[NOTE:
CERTAIN PORTIONS OF THIS DOCUMENT HAVE BEEN MARKED TO INDICATE THAT
CONFIDENTIAL INFORMATION HAS BEEN OMITTED. CONFIDENTIALITY HAS BEEN
REQUESTED FOR THIS CONFIDENTIAL INFORMATION. THE CONFIDENTIAL
PORTIONS HAVE BEEN PROVIDED SEPARATELY TO THE SECURITIES AND
EXCHANGE COMMISSION]
FUKUDA DENSHI CO. LTD. AND
ENDOSONICS CORPORATION
JAPANESE DISTRIBUTION
AGREEMENT
THIS AGREEMENT
(“Agreement”), effective on the Effective Date (defined
below), is made and entered into between EndoSonics Corporation, a
Delaware corporation, with its principal offices at 2870 Kilgore
Road, Rancho Cordova, California 95670, U.S.A. (hereinafter
referred to as “EndoSonics”), and Fukuda Denshi Co.,
Ltd., a corporation of Japan, with its principal offices at 3-39-4
Hongo, Bunkyo-ku, Tokyo 113, Japan (hereinafter referred to as
“Fukuda”).
In consideration
of the mutual promises contained herein, the parties agree as
follow:
A. “Act”
shall mean any act, statute, or regulation of any kind governing
the products in the U.S.A. including the Federal Food, Drug and
Cosmetic Act (21 U.S.C. Sections 301 392 (1993)).
B. “Best
Efforts” shall mean every necessary and prudent effort of a
party applied in a prompt, commercially reasonable manner, to the
maximum extent reasonably allowed by such party’s available
financial resources, taking into account all of such party’s
business commitments for such financial resources.
C. “Cardiometrics
Products” shall mean those guidewire based products for
physiological testing such as WaveWire TM and FloWire TM adapted to be utilized on the In-Vision
TM System.
D. “Effective
Date” shall mean August 31, 1998.
E. “EndoSonics
Products” shall mean all products for use with the ultrasound
imaging systems developed by EndoSonics during the term of this
Agreement and available for sale during the term of this
Agreement.
F. “QSR’s”
shall mean the good manufacturing practices for medical devices set
forth by any Act governing the products in the U.S.A. including
United States 21 C.F.R. Section 820 (1993).
G. “IVUS
Products” shall mean those EndoSonics intravascular
ultrasound products listed in Exhibit “A” attached
hereto and all successor products thereto. IVUS Products may be
changed, abandoned or added by EndoSonics, at its sole discretion,
provided that EndoSonics gives one hundred twenty
(120) days’ prior written notice to Fukuda.
H. “Sites”
shall mean a hospital or other medical facility in the Territory
wherein the IVUS Products can be used.
I. “Territory”
shall mean the country of Japan.
2.
APPOINTMENT AND AUTHORITY OF FUKUDA
A.
Appointment . Subject to the terms and conditions set forth
herein, EndoSonics hereby appoints Fukuda as EndoSonics’
exclusive distributor for the IVUS Products in the Territory for
the period commencing January 1, 2000 until June 30,
2007; provided, however, for the period from January 1, 2000
until December 31, 2001, Johnson & Johnson Medical KK
(“JJMKK”) shall be entitled to promote and sell the
IVUS Products solely to JJMKK’s Sites. The parties hereto
shall determine JJMKK’s Sites and other terms and conditions
for the supply to JJMKK by Fukuda on or before December 31,
1999. Subject to the terms and conditions set forth herein, Fukuda
hereby accepts such appointment.
Subject to the
terms and conditions of this Agreement, EndoSonics shall not
appoint any other distributor, sales agent or other representative
concerning the IVUS products in the Territory during the term of
this Agreement.
B.
Transition of Distribution . Fukuda hereby acknowledges that
EndoSonics and JJMKK are parties to that certain Exclusive
Distribution Agreement dated June 1, 1998 (“JJMKK
Agreement”) whereby JJMKK has exclusive distribution rights
to certain IVUS Products in the Territory. EndoSonics agrees to
terminate the JJMKK Agreement no later than January 1, 2000.
EndoSonics, as per Fukuda’s request, will keep Fukuda advised
in regard to the termination of the JJMKK Agreement. In addition,
EndoSonics will use Best Efforts to: (i) assist Fukuda in
gaining rights to distribute to additional Sites other than the 82
Sites specified in that certain Distribution Transition Agreement
between Fukuda and EndoSonics effective March 1, 1997
(“Distribution Transition Agreement”) as soon practical
before January 1, 2000; and (ii) extend to
December 31, 1999 the rights of Fukuda pursuant to the
Distribution Transition Agreement to continued distribution of the
IVUS Products already installed by Fukuda as of the Effective
Date.
C. Other
Product Rights . EndoSonics hereby grants Fukuda a right of
first refusal or right of first negotiation for the exclusive
distribution of Cardiometrics Products by Fukuda in the Territory
after December 31, 1999, provided that the Cardiometrics
Products are functionally compatible with the In-Vision
TM System at such time. In addition, EndoSonics
hereby grants Fukuda a right of first refusal for the distribution
of all EndoSonics Products after December 31, 1999 to the
extent that EndoSonics may grant to Fukuda such rights. With
respect to all EndoSonics Products where Fukuda has the right of
first refusal hereunder, EndoSonics shall deliver written notice
(“Notice”) to Fukuda should EndoSonics desire to
appoint a distributor in the Territory for such product. The
parties shall negotiate in good faith an agreement for the
distribution of such product for a period of no more than sixty
(60) days after Fukuda receives such Notice. If the parties
agree not to enter into a written agreement within sixty
(60) from the receipt of the Notice by Fukuda, then EndoSonics
shall be free to enter into an agreement with a third party for the
distribution of such product in the Territory, but the terms and
conditions are substantially the same as those previously declined
by Fukuda. EndoSonics agrees that it will not appoint any
distributor for any EndoSonics Products in the Territory on or
before December 31, 1999 which may effect Fukuda’s right
of first refusal granted hereunder.
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D. Use of
Trademarks . EndoSonics hereby grants to Fukuda a non-exclusive
license to use the EndoSonics’ Trademarks (defined herein
below) for the purpose of identifying and marketing the products in
the Territory. Any use of the EndoSonics’ Trademarks will be
in accordance with such instructions as EndoSonics may give Fukuda
from time to time. EndoSonics shall, at its expense,
use reasonable efforts to protect and maintain all registration,
filings and issuance of EndoSonics’ Trademarks in full force
and effect.
E. Fukuda
Trademarks . EndoSonics shall not, without the prior written
consent of Fukuda in each instance, use in any manner whatsoever,
Fukuda’s name, its trademarks, logos, symbols or other images
of Fukuda or of any party affiliated therewith.
F.
Territorial Limitation . Fukuda shall not, without the prior
written consent of EndoSonics: (i) promote, advertise, sell,
distribute the IVUS, EndoSonics and Cardiometrics Products in any
country outside the Territory; (ii) cause, directly or
indirectly, the importation of the Product into any country outside
the Territory; nor (iii) establish a repair or maintenance
facility in any country outside the Territory.
G.
Conflict of Interest . Commencing on January 1, 2000,
Fukuda shall use its Best Efforts in the promotion and sale of the
IVUS Products and all other products to which it acquires exclusive
distribution rights hereunder, and Fukuda will not promote,
advertise, sell nor distribute directly or indirectly and products
competitive to the IVUS Products or any other products to which it
acquires exclusive distribution rights hereunder.
H.
Independent Contractors . The relationship of EndoSonics and
Fukuda established by this Agreement is that of independent
contractors, and nothing contained in this Agreement shall be
construed to (i) give either party the power to direct and
control the day-to-day activities of the other or (ii) allow
either party to create or assume any obligation on behalf of the
other party for any purpose whatsoever. All financial obligations
associated with each party’s business are the sole
responsibility of such party. All sales and other agreements
between Fukuda and its customers are Fukuda’s exclusive
responsibility and shall have no effect on EndoSonics’
obligations under this Agreement. EndoSonics shall be solely
responsible for, and shall indemnify and hold Fukuda free and
harmless from, any and all claims, damages or lawsuits (including
attorneys’ fees) arising out of the acts of EndoSonics, its
employees or its agents. Fukuda shall be solely responsible for,
and shall indemnify and hold EndoSonics free and harmless from, any
and all claims, damages or lawsuits (including attorneys’
fees) arising out of the acts of Fukuda, its employees or its
agents.
3. TERMS OF
PURCHASE OF PRODUCTS BY FUKUDA
A. Terms
and Conditions . All purchases of IVUS Products by Fukuda from
EndoSonics during the term of this Agreement shall be subject to
the terms and conditions of this Agreement.
B.
Prices . All prices are F.O.B. EndoSonics’ plant. This
purchase price to Fukuda for each of the IVUS Products
(“Purchase Price”) are set forth on Exhibit
“A” hereto, as such
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Purchase Prices
shall be amended from time to time during the term of this
Agreement by mutual agreement of the parties.
The prices may be
revised from time to time through consultation between EndoSonics
and Fukuda, taking into account the then prevailing market prices
of the similar products. Such revisions shall apply to all orders
received after the effective date of revision. Price increases
shall not affect unfulfilled purchase orders accepted by EndoSonics
prior to the effective date of the price increase.
C.
Taxes . The amounts payable by Fukuda under Section 3
are exclusive of all taxes and government charges (including,
without limitation, interest and penalties) payable to Japanese
government, if any. If Fukuda is required to withhold any taxes on
amounts payable to EndoSonics in accordance with this Agreement,
pursuant to the laws and regulations of Japan, Fukuda shall
compensate EndoSonics for any such withholding by paying EndoSonics
an additional amount equal to such amount withheld. Nothing in this
Section 3.C. shall be construed to mean that Fukuda is
responsible for taxes and charges (including, without limitation,
interest and penalties ) to the federal or state government of the
U.S.A. which are imposed on EndoSonics.
D. Order
and Acceptance . All orders for IVUS Products submitted by
Fukuda shall be initiated by written purchase orders sent to
EndoSonics and requesting a delivery date during the term of this
Agreement; provided, however, that an order may initially be placed
orally or by facsimile if a confirmational written purchase order
is received by EndoSonics within ten (10) days after said oral or
facsimile order. To facilitate EndoSonics’ production
scheduling, Fukuda shall use reasonable commercial efforts to
submit purchase orders to EndoSonics at least sixty (60) days
prior to the first day of the requested month of delivery. No order
shall be binding upon EndoSonics until accepted by EndoSonics in
writing, and EndoSonics shall have no liability to Fukuda with
respect to purchase orders that are not accepted. EndoSonics shall
notify Fukuda of the acceptance or rejection of an order and of the
assigned delivery date for accepted orders within ten
(10) days of receipt of the purchase order, if not rejected
within such period of ten (10) days, the order shall be deemed
accepted. EndoSonics will use its Best Efforts, consistent with its
obligations to other similarly-situated customers, to process and
ship all orders in accordance with requested delivery dates by
Fukuda.
E. Terms
of Purchase Orders . Fukuda’s purchase orders submitted
to EndoSonics from time to time with respect to IVUS Products to be
purchased hereunder shall be governed by the terms of this
Agreement, and nothing contained in any such purchase order shall
in any way modify such terms of purchase or add any additional
terms or conditions.
F.
Payment . EndoSonics shall submit an invoice to Fukuda upon
each shipment of IVUS Products ordered by Fukuda. The invoice shall
cover Fukuda’s purchase price for the IVUS Products in a
given shipment plus any freight, taxes or other applicable costs
initially paid by EndoSonics but to be borne by Fukuda. Payment
shall be made in U.S. dollars and payment shall be by wire
transfer, check or other instrument approved by EndoSonics. Payment
terms shall be the full invoiced amount due for payment received by
EndoSonics within sixty (60) days of the date of the invoice.
Fukuda may take a two (2) percent discount as a reduction of
the invoice
price if
payment is received by EndoSonics within fifteen (15) days of the
date of invoice. Any invoiced amount not received within sixty
(60) days of the date of invoice shall be subject to a service
charge of one and a half percent (1.5%) per month or such lesser
percentage permitted by applicable law.
G.
Shipping . All IVUS Products delivered pursuant to the terms
of this Agreement shall be suitably packed for air freight shipment
in EndoSonics’ standard shipping cartons, marked for shipment
at Fukuda’s address set forth above or any other address in
the Territory as Fukuda indicates, and delivered to Fukuda or its
carrier agent F.O.B. EndoSonics’ manufacturing plant, at
which time title to such IVUS Products and risk of loss shall pass
to Fukuda. Unless otherwise instructed in writing by Fukuda,
EndoSonics shall select the carrier. All freight, insurance, and
other applicable expenses, as well as any special packing expense,
shall be paid by Fukuda.
H.
Rejection of Products . Fukuda shall inspect all IVUS
Products, except those IVUS Products which are sterilized and
sealed by EndoSonics at its plant, promptly upon receipt thereof
and may reject any IVUS Product that fails to meet the
specifications set forth in EndoSonics’ current product
specifications for that IVUS Product. Any IVUS Product not properly
rejected within sixty (60) days of receipt of that IVUS
Product at Fukuda’s facility after customs clearance for
import (the “Rejection Period”) shall be deemed
accepted. To reject an IVUS Product, Fukuda shall, within the
Rejection Period, notify EndoSonics in writing by facsimile of its
rejection and request a Return Material Authorization
(“RMA”) number. EndoSonics shall provide the RMA number
in writing by facsimile to Fukuda within ten (10) days of
receipt of the request. Within ten (10) days of receipt of the
RMA number, Fukuda shall return to EndoSonics the rejected IVUS
Product, freight collect, in its original shipping carton with the
number displayed on the outside of the carton. Provided that
EndoSonics has complied with its obligations in this Agreement,
EndoSonics reserves the right to refuse to accept any rejected IVUS
Products that do not bear an RMA number on the outside of the
carton. As promptly as possible but no later than fifteen
(15) working days after receipt by EndoSonics of properly
rejected IVUS Products, EndoSonics shall, at its expense, replace
the IVUS Products and ship such replacement IVUS Products freight
prepaid.
I. Return
of Products After Rejection Period . After the Rejection
Period, EndoSonics’ Standard Limited Warranty shall be
applied. For sterilized and sealed IVUS Products such as catheters,
however, EndoSonics shall replace those IVUS Products found
defective with new IVUS Products if such defects should be found
within fifteen (l5) months of shipment of such IVUS Products to
Fukuda if a notice with the details of such defects is given by
Fukuda to EndoSonics within a reasonable period after Fukuda or the
user has discovered defects or ought to have discovered them. If
EndoSonics tests and inspects these returned IVUS Products and
determines that such IVUS Products perform according to EndoSonics
written specifications, no credit will be given to Fukuda. If upon
such test and inspections, such returned IVUS Products do not
perform to EndoSonics’ written specification, these IVUS
Products will be replaced at no cost to Fukuda except in the case
that EndoSonics proves that such defect was caused after the F.O.B.
point of shipment by EndoSonics to Fukuda.
J. No
Time Restriction . Notwithstanding any provision herein to the
contrary, Fukuda’s rights and remedies under this Agreement
or laws of the Territory shall not be subject to any time
restriction that may be imposed by any provisions of the laws of
non-mandatory nature so long as Fukuda gives notice specifying the
nature of the lack of conformity within a reasonable time after
Fukuda or the user has discovered it or ought to have discovered
it.
4. WARRANTY
TO FUKUDA’S CUSTOMERS
A.
Standard Limited Warranty . Fukuda shall pass on to its
customers EndoSonics Standard Limited Warranty for the IVUS
Products. This warranty shall cover the IVUS Products for a period
of fifteen (15) months from the date of shipment to Fukuda.
This warranty is contingent upon proper use of an IVUS Products in
the application for which it was intended and does not cover IVUS
Products that were modified without EndoSonics’ approval or
that were subjected by the customer to unusual physical stress. If
an IVUS Product fails to meet the warranty provided herein,
EndoSonics’ sole liability and Fukuda and/or the
end-user’s sole remedy shall be either the replacement by
EndoSonics of the defective unit with another unit of the same
product (or a unit of a substantially equivalent product thereto if
the original model is no longer manufactured) or the refund by
EndoSonics of the purchase price for such defective
product.
B. No
Other Warranty . EXCEPT FOR THE EXPRESS WARRANTY SET FORTH
ABOVE, ENDOSONICS HEREBY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, BY STATUTE OR OTHERWISE, REGARDING THE IVUS PRODUCTS,
INCLUDING BUT NOT LIMITED TO THEIR FITNESS FOR A PARTICULAR
PURPOSE, OR THEIR MERCHANTABILITY. OTHER THAN FOR PUNITIVE DAMAGES,
NOTHING IN THIS SECTION 4. SHALL LIMIT THE INDEMNIFICATION
OBLIGATION UNDER SECTION 8.A. WITH RESPECT TO DAMAGE CLAIMS FOR
PERSONAL INJURY AND/OR DEATH CAUSED BY DEFECT OF THE IVUS
PRODUCTS.
5.
ADDITIONAL OBLIGATIONS OF ENDOSONICS AND FUKUDA
A.
Clinical Trials; Management Product Supply and Regulatory
Approvals . Fukuda agrees that it will undertake to manage, at
Fukuda’s expense, all animal trials and human clinical trials
required to obtain approval from all Japanese regulatory
authorities to market in the Territory the IVUS Products and all
other products to which Fukuda acquires exclusive distribution
rights under this Agreement. Fukuda agrees to expeditiously submit
for Ministry of Health and Welfare (“MOHW”) approval
for In-Vision TM System and upon receipt of such approval,
transfer the approval to the party specified by EndoSonics. Fukuda
will continue to process the existing submission for the amended
Oracle 96 TM
System and transfer such approval to
JJMKK in accordance with the Distribution Transition Agreement.
EndoSonics will use Best Efforts to cause JJMKK to transfer to
Fukuda all MOHW approvals held by JJMKK on products to which Fukuda
acquires exclusive distribution rights hereunder upon the
termination of the JJMKK Agreement. Any costs and expenses which
exceed the amount paid by JJMKK to Fukuda
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in
consideration of the transfer of the MOHW approvals from Fukuda to
JJMKK will not be the responsibility of Fukuda.
EndoSonics agrees
that it will sell products to Fukuda to conduct the animal trials
and human clinical trials for Japanese marketing approval at a
fifty percent (50%) discount to EndoSonics’ regular prices to
Fukuda. Payment for these products will be
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