**Exhibit 99.1**

 

**NOTE:CONFIDENTIAL TREATMENT HAS BEEN OBTAINED OR REQUESTED AS TO CERTAIN PORTIONS OFTHIS DOCUMENT.  WHENEVER CONFIDENTIALINFORMATION IS OMITTED HEREIN, SUCH CONFIDENTIAL INFORMATION HAS BEEN SUBMITTEDSEPARATELY TO THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FORCONFIDENTIAL TREATMENT.**

 

**MCKESSONMEDICAL-SURGICAL INC. DISTRIBUTION AGREEMENT**

 

ThisDistribution Agreement (***“Agreement”***)is made and entered into as of the 5th day of August, 2005 (***“Effective Date”***), by and betweenMcKESSON MEDICAL-SURGICAL INC., having its principal place of business at 8741Landmark Road, Richmond, Virginia 23228 and any affiliated companies designatedby McKesson Medical-Surgical Inc. to participate under this Agreement (***“Buyer”***), and between CandelaCorporation, a Delaware corporation, having its principal place of business at530 Boston Post Road, Wayland, MA 01778-1886 USA (***“Seller”***).

 

Inconsideration of the mutual covenants contained in this Agreement, and forother good and valuable consideration, the sufficiency of which is acknowledgedby both parties, the parties above agree as follows:

 

1.             **Appointment**.  Subject to the terms and conditions set forthherein, Seller appoints Buyer as its exclusive distributor in the United Statesof all products of Seller set forth on Exhibit A (the ***“Products”***), and Buyer accepts suchappointment.  Buyer shall have the right (i) tomarket, distribute and sell the Products on an exclusive basis in the UnitedStates except for the following specialties and markets—hospitals, dermatology,plastic surgery, spa, medispa (any spa employing a medical director),electrology, government organizations, rental companies, third-party resellersand/or Candela Franchise Customers (as defined below) (the restricted area and marketsshall be referred to as the ***“Restricted Territory”*** and the permitted area andmarkets of distribution for Buyer shall be referred to as the ***“Territory”***) and (ii) todistribute and sell the Products on a non-exclusive basis in the United Stateswithin the Restricted Territory to Buyer’s customers (unless such customers areexisting customers of Seller or have already engaged in the sales process withSeller in the previous twelve (12) month period, including but not limited tohaving expressed interest in Seller’s Product, received a Productdemonstration, requested a purchase proposal, received a purchase proposal orquotation from Seller or issued a purchase order) upon Seller’s prior writtenconsent.  Seller agrees that it shall notsell, lease, market or otherwise distribute the Products to any person orentity other than Buyer (including directly to end-user customers) within theTerritory other than to market the Products within the Territory on Buyer’sbehalf as described in this Agreement. Such exclusive appointment shall be in effect for a period of three (3) yearsfollowing the Effective Date (the “***Term***”) andshall continue automatically in effect for successive terms of one (1) yeareach until terminated pursuant to the terms of this Agreement or unless eitherparty provides at least ninety (90) days prior written notice to the otherparty prior to the end of the then current term of its election to terminatethe Agreement.  The parties agree thatBuyer shall have the right to sell to its customers extended service warrantieson the Products, to the extent that Seller offers such extended warranties,provided such extended warranty sale occurs simultaneously with the initialsale of the Product.  ***“Candela Franchise Customers”*** meancustomers of Candela that do not primarily engage in the practice of medicine,such as Ideal Image.

 

Commencing on that day which is one hundreddays after the Effective Date, Buyer agrees that it shall not purchase, market,distribute or sell similar competing laser and light-based products (limited toany light-based device that is used to provide primarily aesthetic treatmentincluding but not limited to intense pulsed light and LED devices) to Seller’sProducts (the “***Competing Products***”) duringthe term of this Agreement, provided that such restriction shall not apply andBuyer shall have the right to purchase Competing Products from other vendorswithout limitation and/or terminate this Agreement if (a) one of theevents set forth below occurs and Seller fails to cure the violation ornon-compliance described therein within the applicable time period indicatedbelow or (b) one of the events set forth below occurs, but Seller cureseach such violation or non-compliance more than one time in any Contract Year

 

----

 
| **EVENT**                                                                                                                                                                                                                                                                                                                                        | ** ** | **CURE PERIOD**                                                          | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------|------------|
| Violation of  Section 3(a), (e), (f), (h) or (i)                                                                                                                                                                                                                                                                                       |       | None, other  than 3(h(iii) which will have a cure period of 90 days |       |
|                                                                                                                                                                                                                                                                                                                                             |       |                                                                     |       |
| Violation of  Section 3(b), (d) or (g)                                                                                                                                                                                                                                                                                                 |       | 45 days                                                                  |       |
|                                                                                                                                                                                                                                                                                                                                             |       |                                                                     |       |
| Seller’s  failure to meet any Seller obligation under the Plan                                                                                                                                                                                                                                                                              |       | 30 days                                                                  |       |
|                                                                                                                                                                                                                                                                                                                                             |       |                                                                     |       |
| Any Product  is defective or not performing due to a manufacturer’s defect or failure to  meet specifications                                                                                                                                                                                                                               |       | 30 days                                                                  |       |
|                                                                                                                                                                                                                                                                                                                                             |       |                                                                     |       |
| Any Product  fails to meet applicable federal or state legal or regulatory requirements;                                                                                                                                                                                                                                                         |       | 60 days                                                                  |       |
|                                                                                                                                                                                                                                                                                                                                             |       |                                                                     |       |
| Any Product  is subject to allegations or claims of intellectual property infringement or  misappropriation of trade secrets and Buyer reasonably believes that its  continued sale of the Product will subject Buyer to liability, unless Buyer  is fully indemnified for such liability in accordance with Section 11  of this Agreement. |       | None                                                                     |       |
|                                                                                                                                                                                                                                                                                                                                             |       |                                                                     |       |
| Any Product  has been recalled and only for such Product and only for such period that  Seller has not re-introduced the Product that was subject to the recall  (provided such period is no longer than ninety (90) days)                                                                                                                       |       | None                                                                     |       |

 

In the event Buyer elects to purchase Competing Products hereunder,Seller and Buyer shall each have the right to terminate this Agreement uponninety (90) days prior written notice to the other party.

 

2.             Confidentialtreatment requested for this section.

 

3.             **Representations and Warranties**.  Seller represents, warrants and covenantsthat:

 

a.             Title to the Products will pass toBuyer free and clear of all third party liens, claims, security interests orother encumbrances.

 

b.             Seller has manufactured, packagedor is selling the Products to Buyer in compliance with all governing laws, rules andregulations.

 

c.             The Products do not and will notinfringe or violate any validly issued patent, copyright, trademark or otherexclusive right (provided that, for purposes of Section 11.1(b),the warranty set forth in this bullet shall read “The Products do not and willnot infringe or violate any patent, copyright, trademark or other exclusiveright”).

 

2

----

 

d.             That no food, drug, device orcosmetic constituting, or being part of, any shipment or other delivery now orhereafter made to Buyer or on Buyer’s order by Seller will be adulterated ormisbranded within the meaning of the Federal Food, Drug and Cosmetic Act, orwithin the meaning of any applicable state law in which the definitions ofadulteration and misbranding are substantially the same as those contained inthe Federal Food, Drug and Cosmetic Act, or will be an article which maynot, under the provisions of Sections 404 or 505 of said Act, be introducedinto interstate commerce.

 

e.             That Seller’s terms and conditionsof sale are and will be made with a complete understanding of the requirementsof the Robinson-Patman Act and that they are not in violation of the provisionsof said Act or of any other legislation.

 

f.              That no article comprising orbeing part of any shipment or other delivery now or hereafter made to Buyer oron Buyer’s order by Seller will be (a) an article that was originallydistributed as a sample not intended for resale; (b) an article thathas been obtained from or through persons not lawfully entitled to receive,possess, distribute or resell same; or (c) an article that has beenaltered, relabeled or repackaged since its initial shipment from themanufacturer or supplier thereof, unless such alteration, relabeling orrepackaging was in material compliance with all applicable law.

 

g.             That each article comprisingor being part of any shipment or other delivery now or hereafter made to Buyeror on Buyer’s order by Seller will be manufactured, sold, classified,described, packaged, marked, labeled or shipped in accordance with, and shallconform to, all applicable standards and requirements of the Prescription DrugMarketing Act, the Federal Consumer Products Safety Act, the Federal HazardousSubstances Labeling Act, the Federal Insecticide, Fungicide and RodenticideAct, the Flammable Fabrics Act, the Fair Labor Standards Act of 1938, theExplosive and Combustible Act of 1960, the Civil Rights Act of 1964, ExecutiveOrders relative to equal employment opportunity, the Fair Packaging andLabeling Act, the Occupational Safety and Health Act of 1970 and theTransportation Safety Act of 1974, as any of same have been or are amended, orany rule or regulation promulgated under any of these above-specifiedlaws.

 

h.             That neither Seller nor any of itsaffiliates, employees or contractors providing items to Buyer:  (i) have been convicted of a criminaloffense related to healthcare; (ii) are currently excluded, suspended ordebarred from participating in any federal healthcare program; (iii) areunder investigation (civil or criminal) by any federal or state enforcement,regulatory, administrative or licensing agency; or (iv) are currentlylisted on the General Services Administration List of Parties Excluded from theFederal Procurement and Non-Procurement Programs.

 

i.              The Seller shall warrant theProducts for a period of one hundred eighty (180) days from the date suchProducts are delivered to the end-user of such Products or for such longerwarranty period as Seller customarily makes available to distributors orend-users of the Products.

 

Buyerrepresents and warrants that the execution, delivery and performance of thisAgreement by Buyer does not and will not conflict with or violate, and does notand will not result in a breach of any, agreement, license, or any othercontract or written instrument related to distribution services for laser andlight-based products as defined in Section 1.

 

4.             **Seller’s Duties**.  Seller hereby agrees, as long as thisAgreement is in effect, as follows:

 

(a)   Sellershall provide to Buyer free of charge reasonable quantities of literature andother sales material in connection with the Products.  Seller shall keep Buyer well informed ofSeller’s promotional activities pertaining to the Products and shall makeavailable to Buyer training programs sponsored by Seller in connection with theProducts in accordance with Section 15.  Seller shall offer Buyer the same promotionalactivities (including without limitation, training, marketing and seminars) andat the same prices, if any, that Seller makes available to any other UnitedStates distributor of Seller.

 

(b)   Sellermust provide proof of product liability insurance coverage for all productssold to Buyer.  A Certificate ofInsurance evidencing Product Liability Insurance with broad form vendors’coverage naming Buyer and its subsidiaries as an additional insured must besubmitted prior to acceptance as a supplier of Buyer.

 

Seller shall instructits insurance agent/broker to complete a Certificate of Insurance and forwardit to:

 

3

----

 
|   |   | McKesson  Medical-Surgical Inc., |
|--------|--------|----------------------------------|
| Attn.: |   |  Supplier  Management       |
|   |   |  8741 Landmark  Road        |
|   |   |  Richmond, VA  23228        |

 

Seller shall maintain products liability insurance with minimum limitsof coverage of Five Million Dollars ($5,000,000) per claim and an aggregatelimit of Five Million Dollars ($5,000,000). The minimum coverage can be combined with an umbrella policy.  Any deductible shall be the responsibility ofSeller.

 

AdditionalInsurance Requirements:

 

•                  BlanketContractual Liability (including a sole negligence exclusion) insuring Seller’sindemnification obligations (see Section 11 herein).

 

•                  Providethirty (30) days written notice of cancellation or material change in coverage.

 

•                  Listthe name of Seller’s parent company and all subsidiaries/divisions, if any,covered by the policy.

 

•                  Seller’sinsurance policy shall be primary and not contributory to any insurance orself-insurance maintained by Buyer.

 

Seller’s policy shall beoccurrence based and not “claims made”, provided, however, that in the eventSeller can only secure claims-made insurance coverage, Seller represents,covenants, and warrants the following:

 

(a)   Sellershall continue to renew its product liability insurance for the period of six (6) yearssubsequent to the expiration date of this Agreement;

 

**(b)   The in-force product liability insuranceduring the term of this Agreement and the six (6) years subsequent to theexpiration of this Agreement shall incorporate the following provisions:**

** **

A “RetroactiveDate” of on or prior to the Effective Date of this Agreement; and

 

A 6 year extended reporting option willbe placed, if coverage is not renewed, if the option is commercially available.

 

**•**                  Seller’sinsurance agent/broker shall mail renewal Certificates of Insurance to Buyerwithin fourteen (14) days of expiration of the current policy on file to:

 

McKessonMedical-Surgical Inc.

ATTN:  Supplier Management

8741Landmark Road

Richmond,VA  23228

 

(c)   Subjectto Section 8 hereof, Seller shall promptly satisfy Buyer’s ordersfor the Products, to enable Buyer to maintain a supply of the Products sufficientto provide adequate and timely service to Buyer’s Customers as long such ordersare consistent with Buyer’s forecasted Product purchase projections asdescribed in Section 15(f).

 

(d)   Seller’spayment terms are net 30 days.

 

(e)   Whenrebates are applicable, Seller shall provide such rebates in accordance withBuyer’s standard rebate policy.

 

(f)    Basedupon mutual agreement of the specific event in question, Seller agrees toprovide demonstrations and educational seminars (including responsibility forthe travel and living expenses of Seller’s demonstration and trainingpersonnel) to Buyer and Buyer’s customers or potential customers, at Buyer’srequest.

 

(g)   AtSeller’s sole expense, Seller agrees to provide all of the installation,implementation and training services (including responsibility for the traveland living expenses of Seller’s installation, implementation and trainingpersonnel) necessary to enable Buyer’s customer to accept the Product for usein a live, non-testing operational environment within the agreed upon timeframeset forth in the applicable Buyer customer agreement.

 

4

----

 

5.             **Shipment, Risk of Loss and Title**.  All shipments of the Product shall be freightpre-paid, F.O.B. Buyer’s designated destination (including a Buyer customerlocation), unloaded to dock, with risk of loss and title to Products to pass torecipient upon acceptance of delivery by recipient at said destination, unlessotherwise directed by Buyer.

 

6.             **Defective Products**.  All Products shall be received subject torecipient’s right of inspection and rejection, which shall occur with respectto patent defects within a reasonable period of time after delivery of theProducts.  In the event that any of theProducts when delivered to recipient do not conform to Seller’s warranties asset forth in Section 3 of this Agreement or are otherwise defectiveor damaged, recipient shall notify Seller as to such condition promptly uponrecipient’s discovery of same, and shall provide Seller with a reasonableopportunity to inspect such Products. Seller shall either replace, or shall refund the invoice priceassociated with, any Products which do not conform to Seller’s warranty or areotherwise defective or damaged, upon the return of such Products toSeller.  All transportation charges forthe return of such Products shall be paid by Seller.  Payment for the Products prior to inspectionby recipient shall not constitute acceptance thereof and is without prejudiceto any and all claims that recipient may have against Seller.

 

7.             **Returned Products**.

 

7.1           **Pre-authorizedReturns for Products in Buyer’s Inventory**.  For all Products shipped directly to Buyerfor consignment or for Buyer’s inventory (the shipment of which Seller hasagreed to), Buyer shall have the right to return the affected Products toSeller and to receive a refund of the invoice price for such Products if: (i) Sellerfails to correctly fill any of Buyer’s orders for such Products, or (ii) suchProducts are discontinued and are unsalable, or (iii) such Products aresubject to an injunction or governmental order or regulation which limits themarketability of the Products in any way, or (iv) the marketability ofsuch Products is limited as a result of an act or omission of Seller (includingSeller’s notice to cease promoting, marketing, distributing and selling suchProducts pursuant to Section 11(c)), or (v) such Products arereturnable without authorization pursuant to any written agreement betweenBuyer and Seller.  Unless otherwiseagreed, Buyer shall return all Products to Seller by Seller’s catalog and/orlot numbers.  All transportation chargesresulting from the return of Products pursuant to this Subsection 7.1shall be paid by Seller.

 

7.2           **Returnsfor Products from Customers**. With respect to any Products that are shipped directly to a Buyercustomer, Buyer shall have the right to return the affected Products to Sellerand to receive a refund of the invoice price for such Products if: (i) Sellerfails to correctly fill any of Buyer’s orders for such Products, or (ii) asof the date the Product is shipped, such Products are subject to an injunctionor governmental order or regulation which limits the permitted use of theProducts in any way.  Unless otherwiseagreed, Buyer shall return all Products to Seller by Seller’s catalog and/orlot numbers.  All transportation chargesresulting from the return of Products pursuant to this Subsection 7.2shall be paid by Seller.

 

8.             **Excusable Delays**.  Seller shall not be charged with anyliability for delay or non-delivery of the Products when due to a Force MajeureEvent.  Seller shall give Buyer writtennotification of any delay due to such Force Majeure Event.  Within thirty (30) days after receipt of anysuch notification from Seller, Buyer shall instruct Seller in writing that theportion of Buyer’s order affected by such delay is either (i) affirmed,and the time for performance extended for as many days as such causes actuallyretard deliveries; or (ii) terminated. Buyer shall not be charged with failure to meet its Targeted ProductSales when due to a Force Majeure Event. Buyer shall give Seller written notification of any delay due to suchForce Majeure Event.  A **“*Force Majeure Event”*** shallmean any act of God or the public enemy, compliance with any applicable foreignor domestic governmental regulation or order, riots, labor disputes, unusuallysevere weather or any other cause beyond the reasonable control of the affectedparty.  In the event the Force MajeureEvent does not terminate or the affected party does not resume its obligationshereunder within thirty (30) days of the written notification to the otherparty of the delay, the non-affected party may elect to terminate thisAgreement without penalty.

 

9.             **Taxes**.  If Seller’s prices do not include taxesarising from the sale, delivery or use of the Products for which Seller may beheld responsible for collection of payment, either on its own behalf or that ofBuyer, then such taxes (other than income or excess profit taxes) shall be paidby Buyer to Seller upon Seller’s demand.

 

5

----

 

10.           **Use of Buyer’s Name**.  Buyer, at its option, may arrange for Sellerto affix, or Buyer may affix, Buyer’s name, address and telephone number toSeller’s packaging or literature so long as the affixed material does notobliterate or obscure any information placed thereon by Seller.  Nothing in this Agreement shall give Sellerany rights to Buyer’s name or identity.

 

11.           **Indemnification**.

 

11.1         Seller’s Indemnification.  Seller agrees:

 

(a)           To defend, indemnify and hold Buyerharmless against any claims, liability or expense incurred by Buyer, includingreasonable counsel fees, and compensatory, multiple, exemplary and punitivedamages, and fines (the “***Buyer Losses***”),alleged to have arisen through the purchase, use, sale, distribution,consumption or recall of Seller’s products, whether involving a defect in theproduct, its labeling or packaging, unless and until it is proven to be due toBuyer’s negligent handling of the products after shipment by Seller.   In any proceeding brought to enforce Seller’sobligations under this Section 11 the prevailing party shall beentitled to recover reasonable attorneys’ fees.   Seller agrees that the laws of Virginiashall apply to any such proceeding, and agrees to submit to the jurisdiction ofthe federal and state courts in Henrico County, Virginia, in any action broughtpursuant to this paragraph.   Sellerexpressly waives all claims of lack of personal jurisdiction and inconvenientforum in any such proceeding brought before that court.

 

(b)           To defend, indemnify and hold Buyerharmless against any claims, liability or expense , including reasonablecounsel fees, arising through any asserted violations of Seller’s warranties,representations and covenants herein, unless and until it is proven to be dueto Buyer’s negligent handling after shipment by Seller.

 

(c)           If Buyer’s or any end user’s use ofany Product is, or in Seller’s reasonable opinion is likely to be, enjoined dueto a claim of infringement or misappropriation of a third party intellectualproperty right, then Seller may request that Buyer cease promoting, selling,marketing or distributing the affected Product by providing Buyer with writtennotice to such effect (with a copy to Buyer’s law department) and, upon suchoccurrence, either party may terminate this Agreement.  Seller’s obligation to indemnify Buyerhereunder shall cease with respect to any such infringement or misappropriationclaim to the extent Buyer’s Losses are due to Buyer’s failure to ceasepromoting, selling, marketing or distributing the affected Product immediatelyafter receipt of Seller’s written notice prohibiting such activity.

 

11.2         Buyer’s Indemnification.  Buyer agrees to defend, indemnify and holdSeller harmless against any claims, liability or expense incurred by Seller,including reasonable counsel fees, and compensatory, multiple, exemplary andpunitive damages, and fines (the ***“Seller Losses”***),brought by a third party resulting from (i) a breach by Buyer of Buyer’swarranty under Section 3 of this Agreement, or (ii) Buyer’snegligent handling of the Products after shipment by Seller, or (iii) Buyer’sfailure to cease promoting, selling, marketing or distributing the affectedProduct upon receipt of written notice from Seller as described in Section 11.1(c),to the extent the Seller Losses are incurred as a result of such failure.

 

12.           **Termination**.  Either party hereto may terminate thisAgreement as provided elsewhere in this Agreement and as follows:

 

(a)   Uponten (10) days written notice to the other party, in the event that theother party: (i) shall fail to perform any of the obligations in thisAgreement (unless such failure is caused by a material act or omission by theother party) and such failure shall continue for a period of thirty (30) daysafter written notice thereof; or (ii) shall become insolvent, file avoluntary petition under any law relating to bankruptcy or insolvency, or shallbecome unable to pay its debts when due.

 

(b)   Followingthe termination of this Agreement by either party and in the event Buyer hasProducts in its inventory with Seller’s authorization, Buyer shall have theright to sell (i) any remaining inventory of the Products or, at Seller’soption, Seller may within thirty (30) days from the date of termination,repurchase, at Buyer’s cost, Buyer’s remaining inventory of Products (***“Remaining Inventory”***).  If Seller does not repurchase the RemainingInventory as provided above, then Buyer shall remain an authorized distributorof Seller’s Products until all of the Remaining Inventory is sold by Buyer andSeller shall support Buyer’s efforts to sell the Remaining Inventory.

 

(c)   BuyerLead and Customer Protection.  Forthe six (6) month period subsequent to termination or expiration of thisAgreement, the parties agree that Seller shall not, directly or indirectly,market, sell, or distribute any Product to, or in any way initiate discussionswith, any Interested Customer.  An “***Interested Customer”*** shall mean acustomer or potential customer of Buyer that had expressed interest inacquiring a Product (whether such interest was expressed through a request fora purchase proposal, receipt of a quotation from Buyer, or the issuance of a

 

6

----

 

purchase order) prior to thetermination or expiration date of this Agreement.  A list of such “Interested Customers” shallbe provided to the Seller at the time of termination with evidence of thosecustomers fulfilling the requirements of “Interested Customers” as definedabove.

 

13.           **Confidentiality**.

 

(a)           ConfidentialInformation.  As used herein, ***“Confidential Information”*** shallmean any information relating to the business of the disclosing party which thedisclosing party has marked as “confidential,” designated as confidential inthis Agreement or, in the case of oral information, has identified asconfidential in writing to the receiving party within thirty (30) days ofdisclosure.  Notwithstanding the foregoing,information which is orally or visually disclosed to the receiving party by thedisclosing party, or is disclosed in writing without an appropriate letter,proprietary stamp or legend, shall constitute Confidential Information if itwould be apparent to a reasonable person, familiar with the disclosing party’sbusiness and the industry in which it operates, that such information is of aconfidential or proprietary nature, the confidentiality of which is importantto the disclosing party.  The pricing andpricing terms in this Agreement and any other agreement between Seller and aMcKesson Corporation company shall be deemed “Confidential Information” ofMcKesson.  Notwithstanding anything tothe contrary in this Section 13, Confidential Information shall notinclude:

 

i.              informationthat is approved for public release by the written authorization of thedisclosing party;

 

ii.             informationthat was disclosed to the receiving party by a third party having the legalright to make such disclosure, or which the receiving party can establish wasin its lawful possession prior to its receipt thereof from the disclosingparty;

 

iii.            informationthat is in the public domain prior to the receiving party’s receipt thereoffrom the disclosing party, or which subsequently becomes a part of the publicdomain other than by the receiving party’s negligence or wrongful act; or

 

iv.            informationthat the receiving party can establish was independently developed withoutbreach of this Agreement or use of Confidential Information.

 

(b)           Non-disclosure.  Each party: (i) shall not disclose Confidential Information of the other partyto any third party without first obtaining the express written permission ofthe disclosing party (other than to a subcontractor engaged to perform some orall of the services hereunder, which subcontractor shall be bound bysubstantially similar confidentiality provisions); (ii) shall useConfidential Information of the other party only as is necessary to fulfill itsobligations pursuant to this Agreement and with respect to Buyer to providedistribution services to its customers; and (iii) shall limit suchdisclosure to any of its officers, employees or agents on a need-to-know basisfor purposes of fulfilling its obligations under this Agreement and withrespect to Buyer to provide distribution services to its customers.  Notwithstanding the foregoing, ConfidentialInformation of the other party may be disclosed pursuant to a subpoena or courtorder, provided that the receiving party gives prompt notice to the disclosingparty that it intends to make such disclosure so that the other party can takeany appropriate steps it deems necessary to limit the extent of such disclosureor to seek protection of such disclosure.

 

(c)           Effectof Termination.  Upon termination ofthis Agreement, each party shall return to the other party or destroy anyConfidential Information of the other party and provide a written verificationof such return or destruction.  Eachparty’s obligation to maintain the confidentiality of Confidential Informationshall survive for a period of three (3) years following expiration ortermination of this Agreement.  Thereceiving party may retain one (1) copy of Confidential Information forits legal archives, provided that such Confidential Information shall remainsubject to the provisions of this Agreement unless and until the ConfidentialInformation is returned to the disclosing party.

 

14.           **Literature/CatalogProgram**.  Seller shallprovide to Buyer’s sales representatives adequate Product catalogs, Productliterature, and Product matrix charts comparing the Products with competingproduct lines to enable Buyer’s sales representatives to present the Product toits customers.

 

7

----

 

15.           **AdditionalDuties.**

 

(a)   SellerQualified Personnel.  Seller agreesto maintain a sufficient and qualified sales force to support the sales effortof Buyer in the Territory.  Sellerfurther agrees to maintain the necessary and qualified field service andclinical personnel to support the on-going operation of the Products sold byBuyer to its customers.

 

(b)   SellerTraining.  Seller will train thedesignated Buyer personnel at mutually agreed upon times.  The costs of such trainings shall be mutuallyagreed upon by the parties.  The partiesagree to participate in MDSI’s EOL1.  Thefees and costs associated with the production and implementation of an EOLtraining module shall be mutually agreed upon by the parties, provided thatSeller will receive those discounts Buyer negotiates on behalf of Seller forSeller’s EOL training module.  To enableSeller to conduct training and education for Buyer personnel on the Products,Buyer agrees to invite Seller to participate in applicable national, regional,and local meetings, at Seller’s cost, and to attend AVP conference calls.  Buyer agrees to cause its applicable salesmanagers to participate in active on-site Product training with the applicableSeller representatives.

 

(c)   Marketing.  Seller and Buyer agree to jointly support andinvest in efforts to promote Products. These marketing efforts include, but are not limited to: (i) Buyersales representative compensation for Product sales, (ii) qualityliterature and sales tools, (iii) advertising, (iv) national andregional sales meetings, (v) telesales efforts, (vi) conventions, (vii) workshops,(viii) lead generation, (ix) sales tracking information and (x)Product discounts.  Such marketingefforts (including designation of the responsible party) will be documented andagreed to by the parties at the beginning of each Contract Year.

 

(d)   MutualPlan.  At least ninety (90) daysprior to the commencement of any Contract Year (and immediately after theEffective Date for the first Contract Year), Seller and Buyer shall mutuallyagree upon a plan (the ***“Plan”***)that describes in detail each party’s obligations for the subsequent ContractYear pursuant to Sections 4(a), (b), (c), (f), (g) and 15(a), (b) and(c) of the Agreement (by way of example only, a plan that provides adetailed description of Seller’s obligation to maintain sufficient andqualified sales force and a detailed description of what constitutes Buyer’sobligation to undertake telesales efforts).

 

(e)   Liaison.  Both parties agree to identify an initialpoint of contact at each party to discuss any contractual or Product issues,and to initiate the resolution of such issues.

 

(f)    Confidentialtreatment requested for this section.

 

16.   **Miscellaneous**.

 

(a)   Therelationship between the parties hereto shall be that of independentcontracting parties.  Under nocircumstances will either party hereto act or attempt to act, or representitself, directly or indirectly, as an agent of the other party hereto except ascontemplated herein.

 

(b)   ThisAgreement and the transactions provided for herein are to be governed by andconstrued in accordance with the laws of the State of New York without anypresumption or construction against the party causing this Agreement to bedrafted.

 

(c)   ThisAgreement embodies the entire agreement and understanding between the parties heretoand supersedes all prior agreements and understandings relating to the subjectmatter hereof.  No subsequently deliveredinvoice, purchase order, acknowledgment, confirmation, standard terms andconditions or similar document, whether submitted in writing, electronically,or via fax, containing terms inconsistent herewith shall be effective to amendor modify this Agreement unless such document expressly states the intention todo so and is signed by both parties hereto.

 

(d)   ThisAgreement shall be binding upon and inure to the benefit of and be enforceableby the respective successors and assigns of the parties hereto.  This Agreement may not be assigned in wholeor in part by either party hereto, except with the written consent of the otherparty, which consent may not be unreasonably withheld; and

 

(e)   Allnotices, requests, demands and other communications called for or contemplatedherein shall be made in writing and shall be deemed to have been duly given whenpersonally delivered, when sent to Buyer’s President with a copy to the LawDepartment and mailed by certified mail return

 

8

----

 

receipt requested or byovernight mail with a recognized national carrier to the address shown on thefirst page of this Agreement, or such other address as the party maydesignate in writing, or when transmitted to the other party by facsimile.

 

By signing below, the Seller’s representative acknowledges that Buyer’sDistribution Agreement terms and conditions have been read, understood and thatSeller will comply with all of the terms and conditions and policies andprocedures outlined in this document, as amended or supplemented from time totime by Buyer.

 

**The information and representations providedherein by Seller are correct and apply to all merchandise, whether ordered fromSeller, Seller’s agents, subsidiaries or divisions and may be relied and actedupon by Buyer and its subsidiaries or divisions engaged in the distribution ofmedical-surgical or pharmaceutical products. This Distribution Agreement does not constitute an order and no ordersare issued by Buyer or any of Buyer’s distribution centers, except on regularnumbered order blanks.  The contractresulting from the issuance of such orders and acceptance thereof by Seller forproducts Seller now or hereafter distributes through Buyer shall be deemed toincorporate and be made in consideration of Seller’s undertakings in thisdocument.**

 

IN WITNESS WHEREOF, the parties hereto have duly executed thisAgreement as of the day and year first above written.

 
| (***“Buyer”***)       | ** ** | ** (*“Seller”*)** |
|---------------------------------|------------|----------------------------------|
| MCKESSON  MEDICAL-SURGICAL INC. | ** ** | CANDELA  CORPORATION             |
|                            |       |                             |
|  By:                       |       |  By:                        |
|                            |       |                             |
|  Title:                    |       |  Title:                     |
|                            |       |                             |
|  Date:                     |       |  Date:                      |

 

9

----

 

**EXHIBIT A**

 

Confidential treatment requested for this section.

 

**EXHIBIT B**

 

Confidential treatment requested for this section.

 

10

----