EXCLUSIVE DISTRIBUTOR AGREEMENT

 

Exhibit 10.38

 

EDA-0010

 

Medica D.O.O.

 

EXCLUSIVE DISTRIBUTOR AGREEMENT

 

This Agreement (“Agreement”) is effective as of 1^st September 2018, by and between SynCardia Systems, LLC (“SynCardia”) and Medica d.o.o. (“Distributor”). SynCardia and Distributor are sometimes hereinafter referred to individually as a “Party” and collectively as the “Parties.”

 

SynCardia:

 

Business Registration: A limited liability corporation organized and existing under the laws of Delaware, USA

SynCardia Office: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇

SynCardia Contact: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, CEO & President

Facsimile No: +1.520-903-1783

Telephone No.:+1.520-545-1234

E-Mail: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇

Web Address: ▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇▇.▇▇▇

 

Distributor:

 

Business Registration: Medica D.O.O.

Distributor Office: ▇▇▇▇▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇

Distributor Contact: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇

Facsimile No:

Telephone No: ▇▇▇▇▇▇▇▇▇▇▇▇

E-Mail: ▇▇▇▇▇▇.▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇

Web Address:

 

 

WITNESSETH:

 

In consideration of their mutual promises, the parties agree as follows:

 

1.

Definitions and Addenda

 

1.1

Definitions

 

1.1.1

“Territory” means the country or geographical area described as:

 

1.1.1.1

Slovenia.

 

1.1.2

“Distributor” means natural or legal person in the supply chain who, on his own behalf, furthers the availability of a medical device to the end user.

 

1.1.3

“Distributor Certificate” means a document which certifies the Distributor as the Exclusive Distributor of SynCardia products in the Territory.

 

1.1.4

“Eligible Hospital” means a hospital that has experience with both heart transplant procedures and mechanical circulatory support (MCS) devices or experience with MCS devices and a formal arrangement to send transplant-eligible patients to an experienced transplant center.

 

1.1.5

“Initial Order” means the products required for a new hospital and the financial arrangement for later orders of Freedom Discharge Kits for appropriate patients and replacement TAH Kits.

 

1.1.6

“Implant Ready” means an Eligible Hospital in the Territory that has completed Phase II of the start-up certification or is undergoing an emergency Phase I-III training and has the SynCardia TAH-t Kits and all appropriate approved Drivers and Accessories.

 

1.1.7

“Permanently” means perpetual; everlasting. Intended to exist without change for a minimum of fifteen (15) years after the date of manufacture of the last SynCardia medical device.

 

1.2

Addenda

 

1.2.1

A quotation for an initial order at distributor pricing and price list with current distributor pricing is attached as Addendum 1 to this agreement.

 

 

1.2.2

A list of the most recent regulatory approvals for all SynCardia products is attached as Addendum 2 to this agreement.

 

1.2.3

A catalog of SynCardia products and descriptions is attached as Addendum 3 to this agreement.

 

1.2.4

A document with the most recent product and shipping labels is attached as Addendum 4 to this agreement.

 

1.2.5

A Distributor Certificate is attached as Addendum 5 to this agreement.

 

1.2.6

A Certificate of Insurance (COI) is attached as Addendum 6 to this agreement.

 

2.

Background to this Agreement

 

2.1

SynCardia:

 

2.1.1

Has developed and manufactures the SynCardia 70cc and 50cc temporary Total Artificial Hearts (“TAH-t”). The TAH-t is the implantable component of the TAH-t System that provides biomechanical circulation for treating indicated patients at risk of imminent death from biventricular failure.

 

2.1.2

Received approval from the United States Food and Drug Administration (the “FDA”) for the sale of the 70cc TAH-t System in 2004 in the United States. SynCardia has received similar approvals from Health Canada for the sale of 70cc and 50cc TAH-t Systems (“Canadian Licences”). SynCardia has received the CE mark (Certificate #93783) for the commercial distribution of the 70cc and 50cc TAH-t Systems, 70cc and 50cc Surgical Spares Kits and pneumatic Drivers (collectively, “TAH Devices”) for placing on the market within the European Economic Area and in countries that recognize the CE mark.

 

2.1.3

Intends to provide Distributor with new and applicable SynCardia Products after the date of this agreement as they are approved for use by the Regulatory Authorities having jurisdiction in the Territory.

 

2.1.4

Has determined to enter into this Agreement, which contains the terms and conditions under which Distributor will sell, support, monitor and report on SynCardia Products in the Territory.

 

2.1.5

May establish ownership of a subsidiary in a jurisdiction covered by this Distribution Agreement to perform any number of duties required by this agreement on behalf of SynCardia.

 

 

2.2

Distributor:

 

2.2.1

May or may not currently be a SynCardia Distributor with or without an executed Distributor Agreement and may have previously engaged in the business of distributing cardiac assist and related products and services to many hospitals in the Territory that could qualify to become Eligible Hospitals.

 

2.2.2

Has determined that it would benefit from distributing and servicing SynCardia Products to Eligible Hospitals in the Territory.

 

2.2.3

Has determined to enter into this Agreement, which contains the terms and conditions under which Distributor will sell and support SynCardia Products in the Territory.

 

3.

Appointment as Exclusive Distributor

 

3.1

SynCardia hereby appoints Distributor as a distributor of Products and grants Distributor the exclusive right to purchase or rent the Products for resale or re-rental in the Territory. Such Products may only be re-sold or re-rented by Distributor to Eligible Hospitals in the Territory that are “Implant Ready” or in the process of qualifying to become “Implant Ready”.

 

3.1.1

SynCardia agrees that while this Agreement is in effect, it will not appoint or authorize any third person to distribute or sell Products in the Territory and will not, itself, distribute or sell Products in the Territory, except under the terms of this Agreement applying to Dispute Resolution, where SynCardia may appoint a temporary Distributor and/or Authorized Agent to ensure an uninterrupted supply of Products to Eligible Hospitals within the Territory.

 

3.1.2

SynCardia shall provide Distributor with a certificate issued by SynCardia that will provide evidence to hospitals and others that Distributor is the Exclusive Distributor of SynCardia Products in the Territory (“Distributor Certificate”).

 

3.2

Distributor accepts the appointment as a distributor of Products from SynCardia and agrees to purchase and sell, rent or re-rent Products, and otherwise conduct itself strictly in accordance with the terms and conditions of this Agreement. While this Agreement is in effect, Distributor shall:

 

3.2.1

Use its best efforts to promote, market and sell Products in the Territory only to Eligible Hospitals.

 

3.2.2

Submit to SynCardia for its consideration the names of potential Eligible Hospitals prior to making any commitments on SynCardia’s behalf.

 

3.2.2.1

If SynCardia approves such a hospital as a candidate to become an Eligible Hospital, Distributor shall, as directed by SynCardia, assist SynCardia in scheduling and coordinating the start-up certification of such Hospital.

 

 

3.2.3

Maintain a full staff of personnel who have been trained by Distributor and certified by SynCardia and have the requisite knowledge to represent the Products in the Territory.

 

3.2.4

Not promote, advertise, sell or make available Products to anyone other than Eligible Hospitals located within the Territory.

 

3.2.5

Not advertise, promote, sell or represent in any way, any other Artificial Heart or products intended to replace both ventricles of a human heart.

 

3.2.6

Not allow the use of any Products in the Territory in a manner that is inconsistent with its Regulatory Approval.

 

3.2.7

Not disclose any SynCardia Proprietary Information to others.

 

3.2.8

Provide SynCardia with a written list of all products of every type that it distributes in the Territory. Once per year, Distributor shall update this list and shall promptly deliver the updated list to SynCardia electronically.

 

3.2.9

Strictly comply with each provision of this Agreement.

 

3.2.10

Comply with any Regulations and execute any documents required under the US Foreign Corrupt Practices Act.

 

Distributor shall not appoint any Persons to act as Subdistributor (each a “Subdistributor” and, collectively, the “Subdistributors”) or Authorized Agents to distribute the Products within any portion of the Territory without prior written agreement from SynCardia. At the time of signing of this agreement SynCardia has authorized Distributor to appoint ▇▇▇▇▇▇▇ as Subdistributor for the territory of Slovenia.

 

4.

Sales or Rental of Products

 

4.1

Purchase Orders

 

4.1.1

Distributor shall purchase Products in its name and for its own account. Distributor shall submit to SynCardia purchase orders in a form requested by SynCardia, specifying the number and type of Products and requested shipment dates (“Purchase Orders”). All purchase orders are subject to acceptance and approval by SynCardia at its principal place of business.

 

4.1.2

Distributor shall submit expedited purchase orders for emergency requisitions in a form requested by SynCardia, specifying the number and type of Products and requested expedited shipment dates (“Purchase Orders”). All expedited purchase orders are subject to acceptance and approval by SynCardia at its principal place of business.

 

 

4.2

Distribution only to Eligible Hospitals in the Territory

 

4.2.1

Distributor shall only distribute TAH-t Kits and all appropriate approved Drivers and Accessories to a Hospital if such Hospital has completed Phase II of the start-up certification or is undergoing an emergency Phase I-III training and is currently an Eligible Hospital in the Territory. If Distributor fails to adhere to this requirement, then SynCardia may immediately terminate this Agreement and Distributor’s right to distribute the Products.

 

4.3

SynCardia shall use reasonable efforts to fill Purchase Orders received from Distributor and accepted by SynCardia within a reasonable time; however, SynCardia shall not be liable to Distributor for any failure or delay in delivery or shipment of such Products.

 

4.4

Products, Prices & Terms

 

4.4.1

SynCardia shall furnish to Distributor, from time to time, an Addendum to this agreement as new Products and Services are offered or other changes are made.

 

4.4.1.1

The Addendum shall provide identifying detail for each of the Products made available to Distributor and the Distributor Price, Rental Rate, Service Fee and other terms relating to the Sale, Rental or Service of such Product.

 

4.4.1.2

The Addendum and Terms shall have an “Expiration Date” for certain specified Products that will be the date for which the pricing and terms are fixed and cannot be changed without the agreement of Distributor.

 

4.4.2

Distributor shall pay SynCardia the Purchase Price, Rental or Service Fee for each of the Products according to the terms contained in Products, Prices & Terms. Distributor’s failure to comply with the provisions of Products, Prices & Terms shall be a material default that would potentially result in termination of the Agreement.

 

4.4.3

At SynCardia’s discretion and upon prior written notice, a late payment charge will be assessed on any obligation not paid when due at a rate of 1.5% per month; provided, however, that such late payment charge shall not be assessed at a rate in excess of the maximum permitted by applicable law. In addition to the provisions and remedies provided in the Products, Prices and Terms, if: (a) any payment owing by Distributor is not received by SynCardia within ninety (90) days after it is due, or (b) Distributor makes three (3) late payments within any twelve (12) month period,

 

 

SynCardia may, at its discretion and upon written notice to Distributor, refuse to fill or ship any order for Products until receipt by SynCardia of the full invoice amount of such order or until Distributor has established an irrevocable letter of credit with terms satisfactory to SynCardia.

 

4.4.4

All payments shall be made in Euros by electronic funds/wire to the designated account of SynCardia.

 

4.5

Shipping, Risk of Loss, Duty and Taxes

 

4.5.1

Distributor shall promptly inspect the packaging of Products received from SynCardia and shall, within three (3) business days after their arrival, notify SynCardia via email of any damage to Products or shortage of Products.

 

4.5.2

All sales or rental of Products pursuant to Distributor Purchase Orders shall include the cost of shipment to Distributor. Risk of loss of products shall be the responsibility of the Distributor only in the case of Distributor’s negligence.

 

4.5.3

Distributor shall pay all customs duties, import fees, clearance charges, and taxes (including all other expenses of like kind and all VAT, sales, transaction privilege and personal property taxes) arising from the importation, purchase, rent, use or shipping of Products and Shipping Containers or their components, the provision of Service or otherwise with respect to the transactions contemplated herein or in the Quotation. Distributor shall bear the sole responsibility for the collection and payment of any sales, value added, use or other taxes payable in connection with its resale of Products.

 

5.

Driver System Maintenance and Repair

 

5.1

Distributor shall coordinate the shipment of Drivers and Driver Systems for maintenance as specified by SynCardia.

 

5.2

As directed by ▇▇▇▇▇▇▇▇▇, Distributor shall perform checkout of Drivers and Driver Systems and provide specified documentation regarding Driver checkout to SynCardia.

 

5.3

Distributor shall monitor the condition of all Drivers in the Territory and shall promptly notify SynCardia if any Drivers:

 

5.3.1

Do not meet the performance standards established by SynCardia or malfunction during use, or

 

 

5.3.2

Have reached the end of a Service Cycle as determined by Regulatory Approval.

 

5.4

SynCardia shall notify Distributor in advance of upcoming end-of-service cycles so that Distributor can make arrangements to switch equipment prior to end of service cycle with Distributor or Hospital inventory or with Drivers shipped to Distributor for this replacement. Distributor shall notify SynCardia to ship, at SynCardia’s expense, a Replacement Driver as directed by Distributor to replace a Driver as necessary.

 

5.5

Distributor shall arrange and pay for the shipping of all Drivers and Driver System Components moved within the Territory. SynCardia shall pay the cost of shipping Driver Systems to the Distributor or out of the Territory as directed by ▇▇▇▇▇▇▇▇▇.

 

5.6

Distributor shall be responsible for all Products and Shipping Containers delivered to Distributor for use in returning products or for shipping within the territory. Whenever possible, all shipments should use the provided approved shipping containers to maintain product integrity and function, unless otherwise approved by SynCardia.

 

6.

Additional Distributor Responsibilities

 

6.1

Distributor shall, unless otherwise directed by SynCardia, provide specific documentation relating to TAH-t and Driver System tracking, implants and explants, proactive patient updates, training certifications, Driver check outs, customer complaints and other topics as may be amended or implemented for all Eligible Hospitals from time to time.

 

6.2

Distributor shall maintain records of the distribution of SynCardia medical devices to allow traceability and shall assure that these records are available for inspection by SynCardia and by regulatory authorities.

 

6.2.1

Documentation requirements are a material part of this Agreement and non-compliance shall be deemed a material default and cause for termination.

 

6.2.2

SynCardia shall provide the requirements and forms for such reporting.

 

6.3

Should Distributor request that SynCardia provide additional training to a Hospital that is at risk of losing its certification as an Eligible Hospital, Distributor shall share the costs associated with such additional training and proctoring.

 

 

6.4

Distributor and SynCardia shall cooperate in identifying and qualifying prospective Eligible Hospitals within the territory as part of the mutually agreed annual marketing plan proposed by Distributor and reviewed quarterly.

 

6.5

Distributor shall cooperate with SynCardia to establish and maintain a high level of Hospital satisfaction through marketing plans, user groups, clinical and customer support, and other interactions with the staff of the Hospital. As requested by SynCardia, Distributor shall, at its own expense, attend sales and service meetings and training sessions conducted by SynCardia.

 

6.6

Distributor shall remain in good and substantial financial condition during the term of this Agreement.

 

6.6.1

From time to time, upon SynCardia’s request, Distributor shall furnish to SynCardia such financial statements as SynCardia may request to determine Distributor’s financial condition.

 

6.6.2

SynCardia shall have the right, in its sole discretion, to refuse to sell or rent Products to Distributor at any time without notice in the event that Distributor fails to furnish such financial statements to SynCardia or Distributor’s financial condition is unsatisfactory to SynCardia.

 

6.7

Distributor shall use its best efforts to achieve the highest level of reimbursement from private and governmental insurance and reimbursement agencies for Products used by Eligible Hospitals.

 

6.7.1

Should any insurance or reimbursement programs specifically reference Distributor, Distributor shall, in the case of termination or expiration of this Agreement, assign any rights to such reimbursement or payments to such organization or person as designated by SynCardia.

 

6.7.2

Distributor’s obligation to perform such assignments shall be consistent with the specific limitations and requirements of each insurer and each reimbursement program. As directed by SynCardia and as permitted by law, Distributor shall assign the legal ownership of such approvals to an individual or entity legally qualified to receive such assignment.

 

6.8

Distributor shall obtain, at its own cost and expense, all Government Approvals required from any government agency in the Territory for the importation, sale, rental use or disposition of the Products (“Governmental Approvals”).

 

6.8.1

Such Governmental Approvals shall be obtained in the name of SynCardia and for the benefit of SynCardia by the Distributor acting as SynCardia’s Agent.

 

 

6.8.2

To the extent permitted by law, SynCardia shall be the sole beneficial owner of the Governmental Approvals.

 

6.8.3

As directed by SynCardia and as permitted by law, upon termination or expiration of this Agreement, Distributor shall assign the legal ownership of such approvals to an individual or entity legally qualified to receive such assignment.

 

6.9

Distributor shall, in compliance with all laws, rules and regulations applicable to its performance pursuant to this Agreement, procure and maintain all licenses and permits necessary to the performance of its business and conduct its business in a manner so as not to bring discredit upon the reputation of Products or SynCardia.

 

7.

Translations

 

7.1

As required to meet the labeling requirements of any Regulatory Approvals, SynCardia shall deliver to Distributor documents and materials in English or other languages approved by SynCardia (“Official Documents”).

 

7.1.1

SynCardia shall provide Distributor with a list of the languages for which Official Documents have been created.

 

7.1.2

The list will be updated by SynCardia as Official Documents become available in additional languages.

 

7.2

All training is conducted by SynCardia in English and will include Official Documents in English and, if available, in the local language.

 

7.2.1

In cases where the Distributor or SynCardia has translated Official Documents into training materials and manuals, SynCardia shall work with Distributor during the training process to validate that the Distributor’s translation from Official Documents provides adequate guidance and direction to trainees to meet regulatory compliance requirements.

 

7.2.2

Distributor shall provide SynCardia with complete copies of all documents and materials that have been translated from Official Documents for use in the Territory.

 

8.

Training and Marketing Support

 

8.1

SynCardia shall provide start-up certification to a Hospital that has been properly qualified by Distributor and accepted by SynCardia to enter the start-up certification program, providing that SynCardia receives the Initial Order from Distributor for such Hospital by the date of the training, or as agreed specifically for this Hospital.

 

 

8.1.1

SynCardia shall provide the entire start-up certification with costs to be shared as mutually agreed.

 

8.1.2

SynCardia reserves the right to bill Distributor and Distributor agrees to pay for all costs of training should hospital cancel its Initial Order.

 

8.2

SynCardia may, from time to time, delegate selected portions of Phase II, III and IV training to certain qualified employees of Distributor.

 

8.2.1

Such employees of Distributor shall attend appropriate training and obtain certification from SynCardia. Distributor shall employ only the most current training materials and instructional methods provided by SynCardia.

 

8.2.2

Distributor will attend Phase I start-up training as soon as possible after the Effective Date of this Agreement. SynCardia may also designate Distributor to be considered a member of the Clinical Training Team and may perform some of the duties of the Clinical Support Consultant and will issue certificates accordingly.

 

8.3

In order to discover and disseminate best practices and facilitate communication with personnel from Eligible Hospitals, SynCardia will maintain a customer support relationship with all Eligible Hospitals and may sponsor user groups, customer events, media events, training opportunities and other interactions with Eligible Hospital personnel.

 

8.3.1

To the extent possible, SynCardia will include, inform and cooperate with Distributor both formally through annual marketing plans and informally, in all of these relationship activities to achieve the highest level of customer support.

 

8.3.2

Distributor will work with the Sales, Marketing, Certification, and Clinical Support departments of SynCardia in support of planned and opportunistic customer service.

 

8.4

During the term of this Agreement, SynCardia shall:

 

8.4.1

Publish Distributor’s name and address in its list of authorized distributors, if such directory is established;

 

8.4.2

From time to time, per the annual marketing plan to be mutually agreed upon and as opportunities present themselves, support Distributor’s marketing by involving Distributor in any advertising and direct mail activities or other such activities when appropriate;

 

 

8.4.3

From time to time, provide Distributor training and certification to train on the technical details and application of the Products through the opportunity to attend and participate in the four Phases of start-up certification or other field-delivered training;

 

8.4.4

Furnish Distributor, upon Distributor’s request, reasonable technical information respecting applications of the Products;

 

8.4.5

Transmit promptly to Distributor all sales leads for potential Eligible Hospitals in the Territory for the purpose of initiating the qualification process for SynCardia to grant certification per the annual marketing plan, and

 

8.4.6

Provide reasonable marketing and sales support in the Territory, using qualified personnel. SynCardia may provide such support remotely or, at its option, in person in the Territory.

 

8.5

Each party shall bear its own salary, travel and per diem expenses incurred in connection with providing and receiving such training.

 

8.6

Distributor shall provide contact information for interested parties to be added to the SynCardia database for company updates and provide customer and prospective customers contact information for appropriate resource access.

 

9.

Shipping Containers

 

9.1

All Driver Systems shall be shipped to Distributor in special hard shell reusable containers made specifically for the Products shipped (the “Shipping Containers”).

 

9.2

Prices for lost Shipping Containers will be provided in the price list.

 

10.

Trademarks; Packaging and Labeling

 

10.1

SynCardia will supply Product with the relevant documents as part of labeling such as “TAH-t Instructions for Use” required by Regulatory Approval in Official Documents and through validation of the SynCardia translation of Official Documents as described in the section of this Agreement entitled “Translation”.

 

10.2

Distributor acknowledges and understands that the Products may only be used in the manner prescribed by and described in the SynCardia Regulatory Approval current version of labeling “SynCardia Systems, LLC temporary Total Artificial Heart (TAH-t) Instructions for Use” or User’s Manuals for other Products, and Distributor will not promote or suggest the use of the Products for any other purpose or in any other manner.

 

 

10.3

Distributor shall not make any warranties or representations with respect to Products on behalf of SynCardia beyond what is represented in labels, labeling and training materials by SynCardia.

 

10.4

Distributor shall indemnify and hold SynCardia harmless from all claims and damages, including attorneys’ fees, resulting from Distributor’s violation of this paragraph or any other provision of this Agreement. Distributor agrees that it will not sell any products for which the expiration date is passed or if such sale will result in the product’s use after the expiration date or in contravention of local law.

 

10.5

Distributor shall not remove, cover or obliterate any markings or information placed on Products or the packaging thereof as supplied by SynCardia without the express written permission of SynCardia.

 

10.5.1

All labeling must comply with the SynCardia Regulatory Approval requirements.

 

10.5.2

Any labeling of Products to comply with local laws shall be undertaken by SynCardia with the advice and support of Distributor.

 

10.6

SynCardia authorizes Distributor to use, in connection with the sale, rental, promotion and advertising of Products, such trademarks and trade names as may be used by SynCardia in the advertising, promotion and sale of Products only with the prior authorization of SynCardia.

 

10.6.1

All requests for such approvals made by Distributor shall be accompanied by an electronic copy, hard copy, photo or other representation of the item to be approved.

 

10.6.2

Distributor shall have no right or interest in or claim to any such marks or names, shall not use the same in any manner that might tend to defeat or diminish them and shall immediately discontinue the use thereof upon demand of SynCardia, and, in any event, upon termination of this Agreement.

 

10.7

Distributor may use its own mark or logo in connection with its sale, promotion and advertising of Products; but its mark or logo shall be no larger than SynCardia’s trademarks and shall not be so displayed as to cover, obliterate or detract from SynCardia’s trademarks.

 

10.8

SynCardia shall have the perpetual, royalty-free right to utilize and to license others to utilize in the production, packaging, promotion and sale of Products, all brochures, point of sale materials, catalogues, and other advertising, promotional and sales materials developed by or for Distributor for use in connection with the advertising, promotion or sale of Products. Promptly upon SynCardia’s request, Distributor shall execute any and all documents that may be required to accomplish the purposes of the foregoing provisions.

 

 

10.9

Distributor shall notify SynCardia if it desires to have SynCardia apply for any registrations of trademarks with respect to Products in the jurisdictions in which Products are to be resold by Distributor. If SynCardia approves of the filing of any application for any such registration of a trademark, it shall proceed to do so and SynCardia shall cooperate with Distributor’s efforts.

 

10.10

Distributor shall notify SynCardia promptly upon learning of any infringement of the intellectual property associated with Products.

 

10.10.1

SynCardia shall not be obligated to take any action with respect to such infringements.

 

10.10.2

Distributor shall cooperate fully in investigating any such instance and, on SynCardia’s request, shall assist and participate in any action which SynCardia chooses to take with respect thereto.

 

10.10.3

All expenses of any such action shall be paid by SynCardia; all recoveries obtained from the prosecution of any such action shall be retained by SynCardia.

 

11.

Regulatory Requirements

 

11.1

Distributor shall comply with applicable local, national and international government laws, regulations and standards applicable to the receipt, storage and distribution of medical devices.

 

11.2

Distributor shall maintain applicable local, national and internal government registrations and shall provide such registration numbers or certificates to SynCardia upon request.

 

11.3

Distributor shall inform SynCardia within twenty-four (24) hours of any national or international regulatory agency inspection related to SynCardia product or inspections that may otherwise impact product quality, regulatory compliance, distribution of product or general business practice.

 

11.4

Distributor shall report to SynCardia via email any regulatory agency observations, notices, findings or official regulatory actions against Distributor that may involve SynCardia product or my otherwise impact product quality, regulatory compliance, distribution of product or general business practice within twenty-four (24) hours of becoming aware of such findings.

 

 

11.5

Distributor shall maintain a quality system and established procedures adequate for their operation, in accordance with sections of 21 CFR Part 820 and ISO 13485, as applicable to distributors.

 

11.5.1

Distributor shall allow SynCardia, or its authorized representative, to perform audits of the Distributor’s facilities, systems, documentation, and other requirements related to this agreement and to the Product.

 

11.5.2

Distributor shall provide to SynCardia upon request copies of quality systems procedures and other related documents as evidence that said procedures are established, or evidence that contractual requirements herein are met.

 

11.5.3

Such documents may be redacted of information considered by Distributor to be intellectual property or trade secret, where applicable.

 

11.6

Distributor shall maintain procedures for the proper identification, storage, protection, retrieval, retention time and disposition of records that include or refer to the location of:

 

11.6.1

The name and address of the initial consignee;

 

11.6.2

The identification and quantity of devices shipped;

 

11.6.3

The date shipped; and

 

11.6.4

Any control, lot or serial number(s) used;

 

11.6.5

Any applicable test sheets or check-out forms.

 

11.6.6

Records shall be permanently stored in a manner that prevents damage or degradation of the records. In addition, the records shall be controlled in a manner that allows the records to be easily located and not lost due to lack of organization.

 

11.7

Distributor shall establish and maintain procedures to conduct a correction or removal to the initial consignee at the direction of SynCardia and in accordance with the SynCardia recall strategy, including maintaining the integrity of returned product under quarantine and traceability of any returned product to the initial consignee.

 

11.7.1

If SynCardia or any governmental agency or other proper authority orders a product recall or issues a product advisory with respect to any Products, Distributor shall cooperate with SynCardia in:

 

11.7.1.1

Promptly contacting operators of such Products within the Territory of any such advisories or recalls,

 

 

11.7.1.2

Promptly communicating to such customers such information or instructions as SynCardia may desire be transmitted to them,

 

11.7.1.3

Removing all such recalled Products from its inventory and

 

11.7.1.4

Returning of such recalled Products to SynCardia in accordance with SynCardia’s instructions.

 

11.7.2

Distributor shall provide periodic status reports or conduct effectiveness checks on behalf of SynCardia in accordance with the SynCardia recall strategy.

 

11.7.3

SynCardia shall reimburse Distributor for all reasonable costs and expenses incurred by Distributor in connection with such Product advisories and recalls, unless the advisory or recall is due, in whole or in part, to the fault of Distributor or its representatives.

 

11.8

Distributor shall maintain buildings of suitable design and contain sufficient space to perform necessary operations, prevent mix-ups, and assure orderly handling of SynCardia products.

 

11.9

Distributor shall maintain buildings to prevent contamination of SynCardia products by substances that could reasonably be expected to have an adverse effect on product quality, including contamination from filth and pests.

 

11.9.1

Where special environmental conditions have been specified by SynCardia, Distributor shall establish and maintain procedures to adequately control these environmental conditions, including periodically inspecting to verify that these systems are adequate and functioning properly.

 

11.10

Distributor shall offer SynCardia products for sale and use only for a purpose for which they are approved in SynCardia labeling, advertising, or instructions for use.

 

11.10.1

If Distributor becomes aware that any of its employees has marketed, or any of its customers are using SynCardia product outside of the approved labeling, Distributor shall inform SynCardia immediately.

 

11.11

No changes that could impact the quality, scope or effectiveness of the product design shall be made by the Distributor without SynCardia input and approval.

 

11.12

Distributor and SynCardia shall collaborate to evaluate all repair and service requests as to whether they are complaints that are to be reported to SynCardia as described in the following paragraph.

 

 

11.13

Distributor shall establish and maintain procedures for receiving complaints from customers. Such procedures shall ensure that:

 

11.13.1

All complaints are processed in a uniform manner and reported to SynCardia in a timely manner;

 

11.13.2

Oral complaints are documented upon receipt; and

 

11.13.3

Complaints can be evaluated to determine whether they are required to be reported to regulatory authorities.

 

11.13.3.1

Since time is of the essence in meeting statutory reporting time periods, Distributor shall report complaints to SynCardia within twenty-four (24) hours of the time Distributor first becomes aware of them.

 

11.14

Distributor shall agree to an assessment of its operations by SynCardia at reasonable times of operation. SynCardia, in turn, shall give Distributor reasonable notice of its desire to assess and provide an assessment plan to Distributor.

 

12.

Discontinuance of Products/Expiration of Products

 

12.1

SynCardia reserves the right to modify or discontinue the sale or rental of any Products at any time without incurring any liability thereby or any obligation to repurchase or modify Products previously sold by SynCardia to Distributor. SynCardia shall give Distributor notice of discontinuance of Products not less than sixty (60) days prior to the discontinuation of any Product.

 

12.2

SynCardia may rotate TAH Kits to more active clinical centers in an effort to use them before they expire.

 

12.2.1

The released TAH Kits shall be replaced and provided to Distributor at SynCardia expense within thirty (30) days unless Distributor demonstrates an emergency need for replacement earlier.

 

12.2.2

Surgical Spares Kits are not rotated and need to be replaced at Distributor expense when expired.

 

12.2.3

SynCardia shall also provide replacement drivelines, batteries and other products that expire unless Distributor is notified in advance that such products will not be replaced.

 

13.

Confidentiality

 

13.1

Distributor acknowledges that, in the course of performing its duties and obligations under this Agreement, certain information that is confidential or proprietary to SynCardia (“Confidential Information”) will be furnished by SynCardia or SynCardia’s representatives.

 

 

13.1.1

Distributor agrees that any Confidential Information furnished by SynCardia or SynCardia’s representatives will not be used by it or its representatives except in connection with, and for the purposes of, the promotion, marketing, distribution and sale or Products under this Agreement and, except as provided herein, will not be disclosed by it or its representatives without the prior written consent of SynCardia.

 

13.1.2

During the term of this Agreement and any renewal thereof and for a period of three (3) years after the termination thereof, Distributor and all of its owners, directors, agents and employees shall safeguard and treat as confidential the terms of this Agreement, including all referenced documents, and all training, marketing plans, price lists and quotations, technical information and particulars and other information supplied by SynCardia.

 

13.1.3

Distributor shall not disclose this information to any party except in its provision of training and support to Eligible Hospitals.

 

13.2

Exceptions

 

The confidentiality obligations of Distributor under Section 3.2.6 do not extend to any Confidential Information furnished by SynCardia or SynCardia’s representatives that:

 

13.2.1

Is or becomes generally available to the public other than as a result of a disclosure by Distributor or its representatives,

 

13.2.2

Was available to Distributor or its representatives on a non-confidential basis prior to its disclosure thereto by SynCardia or SynCardia’s representatives,

 

13.2.3

Becomes available to Distributor or its representatives on a non-confidential basis from a source other than SynCardia or SynCardia’s representatives; provided, however, that such source is not bound by a confidentiality agreement with SynCardia or SynCardia’s representatives.

 

13.3

Compelled Disclosure

 

13.3.1

In the event that Distributor or its representatives are requested or become legally compelled (by oral questions, interrogatories, requests for information or document subpoena, civil investigative demand or similar process) to disclose any Confidential Information furnished by SynCardia or SynCardia’s representatives or the fact that such Confidential

 

 

Information has been made available to it, Distributor agrees that it or its representatives, as the case may be, will provide SynCardia with prompt written notice of such request(s) so that SynCardia may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement.

 

13.3.2

In the event that such protective order or other remedy is not obtained, or that SynCardia waives compliance with the provisions of this Agreement, Distributor agrees that it will furnish only that portion of such Confidential Information that is legally required and will exercise its best efforts to obtain reliable assurance that confidential treatment will be accorded to that portion of such Confidential Information and other information being disclosed.

 

14.

Relationships

 

14.1

It is understood that neither party is constituted a consultant, agent, employee, servant, partner or joint venturer of the other for any purpose whatsoever.

 

14.2

Distributor shall conduct its business in its own name and shall be solely responsible for its acts, conduct and expenses and the acts, conduct and expenses of its employees and agents.

 

14.3

Distributor is not granted and shall not exercise the right or authority to assume or create any obligation or responsibility or make any representation, including, without limitation, contractual obligations and obligations based on warranties or guarantees on behalf or in the name of SynCardia.

 

15.

Term and Termination

 

15.1

Term

 

15.1.1

This Agreement shall have an initial term commencing upon the Effective Date and, continuing in effect for Three (3) Years thereafter, unless terminated earlier under the provisions of this Section 15.

 

15.1.2

This Agreement can be renewed by mutual written agreement after Three (3) Years in one year increments.

 

15.2

Termination by SynCardia

 

15.2.1

SynCardia may terminate this Agreement in its sole discretion without cause at any time upon sixty (60) days’ written notice to Distributor if Distributor:

 

 

15.2.1.1

During this initial term, does not complete all Regulatory Filings, all TAH product approvals and introduction of T AH products into the relevant market(s).

 

15.2.1.2

Fails to provide evidence of regulatory filings and/or approvals within two (2) years from date of the Agreement.

 

15.2.1.3

Fails to establish an experienced clinical team for TAH implant support and a hospital training program within two years from date of the Agreement.

 

15.3

Termination for Failure to Pay

 

15.3.1

In the event Distributor fails to pay SynCardia under the terms and conditions of this Agreement, SynCardia shall have the right to terminate this Agreement unless paid in full within thirty (30) days of written notice.

 

15.4

Termination by Either Party

 

15.4.1

This Agreement may be terminated at any time by either party for cause or if the other party defaults in the performance of any material provision of this Agreement and such default continues for a period of thirty (30) days after notice in writing thereof; or by SynCardia if Distributor is adjudged bankrupt, makes an assignment for the benefit of creditors, has a receiver appointed, files or has filed against it a petition in bankruptcy or initiates reorganization proceedings.

 

15.5

Termination for Convenience

 

15.5.1

The Parties may terminate this Agreement upon their mutual written agreement.

 

15.6

Change in Control (CIC)

 

15.6.1

In the event of a Change in Control of SynCardia, SynCardia shall have the right to terminate this Agreement with Distributor, in accordance with the following terms:

 

15.6.1.1

SynCardia shall provide Distributor with a written notice of termination of this Agreement (the “CIC Notice”), to become effective ninety (90) days from the date of the notice (the “Notice Period”).

 

15.6.1.2

Upon effectiveness of termination pursuant to the CIC Notice, SynCardia will accept the return of any unused Products, in its original packaging with at least a one year shelf-life remaining, for credit at the original price paid by Distributor for such Products.

 

 

15.6.1.3

Distributor acknowledges that the CIC Notice and acceptance of the return of any unused Products are SynCardia’s sole obligations with respect to a termination by SynCardia in connection with a Change in Control.

 

15.7

Termination without Cause

 

15.7.1

Termination without cause shall be deemed to occur on the date SynCardia delivers written notice to Distributor that SynCardia has terminated this Agreement where such notice does not refer to the provision(s) of this Agreement giving SynCardia the right to terminate this Agreement;

 

15.7.2

In the event that SynCardia terminates this Agreement without cause, SynCardia will reimburse Distributor for:

 

15.7.2.1

Distributor’s documented actual costs (evidenced by invoices or proposals previously approved in writing by SynCardia and government stamped) paid to unrelated parties to obtain Governmental Approvals and Reimbursement (including the costs of translations, consultants and other direct cost)

 

15.7.2.2

Mutually agreed upon marketing costs incurred in the three (3) contractual months prior to the date of the termination notice; and

 

15.7.2.3

As a compensation for all lost profits an amount calculated according to the following procedure:

 

●

First, calculate the PER UNIT PROFIT for each item sold by taking the unit price for such item (provided on the Products, Prices and Terms) and (a) dividing the unit price by .80 and then (b) multiplying the result by 20%

 

●

Second, calculate the NUMBER OF ITEMS of each type sold or each item sold in the 180 day period immediately preceding the date of the termination notice.

 

●

Third, calculate the PROFIT FOR EACH ITEM for the period by multiplying the number of such items sold by the per unit profit for such item.

 

●

Finally, determine the TOTAL PROFIT for such period by adding together the sum of the Profit for each item

 

15.7.3

SynCardia’s obligations set forth in the preceding Section to reimburse Distributor or compensate Distributor for lost profits is contingent upon Distributor’s completion of all of the following preconditions to such reimbursement or compensation:

 

 

15.7.3.1

Completed the assignments required by this Agreement;

 

15.7.3.2

Completed the return to SynCardia of all Driver System Components, Products and training materials under Distributor’s control;

 

15.7.3.3

Transferred all data and records gathered by Distributor in the discharge of its duties to provide reporting to SynCardia; and

 

15.7.3.4

Notified all Hospitals served by Distributor to make future payments as directed by SynCardia and to return all Drivers and Loaned Products as directed by SynCardia.

 

15.7.4

Effect of Termination

 

15.7.4.1

Except as hereinafter provided, upon termination of this Agreement Distributor shall cease the distribution and sale of Products.

 

15.7.4.2

Distributor shall return to SynCardia all Products not purchased by Distributor but in the control of Distributor within 15 days of termination with freight and any duties and Import Costs to be paid by SynCardia.

 

15.7.5

SynCardia shall have the option to purchase from Distributor, at the invoice price Distributor paid, plus freight and duty thereon, all Products which Distributor owns and has in inventory.

 

15.7.5.1

If SynCardia does not exercise said option, Distributor may continue to sell Products it has in inventory for a period of ninety (90) days.

 

15.7.5.2

After the ninety (90) days, Distributor shall return all inventories to SynCardia.

 

16.

Miscellaneous Provisions

 

16.1

Security Interest

 

16.1.1

Insofar as permitted by the laws of the jurisdiction in which such Products are located, SynCardia shall retain a security interest in and the right to repossess all Products sold by SynCardia to Distributor pursuant to this Agreement, and the proceeds of sale thereof, including all accounts, contract rights, chattel paper, documents, receivables and insurance or other proceeds related thereto, until paid in full.

 

 

16.1.2

Upon SynCardia’s request, Distributor shall execute and deliver to SynCardia chattel mortgages, financing statements or other documents necessary to perfect SynCardia’s security interest in the Products and the proceeds of sale thereof.

 

16.1.3

Distributor shall properly notice the Certified Eligible Hospital that this Security Interest is in effect and provide SynCardia with a copy of the label, notice or agreement.

 

16.2

Government Reports and Filings

 

16.2.1

Each party agrees to promptly make all reports to and filings with governmental agencies required by applicable laws, rules and regulations and to use its best efforts to obtain all approvals, licenses, permits and permissions with respect to its or their operations pursuant to this Agreement.

 

16.2.2

The parties shall exchange such documents and approvals promptly upon filing or receipt.

 

16.2.3

Distributor shall bear all costs of the filings of reports and the obtaining the approvals, licenses, permits and permissions required by governmental authorities in the Territory.

 

16.2.4

SynCardia shall bear all costs of the filings of reports and the obtaining the approvals, licenses, permits and permissions required by other governmental authorities.

 

16.2.5

Each party shall cooperate with and assist the other in making such filings and reports and in obtaining such approvals, licenses, permits, permissions and certifications.

 

16.3

Force Majeure

 

16.3.1

If either party is unable to carry out its obligation under this Agreement, either wholly or in part, for a period of ten consecutive days as a result of acts of God, strikes, lockouts, or other industrial disturbances, wars, blockades, embargoes, insurrections, riots, acts or orders of government, explosions, fires, floods, perils of the sea, or any other cause not within the control of the party claiming relief from any of the requirements of this Agreement, and which by exercise of due diligence said party is unable to prevent or overcome, the party so failing shall give written notice and full particulars of such cause or causes to the other party as soon as possible

 

 

after the occurrence of any such cause, and thereupon such obligations shall be suspended during the continuance of such hindrance, which, however, shall be remedied with all possible dispatch, and the obligations, terms and conditions of this Agreement shall be extended for such period as may be necessary for the purpose of making good any suspension so caused. If such hindrance shall last for three (3) consecutive months or more, either party, by notice in writing to the other, may terminate this Agreement.

 

16.4

Applicable Law

 

16.4.1

This Agreement shall be construed in accordance with the laws of SynCardia’s country of domicile.

 

16.4.2

Any legal proceedings instituted against the Distributor by SynCardia shall be brought in the courts of the Distributor’s country of domicile.

 

16.4.3

Any legal proceedings against SynCardia by the Distributor shall be brought in the courts of SynCardia’s country of domicile and

 

16.4.4

For the purposes of such proceedings, the law governing this agreement and such proceedings shall in each case be deemed to be the law of the country in which the relevant proceedings have been instituted in accordance with this clause.

 

16.4.5

For the purpose of proceedings brought against it by the other Party under this clause each Party agrees to submit to the jurisdiction of the courts of the other Party’s country of domicile.

 

16.5

Dispute Resolution

 

16.5.1

The parties shall exercise their best efforts to settle between themselves in an amicable way any dispute which may arise out of or in connection with this Agreement.

 

16.5.2

If SynCardia terminates this Agreement with Distributor, during the time period of the dispute resolution process, SynCardia may appoint a temporary Distributor to provide product to Eligible Hospitals within the Territory to ensure an uninterrupted supply. If SynCardia does appoint a temporary Distributor, then the arbiter(s) will be notified and may take this into consideration when deciding on an arbitral award.

 

16.5.3

Any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination, shall be settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce (the “Rules”) (as modified by this Section 16.5.3).

 

 

16.5.3.1

The number of arbitrators shall be one if both parties agree on the arbitrator. If there is a disagreement on selection of a sole arbitrator, the number of arbitrators then shall be three (3), with the arbitrators to be appointed in accordance with the Rules.

 

16.5.3.2

The place of arbitration shall be in Tucson, Arizona, U.S.A., at any site agreed upon.

 

16.5.3.3

If there is no agreement on the site, the place of arbitration in Tucson shall be selected by the arbitrator(s).

 

16.5.3.4

The arbitral award shall be rendered in writing and shall state the reasons for the award.

 

16.5.3.5

Judgment upon the award rendered by the arbitrator or arbitrators may be entered in any court having jurisdiction thereof, and shall be binding on the parties hereto.

 

16.5.3.6

The costs of arbitration, including reasonable attorneys’ fees and costs, shall be borne by either or both of the parties in whatever proportions the arbitrator or arbitrators may award.

 

16.6

Prohibitions

 

16.6.1

If any provision of this Agreement is prohibited by or under the laws of any jurisdiction in which this Agreement may be used or to which it may be applicable, said provision shall be, as to said jurisdiction, ineffective to the extent of such prohibition, without invalidating thereby any of the remaining provisions of this Agreement.

 

16.7

Entire Agreement

 

16.7.1

This Agreement, including any written amendments or addenda signed by the Parties, evidences the entire agreement of the parties and supersedes and cancels all prior discussions, agreements and understandings with respect to the subject matter hereof between the parties, written, oral or implied.

 

16.8

Assignment

 

16.8.1

This Agreement may not be assigned by either party except with the other party’s written consent; provided, however, that SynCardia may assign this Agreement to a SynCardia subsidiary presently existing or hereafter established.

 

 

16.9

Notices

 

16.9.1

Any notice required or contemplated by this Agreement shall be in writing, delivered in person, by facsimile or by registered mail with return receipt requested, addressed to the parties at their addresses hereinafter set forth, or at such other address as may from time to time be substituted therefor by notice in writing sent by the party changing its address and shall be effective upon receipt of the party to which it is addressed.

 

16.10

Non-Waiver and Amendment

 

16.10.1

Failure by either party to enforce or take advantage of any provision here of shall not constitute a waiver of the right subsequently to enforce or take advantage of such provision. This Agreement or any of the terms or provisions thereof may not be changed or amended or waived, in any way whatsoever, except by written agreement executed by the parties.

 

 

IN WITNESS WHEREOF, this Agreement has been executed as of the day and year first above written.

 

DISTRIBUTOR:
	By:	▇▇▇▇ ▇▇▇▇▇▇▇▇
		Its:	General Manager
SYNCARDIA:	/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
	By:	▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
		Its:	CEO & President
SYNCARDIA:	/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
	By:	▇▇▇▇▇ ▇▇▇▇▇▇▇▇
		Its:	Director of Customer Support

 

 

ADDENDUM 1 - PRICE LIST AND QUOTATION

 

[omitted]

 

 

ADDENDUM 2 - REGULATORY APPROVALS

 

Copies of the following regulatory approval documents accompany this agreement (in PDF packet) and will be updated by SynCardia throughout the term of this agreement as needed.

 

1.

Certificate to Foreign Government for the PMA approved products

 

2.

Certificate of Exportability for the 50cc TAH-t (not PMA approved)

 

3.

Declaration of Conformity for the following Devices

 

a.

50cc and 70cc TAH-t

 

b.

Freedom Driver System

 

c.

Companion 2 Driver System

 

4.

BSI certificates

 

a.

EC Design Examination Certificate - CE 665479

 

b.

EC Certificate - Full Quality Assurance- CE 665477

 

c.

Certificate of Registration - ISO 13485:2003 - MDSAP 65377

 

 

ADDENDUM 3 - SYNCARDIA CATALOG

 

 

 

 

 

 

 

 

 

 

 

ADDENDUM 4 - PRODUCT AND SHIPPING LABEL IMAGES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ADDENDUM 5 - DISTRIBUTOR CERTIFICATE

 

 

 

ADDENDUM 6 - CERTIFICATE OF INSURANCE (COI)