<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-K/A
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from_______________ to_______________
Commission file number 0-19880
ENDOSONICS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 68-0028500
(State of incorporation) (I.R.S. Employer Identification No.)
6616 Owens Drive
Pleasanton, California 94588
(Address of principal executive office, Zip Code)
Registrant's telephone number, including area code: (510) 734-0464
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON STOCK ($.001
PAR VALUE)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by a check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
[Cover page 1 of 2]
<PAGE> 2
The aggregate market value of voting stock held by non-affiliates of
the Registrant, as of March 15, 1996 was approximately $137,500,774 (based on
the closing price for shares of the Registrant's Common Stock as reported by the
Nasdaq National Market for the last trading day prior to that date). Shares of
Common Stock held by each officer, director, and holder of 5% or more of the
outstanding Common Stock have been excluded in that such persons may be deemed
to be affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
On March 15, 1996 approximately 13,408,100 shares of the Registrant's
Common Stock, $.001 par value, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE.
Portions of the Registrant's Proxy Statement for the Annual Meeting of
Stockholders held on May 24, 1996 are incorporated by reference into Part III.
[Cover page 2 of 2]
<PAGE> 3
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(c) Exhibits
10.23* Imaging/Therapeutic Combination Devices Development
Agreement dated as of February 2, 1996 by and between
Cordis Corporation ("Cordis") and the Company.
10.24* Exclusive Distribution Agreement dated February 2,
1996 by and between Cordis and the Company.
10.25* License Agreement dated March 14, 1996 by and between
CVD and Advanced Cardiovascular Systems, Inc. ("ACS")
- --------------------------
* Confidential Treatment Requested
<PAGE> 4
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on July 26, 1996.
ENDOSONICS CORPORATION
By: /s/ DONALD D. HUFFMAN
---------------------
Donald D. Huffman
Vice President, Finance and
Administration
<PAGE> 5
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
- ------ ----------- ----
<S> <C>
10.23* Imaging/Therapeutic Combination Devices Development Agreement
dated as of February 2, 1996 by and between Cordis Corporation
("Cordis") and the Company.
10.24* Exclusive Distribution Agreement dated February 2, 1996 by and
between Cordis and the Company.
10.25* License Agreement dated March 4, 1996 by and between CVD and
Advanced Cardiovascular Systems, Inc. ("ACS")
</TABLE>
- ------------------------------
* Confidential Treatment Requested
<PAGE> 1
Exhibit 10.23
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL
PORTION HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
IMAGING/THERAPEUTIC COMBINATION DEVICES DEVELOPMENT AGREEMENT
This Imaging/Therapeutic Combination Devices Development Agreement is made this
2nd day of February 1996 by and between Cordis Corporation, a Florida
corporation doing business at 14201 N.W. 60th Avenue, Miami Lakes, FL 33014, USA
("Cordis") and EndoSonics Corporation, a Delaware corporation doing business at
6616 Owens Drive, Pleasanton, CA, USA ("EndoSonics").
W I T N E S S E T H:
WHEREAS, EndoSonics develops and markets intravascular imaging systems,
diagnostic imaging catheters and combined angioplasty-imaging catheters;
WHEREAS, Cordis develops and markets medical devices, components and equipment,
including angioplasty catheters and stents;
WHEREAS, EndoSonics and Cordis desire to cooperate in the development and
marketing of advanced, cost effective imaging/therapeutic combination devices
for optimal stent delivery and improved angioplasty procedures by integrating
their proprietary technology and know-how;
NOW THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
1. SECTION 1: DEFINITIONS
As used herein the following terms when used in their capitalized form shall
have the following meanings (such meanings shall be equally applicable to both
the single and the plural forms of each term):
1.1. "Agreement" shall mean this Imaging/Therapeutic Combination Devices
Development Agreement, as amended, modified, or supplemented from time
to time by the parties as set forth herein.
1.2. "Confidential Information' shall have the meaning provided in Section 8
hereof.
1.3. "Development Plan" means the development program containing a schedule
of milestones for the completion of the Product as shall be mutually
agreed upon in writing between Cordis and EndoSonics during the Initial
Specification Phase.
1.4. "Dollars" or "$" shall mean United States Dollars.
1.5. "Exclusive Distribution Agreement" means the agreement so named of even
date herewith between Cordis and EndoSonics.
1.6. "Initial Specification Phase" shall have the meaning set forth in
Section 2.l hereof.
<PAGE> 2
1.7. "Product" means the products to be developed under this Agreement. The
specific product and design specifications will be defined and mutually
agreed upon in writing by the parties during the Initial Specification
Phase.
1.8. "Term" shall have the meaning provided in Section 4.1 hereof.
1.9. "Territory" shall have the meaning provided in the Exclusive
Distribution Agreement.
2. SECTION 2: DEVELOPMENT
2.1. Initial Specification Phase
EndoSonics and Cordis shall each use its best efforts to jointly
define, and agree in writing on, the Product specifications and
Development Plan within a period of [*] days following the date of this
Agreement. Said period is hereinafter referred to as the "Initial
Specification Phase". The tasks to be performed in the Initial
Specification Phase are defined in Exhibit A Incorporated herein.
Within [*] days following the date of this Agreement, EndoSonics and
Cordis shall meet at EndoSonics' facilities to start the Initial
Specification Phase.
If EndoSonics and Cordis, within the Initial Specification Phase, are
unable to agree on Product Specifications or the Development Plan,
including a budget and Cordis' support thereof, either party shall have
the right to terminate the Agreement and the Exclusive Distribution
Agreement without any further obligations.
2.2. Cordis Support:
During the Initial Specification Phase, EndoSonics and Cordis shall
agree on (i) the specific phases and major milestones of the
Development Plan (ii) the support provided by Cordis during each phase
of the Development Plan, (iii) the manner in which Cordis' funding will
be disbursed; and (iv) the manner in which Cordis' funding and/or
services contributions will be accounted for. During the Term, Cordis
shall provide technical, developmental, product, regulatory, clinical
trial, clinical efficacy study and manufacturing support and project
funding for a total aggregate amount of [*] US Dollars [*] over a
period not to exceed 30 months.
2.3. Project Manager:
During the Initial Specification Phase, EndoSonics shall appoint a
Project Manager and Cordis shall appoint a Technical Liaison to act as
contact persons for the exchange of information during the Term hereof.
The Project Manager shall provide progress reports on a regular basis.
Such reports shall enable EndoSonics and Cordis to review the progress
and activities carried out under the Development Plan. The format and
scope of said reports shall be agreed upon prior to the completion of
the Initial Specification Phase.
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL
PORTION HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
2.
<PAGE> 3
2.4. Development Plan:
EndoSonics shall use best efforts to carry out the Development Plan for
the Product in accordance with the terms of the Development Plan and
within all agreed upon timetables and milestones set forth therein. In
addition, EndoSonics agrees to limit the expenditure resulting from the
Development Plan to the agreed upon funding. EndoSonics' failure to
meet the agreed upon milestones for a period of more than [*] days, or
EndoSonics exceeding the agreed upon budget by more than [*] shall
constitute a material breach and basis for termination of this
Agreement under Section 4. Notwithstanding the foregoing, in no event
shall Cordis be required to provide support (i.e. money and services)
in excess of a total aggregate amount [*] US Dollars ([*]).
Cordis agrees to use commercially reasonable efforts to timely provide
EndoSonics with all support required from Cordis in accordance with the
Development Plan. Any material change in the Development Plan shall be
agreed to in writing between EndoSonics and Cordis. Unless otherwise
expressly provided herein, EndoSonics shall be solely responsible for
the conduct of all phases of the Development Plan, provided, however,
that EndoSonics agrees to consult in good faith with Cordis regarding
the Development Plan and Cordis agrees to provide the assistance and
support set forth in the Development Plan.
2.5. Review Meetings:
EndoSonics shall invite Cordis to attend and participate in person-to-
person progress review meetings, occurring quarterly or more or less
often as mutually agreed by the parties in writing. In the event that
Cordis elects to attend such a meeting, the Project Manager and the
Technical Liaison and/or other personnel designated by EndoSonics or
Cordis shall attend and participate in such meeting.
2.6. Disclosure of Information:
Each party hereto shall take reasonable steps to assist the other to
obtain, and make available to the other on a timely basis all
information needed for the successful completion of the Development
Plan, including, but not limited to, results of medical and clinical
trials and results of technical, regulatory and safety studies and
evaluations performed by such party. All disclosures hereunder are
subject to the confidentiality provisions of Section 8 below.
2.7. Exclusive Development:
During the Term, EndoSonics shall not enter into agreements with any
other parties for the development, manufacture, or sale of a product
for use in the intracoronary ultrasound market, similar to Product.
3. SECTION 3: DISTRIBUTION AND TRANSFER PRICE
3.1 Distribution rights
Upon successful completion of the Development Plan, Cordis shall have
exclusive distribution rights for the Product in the Territory, under
terms and conditions set forth in the Exclusive Distribution Agreement
and at transfer prices as provided in section 3.2
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL
PORTION HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
3.
<PAGE> 4
below. Cordis' purchase of Product shall count towards the Minimum
Purchase Amount as specified in the Exclusive Distribution Agreement.
3.2. Transfer Price
Prior to completion of the Development Plan, the parties hereto shall
negotiate in good faith a reasonable transfer price to be paid by
Cordis to EndoSonics for specified unit quantities of the Product to be
purchased by Cordis. Such transfer price shall not exceed [*].
4. SECTION 4: TERM - TERMINATION
4.1. Term:
The term ("Term") of this Agreement shall commence the date hereof,
and, unless terminated sooner pursuant to the provisions of Section
4.2, shall terminate 30 months from the date hereof or upon completion
of the Product in accordance with the Development Plan, whichever comes
first; provided, however, that this Agreement may be extended upon the
mutual written consent of the parties.
Notwithstanding anything contained in this Agreement to the contrary,
if this Agreement expires or terminates prior to the expiration or
termination of the Distribution Agreement, the exclusive distribution
rights granted to Cordis pursuant to Section 3.1 shall survive as long
as the Distribution Agreement remains in full force and effect.
4.2. Termination of Agreement:
This Agreement shall terminate upon the happening of any of the
following events:
(a) either party's failure to cure the breach of any material
term, covenant or condition of this Agreement within 30 days
after the breaching party receives notice of such breach;
(b) immediately upon termination of the Exclusive Distribution
Agreement;
(c) immediately upon written notice to one party upon a material
change in control of the other party including, without
limitation, the acquisition or merger of the other party,
except for the contemplated merger between Johnson & Johnson
and Cordis Corporation;
(d) immediately upon either parties' cessation to function as a
going concern;
(e) immediately upon either parties' dissolution, liquidation,
insolvency, bankruptcy, assignment for the benefit of
creditors or admission in writing of its inability to pay its
debts as they mature.
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL
PORTION HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
4.
<PAGE> 5
4.3. Obligations upon Termination or Expiration:
Upon the expiration or termination of this Agreement, Cordis shall have
no obligation to EndoSonics except with respect to amounts incurred by
EndoSonics in the performance of its obligations under this Agreement
prior to such expiration or termination.
Notwithstanding anything contained herein, Cordis shall not be
responsible for any costs incurred by EndoSonics that exceed budgeted
amounts unless EndoSonics obtains Cordis' written consent prior to
incurring overruns.
5. SECTION 5; PROPRIETARY RIGHTS
Except as expressly agreed in writing between the parties, all
proprietary rights, title, and interest (including all patent rights,
copyrights, trade secret rights and other intellectual property rights
throughout the world ("Proprietary Rights")) with respect to the
Product, including, but not limited to, all inventions (whether or not
patentable), know-how, discoveries, ideas and improvements thereof,
which are
(a) developed or conceived solely by employees of Cordis as a
result of this work performed hereunder shall be owned by
Cordis;
(b) developed or conceived solely by employees of EndoSonics as a
result of the work performed hereunder shall be owned by
EndoSonics;
(e) inseparably contributed, by employees of both parties shall be
jointly owned by EndoSonics and Cordis.
6. SECTION 6: REPRESENTATIONS AND WARRANTIES OF ENDOSONICS
EndoSonics hereby represents and warrants to Cordis that:
(a) it has the power to execute, deliver and perform the terms and
conditions of this Agreement and has taken all the necessary
action to authorize the execution, delivery and performance
hereof;
(b) the execution, delivery and performance of this Agreement will
not contravene any provision of any law, statute, rule,
regulation or policy of any local, state or governmental
authority of which it is actually aware;
(c) the execution, delivery and performance of this Agreement will
not constitute a violation of, be in conflict with, or result
in, breach of any agreement or contract to which it is a party
or to which it is bound;
(d) this Agreement constitutes a legal, valid and binding
agreement of EndoSonics and is enforceable in accordance with
its terms and conditions except as such enforcement may be
limited by general principles of bankruptcy, insolvency or
other similar laws affecting, (a) creditors' rights generally;
or (b) the regulation of competition or franchise;
(e) it shall comply with all applicable laws, regulations,
ordinances, statutes, decrees, or proclamations of all
governmental authorities, of which it is actually
5.
<PAGE> 6
aware, including, without limitation, the regulatory
authorities having jurisdiction over the Product, EndoSonics
and the Territory;
(f) EXCEPT AS SET FORTH IN THIS SECTION 6, ENDOSONICS MAKES NO REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AND EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES
INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OF THE PRODUCT OR THE PERFORMANCE OR NON- INFRINGEMENT
THEREOF. ENDOSONICS HAS NOT AUTHORIZED ANYONE TO MAKE ANY REPRESENTATION OR
WARRANTY OTHER THAN AS PROVIDED ABOVE.
7. SECTION 7: REPRESENTATIONS AND WARRANTIES OF CORDIS:
Cordis hereby represents and warrants to EndoSonics that:
(a) it has the power to execute, deliver and perform the terms and
conditions of this Agreement and has taken all the necessary
action to authorize the execution, delivery and performance
hereof;
(b) the execution, delivery and performance of this Agreement will
not contravene any provision of any law, statute, rule,
regulation or policy of any local, state or governmental
authority of which it is actually aware;
(c) the execution, delivery and performance of this Agreement will
not constitute a violation of, be in conflict with, or result
in, breach of any agreement or contract to which it is a party
or to which it is bound;
(d) this Agreement constitutes a legal, valid and binding
agreement of Cordis and is enforceable in accordance with its
terms and conditions except as such enforcement may be limited
by general principles of bankruptcy, insolvency or other
similar laws affecting; (a) creditors' rights generally; or
(b) a regulation of competition or franchises;
(e) it shall comply with all applicable laws, regulations,
ordinances, statutes, or proclamations of all governmental
authorities of which it is actually aware including, without
limitation, the regulatory authorities having jurisdiction
over the Product, Cordis and the Territory.
(f) EXCEPT AS SET FORTH IN THIS SECTION 7, CORDIS MAKES NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AND EXPRESSLY
DISCLAIMS ALL IMPLIED WARRANTIES INCLUDING WITHOUT LIMITATION
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OF THE PRODUCT OR THE PERFORMANCE OR NON-INFRINGEMENT
THEREOF. CORDIS HAS NOT AUTHORIZED ANYONE TO MAKE ANY
REPRESENTATION OR WARRANTY OTHER THAN AS PROVIDED ABOVE.
6.
<PAGE> 7
8. SECTION 8: CONFIDENTIALITY
During the Term it is anticipated that the parties shall disclose to
each other confidential or proprietary information, including but not
limited to trade secrets, know-how, documentation, pre-clinical and
clinical data, product development plans, specifications, forecasts,
customer information, notes, reports, models, and samples
("Confidential Information"). Only such information that is marked or
labeled by a party as "Confidential Information" shall be considered
Confidential Information.
If a party orally transmits information that it deems to be of a
confidential nature, such party shall, within thirty (30) days from the
transmittal thereof, summarize such information in a written form and
mark such information "Confidential" and provide a copy of such writing
to the other party. The duty of confidentiality set forth herein shall
not apply to information that:
(a) is, at the time of disclosure, in the public domain and
generally available;
(b) after disclosure, enters the public domain except where such
entry is a direct result of a breach of this Agreement;
(c) prior to disclosure, was already known to the party receiving
such information, as evidenced by its written records;
(d) subsequent to disclosure, is obtained from a third party in
possession of such information and not under a contractual or
fiduciary obligation to keep such information in confidence;
(e) is developed by the receiving party in the course of work
entirely independent of any disclosure hereunder by employees
without access or use of the disclosing party's Confidential
Information and such development can be documented to the
reasonable satisfaction of the other party hereto;
(f) is filed with any governmental or regulatory authority to the
extent required or desirable to secure governmental or
regulatory approval for marketing of the Product (provided the
receiving party shall first notify the disclosing party of the
extent of the proposed disclosure and seek to limit disclosure
and to obtain confidential treatment) and
(g) is provided to pre-clinical and clinical investigators where
necessary or desirable for their information to the extent
normal and usual in the custom of the trade and under a
confidentiality agreement with essentially the same
confidentiality provisions contained in this Section 8;
(h) is disclosed pursuant to any judicial or governmental
requirement or order.
Except as expressly allowed herein, the receiving party shall hold in
confidence and not use or disclose any Confidential Information of the
disclosing party and shall similarly bind its employees in writing. All
Confidential Information heretofore disclosed in writing by either
party, including any Confidential Information which may be exchanged
between the parties during the term of this Agreement, shall be deemed
to have been disclosed under this Agreement and shall be subject to the
provisions of this Section 8.
7.
<PAGE> 8
9. SECTION 9: INDEMNIFICATION
9.1. Indemnification by Cordis:
Except with respect to any of the following that arises from gross
negligence or willful misconduct of EndoSonics or its agents and
subject to Section 9.3 Cordis shall indemnify, defend and hold harmless
EndoSonics, its directors, officers, employees, representatives and
agents from and against any and all claims, suits, losses, damages,
costs, fees and expenses incurred by EndoSonics (including reasonable
attorney's fees), and other liabilities asserted by parties, both
governmental and nongovernmental, resulting from or arising out of (a)
any misrepresentation of Cordis contained herein or breach of any
warranty made by Cordis; (b) any breach, violation or non-performance
of any covenant, condition or agreement in this Agreement by Cordis;
and (c) the material inaccuracy of any representation of the Product
made by Cordis.
9.2 Indemnification by EndoSonics:
Except with respect to any of the following that arises from the gross
negligence or willful misconduct of Cordis or its agents and subject to
Section 9.3, EndoSonics shall indemnify, defend and hold harmless
Cordis, its directors, officers, employees, representatives and agents
from and against any and all claims, suits, losses, damages, costs,
fees and expenses (including reasonable attorneys' fees), and other
liabilities asserted by third parties, both governmental and
nongovernmental, resulting from or arising out of (a) any
misrepresentation of EndoSonics contained herein or breach of any
warranty made by EndoSonics, (b) any breach, violation or
nonperformance of any covenant, condition or agreement in this
Agreement by EndoSonics, (c) the material inaccuracy of any
representation of the Product made by EndoSonics.
9.3 Limitations to Indemnify:
The indemnities of Sections 9.1 and 9.2 shall not apply (a) if the
indemnified party fails to give the indemnifying party prompt notice of
any claim it receives and such failure materially prejudices the
indemnifying party, or (b) unless the indemnifying party is given the
opportunity to approve any settlement. Furthermore, the indemnifying
party shall not be liable for attorneys' fees or expenses of litigation
of the indemnified party unless the indemnified party gives the
indemnifying party the opportunity to assume control of the defense or
settlement. In addition, if the indemnifying party assumes such
control, it shall only be responsible for the legal fees and litigation
expenses of the attorneys it designates to assume control of the
litigation. In no event shall the indemnifying party assume control of
the defense of the indemnified party without the consent of the
indemnified party (which consent shall be given or not at its sole
discretion).
8.
<PAGE> 9
10. SECTION 10: MISCELLANEOUS
10.1 Relationship of Parties:
The relationship of Cordis to EndoSonics hereunder shall be solely that
of an independent contractor. Cordis and EndoSonics each acknowledge
and agree that neither Cordis nor EndoSonics is an employee, employer,
agent, partner, or joint venturer of the other.
Neither Cordis nor EndoSonics shall have or hold itself as having the
right or authority to assume or create any obligation or
responsibility, whether express or implied, on behalf of or in the name
of the other, except with the express written authority of the other.
10.2 Notices:
All notices, requests, demands and other communications required or
permitted to be given hereunder shall be in writing, shall be deemed to
have been duty given when delivered in person, or when sent by telex or
telecopy or other facsimile transmission (with the receipt confirmed),
or on the fifth business day after posting thereof be registered or
certified mail, return receipt requested, prepaid and addressed as
follows (or such other address as the parties may designate by written
notice in the manner of aforesaid):
If to Cordis:
Cordis Corporation
14201 N.W. 60th Avenue
Miami Lakes, Florida 33014
USA
Attention: A.J. Novak
Vice President and CFO
Telephone: (305) 824-2357
Facsimile: (305) 824-2440
If to EndoSonics:
EndoSonics Corporation
6616 Owens Drive
Pleasanton, California 94588
USA
Attention: R. Warnking
President & CEO
Telephone: (510) 734-0464
Telefax: (510) 734-0465
10.3 Governing Law:
This Agreement shall be governed by and construed in all respects in
accordance with the laws of the State of Florida (except that the
United States federal law will govern copyright and trademark matters).
9.
<PAGE> 10
10.4 Non-Assignment:
This Agreement may not be assigned by either party without the prior
written consent of the other party.
10.5 Entire Agreement:
This Agreement sets forth the entire understanding of the parties with
respect to the subject matter hereof. This Agreement supersedes all
prior representations, agreements and understandings among the parties
with respect to such subject matter.
10.6 Remedies Cumulative:
The rights, powers and remedies set forth herein are cumulative and
shall be in addition to any and all other rights, powers and remedies
provided by law. The exercise of any right or remedy hereunder shall
not in any way constitute a cure under this Agreement, or prejudice
either party in the exercise of any of its rights under this Agreement
or law.
10.7 Attorneys' Fees:
If litigation between the parties arises out of or relates to this
Agreement, the prevailing party of any such litigation shall, for as
long as allowed by the law and jurisdiction ruling the litigation, be
entitled to recover from the other party its reasonable attorneys' and
legal assistants' fees and other costs incurred in such litigation
(including appellate litigation).
10.8 Amendment:
No changes or amendments or alterations shall be effective unless in
writing and signed by all parties hereto.
10.9 Waiver:
No waiver of any default in the performance of any of the duties or
obligations arising out of this Agreement shall be valid unless in
writing and signed by the waiving party. Waiver of any one default
shall not constitute or be construed as creating waiver of any other
default or defaults. No course of dealing between the parties shall
operate as a waiver or preclude the exercise of any rights or remedies
under this Agreement. Failure on the part of either party to object to
any act or failure to act of the other party, or declare the other
party in default, regardless of the extent of such default, shall not
constitute a waiver by the party of its rights hereunder.
10.10 Severability:
If any provision of this Agreement shall be held to be unenforceable in
whole or in part, then the invalidity of such provision shall not be
held to invalidate any other provision herein and all other provisions
shall remain in full force and effect.
10.11 Force Majeure:
10.
<PAGE> 11
No delay or failure of EndoSonics or Cordis to perform any of their
respective obligations under this Agreement shall be considered a
breach of this Agreement if it results from any cause beyond the
control of EndoSonics or Cordis, as the case may be, including, without
limitation, any act of God, earthquake, hurricane, fire, flood, strike,
lockout or other dispute, natural catastrophe, severe weather or public
emergency, insurrection, riot, war, transportation shortage, or actions
of governmental authorities.
10.12 Survival of Sections:
The obligations set forth in Sections 4.3, 5, 7, 8 and 9 shall survive
the termination of this Agreement.
10.13 Counterparts:
This Agreement may be executed in one or more counterparts, including
facsimile counterparts, each of which shall be deemed an original and
all which together shall constitute one and the same agreement.
10.14 Captions:
The captions contained in this Agreement are inserted only as a matter
of convenience and in no way define, limit or extend the scope or
intent of this Agreement or any provision hereof.
10.15 LIMITATION OF LIABILITY:
NEITHER PARTY SHALL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF
THIS AGREEMENT UNDER ANY LEGAL OR EQUITABLE THEORY FOR (I) ANY
INCIDENTAL OR CONSEQUENTIAL DAMAGES. (II) COST OF PROCUREMENT OF
SUBSTITUTE GOODS, TECHNOLOGY OR SERVICES OR (III) FOR ANY MATTER BEYOND
ITS REASONABLE CONTROL.
11.
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
EndoSonics Corporation
R. Warnking
By: /s/ R. Warnking
Title: President and
Chief Executive Officer
Cordis Corporation
A.J. Novak
By: /s/ A.J. Novak
Title: Vice President and
Chief Financial Officer
12.
<PAGE> 13
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL
PORTION HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT A
INITIAL SPECIFICATION PHASE
It is understood between the parties that the key objective of the Agreement is
the further development and marketing of advanced, cost-effective
imaging/therapy combination devices for optimal stent delivery and improved
angioplasty procedures, through integration of EndoSonics' and Cordis'
proprietary knowledge and know-how.
During the Initial Specification Phase, EndoSonics and Cordis shall agree how
this key objective is best accomplished and shall jointly define:
(a) Product and marketing specifications, including but not limited to
physical characteristics, functional capabilities, image quality,
acoustic capabilities, therapeutic capabilities, biocompatibility,
sterilization specifications and shelf life.
(b) Product cost targets.
(c) Phased project schedule, milestones to be reached, means to measure
achievement of milestones, and funding required for each phase.
(d) Methodology to ensure that Product specifications are met at milestone
completion dates.
(e) Regulatory standards to be met.
(f) Clinical trial and validation requirements.
(g) Critical success factors of the project, and how they will be managed.
(h) Development risks and how they will be managed.
(i) Resources and staffing required to complete the Development Plan.
13.
<PAGE> 1
Exhibit 10.24
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL
PORTION HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
EXCLUSIVE DISTRIBUTION AGREEMENT
This Exclusive Distribution Agreement is made this 2nd day of February 1966 by
and between Cordis Corporation, a Florida corporation doing business at 14201
N.W. 60th Avenue, Miami Lakes, FL 33014, USA ("Cordis") and EndoSonics
Corporation, a Delaware corporation doing business at 6616 Owens Drive,
Pleasanton, CA, USA ("EndoSonics").
WITNESSETH:
WHEREAS, Cordis and EndoSonics entered into a formal Distribution Agreement on
the 29th day of August, 1994 that was followed by an Agreement to Amend on July
20, 1995;
WHEREAS, Cordis S.A. (Belgium) and EndoSonics Nederland B.V., a wholly owned
subsidiary of EndoSonics, entered into a formal Exclusive Distribution Agreement
on the first day of November, 1994 that was followed by an Agreement to Amend on
December 20, 1994 and a Second Agreement to Amend on the first day of June,
1995;
WHEREAS, Cordis, Cordis S.A. (Belgium), and EndoSonics, EndoSonics Nederland
B.V, mutually desire to extend their business relationships, replacing said
agreements by this Agreement between Cordis and EndoSonics;
NOW THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
1. SECTION 1: DEFINITIONS
As used herein the following terms when used in their capitalized form
shall have the following meanings (such meanings shall be equally
applicable to both the singular and the plural forms of each term):
1.1. "Act" shall mean any act, statute, or regulation of any kind governing
the products in the Territory or part of the Territory, including the
United States Federal Food, Drug and Cosmetic Act (21 U.S.C.
Sections 301-392 (1993)).
1.2. "Agreement" shall mean this Exclusive Distribution Agreement, as
amended, modified, or supplemented from time to time.
1.3. "Confidential Information" shall have the meaning provided in Section
20 hereof.
1.4. "Delivery Schedule" shall have the meaning provided in Section 6
hereof.
1.5. "Disclosure Letter" shall have the meaning provided in Section 2.1
hereof.
1.6. "Dollars" or "$" shall mean United States Dollars.
1.7. "GMPs" shall mean the good manufacturing practices for medical devices
set forth by any Act governing the products in the Territory or part of
the Territory, including United States 21 C.F.R. Section 820 (1993).
1.8. "Minimum Purchase Amount" shall have the meaning provided in Section
5 hereof.
<PAGE> 2
1.9. "Person" shall mean any individual, partnership, corporation, trust or
other entity.
1.10. "Products" shall mean the products as defined in Exhibit A.
1.11. "Records" shall have the meaning provided in Section 8 hereof.
1.12. "Renewal Term" shall have the meaning provided in Section 3.1 hereof.
1.13. "System" shall mean any of the systems as defined In Exhibit A.
1.14. "Term" shall have the meaning provided in Section 3.1 hereof.
1.15. "Territory" shall mean the geographical territory of North America,
Europe, the Middle East and Africa as further defined in Exhibit E and
explained in Section 2 hereof.
1.16. "Trademarks" shall mean each trademark, trade name, service marks, the
name "EndoSonics" or any derivation thereof, brand names, signs,
symbols or slogans now or hereafter used by EndoSonics in connection
with the Products.
2. SECTION 2: APPOINTMENT; TERMINATION OF EXISTING DISTRIBUTORS; AMENDMENT
OF TERRITORY; RELATIONSHIP OF PARTIES
2.1 Appointment:
EndoSonics hereby appoints Cordis as its exclusive distributor of the
Products in the Territory, except in those geographic areas where
EndoSonics currently has distributor relationships as disclosed in the
disclosure letter incorporated as Exhibit F ("Disclosure Letter").
Cordis hereby accepts such appointment. Upon termination or expiration
of the distributor relationships disclosed in the Disclosure Letter,
as set forth in Section 2.2 below, Cordis shall have the exclusive
right within the Territory to obtain Products from EndoSonics
hereunder and to market and distribute the Products. Cordis shall not
distribute or otherwise promote the Products in any way in the
geographic areas where EndoSonics has current distributor
relationships, disclosed in the Disclosure Letter, without the prior
written authorization of EndoSonics.
Subject to the terms and conditions of this Agreement, during the Term
and each Renewal Term, if any, EndoSonics shall not appoint any other
distributor, sales agent or other representative with responsibility
for the sale, distribution or marketing of the Products in the
Territory.
During the Term and each Renewal Term, if any, Cordis shall not sell
or commercially promote in the Territory products that compete with
Products, nor shall Cordis represent, or provide either directly or
indirectly marketing services to, any manufacturer or distributor in
the Territory, that relate to such competing products.
2.
<PAGE> 3
2.2 Termination of Existing Distributors:
EndoSonics shall, in consultation with Cordis, use its best efforts to
efficiently and effectively terminate the business relationships
and/or contractual obligations with its current distributors other
than Cordis, or Cordis-appointed distributors, pursuant to the
Disclosure Letter. To the extent that such termination would involve a
breach of contract with EndoSonics' current distributors, EndoSonics
and Cordis shall negotiate in good faith the sharing of cost, if any,
incurred by EndoSonics in terminating such contractual obligations.
2.3 Relationship of Parties:
The relationship of Cordis to EndoSonics hereunder shall be solely
that of an independent contractor. Cordis and EndoSonics each
acknowledge and agree that neither Cordis nor EndoSonics is an
employee, employer, agent, partner, or joint venturer of the other.
Neither Cordis nor EndoSonics shall have or hold itself as having the
right or authority to assume or create any obligation or
responsibility, whether express or implied, on behalf of or in the
name of the other, except with the express written authorization of
the other.
3. SECTION 3: TERM - TERMINATION
3.1. Term:
The term ("Term") of this Agreement shall commence on January 1, 1996,
and, unless terminated sooner pursuant to the provisions of Section
3.2, shall terminate on December 31, 1998; provided, however, that
this Agreement may be extended for successive one-year periods (each
such period, a "Renewal Term") upon the mutual written consent of the
parties.
3.1 Termination of Agreement:
This Agreement shall terminate upon the happening of any of the
following events:
(a) either party's failure to cure the breach of any material
term, covenant, or condition of this Agreement within 30 days
after the breaching party receives notice of such breach;
(b) immediately upon written notice to one party upon the change
in the structure or organization of the other party including,
without limitation, the acquisition or merger of the other
party, except for the contemplated merger between Johnson &
Johnson and Cordis Corporation;
(c) immediately upon written notice upon either party's cessation
to function as a going concern; or
(d) immediately upon written notice upon either party's
dissolution, liquidation, insolvency, bankruptcy, assignment
for the benefit of creditors or admission in writing of its
inability to pay its debts as they mature.
3.
<PAGE> 4
3.3. Obligations upon Termination or Expiration:
If this Agreement is terminated by Cordis, pursuant to Section 3.2,
Cordis shall have no further obligation to EndoSonics except with
respect to payment for Products accepted by Cordis or shipped by
EndoSonics prior to such termination, provided the sale of such
Products is not restricted by a regulatory authority having
jurisdiction over the Products.
Upon complete termination or expiration of this Agreement, all rights
granted by EndoSonics to Cordis shall cease immediately, except that
Cordis may sell, market or distribute any Products for a period of [*]
following such termination for which it has paid the full purchase
price after such termination or expiration. If Cordis has not sold,
marketed or distributed its remaining inventory of the Products at the
expiration of such [*] period, EndoSonics may extend such [*] period
for an additional [*]. If EndoSonics refuses to extend such [*]
period, EndoSonics shall purchase all of Cordis' remaining inventory
of the Products that are in new and unused condition at Cordis'
purchase price; provided, however, that EndoSonics shall only be
required to pay Cordis fair market value for any Products having an
expired sterilization or expiration date.
If Cordis terminates this Agreement pursuant to Section 3.2, or if
EndoSonics terminates this Agreement [*]. Additionally, Cordis'
maximum liability under this Agreement shall be limited to [*].
4. SECTION 4: PRICE; PAYMENT TO CORDIS; PAYMENT TO EndoSonics; ORDERS
4.1. Price:
EndoSonics shall sell the Products to Cordis at prices and conditions
set forth in Exhibit A. During the Term, EndoSonics and Cordis shall
jointly review Products and prices every 6 months.
4.Z Payment to Cordis:
In the event EndoSonics ships Products directly to Cordis' customers
in the Territory, invoices such customers and receives full payment
therefor, EndoSonics shall pay Cordis an amount equal to [*] less the
sum of (a) [*] and (b) [*].
4.3. Payment to EndoSonics:
EndoSonics shall invoice Cordis for all Products purchased by Cordis
and Cordis shall pay EndoSonics within [*] from the date of receipt of
each such invoice. No part of any amount payable to EndoSonics
hereunder may be reduced due to any counterclaim, set-off, adjustment
or other right which Cordis might have against EndoSonics, any other
party or otherwise.
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL
PORTION HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
4.
<PAGE> 5
4.4. Orders:
All orders for Products submitted by Cordis shall be initiated by a
written Cordis purchase order. Such purchase orders may set forth a
delivery date, shipping schedules, destination and other instructions.
Shipping schedules specified in any purchase order shall be binding on
EndoSonics unless EndoSonics objects in writing within 5 days of the
receipt of such purchase order. All North America orders for Products
shall be placed with EndoSonics Corporation, USA. All Europe, Middle
East and Africa orders for Products shall be placed with EndoSonics
Europe B.V., The Netherlands.
Notwithstanding anything to the contrary, Cordis shall have no right
to cancel purchase orders accepted by EndoSonics except if the
Agreement is terminated pursuant to Section 3.2(b)-(e), or to the
extent the sale of the Products is restricted by a regulatory
authority having jurisdiction over the Products, in which case Cordis
shall be proportionally excused from the Minimum Purchase Amount
obligations under Section 5.
At Cordis' request, EndoSonics shall ship the Products directly to
Cordis' customers. In such case EndoSonics will invoice Cordis for any
applicable freight, handling, insurance, customs duties, taxes and
related charges. EndoSonics may, upon the written approval of Cordis,
make deliveries of shipments in installments or at times different
than those stated in purchase orders corresponding to shipped
Products. Such partial shipments shall be billed upon shipment by
EndoSonics. Unless Cordis requests otherwise, all Products ordered by
Cordis shall be packed for shipment and storage in accordance with
EndoSonics' standard commercial practices. It is Cordis' obligation to
notify EndoSonics of any special packaging requirements (which shall
be at Cordis' expense). EndoSonics shall use best commercial efforts
to deliver Products no later than the date specified for such delivery
on the relevant purchase order for such Products and no earlier than
the date ten days prior to such specified date. Risk of loss and
damage to a product shall pass to Cordis upon delivery of such
Products to a carrier of EndoSonics' choice. In the event of any
discrepancy between any term of any purchase order and this Agreement,
the terms of this Agreement shall govern.
5. SECTION 5: MINIMUM PURCHASE AMOUNT
During the Term, Cordis shall use reasonable efforts to purchase
Products for minimum annual purchase amounts (the "Minimum Purchase
Amount") as set forth in Exhibit B.
For the purposes of this provision, a "purchase" of Products within
the time periods as stipulated in Exhibit B shall mean EndoSonics'
shipment of such Products on or before the last day of each of such
time periods. Cordis' failure to meet the Minimum Purchase Amount for
any calendar year shall constitute a material breach and basis for
termination of this Agreement under Section 3.
If EndoSonics fails to make Products resulting from its "Pinnacle"
development program commercially available to Cordis by April 30,
1996, Cordis shall be proportionally excused from meeting the Minimum
Purchase Amount.
5.
<PAGE> 6
6. SECTION 6: DELIVERY SCHEDULE
Upon execution of this Agreement, Cordis shall provide EndoSonics with
a six-month rolling forecast which includes a two-month binding
delivery schedule (the "Delivery Schedule"). The rolling forecast
shall be updated monthly by Cordis. Unless otherwise agreed between
parties or stipulated on a binding purchase order, EndoSonics shall
use best commercial efforts to deliver the Products (a) within 3
months of the placement of a purchase order by Cordis in the event
such order was not part of the Delivery Schedule (b) within 2 months
of the placement of a purchase order by Cordis in the event such order
was part of the Delivery Schedule. If EndoSonics is not able to
deliver the Products as mentioned above, nor to respect other delivery
dates specifically agreed to or binding between the parties, Cordis
shall then have the option to cancel the order and be proportionally
excused from the Minimum Purchase Amount obligations under Section 5.
The repeated failure by EndoSonics to deliver Products as set forth
above shall be considered a material breach of this Agreement and, at
Cordis' option, a basis for termination pursuant to Section 3.2(a).
7. SECTION 7: ADVERTISING
Cordis shall initiate promotions and advertisements to market the
Products in the Territory. All costs associated with any such
activities shall be borne by Cordis.
EndoSonics shall, on an ongoing basis, provide to Cordis all designs,
artwork, commercial and technical data and informational material
created by EndoSonics in connection with the Products to facilitate
the production of promotional and advertising materials by Cordis.
8. SECTION 8: MAINTENANCE OF RECORDS
Cordis and EndoSonics shall, in compliance with applicable law,
including GMPs, maintain accurate records (the "Records") regarding
the Products including, without limitation, records of direct sales of
products to third parties, lot numbers, serial numbers, and other
manufacturing documentation necessary to ensure traceability of
Products. The Parties shall retain the Records pursuant to the GMPs
and applicable law.
9. SECTION 9: TRADEMARKS AND PROTECTION OF PROPRIETARY RIGHTS
9.1. Registration of Trademarks:
EndoSonics shall, at its expense, use reasonable efforts to protect
and maintain all registrations, filings and issuance of its Trademarks
in full force and effect.
9.2. Title:
The proprietary rights of EndoSonics in and to the Products and any
items related thereto are protected by the law of copyright,
trademark, trade secrets and unfair competition. Cordis shall have no
proprietary interest whatsoever in the Trademarks.
6.
<PAGE> 7
9.3. Notification of Infringement:
Cordis shall promptly notify EndoSonics of any infringement, of which
Cordis has knowledge, of the proprietary rights of EndoSonics in and
to the Products or the Trademarks in the Territory and shall cooperate
with EndoSonics in any action by EndoSonics to investigate or remedy
any such infringement. All costs and expenses of investigating and
remedying any such infringement shall be borne by EndoSonics.
9.4. Use of Trademarks and Software License:
EndoSonics hereby grants to Cordis a non-exclusive license to use the
Trademarks for the purpose of identifying and marketing the Products
in the Territory. Any use of the Trademarks will be in accordance with
such instructions as EndoSonics may give Cordis from time to time.
Upon the expiration or earlier termination of this Agreement, the
non-exclusive license granted hereunder to Cordis shall expire and
Cordis shall immediately cease using the Trademarks; provided,
however, that Cordis may continue to use such Trademarks to market,
distribute or sell any inventory of the Products in Cordis' possession
at the time of such expiration or termination as permitted pursuant to
section 3.3. Except for its affiliated companies, distributors and
agents, Cordis shall not grant any sublicenses to use the Trademarks
to any Person, agent or other party without the prior written consent
of EndoSonics in each instance.
For each System sold, EndoSonics is licensing Cordis and its end
customer with a one-time paid in full perpetual license to use the
EndoSonics software, related updates and later releases on the
specific System sold.
9.5. Quality Control:
In order to comply with EndoSonics' quality control standards, Cordis
shall (a) use the Trademarks in compliance with all relevant laws and
regulations in the Territory; (b) accord EndoSonics, after previous
written request, the right to inspect all marketing and promotional
materials in Cordis' possession containing the Trademarks in order to
confirm that Cordis' use of such Trademarks is in compliance with this
Agreement; and (c) not modify any of the Trademarks in any way and not
use any of the Trademarks on any goods or services other than the
Products or in connection therewith. In the event EndoSonics has a
good faith and substantial reason to believe that Cordis is not
complying with this provision, EndoSonics may, within 30 days of a
written notification to Cordis stating and justifying the reasons,
suspend Cordis' right to use the Trademarks until such time as Cordis
gives EndoSonics adequate assurances that it has taken corrective
measures and that it will thereafter comply with this provision.
9.6. Cordis Trademarks:
EndoSonics shall not, without the prior written consent of Cordis in
each instance, use in any manner whatsoever, Cordis' name, its
trademarks, logos, symbols or other images of Cordis or of any party
affiliated therewith.
7.
<PAGE> 8
10. SECTION 10: MEETINGS; EXHIBITS
10.1. Training Meetings:
Cordis shall periodically make arrangements for EndoSonics'
representatives to conduct training meetings with Cordis' sales force
in the various countries of the Territory. EndoSonics and Cordis shall
mutually agree on the date, time and location of such meetings and on
the apportionment of the costs of such meetings.
10.2. Exhibits:
Cordis and EndoSonics shall cooperate and assist each other in the
presentation and exhibition of Products on symposia, conventions and
such other professional gatherings as the parties shall mutually
choose.
11. SECTION 11: REPRESENTATIONS AND WARRANTIES OF CORDIS
Cordis represents and warrants to EndoSonics that as of the date
hereof and at all times during the period of this Agreement:
(a) it has the power to execute, deliver and perform the terms and
conditions of this Agreement and has taken all the necessary
action to authorize the execution, delivery and performance
hereof;
(b) the execution, delivery and performance of this Agreement will
not contravene any provision of any law, statute, rule,
regulation or policy of any local, state or governmental
authority of which it is actually aware;
(c) the execution, delivery and performance of this Agreement will
not constitute a violation of, be in conflict with, or result
in, breach of any agreement or contract to which it is a party
or to which it is bound;
(d) this Agreement constitutes a legal, valid and binding
agreement of Cordis and is enforceable in accordance with its
terms and conditions except as such enforcement may be limited
by general principles of bankruptcy, insolvency or other
similar laws affecting, (a) creditors' rights generally; or
(b) a regulation of competition or franchises;
(e) it shall comply with all applicable laws, regulations,
ordinances, statutes, decrees, or proclamations of all
governmental authorities of which it is actually aware
including, without limitation, the regulatory authorities
having jurisdiction over the Products, Cordis and the
Territory;
(f) it shall not modify or alter any of the Products or the
Trademarks or add to or remove any items from the Products or
to or from the containers or packages in which the Products
are packaged without receiving EndoSonics' prior consent;
(g) it shall not make any additional warranties or any false
claims regarding the features, operations or marketing of
the Products; and
(h) it shall not employ deceptive or illegal practices in
marketing, advertising or selling the Products.
8.
<PAGE> 9
12. SECTION 12: REPRESENTATIONS AND WARRANTIES OF EndoSonics
EndoSonics hereby represents and warrants to Cordis that:
(a) EndoSonics has the power to execute, deliver and perform the
terms and conditions of this Agreement and has taken all the
necessary action to authorize the execution, delivery and
performance hereof;
(b) the execution, delivery and performance of this Agreement will
not contravene any provision of any law, statute, rule,
regulation or policy of any local, state or governmental
authority of which it is actually aware;
(c) the execution, delivery and performance of this Agreement will
not constitute a violation of, be in conflict with, or result
in, breach of any agreement or contract to which it is a party
or to which it is bound, except as provided in the disclosure
letter incorporated as Exhibit E;
(d) this Agreement constitutes a legal, valid and binding
agreement of EndoSonics and is enforceable in accordance with
its terms and conditions except as such enforcement may be
limited by general principles of bankruptcy, insolvency or
other similar laws affecting, (a) creditors' rights generally;
or (b) the regulation of competition or franchise;
(e) it shall comply with all applicable laws, regulations,
ordinances, statutes, decrees, or proclamations of all
governmental authorities, of which it is actually aware,
including, without limitation, the regulatory authorities
having jurisdiction over the Products, EndoSonics and the
Territory and the Products sold to Cordis;
(f) the Products shall be manufactured in accordance with GMPs and
the Act;
(g) when tendered to Cordis, the Products shall be free from
material defects in manufacture, workmanship and materials,
and shall be in compliance with EndoSonics' design,
manufacturing, packaging, labeling and sterilization
specifications; and
(h) EXCEPT FOR THE WARRANTIES MADE IN THIS SECTION 12 AND SECTION
13 AND THE WARRANTY MADE DIRECTLY TO PURCHASERS OF THE SYSTEM
PURSUANT TO SECTION 16 HEREOF, EndoSonics DOES NOT WARRANT THE
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE
PRODUCTS OR THE PERFORMANCE THEREOF, DOES NOT MAKE ANY
WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO PRODUCTS,
SPECIFICATIONS, SUPPORT, SERVICE OR ANYTHING ELSE AND DOES NOT
MAKE ANY WARRANTY TO CORDIS' CUSTOMERS OR AGENTS. EndoSonics
HAS NOT AUTHORIZED ANYONE TO MAKE ANY REPRESENTATION OR
WARRANTY OTHER THAN AS PROVIDED ABOVE.
9.
<PAGE> 10
13. SECTION 13: GUARANTY OF ENDOSONICS
The articles comprising each shipment of the Products or other
deliveries hereafter made by EndoSonics to, or in the order of Cordis,
are hereby guaranteed at the time of such tender to not be Adulterated
or Misbranded (as such terms are used within the meaning of the Act),
or, an article which may not, under the provisions of Sections 404,
505 or 512 of the Act, be introduced into interstate commerce in the
United States of America.
14. SECTION 14: ADDITIONAL OBLIGATIONS OF CORDIS
14.1. Marketing, Promotion, Distribution and Sale of the Products:
Cordis shall provide adequate personnel and facilities, and maintain
sufficient inventory of Products for demonstration purposes, necessary
to perform its obligations hereunder. Within 30 days prior to the
beginning of each calendar year, upon EndoSonics' request, Cordis
shall prepare and submit to EndoSonics an outline of Cordis' marketing
plan for such calendar year.
14.2. Marketing Managers:
Cordis shall appoint a United States and a European intracoronary
ultrasound marketing manager to interface with EndoSonics' United
States and European clinical and support staff.
14.3. Product Recalls:
In the event of any recall of the Products, either voluntary or
otherwise, Cordis' responsibility shall be limited to cooperating and
assisting EndoSonics in locating and retrieving such recalled
Products, as requested by EndoSonics and at EndoSonics' expense.
14.4. Complaints and Returns:
Cordis shall, as soon as reasonably practicable, notify, document and
forward to EndoSonics all customer complaints and any Products
returned in connection therewith. EndoSonics shall respond to Cordis
within ten business days of receipt of a complaint and Cordis shall
report EndoSonics' findings to customers, if applicable. EndoSonics
shall work diligently to resolve all customer complaints.
15. SECTION 15: ADDITIONAL OBLIGATIONS OF ENDOSONICS
15.1. Supply of Product:
EndoSonics shall supply Cordis' requirements for the Products in the
Territory consistent with the delivery Schedule and the Minimum
Purchase Amount.
15.2. Registration Support:
EndoSonics shall assist Cordis in registering the Products in the
Territory by providing Cordis with:
10.
<PAGE> 11
(a) materials in EndoSonics' possession necessary to obtain health
registrations and marketing approvals, licenses and permits;
(b) certificates of analysis, export and compliance;
(c) trademark authorizations; and
(d) such other information as Cordis shall reasonably request from
time to time.
15.3. Assistance:
Upon execution of this Agreement EndoSonics shall, during the Term and
each Renewal Term, if any:
(a) deliver to Cordis all customer leads and inquiries in the
Territory received in connection with the Products. Similarly,
Cordis shall promptly refer any order for delivery of Products
outside the Territory to EndoSonics;
(b) provide reasonable assistance to Cordis in soliciting and
consummating sales of the Products in the Territory.
15.4. Regulatory Reporting and Analysis of returned Products:
EndoSonics shall file, or cause to be filed, all reports required of a
manufacturer pursuant to the applicable medical device reporting
regulations. EndoSonics, as the manufacturer of the Products, shall
perform all failure analysis on the Products within 30 days of receipt
of each failed product and shall file all reports required with the
applicable regulatory agency. EndoSonics shall further cooperate with
and assist Cordis in submitting all reports that Cordis, as
distributor of the products, may be required to file. Cordis shall
promptly provide EndoSonics with copies of all such reports.
15.5. Adverse Impact on the Products:
Each party shall notify the other party's Regulatory Affairs and
Quality Assurance Officer or other designee as soon as reasonably
practicable of all actions or anticipated actions by any regulatory
authority, that could adversely affect the manufacture, marketing,
distribution or sale of the Products. Each party shall promptly
provide copies to the other party of all reports, citations,
violations, warnings and deficiencies received by such party in
connection with the Products.
16. SECTION 16: SERVICE AND MAINTENANCE; INSTALLATION
16.1. Warranty and Service and Maintenance Agreements:
EndoSonics shall make available to purchasers of the System its
standard one-year warranty and an annual service and maintenance
agreement, substantially in the forms set forth in Exhibit C and D,
respectively. Such Warranty, service and maintenance for the [*] to
the end customer shall be [*]. An annual service and maintenance
agreement shall, exclusively through Cordis, be available in the
Territory as from the [*] to the end customer. During the Term,
Cordis' cost for such an annual service and maintenance agreement
shall be $[*]. With respect to the Products, other than the
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL
PORTION HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
11.
<PAGE> 12
System, EndoSonics shall offer purchasers thereof its standard
warranty which shall be consistent with warranties offered by
manufacturers of similar products and devices.
16.2. Service and Maintenance:
As set forth on EndoSonics' maintenance and support program,
incorporated as Exhibit D, EndoSonics shall be solely responsible
within the Territory for the service, repair and maintenance of all
Systems, including dispatching calls and providing Cordis reports from
time to time; except that, in such countries where Cordis distributes
the System through distributors, at Cordis' option, such distributors
shall, during the Term and each Renewal Term, if any, be responsible
for servicing, repairing and maintaining the System. In such cases,
EndoSonics shall, at its expense, provide training to such
distributors regarding the service, repair and maintenance of the
System.
Upon termination of this Agreement for any reason whatsoever,
EndoSonics shall take such steps as are necessary to provide on-going
service, repair and maintenance of the systems installed through
Cordis to end customers. Cordis or the end customers of Cordis shall
bear the cost of all service, repairs and maintenance performed that
is not covered under warranty.
16.3. Installation:
EndoSonics or an EndoSonics authorized representative shall be
responsible within the Territory for the installation of the System
with and at the location of the end customer indicated by Cordis and
EndoSonics guarantees full installation at its cost and expense within
15 days of a written request for installation by Cordis, except that,
in such countries where Cordis distributes the System through
distributors, at Cordis' option, such distributors shall, during the
Term and each Renewal Term, if any, be responsible for installation of
the System. In such cases, EndoSonics shall, at its expense, provide
training to such distributors regarding the installation of the
System.
17. SECTION 17: INDEMNIFICATION
17.1. Indemnification by Cordis:
Except with respect to any of the following that arises from gross
negligence or willful misconduct of EndoSonics or its agents and
subject to Section 17.3 Cordis shall indemnify, defend and hold
harmless EndoSonics, its directors, officers, employees,
representatives and agents from and against any and all claims, suits,
losses, damages, costs, fees and expenses (including reasonable
attorney's fees), and other liabilities asserted by parties, both
governmental and nongovernmental, resulting from or arising out of (a)
any misrepresentation of Cordis contained herein or breach of any
warranty made by Cordis; (b) any breach, violation or nonperformance
of any covenant, condition or agreement in this Agreement by Cordis;
and (c) the material inaccuracy of any representation or warranty of
the Products made by Cordis.
12.
<PAGE> 13
17.2 Indemnification by EndoSonics:
Except with respect to any of the following that arises from the gross
negligence or willful misconduct of Cordis or its agents and subject
to Section 17.3, EndoSonics shall indemnify, defend and hold harmless
Cordis, its directors, officers, employees, representatives and agents
from and against any and all claims, suits, losses, damages, costs,
fees and expenses (including reasonable attorneys' fees), and other
liabilities asserted by third parties, both governmental and
nongovernmental, resulting from or arising out of (a) any
misrepresentation of EndoSonics contained herein or breach of any
warranty or guaranty made by EndoSonics, (b) any breach, violation or
nonperformance of any covenant, condition or agreement in this
Agreement by EndoSonics, (c) the design of the Products, (d) any
injury to any property or person arising in connection with the
design, manufacture, use or application of the Products, (e) any
infringement or alleged infringement of the Products on any product,
device, method, process, trade name, trademark or patent, and (f) any
and all taxes, fees, fines, penalties, assessments, charges, expenses
or other governmental levies assessed on the Products which are not
attributable to Cordis' acts or omissions.
17.3 Limitations to Indemnify:
The indemnities of Sections 17.1 and 17.2 shall not apply (a) if the
indemnified party fails to give the indemnifying party prompt notice
of any claim it receives and such failure materially prejudices the
indemnifying party, or (b) unless the indemnifying party is given the
opportunity to approve any settlement. Furthermore, the indemnifying
party shall not be liable for attorneys' fees or expenses of
litigation of the indemnified party unless the indemnified party gives
the indemnifying party the opportunity to assume control of the
defense or settlement. In addition, if the indemnifying party assumes
such control, it shall only be responsible for the legal fees and
litigation expenses of the attorneys it designates to assume control
of the litigation. In no event shall the indemnifying party assume
control of the defense of the indemnified party without the consent of
the indemnified party (which consent shall be given or not at its sole
discretion).
18. SECTION 18: INSURANCE
EndoSonics shall, during the Term and each Renewal Term, if any,
purchase and maintain insurance naming EndoSonics as insured and
Cordis as an additional insured, insuring EndoSonics' indemnification
obligations set forth herein, except for Section 17.2(e), with such
terms and coverages and in such companies satisfactory to Cordis and
with such commercially reasonable increases and limits as Cordis may
from time to time request, but initially in an amount not less than
$[*] per occurrence combined single limit and $[*] in the aggregate,
except for product liability insurance which will be in the amount of
$[*]. EndoSonics shall furnish to Cordis policies or certificates
evidencing such insurance coverage, which policies or certificates
shall state that such insurance coverage may not be changed or
canceled without at least 10 days prior written notice to Cordis.
19. SECTION 19: INSPECTIONS
Cordis, its agents or representatives shall be provided with
reasonable access to inspect EndoSonics' manufacturing facilities and
manufacturing Records during EndoSonics' regular hours of business
upon reasonable prior notice. EndoSonics shall
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL
PORTION HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
13.
<PAGE> 14
cooperate with Cordis' inspectors and shall provide Cordis with copies
of all documents reasonably required by Cordis to properly perform
such inspections.
20. SECTION 20: CONFIDENTIALITY
During the Term and each Renewal Term, if any, it is anticipated that
the parties shall disclose to each other confidential or proprietary
information ("Confidential Information"). Confidential Information
shall include all technology, inventions, designs, processes,
formulas, computer software, specifications, customer lists, product
development plans, forecasts, and all other business, technical and
financial Information provided to the other party.
If a party orally transmits information that it deems to be of a
confidential nature, such party shall, within 30 days from the
transmittal thereof, summarize such information in a written form and
mark such information "Confidential" and provide a copy of such
writing to the other party. The duty of confidentiality set forth
herein shall not apply to information that:
(a) is, at the time of disclosure, in the public domain and
generally available;
(b) after disclosure, enters the public domain except where such
entry is a direct result of a breach of this Agreement;
(c) prior to disclosure, was already known to the party receiving
such information, as evidenced by its written records;
(d) subsequent to disclosure, is obtained from a third party in
possession of such information and not under a contractual or
fiduciary obligation to keep such information in confidence;
(e) is filed with any governmental or any regulatory authority and
available to the public; or
(f) is disclosed pursuant to any judicial or governmental
requirement or order.
The parties' duty of confidentiality set forth above shall be limited
to the Term, each Renewal Term, if any, and 12 months from the
expiration thereof.
21. SECTION 21: TAXES
21.1 Cordis shall pay to or reimburse EndoSonics any value-added, sales,
use, excise, property or other tax, tariff, duty or assessment levied
or imposed by any governmental authority including, without
limitation, any country, state, province, city or county, arising out
of or related to the transactions contemplated under this Agreement
which EndoSonics is at any time obligated to pay, charge or collect as
a result of Cordis' sale of the Products (other than any tax based on
corporate net income of EndoSonics).
21.2 In the event that any applicable law or treaty requires Cordis to
withhold any part of the sale price of the Products and remit such
amount to a governmental body as an advance payment of EndoSonics' tax
liability, Cordis shall comply with the specific requirements of such
law or treaty, and Cordis will do all of the following:
14.
<PAGE> 15
(a) notify EndoSonics as soon as reasonably practicable of the
assertion by governmental authorities of any such possible
requirement;
(b) promptly furnish EndoSonics with copies of all documents,
assessments, and correspondence between Cordis and any
governmental authorities which relate to such requirement;
(c) assist EndoSonics in completing any documents required in
order for EndoSonics to claim an appropriate credit against
applicable taxes, seek a refund of the amount withheld or
appeal or contest the assessment or claim; and
(d) promptly cease any such withholding immediately upon the
expiration, termination or rescission of such requirement.
22. SECTION 22: OBLIGATION TO MAKE PAYMENT IN US DOLLARS
All payments to be made by either party hereunder shall be made in US
Dollars, or such other currency as the parties may agree upon. In the
event another currency is so agreed upon, then the amount to be paid
shall be calculated using the New York foreign exchange selling rate
for that other currency for the business day preceding the invoice
date as published in the Wall Street Journal. Payments may be made via
wire transfer upon the concurrence of both parties.
23. SECTION 23: MISCELLANEOUS
23.1 Notices:
All notices, requests, demands and other communications required or
permitted to be given hereunder shall be in writing, shall be deemed
to have been duly given when delivered in person, or when sent by
telex or telecopy or other facsimile transmission (with the receipt
confirmed), or on the fifth business day after posting thereof by
registered or certified mail, return receipt requested, prepaid and
addressed as follows (or such other address as the parties may
designate by written notice in the manner of aforesaid):
If to Cordis:
Cordis Corporation
14201 N.W. 60th Avenue
Miami Lakes, Florida 33014
USA
Attention: A.J. Novak
Vice President and CFO
Telephone: (305) 824.2357
Facsimile: (305) 824.2440
and
Cordis S.A. (Belgium)
Waterloo Office Park
Dreve Richelle 161 H
1410 Waterloo
Belgium
15.
<PAGE> 16
Attention: P. Monks
Managing Director
Telephone: +32-2-352.1472
Facsimile: +32-2-352.1592
If to EndoSonics:
EndoSonics Corporation
6616 Owens Drive
Pleasanton, California 94588
USA
Attention: R. Warnking
President and CEO
Telephone: (510) 734.0464
Telefax (510) 734.0465
and
EndoSonics Europe B.V.
Overschieseweg 54
3044 EG Rotterdam
The Netherlands
Attention: Dr. J.P.C. de Weerd
Managing Director
Telephone: +31-10-437.5977
Telefax: +31-10-437.5972
23.2. Governing Law:
This Agreement shall be governed by and construed in all respects in
accordance with the laws of the State of Florida (except that the
United States federal law will govern copyright and trademark
matters).
23.3. Non-Assignment:
This Agreement may not be assigned by either party without the prior
written consent of the other party.
23.4 Entire Agreement:
This Agreement sets forth the entire understanding of the parties with
respect to the subject matter hereof. This Agreement supersedes all
prior representations, agreements and understandings among the parties
with respect to such subject matter, specifically the formal
Distribution Agreement entered into by Cordis and EndoSonics on the
29th day of August 1994, which was followed by an Agreement to Amend
on July 20, 1995, and the Exclusive Distribution Agreement entered
into by Cordis S.A. (Belgium) and EndoSonics Nederland B.V., a wholly
owned subsidiary of EndoSonics, on the first day of November, 1994
that was followed by an Agreement to Amend on December 20, 1994 and a
Second Agreement to Amend on the first day of June, 1995, all of which
are hereby terminated.
23.5 Remedies Cumulative:
16.
<PAGE> 17
The rights, powers and remedies set forth herein are cumulative and
shall be in addition to any and all other rights, powers and remedies
provided by law. The exercise of any right or remedy hereunder shall
not in any way constitute a cure under this Agreement, or prejudice
either party in the exercise of any of its rights under this Agreement
or law.
23.6 Attorneys' Fees:
If litigation between the parties arises out of or relates to this
Agreement, the prevailing party of any such litigation shall, for as
long as allowed by the law and jurisdiction ruling the litigation, be
entitled to recover from the other party its reasonable attorneys' and
legal assistants' fees and other costs incurred in such litigation
(including appellate litigation).
23.7 Amendment:
No changes or amendments or alterations shall be effective unless in
writing and signed by all parties hereto.
23.8 Waiver:
No waiver of any default in the performance of any of the duties or
obligations arising out of this Agreement shall be valid unless in
writing and signed by the waiving party. Waiver of any one default
shall not constitute or be construed as creating waiver of any other
default or defaults. No course of dealing between the parties shall
operate as a waiver or preclude the exercise of any rights or remedies
under this Agreement. Failure on the part of either party to object to
any act or failure to act of the other party, or declare the other
party in default, regardless of the extent of such default, shall not
constitute a waiver by the party of its rights hereunder.
23.9 Severability:
If any provision of this Agreement shall be held to be unenforceable
in whole or in part, then the invalidity of such provision shall not
be held to invalidate any other provision herein and all other
provisions shall remain in full force and effect.
23.10 Force Majeure:
No delay or failure of EndoSonics or Cordis to perform any of their
respective obligations under this Agreement shall be considered a
breach of this Agreement if it results from any cause beyond the
control of EndoSonics or Cordis, as the case may be, including,
without limitation, any act of God, earthquake, hurricane, fire,
flood, strike, lockout or other dispute, natural catastrophe, severe
weather or public emergency, insurrection, riot, war, transportation
shortage, or actions of governmental authorities.
23.11 Survival of Sections:
The obligations set forth in Sections 3.3, 8, 9.2, 9.6, 11, 12, 13,
14.3, 15.4, 15.5, 16.1, 16.2, 17 and 20 through 23 shall survive the
termination of this Agreement.
23.12 Counterparts:
17.
<PAGE> 18
This Agreement may be executed in one or more counterparts, including
facsimile counterparts, each of which shall be deemed an original and
all which together shall constitute one and the same agreement.
23.13 Captions:
The captions contained in this Agreement are inserted only as a matter
of convenience and in no way define, limit or extend the scope or
intent of this Agreement or any provision hereof.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date written above.
EndoSonics Corporation
R.J. Warnking
By: /s/ R.J. Warnking
Title: President & CEO
Cordis Corporation
A.J. Novak
By: /s/ A.J. Novak
Title: Vice President and CFO
18.
<PAGE> 19
EXHIBIT A
PRODUCTS AND PRICES
1. US Products and Price list
<TABLE>
<CAPTION>
Description Part number Price
<S> <C> <C>
[*] S7700471 [*]
[*] S7700471i [*]
[*] S9200054 [*]
[*] [*]
[*] C5400700 [*]
<CAPTION>
Catheters Monthly shipping volume by
catheter category
Price Price Price
<S> <C> <C> <C> <C>
[*] [*] [*]
Visions(R) 3.5F OTW C8804700 [*] [*] [*]
Visions(R) F/X C8852700 [*] [*] [*]
Visions(R) Five-64(TM) [*] [*] [*]
OTW
Visions(R) Five-64(TM) [*] [*] [*]
F/X
Oracle(R)Micro OTW 2.0mm C8805120 [*] [*] [*]
2.5mm C8805125 [*] [*] [*]
3.0mm C8805130 [*] [*] [*]
3.5mm C8805135 [*] [*] [*]
Oracle(R)Focus(TM)OTW 2.5mm [*] [*] [*]
3.0mm [*] [*] [*]
3.5mm [*] [*] [*]
4.0mm [*] [*] [*]
Oracle(R) MegaSonics(TM) 2.5mm [*] [*] [*]
OTW
3.0mm [*] [*] [*]
3.5mm [*] [*] [*]
4.0mm [*] [*] [*]
</TABLE>
All US Products sales are F.O.B. Rancho Cordova, California (systems and system
options) or Pleasanton, California (catheters). For pricing purposes, catheter
categories include Visions(R), Visions(R) Five-64, Oracle(R) Micro, Oracle(R)
Focus and Oracle(R) MegaSonics(TM).
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL
PORTION HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
19.
<PAGE> 20
EXHIBIT A -(contd)
2. Europe Products and Price
List
<TABLE>
<CAPTION>
Description Part number Price
<S> <C> <C>
EndoSonics
[*] S7700471 [*]
[*] S7700471i [*]
[*] S9200054 [*]
[*] [*]
[*] C5400700 [*]
<CAPTION>
Catheters Monthly shipping volume by
catheter category
Price Price Price
<S> <C> <C> <C> <C>
[*] [*] [*]
Visions(R) 3.5F C8804700 [*] [*] [*]
OTW
Visions(R) F/X C8852700 [*] [*] [*]
Visions(R) Five- [*] [*] [*]
64(TM) OTW
Visions(R) Five- [*] [*] [*]
64(TM) F/X
Oracle(R) Micro 2.0mm C8805120 [*] [*] [*]
OTW
2.5mm C8805125 [*] [*] [*]
3.0mm C8805130 [*] [*] [*]
3.5mm C8805135 [*] [*] [*]
Oracle(R) Micro 2.0mm C8856120 [*] [*] [*]
F/X
2.5mm C8856125 [*] [*] [*]
3.0mm C8856130 [*] [*] [*]
3.5mm C8856135 [*] [*] [*]
Oracle(R) Focus(TM) 2.5mm [*] [*] [*]
OTW
3.0mm [*] [*] [*]
3.5mm [*] [*] [*]
4.0mm [*] [*] [*]
Oracle(R)Focus(TM) 2.5mm 66125 [*] [*] [*]
F/X
3.0mm 66130 [*] [*] [*]
3.5mm 66135 [*] [*] [*]
4.0mm 66140 [*] [*] [*]
</TABLE>
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL
PORTION HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
20.
<PAGE> 21
2. Europe Products and Price List Description (cont'd)
<TABLE>
<CAPTION>
Description Part Monthly shipping volume by catheter
number category
Price Price Price
<S> <C> <C> <C> <C>
EndoSonics [*] [*] [*]
Oracle(R) 2.5mm [*] [*] [*]
MegaSonics (TM)
OTW
3.0mm [*] [*] [*]
3.5mm [*] [*] [*]
4.0mm [*] [*] [*]
Oracle(R) 2.5mm 36125 [*] [*] [*]
MegaSonics(TM)
F/X
3.0mm 36130 [*] [*] [*]
3.5mm 36135 [*] [*] [*]
4.0mm 36140 [*] [*] [*]
<CAPTION>
Description Part Price
number
<S> <C> <C>
Du-MED
INTRASOUND(R) 17002 [*]
Peripheral
Vascular
Imaging System
PRINCEPS(R) 50001 [*]
Catheter 4.1
ccs
PRINCEPS(R) 50003 [*]
Catheter 4.3
ccs
</TABLE>
All Europe Products sales are F.O.B. Rotterdam, The Netherlands, except the
Oracle(R) Imaging System and In-Vision(TM) option which are F.O.B. Rancho
Cordova, California. For pricing purposes, catheter categories include
Visions(R), Visions(R) Five-64, Oracle(R) Micro, Oracle(R) Focus and Oracle(R)
MegaSonics(TM).
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL
PORTION HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
21.
<PAGE> 22
EXHIBIT B
MINIMUM PURCHASE AMOUNT
During the Term, Cordis shall use reasonable efforts to purchase Products for
Minimum Annual Purchase Amounts as set forth below.
Calendar Year Minimum Purchase Amount (M$)
1996 [*]
1997 [*]
1998 [*]
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL
PORTION HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
22.
<PAGE> 23
EXHIBIT C
WARRANTY
1. Systems Limited Warranty
NOTICE: EndoSonics reserves the right to make changes in its products
in order to improve design or performance.
Subject to the conditions and limitations on liability stated herein,
EndoSonics warrants that Systems as so delivered shall materially
conform to EndoSonics' then current specifications for Systems, for a
period of one year from the date of delivery. ANY LIABILITY OF
EndoSonics WITH RESPECT TO THE SYSTEM OR THE PERFORMANCE THEREOF UNDER
ANY WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHER THEORY WILL BE
LIMITED EXCLUSIVELY TO SYSTEM REPAIR, REPLACEMENT OR, IF REPLACEMENT IS
INADEQUATE AS A REMEDY OR, IN EndoSonics' OPINION IMPRACTICAL, TO
REFUND THE PRICE PAID FOR THE SYSTEM. EXCEPT FOR THE FOREGOING, THE
SYSTEM IS PROVIDED "AS IS" WITHOUT WARRANTY OF ANY KIND, EXPRESS OR
IMPLIED. INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF FITNESS,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT.
FURTHER, EndoSonics DOES NOT WARRANT, GUARANTEE, OR MAKE ANY
REPRESENTATIONS REGARDING THE USE, OR THE RESULTS OF THE USE, OF THE
SYSTEM OR WRITTEN MATERIALS IN TERMS OF CORRECTNESS, ACCURACY,
RELIABILITY, OR OTHERWISE.
Cordis understands that EndoSonics is not responsible for and will have no
liability for any items or any services provided by any persons other than
EndoSonics' authorized personnel. EndoSonics shall have no liability for delays
or failures beyond its reasonable control.
The happening of any one or more of the following events will void the warranty:
1 - Defects due to negligence, alteration. modification, installation or
repair by anyone other than EndoSonics authorized personnel, or a
representative of Cordis authorized by EndoSonics to repair the
material.
2 - Abuse or misuse by end customer.
3 - Attempted or actual dismantling, disassembling, service or repair in a
procedure not specifically authorized by EndoSonics.
4 - Operating the System in a manner that is not in conformance with
purchase specifications and specifications contained in the Operator's
manual, and/or supplements.
5 - Maintenance of the System which is not in accordance with procedures in
the Operator's manual, and/or supplements.
6 - Repair, alteration or modification of the System in any way other
than by EndoSonics' authorized personnel, or without EndoSonics'
authorization.
23.
<PAGE> 24
If claims under this warranty become necessary, and the System or
components of the System are to be returned, Cordis shall contact
EndoSonics for instructions and issuance of a Returned Materials
Authorization number. The System or components will not be accepted for
warranty purposes unless the return has been authorized by EndoSonics.
System parts or components repaired or replaced under warranty bear the
same warranty expiration date as the original equipment. Consumable
parts (including, but not limited to rechargeable batteries, etc.) are
warranted only against defects in materials and workmanship. System
parts purchased outside the original warranty period are warranted for
a period of 90 days, subject to all of the restrictions contained in
this Limited Warranty. Use of unauthorized replacement parts may void
the warranty. In all cases, EndoSonics will be the sole judge as to
what constitutes warrantable damage.
2. Catheters limited warranty
Subject to the conditions and limitations on liability stated herein,
EndoSonics warrants that Catheters, as so delivered, shall materially
conform to EndoSonics' then current specifications for Catheters upon
receipt. ANY LIABILITY OF EndoSonics, WITH RESPECT TO CATHETERS OR THE
PERFORMANCE THEREOF UNDER ANY WARRANTY, NEGLIGENCE, STRICT LIABILITY OR
OTHER THEORY, WILL BE LIMITED EXCLUSIVELY TO CATHETER REPLACEMENT OR,
IF REPLACEMENT IS INADEQUATE AS A REMEDY OR, IN EndoSonics' OPINION
IMPRACTICAL, TO REFUND THE PRICE PAID FOR THE CATHETER. EXCEPT FOR THE
FOREGOING, CATHETERS ARE PROVIDED "AS IS" WITHOUT WARRANTY OF ANY KIND,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF
FITNESS, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR
NONINFRINGEMENT. FURTHER, EndoSonics DOES NOT WARRANT, GUARANTEE, OR
MAKE ANY REPRESENTATIONS REGARDING THE USE, OR THE RESULTS OF THE USE,
OF CATHETERS OR WRITTEN MATERIALS IN TERMS OF CORRECTNESS, ACCURACY,
RELIABILITY, OR OTHERWISE.
Cordis understands that EndoSonics is not responsible for and will have
no liability for any items or any services provided by any persons
other than EndoSonics authorized personnel. EndoSonics shall have no
liability for delays or failures beyond its reasonable control.
Additionally, this warranty does not apply if:
1. A Catheter is used in a manner other than described by
EndoSonics in the Physicians Guide and Instructions for Use
supplied with the Catheter.
2. A Catheter is used in a manner that is not in conformance with
purchase specifications or specifications contained in the
Physicians Guide and Instructions for Use.
3. A Catheter is re-used or re-sterilized.
4. A Catheter is repaired, altered or modified in any way by
personnel other than EndoSonics authorized personnel, or
without EndoSonics' authorization.
24.
<PAGE> 25
If claims under this warranty become necessary, Cordis shall contact
EndoSonics for instructions and issuance of a Returned Materials
Authorization number, if a catheter is to be returned. Catheters will
not be accepted for warranty purposes unless the return has been
authorized by EndoSonics.
3. Additional limitations to warranty
All Products should be inspected for obvious damage upon arrival. If
Products have been damaged in transit, the EndoSonics Service
department must be notified within 72 hours. All claims for
nonconforming or defective Products must be made in writing within ten
(10) days after delivery to Cordis, and any claims not made within this
period shall be deemed waived and released.
IN NO EVENT SHALL EndoSonics BE LIABLE FOR ANY INCIDENTAL OR
CONSEQUENTIAL DAMAGES DUE TO ANY CAUSE WHATSOEVER. No suit or action
shall be brought against EndoSonics more than one year after the
related cause of action has occurred.
THE FOREGOING CONSTITUTES EndoSonics' SOLE LIABILITY AND CORDIS' SOLE
REMEDY WITH RESPECT TO PRODUCTS SOLD BY EndoSonics.
25.
<PAGE> 26
EXHIBIT D
EXTENDED MAINTENANCE AGREEMENT PROGRAM
CONDITIONS OF EXTENDED MAINTENANCE AGREEMENT
Call Window
8:30 A.M. to 5:00 P.M. (Pacific Time Zone for USA, Central European
Time for Europe) Monday through Friday excluding EndoSonics holidays.
Response Time
48 Hour Response Time during specified call window.
Payment Schedule
Annually in advance.
Term
The Extended Maintenance Agreement shall be effective when signed by
both parties. The initial term is twelve (12) months from the
commencement date, unless modified on the face of the contract
document.
Eligibility for Service
The Extended Maintenance Agreement shall only be valid as long as the
equipment covered by it is properly installed, and is serviced by
EndoSonics authorized personnel only. EndoSonics site environmental
conditions must be met at all times.
Service Responsibilities of EndoSonics
1 EndoSonics shall maintain the equipment in good condition and
furnish space for calls received within the call window.
Specifically, EndoSonics shall:
A. Provide scheduled planned maintenance and safety
check one (1) time per year. Planned maintenance is
to be scheduled two weeks in advance within the call
window, excluding holidays.
B. Provide response to requests for remedial service
within the call window. Requests for service outside
these hours will be provided on a best effort basis
at an additional charge.
C. Provide all expenses incurred by EndoSonics Technical
Representative including airfare, lodging, and travel
time fees.
D. Provide original parts or parts of at least equal
quality.
E. Provide all applicable safety and reliability
modifications at no charge.
F. Provide all applicable software updates at no charge.
26.
<PAGE> 27
2. EndoSonics shall, at no additional cost to the customer,
provide replacement equipment on loan, should EndoSonics fail
to service or repair customer's equipment within a reasonable
time period.
3. Parts not covered under this Agreement are:
Supplies, Video Cassettes and Consumables.
Responsibilities of Customer
Customer shall notify EndoSonics immediately of equipment
malfunction and allow EndoSonics full unrestricted access to
all equipment and areas in which the equipment is commonly
operated.
Charges
1. Payments of service charges are due forty-five (45) days from
the date of the Invoice.
2. All service calls received outside the call window are subject
to a four (4) hour minimum charge and any additional hours
necessary to complete the repair are based upon the overtime
rates prevailing at the time.
EndoSonics' overtime rates are:
(a) one and one half (1.5) times the normal hourly rate
after 5:00 P.M. and before 8:00 A.M. Monday through
Friday and all day Saturday.
(b) two (2) times the normal hourly rate on Sundays and
scheduled EndoSonics holidays.
4. Charges are exclusive of, and Customer is responsible for, all
sales, use, and like taxes where applicable.
27.
<PAGE> 28
EXHIBIT E
TERRITORY
North America Portugal Morocco
The United States of America Rumania Mozambique
and its territories and Russia Namibia
possessions Slovak Republic Niger
Canada Slovenia Nigeria
Mexico Spain Rep. Guinea
Sweden Ruanda
Switzerland Senegal
Tajikistan Sierra Leone
Europe Turkey Somalia
Albania Turkmenistan South Africa
Andorra Ukraine Sudan
Armenia United Kingdom Swaziland
Austria Uzbekistan Tunisia
Belgium Yugoslavia Uganda
Bosnia Herzegovina Zaire
Bulgaria Zambia
Byelorus Zimbabwe
Croatia Africa
Cyprus Algeria
Czech Republic Angola
Denmark Benin Middle East
Estonia Burkina Faso Bahrain
Finland Burundi Iran
France Cameroon Iraq
Georgia Central African Rep. Israel
Germany Chad Jordan
Greece Congo Kuwait
Hungary Djibouti Lebanon
Iceland Egypt Oman
Ireland Equatorial Guinea Qatar
Italy Eritrea Saudi Arabia
Kazachstan Ethiopia Syria
Kirgisia Gabon UAE
Latvia Gambia Yemen, North
Liechtenstein Ghana
Lithuania Guinea Bissau
Luxemburg Ivory Coast
Macedonia Lesotho
Malta Liberia
Moldavia Libya
Monaco Madagascar
Netherlands Malawi
Norway Mali
Poland Mauritania
28.
<PAGE> 29
EXHIBIT F
DISCLOSURE LETTER
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<PAGE> 1
Exhibit 10.25
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL
PORTION HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
LICENSE AGREEMENT
THIS LICENSE AGREEMENT is made and entered into effective as of March
4, 1996, by and between CardioVascular Dynamics, Inc., a Delaware corporation,
having its principal place of business at 13900 Alton Parkway, Suite 122,
Irvine, CA 92718 ("CVD"), and Advanced Cardiovascular Systems, Inc., a
California corporation having its principal place of business at 3200 Lakeside
Drive, Santa Clara, California 95052-8167 ("ACS").
RECITALS:
A. CVD is engaged in the discovery, development, manufacture, and sale
of medical devices for the diagnosis and treatment of vascular disease,
including coronary angioplasty balloon catheters incorporating blood perfusion
capabilities.
B. CVD has developed or acquired and is the owner of all right title
and interest in certain patent rights and the inventions covered thereby, as
well as Know-How, relating to methods and apparatus comprising and related to a
certain device known as the mechanical angioplasty catheter ("MAC"), that
combines blood perfusion and coronary balloon angioplasty in a single device to
treat vascular stenoses.
C. ACS is and has been engaged in the discovery, development,
manufacture and sale of medical devices for the diagnosis and treatment of
vascular disease, including angioplasty balloon catheters having blood perfusion
capability, and continues to be active in this area.
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D. ACS previously acquired from CVD in a License Agreement effective as
of January 15, 1995 (the "Prior Agreement"), an option to acquire the exclusive
worldwide right and license, with a right to sublicense, in and to the MAC
Technology and CVD Patent Rights (each as defined below) to make, have made, use
and sell products covered thereby and to practice processes and methods
thereunder (the "Option").
E. ACS exercised the Option in accordance with the terms of the Prior
Agreement, and the parties desire to set forth the terms and conditions of the
license granted pursuant to the Option in this Agreement.
AGREEMENT:
NOW, THEREFORE, the parties hereby agree as follows:
1. DEFINITIONS
a. "MAC Technology" as used herein shall mean rights in and to CVD
Patent Rights and the inventions covered thereby, and currently available CVD
Know-How only as it relates to practice of said CVD Patent Rights. Improvements
(as hereinafter defined) thereto shall also be included therein.
b. "CVD Patent Rights" as used herein shall mean the patent rights held
by CVD in the patents and patent applications identified on Exhibit A hereto,
and the
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<PAGE> 3
inventions covered thereby, and Foreign Counterparts thereof (as hereinafter
defined), as well as any additional patent rights CVD now owns or controls or
may acquire in the future based upon applications which are continuations,
continuations-in-part, divisionals or substitutes of the original applications
upon which the aforementioned patent rights are based, and the inventions
covered thereby, or Foreign Counterparts thereof, and upon any reexaminations,
reissues, renewals or extensions thereof, and any patent rights which CVD now
owns or controls or may acquire in the future relating to Improvements thereto.
c. "Foreign Counterparts" as used herein shall mean foreign
applications or issued foreign patents, which claim priority from, or share
common priority with an identified United States patent or patent application,
and the inventions covered thereby.
d. "CVD Know How" as used herein shall mean confidential information
regarding the MAC Technology, including, but not limited to, devices and methods
relating thereto, technical and business information, design and manufacturing
information and data, specifications and the like. "CVD Know-How" shall also
include bench, animal and clinical testing results and the like, unless CVD is
prohibited from disclosing such results due to confidentiality restrictions in
agreements with third parties.
e. "ACS Licensed Product" or "Licensed Product" as used herein shall
mean a product which if made, used, or sold by ACS in the absence of the license
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<PAGE> 4
granted from CVD hereunder, would infringe a Valid Claim included in the CVD
Patent Rights or other right of CVD in, or other use of, the MAC Technology.
f. "Valid Claim" as used herein shall mean a claim of an issued patent
that has not been held or declared invalid, unpatentable or unenforceable by the
United States Patent and Trademark Office, a foreign patent office, or a court
of competent jurisdiction from which no appeal can or has been taken.
g. "Net Revenues" as used herein shall mean gross amounts received by
ACS or any of its Affiliates or Sublicensees for sales of ACS Licensed Products,
less any trade and quantity discounts, rebates, and credit for returned goods
and cancellations, and shall exclude freight charges, taxes, duties and the
like, all to the extent that any of the foregoing may be actually paid or
allowed. Hereinafter, such reduction, discounts, credits and other charges,
taxes and duties shall be referred to collectively as "Deductions."
h. "Improvements" as used herein shall mean modifications of the ACS
Licensed Products, CVD Know-How and related devices and methods of use, to the
extent that same directly arise from technology covered by the MAC Technology
and/or CVD Patent Rights, and are dominated by one or more claims of the CVD
Patent Rights.
i. "Affiliate" as used herein shall mean any company or entity which
owns, or is at least fifty percent (50%) owned by, or is under common ownership
with, a party hereto.
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<PAGE> 5
j. "Sublicensee" as used herein shall mean any sublicensee of the
license rights granted hereunder or of a license which is the subject of an
option granted hereunder.
k. "Effective Date" as used herein shall mean the date first written
above.
2. GRANT OF LICENSE TO ACS
a. Effective as of February 14, 1996 (the "Option Exercise Date"), and
subject to the terms and conditions set forth herein, CVD hereby grants to ACS
an exclusive, non-transferable, worldwide right and license, with the right to
sublicense the same as provided herein, in and to the MAC Technology to make,
have made, use and sell, or otherwise dispose of products, and practice
processes and methods thereunder.
3. DEVELOPMENT OF INVENTIONS
a. As between the parties, inventions or know-how developed during the
term of this Agreement solely by one party shall be owned exclusively by that
party, regardless of any obligation of disclosure or licensing set forth herein
regarding same.
b. Inventions or Know-How relating to MAC Technology developed jointly
by the parties shall be jointly owned by the parties, and will be included in
the MAC Technology and licensed to ACS at no additional expense to ACS, subject
to the provisions of Paragraph 12 below.
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<PAGE> 6
4. DISCLOSURE OF IMPROVEMENTS AND RIGHTS THERETO
If CVD conceives, develops, acquires, or otherwise obtains rights to
any Improvements to the MAC Technology, CVD shall immediately notify ACS and
disclose each such Improvement to ACS in writing, including all information
relating to, or necessary to practice the Improvement.
5. RIGHTS AND OBLIGATIONS OF ACS
a. As of the Option Exercise Date, ACS shall have a credit against
future earned royalties of [*] dollars [*].
b. ACS shall make the following non-refundable license fee payments to
CVD:
i. [*] dollars ([*]) upon execution of this Agreement.
ii. [*] dollars ($[*]) upon U.S. Food and Drug Administration
("FDA") approval of the first ACS Licensed Product.
iii. [*] dollars ($[*]) upon commercial U.S. market release of
the first ACS Licensed Product.
c. ACS shall pay a royalty of [*] percent [*] of Net Revenues from ACS
Licensed Products covered by a Valid Claim of a patent included in the CVD
Patent Rights. If, in a particular country, there is no such patent but the ACS
Licensed Product
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL
PORTION HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
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is covered by CVD Know-How, then ACS shall pay a royalty of [*] percent ([*]) of
Net Revenues from such products for a period of [*] years from the first sale of
such ACS Licensed Product in such country. Such royalty payments shall be
reduced by the amount of the credit set forth in subparagraph 5(a) above.
d. Commencing in the calendar year in which commercial launch of an ACS
Licensed Product occurs, in each calendar year in which CVD has received from
ACS royalty payments of less than $[*] in respect of sales of ACS Licensed
Product in such year, ACS shall pay to CVD a minimum annual royalty equal to the
difference between the royalties actually paid to CVD by ACS in respect of ACS
Licensed Products during such year and [*] dollars ([*]). However, during the
calendar year in which commercial launch of an ACS Licensed Product occurs, the
minimum annual royalty amount of such payment shall be pro rated (on a monthly
basis). Such payments shall be paid to CVD by January 31 of the immediately
subsequent calendar year.
6. MARKETING OF PERFUSION PRODUCTS
a. ACS shall exercise reasonable efforts to develop a commercially
viable ACS Licensed Product. In this regard the following shall apply:
i. If ACS, or an Affiliate or Sublicensee, has not submitted a
product incorporating the MAC Technology to the FDA for
approval within twenty four (24) months after the Option
Exercise Date, ACS shall either pay the required [*] dollar
([*]) advance royalty payment to CVD described in subparagraph
5(b)(ii) above, or shall return the original MAC Technology
and all rights thereto
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL
PORTION HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
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<PAGE> 8
to CVD. Each of the parties shall have a royalty free and
paid-up license to practice Improvements jointly developed by
the parties.
ii. If ACS, or an Affiliate or Sublicensee, has not released a
product covered by or incorporating the MAC Technology on the
U.S. market within one hundred eighty (180) days following FDA
approval of such a product, ACS shall either pay the required
[*] dollar ([*]) advance royalty payment to CVD described in
subparagraph 5(b)(iii) above, or shall return the original MAC
Technology and all rights thereto to CVD. Each of the parties
shall have a royalty free and paid-up license to practice
Improvements jointly developed by the parties.
The payments provided for in this subparagraph shall be in lieu of the similar
payments provided in paragraph 5(b)(ii) and (iii) above, and not in addition
thereto.
b. If the MAC Technology and the rights therein are transferred back to
CVD, improvements, know-how, technology, patent rights, and other tangible and
intangible property owned exclusively by ACS shall not be transferred to CVD.
c. If the MAC Technology and the rights therein are transferred back to
CVD, CVD will pay to ACS royalties amounting to [*] percent ([*]) of Net
Revenues from the sale of products incorporating MAC Technology until any
license fees and/or advance royalty payments made by ACS to CVD are repaid in
full.
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL
PORTION HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
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<PAGE> 9
d. In the event that ACS (exercising its sole discretion) determines
that an ACS Licensed Product is covered by one or more additional license
agreements with unaffiliated third parties and ACS is required to pay a royalty
to such third party in order to make, have made, use or sell a particular ACS
Licensed Product, due to a blocking patent or other blocking rights of third
parties which would prevent practice of the MAC Technology but for such license
agreement(s), then the royalty rate at which payments are made to CVD for that
particular ACS Licensed Product shall be subject to a reduction of one
percentage point for each such additional license agreement. However, the
royalty rate for any ACS Licensed Product shall not, in any event be less than
[*] percent ([*]) for products covered by CVD Patent Rights, and [*] percent
([*]) for those covered only by CVD Know-How. The reduction of royalty under
this subparagraph shall be subject to receipt by CVD of reasonable evidence
(which shall, at a minimum, include identification of the blocking patent and a
description of the manner in which the ACS Licensed Product would, absent such
third party agreement be blocked) of the payment obligation to unaffiliated
third parties by ACS and ACS' compliance therewith.
7. DRUG DELIVERY CATHETER OPTION
a. If CVD develops one or more improved product concepts based on
combining features of both the MAC Technology and CVD drug delivery technology
in a single device, and CVD proceeds to the completion of in-vitro and in-vivo
animal testing for such a device, CVD shall present such data, prototype device
and other information CVD deems reasonably required to evaluate the feasibility
of commercializing the device to ACS, together with an estimated budget for the
cost of additional development and trials for such device, licensing fees
therefor, and a projected
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL
PORTION HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
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<PAGE> 10
timetable for completing such development. ACS shall have ninety (90) days from
receipt of such information to evaluate the device, make requisite inquiries for
further information and/or clarification, if required, and notify CVD that ACS
desires to license rights in and to such device (and the proprietary rights
therein) and pursue development of a commercial product based on such
information provided by CVD. During such time period, CVD agrees to entertain
different or modified terms proposed by ACS, and to discuss and/or negotiate in
good faith with ACS with respect to establishing the principal terms of a
license and development agreement regarding the commercial exploitation of such
device; provided, however, that if, within such ninety (90) day period the
parties have not agreed upon such terms (in a memorandum of understanding or
similar document) or ACS declines to exercise such option, then CVD shall be
free to exploit such device as permitted hereunder. If ACS responds
affirmatively within the ninety (90) day period and the parties have agreed upon
the principal terms of a license and development agreement regarding the
commercial exploitation of such device (and the proprietary rights therein), the
two parties shall, on an expedited basis (which shall in no event continue
beyond 60 days following notice to CVD to ACS's affirmative interest), exercise
commercially reasonable, good faith efforts to execute a written license and
development agreement regarding the commercial exploitation of such device (and
the proprietary rights therein) in accordance with such terms.
b. If the option to acquire rights to such a drug delivery perfusion
catheter system is not exercised by ACS, and a drug delivery product employing
MAC Technology is released to the market by CVD, Net Revenues to ACS hereunder
shall be reduced by the amount of like revenues, if any, received by CVD from
sales of such
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<PAGE> 11
drug delivery catheters during the corresponding period of time for royalty
calculation and any resulting correction in royalties owed for that time period
shall be reflected by a Deduction of the requisite amount applied to a
subsequent quarter-annual royalty payment to CVD. ACS would in this later case
grant back to CVD a non-exclusive license in and to the MAC Technology so as to
enable CVD to make, use, sell and distribute said drug delivery perfusion
catheter system product; provided that CVD shall not disclose to a third party
confidential information of ACS without ACS's prior written consent.
8. OTHER LICENSE TERMS APPLICABLE
a. No royalty shall be payable for transfers (by sale or otherwise) of
ACS Licensed Products by ACS, or any of its Sublicensees or Affiliates, to CVD,
provided such transferred Licensed Product is subsequently resold in a royalty-
bearing transaction or is used clinically by ACS or its Affiliates or
Sublicensees in an experimental or other like setting where no Net Revenues are
generated.
b. In the event that ACS, or any of its Affiliates or Sublicensees,
markets the Licensed Product as part of a system or kit that incorporates or
includes other products that are not royalty-bearing Licensed Products, Net
Revenues for royalty purposes shall be computed using the average Net Revenues
per unit of the corresponding royalty-bearing product when sold separately. If
any royalty-bearing product is sold only as part of a system or kit that
includes other products that are not royalty-bearing, and corresponding
royalty-bearing products are not sold separately, then Net Revenues for royalty
purposes shall include and refer to only that part of such sale reasonably
allocable to the royalty-bearing product. In making such allocation, primary
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consideration shall be given to the added value accorded by the royalty-bearing
product to the kit as compared to the value if sold without it. In all such
cases the applicable Deductions as set forth above shall also be taken into
consideration in computation of the Net Revenues.
c. Each Licensed Product shall be marketed and sold on its own merits
in a manner consistent with the standard marketing practices of ACS. However,
the foregoing clause shall not restrict ACS from bundling or otherwise combining
Licensed Products with other products. If a Licensed Product is used as an
inducement to purchase other products of ACS, the basis on which the royalties
or share of Net Revenue are calculated for such Licensed Product shall be
calculated based on the fair market value price of the applicable Licensed
Product regardless of whether such Licensed Product is actually sold below a
fair market value price. If a fair market value price cannot otherwise be
established by the parties, a value added methodology such as that described in
paragraph 8(b) above shall be used to establish a royalty basis for such
Licensed Product.
9. PAYMENTS
a. Royalty payments shall be made to CVD within sixty (60) days after
the end of each calendar quarter during which royalties accrue. Each payment
shall be accompanied by a report that reflects at least (i) the quantity of
royalty-bearing products subject to reporting by virtue of activities of ACS,
and its Affiliates and sublicenses; (ii) Net Revenues amounts; (iii) Deductions,
if any, applied to determine Net Revenues; (iv) the applicable royalty rate, and
(v) the royalties computed and due to CVD. No report shall be required for any
calendar quarter prior to a quarter during which royalties first
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accrue. Thereafter, a report shall be rendered for each calendar quarter during
the remaining term of this Agreement.
b. Royalties occurring on sales outside the United States shall be
converted to United States dollars, with conversion of foreign currency where
appropriate as of the last day of the royalty period based upon conversion rates
in effect at the close of business in New York on such day, as published in the
Wall Street Journal. The parties shall hold in confidence all information
reported with respect to royalty payments, and shall refrain from disclosing
such information to others, except as may be required internally for management
purposes and except as may be required by Federal and State law or by
governmental agencies.
c. ACS shall not be required to make any royalty payments in
contravention of the laws of any country, nor shall ACS be required to make a
royalty payment in the United States if ACS is unable to recoup the amount of
such royalty payments directly or indirectly from an entity within a country in
which the sales on which such payments are based is made. In each country where
the local currency is blocked or cannot be removed from the country, royalties
accrued in each such country shall be paid in such country in local currency by
deposit in a local bank designated by CVD.
10. RECORDS
ACS and CVD shall keep or cause the responsible Affiliate or
Sublicensee to keep true and accurate books and records with respect to all
sales of royalty bearing products under this Agreement in accordance with
customary accounting principles and in a manner consistent with. the accounting
methods employed throughout its business.
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Each of the parties shall have the right, at its own expense, through an
established and reputable independent representative, to examine the relevant
books and records of the other, or the responsible Affiliate or Sublicensee, at
any reasonable time during business hours within five (5) days after notifying
the other of its desire to do so. This examination shall take place no more than
once each year and shall cover no more than the preceding three (3) calendar
years. The examination shall be solely for the purpose of determining the
correctness of the reports and payments required to be made by a party hereto
and its Affiliates and Sublicensees. The independent representative shall report
only on the accuracy of such records and shall not disclose specific entries
except to the extent otherwise disclosed in reports rendered as provided
hereunder. Any amount that is not paid when due shall bear interest at the
lesser of one percent (1%) per month or the maximum amount permitted by
applicable law. In the event that an examination determines that royalties in
any particular payment period have been under-reported by 5% or more, the party
that is the subject of such examination shall pay the costs, fees and expenses
of said independent representative.
11. TAXES
All taxes levied on account of royalties accruing under this Agreement
shall be paid by CVD. If laws or regulations require the withholding of taxes,
the taxes will be deducted by ACS from remittable royalty and shall be paid to
the proper taxing authority. Proof of payment shall be sent to CVD within ninety
(90) days following payment.
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12. PROSECUTION OF PATENTS
a. The cost of preparation and prosecution of the applications included
in the CVD Patent Rights shall be paid by ACS, and ACS shall have control of the
prosecution of such applications, whether by right of approval regarding the
actions of CVD counsel or by using ACS' own counsel in such preparation and
prosecution, as the parties mutually determine in each case; provided that CVD
shall have reasonable opportunity to review and comment on any patent
application prepared by ACS. If ACS determines that it does not wish to control
the prosecution of such a patent application in any individual case, ACS shall
have no obligation to pay the cost of prosecution or maintenance of such a
patent but it shall notify CVD at least ninety (90) days prior to taking, or not
taking, any action which would result in the abandonment, withdrawal, or lapse
of any such patent or patent application. In such circumstance CVD shall control
the prosecution thereof, and may independently choose to not go forward with
prosecution (subject to notifying ACS, and the provisions of subparagraph 12(b)
below) and in that event such patent shall not be included in the MAC
Technology, but ACS shall retain a non-exclusive license to practice any such
patent that is a joint invention of ACS and CVD as described under Paragraph 3
above. If CVD independently develops an Improvement and ACS does not wish to
control or pay the cost of preparation or prosecution of a patent application
thereon, the application and any patent granted therefrom covering such
Improvement shall not be included in the CVD Patent Rights.
b. If CVD elects not to file, prosecute or maintain any patent or
patent application relating to the CVD Patent Rights and Improvements thereon,
it shall notify ACS at least ninety (90) days prior to taking, or not taking,
any action which would
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result in the abandonment withdrawal, or lapse of any such patent or patent
application. ACS shall then have the right to file, prosecute or maintain the
patent or patent application at its own expense, and any patent rights granted
thereon shall be solely owned by ACS, provided that CVD shall retain a non-
exclusive license to practice any such patent rights that are a joint invention
of ACS and CVD as described under Paragraph 3 above. Sales of ACS Licensed
Products in the country in which such patent application had been filed or
issued covered only by the claims of such patent rights owned by ACS shall not
be royalty-bearing to CVD.
c. The language of this subparagraph will also apply to Foreign
Counterparts. The parties shall, after consultation, determine the countries, if
any, where additional Foreign Counterparts will be prosecuted and maintained.
The parties shall keep each other reasonably informed of the status of all
patents included in the CVD Patent Rights and additional Foreign Counterparts
thereof which they have responsibility for hereunder.
d. Each party shall cooperate with the other party, as reasonably
requested, to execute all lawful papers and instruments and to make all rightful
oaths and declarations as may be necessary in the preparation and prosecution of
any and all such patents and patent applications. The party that is paying the
full cost of such preparation and prosecution shall also pay the reasonable out-
of-pocket costs of such cooperation by the non-paying party.
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13. INFRINGEMENT BY THIRD PARTIES
a. Each party will promptly notify the other party of any infringement
or possible infringement of any of the CVD Patent Rights. ACS shall have the
first right, but not the obligation, to prosecute infringement of the MAC
Technology and CVD Patent Rights. CVD shall cooperate as reasonably required in
such prosecution, and ACS shall bear the reasonable costs to CVD of such
cooperation.
b. If ACS fails to prosecute any such infringement within one hundred
eighty (180) days after receiving notice thereof, CVD shall have the right, but
not the obligation, to prosecute such infringement at its own expense. In such
event ACS shall cooperate fully with CVD, and CVD shall bear the reasonable
costs to ACS of such cooperation.
c. Any net recovery obtained by the prosecuting party as a result of
such proceedings, by settlement or otherwise, shall be retained by the
prosecuting party.
14. CONFIDENTIALITY
a. The parties contemplate that information may be disclosed to one
another under this Agreement which is confidential in nature. In this regard,
each party will maintain the confidential information of the other party in
confidence and shall not make use thereof, in whole or in part, except as
expressly authorized in this Agreement.
b. Except as specifically provided, and as may be reasonably necessary
to develop and market products and to enable Affiliates and Sublicensees to
make, have
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made, use and sell products licensed hereunder and to practice processes and
methods as contemplated herein, each of the parties shall refrain from
communicating (whether by disclosure or by providing access) any portion of the
confidential information of the other party to any other person, firm,
corporation or entity without first obtaining prior written permission from the
other party.
c. In recognition of the proprietary nature and value of the
confidential information and the likelihood of loss of business by the other
party in the event of unauthorized disclosure of its confidential information,
the parties agree that the obligations of this Paragraph shall continue unabated
regardless of expiration or termination of this Agreement for any reason, for a
period of not less than five (5) years from the effective date of such
expiration or termination. Neither party shall be obligated or required to
maintain in confidence any information which it can demonstrate with written
records:
i. is at the time in question in the public domain, or is
known to the receiving party prior to disclosure by the
disclosing party without breach of any obligation of
confidence; or
ii. is or has been furnished to the receiving party by a third
party not under a duty of confidentiality; or
iii. is required to be disclosed by Federal or State Law, by a
court of competent jurisdiction or by a governmental agency.
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15. NO DISCLOSURE WITHOUT CONSENT OR LEGAL REQUIREMENT
Neither party shall release any information to any third party with
respect to the terms of this Agreement without the prior written consent of the
other party (which consent shall not be unreasonably withheld). This prohibition
includes, but is not limited to, press releases, educational and scientific
conferences, promotional materials, and disclosures to (or discussions with) the
media. It is understood, however that the parties shall have the right, in the
exercise of reasonable business judgment, to provide required information (but
which, with respect to patent applications and the information contained
therein, shall only be provided to outside counsel without the prior written
consent of the other party) concerning this Agreement to investors and potential
investors, and to Affiliates and potential Sublicensees in order to enable them
to carry out the activities contemplated hereunder and as each may determine, in
its reasonable judgment, to be required by law. Each party agrees to notify the
other party of its intention to disclose such information to a third party (but
not the identify of the third party).
16. TERM
This Agreement shall become effective on the Effective Date and shall
continue, subject to earlier termination in accordance with other terms of this
Agreement until the expiration of the last to expire of the licensed patents
included in the CVD Patent Rights.
17. TERMINATION
a. In the event that either of the parties breaches any of the terms or
conditions of this Agreement including the obligation to pay royalties
thereunder, the
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other party may terminate this Agreement by giving at least sixty (60) days
advance written notice, specifying the act or omission on which such termination
is based. Should such breach be remedied within sixty (60) days of such notice,
this Agreement shall remain in force, subject to continued compliance with all
of the terms, conditions and limitations of this Agreement. Otherwise this
Agreement shall automatically terminate at the end of such notice period.
b. ACS, without affecting the rights of CVD, shall have the right to
terminate its licenses under this Agreement, with or without cause, by giving
thirty (30) days notice to CVD of its intent to terminate.
c. Termination of any license granted under this Agreement shall not
deprive either party of accrued rights including CVD's right to collect
royalties on sales made prior to termination. Upon termination of this
Agreement, ACS shall have the right to sell products licensed hereunder it has
in its inventory. Such sales shall be subject to the obligations to pay royalty
provided for hereunder. All other rights and obligations of the parties,
including the obligations of confidentiality accruing prior to termination or
expiration of this Agreement shall survive such termination or expiration.
18. COMPLIANCE WITH LAWS
a. The parties shall comply with all prevailing laws, rules and
regulations pertaining to the development, testing, manufacture, marketing,
promotion and import or export of ACS Licensed Products.
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b. ACS will be responsible for obtaining, at its cost and expense, all
governmental approvals required to market ACS Licensed Products.
19. REPRESENTATIONS AND WARRANTIES
CVD represents and warrants to ACS that it has the right to grant the
licenses and rights granted herein and has full right and title to the patent
rights and inventions included in the CVD Patent Rights, and that, to the best
of its knowledge, no other person or entity has a claim or right to any aspect
or part of the CVD Patent Rights, and that it has the unencumbered right to
grant the licenses and rights granted in this Agreement, and that no other
license, assignment, sale, agreement or encumbrance has, or will, be made or
entered into which would conflict with this Agreement. CVD represents and
warrants that, to its actual knowledge, based on its written records and without
regard to patents in its possession that have not undergone substantive review,
it is unaware of: (i) any basis on which CVD Patent Rights, or any portion
thereof, are invalid or unenforceable; or (ii) any claims or right of any third
party that could be infringed by practice of the MAC Technology.
20. INDEMNITY
a. Each of the parties shall be responsible for its own errors and
omissions and indemnifies, and agrees to defend and hold harmless, the other and
its officers, directors, professional staff, employees, and agents, and any of
their respective Affiliates, Sublicensees, respective successors, heirs and
assigns (the "Indemnities"), against any claim , demand, liability, damage,
loss, judgment or expense (including reasonable attorneys fees and expense and
out-of- pocket litigation expense) incurred by or imposed upon the Indemnities
arising out of its own activities hereunder (including
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actions in tort, warranty or strict liability) except and to the extent due to
negligence of the other party. Each of the parties shall notify the other
promptly of any claim, demand, suit or action arising out of any activity
hereunder, whether or not the subject of the indemnity herein, and each shall
cooperate as reasonably required in the defense of the matter, and the other
shall bear the reasonable out-of-pocket cost of such cooperation. The
indemnifying party shall have sole control over any litigation or settlement
thereof for which it is responsible under this Paragraph, and it shall not be
required to pay any amount of any settlement to which it has not given its prior
written consent.
b. NEITHER PARTY SHALL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF
THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER THEORY
FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES.
21. RELATIONSHIP OF THE PARTIES
It is understood that the parties hereto are independent contractors
engaged in the conduct of their own respective endeavors. Neither ACS nor CVD
are to be considered the agent or employee of the other for any purpose, and no
party hereto has the right or authority to enter into any contract or assume any
obligation for the other or give any warranty or make any representation on
behalf of another party except where and to the extent specifically authorized
in writing to do so.
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22. ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their successors and assigns, provided, however, that except
as set forth in the next sentence, neither party may assign any obligation to
provide services hereunder, in whole or in part, without the prior written
consent of the other party except in connection with a merger, reorganization or
sale of all or substantially all of the assets of such party. Notwithstanding
any other provision to the contrary in this Agreement or the Prior Agreement (as
defined below), ACS shall have the right to assign its rights and obligations
under this Agreement to Guidant Corporation. ACS shall provide CVD with written
notice of any such assignment within 30 days of making such assignment.
23. FORCE MAJEURE
In the event any party hereto is prevented or is otherwise unable to
perform any of its obligations under this Agreement due to fire, flood,
earthquake, war, strikes, lockouts, labor troubles, failure of public utilities,
injunctions, or other events beyond the reasonable control of the party
affected, the affected party shall give notice promptly to the other party in
writing and, thereupon, the affected party's nonperformance shall be excused and
the time for performance of this Agreement shall be extended for the period of
delay or inability due to such Force Majeure.
24. AMENDMENT
Except as otherwise provided herein, this Agreement may not be amended,
supplemented, or otherwise modified except by an instrument in writing signed by
authorized representatives of CVD and ACS.
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25. NO STRICT CONSTRUCTION
This Agreement has been prepared jointly and shall not be strictly
construed against any party.
26. WAIVER
No waiver of any term, provision, or condition of this Agreement,
whether by conduct or otherwise, in any one or more instances, shall be deemed
to be construed as a further or continuing waiver of such term, provision or
condition of this Agreement.
27. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument.
28. GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the
State of California without reference to choice of law principles, as to all
matters, including, but not limited to, matters of validity, construction,
effect or performance. The venue for resolution of disputes hereunder shall be
the courts located in Santa Clara County, California.
29. NOTICE
a. Any notice, report or statement to either party required or
permitted under this Agreement shall be in writing and shall be sent by
certified mail, return
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receipt requested, postage prepaid, or facsimile transmission with confirmation
sent by certified mail as above, or by courier, such as Federal Express, DHL, or
the like, with confirmation of receipt by signature requested, directed to the
other party at its mailing address set forth below, or to such other mailing
address as the respective parties may from time to time designate by prior
notice in compliance herewith:
ACS: Advanced Cardiovascular Systems, Inc.
3200 Lakeside Drive
P.O. Box 58167
Santa Clara, CA 95052-8167
Fax: (408) 235-3987
Attn.: General Counsel
CVD: CardioVascular Dynamics, Inc.
13844 Alton Parkway, Suite 140
Irvine, CA 92718
Fax: (714) 457-9561
Attn Michael R. Henson, Chairman & CEO
b. Any such notice, report or statement sent in accordance with the
requirements of Subparagraph a. above shall be deemed to be fully given upon
dispatch, subject to proof of receipt.
30. SEVERABILITY
If any term or provision of this Agreement, or the application thereof
to any person or circumstance, shall to any extent be held invalid or
unenforceable under any controlling law, that provision shall be considered
severable and its invalidity shall not affect the remainder of this Agreement,
which shall continue in full force and effect. The parties shall there upon
negotiate in good faith a term there specifically declare that they would have
entered into this carrying out, insofar as possible, the intention of severed
term.
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31. CAPTIONS
Captions are inserted herein only as a matter of convenience and for
reference, and in no way define, limit, or describe the scope of this Agreement
or the intent of any provision herein.
32. SOLE UNDERSTANDING
This Agreement and the Prior Agreement set forth the entire agreement
and understanding between the parties as to the subject matter hereof and
thereof, and supersede, integrate and merge all prior discussions,
correspondence, negotiations, understandings, or agreements. The parties each
represent and warrant that there are no conditions, definitions, warranties,
promises, agreements, understandings or representations, or remaining
obligations, written or oral, with respect to the subject matter of this
Agreement or the Prior Agreement, other than as expressly provided in this
Agreement or the Prior Agreement, or as the same may subsequently be amended in
writing by mutual agreement duly executed by the affected parties hereto. This
Agreement supersedes Sections 2a, 2c, 4a, 6a, 6c, 6d, 6e, 7, 8 and 34 of the
Prior Agreement. If there are any inconsistencies between the terms of the
remaining Sections of the Prior Agreement and the terms of this Agreement, the
terms of this Agreement shall prevail. Except as superseded by this Agreement,
the remaining terms of the Prior Agreement remain in full force and effect.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in duplicate originals effective as of the day and year first above
written.
CardioVascular Dynamics, Inc.
By: /s/ MICHAEL R. HENSON
Michael R. Henson,
Chairman and CEO
ATTEST: Date: March 4, 1996
/s/ DANA P. NICKELL
Advanced Cardiovascular Systems, Inc.
By: /s/ PETER MEINNES
Peter Meinnes,
Vice President
ATTEST: Date: March 4, 1996
/s/ GUY GARFIELD
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EXHIBIT A
License Agreement Between
CardioVascular Dynamics
and
Advanced Cardiovascular Systems, Inc.
(Relevant CVD Patents and Applicants)
U.S. Applications and Patents
Patent No. 5,344,402 issued September 6, 1994 on U.S. Application 08/084,820
filed June 30, 1993, with an Interventional PCT application filed June 1994
No. 08/208,617 filed March 8, 1994 - Amendment filed 1/11/96, Notice of
Allowance
Foreign Applications and Patents
Foreign Counterparts filed in Japan, Belgium, France, Germany, Great Britain and
The Netherlands in December 1994 on U.S. Application No. 08/084,820
08/357,420 - Notice of Allowance, Issue Fee Paid 2/7/96
08/357,401 - Filed 12/16/94
28
