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EXHIBIT 10.24
[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 VOLCANO THERAPEUTICS, INC.
JAPANESE DISTRIBUTION AGREEMENT
THIS
AGREEMENT (“Agreement”), effective on the Effective Date (defined
below), is made and entered into between Volcano Therapeutics, Inc., a Delaware
corporation, with its principal office at 2870 Kilgore Road, Rancho Cordova,
California 95670, U.S.A. (hereinafter referred to as “Volcano”),
and Fukuda Denshi Co., Ltd., a corporation of Japan, with its principal office
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
follows:
1. DEFINITIONS
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 (2002)).
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. “Effective
Date” shall mean November 30, 2004.
D. “EndoSonics
Agreement” shall mean the Japanese Distribution Agreement, dated
August 31, 1998, by and between Fukuda and EndoSonics Corporation, a
Delaware corporation (“EndoSonics”), which was subsequently
assigned to Volcano from Jomed, Inc., a Delaware corporation (formerly
EndoSonics), that granted distribution rights related to certain medical device
products to Fukuda from EndoSonics.
E. “Field”
shall mean the cardiology field and does not include endovascular or peripheral
applications fields.
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 (2004).
G. “Territory”
shall mean the country of Japan, but as defined by the accounts listed on Exhibit A.
Distributor shall make best effort and accept its responsibility to sell to the
accounts listed in Exhibit A.
H. “Volcano
Products” shall mean those Volcano phased array versions of the products
listed on Exhibit B attached hereto and all successor products
thereto. Volcano Products may be changed, abandoned or added by Volcano, at its
sole discretion, provided that Volcano gives one hundred twenty
(120) days’ prior written notice to Fukuda.
2. APPOINTMENT AND
AUTHORITY OF FUKUDA
A. Appointment.
Subject to the terms and conditions set forth herein, Volcano hereby appoints
Fukuda as Volcano’s non-exclusive distributor for the Volcano Products in
the Field
throughout the Territory for
the period commencing on the Effective Date until June 30, 2007. Subject
to the terms and conditions set forth herein, Fukuda hereby accepts such
appointment.
B. Use
of Trademarks. Volcano hereby grants to Fukuda a non-exclusive license to
use the Volcano Trademarks (defined herein below) for the purpose of
identifying and marketing the products in the Territory for use in the Field.
Any use of the Volcano Trademarks will be in accordance with such instructions
as Volcano may give Fukuda from time to time. Volcano shall, at its expense,
use reasonable efforts to protect and maintain all registration, filings and
issuance of Volcano Trademarks in full force and effect.
C. Fukuda
Trademarks. Volcano 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.
D. Territorial
Limitation. Fukuda shall not, without the prior written consent of Volcano:
(i) promote, advertise, sell, distribute the Volcano Products in any
country outside the Territory, (ii) cause, directly or indirectly, the
importation of the Volcano Product into any country outside the Territory; nor
(iii) establish a repair or maintenance facility in any country outside
the Territory.
E. Conflict
of Interest. Commencing on the date hereof, Fukuda shall use its Best
Efforts in the promotion and sale of the Volcano Products and all other
products to which it acquires distribution rights hereunder.
F. Independent
Contractors. The relationship of Volcano 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 Volcano’s obligations under
this Agreement. Volcano 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 Volcano, its
employees or its agents. Fukuda shall be solely responsible for, and shall
indemnify and hold Volcano 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 Volcano Products by Fukuda from Volcano
during the term of this Agreement shall be subject to the terms and conditions
of this Agreement.
B. Prices.
All prices are FCA (Incoterms 2000) Volcano’s plant. The purchase price
to Fukuda for each of the Volcano Products (“Purchase Price”) is
set forth on Exhibit B hereto, as such Purchase Prices shall be
amended from time to time during the term of this Agreement by mutual agreement
of the parties.
The
Purchase Prices may be revised from time to time through consultation between
Volcano 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.
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Price increases shall not
affect unfulfilled purchase orders accepted by Volcano 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),
if any, payable to the Japanese government. If Fukuda is required to withhold
any taxes on amounts payable to Volcano in accordance with this Agreement,
pursuant to the laws and regulations of Japan, Fukuda shall compensate Volcano
for any such withholding by paying Volcano 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 Volcano.
D. Order
and Acceptance. All orders for Volcano Products submitted by Fukuda shall
be initiated by written purchase orders sent to Volcano 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 Volcano within ten (10) days after
said oral or facsimile order. To facilitate Volcano’s production
scheduling, Fukuda shall use reasonable commercial efforts to submit purchase
orders to Volcano at least sixty (60) days prior to the first day of the
requested month of delivery. No order shall be binding upon Volcano until
accepted by Volcano in writing, and Volcano shall have no liability to Fukuda
with respect to purchase orders that are not accepted. Volcano 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. Volcano 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 Volcano
from time to time with respect to Volcano 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.
Volcano shall submit an invoice to Fukuda upon each shipment of Volcano
Products ordered by Fukuda. The invoice shall cover Fukuda’s purchase
price for the Volcano Products in a given shipment plus any freight, taxes or
other applicable costs initially paid by Volcano 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 Volcano. Payment terms shall be the full
invoiced amount due for payment received by Volcano 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 Volcano 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 Volcano Products delivered pursuant to the terms of this Agreement shall be
suitably packed for air freight shipment in Volcano’s 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 FCA (INCOTERMS 2000) Volcano’s manufacturing plant, at
which time title to such Volcano Products and risk of loss shall pass to
Fukuda. Unless otherwise instructed in writing by Fukuda, Volcano shall select
the carrier. All
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freight, insurance, and other
applicable expenses, as well as any special packing expense, shall be paid by
Fukuda.
H. Rejection
of Product. Fukuda shall inspect all Volcano Products, except those Volcano
Products which are sterilized and sealed by Volcano at its plant, promptly upon
receipt thereof and may reject any Volcano Product that fails to meet the
specifications set forth in Volcano’s current product specifications for
that Volcano Product. Any Volcano Product not properly rejected within sixty
(60) days of receipt of that Volcano Product at Fukuda’s facility
after customs clearance for import (the “Rejection Period”) shall
be deemed accepted. To reject a Volcano Product, Fukuda shall, within the
Rejection Period, notify Volcano in writing by facsimile of its rejection and
request a Return Material Authorization (“RMA”) number. Volcano
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 Volcano the rejected Volcano Product,
freight collect, in its original shipping carton with the number displayed on
the outside of the carton. Provided that Volcano has complied with its
obligations in this Agreement, Volcano reserves the right to refuse to accept
any rejected Volcano 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 Volcano of properly rejected Volcano Products, Volcano shall,
at its expense, replace the Volcano Products and ship such replacement Volcano
Products freight prepaid.
I. Return
of Products After Rejection Period. After the Rejection Period,
Volcano’s Standard Limited Warranty shall be applied. For sterilized and
sealed Volcano Products such as catheters, however, Volcano shall replace those
Volcano Products found defective with new Volcano Products if such defects
should be found within fifteen (15) months of shipment of such Volcano
Products to Fukuda if a notice with the details of such defects is given by
Fukuda to Volcano within a reasonable period after Fukuda or the user has discovered
defects or ought to have discovered them. If Volcano tests and inspects these
returned Volcano Products and determines that such Volcano Products perform
according to Volcano written specifications, no credit will be given to Fukuda.
If upon such test and inspections, such returned Volcano Products do not
perform to Volcano’s written specification, these Volcano Products will
be replaced at no cost to Fukuda except in the case that Volcano proves that
such defect was caused after the FCA (INCOTERMS 2000) point of shipment by
Volcano 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 Volcano Standard
Limited Warranty for the Volcano Products. This warranty shall cover the
Volcano Products for a period of fifteen (15) months from the date of
shipment to Fukuda. This warranty is contingent upon proper use of a Volcano
Product in the application for which it was intended and does not cover Volcano
Products that were modified without Volcano’s approval or that were
subjected by the customer to unusual physical stress. If a Volcano Product
fails to meet the warranty provided herein, Volcano’s sole liability and
Fukuda and/or the end-user’s sole remedy shall be either the replacement
by Volcano of the defective unit with another unit of the same product (or
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a unit of a substantially
equivalent product thereto if the original model is no longer manufactured) or
the refund by Volcano of the purchase price paid for such defective product.
B. No
Other Warranty. EXCEPT FOR THE EXPRESS WARRANTY SET FORTH ABOVE, VOLCANO
HEREBY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, BY STATUTE OR
OTHERWISE, REGARDING THE VOLCANO 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 VOLCANO PRODUCTS.
5. ADDITIONAL OBLIGATIONS
OF VOLCANO 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 Field throughout the Territory the Volcano
Products and all other products to which Fukuda acquires distribution rights
under this Agreement. Fukuda agrees to expeditiously submit for Ministry of
Health, Labour and Welfare (“MOHLW’’) approval any Volcano
Product. Upon (i) the termination of this Agreement and/or (ii) the
termination of the EndoSonics Agreement, Fukuda shall, expeditiously transfer
to Volcano all regulatory and/or governmental approvals, permits, licenses and
the like of the Volcano Products and EndoSonics Products (as defined in the
EndoSonics Agreement), to Volcano. Volcano will be responsible to pay Fukuda
only the cost of transferring such approvals, permits, licenses and the like to
Volcano (i.e., labor costs, supplies, and government fees).
Volcano
agrees that it will supply products to Fukuda to conduct the animal trials and
human clinical trials for free.
Volcano
shall assist Fukuda in obtaining regulatory approvals and registration of the
products in the Field throughout the Territory by providing Fukuda with:
(i) materials
in Volcano possession necessary to obtain MOHLW approvals and marketing
approvals, licenses, and permits;
(ii) certificates
of analysis, export and compliance;
(iii) trademark
authorizations; and
(iv) such
other information as Fukuda shall reasonably request from time to time.
Volcano
agrees to train Fukuda in the proper clinical use of all Volcano Products, and
Fukuda shall be responsible in turn for training its customers. Also at
Fukuda’s request, Volcano agrees to make arrangements to send one of
Volcano’s major U.S. clinical investigator physicians to Japan to
(i) give lectures on the use of these products and (ii) perform
clinical training of these products to Japanese physicians. Fukuda agrees to
reimburse Volcano for all out-of-pocket expenses for the travel of this
physician to Japan.
B. Forecasts.
Within the first ten (10) days of every quarter, Fukuda shall provide
Volcano with a four quarter rolling forecast (“Forecast”) showing
prospective orders by product model and intended purchase order submittal date.
The quantities forecasted for the first quarter
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of each Forecast
(“Binding Quarter”) shall be binding on Fukuda and deemed supported
by a non-cancelable purchase order.
C. Promotion
of the Products. Fukuda shall, at its own expense, use its Best Efforts to
promote the sale of the Volcano Products in the Field throughout the Territory.
Such promotion shall include, but not be limited to, preparing promotional
materials in languages appropriate for the Territory, advertising the Volcano
Products in trade publications within the Territory, participating in
appropriate trade shows to the extent Fukuda thinks fit, and directly
soliciting orders from customers for the Volcano Products.
D. Finances
and Personnel. Fukuda shall devote sufficient financial resources,
technically qualified sales personnel, and service personnel to the Volcano
Products to fulfill its responsibilities under this Agreement.
E. Customer
and Sales Reporting. Fukuda shall, at its own expense:
(i) place
the Volcano Products in Fukuda’s catalogues as soon as possible and
feature Volcano Products in any applicable trade show that it attends to the
extent Fukuda thinks fit;
(ii) provide
adequate contact with existing and potential customers in the Field throughout
the Territory on a regular basis, consistent with good business practice;
(iii) assist
Volcano in assessing customer requirements for the Volcano Products, including
modifications and improvements thereto, in terms of quality, design, functional
capability, and other features;
(iv) submit
market research information, as reasonably requested by Volcano, regarding
competition and changes in the market in the Territory; and
(v) provide
Volcano with a report, by product type, of all sales of Volcano Products for
each quarter no later than sixty (60) days following the end of such
quarter.
F. Import
Requirement. Fukuda shall, at its own expense, pay all import licenses and
permits, pay customs charges and duty fees, imposed by any Japanese
governmental authority upon or applicable to any import by Fukuda under this
Agreement, and take all other actions required to accomplish the import of the
Volcano Products purchased by Fukuda.
G. Export
Law Compliance. Fukuda understands and recognizes that the Volcano Product
and other materials made available to it hereunder may be subject to the export
administration regulations of the United States Department of Commerce and
other United States government regulations, as amended from time to time,
related to the export of technical data and equipment and products produced
therefrom. Fukuda agrees to comply with all such regulations in connection with
the distribution of the Volcano Product. Fukuda agrees to cooperate with
Volcano and to provide Volcano with such reasonable assistance as is required
in order to comply with the export administration regulations of the United
States. Nothing in this Section 5.H. shall be construed to require that
Fukuda shall bear any cost or expense required to comply with such U.S. export
regulations.
6. ADDITIONAL OBLIGATIONS
OF VOLCANO
A. Supply
of Sample Products and Materials. Volcano shall supply Fukuda’s
requirements for the Volcano Products in the Field throughout the Territory
consistent with the
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delivery schedules. Volcano
shall promptly provide Fukuda without any charges with marketing and technical
information concerning the Volcano Products as well as reasonable quantities of
brochures, instructional material, advertising literature, and other Volcano
Product data, with all such material printed in the English language. Volcano
agrees to discuss with Fukuda for supplying appropriate number of sample
Volcano Products or granting a fifty percent (50%) discount for appropriate
number of Volcano Products for assistance of Fukuda’s sales.
B. Response
to Inquiries. Volcano shall promptly respond to all inquiries from Fukuda
concerning matters pertaining to this Agreement.
C. Testing.
Volcano shall test all Volcano Products before shipment to Fukuda under U.S.
FDA cGMP or QSR requirements.
D. Delivery
Time. Volcano shall minimize delivery time as much as possible and to
fulfill delivery obligations as committed in any acceptance.
E. Market
Information. Upon reasonable request of Fukuda, Volcano shall provide
Fukuda with information as to general market movement, competitors’
prices and strategies, names of Volcano’s major customers
(users) and other information that may help Fukuda promote and sell the
Volcano Products in the Field throughout the Territory.
F. Customer’s
Special Requirements. From time to time, Fukuda may encounter requests from
customers for special changes or modifications on Volcano Products so that the
Volcano Products meet their particular usage. In such cases, if Fukuda deems it
necessary to comply with such requirements for its market strategy, Fukuda shall
request Volcano to make such changes or modifications on the Volcano Products
and Volcano shall use its reasonable commercial efforts to meet such
requirements.
G. New
Developments. Volcano shall inform Fukuda of new Volcano Product
developments during regularly scheduled quarterly reviews.
H. Regulatory
Reporting and Analysis of Returned Products. Volcano shall file, or cause
to be filed, all reports required of a manufacturer pursuant to the applicable
U.S. medical device reporting regulations. Volcano, as the manufacturer of the
products, shall perform all failure analysis on the products within thirty
(30) days of receipt of each failed product and shall file all reports
required with the applicable U.S. regulatory agency. Volcano shall further
cooperate with and assist Fukuda in submitting all reports that Fukuda, as
distributor of the products, may be required to file. Fukuda shall promptly
provide Volcano with copies of all such reports.
7. TERM AND TERMINATION
A. Term.
This Agreement shall be effective on the Effective Date and shall continue in
force through June 30, 2007, unless terminated earlier under the
provisions of this Section 7. Six (6) months prior to expiration, the
parties will meet to discuss in good faith an extension to this Agreement.
Thereafter the term of the Agreement may be renewed by mutual agreement of the
parties for successive periods of two (2) years each.
B. Termination
for Cause. If either party materially defaults in the performance of any
obligation in this Agreement, then the non-defaulting party may give written
notice to the defaulting party that if the default is not cured within ninety
(90) days after receipt of such notice,
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the Agreement will be
terminated. If the non-defaulting party gives such notice and the default is
not cured during the ninety (90) day period, then the Agreement shall
automatically terminate at the end of that period.
C. Termination
for Insolvency. This Agreement shall terminate, without notice, (i) upon
the institution by or against Fukuda or Volcano of insolvency, receivership or
bankruptcy proceedings or any other proceedings for the settlement of debts;
(ii) upon Fukuda’s or Volcano’s making an assignment for the
benefit of creditors; or (iii) upon Fukuda’s or Volcano’s
dissolution.
D. Fulfillment
of Orders upon Termination. Upon termination of this Agreement, Volcano
shall continue to fulfill, subject to the terms of Section 3 above and if
so requested by Fukuda, all orders accepted by Volcano prior to the date of
termination.
E. Return
of Materials. All trademarks, trade names, patents, copyrights, designs,
drawings, formulas or other data, photographs, samples, literature and sales
aids of every kind with respect to the Volcano Products shall remain the
property of Volcano as long as the objects still remain in Fukuda’s
possession. Within thirty (30) days after the termination of this
Agreement, Fukuda shall prepare all such items in its possession for shipment
as Volcano may direct, at Volcano’s expense. Fukuda shall not make or
retain any copies of any confidential items or information or any product
literature which may have been entrusted to it. Effective upon the termination
of this Agreement, Fukuda shall cease to use all trademarks, marks and trade
names of Volcano; provided, however, that Fukuda may continue to use such
trademarks to market, distribute or sell any inventory of the products in
Fukuda’s possession at the time of such termination as permitted pursuant
to Section 7.F.
F. Inventory
on Termination. Upon termination of this Agreement due to expiration (7.A),
Fukuda may return to Volcano, or its nominee, its remaining inventory which is
new and unused for credit or refund at the then current selling prices or, upon
mutual agreement, for a period not to exceed one hundred eighty
(180) days, sell any remaining inventory. Upon termination due to
Fukuda’s default or insolvency (7.B., 7.C.), Fukuda at Volcano’s
option, will return its remaining inventory which is new and unused for credit
or refund at the then current selling prices or for a period not to exceed one
hundred eighty (180) days, sell any remaining inventory. Upon termination
due to Volcano’s default or insolvency (7.B., 7.C.), Fukuda at its option
will return its remaining inventory which is new and unused for credit or
refund at the then current selling prices, or for a period not to exceed one
hundred eighty (180) days, sell any remaining inventory.
G. Limitation on Liability. In the event of termination by either party in accordance with any of the provisions of this Agreement, neither party shall be liable to the other because of such termination, for compensation, reimbursement or damages on account of the loss of prospective profits or anticipated sales or on account of expenditures, inventory, investments, leases or commitments in connection with the business or goodwill of Volcano o






