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EXHIBIT 10.72
LipoMatrix Contract Number LMI 046
DISTRIBUTOR AGREEMENT
BETWEEN
LIPOMATRIX, INCORPORATED
AND
COLLAGEN CORPORATION
Confidential treatment is requested for a portion of this document.
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LipoMatrix Contract Number LMI 046
TABLE OF CONTENTS
PAGE
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I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II. APPOINTMENT AS EXCLUSIVE DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . 2
III. SPECIFIC RESPONSIBILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
IV. TERMS AND CONDITIONS OF SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
V. ACQUISITION AND USE OF DEMONSTRATION PRODUCT AND
TRANSPONDER READERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
VI. TERM AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
VII. PATENT INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
VIII. PRODUCT LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
IX. LIMITATION OF LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
X. NO RIGHT TO MANUFACTURE OR COPY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
XI. INTELLECTUAL PROPERTY RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
XII. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
EXHIBITS
Exhibit A Risk Management Program*
Exhibit B Risk Management Support Documents*
* Confidential treatment requested for this exhibit.
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LipoMatrix Contract Number LMI 046
DISTRIBUTOR AGREEMENT
This Distributor Agreement (the "Agreement") is entered into as of
March 24, 1995, (the "Effective Date") between LIPOMATRIX, INCORPORATED
("LIPOMATRIX"), a corporation organized under the laws of the British Virgin
Islands with an office located at Puits Godet 24, CH-2000 Neuchatel,
Switzerland and COLLAGEN CORPORATION ("DISTRIBUTOR"), a Delaware corporation
with an office located at 2500 Faber Place, Palo Alto, CA 94303.
IN CONSIDERATION OF THE MUTUAL PROMISES HEREIN CONTAINED, THE PARTIES
AGREE AS FOLLOWS:
I. DEFINITIONS
A. "PRODUCTS" shall mean LipoMatrix's present and future (subject
to Section II.A) breast implant products and other products intended for use in
cosmetic or reconstructive breast surgery. Products may be changed, abandoned
or added by LipoMatrix, at its sole discretion, after reasonable prior written
notice (which shall not be less than ninety (90) days) is given to Distributor,
or in any other manner necessary in order to comply with applicable laws.
LipoMatrix shall be under no obligation to continue the production of any
Product, except as provided herein.
B. "TERRITORY" shall mean the United States of America.
C. "TECHNICAL DATA" shall mean all information belonging to
LipoMatrix in written, graphic or tangible form relating to design,
programming, operation or service of the Products, including all information
that exists as of the Effective Date of this Agreement, or is developed by
LipoMatrix during the term hereof.
D. "INTELLECTUAL PROPERTY RIGHTS" shall mean all of LipoMatrix's
worldwide patents, trademarks, trade names, inventions, copyrights, regulatory
approvals, know-how, trade secrets, and all other intellectual property rights,
in existence as of the Effective Date of this Agreement or hereafter developed
or acquired by LipoMatrix, relating to the design, manufacture, or marketing of
the Products.
E. "TRADE SECRETS" shall mean any formula, pattern, device, or
compilation of information which is used in LipoMatrix's business and which
provides competitive advantage to LipoMatrix and which is not known or used by
LipoMatrix's competitors. This term includes, but is not limited to, formulas,
compounds, manufacturing processes, methods for treating or preserving
materials, patterns for the design or operation of devices, materials filed
with governmental agencies in connection with regulatory approval of
LipoMatrix's products, and information relating to marketing of LipoMatrix
products and services.
F. "LIPOMATRIX TRADEMARKS" shall mean those trademarks, trade
names, service marks, slogans, designs, distinct advertising, labels, logos and
other trade-identifying symbols as are or have been developed and used by
LipoMatrix and/or any of its subsidiaries or affiliate companies anywhere in
the world.
G. "GOVERNMENT AGENCY" shall include all local, national and
supranational bodies with the legal authority to establish rules, regulations,
standards and guidelines, (or to issue certificates of compliance with these),
covering the design, manufacturing and marketing of the
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Products in the Territory. This will include without limitation the United
States Food and Drug Administration.
H. COMMERCIAL SALE. The sale of a Product by Distributor, other
than for clinical use required to obtain governmental approvals to market such
Product.
I. ORDERING YEAR. The twelve-month period commencing on the
first Commercial Sale and each subsequent twelve-month period commencing on the
anniversary of such date.
II. APPOINTMENT AS EXCLUSIVE DISTRIBUTOR
A. Subject to the terms and conditions set forth herein
LipoMatrix hereby appoints Distributor, and Distributor hereby accepts such
appointment, as LipoMatrix's exclusive distributor for the Products in the
Territory. As a result, LipoMatrix will not sell the Products in the Territory,
other than through Distributor. The mechanism for sales of Products for
clinical trials in the Territory shall be determined by mutual agreement. Any
future Product developed by LipoMatrix shall be deemed a Product hereunder. If
Distributor does not initiate commercial sales of such future Product within
ninety (90) days of regulatory clearance, then all rights to such product will
revert to LipoMatrix.
B. Distributor shall not represent or sell competitive products
in the Territory which, in LipoMatrix's opinion, are likely to conflict with
Distributor's obligation to use its reasonable commercial efforts to represent
and sell Products in the Territory.
C. Distributor shall not, directly or indirectly, solicit sales
of the Products outside the Territory. Distributor shall forward to LipoMatrix
all unsolicited inquiries relating to the Products or potential customers
outside of both the Territory and the territory, if any, covered by affiliates
of Distributor that are authorized to distribute Products.
D. The relationship of LipoMatrix and Distributor established by
this Agreement is that of independent contractors, and nothing contained in
this Agreement shall be construed to give either party the power to direct or
control the day-to-day activities of the other or allow one party to create or
assume any obligation on behalf of the other for any purpose whatsoever.
III. SPECIFIC RESPONSIBILITIES
A. MARKETING.
1. MARKETING EFFORTS. During the term of the Agreement,
Distributor shall use its reasonable commercial efforts to develop and exploit
the market and to sell the Products throughout the Territory.
2. MARKETING PLAN. Distributor shall complete, as soon
as practicable (but no later than ninety (90) days prior to the scheduled
commencement of sales), and thereafter, annually on or before March 31, a
comprehensive marketing plan for each country within the Territory.
3. PRINTED MATERIALS.
a. Packaging. LipoMatrix will provide at its
expense all materials in and on the Product packages.
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b. Risk Management Support Documents. The text
of the risk management documents, including the Patient Advisory and Consent
and the Supply Agreement, as of the date of this Agreement in the form attached
as Exhibit B hereto, will be provided by LipoMatrix, but printing and
distribution expenses will be borne by Distributor.
c. Sales and Promotional Literature.
Distributor will produce all sales and promotional literature, obtaining
LipoMatrix's prior approval of scientific and regulatory matters contained
therein. Distributor and LipoMatrix will cooperate on the development of such
materials.
4. TRADE SHOWS. Distributor shall use its reasonable
commercial efforts to attend major national and regional (i.e. regions in or
encompassing the Territory) trade shows and educational forums where similar or
competitive products are displayed and to present the Products fairly at such
shows and workshops.
5. CLINICAL REFERENCE ACCOUNTS. Distributor shall
endeavor to develop key clinical reference accounts with plastic surgeons who
are key opinion leaders within the Territory. This includes those leaders as
reasonably selected by LipoMatrix.
6. MARKETING AND SALES SUPPORT. In LipoMatrix's sole
determination, LipoMatrix personnel shall make periodic visits to the Territory
during the period of this Agreement, as necessary in order to monitor
administration, marketing and sales related to the Products. LipoMatrix shall
pay all transportation, meal, lodging, salary and related expenses for its
personnel in this regard. LipoMatrix shall use commercially reasonable efforts
to assist Distributor in locating and obtaining appropriate clinical expertise
at Distributor's reasonable request, for purposes of supporting Distributor's
marketing effort. The parties will mutually agree in advance on the amount and
duration of clinical education and the allocation of costs associated with such
clinical education.
B. PURCHASE QUOTAS, ORGANIZATION AND FORECASTS.
1. PURCHASE QUOTAS. The purchase quota for the first
Ordering Year shall be mutually agreed between the parties prior to first
Commercial Sale. Such purchase quota will be eighty percent (80%) of the
anticipated sales for the first Ordering Year. The purchase quota for the
second Ordering Year shall equal Distributor's actual purchases (in units) in
the first Ordering Year. The purchase quota for the third Ordering Year shall
equal Distributor's actual purchases (in units) in the second Ordering Year.
Quotas for subsequent Ordering Years shall equal the higher of actual purchases
(in units) or purchase quotas in the prior Ordering Year. Distributor agrees
to use reasonable commercial efforts to meet or exceed the purchase quotas as
set forth in this paragraph. In the event Distributor fails to meet or exceed,
on an aggregate basis, the purchase quotas for two (2) consecutive Ordering
Years beginning on or after the third Ordering Year, LipoMatrix may terminate
this Agreement for cause as provided in Section VI.C, provided, however, that
this termination option must be exercised within sixty (60) days of the
commencement of the next Ordering Year. Purchase quotas will be adjusted if
LipoMatrix is unable to supply Products due to regulatory constraints or
significant manufacturing delays.
2. SALES ORGANIZATION AND TRAINING. Distributor shall
use reasonable commercial efforts to develop a sales organization that is
knowledgeable concerning the features of the Products and the relationship of
those features to the clinical benefits to potential customers within the
Territory. In connection with the sale of Products, at LipoMatrix's request,
Distributor shall make available an individual reasonably satisfactory to
LipoMatrix ("Distributor's Trainer")
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for sales training of Distributor's other representatives. Training for
Distributor's Trainer shall be provided, at LipoMatrix's election, either in
Switzerland or in the Territory, and will occur before commencement of
Commercial Sales, with training updates to be held as needed. LipoMatrix shall
pay the costs of the training (including the transportation, meals, lodging,
salary and related expenses of LipoMatrix employees), and Distributor shall be
responsible for all transportation, meals, lodging, salary and related expenses
of Distributor employees attending such training.
3. QUARTERLY SALES INFORMATION AND FORECASTS. On a
quarterly basis, Distributor shall provide within ten (10) days after the end
of each calendar quarter a reasonably detailed quarterly sales and promotional
report to LipoMatrix.
On a monthly basis, within the first ten (10) days of
every month, Distributor shall provide LipoMatrix with a six (6) month (during
the first Ordering Year) and fifteen (15) month (thereafter) rolling forecast.
4. SALES LAUNCH SCHEDULE. Distributor shall commence
Commercial Sales of the Products in the Territory as soon as practicable after
obtaining regulatory clearance. Clinical or marketing trials may commence at
any time by mutual agreement of the parties and will not constitute a
Commercial Sale.
C. LIPOMATRIX VISITS AND MARKETING REPRESENTATIVE. Upon
reasonable notice, Distributor shall permit and facilitate visits by LipoMatrix
personnel to Distributor's facilities to review compliance with specific
requirements of this Agreement, and to customer sites and to travel with
Distributor's sales personnel for training purposes.
Distributor shall permit the placement within Distributor's
organization of a part-time or full-time Product specialist by LipoMatrix, at
LipoMatrix's sole option and expense, for purposes of providing marketing and
risk management support. Office space will be provided for such individual by
Distributor. This requirement is waived as long as Distributor and its
affiliates collectively own at least twenty percent (20%) of the Common Stock
of LipoMatrix (on an as-converted basis) and the management of Distributor or
any of its affiliates is represented on the board of directors of LipoMatrix.
D. REGULATORY APPROVALS AND COMPLIANCE. LipoMatrix shall obtain
and own all regulatory approvals, certificates, registrations, licenses, and
permits related to the Products unless prohibited by local law. In the event
that necessary approvals, certificates, registrations, licenses and permits
required to sell and distribute the Products in the Territory are required by
local law to be owned by, or held in the name of Distributor, Distributor
agrees that upon termination of this Agreement for any reason, Distributor
shall immediately take all steps necessary to promptly transfer the ownership,
registration or entitlement of such registrations, certificates, licenses and
permits to LipoMatrix or its designee.
Distributor shall provide reasonable assistance to LipoMatrix
in order to obtain any and all applicable regulatory approvals required by
Governmental Agencies under the laws and/or regulations of any jurisdiction in
order to market the Products within Territory, including but not necessarily
limited to, meeting relevant standards and guidelines, preclinical, clinical
and safety approvals required by Government Agencies. LipoMatrix shall
reimburse Distributor for reasonable out-of-pocket expenses incurred by
Distributor in connection with such assistance provided such expenses are
approved in advance.
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LipoMatrix shall have the primary responsibility for
manufacturing compliance and Distributor for any distribution compliance
regarding any reporting or compliance matters in the Territory required of
distributors by Government Agency rules and regulations, including but not
limited to, recalls of the Products and reporting of adverse events involving
the Products. The parties shall share information to allow each party to
fulfill its compliance obligations hereunder.
Each party shall promptly inform the other of any changes in
regulatory or compliance status that might significantly affect the marketing
of the Products in the Territory. Each party shall inform the other within two
(2) working days of any actions taken by such party that could reasonably be
expected to affect the regulatory or compliance status of LipoMatrix or the
Products.
Distributor shall make all reasonable efforts to comply with
appropriate standards for review and approval of orders from its customers.
E. IMPORT LICENSES. Distributor shall obtain import and reexport
licenses and permits and take all other actions required in connection with the
import or reexport of Products purchased hereunder.
F. CUSTOMER FEEDBACK AND POST-MARKETING SURVEILLANCE.
Distributor shall use its commercially reasonable efforts to provide LipoMatrix
with assessments of customer requirements for Product modifications and
improvements. These assessments will focus on the quality, design, functional
capability and other features of the Products, with a view to maximizing the
potential market for such Products within the Territory.
Distributor will promptly furnish LipoMatrix with copies of
any written communications from its customers with respect to the use of its
Products, suggestions for modifications or improvement to the Products,
reliability of Products, performance of the Products, compliance with
specifications, and other pertinent information.
G. REGISTRY INFORMATION. On a monthly basis, Distributor will
provide to LipoMatrix a report which will provide such information defined by
LipoMatrix as necessary for maintenance of a registry of implants, including
but not limited to, the transponder numbers for those Products shipped to
customers or otherwise disposed of, including the transponder number and the
customer number of the physician, clinic or hospital to whom the Product was
sold. Distributor will provide LipoMatrix with an inventory reconciliation as
requested by LipoMatrix from time to time.
H. INVENTORY. Distributor agrees to maintain an inventory of
Products equivalent to three (3) months of forecast sales provided the Products
have a stated shelf life of at least twenty-four (24) months.
Distributor will maintain its inventory of Products in a
clean, secure and well organized facility. In addition, such storage space
will comply with environmental requirements, including temperature or other
requirements, set forth on the labeling of the Products, or other reasonable
requirements notified from time to time by LipoMatrix to Distributor.
Distributor will maintain records of the Products to enable
traceability of Products. Distributor will use an effective materials
management system for tracking its inventory and shipments of Products to its
customers.
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I. RISK MANAGEMENT PROGRAM. Distributor recognizes that
LipoMatrix maintains an active program of risk management as set out in
Exhibits A and B attached to this Agreement (the "Risk Management Program").
The Risk Management Program may be changed by mutual agreement. Distributor
agrees to comply with the Risk Management Program and to use its best efforts
to assure compliance by Distributor's customers.
J. HEALTH AND SAFETY LAWS AND REGULATIONS. Distributor shall
comply fully with any and all applicable health and safety laws and regulations
of the Territory.
K. REPRESENTATIONS. Neither Distributor nor LipoMatrix shall
make any false or misleading representations to customers or others regarding
LipoMatrix or the Products. Distributor and its employees and agents shall not
make any representations, warranties or guarantees with respect to the
specifications, features or capabilities of the Products that are not
consistent with LipoMatrix's documentation accompanying the Products or
LipoMatrix's literature describing the Products, including LipoMatrix's
standard warranty and disclaimers. Distributor shall not make any commitments
or comments to its customers about possible future Product enhancements or
future Products without the written authorization of LipoMatrix.
L. WARRANTY. LipoMatrix warrants that each Product sold to
Distributor hereunder will (i) have any required regulatory clearance for
commercial sale in the Territory, (ii) be free from defects in materials and
workmanship, (iii) be designed in compliance with ISO 9001 design standards,
(iv) be manufactured, packaged, and labeled in accordance with the then
prevailing specifications, and (v) have a remaining shelf life at the date of
shipment of twenty-one (21) months when the stated shelf life from date of
manufacture is twenty-four (24) months (the "Warranty Period"). If Distributor
provides notice to LipoMatrix during the Warranty Period that a Product
breaches this warranty, Distributor shall, if requested by LipoMatrix, return
such Product to LipoMatrix for evaluation, or if not so requested, dispose of
such Product in accordance with LipoMatrix's instructions, and, if such Product
does breach this warranty, LipoMatrix will, in its sole discretion, either
repair or replace same, and reimburse Distributor for its reasonable return
freight incurred therefor, if any, or refund the purchase price.
This warranty does not cover defects or damage caused by
Distributor's misuse, abuse, alterations or failure to properly maintain,
handle and store any Products.
M. EXTENDED WARRANTY. In addition, an extended warranty will be
provided by LipoMatrix as set out in the Risk Management Program. All claims
pursuant to the extended warranty shall be made in a writing (including a
telecopy) stating (1) the name and address of the site at which the Product was
implanted, (2) the name and telephone number of the contact person at the site,
(3) the transponder number of the allegedly nonconforming Product, (4) the date
the Product was delivered to the site by Distributor, and (5) a reasonably
detailed description of the alleged nonconformity. The allegedly
non-conforming Product must be returned to LipoMatrix for evaluation.
LipoMatrix shall promptly advise Distributor of any changes in its extended
warranty.
N. THE WARRANTY SET FORTH IN SECTIONS III.L AND III.M ABOVE IS
EXCLUSIVE AND NO OTHER WARRANTY, WHETHER WRITTEN, ORAL OR IN ANY COMMUNICATION
WITH DISTRIBUTOR, IS EXPRESSED OR IMPLIED. LIPOMATRIX MAKES NO WARRANTIES OR
REPRESENTATIONS AS TO PERFORMANCE OF THE PRODUCT TO DISTRIBUTOR OR TO ANY OTHER
PERSONS, EXCEPT AS SET FORTH HEREIN. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT
TO THE CONTRARY, LIPOMATRIX RESERVES THE RIGHT TO MODIFY THE EXTENDED WAR-
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RANTY POLICY AND OBLIGATIONS SET FORTH HEREIN UPON NOTICE TO DISTRIBUTOR FROM
TIME TO TIME AS TO PRODUCTS ORDERED BY DISTRIBUTOR AFTER THE DATE OF SUCH
NOTICE. ALL IMPLIED WARRANTIES INCLUDING BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND
NON-INFRINGEMENT (EXCEPT AS SET FORTH IN SECTION VII) ARE HEREBY EXCLUDED. THE
FOREGOING DISCLAIMERS SHALL NOT AFFECT LIPOMATRIX'S OBLIGATIONS AS SET FORTH IN
SECTIONS VII AND VIII.
IV. TERMS AND CONDITIONS OF SALE
A. PRICES. Distributor and LipoMatrix shall, prior to launch in
the Territory, mutually agree on list prices for Distributor's sales of
Products to its customers. Prices charged by LipoMatrix to Distributor will
reflect a discount of fifty-five percent (55%) from the agreed upon list price
for the first Ordering Year and a discount of fifty percent (50%) thereafter.
Prices to Distributor for all Products shall be F.O.B. Swiss
manufacturing facility of LipoMatrix and shall exclude freight, taxes
(including, without limitation, export, import and local excise, sales, use,
property and other taxes, but excluding taxes imposed on LipoMatrix's net
income), insurance, duties and other governmental charges levied with respect
to the Products sold hereunder, all of which shall be paid by Distributor.
Prices may be changed at any time during the term of this Agreement, or any
extension or renewal thereof, by mutual agreement.
B. RESEARCH AND DEVELOPMENT FUND. While Distributor markets the
Products, Distributor shall pay to LipoMatrix an amount equal to five percent
(5%) of Distributor's net sales revenue from sales of Products, such payments
to be made for each month by the fifteenth day of the following month. Such
payments shall commence in respect of sales for the month of April 1997. The
payments, and the interest earned on them until expenditure, are intended to be
expended on mutually agreed research, development, clinical and manufacturing
programs for breast implant products and other products intended for use in
cosmetic or reconstructive breast surgery, and if such funding is not expended,
the funds shall revert to Distributor. LipoMatrix shall have full ownership of
the results of such programs; provided, however, if Distributor and its
affiliates beneficially own less than twenty percent (20%) of LipoMatrix,
LipoMatrix will pay Distributor a mutually agreed upon royalty for sales of
products incorporating the results of such programs outside the Territory and
other territories where Distributor and its affiliates are selling Products.
Distributor shall have the exclusive right to market in the Territory all
products developed with any use of such funds and any such product shall be
deemed a Product hereunder. If Distributor does not initiate commercial sales
of such Product within ninety (90) days of regulatory clearance, then all
rights to such product will revert to LipoMatrix.
C. PAYMENT TERMS
1. LipoMatrix agrees to grant Distributor credit terms
for sales. Distributor agrees to pay to LipoMatrix the full amount of all
invoices net sixty (60) days from the invoice date. In the event that
Distributor does not promptly pay all invoices in accordance with this Section,
then the payment terms will revert to payment by irrevocable letter of credit
(or equivalent satisfactory to LipoMatrix) payable against shipping documents.
Accounts past due will be subject to a monthly service charge of one and
one-half percent (1.5%) of unpaid sum, but in no event to exceed the maximum
allowable by law.
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2. All payments shall be in the local currency of the
Territory.
3. Distributor must give LipoMatrix written notice of
any discrepancies among the purchase order, the invoice, and Products received,
within thirty (30) days after receipt of Products or the invoice, whichever
occurs later.
4. If Distributor fails to make payment when due,
LipoMatrix may also decline to make further shipments until all above
indebtedness is paid, and/or alternatively may decline to make further
deliveries except for cash in advance of shipment or letter of credit
acceptable to LipoMatrix.
D. PRODUCT ORDERS. All orders for Products submitted hereunder
shall be initiated by purchase orders sent by regular mail, hand delivery,
airmail, courier mail, e-mail, or facsimile to LipoMatrix. LipoMatrix shall
respond to such orders by air mail, courier mail, e-mail, or facsimile within
reasonable time, not to exceed ten (10) days after receipt thereof. All
purchase orders submitted by Distributor to LipoMatrix shall identify the
Products ordered by Product number and quantity and the desired shipment date.
E. ORDER ACCEPTANCE. All purchase orders are subject to
acceptance by LipoMatrix at its Neuchatel office. LipoMatrix shall have no
obligation or liability to Distributor with respect to purchase orders which
are not accepted; however LipoMatrix shall not unreasonably reject any purchase
order. LipoMatrix shall use reasonable efforts to deliver Products covered by
accepted purchase orders at the times specified in the corresponding quotation
or written acceptance of Distributor's purchase order.
Any orders in the ordinary course of business, consistent with
normal ordering practices, that are rejected by LipoMatrix shall be deducted
from the purchase quota for such Ordering Year as set forth in Section III.B.1.
Distributor's purchase orders hereunder shall be governed by
the terms and conditions of this Agreement. Nothing contained in any purchase
order shall in any way modify or add any terms or conditions of sale.
F. CANCELLATION/RESCHEDULING. Distributor may, at its option and
subject to the provisions of this Section, either reschedule delivery of any
Products or cancel any order or portion thereof, upon written notice to
LipoMatrix. A "reschedule" is defined as changing all or any portion of those
Products scheduled for shipment on any ship date by moving the ship date later
in time. Distributor shall have a right to cancel or reschedule any order for
later shipment provided such request is received by LipoMatrix at least thirty
(30) days in advance of the original ship date. Rescheduling or cancellation
requests made Distributor within thirty (30) days of the original ship date are
subject to LipoMatrix's approval.
G. COUNTRY SHIPMENTS. Products sold to Distributor in the
Territory will not be transferred by Distributor outside the Territory without
the written notification to LipoMatrix and an appropriate billing adjustment to
reflect any difference in prices between countries. Such transfers out of the
Territory will only be permitted to countries in a territory covered by a
distributor that is an affiliated company of Distributor.
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V. ACQUISITION AND USE OF DEMONSTRATION PRODUCT AND TRANSPONDER READERS
A. Products will be provided without charge to Distributor for
Distributor's exclusive use in selling and marketing of Products within the
Territory, in such limited quantities as are determined by mutual agreement.
B. Transponder readers will be loaned to Distributor for use in
tracking inventory and for demonstration use with customers, in such limited
quantities as are determined by mutual agreement.
VI. TERM AND TERMINATION
A. TERM. This Agreement shall commence upon the Effective Date
and shall expire ten (10) years after first Commercial Sale, unless renewed or
terminated as provided below.
B. RENEWAL. Unless terminated in the manner provided below, the
term of this Agreement shall be extended automatically for successive one (1)
year periods, unless either party elects not to renew by written notice to the
other party at least ninety (90) days prior to the conclusion of the initial
term hereof or any such renewal period, as the case may be. Either party may
elect not to renew this Agreement for any or no reason.
C. TERMINATION FOR CAUSE. Either party shall have the right to
terminate this Agreement at any time effective upon written notice, in the
event of (1) breach by the other party of any of the terms and conditions
hereof and failure to correct the breach within the thirty (30) days of written
notice thereof; (2) the other party becoming generally unable to obtain
necessary licenses; or (3) Force Majeure which suspends or delays performance
of this Agreement for more than ninety (90) days from the beginning of such
event.
It is recognized by the parties that the Risk Management
Program (see Section III.A.3.b) is an essential element of this Agreement.
Failure by either party to adhere to its provisions or to use best efforts to
implement it, may be used as grounds for termination of this Agreement for
cause under this Section.
In the event of a substantial change in ownership of
Distributor, or the continued failure by Distributor to meet the purchase
quotas as specified in Section III.B.1, LipoMatrix shall have the right to
terminate this Agreement upon thirty (30) days written notice.
In the event that LipoMatrix is acquired by a third party,
LipoMatrix shall have the right to terminate this Agreement upon thirty (30)
days written notice.
Either party shall have the right to terminate this Agreement,
by written notice taking immediate effect, if the other party becomes
insolvent, or if there are instituted by or against the other party proceedings
in bankruptcy or under insolvency similar laws or for reorganization,
receivership or dissolution. Any such termination shall not relieve either
party from any payment obligation which accrued prior to such termination.
D. CANCELLATION AND REPURCHASE OPTIONS. Upon expiration or
termination of this Agreement, any or all unfilled orders shall be cancelled.
LipoMatrix reserves the right at its sole option to repurchase from Distributor
any or all Products unsold by Distributor, at a mutually agreed upon price,
which in any case shall not exceed the landed price Distributor paid LipoMatrix
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for Products to be repurchased. In the event LipoMatrix fails to repurchase
such Products, Distributor shall have the right to continue to sell its
existing inventory of such Products for a reasonable period following such
expiration or termination.
E. RETURN OF MATERIALS. Upon expiration or termination of this
Agreement, Distributor shall return to LipoMatrix, at LipoMatrix's expense, all
sales promotional materials and aids and any tools or equipment loaned or
furnished to Distributor pursuant to this Agreement.
F. EFFECT OF TERMINATION. In the event of termination by either
party in accordance with any of the provisions this Agreement, or expiration of
this Agreement, neither party shall be liable to the other, because of such
termination or expiration, 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 LipoMatrix or Distributor, occurring as a
result of such termination or expiration, or incurred in anticipation of
renewal.
VII. PATENT INDEMNITY
LipoMatrix will defend any suit brought against Distributor based on a
claim that the Product furnished under this Agreement infringes any patent or
trademark, and will pay all damages and costs that a court awards against
Distributor as a result of such claim and any payments made in settlement of
such claim, provided that Distributor gives LipoMatrix: (a) prompt written
notice of such suit; (b) full control over the defense or settlement thereof;
and (c) all reasonable information and assistance (at LipoMatrix's expense
excluding time spent by employees or consultants of the Distributor) to handle
the defense and settlement thereof.
If the Products, or any part thereof, are, or in the opinion of
LipoMatrix may become, the subject of any claim, suit or proceeding for
infringement of any patent or trademark, or in the event of any adjudication
that the Products, or any part thereof, infringe any patent or trademark, or if
the sale or use of Products, or any part thereof, is enjoined, LipoMatrix may,
at its option and expense: (a) procure for Distributor and its customers the
right under such patent or trademark to use or sell as appropriate the Products
or such part thereof; or (b) replace the Products, or part thereof, with other
suitable Products or parts; or (c) suitably modify the Products or part
thereof, or (d) if none of the foregoing are commercially practicable, refund
the amounts paid therefore by Distributor, and recover possession of such
Products. LipoMatrix shall not be liable for any costs or expenses incurred
without its prior written authorization.
Notwithstanding the provisions of the preceding paragraphs, LipoMatrix
shall not be liable to Distributor or its customers for: (a) infringement of
patent claims covering the usage of LipoMatrix Products in a manner not
intended under this Agreement; (b) any trademark infringements involving any
marking or branding applied by LipoMatrix or involving any marking or branding
applied at the request of Distributor, except if such marking or branding is
owned by LipoMatrix; (c) the modification of Products, or any part thereof,
unless such modification was made by LipoMatrix; or (d) the combination,
operation or use of the Product with other products not furnished by LipoMatrix
to the extent such claim would not have arisen had such combination, operation
or use not occurred.
THE FOREGOING PROVISIONS OF THIS SECTION VII STATE THE ENTIRE
LIABILITY AND OBLIGATIONS OF LIPOMATRIX, AND THE EXCLUSIVE REMEDIES OF
DISTRIBUTOR AND ITS CUSTOMERS WITH RESPECT TO ANY ALLEGED IN-
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FRINGEMENT OF PATENTS, COPYRIGHTS, TRADEMARKS, OR OTHER INTELLECTUAL PROPERTY
RIGHTS, BY THE PRODUCTS OR ANY PART THEREOF.
VIII. PRODUCT LIABILITY
A. INDEMNITY BY DISTRIBUTOR. Distributor shall indemnify and
hold LipoMatrix harmless from and against any and all liability, damage, loss,
cost, expense (including reasonable attorney's fees), regulatory penalties and
enforcement actions resulting from any claims made or suits brought against
LipoMatrix, its employees, directors and customers which arise or result solely
from Distributor's marketing, distribution, handling and shipping of the
LipoMatrix Products, or from Distributor's negligence or willful misconduct.
LipoMatrix shall promptly notify Distributor of any such claim or suit and
shall permit Distributor at Distributor's cost and expense, to handle and
control such claim or suit.
B. INDEMNITY BY LIPOMATRIX. LipoMatrix shall indemnify and hold
Distributor harmless from and against any and all liability, damage, loss, cost
or expense (including reasonable attorney's fees) resulting from any claims
made or suits brought against Distributor, its employees, directors and
customers which arise or result solely from LipoMatrix's design, handling and
shipping of the LipoMatrix Products, or failure to manufacture the LipoMatrix
Products in accordance with agreed upon specifications, FDA Good Manufacturing
Practices or other applicable standards for medical device manufacturers, or
from negligence or willful misconduct. Distributor shall promptly notify
LipoMatrix of any such claim or suit and shall permit LipoMatrix at
LipoMatrix's cost and expense, to handle and control such claim or suit.
C. APPORTIONMENT OF DAMAGES. In the event that any liability,
damage, loss, cost or expense (including reasonable attorney's fees) as
aforesaid cannot be established (with respect to final judgments of a court of
competent jurisdiction from which no appeal is or can be taken as well as
settlements made prior to, during or following termination of litigation to
which the parties have expressly agreed in writing) to have resulted solely
from the actions or failures to act of LipoMatrix or Distributor or their
affiliates, responsibility for payment of such liability, damage, loss, cost or
expense (including reasonable attorney's fees) will be apportioned between
LipoMatrix and Distributor according to the contribution of either party to the
damage; and if such allocation is not mutually agreed, then it will be
determined by mandatory binding arbitration.
D. PRODUCT LIABILITY INSURANCE. LipoMatrix shall use its
reasonable commercial efforts to secure product liability insurance in the
amount of five million dollars ($5,000,000), to the extent this is available on
commercially reasonable terms. LipoMatrix shall have Distributor named as an
additional insured on its product liability insurance policy. If LipoMatrix is
unable to secure or maintain such insurance, Distributor may terminate this
Agreement. The parties agree to review the possibility of increasing the
amount of such insurance if increases in sales so warrant.
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IX. LIMITATION OF LIABILITY
IN NO EVENT, WHETHER THE CAUSE OF ACTION BE BASED IN CONTRACT OR TORT
(INCLUDING NEGLIGENCE) OR ANY OTHER LEGAL OR EQUITABLE THEORY SHALL EITHER
PARTY BE LIABLE FOR INCIDENTAL, CONSEQUENTIAL, INDIRECT, SPECIAL OR PUNITIVE
DAMAGE OF ANY KIND, OR FOR LOSS OF REVENUE, LOSS OF BUSINESS OR OTHER FINANCIAL
LOSS ARISING OUT OF OR IN CONNECTION WITH THE SALE, USE, PERFORMANCE, FAILURE
OR INTERRUPTIONS OF ITS PRODUCTS. NOTWITHSTANDING ANY OTHER PROVISION OF THIS
AGREEMENT, LIPOMATRIX'S MAXIMUM LIABILITY FOR DAMAGES HEREUNDER SHALL NOT
EXCEED THE PURCHASE PRICE OF THE PRODUCTS PURCHASED DURING THE TERM OF THIS
AGREEMENT. THE FOREGOING LIMITATIONS SHALL NOT AFFECT EITHER PARTY'S DUTY TO
INDEMNIFY THE OTHER PARTY FOR THIRD-PARTY SUITS FOR SUCH DAMAGES, AS SET FORTH
IN SECTIONS VII AND VIII.
THE DISCLAIMER OF LIABILITY FOR DAMAGES WILL NOT BE AFFECTED IF ANY
REMEDY PROVIDED HEREUNDER SHALL FAIL OF ITS ESSENTIAL PURPOSE. DISTRIBUTOR HAS
ACCEPTED THE DISCLAIMER OF LIABILITY FOR DAMAGES AS PART OF A BARGAIN TO LOWER
THE PRICE OF THE PRODUCTS AND UNDERSTANDS THAT THE PRICE OF THE PRODUCTS WOULD
BE HIGHER IF LIPOMATRIX WERE REQUIRED TO BEAR ADDITIONAL LIABILITY FOR DAMAGES.
X. NO RIGHT TO MANUFACTURE OR COPY
The Products are offered for sale and are sold by LipoMatrix subject
in every case to the condition that such sale does not convey or license to
Distributor, expressly or by implication, the right to manufacture, duplicate
or otherwise copy or reproduce any of the Products. Distributor shall take
appropriate steps with customers, as mutually agreed, to inform them of, and
both parties shall, as mutually agreed, assist each other in assuring
compliance with, the restrictions contained in this Section.
XI. INTELLECTUAL PROPERTY RIGHTS
A. SOLE PROPERTY OF LIPOMATRIX. Distributor agrees that
Intellectual Property Rights are and shall remain sole property of LipoMatrix
and that LipoMatrix owns all right, title and interest in the product lines
which include the Products now or hereafter subject to this Agreement. The use
by Distributor of any Intellectual Property Rights, including, but not limited
to any patent, invention, trademark, trade name, trade secret or copyrighted
material, is authorized only for the purposes herein set forth. Upon
termination of this Agreement for any reason, authorization shall cease.
Distributor agrees that the Products contain a device
identification system (including software) which is proprietary to LipoMatrix.
LipoMatrix at all times retains ownership of and title to the device
identification system supplied with the Product, and to the trade secrets
embodied in such technology.
Subject to Distributor's acceptance of the obligations
contained in this Section, and to the fulfillment of these obligations,
LipoMatrix grants Distributor a non-exclusive license to use the device
identification system included with the Products solely in the form and on the
medium in which program is delivered for the purposes of operating the Product
in accordance with the instructions set forth in the Instructions for Use
supplied with the Product, and for no other purposes
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whatsoever. Distributor may not decompile, reverse engineer or reverse
assemble such technology, nor may it make a copy of such program or apply any
techniques to derive the trade secrets embodied therein.
B. USE OF LIPOMATRIX NAME AND TRADEMARKS. During the term of
this Agreement, Distributor shall have the right to indicate to the public that
Distributor is an authorized distributor of LipoMatrix's Products and to
advertise within the Territory such Products under the LipoMatrix Trademarks.
Distributor shall not alter or remove any LipoMatrix Trademark applied to the
Products at the factory. At no time during or after the term of this Agreement
shall Distributor challenge or assist others to challenge the LipoMatrix
Trademarks or registration thereof or attempt to register any trademarks, marks
or tradenames confusingly similar to those of LipoMatrix.
C. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Distributor and
LipoMatrix acknowledge that by reason of their relationship hereunder they will
have access to certain information and materials concerning each other's
business, plans, customers and products (including Trade Secrets and Technical
Data provided to Distributor) which are confidential and of substantial value
to Distributor and LipoMatrix, which value would be impaired if such
information were disclosed to third parties.
Each party agrees that it shall not use in any way for its own
account or the account of any third party, nor disclose to any third party, any
such confidential information which is revealed to it by the other party. The
receiving party shall take every reasonable precaution to protect the
confidentiality of such information, which in no event shall be less than the
efforts exercised by such party with respect to its own confidential business
information. Distributor and LipoMatrix shall advise each other in the event
that either party considers particular information or materials to be
confidential. Distributor shall not publish any technical description of the
Products beyond the description published by LipoMatrix.
In the event of expiration or earlier termination of this
Agreement, there shall be no use or disclosure by Distributor or LipoMatrix of
any confidential information, and Distributor shall not manufacture, or have
manufactured, devices, components or assemblies utilizing any of LipoMatrix's
Intellectual Property Rights.
XII. GENERAL
A. COUNTERPARTS AND GOVERNING LAW. This Agreement may be
executed in counterparts. This Agreement shall be construed in accordance
with, and all the rights, powers and liabilities of the parties hereunder shall
be governed by, the internal laws of the State of California, without reference
to choice of law principles thereof.
B. COMPLETE AGREEMENT. This Agreement is intended as the
complete, final and exclusive statement of the terms of agreement between the
parties and supersedes any and all agreements between them relating to the
subject matter hereof. No modification, change or amendment to this Agreement,
nor any waiver of any rights in respect hereto, shall be effective unless in
writing and signed by the party to be charged, unless explicitly permitted by
the terms of this contract. The waiver of breach or default hereunder shall not
constitute the waiver of subsequent breach or default.
C. FORCE MAJEURE. Notwithstanding anything in this Agreement to
the contrary, other than the obligation to pay money, the obligations of either
party under this Agreement, including purchase quotas, shall be excused during
any continuing event which is beyond the reasonable
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control of such party, including without limitation, strike, fire, war,
rebellion, natural disasters/Acts of God, embargo, governmental order or
restriction, or inability for any other reason to supply or deliver Products
due to unnatural or commercially impractical circumstances.
D. NOTICE. Any notice or report required or permitted under this
Agreement shall be deemed given if delivered personally or if sent by either
party to the other by registered or certified mail, postage prepaid, or
internationally recognized courier, for overnight delivery, addressed to the
other party at its address first set forth above or at such other address to
which such party shall give notice hereunder. If by mail, delivery shall
effective five (5) days after deposit with postal authorities.
E. ASSIGNMENT. Distributor shall not assign this Agreement
nor any rights hereunder without the prior written consent of LipoMatrix,
granted in LipoMatrix's sole discretion. Subject to the foregoing, this
Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. LipoMatrix shall be entitled to assign its
interest in this Agreement in connection with a merger or other business
combination in which LipoMatrix is not the surviving entity.
F. SEVERABILITY. In the event any provision of this Agreement is
found to be invalid, illegal or unenforceable, the validity, legality and
enforceability of any of the remaining provisions shall not in any way be
affected or impaired thereby.
G. SURVIVAL. The obligations and duties listed in the Sections
titled "Warranty", "Patent Indemnity", "Limitation of Liability", "No Right to
Manufacture or Copy", "Product Liability" and "Intellectual Property Rights"
shall survive any termination or expiration of this Agreement and shall remain
in effect for a period of ten (10) years thereafter.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
LIPOMATRIX, INCORPORATED COLLAGEN CORPORATION
("LIPOMATRIX") ("DISTRIBUTOR")
By:___________________________________ By:________________________________
(signature) (signature)
Printed Name: Terry R. Knapp, M.D. Printed Name: Howard Palefsky
------------------------- ----------------------
Title: President & CEO Title: Chief Executive Officer
-------------------------------- -----------------------------
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LipoMatrix Contract Number LMI 046
EXHIBIT A
RISK MANAGEMENT PROGRAM
Confidential treatment requested for this exhibit.
18
LipoMatrix Contract Number LMI 046
EXHIBIT B
RISK MANAGEMENT SUPPORT DOCUMENTS
Confidential treatment requested for this exhibit.