Exhibit 99.1
NOTE: CONFIDENTIAL TREATMENT HAS BEEN OBTAINED
OR REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT.
WHENEVER CONFIDENTIAL INFORMATION IS OMITTED HEREIN, SUCH
CONFIDENTIAL INFORMATION HAS BEEN SUBMITTED SEPARATELY TO THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.
MCKESSON MEDICAL-SURGICAL INC.
DISTRIBUTION AGREEMENT
This Distribution Agreement (
“Agreement” ) is made and entered into as
of the 5th day of August, 2005 ( “Effective
Date” ), by and between McKESSON MEDICAL-SURGICAL
INC., having its principal place of business at 8741 Landmark Road,
Richmond, Virginia 23228 and any affiliated companies designated by
McKesson Medical-Surgical Inc. to participate under this Agreement
( “Buyer” ), and between Candela
Corporation, a Delaware corporation, having its principal place of
business at 530 Boston Post Road, Wayland, MA 01778-1886 USA (
“Seller” ).
In consideration of the mutual
covenants contained in this Agreement, and for other good and
valuable consideration, the sufficiency of which is acknowledged by
both parties, the parties above agree as follows:
1.
Appointment . Subject to the terms and
conditions set forth herein, Seller appoints Buyer as its exclusive
distributor in the United States of all products of Seller set
forth on Exhibit A (the
“Products” ), and Buyer accepts such
appointment. Buyer shall have the right (i) to market,
distribute and sell the Products on an exclusive basis in the
United States except for the following specialties and
markets—hospitals, dermatology, plastic surgery, spa, medispa
(any spa employing a medical director), electrology, government
organizations, rental companies, third-party resellers and/or
Candela Franchise Customers (as defined below) (the restricted area
and markets shall be referred to as the “Restricted
Territory” and the permitted area and markets of
distribution for Buyer shall be referred to as the
“Territory” ) and (ii) to distribute
and sell the Products on a non-exclusive basis in the United States
within the Restricted Territory to Buyer’s customers (unless
such customers are existing customers of Seller or have already
engaged in the sales process with Seller in the previous twelve
(12) month period, including but not limited to having expressed
interest in Seller’s Product, received a Product
demonstration, requested a purchase proposal, received a purchase
proposal or quotation from Seller or issued a purchase order) upon
Seller’s prior written consent. Seller agrees that it
shall not sell, lease, market or otherwise distribute the Products
to any person or entity other than Buyer (including directly to
end-user customers) within the Territory other than to market the
Products within the Territory on Buyer’s behalf as described
in this Agreement. Such exclusive appointment shall be in
effect for a period of three (3) years following the Effective
Date (the “ Term ”) and shall continue
automatically in effect for successive terms of one (1) year
each until terminated pursuant to the terms of this Agreement or
unless either party provides at least ninety (90) days prior
written notice to the other party prior to the end of the then
current term of its election to terminate the Agreement. The
parties agree that Buyer shall have the right to sell to its
customers extended service warranties on the Products, to the
extent that Seller offers such extended warranties, provided such
extended warranty sale occurs simultaneously with the initial sale
of the Product. “Candela Franchise
Customers” mean customers of Candela that do not
primarily engage in the practice of medicine, such as Ideal
Image.
Commencing on that day which is one
hundred days after the Effective Date, Buyer agrees that it shall
not purchase, market, distribute or sell similar competing laser
and light-based products (limited to any light-based device that is
used to provide primarily aesthetic treatment including but not
limited to intense pulsed light and LED devices) to Seller’s
Products (the “ Competing Products ”)
during the term of this Agreement, provided that such restriction
shall not apply and Buyer shall have the right to purchase
Competing Products from other vendors without limitation and/or
terminate this Agreement if (a) one of the events set forth
below occurs and Seller fails to cure the violation or
non-compliance described therein within the applicable time period
indicated below or (b) one of the events set forth below
occurs, but Seller cures each such violation or non-compliance more
than one time in any Contract Year
|
EVENT
|
|
CURE PERIOD
|
|
|
Violation of Section 3(a), (e), (f),
(h) or (i)
|
|
None, other than 3(h(iii) which will have a
cure period of 90 days
|
|
|
|
|
|
|
|
Violation of Section 3(b), (d) or
(g)
|
|
45 days
|
|
|
|
|
|
|
|
Seller’s failure to meet any Seller
obligation under the Plan
|
|
30 days
|
|
|
|
|
|
|
|
Any Product is defective or not performing due
to a manufacturer’s defect or failure to meet
specifications
|
|
30 days
|
|
|
|
|
|
|
|
Any Product fails to meet applicable federal or
state legal or regulatory requirements;
|
|
60 days
|
|
|
|
|
|
|
|
Any Product is subject to allegations or claims
of intellectual property infringement or misappropriation of trade
secrets and Buyer reasonably believes that its continued sale of
the Product will subject Buyer to liability, unless Buyer is fully
indemnified for such liability in accordance with
Section 11 of this Agreement.
|
|
None
|
|
|
|
|
|
|
|
Any Product has been recalled and only for such
Product and only for such period that Seller has not re-introduced
the Product that was subject to the recall (provided such period is
no longer than ninety (90) days)
|
|
None
|
|
In the event Buyer elects to purchase Competing
Products hereunder, Seller and Buyer shall each have the right to
terminate this Agreement upon ninety (90) days prior written notice
to the other party.
2.
Confidential treatment requested for this section.
3.
Representations and Warranties . Seller
represents, warrants and covenants that:
a.
Title to the Products will pass to Buyer free and clear of all
third party liens, claims, security interests or other
encumbrances.
b.
Seller has manufactured, packaged or is selling the Products to
Buyer in compliance with all governing laws, rules and
regulations.
c.
The Products do not and will not infringe or violate any validly
issued patent, copyright, trademark or other exclusive right
(provided that, for purposes of Section 11.1(b) , the
warranty set forth in this bullet shall read “The Products do
not and will not infringe or violate any patent, copyright,
trademark or other exclusive right”).
2
d.
That no food, drug, device or cosmetic constituting, or being part
of, any shipment or other delivery now or hereafter made to Buyer
or on Buyer’s order by Seller will be adulterated or
misbranded within the meaning of the Federal Food, Drug and
Cosmetic Act, or within the meaning of any applicable state law in
which the definitions of adulteration and misbranding are
substantially the same as those contained in the Federal Food, Drug
and Cosmetic Act, or will be an article which may not, under
the provisions of Sections 404 or 505 of said Act, be introduced
into interstate commerce.
e.
That Seller’s terms and conditions of sale are and will be
made with a complete understanding of the requirements of the
Robinson-Patman Act and that they are not in violation of the
provisions of said Act or of any other legislation.
f.
That no article comprising or being part of any shipment or
other delivery now or hereafter made to Buyer or on Buyer’s
order by Seller will be (a) an article that was
originally distributed as a sample not intended for resale;
(b) an article that has been obtained from or through
persons not lawfully entitled to receive, possess, distribute or
resell same; or (c) an article that has been altered,
relabeled or repackaged since its initial shipment from the
manufacturer or supplier thereof, unless such alteration,
relabeling or repackaging was in material compliance with all
applicable law.
g.
That each article comprising or being part of any shipment or
other delivery now or hereafter made to Buyer or on Buyer’s
order by Seller will be manufactured, sold, classified, described,
packaged, marked, labeled or shipped in accordance with, and shall
conform to, all applicable standards and requirements of the
Prescription Drug Marketing Act, the Federal Consumer Products
Safety Act, the Federal Hazardous Substances Labeling Act, the
Federal Insecticide, Fungicide and Rodenticide Act, the Flammable
Fabrics Act, the Fair Labor Standards Act of 1938, the Explosive
and Combustible Act of 1960, the Civil Rights Act of 1964,
Executive Orders relative to equal employment opportunity, the Fair
Packaging and Labeling Act, the Occupational Safety and Health Act
of 1970 and the Transportation Safety Act of 1974, as any of same
have been or are amended, or any rule or regulation
promulgated under any of these above-specified laws.
h.
That neither Seller nor any of its affiliates, employees or
contractors providing items to Buyer: (i) have been
convicted of a criminal offense related to healthcare;
(ii) are currently excluded, suspended or debarred from
participating in any federal healthcare program; (iii) are
under investigation (civil or criminal) by any federal or state
enforcement, regulatory, administrative or licensing agency; or
(iv) are currently listed on the General Services
Administration List of Parties Excluded from the Federal
Procurement and Non-Procurement Programs.
i.
The Seller shall warrant the Products for a period of one hundred
eighty (180) days from the date such Products are delivered to the
end-user of such Products or for such longer warranty period as
Seller customarily makes available to distributors or end-users of
the Products.
Buyer represents and warrants that
the execution, delivery and performance of this Agreement by Buyer
does not and will not conflict with or violate, and does not and
will not result in a breach of any, agreement, license, or any
other contract or written instrument related to distribution
services for laser and light-based products as defined in
Section 1 .
4.
Seller’s Duties . Seller hereby agrees,
as long as this Agreement is in effect, as follows:
(a) Seller shall provide
to Buyer free of charge reasonable quantities of literature and
other sales material in connection with the Products. Seller
shall keep Buyer well informed of Seller’s promotional
activities pertaining to the Products and shall make available to
Buyer training programs sponsored by Seller in connection with the
Products in accordance with Section 15 . Seller
shall offer Buyer the same promotional activities (including
without limitation, training, marketing and seminars) and at the
same prices, if any, that Seller makes available to any other
United States distributor of Seller.
(b) Seller must provide
proof of product liability insurance coverage for all products sold
to Buyer. A Certificate of Insurance evidencing Product
Liability Insurance with broad form vendors’ coverage naming
Buyer and its subsidiaries as an additional insured must be
submitted prior to acceptance as a supplier of Buyer.
Seller shall instruct its insurance agent/broker
to complete a Certificate of Insurance and forward it
to:
3
|
|
|
McKesson Medical-Surgical Inc.,
|
|
Attn.:
|
|
Supplier Management
|
|
|
|
8741 Landmark Road
|
|
|
|
Richmond, VA 23228
|
Seller shall maintain products liability
insurance with minimum limits of coverage of Five Million Dollars
($5,000,000) per claim and an aggregate limit of Five Million
Dollars ($5,000,000). The minimum coverage can be combined
with an umbrella policy. Any deductible shall be the
responsibility of Seller.
Additional Insurance
Requirements:
•
Blanket Contractual Liability
(including a sole negligence exclusion) insuring Seller’s
indemnification obligations (see Section 11
herein).
•
Provide thirty (30) days written
notice of cancellation or material change in coverage.
•
List the name of Seller’s
parent company and all subsidiaries/divisions, if any, covered by
the policy.
•
Seller’s insurance policy
shall be primary and not contributory to any insurance or
self-insurance maintained by Buyer.
Seller’s policy shall be
occurrence based and not “claims made”, provided,
however, that in the event Seller can only secure claims-made
insurance coverage, Seller represents, covenants, and warrants the
following:
(a) Seller shall
continue to renew its product liability insurance for the period of
six (6) years subsequent to the expiration date of this
Agreement;
(b) The in-force
product liability insurance during the term of this Agreement and
the six (6) years subsequent to the expiration of this
Agreement shall incorporate the following
provisions:
A “Retroactive Date” of
on or prior to the Effective Date of this Agreement; and
A 6 year extended reporting option
will be placed, if coverage is not renewed, if the option is
commercially available.
•
Seller’s insurance
agent/broker shall mail renewal Certificates of Insurance to Buyer
within fourteen (14) days of expiration of the current policy on
file to:
McKesson Medical-Surgical
Inc.
ATTN: Supplier
Management
8741 Landmark Road
Richmond, VA 23228
(c) Subject to
Section 8 hereof, Seller shall promptly satisfy
Buyer’s orders for the Products, to enable Buyer to maintain
a supply of the Products sufficient to provide adequate and timely
service to Buyer’s Customers as long such orders are
consistent with Buyer’s forecasted Product purchase
projections as described in Section 15(f) .
(d) Seller’s
payment terms are net 30 days.
(e) When rebates are
applicable, Seller shall provide such rebates in accordance with
Buyer’s standard rebate policy.
(f) Based upon
mutual agreement of the specific event in question, Seller agrees
to provide demonstrations and educational seminars (including
responsibility for the travel and living expenses of Seller’s
demonstration and training personnel) to Buyer and Buyer’s
customers or potential customers, at Buyer’s
request.
(g) At Seller’s
sole expense, Seller agrees to provide all of the installation,
implementation and training services (including responsibility for
the travel and living expens
