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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest
event reported):
August 26, 1997
PACIFIC PHARMACEUTICALS, INC.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
0-14838 36-3258753
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(Commission File Number) (IRS Employer Identification Number)
6730 Mesa Ridge Rd.
Suite A
San Diego, California 92121
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (619) 550-3900
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Item 5. Other Events.
News release (the "PTM News Release") dated August 26, 1997, announcing that the
Company signed a five-year renewable distribution agreement with Steri-Oss, Inc.
(the "Steri-Oss Agreement") to exclusively distribute the Periodontal Tissue
Monitor ( the "PTM") in North America and other countries not covered by other
distribution agreements. The PTM News Release filed as Exhibit 99.59 hereto, is
hereby incorporated into this Report by reference. The Steri-Oss Agreement
filed as Exhibit 10.55 hereto, is incorporated into this Report by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) EXHIBITS. The following exhibit accompanies this Report:
Exhibit
Number Exhibit Description
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10.55 Exclusive Distribution Agreement dated August 12, 1997
between Pacific Pharmaceuticals, Inc. and Steri-Oss,
Inc. Portions of this Exhibit have been omitted
pursuant to a request for confidential treatment.
99.59 News release (the "PTM News Release") dated August 26,
1997, announcing that the Company signed a five-year
renewable distribution agreement with Steri-Oss, Inc.
(the "Steri-Oss Agreement") to exclusively distribute
the Periodontal Tissue Monitor ( the "PTM") in North
America and other countries not covered by other
distribution agreements.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PACIFIC PHARMACEUTICALS, INC.
By: /s/ James Hertzog
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James Hertzog
Date: September 29, 1997 Controller-Principal Accounting Officer
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INDEX TO EXHIBITS
Exhibit Sequentially
Number Description of Exhibit Numbered Page
- ------ ---------------------- -------------
10.55 Exclusive Distribution Agreement dated
August 12, 1997 between Pacific
Pharmaceuticals, Inc. and Steri-Oss, Inc.
Portions of this Exhibit have been omitted
pursuant to a request for confidential treatment.
99.59 News release (the "PTM News Release") dated
August 26, 1997, announcing that the Company
signed a five-year renewable distribution
agreement with Steri-Oss, Inc. (the "Steri-Oss
Agreement") to exclusively distribute the
Periodontal Tissue Monitor ( the "PTM") in
North America and other countries not covered
by other distribution agreements.
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Exhibit 10.55
EXCLUSIVE DISTRIBUTION AGREEMENT
This Exclusive Distribution Agreement is entered into as of August 12,
1997 (the "Effective Date") between Pacific Pharmaceuticals, Inc., a Delaware
corporation ("Pacific") and Steri-Oss Inc., a Delaware corporation
("Distributor").
R E C I T A L S
A. Pacific has developed and will manufacture, or will have manufactured
for it, disposable test kits to assist dental practitioners with the diagnosis
and monitoring of the treatment of periodontitis based on the identification of
aspartate aminotransferase, marketed as the Periodontal Tissue Monitor (the "PTM
Kits");
B. Distributor is engaged, among other things, in the distribution of
dental implants and similar devices to dental professionals throughout the
world; and
C. Pacific and Distributor desire to arrange for the purchase of PTM Kits
by Distributor and certain other matters, upon the terms and subject to the
conditions of this Agreement.
IN CONSIDERATION of the covenants set forth below, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Pacific and Distributor agree as follows:
1. APPOINTMENT AS EXCLUSIVE DISTRIBUTOR. Pacific hereby grants to
Distributor the exclusive right to market, distribute and sell the PTM Kits in
the Territory (as that term is defined herein). Except as may otherwise be
permitted by this Agreement, during the term of this Agreement Pacific shall
not (i) appoint or engage any other distributor, agent or sales representative
in the Territory with rights to sell or distribute the PTM Kits, or (ii) sell,
distribute or otherwise deliver PTM Kits in the Territory or to customers in the
Territory. Pacific shall use its best efforts to prevent its distributors or
sales agents outside the Territory from selling or distributing PTM Kits to
customers in the Territory, directly or indirectly. Distributor shall not sell
the PTM Kits to any person outside the Territory or to any person who
Distributor has reason to believe plans to re-sell the PTM Kits outside the
Territory.
2. TERRITORY; RIGHT OF FIRST REFUSAL. As used in this Agreement, the term
"Territory" shall mean the entire world, except the countries of Europe,
including the former Comecon countries, and Japan (the "Excluded Territory"), it
being understood and agreed that Pacific has entered into distribution
arrangements with others for the distribution of the PTM Kits in the Excluded
Territory. In the event that distribution rights for any portion of the Excluded
Territory become available during the term of this Agreement, Pacific shall,
within 30 days of the date on which such rights become available, offer such
distribution rights to Distributor in writing on
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substantially the terms set forth in this Agreement. The offer shall be
accompanied by sufficient information, if available, about sales in the offered
territory, including sales volume by quarter, average sales price, and customer
and market information. Distributor shall have 20 days from receipt of the
notice to declare its intent to accept the offer; if Distributor does not accept
the offer within that time period, then Pacific may offer the rights to others,
provided such offer is on no more favorable terms than those rejected by
Distributor.
3. MAINTENANCE OF EXCLUSIVITY.
3.1 MINIMUM QUANTITIES. In order to maintain the exclusivity of the
distribution rights granted herein, during each Contract Year (as that term is
defined below) Distributor shall order and take delivery of the minimum
quantities of PTM Kits set forth in the table below, except as provided in
Section 5.2. The quantities set forth are based on ten tray kits, and will be
adjusted accordingly to the extent five tray kits are ordered.
Contract Year Minimum Quantity of PTM Kits
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1 *
2 *
3 *
4 *
5 *
3.2 CALCULATION OF MINIMUM QUANTITIES. In the event that Distributor
does not order and take delivery of the minimum quantity during a Contract Year,
Distributor may nevertheless maintain exclusivity if the PTM Kits ordered and
delivered during any preceding Contract Year that exceeded the minimum for such
Contract Year, when added to the PTM Kits ordered and delivered during the
current year, exceed the minimum quantity for the current year. With respect to
the first two Contract Years only, Distributor may satisfy the minimum quantity
if the average quantity of PTM Kits ordered during the first two Contract Years
exceeds the average minimum quantity required for such two Contract Years. In
the event Distributor fails to order the minimum quantity during any Contract
Year, after applying the foregoing principles, this Agreement shall remain in
full force and effect, but Distributor's rights hereunder shall become non-
exclusive and Pacific shall have the right to appoint other distributors and
sales agents for the sale of the PTM Kits, so long as the price and terms
afforded such additional distributors or sales agents are no more favorable than
the terms specified herein.
3.3 DEFINITION OF CONTRACT YEAR. As used in this Section, the term
"Contract Year" shall mean the period of twelve months commencing on the later
to occur of (a) October 1, 1997, or (b) the first day of the calendar month
following the Launch Date (as that term is defined in Section 6.1 hereof), and
each succeeding twelve month period. If Distributor is unable to market the PTM
Kits in the United States for any reason beyond its control, then the
commencement of the first Contract Year shall be delayed until Distributor is
able to market the PTM Kits.
2
* This material has been omitted pursuant to a request for confidential
treatment. The material has been filed with the Securities & Exchange
Commission.
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4. REGULATORY MATTERS. Pacific shall complete follow-up notifications for
Pre-Market Approval of the PTM Kits under the U.S. Food, Drug and Cosmetics Act,
to extend product shelf life to eighteen months, document manufacturing
protocols and file labeling changes. Distributor shall be responsible for
satisfaction of regulatory requirements in any other jurisdiction in which it
proposes to market the PTM Kits.
5. TERMS OF SALE.
5.1 PRICING. Except as provided below, the price for the PTM Kits
during the term of this Agreement shall be $ * per ten tray kit and $ * per
five tray kit. If, after the first anniversary of the Launch Date, Pacific
determines in good faith that the costs to manufacture the PTM Kits have
increased over the manufacturing costs as of the Launch Date, Pacific may
propose a price increase per kit up to * % over the current price at which the
PTM Kits are sold to Distributor, provided such proposal is accompanied by a
reasonably detailed calculation of the increased manufacturing costs (on a
percentage increase basis.) Price increases may be proposed by Pacific no more
than once in any twelve month period. Any price increase under this section
shall become effective 60 days after written notice and accompanying
documentation. All payments to Pacific by Distributor shall be in U.S. dollars,
by wire transfer to a bank designated by Pacific, exclusive of any taxes imposed
by or under the authority of any government or public authority, for which
Distributor shall be solely responsible.
5.2 ORDERING AND DELIVERY. Distributor shall place its first order
within 60 days of the Effective Date. Distributor shall place orders for the PTM
Kits on its standard written form of purchase order at least 60 days in advance
of expected Delivery (as that term is defined below), specifying the quantity of
five-tray kits and the quantity of ten tray kits. The minimum order shall be
1000 units of ten tray kits, or 2000 units of five tray kits, or any equivalent
combination of these two configurations. Pacific shall fill orders by delivery
of the PTM Kits within 60 days of receipt of a valid purchase order. In the
event Pacific fails to fill any order within such 60 day period, Distributor
shall not be required to order and take delivery of specified quantities of PTM
Kits in order to maintain exclusivity as provided in Section 3 or to maintain
the right of first refusal as provided in Section 12. Pacific shall notify
Distributor as soon as practicable of any anticipated delays in scheduled
product deliveries. Payment for all orders shall be made by Distributor to
Pacific within 30 days of the receipt by Distributor of Delivery. If
Distributor pays Pacific the full purchase price for any order at the time it
places the order, Pacific will provide Distributor with additional PTM Kits with
a value equal to 5% of the amount of the purchase order, with no additional
payments required in connection with such additional PTM Kits. Title and risk of
loss shall pass to Distributor upon delivery of the PTM Kits to a common carrier
designated by Distributor (the "Delivery"). All taxes and duties arising from
the sale of the PTM Kits to Distributor shall be for the account of Distributor,
and Distributor shall bear the sole responsibility for the collection and
payment of any sales, use or other taxes payable in connection with the resale
of the PTM Kits. The failure of Pacific to deliver any order or part thereof
shall not be a breach of the entire agreement, and shall not relieve Distributor
of its obligation to pay for any prior or subsequent order.
3
* This material has been omitted pursuant to a request for confidential
treatment. The material has been filed with the Securities & Exchange
Commission.
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5.3 FORECASTS. At 90 day intervals during the term of this
Agreement Distributor shall furnish Pacific with a good faith written estimate
of projected purchases during the ensuing 90 days. Such estimates shall be for
the sole purpose of allowing Pacific to schedule manufacturing and purchases of
raw materials, and shall not obligate Distributor in any way. Pacific shall use
its best efforts to meet each order for the PTM Kits placed by Distributor on or
before the requested shipment date.
5.4 PRODUCT REJECTION. Any PTM Kits delivered to Distributor by
Pacific which do not conform to the specifications furnished by Pacific shall be
promptly replaced by Pacific. If replacement cannot be accomplished within 60
days of the original requested delivery date, any prepayments made toward the
original order will be promptly refunded by Pacific.
5.5 BONUS PTM KITS. Distributor shall be entitled to receive a bonus
(in the form of PTM Kits) based on kits ordered and delivered during each
Contract Year. For each Contract Year in which Distributor orders, and Delivery
is made in respect of, at least the number of PTM Kits set forth as the "Bonus
Threshold" in the table below (which is based on ten tray kits, and will be
adjusted accordingly to the extent five tray kits are ordered), Pacific shall
deliver to Distributor, within 30 days after the end of the Contract Year, with
no payments due to Pacific by Distributor in respect of such bonus, a quantity
of additional PTM Kits determined in accordance with the following table:
Bonus Units
Contract Year Bonus Threshold (Percentage of PTM Kits Ordered)
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1 * 10%
2 * 10%
3 * 12%
4 * 12%
5 * 15%
6. DUTIES AND COVENANTS OF DISTRIBUTOR.
6.1 PRODUCT LAUNCH AND PROMOTION. Upon the later of (i) October 1,
1997, or (ii) receipt of the initial product order as described in Section 5.2
(the later to occur of (i) and (ii) above being referred to herein as the
"Launch Date"), Distributor shall plan and promote a launch of the product line,
which shall include advertising, trade show participation, publicity, and the
development of educational and marketing materials relating to the PTM Kits.
Distributor shall use its best efforts to actively and diligently promote the
sale of the PTM Kits within the Territory and shall expend amounts for
promotion and marketing of the PTM Kits comparable to amounts expended by
Distributor with respect to its other successful product lines.
6.2 COMPLIANCE. Distributor shall comply in all material respects
with all
4
* This material has been omitted pursuant to a request for confidential
treatment. The material has been filed with the Securities & Exchange
Commission.
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applicable laws, regulations or orders of any and all governmental authorities
with respect to the marketing and distribution of the PTM Kits. Distributor
agrees that it will not directly or indirectly do any act or thing which will
constitute a violation by Distributor or Pacific of any applicable laws or
regulations, and will hold Pacific harmless from any such violations caused by
Distributor.
6.3 ASSISTANCE. Distributor shall furnish such assistance as Pacific
may reasonably request, at Pacific's expense, to enable Pacific to defend
against any claims of third parties that may be threatened or filed against
Pacific or its affiliates relating to the sale or use of any of the PTM Kits, or
that Pacific or its affiliates may assert against third parties relating to the
sale or use of any of the PTM Kits in the Territory.
6.4 PRODUCT RECALLS. Distributor shall assist Pacific, at Pacific's
request and expense, in recall of any of the PTM Kits sold pursuant to this
Agreement. Pacific shall bear all costs of shipping the recalled PTM Kits and
any replacement or repaired kits resulting from such recall, except to the
extent that such recall is due to any act or omission of Distributor which
materially contributed to the cause of the product recall, in which case
Distributor shall bear the expense in proportion to its relative fault. If a
product recall is initiated, Distributor shall be excused from compliance with
the minimum quantity requirements set forth in Section 3 for the Contract Year
in which the recall occurs, unless the recall was due to an act or omission of
Distributor.
6.5 COMPLAINTS. Distributor shall notify Pacific promptly after
Distributor becomes aware of any customer complaints concerning, or adverse
patient reactions to, the PTM Kits or the associated procedures, and any
liability claims regarding the PTM Kits, in order that Pacific can resolve the
problem and make any required notification to the U.S. Food and Drug
Administration. In the event that any such notification is required by
regulatory agencies in other countries within the Territory, Distributor shall
make any such notifications.
6.6 PACKAGING. Distributor shall design the packaging and label for
the PTM Kits at its expense, and shall bear any additional direct manufacturing
costs that result from the new package and label. The packages will bear
Distributor's private label; provided, however, that all packaging and labeling
shall be approved in advance by Pacific, which approval shall not be
unreasonably withheld, and will also include the phrase "A product of and
manufactured by Pacific Pharmaceuticals, Inc." on the outer package,
instructions for use, individual tray and, if space allows, on the test
strip/pouch.
6.7 THIRD PARTY REIMBURSEMENT. Distributor shall use its best
efforts to arrange for eligibility for third party reimbursement for the PTM
Kits from major medical insurance carriers, health maintenance organizations and
governmental health plans.
6.8 REPORTS. During the term of this Agreement Distributor shall
provide Pacific with quarterly sales reports, within 45 days of the end of each
calendar quarter,
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summarizing sales of PTM Kits during such quarter, and specifying sales by
country or sub-distributor.
7. DUTIES AND COVENANTS OF PACIFIC.
7.1 COMPLIANCE. Pacific shall ensure that all PTM Kits are traceable
by lot or batch and that the PTM Kits are manufactured, packaged, labeled and
sold to Distributor in accordance with all applicable laws, rules and
regulations. Pacific shall comply in all material respects with all laws,
regulations or orders of any and all governmental authorities within the United
States and shall use best efforts to comply in all material respects with all
laws, regulations or orders of any governmental authorities outside the United
States. Pacific agrees that it will not directly or indirectly do any act or
thing which will constitute a violation by Distributor or Pacific of any
applicable laws or regulations.
7.2 OPERATIONS. Pacific shall hold Distributor harmless for any
violation of state or federal law relating to Pacific's operations.
7.3 WARRANTY. Pacific shall warrant that each PTM Kit sold to
Distributor under this Agreement shall be free from defects in material and
workmanship, and meets specifications set forth in the current pre-market
approval documentation at time of delivery.
7.4 SHELF LIFE; EXPIRATION DATE. The minimum shelf life and
expiration date for the initial order of PTM Kits shall be 9 months from date of
shipment, with the minimum shelf life and expiration date for all other
shipments of 10 months. Following execution of this Agreement, Pacific shall
promptly conduct testing to validate a shelf life and expiration date of at
least 18 months; upon completion of such testing, the minimum shelf life and
expiration date for all subsequent orders shall be 16 months. If Pacific has not
achieved 18 month shelf life and expiration date during the first two Contract
Years, then at the option of Distributor the minimum order size referred to in
Section 5.2 shall be reduced to 500 ten tray kits or 1,000 five tray kits for
such Contract Years. If the 18 month shelf life and expiration date is not
achieved by the end of the second Contract Year, then the parties agree to
negotiate in good faith toward a reduction in the minimum quantity requirements
set forth in Section 3 of this Agreement and the Bonus PTM Kit Thresholds in
Section 5.5 of this Agreement. In the event Distributor purchases PTM Kits with
a shelf life and expiration date of 12 months or less, and the expiration date
of such PTM Kits passes while held in inventory, or if customers return PTM Kits
after the expiration date, then Distributor may return such kits for a product
credit (in the form of similar kits) equal to 50% of the purchase price of the
PTM Kits.
7.5 CORRECTIVE ACTION. In the event of any customer complaints or
regulatory action concerning the PTM Kits or the associated procedures, Pacific
shall take such action as is reasonable necessary to correct the problem or
address the regulatory action, and shall promptly furnish Distributor with
copies of any correspondence with customers and regulatory agencies. In this
regard, Distributor understands that Pacific shall have the right to revise the
specifications
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for the PTM Kit from time to time in order to obtain acceptable performance or
to comply with governmental regulations. Pacific shall notify Distributor in
advance of any changes that will affect product performance or instructions for
use, or that will be noticeable by customers.
8. REPRESENTATIONS. Pacific and Distributor each represents to the other
as follows:
8.1 CORPORATE STATUS. It is a corporation in good standing under the
laws of Delaware, with all necessary corporate power and authority to execute,
deliver and perform this Agreement.
8.2 APPROVAL. The execution, delivery and performance of this
Agreement have been approved by all necessary corporate action.
9. TERM AND TERMINATION.
9.1 TERM. This Agreement shall commence on the Effective Date and
continue for five Contract Years, unless earlier terminated pursuant to the
terms hereof. The terms of this Agreement shall thereafter remain in force for
successive terms of five years each. The parties agree to negotiate in good
faith toward the determination of minimum purchase quantities and unit prices
for any renewal period. After the expiration of the first five-year term of this
Agreement, Pacific shall have the right to appoint, on a non-exclusive basis, an
additional distributor for the PTM Kits in any country within the Territory in
which Distributor does not have sales activity.
9.2 TERMINATION BY NOTICE. Either party may give the other party
written notice of termination of this Agreement if such other party is in
material breach of any of its obligations under this Agreement. The termination
shall become effective sixty days from the date such notice is given unless,
within such sixty-day period, such breach and any intervening breaches have been
cured to the reasonable satisfaction of the non-breaching party.
9.3 AUTOMATIC TERMINATION. Notwithstanding the foregoing, either
party may immediately cancel any order and may immediately terminate this
Agreement, in whole or in part, (i) upon the filing of any petition in
bankruptcy by or against the other party which is not cured or dismissed within
sixty days thereafter, (ii) if the other party is ordered or adjudged bankrupt,
becomes insolvent or goes into liquidation, or generally fails to pay debts as
they become due, (iii) upon appointment of a receiver or custodian of all or a
part of the other party's assets by any judicial or governmental procedure, (iv)
upon admission of the other party to the benefit of any procedure for the
settlement of its debts, or (v) upon seizure of all or a substantial part of the
other party's assets by any judicial or governmental procedure.
9.4 EFFECT OF TERMINATION. Except as otherwise provided for herein,
termination of this Agreement shall not release either party hereto from any
liability which at the time of termination has already accrued to the other
party hereto or which after termination may accrue
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in respect of any act or omission prior to termination from any obligation which
is expressly stated herein to survive termination. Upon the termination or
expiration of this Agreement, Distributor (i) shall return to Pacific all
property of Pacific in Distributor's possession, including, without limitation,
literature, instructions, manuals, brochures, reprints, and marketing materials,
and (ii) shall immediately cease the use of any of Pacific's trademarks,
tradenames, service marks, or brand names incorporated into the Private Label;
provided, however, that Distributor shall be entitled to sell any PTM Kits in
inventory or on order, unless Pacific elects to purchase the PTM Kits from
Distributor at the current purchase price as determined under Section 5.1. Upon
the termination or expiration of this Agreement, Pacific (i) shall return to
Distributor all property of Distributor in Pacific's possession, including,
without limitation, literature, instructions, manuals, brochures, reprints, and
marketing materials, and (ii) shall immediately cease the use of any of
Distributor's trademarks, tradenames, service marks, or brand names,
including, without limitation, the trade mark "Pocket Watch," and all related
logos, designs and symbols.
10. INDEMNIFICATION
10.1 INDEMNIFICATION BY DISTRIBUTOR. Distributor shall indemnify,
defend and hold harmless Pacific, and Pacific's officers, directors, employees
and agents from and against any and all losses, liabilities, damages and
expenses, including, but not limited to, court costs and actual attorneys' fees
(collectively, "Losses") suffered or incurred by them as a result of (i) the
breach of any of Distributor's duties or covenants under this Agreement, or
(ii) the breach of any of the representations and warranties of Distributor set
forth in this Agreement. The foregoing indemnity shall not require payment as a
condition precedent to recovery and shall survive termination of this Agreement.
10.2 INDEMNIFICATION BY PACIFIC. Pacific shall indemnify, defend and
hold harmless Distributor, and Distributor's officers, directors, employees and
agents from and against any and all losses, liabilities, damages and expenses,
including, but not limited to, court costs and actual attorneys' fees
(collectively, "Losses") suffered or incurred by them as a result of (i) the
breach of any of Pacific's duties or covenants under this Agreement, and (ii)
the breach of any of the representations and warranties of Pacific set forth in
this Agreement, and (iii) any product liability claim relating to the PTM Kits,
except to the extent that such claim was due to an act or omission of
Distributor which contributed to the cause of such claim. The foregoing
indemnity shall not require payment as a condition precedent to recovery and
shall survive termination of this Agreement.
11. PROPRIETARY RIGHTS, CONFIDENTIALITY, LICENSE. Distributor
acknowledges that Pacific is the owner of all trade secrets and intellectual
property rights relating to the design and manufacture of the PTM Kits,
including any improvements or modifications to the PTM Kits. Distributor shall
never contest the exclusive right of Pacific to such trade secrets and
intellectual property rights. The parties acknowledge that any and all trade
secrets, ideas, information, research, methods, improvements, patents,
copyrighted material and all other confidential
8
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information, and the good will associated with them, owned or developed by one
party (the "Disclosing Party") and directly or indirectly revealed to the other
party (the "Receiving Party") are, and shall remain, the sole and exclusive
property of the Disclosing Party, except that any and all improvements to the
PTM Kits, whether or not directly or indirectly caused, suggested, or effected
by Distributor, shall be the property of Pacific. All such information and
knowledge about the Disclosing Party, its products, services, standards,
specifications, procedures and techniques, which are not in the public domain or
generally known in the industry, and such information and material as the
Disclosing Party may designate in writing as confidential, shall be deemed
confidential for purposes of this Agreement. The Receiving Party agrees to keep
all such information confidential and to use it only for the purpose and in the
manner authorized by the Disclosing Party. Each party agrees that during and
after the termination of this Agreement, neither the Receiving Party nor any of
its agents or employees shall copy or disclose to any other person or entity, or
use for any purpose other than as contemplated by this Agreement, any
proprietary or confidential information in contravention of this Section.
12. RIGHT OF FIRST REFUSAL. For so long as Distributor orders and takes
delivery of the minimum quantities of PTM kits described in Section 3 necessary
to maintain exclusivity, Distributor shall have the right of first refusal to
acquire the PTM Kit product line, and all associated patents, patent
applications, improvements, trade secrets, know-how, permits, approvals, and all
other property, tangible or intangible, of whatever character, related to the
design, manufacturing and production of the PTM Kits (the "PTM Kit Product
Line"), and Pacific shall not sell, assign, license, hypothecate, or otherwise
transfer such assets nor take any action inconsistent with Distributor's rights
under this Section. In the event Pacific proposes to sell or otherwise transfer
the PTM Kit Product Line or any portion thereof to any person, firm or entity
other than Distributor (and unaffiliated with Pacific), it first shall deliver
to Distributor a notice to that effect accompanied by a copy of any third party
offer or agreement (the "Offer Notice"), and Distributor shall have the right,
exercisable for a period of thirty days following receipt of the Offer Notice
(the "Acceptance Period"), to elect in writing to acquire the PTM Product Line,
or the portion thereof included in the Offer Notice, upon the terms and for the
price therein stated (the "Purchase Election"). Distributor shall then commence
negotiations for the acquisition of the PTM Kit Product Line, or portion
thereof, within 60 days of delivery of the Purchase Election. If any portion of
the consideration recited in the Offer Notice is other than cash, Distributor
will have the right to substitute cash equal to the fair market value of the
non-cash consideration, as reasonably determined by Distributor. In the event
Pacific duly delivers an Offer Notice to Distributor as described in this
Section, and Distributor does not elect to acquire the PTM Product Line or the
portion thereof offered during the Acceptance Period, then Pacific may sell or
transfer the PTM Product Line (or the portion thereof offered) on the terms set
forth in the Offer Notice for a period of sixty days following the expiration of
the Acceptance Period.
In addition, for so long as Distributor orders the minimum quantities of
PTM kits described in Section 3 necessary to maintain exclusivity, Distributor
shall have the right of first refusal to acquire from Pacific any new dental
products, product lines or applications developed or owned by Pacific, utilizing
the procedure set forth in the preceding paragraph.
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13. ASSIGNMENT. This Agreement may not be assigned or otherwise
transferred by either party, in whole or in part, by operation of law or
otherwise, without the prior written consent of the other party, which consent
shall not be unreasonably withheld and any such assignment or transfer without
such prior written consent shall be null and void and of no force or effect
whatsoever; provided, however, that either party may assign this Agreement
without the other party's consent in connection with the sale of substantially
all of the assets associated with such party's business. A change in control of
either party shall not constitute an assignment under this Agreement. In the
event that Pacific sells or assigns the PTM Kit Product Line, then this
Agreement shall be binding on the purchaser or the assignee, as the case may be,
but nothing shall relieve Pacific from its liability under this Agreement.
14. ENTIRE AGREEMENT. This Agreement constitutes the complete, final and
exclusive statement of the terms of the understanding between the parties. This
Agreement supersedes all prior agreements and understandings concerning its
subject matter and may not be amended without further written agreement of both
parties. If any provision of this Agreement should be found to be invalid or
unenforceable, all of the other provisions shall nonetheless remain in full
force and effect to the maximum extent permitted by law.
15. APPLICABLE LAW. This Agreement shall be construed in accordance with,
and all disputes hereunder shall be governed by, the laws of the State of
California.
16. ATTORNEYS' FEES. In any arbitration or proceeding arising hereunder,
the prevailing party shall be entitled to recover its costs and reasonable
attorneys' fees, as determined by the court.
17. ARBITRATION. All disputes arising in connection with this Agreement
shall be finally settled by final binding arbitration; provided, however, that
nothing contained in this Section 17 shall prevent either party from seeking
temporary restraining orders, injunctions, or other equitable relief in any
court of competent jurisdiction.. The arbitration shall be held in San Diego
County, California, and conducted in accordance with the Commercial Rules of
the American Arbitration Association. Judgment upon the award rendered may be
entered in any court having jurisdiction or application may be made to such
court for a judicial acceptance of the award and an order of enforcement. The
arbitrator's fees and costs shall be borne equally between the parties
participating in the arbitration.
18. RELATIONSHIP OF PARTIES. Each party shall be an independent
contractor in relationship to the other party hereunder, and this Agreement does
not create in any manner or for any purpose whatsoever a principal-agent
relationship between Pacific and Distributor. Neither party is authorized to
enter into agreements for or on behalf of the other party, create any obligation
or responsibility, express or implied, for or on behalf of the other party,
accept payment of any obligation due or owed to the other party, accept service
of process for the other party, or bind the other party in any manner or thing
whatsoever. Neither party shall list, print or display the other party's name
in such a manner as to indicate or imply that there is a principal-
10
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agent relationship between Pacific and Distributor.
19. NOTICES. Any notice required or permitted hereunder shall be given in
writing by hand delivery, by carrier guarantying overnight delivery, or by
facsimile or similar electronic means, addressed to the parties at their
respective addresses set forth on the signature page of this Agreement (or such
other addresses as they may from time to time designate) and directed to the
attention of the president of the recipient. Notice by hand delivery shall be
effective upon receipt. Notice by carrier guarantying overnight delivery shall
be effective upon the day following delivery of the notice to such carrier.
Electronic notice shall be effective upon receipt of confirmation of
transmission.
20. FORCE MAJEURE. The obligations of either party to perform under this
Agreement shall be excused if such failure to perform or any delay is caused by
acts of God or the public enemy, strikes, civil commotion, riots, war,
revolution, fire, explosion, flood, compliance with or other action taken to
carry out the intent or purpose of any law or regulation, or any other cause
reasonably beyond the control of the party obligated to perform. Upon the
occurrence of such an event, the duties and obligations of the parties shall be
suspended for the duration of the event preventing proper performance under this
Agreement, provided, however, that if such suspension shall continue in excess
of sixty days, the parties shall meet and attempt to arrive at a mutually
acceptable compromise within the spirit and intent of this Agreement.
21. WAIVER. Either party's failure to insist, in one or more instances,
upon the performance of any term or terms of this Agreement shall not be
construed as a waiver or relinquishment of right to such performance or the
future performance of such term or terms, and the other party's obligation with
respect thereto shall continue in full force and effect.
22. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original and, when executed
separately or together, shall constitute a single original instrument, effective
in the same manner as if the parties have executed one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed by the undersigned
authorized representatives of the parties as of the Effective Date stated above.
Address: 22895 East Park Drive Steri-Oss Inc.
Yorba Linda, CA 92687
By
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Address: 6730 Mesa Ridge Road, Suite A Pacific Pharmaceuticals, Inc.
San Diego, CA 92121
By
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Exhibit 99.59
Contact: Jim Hertzog Rhonda Chiger (investor)
Pacific Pharmaceuticals, Inc. Patricia Gitt (media)
619/550-3900 Dewe Rogerson Inc.
212/688-6840
[email protected]
[email protected]
FOR IMMEDIATE RELEASE
PACIFIC PHARMACEUTICALS, INC. SIGNS DISTRIBUTION AGREEMENT FOR
PERIODONTAL TISSUE MONITOR-TM- KIT
SAN DIEGO, CA, August 26, 1997 -- Pacific Pharmaceuticals, Inc. (AMEX: PHA)
today announced that it has signed a five year renewable agreement with Steri-
Oss, a leading dental implant company, for the distribution of its Periodontal
Tissue Monitor Kit (PTM) in North America and other countries, excluding Europe
and Japan where other distribution agreements are in effect.
Under the terms of the agreement Steri-Oss will be responsible for all sales and
marketing activities of the PTM Kit to periodontists and general dental
practitioners. North American sales of the PTM Kit will be handled by Steri-
Oss's internal salesforce, with foreign market sales and distribution handled
through a network of distributors. Steri-Oss has also agreed to seek third
party eligibility for PTM from major medical insurance carriers, HMO's and
government health plans.
The Company's proprietary Periodontal Tissue Monitor Kit (PTM) is an eye-
readable, chairside disposable test for use in the dental office to assist
practitioners in the early detection and diagnosis of periodontitis, and in the
monitoring of treatment for the disease. The PTM Kit is an objective
biochemical adjunct to traditional methods of monitoring patients by detecting
elevated levels of aspartate aminotransferase (AST) found in the crevicular
fluid (between the neck of the tooth and gum) when cells die.
"Pacific Pharmaceuticals will benefit from Steri-Oss's expertise to educate and
train dental practitioners in the proper use of the PTM Kits, enabling the
Company to remain focused on its cancer therapy programs," said H. Laurence
Shaw, M.D., president and chief executive officer of Pacific Pharmaceuticals.
"We are pleased to partner with a company with established sales and marketing
programs tailored to the dental community."
Pacific Pharmaceuticals, Inc. is a biopharmaceutical company which identifies
and in-licenses unique technologies in the healthcare arena. The Company manages
these products through focused pre-clinical and clinical development, regulatory
approvals and positions them for successful commercialization. Pacific
Pharmaceuticals is actively engaged in the development of cancer therapies, and
is currently developing a proprietary boronated porphyrin compound (BOPP) for
brain cancer, and a proprietary immunotherapy for the treatment of metastatic
cancer.
This news release contains forward looking statements. The actual results could
vary from those expected due to a variety of risks set forth from time to time
in the Company's filings with the Securities and Exchange Commission, including
but not limited to its report on Form 10-Q for the quarter ended June 30, 1997,
and its report on Form 10-K for the year ended March 31, 1997. The Company
undertakes no obligation to publicly release the results of any of these
forward-looking statements which may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
###
