Document:

Amendment No. 1 to Distribution Agreement

 EXHIBIT 10.04 
  
 AMENDMENT NO. 1 TO DISTRIBUTION AGREEMENT

  
 THIS FIRST AMENDMENT TO THE DISTRIBUTION AGREEMENT (this
“Amendment”) is made and entered into and effective as of the 14th day of June, 2002, (“Effective Date”), between PARALLAX MEDICAL, INC., a California corporation having offices in Scotts Valley, California
(“PMI”), and MEDTRONIC SOFAMOR DANEK, INC., an Indiana corporation having offices in Memphis, Tennessee (“MSD”). This Agreement amends the Distribution Agreement between PMI and MSD dated April 1, 2000 (the
“Distribution Agreement”). 
  
 BACKGROUND 
  

	A.	 	PMI and MSD entered into the Distribution Agreement on April 1, 2000, under which PMI granted to MSD and its affiliates the exclusive rights to distribute and sell certain PMI
Product. 

  

	B.	 	MSD and PMI have disputed the amount of money MSD is obligated to pay PMI under the Distribution Agreement, particularly with regard to MSD’s forecasted orders and sales of
PMI’s products and any penalties PMI claims it is entitled to in relation to those forecasts by MSD. 

  

	C.	 	PMI and MSD executed a Term Sheet dated March 7, 2002, attached to this Amendment as Exhibit A (the “Term Sheet”) that outlined the initial terms of their
understanding and which is superceded and terminated by this Amendment. 

  

	D.	 	MSD and PMI each wish to make the Distribution Agreement non-exclusive and to eliminate all penalties or payments that MSD may have owed PMI in connection with forecasts by MSD
under the Distribution Agreement. 

  
 AGREEMENT 
  
 In consideration for
the mutual covenants contained in this Amendment and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, and intending to be legally bound hereby, PMI and MSD hereby agree as follows: 
  

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 ARTICLE 1 
 AMENDMENTS 
  

	1.1	 	Amendment to ARTICLE 2. The heading of ARTICLE 2 of the Distribution Agreement is hereby amended and restated as follows: 

  
 “ARTICLE 2 
 APPOINTMENT AS NON-EXCLUSIVE DISTRIBUTOR” 
  

	1.2	 	Amendment to Section 1.9. Section 1.9 of the Distribution Agreement is hereby amended and restated in its entirety as follows: 

  

	 	“1.9	 	MSD Field” means sales resulting from sales contacts with orthopedic surgeons and/or neurospinal surgeons. PMI agrees and acknowledges that PMI shall not market and/or sell PMI
Product in the MSD field.” 

  

	1.3	 	Amendment to Section 2.1. Section 2.1 of the Distribution Agreement is hereby amended and restated as follows: 

  

	 	“2.1	 	Subject to the terms and conditions of this agreement, PMI hereby appoints MSD as a non-exclusive U.S. distributor for PMI Product in the MSD Field. MSD will have the right to
distribute PMI Product outside of the United States in those countries identified on the schedule attached to this Amendment as Exhibit B. Furthermore, MSD will have the right to distribute PMI Product in countries not identified on Exhibit B
only after PMI approves an MSD business plan for the distribution of PMI Product in those countries (on a country by country basis) and those countries are added to Exhibit B. PMI acknowledges that prior to the execution of this Amendment MSD
may have purchased PMI Product for distribution in countries not identified in Exhibit B. PMI hereby agrees to purchase from MSD all such PMI Product at the purchase price per unit of PMI Product to MSD specified in the Distribution
Agreement.” 

  

	1.4	 	Amendment of Section 2.6. Section 2.6 of the Distribution Agreement is hereby eliminated from the Distribution Agreement in its entirety. 

  

	1.5	 	Amendment of Section 3.1. Section 3.1 of the Distribution Agreement is hereby amended and restated in its entirety as follows: 

  

	 	“3.1	 	MSD will exercise reasonable efforts, consistent with the exercise of good faith business judgment, to market, sell and distribute PMI Product in the MSD Field. Such efforts will
include, without limitation, developing marketing, sales and training literature and aids for PMI Product, and exhibiting PMI Product at meetings that include medical professionals in the MSD Field. MSD will not solicit or provide, and will instruct
its sales force not to solicit or provide service outside of the MSD Field for the duration of this agreement beginning September 1, 2002. MSD will also 

  
  

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	 	    	 	make reasonable efforts to prevent its sales force from soliciting or providing service outside the MSD Field for the duration of this agreement beginning September 1, 2002. After
September 1, 2002 MSD will make reasonable efforts to refer to PMI all inquiries or requests for PMI Product, or for service, assistance, information or advice regarding PMI Product that MSD receives from or on behalf of physicians MSD knows to be
outside the MSD Field.” 

  

	1.6	 	Amendment of Section 3.4. Section 3.4 of the Distribution Agreement is hereby amended and restated in its entirety as follows: 

  

	 	“3.4	 	MSD will market and sell PMI Product to orthopedic spine surgeons and to neurosurgeons; provided, however, that nothing in this agreement prevents MSD from developing or
distributing Competitive Product.” 

  

	1.7	 	Amendment of Article 4. Sections 4.2 and 4.5 of the Distribution Agreement are hereby eliminated from the Distribution Agreement in their entirety. 

 

	1.8	 	Amendment of Article 4.4. Section 4.4 of the Distribution Agreement is hereby amended and restated in its entirety as follows: 

  

	 	“4.4	 	PMI will exercise reasonable efforts, consistent with the exercise of good faith business judgment, to obtain the CE Mark for all PMI Products. 

  

	1.9	 	Amendment of Section 5.3. Section 5.3 of the Distribution Agreement is hereby modified by omitting “(60)” and inserting “(90)”. 

 

	1.10	 	Amendment of Section 5.4. Section 5.4 of the Distribution Agreement is hereby amended and restated in its entirety as follows: 

  

	 	“5.4	 	MSD may accelerate or defer delivery of up to 30% of PMI Products for Products scheduled to be delivered per the purchase order between 31 and 60 days from initial notice of change
of delivery date and up to 50% of Products scheduled to be delivered per the purchase order between 61 and 90 days from initial notice of change of delivery date; provided however that MSD shall take delivery of all PMI products within sixty (60)
days of the original delivery date shown on the purchase order or any date mutually agreed upon. MSD may cancel purchase orders, in whole or in part, according to the schedule set forth below and will pay the appropriate Cancellation Charges set
forth below to PMI based on the percentage of the aggregate price for PMI Products canceled under such purchase orders. 

  

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	Days Prior to Delivery Date	 	Cancellation Privilege
	

	0 to 30 Days	 	Not Allowed
	

	31 to 60 Days	 	Allowed; 50% Cancellation Charge
	

	61 to 90 Days	 	Allowed: 25% Cancellation Charge
	

  

	1.11	 	Amendment of Section 7.6. Section 7.6 of the Distribution Agreement is hereby amended and restated in its entirety as follows: 

  

	 	“7.6	 	Notwithstanding any other provisions hereof, in no event will the price paid for any PMI Product (other than the Parallax Patient Prep Kits) hereunder be less than PMI’s
Minimum Sales Price. From time to time, but no more frequently than every six months, PMI will provide MSD in writing a list of all PMI Product with a price that neither MSD, PMI or their respective affiliates may sell each PMI Product below (the
“Minimum Sales Price”). The parties expressly agree and acknowledge that should either of them sell PMI Product at a price below the Minimum Sales Price, such a sale would constitute a breach pursuant to Section 10.2(a) of the Distribution
Agreement. 

  
 ARTICLE 2 
 ADDITIONAL AGREEMENTS 
  

	2.1	 	Settlement of Disputed Amounts PMI Claims to be Owed by MSD. PMI hereby cancels and withdraws all invoices issued to and received by MSD prior to the Effective Date regarding
cancellation fees or damages related to the Distribution Agreement. 

  

	2.2	 	Entire Agreement; Ratification. The terms and conditions set forth in this Amendment will modify and supercede all inconsistent terms and provisions set forth in the
Distribution Agreement. Except as expressly modified or superceded by this Amendment, the terms and provisions of the Distribution Agreement are hereby ratified and confirmed and will continue in full force and effect. Except for the Services
Agreement between PMI and MSD dated July 5, 2001, this Amendment and the Distribution Agreement constitute the entire agreement among the undersigned with respect to the subject matter thereof. This Amendment and the Distribution Agreement supercede
all prior agreements or understandings with respect to the subject matter thereof, including the Term Sheet and the Services Agreement. 

  

	2.3	 	Term Sheet Superceded and Terminated. The Term Sheet is hereby terminated and as a result the parties thereto have no further rights or obligations under the Term Sheet.

  
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 IN WITNESS WHEREOF, each of the parties has caused this Amendment to be executed in the manner
appropriate to each, effective as of the date first written above. 
  

	 	 	 	 	PARALLAX MEDICAL, INC.
					
	 	 	 	 	 	 	By:	 	 /s/    HOWARD PREISSMAN

					
	 	 	 	 	 	 	Its:	 	 President & CEO

					
	 	 	 	 	 	 	Date:	 	 June 18, 2002

			
	 	 	 	 	MEDTRONIC SOFAMOR DANEK, INC.
					
	 	 	 	 	 	 	By:	 	 /s/    PETER WEHRLY

					
	 	 	 	 	 	 	Its:	 	 President, Interbody Division

					
	 	 	 	 	 	 	Date:	 	 June 19, 2002

  
 [SIGNATURE PAGE OF
AMENDMENT NO.1 OF THE DISTRIBUTION AGREEMENT]Termination Agreement

 EXHIBIT 10.05 
  
 TERMINATION AGREEMENT 
  
 This Termination Agreement (“Termination Agreement”) is made as of this 16th day of January, 2003, between
PARALLAX MEDICAL, INC., a California corporation having offices in Mountain View, California (“PMI”), and MEDTRONIC SOFAMOR DANEK, INC., an Indiana corporation having offices in Memphis, Tennessee (“MSD”).

  
 BACKGROUND 
  

	A.	 	PMI and MSD entered into a Distribution Agreement on April 1, 2000 (the “Distribution Agreement”), as amended in writing on June 14, 2002 (the
“Amendment”), under which PMI granted to MSD and its affiliates the exclusive rights to distribute and sell certain PMI products (the Distribution Agreement and the Amendment are referred to collectively in this Termination
Agreement as the “Amended Distribution Agreement”). 

  

	B.	 	PMI and MSD entered into a Services Agreement on July 5, 2002, regarding the distribution of PMI products in European markets (the “Services Agreement”).

  

	C.	 	The parties intend to terminate all agreements between them, including the Amended Distribution Agreement and Services Agreement, except as explicitly stated otherwise in this
Termination Agreement. 

  
 AGREEMENT 
  
 For good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 
  
 1. Defined Terms; Termination of Amended Distribution Agreement and Services Agreement. 
  

	 	A.	 	Terms not defined in this Termination Agreement will have the meaning ascribed to them in the Amended Distribution Agreement. 

  

	 	B.	 	Except as otherwise stated in this Termination Agreement, MSD and PMI hereby agree to terminate the Amended Distribution Agreement and Services Agreement as well as all other
existing oral and written agreements between MSD and PMI effective February 1, 2003. Upon execution of this Termination Agreement by both MSD and PMI, there will be no other agreements existing of any kind between MSD and PMI, other than as
described in this Termination Agreement. Accordingly, it is the parties’ intent to hereby terminate all agreements and obligations between the parties other than those explicitly stated in this Termination Agreement. 

 
 2. Survival of Certain Provisions. The following sections of the Distribution
Agreement will continue in full force and effect after the date of this Termination Agreement: 6.2, 6.3, 8.3, 8.5, 11.1 and 11.6. Sections 2.1 and 2.2 of the Services Agreement, and Section 2.1 of the Amendment, will also continue in full force and
effect after the date of this Termination Agreement. In addition MSD’s authorized Representative Agreement/status will remain in effect for 180 days after the date of this Termination Agreement unless earlier written notification of
cancellation is sent by PMI. No other provisions of the Amended Distribution Agreement or Services Agreement will survive after the date of this Termination Agreement. 
  
 3. Repurchase of Inventory. Attached as Schedule 3 hereto is a listing of PMI Products purchased by MSD, and that PMI will repurchase
from MSD, together with the prices that PMI will pay to MSD upon the repurchase of those products from MSD. MSD and its subsidiaries will continue to distribute and sell the Current Inventory through January 31, 2003, but will be under no obligation
to purchase additional PMI Products from PMI. All outstanding purchase orders issued by MSD to PMI, including MSD PO numbers 137114 and 142081, are hereby cancelled, with no further obligation on the part of MSD or PMI. On February 1, 2003, PMI will
purchase from MSD those quantities of the PMI Products listed on Schedule 3 that are still in MSD’s inventory, at the prices listed 

 
on Schedule 3, F.O.B. Memphis, Tennessee. MSD will ship the products to PMI, shipping prepaid, for delivery on or before February 28, 2003, and PMI will
promptly reimburse MSD for the actual costs of shipping the products to PMI. Amounts due from PMI under this section 3 shall be due not later than February 28, 2003. At the same time as the goods listed on Schedule 3 are shipped MSD will also ship
to PMI all other PMI produced or PMI labeled inventory in the possession of MSD. 
  
 4. Business Transition 
  

	 	A.	 	The first day for PMI to commence direct sales to MSD’s former PMI customers will be February 3, 2003. 

  

	 	B.	 	Upon the signing of this Agreement MSD will furnish to PMI a complete list of all foreign and domestic customers who have purchased PMI products. The list shall include at a
minimum: name, address and phone number. 

  

	 	C.	 	Upon Signing this agreement MSD will provide to each of its sales representatives and to PMI a “Dear Customer” in the form attached as Exhibit A hereto letter that clearly
describes the transition and provides the necessary information for customers to contact PMI to place future orders. PMI will be authorized to distribute this letter to customers. 

  

	 	D.	 	On the date specified in section 4.A MSD will instruct its customer service department to forward all telephone, fax and email inquiries and orders directly to the PMI customer
service department. 

  

	 	E.	 	Before the date specified in Section 4.A MSD will provide to PMI a list of all commitments (workshops, trade shows, training courses) made on behalf of the PMI product line.

  
 5. Miscellaneous. 
  

	 	A.	 	Publicity. Except as otherwise required by law, press releases or public disclosure concerning this Termination Agreement will be made only with the prior written consent of
MSD. 

  

	 	B.	 	Notices. All notices required or permitted to be given under this Termination Agreement will be in writing and may be delivered by hand, by facsimile, by nationally
recognized private carrier, or by United States mail. Notices delivered by mail will be deemed given three business days after being deposited in the United States mail, postage prepaid, registered or certified mail. Notices delivered by hand by
facsimile, or by nationally recognized private carrier will be deemed given on the first business day following receipt; provided, however, that a notice delivered by facsimile will only be effective if such notice is also delivered by hand, or
deposited in the United States mail, postage prepaid, registered or certified mail, on or before two business days after its delivery by facsimile. All notices will be addressed as follows: 

  
 If to PMI: 
  
 Parallax Medical Inc. 
  
 940 Disc Drive 
 Scotts Valley, CA 95066 
 Attn: Howard Preissman 
 Fax: (831) 439-1725 
  

 2 

 If to MSD: 
  
 Medtronic Sofamor Danek, Inc. 
 1800 Pyramid Place 
 Memphis, Tennessee 38132 
 Attn: Legal Department 
 Fax: (901) 344-1576 
  
 or to such other respective addresses as may be designated by notice given in accordance with the provisions of this Section 5.B. 
  

	 	C.	 	Entire Agreement. This Termination Agreement, along with the selected provisions of the Amended Distribution Agreement and Services Agreement cited in this Termination
Agreement to remain in full force and effect, constitute the entire agreement between the parties. Each recital, background paragraph, exhibit, schedule and attachment referred to in this Termination Agreement hereby are incorporated into this
Termination Agreement by this reference. Any amendments, or alternative or supplementary provisions to this Termination Agreement must be made in writing and duly executed by an authorized representative or agent of each of the parties hereto.

  

	 	D.	 	Survival; Non-Waiver. The failure in any one or more instances of a party to insist upon performance of any of the terms, covenants or conditions of this Termination
Agreement, to exercise any right or privilege in this Termination Agreement conferred, or the waiver by said party of any breach of any of the terms, covenants or conditions of this Termination Agreement, will not be construed as a subsequent waiver
of any such terms, covenants, conditions, right or privileges, but the same will continue and remain in full force and effect as if no such forbearance or waiver had occurred. No waiver will be effective unless it is in writing and signed by an
authorized representative of the waiving party. 

  

	 	E.	 	Applicable Law; Venue. This Termination Agreement will be construed and interpreted in accordance with and governed by the laws of the State of Tennessee, exclusive of its
provisions relating to conflicts of laws. Any legal proceeding related to this Termination Agreement will be commenced only in a state or federal court located in Shelby County, Tennessee, and the parties hereby expressly consent to the exercise of
personal jurisdiction by such court over them for any dispute(s) arising under or related to this Termination Agreement. 

  

	 	F.	 	Binding Effect; Benefit. This Termination Agreement will inure to the benefit of and be binding upon the parties hereto, and their successors and permitted assigns. Nothing
in this Termination Agreement, express or implied, is intended to confer on any person other than the parties hereto, and their respective successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this
Termination Agreement. 

  

	 	G.	 	Assignability. This Termination Agreement will not be assignable by either party without the prior written consent of the other party, except that MSD may assign its rights
and delegate its duties under this Termination Agreement to any of its subsidiaries or affiliates. No such assignment will relieve MSD of any of its liabilities under this Termination Agreement. 

  

	 	H.	 	Amendments. This Termination Agreement will not be modified or amended except pursuant to an instrument in writing executed and delivered on behalf of each of the parties
hereto. 

  

	 	I.	 	Headings. The headings contained in this Termination Agreement are for convenience of reference only and will not affect the meaning or interpretation of this Termination
Agreement. 

  
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 3 

 IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written. 

 

	 PMI:
  
 Parallax Medical Inc.,
         a
California corporation

		
	By:	 	/s/    HOWARD PREISSMAN        
	 	

	 	 	Howard Preissman, President

  
  

	 MSD:
  
 Medtronic Sofamor Danek, Inc.,
         an Indiana corporation

		
	By:	 	/s/    MICHAEL F. DEMANE        
	 	

	 	 	Michael F. DeMane, President

  
  
 [SIGNATURE PAGE OF TERMINATION AGREEMENT]

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