Document:

Exhibit
10.38

 

SEVENTH
AMENDMENT TO

PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS

 

THIS SEVENTH AMENDMENT TO PURCHASE AGREEMENT AND
ESCROW INSTRUCTIONS (“Amendment”) is entered into at San Diego, California as
of June 16, 2003, between H. G. FENTON COMPANY, a California corporation which
acquired title as H. G. Fenton Material Company (“Seller”), and BIOSITE
INCORPORATED, a Delaware corporation (“Buyer”), with reference to the following

 

R E C I
T A L S:

A.                                                                                   Seller
and Buyer are the parties to a Purchase Agreement and Escrow Instructions dated
as of December 7, 2001 and previously amended as of February 12, February 14,
and June 10, 2002, and as of January 24, April 25 and May 27, 2003
(“Agreement”), relating to certain real property in the Carroll Canyon area of
San Diego, California as depicted on Exhibit A to the Agreement
(“Land”). Initially capitalized terms not otherwise defined in this Amendment
have the same meanings as in the Agreement, as previously amended. Pursuant to
the Agreement, the parties have established Escrow No. 51943-PM with Stewart
Title of California, Inc. as Escrow Holder.

 

B.                                                                                     Since
parties’ entry into the Agreement, there have been recorded two agreements
between Seller and Hanson Aggregates Pacific Southwest, Inc., a Delaware
corporation (“Hanson”), the owner of real property (“Hanson Property”) that is
located east of the Land and the other Carroll Canyon holdings of Seller
(collectively, the “Fenton Property”): (i) an Agreement Between Adjacent
Landowners re Payment of Costs of Camino Santa Fe Improvements, which was
recorded in the Office of the County Recorder of San Diego County on April 7,
2003 as Document No. 2003-0384334 (“CSF Agreement”); and a Drainage Facilities
Deed Restriction and Agreement Between Adjacent Landowners, which was recorded
April 7, 2003 as Document No. 2003-0384335 (“Drainage Agreement”; referred to
with the CSF Agreement as the “Hanson Agreements”).

 

C.                                                                                     The
Hanson Agreements burden the Hanson Property and benefit the Fenton Property.
The CSF Agreement obligates Hanson to share in certain costs associated with
the Camino Santa Fe Improvements component of the Seller Improvements that
Fenton is obligated to build pursuant to Paragraphs 7.4 and 13.2 of the
Agreement. The Drainage Agreement restricts any future development of the
Hanson Property that would require connection to the sewer and storm drainage
facilities that are also being constructed by Fenton as part of the Camino
Santa Fe Improvements.

 

D.                                                                                    Because
the Hanson Agreements are now of record, the parties wish to modify the
Agreement to clarify that as between Seller and Buyer, all obligation and
liability arising out of the Hanson Agreements, if any, shall be Seller’s.

 

THE PARTIES AGREE:

 

1.                                                                                       The
Hanson Agreements.

 

(a)                                                                                                                                  The
parties agree that the Hanson Agreements shall be Permitted Exceptions for all
purposes of the Agreement.

 

1

 

(b)                                                                                                                                 As
between Seller and Buyer, all obligation and liability arising out of the
Hanson Agreements, if any, shall belong to Seller, and Buyer shall have no
obligation or liability with respect to either of the Hanson Agreements.

 

(c)                                                                                                                                  To
the extent not already encompassed with Seller’s indemnity set forth in
Paragraph 13.2.3 of the Agreement, Seller also agrees to indemnify, defend and
hold Buyer harmless from liability for any losses, costs (including reasonable
attorneys’ fees), claims, liabilities, expenses and demands arising out of any
claim by Hanson or any successor of Hanson arising out of or connected with the
Hanson Agreements.

 

(d)                                                                                                                                 Seller
acknowledges that the existence of the Hanson Agreements may give rise to
certain concerns or requirements of Buyer’s lender, and Seller agrees to use
commercially reasonable efforts, not involving the posting of security or the
holdback or expenditure of funds, to assist Buyer in satisfying any
lender-imposed conditions. Without limiting the generality of the foregoing,
Seller agrees that upon request of Buyer or Buyer’s lender, it will (i) seek
Hanson’s acknowledgment that the Hanson Agreements will not give rise to any
liability on the part of Buyer or the Land after the Close of Escrow, and/or
(ii) seek Hanson’s signature on any estoppel or subordination that may
reasonably be requested by Buyer’s lender. Nothing in the foregoing shall
constitute any representation or warranty by Seller that Hanson will in fact
sign any documents or instruments or otherwise cooperate as contemplated
herein, and Seller shall not be in default if its efforts in this regard are
not successful.

 

2.                                                                                       Other
Matters of Agreement.

 

(a)                                                                                                                                  This
Amendment may be executed in any number of counterparts, each of which will be
deemed to be an original, but all of which together will constitute one
instrument.

 

(b)                                                                                                                                 Except
to the extent modified hereby, all provisions of the Agreement as previously
amended shall remain in full force and effect.

 

	
  Seller:

  	
  Buyer:

  
	
   

  	
   

  
	
  H. G. FENTON
  COMPANY, a California

  corporation

  	
  BIOSITE
  INCORPORATED, a Delaware

  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/ Henry F.
  Hunte

  	
   

  	
  By

  	
  /s/ Christopher
  J. Twomey

  	
   

  
	
  Its

  	
  Chairman

  	
   

  	
  Its

  	
  V.P., Finance
  and CFO

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/ Robert
  Gottlieb

  	
   

  	
  By

  	
   

  	
   

  
	
  Its

  	
  CFO

  	
   

  	
  Its

  	
   

  	
   

  

 

2Exhibit
10.39

 

*** Text omitted
and filed separately

Confidential
Treatment Requested

Under 17 C.F.R. §§
200.80 (b) (4)

And 240.24b-2

 

DISTRIBUTION
AGREEMENT

 

This
DISTRIBUTION AGREEMENT (this “Agreement”) effective as of May 13, 2003
(the “Effective Date”) is entered into between BIOSITE INCORPORATED, a Delaware
corporation (“Biosite”), with a place of business at 11030 Roselle Street,
Suite D, San Diego, California 92121, and PSS WORLD MEDICAL, INC. (“PSS”),
with a place of business at 4345 Southpoint Boulevard, Jacksonville, Florida
32216.  The parties hereby agree as
follows:

 

1.                                       APPOINTMENT
AND SCOPE

 

1.1                                 Appointment.  Subject to the terms and conditions of this
Agreement, including but not limited to the restrictions set forth in
Sections 1.2 and 1.3, Biosite hereby appoints PSS as a distributor of the
products listed in Schedule A (the “Products”) in the territory described
in Schedule B (the “Territory”), and PSS hereby accepts such appointment,
as set forth in clauses (a) through (d) of this Section 1.1.

 

(a)                                  From
the Effective Date until December 31, 2003, the appointment for Products
described in Part 1 of Schedule A (the “[***]”) shall be
(i) [***] for Physician Office Practices (as defined in Schedule B)
of less than [***] physicians, and (ii) [***] (with [***] or its assignee)
for Physician Office Practices of [***] or more physicians;

 

(b)                                 Effective
as of [***] until [***], the appointment for [***] shall be (i) [***]
(with [***] or its assignee) for Physician Office Practices of [***] or more physicians
to which [***] or its assignee has distributed [***] prior to [***], and (ii)
[***] for all other Physician Office Practices;

 

(c)                                  Effective
as of [***] until [***], the appointment for [***] shall be [***](as described
below) for all Physician Office Practices. 
For purposes of this Section 1.1(c), “[***]” means that Biosite has
the right to sell and distribute [***] directly and to appoint a limited number
of other distributors to sell and distribute [***]; and

 

(d)                                 From
the Effective Date until [***], the appointment (i) for the [***]
described in Part 2 of Schedule A (the “[***]”) shall be [***] for
all Physician Office Practices, and (ii) for all other Products described
in Part 2 of Schedule A shall be [***] for Physician Office Practices
of less than [***] physicians.

 

1.2                                 Performance
Criteria.  Subject to Section
1.2(a), if PSS fails to achieve the applicable minimum sales objectives set
forth in Schedule C for [***] or [***] for any measurement period set
forth in Schedule C, then (a) the parties shall meet no later than
sixty (60) days after the end of the applicable measurement period to discuss
PSS’ efforts to meet such minimum sales objectives, and (b) Biosite shall
have the right (in its sole discretion) as of the end of such sixty (60) day
period to [***]of this Agreement, effective upon written notice to PSS.  The parties expressly agree that Biosite may
not terminate this Agreement solely due to PSS failing to achieve such minimum
sales objectives.

 

(a)                                  PSS
shall not be responsible for failing to achieve the applicable minimum sales
objectives set forth in Schedule C to the extent caused by (i) Biosite’s
breach of its obligations under this Agreement with respect to the delivery of
the applicable Products by Biosite to PSS, or (ii) Biosite recalling the
applicable Products and not replacing such recalled Products in a prompt
manner. 

 

 

* Confidential Treatment
Requested

 

 

1.3                                 Appointment
Restrictions.

 

(a)                                  Notwithstanding
anything to the contrary in this Agreement, PSS shall not have the right to
distribute Products to any customer which, as of the Effective Date, has
purchased Products from Biosite or [***](but not any other distributor of
Biosite) other than a customer that [***](provided that prior to making any
sale of a Product to any such customer, (i) PSS shall provide the
customer’s written statement to Biosite and (ii) PSS shall first allow
Biosite, for thirty (30) days after Biosite receives such written statement
from PSS, to contact the customer to discuss the customer’s statement).

 

(b)                                 PSS
shall refrain from directly or indirectly (i) seeking customers for,
establishing any branch for, or maintaining any distribution depot or network
for the sale of, the Products outside of the Territory, or (ii) selling
the Products to any person or entity other than Physician Office Practices in
the market segments as expressly described above.

 

(c)                                  The
Territory shall not include, and PSS shall not be permitted to sell the
Products in, any territory or to any market segment not expressly described in
the Agreement.  PSS shall take
reasonable steps to limit the likelihood that PSS’s customers in the Territory
purchase Products for resale outside of the Territory.

 

(d)                                 PSS
shall not have the right to appoint sub-distributors, except as approved by
Biosite in advance writing.  Any
permitted sub-distributors shall be subject to the provisions of this
Agreement.

 

1.4                                 Products.  PSS only has a right to sell and distribute
the Products pursuant to the terms and conditions of this Agreement.  PSS has no right to sell or distribute any
other Biosite product unless subject to a separate written agreement by the
parties on a product by product basis.

 

1.5                                 Noncompetition.  PSS shall not, during the period of the
[***] appointment for [***] under Sections 1.1(a) and 1.1(b) (the “[***]
Period”), directly or indirectly sell, offer for sale, or act as sales agent
for the solicitation of orders for any product that measures or detects the
presence or absence of any [***], with or without the [***], including without
limitation [***].

 

1.6                                 Independent
Purchaser Status.  PSS is an
independent purchaser and seller of the Products.  PSS shall not act as an agent or legal representative of Biosite,
nor shall PSS have any right or power to act for or bind Biosite in any respect
or to pledge its credit.  PSS shall be
free to resell Products to Customers in the Territory on such terms as it may,
in its sole discretion, determine, including, without limitation, price,
returns, credits and discounts.

 

1.7                                 Perishable
Products.  PSS acknowledges that the
Products are perishable, and shall manage its inventory such that products are
shipped throughout the Territory on a first-in-first-out basis.  PSS shall be responsible for and shall bear
the full risk with respect to any unsold quantities of the Products remaining
in PSS’s inventory beyond the stated shelf-life thereof; however, if PSS
received from Biosite any such unsold perishable [***] that had a posted
expiration date of [***] or less from the date of shipment of such [***] from
Biosite to PSS, then Biosite shall replace such expired [***](provided that
Biosite may first require PSS to provide reasonable evidence of PSS’s
compliance with this Section 1.7). 

 

2.                                       TERMS
AND CONDITIONS OF SALE

 

2.1                                 Price.  PSS shall purchase the Products from Biosite
at the applicable prices set forth in Schedule A.  Prices shall be subject to change by Biosite
on [***] prior written notice to PSS. 
PSS shall pay Biosite for purchases of the Products within [***] from
PSS’s receipt of invoice.  PSS shall
make all such payments in United States dollars to such account as Biosite
designates for such purpose.

 

2

 

2.2                                 Any
late payment shall be a material breach of this Agreement by PSS, provided
however, and notwithstanding the provisions of Section 8.2, Biosite shall not
have the right to terminate this Agreement for a late payment unless Biosite
has first provided written notice to PSS that Biosite intends to terminate the
Agreement if PSS does not remedy such breach within [***] after PSS’s receipt
of such notice (such notice from Biosite shall not be required if PSS has made
a late payment for the third time or more). 
From time to time during the term of this Agreement, the parties shall
meet and discuss in good faith whether market conditions warrant an adjustment
to the applicable prices set forth in Schedule A.  For any past due amounts due by PSS to
Biosite under this Agreement, PSS shall pay to Biosite (i) a late charge
of [***] per month or the maximum rate permitted by law, whichever is less, on
the past due amounts until paid in full and (ii) any costs (including
reasonable attorneys’ fees) incurred by Biosite in collecting or enforcing any
payment obligations under this Agreement.

 

2.3                                 Taxes.  PSS shall pay all sales, use and transfer
taxes and other charges arising out of the purchase and sale of the Products,
including any state and local personal property taxes and all inspection fees
and duties, applicable to the sale and transport of the Products by PSS in the
Territory which are applicable thereto. 
Biosite shall not be responsible for any business, occupation,
withholding or similar tax, or any taxes of any kind, relating to the purchase
and sale of the Products.

 

2.4                                 Terms
of Sales.  Products shall be shipped
F.O.B. Biosite’s facility in San Diego, California, with freight and insurance
paid by PSS.  Risk of loss shall pass to
PSS upon delivery to PSS’s designated carrier or another common carrier at
Biosite’s facility in San Diego, California. 
Biosite shall notify PSS of scheduled delivery dates by written
acknowledgement of PSS’s order.  Biosite
shall use its reasonable commercial efforts to meet requested delivery dates,
provided that Biosite shall have no liability for any late delivery.  Unless Biosite otherwise expressly agrees in
writing, the lead time for shipping of Products shall be not more than [***]
after receipt of PSS’s order by Biosite. 
Notwithstanding the foregoing, Biosite may defer shipment of Products if
and while PSS is in default of any of its obligations owing to Biosite under
this Agreement, including PSS’s obligations to pay any amounts when due.  If PSS requests drop shipment for a
customer, the entire cost of the transportation designated by PSS shall be borne
by PSS.

 

2.5                                 Orders.  PSS shall make all purchases hereunder by
submitting firm written purchase orders to Biosite.  Such purchase orders shall be in writing and in a form reasonably
acceptable to Biosite.  In the event of
any inconsistency between the terms and conditions of any purchase order and
this Agreement, the terms and conditions of this Agreement shall prevail.  Purchase orders shall not be binding upon
Biosite unless and until accepted by Biosite. 
Within [***] after receipt of a purchase order, Biosite shall notify PSS
in writing of its acceptance or rejection of such purchase order and of the
scheduled delivery dates if the purchase order is accepted.  Biosite shall be deemed to have accepted a
purchase order in the event it does not provide written rejection of such
purchase order within the foregoing timeframe.

 

2.6                                 Returned
Goods.  If Products fail to conform
with the specifications established by Biosite therefor, PSS shall, within
[***] after receipt of the Products, return such nonconforming Products to
Biosite or dispose locally, as Biosite so directs, after obtaining return
authorization from Biosite.  In both
cases all reasonable out-of-pocket expenses (including shipping of returned
Products and replacement Product) shall be borne by Biosite provided that PSS
follows Biosite’s return instructions. 
Should any Product be properly returned as provided above, Biosite shall
replace the returned Product as soon as reasonably practicable.  Such replacement Product shall be at no
additional cost to PSS if PSS had previously paid Biosite for the returned
Product.  Notwithstanding the foregoing,
Biosite shall not be responsible for any Products which fail to pass PSS’s
quality control as a result of improper storage and handling during or after
shipment to PSS.  EXCLUDING BIOSITE’S
INDEMNIFICATION OBLIGATIONS UNDER SECTIONS 2.7(d) AND 6, THE REPLACEMENT OF THE
RETURNED GOODS BY BIOSITE UNDER THIS SECTION 2.6 SHALL BE PSS’S SOLE AND
EXCLUSIVE REMEDY FOR THE FAILURE OF THE PRODUCTS TO CONFORM WITH THE
SPECIFICATIONS ESTABLISHED BY BIOSITE THEREFOR.

 

2.7                                 Warranty,
Restrictions and Limitations.

 

(a)                                  Biosite
warrants that the Products shall perform as stated in the written
specifications established by Biosite therefor as set forth in the then current
Product insert or other written specifications provided or made available by
Biosite with respect to the Products. 
Biosite’s Product

 

3

 

specifications are
subject to change upon thirty (30) days’ notice to PSS; provided, however,
that Products shall perform substantially as described in the specifications
and Product insert or other written specifications provided or made available
by Biosite with respect to the Products as of the date of this Agreement.  The remedy and limitations applicable to
such warranty shall be as set forth in the Product insert.

 

(b)                                 OTHER
THAN AS EXPRESSLY SET FORTH IN SECTION 2.7(a) ABOVE, BIOSITE DISCLAIMS ALL
WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT
LIMITATION, NON-INFRINGEMENT OF THIRD PARTY RIGHTS, MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE.

 

(c)                                  PSS
shall distribute Products labeled by Biosite to customers in the Territory so
as to include all warnings and instructions necessary for the proper use of the
Products.  PSS hereby represents and
warrants that neither PSS nor its agents or employees will make any
representations or claims with respect to the Products which are not authorized
in writing by Biosite.  Subject to the
provisions of Section 6.2 hereof, PSS shall defend, indemnify and hold Biosite harmless from all losses,
liabilities, damages and expenses (including reasonable attorneys’ fees and
costs) resulting from any claims, demands, actions and other proceedings by any
third party to the extent resulting from (i) representations or
claims by PSS with respect to the Products which are not authorized by Biosite;
(ii) PSS’s willful act or omission in connection with the sale, marketing,
promotion or distribution of the Products; or (iii) any claim or failure
by PSS to comply with governmental regulatory requirements relating to the
Products which are applicable to distributors of products.

 

(d)                                 Subject
to the provisions of Section 6.2 hereof, Biosite shall defend, indemnify
and hold PSS harmless from all losses, liabilities, damages and expenses
(including reasonable attorneys’ fees and costs) resulting from any claims,
demands, actions and other proceedings by any third party to the extent
resulting from or alleging that any Product infringes any patent, trademark,
copyright, trade secret or other intellectual property right of a third party,
provided that such infringement is not a result of (i) any modification to a
Product not expressly permitted by Biosite in writing or (ii) any use of a
Product other than pursuant to Product specifications and documentation.

 

2.8                                 Administrative
Fees.  [***]

 

3.                                       COVENANTS
OF PSS

 

3.1                                 Sales
Promotion.  PSS shall use its best
efforts to promote, market and sell the Products to Physician Office Practices
in the Territory in the market segments expressly described above.  PSS shall provide complete training of PSS’s
sales representatives in the use of the Products.  PSS shall provide to each potential customer of Products a full
functional demonstration of such Products.

 

3.2                                 Expenses.  PSS shall be responsible for all of its and
its employees expenses.  PSS agrees that
it shall incur no expense chargeable to Biosite, except as may be specifically
authorized in advance writing in each case by Biosite.

 

3.3                                 Promotional
Materials; Package Inserts.  PSS
shall ensure that all advertising, promotional literature, packaging and
package inserts comply with applicable laws and regulations.  PSS shall submit each of the foregoing to
Biosite for review.  PSS shall not use
any advertising or promotional materials to promote the Products or any
packaging or package inserts that have not been approved in advance writing by
Biosite, which approval shall not be unreasonably withheld.  PSS shall prepare any necessary translations
of Biosite’s sales literature, package inserts and labeling.  

 

3.4                                 Sales
and Marketing Support and Training. 
PSS shall provide Biosite [***] for all [***] as often as PSS [***] to
its other suppliers.  During the period
of the [***] under [***], PSS shall also provide the [***] described in [***].

 

4

 

3.5                                 Customer
and Sales Information.  PSS shall
provide Biosite, [***] during the term hereof, with [***] regarding [***] in
the [***] that have [***] from [***].  
Such [***] include, without limitation, [***].  Notwithstanding [***] of such information, nothing herein shall
preclude [***] from the right or ability to use such information for its lawful
business purposes.

 

3.6                                 Product
Storage and Handling.  PSS shall
comply with Biosite’s reasonable instructions regarding the storage and
handling of the Products, and except as otherwise provided in this Agreement,
PSS shall be solely responsible for the cost thereof.

 

3.7                                 Reports.  At Biosite’s request, PSS shall submit to
Biosite such other reports as are customarily provided by PSS to suppliers
similarly situated with Biosite.

 

3.8                                 Inventory.  At all times during the term of this
Agreement, PSS shall maintain inventory of each Product sufficient to satisfy
not less than PSS’s requirements for its reasonably forecasted sales of such
Product.

 

3.9                                 Product
Information.  During the term of
this Agreement, PSS shall keep complete and accurate records tracking each
[***] on a customer by customer basis, by product serial number, sufficient to
enable Biosite to conduct product recalls, product investigations, software
updates, customer support and the like. 
Additionally, by no later than twelve (12) months after the Effective
Date of the Agreement and for the remaining term of the Agreement, PSS shall
keep complete and accurate records tracking each other Product, on a
customer by customer basis, by whatever means Biosite identifies each
individual item of Product (whether by product serial number, lot number,
or otherwise), sufficient to enable Biosite to conduct product recalls, product
investigations, software updates, customer support and the like.  PSS shall maintain all records obtained
during the term of the Agreement for a period of three (3) years after
termination of the Agreement.  PSS shall
provide all such information to Biosite as soon as reasonably practicable after
Biosite’s written request therefor.

 

4.                                       COVENANTS
OF BIOSITE

 

4.1                                 Sales
and Marketing Support.  Biosite
shall provide to PSS literature and technical information relating to the
Products and their proper use, in such reasonable quantities as to be agreed
upon by the parties.  Unless otherwise
expressly agreed by both parties, all such information and materials shall be
furnished [***] to PSS.  During the
Exclusive Period, subject to PSS complying with its obligations under this
Agreement, Biosite will provide the marketing support described in
Schedule E.

 

4.2                                 Assistance.  Biosite shall provide PSS with reasonable
access to and assistance of its technical, sales, and service personnel in San
Diego, California as Biosite deems appropriate.  Such assistance shall be without charge to PSS except as may be
otherwise mutually agreed.

 

4.3                                 Price
Incentive.

 

(a)                                  If
[***] has (i) [***] of the [***] for [***] set forth in [***] for [***],
and (ii) [***] for [***] set forth in [***] for [***], then following the
[***], Biosite shall [***] an [***] of the [***] by [***] for the [***]

 

(b)                                 If
[***] has (i) [***] of the [***] for [***] set forth in [***] for [***],
and (ii) [***] for [***] set forth in [***] for [***], then following the
end of [***], Biosite shall [***] an [***] of the [***] by [***] for the [***].

 

5

 

4.4                                 Technical
Support.  Biosite shall provide 24
hour, 7-day/week telephone based technical support for customers in accordance
with Biosite’s customer service policies and practices.

 

5.                                       CONFIDENTIALITY

 

5.1                                 Confidential
Information.  “Confidential
Information” shall mean, with respect to a party, all information of any
kind whatsoever, and all tangible and intangible embodiments thereof of any
kind whatsoever (including without limitation, customer information, financial
information, documents, drawings, machinery, patent applications, records,
reports), which is disclosed by such party (the “Disclosing Party”) to the
other party (the “Receiving Party”). 
Notwithstanding the foregoing, Confidential Information of a party shall
not include information which the other party can establish by written
documentation (a) to have been publicly known prior to disclosure of such
information by the Disclosing Party to the Receiving Party, (b) to have
become publicly known, without fault on the part of the Receiving Party,
subsequent to disclosure of such information by the Disclosing Party to the
Receiving Party, (c) to have been received by the Receiving Party at any
time from a source, other than the Disclosing Party, rightfully having
possession of and the right to disclose such information, (d) to have been
otherwise known by the Receiving Party prior to disclosure of such information
by the Disclosing Party to the Receiving Party, or (e) to have been
independently developed by employees or agents of the Receiving Party without
access to or use of such information disclosed by the Disclosing Party to the
Receiving Party.  Notwithstanding
anything to the contrary set forth above, “Confidential Information” shall not
include any information provided to Biosite under Sections 3.5, 3.9, or 8.3(d).

 

5.2                                 Confidentiality
Obligations.  During the term of
this Agreement, and for a period of [***] following the expiration or earlier
termination hereof, the Receiving Party shall maintain in confidence and not
use, disclose or grant the use of the Confidential Information except on a
need-to-know basis of those of its directors, officers and employees to the
extent such disclosure is reasonably necessary in connection with the Receiving
Party’s activities as expressly authorized by this Agreement.  To the extent that disclosure is authorized
by this Agreement, prior to disclosure, the Receiving Party shall obtain
agreement of any such person or entity to hold in confidence and not make use
of the Confidential Information for any purpose other than those permitted by
this Agreement.  The Receiving Party
shall notify the Disclosing Party promptly upon discovery of any unauthorized
use or disclosure of the Confidential Information.

 

5.3                                 Permitted
Disclosures.  The confidentiality
obligations contained in this Section 5 shall not apply to the extent that
the Receiving Party is required to disclose information by law, order or
regulation of a governmental agency or a court of competent jurisdiction,
provided that the Receiving Party shall provide written notice thereof to the
Disclosing Party and sufficient opportunity to object to any such disclosure or
to request confidential treatment thereof.

 

6.                                       INDEMNIFICATION

 

6.1                                 Mutual
Indemnity.  In addition to the
indemnification obligations set forth in Section 2.7, each party (the
“Indemnitor”) shall defend, indemnify
and hold the other party (the “Indemnitee”) harmless from all losses,
liabilities, damages and expenses (including reasonable attorneys’ fees and
costs) resulting from any claims, demands, actions and other proceedings by any
third party to the extent resulting from (a) any material breach of
this Agreement by the Indemnitor, (b) any recklessness or intentional act
or omission by or on behalf of the Indemnitor in the performance of its
activities under this Agreement, (c) any misrepresentations by the
Indemnitor, or (d) any violation by the Indemnitor (or any of its
employees or agents) of, or failure to adhere to, any applicable law,
regulation or order in any country, in each case other than those certain
losses, liabilities, damages and expenses arising out of the gross negligence
or willful misconduct of the Indemnitee. 
The obligations of the parties under this Section 6.1 shall survive
expiration or termination of this Agreement.

 

6.2                                 Procedure.  If the Indemnitee intends to
claim indemnification under this Section 6, it shall promptly notify the
Indemnitor in writing of any claim, demand, action or other proceeding for
which the Indemnitee intends to claim such indemnification, and the Indemnitor
shall have the right to participate in, and, to the extent the Indemnitor so
desires, to assume the defense thereof with counsel mutually satisfactory to
the

 

6

 

parties.  The obligations under this Section 6
shall not apply to amounts paid in settlement of any claim, demand, action or
other proceeding if such settlement is effected without the consent of the
Indemnitor, which consent shall not be withheld or delayed unreasonably.  The failure to deliver written notice to the
Indemnitor within a reasonable time after the commencement of any such action,
if prejudicial to its ability to defend such action, shall relieve the
Indemnitor of any obligation to the Indemnitee under this Section 6, but
the omission so to deliver written notice to the Indemnitor shall not relieve
it of any obligation that it may have to any party claiming indemnification
otherwise than under this Section 6. 
The Indemnitee, its employees and agents, shall reasonably cooperate
with the Indemnitor and its legal representatives in the investigation of any
claim, demand, action or other proceeding covered by this Section 6.

 

6.3                                 Insurance.  Each party shall maintain comprehensive
commercial general liability insurance, including contractual liability insurance
and product liability insurance against claims regarding its activities
contemplated by this Agreement, in such amounts as it customarily maintains for
similar products and activities, which with respect to Biosite shall not be
less than [***] Combined Single Limit Bodily Injury  & Property Damage Each Occurrence [***] Aggregate including
coverage for products and completed operations, contractual liability insuring
the obligations assumed by Biosite under this Agreement, independent
contractors, and personal and advertising injury coverages. Each party shall
maintain such insurance during the term of this Agreement and thereafter for so
long as it maintains insurance for itself covering such activities.  Coverage shall be written on a Standard ISO
Occurrence Form CG00010196 or its equivalent. 
Upon execution of the contract, and annually for the term of this
Agreement, the parties will provide a renewal certificate of insurance
reflecting such policies and coverages as outlined above.  Such certificate shall reflect that the
underlying policies have been endorsed to provide at least 30 days prior
written notice to the other party of the cancellation, non-renewal, reduction
or material change of any such insurance coverage.

 

7.                                       TRADEMARKS,
PATENTS AND COPYRIGHTS.

 

7.1                                 Trademarks
and Trade Names.  PSS shall not use
or register any of Biosite’s trademarks, or any mark or name confusingly
similar thereto, as part of its corporate or business name or in any manner,
except that (a) PSS may identify itself as an authorized distributor of
Biosite; and (b) PSS may use Biosite’s trademarks relating to the Products
for display purpose in connection with solicitation of orders for
Products.  The use by PSS of Biosite’s
trademarks and all goodwill associated therewith shall inure to the benefit of
Biosite.  PSS shall prior to use provide
to Biosite examples of its use of Biosite’s trademarks and shall modify such
use if requested by Biosite.  PSS shall
not do or cause to be done any act or anything contesting or in any way
impairing or reducing Biosite’s right, title or interest in Biosite’s
trademarks.

 

7.2                                 Product
Markings.  PSS shall not alter,
remove or modify any Biosite trademarks, labels or markings, nor affix any
other trademarks, labels or markings to the Products without Biosite’s consent;
provided that PSS may affix labels or other indices on Products it distributes
to identify it as the distributor of Products so long as such labels to not
cover and are not inconsistent with Biosite’s trademarks, labels or markings.  No other PSS labels, package inserts or
other material shall accompany the Products without the approval of Biosite.

 

7.3                                 Trademarks
and Patents Protection.  PSS shall
inform Biosite as soon as reasonably practicable after becoming aware of any
infringements or risk of infringements (a) by a third party of Biosite’s
intellectual property (including but not limited to brands, trademarks,
copyrights, and patents), or (b) by Biosite’s products of third party’s
intellectual property or claims of such by a third party.  PSS agrees to assist Biosite to the best of
its ability to defend Biosite’s interest particularly to follow instructions
and to take any reasonable measures as will be asked by Biosite in such matters.  Biosite will assume the cost of any legal
actions in the defense of its intellectual property.

 

7.4                                 Copyrights.  PSS hereby acknowledges that Biosite has
claimed, or may claim, copyright protection with respect to certain parts of
the Products and the labels, inserts and other materials regarding the
Products.  PSS further acknowledges the
validity of Biosite’s right to claim copyright protection with respect to such
items.  PSS further acknowledges that
Biosite has advised PSS that it has the sole and exclusive right to claim the
copyright protection with respect to all such items.  PSS shall take no action or make no omission which is any way
inconsistent with Biosite’s claim of copyright protection with respect to such
items.

 

7

 

8.                                       TERM
AND TERMINATION

 

8.1                                 Term.  This Agreement shall be effective as of the
Effective Date and shall terminate on [***], unless terminated earlier pursuant
to the provisions set forth below.  The
parties shall meet on approximately [***], to discuss whether the parties
desire to extend the term of this Agreement for an additional period of [***],
provided that neither party shall be obligated to agree to extend the term of
this Agreement.  If the parties agree to
extend the term of this Agreement, such agreement and extended term shall be
set forth in a separate written document.

 

8.2                                 Termination.  This Agreement may be terminated by either
party, in the event the other party shall fail to perform any of its material
obligations hereunder and should fail to remedy such non-performance within
thirty (30) calendar days after receiving written demand therefor.

 

8.3                                 Rights
of Parties on Expiration or Termination. 
The following provisions shall apply on the expiration or termination of
this Agreement.

 

(a)                                  Subject
to PSS’s right to sell Products remaining in inventory as set forth below, PSS
shall cease all sales and other activities on behalf of Biosite and shall
return to Biosite and immediately cease all use of any Confidential Information
of Biosite then in PSS’s possession.

 

(b)                                 Upon
any termination of this Agreement, for a period of [***] after such termination
(the “Initial Sell-Off Period”), PSS shall have the right to sell off its
remaining inventory of Products (and to exercise such rights provided for under
this Agreement as reasonably required for PSS to sell such remaining
stock).  Within five (5) business days
after the conclusion of the Initial Sell-Off Period, PSS shall provide to
Biosite in writing a list of PSS’s remaining inventory of the Products (the “Inventory
Notice”).  Biosite may, at its option,
by providing written notice to PSS within five (5) business days after receipt
of the Inventory Notice, repurchase PSS’s inventory of Products (as set forth
in the Inventory Notice) at the purchase price paid by PSS to Biosite therefor,
plus reasonable freight, insurance and duties. 
In case Biosite is not willing to repurchase such inventory of PSS, for
a period of [***] after Biosite provides written notice to PSS that Biosite is
electing not to repurchase PSS’s inventory of the Products (the “Final Sell-Off
Period”), PSS shall have the right to sell off the remaining inventory of
Products as set forth in the Inventory Notice (and to exercise such rights
provided for under this Agreement as reasonably required for PSS to sell such
remaining stock).  Within five (5)
business days after the conclusion of the Final Sell-Off Period, PSS shall
destroy its remaining inventory of the Products and shall provide written
confirmation thereof to Biosite.

 

(c)                                  Subject
to PSS’s right to sell Products remaining in inventory as set forth above, PSS
shall remove from its property and immediately discontinue all use, directly or
indirectly, of trademarks, designs, and markings owned or licensed exclusively
by Biosite, or any word, title, expression, trademark, design, or marking that
is confusingly similar thereto.

 

(d)                                 PSS
shall provide to Biosite, within three (3) business days after the conclusion
of the Initial Sell-Off Period, complete and up-to-date information regarding customers
in the Territory that have purchased the Products from PSS.  Such information shall include, without
limitation, customer name, address, telephone number, and unit sales by each
customer sorted by zip code.  In the
event that this Agreement is terminated due to breach by PSS, or in the event
that this Agreement is not extended, due to PSS’s election, for an additional
period of [***] after [***] pursuant to the terms and conditions of Section
8.1, then such information to be provided by PSS shall also include Product
price and revenue by each customer sorted by zip code.  All such information provided by PSS under
this Section (d) shall be solely owned by Biosite.  Notwithstanding Biosite’s ownership of such information, nothing
herein shall preclude PSS from the right or ability to use such information for
its lawful business purposes.

 

8.4                                 Sole
Remedy.  Other than due to a breach
of this Agreement by Biosite, provisions pursuant to Section 8.3(b) shall
constitute PSS’s sole remedy for the termination or non-renewal of this
Agreement.  NOTWITHSTANDING ANY OF THE
PROVISIONS OF THIS AGREEMENT, OTHER THAN A 

 

8

 

PARTY’S LIABILITY IN
CONNECTION WITH ANY BREACH OF SECTION 5, AND OTHER THAN A PARTY’S INDEMNITY
OBLIGATIONS UNDER SECTIONS 2.7 OR 6, NEITHER PARTY SHALL, BY REASON OF THE
TERMINATION OF THIS AGREEMENT OR OTHERWISE, BE LIABLE TO THE OTHER PARTY FOR
ANY SPECIAL, INCIDENTAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES SUCH AS,
BUT NOT LIMITED TO, COMPENSATION OR DAMAGES FOR LOSS OF PRESENT OR PROSPECTIVE
PROFITS OR REVENUES, LOSS OF ACTUAL OR ANTICIPATED REVENUE ON SALES OR
ANTICIPATED SALES, OR EXPENDITURES, INVESTMENTS OR COMMITMENTS MADE IN
CONNECTION WITH THE ESTABLISHMENT, DEVELOPMENT OR MAINTENANCE OF THE
DISTRIBUTORSHIP CREATED BY THIS AGREEMENT OR IN CONNECTION WITH THE PERFORMANCE
OF OBLIGATIONS HEREUNDER, WHETHER OR NOT THE OTHER PARTY HAS BEEN NOTIFIED OF
THE POSSIBILITY OF SUCH DAMAGES. 
NOTWITHSTANDING ANY OF THE PROVISIONS OF THIS AGREEMENT, OTHER THAN A
PARTY’S LIABILITY IN CONNECTION WITH ANY BREACH OF SECTION 5, AND OTHER
THAN A PARTY’S INDEMNITY OBLIGATIONS UNDER SECTION 2.7 OR 6, NEITHER PARTY
SHALL BE LIABLE TO THE OTHER PARTY FOR ANY AND ALL CLAIMS UNDER THIS AGREEMENT
IN AN AMOUNT IN THE AGGREGATE GREATER THAN THE AMOUNTS PAID OR PAYABLE BY PSS
TO BIOSITE ON SALES OF BIOSITE’S PRODUCTS DURING THE TERM OF THIS
AGREEMENT.  THE LIMITATIONS SET FORTH
HEREIN SHALL APPLY NOTWITHSTANDING THE FAILURE OF THE ESSENTIAL PURPOSE OF ANY
LIMITED WARRANTIES OR REMEDIES SET FORTH IN THIS AGREEMENT.

 

9.                                       GENERAL
PROVISIONS

 

9.1                                 Entire
Agreement.  This Agreement
represents the entire Agreement between the parties on the subject matter
hereof and supersedes all prior discussions, agreements, and understandings of
every kind and nature between them.  No
modification or amendment of this Agreement shall be effective unless in
writing and signed by both parties.

 

9.2                                 Notices.  All notices under this Agreement shall be in
writing and addressed to the parties at the following addresses:

 

	
   

  	
  If to Biosite

  	
  With copy to:

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  Biosite Incorporated

  	
  Gray Cary Ware & Freidenrich LLP

  	 

	
   

  	
   

  	
  11030 Roselle Street, Suite D

  	
  4365 Executive Drive, Suite 1100

  	 

	
   

  	
   

  	
  San Diego, California 92121

  	
  San Diego, California 92121-2133

  	 

	
   

  	
   

  	
  Attention: President

  	
  Attention: Mark R. Wicker, Esq.

  	 

	
   

  	
   

  	
   

  
	
   

  	
  If to PSS:

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  PSS World Medical, Inc.

  	
   

  	 

	
   

  	
   

  	
  4345 Southpoint Boulevard

  	
   

  	 

	
   

  	
   

  	
  Jacksonville, FL 32216

  	
   

  	 

	
   

  	
   

  	
  Attention: President

  	
   

  	 

						

 

or to such other
address of which either party may advise the other in writing.  Notices shall be effective on receipt.

 

9.3                                 Force
Majeure.  Each party shall be
excused from any delay or failure in performance of any obligation hereunder
(other than an obligation for the payment of money) caused by reason of any
occurrence or contingency beyond its reasonable control, including, but not
limited to an act of God, earthquake, labor disputes, riots, government
requirements, regulatory and environmental requirements, inability to secure
materials and transportation difficulties.  The obligations and rights of the party so excused shall be
extended on a day-to-day basis for the time period equal to the period of such
excusable delay.

 

9.4                                 Assignments.  Neither this Agreement nor any right or
obligation hereunder may be assigned or otherwise transferred (whether
voluntarily, by operation of law or otherwise), without the prior express
written consent of the other party; provided, however, that either party may,
without such consent, assign this Agreement and its rights and obligations
hereunder in connection with the transfer or sale of all or

 

9

 

substantially all of its
business, or in the event of its merger, consolidation, change in control or
similar transaction.  Any permitted assignee
shall assume all obligations of its assignor under this Agreement.  Any purported assignment or transfer in
violation of this Section 9.4 shall be void.

 

9.5                                 Applicable
Law.  This Agreement shall be
construed and enforced in accordance with the laws of the State of California,
without regard to its conflict of laws provisions.

 

9.6                                 Waiver.  No term or provision hereof will be
considered waived by either party, and no breach excused by either party,
unless such waiver or consent is in writing signed on behalf of the party
against whom the waiver is asserted.  No
consent by either party to, or waiver of, a breach by either party, whether
express or implied, will constitute a consent to, waiver of, or excuse of any
other, different, or subsequent breach by either party.

 

IN WITNESS WHEREOF, Biosite and PSS have caused this
Agreement to be executed by their duly authorized representatives, as of the
date year first above written.

 

	
  BIOSITE INCORPORATED

  	
  PSS WORLD MEDICAL, INC.

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Christopher
  J. Twomey

  	
   

  	
  By:

  	
  /s/ Gary A.
  Corless

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice President
  Finance, CFO

  	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John F. 
  Sasen, Sr.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  EVP and Chief Marketing Officer

  	
   

  
										

 

10

 

SCHEDULE
A

 

PRODUCTS AND PRICING

 

Part 1

 

	
  Catalog

  Number

  	
   

  	
  Product

  	
   

  	
  Size

  	
   

  	
  Transfer Price

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  

 

Part 2

 

	
  Catalog

  Number

  	
   

  	
  Product

  	
   

  	
  Size

  	
   

  	
  Transfer Price

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  

 

11

 

[***]

 

 

12

 

SCHEDULE
B

 

PHYSICIAN OFFICE PRACTICE
AND TERRITORY

 

Physician Office Practice means
[***]

 

Territory
means the United States and Puerto Rico.

 

13

 

SCHEDULE
C

 

PERFORMANCE
CRITERIA

 

Minimum Sales Objectives:

 

	
  Measurement Period

  	
   

  	
  End User [***]

  	
   

  	
  End User [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  

 

14

 

SCHEDULE
D

 

SUPPORT FROM PSS

 

PSS
shall perform the following activities at no charge to Biosite:

 

1.             [***]

2.             [***]

 

3.             [***]

4.             [***]

 

5.             [***]

6.             [***]

 

7.             [***]

 

15

 

SCHEDULE E

 

SUPPORT FROM BIOSITE

 

Biosite
shall provide Product marketing support to PSS in the Territory for the Physician Office Practices as follows:

 

1.                     [***]

 

	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  

 

2.                    [***]

3.                    [***]

4.                    [***]

5.                    [***]

6.                    [***]

7.                     [***]

8.                     [***]

9.                     [***]

10.               [*** ]

11.               [***]

 

16

 

SCHEDULE
F

 

PRICE INCENTIVE
OBJECTIVES FOR CALENDAR YEAR 2003

 

	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  

 

17

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