EXHIBIT 10.34
[CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND HAVE BEEN
SEPARATELY FILED WITH THE COMMISSION]
EXCLUSIVE DISTRIBUTION AGREEMENT
JAPAN
- BETWEEN -
HESKA CORPORATION
- AND -
NOVARTIS AGRO K.K., TOKYO
AUGUST 18, 1998
THIS EXCLUSIVE DISTRIBUTION AGREEMENT (THE "AGREEMENT") is entered into AS of
August 18, 1998 (the "EFFECTIVE DATE") between:
(1) HESKA CORPORATION ("HESKA"), a Delaware corporation; and
(2) NOVARTIS AGRO K.K., TOKYO, a Japanese corporation ("NOVARTIS").
WHEREAS, concurrent with the execution of this Agreement, Heska and Novartis
Animal Health Inc. ("NAH BASLE") are entering into an agreement under which it
is granting to Heska a right of first refusal to develop, market and sell
worldwide certain products (the "RIGHT OF FIRST REFUSAL AGREEMENT").
WHEREAS, Novartis wishes to purchase products from Heska for the purpose of
distribution for resale in Japan.
THE PARTIES AGREE AS FOLLOWS:
1. DEFINITIONS.
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In this Agreement, including the Schedules hereto, the following words and
expressions shall have the following meanings:
"AFFILIATE" means, with respect to any entity, any other entity which is
controlled by, in control of, or under common control with, such entity. For
the purpose of this definition, "control" of an entity shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of its management or policies, whether through the ownership of voting
securities, by contract or otherwise.
"BASE RATE" initially means the average exchange rate of Japanese Yen to
United States dollars over the twenty (20) consecutive business ending five (5)
business days prior to the date on which the initial Price is set under SECTION
4.1 for the Product which the Parties project will be the first Product to
achieve Commercial Release. The Base Rate shall be adjusted pursuant to SECTION
4.1.
"COMMERCIAL RELEASE" means, with respect to a Product, that such Product
has been approved for marketing in Japan by all applicable Japanese regulatory
authorities.
"COMPETITIVE PRODUCT" means any product (other than a Product) which has
any of the same diagnostic or therapeutic applications as any Product.
"INITIAL PERIOD" has the meaning given to such term in SECTION 2.4(A).
"MINIMUM EXPIRATION DATE" means, for each Product, the minimum amount of
time from the scheduled shipment date of any such Product unit to the stated
expiration date of such
unit which Heska agrees to provide under SECTION 3.4. The Minimum Expiration
Date for each Product shall be specified pursuant to SECTION 2.4.
"MINIMUM ORDER QUANTITY" means, for each Product, the minimum quantity of
each order for such Product. Heska shall specify such amount pursuant to
SECTION 2.4.
"NAH BASLE" has the meaning given to such term in the first Recital.
"PARTY" means Heska and/or Novartis.
"PERIOD" means each of the Initial Period and each calendar year
thereafter.
"PRICE" has the meaning given to such term in SECTION 4.1.
"PRODUCT SCHEDULE" has the meaning given to such term in SECTION 2.4(A).
"PRODUCTS" means Heska's Feline Heartworm Point of Care Diagnostic, Canine
Heartworm Point of Care Diagnostic, Periodontal Disease Therapeutic, Feline
Trivalent Vaccine, and Feline Bivalent Vaccine. The Parties may revise the
definition of Products pursuant to SECTIONS 6 AND 11.2.
"PURCHASE GOAL" means, for each Product, the amount determined as set forth
in SECTION 2.4.
"RIGHT OF FIRST REFUSAL AGREEMENT" has the meaning given to such term in
the first Recital.
"RMA PROCEDURES" means Heska's returned materials authorization (RMA)
procedures, as revised by Heska from time to time.
"TERM" means the period commencing on the date hereof and, unless
terminated in accordance with SECTION 12, continuing to December 31, 2006.
2. DISTRIBUTOR APPOINTMENT.
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2.1 Appointment. Subject to the terms and conditions set out in this
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Agreement, Heska hereby appoints Novartis as its exclusive distributor in Japan
during the Term to promote, market and sell the Products for use by
veterinarians.
2.2 No Sales Outside Japan. Without the prior written consent of Heska,
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Novartis shall not (a) seek customers outside of Japan, (b) establish
distribution points outside of Japan, nor (c) sell the Products to any
distributor or reseller which Novartis reasonably understands will sell the
Products outside of Japan.
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2.3 No Limit on Price. Notwithstanding SECTION 2.4, Novartis has the
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unrestricted right to unilaterally determine the prices at which it resells the
Products which it purchases hereunder. No Heska representative has the
authority to require or suggest that Novartis charge a particular resale price
for the Products which it purchases hereunder.
2.4 Initial Marketing Plan; Product Schedule.
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(a) Initial Period. At least six months prior to the projected
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Commercial Release of each Product (or, if later, on or prior to the date on
which such Product becomes a Product hereunder), Novartis will provide to Heska
a draft marketing plan (the "MARKETING PLAN") for such Product for the remainder
of the initial calendar year and, if less than nine months remains in such
calendar year, the next succeeding calendar year (the "INITIAL PERIOD"). The
Marketing Plan shall specify in reasonable detail Novartis' marketing plans for
such Product and shall include for the Initial Period Novartis' anticipated
sales price of the Product (the "NOVARTIS PRICE") and Purchase Goal for the
Product based on its good faith sales estimates. Following delivery of such
initial plan, the Parties will agree in good faith on the Product packaging and
Heska will provide Novartis for such Product the Minimum Order Quantity, Minimum
Expiration Date and complete Product specifications. The Parties also shall
calculate the Price of such Product in accordance with SECTION 4.1. All such
terms and materials shall be set forth in a "Product Schedule" substantially in
the form attached as SCHEDULE A (a "PRODUCT SCHEDULE").
(b) Subsequent Periods. For each Period after the Initial Period,
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Novartis will provide to Heska a revised Marketing Plan. Each such plan shall be
delivered by November 1 of the year prior to the start of such Period. Such
plans shall specify for the covered Period the Novartis Price and the Purchase
Goals for the Product. Unless otherwise agreed by Heska, such terms shall be at
least equal to the higher of (i) the respective annualized amounts established
for the immediately preceding Period, and (ii) for (A) the Novartis Price, the
weighted average sales price of such Product in the prior Period, and (B) the
Purchase Goal, the actual annualized sales of such Product in the prior Period.
The applicable Product Schedule shall be revised to reflect such changes.
2.5 Competitive Products. Novartis hereby represents and agrees that
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neither it nor any of its Affiliates sell, nor will sell during the Term, any
Competitive Products in Japan. This representation will be deemed restated as
of the date any item becomes a Product as provided in SECTION 6.2.
3. SALES.
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3.1 Orders. Novartis shall place orders for Products consistent with the
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binding portion of the forecasts as set forth in SECTION 5.4. All orders shall
be initiated by written purchase order to Heska. Each order for a Product shall
request delivery of at least the respective Minimum Order Quantity for such
Product. Orders shall not be binding upon Heska unless and until expressly
accepted by Heska in writing or by shipping Product in accordance with the
order. Heska shall endeavor to accept or reject all orders within five (5)
business days
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[CONFIDENTIAL TREATMENT REQUESTED]
of receipt. No partial shipment of an order shall constitute the acceptance of
the entire order, absent the written acceptance of such entire order.
3.2 Shipping. Anticipated shipment dates shall be as specified in Heska's
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written acceptance of the order. Heska shall use its commercially reasonable
efforts to meet acknowledged shipment dates; however, Heska shall not be liable
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for any damages resulting from its failure to meet such shipment dates, even if
Heska has been advised of the possibility of such damages. Heska shall select
the common carrier and method of shipment. Novartis shall be responsible for
arranging the exporting and importing of all Products ordered under this
Agreement. Risk of loss or damage shall pass to Novartis on delivery of the
Products by Heska to a common carrier. All Products in each order may be
shipped only to a single destination.
3.3 Cancellation/Rescheduling. Novartis may not cancel purchase orders
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for Products. Novartis shall be entitled to reschedule a purchase order one
time without penalty; provided that such rescheduling is requested at least
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fifteen (15) days prior to the scheduled shipment date and the purchase order is
rescheduled to a date no more than thirty (30) days beyond the originally
scheduled shipment date.
3.4 Minimum Expiration Date. Heska agrees that the stated expiration date
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of each Product shall be at least the respective Minimum Expiration Date after
the scheduled shipment date of the related order. If any order is rescheduled
such commitment regarding the Minimum Expiration Date shall be based on the
original scheduled shipment date, not the rescheduled date.
3.5 Rejection of Products. A Product shall be deemed accepted if not
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properly rejected within thirty (30) days after receipt by Novartis or, if
earlier, shipment by Novartis to its customer. Products which have been
accepted (including deemed acceptance) may not be returned based on under or
over shipment or shipment of noncomplying Products. Rejection of a Product
shall be subject to the RMA Procedures.
4. PRICES AND PAYMENT.
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4.1 Setting Prices. At least six months prior to the projected date of
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Commercial Release for each Product, and thereafter promptly following the
setting of the Novartis Price for each Period after the Initial Period, the
Parties shall determine the price at which Heska will sell such Product to
Novartis (the "PRICE"). Such Price shall apply to all orders shipped during the
applicable Period. The Price for such Product will be calculated using the
following formulas:
For orders shipped during the first 24 months following Commercial Release
of such Product:
Price = HC + ([ ](NP-HC))
For orders shipped after the first 24 months following Commercial Release
of such Product:
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[CONFIDENTIAL TREATMENT REQUESTED]
Price = HC + ([ ](NP-HC))
"HC" means Heska's per unit cost to manufacture the Product during the
applicable Period. HC shall be expressed in Japanese Yen using the Base
Rate as the rate of exchange. Such cost to manufacture is defined as all
third party royalties payable by Heska plus, as appropriate, either (a) the
manufacturing costs from a third party manufacturer, or (b) Heska's fully
burdened manufacturing cost (including overhead) for such Product. To
calculate the Price in advance, Heska shall make a good faith estimate of
such manufacturing costs and include it in the applicable Product Schedule.
"NP" means Novartis' weighted average sales price for the Product for the
applicable Period. To calculate the Price in advance, the Parties shall use
the applicable Novartis Price for such Product.
Notwithstanding the above, if at any time during the Term the Average Rate
(defined below) differs from the then current Base Rate by more than 10%, then
the Price for such Product shall be adjusted. Under such adjustment, the Price
shall be the Original Dollar Price (defined below) for such Product converted
into Japanese Yen using such Average Rate. Following such adjustment, such
Average Rate shall become the Base Rate for all future calculations and all
Product Schedules will be appropriately adjusted. "AVERAGE RATE" means the
exchange rate of Japanese Yen to United States dollars averaged over a twenty
(20) consecutive business day period. "ORIGINAL DOLLAR PRICE" shall mean the
Price for such Product (prior to adjustment) expressed in United States dollars
using the Base Rate (prior to adjustment) as the rate of exchange.
4.2 Annual Adjustment and Audit. Following each Period, either Party may
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request that the Price for any Product be adjusted for the Period just ended
based on the actual income and expenses constituting "HC" and "NP" under SECTION
4.1. In connection with calculating "HC" for such adjustments, Heska shall use
the various Base Rates in effect at the time such manufacturing costs were
incurred. In such event, each Party shall provide the other reasonable proof of
their relevant income or costs. Following this recalculation, the payments made
for the affected Product shall be promptly and appropriately adjusted. In
addition, each Party has the right, upon fourteen (14) days' prior notice to the
other, at usual business hours of the day, to cause a certified public
accountant (or the equivalent) to examine (and make copies) of the books and
records of the other relating to such amounts. Such audit shall be at the
requesting Party's expense, except that if based only on the audit results it is
determined that the requesting Party overpaid or was underpaid, as appropriate,
by over five (5%) percent of the amount paid for the audited Period, then the
audited Party shall pay the costs of the audit.
4.3 Prices. The Prices are FOB, Heska's point of manufacture. The Prices
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do not include the costs of shipping and insurance and sales, use, VAT, excise,
withholding or similar taxes. Consequently, Novartis shall pay without
deduction, or reimburse Heska for, the gross amount of all shipping and
insurance charges and any present or future sales, use, VAT, excise, withholding
or similar tax applicable to the sale or furnishing of any Products hereunder.
In
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lieu of a specific tax, Novartis may provide Heska with a tax exemption
certificate acceptable to the applicable taxing authority. All Prices are to be
stated in Japanese Yen.
4.4 Payment. Payment for Products shall be due in full thirty (30) days
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from the date of invoice, which shall be on or subsequent to the date of
shipment. All payments hereunder shall be made in immediately available funds
in Japanese Yen by wire transfer to the account from time to time specified by
Heska. Amounts not paid when due are subject to a monthly charge at the rate of
one and one-half percent (1-1/2%) per month, or the maximum rate permitted by
law, whichever is less. Novartis agrees to not set off amounts it owes for
particular Products against amounts owed to it by Heska.
5. PRODUCT OBLIGATIONS.
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5.1 Sales and Product Support. Novartis agrees to use best efforts to
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develop, promote, support and sell the Products in Japan. Such activities shall
include, but are not limited to, (a) development of marketing support materials
such as sales brochures, journal advertisements, sales aids, technical
bulletins, slide presentations and other related supportive documentation, (b)
ensuring sales personnel detail the Products to distributors, veterinarians and
other interested parties, (c) organizing and sponsoring seminars and meetings
with distributors, veterinarians and other interested parties, (d) actively
participating in trade shows, including prominently displaying and promoting the
Products, and (e) other activities deemed appropriate for the commercial success
of the Products. Heska will provide Novartis personnel, at no additional
charge, reasonable amounts of training regarding the Products at Heska's
facilities in Fort ▇▇▇▇▇▇▇, Colorado. Novartis will pay the travel and living
expenses of its personnel. Novartis will maintain throughout Japan customer
service phone support for the Products for its distributors and veterinarians.
Heska will provide back-up telephone customer support only to Novartis.
Novartis shall contact Heska immediately regarding any material complaints or
reports of material adverse experiences regarding use of the Products.
5.2 Approvals. No later than promptly following the Effective Date,
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Novartis will inform Heska of any legal, administrative or regulatory
requirements in Japan with which Heska or Novartis must or should comply in
connection with this Agreement or the performance by Novartis of the marketing
or distribution of any Product (collectively, the "Approvals"). Novartis will
comply with all applicable laws in connection with performing its rights and
obligations under this Agreement, including obtaining, prior to offering and
reselling any Product, all applicable Approvals required for itself and Heska.
Novartis will maintain the Approvals throughout the Term. The Approvals will be
obtained and maintained by Novartis at its own expense but in Heska's name
(other than Approvals relating only to Novartis). Heska, at its own expense,
will provide reasonable assistance in connection with obtaining the Approvals,
including providing Novartis such data, samples and other information and
materials as are in Heska's possession. Novartis will periodically, and in any
event promptly following Heska's request, provide Heska reasonable information
regarding the status of all Approvals.
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[CONFIDENTIAL TREATMENT REQUESTED]
5.3 Inventory and Sales Reports. Novartis will furnish to Heska inventory
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and sales reports by the 10th day of the month following each calendar quarter.
Such inventory reports will include, at a minimum, with respect to all inventory
on hand at the end of the prior calendar quarter: Product number, quantity, and
expiration dates. Such sales reports will include, at a minimum, with respect
to sales made during the prior calendar quarter: Product number, quantity and
Novartis' weighted average sales price and the range of sales prices.
5.4 Forecasts. At least six months prior to the calendar quarter in which
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Commercial Release of the first Product is projected to occur and, thereafter,
at least sixty days prior to the beginning of each calendar quarter, Novartis
will furnish Heska with a forecast of Novartis' projected Product requirements
for the next succeeding 4 calendar quarters. Each such forecast shall be
binding on Novartis for the first calendar quarter of such forecasted period.
Each such forecast will specify the projected requirements for each Product by
month, except that it shall be broken out by requested shipping dates for the
first calendar quarter of such forecast.
5.5 Approval of Promotional Materials. Novartis will submit to Heska for
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approval prior to use copies (with translations) of all new advertisements and
other promotional materials, including catalog descriptions, involving the
Products prepared by or for Novartis in connection with the Products. If Heska
fails to reject such materials within three weeks of receipt, then Heska will be
deemed to have approved such materials.
5.6 Certain Practices. Novartis agrees to not directly or indirectly
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offer, pay, promise to pay, or authorize the payment of money or anything of
value to any governmental official or representative for the purpose of
influencing such persons' decisions or actions regarding the Products.
5.7 No Modifications to Product. Unless otherwise agreed by Heska in
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writing, Novartis will not (a) sell Products other than in original, unmodified,
and unused condition, (b) remove, obscure or modify any label or other
indication of patent, any trademark or other intellectual property rights on the
Products, (c) add any label or ▇▇▇▇ to any Product, nor (d) promote any Product
under any name or ▇▇▇▇ other than the names and trademarks provided by Heska.
6. PRODUCT DISCONTINUANCE; NEW PRODUCTS.
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6.1 Product Discontinuance. Heska shall have the right, without liability
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to Novartis, to discontinue the manufacture or sale in Japan of any Product
covered by this Agreement due to intellectual property concerns, safety issues
or other reasons reasonably beyond Heska's control. Heska shall endeavor to
notify Novartis as soon as practicable prior to such discontinuance. Heska,
however, shall not incur any liability to Novartis for Heska's failure to
provide such notice.
6.2 New Products. [
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] Such purchase right shall be on
the terms set forth in this Agreement as modified by the Parties.
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Upon agreement, the affected product shall become a Product hereunder and the
Parties shall complete and execute a Product Schedule for such Product.
7. INTELLECTUAL PROPERTY INFRINGEMENT INDEMNIFICATION.
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7.1 Indemnity. Heska will defend, at its own expense, any claim, suit or
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proceeding brought against Novartis to the extent it is based upon a claim that
any Product sold pursuant to this Agreement infringes upon any presently issued
patent or any copyright, or misappropriates any trade secret, of any third
party. Novartis agrees that it shall promptly notify Heska in writing of any
such claim or action and give Heska full information and assistance in
connection therewith. Heska shall have the sole right to control the defense of
any such claim or action and the sole right to settle or compromise any such
claim or action. If Novartis complies with the provisions hereof, Heska will
pay all damages, costs and expenses finally awarded to third parties against
Novartis in such action. If a Product is, or in Heska's opinion might be, held
to infringe as set forth above, Heska may, at its option replace or modify such
Product so as to avoid infringement, or procure the right for Novartis to
continue the use and resale of such Product. If neither of such alternatives
is, in Heska's opinion, commercially reasonable, the infringing Product shall be
returned to Heska and Heska's sole liability, in addition to its obligation to
reimburse awarded damages, costs and expenses as set forth above, shall be to
refund the amounts paid to Heska for such Products by Novartis.
7.2 Limitations. Heska will have no liability for any claim of
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infringement arising as a result of Novartis' use or sale of a Product in
combination with any items not supplied by Heska or any modification of a
Product by Novartis or third parties.
7.3 Entire Liability. THE FOREGOING STATES THE ENTIRE LIABILITY OF HESKA
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TO NOVARTIS OR ANY PURCHASER OF PRODUCTS CONCERNING INFRINGEMENT OF INTELLECTUAL
PROPERTY RIGHTS, INCLUDING BUT NOT LIMITED TO, PATENT, COPYRIGHT TRADEMARK AND
TRADE SECRET RIGHTS.
8. SUITABILITY/LIABILITY.
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8.1 Express Remedies. The express remedies set forth in this Agreement
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are in lieu of all obligations or liabilities on the part of Heska for damages
resulting from breach of warranty, breach of contract, negligence or on any
other legal theory.
8.2 No Consequential Damages, Etc. IN NO EVENT SHALL HESKA BE LIABLE FOR
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COSTS OF PROCUREMENT OF SUBSTITUTE PRODUCTS OR SERVICES, NOR WILL EITHER PARTY
BE LIABLE FOR LOST PROFITS, OR ANY OTHER SPECIAL, INDIRECT, CONSEQUENTIAL OR
INCIDENTAL DAMAGES, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, ARISING OUT
OF OR RELATING TO THIS AGREEMENT, ANY REPRESENTATION OR WARRANTY HEREUNDER, OR
RESULTING FROM THE SALE OF PRODUCTS OR SERVICES BY NOVARTIS OR RESALE OR USE BY
ANY
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DISTRIBUTOR, END-USER OR TRANSFEREE OF SUCH PRODUCTS. THIS LIMITATION SHALL
APPLY EVEN IF A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY. The
limitations in this section shall not limit the obligations of the parties under
SECTIONS 7, 8.4, 8.5 AND 11 of this Agreement.
8.3 No Prospective Profits. Each of Heska and Novartis acknowledges that
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it is acting independently in connection with any actions taken in connection
with this Agreement, including any investments in personnel, facilities, and
marketing activities undertaken hereunder, and is not relying on any express or
implied representation or promise from the other that this Agreement will
continue beyond the Term or will not be terminated in accordance with its terms.
As a result, neither Heska nor Novartis shall, by reason of the termination of
this Agreement under any circumstances be liable to the other for compensation,
reimbursement or damages on account of the loss of prospective profits on
anticipated sales, or on account of expenditures, investments, leases or
commitments, in connection with the business or goodwill of Heska or Novartis,
or otherwise.
8.4 General Indemnity by Heska. Heska will defend, at its own expense,
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any claim, suit or proceeding brought against Novartis to the extent it is based
upon a claim that any Product sold pursuant to this Agreement is defective.
Novartis agrees that it shall promptly notify Heska in writing of any such claim
or action and give Heska full information and assistance in connection
therewith. Heska shall have the sole right to control the defense of any such
claim or action and the sole right to settle or compromise any such claim or
action. If Novartis complies with the provisions hereof, Heska will pay all
damages, costs and expenses finally awarded to third parties against Novartis in
such action. If any Product unit is, or in Heska's opinion might be, defective,
Heska may, at its option, replace such unit or request the return of such unit
and refund the amount paid for such unit by Novartis. Heska shall have no
liability hereunder to the extent any such defect was caused by Novartis' or its
employees' acts or omissions.
8.5 General Indemnity by Novartis. Novartis agrees to indemnify and hold
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Heska harmless from and against all damages, costs and expenses arising with
respect to the sale, distribution or use of any Product, to the extent caused by
any act or omission by Novartis. Without limiting the generality of the
foregoing, Novartis agrees to indemnify and hold Heska harmless from and against
all damages, costs and expenses to the extent caused by Novartis' sale of any
Product in violation of any regulatory requirements in Japan or into any
jurisdiction outside of Japan to the extent approval of the sale of such Product
in such jurisdiction has not been approved by the applicable regulatory
authorities.
9. TRADEMARKS.
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9.1 Limited Trademark License. Subject to the next succeeding sentence,
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Heska grants to Novartis a limited license to use during the Term, for proper
purposes in connection with the promotion and sale of the Products on a non-
exclusive basis, Heska's name and logo
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and the other trademarks used by Heska from time to time with respect to the
Products (collectively, the "TRADEMARKS").
9.2 Novartis' Use. Novartis' use of the Trademarks shall be in accordance
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with applicable trademark law and Heska's policies regarding advertising and
trademark usage as established and amended from time to time. Novartis shall
include all applicable Trademarks in any literature, promotional materials or
advertising which it produces or distributes concerning the Products. Novartis
will not use any such Trademarks other than with respect to the direct promotion
of the Products.
9.3 Ownership of Trademarks. Novartis agrees that the Trademarks are and
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will remain the sole property of Heska and agrees not to do anything
inconsistent with that ownership or to contest ownership of the Trademarks.
Novartis agrees to always identify the Trademarks as being the property of
Heska. Novartis also agrees that all use of the Trademarks by Novartis will
inure to the benefit of, and be on behalf of, Heska.
10. PRODUCT MATERIALS; WARRANTY; MANUFACTURING QUALITY; DEFECTIVE BATCH.
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10.1 Product Materials. Novartis may not make any representations or
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warranties regarding a Product in addition to or different from those specified
by Heska in the applicable Product documentation and any representations or
warranties made by Novartis with respect to the Products shall contain the same
limitations and disclaimers as are included by Heska in such documentation.
10.2 Exclusive Warranty. HESKA HEREBY REPRESENTS AND WARRANTS THAT EACH
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PRODUCT WILL MEET ITS RESPECTIVE SPECIFICATIONS SET FORTH IN THE APPLICABLE
PRODUCT SCHEDULE IN ALL MATERIAL RESPECTS. SUCH WARRANTY IS IN LIEU OF, AND
HESKA DISCLAIMS, ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY
WARRANTY OF MERCHANTABILITY, SATISFACTORY QUALITY, FITNESS FOR A PARTICULAR
PURPOSE AND NONINFRINGEMENT, OR ARISING FROM THE COURSE OF DEALING BETWEEN THE
PARTIES OR USAGE OF TRADE.
10.3 Manufacturing Quality; Defective Batch. The Products sold to Novartis
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will be manufactured by Heska using the same quality assurance procedures as it
uses for Product units sold directly by Heska outside of Japan. If Heska
confirms that any Product unit contains any material defect which, based on the
nature of the defect, is reasonably likely to be present in other Product units
from the same batch, then Novartis may return (or, upon Heska's request, shall
return) to Heska as defective all Product units of that batch in exchange for
other units of the same Product. All such returns shall be in accordance with
the RMA Procedures.
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11. CONFIDENTIAL INFORMATION.
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Neither Party shall use for any purpose, other than as contemplated by this
Agreement, or divulge to any third party, any trade secrets, processes,
techniques, designs, know how or other confidential information provided to such
Party by the other. Notwithstanding the foregoing, these confidentiality
provisions shall not apply to any information: (a) which is independently
developed by the receiving Party or its Affiliates or lawfully received free of
restriction from another source having the right to so furnish such information;
(b) after it has become generally available to the public without breach of this
Agreement by the receiving Party or its Affiliates; (c) which at the time of
disclosure to the receiving Party was known to such Party or its Affiliates free
of restriction; or (d) which and to the extent the receiving Party is required
to disclose pursuant to law, regulations, or an order of a court of competent
jurisdiction, provided that the disclosing Party shall have been afforded a
reasonable opportunity to limit such disclosure. In addition to the above,
subject to disclosure as required under the foregoing clause (d), the Parties
shall maintain in confidence and not divulge to any third party the terms of
this Agreement or any Product Schedule.
12. TERMINATION PROVISIONS.
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12.1 Termination for Cause. Either Party shall have the right to terminate
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this Agreement prior to the end of the Term by notice immediately if:
(a) Breach. The other Party commits any material breach of this
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Agreement which has not been remedied within thirty (30) days of notice thereof;
(b) Insolvency. The other Party enters into liquidation or
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reorganization, whether compulsory or voluntary, or has a receiver appointed as
to all or a substantial part of its assets, or takes or suffers any similar
action in consequence of debt; or
(c) Reduction in Interest. Novartis and its Affiliates together do
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not legally and beneficially own at least five percent (5%) of the issued and
outstanding common stock of Heska.
12.2 Termination Due to Failure to Achieve Purchase Goal. Heska shall have
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the right to terminate this Agreement with respect to any Product if Novartis
fails in any Period to achieve at least seventy-five percent (75%) of the
Purchase Goal for such Product in such Period (unless such failure is due to
Heska's failure to deliver Products in accordance with accepted purchase
orders). If at any point all Products are deleted from this Agreement under
this Section, then either Party may terminate this Agreement upon 5 days' notice
to the other.
12.3 Default Under Right of First Refusal Agreement. Heska shall have the
----------------------------------------------
right to terminate this Agreement immediately if Heska terminates the Right of
First Refusal Agreement due to NAH Basle's default thereunder. Novartis shall
have the right to terminate this Agreement immediately if NAH Basle terminates
the Right of First Refusal Agreement due to Heska's default thereunder.
11
12.4 Effect of Termination as to Any Product. Upon termination of this
---------------------------------------
Agreement as to any Product as provided in Section 12.2:
(a) Termination of Licenses. Except as expressly provided in this
------------------------
Section 12, all rights and licenses granted to Novartis under this Agreement for
such Product and the related Trademarks shall immediately terminate; provided,
--------
that, subject to Heska's rights under clause (b) below, Novartis may sell on a
----
nonexclusive basis but otherwise on the terms set forth in this Agreement its
remaining inventory of such Product for a period of up to ninety (90) days
following the date of termination; and
(b) Right to Purchase Inventory. Heska shall have the right (but not
---------------------------
the obligation) on notice to Novartis from time to time to purchase from
Novartis all or any portion of such Product in its inventory at the time of such
termination for credit against outstanding invoices, or for cash refund to the
extent there are no invoices then outstanding. Any credit or refund due
Novartis for such Product shall be equal to the purchase price of the Product,
less any discounts or credits previously received.
12.5 Effect of Termination of Agreement. Upon expiration or termination of
----------------------------------
this Agreement for any reason:
(a) Termination of Licenses. Except as expressly provided in this
------------------------
Section 12, all rights and licenses granted to Novartis under this Agreement
shall immediately terminate; provided, that, unless this Agreement is terminated
-------- ----
by Heska, (i) Heska shall honor all accepted purchase orders providing for
delivery within 30 days of the date of termination and for which Novartis pays
in full prior to shipment, and (ii) Novartis may sell on a nonexclusive basis
but otherwise on the terms set forth in this Agreement its remaining inventory
of Products for a period of up to ninety (90) days following the date of
termination, subject to Heska's rights under CLAUSE (b) below;
(b) Right to Purchase Inventory. Heska shall have the right (but not
---------------------------
the obligation) on notice to Novartis from time to time to purchase from
Novartis all or any portion of the Products in its inventory at the time of such
expiration or termination for credit against outstanding invoices, or for cash
refund to the extent there are no invoices then outstanding. Any credit or
refund due Novartis for such Product shall be equal to the purchase price of the
Product, less any discounts or credits previously received; and
(c) Confidential Information. Each Party shall return all copies of
------------------------
the other Party's confidential information which remain in such Party's
possession or under its control.
12.6 Survival. The provisions of SECTIONS 1, 4, 7, 8, 10, 11, 12 AND 13
--------
shall survive any termination or expiration of this Agreement.
12
13. GENERAL.
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13.1 No Other Agreements. All previous agreements and arrangements (if
-------------------
any) made by Heska and Novartis and relating to the subject matter hereof are
hereby superseded. This Agreement embodies the entire understanding of the
Parties. There are no promises, terms, conditions or obligations, oral or
written, express or implied, other than those contained in this Agreement. This
Agreement shall supersede any provision of any purchase order submitted by
Novartis for Products during the Term, notwithstanding any provision in such
purchase order to the contrary. This Agreement may only be amended by a writing
signed by the Parties. If this Agreement is translated into Japanese, the
English language version of this Agreement shall control all discrepancies
between such versions.
13.2 Notices. Any notice required to be given hereunder shall be in
-------
writing and may be given by facsimile transmission (confirmed by mail), personal
delivery (including by professional courier), or mailing (by first class
receipted prepaid mail) to the respective address or facsimile number set forth
below, or to such other address or facsimile number as such Party may have
notified the other pursuant to this Section. In the case of facsimile
transmission or personal delivery, such notice shall be deemed to have been
given upon the date of such transmission or delivery. In the case of mailing,
such notice shall be deemed to have been given seven days after such mailing.
Heska: Novartis:
Heska Corporation Novartis Agro K.K. , Tokyo
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ World Trade Center ▇▇▇▇. ▇-▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Hamamatsu-cho 2 chrome
Attn.: ▇▇▇▇ ▇▇▇▇▇▇ Minato-ku, Tokyo ▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇ Attn: Managing Director
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇ Telephone: ▇▇ ▇ ▇▇▇▇ ▇▇▇▇
Telecopier: 81 3 3435 4012
With a copy sent:
Attn.: General Counsel
13.3 Governing Law. The parties hereby agree that their rights and
-------------
obligations under this Agreement will not be governed by the United Nations
Conventions on Contracts for the International Sale of Goods, the application of
which is expressly excluded. Rather, this Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado, without regard
to its provisions concerning the applicability of the laws of other
jurisdictions.
13.4 No Agency. Nothing in this Agreement or any other document or
---------
agreement between the Parties shall constitute or be deemed to constitute a
partnership between the Parties. The relationship between Heska and Novartis
shall be that of seller and buyer. Novartis, its officers, agents and
employees, shall under no circumstances be considered the agents, employees or
representatives of Heska. Neither Party shall have the right to enter into
13
any contracts or binding commitments in the name of or on behalf of the other
Party in any respect whatsoever.
13.5 Assignment. Novartis may not assign any of its rights or obligations
----------
hereunder, whether voluntarily or by operation of law, without the prior written
consent of Heska (which may be granted or withheld in its sole discretion).
Subject to the foregoing, this Agreement will inure to the benefit of and be
binding upon the successors and assigns of the Parties.
13.6 Construction. This Agreement is the result of negotiations among,
------------
and has been reviewed by, Heska and Novartis and their respective counsel.
Accordingly, this Agreement shall be deemed to be the product of each Party
hereto, and no ambiguity shall be construed in favor of or against Heska or
Novartis.
13.7 Headings; Plural Terms; Other Interpretive Provisions. Headings and
-----------------------------------------------------
captions used to introduce Sections of this Agreement are only for convenience
and have no legal significance. All terms defined in this Agreement or any
exhibit in the singular form shall have comparable meanings when used in the
plural form and vice versa. References in this Agreement to "Recitals,"
"Sections" and "Schedules" are to recitals, sections and schedules herein and
hereto unless otherwise indicated. The words "include" and "including" and
words of similar import when used in this Agreement or in any exhibit shall not
be construed to be limiting or exclusive. The word "or" when used in this
Agreement or in any schedule shall mean either or both.
13.8 Force Majeure Events. Neither Party shall be liable for any failure
--------------------
to perform any of its obligations hereunder (other than the payment of money)
which results from an act of God, the elements, fire, flood, component
shortages, a force majeure event, riot, insurrection, industrial dispute,
accident, war, embargoes, legal restrictions or any other cause beyond the
control of the Party.
13.9 Attorneys' Fees. In any litigation, arbitration or court proceeding
---------------
between the Parties with respect to this Agreement, the prevailing Party shall
be entitled to recover, in addition to any other amounts awarded, attorneys'
fees and all costs of proceedings incurred in enforcing this Agreement.
13.10 Arbitration. If a dispute or disagreement (a "DISPUTE") arises
------------
between the Parties in connection with this Agreement, then the Dispute will be
finally settled by binding arbitration to be conducted in English in London,
England (or at such other location as the Parties may agree) under the
International Chamber of Commerce Rules of Conciliation and Arbitration then
prevailing by one arbitrator appointed in accordance with those rules. The
arbitrator shall be chosen from a panel of arbitrators knowledgeable in the
companion animal health care industry. The arbitrator will apply the law
specified in SECTION 13.3 to the merits of the Dispute. The decision of the
arbitrator shall be final, conclusive and binding on the Parties to the
arbitration. Judgment on the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof. The arbitrator may grant permanent
injunctions or other relief in such dispute or claim; provided that the
--------
arbitrator may not grant licenses to any intellectual
14
property owned by either Party nor may the arbitrator award punitive damages.
Notwithstanding the foregoing, without breach of this arbitration provision
either Party may apply to any appropriate court for temporary injunctive relief.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
Effective Date.
HESKA CORPORATION NOVARTIS AGRO K.K., TOKYO
By /s/ ▇▇▇▇ ▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------- ---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President Title: ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇
▇▇