E XHIBIT 10.7
AMENDED AND RESTATED
DISTRIBUTION AGREEMENT
This AGREEMENT is made as of March 1
st
2005 (the “
Effective Date ”), by and between HemoSense, Inc.,
(hereafter referred to as “ HemoSense ”), a
California Corporation, and Quality Assured Services, Inc. (aka,
QAS), with its principal place of business 1506 N Orange Blossom
Trail, Orlando, Florida, 32804 (hereafter referred to as “
Distributor ”). As used in this Agreement, HemoSense
and Distributor are each referred to as a “ Party
” and collectively as “the Parties .” This
Agreement amends, supercedes and restates in its entirety the
Distribution Agreement by and between the Parties dated March 31,
2003 (the “ Original Agreement ”).
WITNESSETH:
WHEREAS HemoSense manufactures products, which
include instrumentation and reagents designed for testing various
blood analytes.
WHEREAS, Distributor desires to distribute and
market the devices and related test supplies subject to the
conditions set forth herein.
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
HemoSense hereby appoints Distributor and
Distributor hereby accepts appointment as a non-exclusive
distributor of the HemoSense products listed or described on
Exhibit A (the “ Products ”), commencing on the
date that the Original Agreement was executed by both
Parties.
When new products as part of the product line
become available, HemoSense will notify Distributor and Distributor
will have the right to purchase these new products from HemoSense
under the terms of this Agreement.
ARTICLE 2 – TERMS OF
AGREEMENT
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2.1
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The initial
term of this Agreement commences upon the Effective Date and ends
February 28, 2007 (the “ Initial Term ”). Upon
the expiration of the Initial Term, and each Renewal Term
thereafter (if any), this Agreement shall be automatically renewed
for a one-year term (each, a “ Renewal Term ”)
unless terminated by either Party in writing and in accordance to
Article 19 of the Agreement.
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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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Page 1 of 15
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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 thirteen (13)
pages, including exhibits.
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2.3
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Distributor’s authority under this
Agreement is limited to directly distributing the Products solely
to the end-user customers within the markets and channels
identified on Exhibit B (the “ Permitted
Markets/Channels ”) solely in the territory identified on
Exhibit B (the “ Territory ”).
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2.4
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DISTRIBUTOR 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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2.5
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Both Parties
agree to hold harmless and indemnify the other for any loss or
damage sustained by the other as a direct result of their
malfeasance or action which exceed their rights or authority in
this Agreement.
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ARTICLE 3 – OBLIGATIONS OF THE
DISTRIBUTOR
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3.1
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The Distributor
will develop adequate numbers of suitably qualified personnel as
well as suitable equipment and infrastructure for efficient
warehousing, distribution and sale, and other services related to
the Products throughout the Territory.
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3.2
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The Distributor
will provide appropriate and professional installation and
application advice (within [***] business days of delivery to its
customers), follow-up services and advice, 24-hour on-call support,
insurance reimbursement services, regulatory requirements advice
and guidance, technical support, training/help/support and, at
their option, data management programs to purchasers of Products
when so requested by the purchaser at no charge to
HemoSense.
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3.4
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The Distributor
will inform HemoSense on 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 within a 48 hour period
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3.5
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The Distributor
will maintain stocks of all the Products at an appropriate level
determined by HemoSense and Distributor having regard to the
monthly sales thereof in the Territory and will ship product to
purchasers the same business day it is requested, when orders are
received by 3:00 p.m. EST on normal business days.
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3.6
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Within three
weeks of the Effective Date, the Distributor will provide HemoSense
with its unit per month Product sales forecast for the six (6)
month period commencing with the first day of the month following
the Effective Date (the “ Initial Forecast ”).
The Initial Forecast will be categorically itemized by
the
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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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Page 2 of 15
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various components of the
Product, (i.e. projected monthly purchases of meters, strips and
other INRatio disposables). By the first ( 1
st
) day of the month after
the Effective Date, and on the 1 st day of each month thereafter, the
Distributor will provide updated twelve (6) month rolling forecasts
(the “ Rolling Forecast ”).
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3.7
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Distributor
shall, at its own expense, and in a manner consistent with the
sales policies of HemoSense:
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(a)
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place the
Product in Distributor’s catalogues as soon as possible,
attend such the appropriate trade shows and display the Product in
any applicable trade show that it attends;
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(b)
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provide
adequate contact with existing and potential customers within the
Permitted Markets/Channels and Territory on a regular basis,
consistent with good business practice;
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(c)
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assist
HemoSense in assessing customers’ requirements for the
Product, including modifications and improvements thereto, in terms
of quality, design, functional capability, and other features;
and
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(d)
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submit market
research information, as reasonably requested by HemoSense,
regarding competition and changes in the market within the
Territory.
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3.8
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If requested by
HemoSense, Distributor shall develop an annual business plan for
the Product which shall include, without limitation, promotion
strategy and tactics, and sales and other marketing plans (“
Business Plan ”). Any such Business Plan shall be
provided to HemoSense for prior review and approval, which approval
shall not be unreasonably withheld. The Business Plan for the first
year of this Agreement shall be provided to HemoSense within one
(1) month after the Effective Date, and no request therefore need
be made by HemoSense. Thereafter, if requested, Distributor shall
provide Business Plans to HemoSense for review and approval not
later than sixty (60) days before January 1 of the Calendar Year to
which such Business Plan pertains.
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ARTICLE 4 – OBLIGATIONS OF THE
COMPANY
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4.1
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HemoSense will
use commercially reasonable efforts to maintain stocks of all the
Products at an appropriate level having regard to the monthly sales
thereof in the Territory. HemoSense will inform the Distributor of
the available stock of the Products and will provide the
Distributor feedback on product deliveries (e.g. order confirmation
including availability of product and shipping schedules within 24
hours of receipt of the order).
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4.2
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HemoSense will
use good faith commercial efforts to process and ship all orders in
accordance with requested delivery dates subject to availability
and mutual agreement on delivery dates. However, no Distributor
purchase orders for Products are binding on HemoSense unless
accepted by HemoSense in writing.
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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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Page 3 of 15
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4.3
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The delivery
date requested in a Distributor purchase order shall be considered
the date Distributor requests shipment by HemoSense. HemoSense will
determine, in its sole discretion, the shipping origin of the
Product. The shipping confirmation will be provided to the
Distributor by fax and/or by e-mail. Products shipped by HemoSense
under this Agreement will, at the time of shipment, have a
remaining shelf life of at least [***] ([***]) months.
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4.4
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HemoSense will
provide to the Distributor reasonable Product support and marketing
support including training in demonstration and use of the
Products. HemoSense will also supply the Distributor with price
lists, literature and support materials, advertising and support of
sales programs, as well as after sales service and technical
support. HemoSense will establish a [***] that will be funded by
[***]% of gross product sales from HemoSense to Distributor. These
funds will be utilized exclusively on marketing programs
specifically for Distributor. For purposes of this Section 4.4,
“Target Sales” means, for each calendar year during the
term of this Agreement, the following:
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Calendar Year
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Target Sales
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2005
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$[***]
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2006
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$[***]
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2007 (and each
calendar year thereafter)
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As determined
by agreement of the Parties, as necessary to provide appropriate
incentives for increase sales
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In addition, within sixty (60) days after the
end of each calendar year during the term of this Agreement,
HemoSense will determine if the gross product sales from HemoSense
to Distributor exceeded the Target Sales for such calendar year.
Where such Target Sales were exceeded, HemoSense will add to the
[***] an additional amount equal to [***] percent ([***]%) of the
overall gross product sales from HemoSense to Distributor in the
just-completed calendar year. If at such time (that is, within
sixty (60) days after the end of each calendar year during the term
of this Agreement) the marketing co-op fund includes a surplus
funding balance that HemoSense has not utilized, and does not
reasonably anticipate utilizing, on marketing programs specifically
for Distributor as contemplated under this Section 4.4, HemoSense
will issue a credit to Distributor for the surplus
amount.
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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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Page 4 of 15
ARTICLE 5 – RECORD KEEPING
The Distributor shall track and record a
reasonable level of traceable detail of product sold to the
Distributor’s customers under this Agreement. These records
will include, but not be limited to customer name, address, Product
# detail, price, lot number (for reagents) and serial number (for
instruments). Distributor agrees to maintain these records during
the term of the Agreement. These records will include monthly sales
tracing reports by Product, Product number, sales, and/or account
or zip code that will be sent to HemoSense no later then 30 days
from the end of a calendar month. These tracings are to be used to
provide commission and sales reporting to the HemoSense sales
force.
The Parties agree to meet no less than twice
yearly for half to full-day reviews of their mutual business. These
reviews will be conducted in alternating locations (i.e.
alternating between Distributor’s offices and
HemoSense’s offices).
ARTICLE 6 – CONFIDENTIALITY
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 both:
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(a)
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is disclosed by
one Party hereto to the other; and
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(b)
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is secret,
confidential, and proprietary to the disclosing Party at the time
of disclosure and is marked as such
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During the period this Agreement remains in
effect and for a period of five (5) years following termination
thereof, each Party (except as is explicitly otherwise required,
permitted or consistent with the terms 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.
The obligations of confidentiality imposed upon
the Parties by the foregoing Paragraph
