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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
EXHIBIT 10.209
"CONFIDENTIAL TREATMENT REQUESTED BY CYGNUS, INC."
LIVINGSTON HEALTHCARE SERVICES INC.
WAREHOUSE DISTRIBUTION CONTRACT
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This contract (the "Contract") is made effective the 25th day of August, 2000,
between Livingston Healthcare Services Inc., a Delaware corporation, having its
principal place of business at 220 Lake Drive, Newark, Delaware, 19702,
hereinafter referred to as "LHSI," and Cygnus, Inc., a Delaware corporation,
having its principal place of business at 400 Penobscot Drive, Redwood City,
California 94063, hereinafter referred to as "Client."
WITNESSETH
WHEREAS, LHSI is in the business of providing outsource logistics services to
healthcare clients requiring similar services,
WHEREAS, Client has substantial knowledge and expertise in and owns certain
technology relating to the development, manufacture and sale of glucose
monitoring systems,
WHEREAS, Client wishes to utilize and engage the services of LHSI for certain of
its logistics requirements, and wishes to utilize LHSI's Premises as more
particularly set forth hereinafter;
WHEREAS, LHSI wishes to provide certain outsource logistics services to Client,
as more particularly set forth hereinafter;
NOW, THEREFORE, in consideration of the premises and covenants hereinafter
contained and other good and valuable consideration each to the other paid and
received, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
ARTICLE I. DEFINITIONS
1.1 "Affiliate(s)" means of a person, firm or entity means any entity
controlled by, under common control with, or controlling such person,
firm or entity. "Control" in this context shall mean direct or indirect
beneficial ownership of greater than fifty percent (50%) of the voting
stock or equity, or greater than fifty percent (50%) interest in the
income of such corporation or other business entity; provided that, if
local law requires a minimum percentage of local ownership, control
will be established by direct or indirect beneficial ownership of one
hundred percent (100%) of the maximum ownership percentage that may,
under such local law, be owned by foreign interests. All references to
LHSI or Client shall apply equally to their Affiliate(s), as if stated
separately each time herein.
1.2 "Agency" means any advertising, promotional, public relations, or
similar agency contracted by Client to develop, support, and execute
the marketing of the Product.
1.3 "Authorized Customer" means any party so designated and approved
through the initialization Work Instruction.
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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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1.4 "DEA" means the United States Drug Enforcement Agency.
1.5 "FDA" means the United States Food and Drug Administration.
1.6 "Force Majeure" means acts of war; civil disturbance or riot; shortages
of materials; earthquake; fire; flood; hurricane; windstorm; or similar
natural disasters; and other acts defined as Force Majeure in the laws
of the State of Delaware.
1.7 "LHSI Premises" means the distribution facilities located in
[CONFIDENTIAL TREATMENT REQUESTED] and [CONFIDENTIAL TREATMENT
REQUESTED], and the Call Center located in [CONFIDENTIAL TREATMENT
REQUESTED] operated by LHSI and may only include other LHSI facilities
if pre-approved by Client.
1.8 "Legend Device" means a device that bears the statement "Caution: U.S.
Federal law restricts the _________________ to sale by or on the order
of a physician."
1.9 "Logistics Fees" means those fees listed in Exhibit "A" attached hereto
and incorporated herein by reference.
1.10 "Products" means, individually and collectively, those items or
transactions which Client has requested LHSI to physically handle for
Client, and any items which Client acquires and/or manufactures during
the term of this Contract.
1.11 "Record" means information inscribed on a tangible medium or stored in
an electronic or other medium and retrievable in perceivable form.
1.12 "Remittance Advice" refers to a summary document of all daily
remittances applied to Client's bank account at Client's banking
institution. This document is provided to LHSI by the banking
institution on behalf of Client.
1.13 "Services" means the full scope of services to be provided by LHSI to
Client, as set forth in Article II.
1.14 "Territory" shall include the 50 States of the United States, the
District of Columbia, Puerto Rico and any other locations on which the
parties may agree in a Record.
1.15 "Work Instruction(s)" means those written procedures maintained and
used by LHSI in the training of its personnel and execution of services
under this Contract and accepted by Client and LHSI in a Record. The
Work Instructions may be amended from time to time by consent of the
parties in a Record. Such consent shall not be unreasonably withheld or
delayed.
1.16 A "Year 2000 Problem" means a data handling problem relating to the
Year 2000 date change that would cause a computer system, software or
equipment to fail to correctly perform, process and handle date-related
data for the dates within and between the twentieth and twenty-first
centuries and all other centuries, including leap year calculations.
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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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ARTICLE II. OBLIGATIONS OF LHSI AND CLIENT
2.1 LHSI shall use commercially reasonable efforts to train its personnel
and perform all services up to the limit of its regulatory authority
required under this Contract substantially in accordance with the Work
Instructions; provided, however, that if provisions of this Contract
and the Work Instructions conflict, then the provisions of this
Contract shall control. For any services outside the bounds of LHSI's
regulatory authority, LHSI will be responsible to transfer those
services to a subcontractor mutually agreed upon by both LHSI and
Client.
2.2 Client shall use commercially reasonable efforts to perform all
obligations required under this Contract substantially in accordance
with the Work Instructions; provided, however, that if provisions of
this Contract and the Work Instructions conflict, then the provisions
of this Contract shall control.
2.3 Client's Products
(a) Client shall deliver Products in reasonable quantities, based
upon information provided by LHSI as to customer orders and
Product inventories, to LHSI at the LHSI Premises during
normal working hours.
(b) Client shall be solely responsible for maintaining a
satisfactory supply of its Products with LHSI at the LHSI
Premises at all times to meet the demands of Client's
customers, subject to Client's manufacturing capacity and the
demand, if any, for Client's Products.
(c) Client shall deliver Products for storage properly marked and
packaged, including a manifest showing sizes or specific stock
keeping units.
(d) Client shall be solely responsible for the procurement,
marketing and sale of the Products.
(e) Client shall be solely responsible for ensuring that the
Products comply with all federal, state, local and other laws
and regulations with respect to safety, labeling and
advertising.
(f) Client shall be solely responsible to its customers for all
warranties express or implied that exist with respect to the
Products as required by law.
(g) Client shall be solely responsible for addressing all
regulatory issues regarding manufacturing defects or safety
issues related to any Product and for deciding the necessity,
scope, and procedures for any Product recall.
(h) Client shall pay the Logistics Fees enumerated in Exhibit "A",
including any minimum fee set forth therein, and perform all
of its other obligations under this Contract and the Work
Instructions. All capital equipment purchased by LHSI for
Client shall become the property of Client and LHSI will
execute requested documents to this effect. Such equipment
will be set forth in Exhibit "C". If Client does not pay the
Logistics Fees enumerated in Exhibit "A" within
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[CONFIDENTIAL TREATMENT REQUESTED] days and Client has not
notified LHSI of a good faith dispute regarding such fees,
then LHSI reserves the right to hold a portion of Client's
inventory with a value not to exceed the undisputed overdue
fees until receipt of fee payment from Client to LHSI.
(i) Client agrees that the Logistics Fee Schedule attached as
Exhibit "A" is conditioned on the accuracy of the Scope of
Service/Logistics Assumptions attached as Exhibit "B". Thus,
Client agrees that if the Scope of Service/Logistics
Assumptions attached as Exhibit "B" prove to be inaccurate in
any material respect, the parties will revise Exhibits "A" and
"B".
2.4 Receiving and Storage
(a) Upon receipt of inbound Products from Client, LHSI shall make
a commercially reasonable visual inspection of each inbound
product shipment, and shall notify Client as soon as
reasonably practicable whenever Products do not substantially
conform to any specification that may be designated by Client
and added to the Work Instructions, provided such
nonconformity is apparent upon a commercially reasonable
visual inspection. LHSI shall not dispose of any nonconforming
Products without prior written authorization and instructions
from an authorized officer of Client.
(b) LHSI shall provide commercially reasonable security at the
LHSI Premises.
(c) Within the scope of its regulatory authority, LHSI shall
comply with all laws and regulations of all local, state and
federal governments and agencies having jurisdiction over the
Products, their storage in the LHSI Premises, and their
distribution, including, but not limited to, the FDA, the DEA,
the Environmental Protection Agency, the Occupational Safety
and Health Administration, the Department of Transportation,
and any other applicable agencies that may have or come to
have jurisdictional authority.
(d) LHSI shall communicate with Client within the next business
day upon discovering that any Products do not conform with any
specification that may be designated in a Record by or as
outlined in the Work Instructions.
(e) LHSI shall provide warehouse, office and management personnel
it determines is reasonably required to perform its
obligations under this Contract.
(f) LHSI shall maintain written documentation conforming to the
Work Instructions attesting to the proper receipt and storage
of Products.
2.5 Customer Service and Technical Support
LHSI shall:
(a) Provide customer service and technical support.
(b) Set up new customers utilizing a customer initialization Work
Instruction.
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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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(c) Provide Cygnus education and testing process for each patient
for any order for a Legend Device.
(d) Follow appropriate Work Instruction to determine and document
the eligibility of the authorizing physician or other
healthcare professional.
(e) Enter patient orders whether received via phone call,
facsimile, mail, website, etc., as specified in the Work
Instruction.
(f) Match patient orders with corresponding physician
authorization.
(g) Verify patient testing.
(h) Maintain records of Authorized Customers who have opened
accounts with Client.
(i) Accept orders on Client's behalf only from Authorized
Customers.
(j) Maintain physician authorization records.
(k) Maintain customer education and test records.
(l) Provide basic Product technical support to customers,
physicians and other healthcare professionals per approved
Work Instruction developed by Client.
(m) Collect data pertaining to potential adverse events and
transmit same to Client per Work Instruction.
(n) Provide reports of all Call Center operations to Client.
2.6 Shipment - In response to orders received from Client or Authorized
Customers, LHSI shall pick, pack and ship as specified below.
(a) LHSI shall pick, pack, and ship each order for Products as
outlined in the Work Instructions after receipt of the order,
unless its inventory of Products is insufficient to fill the
order. LHSI will use commercially reasonable efforts to keep
Client apprised of inventory levels. In the event of
significant daily swings in Client order volume, LHSI shall
request advance authorization from Client for overtime charges
necessary to maintain desired service levels.
(b) Within the scope of its regulatory authority, LHSI shall
package and ship Products in compliance with the Work
Instructions and all applicable laws and all regulations of
the United States Department of Transportation, the FDA, and
any other applicable agencies that have or may come to have
jurisdictional authority.
(c) Upon request, LHSI shall include with shipments a flyer or
other promotional material supplied by Client at a cost to
Client agreed upon in a Record.
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(d) For each shipment LHSI shall prepare standard documents and
disburse as outlined in the Work Instructions.
(e) LHSI shall prepare and forward to Client reports summarizing
orders received, shipments completed, backorders, and current
inventory status, either via fax or electronically, as
specified by Client in a Record, which shall include shipping
dates and quantities of Products delivered to Authorized
Customers.
(f) Shipments of backordered products shall be shipped within the
next business day after receipt of the backordered Products by
LHSI unless otherwise specified in the Work Instructions.
(g) LHSI shall provide transportation management services, which
can include the following: negotiation of freight rates;
carrier selection to commercially reasonable prescribed
service standards put forth by Client; proof of delivery and
damage claim processing; and audit and processing of freight
invoices as agreed to in the Work Instructions.
(h) Perform all other duties performed by a warehousemen.
2.7 Samples and Promotional Literature Fulfillment
(a) LHSI shall provide sample and promotional literature
fulfillment in accordance with commercially reasonable
standards and as outlined in the Work Instructions.
(b) LHSI shall package and ship samples and/or promotional
literature in compliance with the Standard Procedures and all
applicable laws and all regulations of the United States
Department of Transportation, the FDA, and any other
applicable agencies that have or may come to have
jurisdictional authority
2.8 Records and Reports
(a) LHSI shall provide inventory, customer, physician, technical
support, and adverse event records and reports management in
accordance with commercially reasonable standards and as
outlined in the Work Instructions, including, but not limited
to, daily and monthly activity reports.
2.9 Access and Modifications to the LHSI Premises
(a) LHSI represents that it will make all commercially reasonable
efforts to configure and equip the LHSI Premises to adequately
meet Client's current and projected requirements as set forth
in the Work Instructions for Product receiving, storage,
shipment, call center, work stations, personnel, database and
file transmission system.
(b) LHSI shall promptly notify Client, upon notice to LHSI, of any
inspection by a federal, state, or local regulatory
representative concerning the Products and will allow a
representative of Client, if so desired, to be present at LHSI
facilities during such inspections as it relates to Client's
Products. LHSI shall provide
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Client a summary of the results of such inspections and of the
actions, if any, taken to remedy conditions cited in such
inspections.
2.10 Title to and ownership of the Products in possession of LHSI shall
always be vested in Client and subject to its discretion and control.
Title and ownership shall pass directly to the purchaser of the
Products upon delivery by LHSI to a common carrier and all proceeds
derived or credits arising therefrom shall be the sole property of
Client.
2.11 Client shall bear the expense of any inventory taxes that might be
assessed on its Products from time to time.
2.12 During the term of this Contract, warehouse services, customer and
technical services and distribution to be performed in the Territory
with respect to the Products shall be performed solely by LHSI or
subcontractors of LHSI whose services have been pre-approved by Client.
2.13 Client recognizes the rights of LHSI to act and to operate LHSI
Premises as a public warehouse.
2.14 Other Duties
(a) Upon a [CONFIDENTIAL TREATMENT REQUESTED] business days
advance notice, LHSI shall allow Client's personnel or its
representatives to perform physical inventory audits of
Products in LHSI's custody, possession or control at any time
during normal business hours, provided such audit is performed
without interruption to LHSI's normal business activities.
(b) LHSI shall accept returned Products and shall process such
Products in accordance with procedures mutually agreed upon
between the parties in a Record.
(c) LHSI shall provide, with Client's consent, Client's
representative with any document to which Client is otherwise
entitled that such lender may reasonably request.
(d) Within the scope of its regulatory authority, LHSI shall
maintain all permits, licenses and registrations required to
store and distribute Products in each of the fifty states of
the United States, District of Columbia and all other
locations in the Territory.
(e) LHSI shall allow Client's personnel or its representatives to
perform audits of LHSI's quality system and performance
thereof. Such audits may include facilities visits upon
[CONFIDENTIAL TREATMENT REQUESTED] business days notice, and
inspection of records and reports.
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ARTICLE III. INSURANCE
3.1 At all times during the term of this Contract, LHSI shall maintain, at
its own expense, the following insurance coverage:
(i) Workmen's compensation in the amount of [CONFIDENTIAL
TREATMENT REQUESTED] to comply with the statutory requirements
of the State of Delaware, or any other state in which LHSI
performs its obligations hereunder;
(ii) Warehouseman's legal liability insurance in the amount of
[CONFIDENTIAL TREATMENT REQUESTED]. Client acknowledges that
Client has its own insurance sufficient to cover the value of
all Products stored at the LHSI Premises under this Contract.
(iii) Commercial general liability insurance in the amount of
[CONFIDENTIAL TREATMENT REQUESTED] for bodily injury or
property damage for any one occurrence or series of
occurrences arising out of one cause, designating Client as an
additional insured. The policy shall also cover liabilities
specifically assumed under this Contract.
3.2 The responsibility of LHSI for loss or damage of any Product covered by
this Contract, including any packaging of such Product, while being
stored on the LHSI Premises or transported to or from the LHSI
Premises, is limited on a per occurrence basis to the insurance
proceeds received by LHSI, or paid on behalf of LHSI to a maximum of
those amounts set forth in 3.1 above to cover any such loss or damage
of Client's Product, including any self insured retention or
deductible.
3.3 At all times during the term of this Contract, Client shall maintain,
at its own expense, the following insurance coverage:
(i) primary commercial first-party insurance sufficient to cover
the replacement value of Products in the possession of LHSI;
(ii) product liability insurance in an amount appropriate to
Client's business type and level, said amount to be reviewed
on an annual basis;
(iii) Commercial General Liability, Automobile Liability Insurance
and Worker's Compensation Insurance with limits equal to the
limits of LHSI's coverage set forth in Section 3.1 if
employees of Client shall be present at facilities owned or
operated by LHSI.
3.4 Upon request, each party will furnish certificates of insurance to the
other party evidencing the insurance required by this Contract. Each
party will provide at least 30 days prior written notice in the event
of cancellation or material reduction in coverage, and upon request
promptly submit to the other party satisfactory evidence of such
insurance.
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ARTICLE IV. INDEMNIFICATION
4.1 LHSI shall indemnify and hold harmless Client and its Affiliates,
directors, officers, agents, shareholders and employees and defend them
from and against any and all claims, demands, actions, causes of
action, losses, judgments and damages, brought or alleged by a third
party, and any and all costs or expenses relating thereto (including,
but not limited to, reasonable attorney's fees, court costs, and costs
of settlement, and the cost of any Product recall, whether voluntary or
involuntary) whatsoever arising out of or related to the sole
negligence, fraud, or willful misconduct of LHSI, or the material
breach by LHSI of any of LHSI's obligations under this Contract. Client
shall provide LHSI prompt written notice of any claims, demands,
actions, causes of action, losses, judgments or damages and Client
shall have the right, at its discretion and at its cost, to have
attorneys of its choosing participate with LHSI on the investigation,
litigation, settlement and all other aspects of such claims, demands,
actions, causes of action, losses, judgments or damages. In such event
LHSI shall share, on a timely basis, all such information obtained with
Client's designated attorneys. It is a condition to the foregoing
indemnity that Client shall not admit liability nor make any payment,
settlement or compromise in respect thereof without the prior written
consent of LHSI, which consent shall not be unreasonably withheld or
delayed.
4.2 Client shall indemnify and hold harmless LHSI and its Affiliates,
directors, officers, agents, shareholders and employees and defend them
from and against any and all claims, demands, actions, causes of
action, losses, judgments and damages, brought or alleged by a third
party, and any and all costs or expenses relating thereto (including,
but not limited to, reasonable attorney's fees, court costs, and costs
of settlement, and the cost of any Product recall, whether voluntary or
involuntary) whatsoever arising out of or related to the sole
negligence, fraud or willful misconduct of Client, or the material
breach by Client of any of Client's obligations under this Contract.
LHSI shall provide Client prompt written notice of any claims, demands,
actions, causes of action, losses, judgments or damages and LHSI shall
have the right, at its discretion and at its cost, to have attorneys of
its choosing participate with Client on the investigation, litigation,
settlement and all other aspects of such claims, demands, actions,
causes of action, losses, judgments or damages. In such event Client
shall share, on a timely basis, all such information obtained with
LHSI's designated attorneys. It is a condition to the foregoing
indemnity that LHSI shall not admit liability nor make any payment,
settlement or compromise in respect thereof without the prior written
consent of Client, which consent shall not be unreasonably withheld or
delayed.
4.3 Client shall further indemnify and hold harmless LHSI from and against
any and all claims, demands, actions, causes of action, losses,
judgments and damages, brought or alleged by a third party, and any and
all costs or expenses relating thereto (including but not limited to
reasonable attorneys' fees, court costs and costs of settlement)
arising as a result of (a) any actual or asserted violation of the
Federal Food, Drug and Cosmetic Act or any other federal, state or
local law or regulation by virtue of which Products sold, supplied or
delivered by Client shall be alleged or determined to be adulterated,
misbranded, mislabeled or otherwise not in full compliance with any
such law or regulation, (b) the possession, distribution, sale and/or
use of, or by reason of the seizure of, any of Client's Products,
including any prosecution or action whatsoever by any governmental body
or agency or by any private party, including claims of bodily injury,
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death or property damage, or (c) a claim that the Products infringe any
patent, trademark, copyright, license or other property right or
proprietary right of any third party, or (d) any claims regarding any
aspect of the use of credit cards by Authorized Customers to pay for
orders hereunder (including but not limited to regulatory violations,
credit card fraud or processing errors), unless such credit
card-related claim is due to the sole negligence, fraud or willful
misconduct of LHSI. LHSI shall provide Client prompt written notice of
any claims, demands, actions, causes of action, losses, judgments or
damages and LHSI shall have the right, at its discretion and at its
cost, to have attorneys of its choosing participate with Client on the
investigation, litigation, settlement and all other aspects of such
claims, demands, actions, causes of action, losses, judgments or
damages in such event Client shall share, on a timely basis, all such
information obtained with LHSI. It is a condition to the foregoing
indemnity that LHSI shall not admit liability nor make any payment,
settlement or compromise in respect thereof without the prior written
consent of Client, which consent shall not be unreasonably withheld or
delayed.
ARTICLE V. AMENDMENT AND ASSIGNMENT
5.1 This Contract together with Exhibit "A" and Exhibit "B" and Exhibit "C"
hereto, constitute the entire understanding of the parties, and
supersedes the Letter of Intent between the parties dated August 3,
2000 and any and all previous understandings, whether written or oral,
with respect to the subject matter hereof. All such other
understandings are hereby declared null and void and of no further
force or effect, with the exception of the Mutual Confidentiality
Agreement between the parties dated June 19, 2000, which shall remain
in full force and effect. The terms, conditions and provisions of this
Contract shall prevail over any inconsistent statements, terms,
conditions or provisions contained in any documents passing between the
parties hereto including, but not limited to, any acknowledgment,
confirmation or notice. This Contract may not be amended, supplemented,
or otherwise modified except by an instrument in a Record executed by
the parties hereto.
5.2 This Contract shall not be assignable by either Party hereto, in whole
or in part, in fact or by operation of law, without the prior written
consent of the other, except that either Party may assign this Contract
to any of its present Affiliates, as well as to a person or entity who
acquires all or substantially all of the assets or business of the
business unit to which this Contract relates, whether by sale, merger
or otherwise. This Contract shall inure to the benefit of the parties
and to their successors and assigns.
ARTICLE VI. FORCE MAJEURE
6.1 Each party to this Contract shall be excused from the performance of
its obligations hereunder to the extent that such performance is
prevented by Force Majeure, and such excuse shall continue for so long
as the condition constituting the Force Majeure continues.
6.2 Notwithstanding the immediately foregoing provision, if the LHSI
Premises at any time are subject to a condition constituting Force
Majeure such that LHSI is unable to fulfill its obligations under this
Contract, LHSI shall give immediate written notice thereof to Client,
whereupon Client may, at its sole option, immediately terminate this
Contract by giving written notice of termination to LHSI and make other
arrangements for
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distribution of its Products, or permit LHSI to provide other
warehousing facilities reasonably acceptable to Client for the
duration of the Force Majeure. Notwithstanding the foregoing, in the
event that Client elects to permit LHSI to provide a substitute
facility and the Force Majeure condition continues for more than
[CONFIDENTIAL TREATMENT REQUESTED] days, Client may then, at its
sole option, terminate this Contract by giving written notice of
such termination to LHSI. In the event of termination during a Force
Majeure condition, LHSI shall use its best efforts to remove, or
enable Client to remove Products, shipping and packaging materials,
data and information related to Products, and other property of
Client from the LHSI Premises as promptly as possible.
ARTICLE VII. CONFIDENTIALITY
7.1 LHSI shall not disclose, communicate or divulge to, or use for the
direct or indirect benefit of any person, corporation, or other entity,
other than Client, any proprietary information regarding the Products,
Product specifications, business methods, business policies,
procedures, techniques, computer programs, research or development
projects or results, trade secrets, or inventions, used or developed by
Client, any names or addresses of Client's customers or clients, any
data on or relating to past, present or prospective customers of
Client, information regarding Client sales, shipments, costs or
inventories, any promotional materials developed by the Agency on
behalf of Client except for the delivery of such material to an
Authorized Customer, or any other confidential information relating to
or dealing with the business operations or activities of Client or
Client's customers (collectively the "Client Information"), made known,
directly to LHSI, or indirectly learned or acquired by LHSI while
providing services or while the business relationship between LHSI and
Client exists under this Contract.
7.2 Client shall not disclose, communicate or divulge to, or use for direct
or indirect benefit of any person, corporation, or other entity, other
than LHSI, any proprietary information regarding business methods,
business policies, procedures, techniques, computer programs, trade
secrets, or inventions used or developed by LHSI (collectively the
"LHSI Information") made known to Client or learned or acquired by
Client in relation to this Contract.
7.3 The parties agree that in the event of a violation of Sections 7.1 or
7.2, the nonviolating party shall have the right to seek an injunctive
relief, in addition to any other existing rights provided in this
Contract or by operation of law, without the requirement of posting
bond.
7.4 Client's duty of confidentiality with regard to LHSI Information and
LHSI's duty of confidentiality with regard to Client Information shall
not extend to:
(a) any information that, at the time of disclosure, is
in, or after disclosure lawfully becomes a part of the
public domain (but only after it becomes a part of the
public domain);
(b) any information that, prior to disclosure by the
disclosing party, was already in the lawful possession
of the recipient party, as evidenced by written
records kept by the recipient part in the ordinary
course of its
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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business, or as evidenced by proof of actual prior use
by the recipient party;
(c) any information that, subsequent to disclosure, is
obtained by the recipient party from a third party 1)
who is lawfully in possession of that information, 2)
who is not in violation of any contractual, legal or
fiduciary obligation to the disclosing party with
respect to that information; and 3) who does not
prohibit the recipient party from disclosing the
information to others; or
(d) any information disclosed pursuant to any applicable
law or order of any court or government agency
provided the disclosing party gives the other party
prompt notice so that it may seek a protective order
or other appropriate remedy In the event such
protective order or other remedy is not obtained, the
disclosing party shall furnish only that portion of
the information that it is legally required and shall
use its best efforts to assure confidential treatment
of any such information disclosed.
7.5 Nonsolicitation of Employees. Client and LHSI covenant that they shall
not, for a period of [CONFIDENTIAL TREATMENT REQUESTED] after the
termination of this Contract, or with respect to a former employee or
contractor of the other party, for a period of [CONFIDENTIAL TREATMENT
REQUESTED] after the termination of employment of such employee or
contractor, whichever is earlier: (i) solicit or attempt to solicit any
employee or contractor of the other party to quit employment with
Client or LHSI; (ii) interfere with or disrupt Client's or LHSI's
relationship with other employees or contractors of the other party; or
(iii) solicit, entice or take away any person engaged by Client or
LHSI.
ARTICLE VIII. TERM AND TERMINATION
8.1 This Contract shall commence as of the 25th day of August, 2000, and
shall extend for a period of five (5) years, to and including the 25th
day of August, 2005. This Contract shall automatically renew for
successive [CONFIDENTIAL TREATMENT REQUESTED] terms unless notice to
cancel is provided in writing by one party to the other party at least
[CONFIDENTIAL TREATMENT REQUESTED] prior to the end of the applicable
term.
8.2 Client only may terminate this Contract by submitting [CONFIDENTIAL
TREATMENT REQUESTED] prior written notice of termination to the other
party. If Client terminates this Contract within the first
[CONFIDENTIAL TREATMENT REQUESTED] (i.e., prior to [CONFIDENTIAL
TREATMENT REQUESTED]) then LHSI shall be entitled to the lesser of (a)
[CONFIDENTIAL TREATMENT REQUESTED] or (b) [CONFIDENTIAL TREATMENT
REQUESTED]. During the [CONFIDENTIAL TREATMENT REQUESTED] notice period
Client shall pay the greater of (aa) [CONFIDENTIAL TREATMENT REQUESTED]
or (bb) [CONFIDENTIAL TREATMENT REQUESTED]. Client shall pay LHSI any
outstanding amounts owed within [CONFIDENTIAL TREATMENT REQUESTED] days
after termination of this Contract.
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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8.3 If either LHSI or Client should fail to discharge fully and promptly
any of its obligations under this Contract or the Exhibits hereto,
including, but not limited to, the obligation to make payments and
LHSI's obligation to make timely delivery of Products, and its
obligations under Section 2.9(a), and further fail to cure such default
within a reasonable time not to exceed [CONFIDENTIAL TREATMENT
REQUESTED] days (provided that such a failure can be cured) after
written notice thereof by the non-defaulting party, the non-defaulting
party shall have the right to immediately terminate this Contract upon
giving the defaulting party written notice to such effect.
8.4 Each party hereto shall have the right to terminate this Contract in
the event of any proceeding under a Bankruptcy Act or any insolvency,
receivership or dissolution proceeding involving the other party is
commenced and not dismissed within [CONFIDENTIAL TREATMENT REQUESTED]
days of its commencement.
8.5 Upon termination or expiration of this Contract, LHSI shall promptly
return to Client all Products then in its possession or control, all
packaging, shipping and labeling materials related thereto, all invoice
forms, any equipment or other property purchased by Client, and all
customer and sales representative lists and other confidential or
proprietary information provided hereunder by Client or developed by
LHSI in relation to this Contract, and any information provided in
order that LHSI may obtain any government licenses and permits. In the
event of termination by Client under Section 8.2 or termination by LHSI
under Sections 8.3 and/or 8.4 or cancellation under Section 8.1, LHSI
shall be compensated at the accessorial labor rate detailed in Exhibit
"A" of this Contract in returning property of Client from the last
effective day of this Contract.
8.6 In the event of early termination under Section 8.2 by Client, Client
shall pay the remaining [CONFIDENTIAL TREATMENT REQUESTED] book value
and take title to capital assets purchased by LHSI on behalf of Client.
These capital assets, with their original cost and depreciation term,
are specified in Exhibit "C", which shall be updated throughout the
term of this Contract as mutually agreed by the parties.
8.7 The obligation of Client to pay fees and expenses earned or incurred by
LHSI, as the case may be, prior to the effective date of termination,
the obligations of both parties under Article IV, and the rights and
obligations of both parties under Articles VII, VIII and IX shall
survive the termination or expiration of this Contract.
ARTICLE IX. GENERAL
9.1 This Contract shall be interpreted in accordance with the laws of the
State of Delaware, without regard to its conflict of law principles.
The parties understand and agree that the provisions of Article 7 of
the Uniform Commercial Code as enacted by the State Law governing this
Contract shall apply to this Contract. In the event any terms of this
Contract are contrary to Article 7 of the Uniform Commercial Code, this
Contract shall govern.
9.2 The parties agree and acknowledge that they have the obligations to
indemnify each other set forth in Article IV and that LHSI's
responsibility for loss or damage of any Product
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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covered by this Contract is set forth in Article III. With respect
to all other claims for damages that the parties may assess against
each other:
(i) Neither party shall be liable to the other under any
circumstances for consequential, incidental, indirect or
special damages, for lost profits, savings or revenues of any
kind, regardless of whether such party has been advised of the
possibility of such damages; and
(ii) LHSI's total liability for damages to Client under this
Contract shall be limited to money damages and shall not
exceed an amount equal to the amount actually paid to LHSI by
Client.
9.3 Save and except for any provision or covenant contained herein which is
fundamental to the subject matter of this Contract (including without
limitation those that relate to the payment of monies), the invalidity
or unenforceability of any provision or covenant hereof or herein
contained shall not affect the validity or enforceability of any other
provision or covenant hereof or herein contained and any such invalid
or unenforceable provision or covenant shall be deemed to be severable.
9.4 Routine notices of conditions or situations affecting the Services
performed under this Contract will be given in writing between Ken
Pitzer of Cygnus and Karen Sassi of LHSI, or as otherwise designated by
the parties. All other notices will be given in writing and delivered
by mail or facsimile to the parties as follows:
In the case of LHSI:
Livingston Healthcare Services Inc.
220 Lake Drive
Newark, DE 19702
Attention: Karen Sassi
Facsimile: (302) 266-7650
In the case of Cygnus:
Cygnus, Inc.
400 Penobscot Drive
Redwood City, CA 94063
Attention: General Counsel
Facsimile: (650) 599-3913
If notice is mailed by prepaid first-class mail at any time other than
during a general discontinuance of postal service due to strike,
lockout or otherwise, shall be deemed to have been received
[CONFIDENTIAL TREATMENT REQUESTED] business days after the post-marked
date thereof, or if sent by facsimile or electronic mail, shall be
deemed to have been received on the next business day following
dispatch and acknowledgment of receipt by the recipient's facsimile
machine or computer, or if telecopied, shall be deemed to have been
received on the next business day following dispatch or if delivered by
hand shall be deemed to have been received at the time it is delivered.
Notice of change of address shall also be governed by this Section 9.4.
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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9.5 Upon pre-approval by Client, LHSI may to display any logo, trademark,
service mark, service name or trade name of Client (collectively, the
"Mark(s)") at any site at which the Products are stored or in
advertising or other literature promoting LHSI's logistics services.
9.6 Except to the extent necessary under applicable laws or for ordinary
marketing purposes, the Parties agree that no press releases or other
publicity relating to the substance of the matters contained herein
will be made without approval by both Parties. Any press release
announcing this Contract will be jointly developed and released by both
Parties.
IN WITNESS WHEREOF, both parties have executed this Contract to make it
effective as of the date first above written.
CYGNUS, INC.
By: /s/ John C Hodgman
---------------------------------------------
Name: John C Hodgman
-------------------------------------------
Title: Chairman, President & CEO
------------------------------------------
Date: 8/30/00
-------------------------------------------
LIVINGSTON HEALTHCARE SERVICES INC.
By: /s/ Peter Westermann
---------------------------------------------
Name: Peter Westermann
-------------------------------------------
Title: President
------------------------------------------
Date: 8/31/00
-------------------------------------------
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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EXHIBIT A
[CONFIDENTIAL TREATMENT REQUESTED]
CYGNUS, INC.
By: /s/ John C Hodgman
----------------------------------------------
Name: John C Hodgman
--------------------------------------------
Title: Chairman, President & CEO
-------------------------------------------
Date: 8/30/00
--------------------------------------------
LIVINGSTON HEALTHCARE SERVICES INC.
By: /s/ Peter Westermann
-----------------------------------------------
Name: Peter Westermann
---------------------------------------------
Title: President
--------------------------------------------
Date: 8/31/00
---------------------------------------------
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
<PAGE>
EXHIBIT B
[CONFIDENTIAL TREATMENT REQUESTED]
CYGNUS, INC.
By: /s/ John C Hodgman
--------------------------------------------
Name: John C Hodgman
------------------------------------------
Title: Chairman, President & CEO
-----------------------------------------
Date: 8/30/00
------------------------------------------
LIVINGSTON HEALTHCARE SERVICES INC.
By: /s/ Peter Westermann
--------------------------------------------
Name: Peter Westermann
------------------------------------------
Title: President
-----------------------------------------
Date: 8/31/00
------------------------------------------
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
<PAGE>
EXHIBIT C
[CONFIDENTIAL TREATMENT REQUESTED]
CYGNUS, INC.
By: /s/ John C Hodgman
-----------------------------------------------
Name: John C Hodgman
---------------------------------------------
Title: Chairman, President & CEO
--------------------------------------------
Date: 8/30/00
---------------------------------------------
LIVINGSTON HEALTHCARE SERVICES INC.
By: /s/ Peter Westermann
-----------------------------------------------
Name: Peter Westermann
---------------------------------------------
Title: President
--------------------------------------------
Date: 8/31/00
---------------------------------------------
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
