to its Channel End Users within the
Territory. MEDLINE shall not advertise market or solicit orders
within the Territory from customers or potential customer other
than Channel End Users, or outside the Territory from any customers
or potential customers, without HEMOSENSE’s prior
consent. |
| *** |
Confidential treatment requested pursuant to a request for
confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the
Commission. |
| 1.3 |
MEDLINE will have the exclusive right to distribute the
Products to Channel End Users in the Territory; provided that
nothing in this Agreement restricts HEMOSENSE from marketing,
selling, and otherwise distributing Products, directly or
indirectly, to Channel End Users outside the Territory, or to other
customers within the Territory. Hemosense represents that it has
not made, and will not make, any appointment or grant of rights
inconsistent with the grants/appointment of Medline in this Section
1. |
| 1.4 |
During the term of this Agreement, MEDLINE shall meet the
Minimum Unit Sales as delineated in Exhibit C attached hereto.
Further, the Parties hereby agree that to the Minimum Unit Sales
and Pricing for Meters and Strips (the “Minimums”) as
delineated in Exhibit B +C. In the event Medline fails to satisfy
any Minimums under this Agreement, HEMOSENSE’s sole remedy
will be to either terminate this Agreement, or terminate the grant
of exclusivity to Medline in Section 1.3. Under no circumstances or
theory will Medline be liable to HEMOSENSE for damages relating to
any failure of Medline to satisfy any Minimum. For purposed of
determining compliance with the year 1 minimum as provided in
exhibit C, “year 1” shall encompass the first 18 months
of this agreement, “year 2” shall encompass the next
successive 12 months, and “year 3” the last 12 months
of the 3½ year term . The first 6 months of year 1 will serve
as a trial period for determining whether the annual Minimums are
feasible and appropriate or require adjustment. Adjustments to
Minimums shall be by agreement of the parties and made within 60
days of the expiration of the sixth month of year 1; in the event
the parties cannot reach agreement on Minimum adjustments, then
either party may terminate this Agreement on 90 days written
notice. |
ARTICLE 2 – TERMS OF
AGREEMENT
| 2.1 |
The initial term of this Agreement shall commence on the
Effective Date and remain in effect until three and a half (3
1 /
2 ) years thereafter. This Agreement may be renewed
for additional one year periods by written agreement of the Parties
prior to the date on which the Agreement would otherwise expire. In
the event MEDLINE satisfies the Exhibit C minimums in each of the
three contract years, unless declined by Medline, the parties shall
negotiate in good faith for successive one year periods 90 days
before the original agreement expires. If he parties are (a) unable
to reach agreement on the minimums, and/or (b) do not execute an
amendment to this agreement that includes additional years (i)
Medline exclusive rights shall immediately convert to non-exclusive
distribution rights. |
| *** |
Confidential treatment requested pursuant to a request for
confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the
Commission. |
| 2.2 |
No modification of this Agreement is effective or binding
unless in writing and signed by the Parties. This Agreement
consists of 15 pages, including exhibits. |
| 2.3 |
MEDLINE has no authority or right, either legal or apparent,
expressed or implied, to bind HEMOSENSE in any contractual,
financial, or legal obligation. |
| 2.4 |
Both Parties agree to hold harmless, defend and indemnify the
other for any liability, loss, expense or damage sustained by the
resulting from the indemnifying party’s breach of this
Agreement. |
| 2.5 |
HEMOSENSE covenants and agrees that it will not circumvent
MEDLINE and appoint, without MEDLINE’s consent, a third-party
distributor of the Products within the Territory during this
Agreement’s term, unless the grant of exclusivity to MEDLINE
is terminated under Section 1.4. |
ARTICLE 3 – OBLIGATIONS OF
MEDLINE
| 3.0 |
MEDLINE shall use diligent efforts to launch, advertise,
promote, market and distribute the Products to Channel End Users in
the Territory. |
| 3.2 |
MEDLINE will develop adequate numbers of suitably qualified
personnel as well as suitable equipment and infrastructure for
efficient Distribution, sale, and other services related to the
Products throughout the Territory. |
| 3.3 |
The MEDLINE will inform the HEMOSENSE in a timely basis of any
claims, complaints, adverse events or deficiencies concerning the
Products in the Territory and shall provide reasonable assistance
to HEMOSENSE in handling such claims and events. |
| 3.4 |
At MEDLINE’s discretion MEDLINE will maintain stock of
all the Products at an appropriate level having regard to the
monthly sales thereof in the Territory. |
| 3.5 |
MEDLINE will provide monthly sales tracings reports to
HEMOSENSE that will include account name, location, product shipped
and monthly sales volume. This information will be provided by the
15 th of the month after the previous month’s
sales. HEMOSENSE understands that this information is confidential
and is the property of Medline. |
| 3.6 |
MEDLINE shall provide HEMOSENSE with advance copies of any
promotional, advertising and educational materials that MEDLINE
intends to use in connection with the Products. MEDLINE shall not
commercially release any such materials without HEMOSENSE’s
prior approval, which approval HEMOSENSE shall not, after a 30-day
review period, unreasonably withhold. |
| *** |
Confidential treatment requested pursuant to a request for
confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the
Commission. |
ARTICLE 4 – OBLIGATIONS OF
HEMOSENSE
| 4.1 |
At its sole discretion, HEMOSENSE shall implement changes to
the products or develop new products. Notification of changes in
product will be submitted to Medline in writing at a minimum of 60
days prior to the change |
| 4.2 |
HEMOSENSE will maintain stocks of all the Products at an
appropriate level having regard to the monthly sales thereof in the
Territory. HEMOSENSE will inform MEDLINE of the available stock of
the Products and will provide MEDLINE a daily feedback on product
deliveries e.g. order confirmation including availability of
product and shipping schedules within [***] of receipt of the
order. |
| 4.3 |
HEMOSENSE will use good faith commercial efforts to process and
ship all Orders in accordance with requested delivery
dates. |
| 4.4 |
HEMOSENSE will determine, in its sole discretion, the shipping
origin of the Product, without MEDLINE incurring any extra cost by
reason of such choice. The shipping confirmation will be provided
to MEDLINE by fax and/or by e-mail. HEMOSENSE will ship Products
with no less than [***] months shelf life remaining on those
Products for the first three months of the Agreement, but [***]
months minimum for the remainder of the Agreement, to fulfill the
terms of this Agreement. |
| 4.5 |
HEMOSENSE will provide to MEDLINE a reasonable level of product
support and marketing support including product training in
demonstration and use of the Products. HEMOSENSE will also supply
MEDLINE with price lists, literature and support materials,
advertising and support of sales programs, as well as after sales
service and technical support. |
ARTICLE 5 – RECORD
KEEPING
| 5.1 |
MEDLINE shall track and record a reasonable level of traceable
detail of Product sold to MEDLINE’s Channel End-User
customers. These records will include, but not be limited to
customer name, address, product # detail, & quantity, MEDLINE
agrees to maintain these records during the Term of the Agreement
and to supply them monthly to HemoSense. |
| 5.2 |
The PARTIES agree to meet no less than twice yearly to review
their mutual business. These reviews will be conducted in an agreed
upon location. |
ARTICLE 6 –
CONFIDENTIALITY
| 6.1 |
For the purposes of this Article 6, the term
“Confidential Information” shall be any information
embodying a whole or any portion or phase of any business,
scientific or technical information, design, process, procedure,
formula, improvement, concept, idea, technique, know-how, market
data, and accounting data which: |
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(a) |
is disclosed by one Party hereto to the other; |
| *** |
Confidential treatment requested pursuant to a request for
confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the
Commission. |
| |
(b) |
is claimed by the disclosing Party to be secret, confidential,
and proprietary to the disclosing Party; and |
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(i) |
is marked by the disclosing Party as “confidential”
or “proprietary” (or with some similar designation) at
the time of disclosure, or |
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(ii) |
with respect to orally-disclosed information, the disclosing
Party notifies the other Party of the confidential nature of such
information, in writing at the time of disclosure or within a
reasonable time thereafter. |
| 6.2 |
During the period this Agreement remains in effect and for a
period of two (2) years following termination thereof, each Party
(except as is explicitly otherwise required hereby) shall keep
confidential, shall not use for itself or the benefit of others,
and shall not copy or allow to be copied, in whole or in part, any
Confidential Information disclosed to such Party by the other.
Except for information supplied in Section 5.1. |
| 6.3 |
The obligations of confidentiality imposed upon the Parties by
the foregoing Paragraph shall not apply with respect to any alleged
Confidential Information which: |
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(a) |
is known to the recipient thereof prior to receipt thereof from
the other Party hereto; |
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(b) |
is disclosed to said recipient after the day hereof by a third
party who has the right to make such disclosure; or |
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(c) |
is or becomes a part of the public domain through no fault of
said recipient |
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(d) |
is disclosed by disclosing Party to any third Party on an
unrestricted or non-confidential basis. |
ARTICLE 7 – OWNERSHIP OF
PROPOSED SERVICES AND RESULTS
Nothing herein shall, or is intended to,
grant, assign, or transfer, or shall be construed as granting,
assigning, or transferring to HEMOSENSE or MEDLINE, INC any and all
right, title, and interest of each others technical and business
information, commercial practices and procedures, processes,
designs and specifications, and computer software
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