EXHIBIT 10.3
DISTRIBUTION AGREEMENT
Agreement, dated March 31, 1995 (the "Agreement Date"), between MedChem
Products, Inc., a Massachusetts corporation ("MedChem"), and Coletica, a French
Societe Anonyme, governed by articles 118 to 150 of the statute of July 24, 1966
("Coletica").
WHEREAS Coletica manufactures and has available for sale a biological
hemostatic compress bearing the trademark "HEMOSTAGENE(R)" which is described
below, for the manufacturing processes of which the following patents have been
issued:
-FRANCE: N/o/ 87 15 880 of 4/27/90 and Soleau envelope N/o/ 73 552
-EUROPE: N/o/ 03 17 411 of 8/12/92
-USA: N/o/ 4 953 299 of 9/4/90
N/o/ 5331092 of 7/19/94
WHEREAS Coletica owns the trademark HEMOSTAGENE(R) which has been
registered in various countries including the United States of America (1483819
of 6/28/88),
WHEREAS Coletica wishes to market such compress through distributors in
order to develop the sale thereof throughout the world,
WHEREAS MedChem manufactures and sells a hemostatic agent under the brand
name AVITENE(R),
(*) Confidential Material omitted and filed separately with the Securities
and Exchange Commission
WHEREAS MedChem on account of its organization, specialized personnel and
experience, is in a position to promote the sales and to sell such compress in
the United States of America,
WHEREAS MedChem desires that Coletica appoint it as an exclusive
distributor of such compress in the United States of America upon the terms and
subject to the conditions set forth in this Agreement.
NOW THEREFORE, Coletica and MedChem hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings.
1.1 "Agreement" means this Agreement and any amendment or supplement
thereto, concluded in accordance with the provisions of Section 12.6 hereof.
1.2 "Avitene" means the topical collagen hemostat that is marketed
throughout the world in various forms by MedChem.
1.3 "Coletica Technology" means all know-how, trade secrets and technical
information owned or controlled by Coletica, relating to the Product, including
to the extent they exist, inventions (whether or not patentable), ideas,
concepts, practices, formulas, techniques, procedures, ingredients, laboratory
notebook information, reports, engineering drawings, production manuals,
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specifications, computer software and software documentation, design information
and test procedures.
1.4 "Confidential Information" means all materials, trade secrets or other
information, regarding the Product or Coletica that are designated as
confidential in writing by the disclosing party prior to or at the time any such
material,trade secret or other information is disclosed. Notwithstanding the
foregoing, materials, trade secrets or other information that are orally or
visually disclosed, or are disclosed in writing without such designation shall
constitute Confidential Information if the disclosing party, within thirty (30)
days after such disclosure, delivers to the other party a written document
describing the materials, trade secrets or other information and referencing the
place and date of such oral, visual or written disclosure and the names of the
persons to whom such disclosure was made.
1.5 "Customer" means those persons who purchase the Product directly from
MedChem.
1.6 "Net Sales" means the price paid by Customers to MedChem for the
Product, less rebates, returns, allowances and discounts.
1.7 "Patents" means the patents described in the preamble to this
Agreement, together with any patent applications, and includes any divisions,
continuations, continuations-in part, or reissuances thereof, presently owned or
controlled by or
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hereafter acquired or controlled by Coletica, relating to the Product,
including, without limitation, the production and use thereof.
1.8 "Premarket Approval" means the approval by the Food and Drug
Administration required prior to the distribution of the Product in the
Territory.
1.9 "Product" means an aseptic fully absorbable hemostatic compress
composed of lyophilized non-denatured collagen as further described on Exhibit A
attached hereto.
1.10 "Territory" means the United States of America.
1.11 "Transfer Price" shall have the meaning set forth in Section 5.2 of
this Agreement.
1.12 "Units" means one hemostatic compress in its blister pack.
2. APPOINTMENT; COLETICA OBLIGATIONS
2.1 Appointment. Coletica appoints MedChem, which appointment MedChem
accepts, as its exclusive distributor of the Product within the Territory for
the term of this Agreement and, by virtue of such appointment, MedChem shall
have the right, upon the terms and subject to the conditions hereinafter set
forth, to purchase Product from Coletica for resale by MedChem.
2.2 By appointing MedChem as its exclusive distributor for the Territory,
Coletica agrees that, during the term of this
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Agreement, it will not appoint any other person or company situated within the
Territory as a distributor of the Product or sell the Product to any person or
Company in the Territory, and by accepting such appointment *.
2.3 MedChem shall not sell the Product directly or indirectly to customers
situated outside the Territory and shall forward to Coletica any order, inquiry
or call for the Product if originating from potential or actual customers
located outside the Territory.
2.4 MedChem shall not seek business with respect to the Product directly
or indirectly through a branch, a subsidiary or otherwise outside the Territory
and shall not maintain any inventories of the Product outside the Territory.
2.5 Obligations of Coletica.
-----------------------
(a) Coletica shall provide MedChem at Coletica's expense with
marketing and technical assistance in the form of week-long semi-annual
visits by two Coletica representatives.
(b) Coletica shall furnish MedChem its sales and marketing
materials, if available, for the Product. MedChem
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(*) Confidential material omitted and filed separately with the Securities and
Exchange Commission.
shall have the right, at its expense, to copy, distribute and create
derivative works (including translations) of such materials for use in
distribution of the Product, subject to any applicable copyrights.
(c) Coletica shall use its best efforts to obtain Premarket
Approval by *; provided, however, that such date may be
extended for successive thirty (30) day periods, upon the mutual agreement,
in their respective sole discretion, of MedChem and Coletica.
(d) Commencing on the date of this Agreement, and with a view to
conducting its due diligence, MedChem shall be permitted access to Coletica
Technology and Coletica's premises and financial information to enable
MedChem to evaluate (i) the efficacy and quality of the Product, (ii)
whether Coletica manufactures the Product in compliance with Good
Manufacturing Practices (as such term is used by the Food and Drug
Administration) and (iii) Coletica's ability to meet its obligations under
this Agreement. Such access shall be limited to the extent necessary to
accomplish, and the information gathered through such review shall be used
for, the specific purposes set forth in the prior sentence only, and for no
other purposes, and all of such information shall be deemed to be
Confidential Information for purposes of this Agreement, subject to the
provisions of Section 8 hereof, without any further notice, designation or
other act on
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(*) Confidential material omitted and filed separately with the
Securities and Exchange Commission.
Coletica's part. Furthermore, any such access shall be subject to
reasonable rules that may be imposed from time to time by Coletica and
shall be conducted by MedChem in such a manner as to avoid any disruption
of Coletica's business. Such due diligence will include, without
limitation, the activities described on Exhibit C hereto in the time frames
set forth on such Exhibit, and shall be carried out at the latest by *
assuming Coletica meets its obligations in a timely manner.
(e) Semi-annually, MedChem shall be permitted access to Coletica
Technology and Coletica's premises to enable MedChem to evaluate whether
Coletica is in compliance with Good Manufacturing Practices with respect to
the Product. Such access shall be limited to the extent necessary to
accomplish, and the information gathered through such review shall be used
for, the specific purpose set forth in the prior sentence only, and for no
other purpose, and all of such information shall be deemed to be
Confidential Information for purposes of this Agreement, subject to the
provisions of Section 8 hereof, without any further notice, designation or
other act on Coletica's part. Furthermore, any such access shall be
subject to reasonable rules that may be imposed from time to time by
Coletica and shall be conducted by MedChem in such a manner as to avoid any
undue disruption of Coletica's business. It is understood that the access
referred to in
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(*) Confidential material omitted and filed separately with the
Securities and Exchange Commission.
this subsection (e) shall be provided to *.
(f) Coletica shall furnish MedChem copies of (i) the Premarket
Approval and documentation relating thereto (other than proprietary
manufacturing technology) and (ii) any published or proposed articles
relating to the Product as soon as reasonably possible after such articles
have been published or prepared in order to assist MedChem in the
distribution of the Product. MedChem shall have the right, at its expense,
to translate, copy, distribute and create derivative works (including
translations) of such articles for use in distribution of the Product,
subject to any applicable copyrights and any non-disclosure agreements
under which Coletica agrees to keep confidential the identity of a person
performing services for Coletica.
(g) Coletica shall not sell Product to any person outside of the
Territory which it has reason to believe intends to resell the Product,
directly or indirectly, in the Territory.
(h) Coletica shall furnish MedChem with copies of its financial
information made available to the public.
3. ADDITIONAL TERRITORIES
----------------------
(a) Not earlier than * or later than *, MedChem may deliver written
notice to Coletica requesting
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(*) Confidential material omitted and filed separately with the
Securities and Exchange Commission.
Coletica to enter into exclusive distribution agreements, on terms substantially
similar to those contained herein for such countries outside of the Territory as
MedChem shall designate * together with such other terms as may be reasonably
requested by MedChem and or Coletica because of the commercial circumstances of
the country so designated. MedChem shall furnish Coletica a description of
MedChem's plans and resources to commercialize the Product in such countries and
the sales force to be used for such purpose, which plans and force shall be (i)
included as terms of the agreement for such countries and (ii) acceptable to
Coletica in the exercise of its reasonable discretion in light of the relevant
market for the Product. MedChem may not require Coletica to enter into a
distribution agreement pursuant to this Section 3(a) in any country where (i)
Coletica does not wish to register the Product with the appropriate health
authorities, if required, to permit the Product to be distributed in such
country or (ii) the laws of such country require Coletica to waive its rights to
the confidentiality of its proprietary information. The terms of the
distribution agreement as set forth above shall be evidenced by an agreement for
each such country, which shall be negotiated in good faith, based on the terms
set forth in this Section 3(a) and shall be entered into by MedChem and
Coletica.
(b) After *, Coletica may negotiate with third parties regarding
distribution of the Product in any country (or portion thereof) outside of the
Territory not covered by a
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(*) Confidential material omitted and filed separately with the
Securities and Exchange Commission.
distribution agreement with MedChem entered into pursuant to Section 3(a) *.
Coletica shall notify MedChem prior to entering into any such agreement in any
such country and the terms thereof. If MedChem provides to Coletica (i) written
notice of its intent to enter into such agreement in such country and, at the
time of giving such notice, a description of MedChem's plans to commercialize
the Product in such country (which, as determined by Coletica, in the exercise
of its reasonable judgment, shall be at least as favorable to Coletica as the
plans for such commercialization by such third party), MedChem and Coletica
shall enter into a distribution agreement for such country (or portion thereof)
on the terms contained herein unless the proposed agreement is *. In such event
MedChem and Coletica shall enter into a distribution agreement for such country
on such *. Notwithstanding the foregoing, if MedChem exercises its right of
first refusal hereunder, the price terms for such distribution agreement shall
be no less favorable to Coletica, in Coletica's reasonable judgment, than those
contained in the distribution agreement proposed between Coletica and such third
party. The terms of such distribution agreement shall be evidenced by an
agreement for each such country, which shall be negotiated in good faith based
on the terms set forth in this Section 3(b), and shall be entered into by
MedChem and Coletica.
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(*) Confidential material omitted and filed separately with the
Securities and Exchange Commission.
Unless Coletica has granted rights to the Product in a country to a
third party after MedChem failed to exercise its right of first refusal
described above with respect to such country, MedChem shall have the right, by
giving written notice to Coletica, at any time to add such country * to the
Territory. Any such election by MedChem shall be treated as if it were an
election pursuant to Section 3(a), for purposes of determining the terms of any
such agreement, except that Coletica shall not be required to add such country
to the Territory if within 90 days from the date Coletica receives MedChem's
written notice, Coletica notifies MedChem of the terms and conditions under
which a third party (which Coletica identifies) is willing to enter into a
distribution agreement for such country and MedChem fails, within thirty (30)
days thereafter, to agree to such terms and conditions.
MedChem's rights under this Section 3 are conditioned upon MedChem's
being in compliance with the terms and conditions of this Agreement at the time
of its exercise of such rights.
MedChem may appoint subdistributors in any territory covered by
distribution agreements with Coletica, upon prior written notice to Coletica,
but in any event MedChem shall be responsible for all aspects of this Agreement
notwithstanding such appointment and Coletica shall have no obligation with
respect to such subdistributors.
4. Supply of Product
-----------------
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(*) Confidential material omitted and filed separately with the
Securities and Exchange Commission.
4.1 Supply and Sourcing. As soon as the Specifications and the test
plan and quality certificate referred to in Section 4.2 hereof have been
determined and Premarket Approval has been received, Coletica shall supply
MedChem with MedChem's requirements of the Product and shall manufacture the
Product in compliance with Good Manufacturing Practices and with all other
applicable laws and regulations in the Territory. During and upon completion of
the manufacture of the Product Coletica shall conduct adequate quality control,
sterility tests and inspections to support the compliance of the Product with
the Specifications and the representations and documentation provided by
Coletica to the FDA in connection with the Premarket Approval including, without
limitation, as to safety and efficacy. In addition, Coletica will source the
hides used in the manufacture of the Product to be sold in the Territory from
the United States and will use its best efforts to arrange for such sourcing by
April 1, 1995; provided, however, that MedChem may, in the exercise of its
discretion, agree on a different country of origin for the hides if
circumstances change.
4.2 Coletica warrants that the Product sold to MedChem will be in
conformity with the definition of Product (Exhibit A attached hereto) and with
specifications describing the existing performance and quality of the Product
and labelling and packaging to be established by MedChem and Coletica prior to
* and to be set forth on Exhibit B to this Agreement (the
"Specifications"). Other warranties as to the merchantability,
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(*) Confidential material omitted and filed separately with the
Securities and Exchange Commission.
fitness for particular purposes or other matters are hereby expressly
disclaimed.
As part of the Specifications, MedChem and Coletica shall establish prior
to * (a) a in vitro test plan to certify the conformity of the
Product sold to MedChem with the Specifications and (b) the form of the quality
certificate to be submitted with respect to each shipment of the Product. It is
understood that such test plan shall be repeatable by MedChem at its facilities.
MedChem and Coletica shall negotiate the costs of any additional tests not
provided for in the Premarket Approval or current quality plan except that
MedChem shall bear the costs of extraordinary tests that it requests.
4.3 Forecasting and Ordering Procedures. As soon as the conditions
set forth in the first sentence of Section 4.1 hereof have been satisfied,
MedChem may issue purchase orders to Coletica by fax confirmed by an executed
copy of such purchase order by air mail, postage prepaid, to the office of
Coletica set forth in Section 12.4 hereof from time to time specifying the
number of Units in whole batches (with a one batch minimum) that MedChem desires
to purchase from Coletica. Coletica shall acknowledge receipt and acceptance of
each purchase order within 8 days of receipt by returning an executed copy of
such purchase order together with delivery dates to MedChem by telecopier
transmission, confirmed by delivery of an executed copy of such purchase order
by air mail, postage prepaid, to the office of MedChem set forth in
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(*) Confidential material omitted and filed separately with the
Securities and Exchange Commission.
Section 12.4 hereof. Subject to the provisions of Section 12.11 (Force
Majeure), Coletica shall deliver the orders on or before the dates indicated.
Not later than the tenth business day after Coletica has informed MedChem of the
issuance of the Premarket Approval, MedChem shall send to Coletica a forecast of
its requirements of the Product for each quarter in the next twelve months
commencing on the first day of the month after such business day. Not later
than the thirtieth business day prior to the commencement of each quarterly
period thereafter, MedChem shall send to Coletica a forecast of its requirements
of the Product for each quarter in the following twelve months. MedChem shall
purchase the Units forecast for the first quarterly period covered by each such
forecast. Coletica shall not be obligated hereunder to deliver a quantity of
Product in any quarter than exceeds by * the amount forecast for such quarter by
MedChem, although it will endeavor to deliver all of the Product ordered by
MedChem hereunder.
MedChem shall inform Coletica, as soon as possible, of any commercial
success of the Product which is likely to entail an increase by * of the
forecasted volume of orders for any quarter within any twelve (12) month period.
In such a case, the parties shall agree on a progressive increase in the rhythm
of manufacturing and delivery, taking into account the time constraint for
Coletica to effect the necessary investment to increase its production capacity.
Coletica shall make diligent efforts to meet the additional needs of MedChem
including, without limitation,
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(*) Confidential material omitted and filed separately with the
Securities and Exchange Commission.
making such capital investments as may be required for such purpose.
4.4 Delivery. Within eight (8) days of receipt of a purchase order
from MedChem, Coletica shall confirm such purchase order and within thirty (30)
days of such confirmation, Coletica shall deliver to MedChem the Units ordered
F.O.B. Boston Airport. MedChem shall pay all United States customs duties and
related expenses arising from such delivery and shall be responsible for
obtaining and maintaining all necessary U.S. import licenses, permits and
approvals and for clearing the Product through U.S. customs. Coletica shall
furnish with each shipment of the Product relevant certificates of quality
defined in Section 4.2 or in such form as may be amended by mutual agreement or
as required by health or customs authorities in the Territory. If for any
reason Coletica is unable to deliver any portion of an order, Coletica shall
notify MedChem. In such event MedChem may, within five (5) business days of the
notification, cancel all or a portion of such order. In the event of any
inconsistency between the terms of this Agreement and the terms of any purchase
order, the terms of this Agreement shall control. Notwithstanding anything in
this Section 4 to the contrary, MedChem agrees that its orders placed during the
* days after the conditions set forth in the first sentence of Section 4.1
hereof have been satisfied shall not exceed * units, in the aggregate, and that
Coletica shall have * to fill any such initial orders.
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(*) Confidential material omitted and filed separately with the
Securities and Exchange Commission.
4.5 Rejection of Non-Conforming Product. MedChem may reject
by written notice delivered to Coletica any Unit that does not conform with the
Specifications. Such notice shall contain MedChem's reasons for such rejection.
Coletica shall respond to such notice specifying the reason(s) for the non-
conformance and identifying the corrective action to be taken to prevent further
occurrences. MedChem may, at its discretion and at its sole cost, perform on-
site audits of such corrective action. MedChem shall notify Coletica within * of
Units to Boston airport of any non-conformance that can be readily observed
without the use of equipment. MedChem shall inspect the Product within a
reasonable time after receipt. Upon rejection of non-conforming Product,
Coletica shall use reasonable efforts to replace the non-conforming Product
within thirty (30) days of receipt by Coletica of MedChem's notice of rejection.
At Coletica's request, Non-conforming Product shall be returned to Coletica at
Coletica's expense. Coletica shall bear the expense of any recall of the Product
in the Territory if such recall is attributable to the design or the manufacture
of the Product. MedChem shall bear the expense of any recall of the Product in
the Territory attributable to the negligence of, or misconduct by, MedChem
unrelated to the design and manufacture of the Product. MedChem shall have no
right to reject Product that conformed to the Specifications upon delivery,
MedChem assuming all risk of loss or damage thereafter, and Coletica shall have
the right to inspect all Product delivered to MedChem, whether at the point of
delivery, or in storage, or
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(*) Confidential material omitted and filed separately with the Securities and
Exchange Commission.
elsewhere. MedChem shall use its reasonable efforts to identify any non-
conforming Product within *.
4.6 Inability to Satisfy MedChem's Requirements. If Coletica is
unable to satisfy MedChem's requirements for the Product, Coletica shall
allocate its supply of Product such that MedChem receives all of Coletica's
supply until such requirements are met.
4.7 MedChem's Right to Manufacture. If (i) Coletica fails to deliver
* of MedChem's orders for the Product for any consecutive * or * of such orders
for any consecutive * so long as such orders are in accordance with the terms
hereof and (ii) MedChem terminates this Agreement pursuant to Section 9.3 as a
result thereof within ninety (90) days by written notice, then, MedChem shall
have the right, upon written notice to Coletica given with such termination
notice, to manufacture the Product. If MedChem elects to manufacture the
Product, Coletica shall be deemed to have granted to MedChem, without any
further action on its part, an exclusive license in the Territory under the
Coletica Technology and the Patents to make and have made the Product for
distribution in the Territory. Such license shall remain in effect for what
would have been the remaining term of this Agreement, had MedChem not given
notice of termination. In connection with such license, Coletica shall provide
MedChem, at MedChem's cost, with all assistance and know-how reasonably
requested by MedChem to enable MedChem or its
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(*) Confidential material omitted and filed separately with the
Securities and Exchange Commission.
designated supplier to manufacture the Product. The royalty for such license
shall be * of MedChem's Net Sales, payable quarterly. At Coletica's request,
such exclusive licensing agreement shall be set forth in a written agreement
between Coletica and MedChem, which shall include standard licensing agreement
provisions, including those relating to inspection and quality control.
5. PAYMENTS
5.1 Deposit Fee. Upon the later to occur of the Agreement Date and
April 14, 1995, MedChem shall deposit with Fleet Bank of Maine, as escrow agent
(the "Escrow Agent"), two million dollars ($2,000,000) (the "Deposit Fee") to be
held and disbursed pursuant to the Escrow Agreement executed as of the date
hereof, on the following basis: if the Effective Date (as defined below) occurs
on or before this Agreement is terminated, then the amounts held in escrow shall
be distributed to Coletica; if the Effective Date has not occurred by the date
that this Agreement is terminated, then the amounts held in escrow shall be
distributed to MedChem. The term "Effective Date" shall mean the date on which
the last of the following shall occur:
(a) the completion of MedChem's due diligence pursuant to Section
2.5(d) of this Agreement, (b) the establishment by MedChem and Coletica of
the Specifications pursuant to Section 4.2 of this Agreement, (c)
production by Coletica of one batch of Product made from hides sourced in
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(*) Confidential material omitted and filed separately with the
Securities and Exchange Commission.
the Territory, as contemplated by clause (iv) of Section 9.2(a) of the
Agreement and (d) Premarket Approval.
5.2 Promotional Samples and Price of Specific Product
(a) Together with the delivery of the first order for the Product and
on each semi-annual anniversary of the date of such order, Coletica shall
deliver, * deliverable under this Section 5.4(a) to be used by MedChem to
promote the sale of the Product (the "Promotional Samples"); provided, however,
that the maximum Promotional Samples shall be * subject to this Agreement,
including pursuant to Section 5.4 hereof.
(b) The price ("Transfer Price") paid by MedChem to Coletica for each
Unit other than Promotional Samples shall be as follows, calculated at the date
Coletica received the order for the Product with Unit volume measured over the
life of this Agreement (A) * for each of the first * Units of hemostatic
compresses subject to this Agreement, including pursuant to Section 5.4 hereof
and (B) * for each additional Unit.
(c) Coletica shall issue an invoice for Units upon shipment.
Invoices are payable within sixty (60) days of their date.
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(*) Confidential material omitted and filed separately with the
Securities and Exchange Commission.
(d) Coletica may, in its sole discretion and at its sole expense,
request MedChem to provide an irrevocable and confirmed letter of credit
covering the payment by MedChem of invoices issued by Coletica.
5.3 Additional Compensation
-----------------------
(a) After MedChem sells * in the aggregate, of all sizes of hemostatic
compresses subject to this Agreement, including pursuant to Section 5.4 hereof,
measured over the life of this Agreement, for each of the **** *** *******
*********** Units (other than Promotional Samples) sold by MedChem, MedChem
shall pay to Coletica a sum equal to ********* ***** of the excess of Net Sales
attributable to such Unit over ****** ******* ********, which will be considered
as an increase in the Transfer Price.
(b) For each Unit (other than Promotional Samples) in the aggregate,
of all sizes of Product, measured over the life of this Agreement in excess of
*** ******* *********** Units sold by MedChem, MedChem shall pay to Coletica a
sum equal to ******** ***** of the excess of Net Sales attributable to such Unit
over ****** ******* ********, which will be considered as an increase in the
Transfer Price.
(c) MedChem shall deliver to Coletica within forty-five (45) days
after the end of each calendar quarter a report showing its computation of the
additional compensation due to Coletica for such calendar quarter; together with
payment of all
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(*) Confidential material omitted and filed separately with the
Securities and Exchange Commission.
amounts shown to be due. MedChem's obligation to pay the amounts due under this
Section 5, including under this Section 5.3, shall survive any termination or
expiration of the term of this Agreement.
5.4 Other Products
--------------
Coletica and MedChem shall negotiate in good faith an amendment to
this Agreement *. Such amendment shall provide, without limitation, for a * as
well as appropriate labelling and packaging. If Coletica and MedChem cannot
agree on such amendment, Coletica may not enter into an agreement with any other
party to distribute such other product in the Territory.
Notwithstanding the foregoing, MedChem and Coletica have agreed upon
the following Transfer Price of a size variation of the Product in the form of a
3 1/2" x 5" x 1/4" compress: For Units other than Promotional Samples, (A) * for
each of the first * Units of all sizes of hemostatic compresses subject to this
Agreement, including pursuant to this Section 5.4, and (B) * for each additional
Unit. Coletica shall apply for an amendment to the Premarket Approval to include
the size product referred to in this paragraph.
5.5 Pricing and Marketing Decisions. MedChem shall establish the sales
price of the Product in its sole discretion and
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(*) Confidential material omitted and filed separately with the
Securities and Exchange Commission.
shall have the right to distribute the Product in any manner it deems
appropriate. MedChem shall provide to customers such warranty provisions as are
strictly in compliance with the requirements resulting from any laws,
regulations and practices applicable to distribution of the Product in the
Territory; provided, however, that Coletica shall never be bound by warranties
which would exceed the ones expressed in Section 4.2 of this Agreement.
5.6 Payment Currency. All amounts due under this Agreement shall be
paid in United States currency by wire transfer to an account in a bank
designated by the receiving Party or in such other form and/or manner as the
receiving Party may reasonably request.
6. REPRESENTATIONS AND WARRANTIES
------------------------------
6.1 Coletica hereby represents and warrants to MedChem as follows:
(a) Binding Obligation. This Agreement has been duly authorized
by all necessary action by Coletica and constitutes its valid and binding
obligation enforceable in accordance with the terms hereof.
(b) Right, Power and Authority. Coletica has the full right,
power and authority to enter into this Agreement and the execution,
delivery and performance of this Agreement by Coletica will not violate the
provisions of any law, rule or regulation applicable to it or conflict with
or result in
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the breach or termination of, or constitute a default under, any agreement
or instrument to which it is a party.
(c) Title to Product and Coletica Technology. Coletica owns all
rights, title and interest in and to the Product and the Coletica
Technology, free and clear of all liens, claims and encumbrances whatsoever
and no other person or entity has any rights to the Product or the Coletica
Technology in the Territory.
(d) Infringement of Coletica. To the best of Coletica's
knowledge, no person or entity is infringing, violating or misappropriating
the Coletica Technology.
(e) Capacity. Coletica has the capacity to manufacture *******
***** **** * *** * ****** per year.
6.2 MedChem hereby represents and warrants to Coletica as follows:
(a) Binding Obligation. This Agreement has been duly authorized
by all necessary action by MedChem and constitutes its valid and bonding
obligation enforceable in accordance with the terms hereof.
(b) Right, Power and Authority. MedChem has the full right,
power and authority to enter into this Agreement and the execution,
delivery and performance of this Agreement by MedChem will not violate the
provisions of any law, rule or regulation applicable to it or conflict with
or result in the
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(*) Confidential material omitted and filed separately with the
Securities and Exchange Commission.
breach or termination of, or constitute a default under, any agreement or
instrument to which it is a party.
7. INTELLECTUAL PROPERTY
---------------------
7.1 Ownership of Coletica Technology. Coletica shall retain sole
ownership of the Coletica Technology, subject to the express terms thereof and
to any licensing agreements not prohibited hereby and to the sale of the
Coletica Technology to a third party in connection with the sale of
substantially all of Coletica's business related to the Agreement.
7.2 Trademarks.
----------
(a) Coletica hereby grants MedChem the exclusive license in the
Territory during the term of this Agreements to use the trademark
"HEMOSTAGENE" (the "Trademark") in connection with distribution of the Product
in the Territory. MedChem acknowledges that Coletica owns the Trademark.
(b) Coletica shall take reasonable steps to protect its rights in the
Trademark in the Territory and shall bear all expenses incurred in connection
therewith, including expenses of renewal of the Trademark registration as it
becomes due. MedChem shall exercise due care in protecting the Trademark,
including watching for infringement and potential infringement of the Trademark
and shall notify Coletica of all infringements and potential infringement which
may come to its attention and shall cooperate with Coletica in the prosecution
of infringers, which shall be carried forward at Coletica's expense. Coletica
shall
24
conduct and bear the expense of any suits against MedChem arising out of its use
of the Trademark in accordance with the terms of this Agreement and save MedChem
harmless from any judgement arising out of such suits.
(c) In order to protect and safeguard the Trademark and good will with
respect to the Products which are to be distributed in the Territory, MedChem
shall at all times during the term of this Agreement:
(i) Ensure that all labels, wrappers, directions for use,
pamphlets, advertisements and all other printed communications and/or
articles prepared by it for the Product bearing the Trademark, to the
extent reasonably required for the protection of the Trademark, state that
the Trademark is a registered trademark of Coletica.
(ii) Give Coletica or its representatives periodic access, at
reasonable hours and on reasonable notice, to the distribution, sales and
marketing offices of MedChem to inspect and take samples of the Product.
(iii) Submit to Coletica at reasonable intervals, samples and
specimens of all packaging, labelling, promotional pieces and advertising
being used in connection with the Product.
(d) MedChem shall not have any right to use the name of Coletica or
any of its affiliates, or to use the Trademark,
25
except in connection with the distribution of the Products. MedChem shall not,
directly or indirectly, take any action which might impair the right, title or
interest of Coletica to the Trademark, and agrees that it will not attempt to
acquire any right, title or interest therein. MedChem shall not in any manner
represent that it has any ownership interest in the Trademark. MedChem shall
have no right to grant sublicenses or other rights in the Trademark to any third
party, and shall keep its interests in the Trademark free and clear of all
liens, encumbrances and claims of third parties.
(e) Coletica grants permission to MedChem to sell the Product under
the trademark AVIFOAM. MedChem shall take reasonable steps to protect its
rights in such trademark and shall bear all expenses incurred in connection
therewith. MedChem shall have the right to register or cause to be registered
such trademark for the sale and promotion of the Product in the Territory. The
cost of said registration shall be borne by MedChem who will submit it in its
own name and for its own account. Coletica shall have no right, title, or
interest in such trademark. MedChem shall notify Coletica of all infringements
of the trademark AVIFOAM which may come to its attention. MedChem shall conduct
and bear the expense of any suits against Coletica arising out of or relating to
such trademark, and shall save Coletica harmless from any judgments arising out
of such suits.
26
7.3 Patents. Coletica shall file, prosecute and maintain the
Patents. If Coletica elects not to file, prosecute or maintain any Patent in
the Territory it shall give notice of such fact to MedChem. In such event,
MedChem may, in the exercise of its sole discretion, on behalf of Coletica,
file, prosecute and maintain such Patent in the Territory and credit against the
Transfer Price the complete cost, including reasonable attorney's fees, to take
such action.
8. CONFIDENTIAL INFORMATION
------------------------
8.1 Treatment of Confidential Information. Each party hereto shall
not disclose the Confidential Information of the other party to others, or use
it for any purpose, except to carry out the objectives of this Agreement, and
shall exercise every reasonable precaution to prevent the disclosure of such
Confidential Information not authorized under this Section 8.1 by or through any
of its directors, officers, employees, consultants, or agents.
8.2 Release from Restrictions. The provisions of Section 8.1 shall
-------------------------
not apply to any Confidential Information which:
(a) was known or used by the receiving party prior to its date of
disclosure to the receiving party, as evidenced by the prior written
records of the receiving party; or
(b) is lawfully disclosed to the receiving party by sources (other
than the disclosing party) rightfully in possession of the Confidential
Information; or
27
(c) becomes published or generally known to the public through no
fault or omission on the part of the receiving party or an affiliated
party; or
(d) is independently developed by or for the receiving party without
reference to or reliance upon the Confidential Information; or
(e) is required to be disclosed by the receiving party to comply with
applicable laws, to defend or prosecute litigation or to comply with
governmental regulations, provided that the receiving party provides prior
written notice of such disclosure to the other party and takes reasonable
and lawful actions to avoid and/or minimize the degree of such disclosure.
In any event, Coletica and MedChem shall be released from any obligations
under this Section 8 after a period of * years after the date of termination or
expiration of the term of this Agreement.
9. TERM AND TERMINATION
--------------------
9.1 Term. The term of this Agreement shall expire on the fifth
anniversary (the "Initial Termination Date") of the first day of the month
immediately following the receipt by Coletica of notification of the issuance of
Premarket Approval (Coletica shall inform MedChem of such issuance within five
(5) business days from the date of such receipt) unless earlier terminated in
accordance
28
(*) Confidential material omitted and filed separately with the
Securities and Exchange Commission.
with the provisions of this Section 9. MedChem may extend the term to (i) the
second anniversary of the Initial Termination Date (the "Second Termination
Date") if MedChem has sold between * and * Units of hemostatic compresses
subject to this Agreement, including the 3 1/2" x 5" x 1/4" compress referred to
in Section 5.4 hereof, during the twelve month period ending on the Initial
Termination Date, and (ii) the fifth anniversary of the Initial Termination Date
if MedChem has sold more than * Units of hemostatic compresses subject to this
Agreement, including the 3 1/2" x 5" x 1/4" compress referred to in Section 5.4
hereof, during such twelve month period.
9.2 Termination for Failure *. (a) MedChem may terminate this
Agreement if (i) * (or such extended date as may be agreed upon pursuant to
Section 2.5(c)) and, within thirty (30) days thereafter, MedChem delivers a
written termination notice to Coletica or (ii) MedChem determines in the
exercise of its sole discretion with respect to the Product and Coletica's
ability to meet its obligations under this Agreement, after conducting its due
diligence as provided in Section 2.5(d) hereto, that the * (iii) MedChem and
Coletica *; provided, however, that, subject to the provisions of this
Agreement, including,
29
(*) Confidential material omitted and filed separately with the
Securities and Exchange Commission.
without limitation, Section 2.5(d) and Section 2.5(e) hereto, MedChem's rights
under this Section 9.2(a)(ii) and Section 9.2(a)(iii) shall expire if Coletica
has not received a written termination notice from MedChem on or before * * or
(iv) * and, within thirty (30) days thereafter, MedChem delivers a written
termination notice to Coletica. Such Product shall not in the determination of
MedChem differ from the Specifications.
(b) Coletica may terminate this Agreement if (i) * (or such extended
date as may be agreed upon pursuant to Section 2.5(c)) and, within thirty (30)
days thereafter, Coletica delivers a written termination notice to MedChem or
(ii) Coletica determines in the exercise of its sole discretion that the * in
the manner contemplated by this Agreement or (iii) MedChem and Coletica *;
provided, however, that Coletica can exercise such right by notice delivered to
MedChem not later than *.
9.3 Termination for Breach. Each party (the "non-breaching party")
shall be entitled to terminate this Agreement by written notice to the other
party (the "breaching party") if the breaching party is in default of any of its
material obligations hereunder and fails to remedy such default within 30 days
after
30
(*) Confidential material omitted and filed separately with the
Securities and Exchange Commission.
written notice thereof by the non-breaching party; provided, however, that any
failure to pay an amount due shall entitle the non-breaching party to terminate
this Agreement if the breaching party fails to make the payment within ten (10)
days after receipt of written notice thereof by the non-breaching party. It is
understood that MedChem shall have the right to elect to manufacture the Product
pursuant to Section 4.7 only if Coletica fails to deliver the Product to MedChem
for the periods set forth in Section 4.7. Coletica may also terminate this
Agreement after giving MedChem 30 days' notice if MedChem, directly or
indirectly, comes under the control of persons or entities different from those
having control of MedChem on the Agreement Date and who directly or indirectly
manufacture, distribute or sell a hemostatic collagen compress or a gelatin
compress competing with the Product; provided, however, that Coletica may not
terminate this Agreement for such reason if such persons or entities cease
manufacturing, distributing and selling such competing compress within sixty
(60) days after Coletica's notice of termination. Upon termination of this
Agreement pursuant to this Section 9.3, neither party shall be relieved of any
obligations incurred prior to such termination.
9.4 Consequences of Termination. Upon termination of this Agreement
pursuant to Section 9.2, the Escrow Agent shall immediately deliver to MedChem
the Deposit Fee and interest thereon as set forth in the Escrow Agreement. Upon
termination of this Agreement pursuant to Section 9.1, 9.2 or 9.3, each party
shall
31
promptly return to the other party all written Confidential Information, and all
copies thereof, of such other party.
Upon termination of this Agreement, (i) all orders already placed by
MedChem with Coletica will be carried out in accordance with the conditions
thereof and those of this Agreement which survive the termination of this
Agreement exclusively for the purpose of carrying out such orders (except in the
case of a default due to non-payment), (ii) all invoices issued by Coletica or
to be issued by Coletica in connection with such orders shall be paid by MedChem
at their maturity date and (iii) Coletica may at its option either (a) allow
MedChem to dispose of the inventory of Product in its possession or (b)
repurchase such inventory of Product at the Transfer Price invoiced to MedChem
for such inventory.
If Coletica elects to repurchase such inventory, MedChem shall immediately
cease to use the Trademark on any of its signs, printed materials and commercial
documents and shall promptly package the Product for reshipment Coletica F.O.B.
Boston Airport.
9.5 Survival of Obligations. Notwithstanding any termination or
expiration of the term of this Agreement, the provisions of Section 8
(Confidential Information) and Section 10 (Indemnification) shall survive.
9.6 Remedies Not Exclusive; No Consequential Damages. Termination of
this Agreement by either party shall not constitute
32
an election of remedies, and all other remedies shall remain available
notwithstanding any such termination. Neither party, however, shall be liable
for consequential damages under this Agreement.
10. INDEMNIFICATION
---------------
10.1 Product Liability Indemnification. Coletica shall defend
MedChem at Coletica's cost and expense, and will indemnify and hold MedChem
harmless from and against, any and all claims, losses, costs, damages, fees or
expenses arising out of or in connection with (a) the design and manufacture of
the Product or (b) use of the Product for its intended purpose and in accordance
with its instructions and United States governmental rules, regulations or
orders applicable to such use, including, but not limited to, any actual or
alleged injury, damage, death, or other consequence, claimed by reason of breach
of warranty, negligence, strict liability, product defect or other similar cause
of action, regardless of the form in which any such claim is made, except to the
extent that such claim, loss, cause, damage, fee or expense (together, "Excluded
Claims"), arises out of the negligence of, or misconduct by, MedChem, unrelated
to the design and manufacture of the Product or the use of the Product as set
forth in clause (b) above, in which case MedChem shall indemnify and hold
Coletica harmless from and against such Excluded Claims. The procedures to
implement the provisions of this Section 10.1 are set forth in Exhibits D(1) and
D(2).
33
10.2 Insurance. Commencing not later than the date of the first
shipment of Product to MedChem, Coletica shall maintain product liability
insurance in the amount of * against any amounts for which it is obligated to
indemnify MedChem under Section 10.1 above. The policies representing such
insurance shall specify MedChem as a named insured and shall expressly refer to
the terms and conditions of such indemnity. Coletica shall provide MedChem with
certificates of insurance from the insurance carrier maintaining such insurance
certifying that such coverage is in force, which certificate shall also provide
that MedChem shall receive at least thirty (30) days advance notice of any
cancellation or expiration of such policies.
10.3 Intellectual Property Indemnification by Coletica. Coletica
shall indemnify, hold harmless and defend MedChem from and against any and all
suits, actions, damages, costs, losses, expenses (including settlement awards
and reasonable attorneys' fees) and other liabilities arising from or in
connection with any claim alleging that the Product infringes any patent,
copyright, trademark, trade secret, or other intellectual property right and
shall pay all costs and damages awarded. The procedures to implement the
provisions of this Section 10.3 are set forth in Exhibit D(1).
10.4 Intellectual Property Indemnification by MedChem. MedChem shall
indemnify, hold harmless and defend Coletica from and against any and all suits,
actions, damages, costs, losses,
34
(*) Confidential material omitted and filed separately with the Securities and
Exchange Commission.
expenses (including settlement awards and reasonable attorneys' fees) and other
liabilities arising from or in connection with any claim alleging that the
Product infringes the trademark Avifoam and shall pay all costs and damages
awarded. The procedures to implement the provisions of this Section 10.4 are
set forth in Exhibit D(2).
11. OBLIGATIONS OF MEDCHEM
----------------------
11.1 MedChem shall promote and develop the sale of the Product within
the Territory, provide Customers with information relating to the Product so as
to facilitate the sale and use thereof, perform any and all activities as shall
be necessary or advisable to provide adequate coverage for the Product
throughout the Territory and, generally, shall perform its obligations hereunder
in accordance with sound commercial practice.
11.2 MedChem shall translate or cause to be translated, as its own
expenses, into the English language any technical, descriptive or sales
literature furnished by Coletica. It will include the Product in its catalogues
and other commercial documentation.
11.3 If required to do so by Coletica, MedChem shall provide its assistance
to Coletica so as to facilitate the obtaining of the Premarket Approval from the
Food and Drug Administration ("FDA") and any other governmental authorizations
with respect to the registration or sale of the Product. From and after the
delivery to MedChem of the Product, MedChem shall comply with all relevant laws,
rules, regulations, orders and ordinances with respect to the
35
import, storage, transportation, handling, sale and marketing of the Product,
including those of the FDA. MedChem shall promptly send copies to Coletica of
any communication that it receives from or sends to the FDA or other regulatory
authorities with respect to the Product, and shall make available for inspection
by Coletica any records or other documentation required to be maintained with
respect to the Product by the FDA or other regulatory authorities.
11.4 MedChem shall use premises which are adequately located and fitted out
for the storage and display of the Product. Coletica reserves the right to
visit, at reasonable hours and on reasonable notice, the distribution, sales and
marketing offices of MedChem and its sub-distributors.
11.5 (a) Medchem agrees to furnish to Coletica quarterly reports on the
sales of the Product containing appropriate information on the market conditions
in the Territory, competing products, forecasts of sales to Customers, existing
inventories, Customers' criticisms or complaints and on any other activities
conducted by MedChem pursuant to this Agreement.
(b) Coletica shall have the right (not to exceed once during each calendar
year) to engage at its expense an independent certified public accountant,
reasonably acceptable to MedChem, to inspect, during normal business hours and
upon reasonable advance notice, such books, records and other supporting data of
MedChem as may be necessary to verify MedChem's reports and computations as
described in Section 5.3(c) hereof.
36
11.6 During the 12 months after receipt of the first shipment of
Units, MedChem shall invest * in the following marketing and promotional
actions: paper advertising; conventions, fairs and exhibitions; direct mailing
in conjunction with national conventions; "how to" video developments; and
papers and special reprints. MedChem shall provide to Coletica from time to time
copies of invoices relating to such actions and such other examples of such
actions as Coletica shall reasonably request.
12. MISCELLANEOUS
-------------
12.1 Publicity. No party shall originate any publicity, news
release or other public announcement, written or oral, relating to this
Agreement without the prior written approval of the other party except as
otherwise required by law. Such approval shall not be unreasonably withheld.
12.2 Governing Law. This Agreement shall be governed by and
interpreted in accordance with the internal laws of the State of New York.
12.3 Waiver. The waiver by any party of a breach or a default of
any provision of this Agreement by the other party shall not be construed as a
waiver of any succeeding breach of the same or any other provision, nor shall
any delay or omission on the part of a party to exercise or avail itself of any
right, power or privilege that it has or may have hereunder operate as a waiver
of any such right, power or privilege by such party.
37
(*) Confidential material omitted and filed separately with the
Securities and Exchange Commission.
12.4 Notices. Unless otherwise specifically provided, all notices
required or permitted by this Agreement shall be in writing and may be delivered
personally, or may be sent by fax, telex, or air mail or by overnight courier,
return receipt requested, addressed to the party to be served at the address set
forth below or such other address as either party may from time to time
designate to the other. If the notice is sent by telex or fax, a confirmed copy
of such telex or fax shall be sent by air mail or overnight courier. All
notices shall be effective when actually received.
If to MedChem: MedChem Products, Inc.
232 West Cummings Park
Woburn, Massachusetts 01801
Attention: President
Telecopy: (617) 932-4125
If to Coletica: Coletica
32, rue St. Jean-de-Dieu
69007 Lyon
France
Attention: President
Telecopy: 33 78580971
12.5 No Agency. MedChem shall purchase the Product from Coletica
and resell the Product in its own name and for its own account and will maintain
throughout the term of this Agreement its status as an independent contractor.
Nothing herein shall be deemed to constitute MedChem, on the one hand, or
Coletica, on the other hand, as the agent or representative of the other, or as
joint venturers or partners for any purpose. Neither MedChem nor Coletica shall
be responsible for the acts or omissions of the other. MedChem shall have no
right or authority to execute any
38
agreement in the name of Coletica or to make any representation, warranty or
commitment for or in the name of Coletica, except as expressly authorized
herein.
12.6 Entire Agreement and Modifications. This Agreement together
with the Exhibits hereto constitute the entire agreement between the parties
with respect to the subject matter hereof and supersede all prior agreements
between the parties, whether written or oral, relating to the same subject
matter. No modifications, amendments, or supplements to, or approvals or
consents under this Agreement shall take effect for any purpose unless set forth
in writing and signed by the party to be bound.
12.7 Headings. The headings contained in this Agreement are for
convenience of reference only and shall not be considered in construing this
Agreement.
12.8 Severability. If any court of competent jurisdiction, or
arbitrator having authority, finds any provision of this Agreement invalid or
unenforceable, the invalidity of such provision shall not affect the other
provisions of this Agreement and all provisions not affected by such invalidity
shall remain in full force and effect. The invalidity of a provision in one
jurisdiction shall not affect the validity or enforceability of the provision in
any other jurisdiction.
12.9 Successors and Assigns. Neither party shall assign its rights
or duties under this Agreement without the prior written
39
consent of the other party, which consent shall not be unreasonably withheld;
provided, however, that MedChem shall have the right to assign this Agreement in
connection with a sale of substantially all of its business related to this
Agreement unless the purchaser of such business directly or indirectly
manufactures, distributes or sells an hemostatic collagen compress or a gelatin
compress, which, in Coletica's reasonable judgment, competes with the Product
and does not cease manufacturing, distributing and selling such competing
compress within sixty (60) days of such assignment. Similarly, Coletica shall
have the right to assign this Agreement in connection with sale of substantially
all of its business related to this Agreement. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their successors and
permitted assigns. Upon a permitted assignment, the assigning party shall have
no further rights or obligations hereunder, but shall continue to be bound by
all preexisting rights or obligations.
12.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of such together
shall constitute one and the same instrument.
12.11 Force Majeure. No party to this Agreement shall be responsible
to the other party for nonperformance or delay in performance of the terms of
this Agreement, except for the payment of money and except in the circumstances
contemplated by Section
40
4.7 hereof, due to force majeure, including acts of God, war, riots, strikes,
restrictions in supplies or energy or other events beyond the control of such
party, affecting such party or its sub-contractors' production facilities or the
sale or transportation of the Product to MedChem. The occurrence of force
majeure has to be immediately notified to the other party.
12.12 Arbitration. (a) Any claim, dispute or controversy arising
out of or relating to this Agreement, including, without limitation, the breach
or alleged breach hereof, shall be submitted by the parties to arbitration to be
held in New York City in accordance with the rules of the American Arbitration
Association then in effect. The decision of the arbitrators shall be final and
binding. The parties consent to the jurisdiction of the Supreme Court of the
State of New York, and of the United States District Court for the Southern
District of New York, for all purposes in connection with such arbitration,
including the entry of judgement on any award. The parties agree that any
process or notice of motion or other application to either of said courts, and
any paper in connection with such arbitration, may be served inside or outside
the State of New York by certified or registered mail or by personal service,
provided a reasonable time for appearance is allowed. Any provisional remedy
(including injunctive relief) which, but for this agreement to arbitrate
disputes, would be available at law, shall be available to the parties hereto
pending arbitration.
41
(b) Each of the parties (i) hereby irrevocably submits itself and
acknowledges and recognizes the jurisdiction of the Supreme Court of the State
of New York, and of the United States District Court for the Southern District
of New York, for any purpose under this Agreement, including, without
limitation, obtaining any provisional remedy arising out of, under, or in
connection with, relating to, or based upon a breach of this Agreement, and (ii)
waives and agrees not to assert, as a defense or otherwise, in any such suit,
action or proceeding, any claim that such courts to not have jurisdiction over
it or that such suit, action or proceeding is brought in an inconvenient forum.
The parties agree that any process or notice of motion or other application to
either of said courts, and any paper in connection with such provision remedy,
may be served inside or outside the State of New York, by certified or
registered mail or by personal service, provided a reasonable time for
appearance is allowed.
(c) Each of the parties, to the full extent allowed by law, hereby
reserves all other rights to object to such jurisdiction, the submission to
jurisdiction set forth in this
42
Section 12.12 being intended solely for the purposes of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names by their properly and duly authorized officers as of the
date first above written.
MEDCHEM PRODUCTS, INC.
By: /s/ Edward J. Quilty
------------------------------
Name: Edward J. Quilty
Title: President
COLETICA
By: /s/ Pierre Devictor
------------------------------
Name: Pierre Devictor
Title: President
43