CONFIDENTIAL
TREATMENT REQUESTED: Certain portions of this document have been
omitted pursuant to a request for confidential treatment and, where
applicable, have been marked with an asterisk
(“ [****] ”) to denote where
omissions have been made. Note that eight pages of this exhibit
contain omitted material pursuant to this request. The confidential
material has been filed separately with the Securities and Exchange
Commission.
EXCLUSIVE DISTRIBUTION
AGREEMENT
This Exclusive Distribution Agreement
(“Agreement”) is made as of April 1, 2002 (the
“Effective Date”), between Alliance Pharmaceutical
Corp., a New York corporation, having its principal place of
business at 3040 Science Park Road, San Diego, California 92121
(“Client”), and CORD Logistics, Inc., an Ohio
corporation, having its principal place of business at 15 Ingram
Boulevard, LaVergne, Tennessee 37086
(“CORD”).
A.
Client is, among other things, in
the business of developing and marketing pharmaceutical products in
the United States, the District of Columbia and Puerto Rico (the
“Territory”).
B.
CORD is, among other things, in the
business of distributing pharmaceutical products to wholesalers,
specialty distributors, physicians, clinics, hospitals, pharmacies,
and other health care providers in the Territory, and of providing
Information Systems and other services that support its
customers’ use of its distribution capabilities.
C.
Client desires to engage CORD as its
exclusive distribution agent for commercial sales of lmagent™
in all formulations (collectively, the “Product”), and
such other pharmaceutical products agreed to by the parties in the
Territory and to perform certain other services described in this
Agreement, all upon the terms and conditions set forth in this
Agreement.
THEREFORE, in consideration of the mutual
conditions and covenants set forth herein, CORD and Client
(collectively referred to as “Party” or
“Parties”) agree as follows:
1.
Appointment/Authorization
.
1.1
Upon the terms and conditions set
forth in this Agreement, Client appoints CORD as its exclusive
distribution agent of Product in the Territory to Client’s
customers, including, but not limited to, wholesalers, specialty
distributors, physicians, clinics, hospitals, pharmacies and other
health care providers in the Territory (collectively,
“Customers”).
1.2
Subject to the terms and conditions
set forth in this Agreement, CORD accepts the appointment to
represent Client as its authorized exclusive distribution agent of
Product to Customers in the Territory.
1.3
Client shall provide CORD with a
right of first negotiation with respect to the distribution of new
imaging agents or other pharmaceutical products acquired or
promoted by Client in the Territory after the Effective Date.
Client shall grant CORD an exclusive right of negotiation with
respect to the distribution of such new product for a period of
sixty (60) days after Client’s notice to CORD that such new
product will be available for distribution. If the parties have not
reached an agreement with respect to the distribution of the new
product within sixty (60) days from the date of Client
’ s notice, and entered into a definitive
agreement within sixty (60) days thereafter, or if Cord notifies
Client in writing at any point during such negotiation period that
it is not interested or unable to distribute such new product(s),
then Client shall have no further obligation with respect to that
new product under this Section 1.3.
[****] Represents material which has been redacted
pursuant to a request for confidential treatment pursuant to Rule
24B-2 under the Securities Exchange Act of 1934, as amended. The
confidential materials have been filed separately with the
SEC.
2.
Services .
2.1
CORD shall provide the services set
forth in the Operating Guidelines, which include, without
limitation, storage, distribution, returns, customer support,
financial support, EDI and system access support
(“Services”). A copy of the Operating Guidelines is
attached hereto as Exhibit A and incorporated by
reference.
2.2
The Operating Guidelines may be
amended from time to time upon the mutual written agreement of the
Parties; provided, however, that any change, modification or
amendment to the Operating Guidelines may result in an increase in
the fees charged by CORD in Section 5.
2.3
CORD’s services shall comply
with the Operating Guidelines, provided Client’s shipment of
Products to CORD are within [****] of its Forecast (as
hereinafter defined).
2.4
All Product Returns shall be
processed and handled by CORD in accordance with the Operating
Guidelines; and, any customization or additional return services
requested by Client shall be performed at an additional fee as
agreed by the Parties.
2.5
Client is solely responsible for all
Product recalls. In the event Product is subject to recall, or
Client, on its own initiative, recalls any Product, CORD shall
provide assistance to Client as set forth in the Operating
Guidelines, provided that Client shall pay to CORD an amount equal
to CORD’s actual costs incurred with any, such recall
services. Such cost shall be in addition to the Service Fees
described in Section 5 below.
3.
Product Supply/Client
Responsibilities.
3.1
Client shall deliver Product to CORD
at CORD’s facility located at 15 Ingram Boulevard, Suite 100,
La Vergne, TN 37086, or to such other distribution facility as may
be designated by CORD to Client in writing
(“Facility”).
3.2
Client shall be responsible for
delivery of Product to the Facility, including all costs, expenses
and risk of loss associated with such delivery. Title to Product
shall remain with Client at all times, even when Product is stored
or warehoused at the Facility. Client shall at all times insure the
Product for damage, loss, destruction, theft or any such other
property damage (“Loss”) as further set forth in
Section 17 below. Except for Loss resulting solely from the gross
negligence or willful misconduct of CORD, Client shall bear all
risk of loss or damage with respect to the Product stored or
warehoused at the Facility.
3.3
Client shall provide CORD with a
forecast of the volume of Product to be handled by CORD under this
Agreement, not less often than [****]
(“Forecast”). Upon execution of this Agreement, Client
shall deliver to CORD a customer list, which sets forth the Product
prices (the “Customer Price List”). Client shall notify
CORD of any change in the Customer Price List not less than
[****]
prior to the effective date of any such change. CORD shall use
commercially reasonably efforts to implement such price change in
accordance with Client’s instruction.
3.4
CORD shall visually inspect each
shipment of Product for external damage or loss in transit and
notify Client of any such damage or loss within a commercially
reasonable period of time following discovery.
2
[****] Represents material which has been redacted
pursuant to a request for confidential treatment pursuant to Rule
24B-2 under the Securities Exchange Act of 1934, as amended. The
confidential materials have been filed separately with the
SEC.
4.
Information System
Access.
4.1
CORD shall provide Client access to
an Operating System Base, which consists of the software used by
CORD to support the services provided to Client, including the
server and other components needed to execute the software and
certain support services associated therewith, as further set forth
in the Operating Guidelines (collectively, the
“System”), upon the terms and conditions set forth in
the System Access Agreement. A copy of the System Access Agreement
is attached as Exhibit C and incorporated herein by reference. The
software releases are (1) EliteSeries 6.1.2, as modified by CORD,
supplied by Tecsys, Inc., a Montreal, Quebec, Canadian company, and
any upgrades, maintenance releases or modifications implemented by
CORD to support distribution services provided by CORD; (2) BACCS
3.0 as modified by CORD and any upgrades implemented by CORD to
support financial services provided by CORD; and (3) Impromptu 6.0,
supplied by Cognos Inc., a Canadian company, and any upgrades,
maintenance releases or modifications implemented by CORD to
support reporting services provided by CORD.
4.2
The System shall be made available
to Client at the fees set forth in the Fee Schedule, except that
any custom enhancements requested by Client shall be billed
separately based on an hourly rate set forth in the Fee Schedule
(as defined in Section 5).
4.3
In addition to the terms set forth
in the System Access Agreement, Client shall maintain (4) a local
area network sufficient to support Client’s terminals and
personal computers that have access to the System, all such
personal computers shall meet the minimum specifications necessary
to support software needed to access the system; (5) a centralized
server sufficient for data storage, if data export requirements
exist; and (6) a connection to the internet sufficient to support
system access. Client shall also assign knowledgeable and qualified
employees or representatives to facilitate access to the
System.
5.
Fees.
5.1
As compensation for the Services,
Client shall pay to CORD the fees (the “Fees”) set
forth on Exhibit B (the “Fee Schedule”).
5.2
CORD shall issue an invoice to
Client for the Services rendered under this Agreement or for any
other amounts due on a [****] basis. Payment is due
within [****] days of the invoice
date. If the Invoice is not paid within such [****] day period, a service
charge on the unpaid amount calculated at the rate of
[****] per
month (or the maximum rate permitted by law if such rate is less
than [****]
per month) shall be imposed until such amount is paid in
full.
5.3
The Fees shall be held firm for the
[****] .
Thereafter, CORD shall adjust the price not more often than once
per contract year by the increase in the Producer Price Index - All
Commodities published by the United States Department of Labor,
Bureau of Statistics, as amended from time to time. In the case of
a decrease in the Producer Price Index — All Commodities
referenced above, Client’s pricing shall remain unchanged
from the immediately preceding contract year. For purposes of
sub-Section (i), the base point shall be the index level on the
first day of the contract year.
5.4
Notwithstanding the terms set forth
above in Section 5.3, if CORD can reasonably demonstrate that the
costs for providing the Services have materially increased, or are
likely to materially increase in the coming year due to the
adoption of any applicable law or regulation (or any material
change in the interpretation or administration thereof), or due to
unforeseen circumstances beyond CORD’s reasonable control,
then upon notice from CORD, the Parties agree to meet in good faith
and negotiate a mutually acceptable adjustment to the
Fees.
3
[****] Represents material which has been redacted
pursuant to a request for confidential treatment pursuant to Rule
24B-2 under the Securities Exchange Act of 1934, as amended. The
confidential materials have been filed separately with the
SEC.
6.
Term and
Termination.
6.1
The initial term of this Agreement
shall begin on the Effective Date and shall continue for a period
of [****]
years (the “Initial Term”), unless
terminated earlier pursuant to this Agreement. Thereafter, this
Agreement shall automatically renew for additional terms of
[****]
each, unless written notice of termination is given by either Party
at least ninety (90) days prior to the end of the Initial Term, or
such other term, in which case this Agreement shall terminate at
the end of the then current term.
6.2
Either Party shall have the right to
terminate this Agreement:
(a)
upon one hundred eighty (180) days
prior written notice to the other Party, provided that in the event
Client terminates this Agreement, without cause, prior to the end
of the Initial Term, such termination shall be effective only upon
payment to CORD of six (6) months of the System Access Fees set
forth on the Fee Schedule;
(b)
upon the breach by the other Party
of a material provision of this Agreement and that Party’s
failure to cure such breach within thirty (30) days following
written notice thereof from the non-breaching Party, provided that,
with respect to any failure to make any payment when due under this
Agreement, such period to cure shall be reduced to ten (10) days;
or
(c)
immediately upon notice to the other
Party following the commencement of any bankruptcy or insolvency
proceeding (whether voluntary or involuntary) with respect to such
other Party or its assets, which in the event of an involuntary
proceeding, is not dismissed within sixty (60) days, the general
assignment for the benefit of creditors by such other Party, or the
appointment of a receiver, trustee or liquidator by or for such
other Party.
6.3
Termination or expiration of this
Agreement shall not relieve either Party from any liability or
obligation that accrued prior to such termination or expiration.
Upon termination or expiration of this Agreement, all Product shall
be returned to Client or a designee of Client, at Client’s
sole cost and expense. Sections 13 and 14 shall survive termination
or expiration of this Agreement.
7.
Audits . No
more than twice per calendar year, Client or its designee shall
have the right during normal business hours (i.e., 8:00 a.m. to
5:00 p.m. local time), upon fifteen (15) business days prior
written notice to CORD, to: ii) conduct a physical audit of such
parties of the Facility that relate solely to Product stored and
warehoused at the Facility under this Agreement; and iii) review
and audit records that relate solely to the storage and
distribution of the Product. Notwithstanding the foregoing, Client
or its designee may, from time to time and subject to CORD’s
prior consent, perform additional physical audits of the Product
located at the Facility in the event of a reasonable, documented
concern related to the state of such Product. Such additional
audits shall be conducted during normal business hours (i.e., 8:00
a.m. to 5:00 p.m. local time).
4
8.
Compliance With
Laws . Each
Party shall conduct its activities in connection with this
Agreement in compliance with all applicable laws, rules,
regulations, and orders of governmental entities.
9.
Representations and
Warranties .
9.1
Each Party represents and warrants
to the other that:
(a)
it has full power and authority to
enter into this Agreement and perform all obligations and
conditions to be performed by it under this Agreement without any
restriction by any other Agreement or otherwise;
(b)
the execution, delivery and
performance of this Agreement have been duly authorized by all
necessary corporate action of that Party; and
(c)
this Agreement constitutes the
legal, valid and binding obligation of that Party.
9.2
Client further represents and
warrants to CORD that the Product:
(a)
is and shall be manufactured in
conformity with the Food, Drug and Cosmetic Act, as amended from
time to time, and all other applicable laws, rules, regulations and
orders of governmental entities relating to the manufacture,
promotion, sale or distribution of the Product;
(b)
does not violate or infringe any
patent, trademark, tradename or other interest of any person or
entity.
10.
Taxes . Client shall pay when due all sales, use, gross
receipts, excise, personal property taxes associated with the
Product (excluding any personal property tax associated with
CORD’s equipment used in connection with the Services), and
other taxes now or hereafter imposed as a result of the
transactions contemplated by this Agreement (other than taxes based
on CORD’s net income), none of which have been included in
the fees payable to CORD under this Agreement; provided that the
amounts payable by Client under this section shall not include
taxes based on the net income of CORD.
11.
Trademarks . Neither Party shall have the right to use the
name of the other Party or any Affiliate of the other Party, or the
other Party’s or such Affiliates’ trademarks, service
marks, logos, or other similar marks in any manner except with the
prior written approval of that Party; provided that the foregoing
shall not prohibit CORD’s use of Client names or marks in
connection with the performance of the Services in a manner
consistent with this Agreement. “Affiliate,” as used in
this Agreement, means any legal entity which, during the Term
hereof, controls, is controlled by, or is under common control
with, such Party. For purposes of this definition, an entity shall
be deemed to control another entity if it owns or controls,
directly or indirectly, at least fifty percent (50%) of the voting
interest of all equity interests of the other entity (or other such
comparable ownership interest for an entity other than a
corporation).
5
12.
Confidentiality.
12.1
Each Party acknowledges that as a
result of this Agreement it may learn and have access to trade
secrets and other confidential and proprietary information of the
other Party through employees, representatives and/or agents acting
on behalf of or subcontracted to either Party (collectively the
“Representatives”), including without limitation,
financial information, information regarding business practices and
techniques, customer lists and systems and technology information,
or any information identified as confidential in writing by either
Party (the “Confidential Information”). For purposes of
this Agreement, Confidential Information shall not include
information disclosed by one Party to the other Party to the extent
that such information can be proven by written evidence: b) to be
in the public domain or generally available in the industry in
which the disclosing Party engages in business without any
violation of this Agreement by the other Party; c) is already
legally known to the other Party or any of its Affiliates at the
time of its disclosure by the disclosing Party; d) becomes known to
the other Party or any of its Affiliates from a third party without
any obligation of confidentiality or limitation on use; or e) is
independently developed by the other Party or any of its Affiliates
prior to the date of its disclosure. The specific material terms of
this Agreement shall be deemed to be the Confidential Information
of each Party. Confidential Information shall not be deemed to be
in the public domain or publicly known or in the receiving
Party’s possession because it is embraced by more general
information in the receiving Party’s possession or because it
is embraced in general terms in publications.
12.2
Neither Party shall, directly or
indirectly, at any time: f) disclose to any third person or entity
any Confidential Information of the other Party (whether learned
before or after the date of this Agreement), or g) use, or permit
or assist any third person or entity to use, any such Confidential
Information, excepting only: (1) disclosures required by law, rule,
regulation or order, as reasonably determined by the disclosing
Party or its legal counsel, and (2) disclosures on a confidential
basis to directors, officers, employees, and agents of that Party
or its Affiliates who have a reasonable need to know such
Confidential Information in the normal course of business of that
Party or any of that Party’s Affiliates.
12.3
The obligations of confidentiality
hereunder shall survive the termination of this Agreement for a
period of three (3) years. Upon termination of this Agreement (for
any reason) each Party shall promptly: (3) return to the other
Party all documentation and other materials (including copies of
original documentation or other materials) containing any
Confidential Information of the other Party; or (4) with the other
Party’s consent, which consent will not be unreasonably
withheld, certify to the other Party, pursuant to a certificate in
form and substance reasonably satisfactory to the other Party, as
to the destruction of all such documentation and other
materials.
13.
Indemnification
. Each Party shall indemnify and hold harmless the
other Party and its parent and Affiliates, and each of their
directors, officers, employees, agents, and representatives from
and against all claims, liabilities, losses, damages, costs, and
expenses, including, without limitation, reasonable
attorneys’ fees (“Liability”) to a third party or
property arising directly or indirectly out of any failure of that
Party to perform fully all obligations and conditions to be
performed by that Party pursuant to this Agreement or any breach of
any warranty made by that Party in this Agreement. Client further
agrees to indemnify and hold harmless CORD, its parent and
Affiliates and each of their directors, officers, employees, agents
and representatives from any and all Liability arising directly or
indirectly out of injury or death to person or property alleged to
have been caused by Client’s Product.
6
14.
Limitation of
Liability. NOTWITHSTANDING THE FOREGOING PROVISIONS OF
SECTION 13, OR ANY OTHER PROVISION OF THIS AGREEMENT TO THE
CONTRARY, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY
CONSEQUENTIAL (SPECIFICALLY EXCEPTING THOSE CONSEQUENTIAL DAMAGES
ARISING FROM EACH PARTY’S OBLIGATION TO INDEMNIFY THE OTHER
FOR LIABILITY ARISING OUT OF OR RELATING TO THIRD PARTY CLAIMS IN
ACCORDANCE WITH SECTION 13 ABOVE), INCIDENTAL, INDIRECT, SPECIAL,
OR OTHER SIMILAR DAMAGES ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT.
15.
Insurance . During the term of this Agreement and for as
long thereafter as necessary to cover claims resulting from this
Agreement, Client shall maintain: (5) product liability and
commercial general liability insurance having a limit of not less
than $5 million; and (6) property damage insurance at replacement
value for the Product located at the CORD Facility or in transit to
or from the CORD Facility, pursuant to one or more insurance
policies with reputable insurance carriers. Cardinal Health, Inc.
and its subsidiaries shall be designated as “additional
insureds” under the product liability and commercial general
liability insurance policy(ies) and under the property damage
insurance policy(ies). Prior to the Commencement Date, Client shall
deliver to CORD certificates evidencing such insurance. Client
shall not cause or permit such insurance to be canceled or modified
to materially reduce its scope or limits of coverage during the
term of this Agreement or thereafter as provided above. Except for
any losses resulting solely from the gross negligence or
intentional misconduct of CORD, Client shall bear all risk of loss
or damage with respect to the Product, whether located at the
Facility or otherwise.
16.
Dispute
Resolution . The
Parties agree to use good faith efforts to resolve all disputes
within ninety (90) days of written notice that such a dispute
exists. If dispute under this Agreement cannot be resolved by the
Parties within such sixty (60) day period, the Parties agree to
refer the matter to one executive from each Party not directly
involved in the dispute for review and resolution. A copy of the
terms of this Agreement, agreed upon facts and areas of
disagreement, and a concise summary of the basis for each
side’s contentions will be provided to both executives who
shall review the same, confer, and attempt to reach a mutual
resolution of the issue within forty-five (45) days after receipt
of the materials referenced above. If the matter has not been
resolved within such forty-five (45) day period, either or both
Parties may pursue resolution of the matter through litigation or
other process available under law or equity.
17.
Miscellaneous .
17.1
Relationship of the
Parties. The relationship
among the Parties is that of independent contractors, and this
Agreement does not establish or create a partnership, joint
venture, or other agency relationship among the Parties.
7
17.2
Notices. Any notice or other communication required or
desired to be given to any Party under this Agreement shall be in
writing and shall be deemed given: ii) three business days after
such notice is deposited in the United States mail, first-class
postage prepaid, and addressed to that Party at the address for
such Party set forth at the end of this Agreement; iii) one
business day after delivered to Federal Express, Airborne, or any
other similar express delivery service for delivery to that Party
at that address; or iv) when sent by facsimile transmission, with
electronic confirmation, to that Party at its facsimile number set
forth at the end of this Agreement. Any notice delivered by
facsimile transmission will be deemed delivered upon electronic
confirmation provided the notice is also deposited in the U.S.
mail, first-class postage prepaid. Any Party may change its address
or facsimile number for notices under this Agreement by giving the
other Parties notice of such change.
17.3
Governing Law.
This Agreement shall be construed
under the laws of the State of Tennessee, without regard to its
conflicts of laws provisions.
17.4
Severability.
If any term of this Agreement is
declared invalid or unenforceable by a court or other body of
competent jurisdiction, the remaining terms of this Agreement will
continue in full force and effect.
17.5
Non-Waiver.
No failure by either Party to insist
upon strict compliance with any term of this Agreement, to enforce
any right, or to seek any remedy upon any default of the other
Party shall affect, or constitute a waiver of, the first
Party’s right to insist upon strict compliance, to exercise
that option, to enforce that right, or to seek that remedy with
respect to that default or any prior, contemporaneous, or
subsequent default. No custom or practice of the Parties at
variance with any provision of this Agreement shall affect, or
constitute a waiver of, that Party’s right to demand strict
compliance with all provisions of this Agreement.
17.6
Force Majeure.
If the performance of any part of
this Agreement by either Party shall be prevented, restricted,
interfered with or affected for any length of time by fire or other
casualty, government restrictions, war, riots, strikes or labor
disputes, lock out, transportation delays, acts of God, or any
other causes which are beyond the reasonable control of such Party,
such Party shall not be responsible for delay or failure of
performance of this Agreement for such length of time, provided,
however, that the obligation of one Party to pay amounts due to the
other Party shall not be subject to the provisions of this
Section.
17.7
Complete Agreement.
This Agreement constitutes the
entire understanding between the Parties and supersedes any
contracts, agreements or understanding (oral or written) of the
Parties with respect to the subject matter hereof. No term of this
Agreement may be amended except upon written agreement of both
Parties, unless provided otherwise in this Agreement.
17.8
Assignment.
Except as set forth herein, neither
Party shall have the right to assign this Agreement, or any of such
Party’s rights or obligations under this Agreement, without
the prior written consent of the other Party, provided, however,
that CORD may assign its rights under this Agreement to any parent,
subsidiary or affiliate without obtaining such consent. This
Agreement shall be binding upon, inure to the benefit of, and be
enforceable by and against the respective successors and assigns of
the Parties.
17.9
Independent
Contractor. The
relationship of the Parties is that of independent contractors, and
neither Party shall incur any debts or make any commitments for the
other Party except to the extent expressly provided in this
Agreement. Nothing in this Agreement is intended to create or shall
be construed as creating between the Parties the relationship of
joint ventures, co-partners, employer, employee or principal and
agent.
8
IN WITNESS WHEREOF, the undersigned acknowledge
and accept the terms of this Agreement and have duly executed this
Agreement.
|
CORD LOGISTICS,
INC.
By:
/s/ Frank C.
Wegerson
Frank C. Wegerson
Vice President and General
Manager
15 Ingram
Boulevard
LaVergne, TN
37086
Facsimile No.
(615) 793-4783
|
ALLIANCE
PHARMACEUTICAL CORP.
By: /s/ Jack
DeFranco
B. Jack DeFranco
Vice President,
Marketing & Business Development
3040 Science
Park Road
San Diego, CA
92121
Facsimile No.:
(858) 410-5201
|
9
Exhibits
Exhibit A Operating Guidelines
Exhibit B Fee Schedule
Exhibit C System Access Agreement
Alliance Pharmaceuticals
/ CORD Logistics, Inc.
Exhibit
A
Operating
Guidelines
In performing
its obligations under the Distribution Services Agreement
(“Agreement”), CORD Logistics, Inc.
(“CORD”) will follow the Operating Guidelines as
developed jointly with Alliance Pharmaceuticals Corp Inc.
(“Client”). These Operating Guidelines are in addition
to CORD Standard Operating Procedures (“SOPs”). Copies
of these documents are maintained by both parties and will be
reviewed, and updated if necessary, from time to time as mutually
agreed, but not less than once per calendar year.
1.0
WAREHOUSING,
|
1.1
|
CORD will
maintain its wa
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