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EXHIBIT 10.36
Redacted Version
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DEALERSHIP AGREEMENT
This Dealership Agreement ("Agreement") is entered into this 1st day of
October, 1999, (the "Effective Date") by and between OSTEX INTERNATIONAL, INC.,
a Washington corporation, 2203 Airport Way South, Suite 400, Seattle, Washington
98134 (hereinafter referred to as "Ostex") and PHYSICIAN SALES AND SERVICE,
INC., a Florida corporation, with offices at 4345 Southpoint Blvd.,
Jacksonville, FL 32216 (hereinafter referred to as "PSS").
WITNESSETH:
In consideration of the mutual promises made herein, the parties agree as
follows:
1. DEFINITIONS. As used herein:
a) "Territory" shall mean the U.S.A.
b) "Product" shall mean the Osteomark-registered trademark-
NTx/Creatinine quantitative point-of-care ("POC") device
manufactured exclusively for Ostex by Metrika, Inc.
c) "Office Market" shall mean office-based physicians, [ * ].
2. GRANT OF DEALERSHIP.
Ostex hereby grants PSS an exclusive Dealership to serve the Office
Market in the Territory with respect to the promotion and sale of the
Product. PSS accepts such Dealership and shall undertake its best
efforts to promote the sale of the Product. PSS understands that Ostex
has expended and will continue to expend substantial efforts and funds
to secure and retain public goodwill toward the Product and its
trademarks, and recognizes the vital interest to Ostex in the proper
marketing of the Product. It shall be a material condition of this
Agreement that PSS will sell the Product only to the Office Market
within the Territory.
It is expressly understood and agreed that although this Agreement is
exclusive, Ostex may sell the Product to [ * ] for distribution to the
Office Market in the Territory, provided the [ * ] distribute the
Product with their own sales force and solely in connection with the
marketing of [ * ] to the Office Market. During the term of this
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Agreement, Ostex will 1not sell the Product to [ * ], for distribution
to the Office Market in the Territory, [ * ]. Furthermore, if Ostex
sells such Product to [ * ] at a [ * ] that Ostex sells the Product to
PSS, Ostex will share [ * ] percent of the proceeds attributable to the
[ * ] with PSS.
During the term of this Agreement, and at any time that PSS is selling
the Product, PSS shall not represent other products that compete with
the Ostex Product.
3. PRICING, SUPPLY, AND RETURNS.
For the first [ * ] months of this Agreement, Ostex agrees to sell the
Product to PSS at the price of [ * ] dollars [ * ] per [ * ]
point-of-care devices.
Prior to the Product achieving CLIA waiver status, Ostex agrees to
provide PSS [ * ] urine controls and [ * ] point-of-care devices with
every [ * ] point-of-care devices that PSS orders.
After the Product achieves CLIA waiver status, Ostex agrees to sell to
PSS urine controls for use with the Product at a price [ * ].
Between the fifth and sixth month of this Agreement, the parties will
review and may adjust the Product pricing (by no more than +/- [ * ])
in view of the progressive rollout results. At that time the parties
will also agree to minimum purchase requirements of the Product for the
remaining term of this Agreement, commencing [ * ]. If at the end of
any calendar year these performance expectations are not met, Ostex may
at its sole discretion convert this Agreement to a [ * ] dealership or
terminate this Agreement.
Sales shall be FOB Seattle, WA, or Sunnyvale, CA.
The terms of payment are net thirty (30) days of invoice date. Past due
accounts are subject to a service and handling charge of 1 % per month.
Within [ * ] days before the beginning of each calendar quarter, in
consultation with Ostex, PSS will provide Ostex with a "Rolling
Forecast" of PSS's requirements for Product for the twelve-month period
commencing on the next calendar quarter. PSS's stated requirements for
the first three-month period of each twelve-month period will
constitute a firm purchase order that will obligate PSS to purchase the
indicated number of Product devices. The forecasted demand for the
fourth, fifth, and sixth months of each Rolling Forecast shall be
relied upon by Ostex for the purposes of manufacturing and supply
obligations hereunder, but PSS may within the subsequent Rolling
Forecast vary its initial forecast for such months by no more than [ *
] percent ([ * ]%) of the aggregate
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unless agreed to by Ostex. The final [ * ] months of each Rolling
Forecast will constitute non-binding estimates of PSS's requirements
for the periods described therein.
Ostex shall accept return of Product purchased by PSS under this
Agreement under the following conditions: (i) the Product was
originally shipped to PSS with less than [ * ] months shelf life; (ii)
the Product is unopened and unused; (iii) PSS provides the necessary
data for Ostex to authorize a return (e.g., lot number, expiration
date, condition, and purchase order number of the Product). Upon
receipt and confirmation of information requested, Ostex will issue a
Return Material Authorization ("RMA") number that PSS must include on
all paperwork that accompanies the returned Product (including the
outside of the return packaging).
Ostex shall also accept return of Product purchased by PSS under this
Agreement in the event that Ostex becomes bankrupt or insolvent or
undergoes a change of ownership.
4. PRODUCT LAUNCH.
Ostex will organize with the PSS Marketing team a progressive rollout
of the Product on a [ * ] basis.
PSS will establish with Ostex inventory minimums and sales goals by
[*]. Minimum acceptable inventory will be [ * ] days.
5. PSS'S RESPONSIBILITIES.
a) PSS agrees to actively promote the sale of the Product to the
Office Market in the Territory, to the best of PSS's ability
nationally, and to otherwise safeguard Ostex' interest
wherever possible. All promotional material will be reviewed
and approved by Ostex prior to PSS's use, in accordance with
Ostex' promotional and advertising policy.
b) PSS shall provide Ostex with monthly sales reports indicating
sales of Product to physicians by [ * ].
c) PSS agrees to keep Ostex informed about market trends and
conditions, experiences with customers, and major negotiations
and prospective sales possibilities.
d) PSS agrees to turn over to Ostex any and all leads from any
potential customers who are not in the Office Market.
e) PSS further agrees to assist Ostex in promoting the Osteomark
NTx assay [ * ], and to that end to transmit to Ostex
hereunder leads with respect to potential sales of NTx [ * ].
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f) PSS agrees to provide at Ostex direction proper documentation
of PSS's handling of the Product to assure that OstexProduct
in PSS's possession complies with all orders, rules and
regulations issued by the FDA and QS Regulation.
g) PSS shall provide all in-service training for Product sold by
PSS to the Office Market.
h) PSS agrees not to alter the Product in any way and not to
remove the Ostex name, trademarks, or trade dress from the
Product or its packaging.
i) PSS shall provide a place of business with adequate
communications service to efficiently effect the business of
Product sales.
j) PSS shall maintain adequate inventory of Ostex sales materials
and technical information and make effective use of such items
in its best judgment.
6. OSTEX RESPONSIBILITIES
a) Ostex will provide assistance to the PSS Marketing team in
launching the Product [ * ].
b) Ostex will at its option support PSS's annual national sales
meeting at [ * ] for the first year, and thereafter at invited
[ * ]. Additionally, Ostex will participate in quarterly
promotions to include Platinum Plus promotions.
c) Ostex shall provide an 800 support number for PSS and
customers.
d) Ostex shall provide PSS with a reasonable quantity of
promotional materials to assist in PSS's marketing efforts.
Additional promotional materials can be purchased from Ostex [
* ].
e) Ostex shall turn over to PSS all Office Market leads for the
Product but not for other Ostex products.
f) Ostex will provide a product video or computer display for use
in the sales activities of PSS's sales personnel.
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7. CONFIDENTIAL INFORMATION
PSS and Ostex agree not to make available or accessible to any third
party or use except as authorized for the purposes of performing this
Agreement any technical or commercial data or other information of a
competitive, special or confidential nature, transmitted to either
party by the other, and this undertaking shall continue to be
applicable for a period of [ * ] following the expiration or
termination of the Agreement for whatever cause. However, upon
expiration or termination of this agreement PSS will promptly provide
sufficient customer information to Ostex so that Ostex to can continue
to service such existing customers of the Product in the Office Market.
8. INSURANCE
PSS shall procure and maintain in full force and effect during the term
of this Agreement an insurance policy or policies, protecting PSS, its
officers, directors, employees and agents against any loss, liability
or expense whatsoever, arising out of or in connection with PSS's sale
of the Product.
Ostex shall indemnify and hold harmless PSS and its agents, employees,
officers and directors from claims relating to the use of the Product,
product liability, warranty claims and all matters relating to the
Product except to the extent that the claim arises from or is related
to the acts, omissions or misrepresentations of the PSS, its employees,
officers, directors and agents.
Ostex shall secure Product liability insurance in an amount not less
than [ * ] and shall secure a vendor endorsement naming PSS as an
additional insured.
9. TRADE SHOWS AND TRAINING COURSES.
a) PSS agrees to display and promote the Product at a reasonable
number of local meetings or exhibits as they may arise, at its
sole cost and expense. All exhibit material developed for and
all promotional material distributed at such local meetings
and exhibits will be reviewed and approved by Ostex prior to
use, in accordance with Ostex promotion and advertising
policy.
b) From time to time, PSS agrees to send select members of its
sales and marketing group to Ostex for training, at PSS's sole
cost and expense. Ostex agrees to provide appropriate training
to PSS's employees at PSS's locations at [ * ].
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10. OSTEX NAME AND TRADEMARK
In the event the PSS wishes to fix a label on the outer packaging box
containing the Products, showing that the PSS has an Ostex Dealership,
PSS agrees to coordinate with Ostex in advance the manner, size,
location and appearance of such label.
PSS shall use the name Ostex and the Ostex-registered trademark- and
Osteomark-registered trademark- trademarks only for the duration of
this Agreement and only for the design of marketing materials for the
Product, and only after having obtained specific prior approval in
writing from Ostex. PSS will, therefore, submit all such proposals to
Ostex for approval.
PSS agrees to immediately cease use of the name Ostex and the
Ostex-registered trademark- and Osteomark-registered trademark-
trademarks upon expiration or termination of this Agreement.
11. TERM OF THE AGREEMENT
This Agreement shall come into effect on the Effective Date set forth
above, and shall continue for a period of [ * ] years from the
Effective Date, unless terminated earlier as provided herein.
This Agreement shall be automatically renewed for successive [ * ]
periods, unless either party notifies the other party in writing of its
intention not to renew this Agreement at least [ * ] days prior to the
expiration of the then current term.
12. IMMEDIATE TERMINATION PRIOR TO EXPIRATION OF THE AGREEMENT
Either party shall have the right to terminate this Agreement with
immediate effect during the term of the Agreement if the other party
shall be adjudged bankrupt or insolvent, or shall become insolvent, or
if a receiver or other officer is appointed by any court or
governmental authority to administer or liquidate the company, or in
the event of dissolution proceedings by or against said other party.
13. TERMINATION WITH CAUSE
Either party shall have the right to terminate this Agreement in the
event that the other party defaults in the material performance of this
Agreement and continues in default thereof after [ * ] days' written
notice by the first party of such default. During this [ * ] day cure
period the parties agree to discuss the conflict at senior levels with
the goal of resolving the conflict without termination or litigation.
If the conflict is not resolved within the [ * ] day cure period, the
notifying party may terminate the Agreement or, if the notifying party
is Ostex, convert this Agreement to a nonexclusive dealership. If Ostex
terminates this Agreement following the [ * ] day cure period, Ostex
must provide
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an additional [ * ] day separation period during which PSS can sell its
inventory of Product.
14. TERMINATION WITHOUT CAUSE
Either party shall have the right to terminate this Agreement, without
cause, upon [ * ] months prior written notice.
15. UNDERTAKINGS RELATED TO TERMINATION
Upon termination or expiration of this Agreement for whatever cause:
a) PSS agrees to return Ostex immediately after such termination
or expiration, or separation period, all written materials
forwarded by Ostex to PSS hereunder.
b) Ostex shall have the option to purchase from PSS, exercisable
in Ostex's sole discretion, and PSS agrees to sell to Ostex at
the price that PSS paid to Ostex, any or all Ostex Product to
which PSS has title upon said termination or expiration.
c) PSS agrees that no obligation shall exist for Ostex to
indemnify PSS for damages of any kind pertaining to PSS's
investment in the promotion of the Product, it being
understood that the PSS price permits a sufficient return on
investment.
16. AMENDMENTS
This Agreement cannot be amended except in writing duly signed by an
authorized representative of Ostex and PSS.
17. NON-ASSIGNABILITY
The Agreement shall not be assignable by either party without the
written consent of the other, except that Ostex may assign this
Agreement to any affiliated Ostex company without consent. Any
attempted assignment in violation hereof shall be void.
18. NOTICES
All notices required to be given hereunder shall be deemed given if in
writing and deposited in the United States mail in a sealed envelope,
certified, with postage thereon prepaid and addressed to Ostex or PSS,
at the addresses listed on page 1 of this Agreement or at such other
address as the parties may direct by notice given as herein provided.
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19. INDEPENDENT CONTRACTOR
Each of the parties is an independent contractor. Neither party has any
authority, expressed or implied, to act for the other in dealings with
others, and neither shall purport to act as the agent or employee of
the other. PSS and Ostex shall be responsible for compliance with all
laws and regulations governing their respective businesses, and will
hold the other party harmless from all claims arising out of its
conduct. No employee of PSS shall be deemed in any manner whatsoever to
be an employee of Ostex, and as such shall not be entitled to and is
not qualified under any employee benefit plans provided by Ostex for
Ostex employees. The employees of PSS shall not be entitled to
participate in any plans, arrangements or distributions by Ostex
pertaining to, or in connection with, any bonus, pension, health,
insurance, welfare or similar benefit plan offered by Ostex to
employees. PSS and its employees shall be solely responsible for any
and all city, state and federal income taxes, social security
withholding taxes and any other tax obligation to which the employees
of PSS may be subjects. Ostex shall not be responsible for any payments
due to or on account of PSS's employees in connection with the
Agreement.
20. WAIVER
The waiver by either party of a default or breach of any provision of
this Agreement by the other party shall not operate or be construed as
a waiver of any subsequent default or breach.
21. ARBITRATION.
In the event of any controversy or threatened breach arising under or
relating to this Agreement, the parties agree to submit such issue to
arbitration at an office of the American Arbitration Association,
according to the rules and regulations of that Association. The
arbitration shall take place in Seattle, WA if initiated by PSS, or in
Jacksonville, FL if initiated by Ostex. The arbitrators shall be
authorized to award the costs and expenses of arbitration to the
prevailing party. Judgment on an arbitration award entered pursuant to
a vote duly taken may be entered in any court of competent
jurisdiction.
The party desiring arbitration shall give written notice to that effect
to the other party, stating the dispute to be arbitrated and the name
and address of the person designated to act as arbitrator on its
behalf. Within ten (10) days after said notice shall be given, the
other party shall give written notice to the first party, stating the
name and address of the person designated to act as arbitrator on its
behalf. In the event that the second party shall fail to notify the
first party of its designation of an arbitrator as aforesaid within the
time above specified, then the appointment of the second arbitrator
shall be made in the same manner as hereinafter provided for the
appointment of a third arbitrator by the American Arbitration
Association. The arbitrators so chosen shall meet within ten (10) days
after the second arbitrator shall be appointed and within thirty (30)
days thereafter shall decide the controversy they were appointed to
arbitrate.
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In the event that within the aforesaid period, the two arbitrators
shall be unable to agree on a decision they shall appoint a third
arbitrator, and if they cannot agree on said appointment, the third
arbitrator shall be appointed on their application or on the
application of either party, by the American Arbitration Association.
The three (3) arbitrators shall meet and decide the dispute. A decision
in which two (2) of the three (3) arbitrators shall concur shall be
binding and conclusive on the parties. In designating arbitrators and
deciding the dispute, the arbitrators shall act according to the rules
then in force of the American Arbitration Association, subject,
however, to such limitations as the provisions of this Agreement may
place on them.
Any claims for breach of this Agreement or any cause of action
whatsoever arising out of, or in any way related to this Agreement,
shall be waived and forfeited, unless asserted by the claiming party by
commencement of an arbitration proceeding with respect to such breach
within one (1) year after the claiming party has become aware of the
claim.
In the event any proceeding is brought to enforce or interpret any of
the terms of this Agreement, including Ostex Standard Terms and
Conditions of Sale or policies, the prevailing party shall be entitled
to recover from the other party all reasonable attorney's fees,
together with such other expenses, costs and disbursements as may be
allowed by law.
22. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between Ostex and PSS,
is a complete and exclusive statement, and supersedes all previous
agreements of any kind concerning the subject matter and scope hereof.
23. CHOICE OF LAW
This Agreement shall be governed by and interpreted under the laws of
the State of Washington without regard to the conflicts of laws rules thereof.
Accepted:
OSTEX INTERNATIONAL, INC. PHYSICIAN SALES AND SERVICE, INC.
Name: THOMAS A. BOLOGNA D. J. HARPER
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Signature: /s/ THOMAS A. BOLOGNA /S/ D. J. HARPER
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Title: Chairman, President & CEO Senior Vice President
Date: OCTOBER 7,1999 11/10/99
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