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