EXHIBIT 10.33
MANUFACTURING SUPPLY AND DISTRIBUTION AGREEMENT BETWEEN SONOMED, INC. AND
OPHTHALMIC TECHNOLOGIES, INC. DATED AS OF MARCH 11, 2004
MANUFACTURING, SUPPLY AND DISTRIBUTION AGREEMENT
THIS AGREEMENT by and between SONOMED, INC., incorporated in the State of New
York, in the Unites States of America ("SONOMED"), and Ophthalmic Technologies,
Inc., a Canadian Corporation ("OTI").
WHEREAS, SONOMED desires to purchase, market and sell certain products
manufactured by OTI and OTI is willing and able to manufacture and supply such
products to SONOMED under the terms and conditions described in this Agreement;
NOW, THEREFORE, SONOMED and OTI agree as follows:
1. DEFINITIONS
The following terms shall have the meaning specified in this SECTION:
1.1 "ACCESSORIES" shall mean the individual PRODUCT components which may
be sold separately as replacement parts, accessories to the Product
as well as software upgrades to the system not included as standard
features to Combination Products.
1.2 "AFFILIATE" shall mean corporations, partnerships or other business
entities, which, directly or indirectly are controlled by, control,
or are under common control with a party to this Agreement.
1.3 "ANNUAL FORECAST" shall mean a non-binding production planning
forecast setting forth SONOMED's estimated requirements for
PRODUCTS, including both estimated quantities and delivery dates,
during a specified rolling twelve (12) month period.
1.4 "ANNUAL MINIMUM" shall mean the quantities of Products set forth in
SCHEDULE A for each YEAR.
1.5 "ANNUAL ORDERS" shall mean binding blanket purchase orders
specifying the minimum quantity, but not delivery dates, of PRODUCTS
to be purchased by SONOMED during a YEAR.
1.6 "BUSINESS DAY" shall mean every day with the exception of Saturday,
Sunday or national holidays in the United States or Canada.
1.7 "COMBINATION PRODUCTS" shall mean ultrasound devices, which have the
capability to obtain images of both the anterior and posterior
segments of the eye, or high frequency
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anterior segment device upgrades to posterior segment devices
previously sold to OTI ("Upgrades"). For greater certainty, an
Anterior Segment Device is one that utilizes a 35-50 mhz probe. A
posterior segment device is one that utilizes a 10-20 mhz probe.
1.8 "CONFIDENTIAL INFORMATION" means any proprietary information or
materials belonging to OTI or SONOMED, whether or not patentable,
including but not limited to: formulations, techniques, methodology,
equipment, data, reports, know-how, sources of supply, patent
positioning, consultants and business plans, which are communicated
to, learned of, developed or other wise acquired by the party
receiving such information or material during or in the course of
the agreement including information concerning the existence, scope
or activities of any research and development project of OTI or
SONOMED.
1.9 "DELIVERY ORDERS" shall mean irrevocable, written purchase orders
for PRODUCTS which specify the (i) product(s), by SKU, (ii) quantity
to be delivered, (iii) designated carrier and (iv) requested
delivery date. SONOMED shall purchase for delivery a minimum of 10
units of Product at any one time.
1.10 "EFFECTIVE DATE" shall mean March 1 1, 2004.
1.11 "FDA" shall mean the United States Food and Drug Administration.
1.12 "FIELD" AND OR "ANTERIOR SEGMENT DEVICE" shall mean medical devices
utilizing 35MHz to 50 MHz ultrasound to obtain images of the
anterior segment of the eye.
1.13 "MASTER ARTWORK TEXT" shall mean the specific text or graphics for
all items of labeling, including, but not limited to all special
packaging, labels, markings and graphical screen representations, if
any, to be included in the GUI. All of the same to be provided by
SONOMED at its cost and expense and utilized by OTI in connection
with the packaging and labeling of the PRODUCT.
1.14 "NON-CONFORMING PRODUCT" shall mean any PRODUCT, WHICH DOES NOT
CONFORM, to the SPECIFICATIONS, QSRS or other requirements of this
Agreement.
1.15 "PRODUCTS" or "PRODUCT" shall mean the 35 MHz and 50 MHz Anterior
Segment ultrasound device, along with associated software and
computer hardware, conforming to the SPECIFICATIONS and the QSRS.
1.16 "QUARTER" shall mean the three-month periods commencing on the
Effective Date of each Year of the Term.
1.17 "QSRS" shall mean the quality system regulations for manufacture of
medical devices promulgated under the United States Federal Food,
Drug and Cosmetic Act, as amended.
1.18 "SPECIFICATIONS" shall mean the descriptions, criteria, standards,
and other requirements set forth in the attached Schedule B. The
parties agree that the Products shall be provided with up to date
configurations similar to the basic features offered as standard to
the Anterior Segment systems on the OTI Combined Products, except
that the systems may differ in terms of computer platform, and
graphical user interface. The database will be removed from the
Products but will be reinstalled if requested by SONOMED. OTI may
make modifications to the design of or features to any of the
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Products or make improvements to them at any time but shall be under
no obligation to apply the same to any Products previously purchased
by SONOMED.
1.19 "SUPPLY FAILURE" shall mean failure by OTI for any reason to supply
at least seventy-five percent (75%) of the Product quantities
specified in SONOMED's DELIVERY ORDERS in any two consecutive
QUARTERS, excluding any NON-CONFORMING PRODUCTS supplied by OTI,
provided such DELIVERY ORDERS are consistent with the ANNUAL ORDER
for such period.
1.20 "TERM" shall mean the period beginning on the EFFECTIVE DATE and
ending on the last day of YEAR 3.
1.21 "TERRITORY" shall mean the United States of America.
1.22 "YEAR" SHall mean consecutive twelve (12) month periods, with Year 1
beginning on the EFFECTIVE DATE.
2. APPOINTMENT AS EXCLUSIVE DISTRIBUTOR
2.1 Exclusive Rights. Subject to OTI's retained rights as provided in
SECTION 2.2, OTI hereby appoints SONOMED as OTI's exclusive vendor
to market, sell and distribute the Products throughout the Territory
during the Term. Products may not be resold outside the Territory.
2.2 OTI Retained Rights. OTI shall retain the right to sell Combined
Products in the Territory.
2.3 Branding. The Products will be branded and identified as SONOMED
Product. SONOMED to Provide OTI with all Master Artwork Text.
3. SONOMED OBLIGATIONS TO MARKET
3.1 Purchase of Products; Sales Efforts. SONOMED shall purchase Products
from OTI on the terms and conditions set forth in this Agreement,
and shall use commercially reasonable efforts to maximize sales of
the Products in the Territory.
3.2 General Duties. SONOMED shall, at its expense, be responsible for:
(i) All marketing decisions regarding the Products including, but
not limited to, pricing, provided that SONOMED shall make
reasonable efforts to maintain an average resale price of less
than Forty Thousand US Dollars ($40,000) in the United States.
(ii) Customer order processing, billing and collection for Products
sold by SONOMED in the Territory.
(iii) Preparing all promotional materials and conducting all
promotional activities relating to the Products sold by
SONOMED in compliance with all applicable laws and regulations
of the regulatory authorities in each country in the
Territory;
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(iv) Establishing and maintaining a system of record keeping, with
the support and assistance of OTI, including a register of lot
numbers and individual Product numbers and customer names and
addresses for all Product sold by SONOMED in order to assist
OTI with traceability in the event of a Product recall and
require any customer that is not the end user of Products, to
maintain a similar register, including names and addresses of
its end users.
3.3 Conference Presence. SONOMED shall display the Product at its booth
at the AAO and ASCRS and other conferences and trades shows in the
United States at which it attends. An OTI product specialist will
assist SONOMED at its booth at the yearly AAO and ASCRS.
3.4 Training Courses. IF requested by SONOMED, OTI will attend up to
three times per year at its cost, a sales training session for
SONOMED sales staff, distributors and agents.
3.5 Advertising. SONOMED will advertise the Product on its web site and
other product promotions and advertisements.
3.6 Product Manager. SONOMED will assign a product manager responsible
for the Product.
3.7 Employee Training. SONOMED will send selected sales, marketing, and
development personnel for training by OTI at OTI's offices in
Toronto, Canada at such times as shall be mutually agreed by the
parties. Each party shall bear its own expenses associated with such
training.
4. MANUFACTURE AND SUPPLY; RIGHTS TO PURCHASE
4.1 Requirements. During the Term, SONOMED shall have the obligation to
purchase the quantity of Products set out in Schedule A and shall
have the right to purchase and OTI shall manufacture and supply
SONOMED's requirements for the Products at such times and in such
quantities as specified by SONOMED in its Annual Forecasts and
Delivery Orders as provided herein. OTI shall be responsible for
maintaining an adequate inventory of Products and shall exercise its
best efforts to ensure that a sufficient quantity of Product will be
available to satisfy SONOMED's Annual Orders.
4.2 Accessories. SONOMED shall have the right to purchase Accessories on
an as needed basis.
4.3 Service. SONOMED to provide service after the expiration of the
warranty period.
4.4 Documentation. OTI shall provide SONOMED with a current operating
and service manual text in English and all current photographs in
electronic format.
5. ANNUAL ORDERS; INITIAL PAYMENT; DEMONSTRATION UNITS
5.1 Initial Annual Order. Within ten (10) Business Days following the
Effective Date, SONOMED shall agree to purchase and shall submit to
OTI the Annual Order for the
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Year 1 Annual Minimum or such greater number it may desire (less the
5 demonstration units referred it in 5.4).
5.2 Subsequent Annual Orders. SONOMED agrees to purchase and submit an
Annual Order for no less than the applicable Annual Minimum at least
sixty (60) days prior to the beginning of each Year.
5.3 Initial Deposit. SONOMED shall pay to OTI the sum of seventy
thousand dollars $70,000 (US) which sum shall be applied as a credit
against SONOMED's order of demonstration units.
5.4 Demonstration Units. SONOMED hereby agrees to purchase five (5)
demonstration units at a per unit purchase price of Fourteen
Thousand US Dollars ($14,000), for use by its salesman and for
display and use in its various courses, conferences and trades
shows. The Initial Deposit will be applied by OTI against this
order.
5.5 Delivery Order Commitment. In the event that as of the expiration of
any Year during the Term, SONOMED has failed to submit Delivery
Orders for the Annual Order for such Year, OTI shall have the right
to invoice SONOMED for such remaining units and SONOMED shall pay
for such units in full within thirty (30) calendar days following
receipt of invoice. Upon receipt of such payment, OTI shall deliver
the remaining units to SONOMED's designated carrier for shipment.
Failure to pay shall be considered a material breach of this
Agreement.
5.6 UPGRADE CREDIT. OTI SHALL WITHIN TWO WEEKS OF EACH QUARTER PROVIDE A
WRITTEN REPORT TO SONOMED AS TO THE NUMBER OF UPGRADES OTI HAS SOLD
IN SUCH QUARTER. THE ANNUAL MINIMUM FOR SUBSEQUENT ANNUAL ORDERS
REFERRED TO IN 5. 2 ABOVE MAY BE REDUCED BY SONOMED BY THE NUMBER OF
UPGRADES SOLD BY OTI IN THE PREVIOUS YEAR. THE ANNUAL MINIMUM IN ANY
GIVEN YEAR MAY NOT BE REDUCED BY GREATER THAN ONE THIRD OF THE
ANNUAL MINIMUM. IF SONOMED WISHES TO REDUCE THE ANNUAL MINIMUM IT
MUST GIVE NOTICE TO OTI OF SUCH DESIRE AND THE QUANTITY BY WHICH IT
DESIRES TO REDUCE THE ANNUAL MINIMUM AT THE TIME IT DELIVERS TO OTI
ITS ANNUAL ORDER IN ACCORDANCE WITH SECTION 5.2 ABOVE.
6. FORECASTS, ORDERS, SHIPMENTS
6.1 Annual Forecasts. SONOMED will provide OTI with an initial Annual
Forecast upon execution of this Agreement and shall update the
Annual Forecast on a rolling basis no later than thirty (30)
calendar days prior to the first day of each subsequent Quarter.
6.2 Delivery Orders. SONOMED will provide OTI with an initial Delivery
Order within ten (10) Business Days following the Effective Date and
will submit subsequent Delivery Orders to OTI at least ninety (90)
calendar days in advance of SONOMED's requested delivery date.
SONOMED agrees to submit with its Annual Order each Year Delivery
Orders for a minimum of twenty-five per cent (25%) of the Annual
Order for each applicable Year of the Term to be delivered during
the first Quarter of each such Year . SONOMED further agrees to
purchase and take delivery each Quarter of each Year twenty-five
percent of the Annual Order for each applicable Year.
6.3 Shipment. Title and risk of loss or damages to the Products shall
pass to SONOMED upon OTI's delivery to SONOMED's designated carrier
for shipment at OTI's warehouse facility in Toronto, Canada. SONOMED
shall bear any costs of shipment of
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the Products from the point of delivery to SONOMED's designated
carrier as well as the amount of any and all taxes (other than
income or franchise taxes of OTI), custom duties or other charges
which may be required to be paid or collected on the sale, delivery,
or transportation of the Products. OTI shall not be responsible for
delays, loss or damage in shipment. SONOMED assumes and agrees to
pay all costs and charges for transportation, handling and insurance
of the Products from the point of shipment.
6.4 Invoicing. OTI shall submit an invoice for payment to SONOMED as of
the date of fulfillment of any Delivery Order.
7. PRICE AND PAYMENT
7.1 Purchase Price. The per unit purchase price for all Products
purchased by SONOMED in Year 1 shall be Fourteen Thousand US Dollars
($14,000). OTI may upon three months' prior written notice, increase
the price of the Products after Year two and for each subsequent
year by an amount not to exceed five (5%) per annum. If SONOMED
disagrees with the price increase it may terminate the Agreement
within five business days of receipt of such price increase notice
in which event OTI will have five business days to retract such
price increase in which even this Agreement continues or to accept
such termination in which event section 18.4 will apply.
7.2 Payment Terms. Except for the initial payment under SECTION 5.3 and
as otherwise indicated in this agreement, SONOMED shall pay for the
applicable purchase price within thirty (30) calendar days from the
later of (i) receipt of invoice from OTI or (ii) date of delivery of
Products to SONOMED's designated carrier for shipment.
7.3 Accessories. SONOMED shall pay the purchase price for Accessories
within thirty (30) calendar days from the later of (i) receipt of
invoice from OTI or (ii) date of delivery of Products to SONOMED's
designated carrier for shipment.
7.4 Currency. All payments due hereunder shall be made in U.S. Dollars
to OTI at its headquarters in Toronto, Canada, or such other place
as OTI may designate.
8. INTELLECTUAL PROPERTY
8.1 Ownership. OTI shall retain all rights, title and interest in and to
all intellectual property rights relating to the Products held by
OTI prior the Effective Date or developed by OTI during the Term.
Neither party shall use any trademark of the other party without
prior written consent.
8.2 Prosecution and Maintenance. Each party will undertake, diligently
pursue, and bear all costs of the prosecution and maintenance of its
respective patent rights.
8.3 Response to Infringement. If either party becomes aware of any
infringement or threatened infringement of the patent rights of
either party, the party having such knowledge will give notice to
the other. The party whose rights are so infringed shall have the
responsibility to take such action as may be necessary, at its own
expense, to prevent or eliminate such infringement. The other party
shall cooperate in any reasonable manner. OTI shall not compromise
or settle any suit for infringement of its patent rights relating to
the Products in the Territory without the prior written
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approval of SONOMED, which approval shall not be unreasonably
withheld, conditioned or delayed.
8.4 Damage Awards. Any damages recovered by the party bringing the
action for patent infringement will be used first to compensate that
party for its out-of-pocket expenses in the prosecution of any such
action, suit or proceeding for infringement. Any remaining damages
recovered by that party will be apportioned between SONOMED and OTI
in proportion to the damage incurred by each party as a result of
the infringement.
9. THIRD PARTY RIGHTS
9.1 Notice of Claims. If either party becomes aware of any action, or
suit, or threat of action or suit, by a third party alleging that
the manufacture, use or sale or offer for sale of the Products
infringes a patent, or violates any other proprietary rights of any
third party, such party will promptly notify the other party of the
same and fully disclose all information relating thereto.
9.2 Defense. OTI shall use commercially reasonable efforts to defend any
such action relating to the Products. OTI shall cooperate and
consult with SONOMED during the course of such defense and shall
keep SONOMED fully informed with respect to all significant aspects
of such action. SONOMED shall assist OTI by providing information in
the possession and control of SONOMED and to provide such fact
witnesses as may be reasonably necessary to such defense.
9.3 Judgments and Settlements. If, by the terms of a (i) settlement of
any claim against SONOMED or OTI, or (ii) judgment, decree or
decision of a court, tribunal or other authority of competent
jurisdiction finding that sale of any of the Products infringes a
patent, or violates any other proprietary rights of any third party,
SONOMED is required to compensate or pay damages to such third
party, OTI will pay all such damages.
10. REGULATORY COMPLIANCE
10.1 Product Registrations. OTI shall obtain and maintain all site
licenses, device registrations and other regulatory approvals, which
may be or become necessary to enable OTI to manufacture and sell the
Products to SONOMED and for SONOMED to market and sell the Products
in the United States.
10.2 Agency Inspections. OTI will notify SONOMED of the outcome of any
inspection of any of its manufacturing or warehouse facilities
utilized in connection with this Agreement by the FDA, and shall
notify SONOMED within five (5) Business Days of any regulatory
action taken.
11. QUALITY ASSURANCE AND IMPROVEMENTS
11.1 Master Artwork Text. SONOMED shall develop and provide Master
Artwork Text no less than thirty (30) Business Days prior to the
delivery date specified in SONOMED's initial Delivery Order.
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11.2 Packaging. All Products shall be packaged in OTI's designated
packaging, unless otherwise agreed by the parties. If SONOMED
requires special packaging with SONOMED's designated brand names,
model numbers and Master Artwork Text it shall either provide for it
at its cost or pay OTI for it.
11.3 Quality Assurance. OTI shall conduct quality testing on the Products
prior to delivery to SONOMED as set forth in the Specifications and
as required under the QSRs and shall deliver to SONOMED concurrently
with each shipment a Certificate of Compliance stating that each
unit shipped has been produced in accordance therewith. OTI shall
retain all manufacturing records for no less than ten (10) years
following the date of manufacture. OTI shall maintain documentation
regarding each serialized unit and software revision level (as
applicable) for each Product manufactured by or on behalf of OTI
hereunder.
12. WARRANTY
12.1 OTI Warranties. OTI hereby represents and warrants that (i) OTI
shall satisfy all requirements of the QSRs; (ii) all Products
supplied to SONOMED hereunder shall have been manufactured, quality
tested and packaged in accordance with, and shall conform to, the
Specifications, all other requirements set forth in this Agreement
and all laws and regulations, including but not limited to the QSRs,
which may be or become applicable to the production of the Products
during the term of this Agreement, (iii) OTI will maintain the
integrity of the practices and processes upon which SONOMED has
relied for Qualification.
12.2 Product Warranties. All Products sold by SONOMED shall under normal
and reasonable use and maintenance be warranted by OTI against
defects in materials and workmanship for a period equal to the
earlier of eighteen months (18) from the date of delivery to
SONOMED's designated carrier for shipment or twelve months (12) from
the date of delivery by SONOMED to the designated carrier for
shipment of SONOMED's end user.
12.3 Limitations. Except for the warranties set forth above, OTI makes no
other warranty of any kind with regard to Products whether express,
arising by operation of law, or otherwise, including without
limitation any implied warranties of merchantability and fitness for
a particular purpose. OTI shall not in any circumstance be liable
for incidental or consequential damages. OTI excludes and disclaims,
to the extent permitted by applicable law, any and all implies
warranties including without limitation, implied warranties in
connection with the design, sale, merchantability or fitness of the
Products for any particular purpose of use. OTI shall not have any
other liability for direct, consequential or incidental damages or
damages arising from personal injury, loss of life or lost profits,
and any and all liability of OTI shall be limited to the cost of the
repair of replacement of the Products.
12.4 Indemnity. If SONOMED makes any warranty or representation in
consistent with or in addition to the warranties stated in this
section, it shall, at its own expense, defend and hold OTI harmless
from any claim to the extent it is based upon such inconsistent or
additional warranty or representation. In addition, SONOMED agrees
to indemnify and save harmless OTI from and against any and all
claims, liabilities, costs and damages of any kind or amount
whatsoever (including reasonable legal fees and other litigation
costs, regardless of outcome) which arise in connection with the
performance
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of any servicing provided by SONOMED to the users of the Product
other than in accordance with procedures established by OTI or
common to the industry. OTI shall similarly indemnify the
Distributor to the extent of claims relating to such servicing where
the SOMOMED has complied with such procedures
12.5 Service. OTI shall provide at its Toronto facility, or, at OTI's
discretion arrange to provide through a mutually agreed upon third
party, covered service under the terms of the warranty provided
under SECTION 12.2 without additional charge to SONOMED or SONOMED's
customers except for the cost of shipping Product to OTI's service
location, which shall be borne by SONOMED or its customer. Costs and
terms for service outside the scope of the warranty shall be
determined by OTI. Any product that is serviced or refurbished by
OTI shall be tested against the current finished good specification
prior to release back to the customer.
13. RECALLS, COMPLAINTS, RETURNS
13.1 Notification. The parties shall immediately contact each other in
the event that either party has any reason to believe that a
voluntary withdrawal or recall of any Product may be necessary.
SONOMED and OTI shall jointly confer and cooperate to resolve any
issues with respect to a voluntary withdrawal or recall, including
without limitation, the necessity of declaring the voluntary
withdrawal or recall, the manner in which the voluntary withdrawal
or recall should be conducted and the duration of the voluntary
withdrawal or recall, provided that either party shall have the
right to require a voluntary withdrawal of any Product in the event
of a reasonable and good faith concern regarding the safety of such
Product. SONOMED shall be responsible for notification of the
applicable health authorities in the event of a voluntary withdrawal
or recall.
13.2 SONOMED Responsibility. SONOMED shall be responsible for the costs
of a recall or voluntary withdrawal, and shall reimburse OTI for any
costs reasonably incurred by OTI, in the event a recall or voluntary
withdrawal is determined, by mutual agreement of the parties (or by
an independent third party if the parties are unable to agree upon
the cause), to have been caused by SONOMED's storage, promotion or
distribution of Products.
13.3 OTI Responsibility. OTI shall be responsible for the costs of a
recall or voluntary withdrawal, and shall reimburse SONOMED for any
costs reasonably incurred by SONOMED, in the event the recall is
determined, by mutual agreement of the parties (or by an independent
third party if the parties are unable to agree upon the cause), to
have been caused by a defect in the design, packaging or manufacture
of the Product.
13.4 Market Complaints. SONOMED shall establish and maintain an
appropriate system for collecting market complaints relating to
Products sold by SONOMED, communicating market complaint information
to OTI, facilitating corrective actions and product recalls. SONOMED
will report all Product or packaging related complaints to OTI
within twenty (20) Business Days following receipt of the complaint.
Any suspected adverse incident shall be reported to OTI within five
(5) Business Days following receipt of the complaint. OTI shall
provide SONOMED with a written acknowledgement of receipt of the
complaint or suspected adverse incident and take appropriate
investigative and, if necessary corrective action, as required by
the QSRs and shall provide SONOMED with all relevant information
relating to any such
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investigation and corrective action. SONOMED shall be responsible,
in consultation with OTI, for reporting any adverse incident to the
relevant regulatory authorities as required by the QSRs.
13.5 Returns. SONOMED shall be responsible for responding to inquiries or
complaints concerning any Product and for the collection and
processing of any Products returned by customers as defective.
SONOMED shall return such Product to OTI for evaluation. Any Product
which is confirmed by OTI to be Non-Conforming shall be repaired or
replaced without additional charge. OTI shall use reasonable
commercial efforts to repair or replace any Non-Conforming Products
within twenty (20) Business Days.
14. INDEMNIFICATION
14.1 OTI shall indemnify and hold harmless SONOMED, its officers, agents
and employees against any claim, loss, damage, penalty, assessment
or expense (including reasonable attorneys fees) ("Claim") arising
directly or indirectly from OTI's (i) manufacture, testing, handling
or storage of the Product, (ii) breach of warranty, (iii) breach of
any of its other obligations under this Agreement; or (iv)
infringement of any intellectual property rights belonging to any
third party.
14.2 SONOMED shall indemnify and hold harmless OTI and its officers,
agents and employees against any Claim arising directly or
indirectly from SONOMED's (i) manufacture, testing, handling or
storage of Eye Seals purchased by OTI, (ii) handling or storage of
the Product, (ii) marketing, sale or distribution of the Product in
any manner which is inconsistent with the Product's applicable
regulatory approvals, (iii) breach of any of its obligations under
this Agreement, or (iv) infringement of any intellectual property
rights belonging to any third party.
14.3 In the event that either party (the "Indemnified Party") receives
notice of, or becomes aware of, a Claim for which the Indemnified
Party intends to seek indemnity hereunder, the Indemnified Party
shall promptly provide the other party (the "Indemnifying Party")
with notice of such Claim. The Indemnifying Party shall have the
right, at its option and its own expense, to be represented by
counsel of its own choice and to defend against, negotiate, settle
or otherwise deal with any such Claim, provided the Indemnifying
Party shall not enter into any settlement or compromise of any such
Claim which could lead to liability or create any financial or other
obligation on the part of the Indemnified Party without the
Indemnified Party's prior written consent which consent shall not be
unreasonably withheld. The Indemnified Party may participate in the
defense of any Claim with counsel of its own choice and at its own
expense. The parties agree to cooperate fully with each other in
connection with the defense, negotiation or settlement of any such
Claim. In the event that the Indemnifying Party does not undertake
the defense, compromise or settlement of a Claim, the Indemnified
Party shall have the right to control the defense or settlement of
such Claim with counsel of its choosing provided, however, that the
Indemnified Party shall not settle or compromise any such claim
without the Indemnifying Party's prior written consent, which
consent shall not be unreasonably withheld.
15. INSURANCE
During the term of this Agreement and for 2 years thereafter OTI
shall maintain product liability insurance on the Products with a
minimum of One Million US Dollars
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($1,000,000) for bodily injury and One Million US Dollars
($1,000,000) for property damage. OTI shall, upon SONOMED's request,
provide a Certificate of Insurance evidencing such insurance.
16. NON- COMPETITION
16.1 SONOMED shall not be concerned or interested either directly or
indirectly in the manufacture, production, importation, sale or
advertisement of any goods in the Territory which are like or
similar to or in conjunction with some other product might otherwise
compete or interfere with the sale of any of the Products
("Competing Products").
16.2 SONOMED shall not either directly or through any agents sell any of
the Products outside the Territory or, knowingly, or having reason
to believe that they would be so resold, sell the Products to any
person or body corporate with the view to their resale outside the
Territory.
16.3 OTI shall not either directly or through any agents sell any of the
Products within the Territory or, knowingly, or having reason to
believe that they would be so resold, sell the Products to any
person or body corporate with the view to their resale within the
Territory.
16.4 SONOMED, shall not and shall ensure that its subsidiaries,
affiliates and agents, shall not purchase from any third party or
modify, adapt, translate, decompile nor create or attempt to create,
by reverse engineering or otherwise, the Products, the software
supplied in the Products or the original component hardware
(components engineered specifically for the Products, in particular
the probe, emitter receiver and video capture boards) that form the
components of the Products nor shall SONOMED do same with respect to
the Products, the original hardware components forming the Products
or the software contained in and distributed with the Products for
the purpose of creating a derivative work or competitive work, nor
shall SONOMED use CONFIDENTIAL INFORMATION (defined in section 17)
for the purpose of the same. SONOMED acknowledges that any
contravention of this section and section 17 of this Agreement will
have severe adverse economic consequences for OTI.
16.5 SONOMED agrees that if it or any of its subsidiaries or affiliated
companies decided to develop, market and or manufacture in house or
purchase from a third party on AN OEM basis COMPETING PRODCUTS than
SONOMED must give OTI prior written notice of its desire so to do a
minimum of nine (9) months' prior to the introduction by SONOMED of
such COMPETING PRODUCT to the Territory. Upon receipt of such
notice, OTI shall have the right to terminate this Agreement at
anytime following receipt of such notice in which event OTI will
fill all unfilled Delivery Orders but shall not be obliged to fill
the balance of the Annual Order. In the event that OTI delivers
notice of termination pursuant to this section the provisions of
section 18.4 shall apply. For greater clarity it is agreed that if
OTI does terminate the agreement in accordance with this section
16.5 SONOMED shall not sell or market its COMPETING PRODUCT into the
Territory until the completion of such 9 month notice period. It is
agreed that failure on the part of SONOMED to provide such notice
will lead to severe adverse economic consequences for OTI.
50
17. CONFIDENTIALITY AND ANNOUNCEMENTS
17.1 DURING THE TERM OF THIS AGREEMENT AND FOR A PERIOD OF TWO (2) YEARS
AFTER THE EXPIRATION OR TERMINATION OF THIS AGREEMENT, A PARTY
RECEIVING (THE "RECEIVING PARTY") CONFIDENTIAL INFORMATION OF THE
OTHER PARTY (THE "DISCLOSING PARTY") PURSUANT TO THIS AGREEMENT
SHALL NOT:
(i) USE SUCH CONFIDENTIAL INFORMATION FOR ANY REASON OTHER THAN
FOR THE PURPOSE OF FULFILLING THE RECEIVING PARTY'S
OBLIGATIONS AND COMMITMENTS UNDER THIS AGREEMENT;
(ii) DISCLOSE SUCH CONFIDENTIAL INFORMATION TO ANY PERSON OTHER
THAN EMPLOYEES OF THE RECEIVING PARTY WHO HAVE A NEED TO KNOW
SUCH INFORMATION AND TO THIRD PARTIES SUBJECT TO WRITTEN
AGREEMENTS PROHIBITING THE DISCLOSURE OR USE OF SUCH
CONFIDENTIAL INFORMATION OTHER THAN FOR THE PURPOSES
CONTEMPLATED BY THIS AGREEMENT.
(iii) UPON THE DISCLOSING PARTY'S REQUEST, THE RECEIVING PARTY SHALL
RETURN OR DESTROY, AT THE DISCLOSING PARTY'S OPTION, ALL
MATERIALS, DOCUMENTS OR RECORDS INCORPORATING THE DISCLOSING
PARTY'S CONFIDENTIAL INFORMATION, PROVIDED THAT THE RECEIVING
PARTY SHALL BE ENTITLED TO RETAIN ONE COPY OF SUCH RECORDS FOR
ARCHIVE PURPOSES, WHICH SHALL REMAIN SUBJECT TO THE
RESTRICTIONS AGAINST USE AND DISCLOSURE SET FORTH HEREIN.
17.2 THE OBLIGATIONS SET FORTH IN Section 17.1 ABOVE SHALL NOT APPLY TO
ANY INFORMATION THAT THE RECEIVING PARTY CAN SHOW BY COMPETENT PROOF
(i) WAS GENERALLY KNOWN TO THE PUBLIC AT THE TIME OF DISCLOSURE BY
THE DISCLOSING PARTY; (ii) BECOMES GENERALLY KNOWN TO THE PUBLIC
THEREAFTER THROUGH NO ACT OR OMISSION OF THE RECEIVING PARTY OR ITS
OFFICERS, EMPLOYEES, AGENTS, OR REPRESENTATIVES;(iii) IS DEVELOPED
BY THE RECEIVING PARTY THROUGH ENTIRELY INDEPENDENT EFFORTS AND
WITHOUT USE OF THE CONFIDENTIAL INFORMATION.
17.3 NEITHER PARTY SHALL MAKE ANY PRESS RELEASE OR TRADE ANNOUNCEMENT
RELATING TO THIS AGREEMENT, OR OTHERWISE DISCLOSE THE TERMS OF THIS
AGREEMENT, WITHOUT THE PRIOR WRITTEN CONSENT OF THE OTHER PARTY,
EXCEPT AS REQUIRED BY A COURT OF COMPETENT JURISDICTION OR PURSUANT
TO THE DISCLOSURE REQUIREMENTS OF A GOVERNMENTAL AGENCY.
18. TERM AND TERMINATION
18.1 TERM. THIS AGREEMENT WILL COMMENCE ON THE EFFECTIVE DATE AND WILL
CONTINUE IN EFFECT UNTIL THE EXPIRATION OF THE TERM. THE TERM SHALL
BE AUTOMATICALLY RENEWED FOR A FURTHER TERM OF ONE YEAR PROVIDED
SONOMED HAS COMPLIED WITH ALL OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND PROVIDED FURTHER THAT OTI AND SONOMED HAVE, AT LEAST
THREE MONTHS' PRIOR TO THE TERM AGREED UPON MINIMUM QUANTITIES AND
PRICING FOR THE RENEWAL
18.2 EARLY TERMINATION. EITHER PARTY MAY TERMINATE THIS AGREEMENT AT ANY
TIME IN THE EVENT OF THE OTHER PARTY'S (i) FAILURE TO CURE ANY
NONCOMPLIANCE WITH ANY MATERIAL TERM OF THIS AGREEMENT WITHIN SIXTY
(60) DAYS FOLLOWING RECEIPT OF WRITTEN NOTICE FROM THE
NON-DEFAULTING PARTY, OR (ii) BANKRUPTCY OR INITIATION OF SIMILAR
PROCEEDINGS BY OR AGAINST SUCH PARTY.
18.3 FAILURE TO PURCHASE ANNUAL MINIMUM. IN ADDITION TO OTHER RIGHTS IT
MAY HAVE OTI SHALL HAVE THE RIGHT TO TERMINATE THIS AGREEMENT IN THE
EVENT THAT SONOMED FAILS TO SUBMIT AN ANNUAL ORDER FOR THE ANNUAL
MINIMUM IN ACCORDANCE WITH Section 5.2. OTI SHALL EXERCISE SUCH
RIGHT BY DELIVERY OF WRITTEN NOTICE TO SONOMED AND SUCH TERMINATION
SHALL BE EFFECTIVE AS OF THE LAST DAY OF THE SIXTH MONTH OF THE YEAR
FOR WHICH THE ANNUAL ORDER WAS DUE. IN WHICH EVENT SONOMED SHALL BE
OBLIGATE TO PURCHASE AND PAY FOR FIFTY PER CENT OF THE ANNUAL
MINIMUM FOR SUCH YEAR, WHICH PRODUCT WILL BE SHIPPED TO SONOMED IN 6
EQUAL BATCHES SPREAD OVER A SIX MONTH PERIOD COMMENCING ON THE FIRST
DAY OF THE YEAR. ALL PRODUCT TO BE PURCHASED BY SONOMED DURING THIS
PERIOD SHALL PREPAID BY SONOMED.
18.4 EFFECT OF TERMINATION. IN THE EVENT OF TERMINATION OF THIS IN
ACCORDANCE WITH SECTION 18.2 ALL AMOUNTS OWED OR TO BE OWED BY
SONOMED TO OTI SHALL BECOME IMMEDIATELY DUE AND PAYABLE NET OF ANY
AMOUNTS JUSTLY OWED BY OTI TO SONOMED AND ALL UNFILLED DELIVERY
ORDERS OF PRODUCT SPECIFYING SHIPMENT DATES BEYOND 60
51
DAYS WILL BE TERMINATED. THE TERMINATION OF THE DELIVERY ORDERS
HOWEVER DOES NOT LIMIT EITHER PARTIES RIGHTS PURSUANT TO
SECTION 18.7.
18.5 SURVIVAL. NOTWITHSTANDING ANY TERMINATION OF THIS AGREEMENT, THE
PROVISIONS OF Sections 8.1, 8.3, 8.4, 9, 13, 14, 15, AND 17 SHALL
SURVIVE THE TERMINATION OR EXPIRATION OF THIS AGREEMENT FOR A PERIOD
OF 5 YEARS.
18.6 EARLY TERMINATION AFTER SIX MONTHS. After six months and only on the
commencement date of each Quarter, including the date of the sixth
month, EITHER PARTY MAY TERMINATE THIS AGREEMENT UPON SIX MONTHS'
PRIOR WRITTEN NOTICE . IF SONOMED TERMINATES IN THIS MANNER IT MUST
AT A MINIMUM DURING THE SIX MONTH NOTICE PERIOD PURCHASE, TAKE
DELIVERY OF AND PAY FOR, IN ADDITION TO PRODUCT ALREADY SUBJECT TO
DELIVERY ORDERS, AN ADDITIONAL NUMBER OF PRODUCT EQUAL TO 50% OF THE
ANNUAL ORDER FOR SUCH YEAR (WHICH NUMBER TOGETHER WITH PREVIOULSY
PLACED AND UNFILLED DELIVERY ORDERS SHALL NOT EXCEED 50% OF THE
ANNUAL ORDER. SONOMED WILL PREPAY FOR ALL PRODUCT PURCHASED DURING
THIS PERIOD INCLUDING PRODUCT FOR WHICH A DELIVERY ORDER HAS BEEN
GIVEN BUT NOT YET DELIVERED BY OTI. IF OTI TERMINATES IN THIS MANNER
IT MUST CONTINUE TO SUPPLY SONOMED AND SONOMED AGREES TO PURCHASE
DURING SUCH NOTICE PERIOD IN ACCORDANCE WITH SONOMED'S DELIVERY
ORDERS SUBMITTED PRIOR TO THE DATE OF NOTICE OF TERMINATION. IN
ADDITION, SONOMED SHALL HAVE THE RIGHT (WHICH RIGHT MUST BE
EXERCISED BY SONOMED PLACING A DELIVERY ORDER WITHIN FIFTEEN DAYS OF
RECEIVING NOTICE OF TERMINATION) BUT NOT THE OBLIGATION, TO PURCHASE
DURING SUCH SIX MONTH PERIOD AN ADDITIONAL NUMBER OF PRODUCT UP TO
50% OF THE ANNUAL ORDER FOR SUCH YEAR (WHICH NUMBER TOGETHER WITH
PREVIOUSLY PLACED AND UNFILLLED DELIVERY ORDERS SHALL NOT EXCEED 50%
OF THE ANNUAL ORDER), WHICH PRODUCT WILL BE SHIPPED TO SONOMED IN 6
EQUAL BATCHES SPREAD OVER A SIX MONTH PERIOD.
18.7 NO TERMINATION OF THIS AGREEMENT SHALL IN ANY MANNER WHATSOEVER
RELEASE, OR BE CONSTRUED AS RELEASING, ANY PARTY FROM ANY LIABILITY
TO THE OTHER ARISING OUT OF OR IN CONNECTION WITH A PARTY'S BREACH
OF, OR FAILURE TO PERFORM, ANY COVENANT, AGREEMENT, DUTY OR
OBLIGATION CONTAINED HEREIN.
18.8 DISCONTINUANCE OF MANUFACTURE . IF AS A RESULT OF A CHANGE IN
COMPUTER PLATFORM CONFIGURATION OR COMPUTER OPERATING SYSTEM
SOFTWARE SUCH THAT IT IS NO LONGER ECONOMICALLY FEASIBLE FOR OTI TO
ENSURE COMPATIBILITY OF SUCH SYSTEMS WITH THE ORIGINAL COMPONENT
HARDWARE AND/OR PRODUCT SOFTWARE OTI DECIDES TO CEASE MANUFACTURING
THE PRODUCT OTI MAY TERMINATE THIS AGREEMENT ON 90 DAYS PRIOR
WRITTEN NOTICE . THIS NOTICE MAY ONLY BE GIVEN IF OTI ALSO CEASES
MANUFACTURE OF COMBINATION PRODUCTS AT THE SAME TIME.
19. FORCE MAJEURE
Neither party shall be liable to the other for loss or damages for any
default or delay attributable to any cause beyond the reasonable control
of that party, including, but not limited to an act of God, flood, fire,
explosion, strike, war, acts of terrorism, governmental action other
regulatory enforcement action arising from any violation of law, rule or
regulation by the party seeking the protection of this provision. If any
such event occurs, the party affected shall notify the other party and
shall exercise diligent efforts to resume performance of its obligations
as soon as possible. In the event the party affected is unable to resume
performance within sixty (60) days, the other party shall have the right
to terminate this Agreement upon ten (10) days prior written notice.
52
20. MISCELLANEOUS
20.1 WAIVER. NO WAIVER OF ANY OF THE TERMS OF THIS AGREEMENT SHALL BE
EFFECTIVE UNLESS MADE IN WRITING AND SIGNED BY AN AUTHORIZED
REPRESENTATIVE OF THE PARTY WAIVING ITS RIGHTS HEREUNDER.
20.2 NO LICENSE. NO LICENSE UNDER ANY TRADEMARK, PATENT, COPYRIGHT OR
OTHER PROPERTY RIGHT IS GRANTED UNDER THIS AGREEMENT EXCEPT TO THE
EXTENT REQUIRED FOR SONOMED TO MARKET AND SELL THE PRODUCTS IN
ACCORDANCE WITH THIS AGREEMENT.
20.3 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED
PURSUANT TO THE LAWS OF ONTARIO, CANADA, DISREGARDING ANY CONFLICTS
OF LAWS PROVISIONS.
20.4 INDEPENDENT CONTRACTORS. NOTHING IN THIS AGREEMENT IS INTENDED OR
SHALL BE DEEMED TO CONSTITUTE A PARTNERSHIP, AGENCY, OR JOINT
VENTURE RELATIONSHIP BETWEEN THE PARTIES. ALL ACTIVITIES BY THE
PARTIES HEREUNDER SHALL BE PERFORMED BY THEM AS INDEPENDENT
CONTRACTORS. NEITHER PARTY SHALL INCUR ANY DEBTS OR MAKE ANY
COMMITMENTS FOR THE OTHER PARTY, EXCEPT TO THE EXTENT SPECIFICALLY
PROVIDED HEREIN.
20.5 ASSIGNMENT. THIS AGREEMENT SHALL BE BINDING UPON AND INURE TO THE
BENEFIT OF THE PARTIES, THEIR SUCCESSORS AND PERMITTED ASSIGNS.
SONOMED MAY NOT ASSIGN THIS AGREEMENT WITHOUT THE PRIOR WRITTEN
CONSENT OF THE OTI, PROVIDED THAT SONOMED SHALL HAVE THE RIGHT TO
ASSIGN THIS AGREEMENT TO A AN AFFILIATE OR SUBSIDIARY. THIS TERM IS
CONSIDERED A MATERIAL TERM OF THE CONTRACT.
20.6 ARBITRATION. IN THE EVENT THAT THE PARTIES ARE UNABLE TO RESOLVE ANY
DISPUTE ARISING UNDER THIS AGREEMENT THOUGH DIRECT NEGOTIATIONS, THE
PARTIES AGREE AND CONSENT TO THE RESOLUTION OF SUCH DISPUTE BY
BINDING ARBITRATION. ANY SUCH ARBITRATION SHALL BE CONDUCTED IN
ACCORDANCE WITH THE PROCEDURES OF THE INTERNATIONAL CHAMBER OF
COMMERCE, OR AS OTHERWISE AGREED BY THE PARTIES, AND SHALL BE HELD
IN TORONTO, CANADA BEFORE A SINGLE ARBITRATOR SELECTED BY MUTUAL
AGREEMENT OF THE PARTIES. NOTWITHSTANDING THE FOREGOING, EITHER
PARTY SHALL HAVE THE RIGHT TO SEEK INJUNCTIVE RELIEF IN A COURT OF
COMPETENT JURISDICTION TO PREVENT ANY BREACH OF THIS AGREEMENT BY
THE OTHER PARTY.
20.7 NOTICES. ALL NOTICES HEREUNDER SHALL BE IN WRITING AND SHALL BE
CONSIDERED DELIVERED ON THE DAY OF HAND DELIVERY, ONE DAY AFTER
DELIVERY TO A NATIONALLY RECOGNIZED OVERNIGHT DELIVERY SERVICE,
CHARGES PREPAID, THREE DAYS AFTER BEING SENT BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID:
If to SONOMED, as follows:
SONOMED ,Inc.
300 Marcus Avenue
Lake Success, New York
11042
Attn: Barry Durante, EVP
Tel: 516 -354-0900
Fax: 516-354-5902
E-mail: bdurante@escalon.com
53
If to OTI, as follows:
37 Kodiak Cres., Unit 16
Toronto, Ontario, Canada
M3J 3E5
Attn: President
Tel: 416 631-9123
Fax: 416 631-6932
E-mail: info@oti-canada.com
or to such other address as any party shall have specified by notice
to the other in accordance with this paragraph.
20.8 COMPLIANCE WITH LAW. EACH PARTY SHALL COMPLY WITH ALL LEGAL AND
REGULATORY REQUIREMENTS APPLICABLE TO THE CONDUCT OF ITS BUSINESS,
INCLUDING BUT NOT LIMITED TO, COMPLIANCE WITH ALL SAFETY, HEALTH,
ENVIRONMENTAL AND EMPLOYMENT LAWS APPLICABLE TO THE ACTIVITIES TO BE
UNDERTAKEN BY SUCH PARTY PURSUANT TO THIS AGREEMENT.
20.9 ENTIRE AGREEMENT, MODIFICATION, COUNTER PARTS. THE TERMS OF THIS
AGREEMENT REPRESENT THE ENTIRE AGREEMENT OF THE PARTIES WITH RESPECT
TO THE SUBJECT MATTER HEREIN AND SHALL NOT BE MODIFIED OR
SUPPLEMENTED EXCEPT IN A WRITTEN DOCUMENT DULY EXECUTED BY THE
PARTIES EXPRESSLY STATING THAT IT IS INTENDED TO MODIFY, SUPPLEMENT
OR AMEND THIS AGREEMENT. THIS AGREEMENT SHALL PREVAIL IN THE EVENT
OF ANY INCONSISTENCIES BETWEEN IT AND THE TERMS OF ANY PURCHASE
ORDER, INVOICE OR OTHER FORM UTILIZED BY THE PARTIES. THIS AGREEMENT
MAY BE EXECUTED IN ONE OR MORE COUNTERPARTS, EACH OF WHICH SHALL BE
DEEMED AN ORIGINAL, BUT ALL OF WHICH TOGETHER SHALL BE DEEMED ONE
AND THE SAME INSTRUMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized officers the day and year first
above written.
SONOMED, INC.
By: /s/ Richard J. DePiano
-------------------------
TITLE: CEO
OPHTHALMIC TECHNOLOGIES, INC.
By: /s/ Rishard Weitz
-------------------------
Title: President
54
SCHEDULE A
ANNUAL MINIMUMS
YEAR: Year 1 Year 2 Year 3
------ ------ ------
UNITS: 80 120 150
55
SCHEDULE B
PRODUCT SPECIFICATIONS
HF 35-50 (UBM) PROBE
Type: Motor Driven, compact probe with inter-changeable High Frequency
Transducers
Transducers Frequency: 35 MHz. and/or 50 Mhz.
Scanning Method: variable field sector scanner
Sector angle: 22.5 degrees and 10 degrees fields
Scanning speed: Variable 12.5 and 25 Frames/Second (fps)
Display: Observable range: variable: 18.5mm. Wide x 14mm Deep @ 38 degrees
sector
12.0mm. Wide x 14mm Deep @ 20 degrees
sector
DUAL SCREEN SIMULTANEOUS DISPLAY WITH LIVE ZOOM AND STANDARD SCREEN DISPLAY.
ELECTRONIC RESOLUTION
In Sector of 38 degrees fielD
Axial (depth) direction: 0.027 mm.
Lateral (width) direction: max. 0.035 mm.
In Sector of 20 degrees field
Axial (depth) direction: 0.027 mm.
Lateral (width) direction: max. 0.23 mm.
ACOUSTIC AXIAL RESOLUTION
0.068 mm. with 35 MHz. Transducer
0.050 mm. with 50 MHz. Transducer
Gain curves: Logarithmic with user-selectable window (contrast) & level
(brightness) control
COMPUTER- minimum configuration required to drive software together with 17 inch
monitor, may change from time to time
MEASUREMENTS
- A-Scan Profile with 2 markers, Dual Calipers measurements,
- Anterior Segment Biometry - single measurement of Cornea thickness,
Anterior Chamber Depth (ACD) and Lens thickness.
- Distance Measurement; Angle to Angle, Sulcus to Sulcus, Corneal and
Scleral thickness
- Angle in degrees
56
DYNAMIC RECORDING
Recording time: Depends on memory, 20 sec. or more
Recording Frame rate: 12.5 or 25 fps
Sound sampling rate: CD quality, 44.1 KHz
ELECTRICAL:
Voltage: AC 90 - 240 V
Frequency: 50/60 Hz
Exact specifications may change from time to time
57