This
Distribution Agreement (“Agreement”) is made as of this
30th day of September 2005, by and between: MICRUS
ENDOVASCULAR CORPORATION, a Delaware corporation, having a
principal place of business at 610 Palomar Avenue, Sunnyvale,
California 94085, United States (“ Micrus ”);
Goodman CO., LTD. a company organized under the laws of Japan, and
having a principal place of business at 108 Fujigaoka, Meito-ku,
Nagoya 465-0032, Japan (“ Distributor
”).
WHEREAS,
Micrus has developed and desires to commercialize an implantable,
three-dimensional microcoil and its resistive heat-activated
delivery device to be used in the Field, as hereinafter defined,
and may develop other products for use in the Field; and
WHEREAS,
Distributor has substantial experience in marketing medical
products and desires to distribute the Product, as hereinafter
defined, in the territory of the country of Japan; and
WHEREAS,
Micrus is willing to use Distributor as its exclusive distributor
of the Product for use in the Field, in the territory of Japan,
subject to the terms and conditions of this Agreement.
NOW
THEREFORE, in consideration of the premises and the mutual
covenants herein recited, and other good and valuable
considerations, the receipt of which is acknowledged, it is agreed
as follows:
As
used in this Agreement, the following terms, whether used in the
singular or plural, shall have the meanings indicated:
1.1 “
Effective Date ” shall mean the date of this Agreement
first written above.
1.2 “
Field ” shall mean the field of interventional
neuroradiology, or such field(s) as to which the parties may agree
in writing.
1.3 “
Marketing Authorizations ” shall mean all
authorizations, licenses, approvals, and registrations to import,
market and distribute the Products in the Territory pursuant to the
terms of this Agreement, as may be required by an appropriate
governmental agency.
1.4 “
Product(s) ” shall mean (a) the implantable,
three-dimensional microcoils, together with a resistive
heat-activated delivery device, developed, manufactured, or made
available to Distributor by Micrus, and (b) any other Micrus
product which utilizes Micrus’ licensed, patented or
proprietary microcoil and related delivery device technology; both
of the foregoing (a) and (b) solely as used in the Field
and as delivered to Distributor from time to time by Micrus under
this Agreement.
1.5
Territory shall mean the geographic territories of
Japan.
*** Certain
confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.
1
ARTICLE II — APPOINTMENT OF
DISTRIBUTOR
2.1 Appointment
of Distributor . Subject to the terms and conditions of this
Agreement (including, without limitation, Article VI), Micrus
hereby appoints Distributor as its exclusive distributor of the
Product within the Territory. Distributor agrees that it shall not
sell, advertise, distribute or otherwise transfer or assist in the
transfer of any product that competes with the Product. Distributor
may distribute the Product only as packaged by Micrus. Distributor
shall not sell, advertise, distribute, or otherwise transfer or
assist in the transfer of the Product outside the Territory unless
at the direct written request of Micrus. Micrus reserves the right
to grant similar distribution rights in the Product to third
parties for distribution and sale outside of the Territory.
Distributor may appoint an associate distributor or sub-distributor
of the Product; provided (a) Distributor shall promptly notify
Micrus in writing and shall provide Micrus such information
regarding each associate distributor or sub-distributor as Micrus
reasonably requests (including information requested to confirm
compliance with Sec. 5.5, Compliance with Laws); (b) each such
distributor or sub-distributor shall be bound in writing to
restrictions at least as strict as those restrictions imposed on
Distributor under this Agreement; and (c) Distributor shall be
responsible for full compliance with the terms for this Agreement
by all distributors and sub-distributors designated by
Distributor.
2.2
Relationship of Parties . The relationship of Micrus and
Distributor established by this Agreement is that of independent
contractors, and nothing contained in this Agreement shall be
construed to: (i) give either party the power to direct or
control the day-to-day activities of the other; or (ii) allow
Distributor to create or assume any obligation on behalf of Micrus
for any purpose whatsoever. All financial obligations associated
with Distributor business are the sole responsibility of
Distributor. All sales and other agreements between Distributor and
its customers are Distributor’s exclusive responsibility and
shall have no effect on Distributor’s or Micrus’
obligations under this Agreement.
2.3 Marketing
Authorizations .
2.3.1
Distributor Obligations . Micrus shall use its commercially
reasonable efforts to cause Getz Bros. Co., Ltd. (hereinafter
referred to as “Getz”) to obtain all necessary
Marketing Authorizations and reimbursement approvals under the name
of Micrus or its subsidiary. At Distributor’s own expense,
Distributor shall use its best efforts to obtain and maintain
Marketing Authorizations and reimbursement approvals under the name
of Micrus or its subsidiary for any Products which are not covered
by the Marketing Authorizations obtained by Getz. Specifically,
Distributor agrees that it will undertake to manage, at
Distributor’s expense, all regulatory work required to obtain
such Marketing Authorizations in the name of Micrus or its
subsidiary. If Micrus determines that for any reason Marketing
Authorizations or reimbursement approvals cannot or should not be
held in the name of Micrus or its subsidiary, then at Micrus’
sole election Distributor shall receive as transferee (or apply for
and take all steps necessary to obtain) and hold and maintain all
Marketing Authorizations and reimbursement approvals in
Distributor’s own name for the sole purpose of performing
under this Agreement and enabling the distribution of Products
under this Agreement. Micrus shall deliver to Distributor all
relevant scientific, clinical, toxicological, all animal trials and
human clinical trial and manufacturing data in the possession of
Micrus for Distributor to obtain and maintain such Marketing
Authorizations in the name of Micrus or its subsidiary. If clinical
trials are required for regulatory purposes on any new products
Micrus wants to import into Japan Micrus will pay for those trials.
Micrus shall pay up to 20% of any regulatory costs for maintaining
the Marketing Authorizations held in the name of Micrus or its
subsidiary that Distributor has borne up to a maximum of $10,000
per quarter.
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Distributor
shall provide Micrus with written quarterly progress reports of its
efforts to obtain Marketing Authorizations. All such clinical trial
and other data relating to the Products (whether furnished by
Micrus or developed by Distributor) shall be deemed proprietary and
confidential information of Micrus under Article VII but may
be disclosed by Distributor to the appropriate governmental agency
only to the extent necessary to obtain the relevant Marketing
Authorizations. Distributor agrees not to sell or distribute the
Product in any geographic region within the Territory until such
time as all Marketing Authorizations in such geographic region have
duly been obtained, and to act at all times in a manner consistent
with such Marketing Authorizations. Distributor agrees that
promptly upon the expiration or earlier termination of this
Agreement, for any reason, Distributor shall transfer all Marketing
Authorizations and reimbursement approvals held by Distributor
relating to this Agreement to either Micrus or a third party as
instructed by Micrus, provided that Micrus shall reimburse all
out-of-pocket costs incurred by Distributor to effect such
transfer.
2.4.1
License . Micrus hereby grants to Distributor the
non-transferable, non-assignable, non-sublicensable right and
license to use its trademarks, service marks, and tradenames that
Micrus may adopt from time to time (the “ Trademarks
”) solely on or in connection with Distributor’s
promotion, sale and distribution of the Product within the
Territory as authorized under this Agreement for the term of this
Agreement. Distributor shall have the right to indicate to the
public that it is an authorized distributor of the Product.
Distributor shall not alter or remove any Trademark applied to the
Product. Nothing herein shall grant to Distributor any right, title
or interest in the Trademarks. All use of the Trademarks, and all
goodwill associated therewith, shall inure to the benefit of
Micrus. At no time during or after the term of this Agreement shall
Distributor challenge or assist others to challenge the Trademarks
or the registration thereof or attempt to register any trademarks,
marks or trade names confusingly similar to those of
Micrus.
2.4.2
Approval of Representations . Distributor shall respect the
Trademarks and follow the instructions of Micrus as to all usage of
the Trademarks, including, without limitation, complying with
Micrus’ quality control requirements and submitting samples
of Distributor’s use of the Trademarks to Micrus for
approval. If any of the Trademarks are to be used in conjunction
with any other mark on or in relation to the Product, then the
Trademark shall be presented equally legibly, equally prominently,
and of the same or greater size than the other mark(s) but
nevertheless separated from the other trademark so that each
appears to be a mark in its own right, distinct from the other
mark(s).
2.5 Provision
of Data . Distributor agrees to provide Micrus promptly with
all clinical and technical information and data with respect to the
Product, which it develops during the term of this Agreement.
Distributor further agrees to communicate promptly to Micrus any
and all modifications, design changes or improvements to the
Products suggested by any of Distributor’s customers,
distributors, employees or agents. Distributor further agrees that
Micrus shall have, and is hereby assigned, any and all right, title
and interest in and to any data relating to the Product, including
animal and clinical trial data, as well as any suggested
modifications, design changes or improvements to the Products (all
of which shall be deemed Confidential Information under
Article VII) without the payment of any additional
consideration therefor either to Distributor or its customers,
service providers, distributors, employees or agents. Distributor
will also promptly notify Micrus of any infringement of any of the
Trademarks, patent or other proprietary rights relating to the
Products of which Distributor becomes aware.
3
ARTICLE III —
CONSIDERATION; PURCHASE OF PRODUCT
3.1 License
Fee . On or before September 30, 2005, Distributor shall
pay to Micrus a non-refundable, non-cancelable license fee in the
amount of seven hundred fifty thousand U.S. dollars (US $750,000).
If this payment is not received on or before September 30,
2005, in addition to all other remedies of the parties, this
Agreement shall automatically terminate, notwithstanding
Section 10.2.
3.2.1
All purchases of Product by Distributor from Micrus during the term
of this Agreement shall be subject to the terms and conditions of
this Agreement. Subject to this Section 3.2, Micrus will sell
Product to Distributor at the preferential prices shown in
Exhibit A (“ Purchase Price ”) until
[***] after the Effective Date or until such time the
pricing is revised in accordance with this Agreement, whichever is
earlier. The parties agree to discuss, in good faith, revisions to
the prices, within at least [***] from the Effective Date of
this Agreement, based on market data then available to Micrus and
as relevant. [***] Distributor shall have sole discretion to
establish the resale price of the Product to third parties subject
only to any regulatory or governmental limitations.
3.2.2
Micrus shall have the right to adjust the Purchase Price annually
on the anniversary of the Effective Date. Micrus shall consult with
Distributor and take into consideration Distributor’s
feedback in adjusting the Purchase Price. Additionally, the parties
may by mutual agreement make further adjustments more frequently at
such other times as the parties may agree in writing. Such
revisions shall apply to all orders for the affected Product
received after the effective date of revision. Price increases
shall not affect unfulfilled purchase orders accepted by Micrus in
writing prior to the effective date of the price increase. Micrus
will not raise the price unless government reimbursement for that
product increases within the territory.
3.2.3
All prices are F.O.B. Micrus’ place of
manufacture.
3.3 Taxes .
The Purchase Price will be net of any Distributor federal, state or
local taxes that may be applicable to the Product. When Micrus has
the legal obligation to collect such taxes, the appropriate amount
shall be added to Distributor’s invoice and paid by
Distributor, unless Distributor provides Micrus with a valid
tax exemption certificate authorized by the appropriate taxing
authority.
3.4 Order and
Acceptance . All orders for Product submitted by Distributor
shall be initiated by written purchase orders sent to Micrus
requesting a delivery date during the term of this Agreement.. To
facilitate Micrus’ production scheduling, Distributor shall
submit purchase orders to Micrus at least fifteen (15) days
prior to the requested delivery date. No order shall be binding
upon Micrus until accepted by Micrus in writing, and Micrus shall
have no liability to Distributor with respect to purchase orders
that are not so accepted. Micrus shall either: (i) notify
Distributor, in writing, of the acceptance or rejection of an order
(or any portion thereof) and of the assigned delivery date for
accepted orders with ten (10) days of receipt of the purchase
order; or (ii) send Product pursuant to such accepted order.
No partial fulfillment of an order shall constitute a commitment to
fulfill the entire order, absent the written acceptance of such
entire order. Micrus shall
***
Confidential Treatment Requested
4
use its
commercially reasonable efforts to deliver Product at the time
specified in its written acceptance of Distributor’s purchase
orders. Micrus reserves the right at any time with six months
notice except as mandated by a governmental or regulatory body to
discontinue the manufacture, supply or sale of any Product, to make
changes in materials or design, or to add improvements to any
Product, without incurring any liability whatsoever.
3.5 Terms of
Purchase Orders . Distributor’s purchase orders submitted
to Micrus from time to time with respect to Product to be purchased
hereunder shall be governed by the terms of this Agreement, and
nothing contained in any such purchase order shall in any way
modify such terms of purchase or add any additional terms or
conditions.
3.6 Payment
. Micrus shall submit an invoice to Distributor upon each shipment
of Product ordered by Distributor. The invoice shall set forth the
Purchase Price for the Product in a given shipment plus any
freight, taxes or other applicable costs initially paid by Micrus
but to be borne by Distributor. Payment shall be made by
Distributor by wire transfer, check or other instrument approved in
writing by Micrus. Payment terms shall be the full invoiced amount
to be paid by Distributor to Micrus within sixty (60) days of
the date of the invoice; which payment terms shall be reviewed
after the first year of this Agreement for payment terms applicable
to subsequent years of the then-current term of the Agreement;
provided, however, that any revision to the payment terms must be
made by a mutually agreed to writing executed by both parties. Any
invoiced amount not received within sixty (60) days of the
date of invoice shall be subject to a service charge of one percent
(1%) per month, or if lower, the maximum interest rate allowed by
law. Distributor shall pay all of Micrus’ costs and expenses
(including reasonable attorney’s fees) to enforce and
preserve Micrus’ rights under this Subsection 3.6. If at any
time an outstanding invoice for Product shipped to Distributor
becomes unpaid and outstanding for greater than ninety
(90) days, at Micrus’ option, Micrus may require that
Distributor effect payment by means of an irrevocable letter of
credit drawn on a California bank approved by Micrus; the letter of
credit shall be upon terms acceptable by Micrus, shall allow for
partial shipment, and shall be in an amount equal to
Distributor’s purchase price for the Product plus all
applicable taxes, shipping charges, and other charges to be borne
by Distributor. All exchange, interest, banking collection and
other charges shall be at Distributor’s expense.
3.7 Quarterly
Reports . Within forty-five (45) days after the end of
each quarter, Distributor shall provide Micrus with a written sales
breakdown, including without limitation, the amount and type of
Product, and names of end users of the Product sold during the
period.
ARTICLE IV — SUPPLY OF
PRODUCT
4.1 Terms of
Distributor Requirements . Subject to the terms and conditions
of this Agreement (including, without limitation,
Section 3.4), Micrus agrees to sell and Distributor agrees to
purchase from Micrus Distributor’s entire requirements of
products of the type provided by Micrus under
5
this Agreement,
solely for distribution and/or sale in the Territory. Micrus shall
use commercially reasonable efforts to manufacture the Product and,
subject to Section 3.4, supply them to Distributor in
quantities sufficient to satisfy Distributor’s needs in
accordance with the provisions of this Article IV, provided
Distributor submits to Micrus purchase estimates pursuant to
Section 4.2.
4.2 Purchase
Estimates . Distributor shall submit to Micrus, beginning
ninety (90) days before the first anticipated order of Product
and within the first ten (10) days after the beginning of each
calendar quarter thereafter, a non-binding good faith estimate of
the amount of Product to be required and purchased by Distributor
for both the next three months and the next twelve-month
periods.
4.3 Inspection
and Dispute Resolution Relating to Satisfaction of Product
Specifications . The following provisions relate to inspection
and resolution of disputes:
4.3.1
Rejection of Product . Distributor shall inspect all Product
promptly upon receipt thereof and may reject any Product pursuant
to this Section 4.3.1 that fails to meet the specifications
set forth in Micrus’ current product specifications for the
Product. Any Product not properly rejected within thirty
(30) days of receipt of that Product at Distributor’s
facility after customs clearance for import (the “
Rejection Period ”) shall be deemed accepted. To
reject a Product, Distributor shall within the Rejection Period,
(i) notify Micrus in writing by telefax or by telex (with
confirmation of transmission) of its rejection and the reason for
the rejection, and (ii) return, at its expense, the rejected
Product to Micrus (the “ Returned Product ”) in
the same condition in which it was delivered to Distributor. All
claims made by Distributor after its inspection of the Product
shall be handled on a case-by-case basis during which time Micrus
shall have the right to first inspect any Product involved before
being required to take any action with respect thereto. Micrus
shall make its investigation within thirty (30) days of receipt of
notice of a claim from Distributor. Micrus shall, at its expense,
replace Product it determines to be defective and ship such
replacement Product freight prepaid. In no event shall Micrus be
liable under this Agreement for any failure of any Product to meet
the specifications due to modification or improper use, storage or
shipment of the Product by Distributor or anyone receiving the
Product from or on behalf of Distributor.
4.3.2
Resolution of Disputes Relating to Product Specifications .
If the parties hereto fail to agree as to whether a delivered
quantity of Product meets its agreed specifications, then the
parties shall cooperate to have the Product in dispute analyzed by
a jointly selected qualified independent testing
laboratory.
4.3.3
Return of Product After Rejection Period . After the
Rejection Period, Micrus’ limited warranty as stated in
Section 8.1 hereof shall be applied. If Micrus tests and
inspects the Returned Product and determines that such Returned
Product (i) has been physically damaged, (ii) has been
modified or improperly used, stored or shipped by Distributor or
anyone receiving the Product from or on behalf of Distributor, or
(ii) performs according to Micrus’ written
specifications, no credit will be given to Distributor. If upon
such test and inspections such Returned Product (a) has not
been physically damaged, (b) has not been modified or
improperly used, stored or shipped by Distributor or anyone
receiving the Product from or on behalf of Distributor, and
(c) does not perform to Micrus’ written specification,
these Returned Products will be replaced at no cost to Distributor.
In all cases of physical damage or modification to, or improper
use, storage or shipment of, Returned Product, no credit will be
given to Distributor.
6
4.4 Title .
Title and risk of loss pass to Distributor when Product leaves
Micrus’ facility. Distributor shall be solely responsible for
the payment of all freight and insurance and other costs, expenses,
fees, duties, imports, and charges of whatever kind or nature
arising from the shipment, delivery, and importation of Product
into the Territory. Distributor shall solely be responsible for
taking all actions necessary to obtain clearance to import Product
into the Territory and Distributor warrants that it will comply in
all respects with any restrictions set forth in the export license
for every Product purchased hereunder.
4.5
Reporting . Distributor agrees to report to Micrus any
information from any source, including, without limitation,
employees, distributors, agents, customers, user facilities,
individuals, or medical or scientific literature, whether published
or unpublished, that reasonably suggests that there is a problem
with the Product or a probability that the Product or a similar
product has caused or contributed to a death, serious illness or
serious injury, including but not limited to, severe or permanent
disability, stroke, or brain damage as promptly as possible but
within five (5) days of receipt of information of such event.
Distributor agrees not to disclose any such information referred to
herein to any third party without the prior written consent of
Micrus.
4.5.1
Serious illness means an event that is life threatening, results in
permanent impairment of a body function or permanent damage to the
body structure, or necessitates immediate medical or surgical
intervention to preclude permanent impairment of a body function or
permanent damage to a body structure.
4.5.2
Serious injury means an event that is life threatening, results in
permanent impairment of a body function or permanent damage to a
body structure, or necessitates medical or surgical intervention to
preclude permanent impairment of a body function or permanent
damage to a body structure.
4.6
Monitoring . Each of the parties hereto shall monitor all
relevant journals and media communications for information on
factors materially affecting the use or efficacy of the Product and
shall promptly inform the other party of such information. The
informing party may provide in writing its evaluation of such
information. Either party shall promptly inform the other if it has
actual knowledge of any measures which are necessary to eliminate
or minimize any risk associated with the use of the Product or a
specific production lot of the Product.
ARTICLE V — ADDITIONAL
OBLIGATIONS OF DISTRIBUTOR
5.1 Marketing
Obligations . Distributor agrees to use its best efforts to
successfully promote and distribute the Product, at its own
expense, in the Territory as soon as feasible after the Effective
Date of this Agreement using diligent and vigorous efforts to
maximize sales and market penetration at the earliest date. Such
efforts shall include, but are not limited to, preparing
promotional materials, advertising the Product in trade
publications within the Territory, participating in appropriate
trade shows within the Territory, and directly soliciting orders
from customers within the Territory for the Product. Subject to
Micrus’ approval and obligations under Article VIII
hereof, Distributor shall also be responsible for all quality
control, lot release for Distributor’s requirements,
promotional activities, marketing and selling efforts, distribution
and technical services. All promotional materials developed by
Distributor shall be submitted to Micrus for approval before such
materials are distributed by Distributor. Micrus shall promptly
review such materials, and if no written response is provided by
Micrus within
7
thirty
(30) days after receipt of such material, then the material
will be deemed to have been approved by Micrus.
5.2 Finances
and Personnel . Distributor shall, at its sole cost, expense,
and risk: (i) employ on its own behalf an appropriate number
of specialized, trained, and qualified sales personnel whose main
function shall be the promotion and sale of the Product in the
Territory; and (ii) maintain a suitable organization for the
promotion and sale of the Products in the Territory pursuant to
Distributor’s obligations hereunder.
5.3 Customer
and Sales Reporting . Distributor shall, at its own expense and
consistent with the sales policies of Micrus:
5.3.1
place the Product in Distributor’s catalogues as soon as
possible and feature the Product in any applicable trade show
within the Territory that it attends;
5.3.2
provide adequate contact with existing and potential customers
within the Territory on a regular basis, consistent with good
business practice;
5.3.3
assist Micrus in assessing customer requirements for the Product,
including modifications and improvements thereto, in terms of
quality, design, functional capability, and other
features;
5.3.4
provide Micrus a complete copy of all customer information
routinely kept in Distributor’s possession no less than once
each calendar quarter, including customer names and contact
person(s); and
5.3.5
submit market research information, as reasonably requested by
Micrus regarding competition and changes in the market within the
Territory.
5.4 Marketing
Plans . Distributor shall submit to Micrus for its approval a
Product launch plan for the Product in the Territory as soon as
possible and, in any event no later than ninety (90) days from
the Effective Date, and on or before October of each year
thereafter, an annual marketing and sales plan for the Product.
Each of these plans shall include specific marketing sales
strategies, tactics and goals, market research analysis, promotion
budgets, and sales projections.
5.5 Compliance
with Laws . Distributor shall market and distribute the Product
in the Territory in compliance with all applicable laws and
regulations and good commercial practice and for uses and
applications approved by Micrus in writing for the Product.
Distributor shall comply with all laws, rules and regulations as
applicable to the marketing, distribution and sale of the Product
in the Territory or any part of it. Distributor further agrees to
comply with the U.S. Foreign Corrupt Practices Act of 1977, as
amended (the “FCPA”) and all applicable export laws,
restrictions and regulations of any U.S. or foreign agency or
authority and not to export or re-export or allow the export or
re-export of the Product or any related technology or information
in violation of any such laws, restrictions or regulations. A copy
of the FCPA is attached to this Agreement as
Appendix A. .
Distributor
hereby declares that it has read and understood the provisions of
the FCPA and, on that basis, it further represents and covenants
that neither it nor any of its employees or agents have taken or
will
8
take any action
to cause Distributor to be in violation of the FCPA. Specifically,
Distributor hereby certifies that it has not paid, nor offered or
agreed to pay, nor has caused to be paid, or offered or agreed to
be paid, directly or indirectly, in respect of this Agreement, any
political contributions, fees or commissions to any public or
governmental employee or official anywhere for the purpose of
influencing such official’s act or decision to provide
business to Distributor. Distributor further certifies that it will
not, directly or indirectly, in connection with this Agreement and
the business resulting therefrom, offer, pay, promise to pay, or
authorize the giving of money or anything of value to any public or
governmental employee or official, to any political party or
official thereof or to any candidate for political office, or to
any person, while knowing or being aware of a high probability that
all or a portion of such money or thing of value will be offered,
given or promised, directly or indirectly, to any public or
government official, to any political party or official thereof, or
to any candidate to political office, for the purpose of:
(a) influencing any act or decision of such official,
political party, party official, or candidate in his or its
official capacity, including a decision to fail to perform his or
its official functions; or (b) inducing such official,
political party, party official or candidate to use his or its
influence with the government or instrumentality thereof to affect
or influence any act or decision of such government or
instrumentality, in order to assist Micrus or Distributor in
obtaining or retaining business for or with, or directing business
to any third party.
Distributor
agrees that if subsequent developments cause the certifications and
information reported herein to be no longer accurate or complete,
Distributor will immediately so advise Micrus. Distributor further
agrees that its violation of any part of this Section 5.5 will
be a material breach of this Agreement and cause for immediate
termination, without further liability or obligation on the part of
Micrus notwithstanding anything to the contrary provided in this
Agreement.
Distributor
shall obtain and bear all expenses relating to any necessary
licenses and/or exemptions with respect to the export from the
United States of the Products to any location in compliance with
all applicable laws and regulations.
5.6 Minimum
Purchase Requirements . The parties agree that reasonable
marketing efforts should enable Distributor to achieve the minimum
annual purchase requirements in the amounts and according to the
payment schedule set forth in Exhibit B hereto
(“Minimum Purchase Requirements”). Exhibit B
reflects an annual measurement period ending on March 31 of
each year, with the figures prorated in the first and final years
to reflect partial periods. For each annual measurement period
ending March 31, Distributor must have purchased and paid for
at least the amount of the Minimum Purchase Requirement shown in
Exhibit B for such period on or before March 31. If
Distributor fails to satisfy the Minimum Purchase Requirement for
any period, in addition to all other remedies, Micrus may terminate
this Agreement. In the case or termination or expiration of this
Agreement, the Minimum Purchase Requirement for the last annual
measurement period shall be prorated as of the effective date of
the expiration or termination, and Distributor must have purchased
and paid for at least the amount of the Minimum Purchase
Requirement prorated for such period on or before the effective
date of termination or expiration.
5.7 Stock
order . Within 45 days after the distribution agreement is
signed, Distributor agrees to place an order to have a minimum
stock to supply the local market (see exhibit C for 1
st order’s details).
ARTICLE VI — FAILURE TO
MEET MINIMUM
9
In the event that
in any given year, the total payments by Distributor under
Section 3.6 do not, in the aggregate, equal or exceed: the
Minimum Purchase Requirement set forth in Section 5.6 for such
year; and Distributor fails to pay the Short-Fall within sixty
(60) days of the end of such year, then Micrus may, at its
sole discretion, either: (a) convert the grant of the
distribution rights pursuant to Section 2.1 hereof to a
non-exclusive basis; or (b) terminate this Agreement upon
thirty (30) days prior written notice to Distributor. If
Micrus elects to convert the grant of distribution rights to a
non-exclusive basis, such election shall be made by delivery of
written notice by Micrus to Distributor and shall take effect on
the date set forth in the notice.
ARTICLE VII — CONFIDENTIAL
INFORMATION
The parties hereto
agree that each shall keep completely confidential and shall not
publish or otherwise divulge or use for its own benefit or for the
benefit of any third party any information of a proprietary nature
furnished to it (the “ Receiving Party ”) by the
other party (the “ Disclosing Party ”) for a
period of five (5) years after the termination of this
Agreement without the prior written approval of the disclosing
party in each instance, except to the extent that it is
necessary to divulge such information for the obtaining of
governmental approval for the marketing of the Product and the
Receiving Party discloses only the minimum of information necessary
in connection therewith and takes reasonable steps to maintain the
confidentiality of such information. Nothing in this Article 7
shall prevent disclosure or use of information: (i) already known
to the Receiving Party prior to its receipt of such information
from the Disclosing Party; (ii) which was known to the public
at the time of disclosure, or subsequently becomes so known through
no act or omission of the Receiving Party; (iii) which is
properly acquired by the Receiving Party from a third party having
the right to convey such information; or (iv) that is required
to be disclosed by law or regulation or in connection with any
financing, acquisition, merger or sale, provided the Receiving
Party provides the Disclosing Party with advance notice of such
disclosure and takes reasonable steps to protect the
confidentiality of such information. Information of a proprietary
nature shall include, but not be limited to, information concerning
a party’s products, proposed products, marketing plans,
methods of manufacture, customers or any other information or
materials in whatever form not generally known to the public.
Subject to the foregoing, this specific terms of this Agreement
(including all financial terms) shall be kept confidential,
however, the parties may refer generally to this Agreement and the
parties’ relationship arising therefrom.
ARTICLE VIII — WARRANTY;
LIMITATION OF LIABILITY
8.1
Warranty . Micrus represents and warrants to Distributor
that all Product manufactured and delivered to Distributor pursuant
to this Agreement shall meet Micrus’ specifications for such
Product at the time of delivery by Micrus to Distributor for the
shelf life of the Product as specified on the Product labeling;
provided , however , that such Product: (i) has
been shipped in accordance with Micrus’ shipping instructions
and stored in accordance with the instructions on the labeling and
the packaging for such Product; (ii) is used in the
application for which it was intended; and (iii) has not been
modified without Micrus’ prior written consent. Distributor
shall handle and be solely responsible for all warranty returns
from its direct and indirect customers. Micrus’ sole and
exclusive liability under the warranty set forth in
Section 8.1 shall be limited to a replacement to Distributor
of the defective Product with a Product substantially equivalent to
the Product originally shipped by Micrus to Distributor.
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8.2 No Other
Warranty . EXCEPT FOR THE EXPRESS WARRANTY SET FORTH IN SECTION
8.1 HEREIN, THE PRODUCT IS PROVIDED “AS IS,” AND MICRUS
GRANTS NO OTHER WARRANTIES, EXPRESS OR IMPLIED, BY STATUTE OR
OTHERWISE, REGARDING ANY PRODUCT, ITS FITNESS FOR ANY PARTICULAR
PURPOSE, ITS QUALITY, ITS MERCHANTABILITY, OR OTHERWISE.
8.3 Limitation
of Liability . NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT
OR OTHERWISE, IN NO EVENT SHALL MICRUS BE LIABLE TO DISTRIBUTOR OR
ANY OTHER PERSON OR ENTITY WITH RESPECT TO ANY SUBJECT MATTER OF
THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR
OTHER LEGAL OR EQUITABLE THEORY FOR (A) THE COST OF
PROCUREMENT OF SUBSTITUTE GOODS, (B) ANY SPECIAL,
CONSEQUENTIAL, PUNITIVE, INDIRECT OR INCIDENTAL DAMAGES OR
(C) LOST PROFITS OR LOST BUSINESS; EVEN IF THE REMEDIES
PROVIDED FOR IN THIS AGREEMENT FAIL OF THEIR ESSENTIAL PURPOSE AND
EVEN IF EITHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES; PROVIDED, HOWEVER, THAT NOTHING HEREIN SHALL RELIEVE
MICRUS FROM ANY PRODUCT LIABILITY CLAIM, AS SET FORTH IN ARTICLE IX
HERETO.
8.4
Ownership . Distributor acknowledges and agrees that as
between Distributor and Micrus, Micrus owns all right, title and
interest in and to all clinical, technical, product, sales,
marketing, and customer information and data with respect to the
Product (including, without limitation, any and all modifications,
design changes or improvements relating thereto), and all
industrial and intellectual property rights of any kind in relation
to the Product (including, without limitation, any and all
modifications, design changes or improvements relating thereto) or
any of the foregoing, including, without limitation, the right to
patents, registered or other designs, trademarks, trade names,
inventions, copyright, know-how and any other confidential
information. Nothing contained in this Agreement shall be effective
to give Distributor any rights of ownership in or to any of the
foregoing. To the extent Distributor owns any rights, title or
interest in or to the foregoing, Distributor hereby assigns all of
such rights to Micrus. The provision of Product technical
information to Distributor under this Agreement is for the sole
purpose of obtaining approval from the regulatory authorities in
the Territory for the Product and is subject to the confidentiality
obligations set forth in Article VII. The use by Distributor
of any of these property rights is authorized only for the purposes
herein set forth, and upon termination of this Agreement for any
reason such authorization shall cease.
8.5 Sale
Conveys No Right to Manufacture or Copy . The Product is
offered for sale and is sold by Micrus subject in every case to the
condition that such sale does not convey any license, expressly or
by implication, to manufacture, duplicate or otherwise copy or
reproduce the Product or any portion thereof. Distributor shall
take appropriate steps with its customers and distributors, if any,
as Micrus may request, to inform them of and assure compliance with
the restrictions contained in this Section 8.5.
ARTICLE IX —
INDEMNIFICATION
9.1
Indemnification by Micrus . Micrus agrees to and hereby does
indemnify and hold Distributor harmless from and against all
claims, damages, losses, costs and expenses, including reasonable
attorneys’ fees, which Distributor may incur by reason of any
Product sold or furnished by
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Micrus which
result in injury, illness, or death of any person, to the extent
that such claims arise out of or result from either the negligence
or willful misconduct of Micrus in: (i) product design; or
(ii) manufacturing; or (iii) breach of any
representations or warranties by Micrus hereunder, except if
such claims arise from the negligence or willful misconduct of
Distributor, any modification of the Product other than by Micrus
or any breach by Distributor of any of its obligations,
representations or warranties under this Agreement. Micrus shall
have sole control of any such action or settlement negotiations,
and Micrus agrees to pay, subject to the limitations hereinafter
set forth, any final judgment entered against Distributor or its
customer on such issue in any such suit or proceedings indemnified
hereunder by Micrus. Distributor agrees to notify Micrus promptly
in writing of such claim, suit or proceeding and gives Micrus
authority to proceed as contemplated herein, and, at Micrus’
expense, give Micrus proper and full information and assistance to
settle and/or defend any such claim, suit or proceeding. If the
Product, or any part thereof, is the subject of any claim, suit or
proceeding for infringement of any third party patents or trademark
in the United States or in the Territory, or if the sale or use of
the Product, or any part thereof, is, as a result thereof,
enjoined, then Micrus shall, at its option and expense:
(a) procure for Distributor and its customers the right under
such patent, or trademark to sell or use, as appropriate, the
Product or such part thereof; or (b) replace the Product, or
part thereof, with other suitable Product or parts; or
(c) suitably modify the Product, or part thereof, or
(d) if the use of the Product, or part thereof, is prevented
by injunction, remove the Product or part thereof, and refund the
aggregate payments paid therefore by Distributor, less a reasonable
sum for the use and damage; provided that such claim, suit or
proceeding is not based on a modification of the Product by
Distributor or anyone other than Micrus, or a combination of the
Product with any product other than those provided by Micrus for
use with the Product.
9.2
Indemnification by Distributor . Distributor hereby agrees
to and hereby does indemnify and hold Micrus harmless from and
against all claims, damages, losses, costs and expenses, including
reasonable attorneys’ fees, which Micrus may incur to the
extent that such claims arise out or result from: (i) the
unlawful sale or other distribution of Product by Distributor,
including any improper sales by Distributor to customers who are
located outside the Territory; (ii) the negligent or willful
misconduct of Distributor in the distribution, labeling or
packaging of the Product; (iii) Distributor’s
recommended use of Product in violation of this Agreement;
(iv) modification of the Product by Distributor,
(v) combination of the Product with any product other than
those provided by Micrus for use with the Product, or
(vi) breach of any representation, warranty, or obligation by
Distributor hereunder, except for such claims which arise
out of or result from the gross negligence, or willful misconduct
of Micrus. Distributor shall have sole control of any such action
or settlement negotiations, and Distributor agrees to pay, subject
to the limitations hereinafter set forth, any final judgment
entered against Micrus or its customer on such issue in any such
suit or proceedings defended by Distributor. Micrus agrees to
notify Distributor promptly in writing of such claim, suit or
proceeding and gives Distributor authority to proceed as
contemplated herein, and, at Distributor’s expense, give
Distributor proper and full information and assistance to settle
and/or defend any such claim, suit or proceeding.
9.3
Contribution . In the event the negligence of Distributor
and Micrus contribute to any loss, cost, damages, claim or expense
relating to Product supplied and/or distributed or sold hereunder,
then Distributor and Micrus shall be responsible for that portion
of the loss, cost, damages, claim or expense to which its
negligence contributed.
ARTICLE X — TERM AND
TERMINATION
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10.1 Term .
This Agreement shall commence on the Effective Date and shall
continue in force for a fixed term of five (5) years, unless
terminated earlier under the provisions of this Agreement. At the
end of the fixed term, this Agreement shall be automatically
renewed on the same terms and conditions for an additional one
(1) year period, unless earlier terminated under the
provisions hereof or unless one party give
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