EXHIBIT 10.11
EXECUTION COPY
AMENDED AND RESTATED
EXCLUSIVE DISTRIBUTION AGREEMENT
This EXCLUSIVE DISTRIBUTION AGREEMENT, dated as of December 19, 1994,
as amended and restated in its entirety as of September 15, 1995, by and between
DADE INTERNATIONAL INC., a Delaware corporation with its principal offices at
1717 Deerfield Road, Deerfield, Illinois 60015, hereinafter called the
"Supplier" or "Dade", and BAXTER HEALTHCARE CORPORATION, a Delaware corporation
with its principal offices at One Baxter Parkway, Deerfield, Illinois 60015,
hereinafter called the "Distributor".
RECITALS
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1. Distributor's parent, Baxter International Inc. ("Baxter") and
Diagnostics Holding, Inc., a Delaware corporation ("Purchaser") have entered
into a Purchase Agreement dated as of October 1, 1994, as amended (the "Purchase
Agreement") pursuant to which Purchaser acquired from Baxter all of the
outstanding shares of common stock of Supplier.
2. Supplier is a corporation formed to engage in the "Business" as
defined in the Purchase Agreement and desires to distribute its products in the
United States through Distributor. Distributor is experienced in the
distribution of products in the health care industry and employs skilled
personnel and maintains facilities for these purposes. Distributor is willing
to distribute Supplier's products.
3. Distributor and VWR Scientific Products Corporation ("VWR"), are
parties to an Asset Purchase Agreement dated May 24, 1995, as amended from time
to time (the "VWR Purchase Agreement") pursuant to which VWR purchased
Distributor's industrial distribution business, and undertook employment of
various personnel and performance of certain of Distributor's obligations
associated therewith.
4. Dade and VWR are parties to certain distribution agreements dated
as of September 15, 1995, pursuant to which VWR distributes Dade's and its
subsidiaries' products to industrial customers in, among other territories, the
United States (the "VWR Distribution Agreements").
5. Supplier, Distributor and VWR are parties to an Interim Agreement
dated as of September 14, 1995, concerning the distribution of Dade's and its
subsidiaries' products by VWR (the
"Interim Agreement"), and which provided for the negotiation of the VWR
Distribution Agreements and the amendment of this Agreement.
6. Distributor and Dade desire to amend and restate this Agreement in
its entirety to reflect the VWR Purchase Agreement and the VWR Distribution
Agreements.
7. Distributor and Dade acknowledge that there are various issues in
dispute between Distributor and Dade and agree that the execution of the
amendment and restatement of this Agreement shall not be deemed to have any
effect upon the positions of the parties regarding the proper interpretation of
the language contained herein.
8. Dade and Intracel Corporation ("Intracel") are parties to a Stock
Purchase Agreement, dated as of November 16, 1995 (the "Bartels Stock Purchase
Agreement"), pursuant to which Intracel purchased all of the outstanding shares
of common stock of Bartels, Inc. ("Bartels"). In connection with the Bartels
Stock Purchase Agreement, Dade has assigned its rights, duties and obligations
under this Agreement (as in effect prior to the amendment and restatement
effected hereby) to Intracel and Bartels with respect to the Bartels class of
products (the "Bartels Assignment and Assumption"). This Amended and Restated
Exclusive Distribution Agreement does not purport to affect the rights or
obligations of any of the original parties to this Agreement with respect to the
Bartels class of products, which rights and obligations shall continue to be
governed by the terms of this Agreement without regard to the amendments
included in this Amendment and Restatement. Accordingly, effective November 21,
1995, the term "Products" as used in this Amendment and Restatement shall
exclude the Bartels class of products (and therefore have been omitted
herefrom). The parties acknowledge that Dade and Distributor are not in
agreement as to whether Dade was relieved of its obligations under the original
Agreement with respect to the Bartels class of products as a result of the
Bartels Assignment and Assumption. Nothing contained in this Amendment and
Restatement shall affect such dispute or the interpretation of the original
Agreement with respect thereto.
AGREEMENT
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In consideration of the mutual covenants contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Supplier and Distributor agree that this Agreement is
amended and restated as follows:
1. Definitions.
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"Affiliate" shall mean any person, firm or corporation controlling,
controlled by or under direct or indirect common control with a party hereto.
For the purpose of this definition, the term "control" means the power to direct
the management or policies of a party, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Baxter Industrial Customers" means those Industrial Customers
described on Exhibit B-2 to the extent that such customers are not being served
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by VWR pursuant to the VWR Distribution Agreements.
"Exclusive Territory" shall mean the United States.
"Products" shall mean the products of Supplier listed by Supplier's
catalog number in Exhibit A, and all other products manufactured or sold by
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Supplier after the date hereof which do not constitute "New Products" hereunder.
Products shall include, without limitation: (i) all accessories for,
modifications of, improvements of, substitutes for, or line extensions of the
products identified in the first sentence of this definition; (ii) any kit or
other combination of items that includes one or more of such products; (iii) any
product identified in Section IV of Exhibit A which is being developed by or for
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the business of Supplier but not yet sold as of the date hereof; or (iv) any
such product which is offered for sale in a size or form of packaging that is
different from the size or form in which it was offered for sale initially.
Products shall not include components or spare parts necessary for the repair or
refurbishment of Instruments. For the purposes of this Agreement, "classes of
Products" shall be those separate classes identified in Section I of Exhibit A.
"New Products" shall mean products which have uses or applications
different from the uses or applications of the Products in existence on the date
of this Agreement or at any time thereafter. By way of illustration only, a
hematology system would be considered a "New Product" and would not, for
example, be considered a line extension of hemostasis.
"Industrial Customers" shall mean customers who purchase Products for
use in, or resale to, laboratories, production plants, and other facilities (in
all cases not involved in the care of human patients or the diagnosis of disease
or defect for the purpose of care of human patients), including, without
limitation, analytical research and development laboratories, educational
institutions, environmental testing laboratories, clean room facilities,
biotechnology and pharmaceutical research and production facilities, medical
device manufacturers, electronic and semiconductor manufacturers, and government
research facilities.
"Instruments" shall mean the analytical instruments included among the
Products.
"Term" shall mean the period of time specified in Section 3 hereof,
including any and all renewals thereof.
2. Distribution Rights.
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(a) Supplier hereby grants to Distributor the exclusive right to sell
the Products throughout the Exclusive Territory, subject to the following
conditions and limitations:
(1) During the Term of this Agreement, Supplier shall distribute
Products within the Exclusive Territory only through Distributor pursuant to
this Agreement; provided, however, that nothing in this Agreement shall prohibit
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Supplier from: (i) continuing to directly sell, solicit orders for or otherwise
distribute those products it presently distributes that are identified on
Exhibit B; (ii) continuing to distribute the Products within the Exclusive
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Territory only for export outside the Exclusive Territory provided that such
distributors shall include only those distributors listed on Exhibit G and such
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other distributors identified by Supplier to Distributor and provided further
that Supplier uses reasonable efforts to include in its agreements entered into
after the date of this Agreement with such persons exporting such Products a
provision that, so long as this Agreement is in effect, such distributors will
not distribute the Products in the Exclusive Territory; or (iii) distributing
Products to Industrial Customers (other than to Industrial Customers of the type
described on Exhibit B-2, as to which Distributor and VWR have a co-exclusive
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right to distribute the Products). Other than as provided in the parenthetical
of the immediately preceding clause (iii), Distributor shall not have the right
to distribute Products to Industrial Customers. During the period during which
Distributor is performing purchasing, warehousing and invoicing services to VWR
pursuant to the transition services arrangements entered into between Baxter and
VWR in connection with the VWR Purchase Agreement (but in no event later than
the second anniversary hereof (the "Interim Period")), Distributor shall have
the right to distribute Products to VWR pursuant to such arrangements.
(2) Subject to the other provisions of this Agreement, Supplier may
not sell, solicit orders for or otherwise distribute the Products within the
Exclusive Territory, other than through Distributor under the terms of this
Agreement, without the prior written consent of Distributor. Distributor's
consent will not be unreasonably withheld. In determining whether to give its
consent, Distributor will give due consideration to the presence or absence of
the following factors: (i) whether the Product is customized to meet the
specifications of a particular customer; (ii) whether the Product is to be used
solely by the customer or resold by the customer; (iii) if the Product is to be
resold, whether it is an OEM product bearing the customer's trademark; (iv)
whether the proposed sale of the Product to any customer is substantial in
relation to the prior purchases of the same Product by such customer from
Distributor; (v) whether the Product is to be delivered for use in a clinical
laboratory; (vi) whether the Product is to be packaged in a form not normally
carried by Distributor or delivered in a manner not normally utilized by
Distributor; and (vii) whether the sale of the product will materially adversely
affect Distributor's sale of Products hereunder.
(3) Under no circumstances shall Distributor have any obligation to
purchase any minimum quantity of Products or class of Products.
(b) Distributor hereby accepts such grant, subject to the following
conditions and limitations:
(1) During the Term of this Agreement, except as expressly provided
pursuant to the transition services arrangements (as in effect as of September
15, 1995) between Distributor and VWR pursuant to the VWR Purchase Agreement,
neither Distributor nor any of its Affiliates shall, directly or indirectly: (i)
manufacture, sell, lease, solicit orders for or otherwise distribute in the
Exclusive Territory any product that is competitive with any of the Products; or
(ii) operate, manage, advise, or otherwise assist in any manner (in each case,
either alone or in association with any other person) any person in the
manufacture, leasing or sale within the Exclusive Territory of products that are
competitive with the Products; (iii) purchase more than a ten percent (10%)
interest in a company whose annual gross revenues from the manufacture, lease or
sale in the Exclusive Territory of products competitive with Products exceeds
fifty million dollars ($50,000,000); or (iv) own more than a ten percent (10%)
equity interest in a company whose annual gross revenues from the manufacture,
lease or sale in the Exclusive
Territory of products competitive with Products exceeds an amount equal to fifty
million dollars ($50,000,000) times a fraction (A) the numerator of which is the
value of the consumer price index for medical products in effect on the most
recent month for which such index is available at the time of the acquisition of
such interest and (B) the denominator of which is the value of such index as of
December 14, 1994. Notwithstanding the foregoing: (x) nothing in this Agreement
shall prohibit Distributor or any of its Affiliates from continuing to sell,
solicit orders for or otherwise distribute the products referred to on Exhibit C
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hereto, which Distributor is selling, soliciting orders for or otherwise
distributing as of the date hereof and which are competitive with the Products;
and (y) Distributor may purchase, store and sell competitive products not
normally carried for non-Valuelink customers to customers as a part of the
Valuelink program; provided Distributor does not: (i) advertise or promote the
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sale to a Valuelink customer of any such competitive product; (ii) pay any
commission to its sales representative having responsibility with respect to
such sale; and (iii) receive from the vendor of the competitive product a margin
and/or fees greater than Distributor's best reasonable estimate of its variable
costs for handling such product. For the purposes of this Agreement, the
Valuelink program shall be understood to be that program administered under a
separate service contract that displaces the "General Stores" inventory through
provision of a broad range of medical/surgical and laboratory products utilizing
just-in-time deliveries in low-unit-of-measure quantities.
(2) Distributor may distribute Products hereunder through sub-
distributors provided the dollar volume of Products sold to sub-distributors in
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any year does not exceed twenty percent (20%) of the dollar volume of all
Products sold by Distributor in the year.
(3) Except as may be agreed otherwise in writing by the parties,
neither Distributor nor any of its Affiliates or sub-distributors shall directly
or indirectly sell, solicit orders for or otherwise distribute to any customer
located outside of the Exclusive Territory, any Product purchased by Distributor
hereunder.
(4) Neither Distributor nor any of its Affiliates shall grant, or
cause any of its subdistributors to grant, any warranty or similar right with
respect to the Products that is different from or additional to the warranty set
forth in Section 6(s), or enter into any service contract on behalf of Supplier
utilizing any form not approved by Supplier, without
the prior written consent of Supplier. To the extent Distributor or any of its
Affiliates or subdistributors grants, or is deemed to have granted, any such
warranty or right, or enters into any such service contract, Distributor shall
be solely responsible therefor, it being understood that the purpose of this
sentence is to allocate responsibility between Distributor and Supplier and not
with respect to any other party.
(c) New Products may be added to this Agreement and Products may be
deleted from this Agreement only by mutual written agreement of the parties;
provided Distributor shall add coagulation instruments offered by Supplier as a
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replacement for the MLA Instruments if Distributor is offered a gross profit
margin of 15% on such coagulation instruments. Notwithstanding the foregoing,
Supplier may, upon giving ten (10) days written notice to Distributor delete
from Exhibit A and this Agreement any Product, the manufacture and sale of which
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has been generally discontinued by Supplier in the Exclusive Territory.
Supplier shall consult with Distributor in connection with the selection or
development of a substitute for any generally discontinued Product. If Supplier
generally discontinues selling any class of Instruments utilizing captive
reagent systems (other than Stratus or Paramax Instruments), Distributor may
thereafter sell, solicit orders for or otherwise distribute instruments and
reagent systems of a competitive manufacturer.
(d) Notwithstanding the foregoing provisions of this Section 2, this
Agreement shall not prohibit: (i) Supplier from distributing Products within the
Exclusive Territory otherwise than through Distributor to the extent and during
the time that Distributor shall be unable to so distribute Products because of
any matter referred to in Section 10 or because Distributor is otherwise
prohibited legally from selling Products to any customer or class of customer;
(ii) Supplier from distributing Products to Industrial Customers within or
outside the Exclusive Territory after September 15, 1995 (it being understood
that Distributor and VWR have a co-exclusive right to distribute Products to
Industrial Customers of the type described on Exhibit B-2 and Supplier shall not
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have the right to distribute Products to such customers); (iii) Distributor or
its Affiliates from distributing Products that are competitive with the Products
within the Exclusive Territory to the extent and during the time that Supplier
shall be unable to deliver Products to Distributor because of any matter
referred to in Section 10 or because Supplier is otherwise prohibited legally
from selling Products to Distributor; (iv) Distributor or its Affiliates from
selling, soliciting orders for or otherwise distributing anywhere in the world
products that are not competitive with the Products; or (v) Distributor or its
Affiliates from selling,
soliciting orders for or otherwise distributing outside the Exclusive Territory
products that are competitive with the Products, except as may be provided
otherwise in the Purchase Agreement.
(e) In the event Supplier terminates this Agreement with respect to
any Products pursuant to Section 8(c)(ii) hereof, subsection 2(b)(1) shall be of
no further force or effect with respect to such terminated Products from and
after the earlier to occur of: (i) the six-month anniversary of the effective
date of such Product termination and (ii) the expiration of the term of this
Agreement (as used in this subsection 2(e), the earlier of clauses (i) or (ii)
shall be deemed to be the "Termination Date"). From the effective date of such
Product termination through the Termination Date, Supplier shall sell such
terminated Products to Distributor on a non-exclusive basis and otherwise in
accordance with the terms of this Agreement. Thereafter, Supplier shall have no
obligation to sell such terminated Products to Distributor except as set forth
in Section 9(a) or Section 9(b).
(f) In the event Distributor terminates this Agreement with respect
to any Products pursuant to Section 8(c)(i) or 8(d) hereof, subsection 2(b)(1)
shall be of no further force or effect with respect to such terminated Products
from and after the earlier to occur of (i) the twelve-month anniversary of the
effective date of such Product termination and (ii) the expiration of the Term
of this Agreement (as used in this subsection 2(f), the earlier of clauses (i)
and (ii) shall be deemed to be the "Termination Date"). From the effective date
of such Product termination through the Termination Date, Supplier shall sell
such terminated Products to Distributor on a non-exclusive basis and otherwise
in accordance with the terms of this Agreement. Thereafter, Supplier shall have
no obligation to sell such terminated Products to Distributor except as set
forth in Section 9(a) or Section 9(b).
(g) If, at the time of enforcement of any provision of this Section
2, a court shall hold that the duration or scope of such provision is
unreasonable under circumstances then existing, Supplier and Distributor agree
that the maximum duration or scope reasonable under such circumstances shall be
substituted for the stated duration or scope.
(h) Supplier and Distributor each recognize and affirm that in the
event of a material breach of any of the non-competition provisions of this
Section 2, money damages would be inadequate and the damaged party would have no
adequate remedy at law. Accordingly, Supplier and Distributor each agree that
the damaged party shall have the right, in addition to any other rights and
remedies existing in its favor, to enforce its rights and the
breaching party's obligations not only by an action or actions for damages, but
also by an action or actions for specific performance, injunction and/or other
equitable relief in order to enforce or prevent any violations (whether
anticipatory, continuing or future) of the non-competition provisions of this
Section 2.
3. Term and Renewal.
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The initial term of this Agreement shall begin on the date of this
Agreement and end on December 31, 1999; provided that the Term of this Agreement
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shall be automatically renewed for an additional two (2) year term, and
thereafter for additional and successive terms of one (1) year each, unless and
until such initial or additional term is terminated as provided in Section 8 of
this Agreement. References in this Agreement to "the date of this Agreement" or
words of similar import shall be deemed to mean December 16, 1994. The
amendment and restatement of this Agreement embodied herein shall be deemed
effective as of September 15, 1995.
4. Prices.
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(a) The pricing provisions for all Products are set forth in Sections
4(a) through 4(d) herein. From the date of this Agreement, the initial invoice
price for each Product sold by Supplier to Distributor shall be determined by
Supplier. Supplier may increase or decrease the initial invoice price of any
Product effective on the first day of any calendar year after 1995 by giving
written notice to Distributor at least ninety (90) days prior to the effective
date of the change, except Supplier may change the initial invoice price with
respect to the Burdick & Jackson class of Products at the time of the execution
of the amendment and restatement contemplated hereby. Supplier shall honor
Distributor's purchase orders received by Supplier prior to the effective date
of the price change and sell Products at the prices in effect when such orders
were placed; provided any orders placed by Distributor during such ninety (90)
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day period do not exceed one hundred ten percent (110%) of the orders placed for
such Products during the three (3) month period immediately preceding the date
of the notice, unless Supplier offers Distributor a volume purchase incentive
during the ninety (90) day period in which case the foregoing limit shall not
apply.
(b) Under the Vendor Rebate system, and subject to the provisions of
Section 4(b)(6), Distributor shall be entitled to receive from the sale of
Products the guaranteed gross profit margins set forth in Exhibit A for each
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class of Products, and the price paid by Distributor shall be determined from
the "Actual Selling Price." It is anticipated that the "Actual Selling Price"
minus the initial invoice price for each Product will produce a
difference greater or less than the guaranteed gross profit margin (stated in
dollars) for the Product. For the purposes of this Section 4, the "Actual
Selling Price" shall be the price (excluding taxes and other add-on charges)
actually charged to the customer in the case of a Product sold by Distributor,
or the price used to determine the lease payments in the case of a Product
leased by Distributor to a customer. If that difference is less than the
guaranteed gross profit margin (stated in dollars), Distributor will be entitled
to a rebate from Supplier. If that difference is greater than the guaranteed
gross profit margin (stated in dollars), Supplier will be entitled to an
additional payment from Distributor. The rebates due Distributor and additional
payments due Supplier will be calculated in the following manner for each
transaction:
(1) If the difference is less than or equal to the guaranteed gross
profit margin (stated in dollars), the amount of the rebate shall be equal to
the difference between: (i) the invoice price; and (ii) the product of the
Actual Selling Price times the difference between 1.0 and the guaranteed gross
profit margin for the Product, as indicated in the following formula:
Invoice | Actual ( Guaranteed )|
Rebate = - | Selling X ( 1.0 - Gross Profit )|
Price | Price ( Margin )|
(2) If that difference is greater than the guaranteed gross profit
margin (stated in dollars), the additional payment due Supplier shall be equal
to the difference between: (i) the product of the Actual Selling Price times the
difference between 1.0 and the guaranteed gross profit margin for the Product;
and (ii) the invoice price, as indicated in the following formula:
Additional | Actual ( Guaranteed )| Invoice
Payment = | Selling X ( 1.0 - Gross Profit )| - Price
| Price ( Margin )|
For the purposes of the above formulas, the guaranteed gross profit margin
shall be stated as a decimal.
(3) Within ten (10) days after the end of each month, Distributor shall
provide to Supplier a report identifying the Products in each class sold by
Distributor during the month. This report will show total rebates due
Distributor and additional payments due Supplier with respect to all sales of
each class of Products by customer. The rebates and additional payments will be
netted against each other, and an amount owed to or to be paid by Distributor
shall be determined.
(4) Distributor shall be entitled to its full gross profit margin with
respect to any Products in inventory on the effective date of this Agreement,
including inventory that has been paid for by Distributor and shipped by
Supplier, but that has not yet been received by Distributor.
(5) With respect to intracompany transfers of Products by Distributor to
its Affiliates which shall be for such Affiliates' own use and not for resale to
any non-Affiliate, the "Actual Selling Price" of such Products at the time of
the transfer shall be deemed to be the Average Selling Price realized by
Distributor on sales to customers for the calendar year immediately preceding.
(6) If due to market conditions or otherwise, Distributor determines that
it needs to price a Product to a customer at an Actual Selling Price that will
produce a gross profit margin less than the guaranteed gross profit margin for
the Product at the initial invoice price then in effect, Distributor may request
that Supplier pay a rebate under the formula set forth in Section 4(b)(1)
sufficient to yield the guaranteed gross profit margin. Approval of any such
rebate must be obtained from Supplier in advance of Distributor's execution of a
pricing agreement with a customer; provided that with regard to pricing
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agreements in effect between Distributor and its customers for such Products as
of the date of this Agreement, Supplier hereby agrees that the price to
Distributor for all Products resold under such agreements shall be equal to the
agreement price in effect on the date of this Agreement, less the guaranteed
gross profit margin times that price. Unless Supplier agrees in writing to
lower the price to Distributor, that price to Distributor will remain firm
throughout the term of Distributor's agreement with each customer even if
Distributor agrees to lower the price to such customer.
(7) If MLA's price to Supplier for MLA disposables is higher than list
price multiplied by .85, the parties will
negotiate in good faith to determine how the parties will share the losses
incurred in connection with the distribution of such MLA disposables to such
customers.
(c) Supplier agrees to provide Distributor a rebate advance
calculated for each class of Products that Distributor stocks. The amount of
the rebate advance will equal Distributor's inventory value for the class of
Products at month end minus Distributor's account payable to Supplier for that
class of Products at month end, multiplied by the average rebate percentage for
that class of Products. (No advance will be due if the result is a negative
number.) The average rebate percentage for a Product class will equal the total
net rebates requested for the prior calendar quarter (rebates requested minus
additional amounts owed, if any), divided by the sum of Distributor's cost of
sales of such class for the quarter plus the total net rebates requested. The
first such calculation will be made sixty (60) days after the parties convert
from the use of the Top-to-Bottom approach to the Vendor Rebate approach, and
will be reviewed at the beginning of each subsequent calendar quarter and
adjusted as necessary based upon the rebate experience for the quarter just
ended.
(d) The invoice prices to Distributor for all Products under this
Agreement shall not include any transportation charges, state sales taxes, or
any other sales, use, inventory, delivery, value added or like taxes of any
federal, state or local government, however imposed. Except for samples of
Products provided by Supplier to customers or Instruments that are the subject
of operating leases between Supplier and customers, Distributor shall be
responsible for all such charges and taxes and shall pay Supplier any and all
taxes which Supplier is required to collect or pay with respect to the sale,
lease, distribution or use of Products under this Agreement. The Supplier shall
own and be responsible for paying property taxes on all operating leases
(including Instruments leased to customers under operating leases) that Supplier
carries as fixed assets.
5. Distributor's Duties.
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Distributor shall:
(a) Continue to supply Products to existing customers (other than
Industrial Customers after September 15, 1995 that are not Baxter Industrial
Customers) of the Business in the Exclusive Territory pursuant to all contracts,
commitments or other arrangements in effect as of the date of commencement of
distribution activities under this Agreement. In connection therewith,
Distributor shall be responsible for: (i) purchasing all Instruments that are
leased to customers under capital equipment
leases and assuming rights and obligations under such leases (except that
Distributor may assign such leases to a third party leasing company); (ii)
paying all rebates to customers with respect to Products pursuant to "Corporate
Program" rebate agreements in effect on the commencement of distribution
activities under this Agreement; and (iii) paying all other rebates and
administrative fees owed under existing agreements with the group purchasing
organizations or multi-hospital systems identified in Exhibit D; provided
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Distributor shall be entitled to charge back to Supplier the rebates and
administrative fees set forth in Exhibit D for such programs.
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(b) Submit orders for Products on Distributor's standard purchase
order form or other means utilized by Distributor prior to the commencement of
distribution activities hereunder, or through such other form or means as may be
mutually agreed to in writing by the parties prior to its use; provided,
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however, that unless agreed in writing to the contrary, no provision of
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Distributor's standard purchase order form, Supplier's acknowledgment or
invoice forms, or other forms of either party shall have any effect.
(c) Deliver payment via electronic funds transfer (or wire transfer
if electronic funds transfer is not available) for orders of Products (other
than Products included in single lot QAP inventory programs) and other amounts
due under this Agreement so that such funds are available to Supplier at the
close of business on the 15th of each month, or the first business day
thereafter if the 15th is not a business day, for any invoices issued during the
prior month and any supplemental invoices covering such month. The payment
period for the purposes of the preceding sentence shall begin on the date of
Supplier's invoice. With respect to the Products included in the single lot QAP
inventory programs, the payment terms to Supplier shall be set to match the
Distributor's Inventory Days on Hand (DIOH). At the commencement of this
Agreement the payment terms for QAP Products shall be set at two hundred fifty-
six (256) days. The foregoing two hundred fifty-six (256) day period shall be
reviewed on June 30, 1995 and on each six-month anniversary occurring thereafter
and adjusted based on the previous twelve month's average monthly DIOH. For the
purposes of this Section 5(c), Distributor's QAP inventory shall be valued at
the initial invoice price with respect to Products purchased under Section 4(b).
A single lot QAP inventory program shall be any single lot of control Products
purchased for a specific customer and maintained in inventory by Distributor in
order to meet customer requirements for maintaining consistent manufacturing lot
usage. Distributor shall pay interest to Supplier on any overdue payment under
this Agreement at a rate per annum equal to the prime rate of interest published
from time-to-time by the Wall Street Journal.
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(d) Whenever feasible, consult with Supplier in the modification and
improvement of Products and the development of New Products.
(e) Actively advertise, promote and distribute the Products to an
extent no less reasonably favorable to the Products in comparison with other
products purchased for resale by Distributor (as determined as of the date of
this Agreement), by methods which in Distributor's reasonable judgment are
suited for the marketing of such Products, including, but not limited to, the
following:
(1) Promptly respond to customer requests for Product information.
(2) Refer customers to Supplier's "800" hotline telephone service in
response to inquiries from customers concerning the use and routine maintenance
of Products and field service for repair or replacement of Products.
(3) Accept returns of Products and deliver replacement of Products when
and as reasonably requested by customers, including without limitation, reagents
and other dated products included within the Products whose useful life has
expired. Distributor's obligation to accept the return of an Instrument shall
be subject to the provisions of Section 6(h). The cost of a return or
replacement shall be paid by Supplier if the return or replacement is necessary
due to Supplier's failure to deliver Products in accordance with its obligations
to the customer or, as set forth in Section 6(p) or otherwise, to Distributor,
or when otherwise agreed to by Supplier or its representatives.
(4) Promptly and courteously resolve billing disputes with Supplier or
customers.
(5) When required by customers, provide single lot storage in excess of
thirty (30) days of those reagents and control materials included in the single
lot catalog numbers included in vendor codes FL and FM.
(6) Coordinate the ordering of capital equipment Products with the
installation of such Products, the ordering and installation of related
ancillary equipment and any other processing necessary to complete such orders
in each case in a timely manner consistent with past practice.
(7) Promote the sale of service contracts for Instruments, such contracts
to be entered into directly
between Supplier and customers with Distributor acting as Supplier's agent for
the purposes of executing such contracts on Supplier's behalf. Distributor
shall be authorized to enter into such contracts for Supplier utilizing only the
standard form of contract approved by Supplier and at no less than eighty
percent (80%) of the list price established by Supplier therefor, unless another
form or price is approved in advance and in writing by Supplier. Distributor
shall be responsible for billing, collecting and remitting to Supplier all
amounts due under such contracts. Distributor shall receive a fee for these
services equal to one percent (1%) of all sums collected. Supplier shall assume
the credit risk on all such contracts and shall be responsible for any
collection efforts on overdue accounts. On accounts due for 120 days or more,
and upon Distributor's request, Supplier shall forward to Distributor the
outstanding overdue amounts.
(8) Continue to administer the single lot program with respect to Products
in the same manner and to the same extent as that program is conducted
immediately prior to the commencement of distribution activities under this
Agreement. If at any time Supplier is dissatisfied with the services provided by
Distributor under this program, Supplier shall notify Distributor, and
thereafter the parties shall meet to discuss Supplier's concerns and to develop
a mutually agreed plan to address those concerns. The parties will follow the
procedures or undertake other actions required by the agreed plan.
Notwithstanding the foregoing, Supplier shall have the option to assume
responsibility for the administration, stocking, and physical distribution of
all single lot inventory programs for Products. If Supplier exercises this
option (by delivery of written notice) on or before September 30, 1995, for each
full year Supplier assumes responsibility for the single lot Program, Supplier
shall receive a prepaid annual rebate of seven hundred sixty thousand dollars
($760,000), provided that such amount shall be prorated for partial years. If
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Supplier exercises this option (by delivery of written notice) after September
30, 1995, for each full calendar year Supplier assumes responsibility for the
single lot Program, Supplier will receive a prepaid annual rebate equal to forty
thousand dollars ($40,000) times the number of persons who spent more than
ninety percent (90%) of their time performing Distributor's single lot
coordination function for the Dade class of Products, and whose positions will
be eliminated as a result of Supplier's exercise of the option. Supplier will
reimburse Distributor for all of Distributor's severance expenses arising out of
the termination of Distributor's single lot coordinators solely as a result of
the transfer, at any time, of these responsibilities to
Supplier. Such reimbursement will be based on Distributor's employee severance
program then in effect. Supplier will assume responsibility six (6) months
after exercising the option. During the six (6) month period between Supplier's
notice and assumption of responsibility, Supplier and Distributor will develop a
plan for transition to Supplier's centralized management and stocking system.
If during the Term of this Agreement, Supplier terminates this Agreement with
respect to the Dade class of Products, Distributor shall no longer owe any such
prepaid annual rebate.
(9) Include Products in Distributor's catalogs and other promotional
materials in such form and manner as Distributor deems reasonably appropriate.
(10) Display Products in certain trade shows under the terms set forth in
Exhibit E, and at such other trade shows and Distributor's national and regional
- ---------
sales meetings in such form and manner as Distributor deems reasonably
appropriate.
(11) Share with Supplier information in Distributor's possession about the
Products and their ability to compete in the Exclusive Territory and to meet
customers' needs.
(12) Continue to offer and administer the "Advantage Now" ("Ad Now")
program offered by Supplier's predecessor and Distributor during 1993, or such
substitute program therefor as Distributor deems appropriate in order to respond
to generally prevailing market conditions.
(13) Continue to include Products in Distributor's "Corporate Rebate
Program" for its manufactured products, to the extent such program is offered to
Distributor's customers. Distributor shall pay any rebates due customers under
agreements entered into with respect to such program.
(14) Distributor shall pay rebates and national administrative fees, and
be permitted to charge back to Supplier such rebates and fees, owed under
agreements with group purchasing organizations and multi-hospital systems
entered into by Distributor after the date of this Agreement, provided Supplier
--------
approves the inclusion of Products and payment of rebates thereunder before
Distributor enters into any such agreement.
Notwithstanding the foregoing after September 15, 1995 Distributor shall
have no obligations under this Section 5(e) with respect to Industrial
Customers, except that Distributor shall
promote and distribute the Products to the Baxter Industrial Customers existing
at September 15, 1995 or that become customers of Distributor from time to time
thereafter (so long as such customers are of the type described on Exhibit B-2)
-----------
to the extent reasonably necessary to service and retain such customers in
accordance with historical practices (it being understood that Distributor shall
not be required to publish separate catalogs or other promotional materials or
undertake any other action directed at marketing the Products solely to
Industrial Customers).
(f) Use Supplier's trademarks and trade names only in connection with
the Products and subject to the terms of this Agreement, including but not
limited to Section 7 hereof.
(g) Cooperate with Supplier in providing annual and "as required"
training with respect to the Products for Distributor's sales representatives
and members of its multihospital/group selling organization and its account
management organization.
(h) Stock inventories of the Products that are listed in Exhibit A as
---------
required to be stocked by Distributor at such locations and in sufficient
quantities in order to provide service levels at least equal to the service
levels achieved immediately prior to the commencement of distribution activities
under this Agreement as determined on a monthly basis. Either party's
obligation to provide any other level of service shall be subject to mutual
agreement of the parties.
(i) Store Products only in a manner consistent with applicable
manufacturer's specifications in order to prevent damage to or deterioration of
Products.
(j) Give Supplier ten (10) days written notice of any and all
proposed returns of Products to Supplier. Distributor shall not return any
Products to Supplier without Supplier's prior written approval. Distributor
shall use reasonable efforts to resell any returned Instrument that has been
refurbished by Supplier to like-new condition. The price to Distributor of any
returned Instrument shall be equal to the amount credited to Distributor with
respect to such Instrument under Section 6(h) plus Supplier's cost of
refurbishment.
(k) Develop and periodically update a target customer list
identifying qualified prospective purchasers of instrument systems included in
the Products.
(l) Except as otherwise provided herein, Distributor shall offer to
its personnel such incentives and compensation programs as Distributor deems
reasonably appropriate.
(1) For the period beginning from the date of execution of this Agreement
through December 31, 1994, Distributor shall offer those incentives and
compensation programs identified in Exhibit F.
---------
(2) Beginning on January 1, 1995 and continuing throughout the Term of
this Agreement, Distributor shall pay commissions to its "Distribution
Representatives" equal to two percent (2%) of Distributor's guaranteed gross
profit margin from the sale of Products. For the purposes of this Section
5(l)(2), the term "Distribution Representative" shall be a sales representative
of Distributor who is primarily responsible for, and whose compensation is
primarily based upon, providing efficient and effective distribution services to
hospitals, research institutions and reference laboratories (other than sales
representatives who make direct sales to hospitals through Distributor's
telemarketing system). In addition, Supplier may request Distributor to pay to
its Distribution Representatives and telemarketing sales representatives up to
three million three hundred thousand dollars ($3,300,000) in additional annual
compensation with respect to sales of Products. Such additional compensation
may consist of commissions, Instrument spiffs, bonuses or other incentives. The
terms of any such program shall be specified by Supplier and implemented by the
agreement of Distributor, which agreement will not be unreasonably withheld.
Supplier shall reimburse Distributor for the excess of any such additional
compensation paid in a year over the annual allowance for the year provided to
Supplier under the Purchase Agreement. Supplier shall make its request for any
such additional compensation program at least ninety (90) days prior to the
beginning of any year in which such program is to be implemented, except that
for 1995, such request will have been made, if at all, under the terms of the
Purchase Agreement. If Supplier provides any such additional compensation, one
million dollars ($1 million) of such additional compensation (or the total
amount if less than one million dollars ($1 million) is to be provided) shall be
budgeted for an incentive or incentives, and the structure and rates for such
incentive or incentives shall remain constant during the year. Supplier shall
provide as much information as is reasonably possible about the structure,
rates, and timing of its plans for additional incentives utilizing the amount of
budgeted additional compensation in excess of one million dollars ($1 million),
provided that the provision of such information shall not limit Supplier's right
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to modify such additional incentives. The purpose of the incentive compensation
program for Products described in this subsection (including the three million
three hundred thousand dollars
($3.3 million) in additional annual compensation) is to establish an incentive
compensation program that is relatively favorable to the Products as compared to
other incentive compensation programs for other emphasis products distributed by
Distributor. During the Term, if any change is made to Distributor's incentive
compensation programs for other emphasis products that results in an adverse
change in the relatively favorable status of the incentive compensation program
for the Products (including, without limitation, changes in compensation rates
or changes in participation eligibility), then Supplier and Distributor shall
negotiate in good faith to restructure the incentive compensation program for
Products in order to restore such relatively favorable status. For purposes of
this paragraph, incentive compensation programs shall include any compensation
or other benefits directly or indirectly offered by third parties including,
without limitation, travel and vacation award programs.
(m) Obtain and maintain for one (1) year following the expiration or
termination of this Agreement, product liability insurance (containing either a
vendor's endorsement or contractual liability coverage referencing the
indemnification provisions contained in Section 5(q) hereof) on all Products
with insurers reasonably satisfactory to Supplier with minimum limits of
$1,000,000/$3,000,000 for bodily injury and $300,000 for property damage and
immediately furnish to Supplier a certificate of insurance issued by the
insurance carrier evidencing the foregoing endorsements, coverages and limits
and that such insurance shall not be cancelable without at least fifteen (15)
days prior written notice to Supplier; provided, however, that Distributor may
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satisfy its obligations under this Section 5(m) through its self-insurance
program.
(n) Comply (or cause compliance) in all material respects with all
existing and future federal, state or other laws and regulations applicable to
the conduct of Distributor's business or the possession, use and sale to its
customers of Products pursuant to this Agreement, including, but not limited to,
the following:
(1) Give prompt written notice to Supplier if Distributor should become
aware of any defect or condition (actual or alleged) which may alter the quality
of the Products in any material respect or may render any of the Products in
violation in any material respect of any applicable federal, state or other law
or regulation, including, but not limited to, any violation which would
reasonably likely require any alteration of the specifications
of any Product, affect the sale of any Product, cause revocation of any federal,
state or other regulatory approval with respect to any Product or its sale
hereunder or give rise to a claim against Supplier by any person.
(2) Make prompt return of any and all Products affected by holds or
recalls, if so requested by Supplier.
(3) Not alter, remove or otherwise modify the packaging, labeling or
product insert sheets furnished by Supplier for the Products.
(4) Keep appropriate records of all lot coded Products other than
Instruments and serial numbered Instruments distributed to customers.
(o) On or before the fifteenth (15) day after the end of each month
of the Term, provide Supplier with a sales trace file in a format to be mutually
agreed upon, including, but not limited to, information by customer with respect
to all invoices and credits issued to such customer. Supplier shall pay an
annual fee of one hundred fifteen thousand dollars ($115,000) for these files.
Provide to Supplier sales reports and such other information as Distributor
generates in the ordinary course of business immediately prior to the
commencement of distribution activities under this Agreement (other than any
such reports or information with respect to Industrial Customers that are not
Baxter Industrial Customers); provided, the format of such reports may be
--------
changed from time to time by Distributor so long as any such change is
implemented by Distributor in the ordinary course of business and generally
applicable to other product lines distributed by Distributor; and provided
--------
further, the content of such reports may be changed with the consent of
- -------
Supplier, which consent will not be unreasonably withheld.
(p) Provide Supplier's personnel with reasonably adequate office,
product service and parts warehouse space and related office support at
Distributor's facilities; provided that, unless otherwise agreed to by Supplier
--------
and Distributor, Supplier shall reimburse Distributor for the direct costs to
Distributor of such space and support except that Supplier shall not be charged
for non-exclusive use of common areas or any overhead costs. Such costs are
currently one thousand dollars ($1000) per month per single office and related
copying, facsimile, telephone and voice mail services; one dollar and twenty
five cents ($1.25) per ft/2/ per month for product service work space; forty two
cents ($0.42) per ft/2/ per month for warehouse space; one thousand dollars
($1,000) per month per secretary shared with one or two other persons, if
Supplier requests such secretarial support.
(q) Distributor shall indemnify and hold harmless Supplier and its
successors, assigns, directors, officers, employees, (all of the foregoing being
collectively referred to in Section 12 as "Indemnified Persons") with respect to
all liabilities, damages, losses and expenses, including reasonable attorney's
fees, arising out of third party claims for personal injury, wrongful death or
property damage to the extent such claims are caused by any wrongful or
negligent act or omission by Distributor (or its employees or other agents,
including subdistributors) in its performance of the terms of this Agreement;
provided that Section 12 shall apply to any claim, arbitration proceeding or
- --------
court suit made or brought by any third party as to which any Indemnified Person
intends to claim indemnification under this Section 5(q); and provided further,
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that this Section 5(q) shall not apply to any claim, liability, damage, loss or
expense to the extent that Supplier is responsible therefor under this
Agreement, including, but not limited to, any of the foregoing caused by
Supplier's negligence or any failure of the Products to meet any product claim
made in Supplier's labeling or product insert sheets.
(r) During the Term, Distributor shall provide to Supplier, for
Supplier's internal use only and not for resale, laboratory supply products
manufactured by Baxter and its Affiliates. Supplier shall pay Distributor's
actual cost for such laboratory supply products manufactured by Baxter and its
Affiliates.
(s) Historically Supplier has distributed through Distributor a line
of immunology/serology/parasitology products that it did not manufacture,
including ImmunoScan Line, Trans-Caddy Line, and RDT/PAC BIO Cards. As
compensation for the lost revenue to Supplier due to the transfer to Distributor
of all rights, responsibilities, benefits and liabilities relating to these
product lines, Distributor agrees to pay to Supplier three hundred thousand
dollars ($300,000) on or prior to the fifteenth day of the first month of each
calendar quarter during which this Agreement remains in effect with regard to
the MicroScan class of Products.
(t) In return for inclusion of Instrument Laboratories blood gas
controls as competitive products that Distributor may sell (see Exhibit C),
---------
Distributor agrees that if during the Term of this Agreement with regard to the
Dade Controls class of Products, one of the customers identified on Exhibit H
---------
ceases purchasing Dade blood gas controls and begins purchasing Instrument
Laboratories blood gas controls (or, thereafter, any other blood gas controls
distributed by Distributor), Distributor will pay to Supplier within 30 days of
the end of each calendar quarter an amount equal to Supplier's lost standard
gross profit on such sales of Dade
blood gas controls for such calendar quarter (determined based upon sales of an
equivalent volume of such Instrument Laboratories or other blood gas controls).
Such payments will continue during the period that this Agreement is in effect
with regard to the Dade controls class of Products for so long as such customer
continues to purchase blood gas controls from Distributor. Distributor will not
solicit sales of Instrument Laboratories blood gas controls to any of the
customers listed on Exhibit H, but may sell Instrument Laboratories products to
---------
such customers who have been solicited by Instrument Laboratories.
6. Supplier's Duties.
-----------------
Supplier shall:
(a) Ship all Products as directed by Distributor in accordance with
the following:
(1) All Products shipped to Distributor by Supplier shall be shipped
collect, F.O.B. Origin; provided, however, Distributor shall be entitled to
--------- -------
charge back to Supplier as a part of the monthly reconciliation under Section
4(b) Distributor's inbound freight costs pursuant to the formula and procedures
utilized by Distributor immediately prior to the commencement of distribution
activities under this Agreement. Distributor shall calculate the inbound
freight charge back so that, given the same volume and Product mix, the dollar
amount of the inbound freight charged back to Supplier will be the same amount
charged under the method used immediately prior to the date of this Agreement,
plus a percentage increase or less a percentage decrease equal to the percentage
increase or decrease in Distributor's total combined costs of commercial freight
and in the operation of Distributor's inbound freight program.
(2) All Products shipped directly to Distributors' customers by Supplier
("drop shipments") shall be shipped F.O.B. Destination, Prepaid and Add, with
Supplier adding the freight charges for such shipment to its invoices to
Distributor; provided, however, that if Supplier utilizes any carrier or mode of
--------- -------
transportation at the request of a customer or otherwise that is different from
the carrier or mode customarily utilized for these purposes immediately prior to
the commencement of distribution activities hereunder and which have not
approved in advance by Distributor, Supplier shall be responsible for the
increased cost in utilizing the carrier or mode it selects.
(3) Title and risk of loss of all Products will pass to Distributor
upon Supplier's delivery of such Products either to a carrier or directly to
Distributor.
(4) Supplier shall cooperate with Distributor or customers in pursuing
claims for loss or damage to Products in transit.
(5) Any deviation from the foregoing provisions of this Section 6(a)
must be agreed upon by both Supplier and Distributor prior to shipment.
(6) Adequately package and deliver Products to a common carrier or
directly to Distributor.
(b) Promptly refer all inquiries for the Products from customers
(other than Industrial Customers after September 15, 1995 that are not Baxter
Industrial Customers) in the Exclusive Territory to Distributor.
(c) Advertise and promote the Products in such form and manner as
Supplier deems appropriate.
(d) Except as to Burdick & Jackson Products, assume responsibility
for all operating leases in effect on the date of this Agreement. Supplier will
continue to offer such operating leases as Supplier deems appropriate in its
sole discretion, it being understood that if a customer does not wish to
purchase an Instrument or lease an Instrument from Distributor under a capital
lease, and if Supplier does not wish to offer an operating lease to such
customer, the parties may lose the benefit of the sale of reagents for the
Instrument to such customer.
(e) Pay for factory returns, sample accounts and any amounts due
under Section 4 on net thirty (30) day terms. The payment period for the
purposes of the preceding sentence shall begin on the date of Distributor's
invoice. Supplier shall pay interest to Distributor on any overdue payment
under this Agreement at a rate per annum of equal to the prime rate of interest
published from time-to-time by the Wall Street Journal.
-------------------
(f) Promptly and courteously resolve billing disputes with
Distributor and provide Distributor such information or assistance as
Distributor may reasonably require to resolve billing disputes with customers or
freight claims with carriers.
(g) Provide, in a manner consistent with past practice, at Supplier's
expense, all repair and maintenance services for Instruments, including without
limitation: (i) the major overhaul
and repair of such Products; (ii) in-warranty repair service in accordance with
Section 6(s) at no cost to Distributor; (iii) out-of-warranty repair service
pursuant to service contracts between Supplier and customers; provided Supplier
--------
may charge back to Distributor the difference between eighty percent (80%) of
Supplier's regular list price for contract services and the actual fee in the
contract for any contract where Distributor has negotiated a fee with the
customer more than twenty per-cent (20%) lower than Supplier's regular list
price; (iv) out-of-warranty repair services on an as-needed fee-for-service
basis for Products not subject to any service contract; (v) installation of
Instruments as requested by Distributor at customer or demonstration sites; (vi)
reasonable refurbishment of Supplier's demonstration products; and (vii) "800"
telephone hot line service to respond to inquiries from customers concerning the
use and routine maintenance of Products and field service for repair and
replacement of Products. Supplier shall maintain a price list for all service
contracts and other out-of-warranty service charges to customers, and give
Distributor, and customers where applicable, at least ninety (90) days advance
written notice of any change in such prices. Supplier shall maintain adequate
facilities, personnel and inventories of spare parts to enable it to provide
these repair and maintenance services. Some or all of the facilities and
personnel required to provide such services may be located at space in
Distributor's facilities pursuant to Section 5(p) hereof.
(h) Accept the return of an Instrument: (i) from a customer; provided
--------
Supplier has approved any such return and Distributor's credit to the customer
in advance; (ii) from Distributor in a case where Distributor has leased the
Instrument to a customer under a capital lease, the customer has defaulted on
the lease on account of the customer's bankruptcy, and Distributor repossesses
the Instrument. With respect to returns on account of a customer's bankruptcy,
Supplier shall credit Distributor an amount equal to the unamortized net book
value of the Instrument less, for Paramax Instruments only, that portion of the
gross profit realized by Distributor and paid by such customer. The Instrument
will then be refurbished by the Supplier and resold to Distributor when and as
Distributor obtains a customer for the same. Distributor shall use its
reasonable efforts to resell such refurbished Instrument and Distributor and
Supplier shall share equally in any profit or loss arising out of such sale.
Supplier shall credit Distributor for each Instrument returned for other reasons
at the price at which Distributor issues its credit to the customer less the
original gross margin percent applicable to the returned Instrument; provided
--------
Distributor has used its best reasonable efforts to maintain the goodwill of the
customer and to place a substitute Instrument with the customer.
(i) Reimburse Distributor at Distributor's cost for all outdated
Products shipped after the date of this Agreement included within the Dade QAP
and College of American Pathologists ("CAP") programs and the single lot
reagents associated with those programs. For any Product (excluding Dade QAP,
CAP and associated single lot reagents) delivered to Distributor after the date
of this Agreement with at least six (6) months of shelf-life remaining at the
date of delivery, Supplier and Distributor shall share, on a fifty-fifty basis,
the cost of Products returned by customers due to their inability to use such
Products prior to the labelled expiration dates. The maximum amount subject to
such sharing shall be two hundred thousand dollars ($200,000) per year;
accordingly, the maximum reimbursement from Supplier to Distributor shall be one
hundred thousand dollars ($100,000) per year. For any Product (excluding Dade
QAP, CAP, and associated single lot reagents) delivered to Distributor after the
date of this Agreement with less than six (6) months of shelf life remaining at
the date of delivery, Supplier shall reimburse Distributor for any expired
Products at Distributor's cost, provided that Distributor shall use its best
--------
efforts to sell such Products to customers to maximize usage prior to the
expiration date. Supplier acknowledges that, at the time a Product is sold by
Distributor to a customer, Distributor will not be able to determine what the
shelf life of the Product was at the time such Product was received by
Distributor, even though Distributor will be able to determine the remaining
shelf life. Therefore, to receive such reimbursement from Supplier, Distributor
shall document that Distributor received, at its relevant distribution center,
appropriate quantities of that specific catalog number and lot number of Product
with less than six (6) months shelf life. For any Product drop-shipped by
Supplier directly to a customer that cannot be used by such customer prior to
the expiration date, Supplier shall negotiate with customer regarding whether
such Product shall be replaced at Supplier's expense. Distributor shall pay the
transportation costs for any Products returned by Distributor under this Section
6(i).
(j) Furnish Distributor, at no cost to Distributor, reasonable
quantities of sales literature, product insert sheets, customer instruction
manuals and catalogs for each Product, as well as photographs of Products and
camera-ready artwork for such materials.
(k) Allow Distributor to inspect Supplier's facilities during normal
business hours for the purpose of determining adherence to quality assurance and
regulatory compliance standards.
(l) Furnish to Distributor, when reasonably requested by Distributor
from time to time and at no cost to Distributor,
reasonable quantities of original factory outer cartons and packaging materials.
(m) Obtain and maintain for one (1) year after the termination of
this Agreement product liability insurance (containing either a vendor's
endorsement or contractual liability coverage referencing the indemnification
provisions contained in Section 6(t) hereof) on all Products with insurers
reasonably satisfactory to Distributor with minimum limits of
$1,000,000/$3,000,000 for bodily injury and $300,000 for property damage and
immediately furnish to Distributor a certificate of insurance issued by the
insurance carrier evidencing the foregoing endorsements, coverages and limits
and that such insurance shall not be cancelable without at least fifteen (15)
days prior written notice to Distributor; provided, however, that Supplier may
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satisfy its obligation under this Section 6(m) through a self-insurance program.
(n) Comply (or cause compliance) in all material respects with all
existing and future federal, state, or other laws and regulations applicable to
the conduct of Supplier's business or the manufacture, packaging, labeling and
sale to Distributor of Products pursuant to this Agreement, including, but not
limited to, the following:
(1) Give prompt written notice to Distributor if Supplier should become
aware of any defect or condition (actual or alleged) which may alter the quality
of the Products in any material respect or may render any of the Products in
violation in any material respect of any applicable federal, state or other
applicable law or regulation, including, but not limited to, any violation which
would reasonably likely require any alteration of the specifications of any
Product, affect the sale of any Product, cause revocation of any federal, state
or other regulatory approval with respect to any Product or its sale hereunder
or give rise to a claim against Distributor by any person.
(2) Give prompt written notice to Distributor of any and all Products
affected by holds or recalls. If any Products are returned to Distributor by a
customer or by Distributor to Supplier due to a recall or other manufacturing
defect in the Products, Supplier shall reimburse Distributor the full price of
such returned Products, whose expiration date has not expired, paid by
Distributor under Section 4, plus the reasonable costs and expenses incurred by
Distributor in returning such Products to Supplier, including without limitation
all return transportation charges. Recalls shall be initiated by written notice
from Supplier.
(o) Stock inventories of the Products that are listed in Exhibit A as
---------
required to be stocked by Supplier, at such locations and in sufficient
quantities in order for Distributor and Supplier to provide service levels at
least equal to the service levels achieved immediately prior to the commencement
of distribution activities under this Agreement as determined on a monthly
basis. Either party's obligation to provide any other level of service shall be
subject to mutual agreement of the parties.
(p) Except as agreed otherwise deliver Products to Distributor having
expiration dates with no less than three (3) months of shelf life remaining from
the date of delivery.
(q) Assist Distributor's promotion activities under Section 5(e)
hereof, including, but not limited to, having Supplier's personnel accompany
Distributor's sales personnel on sales presentations at such times, at such
places and with expenses of customers allocated as may be agreed upon from time
to time by Distributor and Supplier. Supplier's assistance shall focus
particularly on promoting the technical features, capabilities and benefits of
Products. Supplier shall also provide customers from time to time with
reasonable quantities of sample Products at no charge, and make demonstration
Products owned by Supplier available from time to time for demonstrations at
customers' facilities.
(r) Develop and conduct training programs for Distributor's employees
with respect to the Products at such times and at such places as may be agreed
upon from time to time by Distributor and Supplier.
(s) Warrant to Distributor that: (i) all Products sold to
Distributor or its customers pursuant to this Agreement shall not be adulterated
or misbranded and the packaging or labeling thereof shall not be misleading
within the meaning of applicable laws or regulations relating thereto; (ii) each
Product shall be free from defects in material or workmanship and shall conform
to the labeling and product insert sheets for the Product; and (iii) Supplier
shall have good and marketable title to all such Products free and clear of all
liens or encumbrances (other than any created by Distributor or its customers).
The foregoing warranties shall commence on the date of delivery and receipt of
the Products by Distributor in the case of Products shipped to Distributor, and
on the date of delivery and receipt of Products by a customer in the case of
Products drop shipped to a customer, and expire one (1) year thereafter (the
"Warranty Period"), except that the Warranty Period for each Product the use of
which is subject to an expiration date shall expire on the applicable expiration
date. These warranties will not apply to any Product which has been modified,
improved or refurbished other than by Supplier and will
not cover any defect, malfunction or damage due to: (A) accident, neglect or
willful mistreatment of the Product; (B) failure to properly store or handle a
Product; (C) failure to use, operate, service or maintain the Product in
accordance with Supplier's applicable operating and service manuals; or (D)
failure to use or apply proper reagents or chemicals in or to the Product. Any
Product which proves not to be in conformity with these warranties during the
applicable Warranty Period will be repaired or replaced at the option and
expense of Supplier. Supplier shall pay the reasonable transportation and other
costs incurred by Distributor with respect to any Products returned to Supplier
for repair or replacement under these warranties, or reimburse Distributor for
any such costs.
(1) THE FOREGOING WARRANTIES CONTAIN THE SOLE REMEDY FOR ANY DEFECT IN THE
PRODUCTS. THE FOREGOING WARRANTIES ARE EXCLUSIVE AND IN LIEU OF ALL OTHER
WARRANTIES OF ANY KIND, WHETHER STATUTORY, WRITTEN, ORAL, EXPRESS OR IMPLIED,
INCLUDING ANY WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE AND
MERCHANTABILITY. IN NO EVENT, WHETHER AS A RESULT OF BREACH OF CONTRACT, TORT
LIABILITY (INCLUDING NEGLIGENCE) OR OTHERWISE, SHALL SUPPLIER BE LIABLE TO
DISTRIBUTOR FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES.
(2) ANY LIABILITY OF SUPPLIER TO DISTRIBUTOR SHALL BE LIMITED TO THE TOTAL
PRICE PAID BY DISTRIBUTOR FOR THE PRODUCTS WHICH ARE THE SUBJECT OF SUCH
LIABILITY PLUS ALL COSTS FOR TRANSPORTATION AND OTHER DIRECT EXPENSES INCURRED
BY DISTRIBUTOR WITH RESPECT TO SUCH PRODUCTS.
(t) Supplier shall indemnify and hold harmless Distributor, its
Affiliates and their respective successors, assigns, directors, officers,
employees (all of the foregoing being collectively referred to in Section 12 as
"Indemnified Persons") with respect to all claims, liabilities, damages, losses
and expenses, including reasonable attorney's fees, caused by: (i) any actual or
alleged patent, copyright or trademark infringement, or violation of any other
proprietary right, arising out of the purchase, sale or use of the Products
pursuant to this Agreement; (ii) any actual or alleged breach of any warranty or
obligation contained in Section 6(s) (subject to the limitations in Section 6(s)
to the extent provided therein); (iii) any claim for personal injury, wrongful
death or property damage arising out of the use of a Product; and (iv) any
wrongful or negligent act or omission by Supplier (or its employees or agents)
in its performance of the terms of this Agreement; provided that Section 12
--------
shall apply to any claim, arbitration proceeding or court suit made or brought
by any third party as to which any Indemnified Person intends to claim
indemnification under this Section 6(t); and provided, further,
-------- -------
that this Section 6(t) shall not apply to any claim, liability, damage, loss or
expense to the extent that Distributor is responsible therefor under this
Agreement, including, but not limited to, any of the foregoing caused by
Distributor's design, specifications, improper storage or handling of Products,
or negligence.
(u) Assist Distributor in refurbishing Instruments as required by the
Agreement between Citicorp North America Inc. and Baxter Healthcare Corporation,
Scientific Products Division, dated March 22, 1988 (the "Citicorp Agreement")
and provide reasonable technical demonstrations and presentations in connection
with remarketing such Instruments. To the extent not paid by Citicorp,
Distributor will pay all such refurbishment costs.
(v) At Distributor's request if agreed to by Supplier, act as sales
agent for Distributor in connection with Distributor's resale and distribution
of the Products throughout the Exclusive Territory, including providing sales
quotations, sales support and Distributor's prices to Distributor's customers
and executing sales and distribution contracts as agent for Distributor pursuant
to operating guidelines, terms and conditions approved in advance and in writing
by Distributor. In connection therewith, Supplier shall disclose to
Distributor's customers that it is acting as agent for and on behalf of
Distributor in the pricing and sale of the Products. Final authority shall
remain with Distributor concerning the terms and conditions of Distributor's
resale of the Products, including particularly with respect to all pricing
terms. Nothing herein shall affect the provisions set forth in Section 2
concerning distribution rights granted by Supplier to Distributor or in Section
4 concerning prices for the sale of the Products from Supplier to Distributor.
7. Trademarks.
----------
(a) Supplier acknowledges that Distributor is the owner or licensee
of the trademarks and trade names connoting Distributor which Supplier may elect
to use in the promotion and sale of the Products and that Supplier has no right
or interest in such trademarks and trade names except in accordance with Section
7(b); provided, however, that, except as permitted under Section 6.3 of the
-------- -------
Purchase Agreement, in no event shall the Supplier use the trade name "Baxter"
or any trademark using the word "Baxter" under this Agreement or otherwise
without the consent of the owner thereof. Distributor acknowledges that
Supplier is the owner or licensee of the trademarks and trade names connoting
Supplier which Distributor may elect to use in the promotion and sale of the
Products hereunder, and the Distributor has no right or interest in
such trademarks or trade names except in accordance with Section 7(b).
(b) Subject to Section 7(a) hereof, each party hereby grants to the
other party a non-exclusive royalty-free license to use the trademarks and trade
names owned by or licensed to such party within the Exclusive Territory on the
Products (other than Products sold directly by Supplier or through a distributor
other than the Distributor) and related literature and advertising during the
Term of this Agreement, it being expressly understood that such license shall
terminate and such use shall be discontinued upon the termination of this
Agreement. Each party disclaims any rights in the trademarks and trade names
owned by or licensed to the other party other than the license provided for
herein.
(c) Each of the parties hereto shall maintain, for all permitted uses
of the other party's trademarks and trade names, quality standards which are
equivalent to or stricter than the standards used by such other party from time-
to-time with respect to its products and services relating to such trademarks or
trade names. At the request of either party, a party shall provide copies and
samples of materials that it uses which bear the trademarks or trade names of
the requesting party.
(d) Each of the parties hereto shall notify the other party promptly
of any and all infringements or improper use by others not parties to this
Agreement of the trademarks and trade names connoting the other party, should
such party discover reasonable cause for believing that such infringement or
improper use is taking place, and provide all information which it has available
thereon. Each party shall have sole discretion and control with regard to any
proceedings relating to infringement or improper use of the trademarks and trade
names connoting such party. The other party may choose to be represented by its
own counsel in any such proceedings but such representation shall be at the
other party's sole expense.
(e) Each party acknowledges that the other party would not have any
adequate remedy at law for the breach by either party of any one or more of the
covenants contained in this Section 7 and agrees that, in the event of such
breach, the other party may, in addition to the other remedies which may be
available to it, file a suit in equity to enjoin the breaching party from any
further breach of any of the terms of this Section 7.
8. Termination.
-----------
This Agreement may be terminated as follows:
(a) Either party shall have the right to terminate this Agreement
effective upon delivery of written notice to the other party if: (i) the other
party makes an assignment for the benefit of creditors; (ii) the other party
becomes bankrupt or insolvent or is petitioned into bankruptcy; (iii) the other
party takes advantage of any federal, state or foreign insolvency act; (iv) if a
receiver or receiver/manager is appointed for all or any substantial part of its
property and business and such receiver or receiver/manager remains undischarged
for a period of thirty (30) days; (v) if the corporate existence of the other
party is terminated by voluntary or involuntary dissolution; or (vi) the other
party defaults in the performance of any of its covenants or obligations
contained in this Agreement and such default is not remedied to the non-
defaulting party's reasonable satisfaction within two (2) months after written
notice to the defaulting party of such default, or if such default is not
capable of rectification within two (2) months, if the defaulting party has not
promptly commenced to rectify the default within such two (2) month period, and
thereafter proceeds diligently to rectify same.
(b) Distributor may terminate this Agreement at any time after the
four-year anniversary of the date of this Agreement by giving Supplier at least
six (6) months prior written notice; provided that in no event shall Distributor
--------
be entitled to deliver such notice prior to such fourth anniversary.
(c) (i) Supplier may terminate this Agreement in its entirety if the
sales of Products by Distributor and VWR to their customers (excluding the
Burdick & Jackson and Dade Lablink classes of Products and product service
billings) for 1995 are less than three hundred eighty-three million dollars
($383 million) (including sales of the Bartels class of Products). Supplier may
exercise this right to terminate by giving Distributor written notice within
thirty (30) days following receipt of the final statement of sales for 1995,
which statement shall be delivered by Distributor to Supplier on or before
January 30, 1996. (ii) Supplier also may terminate this Agreement with respect
to any or all classes of Products identified in Exhibit A (including products
---------
that become "Products" hereunder after the date of this Agreement) at any time
after the date of this Agreement, in the case of the Burdick & Jackson class of
Products, or after the eighteen-month anniversary of the date of this Agreement,
in the case of all other classes of Products, by giving Distributor at least six
(6) months prior written notice; provided that in no event shall Supplier be
--------
entitled to deliver such notice other than in the case of the Burdick & Jackson
class of Products prior to such eighteen-month anniversary. Any such
terminated class of Products shall cease to be "Products" within the meaning of
this Agreement.
(d) In the event Supplier terminates this Agreement with respect to
some but not all Products (other than the Burdick & Jackson and Bartels classes
of Products) and such terminated Products represent more than forty percent
(40%) of the aggregate gross profits earned by Distributor from the distribution
of Products (other than the Burdick & Jackson and Bartels classes of Products)
during the immediately preceding fiscal year, Distributor may terminate this
Agreement with respect to all remaining Products by giving six (6) months prior
written notice to Supplier.
(e) Any notice given under this Section shall specifically identify
the paragraph under which the termination right is being exercised, and in the
case of termination under Sections 8(c) or 8(d), the class or classes of
Products that are subject to the termination.
9. Procedures on Expiration or Termination.
---------------------------------------
(a) On the expiration of this Agreement, or termination of this
Agreement for whatever reason with respect to some or all of the Products,
Supplier shall continue to honor Distributor's orders for Products up to the
effective date of expiration or termination and thereafter to the extent that
such orders are necessary for Distributor to satisfy orders for Products from
customers having contracts with Distributor that can not be cancelled; provided
--------
that, any such contract was entered into by Distributor prior to a notice of
termination, or if it was entered into after the notice of termination, it was
entered into in the ordinary course of business and contains terms consistent
with contracts entered into prior to the notice of termination. Distributor
shall pay for such Products on the terms and conditions of this Agreement. With
respect to the customer contracts referred to in the previous sentence, at the
end of any non-exclusive period referred to in either Section 2(e) or Section
2(f), Distributor will assign to Supplier (to the extent permitted thereunder):
(i) the contract in its entirety if it relates solely to Products; or (ii) the
portion of the contract related to Products if such contract covers other
products sold by Distributor in addition to Products. Distributor will use
reasonable efforts to obtain the consent of the customer to any such assignment.
If the customer does not agree to the assignment of any such contract subject to
consent (or portion thereof related to Products), and if Distributor is not able
to otherwise terminate the contract with respect to Products, Supplier shall
continue to supply Products to Distributor to enable Distributor to honor its
obligations under the contract.
(b) Supplier shall review all Ad Now and other capital lease
agreements between Distributor and customers in effect on the
effective date of expiration or termination. The profitability and
collectability of those agreements shall be evaluated, and the present net book
value determined in accordance with generally accepted accounting principles.
Supplier shall have the right, but not the obligation, to purchase at the net
book value determined in accordance with the previous sentence, some or all of
the agreements with customers who have committed to use Products; provided
--------
Distributor shall have the right to reject any such purchase to the extent the
lease is a part of a combined contract with a customer for the sale or lease of
products other than Products, and the revenue from the sale or lease of Products
under the contract is less than thirty percent (30%) of all revenues from the
combined contract. If the revenue from the sale or lease of Products under any
such combined contract is greater than thirty percent (30%) of all revenues from
the contract and Supplier agrees to purchase such contract, then Supplier is
entitled to all revenues derived from such contract and Distributor agrees to
sell the non-Dade Products to Supplier, drop-shipping them to the customer, at
no more than the customer price stated on the contract excluding any equipment
markup. Supplier shall continue to sell Products to Distributor to enable
Distributor to supply Products under all agreements not purchased by Supplier,
until such time as Distributor has collected its full receivables from such
agreements, without adjustment under the immediately preceding sentence of this
Section 9(b).
(c) At any time after the expiration of this Agreement in its
entirety or after the effective date of termination with respect to any
terminated Products, upon written request from Distributor, Supplier shall
repurchase for cash Distributor's inventory of the Products affected by the
termination and not required to fulfill customer contracts referred to in
Section 9(a) or Section 9(b): (i) in which Distributor has good and marketable
title free of all liens and encumbrances; (ii) which are not obsolete and in the
case of dated Products have at least ninety (90) days remaining shelf life; and
(iii) which are in good, resalable condition and in their original packaging;
provided, in the event of a termination, Supplier shall not be obligated to
- --------
purchase any quantity of Products in a class in excess of the aggregate value of
all Products in that class in Distributor's inventory on the date of the notice
of termination. The purchase price of such inventory shall be equal to the net
book value of the Products. Supplier may offset any payments due under this
Section 9(c) against amounts then owed to Supplier by Distributor.
(d) After the effective date of expiration or termination of this
Agreement, nothing in this Agreement shall restrict Supplier's right to sell or
otherwise dispose of the
Products or Distributor's right to sell or otherwise dispose of competing
products, within or outside of the Exclusive Territory.
10. Force Majeure.
-------------
The obligations of either party to perform under this Agreement shall
be excused during each period of delay caused by matters (not including lack of
funds or other financial causes) such as strikes, shortages of raw material,
government orders or acts of God, which are reasonably beyond the control of the
party obligated to perform. Any delay occasioned thereby shall not constitute a
default under this Agreement, and the obligations of the parties shall be
suspended during the period of delay so occasioned. The obligation of any party
to perform under this Agreement shall be excused with respect to any Product
during the continuance of any period of delay resulting from action taken by the
U.S. Food and Drug Administration against Supplier insofar as such action
affects Supplier's or Distributor's ability to manufacture or sell such Product
in the United States.
11. Confidentiality.
---------------
(a) Supplier agrees that: (i) valuable marketing information of a
confidential nature may be previously known by Supplier or disclosed by
Distributor to Supplier pursuant to this Agreement; (ii) that such information
shall be retained by Supplier in confidence; and (iii) that Supplier shall not,
either during the term of this Agreement or for ten (10) years after its
termination, publish or disclose or cause anyone else to publish or disclose any
such confidential information. Notwithstanding the foregoing provisions of this
Section 11(a), the above restrictions on disclosure and use shall not apply to
any information which Supplier can show by written evidence was known to it at
the time of receipt thereof, which is or becomes public information through no
fault of Supplier, or which may subsequently be obtained from sources other than
Distributor who are not bound by a confidentiality agreement with Distributor.
(b) Distributor agrees that: (i) valuable marketing or technical
information of a confidential nature may be previously known by Distributor or
disclosed by Supplier to Distributor pursuant to this Agreement; (ii) that such
information shall be retained by Distributor in confidence; (iii) that the
continued access or transmittal of such technical information by Supplier to
Distributor is upon the express condition that such technical information is to
be used solely for the purpose of effectuating this Agreement; and (iv) that
Distributor shall not, either during the term of this Agreement or for ten (10)
years after its termination, publish or disclose or cause anyone else to publish
or
disclose any confidential marketing information of Supplier, or publish,
disclose or use or cause anyone else to publish, disclose or use, any
confidential technical information of Supplier. Notwithstanding the foregoing
provisions of this Section 11(b), the above restrictions on disclosure and use
shall not apply to any information which is or becomes public information
through no fault of Distributor, or which may subsequently be obtained from
sources other than Supplier who are not bound by a confidentiality agreement
with Supplier.
(c) Each party acknowledges that the other party would not have any
adequate remedy at law for the breach by either party of any one or more of the
covenants contained in this Section 11 and agrees that, in the event of such
breach, the other party may, in addition to the other remedies which may be
available to it, file a suit in equity to enjoin the breaching party from any
further breach of any of the terms of this Section 11.
12. Third Party Claims.
------------------
If a third party shall make any claim or commence any arbitration
proceeding or court suit against any one or more of the Indemnified Persons with
respect to which they intend to make any claim for indemnification against
Distributor under Section 5(q) or against Supplier under Section 6(t), such
Indemnified Persons shall promptly give written notice to Distributor or
Supplier, as the case may be, of such third party claim, arbitration proceeding
or court suit and the following provisions shall apply:
(a) Subject to Section 12(b), such Indemnified Persons shall have the
right to conduct and control, through counsel of their choosing, the defense of
any third party claim, arbitration proceeding or court suit, and such
Indemnified Persons may, subject to the limitations contained herein, settle the
same; provided that such Indemnified Persons shall give the indemnifying party
--------
advance notice of any proposed settlement. Such Indemnified Persons shall
permit the indemnifying party to participate in the defense of any such action
or suit through counsel chosen by it; provided that the fees and expenses of
--------
such counsel shall be borne by the indemnifying party. Any settlement with
respect to a claim for money damages effected after the indemnifying party by
written notice to such Indemnified Persons shall have disapproved such
settlement shall discharge the indemnifying party from liability with respect to
the subject matter thereof under this Agreement, and no claim for
indemnification therefor shall be claimed under Section 5(q) or Section 6(t), as
the case may be. If the indemnifying party disapproves any settlement with
respect to a claim for money damages, the
Indemnified Party shall have the right to tender the defense of such claim to
the indemnifying party and, in any event, the indemnifying party shall
thereafter be responsible for the full amount of all liabilities, damages,
losses and expenses, including reasonable attorney fees, resulting from such
claim.
(b) Notwithstanding Section 12(a), if the remedy sought in any claim,
arbitration proceeding or court suit referred to in this Section 12 is solely
money damages, the indemnifying party shall have fifteen (15) business days
after receipt of the notice referred to above in this Section 12 to notify such
Indemnified Persons that it elects to conduct and control the defense of such
claim, proceeding or suit. If the indemnifying party does not give the
foregoing notice, such Indemnified Persons shall have the right to defend or
settle such claim, proceeding or suit in the exercise of their exclusive
discretion, and the indemnifying party shall, upon request from any of such
Indemnified Persons, promptly pay to them in accordance with Section 5(q) or
Section 6(t), as the case may be, the amount of any liabilities, damages, losses
and expenses, including reasonable attorney's fees, resulting from such claim,
proceeding or suit. If the indemnifying party gives the foregoing notice, the
indemnifying party shall have the right to undertake, conduct and control,
through counsel of its own choosing and at the sole expense of the indemnifying
party, the conduct and control of the defense and any settlement of such claim,
proceeding or suit, and such Indemnified Persons shall cooperate with the
indemnifying party in connection therewith; provided that: (i) the indemnifying
--------
party shall not thereby permit to exist any lien, encumbrance or other adverse
charge upon any asset of any of such Indemnified Persons; (ii) the indemnifying
party shall permit such Indemnified Persons to participate in such defense or
settlement through counsel chosen by such Indemnified Persons, but the fees and
expenses of such counsel shall be borne by such Indemnified Persons except as
provided in clause (iii) below; and (iii) the indemnifying party shall promptly
reimburse under Section 5(q) or Section 6(t), as the case may be, such
Indemnified Persons for the full amount of any liabilities, damages, losses and
expenses, including reasonable attorney's fees, resulting from such claim,
proceeding or suit, except in each case for any fees and expenses of counsel for
such Indemnified Persons incurred after the assumption of the conduct and
control of such claim, proceeding or suit by the indemnifying party. So long as
the indemnifying party is contesting any such claim, proceeding or suit in good
faith, such Indemnified Persons shall not pay or settle any such claim,
proceeding or suit; provided, however,
-------- -------
that such Indemnified Persons shall have the right to pay or settle any such
claim, proceeding or suit; provided, further, that in such event such
-------- -------
Indemnified Persons shall be deemed to have waived any right to indemnity
therefor by the indemnifying party under Section 5(q) or Section 6(t), as the
case may be.
13. Miscellaneous Provisions
------------------------
(a) All notices and other communications required under this
Agreement shall be in writing and shall be deemed to have been given if
delivered by hand, or sent by courier or facsimile transmission; (provided that
--------
in the case of facsimile transmission, a confirmation copy of the notice shall
be delivered by hand or sent by courier within two (2) days of transmission),
addressed, if to Supplier, to Dade International Inc., 1717 Deerfield Road,
Deerfield, Illinois 60015, Attention: President (facsimile number: (708) 948-
3974), and a copy to Purchaser c/o Bain Capital, Inc., Two Copley Place, Boston,
Massachusetts 02116, Attention: Mark Nunnelly (facsimile number (617) 572-
3724), and if to Distributor, to Baxter Healthcare Corporation, One Baxter
Parkway, Deerfield, Illinois 60015, Attention: General Counsel (facsimile
number: (708) 948-4266), with a copy to President of Baxter Distribution, 1450
Waukegan Road, Building N, McGaw Park, Illinois 60085 (facsimile number: (708)
689-5960), and a copy to Hospital Business, 1450 Waukegan Road, Building N,
McGaw Park, Illinois 60085, Attention: General Counsel (facsimile number: (708)
689-6452), until notice of a change is given as provided in this Section 13(a).
All notices given in accordance with this section shall be effective, if
delivered by hand or by courier, at the time of delivery, and, if communicated
by facsimile transmission, at the time of transmission.
(b) This Agreement is the entire agreement between the parties hereto
with respect to the subject matter hereof, there being no prior written or oral
promises or representations not incorporated herein or therein. Without
limiting the generality of the foregoing, this Agreement supersedes the Interim
Agreement and the attachments thereto.
(c) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Illinois and the federal laws of the
United States of America applicable therein. Any lawsuit arising from or
related to this Agreement shall be brought before the United States District
Court for the Northern District of Illinois or an Illinois state court sitting
in Lake County, Illinois, or Cook County, Illinois. The parties hereby consent
to the jurisdiction of such courts.
(d) No amendment or modification of the terms of this Agreement shall
be binding on either party unless reduced to writing and signed by an authorized
officer of the party to be bound. The waiver by either party of any particular
default by the other party shall not affect or impair the rights of the party so
waiving with respect to any subsequent default of the same or a different kind;
nor shall any delay or omission by either party to exercise any right arising
from any default by the other affect or impair any rights which the non-
defaulting party may have with respect to the same or any future default.
(e) Each party represents and warrants that the terms of this
Agreement do not violate any existing obligations or contracts of, or any law,
rule, regulation, judgment or order binding on, such party. Each party shall
indemnify and hold harmless the other party from and against any and all
liabilities, damages, losses and expenses (including reasonable attorney's fees)
resulting from any third party claim, arbitration proceeding or court suit which
is hereafter made or brought against the other party and which alleges any such
violation, all as provided in Section 12 with respect to the indemnification
provided in Section 5(q) and Section 6(t).
(f) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall be ineffective to the extent of such
prohibition or unenforceability without affecting, impairing or invalidating the
remaining provisions or the enforceability of this Agreement.
(g) Except as provided otherwise in Section 5(e)(7) and 6(v), neither
party constitutes the other as its agent, partner, joint venturer, or legal
representative and neither party has express or implied authority to bind the
other in any manner whatsoever by virtue of this Agreement.
(h) Each party shall maintain and keep records of their activities
under this Agreement in sufficient detail to enable their performance to be
verified. Upon no less than five (5) business days advance written notice from
a party, the records of the party receiving the notice shall be made available
for inspection by the party giving the notice, or any firm of certified public
accountants selected by such party, for the purpose of verifying the performance
of the party receiving the notice.
(i) Any reference in this Agreement to practices of either party as
of or prior to the date of this Agreement will not be narrowly construed and
will take into consideration a commercially reasonably period of time preceding
the date of this Agreement.
(j) On and after the effectiveness of the amendment and restatement
contemplated hereby, each reference herein to "this Agreement," "hereunder,"
"hereof," "herein," or words of like import, and each reference in any other
document (other than any document entered into in connection with the Bartels
Stock Purchase Agreement) referring to "the U.S. Distribution Agreement,"
"thereunder," "thereof," or words of like import shall mean this Agreement as
amended and restated.
14. Assignment.
----------
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns; provided, however,
-------- -------
that neither party shall have the right to transfer or assign its interest in
this Agreement without the prior written consent of the other party, which
consent shall not be unreasonably withheld; provided, further, that,
-------- -------
notwithstanding the foregoing provisions of this Section 14, either party may
assign its rights and obligations under this Agreement to any corporation that
shall acquire all or substantially all of the party's business and assets to
which this Agreement relates and who shall assume in writing all of the party's
obligations hereunder and deliver a signed copy of such assumption instrument to
the other party. Supplier may assign its rights hereunder with respect to all
or substantially all of the Products in the classes identified in Exhibit A, in
---------
connection with the sale of all or substantially of the assets of the business
to which such Products relate. Notwithstanding the provisions of Section 8(b),
Distributor shall have the right to terminate any partially assigned agreement
effective on the earlier to occur of two (2) years from the date of the
assignment or four (4) years six (6) months from the date of this Agreement;
provided Distributor gives six (6) months written notice prior to the effective
- --------
date of any such termination.
15. Performance.
-----------
The parties acknowledge that either party may exercise some of the
rights or engage in certain of the activities hereunder though an Affiliate. In
particular, Burdick & Jackson, Inc. will act as Supplier with respect to the
Burdick & Jackson class of Products, Dade MicroScan, Inc. will act as Supplier
with respect to the Dade MicroScan class of Products and Dade Diagnostics of
P.R., Inc. will act as Supplier with respect to Products manufactured by such
company. Supplier represents and warrants that as of the date of this
Agreement, Burdick & Jackson, Inc., Dade Diagnostics of P.R., Inc. and Dade
MicroScan, Inc., are wholly owned subsidiaries of Supplier. Neither party shall
be relieved of any obligation
hereunder as a result of the conduct of an Affiliate, and each party shall be
fully responsible for the conduct of its Affiliate.
16. Arbitration Procedure.
---------------------
(a) The parties agree that they will attempt to settle any claim or
controversy arising out of this Agreement through good faith negotiations in the
spirit of mutual cooperation between senior business executives with authority
to resolve the controversy.
(b) Any dispute that cannot be resolved by the parties through good
faith negotiations will then, upon the written request of either party, be
resolved by binding arbitration conducted in accordance with the Rules of the
CPR Institute for Dispute Resolution by a sole arbitrator who is a former judge
or other mutually agreed upon individual. To the extent not governed by such
rules, such arbitrator shall be directed by the parties to set a schedule for
determination of such dispute that is reasonable under the circumstances. Such
arbitrator shall be directed by the parties to determine the dispute in
accordance with this Agreement and the substantive rules of law (but not the
rules of procedure or evidence) that would be applied by a federal court. The
arbitration will be conducted in the English language in the State of Illinois.
The arbitration will be governed by the United States Arbitration Act, 9 U.S.C.
(S)(S) 1-16 and the Patent Arbitration Act, 35 U.S.C. (S) 294. Judgment upon
the award rendered by the arbitrator may be entered by any court having
jurisdiction.
(c) Nothing contained in this Section 16 shall prevent either party
from resorting to judicial process if injunctive relief from a court is
necessary to prevent serious and irreparable injury to one party or to others.
The use of arbitration procedures will not be construed under the doctrine of
laches, waiver or estoppel to affect adversely either party's right to assert
any claim or defense.
17. Counterparts.
------------
For convenience of the parties hereto, this Agreement may be executed
in one or more counterparts, each of which shall be deemed an original for all
purposes.
* * *
IN WITNESS WHEREOF, the parties have by their duly authorized officers
executed this amendment and restatement on January 31, 1996, effective as of
September 15, 1995.
Supplier: Distributor:
- -------- -----------
DADE INTERNATIONAL INC. BAXTER HEALTHCARE CORPORATION
By: /s/ John Connaughton By: /s/ John Gaither
------------------------- --------------------------
Name: John Connaughton Name: John Gaither
Title: Vice President Title: Corporate Vice President
---------------------- ------------------------
Each of the following wholly owned subsidiaries of Supplier hereby
agrees to perform the duties and obligations of Supplier pursuant to this
Agreement regarding the class of Products supplied by each such subsidiary:
BURDICK & JACKSON, INC.
By: /s/ John Connaughton
------------------------
Name: John Connaughton
Title: Vice President
---------------------
DADE MICROSCAN, INC.
By: /s/ John Connaughton
------------------------
Name: John Connaughton
Title: Vice President
---------------------
DADE DIAGNOSTICS OF P.R., INC.
By: /s/ John Connaughton
------------------------
Name: John Connaughton
Title: Vice President
---------------------
AMENDMENT TO
AMENDED AND RESTATED
EXCLUSIVE DISTRIBUTION AGREEMENT
This Amendment to that EXCLUSIVE DISTRIBUTION AGREEMENT, dated as of
December 19, 1994, as amended and restated in its entirety as of September 15,
1995, is made and entered into by and between DADE INTERNATIONAL INC., a
Delaware corporation with its principal offices at 1717 Deerfield Road,
Deerfield, Illinois 60015, hereinafter called the "Supplier" or "Dade", and
BAXTER HEALTHCARE CORPORATION, a Delaware corporation with its principal offices
at One Baxter Parkway, Deerfield, Illinois 60015, hereinafter called the
"Distributor". Such Agreement, as amended from time to time, is hereinafter
referred to as the "Distribution Agreement". As used herein, unless the context
otherwise requires, capitalized terms shall have the meanings ascribed to them
in the Distribution Agreement.
RECITALS
--------
1. Supplier has given Distributor a notice (the "Termination Notice") pursuant
to Section 8 (c)(ii) of the Distribution Agreement that effective December
16, 1996 the Distribution Agreement shall be terminated with respect to
both (a) all Products of the Stratus class of Products and (b) all Products
of the Paramax class of Products.
2. Supplier and Distributor have been engaged in discussions regarding how the
two parties will proceed forward under the Distribution Agreement.
3. Supplier and Distributor desire to amend the Distribution Agreement to
memorialize the above-referenced discussions and the agreements between
Supplier and Distributor arising therefrom.
AGREEMENT
---------
In consideration of the mutual covenants contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Supplier and Distributor agree as follows:
1. Termination of Stratus and Paramax.
----------------------------------
(a) Distributor hereby acknowledges receipt of the Termination Notice.
(b) Notwithstanding the Termination Notice, the Distribution Agreement
shall continue in effect unaffected by the Termination Notice with
respect to the Stratus class of Products and the Paramax class of
Products; provided that Supplier shall have the ability to provide
notice of termination under Paragraph 8(c)(ii) of the Distribution
Agreement with respect to the Paramax class of Products or Stratus
class of Products on or after June 17, 1997 or, if extended pursuant
to Paragraph 7, on or after June 17, 1998. Notwithstanding anything
in the Distribution Agreement to the contrary, the terms "Paramax
class of Products" and "Stratus class of Products" shall mean those
chemistry and specialty chemistry analyzers sold under the Paramax and
Stratus trade names as of the date hereof and those assays and
consumables manufactured or sold by Supplier for use on such Stratus
or Paramax analyzers as of the date hereof and any new assays for such
analyzers.
- Page 2 of 18 -
(c) Effective December 16, 1996, the conditions and limitations
contained in Section 2(b)(1) of the Distribution Agreement shall have
no further force and effect with respect to products that are
competitive with the Stratus and Paramax classes of Products.
2. Exceptions to the Distribution Agreement. Effective December 16, 1996, in
----------------------------------------
the event that any customer indicates that it prefers to purchase any
Product other than through Distributor, Distributor will be deemed to have
given the consent necessary, pursuant to Section 2(a)(2) of the
Distribution Agreement, to allow Supplier to sell, solicit orders for or
otherwise distribute Products within the Exclusive Territory other than
through Distributor, subject to the provisions of this Paragraph 2.
(a) Notwithstanding the foregoing, if any customer indicates that it
prefers to purchase Products other than through Distributor, customer
or Supplier shall confirm such preference in writing and shall send a
copy of such writing to Distributor. Distributor shall have thirty
(30) days following receipt of such copy to convince customer to
change its preference.
(b) During such thirty (30) day period, Distributor shall fill all
purchase orders received from such customer and supply all Products
ordered by such customer; provided, however, in the event that
Distributor does not fill such purchase orders and supply such
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Products, then Distributor agrees that Supplier may fill such purchase
orders and supply such Products to that customer other than through
Distributor. Following such thirty (30) day period, Supplier shall
confirm with customer its preference and if customer prefers to
purchase Products other than through Distributor, then Supplier shall
have the right to sell, solicit orders for or otherwise distribute
Products to that customer thereafter, other than through Distributor.
In the event that Supplier does sell, solicit orders for or
otherwise distribute Products to that customer other than through
Distributor, pursuant to this Paragraph 2, Supplier shall purchase and
Distributor shall assign to Supplier within ninety (90) days all such
customer receivables for Product that Distributor is unable to
collect.
(c) Distributor shall not be entitled to any gross profit, commission,
margin or any other amount on any sales of Products which, pursuant to
this Paragraph 2, are not sold or distributed through Distributor.
3. Gross Profit Margin.
-------------------
(a) The guaranteed gross profit margin for the Stratus and Paramax
classes of Products shall remain at ten percent (10%) through December
16, 1996.
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(b) Effective December 16, 1996, Section 4(b) and Exhibit A of the
Distribution Agreement are amended to provide that the Distributor
shall be entitled to receive from the sale of the Stratus and Paramax
classes of Products a guaranteed gross profit margin of four percent
(4%) instead of a guaranteed gross profit margin of ten percent (10%);
provided that such guaranteed gross profit margin shall remain at ten
percent (10%) with respect to sales of Products that are shipped by
Distributor. Any decision to have Supplier ship directly to customer
shall be in Supplier's sole discretion.
(c) Distributor shall continue to maintain the same level of inventory
of the Stratus and Paramax class of Products which it has historically
maintained for such Products until such point in time when Supplier
elects to ship such Products directly to customers. Distributor and
Supplier shall negotiate, in good faith, to develop a transition plan,
for Supplier to ship such Paramax and Stratus class of Products
directly to customers.
(d) The parties agree that neither party may modify its normal selling
process in order to change the timing of normal customer ordering
patterns for the purpose of taking advantage of a more favorable
margin.
4. Incentive Compensation
----------------------
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(a) "Best Value Products" shall mean a select offering of third-party
manufactured and Distributor self-manufactured products which perform
consistently, offer the best value for the price, and provide good
economics throughout the supply chain. Best Value Products are
especially promoted externally to Distributor's customers and
internally to Distributor's sales personnel through financial
incentives. Except as provided herein, all Best Value Products are
required to meet the following specific criteria: (a) the product must
be a market leader as demonstrated by sales volume or have the
potential to become a market leader; (b) that product must provide a
return on managed capital greater than 30% after tax; and (c) the
product must meet a minimum of silver status on the Supplier
scoreboard.
(b) Regardless of whether or not Supplier or the Products meet the
definition of Best Value Products hereunder, Distributor shall
promote the Stratus and Paramax classes of Products as Best Value
Products for as long as Distributor distributes such Products under
the Distribution Agreement.
(c) In the event Distributor creates a new promotion or incentive
program in addition to or in substitution of its Best Value Products
program, the Stratus and Paramax classes of Products shall be granted
the most favorable treatment under such new promotion or
- Page 6 of 18 -
incentive program, regardless of whether Supplier or the Products meet
the criteria for such treatment under such program, for as long as
Distributor distributes such Products under the Distribution
Agreement.
(d) With the exceptions and qualifications specified herein, the
Stratus and Paramax classes of Products shall be the only chemistry
and specialty chemistry products promoted by Distributor to any person
involved in Distributor's selling process, including but not limited
to Distributor's Field Sales Representatives and Health Systems
Representatives, as having Best Value Products status or having the
benefit of any other promotions or incentive programs. Distributor
shall not provide any incentive or bonus to anyone involved in
Distributor's selling process, including but not limited to
Distributor's Field Sales Representatives or Health Systems
Representatives, for any purpose including the purposes of the
variable compensation and performance quota system nor permit any
third party to directly or indirectly offer or pay any incentives or
bonuses to such employees or agents involved in Distributor's selling
process with respect to any chemistry analyzer competitive with the
Stratus and Paramax classes of Products.
(1) In addition to any commission or incentive required to be
paid under the Distribution Agreement, Distributor shall
- Page 7 of 18 -
involved in Distributor's selling process, including but not limited
to Distributor's Field Sales Representatives or Health Systems
Representatives, for any purpose including the purposes of the
variable compensation and performance quota system nor permit any
third party to directly or indirectly offer or pay any incentives or
bonuses to such employees or agents involved in Distributor's selling
process with respect to any chemistry analyzer competitive with the
Stratus and Paramax classes of Products.
(1) In addition to any commission or incentive required to be
paid under the Distribution Agreement, Distributor shall paid to
the Laboratory Specialist selling such Paramax Products
regardless of the volume or quantity of Paramax Product sold by
that person).
(2) With respect to specialty chemistry assays, the conditions
and limitations imposed by this Section 4(d) shall apply only to
the following assays that are performed on a specialty chemistry
analyzer: creatine kinase-muscle band (CK-MB) quantitative,
myoglobin quantitative, troponin-I quantitative, and any other
acute chest pain, cardiac related assay.
(3) The conditions and limitations imposed by this Section 4(d)
shall not apply to any solicitation of or sale to any customer
account of any general chemistry analyzer which performs less
than 250 tests per hour.
- Page 8 of 18 -
create a
special incentive program ("Special Incentive Program") for the
Paramax class of Products which will enable Distributor's
Laboratory Specialists or equivalent sales personnel to earn a
separate bonus or commission in addition to the bonus or
commission paid on sales of Best Value Product status Paramax
Products, at a rate of two percent (2%) of gross profit for each
Paramax Product sold (it being understood that such bonus or
commission will be affords materially less favorable treatment
than that given to Paramax class of Products under the Best Value
Product program.
(e) Notwithstanding anything to the contrary, in the event that
Distributor promotes any chemistry analyzer as permitted above, other
than an analyzer manufactured or sold by Supplier or its affiliates,
as having Best Value Product status or having the benefit of any other
promotion or incentive, to any person involved in Distributor's
selling process for any purpose, then Supplier shall have the right to
terminate any Paramax, Stratus or other chemistry programs which were
created pursuant to Paragraph 6 hereof or otherwise.
(f) Except as permitted under the Distribution Agreement, prior to
December 17, 1997, Supplier shall take no affirmative action to
implement the sale of such Stratus and Paramax classes of Products
directly by Supplier or its affiliates to the customer except as
otherwise permitted hereunder.
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(4) Notwithstanding the conditions set forth in this Paragraph
4(d), Distributor may promote a Best Value Product status for
other general chemistry analyzers in non-Paramax accounts only;
provided that any such promotion (g) Nothing in this Paragraph 4
shall modify or limit Distributor's obligations under Paragraph 5
of the Distribution Agreement.
5. DuPont IVD Products.
-------------------
The parties acknowledge that the technology and products of the worldwide
in vitro diagnostics business of E.I. DuPont de Nemours and Company that
-- -----
was acquired by Supplier's affiliate on May 7, 1996 (the "DuPont IVD
Business") are not and shall not be considered to be Products for any
purpose, including Section 8(d) of the Distribution Agreement, at any time
under the Distribution Agreement. Distributor hereby releases Supplier and
its affiliates from any past, present or future claim, liability expense,
suit, action, damage or the like arising out of or resulting from
Supplier's or its affiliates' solicitation of orders, sale or distribution
of products of the IVD Business other than through Distributor, based on or
related to the Distribution Agreement or that Purchase Agreement between
Baxter International Inc. and Diagnostics Holding Inc. dated October 1,
1994 and amended and restated as of December 15, 1994.
6. New Business Opportunities: Business Evaluation.
------------------------------------------------
(a) Prior to October 1, 1996, Supplier and Distributor shall assemble
a Steering Team which will be charged with identifying prior to
- Page 10 of 18 -
October 31, 1996, ways to enhance their combined business
opportunities for the sale of any products, including Products. Both
parties will work together to identify business opportunities that
could generate $2.2 million to $5.8 million in annual incremental
gross profit; such business shall be business which Supplier would not
otherwise be able to generate without Distributor's assistance. The
Steering Team shall focus on (i) developing and agreeing upon margins
and bonus incentives (which would be calculated on a monthly basis, if
possible, or on a quarterly basis and paid to Distributor within
thirty (3O) days of such calculation) in order to capitalize on such
opportunities; and (ii) establishing mechanisms by which Supplier's
Regional Managers and Vice President of Sales and the Distributor's
Lab Specialist Managers will verify incremental business secured by
the participation of Distributor. In the event Supplier and
Distributor agree to programs involving products relating to the
DuPont IVD Business, Supplier shall perform physical distribution,
invoicing and accounts receivable collection services; if a customer
requires single invoicing by Distributor, Supplier will support such a
business requirement. Distributor shall not promote such a single
invoicing program to any IVD customers; provided, however, Distributor
may promote to
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customers its general capabilities of single invoicing as one
component of its cost reduction capabilities.
(b) On or before October 1, 1996, Distributor and Supplier shall
jointly assemble a second Steering Team which will include senior
management representatives of each party, which will be charged with
reviewing and addressing performance issues, including but not limited
to operations, regulations, data and pricing. Such Steering Team shall
serve as the single point contact for all current and future problem
resolution, program development and administration, and Distributor
shall use best efforts to implement such resolutions uniformly
throughout all sales regions of Distributor and, to the extent
Supplier has any duties, Supplier shall use best efforts to implement
such resolutions throughout its organization. Such Steering Team shall
establish, on or prior to October 31, 1996, the initial performance
standards for Distributor and shall develop a means of measuring such
performance standards with respect to such things as financial
performance, personnel commitment, customer service and QAP support,
E&O exposure, refrigerator failures, pricing accuracy, and the
accuracy and timeliness of lot level inventory information, lot
traceability, lot segregation and hold processing. After October 31,
1996, the Steering Team shall review and update such initial standards
and
- Page 12 of 18 -
establish such additional standards as are necessary to address
any issues or problems which Supplier identifies from time to time.
Once such standards are agreed to by the Steering Team, Distributor
and Supplier, to the extent that Supplier has any duties under such
standards, shall use their best efforts to comply with such standards.
Notwithstanding anything in this Paragraph 6(b) to the contrary,
nothing herein shall relieve Distributor of its obligations under
Paragraph 5 of the Distribution Agreement.
(c) Distributor will continue to provide to Supplier access to the
domestic information systems and services provided to Supplier under
the Transition Services Agreement between the parties dated December
19, 1994 up to and including May 16, 1997, on the same basis as
Supplier was contractually obligated to pay for such systems and
services under the Transition Services Agreement, provided that
Distributor may increase charges to Supplier to offset any additional
direct costs incurred. Examples of these information systems and
services are Adept, Fieldwatch, SRTK, EUC and the like. Nothing in
this Paragraph 6(c) shall limit or modify Distributor's obligations to
provide information systems and services or Supplier's obligations to
pay for such systems and services under the Distribution Agreement.
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7. Limitation on Further Terminations.
----------------------------------
Supplier shall not exercise its rights under Section 8(c)(ii) of the
Distribution Agreement by giving Distributor the written notice required
with respect to any class or classes of Products prior to June 17, 1997.
Such date shall be extended to June 17, 1998, provided that the second
Steering Team has reached written agreement on initial and, if applicable,
subsequent performance standards to be established from time to time
pursuant to Section 6(b) and Distributor shall continue to meet such
performance standards. If the second Steering Team has not reached
agreement on such standards or, despite Distributor's best efforts to meet
the performance standards established under Paragraph 6(b), if Distributor
has not in fact met those performance standards or other terms of the
Distribution Agreement, such June 17, 1997 date shall not be extended.
8. Certain Termination Provisions.
------------------------------
(a) As referred to in Section 8(d) of the Distribution Agreement, the
forty percent (40%) of the aggregate gross profit earned by
Distributor from the distribution of Products shall be based upon
calendar year 1995 rather than the applicable "preceding fiscal year".
- Page 14 of 18 -
(b) Supplier and Distributor agree that for purposes of Section 8(d)
of the Distribution Agreement, gross profits from sales of products of
the DuPont IVD Business shall not be taken into account in any
respect.
(c) For purposes of 8(d) only of the Distribution Agreement, the
Distribution Agreement shall be deemed terminated as of December 16,
1996 with respect to the Stratus and Paramax classes of Products.
(d) Distributor shall have the right to give Supplier notice of
termination of the Best Value Product status of the Paramax and
Stratus classes of Products or, in addition, in the case of the
Paramax class of Products, the Special Incentive Program, as of June
17, 1997 to be effective December 16, 1997. In the event that
Distributor gives Supplier such notice, notwithstanding anything in
Paragraphs 1(b) and 7 to the contrary, Supplier shall have the right
to provide notice of termination of the Distribution Agreement as to
any class of Product or as to all classes of Products pursuant to the
terms of the Distribution Agreement to be effective December 16, 1997
or thereafter.
- Page 15 of 18 -
9. Acquisition By Dade.
-------------------
In the event of an acquisition by Supplier or any of its affiliates of all
or any portion of a business that includes products which would otherwise
be considered Products under the Distribution Agreement ("Acquired
Products"), (i) such Acquired Products, together with line extensions and
other subsequent products based upon technology held by the acquired
business, shall not be considered to be Products under the Distribution
Agreement for any purpose at any time and (ii) the parties agree to
negotiate in good faith to structure a mutually beneficial distribution
arrangement for any such Acquired Products. Such negotiations shall
commence no later than thirty (30) days after the closing of any such
acquisition. The parties agree to negotiate in good faith to reach an
agreement regarding the distribution of such Acquired Products within sixty
(60) days of the commencement of negotiations (it being understood that
neither party shall be obligated to in fact reach agreement, and it further
being understood that any good faith negotiation would require that
Distributor not demand of Supplier more favorable terms than those terms
set forth in the Distribution Agreement). If the parties cannot agree on
such an arrangement regarding the Acquired Products within said sixty (60)
day period, then notwithstanding anything in the Distribution Agreement to
the contrary, as its only right and remedy, Distributor would have the
right to sell, solicit orders for and otherwise distribute products
- Page 16 of 18 -
that are competitive with any of the Acquired Products. Distributor shall
have sixty (60) days following the end of such sixty (60) day negotiation
period to exercise such right and remedy hereunder by delivering written
notice of such election to Supplier. Following such notification, Supplier
would have the right to sell, solicit orders for or otherwise distribute
products competitive with such Acquired Products other than through
Distributor.
10. This Amendment together with the Distribution Agreement constitutes the
entire agreement between the parties with respect to the subject matter
hereof and shall supersede all previous negotiations, commitments and
writings with respect to such subject matter.
11. Counterparts.
------------
For the convenience of the parties hereto, this Amendment may be executed
in one or more counterparts, each of which shall be deemed an original for
all purposes.
- Page 17 of 18 -
IN WITNESS WHEREOF, the parties have by their duly authorized officers
executed this amendment on September 26, 1996, effective as of September
26, 1996.
SUPPLIER: DISTRIBUTOR:
- -------- -----------
DADE INTERNATIONAL INC. BAXTER HEALTHCARE CORPORATION
By: /s/ John F. Doherty By: /s/ Ron LaBrum
--------------------------- ---------------------------
Name: John F. Doherty Name: Ron LaBrum
Title: Senior Vice President of Title: President Supply Chain
------------------------ ------------------------
Operations
----------
By: /s/ Scott T. Garrett By: /s/ Joe Damico
--------------------------- ---------------------------
Name: Scott T. Garrett Name: Joe Damico
Title: President and Chief Title: Group Vice President
------------------------ ------------------------
Executive Officer
-----------------
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