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[ *
]
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= Certain
confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.
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THIS EXCLUSIVE AGREEMENT
(“Agreement”) is made and entered into by and between
Abbott Point of Care Inc., a Delaware corporation, having its
principal place of business at 400 College Road East, Princeton, NJ
08540 (“Abbott”), and Abaxis, Inc., a Delaware
corporation with offices at 3240 Whipple Road, Union City, CA 94587
(“Abaxis”), and effective as of May 1, 2009
(“Effective Date”).
WHEREAS, Abbott is a manufacturer of diagnostic
health care equipment and reagents and desires to obtain an OEM
distributor of Products (as hereinafter defined) in the Field (as
hereinafter defined) in the Territory (as hereinafter
defined);
WHEREAS, Abaxis is a manufacturer and
distributor of various products in the Field in the Territory;
and
WHEREAS, in accordance with the terms and
conditions hereof, Abbott is willing to appoint Abaxis as its
exclusive distributor of Products in the Territory, and Abaxis is
willing to accept such appointment.
NOW, THEREFORE, in consideration of the mutual
covenants and agreements contained herein, and upon the terms and
subject to the conditions set forth below, Abaxis and Abbott hereby
agree as follows:
As used in this Agreement, the following terms
shall have the meanings set forth below:
1.1 “Abaxis Trademarks” shall mean
the Abaxis-owned trademarks and trade names set forth on
Exhibit 1.1.
1.2 “Abbott Trademarks” shall mean
the Abbott-owned trademarks and trade names set forth on
Exhibit 1.2.
1.3 “Affiliate” shall mean, with
respect to a Party, any other business entity which directly or
indirectly controls, is controlled by, or is under common control
with, such Party. A business entity or party shall be regarded as
in control of another business entity if it owns, or directly or
indirectly controls, at least fifty percent (50%) of the voting
stock or other ownership interest of the other business entity, or
if it directly or indirectly possesses the power to direct or cause
the direction of the management and policies of the other business
entity by any means whatsoever.
1.4 “Analyzer” shall mean the
i-STAT ® 1 device.
1.5 “Base Target” shall mean, for
each Contract Year, the minimum unit number of Product purchases
required to be made by Abaxis and its Affiliates during such
Contract Year.
1.6 “Cartridge” shall mean the
disposable test component of a particular Product that contains one
or more sensor chips and fluid handling channels and operates on an
Analyzer.
1.7 “Confidential Information” shall
mean any proprietary, confidential or non-public information,
including without limitation information relating to products, End
Users, suppliers, data, processes, prototypes, samples, plans,
marketing plans, reports, forecasts, technical or commercial
information, patents, patent applications, research, research
results and other trade secrets, strategies, Know-How (as
hereinafter defined) or intellectual property rights disclosed in
writing by one Party to the other Party under this Agreement, as
well as information disclosed orally and disclosed to be
“Confidential Information” at the time of disclosure,
to the extent such oral disclosure is reduced to writing, marked
“Confidential” and provided to the receiving Party
within [ * ] after oral disclosure. “Confidential
Information” shall not include any information
which:
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(a)
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Is
known to the receiving Party before receipt thereof under this
Agreement, as evidenced by the receiving Party’s written
records;
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(b)
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Is
disclosed to the receiving Party without restriction by a Third
Party (as hereinafter defined) not under an obligation of
nondisclosure to the disclosing Party;
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(c)
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Is
or becomes part of the public domain other than through a breach of
this Agreement by the receiving Party;
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[ *
]
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= Certain
confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.
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2
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(d)
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Is
disclosed by the disclosing Party to a Third Party without a duty
of confidentiality;
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(e)
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Is
independently developed by or for the receiving Party without use
of the disclosing Party’s Confidential Information, as
evidenced by the receiving Party’s records; or
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(f)
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Is
disclosed by the receiving Party with the disclosing Party’s
prior written approval.
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1.8 “Contract Quarter” shall mean
each calendar quarter during the Initial Term or any Renewal Term
(as defined in Section 8.1).
1.9 “Contract Year” shall mean the
twelve (12) month period from January 1 through
December 31 of each year during the Term, provided that the
first Contract Year shall mean the period beginning on the
Effective Date and ending on December 31, 2009.
1.10 “Dealer” shall mean a natural
person, corporation, partnership, trust, joint venture, government
authority or other legal entity or organization in the Territory,
other than Abaxis or Abbott and/or their respective Affiliates,
which purchases Products from Abaxis for the purpose of resale to
End Users for use in the Field.
1.11 “End User” shall mean a natural
person, corporation, partnership, trust, joint venture, government
authority or other legal entity or organization in the Field in the
Territory, other than Abaxis or Abbott and/or their respective
Affiliates, that purchases Products under this Agreement for its
own use or consumption in the Field, and excluding any Third Party
use in the human healthcare market.
1.12 “Field” shall mean the animal
health care market, including laboratory animal research and
specifically excluding the human health care market.
1.13 “Know-How” shall mean any and
all data and information, including but not limited to ideas,
designs, engineering drawings, methodologies of preparation or
manufacturing, processes, instructions for use, formula
enhancements, raw material specifications, raw material standards,
and sources of raw material procurements, relating to the
manufacture of Products.
1.14 “Products” shall mean the
products manufactured by or for Abbott listed on
Exhibit 1.14.
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[ *
]
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= Certain
confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.
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3
1.15 “Product Purchases” shall mean,
for each Contract Year, the Products purchased by Abaxis and its
Affiliates from Abbott. For the purposes of this definition, a
Product shall be considered purchased in the Contract Year in which
it was delivered after having been duly ordered in accordance with
the terms and conditions hereunder.
1.16 “Product Sales” means the
Products Sold in the Field in the Territory by Abaxis directly to:
(a) Dealers (as hereinafter defined) for resale to End Users;
or (b) End Users; net of returns. Notwithstanding the
foregoing, Products returned as a result of non-compliance with the
warranties set forth in Section 3.4(f) shall be counted as
Product Sales, it being understood that any replacement Products
corresponding to such returned Products shall not be included in
Product Sales.
1.17 “Purchase Price” shall mean the
price for Analyzers, Cartridges and other Products purchased by
Abaxis and its Affiliates from Abbott hereunder, as set forth on
Exhibit 1.17 and more fully described in
Section 3.3.
1.18 “Sale”, “Sell” or
“Sold” shall mean to sell, hire, let, rent, lease or
otherwise dispose of Product to a Third Party or Affiliate,
provided such Affiliate is an End User of Products for commercial
purposes for monetary or other valuable consideration.
“Sale”, “Sell” or “Sold” shall
not include a transaction where samples of Product are supplied
without charge to a Third Party or Affiliate for marketing or
demonstration purposes or in connection with clinical or other
experimental trials.
1.19 “Term” shall mean the
“Initial Term” and any “Renewal
Term”.
1.20 “Territory” shall mean the
entire world except Japan.
1.21 “Third Party” shall mean a
natural person, corporation, partnership, trust, joint venture,
governmental authority or other legal entity or organization other
than the Parties and/or their Affiliates.
ARTICLE 2
APPOINTMENT AND AUTHORIZATION
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(a)
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Initial Non-Exclusive
Appointment .
As of the Effective Date, Abbott hereby appoints Abaxis and its
Affiliates as Abbott’s non-exclusive distributor of Products
in the Field in the Territory until October 31, 2009, and
Abaxis hereby accepts such appointment. Abaxis shall have the
non-exclusive right to Sell and distribute Products in the
Territory until October 31, 2009.
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[ *
]
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= Certain
confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.
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4
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(b)
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Exclusive Appointment
. As of November 1,
2009, and subject to Sections 2.1(d) and 2.5 below, Abbott
hereby appoints Abaxis and its Affiliates for the Term as its
exclusive distributor of Products in the Field in the Territory,
and Abaxis hereby accepts such appointment from Abbott. As
exclusive distributor in the Field in the Territory, Abaxis shall
have the sole and exclusive right (even as to Abbott) to Sell and
distribute Products in the Territory for use in the
Field.
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(c)
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Abbott Restriction
. For so long as Abaxis
is the exclusive distributor of Products in the Field in the
Territory in accordance with the terms and provisions of this
Agreement and subject to Section 2.1(d) below, Abbott shall
not Sell or, directly or indirectly (e.g., through Affiliates or
Third Parties) distribute Products, in the Field in the Territory.
Upon reasonable prior notice and at mutually agreeable times,
Abaxis may, at Abaxis’ expense, retain an independent third
party auditor to audit Abbott’s books and records relating to
Abbott’s Sales of Products solely to verify Abbott’s
compliance with its obligations under this Section 2.1(c),
provided that such independent third party auditor shall execute a
customary confidentiality agreement with the audited party with
respect to the information received in connection with such audit
that is not broader in scope or more burdensome than the
confidentiality obligations contained in this Agreement.
Notwithstanding this subsection 2.1(c) or subsections 2.1(a) and
2.1(b) above, Abbott may maintain certain consultative and
technical staff, at Abbott’s expense, to assist Abaxis in
connection with such marketing, promotion, sales and distribution
efforts. Other than Section 3.2(b), nothing contained in this
Agreement shall limit or be interpreted to limit Abbott or
Abbott’s Affiliates from selling products not listed on
Exhibit 1.14 in the Territory.
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[ *
]
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= Certain
confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.
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5
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(d)
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Exceptions to Exclusivity
. Notwithstanding
anything else provided in this Agreement, any right of Abaxis
hereunder to exclusively distribute Products shall be subject to
the following exceptions: (I) Abbott shall be permitted to
sell Products to [ * ], but only to [ * ], and (II) Abbott and/or
its authorized distributors shall be permitted to sell Products [ *
] for [ * ].
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2.2 Non-Exclusive Appointment in Japan .
As of the Effective Date, Abbott hereby appoints Abaxis and its
Affiliates for the Term as Abbott’s non-exclusive distributor
of Products, other than the BNP Cartridge, in the Field in Japan,
and Abaxis hereby accepts such appointment. Abaxis shall have the
non-exclusive right to Sell and distribute Products in Japan for
use in the Field other than the BNP Cartridge which Abaxis agrees
not to Sell or distribute in Japan.
2.3 Authorization . Abbott hereby
authorizes Abaxis to represent itself as Abbott’s exclusive
authorized distributor of Products in the Field in the Territory
using Abbott Trademarks.
2.4 Minimum Purchase and Sales
Requirements .
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(a)
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Minimum Purchase
Requirement .
Abaxis shall achieve Product Purchases greater than or equal to the
Base Target as set forth in the following Table 2.4(a)
(“Minimum Purchase Requirement”). The Parties shall
meet and negotiate in good faith to establish the Minimum Purchase
Requirement for any Renewal Terms occurring beyond the years
specified in Table 2.4(a).
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[ *
]
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= Certain
confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.
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6
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Base Target
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Base
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Cartridge
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Base
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Contract
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Purchases
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Analyzer Purchases
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Year
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(USD)
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(Units)
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[ * ]
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[ * ]
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$[ * ]
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[ * ]
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$[ * ]
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[ * ]
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$[ * ]
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[ * ]
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$[ * ]
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[ * ]
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$[ * ]
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[ * ]
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(b)
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Minimum Sales Requirement
. Abaxis shall achieve
Product Sales of at least [ * ] of Product Purchases with respect
to the number of units purchased by Abaxis from Abbott and, in
turn, Sold by Abaxis, within each Contract Year (“Minimum
Sales Requirement”). To achieve the Minimum Sales Requirement
in a given Contract Year with respect to Cartridges, [ * ] must
equal at least [ * ]. To achieve the Minimum Sales Requirement in a
given Contract Year with respect to Analyzers, [ * ] must equal at
least [ * ].
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2.5 Failure to Achieve Minimum Purchase and
Sale Requirements . Abbott’s sole remedies for
Abaxis’ failure to achieve the Minimum Purchase Requirement
and Minimum Sales Requirement set forth in Section 2.4 above
in any Contract Year shall be to convert Abaxis’ status as
exclusive distributor of Products in the Field in the Territory to
non exclusive distributor of Products in the Field in the Territory
effective upon [ * ] prior written notice, and/or to terminate this
Agreement upon [ * ] prior written notice.
2.6 Annual Product Purchases Calculation
. Following each Contract Year, the number of Product Purchases for
such Contract Year shall be determined as set forth in Subsections
2.6(a) and/or 2.6(b) below and the Parties shall execute and attach
to this Agreement the “Annual Product Purchase
Calculation” form set forth on Exhibit 2.6 completed for
such Contract Year.
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[ *
]
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= Certain
confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.
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7
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(a)
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Abbott Provides Abbott
Calculation . Within [ * ] after the end of
each Contract Year, Abbott may provide Abaxis with Abbott’s
written calculation of Abaxis’ Product Purchases in such
Contract Year (the Abbott Calculation”). If Abaxis disagrees
with the Abbott Calculation, if any, Abaxis shall have [ * ] after
receipt of the Abbott Calculation to respond in writing, with
(a) Abaxis’ estimate; (b) the difference between
Abaxis’ estimate and the Abbott Calculation; and
(c) purchase order level detail so that Abbott may verify the
Abbott Calculation. If Abbott disagrees with Abaxis’
calculation and Abaxis requests, in writing, purchase order level
detail for the Abbott Calculation, Abbott shall provide such
information. If the exchange of such information does not resolve
the dispute, the Parties shall negotiate in good faith to determine
the actual Product Purchases in such Contract Year and, if such
dispute is not resolved within [ * ], the dispute shall be resolved
pursuant to Section 9.11.
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(b)
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Abbott Does Not Provide Abbott
Calculation . If Abbott does not provide Abaxis
with the Abbott Calculation within [ * ] after the end of a given
Contract Year, Abaxis shall provide Abbott with Abaxis’
written calculation of Abaxis’ Product Purchases in such
Contract Year (the “Abaxis Calculation”) within [ * ]
after the end of such Contract Year. If Abbott disagrees with the
Abaxis Calculation, Abbott shall have [ * ] after receipt of the
Abaxis Calculation to respond, in writing, with
(i) Abbott’s estimate, (ii) the difference between
Abbott’s estimate and the Abaxis Calculation, and (iii)
purchase order level detail so that Abaxis may verify the Abaxis
Calculation. If Abaxis disagrees with Abbott’s calculation
and Abbott requests, in writing, purchase order level detail for
the Abaxis Calculation, Abaxis shall provide such information. If
the exchange of such information does not resolve the dispute, the
Parties shall negotiate in good faith to determine the actual
Product Purchases in such Contract Year and, if such dispute is not
resolved within [ * ], the dispute shall be resolved pursuant to
Section 9.11.
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[ *
]
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= Certain
confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.
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8
2.7 Annual Product Sales Calculation .
Abaxis shall provide Abbott with Abaxis’ written calculation
of Abaxis’ Product Sales in each Contract Year in conjunction
with its annual reporting obligations set forth in Section 3.8
of this Agreement.
2.8 Promotional Materials . Abaxis shall
not disseminate or publish any written promotional materials or
advertisements intended for customer distribution referencing the
Products without Abbott’s prior written approval, which
approval shall not be unreasonably withheld. Abaxis shall forward
any written promotional materials or advertisements requiring
Abbott’s approval pursuant to the terms of this
Section 2.8 to the attention of Divisional Vice President,
Marketing, Abbott Point of Care, 400 College Road East, Princeton,
NJ 08540. Abbott shall review and comment on such written
promotional materials or advertisements within [ * ] after receipt
thereof from Abaxis. If Abbott does not respond during such [ * ]
period, such promotional materials shall be deemed
approved.
ARTICLE 3
SALES, MARKETING AND SUPPORT
3.1 Sales and Promotional Activities
.
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(a)
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Marketing . Abaxis shall, at its own expense,
use commercially reasonable efforts to market and promote the
Products in the Territory. Abaxis’ promotional activities
shall include, but shall not be not limited to: (a) including
the Products in its appropriate catalogs, promotional mailings and
like publications; (b) developing, preparing and placing
advertising concerning the Products in appropriate media or through
appropriate direct mail; (c) exhibiting the Products at
appropriate trade shows and exhibitions; (d) conducting
commercially reasonable and appropriate market research; and
(e) rendering other services customarily rendered by a
distributor of veterinary medical products. By [ * ] of each
Contract Year, Abaxis shall provide Abbott with a list of all
proposed trade shows and exhibitions that it plans to attend in the
next Contract Year. Abaxis may develop printed sales and
promotional materials relating to the Products in the local
language at its own expense. Abaxis
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[ *
]
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= Certain
confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.
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9
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shall provide such materials, if
any, which have not been previously approved to Abbott for
Abbott’s review and approval, which approval shall not be
unreasonably delayed or withheld. Abbott shall review such
materials within [ * ], and Abbott’s failure to object to any
materials within such [ * ] of sending shall be deemed approval. If
Abbott objects to the material, Abaxis shall modify such materials
accordingly.
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(b)
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Sales Personnel
. Abaxis, at its sole
cost and expense, shall engage, compensate, supervise, train and
maintain such competent, qualified personnel as may be reasonably
required to, deliver, promote, market, sell, distribute, provide
technical service and support for the Products, and End User
complaint handling in the Territory.
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(c)
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Sales Effort . Abaxis shall use a degree of
effort to market, promote and Sell the Products in the Field in the
Territory [ * ].
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(d)
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Fees and Commission
. Abaxis shall not [ *
]. Abaxis shall not [ * ], including [ * ].
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(e)
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Appointment of Dealers
. Abaxis shall have the
right to appoint Dealers for the sale of the Products in the Field
in the Territory. Abaxis shall within [ * ] of this agreement
update Abaxis’ written Distributor Policy to include language
that [ * ] and shall communicate the same to its then-existing
dealers. Abaxis agrees that, if it enters into a new agreement or
arrangement, following the Effective Date, with any dealer to allow
such dealer to offer for Sale, Sell, have Sold, use, have used,
market, have marketed, distribute, have distributed, import and
have imported Products in the Field in any country or region of the
Territory, Abaxis shall [ * ], and further by subjecting them to
the Distributor Policy described in the foregoing
sentence.
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[ *
]
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= Certain
confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.
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10
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(f)
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Technical Support
. Abaxis shall be
responsible as the first point of contact for technical support
with the End User, including the establishment of species-specific
reference ranges. Abaxis will further provide technical support on
the usage of Products by the End Users based upon information
supplied by Abbott, [ * ]. The term “Technical Support”
shall mean problem resolution, explanation of functionality and
collection of incident reports. Abbott will provide technical
support to Abaxis [ * ].
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(g)
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Modified and New Products
. Abaxis shall provide
timely comprehensive information to its Dealers or End Users, as
appropriate, with respect to newly available Products,
discontinuance of Products and changes in existing Products,
including, but not limited to, performance specification changes
and required software upgrades in Analyzers (which may or may not
be coupled to specific lots of Cartridges). Abaxis shall use
commercially reasonable efforts to ensure that each End User in the
Territory makes any such performance specification changes and
software upgrades in a timely manner. Abbott shall inform Abaxis in
writing of newly available Products, the discontinuance of
Products, or changes in existing Products at least [ * ] prior to
the availability of such new Products or the effectiveness of such
discontinuance or change, as the case may be.
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(h)
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Warranty Services
. Abaxis shall provide a
technical liaison and assistance to End Users for warranty service
of the Products, [ * ]. In addition, at the written request of
Abbott, Abaxis shall perform certain warranty repairs pursuant to
the warranty set forth in Section 3.4(f) of this Agreement
during the term of such warranty, which shall be billed to and paid
by Abbott at mutually agreed upon labor rates and using replacement
parts furnished by Abbott at its sole cost.
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(i)
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Customer Service
. Abaxis acknowledges
and agrees that it shall be responsible for all customer service,
training, and education within the Territory relating to the
operation and use of the Products. All such services shall be
performed in accordance with Abbott’s standards and
specifications, as notified by Abbott to Abaxis from time to time
during the continuance of this Agreement. As part of its customer
service obligations, Abaxis shall maintain a twenty-four
(24) hour answering service to assist Customers with all
Product inquiries.
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[ *
]
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= Certain
confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.
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11
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(j)
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Strategy Meetings
. Periodically during
the Term (but not less than [ * ]), Abaxis and Abbott shall review
topics which may include Abaxis’ marketing and selling
strategy, potential collaboration in the development of new Product
assays or configurations to meet needs or opportunities in the
Field, training of End Users, inventory, and other practices with a
view toward maximizing End Users’ use of and satisfaction
with Products.
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(k)
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Quality Assurance Audit by
Abbott .
Abbott shall, upon giving not less than [ * ] notice to Abaxis,
have the right, during normal business hours, to retain an
independent third party to visit or assess all locations where
Abaxis maintains, ships, or repairs inventory of Products to
conduct a quality assurance audit of such facilities and/or an
on-site surveillance of its inventory storage tracking, provided
that such independent third party shall execute a customary
confidentiality agreement with the audited party with respect to
the information received in connection with such audit that is not
broader in scope or more burdensome than the confidentiality
obligations contained in this Agreement. Provided further that some
or all of such audit activities may be undertaken directly by
Abbott upon the prior mutual written agreement of the Parties. In
the event that an audit reveals matters that Abbott determines
should be corrected by Abaxis, Abbott shall provide, in writing,
within [ * ] of such audit, a list of such matters and any proposed
corrective action to be taken by Abaxis. Abaxis shall respond
within [ * ] of receiving Abbott’s notification of the
corrective action to be taken and an estimated complete
date.
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[ *
]
|
|
= Certain
confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.
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12
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(l)
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Quality Assurance Audit by
Abaxis .
Abaxis shall, upon giving not less than [ * ] notice to Abbott,
have the right, during normal business hours, to retain an
independent third party to visit or assess all locations where
Abbott manufactures, maintains, ships, or repairs inventory of
Products to conduct a quality assurance audit of such facilities
and/or an on-site surveillance of its inventory storage tracking,
provided that such independent third party shall execute a
customary confidentiality agreement with the audited party with
respect to the information received in connection with such audit
that is not broader in scope or more burdensome than the
confidentiality obligations contained in this Agreement. Provided
further that some or all of such audit activities may be undertaken
directly by Abaxis upon the prior mutual written agreement of the
Parties. In the event that an audit reveals matters that Abaxis
determines should be corrected by Abbott, Abaxis shall provide, in
writing, within [ * ] of such audit, a list of such matters and any
proposed corrective action to be taken by Abbott. Abbott shall
respond within [ * ] of receiving Abaxis’ notification of the
corrective action to be taken and an estimated complete
date.
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(m)
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Compliance Audit
. Upon reasonable prior
notice and at mutually agreeable times, Abbott may, at
Abbott’s expense, retain an independent third party auditor
to audit Abaxis’ books and records pertaining to its business
in the Field, to the extent such books and records are relevant to
Abaxis’ compliance with its obligations under this
Section 3.1, solely to verify Abaxis’ compliance with
its obligations under this Section 3.1, provided that such
independent third party auditor shall execute a customary
confidentiality agreement with the audited party with respect to
the information received in connection with such audit that is not
broader in scope or more burdensome than the confidentiality
obligations contained in this Agreement.
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3.2 Diversion and Counterfeiting
.
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(a)
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Resellers — Obligations of
Abaxis .
Abaxis shall not promote or market any Product for use outside the
Field, [ * ]. Abaxis shall not [ * ]. Abaxis shall [ * ].
Recognizing the end use of the Products in healthcare, Abaxis shall
not [ * ]. Abaxis shall [ * ]. Upon Abbott’s request, if and
to the extent Abaxis or its dealers Sell Products to customers
outside the Field, Abaxis shall [ * ]. The Cartridge units Sold
outside the Field shall not be included in Cartridge Purchases for
the purpose of meeting the Minimum Purchase Requirement or the
Minimum Sales Requirement contained in Section 2.4. Without
Abbott’s specific written consent, Abaxis may not [ *
].
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[ *
]
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= Certain
confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.
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13
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(b)
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Resellers — Obligations of
Abbott .
This Section 3.2(b) is subject to the limitations set forth in
Section 2.1(d). Neither Abbott nor its Affiliates shall
promote or market any Product for use in the Field, [ * ]. Neither
Abbott nor its Affiliates shall [ * ]. Abbott shall [ * ]. Abbott
and its Affiliates shall not [ * ]. Abbott shall [ * ]. Without
Abaxis’ specific written consent, neither Abbott nor its
Affiliates may [ * ].
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(c)
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Counterfeit Products
. Abaxis shall purchase
Products for distribution and Sale in the Field in the Territory
exclusively from Abbott. If Abaxis is offered the opportunity to
purchase or otherwise becomes aware of any counterfeit products
similar in appearance and/or function to the Products manufactured
by an entity other than Abbott (“Counterfeit
Products”), Abaxis shall promptly notify Abbott thereof.
Abaxis covenants and agrees not to purchase any Counterfeit
Products, and the failure of Abaxis to comply with the foregoing
covenant and agreement shall constitute grounds for immediate
termination of this Agreement by written notice to such effect sent
by Abbott. Such termination of this Agreement shall be effective as
of the date of receipt of any such notice by Abaxis. In addition,
Abaxis acknowledges that its purchase of Counterfeit Products will
cause Abbott irreparable harm and that Abbott shall have the right
to equitable and injunctive relief, in addition to money damages,
in the case of such action by Abaxis.
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(d)
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Corrupt Practices
. Abaxis shall not use
any compensation hereunder as payment to any government official or
employee of any country in the Territory for the purpose of
influencing such person’s decisions or actions regarding the
Products.
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[ *
]
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= Certain
confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.
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14
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(e)
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Abbott Compliance Audit
. Upon reasonable prior
notice and at mutually agreeable times, Abbott may, at
Abbott’s expense, retain an independent third party auditor
to audit Abaxis’ books and records relating to Abaxis’
Sales of Product solely to verify Abaxis’ compliance with its
obligations under this Section 3.2, provided that such
independent third party auditor shall execute a customary
confidentiality agreement with the audited party with respect to
the information received in connection with such audit that is not
broader in scope or more burdensome than the confidentiality
obligations contained in this Agreement.
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(f)
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Abaxis Compliance Audit
. Upon reasonable prior
notice and at mutually agreeable times, Abaxis may, at
Abaxis’ expense, retain an independent third party auditor to
audit Abbott’s books and records relating to Abbott’s
Sales of Products solely to verify Abbott’s compliance with
its obligations under this Section 3.2, provided that such
independent third party auditor shall execute a customary
confidentiality agreement with the audited party with respect to
the information received in connection with such audit that is not
broader in scope or more burdensome than the confidentiality
obligations contained in this Agreement.
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3.3 Purchase Prices . Abaxis’
Purchase Prices for the Products as of the Effective Date are set
forth in Exhibit 1.17, attached hereto and incorporated
herein. All Purchase Prices for the Products and payments therefor
shall be in U.S. dollars.
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(a)
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Price Adjustments
. The Purchase Price for
each Product shall [ * ], upon [ * ] prior written notice, Abbott
may adjust the Purchase Prices for the Products, provided such
increase may not exceed [ * ]. “PPI” shall mean the
most current final Producer Price Index for Manufacturing,
Analytical and Scientific Instruments Except Optical, (industry
code 334516-0), not seasonally adjusted, as published by the United
States Department of Labor, Bureau of Labor Statistics; provided,
that if the United States Department of Labor, Bureau of Labor
Statistics, or a successor agency, ceases to publish the foregoing
PPI, the index that will most nearly accomplish the purpose thereof
and the use thereof by the parties hereto with respect to price
increases under this Agreement shall be used in lieu of the
foregoing PPI. Notwithstanding the foregoing, Abbott may adjust the
Purchase Price for a Product at any time during the Term of this
Agreement in the event that [ * ], in the event of such an
increase, [ * ].
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[ *
]
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= Certain
confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.
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15
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(b)
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[ *
]. Abaxis shall have the right to purchase up to [ * ] Cartridges
from Abbott per Calendar Year at a [ * ] to be used for [ * ]. Such
purchases of Product for [ * ] purposes in accordance with this
subsection will not count towards the Minimum Purchase Requirement
and will not incur premium charges.
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(c)
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Rebate . Abaxis will receive a [ * ] rebate
on Purchase Prices for purchases that exceed the Minimum Purchase
Requirement in any Contract Year, [ * ]. This rebate will be paid
to Abaxis within [ * ] of the end of any calendar quarter during
the Calendar Year in which the Minimum Purchase Requirement is
exceeded.
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(d)
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Resale Prices
. Abbott price increases
to Abaxis are in no way contingent upon Abaxis agreeing to increase
prices to its customers nor its effectiveness in increasing prices
to its customers. Abaxis shall set its own prices for resale of the
Products to customers provided that Abbott may, at its option,
suggest resale prices to Abaxis.
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(e)
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Taxes; Import Fees
. All Purchase Prices
for the Products do not include insurance, freight, customs,
duties, taxes, any foreign, federal, state or local taxes that may
be applicable to Products including, without limitation, sales,
excise, value-added, withholding, and other taxes. Customs duties
and charges, if any, shall be borne by Abaxis. Any and all export
and import licenses or approvals shall be obtained by Abaxis at its
expense. When Abbott has the legal obligation to collect such
taxes, the appropriate amount shall be added to Abaxis’
invoice and paid by Abaxis unless Abaxis provides Abbott with a
valid tax exemption certificate authorized by the appropriate
taxing authority.
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[ *
]
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= Certain
confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.
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16
3.4 Other Terms and Conditions of Sale .
Abaxis’ purchase of Products from Abbott hereunder shall also
be subject to the following terms and conditions of
sale:
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(a)
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Payment Terms
. Payment terms for all
shipments of Products to Abaxis shall be net [ * ] from the date of
receipt of Abbott’s invoice to Abaxis for each shipment of
Products. All payments shall be made without set-off or
counterclaim and free and clear of and without deduction for any
other charges of any kind, other than amounts that are the subject
of a reasonable good faith dispute. The invoiced amount shall be
paid by Abaxis to Abbott by: (a) wire transfer to the bank
specified by Abbott, or (b) certified bankers check. Abbott
reserves the right to change the payment or credit terms at any
time upon [ * ] prior notice to Abaxis. Any invoiced amount not
received within [ * ] of the date the payment was due shall be
subject to a service charge of the lesser of [ * ] per month or the
maximum rate permitted by law.
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(b)
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Order Entry . Abaxis shall order Products on
purchase orders consistent with the process set forth in
Section 3.5 and, for co-branded Products only, subject to the
minimum order requirements set forth on Exhibit 3.4(b). All
purchase order forms shall specify the quantities of each Product
ordered, requested delivery dates, the identity of Products
ordered, Product price, and delivery and shipping instructions
including carrier selected. All orders will be governed by the
terms of this Agreement. Any other terms and conditions stated on
such purchase orders shall not be applicable to purchases
hereunder.
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(c)
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Delivery . All shipments of Products to
Abaxis shall be shipped F.O.B. Abbott’s facilities. Abbott
shall select the carriers for all shipments of Products hereunder
following consultation with Abaxis, provided that [ * ] Abaxis
shall be responsible for shipping charges for the Products, which
shall be added to Abbott’s invoices to Abaxis. Title and risk
of loss shall pass to Abaxis upon delivery of the Products to the
carrier for shipment.
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[ *
]
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= Certain
confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.
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17
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(d)
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Acceptance of Product
. Abaxis shall inspect
all Products upon delivery in a commercially reasonable manner.
Failure by Abaxis to give notice of defective or damaged Product
within the time periods specified in Section 3.4(e) shall be
deemed a waiver of Abbott’s obligations as stated herein,
with respect to such defect or damage only. Notwithstanding the
foregoing, this Section 3.4(d) is not intended to limit
Abaxis’ rights under Section 7.3 with respect to
defective or damaged Product.
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(e)
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Defective and Improper Delivery;
Product Returns . If Abaxis or a Dealer or End User
claims that: (a) incorrect Product was shipped; or
(b) there was a shortage in the shipment, and notice in
writing of such incorrect shipment or shortage is provided to
Abbott within [ * ] of receipt of the shipment then, upon receipt
of such notice, Abbott’s sole obligation shall be to either
replace any incorrectly shipped Product, make up any shortfall, or
refund any Purchase Price paid by Abaxis, at Abbott’s option.
If any Product is claimed by Abaxis, a Dealer or End User to be
defective and Abbott is notified in writing of such defect within [
* ] of receipt of the Product by the End User or, in the case of a
latent defect, Abbott is notified in writing within [ * ] of
discovery of such latent defect within the warranty period stated
in Section 3.4(f), then Abbott’s sole obligation shall
be to either repair or replace any Product found by Abbott to be
defective or determined to be defective by a Third Party laboratory
as provided below. If Abaxis claims a credit pursuant to this
Section 3.4(e), such claim shall be accompanied by the
original invoice issued by Abaxis to the End User or Dealer
returning the Product. Upon request by Abbott, Abaxis shall deliver
to Abbott, at Abaxis’ cost, any returned Product with regard
to which the credit is claimed. Abbott shall determine [ * ]. Any
disagreements between the parties as to which a returned Product is
defective shall, at the request of either party, be resolved by a
mutually acceptable independent third party laboratory
after
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[ *
]
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= Certain
confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.
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18
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analysis of the relevant Products.
Such third party laboratory shall determine whether such Products
are defective, and the parties agree that such laboratory’s
determination on this issue shall be final, binding, and
determinative. The party against whom the third party laboratory
rules shall bear all costs of such third party testing. All sales
of the Products are final and there will be no Product returns
accepted except as set forth in this Section 3.4(e) without
Abbott’s prior written consent.
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(f)
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Warranty . Abbott warrants that (i) each
Product sold hereunder will, at the time of shipment, comply with
the then-current specifications for such Product and be free and
clear of any and all encumbrances, liens, or other third party
claims; (ii) Products (including refurbished Analyzers) shall
comply with Abbott’s standard warranty therefor, as set forth
in Exhibit 3.4(f). ABBOTT MAKES NO OTHER WARRANTIES, WHETHER
EXPRESS OR IMPLIED, AND ABBOTT EXCLUDES AND DISCLAIMS ANY OTHER
WARRANTIES INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. ABBOTT SHALL
HAVE NO LIABILITY FOR INDIRECT, INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES RELATING TO THE SALE OR USE OF THE PRODUCTS,
INCLUDING LOST PROFITS.
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3.5 Rolling Forecasts . [ * ] after the
Effective Date, Abaxis shall provide Abbott with a monthly forecast
of its requirements of the Products for the first full Contract
Year. On or before the [ * ] prior to the beginning of each
subsequent calendar month during the Term, Abaxis shall provide
Abbott with a rolling [ * ] forecast, the first [ * ] of which will
be firm purchase orders binding on Abaxis, the last [ * ] of each
shall consist of Abaxis’ best estimate forecast of its
requirements of Products. Abaxis shall also provide, with each
monthly forecast, a [ * ] rolling unit and dollar sales history
detail for each individual Product, major customer type (Dealer and
End User), United States and each major international area (e.g.
Western Europe, Asia), the quantities and prices of Products Sold
by Abaxis, the aggregate total dollar sales volume for purchases on
a Product group-by-Product group basis and such other information
relating to the Sales and distribution of Products by Abaxis as
Abbott may reasonably request.
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[ *
]
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= Certain
confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.
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19
3.6 Inventory . Abaxis shall use
commercially reasonable efforts to maintain a level of inventory of
all Products that Abaxis distributes in the Territory sufficient to
ensure that Abaxis is able to fill at least [ * ] of
customers’ orders within [ * ] of Abaxis’ receipt of
such orders. Abaxis shall store Product inventory in its
distribution centers in a manner appropriate for maintaining such
Products in good and saleable condition as required on Product
labeling and consistent with the Product dating and storage
conditions specified by Abbott. All Abaxis distribution centers
shall conform to the temperature control requirements set forth on
Product labeling, and shall be subject to periodic audit by Abbott
by no more than three (3) Abbott representatives per audit at
mutually agreeable reasonable times and upon reasonable prior
notice. Abax
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