EXHIBIT 10.28
DISTRIBUTOR AGREEMENT
This Distributor Agreement (the "AGREEMENT") is entered into in Cupertino,
California, as of MAY 6, 1999 (the "EFFECTIVE DATE"), between GENERAL
SURGICAL INNOVATIONS, INC., a corporation organized under the laws of
California, United States of America ("MANUFACTURER"), with principal offices
at 10460 Bubb Road, Cupertino, CA 95014, United States of America (the
"DISTRIBUTION SITE") and DEXTERITY SURGICAL, INC., a corporation organized
under the laws of _________________ ("DISTRIBUTOR"),with offices at 1495
Hembree Road, Suite 700, Roswell, GA 30076.
In consideration of the mutual promises contained herein, the
parties agree as follows:
1. DEFINITIONS
(a) "PRODUCTS" shall mean those products listed in
EXHIBIT A attached hereto. Products may be added, changed, or discontinued by
Manufacturer, at Manufacturer's sole discretion so long as alternative
products are available to Distributor, except for Products that are
unavailable for any of the reasons described in sections 12 and 13 in this
Agreement. Manufacturer shall be under no obligation to continue the
production of any Product, except as provided herein.
(b) "TERRITORY" shall mean that geographic area
identified in EXHIBIT B attached hereto.
2. APPOINTMENT AND AUTHORITY OF DISTRIBUTOR
(a) APPOINTMENT. Subject to the terms and conditions
set forth herein, Manufacturer hereby appoints Distributor as Manufacturer's
non-exclusive distributor for the Products in the Territory for sale and use
solely in connection with hernia and bladder neck suspension applications
(the "PERMITTED APPLICATIONS"), and Distributor hereby accepts such
appointment. Distributor shall have the non-exclusive, non-assignable,
non-licensable right, during the term of this agreement, to promote, sell,
market and distribute the Products for the Permitted Applications to
end-users (either directly or through sub-distributors) in the Territory.
Distributor represents that it has full authority to enter into this
Agreement and that this Agreement does not conflict with any other agreement
entered into by this party or any of it's related or affiliated entities.
(b) TERRITORIAL RESPONSIBILITY. Distributor shall not
promote or solicit orders for the Products outside the Territory or establish
a facility for purposes relating to the Products outside the Territory.
Distributor shall forward to Manufacturer all unsolicited inquiries relating
to the Products from customers or potential customers outside the Territory.
(c) CONFLICT OF INTEREST. During the term of this
Agreement, Distributor shall not, without Manufacturer's prior written
consent, represent, promote or otherwise try to sell
within the Territory any lines or products that compete with the Products
covered by this Agreement.
(d) INDEPENDENT CONTRACTORS. The relationship of
Manufacturer and Distributor established by this Agreement is that of
independent contractors, and nothing contained in this Agreement shall be
construed to give either party the power to direct and control the day-to-day
activities of the other or allow one party to create or assume any obligation
on behalf of the other for any purpose whatsoever. All financial obligations
associated with Distributor's business are the sole responsibility of
Distributor. All sales and other agreements between Distributor and
Distributor's customers are Distributor's exclusive responsibility and shall
have no effect on Distributor's obligations under this Agreement.
3. TERMS OF PURCHASE OF PRODUCTS BY DISTRIBUTOR
(a) TERMS AND CONDITIONS. All purchases of Products by
Distributor from Manufacturer during the term of this Agreement shall be
subject to the terms and conditions of this Agreement.
(b) PRICES. The purchase price to Distributor for each
of the Products ("PURCHASE PRICE") shall be as set forth in EXHIBIT A
attached hereto. Manufacturer has the right at any time to revise the prices
in EXHIBIT A with thirty (30) days' advanced written notice to Distributor;
PROVIDED, that Manufacturer shall not revise such prices during the initial
six-months of this agreement nor more than once each twelve months
thereafter, and provided that Manufacturer shall not increase the purchase
price for any product by more than 5% during any twelve month period. Such
revisions shall apply to all orders received after the effective date of
revision. Price changes shall not affect unfulfilled purchase orders accepted
by Manufacturer prior to the effective date of the price change.
(c) COMMERCIAL SALE COMMITMENT. Prior to the Effective
Date hereof, the parties will mutually develop an annual marketing plan (the
"MARKETING PLAN"), which will contain, among other things, a list of target
customers and the minimum number of units or dollar value of Products that
Distributor will sell for each quarter (the "COMMERCIAL SALE COMMITMENT"),
set forth in EXHIBIT C attached hereto. At the end of each quarter, the
parties will meet to review the Distributor's performance as against the
Marketing Plan for such quarter. If at the end of a quarter Distributor has
purchased less than 95% of the Commercial Sale Commitment for such quarter,
Manufacturer may either (i) adjust the Distributor's Commercial Sale
Commitment or (ii) terminate the Distributor's right to sell Manufacturer's
Products in all or any portion of the Distributor's Territory upon giving
thirty (30) days prior written notice thereof to Distributor.
If the Agreement is extended beyond the Initial Period for an
additional twelve months term ("ADDITIONAL TERM") pursuant to section 8(a)
below, then the parties will meet to review the Distributor's performance as
against the New Commercial Sale Commitment for the Additional Term of the
Agreement. If at the end the Additional Term, Distributor has purchased less
than 95% of the Commercial Sale Commitment for such Additional Term,
Manufacturer may either (i)
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adjust the Distributor's Commercial Sale Commitment or (ii) terminate the
Distributor's right to sell Manufacturer's Products in all or any portion of
the Distributor's Territory upon giving thirty (30) days prior written notice
thereof to Distributor.
(d) TAXES. Distributor's Purchase Price does not
include any federal, state or local taxes that may be applicable to the
Products. In the event that such taxes are applicable and Manufacturer has
the legal obligation to collect such taxes, Manufacturer shall be entitled to
add to Distributor's invoice the amount of such taxes and Distributor shall
pay such amount unless Distributor provides Manufacturer with a valid tax
exemption certificate authorized by the appropriate taxing authority.
(e) ORDER AND ACCEPTANCE. All orders for Products
submitted by Distributor shall be initiated by written purchase orders (a
form of which is attached as EXHIBIT D) sent to Manufacturer (by mail,
express overnight courier or facsimile transmission) and requesting a
delivery date during the term of this Agreement. No order shall be binding
upon Manufacturer until accepted by Manufacturer in writing, and Manufacturer
shall have no liability to Distributor with respect to purchase orders that
are not accepted. No partial shipment of an order shall constitute the
acceptance of the entire order, absent the written acceptance of such entire
order. Manufacturer shall use Manufacturer's reasonable commercial efforts to
deliver Products at the times specified either in Manufacturer's quotation or
in Manufacturer's written acceptance of Distributor's purchase orders. In the
event of any conflict between the terms of this Agreement and any terms
contained in Distributor's purchase order, this Agreement shall be
controlling. Nothing contained in any purchase order of Distributor shall in
any way modify any of the terms contained herein or add any additional terms
or conditions.
(f) PAYMENT. Full payment of Distributor's Purchase
Price for the Products (including any freight, taxes or other applicable
costs initially paid by Manufacturer but to be borne by Distributor) shall be
in United States of America dollars. All exchange, interest, banking,
collection, and other charges shall be at Distributor's expense. Payment
terms shall be net thirty (30) days, and payment shall be made by wire
transfer, check or other instrument approved by Manufacturer. Any invoiced
amount not paid when due shall be subject to a service charge at the lower of
the rate of one and one-half percent (1.5%) per month or the maximum rate
permitted by law. If Distributor fails to make any payment to Manufacturer
when due, Manufacturer may, without affecting its rights under this
Agreement, cancel or delay any future shipments of the Products to
Distributor.
(g) SHIPPING. All Products delivered pursuant to the
terms of this Agreement shall be suitably packed for air freight shipment in
Manufacturer's standard shipping cartons, marked for shipment at
Manufacturer's manufacturing plant to Distributor's address set forth above,
and delivered to Distributor at Distributor's address set forth above, at
which time title to such Products and risk of loss shall pass to Distributor.
All freight, insurance, and other shipping expenses, as well as any special
packing expense, shall be paid by Distributor. Distributor shall also bear
all applicable taxes, duties, and similar charges that may be assessed
against the Products.
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(h) REJECTION, RETURN OF PRODUCTS. Distributor shall
inspect all Products promptly upon receipt thereof and may reject any Product
that fails in any material way to meet Manufacturer's specifications for that
Product. Any Product not properly rejected within ten (10) days after receipt
of that Product by Distributor (the "REJECTION PERIOD") shall be deemed
accepted. To reject a Product, Distributor shall, within the Rejection
Period, notify Manufacturer of its rejection in writing and request a
Material Return Authorization ("MRA") number. Manufacturer shall provide the
MRA number to Distributor within seven (7) days after receipt of the request.
Within seven (7) days after receipt of the MRA number, Distributor shall
return to Manufacturer the rejected Product, freight prepaid, in its original
shipping carton with the MRA number displayed on the outside of the carton.
Manufacturer reserves the right to refuse to accept any rejected or returned
Products that do not bear an MRA number on the outside of the carton. As
promptly as possible but no later than thirty (30) working days after receipt
of properly rejected Products, Manufacturer shall, at its option and expense,
repair or replace the Products. Manufacturer shall pay the shipping charges
back to Distributor for properly rejected Products; otherwise, Distributor
shall be responsible for the shipping charges. After the Rejection Period,
any Product that Distributor returns must be approved in advance by
Manufacturer. Distributor shall pay twenty five percent (25%) of
Distributor's purchase price for that Product as a restocking fee and
Manufacturer shall credit the balance of the purchase price to Distributor's
account within thirty (30) working days after receipt of returned Product.
Distributor shall be responsible for the shipping charges for all Product
returned after the Rejection Period.
4. TRAINING, INSTALLATION AND SERVICE
(a) SERVICES BY DISTRIBUTOR. Distributor shall have
the responsibility to deliver the Products and train the customers with
respect to the Products sold. The services shall (i) be performed only by
specially and properly trained personnel of Distributor, (ii) be of the
highest quality, and (iii) be performed properly. Distributor shall ensure
that one of its employees who is trained in the use of the Product is present
at the customer's site and is available to answer questions during the use of
the Product at such customer's first use thereof.
(b) TRAINING BY MANUFACTURER. Manufacturer shall
provide sales and technical training, and technical support, to Distributor's
personnel at periodic intervals, with the frequency and content of the
training to be determined by agreement between Distributor and Manufacturer.
Each of Distributor and Manufacturer shall pay its own costs for travel,
food, and lodging during each training period, and Manufacturer shall supply
training manuals, training brochures and videos for each training session. In
addition to sales and technical training, Manufacturer shall cooperate with
Distributor in establishing efficient promotional procedures and policies.
Manufacturer shall promptly respond to Distributor's reasonable technical
questions relating to Product.
5. WARRANTY TO DISTRIBUTOR'S CUSTOMERS
(a) STANDARD LIMITED WARRANTY. Manufacturer warrants
that the Products sold to Distributor will comply at the time of shipment to
Distributor with the requirements of the
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U.S. Federal Food, Drug and Cosmetic Act, if applicable. This warranty is
contingent upon proper use of a Product in the application for which such
Product was intended and does not cover Products that were modified without
Manufacturer's approval, that have expired or that were subjected by the
customer to unusual physical, chemical or electrical stress.
(b) REMEDY FOR BREACH OF WARRANTY. Subject to the
limitations in Sections 5(c) and (d) hereof and subject to Distributor's and
its customers' compliance with all instructions and requirements regarding
the use of Products, including but not limited to expiration date
restrictions, Manufacturer agrees at Manufacturer's sole discretion to repair
or replace any Product sold hereunder that is proven to have a material
defect in material or workmanship and of which defect Manufacturer is
notified in writing by Distributor within thirty days after Distributor's
customer's attempted use of such Product. Distributor's and Distributor's
customer's sole and exclusive remedy against Manufacturer, and Manufacturer's
sole and exclusive liability, shall be the repair or replacement of, or
refund of the Purchase Price paid for, the Product in accordance with this
limited warranty.
(c) NO OTHER WARRANTY. EXCEPT FOR THE EXPRESS LIMITED
WARRANTY SET FORTH IN SUBSECTION 5(a) ABOVE, MANUFACTURER GRANTS NO
WARRANTIES FOR THE PRODUCTS, EXPRESS OR IMPLIED, EITHER IN FACT OR BY
OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND MANUFACTURER SPECIFICALLY
DISCLAIMS ANY IMPLIED WARRANTY OF QUALITY, WARRANTY OF MERCHANTABILITY,
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR WARRANTY OF NON INFRINGEMENT.
(d) LIMITATION OF LIABILITY. MANUFACTURER'S LIABILITY
UNDER THE WARRANTY SHALL BE LIMITED TO A REFUND OF THE CUSTOMER'S PURCHASE
PRICE. IN NO EVENT SHALL MANUFACTURER BE LIABLE FOR THE COST OF PROCUREMENT
OF SUBSTITUTE GOODS BY THE CUSTOMER OR FOR ANY SPECIAL CONSEQUENTIAL OR
INCIDENTAL DAMAGES FOR BREACH OF WARRANTY.
6. ADDITIONAL OBLIGATIONS OF DISTRIBUTOR
(a) COMPLIANCE WITH LAWS AND REGULATIONS. Distributor
shall obtain all necessary government approvals to market and sell the
Products in the Territory and shall comply fully, at its expense, with any
and all applicable laws and regulations (including but not limited to health
and safety laws and regulations) of the Territory.
(b) COMMENCEMENT OF MARKETING. Distributor shall
commence marketing of the Products throughout the Territory promptly, but in
any event within 30 days, after effective date of the Agreement. Distributor
shall be deemed to have commenced the marketing of the Products only when it
shall have offered the Products regularly for sale.
(c) APPROPRIATE CUSTOMERS. Distributor shall use its
best efforts to distribute and sell the Products in the Territory, and shall
distribute and sell such Products for use only by qualified individuals as
appropriate in the Territory in compliance with local laws and
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regulations and good commercial practice and for uses and applications
approved by Manufacturer for the Products.
(d) INVENTORY. Distributor shall, at Distributor's own
expense, maintain a sufficient inventory of the Products at all times during
the term of this Agreement as necessary in order to meet the reasonably
anticipated requirements of any customer or potential customer within the
Territory.
(e) CUSTOMER AND SALES REPORTING. Distributor shall,
at Distributor's own expense and consistent with the sales policies of
Manufacturer and with good business practice: (i) place the Products in
Distributor's literature as soon as possible; (ii) provide adequate contact
with existing and potential customers within the Territory on a regular
basis; (iii) assist Manufacturer in assessing customer requirements for the
Products, including modifications and improvements thereto, in terms of
quality, design, functional capability, and other features; and (iv) provide
Manufacturer: (1) market research information, as reasonably requested by
Manufacturer for purposes of Manufacturer's market research, regarding
competition and changes in the market within the Territory, and on a monthly
basis, (2) a summary of the inventory of Products held by Distributor at the
end of the previous month and (3) within the first 5 days of each month,
using Manufacturer's format, a monthly listing of Products sold (by Product
type) the previous month that includes the customer name, address and name of
the representative or agent of Distributor responsible for the sale.
(f) AUDITS. Manufacturer reserves the right to
authorize a representative of Manufacturer, at Manufacturer's expense, to
audit Distributor's records relating to the Products, inventories, sales and
shipments within the Territory, records of product inquiries, and regulatory
compliance records and systems. Upon prior written notice, Distributor shall
provide reasonable access to such records during normal business hours at
Distributor's business locations. Distributor shall maintain all such records
at Distributor's location for a minimum of two (2) years after termination of
this Agreement.
(g) PROMOTION OF THE PRODUCTS. Distributor shall,
solely at Distributor's own expense, vigorously promote the sale of the
Products within the Territory. Such promotion shall include, but not be
limited to, preparing all promotional materials intended specifically for use
in the Territory, participating in appropriate trade shows, and directly
soliciting orders from customers within the Territory for the Products.
Distributor and its employees and agents shall not promote the Products for
any indications not approved for such Products by applicable regulatory
authorities. All promotional materials prepared by Distributor relating to
the Products must be consistent with applicable law and promotional materials
used by Manufacturer or other distributors of Manufacturer in connection with
the Products. Distributor shall provide to Manufacturer for purposes of
review and comment by Manufacturer any and all promotional, advertising, and
educational materials and programs relating to the Products prior to the
release of such materials or commencement of such programs. Manufacturer
shall make its best efforts to provide to Distributor, within ten (10)
business days after receipt of such materials and/or programs, any and all
comments and suggestions relating to such material and/or programs. In
addition, Manufacturer shall be entitled, on Manufacturer's written request,
to receive copies of
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any promotional materials used by Distributor and inspect such materials for
purposes of determining that such materials are consistent with promotional
materials used by Manufacturer or other distributors of Manufacturer.
(h) REPRESENTATIONS. Distributor shall not make any
false or misleading representations to customers or others regarding
Manufacturer or the Products. Distributor and its employees and agents shall
not make any representations, warranties or guarantees with respect to the
specifications, features or capabilities of the Products that are not
contained within Manufacturer's documentation accompanying the Products or
Manufacturer's literature describing the Products, including Manufacturer's
standard limited warranty and disclaimers.
(i) FINANCES AND PERSONNEL. Distributor shall maintain
a net worth and working capital sufficient to allow Distributor to perform
fully and faithfully Distributor's obligations under this Agreement.
Distributor shall devote sufficient financial resources and technically
qualified sales and training personnel to the Products to fulfill
Distributor's responsibilities under this Agreement.
(j) LIMITATION ON DISTRIBUTOR'S RIGHTS TO THE
PRODUCTS. Distributor shall have no right to copy, modify or remanufacture
any Product or part thereof. Distributor shall not make any changes,
alterations, modifications or additions to the Products without prior written
approval of Manufacturer, which may be withheld in its sole discretion.
(k) REGULATORY COMPLIANCE. Each of the parties agrees
to comply with state, federal, and international regulatory requirements as
are required for its status as a medical device manufacturer or medical
device distributor, as applicable. In the case of Distributor, this
compliance shall include but not be limited to compliance with FDA
regulations, including notice to Manufacturer of any Product inquiries and
returns of any Products to Distributor, and retention of records relating to
compliance correspondence with governmental entities, Product inquiries and
compliance systems. Distributor shall provide copies of its customer
inquiries related to Products as well as the results of any related
investigations. Distributor shall notify Manufacturer of any adverse
reaction, malfunction, injury or other similar claims with respect to any of
the Products of which it becomes aware.
(l) FORECASTS. In order for Manufacturer to plan for
and schedule its manufacturing operations, within the first five days of each
quarter Distributor shall provide Manufacturer with a forecast of prospective
orders for the next six months by Product and Distributor's anticipated
purchase order submission date. Subject to Section 3(c) above, such rolling
six-month forecasts shall be non-binding and shall be used by Manufacturer
for information purposes only.
(m) DEMONSTRATION PRODUCTS. Manufacturer shall provide
each Distributor's representative with up to $1,000 per month of
demonstration Products (not for resale) for promotional use at a cost of 50%
of the prices for products listed on Exhibit A. Distributor will provide
Manufacturer with reporting on disposition of such products. The maximum
value of demonstration Products any one representative may receive in any one
month is $1,000. This limit will not be carried over from month to month.
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(n) THIRD PARTY CONFIDENTIAL INFORMATION. Manufacturer
desires and Distributor agrees and warrants that Distributor will not use any
confidential information received by Distributor from a third party in
Distributor's performance of its obligations under this Agreement.
7. ADDITIONAL OBLIGATIONS OF MANUFACTURER. Manufacturer shall
promptly provide Distributor with Manufacturer's core materials relating to
promotion of the Products. Manufacturer shall promptly respond to all
reasonable inquiries from Distributor concerning matters pertaining to this
Agreement. Manufacturer shall inform Distributor of new product developments
relating to Products. Manufacturer shall forward to Distributor copies of all
approval letters received from the U.S. Food and Drug Administration with
respect to Products.
8. TERM AND TERMINATION
(a) TERM. This Agreement shall commence on the
Effective Date hereof and continue in full force and effect for one (1) year
(the "INITIAL PERIOD"), unless terminated earlier under the provisions of
this Section 8 or Section 3(c). Thereafter, if Distributor has satisfied its
Commercial Sale Commitment, Manufacturer shall extend the term of this
Agreement for an additional twelve (12) months provided that within 15 days
after the end of the Initial Period, Manufacturer and Distributor agree to
the Commercial Sale Commitment for the extended twelve (12) months ("New
Commercial Sale Commitment"). If within 15 days after the end of the Initial
Period a New Commercial Sale Commitment is not agreed upon by both parties,
Manufacturer or Distributor shall have the right to terminate the Agreement
at any time.
(b) TERMINATION FOR CAUSE. If either party defaults in
the performance of any material provision of this Agreement (which, in the
case of a default by Distributor, includes but is not limited to, failure to
make timely payment for Products purchased or failure to comply with Section
2(b) or 3(c)), then the non-defaulting party may give written notice to the
defaulting party that if the default is not cured within thirty (30) days
after the receipt of such notice, the non-defaulting party may terminate the
Agreement. If the non-defaulting party gives such notice and the default is
not cured during such thirty (30) day period, then the non-defaulting party
may terminate the Agreement at the end of such cure period.
(c) TERMINATION FOR INSOLVENCY. This Agreement shall
terminate, without notice, (i) upon the institution by or against either
party of insolvency, receivership or bankruptcy proceedings or any other
proceedings for the settlement of such party's debts, (ii) upon either
party's making an assignment for the benefit of creditors, or (iii) upon
either party's dissolution or ceasing to do business.
(d) LIMITATION ON LIABILITY FOR TERMINATION. In the
event of termination by either party in accordance with any of the provisions
of this Agreement, neither party shall be liable to the other because of such
termination, for compensation, reimbursement or damages on account of the
loss of prospective profits or anticipated sales or on account of
expenditures,
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inventory, investments, leases or commitments in connection with the business
or goodwill of Manufacturer or Distributor, except for damages resulting from
a breach of this Agreement to which a party is entitled subject to the
provisions of this Agreement. Termination shall not, however, relieve either
party of obligations incurred prior to the termination.
(e) SURVIVAL OF CERTAIN TERMS. The provisions of
Sections 1, 2(d), 5, 6(f), 8, 9, 10, 11, 12, 13 and 14 shall survive the
termination of the Agreement for any reason. All other rights and obligations
of the parties shall cease upon termination of this Agreement.
(f) NON-SOLICITATION. During the term of this
Agreement and for a period of one (1) year after termination thereof for any
reason whatsoever, Manufacturer shall not solicit, recruit, employ, or
compensate, directly or indirectly, any person engaged or previously engaged
by Distributor as an employee, independent contractor or in any other
capacity, who is or was involved in the sale of products through Distributor,
without prior written consent of the President of Distributor. During the
term of this Agreement and for a period of one (1) year after termination
thereof for any reason whatsoever, Distributor shall not solicit, recruit,
employ, or compensate, directly or indirectly, any person engaged or
previously engaged by Manufacturer as an employee, independent contractor or
in any other capacity, who is or was involved in the sale of Manufacturer's
products, without prior written consent of the President of Manufacturer.
9. LIMITATION ON LIABILITY. MANUFACTURER'S LIABILITY ARISING
OUT OF THIS AGREEMENT AND/OR SALE OF THE PRODUCTS SHALL BE LIMITED TO THE
AMOUNT PAID BY THE CUSTOMER FOR THE PRODUCTS. IN NO EVENT SHALL MANUFACTURER
BE LIABLE FOR COSTS OF PROCUREMENT OF SUBSTITUTE GOODS BY ANYONE. IN NO EVENT
SHALL MANUFACTURER BE LIABLE TO DISTRIBUTOR OR ANY OTHER PERSON OR ENTITY FOR
ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, OR INDIRECT DAMAGES, HOWEVER CAUSED,
ON ANY THEORY OF LIABILITY, WHETHER OR NOT MANUFACTURER HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGE.
10. PROPERTY RIGHTS AND CONFIDENTIALITY
(a) PROPERTY RIGHTS. Distributor agrees that
Manufacturer owns all right, title, and interest in the product lines that
include the Products and in all of Manufacturer's patents, trademarks, trade
names, inventions, copyrights, know-how, and trade secrets relating to the
design, manufacture, operation and servicing of the Products. The use by
Distributor of any of these property rights is authorized only for the
purposes herein set forth, and upon termination of this Agreement for any
reason such authorization shall cease.
(b) SALE CONVEYS NO RIGHT TO MANUFACTURE OR COPY. The
Products are offered for sale and are sold by Manufacturer subject in every
case to the condition that such sale does not convey any license, expressly
or by implication, to manufacture, duplicate or otherwise copy or reproduce
any of the Products. Distributor shall take appropriate steps with
Distributor's customers (including but not limited to compliance with
Manufacturer's reasonable requests) to inform them of and assure compliance
with the restrictions contained in this Subsection 10(b).
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(c) CONFIDENTIALITY.
(i) Each party acknowledges that by reason of
its relationship to the other hereunder, it will have access to certain
proprietary information and materials concerning the other party's business,
plans, customers, technology, and products, including but not limited to
trademarks, trade names, patents, copyrights, design, drawings, formulas or
other data, photographs, samples, literature, and sales aids, conveyed orally
(and confirmed in writing within 30 days after oral conveyance), in writing
or through other tangible materials (the "CONFIDENTIAL INFORMATION"). Each
party agrees that during the term of this Agreement and for four (4) years
thereafter it will not use in any way for its own account or the account of
any third party (except for the purpose of performing its obligations under
this Agreement), nor disclose to any third party, any such Confidential
Information revealed to it by the other party without the express prior
written consent of the disclosing party. Each of the parties further agrees
to use the same degree of care concerning Confidential Information as it uses
to protect its own confidential and proprietary technical information (but no
less than reasonable care) to prevent the unauthorized disclosure to any
third party of the Confidential Information received from the disclosing
party hereunder. The parties agree that they shall acquire no rights with
respect to Confidential Information of the other party received hereunder.
The parties agree that the Confidential Information received by a disclosing
party hereunder shall not be disclosed to any third party or to any employee,
officer or director of the receiving party, except to those employees,
officers and directors whose responsibilities require such disclosure for
purposes of performing the parties' obligations under this Agreement;
PROVIDED that such employees, officers and directors have entered into
confidentiality agreements with provisions substantially similar to those set
forth in this Section 10(c).
(ii) The obligations hereunder shall not apply
to Confidential Information: (A) which the receiving party can demonstrate by
written records was known to the receiving party prior to the date of
disclosure by the disclosing party; PROVIDED that such information was not
obtained by the receiving party through disclosure by a third party receiving
such information in confidence from the disclosing party; (B) which is now in
the public knowledge, or becomes public knowledge in the future other than by
breach of this Agreement by the receiving party; (C) which, as can be
established by written records, is independently developed by the receiving
party without benefit of Confidential Information received from the
disclosing party; (D) which is disclosed to the receiving party, after the
date of disclosure by the disclosing party, by a third party having a right
to make such disclosure; (E) which is required to be included in any filing
or action taken by the receiving party to obtain government approval to
market the Products; or (F) is required to be disclosed by applicable law or
proper legal, governmental or other competent authority provided that the
party whose information is to be disclosed shall be notified sufficiently in
advance of such requirement so that it may seek a protective order (or its
equivalent) with respect to such disclosure, which the other party shall
fully comply with, PROVIDED, HOWEVER, that when permitted by the provisions
of local laws, the receiving party shall use its reasonable best efforts to
protect the confidentiality of such Confidential Information submitted to
governmental agencies or authorities pursuant to this Agreement.
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(iii) Upon termination of this Agreement, the
receiving party shall return to the disclosing party within 15 days
thereafter any and all tangible copies of any Confidential Information
provided to it by the disclosing party hereunder, and any notes taken by
employees, officers and directors of the receiving party regarding the
Confidential Information disclosed to it.
11. TRADEMARKS AND TRADE NAMES
(a) USE. During the term of this Agreement,
Distributor shall have the right to indicate to the public that Distributor
is an authorized distributor of Manufacturer's Products and to advertise
within the Territory such Products under the trademarks and trade names that
Manufacturer may adopt from time to time ("MANUFACTURER'S TRADEMARKS"), but
shall not affix Distributor's trademark or trade name to any Product.
Distributor shall not alter or remove any Manufacturer's Trademark applied by
Manufacturer to the Products. Except as set forth in this Section 11, nothing
contained in this Agreement shall grant to Distributor any right, title or
interest in Manufacturer's Trademarks. At no time during or after the term of
this Agreement shall Distributor challenge or assist others to challenge
Manufacturer's Trademarks or the registration thereof or attempt to register
any trademarks, marks or trade names confusingly similar to those of
Manufacturer. Effective upon the termination of this Agreement, Distributor
shall cease to use all trademarks, marks, and trade names of Manufacturer.
(b) APPROVAL OF REPRESENTATIONS. All representations
of Manufacturer's Trademarks that Distributor intends to use shall first be
submitted to Manufacturer for approval, which shall not be unreasonably
withheld, of design, color, and other details, or shall be exact copies of
those used by Manufacturer.
12. PATENT, COPYRIGHT, AND TRADEMARK INDEMNITY
(a) INDEMNIFICATION. Distributor agrees that
Manufacturer has the right to defend, or at Manufacturer's option to settle,
and Manufacturer agrees, at Manufacturer's own expense, to defend or at
Manufacturer's option to settle, any claim, suit or proceeding brought
against Distributor on the issue of infringement of any United States issued
patent or United States registered copyright or United States registered
trademark by the Products sold hereunder or the use thereof, subject to the
limitations hereinafter set forth. Manufacturer shall have sole control of
any such action or settlement negotiations, and Manufacturer agrees to pay,
subject to the limitations hereinafter set forth, any final judgment entered
against Distributor on such issue in any such suit or proceeding defended by
Manufacturer. Distributor agrees that Manufacturer at Manufacturer's sole
option shall be relieved of the foregoing obligations unless Distributor
notifies Manufacturer promptly in writing of such claim, suit or proceeding
and gives Manufacturer authority to proceed as contemplated herein, and, at
Manufacturer's expense, gives Manufacturer proper and full information and
assistance to settle and/or defend any such claim, suit or proceeding.
Manufacturer shall not be liable for any costs or expenses incurred without
Manufacturer's prior written authorization.
(b) LIMITATION. Notwithstanding the provisions of
Subsection 12(a) above, Manufacturer assumes no liability for (i)
infringements covering completed equipment or any
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composition, assembly, circuit, combination, method or process in which any
of the Products may be used but not covering the Products when used alone;
(ii) trademark infringements involving any marking or branding not applied by
Manufacturer or involving any marking or branding applied by Manufacturer at
the request of Distributor; (iii) infringements involving the modification or
servicing of the Products, or any part thereof, unless such modification or
servicing was done by Manufacturer; or (iv) use other than for the
indications approved by Manufacturer.
(c) ENTIRE LIABILITY. THE FOREGOING PROVISIONS OF THIS
SECTION 12 STATE THE ENTIRE LIABILITY AND OBLIGATIONS OF MANUFACTURER AND THE
EXCLUSIVE REMEDY OF DISTRIBUTOR WITH RESPECT TO ANY ALLEGED INFRINGEMENT OF
PATENTS, COPYRIGHTS, TRADEMARKS OR OTHER INTELLECTUAL PROPERTY RIGHTS BY THE
PRODUCTS OR ANY PART THEREOF.
13. INDEMNIFICATION.
INDEMNITY. In order to distribute between themselves the
responsibility for the handling and expense of claims arising out of the
manufacture, distribution, sale or use of the Product, the Parties agree as
follows:
(a) BY MANUFACTURER. Manufacturer shall defend any
suit brought against Distributor to the extent based on a claim (a
"Manufacturer Product Claim") arising out of, based upon, or caused by
alleged defects in materials, workmanship, mechanical design or malfunction
(as a result of use for the Permitted Applications and in accordance with
instructions in the package inserts or other sales literature) of the
Products, and will pay all damages and costs that a court or arbitration
awards against Distributor as a result of such claim, provided that
Distributor gives Manufacturer (i) prompt written notice of such claim, (ii)
full control over the defense or settlement thereof and (iii) all reasonable
information and assistance (at Manufacturer's expense excluding time spent by
employees of Distributor and Distributor attorneys fees and expenses) to
handle the defense or settlement thereof. Should the Products become, or in
Manufacturer's reasonable opinion be likely to become, the subject of a
Manufacturer Product Claim, Manufacturer may recall the Product, and at its
option, either modify the Product to fix any such defect or accept return of
the Product and refund to Distributor the purchase price of the Product. The
foregoing indemnification does not extend to any claim arising out of (i) a
modification by Distributor of the Product which is not approved by
Manufacturer, or (ii) the combination, operation or use of the Product with
any device or instrument not furnished by Manufacturer to the extent such
claim would not have arisen had such combination, operation or use not
occurred unless such combination, operation or use is disclosed or described
in a Manufacturer patent or patent application covering the Product, in the
510(k) Clearance or in Manufacturer's sales literature for the Product.
(b) BY DISTRIBUTOR. Distributor shall defend any suit brought
against Manufacturer to the extent based on a claim (a "Distributor Claim")
(i) arising out of, based upon or caused by the handling by Distributor of
the Products (excluding matters for which Manufacturer is responsible
-12-
under Section 13 (a)), or (ii) arising out of or incident to any
misrepresentation or any breach of any warranty or covenant of Distributor
hereunder or any default in the observance or performance of any term or
provision to be observed or performed by Distributor hereunder; and will pay
all damages and costs that a court or arbitration awards against Manufacturer
as a result of such claim, provided that Manufacturer gives Distributor (i)
prompt written notice of such claim, (ii) full control over the defense or
settlement thereof, and (iii) all reasonable information and assistance (at
Distributor's expense excluding time spent by employees of Manufacturer and
Manufacturer attorneys' fees and expenses) to handle the defense and
settlement thereof.
(c) ENTIRE LIABILITY. THE FOREGOING PROVISIONS OF THIS SECTION
13 STATE (I) THE ENTIRE LIABILITY AND OBLIGATIONS OF MANUFACTURER, AND THE
EXCLUSIVE REMEDY OF DISTRIBUTOR, WITH RESPECT TO ANY MANUFACTURER PRODUCT
CLAIM, AND (II) THE ENTIRE LIABILITY AND OBLIGATIONS OF DISTRIBUTOR, AND THE
EXCLUSIVE REMEDY OF MANUFACTURER, WITH RESPECT TO ANY DISTRIBUTOR CLAIM.
14. GENERAL PROVISIONS
(a) GOVERNING LAW AND JURISDICTION. This Agreement
shall be governed by, and construed and interpreted in accordance with, the
laws of the State of California, United States of America, without reference
to conflict of laws principles or statutory rules of arbitration. The federal
and state courts within the State of California, United States of America
shall have exclusive jurisdiction to adjudicate any dispute arising out of
this Agreement. Distributor hereby expressly consents to (i) the personal
jurisdiction of the federal and state courts within California, (ii) service
of process being effected upon Distributor by registered mail sent to the
address set forth at the beginning of this Agreement, and (iii) the
uncontested enforcement of a final judgment from such court in any other
jurisdiction wherein Distributor or any of Distributor's assets are present.
(b) ENTIRE AGREEMENT. This Agreement sets forth the
entire agreement and understanding of the parties relating to the subject
matter herein and merges all prior discussions between them. No modification
of or amendment to this Agreement, nor any waiver of any rights under this
Agreement, shall be effective unless in writing signed by the party to be
charged.
(c) NOTICES. Any notice required or permitted by this
Agreement shall be in writing (in the English language) and shall be made by
personal delivery or sent by facsimile transmission, overnight express
courier (such as Federal Express) or by prepaid registered or certified mail,
return receipt requested, addressed to the other party at the address shown
below or at such other address for which such party gives notice hereunder.
Such notice shall be deemed to have been given upon the earlier of receipt by
the party to whom notice was sent if by personal service, facsimile
transmission or overnight express courier (and as evidenced by sender's
confirmation receipt in the case of facsimile transmission or overnight
express courier) or three (3) days after deposit in the mail, if by certified
or registered mail:
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General Surgical Innovations, Inc.
10460 Bubb Road
Cupertino, CA 95014
Attn: Stephen J. Bonelli
fax: 408-863-1100
Dexterity Surgical, Inc.
Address:____________________________
____________________________________
Attn:_______________________________
fax:________________________________
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(d) FORCE MAJEURE. Nonperformance of either party
shall be excused to the extent that performance is rendered impossible by
strike, earthquake, fire, flood, governmental acts or orders or restrictions,
failure of suppliers, or any other reason where failure to perform is beyond
the reasonable control of and is not caused by the negligence of the
non-performing party.
(e) NON-ASSIGNABILITY AND BINDING EFFECT. A mutually
agreed consideration for Manufacturer's entering into this Agreement is the
reputation, business standing, and goodwill already honored and enjoyed by
Distributor under Distributor's present ownership, and, accordingly,
Distributor agrees that Distributor's rights and obligations under this
Agreement may not be transferred or assigned directly or indirectly without
the prior written consent of Manufacturer. Manufacturer may assign or
transfer this Agreement, in whole or in part, to its parent or any of its
affiliates in which it has greater than fifty percent (50%) ownership or to
any acquiror or successors to substantially all that part of its business to
which this Agreement relates. Subject to the foregoing sentence, this
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their successors and assigns.
(f) LEGAL EXPENSES. The prevailing party in any legal
action brought by one party against the other and arising out of this
Agreement shall be entitled, in addition to any other rights and remedies
that such prevailing party may have, to reimbursement of expenses incurred by
such prevailing party, including court costs and reasonable attorneys' fees.
(g) COUNTERPARTS. This Agreement may be executed in
two or more counterparts, by facsimile or otherwise, each of which shall be
deemed an original and all of which together shall constitute one instrument.
(h) PARTIAL INVALIDITY. If any provision of this
Agreement is held to be invalid, then the remaining provisions shall
nevertheless remain in full force and effect. The parties agree to
renegotiate in good faith any term held invalid and to be bound by the
mutually agreed substitute provision.
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IN WITNESS WHEREOF, the undersigned are duly authorized to execute
this Agreement on behalf of Manufacturer and Distributor, as applicable.
GENERAL SURGICAL INNOVATIONS, INC. DEXTERITY SURGICAL, INC.
("Manufacturer") ("Distributor")
By: ______________________________ By: ______________________________
Print Name: ______________________ Print Name: ______________________
Title: ___________________________ Title: ___________________________
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EXHIBIT A
PRODUCT DESCRIPTION AND PURCHASE PRICE
- ----------------------------------------------------------------------------------------------------------------------------------
Dexterity Dexterity
Sales Individual Purchase Purchase
Description Model # Unit List Price Price/unit Price
- ----------------------------------------------------------------------------------------------------------------------------------
GENERAL
TOTAL SOLUTION HERNIA KIT CONFIGURATIONS
SPACEMAKER II, 900CC W/O CANNULA
5mm helical tack, Surgipro Mesh & BTC TSK-4HB 3/box $640.00 $405.00 $1,215.00
5mm helical tack, Surgipro Mesh & EPS TSK-4HE 3/box $665.00 $425.00 $1,275.00
5mm helical tack & Surgipro mesh TSK-4H 3/box $545.00 $329.00 $ 987.00
5mm helical tack & BTC TSK-4CB 3/box $575.00 $360.00 $1,080.00
5mm helical tack & EPS TSK-4CE 3/box $600.00 $380.00 $1,140.00
5mm helical tack TSK-4C 3/box $480.00 $284.00 $ 852.00
Surgipro Mesh TSK-4J 3/box $295.00 $182.00 $ 546.00
BTC TSK-4MB 3/box $325.00 $205.00 $ 615.00
EPS TSK-4ME 3/box $350.00 $225.00 $ 675.00
5mm helical tack & premium mesh TSK-4HP 3/box $605.00 $370.00 $1,110.00
5mm helical tack, SpaceSEAL BTC & premium mesh TSK-4CXP 3/box $700.00 $446.00 $1,338.00
INDIVIDUAL ITEMS
SpaceSEAL EPS 10/11mm EPS-400 6/box $120.00 $110.00 $ 660.00
5mm Helical Tack Instrument MFD-1A 6/box $250.00 $209.00 $1,254.00
BTC BTC-400 6/box $ 95.00 $ 87.00 $ 522.00
Surgipro mesh MSH-660 3/box $ 65.00 $ 52.00 $ 156.00
SPACEMAKER II-900cc w/o cannula VSM-2900-01 single $230.00 $135.00 $ 135.00
Note: All hernia kit configurations are sold in quantities of 3.
Surgipro Mesh 6"x6" (15.2x15.2cm).
Note: Premium mesh not sold individually.
Note: Additional products and kit configurations to be added
for hernia
Note: Products and kit configurations to be added for bladder
neck suspension
GENERAL SURGICAL INNOVATIONS, INC. DEXTERITY SURGICAL, INC.
(The Manufacturer) (The Distributor)
By:____________________________________ By:_____________________________________
Print Name:____________________________ Print Name:_____________________________
Title:_________________________________ Title:__________________________________
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EXHIBIT B
TERRITORY
Distributor's Territory shall be all portions of the following: (List
specific states. If only a partial state is covered, specific zip codes or
Customers need to be identified.)
ALABAMA
COLORADO THROUGH PARK CITY MEDICAL
DELAWARE
FLORIDA LESS 20 TO 25 ACCOUNTS DIRECT TBD
GEORGIA LESS 20 TO 25 ACCOUNTS DIRECT TBD
IDAHO NORTHERN IDAHO FROM I-12 (LEWISTON) TO MONTANA BORDER, NORTH
REST OF STATE THROUGH PARK CITY MEDICAL
ILLINOIS I-74 NORTH INCLUDING CHAMPAIGN
INDIANA LESS 20 TO 25 ACCOUNTS DIRECT TBD
IOWA
KENTUCKY NORTHERN KENTUCKY SOUTH TO DRY RIDGE
LOUISIANA
MARYLAND LESS 20 TO 25 ACCOUNTS DIRECT TBD
MICHIGAN WEST OF I-69 SOUTH AT THE INDIANA BORDER TO I-75 NORTH TO BAY
CITY. INCLUDES TRAVERSE CITY.
MINNESOTA
MISSISSIPPI I-6 EAST TO 41 EAST TO ALABAMA BORDER (OXFORD INCLUDED) SOUTH
TO LOUISIANA BORDER. TUPELO TBD.
NEW MEXICO
NEW YORK WESTERN NEW YORK I-13 (ELMIRA NORTH TO ITHACA) I-34 NORTH TO
AUBURN I-34 NORTH TO OSWEGO
NORTH CAROLINA LESS 20 TO 25 ACCOUNTS DIRECT TBD
NORTH DAKOTA
OHIO
SOUTH CAROLINA
TENNESSEE TENNESSEE RIVER EAST (LESS TRI-CITIES)
TEXAS LESS 20 TO 25 ACCOUNTS DIRECT TBD
UTAH THROUGH PARK CITY MEDICAL
VIRGINIA
WASHINGTON FROM I-97 EAST TO IDAHO BORDER
WEST VIRGINIA THROUGH GREG CHANEY
WISCONSIN
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Manufacturer reserves the right to designate a maximum of 20 accounts per
Manufacturer territory manager's territory as exclusive accounts.
GENERAL SURGICAL INNOVATIONS, INC. DEXTERITY SURGICAL, INC.
("Manufacturer") ("Distributor")
By: ______________________________ By: ______________________________
Print Name: ______________________ Print Name: ______________________
Title: ___________________________ Title: ___________________________
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EXHIBIT C
COMMERCIAL SALE COMMITMENT
May 1999 $216,000
June 1999 $327,000
----------
Q4 1999 Total $543,000
July 1999 $440,000
August 1999 $557,000
September 1999 $680,000
----------
Q1 2000 Total $1,677,000
October 1999 $806,000
November 1999 $926,000
December 1999 $964,000
----------
Q2 2000 Total $2,696,000
January 2000 $1,002,000
February 2000 $1,053,000
March 2000 $1,099,000
----------
Q3 2000 Total $3,154,000
April 2000 $1,140,000
----------
April 2000 Total $1,140,000
----------
12 Month Total $9,210,000
----------
----------
GENERAL SURGICAL INNOVATIONS, INC. DEXTERITY SURGICAL, INC.
("Manufacturer") ("Distributor")
By: ______________________________ By: ______________________________
Print Name: ______________________ Print Name: ______________________
Title: ___________________________ Title: ___________________________
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EXHIBIT D
SPECIAL SHIPPING INSTRUCTIONS
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