exv10w23



 




[NOTE:
CERTAIN PORTIONS OF THIS DOCUMENT HAVE BEEN MARKED TO INDICATE THAT
CONFIDENTIAL INFORMATION HAS BEEN OMITTED. CONFIDENTIALITY HAS BEEN
REQUESTED FOR THIS CONFIDENTIAL INFORMATION. THE CONFIDENTIAL
PORTIONS HAVE BEEN PROVIDED SEPARATELY TO THE SECURITIES AND EXCHANGE
COMMISSION]



Exhibit 10.23




FUKUDA
DENSHI CO. LTD. AND ENDOSONICS CORPORATION




JAPANESE DISTRIBUTION AGREEMENT




     THIS AGREEMENT (“Agreement”), effective on the Effective Date (defined below), is made and
entered into between EndoSonics Corporation, a Delaware corporation, with its principal offices at
2870 Kilgore Road, Rancho Cordova, California 95670, U.S.A. (hereinafter referred to as
“EndoSonics”), and Fukuda Denshi Co., Ltd., a corporation of Japan, with its principal offices at
3-39-4 Hongo, Bunkyo-ku, Tokyo 113, Japan (hereinafter referred to as “Fukuda”).



     In consideration of the mutual promises contained herein, the parties agree as follow:



1. DEFINITIONS




     A. “Act” shall mean any act, statute, or regulation of any kind governing the products in the
U.S.A. including the Federal Food, Drug and Cosmetic Act (21 U.S.C. Sections 301 392 (1993)).



     B. “Best Efforts” shall mean every necessary and prudent effort of a party applied in a
prompt, commercially reasonable manner, to the maximum extent reasonably allowed by such party’s
available financial resources, taking into account all of such party’s business commitments for such
financial resources.



     C. “Cardiometrics Products” shall mean those guidewire based products for physiological
testing such as WaveWireTM and FloWireTM adapted to be utilized
on the In-VisionTM System.



     D. “Effective Date” shall mean August 31, 1998.



     E. “EndoSonics Products” shall mean all products for use with the ultrasound imaging systems
developed by EndoSonics during the term of this Agreement and available for sale during the term of
this Agreement.



     F. “QSR’s” shall mean the good manufacturing practices for medical devices set forth by any
Act governing the products in the U.S.A. including United States 21 C.F.R. Section 820 (1993).



     G. “IVUS Products” shall mean those EndoSonics intravascular ultrasound products listed in
Exhibit “A” attached hereto and all successor products thereto. IVUS Products may be changed,
abandoned or added by EndoSonics, at its sole discretion, provided that EndoSonics gives one
hundred twenty (120) days’ prior written notice to Fukuda.



     H. “Sites” shall mean a hospital or other medical facility in the Territory wherein the IVUS
Products can be used.



 









 





     I. “Territory” shall mean the country of Japan.



2. APPOINTMENT AND AUTHORITY OF FUKUDA




     A. Appointment. Subject to the terms and conditions set forth herein, EndoSonics
hereby appoints Fukuda as EndoSonics’ exclusive distributor for the IVUS Products in the Territory
for the period commencing January 1, 2000 until June 30, 2007; provided, however, for the period
from January 1, 2000 until December 31, 2001, Johnson & Johnson Medical KK (“JJMKK”) shall be
entitled to promote and sell the IVUS Products solely to JJMKK’s Sites. The parties hereto shall
determine JJMKK’s Sites and other terms and conditions for the supply to JJMKK by Fukuda on or
before December 31, 1999. Subject to the terms and conditions set forth herein, Fukuda hereby
accepts such appointment.



     Subject to the terms and conditions of this Agreement, EndoSonics shall not appoint any other
distributor, sales agent or other representative concerning the IVUS products in the Territory
during the term of this Agreement.



     B. Transition of Distribution. Fukuda hereby acknowledges that EndoSonics and JJMKK
are parties to that certain Exclusive Distribution Agreement dated June 1, 1998 (“JJMKK Agreement”)
whereby JJMKK has exclusive distribution rights to certain IVUS Products in the Territory.
EndoSonics agrees to terminate the JJMKK Agreement no later than January 1, 2000. EndoSonics, as
per Fukuda’s request, will keep Fukuda advised in regard to the termination of the JJMKK Agreement.
In addition, EndoSonics will use
Best Efforts to: (i) assist Fukuda in gaining rights to distribute to additional Sites other than
the 82 Sites specified in that certain Distribution Transition Agreement between Fukuda and
EndoSonics effective March 1, 1997 (“Distribution Transition Agreement”) as soon practical before
January 1, 2000; and (ii) extend to December 31, 1999 the rights of Fukuda pursuant to the
Distribution Transition Agreement to continued distribution of the IVUS Products already installed
by Fukuda as of the Effective Date.



     C. Other Product Rights. EndoSonics hereby grants Fukuda a right of first refusal or
right of first negotiation for the exclusive distribution of Cardiometrics Products by Fukuda in
the Territory after December 31, 1999, provided that the Cardiometrics Products are functionally
compatible with the In-VisionTM System at such time. In addition, EndoSonics hereby
grants Fukuda a right of first refusal for the distribution of all EndoSonics Products after
December 31, 1999 to the extent that EndoSonics may grant to Fukuda such rights. With respect to
all EndoSonics Products where Fukuda has the right of first refusal hereunder, EndoSonics shall
deliver written notice (“Notice”) to Fukuda should EndoSonics desire to appoint a distributor in
the Territory for such product. The parties shall negotiate in good faith an agreement for the
distribution of such product for a period of no more than sixty (60) days after Fukuda receives
such Notice. If the parties agree not to enter into a written agreement within sixty (60) from the
receipt of the Notice by Fukuda, then EndoSonics shall be free to enter into an agreement with a
third party for the distribution of such product in the Territory, but the terms and conditions are
substantially the same as those previously declined by Fukuda. EndoSonics agrees that it will not
appoint any distributor for any EndoSonics Products in the Territory on or before December 31, 1999
which may effect Fukuda’s right of first refusal granted hereunder.



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     D. Use of Trademarks. EndoSonics hereby grants to Fukuda a non-exclusive license to
use the EndoSonics’ Trademarks (defined herein below) for the purpose of identifying and marketing the
products in the Territory. Any use of the EndoSonics’ Trademarks will be in accordance with such
instructions as EndoSonics may give Fukuda from time to time.
EndoSonics shall, at its expense,
             use
reasonable efforts to protect and maintain all registration, filings and issuance
of EndoSonics’ Trademarks in full force and effect.



     E. Fukuda Trademarks. EndoSonics shall not, without the prior written consent of
Fukuda in each instance, use in any manner whatsoever, Fukuda’s name, its trademarks, logos,
symbols or other images of Fukuda or of any party affiliated therewith.



     F. Territorial Limitation. Fukuda shall not, without the prior written consent of
EndoSonics: (i) promote, advertise, sell, distribute the IVUS, EndoSonics and Cardiometrics
Products in any country outside the Territory; (ii) cause, directly or indirectly, the importation
of the Product into any country outside the Territory; nor (iii) establish a repair or maintenance
facility in any country outside the Territory.



     G. Conflict of Interest. Commencing on January 1, 2000, Fukuda shall use its Best
Efforts in the promotion and sale of the IVUS Products and all other products to which it acquires
exclusive distribution rights hereunder, and Fukuda will not promote, advertise, sell nor
distribute directly or indirectly and products competitive to the IVUS Products or any other
products to which it acquires exclusive distribution rights hereunder.



     H. Independent Contractors. The relationship of EndoSonics and Fukuda established by
this Agreement is that of independent contractors, and nothing contained in this Agreement shall be
construed to (i) give either party the power to direct and control the day-to-day activities of the
other or (ii) allow either party to create or assume any obligation on behalf of the other party
for any purpose whatsoever. All financial obligations associated with each party’s business are the
sole responsibility of such party. All sales and other agreements between Fukuda and its customers
are Fukuda’s exclusive responsibility and shall have no effect on EndoSonics’ obligations under
this Agreement. EndoSonics shall be solely responsible for, and shall indemnify and hold Fukuda
free and harmless from, any and all claims, damages or lawsuits (including attorneys’ fees) arising
out of the acts of EndoSonics, its employees or its agents. Fukuda shall be solely responsible for,
and shall indemnify and hold EndoSonics free and harmless from, any and all claims, damages or
lawsuits (including attorneys’ fees) arising out of the acts of Fukuda, its employees or its
agents.



3. TERMS OF PURCHASE OF PRODUCTS BY FUKUDA




     A. Terms and Conditions. All purchases of IVUS Products by Fukuda from EndoSonics
during the term of this Agreement shall be subject to the terms and conditions of this Agreement.



     B. Prices. All prices are F.O.B. EndoSonics’ plant. This purchase price to Fukuda for
each of the IVUS Products (“Purchase Price”) are set forth on Exhibit “A” hereto, as such




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Purchase Prices shall be amended from time to time during the term of this Agreement by mutual
agreement of the parties.




     The prices may be revised from time to time through consultation between EndoSonics and Fukuda,
taking into account the then prevailing market prices of the similar products. Such revisions
shall apply to all orders received after the effective date of revision. Price increases shall not
affect unfulfilled purchase orders accepted by EndoSonics prior to the effective date of the price
increase.



     C. Taxes. The amounts payable by Fukuda under Section 3 are exclusive of all taxes and
government charges (including, without limitation, interest and penalties) payable to Japanese
government, if any. If Fukuda is required to withhold any taxes on amounts payable to EndoSonics in
accordance with this Agreement, pursuant to the laws and regulations of Japan, Fukuda shall
compensate EndoSonics for any such withholding by paying EndoSonics an additional amount equal to
such amount withheld. Nothing in this Section 3.C. shall be construed to mean that Fukuda is
responsible for taxes and charges (including, without limitation, interest and penalties ) to the
federal or state government of the U.S.A. which are imposed on EndoSonics.



     D. Order and Acceptance. All orders for IVUS Products submitted by Fukuda shall be initiated
by written purchase orders sent to EndoSonics and requesting a delivery date during the term of
this Agreement; provided, however, that an order may initially be placed orally or by facsimile if
a confirmational written purchase order is received by EndoSonics
within ten (10) days after said
oral or facsimile order. To facilitate EndoSonics’ production scheduling, Fukuda shall use
reasonable commercial efforts to submit purchase orders to EndoSonics at least sixty (60) days
prior to the first day of the requested month of delivery. No order shall be binding upon
EndoSonics until accepted by EndoSonics in writing, and EndoSonics shall have no liability to
Fukuda with respect to purchase orders that are not accepted. EndoSonics shall notify Fukuda of the
acceptance or rejection of an order and of the assigned delivery date for accepted orders within
ten (10) days of receipt of the purchase order, if not rejected
within such period of ten (10) days, the order shall be deemed accepted. EndoSonics will use its Best Efforts, consistent
with its obligations to other similarly-situated customers, to process and ship all orders in
accordance with requested delivery dates by Fukuda.



     E. Terms of Purchase Orders. Fukuda’s purchase orders submitted to EndoSonics
from time to time with respect to IVUS Products to be purchased hereunder shall be
governed by the terms of this Agreement, and nothing contained in any such purchase
order shall in any way modify such terms of purchase or add any additional terms or
conditions.



     F. Payment. EndoSonics shall submit an invoice to Fukuda upon each shipment of IVUS
Products ordered by Fukuda. The invoice shall cover Fukuda’s purchase price for the IVUS
Products in a given shipment plus any freight, taxes or other applicable costs initially
paid by EndoSonics but to be borne by Fukuda. Payment shall be made in U.S. dollars and
payment shall be by wire transfer, check or other instrument approved by EndoSonics.
Payment terms shall be the full invoiced amount due for payment received by EndoSonics
within sixty (60) days of the date of the invoice. Fukuda may take a two (2) percent
discount as a reduction of the invoice



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price if payment is received by EndoSonics within fifteen (15) days of the date of
invoice. Any invoiced amount not received within sixty (60) days of the date of invoice shall be
subject to a
service charge of one and a half percent (1.5%) per month or such lesser percentage permitted by
applicable law.




     G. Shipping. All IVUS Products delivered pursuant to the terms of this Agreement
shall be suitably packed for air freight shipment in EndoSonics’ standard shipping cartons,
marked for shipment at Fukuda’s address set forth above or any other address in the Territory
as Fukuda indicates, and delivered to Fukuda or its carrier agent F.O.B. EndoSonics’
manufacturing plant, at which time title to such IVUS Products and risk of loss shall pass to
Fukuda. Unless otherwise instructed in writing by Fukuda, EndoSonics shall select the carrier.
All freight, insurance, and other applicable expenses, as well as  any special packing
expense, shall be paid by Fukuda.



     H. Rejection of Products. Fukuda shall inspect all IVUS Products, except those IVUS
Products which are sterilized and sealed by EndoSonics at its plant, promptly upon receipt thereof
and may reject any IVUS Product that fails to meet the specifications set forth in EndoSonics’
current product specifications for that IVUS Product. Any IVUS Product not properly
rejected within sixty (60) days of receipt of that IVUS Product at Fukuda’s facility after customs
clearance for import (the “Rejection Period”) shall be deemed accepted. To reject an IVUS Product,
Fukuda shall, within the Rejection Period, notify EndoSonics in writing by facsimile of its
rejection and request a Return Material Authorization (“RMA”) number. EndoSonics shall provide the
RMA number in writing by facsimile to Fukuda within ten (10) days of receipt of the request.
Within ten (10) days of receipt of the RMA number, Fukuda shall return to EndoSonics the rejected
IVUS Product, freight collect, in its original shipping carton with the number displayed on the
outside of the carton. Provided that EndoSonics has complied with its obligations in this
Agreement, EndoSonics reserves the right to refuse to accept any rejected IVUS Products that do
not bear an RMA number on the outside of the carton. As promptly as possible but no later than
fifteen (15) working days after receipt by EndoSonics of properly rejected IVUS Products,
EndoSonics shall, at its expense, replace the IVUS Products and ship such replacement IVUS
Products freight prepaid.



     I. Return
of Products After Rejection Period. After the Rejection Period, EndoSonics’
Standard Limited Warranty shall be applied. For sterilized and sealed IVUS Products such as
catheters, however, EndoSonics shall replace those IVUS Products found defective with new IVUS
Products if such defects should be found within fifteen (l5) months of shipment of such IVUS
Products to Fukuda if a notice with the details of such defects is given by Fukuda to EndoSonics
within a reasonable period after Fukuda or the user has discovered defects or ought to have
discovered them. If EndoSonics tests and inspects these returned IVUS Products and determines
that such IVUS Products perform according to EndoSonics written specifications, no credit will be
given to Fukuda. If upon such test and inspections, such returned IVUS Products do not perform to
EndoSonics’ written specification, these IVUS Products will be
replaced at no cost to Fukuda
except in the case that EndoSonics proves that such defect was caused after the F.O.B. point of
shipment by EndoSonics to Fukuda.



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     J. No Time Restriction. Notwithstanding any provision herein to the contrary,
Fukuda’s rights and remedies under this Agreement or laws of the Territory shall not be subject to
any time restriction that may be imposed by any provisions of the laws of non-mandatory nature so
long as Fukuda gives notice specifying the nature of the lack of conformity within a reasonable
time after Fukuda or the user has discovered it or ought to have discovered it.



4. WARRANTY TO FUKUDA’S CUSTOMERS




     A. Standard Limited Warranty. Fukuda shall pass on to its customers EndoSonics Standard
Limited Warranty for the IVUS Products. This warranty shall cover the IVUS Products for a
period of fifteen (15) months from the date of shipment to Fukuda. This warranty is contingent
upon proper use of an IVUS Products in the application for which it was intended and does not
cover IVUS Products that were modified without EndoSonics’ approval or that were subjected by
the customer to unusual physical stress. If an IVUS Product fails to meet the warranty
provided herein, EndoSonics’ sole liability and Fukuda and/or the end-user’s sole remedy shall
be either the replacement by EndoSonics of the defective unit with another unit of the same
product (or a unit of a substantially equivalent product thereto if the original model is no
longer manufactured) or the refund by EndoSonics of the purchase price for such defective
product.



     B. No Other Warranty. EXCEPT FOR THE EXPRESS WARRANTY SET FORTH ABOVE, ENDOSONICS HEREBY
DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, BY STATUTE OR OTHERWISE, REGARDING THE
IVUS PRODUCTS, INCLUDING BUT NOT LIMITED TO THEIR FITNESS FOR A PARTICULAR PURPOSE, OR THEIR
MERCHANTABILITY. OTHER THAN FOR PUNITIVE DAMAGES, NOTHING IN THIS SECTION 4. SHALL LIMIT THE
INDEMNIFICATION OBLIGATION UNDER SECTION 8.A.
WITH RESPECT TO DAMAGE CLAIMS FOR PERSONAL INJURY AND/OR DEATH CAUSED BY DEFECT OF THE
IVUS PRODUCTS.



5. ADDITIONAL OBLIGATIONS OF ENDOSONICS AND FUKUDA




     A. Clinical Trials; Management Product Supply and Regulatory
Approvals. Fukuda agrees that it will undertake to manage, at Fukuda’s expense,
all animal trials and human clinical trials required to obtain approval from all
Japanese regulatory authorities to market in the Territory the IVUS Products and all
other products to which Fukuda acquires exclusive distribution rights under this
Agreement. Fukuda agrees to expeditiously submit for Ministry of Health and Welfare
(“MOHW”) approval for In-VisionTM System and upon receipt of such
approval, transfer the approval to the party specified by EndoSonics. Fukuda will
continue to process the existing submission for the amended Oracle 96TM 
System and transfer such approval to JJMKK in accordance with the Distribution
Transition Agreement. EndoSonics will use Best Efforts to cause JJMKK to transfer to
Fukuda all MOHW approvals held by JJMKK on products to which Fukuda acquires
exclusive distribution rights hereunder upon the termination of the JJMKK Agreement. Any
costs and expenses which exceed the amount paid by JJMKK to Fukuda




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in consideration of the transfer of the MOHW approvals from Fukuda to JJMKK will not be the
responsibility of Fukuda.




     EndoSonics agrees that it will sell products to Fukuda to conduct the animal trials and human
clinical trials for Japanese marketing approval at a fifty percent (50%) discount to EndoSonics’
regular prices to Fukuda. Payment for these products will be sixty (60) days following shipment from EndoSonics. Shipment costs will be added to invoice amounts.



     EndoSonics shall assist Fukuda in obtaining regulatory approvals and registration of the products
in the Territory by providing Fukuda with;



     (i) materials in EndoSonics possession necessary to obtain MOHW approvals and marketing approvals,
licenses, and permits;



     (ii) certificates of analysis, export and compliance;



     (iii) trademark authorizations; and



     (iv) such other information as Fukuda shall reasonably request from time to time.



     EndoSonics agrees to train Fukuda in the proper clinical use of all IVUS Products, and Fukuda
shall be responsible in turn for training their customers. Also at Fukuda’s request, EndoSonics
agrees to make arrangements to send one of EndoSonics’ major U.S. Clinical Investigator Physicians
to Japan to (i) give lectures on the use of these products and (ii) perform clinical training of
these products to Japanese physicians. Fukuda agrees to reimburse EndoSonics for all out-of-pocket
expenses for the travel of this physician to Japan.



     B. Minimum Purchases. Commencing on January 1, 2000 until the termination or expiration of
this Agreement, Fukuda commits to purchase from EndoSonics certain annual minimum quantities of
IVUS Products (“Minimums”). The Minimums for the calendar year 2000 shall be the greater of : (i)
JJMKK’s purchases of IVUS Products for the 1998 calendar year plus twenty percent (20%); or (ii)
JJMKK’s purchases of IVUS Products for the 1999 calendar year plus ten percent (10%). EndoSonics
shall provide Fukuda with sufficient documentary evidences, such as purchase orders of JJMKK, to
certify JJMKK’s purchases for the 1998 and 1999 calendar years by January 15, 2000. Fukuda shall use
reasonable commercial efforts to ensure that the annual purchase commitment is reasonably
distributed over each calendar quarter. For each calendar year after
2000, the parties shall discuss in good faith and agree upon Minimums in writing no later than six
(6) months prior to the commencement of such calendar year. If Fukuda fails to purchase the
required Minimums in any calendar year, EndoSonics may, as the sole remedy for Fukuda’s failure to
purchase the Minimums, upon thirty (30) days written notice to Fukuda, either terminate this
Agreement or render non-exclusive the distribution rights granted to Fukuda in Section 2.A.



     C. Forecasts. Within the first ten (10) days of every quarter, Fukuda shall provide EndoSonics
with a four quarter rolling forecast (“Forecast”) showing prospective orders by product model and
intended purchase order submittal date. The quantities forecasted for the first quarter of each
Forecast (“Binding Quarter”) shall be binding on Fukuda and deemed supported by a non-cancelable
purchase order. In addition, the quantities corresponding to the Binding



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Quarter of the next four quarter rolling forecast may not be less than 50% of the quantities
corresponding to the second quarter forecast of the previous Forecast.




     D. Promotion of the Products. Fukuda shall, at its own expense, use its
best efforts to promote the sale of the IVUS Products within the Territory. Such
promotion shall include, but not be limited to, preparing promotional materials in
languages appropriate for the Territory, advertising the IVUS Products in trade
publications within the Territory, participating in appropriate trade shows to the
extent Fukuda thinks fit, and directly soliciting orders from customers for the IVUS
Products.



     E. Finances and Personnel. Fukuda shall devote sufficient financial
resources, technically qualified sales personnel, and service personnel to the IVUS
Products to fulfill its responsibilities under this Agreement.



     F. Customer and Sales Reporting. Fukuda shall, at its own expense.



          (i) place the IVUS Products in Fukuda’s catalogues as soon as
possible and feature IVUS Products in any applicable trade show that it
attends to the extent Fukuda thinks fit;



          (ii) provide adequate contact with existing and potential
customers within the Territory on a regular basis, consistent with good
business practice;



          (iii) assist EndoSonics in assessing customer requirements for the
IVUS Products, including modifications and improvements thereto, in terms of
quality design, functional capability, and other features;



          (iv) submit market research information, as reasonably requested
by EndoSonics, regarding competition and changes in the market within the
Territory; and



          (v) provide EndoSonics with a report, by product type, of all
sales of IVUS Products for each quarter no later than thirty (30) days
following the end of such quarter.



     G. Import Requirements. Fukuda shall, at its own expense pay all import
licenses and permits, pay customs charges and duty fees, imposed by any Japanese
governmental authority upon or applicable to any import by Fukuda under this
Agreement, and take all other actions required to accomplish the import of the IVUS
Products purchased by Fukuda.



     H. Export Law Compliance. Fukuda understands and recognizes that the
Product and other materials made available to it hereunder may be subject to the
export administration regulations of the United States Department of Commerce and other United States government regulations, as amended from time to time, related to the export
of technical data and equipment and products produced therefrom. Fukuda agrees to
comply with all such regulations in connection with the distribution of the IVUS
Product. Fukuda agrees to cooperate with EndoSonics and to provide EndoSonics with
such reasonable assistance as is required in order to comply with the export
administration regulations of the United States. Nothing in this Section 5.H. shall be construed to require that Fukuda shall bear any cost or expense required to comply with such U.S. export regulations.








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     I. Upgrade of IVUS Products. No later than June 30, 1999, Fukuda hereby agrees to
upgrade the Oracle 96TM Systems installed as of the Effective Date to: (i)
conform to the specification for the
In-VisionTM Systems, and (ii) Include both
the ChromaFloTM and In-Line DigitalTM features. EndoSonics shall
supply to Fukuda kits required for such upgrade at the following prices:



	 	 	 	 	 
	Feature 	 	Price per Unit (U.S.$)
	Upgrade to In-VisionTM System
	 	$	10,000	 
	 	 	 	 	 
	Addition of ChromaFloTM and In-Line
DigitalTM to the In-VisionTM System
	 	$	13,000	 






     J.r In-VisionTM
System Promotional Allowances. During 1999, up
to 10 In-VisionTM Systems may be purchased by Fukuda from JJMKK for which
EndoSonics will provide promotional allowances to Fukuda. The promotional allowances
will be the amount of the difference in price between EndoSonics then current selling
price of an In-VisionTM  System to JJMKK and fifty-two thousand dollars
($52,000), but not to exceed thirty-two thousand five hundred dollars ($37,500). The
promotional allowances will be paid within thirty (30) days after the end of the 1999
calendar quarter in which Fukuda purchases the In-VisionTM Systems.


6. ADDITIONAL OBLIGATIONS OF ENDOSONICS 




     A. Supply of Sample Products and Materials. EndoSonics
shall supply Fukuda’s requirements for the IVUS Products in the Territory
consistent with the delivery schedules and the Minimums. EndoSonics shall
promptly provide Fukuda without any charges with marketing and technical
information concerning the IVUS Products as well as reasonable quantities of
brochures, instructional material, advertising literature, and other IVUS
Product data, with all such material printed in the English language.
EndoSonics agrees to discuss with Fukuda for supplying appropriate number of
sample IVUS Products or granting a fifty percent (50%) discount for
appropriate number of IVUS Products for assistance of Fukuda’s sales.



     B. Response to Inquiries. EndoSonics shall promptly
respond to all inquiries from Fukuda concerning matters pertaining to this
Agreement.



     C. Testing. EndoSonics shall test all IVUS Products
before shipment to Fukuda under U.S. FDA GMP or QSR requirements.




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     D. Delivery Time. EndoSonics shall minimize delivery time as much as possible and to fulfill
delivery obligations as committed in any acceptance.



     E. Territorial Inquiries. EndoSonics shall submit to Fukuda any inquiry originating from the
Territory rather than answering the inquiry directly.



     F. Quotations to exporters. EndoSonics shall refrain from giving quotations to exporters whom
EndoSonics knows or has reason to suspect will ship IVUS Products to the Territory.



     G. Market Information. Upon reasonable request of Fukuda, EndoSonics shall provide Fukuda with
information as to general market movement, competitors’ prices and strategies, names of EndoSonics’
major customers (users) and other information that may help Fukuda promote and sell the IVUS
Products in the Territory.



     H. Customer’s Special Requirements. In case Fukuda encounters requests from customers for special
changes or modifications on IVUS Products so that the IVUS Products meet their particular usage. In
such cases, if Fukuda deems it necessary to comply with such requirements for its market strategy,
Fukuda shall request EndoSonics to make such changes or modifications on the IVUS Products and
EndoSonics shall use its reasonable commercial efforts to meet such requirements.



     I. New Developments. EndoSonics shall inform Fukuda of new IVUS Product developments
during regularly scheduled quarterly reviews.



     J. Regulatory Reporting and Analysis of Returned Products. EndoSonics shall file, or cause to be
filed, all reports required of a manufacturer pursuant to the applicable U.S. medical device
reporting regulations. EndoSonics, as the manufacturer of the products, shall perform all failure
analysis on the products within thirty (30) days of receipt of each failed product and shall file
all reports required with the applicable U.S. regulatory agency. EndoSonics shall further cooperate
with and assist Fukuda in submitting all reports that Fukuda, as distributor of the products, may
be required to file. Fukuda shall promptly provide EndoSonics with copies of all such reports.



7. TERM AND TERMINATION




     A. Term. This Agreement shall be effective on the Effective Date and shall continue in
force through June 30, 2007, unless terminated earlier under the provisions of this
Section 7. Six (6) months prior to expiration, the parties will meet to discuss in good
faith an extension to this Distribution Agreement. Thereafter the term of the Distribution
Agreement may be renewed by mutual agreement of the parties for successive periods of two
(2) years each, provided that (i) Fukuda has fulfilled its minimum purchase obligation
agreed upon with EndoSonics on or before September 30 of each year and (ii) the parties
mutually agree to minimums for each extension year.




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     B. Termination
for Cause. If either party materially defaults in the performance any
obligation in this Agreement, then the non-defaulting party may give written notice to the
defaulting party that if the default is not cured within ninety (90) days after receipt of such
notice, the Agreement will be terminated. If the non-defaulting party gives such notice and the
default is not cured during the ninety-day period, then the Agreement shall automatically terminate
at the end of that period.



     C. Termination
for Insolvency. This Agreement shall terminate, without notice, (i) upon the
institution by or against Fukuda or EndoSonics of insolvency, receivership or bankruptcy
proceedings or any other proceedings for the settlement of debts; (ii) upon Fukuda’s or EndoSonics’
making an assignment for the benefit of creditors; or (iii) upon Fukuda’s or EndoSonics’
dissolution.



     D. Fulfillment
of Orders upon Termination. Upon termination of this Agreement, EndoSonics
shall continue to fulfill, subject to the terms of Section 3 above and if so requested by Fukuda,
all orders accepted by EndoSonics prior to the date of termination.



     E. Return
of Materials. All trademarks, trade names, patents, copyrights, designs,
drawings, formulas or other data, photographs, samples, literature and sales aids of every kind
with respect to the IVUS Products shall remain the property of EndoSonics as long as the objects
sill remain in Fukuda’s possession. Within thirty (30) days after the termination of this
Agreement. Fukuda shall prepare all
such items in its possession for shipment as EndoSonics may direct,
at EndoSonics’ expense. Fukuda
shall not make or retain any copies of any confidential items or information or any product
literature which may have been entrusted to it. Effective upon the termination of this Agreement,
Fukuda shall cease to use all trademarks, marks and trade names of EndoSonics; provided, however,
that Fukuda may continue to use such trademarks to market, distribute or sell any inventory of the
products in Fukuda’s possession at the time of such termination as permitted pursuant to Section
7.F.



     F. Inventory
on Termination. Upon termination of this Agreement due to expiration (7.A.)
Fukuda may return to EndoSonics, or its nominee, its remaining inventory which is new and unused
for credit or refund at then current selling prices or, upon mutual agreement, for a period not to
exceed one hundred eighty (180) days, sell any remaining
inventory. Upon termination due to
Fukuda’s default or insolvency (7.B., 7.C.), Fukuda at EndoSonics’ option will return its remaining
inventory which is new and unused for credit or refund at then current selling prices or for a
period not to exceed one hundred eighty (180) days, sell any remaining inventory. Upon termination
due to EndoSonics’ default or insolvency (7.B., 7.C.), Fukuda at its option will return its
remaining inventory which is new and unused for credit or refund at then current selling prices, or
for a period not to exceed one hundred eighty (180) days, sell any remaining inventory.



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     G. Limitation on Liability. In the event of termination by either party in
accordance with any of the provisions of this Agreement, neither party shall be liable to the
other, because of such termination, for compensation, reimbursement or damages on account of the
loss of prospective profits or anticipated sales or on account of expenditures, inventory,
investments, leases or commitments in connection with the business or goodwill of EndoSonics or
Fukuda. Termination shall not, however, relieve either party of obligations incurred prior to the
termination.



     H. Survival of Certain Terms. The provisions of Sections 2.F, 3.F, 4, 7,
8, 9, 10, 11 and 12 shall survive the termination of this Agreement for any reason.
All other rights and obligations of the parties shall cease upon termination of this
Agreement



8. LIABILITY COVERAGE AND LIMITATIONS




     A. Products Liability. EndoSonics agrees to carry products liability
insurance for all of its IVUS Products. This liability insurance will cover the
design, manufacture and performance of IVUS Products when these products are promoted,
sold and used by customers for uses specified in EndoSonics labeling, promotional
materials and instructions for use. Fukuda will be responsible for any liability
arising out of (1) Fukuda’s sales of IVUS Products for applications not included in
EndoSonics’ labeling, promotional material and instructions for use, (2) for liability
claims arising from Fukuda’s wrongful training of customer users, and (3) liability
claims arising from wrongful use of IVUS Products by Fukuda’s customers. EndoSonics
shall indemnify and hold Fukuda free and harmless from all costs, expenses and damages
incurred by Fukuda in connection with third party claims concerning personal injury or
death caused by a defect in the design or manufacture of an IVUS Product or a
non-conformance with EndoSonics’ then current specifications for IVUS Products
existing at the time of delivery of such IVUS Product by EndoSonics under Section 3.G.



     B. Limitation
on Liability. ENDOSONICS’ LIABILITY ARISING OUT OF THIS
AGREEMENT AND/OR SALE OF THE IVUS PRODUCT SHALL BE LIMITED TO THE AMOUNT PAID BY THE
CUSTOMER FOR THE IVUS PRODUCTS. IN NO EVENT SHALL ENDOSONICS BE LIABLE FOR COSTS OF
PROCUREMENT OF SUBSTITUTE GOODS. IN NO EVENT SHALL ENDOSONICS BE LIABLE TO FUKUDA OR
ANY OTHER ENTITY FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, OR INDIRECT DAMAGES,
HOWEVER CAUSED, ON ANY THEORY OF LIABILITY, AND NOTWITHSTANDING ANY FAILURE OF
ESSENTIAL PURPOSE OR ANY LIMITED PURPOSE OR ANY LIMITED REMEDY. OTHER THAN FOR
PUNITIVE DAMAGES, NOTHING IN THIS SECTION 8.B. SHALL LIMIT THE INDEMNIFICATION
OBLIGATION UNDER SECTION 8.A. WITH RESPECT TO DAMAGE CLAIMS FOR PERSONAL INJURY AND/OR
DEATH CAUSED BY DEFECT OF THE IVUS PRODUCTS.



9. PROPERTY RIGHTS AND CONFEDENTIALITY




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     A. Property
Rights. Fukuda agrees that EndoSonics owns all right, title and
interest in the IVUS Product lines that include the IVUS Products now or hereafter subject
to this Agreement and in all of EndoSonics’ patents, trademarks, trade names, inventions,
copyrights, know-how, and trade secrets relating to the design, manufacture, operation or
service of the IVUS Products. The use by Fukuda of any of these property rights is
authorized only for the purposes herein set forth, and upon termination of this Agreement
for any reason, such authorization shall cease.



     B. Sale
Conveys No Right to Manufacture or Copy. The IVUS Products are offered
for sale and are sold by EndoSonics subject in every case to the condition that such sale
does not convey any license, expressly or by implication, to manufacture, duplicate or
otherwise copy or reproduce any of the IVUS Products. Fukuda shall take appropriate steps
with its customers, as EndoSonics may request, to inform them of and assure compliance
with the restrictions contained in this Subsection 9.B.



     C. Confidentiality. Each Party shall maintain in confidence all Confidential
Information, as defined below, of the other party and shall not use, disclose or grant use
of such Confidential Information except as expressly authorized by this Agreement. A party
may disclose Confidential Information, as authorized hereunder, only to those of its
employees or agents who agree to be bound by the terms of this Section 9. Fukuda may
disclose the Confidential Information to MOHW, if and when it is so required, during the
MOHW approval proceedings, provided that Fukuda shall make its Best Efforts to avoid or
limit such disclosure. As used in this Agreement, the term “Confidential Information”
shall mean information deemed by a party to be its confidential or proprietary information
and disclosed to the other party in writing and marked “Confidential”, or disclosed orally under confidence, including without limitation,
any confidential engineering designs and drawings, know-how, trade secret, research, data,
process, technique, research project, work in process, future development, scientific,
manufacturing, marketing, business plan, financial or personnel matter relating to the
party, its present or future products, sales suppliers, customers, employees, investors or
business. Upon request of either of the parties hereto, the other party shall advise
whether or not it considers any particular information or materials to be confidential.
Fukuda shall not publish any technical description of the IVUS Products beyond the
description published by EndoSonics (except to translate that description into
appropriate languages for the Territory). In the event of termination of this Agreement,
there shall be no use or disclosure by either of the parties hereto of any Confidential
Information of the other party, provided that the restrictions under Section 9 hereof
does not in any manner affect Fukuda’s rights and/or licenses granted under any other
agreements entered into between EndoSonics and Fukuda.



     D. Exclusions.
The term “Confidential Information” shall not be deemed to
include information which: (i) is now, or hereafter becomes, through no act or failure to
act on the part of a party receiving such information, generally known or available; (ii)
is known by the party receiving such information at the time of receiving such
information, as evidenced by its records; (iii) is hereafter furnished to the party
receiving such information by a third party, as a matter of right and without restriction
on disclosure; (iv) is the subject of a written consent to disclose provided by the
disclosing party, which consent may be withheld in the sole discretion of such



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party; or (v) is discovered or developed by a party independent of and without any
reference to Confidential Information of the disclosing party, as evidenced by the written
records of the receiving party.




10. TRADEMARKS AND TRADE NAMES




     A. Use. During the term of this Agreement, Fukuda shall have the
right to indicate to the public that it is an authorized distributor of IVUS
Products and to advertise (within the Territory) such IVUS Products under the
trademarks, marks and trade names that EndoSonics may adopt from time to time
(“EndoSonics’ Trademarks”). Fukuda shall not alter or remove any EndoSonics’
Trademarks applied to the IVUS Products at the factory. Nothing herein shall grant
to Fukuda any right, title or interest in EndoSonics’ Trademarks. At no time
during or after the term of this Agreement shall Fukuda challenge or assist others
to challenge EndoSonics’ Trademarks or the registration thereof or attempt to
register any trademarks, marks or trade name confusing similar to those of
EndoSonics.



     B. Approval
of Representations. Fukuda shall respect EndoSonics’
Trademarks and follow the instructions of EndoSonics as to the usage of
EndoSonics’ Trademarks. If any of EndoSonics’ Trademarks are to be used in
conjunction with another trademark on or in relation to the IVUS Products, then
EndoSonics’ marks shall be presented equally legibly, equally prominently, and of
the same or greater size than the other but nevertheless separated from the other
so that each appears to be a mark in its own right, distinct from the other mark.



11. PATENT COPYRIGHT AND TRADEMARK INDEMNITY




     A. Indemnification. Fukuda agrees that EndoSonic has the right to
defend, or at its option to settle, and EndoSonics agree, at its own expense,
to defend or at its option to settle, any claim, suit or proceeding brought
against Fukuda or its customer on the issue of infringement of any Japanese
patent, or trademark by the IVUS Products sold hereunder, or the use
thereof, subject to the limitations hereinafter set forth. EndoSonics shall have sole control of any
such action or settlement negotiations, and EndoSonics agrees to pay, subject
to the limitations hereafter set forth, any final judgment entered against
Fukuda or its customer on such issue in any such suit or proceeding defended
by EndoSonics. Fukuda agrees to notify EndoSonics promptly in writing of such
claim, suit or proceeding and gives EndoSonics authority to proceed as
contemplated herein, and at EndoSonics’ expense, gives EndoSonics proper and
full information and assistance to settle and/or defend any such claim, suit
or proceeding. If the IVUS Products, or any part thereof, are the subject of
any claim, suit or proceeding for infringement of any Japanese patent, or
trademark, or if the sale or use of the IVUS Products, or any part thereof,
is, as result, enjoined, then EndoSonics shall, at its expense (i) procure
for Fukuda and its customers the right under such patent, or trademark to
sell or use, as appropriate, the IVUS Products or such part thereof, or (ii)
replace the IVUS Products, or part thereof, with other suitable IVUS Products
or parts; or (iii) suitably modify the IVUS Products, or part thereof, or
(iv) if the use of the IVUS Products, or part thereof is prevented by
injunction, remove the IVUS Products, or part thereof, and refund the
aggregate payments paid therefor by Fukuda, less a reasonable sum for use and
damage.



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     B. Limitation. Notwithstanding the provisions of Subsection 11.A. above, EndoSonics assumes no
liability for (i) infringements covering completed equipment or any assembly, circuit, combination
method or process in which any of the IVUS Products may be used but not covering the IVUS Products
standing alone; (ii) any trademark infringement involving any marking or branding not applied by
EndoSonics or involving any marking or branding applied at the request of Fukuda; or (iii) the
modification of the IVUS Product, or any part thereof, unless such modification or servicing was
done by EndoSonics.



     C. Entire Liability. The foregoing provision of this Section 11 states the entire liability and
obligations of EndoSonics and the exclusive remedy of Fukuda and its customers, with respect to any
alleged patent or trademark infringement by the IVUS Products or any part thereof.



12. GENERAL PROVISIONS




     A. Arbitration. All disputes, controversies, or differences which may arise between the parties
hereto, out of, in relation to, or in connection with this Agreement or
the breach thereof, shall be finally settled by arbitration in accordance with the Japan-American
Trade Arbitration Agreement of September 16, 1952 (as amended), by which each party hereto agrees
to be bound. If arbitration is requested by Fukuda, arbitration shall be conducted in Palo Alto,
California, U.S.A.; if arbitration is requested by EndoSonics, arbitration shall be conducted in
Tokyo, Japan. Judgment upon an award rendered may be entered in any court having jurisdiction, or
application may be made to such court for judicial acceptance of the award and an order of
endorsement, as the case may be.



     B. Entire Agreement. This Agreement sets forth the entire agreement and understanding of the
parties relating to the subject matter herein and merges all prior discussions between them. No
modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement,
shall be effective unless in writing signed by the party to be charged.



     C. Notices. Any notice required or permitted by this Agreement shall be in writing and; (i) upon
personal delivery to the party be notified; (ii) when sent by confirmed facsimile if sent during
normal business hours of the recipient (if not, then on the next business day); (iii) ten (10) days
after having been sent by registered or certified airmail, return receipt requested, postage
prepaid; or (iv) four (4) business days, after being properly deposited with an internationally
recognized overnight courier, specifying express delivery, with written verification of receipt
addressed to the other party at the address shown at the beginning of this Agreement or at such
other address for which such party gives notice hereunder.



     D. Force Majeure. Nonperformance of either party shall be excused to the extent that performance is
rendered impossible by strike, fire, flood, governmental acts or
orders or



-15-
















 






restrictions, failure of suppliers, or any other reason where failure to perform is beyond
the control of and not caused by the negligence of the non-performing party. ‘




     E. Change
of Control: Assignment. This Agreement including all terms
and conditions hereof which survive any
termination or expiration of this Agreement, shall be binding upon
and inure to the benefit of the
parties hereto and their permitted successors and assigns. Neither party may assign any of its
rights and obligations hereunder without prior written consent of the other party, and any such
assignment or purported assignment shall be void, except that an assignment to merger,
acquisition or sale of all or substantially all of the assets of party shall not require such
consent.



     F. Partial Invalidity. If any provision of this Agreement is held to be invalid by a court
of competent jurisdiction, then the remaining provisions shall nevertheless remain in full
force and effect. The parties agree to renegotiate in good faith any term held
invalid and to be bound by the mutually agreed substitute provision.



     G. Legal
Expenses. The prevailing party in any legal action brought by one party
against this other and arising out of this Agreement shall be entitled, in addition to any
other rights an remedies it may have, to reimbursement for its expense, including arbitration
costs and reasonable attorneys’ fees.



     H. Counterparts. This Agreement shall be executed in two counterparts, each of which shall
be deemed an original, each party retaining one copy thereof.



	 	 	 	 	 
	 

	 	ENDOSONICS CORPORATION	 	 
	 
	 	 	 	 
	 

	 	By: /s/ Reinhard J. Warnking
 

	 	 
	 

	 	PRINTED NAME: Reinhard J. Warnking	 	 
	 

	 	TITLE: President, CEO	 	 
	 
	 	 	 	 
	 

	 	FUKUDA DENSHI CO., LTD.	 	 
	 
	 	 	 	 
	 

	 	By: /s/ Kotaro Fukuda
 

	 	 
	 

	 	PRINTED NAME: Kotaro Fukuda	 	 
	 

	 	TITLE: President and Board Member	 	 






-16-









 











EXHIBIT A

TO FUKUDA DENSHI CO. LTD. AND ENDOSONICS CORPORATION

JAPANESE DISTRIBUTION AGREEMENT

Prices Effective November 1, 2005

Description of VOLCANO Products and Pricing




	 	 	 	 	 
	Distributor Name:

	 	Fukuda Intervention Systems
	 	 
	Distributor Territory:

	 	Japan	 	 






	 	 	 	 	 	 	 	 	 
	 	 	CATALOG	 	 	TRANSFER PRICE	 
	PRODUCT	 	NUMBER	 	 	 (EACH)	 
	IVG3 System:
	 	 	S7700908	 	 	 	 	 
	1-15 Units Purchased Annually
	 	 	 	 	 	[CONFIDENTIAL] USD
	16-24 Units Purchased Annually
	 	 	 	 	 	[CONFIDENTIAL] USD
	25+ Units Purchased Annually
	 	 	 	 	 	[CONFIDENTIAL] USD
	 
	 	 	 	 	 	 	 	 
	IVG/VH
	 	 	804908004	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	1-15 Units Purchased Annually
	 	 	 	 	 	[CONFIDENTIAL] USD
	16-24 Units Purchased Annually
	 	 	 	 	 	[CONFIDENTIAL] USD
	25+ Units Purchased Annually
	 	 	 	 	 	[CONFIDENTIAL] USD
	Eagle Eye Gold Catheter
	 	 	85900	 	 	[CONFIDENTIAL] USD
	Avanar Catheter
	 	 	85700	 	 	[CONFIDENTIAL] USD
	PV. 018 Catheter
	 	 	86700	 	 	[CONFIDENTIAL] USD
	PV 8.2 Catheter
	 	 	88900	 	 	[CONFIDENTIAL] USD
	TrakBack II
	 	 	91002	 	 	[CONFIDENTIAL] USD
	R100 Reusable Pullback Device — should this be here?
	 	 	804547001	 	 	[CONFIDENTIAL] USD
	Flat Panel Monitor (for use with Gold system only)
	 	 	803502-001	 	 	[CONFIDENTIAL] USD
	*Plus Upgrade (Tsunami Upgrade Kit)
	 	 	S9200100	 	 	[CONFIDENTIAL] USD
	*DICOM Connection Kit
	 	 	803183-001	 	 	[CONFIDENTIAL] USD







	 	§	 	Travel costs associated with installation are not included in product cost.
	 
	 	§	 	All prices are quoted “each” and in US Dollars
	 
	 	§	 	Volcano Corporation Terms are FOB Origin, net sixty (60) days.





	 	 	 
	 

	 	 
	Distributor Authorized Signature and Date

	 	VOLCANO Authorized Signature and Date





 




					
	Volcano Corporation
	 	CONFIDENTIAL
	 	3/14/2006