Document:

Exhibit 10.1

 

EXECUTION COPY

 

RITE AID CORPORATION.
 $810,000,000 6.75% Senior Notes due 2021

 

EXCHANGE AND REGISTRATION RIGHTS AGREEMENT

 

July 2, 2013

 

Citigroup Global Markets Inc.

Merrill Lynch, Pierce, Fenner & Smith Incorporated

Wells Fargo Securities, LLC

Goldman, Sachs & Co.

Morgan Stanley & Co. LLC

As Initial Purchasers

c/o Citigroup Global Markets Inc.

388 Greenwich Street

New York, New York 10013

 

Ladies and Gentlemen:

 

Rite Aid Corporation, a Delaware corporation (the “Company”), proposes to issue and sell, upon the terms set forth in a purchase agreement dated June 18, 2013 (the “Purchase Agreement”), to the initial purchasers set forth in the Purchase Agreement (the “Initial Purchasers”), $810,000,000 aggregate principal amount of its 6.75% Senior Notes due 2021 (the “Securities”) to be guaranteed by the subsidiary guarantors listed on Schedule I hereto (the “Subsidiary Guarantors”) relating to the initial placement of the Securities (the “Initial Placement”).  Capitalized terms used but not defined herein shall have the meanings given to such terms in the Purchase Agreement.

 

As an inducement to the Initial Purchasers to enter into the Purchase Agreement, and as satisfaction of the conditions thereunder, the Company and the Subsidiary Guarantors agree with you for your benefit and the benefit of the holders from time to time of the Securities (including the Initial Purchasers) and the Exchange Securities (as defined herein) (each a “Holder” and collectively, the “Holders”), as follows:

 

1.  Registered Exchange Offer.  Unless the Registered Exchange Offer (as defined herein) shall not be permitted by applicable law or applicable interpretation of the staff of the Securities and Exchange Commission (the “SEC” or “Commission”), the Company shall (i) prepare and, not later than 150 days following the date of the original issuance of the Securities (the date of such issuance being referred to herein as the “Issuance Date”), file with the Commission a registration statement (the “Exchange Offer Registration Statement”) on an appropriate form under the Securities Act with respect to a proposed offer to the Holders of the Securities (the “Registered Exchange Offer”) to

 

 

issue and deliver to such Holders, in exchange for the Securities a like aggregate principal amount of debt securities of the Company (the “Exchange Securities”) that are substantially identical in all material respects to the Securities, except for the transfer restrictions relating to the Securities, (ii) use its commercially reasonable efforts to cause the Exchange Offer Registration Statement to become effective under the Securities Act no later than 210 days after the Issuance Date and (iii) as soon as practicable after the effectiveness of the Exchange Offer Registration Statement, initiate the Registered Exchange Offer as set forth in the following paragraph.  The Exchange Securities will be issued under the same indenture as the Securities (the “Indenture”) dated as of July 2, 2013, among the Company, the Subsidiary Guarantors and the Trustee or such other bank or trust company that is reasonably satisfactory to the Initial Purchasers, as trustee (the “Trustee”), with such modifications as may be appropriate to account for the registration of the Exchange Securities under the Securities Act.

 

Upon the effectiveness of the Exchange Offer Registration Statement, the Company shall commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder electing to exchange Securities for Exchange Securities (assuming that such Holder (a) is not an affiliate of the Company or an Exchanging Dealer (as defined herein) not complying with the requirements of the next sentence, (b) is not holding Securities that have, or that are reasonably likely to have, the status of an unsold allotment in the Initial Placement, (c) acquires the Exchange Securities in the ordinary course of such Holder’s business and (d) has no arrangements or understandings with any person to participate, and is not participating, in the distribution of the Exchange Securities) and to trade such Exchange Securities from and after their receipt without any limitations or restrictions under the Securities Act and without material restrictions under the securities laws of the several states of the United States.  The Company, the Holders and each Exchanging Dealer acknowledge that, pursuant to current interpretations by the Commission’s staff of Section 5 of the Securities Act, each Holder that is a Broker-Dealer electing to exchange Securities, acquired for its own account as a result of market-making activities or other trading activities, for Exchange Securities (an “Exchanging Dealer”), is required, in connection with a sale of any such Exchange Securities received by such Exchanging Dealer pursuant to the Registered Exchange Offer, to deliver a prospectus containing substantially the information set forth (i) in Annex A hereto on the cover of such prospectus, (ii) in Annex B hereto in the “Exchange Offer Procedures” section and the “Purpose of the Exchange Offer” section of such prospectus and (iii) in Annex C hereto in the “Plan of Distribution” section of such prospectus, in each case subject to any changes, additions, deletions or moving of such disclosure required by the SEC.

 

In connection with the Registered Exchange Offer, the Company shall:

 

(a)  deliver to each Holder of Securities a copy of the prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents;

 

(b)  keep the Registered Exchange Offer open for not less than 30 days and not more than 60 business days (or, in each case, longer, if required by applicable

 

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law) after the date on which notice of the Registered Exchange Offer is delivered to the Holders of Securities and the Initial Purchasers;

 

(c)  utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan, The City of New York;

 

(d)  permit Holders to withdraw tendered Securities at any time prior to the end of the Registered Exchange Offer, as set forth in the materials originally delivered to Holders of Securities or otherwise extended by the Company;

 

(e)  comply with all requests of the Securities and Exchange Commission in order to consummate the Registered Exchange Offer; and

 

(f)  comply in all respects with all laws that are applicable to the Registered Exchange Offer.

 

As soon as practicable after the close of the Registered Exchange Offer, the Company shall:

 

(a)  accept for exchange all Securities tendered and not validly withdrawn pursuant to the Registered Exchange Offer;

 

(b)  deliver to the Trustee for due cancelation all Securities so accepted for exchange; and

 

(c)  cause the Trustee for the Exchange Securities promptly to authenticate and deliver to each Holder, Exchange Securities equal in principal amount to the Securities of such Holder so accepted for exchange.

 

The Company shall use its best efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the prospectus contained therein in order to permit such prospectus to be used by all persons subject to the prospectus delivery requirements of the Securities Act for such period of time as such persons must comply with such requirements in order to resell the Exchange Securities; provided that (i) in the case where such prospectus and any amendment or supplement thereto must be delivered by an Exchanging Dealer, such period shall be the earlier of 210 days from the close of the Registered Exchange Offer and the date on which all Exchanging Dealers have sold all Exchange Securities held by them and (ii) the Company shall make such prospectus and any amendment or supplement thereto available to any Broker-Dealer for use in connection with any resale of any Exchange Securities for a period of not less than 90 days after the consummation of the Registered Exchange Offer.

 

Notwithstanding the foregoing, during any 365-day period, the Company may suspend the effectiveness of the Exchange Offer Registration Statement or the Shelf Registration Statement (i) in relation to a Shelf Registration Statement, solely for the purpose of filing of a post-effective amendment to such Shelf Registration Statement for such time as is reasonably necessary to incorporate annual audited financial information,

 

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quarterly financial information or other information required by the Commission with respect to the Company (a “Shelf Suspension Period”) where such post-effective amendment is not yet effective and needs to be declared effective to permit Holders of the Securities to use the related prospectus and the Company is using its commercially reasonable best efforts to have such post-effective amendment declared effective or (ii) for up to 2 periods (each such period pursuant to this clause (ii) a “Suspension Period”) of up to 45 consecutive days (except for the consecutive 45-day period immediately prior to maturity of the Securities), but no more than an aggregate of 75 days during any 365-day period, if there is a possible acquisition or business combination or other transaction, business development or event involving the Company that may require disclosure in the Exchange Offer Registration Statement or the Shelf Registration Statement and the Company determines in the exercise of its reasonable judgment that such disclosure is not in the best interests of the Company and its stockholders or obtaining any financial statements relating to an acquisition or business combination required to be included in the Exchange Offer Registration Statement or the Shelf Registration Statement would be impracticable.  In such a case, the Company shall promptly notify any such Broker-Dealers of the suspension of the effectiveness of the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, provided that such notice shall not require the Company to disclose the possible acquisition or business combination or other transaction, business development or event if the Company determines in good faith that such acquisition or business combination or other transaction, business development or event should remain confidential.  Upon the abandonment, consummation or termination of the possible acquisition or business combination or other transaction, business development or event or the availability of the required financial statements with respect to a possible acquisition or business combination, the suspension of the use of the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, pursuant to this paragraph shall cease and the Company shall promptly notify such Broker-Dealers that the use of the prospectus contained in the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, as amended or supplemented, as applicable, may resume.  The Company shall provide sufficient copies of the latest version of such prospectus to such Broker-Dealers, promptly upon written request, and in no event later than one Business Day after such request, at any time during such period.

 

The Indenture shall provide that the Securities and the Exchange Securities shall vote and consent together on all matters as to which the Indenture provides for voting and consent as one class and that neither the Securities nor the Exchange Securities will have the right to vote or consent as a separate class on any matter.

 

Interest on each Exchange Security issued pursuant to the Registered Exchange Offer will accrue from the last interest payment date on which interest was paid on the Securities surrendered in exchange therefor or, if no interest has been paid on the Securities, from the date of original issuance of the Securities.

 

Each Holder hereby acknowledges and agrees that any such Holder using the Registered Exchange Offer to participate in a distribution of the Exchange Securities

 

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(x) could not under Commission policy as in effect on the date of this Agreement rely on the position of the Commission in Morgan Stanley and Co., Inc. (pub. avail. June 5, 1991) and Exxon Capital Holdings Corporation (pub. avail. May 13, 1988), as interpreted in the Commission’s letter to Shearman & Sterling dated July 2, 1993 and similar no-action letters, and (y) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any secondary resale transaction which must be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K under the Securities Act if the resales are of Exchange Securities obtained by such Holder in exchange for Securities acquired by such Holder directly from the Company or one of its affiliates.  Accordingly, each Holder participating in the Registered Exchange Offer shall be required to represent to the Company that at the time of the consummation of the Registered Exchange Offer (i) any Exchange Securities received by such Holder will be acquired in the ordinary course of business, (ii) such Holder will have no arrangements or understanding with any person to participate, and is not participating, in the distribution of the Securities or the Exchange Securities within the meaning of the Securities Act, (iii) such Holder is not an affiliate of the Company or, if it is such an affiliate (as defined in Section 10(e)), such Holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable, (iv) it is not acting on behalf of any person who, to its knowledge, could not truthfully make the foregoing representations and (v) it shall have made such other representations as may be reasonably necessary under applicable SEC rules, regulations or interpretations to render the use of Form S-4 or another appropriate form under the Securities Act available or for the Exchange Offer Registration Statement to be declared effective.  To the extent permitted by law, upon the written request of the Initial Purchasers, the Company shall inform the Initial Purchasers of the names and addresses of the Holders to whom the Exchange Offer is made, and the Initial Purchasers shall have the right to contact such Holders and otherwise facilitate the tender of Securities in the Exchange Offer.

 

Notwithstanding any other provisions hereof, the Company will ensure that (i) any Exchange Offer Registration Statement and any amendment thereto and any prospectus forming part thereof and any supplement thereto shall comply in all material respects with the Securities Act and the rules and regulations of the Commission thereunder, (ii) any Exchange Offer Registration Statement and any amendment thereto shall not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Exchange Offer Registration Statement, and any supplement to such prospectus, shall not, as of the consummation of the Registered Exchange Offer, include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

If any Initial Purchaser determines that it is not eligible to participate in the Registered Exchange Offer with respect to the exchange of Securities constituting any portion of an unsold allotment, at the written request of such Initial Purchaser, the Company shall issue and deliver to such Initial Purchaser or the person purchasing Exchange Securities registered under a Shelf Registration Statement (as contemplated by

 

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Section 2 hereof) from such Initial Purchaser, in exchange for such Securities, a like principal amount of Exchange Securities.  The Company shall use its best efforts to cause the CUSIP Service Bureau to issue the same CUSIP number for such Exchange Securities as for Exchange Securities issued pursuant to the Registered Exchange Offer.

 

2.  Shelf Registration.  If (i) because of any change in law or applicable interpretations thereof by the Commission’s staff the Company is not permitted to effect the Registered Exchange Offer as contemplated by Section 1 hereof, (ii) the Exchange Offer Registration Statement is not declared effective within 210 days after the Issuance Date or the Registered Exchange Offer is not consummated within 270 days after the Issuance Date, (iii) a Holder (including an Initial Purchaser) of Securities notifies the Company following the completion of the Registered Exchange Offer that the Securities held by such Holder are not eligible to be exchanged for Exchange Securities in the Registered Exchange Offer, (iv) certain Holders (other than the Initial Purchasers) of the Securities are prohibited by law or the policy of the Commission from participating in the Registered Exchange Offer or the Exchange Securities may not be freely transferable by such Holders other than by reason of such Holder being an affiliate of the Company (it being understood that the requirement that a participating Broker-Dealer deliver the prospectus contained in the Exchange Offer Registration Statement in connection with sales of Exchange Securities shall not result in such Exchange Securities being not “freely transferable”), or (v) in the case of any Initial Purchaser that participates in the Registered Exchange Offer or acquires Exchange Securities pursuant to Section 1(d) hereof, such Initial Purchaser does not receive freely tradeable Exchange Securities in exchange for Securities constituting any portion of an unsold allotment (it being understood that (x) the requirement that an Initial Purchaser deliver a prospectus containing the information required by Item 507 or 508 of Regulation S-K under the Securities Act in connection with sales of Exchange Securities acquired in exchange for such Securities shall not result in such Exchange Securities not being “freely transferable” and (y) the requirement that an Exchanging Dealer deliver a prospectus in connection with sales of Exchange Securities acquired in the Registered Exchange Offer in exchange for Securities acquired as a result of market-making activities or other trading activities shall not result in such Exchange Securities being not “freely transferable”), then the following provisions shall apply:

 

(a)  The Company shall promptly (i) file (but in no event more than 30 days after so required or requested pursuant to this Section 2) with the Commission, and, if such registration statement is not a registration statement that shall become effective upon filing thereof pursuant to General Instruction I.D. of Form S-3 (an “Automatic Shelf Registration Statement”), thereafter shall use their reasonable best efforts to cause to be declared effective, a shelf registration statement on an appropriate form under the Securities Act relating to the offer and sale of the Transfer Restricted Securities (as defined herein) by the Holders thereof from time to time in accordance with the methods of distribution set forth in such registration statement (hereafter, a “Shelf Registration Statement” and, together with any Exchange Offer Registration Statement, a “Registration Statement”) or (ii) solely at its option, in lieu of filing a shelf registration statement and causing such registration statement to be declared effective as described in clause (i) above, designate, by means of an Officers’ Certificate (as defined in the

 

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Indenture), an existing Automatic Shelf Registration Statement as a Shelf Registration Statement able to be used for the offer and sale of the Transfer Restricted Securities.

 

(b)  Subject to any Suspension Periods provided for in Section 1, the Company shall keep the Shelf Registration Statement continuously effective, supplemented and amended, or shall file additional registration statements, as required by the Securities Act, in order to permit the prospectus forming part thereof to be used by Holders of Transfer Restricted Securities for a period ending on the earlier of (i) one year from the effective date of the Shelf Registration Statement or such shorter period that will terminate when all the Transfer Restricted Securities covered by the Shelf Registration Statement have been sold pursuant thereto and (ii) the date the Transfer Restricted Securities cease to be outstanding (in any such case, such period being called the “Shelf Registration Period”).  The Company shall be deemed not to have complied with this paragraph (b) if it voluntarily takes any action that would result in Holders of Transfer Restricted Securities covered thereby not being able to offer and sell such Transfer Restricted Securities during that period, unless such action is required by applicable law.

 

(c)  Notwithstanding any other provisions hereof, the Company shall ensure that (i) any Shelf Registration Statement and any amendment thereto and any prospectus forming part thereof and any supplement thereto complies in all material respects with the Securities Act and the rules and regulations of the Commission thereunder, (ii) any Shelf Registration Statement and any amendment thereto (in either case, other than with respect to information included therein in reliance upon or in conformity with written information furnished to the Company by or on behalf of any Holder specifically for use therein (the “Holders’ Information”)) does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Shelf Registration Statement, and any supplement to such prospectus (in either case, other than with respect to Holders’ Information), does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

3.  Additional Interest.  (a)  If (i) neither the Exchange Offer Registration Statement nor the Shelf Registration Statement, as the case may be, is filed with the Commission on or prior to the date which is 150 days after the Issuance Date, (ii) the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, is not declared effective or an Automatic Shelf Registration Statement is not designated as a Shelf Registration Statement able to be used for the offer and sale of the Transfer Restricted Securities within 210 days after the Issuance Date, (iii) the Exchange Offer Registration Statement is declared effective, but the Registered Exchange Offer is not consummated on or prior to 270 days after the Issuance Date, (iv) the Company is required to file the Shelf Registration Statement in accordance with Section 2, but the Company does not so file the Shelf Registration Statement or designate an Automatic Shelf Registration Statement to be used for the offer and sale of the Transfer Restricted Securities and a prospectus supplement covering the offer and sale of the Transfer Restricted Securities is not filed with respect to an Automatic Shelf Registration

 

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Statement so designated on or prior to the 30th day after the Company’s obligation to file such Shelf Registration Statement arises, (v) the applicable Registration Statement is filed and declared effective or so designated but shall thereafter cease to be effective (at any time that the Company is obligated to maintain the effectiveness thereof) without being again effective within 30 days or being succeeded within 30 days by an additional Registration Statement filed and declared effective or immediately effective, provided that such 30-day period shall toll during a Suspension Period or during any Shelf Suspension Period, or (vi) any Suspension Periods exceed, in the aggregate, 75 days during any 365-day period (each such event referred to in clauses (i) through (vi), a “Registration Default”), the Company shall be obligated to pay additional interest (“Additional Interest”) to each Holder of Transfer Restricted Securities, during the period of one or more such Registration Defaults, at a rate of 0.25% per annum on the applicable principal amount of Transfer Restricted Securities held by such Holder for the first 90-day period immediately following the occurrence of a Registration Default, and such rate will increase by an additional 0.25% with respect to each subsequent 90-day period until all Registration Defaults have been cured, provided that the maximum additional rate may in no event exceed 0.50% per annum.  Such obligation to pay Additional Interest shall survive until (i) the applicable Registration Statement is filed, (ii) the Exchange Offer Registration Statement is declared effective and the Registered Exchange Offer is consummated with respect to all properly tendered Securities, (iii) the Shelf Registration Statement is declared effective or (iv) the Shelf Registration Statement again becomes effective (or is superseded by another effective Shelf Registration Statement), as the case may be. Following the cure of all Registration Defaults, the accrual of Additional Interest will cease.

 

As used herein, the term “Transfer Restricted Securities” means (i) each Security until the date on which such Security has been exchanged for a freely transferable Exchange Security in the Registered Exchange Offer, (ii) each Security until the date on which it has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (iii) each Security until the date on which it is distributed to the public pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule 144 without limitations.  Notwithstanding anything to the contrary in this Section 3(a), the Company shall not be required to pay Additional Interest to a Holder of Transfer Restricted Securities if such Holder failed to comply with its obligations to make the representations set forth in the third to last paragraph of Section 1 or failed to provide the information required to be provided by it, if any, pursuant to Section 4(n).

 

(b)  The Company shall notify the Trustee and the paying agent under the Indenture immediately upon the happening of each and every Registration Default.  The Company shall pay the Additional Interest due on the Transfer Restricted Securities by depositing with the paying agent (which may not be the Company for these purposes), in trust, for the benefit of the Holders thereof, prior to 11:00 a.m., New York City time, on the next applicable interest payment date specified by the Indenture and the Securities, sums sufficient to pay the Additional Interest then due.  The Additional Interest due shall be payable on each applicable interest payment date specified by the Indenture and the Securities to the record holder entitled to receive the interest payment to be made on such

 

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date.  Each obligation to pay Additional Interest shall be deemed to accrue from and include the date of the applicable Registration Default.

 

(c)  The parties hereto agree that the Additional Interest provided for in this Section 3 constitutes a reasonable estimate of and is intended to constitute the sole damages that will be suffered by Holders of Transfer Restricted Securities by reason of the failure of (i) the Shelf Registration Statement or the Exchange Offer Registration Statement to be filed, (ii) the Shelf Registration Statement to be declared or remain effective or (iii) the Exchange Offer Registration Statement to be declared effective and the Registered Exchange Offer to be consummated, in each case to the extent required by this Agreement.

 

4.  Registration Procedures.  In connection with any Registration Statement, the following provisions shall apply:

 

(a)  The Company shall (i) furnish to each of the Initial Purchasers a copy of the Registration Statement and each amendment thereof and each supplement (other than reports required to be filed by it under the Exchange Act), if any, to the prospectus included therein and shall use its reasonable best efforts to reflect in each such document, when so filed with the Commission, such comments as any Initial Purchaser or any Holder may reasonably propose; (ii) include the information set forth (A) in Annex A hereto on the cover of such prospectus, (B) in Annex B hereto in the “Exchange Offer Procedures” section and the “Purpose of the Exchange Offer” section of such prospectus, (C) in Annex C hereto in the “Plan of Distribution” section of the prospectus forming a part of the Exchange Offer Registration Statement and (D) in Annex D hereto in any Letter of Transmittal delivered pursuant to the Registered Exchange Offer, in each case subject to any changes, additions, deletions or moving of such disclosure required by the SEC; and (iii) if requested by an Initial Purchaser, include the information required by Items 507 or 508 of Regulation S-K, as applicable, in the prospectus forming part of the Exchange Offer Registration Statement.

 

(b)  The Company shall advise each of the Initial Purchasers, each Exchanging Dealer and the Holders (if applicable) and, if requested by any such person, confirm such advice in writing (which advice pursuant to clauses (ii)-(v) hereof shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made):

 

(i)   when any Registration Statement and any amendment thereto has been filed with the Commission and when such Registration Statement or any post-effective amendment thereto has become effective;

 

(ii)   of any request by the Commission for amendments or supplements to any Registration Statement or the prospectus included therein or for additional information;

 

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(iii)   if known by the Company, of the issuance by the Commission of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for that purpose;

 

(iv)  of the receipt by the Company of any notification with respect to the suspension of the qualification of the Securities or the Exchange Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and

 

(v)  of the happening of any event that requires the making of any changes in any Registration Statement or the prospectus included therein in order that the statements therein are not misleading and do not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.

 

(c)  The Company shall make every reasonable effort to obtain the withdrawal at the earliest possible time of any order suspending the effectiveness of any Registration Statement or qualifying the Securities therein for sale in any jurisdiction.

 

(d)  The Company shall furnish to each Holder of Transfer Restricted Securities included within the coverage of any Shelf Registration Statement, without charge, upon the written request of such Holder, at least one conformed copy of such Shelf Registration Statement and any post-effective amendment thereto, including all material incorporated therein by reference, including financial statements and schedules and, if any such Holder so requests in writing, all exhibits thereto (including those, if any, incorporated by reference).

 

(e)  The Company shall, during the Shelf Registration Period, promptly deliver to each Holder of Transfer Restricted Securities included within the coverage of any Shelf Registration Statement, without charge, as many copies of the prospectus (including each preliminary prospectus) included in such Shelf Registration Statement and any amendment or supplement thereto as such Holder may reasonably request; and the Company consents to the use of such prospectus or any amendment or supplement thereto by each of the selling Holders of Transfer Restricted Securities in connection with the offer and sale of the Transfer Restricted Securities covered by such prospectus or any amendment or supplement thereto.

 

(f)  The Company shall furnish to each Exchanging Dealer who so requests in writing, without charge, at least one conformed copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules and, if any Exchanging Dealer so requests in writing, all exhibits thereto (including those, if any, incorporated by reference).

 

(g)  The Company shall, during the Exchange Offer Registration Period or the Shelf Registration Period, as applicable, promptly deliver to each Initial Purchaser, each Exchanging Dealer and such other persons that are required to deliver a prospectus following the Registered Exchange Offer, without charge, as many copies of the final prospectus included in the Exchange Offer Registration Statement or the Shelf Registration Statement and any amendment or supplement thereto as such Initial

 

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Purchaser, Exchanging Dealer or other persons may reasonably request; and the Company consents to the use of such prospectus or any amendment or supplement thereto by any such Initial Purchaser, Exchanging Dealer or other persons, as applicable, as aforesaid.

 

(h)  Prior to the effective date of any Registration Statement, the Company shall use its reasonable best efforts to register or qualify, or cooperate with the Holders of Securities or Exchange Securities included therein and their respective counsel in connection with the registration or qualification of, such Securities or Exchange Securities for offer and sale under the securities or blue sky laws of such jurisdictions as any such Holder reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Securities or Exchange Securities covered by such Registration Statement, provided that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action which would subject it to general service of process or to taxation in any such jurisdiction where it is not then so subject.

 

(i)  The Company shall cooperate with the Holders of Securities or Exchange Securities to facilitate the timely preparation and delivery of certificates representing Securities or Exchange Securities to be sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as the Holders thereof may request in writing at least one business day prior to sales of Securities or Exchange Securities pursuant to such Registration Statement.

 

(j)  If any event contemplated by Section 4(b)(ii) through (v) occurs during the period for which the Company is required to maintain an effective Registration Statement, the Company shall promptly prepare and file with the Commission a post-effective amendment to the Registration Statement or an amendment or a supplement to the related prospectus or file any other required document so that, as thereafter delivered to purchasers of the Securities or Exchange Securities from a Holder, the prospectus will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  In such circumstances, other than with respect to any Shelf Suspension Period, the period of effectiveness of the Exchange Offer Registration Statement provided for in Section 1 and the Shelf Registration Statement provided for in Section 2(b) shall each be extended by the number of days from and including the date of the giving of a notice of suspension pursuant to Section 4(b) to and including the date when the Initial Purchasers, the Holders of the Securities and any known Exchanging Dealer shall have received such amended or supplemented Prospectus pursuant to this Section.

 

(k)  Not later than the effective date of the applicable Registration Statement, the Company shall obtain a CUSIP number for the Securities and the Exchange Securities and provide the applicable trustee with printed certificates for the Securities or the Exchange Securities, as the case may be, in a form eligible for deposit with The Depository Trust Company.

 

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(l)  The Company shall comply with all applicable rules and regulations of the Commission and make generally available to the Company’s security holders as soon as reasonably practicable after the effective date of the applicable Registration Statement an earning statement satisfying the provisions of Section 11(a) of the Securities Act, provided that in no event shall such earning statement be delivered later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of the Company’s first fiscal quarter commencing after the effective date of the applicable Registration Statement, which statement shall cover such 12-month period.

 

(m)  The Company shall cause the Indenture to be qualified under the Trust Indenture Act as required by applicable law in a timely manner.

 

(n)  The Company may require each Holder of Transfer Restricted Securities to be registered pursuant to any Shelf Registration Statement to furnish to the Company such information concerning the Holder and the distribution of such Transfer Restricted Securities as the Company may from time to time reasonably require for inclusion in such Shelf Registration Statement, and the Company may exclude from such registration the Transfer Restricted Securities of any Holder that fails to furnish such information within a reasonable time after receiving such request.

 

(o)  In the case of a Shelf Registration Statement, each Holder of Transfer Restricted Securities to be registered pursuant thereto agrees by acquisition of such Transfer Restricted Securities that, upon receipt of any notice from the Company pursuant to Section 4(b)(ii) through (v), such Holder will discontinue disposition of such Transfer Restricted Securities until such Holder’s receipt of copies of the supplemental or amended prospectus contemplated by Section 4(j) or until advised in writing (the “Advice”) by the Company that the use of the applicable prospectus may be resumed.  If the Company shall give any notice under Section 4(b)(ii) through (v) during the period that the Company is required to maintain an effective Registration Statement (the “Effectiveness Period”), other than with respect to any Shelf Suspension Period, such Effectiveness Period shall be extended by the number of days during such period from and including the date of the giving of such notice to and including the date when each seller of Transfer Restricted Securities covered by such Registration Statement shall have received (x) the copies of the supplemental or amended prospectus contemplated by Section 4(j) (if an amended or supplemental prospectus is required) or (y) the Advice (if no amended or supplemental prospectus is required).

 

(p)  In the case of a Shelf Registration Statement, the Company shall enter into such customary agreements (including, if requested, an underwriting agreement in customary form) and take all such other action, if any, as Holders of a majority in aggregate principal amount of the Securities or Exchange Securities being sold or the managing underwriters, if any, shall reasonably request in order to facilitate any disposition of Securities or Exchange Securities pursuant to such Shelf Registration Statement.

 

(q)  In the case of any Shelf Registration Statement, the Company shall:

 

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(i)  make reasonably available for inspection by the Holders of, representatives and counsel to, a majority in aggregate principal amount of the Securities to be registered thereunder, any underwriter participating in any disposition pursuant to such Registration Statement and any attorney, accountant or other agent retained by such Holders or any such underwriter all relevant financial and other records, pertinent corporate documents and properties of the Company;

 

(ii)  cause the Company’s officers, directors and employees to supply all relevant information reasonably requested by the Holders or any such underwriter, attorney, accountant or agent in connection with any such Shelf Registration Statement as is customary for similar due diligence examinations; provided, however, that the foregoing inspection and information gathering shall be coordinated on behalf of the Initial Purchasers by Citigroup Global Markets Inc. in connection with any underwritten Shelf Registration Statement to which it is a party, and on behalf of the Holders by one counsel designated by the Holders of a majority of the Securities; provided, further, that any information provided pursuant to Section 4(q)(i) and (ii) that is designated in writing by the Company, in good faith, as confidential at the time of delivery of such information shall be kept confidential by the Holders or any such underwriter, attorney, accountant or agent, and shall be used only in connection with such Shelf Registration and the transactions contemplated thereby unless such disclosure is made in connection with a court proceeding or required by law, or such information becomes available to the public generally or through a third party without an accompanying obligation of confidentiality;

 

(iii)  make such representations and warranties to the underwriters, if any, in form, substance and scope as are customarily made by issuers to underwriters in primary underwritten offerings and covering matters including, but not limited to, those set forth in the Purchase Agreement;

 

(iv)  obtain opinions of its counsel and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the underwriters, if any) addressed to each selling Holder and the underwriters, if any, covering such matters as are customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such Holders and underwriters;

 

(v)  if requested in writing by Holders of a majority in aggregate principal amount of the Securities to be registered thereunder or by any underwriter participating in any disposition pursuant to such Shelf Registration Statement, to use its reasonable best efforts to obtain “cold comfort” letters and updates thereof from the independent certified public accountants of the Company, addressed to each selling Holder of Securities registered thereunder and the underwriters, if any, in customary form and covering matters of the type customarily covered in “cold comfort” letters in connection with primary underwritten offerings; and

 

(vi)  deliver such documents and certificates as may be reasonably requested by the Holders of a majority in aggregate principal amount of the Securities and the Exchange Securities being sold and the underwriters, if any, and with any

 

13

 

customary conditions contained in the underwriting agreement or other agreement entered into by the Company.

 

The actions set forth in clauses (iii), (iv) and (v) of this subsection shall be performed at (A) the effectiveness of such Shelf Registration Statement and, if applicable, each post-effective amendment thereto or, in the case of the designation of an existing Automatic Shelf Registration Statement for the offer and sale of Transfer Restricted Securities, upon the filing of a prospectus supplement relating to such offer and sale of Transfer Restricted Securities or any post-effective amendment thereto; and (B) each closing under any underwriting or similar agreement as and to the extent required thereunder.

 

(r)  If a Registered Exchange Offer is to be consummated, upon delivery of the Securities by Holders to the Company (or to such other person as directed by the Company) in exchange for the Exchange Securities, the Company shall mark, or cause to be marked, on the Securities so exchanged that such Securities are being canceled in exchange for the Exchange Securities.  In no event shall the Securities be marked as paid or otherwise satisfied.

 

(s)  The Company will use its reasonable best efforts to cause the Securities covered by a Registration Statement to be rated with at least one nationally recognized statistical rating agency, if so requested by Holders of a majority in aggregate principal amount of the Securities and the Exchange Securities being sold with respect to the related Registration Statement or by any underwriters.

 

(t)  In the event that any Broker-Dealer shall underwrite any Securities or participate as a member of an underwriting syndicate or selling group or “assist in the distribution” (within the meaning of the Rules of Fair Practice and the By-Laws of the Financial Industry Regulatory Authority, Inc.) thereof, whether as a Holder of such Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, the Company shall assist such Broker-Dealer in complying with the requirements of such Rules and By-Laws, including, without limitation, by:

 

(i)  if such Rules or By-Laws shall so require, engaging a “qualified independent underwriter” (as defined in such Rules) to participate in the preparation of the Registration Statement, to exercise usual standards of due diligence with respect thereto and, if any portion of the offering contemplated by such Registration Statement is an underwritten offering or is made through a placement or sales agent, to recommend the yield of such Securities;

 

(ii)  indemnifying any such qualified independent underwriter to the extent of the indemnification of underwriters provided in Section 6 hereof; and

 

(iii)  providing such information to such Broker-Dealer as may be required in order for such Broker-Dealer to comply with the requirements of such Rules.

 

5.  Registration Expenses.  The Company shall bear all expenses incurred in connection with the performance of its obligations under Sections 1, 2, 3 and 4 and, in

 

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the case of a Shelf Registration Statement, the Company shall reimburse the Holders for the reasonable fees and disbursements of one firm of attorneys (in addition to any local counsel) chosen by the Holders of a majority in aggregate principal amount of the Securities and the Exchange Securities to be sold pursuant to each Registration Statement acting for the Holders and the Initial Purchasers in connection therewith and, in the case of any Exchange Offer Registration Statement, will reimburse the Initial Purchasers for the reasonable fees and disbursements of one counsel (in addition to any local counsel) acting in connection therewith.

 

6.  Indemnification.  (a)  In the event of a Shelf Registration Statement or in connection with any prospectus delivery pursuant to an Exchange Offer Registration Statement by an Exchanging Dealer, the Company shall indemnify and hold harmless each Holder (including, without limitation, each Initial Purchaser and any such Exchanging Dealer), their affiliates, their respective officers, directors, employees, representatives and agents, and each person, if any, who controls such Holder within the meaning of the Securities Act or the Exchange Act (collectively referred to for purposes of this Section 6 and Section 7 as a Holder), from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, without limitation, any loss, claim, damage, liability or action relating to purchases and sales of Securities or Exchange Securities), to which that Holder may become subject, whether commenced or threatened, under the Securities Act, the Exchange Act, any other federal or state statutory law or regulation, at common law or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in any such Registration Statement or any prospectus forming part thereof or in any amendment or supplement thereto or any “issuer free writing prospectus” within the meaning of the Securities Act approved by the Company or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and shall reimburse each indemnified party promptly upon demand for any legal or other expenses reasonably incurred by that indemnified party in connection with investigating or defending or preparing to defend against or appearing as a third party witness in connection with any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, an untrue statement or alleged untrue statement in or omission or alleged omission from any of such documents in reliance upon and in conformity with any Holders’ Information.

 

(b)  In the event of a Shelf Registration Statement, each Holder severally and not jointly shall indemnify and hold harmless the Company, its affiliates, its respective officers, directors, employees, representatives and agents, and each person, if any, who controls the Company, within the meaning of the Securities Act or the Exchange Act (collectively referred to for purposes of this Section 6(b) and Section 7 as the Company), from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which the Company may become subject, whether commenced or threatened, under the Securities Act, the Exchange Act, any other federal or state statutory law or regulation, at common law or otherwise, insofar as such loss,

 

15

 

claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in any such Registration Statement or any prospectus forming a part thereof or in any amendment or supplement thereto or any “issuer free writing prospectus” within the meaning of the Securities Act or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with any Holders’ Information furnished to the Company by such Holder, and shall reimburse the Company for any legal or other expenses reasonably incurred by the Company, in connection with investigating or defending or preparing to defend against or appearing as a third party witness in connection with any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that no such Holder shall be liable for any indemnity claims hereunder in excess of the amount of net proceeds received by such Holder from the sale of Securities or Exchange Securities pursuant to such Shelf Registration Statement.

 

(c)  Promptly after receipt by an indemnified party under this Section 6 of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party pursuant to Section 6(a) or 6(b), notify the indemnifying party in writing of the claim or the commencement of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Section 6 except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided further, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 6.  If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party.  After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 6 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than the reasonable costs of investigation; provided, however, that an indemnified party shall have the right to employ its own counsel in any such action, but the fees, expenses and other charges of such counsel for the indemnified party will be at the expense of such indemnified party unless (1) the employment of counsel by the indemnified party has been authorized in writing by the indemnifying party, (2) the indemnified party has reasonably concluded that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, (3) a conflict or potential conflict exists (based upon advice of counsel to the indemnified party) between the indemnified party and the indemnifying party (in which case the indemnifying party will not have the right to direct the defense of such action on behalf of the indemnified party) or (4) the indemnifying party has not in fact employed counsel

 

16

 

reasonably satisfactory to the indemnified party to assume the defense of such action within a reasonable time after receiving notice of the commencement of the action, in each of which cases the reasonable fees, disbursements and other charges of counsel will be at the expense of the indemnifying party or parties. It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm of attorneys (in addition to any local counsel) at any one time for all such indemnified party or parties. Each indemnified party, as a condition of the indemnity agreements contained in Sections 6(a) and 6(b), shall use all reasonable efforts to cooperate with the indemnifying party in the defense of any such action or claim. No indemnifying party shall be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with its written consent or if there be a final judgment for the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified party (which consent shall not be unreasonably withheld), effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability or claims that were raised or could have been raised by such plaintiff in such proceeding.

 

7.  Contribution.  If the indemnification provided for in Section 6 is unavailable or insufficient to hold harmless an indemnified party under Section 6(a) or 6(b), then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the indemnified party, on the one hand, and the indemnifying party, on the other hand, from the Initial Placement and the Registration Statement which resulted in such loss, claim, damage or liability, or action in respect thereof, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and such Holder, on the other, with respect to the statements or omissions that resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations.  Benefits received by the Company shall be deemed to be equal to the total net proceeds from the Initial Placement (before deducting expenses) received by the Company, and benefits received by the Initial Purchasers shall be deemed to be equal to the total purchase discounts and commissions in each case set forth on the cover of the Final Memorandum.  Benefits received by any other Holders shall be deemed to be equal to the value of receiving Securities or Exchange Securities, as applicable, registered under the Securities Act.  The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to the Company or information supplied by the Company on the one hand or to any Holder or information supplied by such Holder on the other, the intent

 

17

 

of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 7 were to be determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section 7 shall be deemed to include, for purposes of this Section 7, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending or preparing to defend any such action or claim.  Notwithstanding the provisions of this Section 7, an indemnifying party that is a Holder of Securities or Exchange Securities shall not be required to contribute any amount in excess of the amount by which (A) with respect to any Holder, the total price at which the Securities or Exchange Securities sold by such indemnifying party to any purchaser, (B) with respect to an Initial Purchaser, the total consideration received by such Initial Purchaser pursuant to the Purchase Agreement, as the case may be, exceeds the amount of any damages which such indemnifying party has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

 

8.  Rules 144 and 144A.   So long as Transfer Restricted Securities remain outstanding, the Company shall use its reasonable best efforts to file the reports required to be filed by it under the Securities Act and the Exchange Act in a timely manner and, if at any time the Company is not required to file such reports, it will, upon the written request of any Holder of Transfer Restricted Securities, make publicly available other information so long as necessary to permit sales of such Holder’s securities pursuant to Rules 144 and 144A.  So long as Transfer Restricted Securities remain outstanding, upon the written request of any Holder of Transfer Restricted Securities, the Company shall deliver to such Holder a written statement as to whether it has complied with such requirements. Notwithstanding the foregoing, nothing in this Section 8 shall be deemed to require the Company to register any of its securities pursuant to the Exchange Act.

 

9.  Underwritten Registrations.  If any of the Transfer Restricted Securities covered by any Shelf Registration Statement are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will administer the offering will be selected by the Holders of a majority in aggregate principal amount of such Transfer Restricted Securities included in such offering, subject to the consent of the Company (which shall not be unreasonably withheld or delayed), and such Holders shall be responsible for all underwriting commissions and discounts in connection therewith.

 

No person may participate in any underwritten registration hereunder unless such person (i) agrees to sell such person’s Transfer Restricted Securities on the basis reasonably provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all

 

18

 

questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.

 

10.  Miscellaneous.  (a)  Amendments and Waivers.  The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of Holders of a majority in aggregate principal amount of the Securities and the Exchange Securities; provided that, with respect to any matter that directly or indirectly affects the rights of any Initial Purchaser hereunder, the Company shall obtain the written consent of each such Initial Purchaser against which such amendment, qualification, supplement, waiver or consent is to be effective.  Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders whose Securities or Exchange Securities, as the case may be, are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by Holders of a majority in aggregate principal amount of the Securities and the Exchange Securities being sold by such Holders pursuant to such Registration Statement.

 

(b)  Notices.  All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, e-mail or other electronic delivery, first-class mail, telecopier or any courier guaranteeing next-day delivery:

 

(1) if to a Holder, at the most current address given by such Holder to the Company in accordance with the provisions of this Section 10(b), which address initially is, with respect to each Holder, the address of such Holder maintained by the Registrar under the Indenture (or, if such Holder’s Securities are held by The Depository Trust Company, by means of electronic delivery);

 

(2) if to you, initially at the respective addresses set forth in the Purchase Agreement; and

 

(3) if to the Company, initially at the address of the Company set forth in the Purchase Agreement.

 

All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; when delivered by e-mail or other electronic delivery, if receipt is acknowledged in a reply e-mail by the recipient; one business day after being delivered to a next-day air courier; five business days after being deposited in the mail; and when receipt is acknowledged by the recipient’s telecopier machine, if sent by telecopier.

 

(c)  Successors And Assigns.  This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including, without the need for an express assignment or any consent by the Company thereto, subsequent Holders of Securities and the Exchange Securities.  The Company hereby agrees to extend the benefits of this Agreement to any Holder of Securities and the Exchange

 

19

 

Securities, and any such Holder may specifically enforce the provisions of this Agreement as if an original party hereto.

 

(d)  Counterparts.  This Agreement may be executed in any number of counterparts (which may be delivered in original form or by telecopier) and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

 

(e)  Definition of Terms.  For purposes of this Agreement, (a) the term “business day” means any day on which the New York Stock Exchange, Inc. is open for trading, (b) the term “subsidiary” has the meaning set forth in Rule 405 under the Securities Act, (c) except where otherwise expressly provided, the term “affiliate” has the meaning set forth in Rule 405 under the Securities Act, (d) the term “Broker-Dealer” shall mean any broker or dealer registered as such under the Exchange Act, (e) the term “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, (f) the term “Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder, (g) the term “Exchange Offer Registration Period” shall mean the 210 day period following the consummation of the Registered Exchange Offer, exclusive of any period during which any stop order shall be in effect suspending the effectiveness of the Exchange Offer Registration Statement, and (h) the term “Shelf Registration” shall mean a registration effected pursuant to Section 2 hereof.

 

(f)  Headings.  The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

 

(g)  Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed within the State of New York.

 

(h)  No Inconsistent Agreements.  The Company has not entered into, or shall not, on or after the date of this Agreement, enter into any agreement that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof.

 

(i)  Severability.  The remedies provided herein are cumulative and not exclusive of any remedies provided by law.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

20

 

(j)  Securities Held by the Company, etc.  Whenever the consent or approval of Holders of a specified percentage of principal amount of Securities or Exchange Securities is required hereunder, Securities or Exchange Securities, as applicable, held by the Company or its Affiliates shall be disregarded and deemed not to be outstanding in determining whether such consent or approval was given by the Holders of such required percentage.

 

21

 

Please confirm that the foregoing correctly sets forth the agreement among the Company, the Subsidiary Guarantors and the several Initial Purchasers.

 

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
RITE   AID CORPORATION,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
/s/   Marc A. Strassler
    
	
 
    	
 
    	
Name:   Marc A. Strassler
    
	
 
    	
 
    	
Title:   Executive   Vice President, General Counsel and Secretary
    

 

[Signature Page to Exchange and Registration Rights Agreement]

 

22

 

	
 
    	
Each   of the Subsidiary Guarantors listed on Schedule I hereto,
    
	
 
    	
 
    
	
 
    	
by
    
	
 
    	
 
    	
/s/   Marc A. Strassler
    
	
 
    	
 
    	
Name:   Marc A. Strassler
    
	
 
    	
 
    	
Title:   Authorized Person
    

 

[Signature Page to Exchange and Registration Rights Agreement]

 

23

 

	
The   foregoing Agreement is hereby confirmed and accepted as of the date first   above written.
    	
 
    
	
 
    	
 
    
	
Citigroup Global Markets Inc.
    	
 
    
	
Merrill Lynch, Pierce, Fenner & Smith   Incorporated
    	
 
    
	
Wells Fargo Securities, LLC
    	
 
    
	
Goldman, Sachs & Co.
    	
 
    
	
Credit Suisse Securities (USA) LLC
    	
 
    
	
 
    	
 
    	
 
    
	
By:   
    	
Citigroup   Global Markets Inc.
    	
 
    	
By:   
    	
Merrill   Lynch, Pierce, Fenner & Smith Incorporated
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
by
    	
 
    	
 
    	
by
    	
 
    
	
 
    	
/s/   Barbara R. Matas
    	
 
    	
 
    	
/s/   Michelle Rowen
    
	
 
    	
Name:   Barbara R. Matas
    	
 
    	
 
    	
Name:   Michelle Rowen
    
	
 
    	
Title:    Managing Director
    	
 
    	
 
    	
Title:   Director
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:   
    	
Wells   Fargo Securities, LLC
    	
 
    	
By:   
    	
Goldman,   Sachs & Co.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
by
    	
 
    	
 
    	
by
    	
 
    
	
 
    	
/s/   Stephen M. Neill
    	
 
    	
 
    	
/s/   Michael Hickey
    
	
 
    	
Name:   Stephen M. Neill
    	
 
    	
 
    	
Name:   Michael Hickey
    
	
 
    	
Title:   Managing Director
    	
 
    	
 
    	
Title:   Vice President
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:   
    	
Morgan   Stanley & Co. LLC
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
by
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
/s/   Julie Lilienfield
    	
 
    	
 
    	
 
    
	
 
    	
Name:   Julie Lilienfield
    	
 
    	
 
    	
 
    
	
 
    	
Title:   Authorized Signatory
    	
 
    	
 
    	
 
    

 

 

	
For   themselves and the other several Initial Purchasers named in Schedule I   to the Purchase Agreement.
    	
 
    

 

[Signature Page to Exchange and Registration Rights Agreement]

 

24

 

ANNEX A

 

Each broker-dealer that receives Exchange Securities for its own account pursuant to the Registered Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities.  The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.  This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Securities where such Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities.  The Company has agreed that, starting on the Expiration Date (as defined herein) and ending on the close of business 210 days after the Expiration Date, it will make this prospectus available to any broker-dealer for use in connection with any such resale.  See “Plan of Distribution.”

 

 

ANNEX B

 

Each broker-dealer that receives Exchange Securities for its own account in exchange for Securities, where such Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities.  See “Plan of Distribution.”

 

 

ANNEX C

 

PLAN OF DISTRIBUTION

 

Each broker-dealer that receives Exchange Securities for its own account pursuant to the Registered Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities.  This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Securities where such Securities were acquired as a result of market-making activities or other trading activities.  The Company has agreed that, starting on the Expiration Date (as defined herein) and ending on the close of business 210 days after the Expiration Date, it will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale.  In addition, until                               , 201    , all dealers effecting transactions in the Exchange Securities may be required to deliver a prospectus.

 

The Company will not receive any proceeds from any sale of Exchange Securities by broker-dealers.  Exchange Securities received by broker-dealers for their own account pursuant to the Registered Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices.  Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Securities.  Any broker-dealer that resells Exchange Securities that were received by it for its own account pursuant to the Registered Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Securities may be deemed to be an “underwriter” within the meaning of the Securities Act and any profit on any such resale of Exchange Securities and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

 

For a period of 210 days after the Expiration Date the Company will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents in the Letter of Transmittal.  The Company has agreed to pay all expenses incident to the Registered Exchange Offer (including the expenses of one counsel for the Holders of the Securities) other than commissions or concessions of any broker-dealers and will indemnify the Holders of the Securities (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act.

 

 

ANNEX D

 

o                                    CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

 

 

Name:

Address:

 

 

If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Securities.  If the undersigned is a broker-dealer that will receive Exchange Securities for its own account in exchange for Securities that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

 

 

SCHEDULE I

 

Subsidiary Guarantors

 

	
112   Burleigh Avenue Norfolk, LLC
    
	
1515   West State Street Boise, Idaho, LLC
    
	
1740   Associates, LLC
    
	
3581   Carter Hill Road—Montgomery Corp.
    
	
4042   Warrensville Center Road—Warrensville Ohio, Inc.
    
	
5277   Associates, Inc.
    
	
5600   Superior Properties, Inc.
    
	
657-659   Broad St. Corp.
    
	
764   South Broadway—Geneva, Ohio, LLC
    
	
Ann &   Government Streets—Mobile, Alabama, LLC
    
	
Apex   Drug Stores, Inc.
    
	
Broadview   and Wallings—Broadview Heights Ohio, Inc.
    
	
Central   Avenue & Main Street Petal-MS, LLC
    
	
Eagle   Managed Care Corp.
    
	
Eckerd   Corporation
    
	
EDC   Drug Stores, Inc.
    
	
Eighth   and Water Streets—Urichsville, Ohio, LLC
    
	
England   Street—Asheland Corporation
    
	
Fairground,   LLC
    
	
GDF, Inc.
    
	
Genovese   Drug Stores, Inc.
    
	
Gettysburg   and Hoover—Dayton, Ohio, LLC
    
	
Harco, Inc.
    
	
JCG   (PJC) USA, LLC
    
	
JCG   Holdings (USA), Inc.
    
	
K&B   Alabama Corporation
    
	
K&B   Louisiana Corporation
    
	
K&B   Mississippi Corporation
    
	
K&B   Services, Incorporated
    
	
K&B   Tennessee Corporation
    
	
K&B   Texas Corporation
    
	
K&B, Incorporated
    
	
Keystone   Centers, Inc.
    
	
Lakehurst   and Broadway Corporation
    
	
Maxi   Drug North, Inc.
    
	
Maxi   Drug South, L.P.
    
	
Maxi   Drug, Inc.
    
	
Maxi   Green, Inc.
    
	
Mayfield &   Chillicothe Roads—Chesterland, LLC
    
	
Munson &   Andrews, LLC
    
	
Name   Rite, LLC
    
	
Northline &   Dix—Toledo—Southgate, LLC
    
	
P.J.C.   Distribution, Inc.
    
	
P.J.C.   Realty Co., Inc.
    

 

 

	
Patton   Drive and Navy Boulevard Property Corporation
    
	
Paw   Paw Lake Road & Paw Paw Avenue-Coloma, Michigan, LLC
    
	
PDS-1   Michigan, Inc.
    
	
Perry   Distributors, Inc.
    
	
Perry   Drug Stores, Inc.
    
	
PJC   Dorchester Realty LLC
    
	
PJC   East Lyme Realty LLC
    
	
PJC   Haverhill Realty LLC
    
	
PJC   Hermitage Realty LLC
    
	
PJC   Hyde Park Realty LLC
    
	
PJC   Lease Holdings, Inc.
    
	
PJC   Manchester Realty LLC
    
	
PJC   Mansfield Realty LLC
    
	
PJC   New London Realty LLC
    
	
PJC   of Massachusetts, Inc.
    
	
PJC   of Rhode Island, Inc.
    
	
PJC   of Vermont, Inc.
    
	
PJC   Peterborough Realty LLC
    
	
PJC   Providence Realty LLC
    
	
PJC   Realty MA, Inc.
    
	
PJC   Realty N.E. LLC
    
	
PJC   Revere Realty LLC
    
	
PJC   Special Realty Holdings, Inc.
    
	
Ram—Utica, Inc.
    
	
RDS   Detroit, Inc.
    
	
READ’s   Inc.
    
	
Rite   Aid Drug Palace, Inc.
    
	
Rite   Aid Hdqtrs. Corp.
    
	
Rite   Aid Hdqtrs. Funding, Inc.
    
	
Rite   Aid of Alabama, Inc.
    
	
Rite   Aid of Connecticut, Inc.
    
	
Rite   Aid of Delaware, Inc.
    
	
Rite   Aid of Florida, Inc.
    
	
Rite   Aid of Georgia, Inc.
    
	
Rite   Aid of Illinois, Inc.
    
	
Rite   Aid of Indiana, Inc.
    
	
Rite   Aid of Kentucky, Inc.
    
	
Rite   Aid of Maine, Inc.
    
	
Rite   Aid of Maryland, Inc.
    
	
Rite   Aid of Massachusetts, Inc.
    
	
Rite   Aid of Michigan, Inc.
    
	
Rite   Aid of New Hampshire, Inc.
    
	
Rite   Aid of New Jersey, Inc.
    
	
Rite   Aid of New York, Inc.
    
	
Rite   Aid of North Carolina, Inc.
    

 

2

 

	
Rite   Aid of Ohio, Inc.
    
	
Rite   Aid of Pennsylvania, Inc.
    
	
Rite   Aid of South Carolina, Inc.
    
	
Rite   Aid of Tennessee, Inc.
    
	
Rite   Aid of Vermont, Inc.
    
	
Rite   Aid of Virginia, Inc.
    
	
Rite   Aid of Washington, D.C., Inc.
    
	
Rite   Aid of West Virginia, Inc.
    
	
Rite   Aid Online Store, Inc.
    
	
Rite   Aid Payroll Management, Inc.
    
	
Rite   Aid Realty Corp.
    
	
Rite   Aid Rome Distribution Center, Inc.
    
	
Rite   Aid Services, LLC
    
	
Rite   Aid Specialty Pharmacy LLC
    
	
Rite   Aid Transport, Inc.
    
	
Rite   Fund, Inc.
    
	
Rite   Investments Corp.
    
	
Rx   Choice, Inc.
    
	
Seven   Mile and Evergreen—Detroit, LLC
    
	
Silver   Springs Road—Baltimore, Maryland/One, LLC
    
	
Silver   Springs Road—Baltimore, Maryland/Two, LLC
    
	
State &   Fortification Streets—Jackson, Mississippi, LLC
    
	
State   Street and Hill Road—Gerard, Ohio, LLC
    
	
The   Jean Coutu Group (PJC) USA, Inc.
    
	
The   Lane Drug Company
    
	
Thrift   Drug, Inc.
    
	
Thrifty   Corporation
    
	
Thrifty   PayLess, Inc.
    
	
Tyler   and Sanders Roads—Birmingham, Alabama, LLC
    

 

3[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Exhibit 10.1

EXECUTION COPY

 

EXCLUSIVE AGREEMENT

THIS EXCLUSIVE AGREEMENT (“Agreement”) is made and entered into on October 26, 2012 by and between Abbott Point of Care Inc., a Delaware corporation, having its principal place of business at 400 College Road East, Princeton, NJ 08540 (“Abbott”), and Abaxis, Inc., a Delaware corporation with offices at 3240 Whipple Road, Union City, CA 94587 (“Abaxis”), and effective as of January 2, 2013 (“Effective Date”).  Abbott and Abaxis are sometimes referred to herein individually as a “Party” and collectively as the “Parties”.

RECITALS

WHEREAS, Abaxis is a manufacturer of diagnostic health care equipment and reagents and desires to obtain an OEM distributor of Products (as hereinafter defined) in the Field (as hereinafter defined) in the Territory (as hereinafter defined);

WHEREAS, Abbott is a manufacturer and distributor of various products in the Field in the Territory; and

WHEREAS, in accordance with the terms and conditions hereof, Abaxis is willing to appoint Abbott as its exclusive distributor of Products in the Territory, and Abbott is willing to accept such appointment.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and upon the terms and subject to the conditions set forth below, Abaxis and Abbott hereby agree as follows:

ARTICLE 1

 

DEFINITIONS

 

As used in this Agreement, the following terms shall have the meanings set forth below:

1.1            “Abaxis Trademarks” shall mean the Abaxis-owned trademarks and trade names set forth on Exhibit 1.1.

1

1.2           “Abbott Trademarks” shall mean the Abbott-owned trademarks and trade names set forth on Exhibit 1.2.

1.3           “Affiliate” shall mean, with respect to a Party, any other business entity which directly or indirectly controls, is controlled by, or is under common control with, such Party. A business entity or party shall be regarded as in control of another business entity if it owns, or directly or indirectly controls, at least fifty percent (50%) of the voting stock or other ownership interest of the other business entity, or if it directly or indirectly possesses the power to direct or cause the direction of the management and policies of the other business entity by any means whatsoever.

1.4           "Analyzer" shall mean the Piccolo Xpress® device.

1.5           "Base Target" shall mean, for each Contract Year, the minimum unit number of Product purchases required to be made by Abbott and its Affiliates during such Contract Year.

1.6           “Confidential Information” shall mean any proprietary, confidential or non-public information, including without limitation information relating to products, End Users, suppliers, data, processes, prototypes, samples, plans, marketing plans, reports, forecasts, technical or commercial information, patents, patent applications, research, research results and other trade secrets, strategies, Know-How (as hereinafter defined) or intellectual property rights disclosed in writing by one Party to the other Party under this Agreement, as well as information disclosed orally and disclosed to be “Confidential Information” at the time of disclosure, to the extent such oral disclosure is reduced to writing, marked “Confidential” and provided to the receiving Party within [ * ] after oral disclosure.  “Confidential Information” shall not include any information which:

	 	
(a)

	
Is known to the receiving Party before receipt thereof under this Agreement, as evidenced by the receiving Party’s written records;

	 	
(b)

	
Is disclosed to the receiving Party without restriction by a Third Party (as hereinafter defined) not under an obligation of nondisclosure to the disclosing Party;

	 	
(c)

	
Is or becomes part of the public domain other than through a breach of this Agreement by the receiving Party;

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

2

	 	
(d)

	
Is disclosed by the disclosing Party to a Third Party without a duty of confidentiality;

 

	 	
(e)

	
Is independently developed by or for the receiving Party without use of the disclosing Party’s Confidential Information, as evidenced by the receiving Party’s records; or

	 	
(f)

	
Is disclosed by the receiving Party with the disclosing Party’s prior written approval.

 

1.7           “Contract Quarter” shall mean each calendar quarter during the Initial Term or any Renewal Term (as defined in Section 8.1).

1.8           “Contract Year” shall mean the twelve (12) month period from January 1 through December 31 of each year during the Term, provided that the first Contract Year shall mean the calendar year ending on December 31, 2013.

1.9           "Dealer" shall mean a natural person, corporation, partnership, trust, joint venture, government authority or other legal entity or organization in the Territory, other than Abaxis or Abbott and/or their respective Affiliates, which purchases Products from Abbott for the purpose of resale to End Users for use solely in the Field.

1.10        "Disc" shall mean the disposable test component of a particular Product that contains Abaxis’ [ * ] and [ * ] and operates on an Analyzer.

1.11       "End User" shall mean a natural person, corporation, partnership, trust, joint venture, government authority or other legal entity or organization in the Field in the Territory, other than Abaxis or Abbott and/or their respective Affiliates, that purchases Products under this Agreement for its own use or consumption solely in the Field.

1.12       “Field” shall mean the professionally attended human healthcare market but excluding the following: Catapult Health, LLC, pharmacy and retail store clinics, shopping malls, contract research organizations (CROs), and cruise lines.  The Field does not include use in the veterinary healthcare market.

1.13        “Know-How” shall mean any and all data and information, including but not limited to ideas, designs, engineering drawings, methodologies of preparation or manufacturing, processes, instructions for use, formula enhancements, raw material specifications, raw material standards, and sources of raw material procurements, relating to the manufacture of Products.

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

3

1.14        "Products" shall mean the products manufactured by or for Abaxis listed on Exhibit 1.14.

1.15       "Product Purchases" shall mean, for each Contract Year, the Products purchased by Abbott and its Affiliates from Abaxis.  For the purposes of this definition, a Product shall be considered purchased in the Contract Year in which it was delivered after having been duly ordered in accordance with the terms and conditions hereunder.

1.16        "Product Sales" means the Products Sold in the Field in the Territory by Abbott directly to:  (a) Dealers for Sale or resale to End Users; or (b) End Users; net of returns. Notwithstanding the foregoing, Products returned as a result of non-compliance with the warranties set forth in Section 3.4(f) shall be counted as Product Sales, it being understood that any replacement Products corresponding to such returned Products shall not be included in Product Sales.

1.17        “Purchase Price” shall mean the price for Analyzers, Discs and other Products purchased by Abbott and its Affiliates from Abaxis hereunder, as set forth on Exhibit 1.17 and more fully described in Section 3.3.

1.18        "Sale", "Sell" or "Sold" shall mean to sell, hire, let, rent, lease or otherwise dispose of Product to a Third Party or Affiliate, provided such Affiliate is an End User of Products for commercial purposes for monetary or other valuable consideration.  "Sale", "Sell" or "Sold" shall not include a transaction where samples of Product are supplied without charge to a Third Party or Affiliate for marketing or demonstration purposes or in connection with clinical or other experimental trials.

1.19        “Term” shall mean the “Initial Term” and any “Renewal Term”.

1.20        "Territory" shall mean the United States and China, including Hong Kong.

1.21         "Third Party" shall mean a natural person, corporation, partnership, trust, joint venture, governmental authority or other legal entity or organization other than the Parties and/or their Affiliates.

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

4

ARTICLE 2

 

APPOINTMENT AND AUTHORIZATION

2.1            Appointment.

	 	
(a)

	
Exclusive Appointment.  Subject to Section 2.5 below, Abaxis hereby appoints Abbott and its Affiliates for the Term as its exclusive distributor of Products in the Field in the Territory, and Abbott hereby accepts such appointment from Abaxis.  As exclusive distributor in the Field in the Territory as of the Effective Date, Abbott shall have the sole and exclusive right (even as to Abaxis) to Sell and distribute Products in the Territory for use in the Field.  Exhibit 2.1 contains a list of all (i) [ * ], including address and contact information, of any Product in the Field in the Territory known to Abaxis as of the date of this Agreement and (ii) [ * ], including address and contract information, of any Product in the Field in the Territory known to Abaxis as of the date of this Agreement.  Abaxis shall update Exhibit 2.1 not less than [ * ] prior to the Effective Date.

	 	
(b)

	
Abaxis Restriction.  For so long as Abbott is the exclusive distributor of Products in the Field in the Territory in accordance with the terms and provisions of this Agreement, Abaxis shall not Sell or, directly or indirectly (e.g., through Affiliates or Third Parties) distribute Products, in the Field in the Territory.  Upon reasonable prior notice and at mutually agreeable times, Abbott may, at Abbott’s expense, retain an independent third party auditor to audit Abaxis’ books and records relating to Abaxis’ Sales of Products solely to verify Abaxis’ compliance with its obligations under this Section 2.1(b), provided that such independent third party auditor shall execute a customary confidentiality agreement with the audited party with respect to the information received in connection with such audit that is not broader in scope or more burdensome than the confidentiality obligations contained in this Agreement.  Notwithstanding this subsection 2.1(b) or subsection 2.1(a) above, Abaxis may maintain certain consultative and technical staff, at Abaxis' expense, to assist Abbott in connection with such marketing, promotion, sales and distribution efforts.  Other than Section 3.2(b), nothing contained in this Agreement shall limit or be interpreted to limit Abaxis or Abaxis’ Affiliates from selling products not listed on Exhibit 1.14 in the Territory.

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

5

2.2           [Intentionally Omitted].

2.3           Authorization.  Abaxis hereby authorizes Abbott to represent itself as Abaxis’ exclusive authorized distributor of Products in the Field in the Territory using Abaxis Trademarks in accordance with Section 4.2.

2.4           Minimum Purchase and Sales Requirements.

	 	
(a)

	
Minimum Purchase Requirement.  Abbott shall achieve Product Purchases greater than or equal to the Base Target as set forth in the following Table 2.4(a) (“Minimum Purchase Requirement”).  If [ * ], or [ * ] in accordance with this Agreement, [ * ] and [ * ].  The Parties shall meet and negotiate in good faith to establish the Minimum Purchase Requirement for any Renewal Terms occurring beyond the years specified in Table 2.4(a).

Table 2.4(a)

 

	
 

	
 

Base Target

 

	
 

Contract

Year

 

	
Base

Disc

Purchases

(Units)

 

	
Base

Analyzer 

Purchases

(Units)

 

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

 

	 	
(b)

	
Minimum Sales Requirement.  Abbott shall achieve Product Sales of at least [ * ] of Product Purchases with respect to the number of units purchased by Abbott from Abaxis and, in turn, Sold by Abbott, within each Contract Year (“Minimum Sales Requirement”).  To achieve the Minimum Sales Requirement in a given Contract Year with respect to Discs, the number of Product units Sold by Abbott must equal at least [ * ].  To achieve the Minimum Sales Requirement in a given Contract Year with respect to Analyzers, the number of Product units Sold by Abbott must equal at least [ * ].

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

6

2.5           Failure to Achieve Minimum Purchase and Sale Requirements.  Abaxis’ sole remedies for Abbott’s failure to achieve the Minimum Purchase Requirement and Minimum Sales Requirement set forth in Section 2.4 above in any Contract Year shall be to convert Abbott’s status as exclusive distributor of Products in the Field in the Territory to non-exclusive distributor of Products in the Field in the Territory effective upon [ * ] prior written notice, and/or to terminate this Agreement upon [ * ] prior written notice.

2.6           Annual Product Purchases Calculation.  Following each Contract Year, the number of Product Purchases for such Contract Year shall be determined as set forth in Subsections 2.6(a) and/or 2.6(b) below and the Parties shall execute and attach to this Agreement the “Annual Product Purchase Calculation” form set forth on Exhibit 2.6 completed for such Contract Year.

 

	 	
(a)

	
Abaxis Provides Abaxis Calculation.  Within [ * ] after the end of each Contract Year, Abaxis may provide Abbott with Abaxis’ written calculation of Abbott’s Product Purchases in such Contract Year (the "Abaxis Calculation").  If Abbott disagrees with the Abaxis Calculation, Abbott shall have [ * ] after receipt of the Abaxis Calculation to respond in writing, with (i) Abbott’s calculation; (ii) the difference between Abbott’s calculation and the Abaxis Calculation; and (iii) purchase order level detail so that Abaxis may verify Abbott’s calculation.  If Abaxis disagrees with Abbott’s calculation and Abbott requests, in writing, purchase order level detail for the Abaxis Calculation, Abaxis shall provide such information.  If the exchange of such information does not resolve the dispute, the Parties shall negotiate in good faith to determine the actual Product Purchases in such Contract Year and, if such dispute is not resolved within [ * ], the dispute shall be resolved pursuant to Section 9.11.

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

7

	 	
(b)

	
Abaxis Does Not Provide Abaxis Calculation.  If Abaxis does not provide Abbott with the Abaxis Calculation within [ * ] after the end of a given Contract Year, Abbott shall provide Abaxis with Abbott’s written calculation of Abbott’s Product Purchases in such Contract Year (the "Abbott Calculation") within [ * ] after the end of such Contract Year.  If Abaxis disagrees with the Abbott Calculation, Abaxis shall have [ * ] after receipt of the Abbott Calculation to respond, in writing, with (i) Abaxis’ calculation, (ii) the difference between Abaxis' calculation and the Abbott Calculation, and (iii) purchase order level detail so that Abbott may verify Abaxis’ calculation.  If Abbott disagrees with Abaxis' calculation and Abaxis requests, in writing, purchase order level detail for the Abbott Calculation, Abbott shall provide such information.  If the exchange of such information does not resolve the dispute, the Parties shall negotiate in good faith to determine the actual Product Purchases in such Contract Year and, if such dispute is not resolved within [ * ], the dispute shall be resolved pursuant to Section 9.11.

2.7           Annual Product Sales Calculation.  Abbott shall provide Abaxis with Abbott’s written calculation of Abbott’s Product Sales in each Contract Year in conjunction with its annual reporting obligations set forth in Section 3.8 of this Agreement.

2.8           Promotional Materials.  Abbott shall not disseminate or publish any written promotional materials or advertisements intended for customer distribution referencing the Products without Abaxis’ prior written approval, which approval shall not be unreasonably withheld.  Abbott shall ensure that translations, if any, are performed by professional translators into the applicable local language, and that such translations are certified.  Abbott shall forward any written promotional materials or advertisements, along with [ * ] copies of any translated materials and their associated certifications, requiring Abaxis’ approval pursuant to the terms of this Section 2.8 to the attention of Abaxis Regulatory Department, 3240 Whipple Road, Union City, CA 94587. Abaxis shall review and comment on such written promotional materials or advertisements within [ * ] after receipt thereof from Abbott.  If Abaxis does not respond during such [ * ] period, such promotional materials shall be deemed approved.

2.9           Performance by Affiliates.  Each of the Parties acknowledges and agrees that it shall remain fully responsible for the performance of any of its Affiliates with respect to any obligations delegated or assigned to its Affiliates under this Agreement.

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

8

ARTICLE 3

 

SALES, MARKETING AND SUPPORT

3.1          Sales and Promotional Activities.

 

	 	
(a)

	
Marketing.  Abbott shall, at its own expense, use commercially reasonable efforts to market and promote the Products in the Territory.  Abbott’s promotional activities shall include, but shall not be not limited to: (a) including the Products in its appropriate catalogs, promotional mailings and like publications; (b) developing, preparing and placing advertising concerning the Products in appropriate media or through appropriate direct mail; (c) exhibiting the Products at appropriate trade shows and exhibitions; (d) conducting commercially reasonable and appropriate market research; and (e) rendering other services customarily rendered by a distributor of human medical products.  By [ * ] of each Contract Year, Abbott shall provide Abaxis with a list of all proposed trade shows and exhibitions that it plans to attend in the next Contract Year.  Abbott may develop printed sales and promotional materials relating to the Products in the local language at its own expense.  Abbott shall provide such materials, if any, which have not been previously approved to Abaxis for Abaxis’ review and approval, which approval shall not be unreasonably delayed or withheld.  Abaxis shall review such materials within [ * ], and Abaxis’ failure to object to any materials within such [ * ] of sending shall be deemed approval.  If Abaxis objects to the material, Abbott shall modify such materials accordingly.

 

	 	
(b)

	
Sales Personnel.  Abbott, at its sole cost and expense, shall engage, compensate, supervise, train and maintain such competent, qualified personnel as may be reasonably required to, deliver, promote, market, sell, and distribute the Products.

 

	 	
(c)

	
Sales Effort.  Abbott shall use a degree of effort to market, promote and Sell the Products in the Field in the Territory that is consistent with [ * ], provided however that [ * ] and [ * ].

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

9

	 	
(d)

	
Fees and Commission.  Abbott shall not [ * ].  Abbott shall not [ * ], including [ * ], provided however that [ * ].

 

	 	
(e)

	
Appointment of Dealers.  Abbott shall have the right to appoint Dealers for the sale of the Products in the Field in the Territory.  Abbott shall use commercially reasonable efforts to restrict each of its then-existing dealers from reselling Products to Third Parties outside the Field or Territory.  Abbott agrees that, if it enters into a new agreement or arrangement, following the Effective Date, with any dealer to allow such dealer to offer for Sale, Sell, have Sold, use, have used, market, have marketed, distribute, have distributed, import and have imported Products in the Field in any country or region of the Territory, Abbott shall use commercially reasonable efforts to restrict the dealer from reselling Products to Third Parties outside the Field and Territory.

 

	 	
(f)

	
Technical Support.  Abaxis shall be responsible for Technical Support with the End User.  The term "Technical Support" shall mean complaint trending and tracking, maintenance of a Quality System compliant to governmental authority requirements of all markets in the Territory, complaint investigations for quality incidents, root cause determination, Product corrections and corrective actions resulting from quality issues, filing of all MDR reports, performance of risk evaluations and decision and execution authority on Product quality holds and field actions.  “Technical Support” shall also mean all Product improvement initiatives initiated in response to governmental authority requirements or customer satisfaction issues.

	 	
(g)

	
Modified and New Products.  Abbott shall provide timely comprehensive information to its Dealers or End Users, as appropriate, with respect to newly available Products, discontinuance of Products and changes in existing Products, including, but not limited to, performance specification changes and required software upgrades in Analyzers (which may or may not be coupled to specific lots of Discs).  Abbott shall use commercially reasonable efforts to ensure that each End User in the Territory makes any such performance specification changes and software upgrades in a timely manner.  Abaxis shall inform Abbott in writing of newly available Products, the discontinuance of Products, or changes in existing Products at least [ * ] prior to the availability of such new Products or the effectiveness of such discontinuance or change, as the case may be.

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

10

	 	
(h)

	
Warranty Services.  Abaxis shall provide a technical liaison and assistance to End Users for standard and extended non-standard warranty services of the Products.  The standard warranty, as set forth in Exhibit 3.1(h) of this Agreement, shall [ * ] for a period of [ * ] of the [ * ].  Costs for repairs (inclusive of labor, overhead and standard shipping costs related to such repairs) performed under the standard warranty for each Analyzer shall be billed to and payable by Abbott [ * ] at $[ * ]; provided, however, that [ * ] in any [ * ] of the [ * ] and [ * ] that remain [ * ] in the [ * ].  Warranty services beyond the standard warranty shall constitute extended non-standard warranty, the costs for repairs (inclusive of labor, overhead, standard shipping costs and replacement parts related to such extended non‐standard warranty repairs) for which shall be billed to and payable by Abbott [ * ] at $[ * ].  Abaxis shall only be obligated to provide repair services under the standard warranty for the [ * ] of (i) any [ * ] or (ii) if [ * ] within the [ * ], the [ * ] of the [ * ].  Notwithstanding the foregoing, with respect to any existing warranties as of the Effective date beyond the initial standard warranty, Abaxis [ * ] for the [ * ] of (i) any [ * ] or (ii) if [ * ] during the [ * ], the [ * ] of the [ * ].  Abaxis shall provide to Abbott within [ * ] following the end of [ * ] a report that provides the following for [ * ] by Abaxis: [ * ]; [ * ]; [ * ]; [ * ]; and [ * ].

 

	 	
(i)

	
Order Entry.  Abbott acknowledges and agrees that it shall be responsible for all order entry, training, and education within the Territory relating to the operation and use of the Products.  All such services shall be performed in accordance with Abaxis’ standards and specifications, as notified by Abaxis to Abbott from time to time during the continuance of this Agreement.

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

11

	 	
(j)

	
Strategy Meetings.  Periodically during the Term (but not less than [ * ]), Abaxis and Abbott shall review topics which may include Abbott’s marketing and selling strategy, potential collaboration in the development of new Product assays or configurations to meet needs or opportunities in the Field, training of End Users, inventory, and other practices with a view toward maximizing End Users' use of and satisfaction with Products.

 

	 	
(k)

	
Quality Assurance Audit by Abaxis.  Not more than [ * ], Abaxis shall, upon giving not less than [ * ] notice to Abbott, have the right, during normal business hours, to retain an independent Third Party to visit or assess all locations where Abbott maintains or ships inventory of Products to conduct a quality assurance audit of such facilities and/or an on-site surveillance of its inventory storage tracking, provided that such independent third party shall execute a customary confidentiality agreement with the audited party with respect to the information received in connection with such audit that is not broader in scope or more burdensome than the confidentiality obligations contained in this Agreement.  Provided further that some or all of such audit activities may be undertaken directly by Abaxis upon the prior mutual written agreement of the Parties.  In the event that an audit reveals matters that Abaxis determines should be corrected by Abbott, Abaxis shall provide, in writing, within [ * ] of such audit, a list of such matters and any proposed corrective action to be taken by Abbott.  Abbott shall respond within [ * ] of receiving Abaxis’ notification of the corrective action to be taken and an estimated complete date.

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

12

	 	
(l)

	
Quality Assurance Audit by Abbott.  Abbott shall, upon giving not less than [ * ] notice to Abaxis, have the right, during normal business hours, to retain an independent third party to visit or assess all locations where Abaxis manufactures, maintains, ships, or repairs inventory of Products to conduct a quality assurance audit of such facilities and/or an on-site surveillance of its inventory storage tracking, provided that such independent third party shall execute a customary confidentiality agreement with the audited party with respect to the information received in connection with such audit that is not broader in scope or more burdensome than the confidentiality obligations contained in this Agreement.  Provided further that some or all of such audit activities may be undertaken directly by Abbott upon the prior mutual written agreement of the Parties.  In the event that an audit reveals matters that Abbott determines should be corrected by Abaxis, Abbott shall provide, in writing, within [ * ] of such audit, a list of such matters and any proposed corrective action to be taken by Abaxis.  Abaxis shall respond within [ * ] of receiving Abbott’s notification of the corrective action to be taken and an estimated complete date.

 

	 	
(m)

	
Compliance Audit.  Upon reasonable prior notice and at mutually agreeable times, Abaxis may, at Abaxis’ expense, retain an independent Third Party auditor to audit Abbott’s books and records pertaining to its business in the Field and Territory, to the extent such books and records are relevant to Abbott’s compliance with its obligations under this Section 3.1, solely to verify Abbott’s compliance with its obligations under this Section 3.1, provided that such independent third party auditor shall execute a customary confidentiality agreement with the audited party with respect to the information received in connection with such audit that is not broader in scope or more burdensome than the confidentiality obligations contained in this Agreement.

 

3.2       Diversion and Counterfeiting.

 

	 	
(a)

	
Resellers – Obligations of Abbott.  Abbott shall not promote or market any Product for use outside the Field or Territory, [ * ] will be [ * ] or otherwise [ * ]. Abbott shall not [ * ] that such [ * ].  In any event, Abbott shall [ * ] to [ * ].  Recognizing the end use of the Products is solely in healthcare in the Territory, Abbott shall not [ * ] or otherwise [ * ].  Abbott shall [ * ] and [ * ] to be [ * ].  Upon Abaxis’ request, if and to the extent Abbott or its Dealers Sell Products to customers for use outside the Field or Territory, Abbott shall [ * ] to the [ * ] and [ * ].  The Analyzer and Disc units Sold outside the Field or Territory shall not be included in Analyzer and Disc Purchases for the purpose of meeting the Minimum Purchase Requirement or the Minimum Sales Requirement contained in Section 2.4.  Without Abaxis’ specific written consent, Abbott may not [ * ] or otherwise [ * ].

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

13

	 	
(b)

	
Resellers – Obligations of Abaxis.  Neither Abaxis nor its Affiliates shall promote or market any Product in the Territory for use in the Field, [ * ] will be [ * ]. Neither Abaxis nor its Affiliates shall [ * ] that such [ * ].  Abaxis shall [ * ] to [ * ].  Abaxis and its Affiliates shall not [ * ] or otherwise [ * ].  Abaxis shall [ * ] and [ * ] to be [ * ].  Without Abbott’s specific written consent, neither Abaxis nor its Affiliates may [ * ] or otherwise [ * ].

	 	
(c)

	
Counterfeit Products.  Abbott shall purchase Products for distribution and Sale in the Field in the Territory exclusively from Abaxis.  If Abbott is offered the opportunity to purchase or otherwise becomes aware of any counterfeit products similar in appearance and/or function to the Products manufactured by an entity other than Abaxis (“Counterfeit Products”), Abbott shall promptly notify Abaxis thereof.  Abbott covenants and agrees not to knowingly purchase any Counterfeit Products, and the failure of Abbott to comply with the foregoing covenant and agreement shall constitute grounds for immediate termination of this Agreement by written notice to such effect sent by Abaxis.  Such termination of this Agreement shall be effective as of the date of receipt of any such notice by Abbott. In addition, Abbott acknowledges that its purchase of Counterfeit Products will cause Abaxis irreparable harm and that Abaxis shall have the right to equitable and injunctive relief, in addition to money damages, in the case of such action by Abbott.  Abbott further acknowledges and agrees that Abaxis shall have no obligation to provide any warranty services for Counterfeit Products, however obtained by a Dealer or End User in the Field and Territory.

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

14

	 	
(d)

	
Corrupt Practices.  Abbott shall comply with all relevant governmental rules and regulations with respect to Abbott’s promotion, marketing, Sale, and distribution of Products in the Field in the Territory.  Abbott agrees, in its performance of this Agreement, to comply with all applicable laws, including the U.S. Foreign Corrupt Practices Act (15 U.S.C. § 78dd-1, et seq.) (“FCPA”), U.S. export control laws, and anti-corruption laws in the Territory and to promptly notify Abaxis of any violations of such applicable laws by Abbott.  Further, Abbott represents and warrants that it shall take no action that would cause Abaxis to be in violation of the FCPA, U.S. export control laws or any other applicable anti-corruption laws in the Territory.  Abbott shall not use any compensation hereunder as payment to any government official or employee of any country in the Territory for the purpose of influencing such person's decisions or actions regarding the Products.

	 	
(e)

	
Abbott Compliance Audit.  Upon reasonable prior notice and at mutually agreeable times, Abbott may, at Abbott’s expense, retain an independent third party auditor to audit Abaxis’ books and records relating to Abaxis’ Sales of Product solely to verify Abaxis’ compliance with its obligations under this Section 3.2, provided that such independent third party auditor shall execute a customary confidentiality agreement with the audited party with respect to the information received in connection with such audit that is not broader in scope or more burdensome than the confidentiality obligations contained in this Agreement.

	 	
(f)

	
Abaxis Compliance Audit.  Upon reasonable prior notice and at mutually agreeable times, Abaxis may, at Abaxis’ expense, retain an independent third party auditor to audit Abbott’s books and records relating to Abbott’s Sales of Products solely to verify Abbott’s compliance with its obligations under this Section 3.2, provided that such independent third party auditor shall execute a customary confidentiality agreement with the audited party with respect to the information received in connection with such audit that is not broader in scope or more burdensome than the confidentiality obligations contained in this Agreement.

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

15

3.3           Purchase Prices.  Abbott’s Purchase Prices for the Products as of the Effective Date are set forth in Exhibit 1.17, attached hereto and incorporated herein.  All Purchase Prices for the Products and payments therefor shall be in U.S. dollars.

	 	
(a)

	
Price Adjustments.  The Purchase Price for each Product shall [ * ], upon [ * ] prior written notice, Abaxis may adjust the Purchase Prices for the Products, provided such increase may not exceed [ * ] the PPI [ * ] of the [ * ] the PPI [ * ]. “PPI” shall mean the most current final Producer Price Index for Manufacturing, Analytical and Scientific Instruments Except Optical, (industry code 334516-0), not seasonally adjusted, as published by the United States Department of Labor, Bureau of Labor Statistics; provided, that if the United States Department of Labor, Bureau of Labor Statistics, or a successor agency, ceases to publish the foregoing PPI, the index that will most nearly accomplish the purpose thereof and the use thereof by the parties hereto with respect to price increases under this Agreement shall be used in lieu of the foregoing PPI.

	 	
(b)

	
[ * ].  Abbott shall have the right to purchase [ * ] from Abaxis per Calendar Year at [ * ] to be used for [ * ].  In addition, Abbott shall have the right to purchase [ * ] from Abaxis in the [ * ] at a price of $[ * ] to be used for [ * ].  Such purchases of Product for [ * ] in accordance with this subsection will not count towards the Minimum Purchase Requirement and will not incur premium charges.

	 	
(c)

	
[Intentionally Omitted].

	 	
(d)

	
Resale Prices.  Abaxis price increases to Abbott are in no way contingent upon Abbott agreeing to increase prices to its customers nor its effectiveness in increasing prices to its customers.  Abbott shall set its own prices for resale of the Products to customers, provided that Abaxis may, at its option, suggest resale prices to Abbott.

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

16

	 	
(e)

	
Taxes; Import Fees.  All Purchase Prices for the Products do not include insurance, freight, customs, duties, taxes, any foreign, federal, state or local taxes that may be applicable to Products including, without limitation, sales, excise ([ * ] by the [ * ]), value-added, withholding, and other taxes. Customs duties and charges, if any, shall be borne by Abbott.  Any and all export and import licenses or approvals for Products in the Territory shall be held in [ * ] name, and such licenses or approvals will, [ * ], either [ * ] with the [ * ] or [ * ], in either case [ * ].  For clarity, in the event applicable laws or regulations prevent such export and import licenses or approvals from being held in [ * ] name, [ * ].  When Abaxis has the legal obligation to collect such taxes, the appropriate amount shall be added to Abbott’s invoice and paid by Abbott unless Abbott provides Abaxis with a valid tax exemption certificate authorized by the appropriate taxing authority.  [ * ] shall be responsible for all [ * ] by the [ * ].

3.4           Other Terms and Conditions of Sale.  Abbott’s purchase of Products from Abaxis hereunder shall also be subject to the following terms and conditions of sale:

	 	
(a)

	
Payment Terms.  Payment terms for all shipments of Products to Abbott shall be net [ * ] from the date of receipt of Abaxis' invoice to Abbott for each shipment of Products.  All payments shall be made without set-off or counterclaim and free and clear of and without deduction for any other charges of any kind, other than amounts that are the subject of a reasonable good faith dispute.  The invoiced amount shall be paid by Abbott to Abaxis by: (a) wire transfer to the bank specified by Abaxis, or (b) certified bankers check.  Abaxis reserves the right to change the payment or credit terms at any time upon [ * ] prior notice to Abbott. Any invoiced amount not received within [ * ] of the date the payment was due shall be subject to a service charge of the lesser of [ * ] percent ([ * ]%) per month or the maximum rate permitted by law.

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

17

	 	
(b)

	
Order Entry.  Abbott shall order Products on purchase orders consistent with the process set forth in Section 3.5; provided, however, that Abbott shall [ * ] of the [ * ] of the [ * ].  All purchase order forms shall specify the quantities of each Product ordered, requested delivery dates, the identity of Products ordered, Product price, and delivery and shipping instructions including carrier selected.  All orders will be governed by the terms of this Agreement. Any other terms and conditions stated on such purchase orders shall not be applicable to purchases hereunder.

	 	
(c)

	
Delivery.  All shipments of Products to Abbott shall be shipped F.O.B. Abaxis' facilities.  Abbott shall select the carriers for all shipments of Products hereunder following consultation with Abaxis, provided that [ * ].  Abbott shall be responsible for shipping charges for the Products, which shall be added to Abaxis’ invoices to Abbott.  Title and risk of loss shall pass to Abbott upon delivery of the Products to the carrier for shipment.  All shipments of Products shall contain bar codes that provide Product part number, lot number and expiration date.

	 	
(d)

	
Acceptance of Product.  Abbott shall inspect all Products upon delivery in a commercially reasonable manner.  Failure by Abbott to give notice of defective or damaged Product within the time periods specified in Section 3.4(e) shall be deemed a waiver of Abaxis' obligations as stated herein, with respect to such defect or damage only.  Notwithstanding the foregoing, this Section 3.4(d) is not intended to limit Abbott’s rights under Section 7.3 with respect to defective or damaged Product.

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

18

	 	
(e)

	
Defective and Improper Delivery; Product Returns.  If Abbott or a Dealer or End User claims that: (a) incorrect Product was shipped; or (b) there was a shortage in the shipment, and notice in writing of such incorrect shipment or shortage is provided to Abaxis within [ * ] of receipt of the shipment then, upon receipt of such notice, Abaxis' sole obligation shall be to either replace any incorrectly shipped Product, make up any shortfall, or refund any Purchase Price paid by Abbott as a credit, at Abaxis' option; provided, however, that [ * ].  If any Product is claimed by Abbott, a Dealer or End User to be defective and Abaxis is notified in writing of such defect within [ * ] of receipt of the Product by the End User or, in the case of a latent defect, Abaxis is notified in writing within [ * ] of discovery of such latent defect within the warranty period stated in Section 3.4(f), then Abaxis' sole obligation shall be to either repair or replace any Product found by Abaxis to be defective or determined to be defective by a Third Party laboratory as provided below.  If Abbott claims a credit pursuant to this Section 3.4(e), such claim shall be accompanied by the original invoice issued by Abbott to the End User or Dealer returning the Product.  Upon request by Abaxis, Abbott shall deliver to Abaxis, at Abaxis’ cost, any returned Product with regard to which the credit is claimed.  Abaxis shall determine [ * ], which [ * ].  Any disagreements between the parties as to which a returned Product is defective shall, at the request of either party, be resolved by a mutually acceptable independent third party laboratory after analysis of the relevant Products.  Such third party laboratory shall determine whether such Products are defective, and the parties agree that such laboratory’s determination on this issue shall be final, binding, and determinative.  The party against whom the third party laboratory rules shall bear all costs of such third party testing.  All sales of the Products are final and there will be no Product returns accepted except as set forth in this Section 3.4(e) without Abaxis' prior written consent.

	 	
(f)

	
Warranty.  In addition to the warranties provided in Article 6, Abaxis warrants that (i) each Product sold hereunder will, at the time of shipment, comply with the then-current specifications for such Product and be free and clear of any and all encumbrances, liens, or other third party claims; (ii) Products (including refurbished Analyzers) shall comply with Abaxis' standard warranty therefor, as set forth in Exhibit 3.4(f).  ABAXIS MAKES NO OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, AND ABAXIS EXCLUDES AND DISCLAIMS ANY OTHER WARRANTIES INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. ABAXIS SHALL HAVE NO LIABILITY FOR INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES RELATING TO THE SALE OR USE OF THE PRODUCTS, INCLUDING LOST PROFITS.

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

19

3.5           Rolling Forecasts.  [ * ] after the Effective Date, Abbott shall provide Abaxis with a monthly forecast of its requirements of the Products for the first full Contract Year.   On or before the [ * ] prior to the beginning of each subsequent calendar month during the Term, Abbott shall provide Abaxis with a rolling [ * ] forecast, the first [ * ] of which will be firm purchase orders binding on Abbott, the last [ * ] of each shall consist of Abbott’s best estimate forecast of its requirements of Products.  Abbott shall also provide, with each monthly forecast, a [ * ] rolling unit and dollar sales history detail for each individual Product, major customer type (Dealer and End User), United States and China, including Hong Kong, the quantities and prices of Products Sold by Abbott, the aggregate total dollar sales volume for purchases on a Product group-by-Product group basis and such other information relating to the Sales and distribution of Products by Abbott as Abaxis may reasonably request.

3.6           Inventory.   Abbott shall establish inventory targets and maintain inventory levels for Products [ * ] and shall maintain delivery targets [ * ].  Abbott shall ensure that Product is maintained in appropriate environmental conditions at all utilized Abbott distribution facilities, as prescribed by Abaxis.

3.7       Export Regulations.  Abbott will not take any action which would, or fail to take any action where such failure would, directly or indirectly result in or constitute a violation by Abaxis or Abbott of any applicable law, treaty, ruling or regulation, including, without limitation, laws and regulations relating to the export, resale and distribution of the Products. In performing Abbott’s obligations, Abbott or any person acting on its behalf must not seek, accept, offer, promise or give any payments, fees, loans, services or gifts from or to any person or firm as a condition or result of doing business with Abaxis or Abbott. In performing its obligations under this Agreement, neither Abbott nor any person acting on Abbott’s behalf shall make, directly or indirectly, any offer or promise or authorization of a bribe, kickback, payoff or any other payment or gift intended to improperly influence an agent, government official, political party or candidate for public office to exercise their discretionary authority or influence in order to assist in the sale, marketing, promotion, importation, licensing or distribution of the Products.

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

20

3.8       Annual Reporting; Books and Records.  Abbott shall provide to Abaxis annually within [ * ] following the end of each Contract Year, a report that provides Product unit Sales to Dealers and End Users that Abbott Sells to directly, aggregated monthly in each country or region, and the calculation of the percentage of Products Sold to customers by country or region.  Abbott shall maintain books and records in keeping with standard industry practice relating to the Sale of Products hereunder including monthly Disc unit Sales to Dealers and End Users that Abbott Sells to directly, aggregated monthly in each country or region, and shall retain such records during the Term and for [ * ] thereafter.  Such books and records shall be in accordance with generally accepted accounting principles reflecting each Product's unit Sales and per country or region in the Territory.  Upon [ * ] prior written notice to Abbott, Abbott’s books and records relating to the Sale of Product hereunder shall be open for inspection in accordance with the following terms.  To conduct such inspection, Abaxis shall retain, at its own expense, an independent certified public accountant reasonably acceptable to Abbott.  Such examination shall occur at Abbott’s principal place of business during normal business hours for the sole purpose of verifying the accuracy of financial calculations hereunder.  Such independent accountant shall be required to execute a mutually acceptable confidentiality agreement and shall report to Abaxis only the amount of any discrepancy, if any, in the calculations.  Abaxis shall bear the cost of such audit, unless the audit reveals inaccurate annual reporting of unit Sales greater than [ * ] percent ([ * ]%) or a value of [ * ] Dollars ($[ * ]) (whichever is greater), in which case Abbott shall reimburse Abaxis for its reasonable expenses incurred in connection with such audit.

3.9           Product Recalls and Complaints.  Upon Abaxis’ request, and at Abaxis’ sole cost, Abbott shall assist Abaxis in identifying Dealers and End Users for notification in connection with any Product recalls; provided, however, that if such Product recall is due to any fault of or material breach by Abbott, then the cost of such Product recall shall be apportioned to Abbott and Abaxis according to each Party’s relative fault for the Product recall. Within [ * ] of Abbott’s own receipt of notice (at Abbott headquarters) of any End User technical questions, complaints or actual or alleged Product defects, Abbott shall notify Abaxis thereof orally, followed promptly by a written notice.

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

21

3.10       Billing and Collections.  Abbott shall have sole responsibility for billings to and collections from customers for Abbott’s sales of Products.

3.11       Abaxis Trademarks.  Abbott acknowledges that Abaxis Trademarks are valid trademarks and trade names and the sole property of Abaxis, and Abbott shall not disparage or challenge the validity of Abaxis Trademarks during the Term.  Abbott shall promptly notify Abaxis of any actual or alleged infringements of Abaxis Trademarks of which Abbott becomes aware during the Term.  Nothing contained herein shall be construed to authorize Abbott: (a) to use any Abaxis Trademarks as a style or name, or as a part of the style or name, of any firm, partnership or corporation; (b) to apply Abaxis Trademarks to any goods other than the Products; or (c) at any time after the termination of this Agreement, to apply Abaxis Trademarks to goods or to any other use whatsoever.

3.12        Non-Competition Obligations.  During the Term, other than the Analyzer and the Discs, Abbott shall not promote, distribute or sell [ * ] that utilizes [ * ] for [ * ] (i) [ * ], (ii) [ * ], (iii) [ * ], (iv) [ * ], (v) [ * ], and (vi) any [ * ] in the Product from time to time during the Term (“Competitive Product”) in the Field in the Territory, and shall use its best efforts to ensure compliance with the provisions of this Section 3.12 by all Abbott employees, subject to the following exceptions and conditions:

(a)            Exception for Recall or Withdrawal.  If any Product is the subject of a recall, withdrawal or interruption of Product supply for a period in excess of [ * ], or a Product is not available for resale due to Abaxis’ inability to supply such Products, Abbott may, at its option, purchase and resell reasonably comparable replacement products for the duration of such recall or withdrawal or Product unavailability, provided that (i) [ * ] and [ * ], and [ * ] and [ * ] of such recall, withdrawal or Product unavailability; (ii) [ * ] and/or [ * ] which are [ * ] rather than [ * ]; (iii) Abbott shall return to selling recalled, withdrawn or unavailable Products [ * ] and discontinue selling competitor’s products within [ * ] of the availability of such Products [ * ]; (iv) Abaxis shall notify Abbott in writing at least [ * ] prior to the availability of such Products [ * ] to enable Abbott to commence reduction of competitive product stock.  In the event that Abbott does not cease selling replacement products and resume selling Products [ * ] as set forth above within [ * ] of such Products becoming available, Abaxis shall have the right, without prejudice to any other rights or remedies available to it, to terminate this Agreement upon [ * ] prior written notice to Abbott.

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

22

(b)           Compliance Audit.  Upon reasonable prior notice to Abbott and at mutually agreeable times, Abaxis may, at Abaxis’ expense, retain an independent Third Party auditor to audit Abbott’s sales records, branch inventory and any other records necessary to verify Abbott’s compliance with its obligations under this Section 3.12, provided that such independent Third Party auditor shall execute a customary confidentiality agreement with the audited party with respect to the information received in connection with such audit that is not broader in scope or more burdensome than the confidentiality obligations contained in this Agreement.  In the event that any such audit reveals that Abbott is non-compliant with the provisions of this Section 3.12 or that Abbott has given to Abaxis false sales data or other information concerning the purchase or sale Products, Abaxis shall notify Abbott of the results of such audit and Abbott shall have [ * ] to cure any identified deficiencies.  In the event that Abbott does not cure any identified deficiencies within such [ * ] period, Abaxis may, as its sole remedy, terminate this Agreement on [ * ] notice to Abbott.

3.13        Regulatory Approvals.  If and solely to the extent required by local laws, Abaxis shall, [ * ], obtain and maintain in effect all regulatory registrations, permits, licenses and approvals (collectively, “Approvals”) necessary or appropriate for the importation of the Products into, and the distribution, sale, resale, and use of the Products within the Territory; provided however that Abbott shall, [ * ], obtain and maintain in effect all Approvals that Abaxis requests that Abbott obtain and maintain.  Abbott represents and warrants that it has and shall maintain at all times during the Term, all Approvals it has agreed to obtain and is responsible for on behalf of or for Abaxis pursuant to this Section 3.13.  Abaxis shall promptly forward all copies of all such Approvals obtained and maintained by Abaxis to Abbott’s Regulatory Affairs Department. Abaxis shall inform Abbott within a reasonable period of time of any changes to the Approval process or the vigilance reporting requirements within the Territory.  To the extent permitted by applicable law, such Approvals shall be [ * ]. If, however, applicable law requires [ * ] of this [ * ], Abbott shall, [ * ] and [ * ], or to [ * ].  Abaxis represents and warrants that it has and shall maintain at all times during the term of this Agreement, all Approvals it is responsible for (other than those of Abbott) pursuant to this Section 3.13.  Should Abaxis fail to obtain or maintain such Approvals during the term of this Agreement, Abbott shall have the right to immediately terminate this Agreement upon written notice to Abaxis.

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

23

3.14        Legal Environment.  Each Party shall immediately advise the other if it becomes aware of any legislation, rule, regulation or other law (including, but not limited to, all health and safety, custom, trade, tariff or other import laws, approvals process or vigilance reporting requirements) which is in effect or which may come into effect after this Agreement becomes effective and which affects the importation of the Products into, or the distribution, sale, or use of the Products within the Field in the Territory, and the Parties shall use commercially reasonable efforts to remain informed of all such legislation, rules, regulations or other laws.

3.15        Quality.  Abbott shall maintain a distribution record system, compliant with all applicable laws and regulations, that enables Abaxis to effect any required Product quality holds or Product recalls.

3.16        Contacts with Authorities.  Abbott shall notify Abaxis of any correspondence exchanged with local authorities regarding the distribution of the Products in the Territory.

3.17        Debarment and Exclusion.  Abbott represents and warrants that, to the best of its knowledge, neither it, nor any of its employees or agents providing services under this Agreement, has ever been, is currently, or is the subject of a proceeding that could lead to that Party becoming, as applicable, a Debarred Individual or Debarred Entity.  A “Debarred Individual” is an individual who has been debarred by the U.S. Food and Drug Administration (“FDA”) pursuant to Title 21 United States Code §335a (a) or (b), or by any other competent authority, including, without limitation, any local competent authority, from providing services in any capacity to a person that has an approved or pending drug product application. A “Debarred Entity” is a corporation, partnership or association that has been debarred by FDA pursuant to Title 21 United States Code §335a (a) or (b), or by any other competent authority, including, without limitation, any local competent authority, from submitting or assisting in the submission of any abbreviated drug application, or a subsidiary or affiliate of such a corporation, partnership or association.  Abbott further covenants, represents and warrants that if, during the term of this Agreement, it becomes aware that it, or any of its employees or agents providing services under this Agreement, becomes or is the subject of a proceeding that could lead to that Party becoming, as applicable, a Debarred Individual or Debarred Entity, Abbott shall immediately notify Abaxis, and Abaxis shall have the right to immediately terminate this Agreement.

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

24

3.18        Customer Communication.  Abbott shall promptly inform Abaxis of any Product quality-related communication (i.e., Product information, customer letters, device correction).  Abbott shall follow the reasonable actions requested by Abaxis regarding quality-related matters and, at Abaxis’ request, provide any reasonable quality-related information without delay to its customers.

3.19       Promotional Materials.  At no cost to Abbott, Abaxis shall provide Abbott with such promotional materials relating to the Products as Abaxis deems appropriate in such quantities as may be mutually agreed for Abbott’s use hereunder.  Such documents shall be in the English language, and may be in other languages to the extent already available.  As required by local regulatory laws or regulations, Abbott shall, at its own cost, arrange for translation and certification of the translation of documents relating to the Products by a professional translator into the local language(s) of Customers and shall revise such translation (and update the applicable certification) in accordance with the changes to the Documents that may be made from time to time by Abaxis.  Such translation shall at a minimum meet all regulatory requirements of the Territory and be of a standard deemed appropriate for medical products and comparable with that provided for other products sold into the health care industry in the Territory.  Abbott will provide any documents translated into the local language, along with their associated certifications, to Abaxis for review and shall revise such translation according to Abaxis’ comments.

3.20        Training For Abbott and End Users.  Abaxis shall provide Abbott personnel such training, at Abaxis' expense, as Abbott may request in writing and that Abaxis, at its sole discretion, deems reasonable.  Notwithstanding the above, all expenses incurred by Abbott’s personnel in connection with such training, including without limitation, travel and other per diem expenses shall be borne by Abbott.  Records of original training (i.e., excluding any follow-up training) directed by Abaxis will be maintained at Abaxis’ place of business in its Document Control department, and copies of such records will be provided to Abbott.  Abbott, prior to shipment of Products to an End User, shall provide to each such End User Product storage and use instructions.  Abbott shall use commercially reasonable efforts to ensure that all necessary and adequate introductory training is made available to End Users within [ * ] after receipt of Analyzers and Discs; further, Abbott shall provide its End Users with necessary and adequate training and support within [ * ] after delivery of the first shipment of Products to an End User.  Upon Abbott’s written request, Abaxis may provide follow-up training, at its sole discretion, at Abbott’s facility.  Abaxis shall pay for its employees' salaries and their travel and travel-related expenses, including meals, lodging and other living expenses.  For training situations not covered by this Section 3.20, and the Parties shall discuss how to equitably share the travel and related expenses.

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

25

ARTICLE 4

 

INTELLECTUAL PROPERTY

 

4.1           Markings.  Products distributed by Abbott hereunder shall include the Abaxis Trademarks.  Abbott shall not omit or alter patent numbers, trade names or trademarks, numbers or series or any other Abaxis markings affixed on the Products obtained from Abaxis or alter labeling of Products.  Abbott is not authorized to use the trademark and trade name “Abaxis” or any other trademark or trade name of Abbott in any manner except to indicate that Abbott is the exclusive distributor of Product in the Field in the Territory and that Abaxis is the manufacturer of the Products, which use shall in any event be consistent with the provisions of Section 4.2 during the Term, that Abbott is an independent distributor for Abaxis and is selling Abaxis’ Products.

4.2           Use of Trademarks and Tradenames.

(a)            Abaxis hereby grants to Abbott a license to use, on a nonexclusive basis for the Term, in the Field, in the Territory, without cost to Abbott other than payment for the Products, the Abaxis Trademarks, solely to identify Abaxis as the manufacturer of the Products and for Abbott’s distribution of Products and related performance under this Agreement.  Abbott’s license to use the Abaxis Trademarks shall include the right to use the Abaxis Trademarks in connection with advertising and marketing the Products, and the right to promote that Abbott is an independent distributor for Abaxis and is selling Abaxis' Products.    The Abaxis Trademarks and the goodwill associated therewith are and shall remain the exclusive property of Abaxis.  Abbott shall not:  (a) use the Abaxis Trademarks as part of any composite mark including any elements not approved in advance in writing by Abaxis; (b) challenge the validity or enforceability of the Abaxis Trademarks (unless such restriction is illegal); or (c) acquire any proprietary rights in the Abaxis Trademarks by reason of any activities under this Agreement or otherwise.  All uses of the Abaxis Trademarks by Abbott and any additional goodwill created thereby shall inure to the exclusive benefit of Abaxis.  Except for the limited right to use the Abaxis Trademarks as set forth herein, no right, license or other interest with respect to the Abaxis Trademarks is granted under this Agreement.  Abaxis, at all times during the Term on reasonable notice, shall have the right to inspect the materials and services on or in connection with which the Abaxis Trademarks are used in order to assure Abaxis that its quality standards relating to the Products and Abbott’s servicing and other provisions of this Agreement pertinent to the Abaxis Trademarks are being observed.  If at any time Abaxis shall reasonably object to any use to which the Abaxis Trademarks are put, Abbott shall promptly cease any such use.

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

26

(b)           Abbott hereby grants to Abaxis a license to use (but with no obligation to use), on a non-exclusive basis for the Term, in the Field in the Territory, the Abbott Trademarks, solely to identify Abbott as a distributor for the Products.  Abaxis acknowledges and agrees that Abbott is the sole and exclusive owner of all right, title and interest in and to the Abbott Trademarks, and that any and all goodwill derived from its use of the Abbott Trademarks as permitted hereunder shall inure solely to the benefit of Abbott.  Abaxis shall obtain the prior written approval of Abbott for all use of the Abbott Trademarks, including, but not limited to, use of the Abbott Trademarks in any publication, press release, marketing materials, promotional materials, or website.  Abbott may grant or withhold approval at Abbott’s sole discretion.  If at any time Abbott shall reasonably object to any use to which the Abbott Trademarks are put, Abaxis shall promptly cease any such use.  Abaxis shall not, during or after the Term, anywhere in the world, take any action that in Abbott’s sole and absolute discretion impairs or contests or tends to impair or contest the validity of Abbott’s right title and interest in and to Abbott’s Trademarks.

(c)            Abbott agrees to refrain from any use of the Abaxis Trademarks in a manner that threatens to damage the goodwill associated with the Abaxis Trademarks or which threatens to tarnish the reputation or otherwise reflect unfavorably upon Abaxis.  Abaxis agrees to refrain from any use of the Abbott Trademarks in a manner that threatens to damage the goodwill associated with the Abbott Trademarks or which threatens to tarnish the reputation or otherwise reflect unfavorably upon Abbott.

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

27

4.3           License to Use Computer Software.  All software, on whatever media and in whatever form, Abaxis shall deliver to Abbott hereunder (the "Software") is and shall remain the property of Abaxis and its suppliers and licensors thereof and shall only be used in accordance with the terms of this Agreement and any End User License Agreements (each, a "EULA") distributed therewith.  The Software contains copyrighted and proprietary trade secrets of Abaxis (and its suppliers and licensors), and Abbott shall keep the Software in confidence.  Abbott shall not copy, use or disassemble the Software unless agreed by Abaxis.  Abbott shall have the right to reproduce Software only for:  (a) one backup/archival copy; and (b) installation on and use with equipment designated by Abaxis as suitable therefor and for use solely with the Products distributed by Abbott.  Abbott shall reproduce the copyright and other proprietary notices of Abaxis and Third Parties present in the Software delivered to Abbott.  Abbott’s license to use and distribute the Software shall terminate on the earlier of:  (w) termination of this Agreement; (x) discontinuance of use of the designated equipment for the Software; (y) discontinuance of payment of periodic license and maintenance fees, if any; or (z) breach by Abbott of any of the above given terms; provided, that End Users' license rights shall continue in accordance with each EULA.  All copies of Software with respect to which the license hereunder is terminated shall be returned to Abaxis within [ * ] after such termination.  Abbott shall deliver to each End User a copy of Abaxis' EULA, which shall inform them that such Software is and shall remain the property of Abaxis and its suppliers and licensors.  Copies of the translated materials shall be provided by Abbott to Abaxis for inclusion in the technical file before any CE marked Product is distributed in Abbott’s territory in the Field.

ARTICLE 5

 

CONFIDENTIALITY

5.1           Confidential Information.  It is contemplated that in the course of the performance of this Agreement each Party may, from time to time, disclose Confidential Information to the other Party.  The Confidential Information may be in any form whatsoever and shall be disclosed by one Party to the other Party in connection with this Agreement pursuant to the respective rights and obligations hereunder.

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

28

5.2           Term of Confidentiality.  Except to the extent expressly authorized by this Agreement or otherwise agreed to in writing, during the term of this Agreement and for a period of [ * ] following the termination of this Agreement, the receiving Party shall take such reasonable measures to maintain such Confidential Information as confidential as it takes to protect its own proprietary and confidential information, shall not use for its own benefit or the benefit of others, and shall not publish or otherwise disclose such Confidential Information except that each Party shall be each permitted to disclose portions of Confidential Information to the extent reasonably necessary to exercise its rights or fulfill its obligations hereunder, to such Party’s employees, agents, attorneys, accountants and other professional advisors, provided that such recipients of Confidential Information are subject to an obligation of confidentiality to such Party.

5.3           Disclosure Due to Judicial or Administrative Processes.  In the event that a receiving Party is required by applicable judicial or administrative process to disclose Confidential Information, it shall promptly notify the disclosing Party and will reasonably cooperate with and allow the disclosing Party, at its sole cost and expense, a reasonable time to oppose such process and/or seek a protective order to limit exposure to and dissemination of said Confidential Information.

5.4           Disclosure Mandated by Law.  To the extent any disclosure is required by applicable law or regulation, including but not limited to securities or other laws or regulations of any country, the Parties shall consult with each other regarding the contents of such disclosure prior to such disclosure, and the Party intending to disclose the Confidential Information pursuant to this Section 5.4 in any event shall provide to the other Party a draft copy of the information to be disclosed for approval at least [ * ] prior to such disclosure, such approval not to unreasonably withheld.

5.5           Publicity.  Neither Party shall make any public announcement concerning this Agreement, nor make any public statement which includes the name of the other Party or any of its Affiliates, or otherwise use the name of the other Party or any of its Affiliates in any public statement or document, except as may be required by law or judicial order, without the written consent of such other Party, which written consent shall not be unreasonably withheld.  Notwithstanding the foregoing, Abaxis shall have the right, without obtaining Abbott’s consent, to make a public announcement that solely communicates the fact that Abaxis has filed a legally required disclosure with the Securities and Exchange Commission relating to the execution of this Agreement, provided that Abbott shall have an opportunity to review and comment on such disclosure at least [ * ] before such disclosure is filed.

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

29

5.6           Terms of the Agreement.  The terms of this Agreement are confidential and shall be treated as Confidential Information hereunder.

5.7           Return or Destruction of Confidential Information.  Upon expiration or termination of this Agreement, or at any time upon request by Abaxis, Abbott shall promptly return to Abaxis or destroy all Confidential Information disclosed by Abaxis to Abbott (including any and all copies thereof).  Upon request, Abbott shall certify to Abaxis that such action has been taken.  Upon expiration or termination of this Agreement, or at any time upon request by Abbott, Abaxis shall promptly return to Abbott or destroy all Confidential Information disclosed by Abbott to Abaxis (including any and all copies thereof).  Upon request, Abaxis shall certify to Abbott that such action has been taken.

ARTICLE 6

 

REPRESENTATIONS AND WARRANTIES

6.1           Each Party hereby represents and warrants to the other Party as follows:

(a)           Corporate Existence and Power.  Such Party (a) is a corporation duly organized, validly existing and in good standing under the laws of the state in which it is incorporated, (b) has the corporate power and authority and the legal right to own and operate its property and assets, to lease the property and assets it operates under lease, and to carry on its business as it is now being conducted and as it is proposed to be conducted hereunder, and (c) is in compliance with all requirements of applicable laws and regulations, except as previously disclosed to the other Party or to the extent that any noncompliance would not have a material adverse effect on the properties, business, or financial condition of such Party and would not materially and adversely affect such Party's ability to perform its obligations under this Agreement.

(b)           Authorization and Enforcement of Obligations.  Such Party (a) has the corporate power and authority and the legal right to enter into this Agreement and to perform its obligations hereunder, and (b) has taken all necessary corporate action on its part to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder.  This Agreement has been duly executed and delivered on behalf of such Party, and constitutes a legal, valid, binding obligation, enforceable against such Party in accordance with its terms.

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

30

(c)           Consents.  All necessary consents, approvals and authorizations of all governmental authorities and other persons required to be obtained by such Party in connection with the execution, delivery and performance of this Agreement have been obtained.

(d)           No Conflict.  The execution and delivery of this Agreement and the performance of such Party's obligations hereunder (a) do not conflict with or violate any requirement of applicable laws or regulations and (b) do not conflict with, violate or breach or constitute a default or require any consent under, any contractual obligation of such Party.

(e)           Compliance With Laws.  Each Party shall perform its obligations hereunder in compliance with all applicable laws, including without limitation federal, state and local laws, regulations and accepted industry guidelines.

6.2           Intellectual Property Representations and Warranties.  Abaxis represents and warrants to Abbott as follows:

(a)            Abaxis owns the intellectual property or has the right to license the intellectual property for which a license is granted under this Agreement, including, but not limited to, the Abaxis Trademarks and Software;

(b)          Abaxis will [ * ], the [ * ] that are set forth in this Agreement;

(c)            To Abaxis’ knowledge, the [ * ] are [ * ] in the Territory;

(d)           As of the date of this Agreement and to Abaxis’ knowledge, [ * ] by the [ * ] in accordance with this Agreement, including, but not limited to, [ * ] and [ * ] in accordance with this Agreement;

(e)           As of the date of this Agreement, there have been no written claims or assertions made against Abaxis that the making, using, offering for sale, importing or distribution of the Products in the Territory [ * ], or [ * ].

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

31

ARTICLE 7

 

INDEMNIFICATION AND INSURANCE

7.1           Abbott Indemnification.  Abbott shall defend, indemnify and hold harmless Abaxis, its Affiliates, and the officers, directors, employees and agents of Abaxis and its Affiliates, from and against any and all liabilities, damages, claims, demands, costs, or expenses (including reasonable attorneys' fees) claimed by any Third Party for any property or other economic loss or damage or injury or death suffered by it to the extent the same is determined to have been caused by (i) Abbott’s negligence, willful misconduct or breach of this Agreement, or (ii) the use of a Product outside the Field, other than to the extent of any breach of this Agreement by Abaxis, but only if Abbott knowingly and willingly promoted or marketed such Product for such use outside the Field, or Sold such Product when it knew or should have reasonably known that such Product would be used outside the Field.

7.2           Insurance.  During the Term, Abaxis and Abbott shall each maintain general business liability insurance coverage, including, if applicable, self-insurance, in the minimum aggregate amount of [ * ] Dollars ($[ * ]).

7.3           Abaxis Indemnification.  Abaxis shall defend, indemnify and hold harmless Abbott, its Affiliates, and the officers, directors, employees and agents of Abbott and its Affiliates, from and against any and all liabilities, damages, claims, demands, costs, or expenses (including reasonable attorneys’ fees) claimed by any Third Party for any property or other economic loss or damage or injury or death suffered by it to the extent the same is determined to have arisen out of or been attributable to: (i) [ * ] in the Field in accordance with the procedures and for the uses set forth in the operator’s manual, product insert or other instructions setting forth the intended use for the applicable Product; (ii) the use of a Product in the Territory in the Field other than to the extent of any willful misconduct, negligence or breach of this Agreement by Abbott; (iii) any claim by a Third Party relating to the Abaxis Trademarks, Software, or other Abaxis intellectual property, including, but not limited to, claims arising out of Abbott’s use of the Abaxis Trademarks, Software or other Abaxis intellectual property in the Territory in accordance with the terms of this Agreement; or (iv) Abaxis’ negligence, willful misconduct or breach of this Agreement.  Abaxis’ obligations hereunder will apply only when the applicable Product is unmodified by Abbott, lawfully used in the Field, lawfully dispensed or lawfully distributed all in accordance with the terms and conditions of this Agreement, and used in accordance with the applicable operator’s manual, product insert or as otherwise instructed in writing by Abaxis.  Any other use of the applicable Product will not be subject to this indemnity.

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

32

7.4       Conditions of Indemnifications.  If Abaxis seeks indemnification from Abbott pursuant to Section 7.1 or Abbott seeks indemnification from Abaxis pursuant to Section 7.3, the Party seeking indemnification shall (a) notify the other Party in writing of the claim or suit for which indemnification is sought within [ * ] after the date the Party seeking indemnification itself receives notice of such claim or suit and (b) allow the other Party to control the defense or settlement of such claim or suit, provided that the Party seeking indemnification may, at its own option and expense, participate in the defense or settlement of such claim or suit, and provided further that the indemnifying Party shall not enter into any binding settlement, consent to any judgment or otherwise resolve any such claim or suit pursuant to which the indemnified Party would be obligated to take or refrain from taking any action or to make any payments or admissions, without the indemnified Party’s prior written consent, such consent not to be unreasonably withheld or delayed.  Failure to deliver written notice pursuant to this Section 7.4 shall only relieve the indemnifying Party of its obligations under this Article 7 if and to the extent such indemnifying Party is actually materially prejudiced thereby.

ARTICLE 8

 

TERM AND TERMINATION

8.1           Expiration.  Unless terminated earlier by written agreement of the Parties or in accordance with the provisions of this Agreement, the term of this Agreement shall commence on the Effective Date and continue until the conclusion of Five (5) Contract Years thereafter (“Initial Term”).  UPON EXPIRATION OF THE INITIAL TERM, THE AGREEMENT SHALL CONTINUE AUTOMATICALLY FOR ADDITIONAL SUCCESSIVE ONE (1) YEAR PERIODS (EACH ONE (1) YEAR PERIOD AFTER THE INITIAL TERM, A “RENEWAL TERM”) UNLESS TERMINATED BY EITHER PARTY BY GIVING WRITTEN NOTICE OF NON-RENEWAL TO THE OTHER PARTY NOT LESS THAN SIX (6) MONTHS PRIOR TO EXPIRATION OF THE INITIAL TERM OR ANY RENEWAL TERM OR UNLESS OTHERWISE TERMINATED IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT.  The Initial Term and Renewal Terms shall be defined as the “Term” of the Agreement.  If Abaxis gives notice to Abbott of its election not to renew this Agreement, Abaxis shall pay Abbott a one-time termination fee of [ * ] on the last day of the Term.

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

33

8.2           Early Termination.  This Agreement may be terminated as set forth below and following provision of written notice:

	 	
(a)

	
Bankruptcy.  A Party may terminate this Agreement if the other Party becomes insolvent, is adjudged bankrupt, applies for judicial or extra-judicial settlement with its creditors, makes an assignment for the benefit of its creditors, voluntarily files for bankruptcy or has a receiver or trustee (or the like) in bankruptcy appointed by reason of its insolvency, or in the event an involuntary bankruptcy action is filed against the other Party and not dismissed within [ * ], or if the other Party becomes the subject of liquidation or dissolution proceedings or otherwise discontinues business.

	 	
(b)

	
Default.  A Party may terminate this Agreement if the other Party commits a material breach of this Agreement and the Party alleged to be in breach fails to (i) cure such breach or (ii) commence dispute resolution proceedings under Section 9.11 contesting whether a breach has occurred and/or whether such breach is a material breach within [ * ] after receipt of written notice from the Party asserting the breach. For purposes of this Section, a material breach by Abaxis shall include, but is not limited to, any material breach by Abaxis of its non-competition obligations pursuant to Section 3.12.

	 	
(c)

	
Change of Control.  In the event that a Third Party, directly or indirectly, acquires at least fifty percent (50%) of the controlling interest in or assets of Abaxis, whether in a single transaction or otherwise, including any sale of assets, sale of shares, mixed sale of assets and shares, merger, consolidation or other form of business combination transaction (“Change of Control”), Abaxis shall give written notice of such Change of Control to Abbott within [ * ] of the effective date of such Change of Control.  Within [ * ] of a Change of Control, Abbott shall have the right to terminate this Agreement upon written notice to Abaxis setting forth the effective date of termination of this Agreement, which effective date shall be no earlier than [ * ] after the date of receipt of Abbott’s notice of termination. Within [ * ] of a Change of Control, Abaxis or its successor shall have the right to terminate this Agreement upon written notice to Abbott setting forth the effective date of termination of this Agreement, which effective date shall be no earlier than [ * ] after the date of receipt of Abaxis’ notice of termination.  If during the [ * ] Contract Year or any time thereafter (i.e., the following one-time fee is not applicable if the termination notice occurs during the [ * ]) Abaxis or its successor gives notice to Abbott of its election to terminate this Agreement pursuant to this Section 8.2(c), Abaxis or its successor shall pay Abbott a one-time termination fee on the last day of the Term in an amount equal to [ * ] in the [ * ] by [ * ] in the [ * ] by [ * ] in the [ * ] by [ * ] in the [ * ] by [ * ].

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

34

8.3           Effect of Termination.  Upon the termination of this Agreement:

	 	
(a)

	
The Parties shall immediately cease the use of any Confidential Information of the other Party and, in the case of Abbott, of the Abaxis Trademarks, except as permitted in Section 8.3(b) below.

	 	
(b)

	
Unless this Agreement is terminated by Abaxis for Abbott’s breach or bankruptcy, and subject to Abaxis' rights as provided in this Section 8.3, (i) Abaxis shall honor all accepted purchase orders providing for delivery of Product within [ * ] of the date of termination and for which Abbott pays in full prior to shipment, and (ii) Abbott or its successor may Sell Products on a nonexclusive basis but otherwise on the terms set forth in this Agreement its remaining inventory of Products for a period of up to [ * ] following the date of termination.

	 	
(c)

	
Abaxis shall have the right (but not the obligation), upon prior written notice to Abbott given within [ * ] after termination to purchase from Abbott all or any portion of the Products in its inventory, for the same Purchase Prices paid for such products by Abbott, at the time of such termination for credit against outstanding invoices, or for cash refund to the extent there are no invoices then outstanding.

	 	
(d)

	
Abbott shall return to Abaxis all promotional and sales training materials provided to Abbott by Abaxis under this Agreement.

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

35

	 	
(e)

	
To the extent permitted by law, Abbott shall assign to Abaxis and deliver to Abaxis any and all export and import permits, health resignations, licenses, exemptions from customs duties and governmental consents of any nature specifically relating to Abaxis Products, which Abbott may have or retain directly or indirectly in connection with the Products imported, Sold and/or distributed under this Agreement, which it has not yet assigned or waived, or which have not yet been delivered prior to termination.

	 	
(f)

	
Abbott shall not, in the final six months of any notification of termination (or such actual time after notice and before actual termination, if shorter), undertake any actions intended or designed to cause End Users to purchase higher than normal levels of inventory of Products.

8.4           Continuing Obligations.  Upon any termination of this Agreement (except termination for cause by Abbott due to Abaxis' breach), at Abaxis' election and in accordance with Abaxis' instructions, Abbott shall:  (a) cooperate in referring End Users to Abaxis or to such other persons as Abaxis may direct for continuing purchase of Products and related services; and (b) provide Abaxis with a list of each End User who purchased Product through Abbott, including records of all Software updates performed.  Following termination of this Agreement for any reason, Abbott shall have no further obligations to End Users with respect to Software updates and maintenance or technical support.  Nothing in this Agreement shall be construed as preventing Abbott from soliciting End Users for other products following the termination of this Agreement.

8.5           Post-Termination Obligations.  Termination or expiration of this Agreement through any means and for any reason shall not relieve the Parties of any obligations accruing prior thereto, and shall be without prejudice to the rights and remedies of either Party with respect to any breach of any of the provisions of this Agreement.

8.6           Survival.  The following Articles and Sections shall survive termination or expiration of the Agreement:  Articles 1, 5 and 9 and Sections 3.4(f), 7.1, 7.3, 7.4, 8.1, 8.3, 8.4, 8.5 and 8.6.  In addition, all provisions that expressly survive termination, that are irrevocable or that arise due to termination shall survive in accordance with their terms.  Any other provisions of this Agreement contemplated by their terms to pertain to a period of time following termination or expiration of this Agreement shall survive only for the specified period of time.

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

36

ARTICLE 9

 

MISCELLANEOUS

9.1           Force Majeure.  Neither Party shall be held in breach of this Agreement for failure to perform any of its obligations hereunder and the time required for performance shall be extended for a period equal to the period of such delay, provided that such delay has been caused by or is a result of any acts of God; acts of the public enemy; civil strife; wars declared or undeclared; embargoes; labor disputes, including strikes, lockouts, job actions or boycotts; fires; explosions; floods; shortages of material or energy; events caused by reason of laws or regulations or orders by any government, governmental entity or instrumentality or by any other supervening unforeseeable circumstances beyond the reasonable control of the Party so affected.  The Party so affected shall: (a) give prompt written notice to the other Party of the nature and date of commencement of the force majeure event and its expected duration; and (b) use its commercially reasonable efforts to relieve the effect of such cause as rapidly as possible.

9.2           Assignment.  This Agreement may be assigned by Abbott to an Abbott Affiliate without consent of Abaxis. In addition, (a) any Party may without the consent of the other Party assign its rights to payments under this Agreement and (b) any Party may without the consent of the other Party assign its rights and delegate performance of its obligations under this Agreement in connection with a sale of all or substantially all of that portion of the business of the assigning Party to which this Agreement relates (whether such sale is structured as a sale of assets, sale of shares, mixed sale of assets and shares, merger, consolidation or other form of business combination transaction).  The assigning Party shall provide a written notice to the other Party of any assignment pursuant to clause (b) above as of the date of the assignment.  Following any assignment pursuant to clause (b) above, the assigning Party shall continue to be responsible for the performance of all obligations arising under this Agreement prior to the date of assignment, and the assignee shall be responsible for the performance of all obligations arising under this Agreement on or after the date of the assignment.  In addition, Abbott shall identify to Abaxis the Affiliate as promptly as practicable following assignment to such Affiliate.

 

Except as otherwise provided in this Section 9.2, no Party shall assign its rights or delegate performance of its obligations under this Agreement to any Third Party without the prior written consent of the other Party, such consent not to be unreasonably withheld, and any attempted assignment without such consent shall be void.  This Agreement shall inure to the benefit of and shall be binding upon and enforceable by, the Parties and their successors and permitted assigns.

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

37

9.3           Binding Effect.  This Agreement shall be binding upon and inure to the benefit of each of the Parties and its successors and permitted assigns.

9.4           Waiver.  No waiver or modification of any of the terms of this Agreement shall be valid unless in writing and signed by authorized representatives of both Parties. Failure by either Party to enforce any of its rights under this Agreement shall not be construed as a waiver of such rights nor shall a waiver by either Party in one or more instances be construed as constituting a continuing waiver or as a waiver in other instances.

9.5           Severability.  Any provision of this Agreement that in any way contravenes the law of any state or country in which this Agreement is effective shall, in that state or country, to the extent the law is contravened, be considered separable and non-applicable and shall not effect any other provision or provisions of this Agreement.  Parties shall cooperate to mitigate the effects of any such contravening clause/term.

9.6           Relationship of the Parties.  The relationship of the Parties under this Agreement is that of independent contractors.  Nothing contained in this Agreement is intended or is to be construed so as to constitute the Parties as partners, joint ventures, or either Party as an agent or employee of the other.  Neither Party has any express or implied right under this Agreement to assume or create any obligation on behalf of or in the name of the other, or to bind the other Party to any contract, agreement or undertaking with any Third Party, and no conduct of the Parties shall be deemed to infer such right.

9.7           Entire Agreement; Modifications.  This Agreement, together with any exhibits hereto, constitute the entire agreement between the Parties relating to the subject matter hereof.  It may not be modified or amended except in a writing and signed by both Parties.  All previous agreements or arrangements between the Parties, written or oral, relating to the subject matter hereof are hereby canceled and superseded.

9.8           Compliance with Law.  In performing this Agreement, each Party shall comply with all applicable laws, regulations and guidelines and shall not be required to perform or omit to perform any act required or permitted under this Agreement if such performance or omission would violate the provisions of any such law, regulation or guideline.

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

38

9.9           Counterparts.  This Agreement may be executed in one or more identical counterparts, each of which shall be considered an original and all of which together shall constitute one and the same instrument.

9.10        Governing Law.  All disputes arising in any manner out of or in relation to this Agreement shall be resolved in accordance with the laws of Illinois, without reference to its choice of laws provisions.  Each Party hereby disclaims the application to this Agreement of the United Nations Convention on the International Sale of Goods.

9.11        Alternative Dispute Resolution.  Any dispute that arises in connection with this Agreement shall be binding on the Parties and resolved by binding Alternative Dispute Resolution (“ADR”) in the manner described in Exhibit 9.11.

9.12        Notices.  Any notice, report, payment or statement required or permitted under this Agreement shall be considered to be given when in writing sent by certified mail (return receipt requested), postage prepaid, or faxed then mailed, or if sent via courier and addressed to the Party for whom it is intended at its address of record.  The record address of the Parties is as follows:

	 	
If to Abaxis:

	
Abaxis, Inc.

Attn: Chief Commercial Officer

3240 Whipple Road

Union City, CA 94587

Fax: 510-441-6150

	 	
with copy to:

	
Cooley LLP

3175 Hanover Street

Palo Alto, CA 94304-1130

Attn:  Glen Sato, Esq.

Fax: 650-849-7400

 

	 	
If to Abbott:

	
Director, Business Development

Abbott Point of Care

400 College Road East

Princeton, NJ  08540

Tel: 609-454-9418

Fax: 609-228-5570

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

39

	 	
with copy to:

	
Divisional Vice President, Commercial Legal Operations

Abbott Laboratories

AP6A-2

100 Abbott Park Road

Abbott Park, IL 60064-6049

Fax: 847-938-1206

9.13        Expenses.  Unless otherwise specifically provided for herein, all costs and expenses incurred with connection with this Agreement and the transactions contemplated hereby shall be paid by the Party that shall have incurred the same, and the other Party shall have no liability thereto.

9.14        Interpretation.  When a reference is made in this Agreement to Sections, Subsections, Tables or Exhibits, such references shall be to a Section, Subsection, Table or Exhibit to this Agreement unless otherwise indicated.  The words “include,” “includes” and “including” when used herein shall be deemed in each case to be followed by the words “without limitation.”  The table of contents and headings, if contained in this Agreement, have been inserted for convenience of reference only and shall not be relied upon in construing this Agreement.  Use of any gender herein to refer to any person shall be deemed to comprehend masculine, feminine, and neuter unless the context clearly requires otherwise.

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

40

IN WITNESS WHEREOF, each Party has caused this Agreement to be signed by its duly authorized representative as of the date set forth below.

	
ABBOTT POINT OF CARE INC.

	
 

	
ABAXIS, INC.

	
	
 

	
 

	
 

	
 

	
 

	
	
By:

	
/s/  Greg Arnsdorff 

	
 

	
By:

	
/s/  Clinton H. Severson  

	
	
 

	
 

	
 

	
	
Name:  Greg Arnsdorff

	
 

	
Name  Clinton H. Severson

	
	
 

	
 

	
 

	
	
Title:  President

	
 

	
Title:  Chairman, President and CEO

	
	
 

	
 

	
 

	
	
Date:  10/26/12

	
 

	
Date:  10/26/12

	

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

41

Exhibit 1.1

Abaxis Trademarks

	
MARK

	
COUNTRY

	
APPLICATION/

REGISTRATION

NO.

	
CLASS/GOODS/

SERVICES

	
CURRENT 

STATUS

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

42

Exhibit 1.2

Abbott Trademarks

	
Mark

	
Territory

	
Class/ Goods/Services

	
Registration 

No.

	
Current 

Status

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

43

	
Mark

	
Territory

	
Class/ Goods/Services

	
Registration 

No.

	
Current 

Status

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

44

	
Mark

	
Territory

	
Class/ Goods/Services

	
Registration 

No.

	
Current 

Status

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

45

	
Mark

	
Territory

	
Class/ Goods/Services

	
Registration 

No.

	
Current 

Status

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

46

Exhibit 1.14

Products

	
 

	
 

	
 

	
PICCOLO EXPRESS CHEMISTRY ANALYZER

	
 

	
[ * ]

	
[ * ]

	
[ * ] REAGENT DISCS

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
[ * ] REAGENT DISCS

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

	
 

	
[ * ]

	
[ * ]

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

47

Exhibit 1.17

Purchase Price

Discs

[ * ]

Analyzers

[ * ]

[ * ]

[ * ]

	
Part #:

	
Price:

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

[ * ]

	
Part #:

	
Price:

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

	
[ * ]

[ * ] are subject to [ * ]

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

48

Exhibit 2.1

[ * ] and [ * ]

(Known to Abaxis as of the date of this Agreement)

(See attached list)

[ * ]

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

49

Exhibit 2.6

Annual Product Purchase Calculation

 

	
Contract Year:     _____________

	
	 	
	
Abaxis Calculation:   _____________

	
date provided to Abbott:  __________

	
 

	
 

	
Approved by Abbott:   __ Yes / __ No*

	
date approved by Abbott:   _________

	 	
	
* if No:

	
 

	
Abbott Calculation:   _____________

	
date provided to Abaxis:   __________

	 	
	
Approved by Abaxis:   __ Yes / __ No **

	
date approved by Abaxis:   _________

	
 

	
 

	
** if No:

	
 

	
Agreed Calculation:   _____________

	
date agreed:   _________

 

Official Determination of Product Purchases

For Contract Year           _______ is _____________________.

Agreed and Accepted by:

	
Abbott Point of Care Inc.

		
Abaxis, Inc.

	
 

	
 

	
 

		
 

		
 

	
By:

	 		
By:

	 	
	
 

	
 

		
 

		
 

	
Name:

	 		
Name:

	 	
 

	
 

	
 

		
 

		
 

	
Title:

	
 

		
Title:

	 	
 

	
 

	
 

		
 

		
 

	
Date:   

	 		
Date:

	 	

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

50

Exhibit 3.1(h)

Standard Warranty

Abaxis warrants the Analyzer (excluding disposable or consumable supplies) against defects in materials and workmanship for [ * ] to the [ * ].

If Abaxis receives notice of such defects during the warranty period, Abaxis shall, at its option, either repair or replace products which prove to be defective. During this warranty period, Abaxis shall [ * ].

Costs for repairs (inclusive of labor, overhead and standard shipping costs related to such repairs) performed under the standard warranty for each Analyzer shall be billed to and payable by Abbott [ * ] at $[ * ]; provided, however, that [ * ] in any [ * ] of the [ * ] and [ * ] that remain [ * ] in the [ * ].  Abaxis will provide at its discretion one of the following to customers with an Analyzer requiring service during the warranty period: (1) [ * ] which will [ * ], or (2) [ * ] for the [ * ] and [ * ].

With respect to software or firmware, if Abaxis receives notice of defects in these products during the warranty period, [ * ], provided that [ * ].  Abaxis does not [ * ] or [ * ].

Warranty services beyond the standard warranty shall constitute extended non-standard warranty, the costs (inclusive of labor, overhead, standard shipping costs and replacement parts related to such extended non‐standard warranty repairs) for which shall be billed to and payable by Abbott [ * ] at $[ * ].

Abaxis shall provide to Abbott within [ * ] following the end of [ * ] a report that provides the following for [ * ] by Abaxis: [ * ]; [ * ]; [ * ]; [ * ]; and [ * ].

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

51

Exhibit 9.11

ALTERNATE DISPUTE RESOLUTION (ADR)

The Parties recognize that from time to time a dispute may arise relating to either Party’s rights or obligations under this Agreement. The Parties agree that any such dispute shall be resolved by the Alternative Dispute Resolution (“ADR”) provisions set forth in this Exhibit 9.11, the result of which shall be binding upon the Parties.  

To begin the ADR process, a party first must send written notice of the dispute to the other party for attempted resolution by good faith negotiations between their respective [ * ] (or their designees) of the affected subsidiaries, divisions, or business units within [ * ] days after such notice is received (all references to “days” in this ADR provision are to calendar days). If the matter has not been resolved within [ * ] days after the notice of dispute, or if the parties fail to meet within such [ * ] days, either party may initiate an ADR proceeding as provided herein. The parties shall have the right to be represented by counsel in such a proceeding.

1.              To begin an ADR proceeding, a party shall provide written notice to the other party of the issues to be resolved by ADR. Within [ * ] days after its receipt of such notice, the other party may, by written notice to the party initiating the ADR, add additional issues to be resolved within the same ADR.

2.             Within [ * ] days following the initiation of the ADR proceeding, the parties shall select a mutually acceptable independent, impartial and conflicts-free neutral to preside in the resolution of any disputes in this ADR proceeding. If the parties are unable to agree on a mutually acceptable neutral within such period, each party will select one independent, impartial and conflicts-free neutral and those two neutrals will select a third independent, impartial and conflicts-free neutral within [ * ] days thereafter.  None of the neutrals selected may be current or former employees, officers or directors of either party, its subsidiaries or affiliates.

3.             No earlier than [ * ] days or later than [ * ] days after selection, the neutral(s) shall hold a hearing to resolve each of the issues identified by the parties. The ADR proceeding shall take place at a location agreed upon by the parties. If the parties cannot agree, the neutral(s) shall designate a location other than the principal place of business of either party or any of their subsidiaries or affiliates.

4.             At least [ * ] days prior to the hearing, each party shall submit the following to the other party and the neutral(s): 

(a)           a copy of all exhibits on which such party intends to rely in any oral or written presentation to the neutral;

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

52

(b)           a list of any witnesses such party intends to call at the hearing, and a short summary of the anticipated testimony of each witness;

(c)           a proposed ruling on each issue to be resolved, together with a request for a specific damage award or other remedy for each issue. The proposed rulings and remedies shall not contain any [ * ] or any [ * ] and shall not exceed [ * ] per issue. The parties agree that neither side shall [ * ] any [ * ].

(d)           a brief in support of such party’s proposed rulings and remedies, provided that the brief shall not exceed [ * ]. This page limitation shall apply regardless of the number of issues raised in the ADR proceeding. 

Except as expressly set forth in subparagraphs 4(a) - 4(d), no discovery shall be required or permitted by any means, including depositions, interrogatories, requests for admissions, or production of documents. 

5.             The hearing shall be conducted on [ * ] consecutive days and shall be governed by the following rules: 

(a)           Each party shall be entitled to [ * ] hours of hearing time to present its case. The neutral shall determine whether each party has had the [ * ] hours to which it is entitled. 

(b)          Each party shall be entitled, but not required, to make an opening statement, to present regular and rebuttal testimony, documents or other evidence, to cross-examine witnesses, and to make a closing argument. Cross-examination of witnesses shall occur immediately after their direct testimony, and cross-examination time shall [ * ] the party [ * ]. 

(c)          The party initiating the ADR shall begin the hearing and, if it chooses to make an opening statement, shall address not only issues it raised but also any issues raised by the responding party. The responding party, if it chooses to make an opening statement, also shall address all issues raised in the ADR. Thereafter, the presentation of regular and rebuttal testimony and documents, other evidence, and closing arguments shall proceed in the same sequence. 

(d)          Except when testifying, witnesses shall be excluded from the hearing until closing arguments. 

(e)           [ * ], including any statements made therein, shall not be admissible under any circumstances. [ * ] for purposes of the ADR hearing also shall not be admissible. As to all other matters, the neutral(s) shall have sole discretion regarding the admissibility of any evidence. 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

53

6.             Within [ * ] days following completion of the hearing, each party may submit to the other party and the neutral(s) a post-hearing brief in support of its proposed rulings and remedies, provided that such brief shall not [ * ] and shall not exceed [ * ]. This page limitation shall apply regardless of the number of issues raised in the ADR proceeding. 

7.             The neutral(s) shall rule on each disputed issue within [ * ] days following completion of the hearing. Such ruling shall adopt in its entirety the proposed ruling and remedy of one of the parties on each disputed issue but may adopt one party’s proposed rulings and remedies on some issues and the other party’s proposed rulings and remedies on other issues. The neutral(s) shall not [ * ] or otherwise [ * ]. 

8.             The neutral(s) shall be paid a reasonable fee plus expenses. These fees and expenses, along with the reasonable legal fees and expenses of the prevailing party (including all expert witness fees and expenses), the fees and expenses of a court reporter, and any expenses for a hearing room, shall be paid as follows: 

(a)           If the neutral(s) rule(s) in favor of one party on all disputed issues in the ADR, the losing party shall pay [ * ] of such fees and expenses. 

(b)           If the neutral(s) rule(s) in favor of one party on some issues and the other party on other issues, the neutral(s) shall issue with the rulings a written determination as to how such fees and expenses shall be allocated between the parties. The neutral(s) shall allocate fees and expenses in a way that [ * ] to the [ * ], with the party prevailing on [ * ], or on [ * ] or [ * ], recovering [ * ] of its legal fees and expenses. 

9.             The rulings of the neutral(s) and the allocation of fees and expenses shall be binding, non-reviewable, and non-appealable, and may be entered as a final judgment in any court having jurisdiction.

10.          Except as provided in paragraph 9 or as required by law, the existence of the dispute, any settlement negotiations, the ADR hearing, any submissions (including exhibits, testimony, proposed rulings, and briefs), and the rulings shall be deemed Confidential Information. The neutral(s) shall have the authority to impose sanctions for unauthorized disclosure of Confidential Information.

11.           All ADR hearings shall be conducted in the English language.

 

[ * ] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

54

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