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MEDICAL DEVICE ALLIANCE INC.
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EXHIBIT 10.21
DISTRIBUTION AGREEMENT
BETWEEN
LYSONIX INCORPORATED
AND
XXXXXX GROUP
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DISTRIBUTION AGREEMENT
The Xxxxxx Group, Inc., a Georgia corporation with its principal
offices located at 0000 Xxxxxxx Xxxxx Xxxxx, Xxxxxxxxxxxxx, XX. 00000,
(hereinafter referred to as "Supplier"), hereby grants to LYSONIX, INC., a
Nevada corporation with its principal offices located at 0000 Xxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxxx 00000, (hereinafter referred to as "Distributor"), the
right to distribute and sell throughout the Territories, as defined below, those
products set forth in paragraph 1, and Distributor accepts such grant for the
term and on the conditions herein stated (the "Agreement").
1. PRODUCTS COVERED BY THE AGREEMENT
The products covered by the Agreement are those products and
accessories set forth in the separate schedule, initialed by the parties, and
attached to the Agreement as Exhibit "A", together with the parts and components
necessary for the repair and replacement thereof, and all modifications,
improvements, and developments pertaining to such products, accessories and
components, all of which are hereinafter referred to as the "Products".
2. NEW PRODUCTS
Supplier may submit to Distributor specifications and, where
feasible, samples of each new product which Supplier intends to manufacture.
Within sixty (60) days after such submission, Distributor may acquire
distribution rights for such new products by advising Supplier in writing that
Distributor is electing to have such new products included within the Products
described in paragraph 1 hereof. A revised Exhibit "A' setting forth the
original products and the new products covered by the Agreement shall be
prepared immediately, initialed by the parties hereto and attached to the
Agreement. It is expressly understood and agreed that, in the event Distributor
does not exercise its option to the exclusivity to distribute such new products,
Supplier shall have the right to market those products as it deems fit in its
sole discretion.
3. TERRITORIES
a. EXCLUSIVE DISTRIBUTION TERRITORIES. The Distributor
shall have the right to sell and distribute the Products on an exclusive basis
throughout the United States of America and any of the territories, possessions,
protectorates and affiliates of the United States, excluding Puerto Rico
(collectively, the "Exclusive Territories"). Supplier will not itself sell
Products into the Exclusive Territories and will not appoint any other
distributors, dealers, direct or indirect selling agents or in any way
distribute or sell the Products in the Exclusive Territories during the term
hereof.
b. INTERNATIONAL DISTRIBUTION TERRITORIES. The
Distributor shall have the right to sell and distribute the Products on an
exclusive basis in all international markets not identified as having existing
assigned exclusive distributors previously appointed by Supplier and/or as
identified in Exhibit B hereto. The Supplier shall identify all international
countries in which exclusive distribution agreements exist prior to the
execution of this Agreement.
LYSONIX, INC.
DISTRIBUTION AGREEMENT
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4. TERMS AND RENEWAL
The initial term of the Agreement shall begin September 17,
1997, and ending on December 31, 1998, unless earlier terminated as provided
herein. The Agreement will be automatically renewed under two additional and
separate renewals, annually, on January 1st of each of the next two subsequent
years (the "Anniversary Date") unless written notice of non-renewal is given by
either party ninety (90) days prior to the Anniversary Date. If such notice of
non-renewal is given, the Agreement shall not be renewed and shall expire and
terminate. Either party may terminate the Agreement "for cause" at any time in
accordance with Paragraph 9 hereto. Upon expiration or termination of the
Agreement, the Distributor shall only have the right to sell Products then in
its possession and inventory.
5. DISTRIBUTOR'S DUTIES
a. Distributor shall purchase from Supplier for its own
account for resale such Products and in such quantities to meet the demand in
the Exclusive Territories and to always actively promote and sell the Products
in the Exclusive Territories
b. Distributor shall submit its order for the Products
on its standard purchase order form, a copy of which is attached hereto as
Exhibit "C", without regard to any terms and conditions which may appear on the
reverse of such standard purchase form;
c. Distributor shall promote and sell the Products,
subject to Supplier's standard warranty, as may be amended from time to time by
Supplier;
d. Distributor shall provide instructions to its
customers in the use and routine maintenance of the Products and post-sale
follow-up with customers as related to warranty, exchange, information, service
or otherwise and to provide Supplier with feedback on leads in the Exclusive
Territories provided to Distributor by Supplier;
e. Distributor shall work with and assist Supplier,
using whenever feasible, the facilities of Distributor, and/or its related
companies and divisions, in the modification and improvement of the Products and
the development of new products;
f. Distributor shall promote and advertise the Products
at important regional and national plastic surgery, cosmetic surgery and/or
aesthetic surgery meetings attended by the Distributor, including the ASPRS
annual trade show. Distributor shall coordinate with Supplier's Xx. Xxxxxxx for
any travel required by Xx. Xxxxxxx with Distributor's sales persons;
g. Distributor shall maintain customer service staff, a
direct sales force and sufficient inventory of the Products to meet the needs of
the customers in the Exclusive Territories;
h. Distributor shall pay for printing of adequate
quantities of brochures for use in sales of the Products and will coordinate
with Supplier on a marketing and sales plan for each year under this Agreement
during the fourth quarter of the preceding year;
LYSONIX, INC.
DISTRIBUTION AGREEMENT
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i. Distributor shall name Supplier as an additional
insured on its product liability insurance;
j. Distributor shall not disclose during the term of the
Agreement or for a period of two (2) years thereafter, any trade secrets or
proprietary information obtained from Supplier before or during the term of the
Agreement except to the extent that disclosure is required by law, the
information is otherwise available to the public or the industry, the
information is presently known to the Distributor, or the information is
disclosed to Distributor by a third party who has a lawful right to disclose
same.
6. SUPPLIER'S DUTIES
a. Supplier shall ship Distributor's orders for the
Products, fob Atlanta, Georgia, at the prices set forth on Exhibit "A" hereto;
b. Supplier shall work with Distributor to provide the
following information for the Products set forth in Exhibit "A":
i. Typical patient measurements for developing
a product selection guide; and
ii. Quality control specifications including
testing methods, sampling procedures, and
acceptance levels.
c. Supplier shall give at least sixty (60) days prior
written notice of each increase in price of the Products and honor Distributor's
existing purchase orders at the prices in effect immediately prior to the
effective date of such price increase if such purchase orders as placed sixty
(60) days prior to any announced price increase. Supplier hereby expressly
warrants to Distributor that each such price increase shall be in full
compliance with any and all price control restrictions, if any, imposed by the
federal or any state government during the term of the Agreement;
d. Supplier shall adequately label, package and deliver
the Products, using references to and trademarks of Supplier shall bear all
costs associated with tagging, labeling and/or packaging of the products except
that Distributor shall bear all costs associated with printing of package
inserts for the Products, which the Supplier shall include in the Products'
packaging;
e. At the Distributor's written request, Supplier will
specifically label the Products on behalf of the Distributor, the cost of such
special labeling shall be borne by the Distributor and all such labels shall
include the Supplier's trademarked brand name, Xxxxxx, as approved by the
Supplier;
f. Supplier shall notify Distributor immediately in
writing should Supplier become aware of any defect or condition which may render
any of the Products in violation of the United States Food, Drug and Cosmetic
Act, or in any way alters the specifications and the quality of the Products;
g. Supplier shall notify Distributor prior to
implementing any design changes in the Products and/or the manufacture, assembly
or labeling process of the Products which could affect the quality of the
Products;
LYSONIX, INC.
DISTRIBUTION AGREEMENT
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h. Supplier shall promptly turn over all sales leads for
the Products from the Exclusive USA and International Territories covered in the
Agreement to Distributor;
i. Supplier shall maintain property and comprehensive
insurance to the levels needed to, in its sole discretion, maintain supplies of
the Products;
j. Supplier shall furnish Distributor, upon written
request and at Distributor's expense, suitable copy and photographs for use by
Distributor in advertising and cataloging.
7. RETURNS AND CREDITS.
All returns shall be sent to Supplier freight and
miscellaneous costs pre-paid, with approve return authorizations by Supplier
noted on all packaging and documentation. At its discretion, Supplier may
replace or repair any returned Products. If replacement or repair of the
returned Products is not possible, the Supplier shall issue credit for returned
merchandise according to the schedule below:
a. Merchandise returned in unused, salable condition
(outside seal intact) within thirty (30) days of delivery: CREDIT @ 80% OF
DISTRIBUTOR NET COST.
b. Orders for merchandise accepted by the Supplier and
terminated by the Distributor prior to delivery: CREDIT @ 90% OF DISTRIBUTOR NET
COST.
c. Defective merchandise: CREDIT @ 100% OF DISTRIBUTOR
NET COST.
d. Merchandise processed in error by Supplier: CREDIT @
100% OF DISTRIBUTOR NET COST.
e. Merchandise not suitable for resale: NO CREDIT.
f. Merchandise returned due to changes in product line:
CREDIT AMOUNT DETERMINED BY EACH CIRCUMSTANCE.
8. MINIMUM ORDERS AND PAYMENTS/DELIVERY SCHEDULE
a. Distributor agrees to order a minimum of $1,200,000
worth of Products under the Agreement from September 17, 1997 through December
31, 1998 (the first year of the Agreement), under non-revocable purchase orders
issued to Supplier on a monthly basis by Distributor, with subsequent monthly
purchase orders to be progressively increasing in dollar amounts but not to
exceed an increase of ten percent (10%) of the previous month's purchase order
dollar value, unless approved in writing by the Supplier. Distributor agrees to
pay a deposit of Thirty Percent (30%) of each purchase order, to be enclosed
with any purchase orders issued during the first year of the Agreement and the
balance to be net 30 days from the date of shipment of the Products by the
Supplier.
b. Upon the execution of the Agreement, Distributor
agrees to pay the Supplier a non-refundable manufacturing incentive fee of Three
Hundred Sixty Thousand Dollars ($360,000) to be credited first against the 30%
deposit on the year's purchase orders.
LYSONIX, INC.
DISTRIBUTION AGREEMENT
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c. Distributor agrees to order a minimum of $1,500,000
worth of Products under the Agreement from January 1, 1999 through December 31,
1999 (the second year of the Agreement), under non-revocable purchase orders
issued to Supplier on a monthly basis by Distributor, with any subsequent
monthly purchase orders not to exceed an increase of ten percent (10%) of the
previous month's purchase order dollar value, unless approved in writing by the
Supplier.. Distributor agrees to pay a deposit of Ten Percent (10%) of each
purchase order, to be enclosed with any purchase orders issued during the second
year of the Agreement and the balance to be net 30 days from the date of
shipment of the Products by the Supplier.
d. Distributor agrees to order a minimum of $1,800,000
worth of Products under the Agreement from January 1, 2000 through December 31,
2000 (the third year of the Agreement), under non-revocable purchase orders
issued to Supplier on a monthly basis by Distributor, with any subsequent
monthly purchase orders not to exceed an increase of ten percent (10%) of the
previous month's purchase order dollar value, unless approved in writing by the
Supplier.. Distributor agrees to pay any invoice balance net 30 days from the
date of shipment of the Products by the Supplier for purchase orders issued
during the third year of the Agreement.
e. Timely payment by Distributor to Supplier is of the
essence. A finance charge of 1.5% per month shall be applied on all invoices not
paid within thirty (30) days. Invoices shall be paid without deduction or
offset. Distributor shall pay all costs of collection, including reasonable
attorneys' fees if past due balances are collected by or through an attorney.
f. Distributor agrees that any delivery schedules agreed
to by Supplier shall be construed as estimates and not firm commitments, unless
a firm delivery date is agreed to in writing by Supplier.
9. PATENTS AND TRADEMARKS
a. PATENTS
Supplier shall, in its reasonable discretion, prosecute
diligently each application for United States and foreign patent which is now or
hereafter pending covering some one or more of the Products and, upon issuance,
shall, in its reasonable discretion, diligently prosecute each infringer
thereof. Supplier shall defend, indemnify and hold harmless Distributor from and
against any liability arising out of a claim of patent infringement made with
respect to any of the Products. Supplier agrees to repurchase from Distributor,
at a price equivalent to the full purchase price paid by Distributor, any
quantity of the Products in Distributor's inventory which Products Distributor
reasonably believes it should not or cannot sell, based on an opinion of counsel
of the parties hereto that future sales by Distributor may result in patent
infringement, or because of a decision, whether interlocutory or final, rendered
in any patent infringement action.
b. TRADEMARKS AND TRADE NAMES
Distributor recognizes that Supplier is the owner of the
trademarks and trade names which may be used in the promotion and sale of the
Products and that Distributor has no right or interest in such trademarks and
trade names. Distributor further recognizes that Supplier, through its duly
authorized representatives shall have the right to inspect Distributor's
facilities at reasonable times to determine the quality of such labeling,
packaging and inserts which will be placed on the Products.
LYSONIX, INC.
DISTRIBUTION AGREEMENT
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c. TRADEMARK LICENSE
Supplier hereby grants to Distributor the royalty-free right
to use Supplier's trademarks on the products during the term of the Agreement,
it being understood that Distributor shall discontinue the use of such
trademarks upon the termination of the Agreement and disclaims any rights in the
trademarks other than the said license.
10. TERMINATION
Either party shall have the right to terminate the Agreement,
for cause, on written notice if the other: (a) commits or suffers any act of
bankruptcy or insolvency; or (b) fails to cure any material breach in the
provisions of the Agreement within forty five (45) days after written notice to
the other party hereto of such breach.
11. PROCEDURES ON TERMINATION
a. WINDUP
On the termination of the Agreement, for whatever reason,
Supplier shall continue to honor Distributor's orders for the Products up to the
effective date of termination and Distributor shall pay for such products all on
the terms and conditions of the Agreement.
b. REPURCHASE OF INVENTORY
Returns that cannot be replaced or repaired will be credited
as per the Credit Schedule in paragraph 6 above for returned Products.
12. FORCE MAJEURE
The obligations of either party to perform under the Agreement shall be
excused during each period of delay caused by matters such as strikes, shortages
of power or raw material, government orders or acts of God, which are reasonably
beyond the control of the party obligated to perform.
13. CONFIDENTIAL INFORMATION
a. CONFIDENTIALITY
Supplier and Distributor acknowledge and agree that, pursuant
to the Agreement, valuable information of a confidential nature may be disclosed
by Distributor to Supplier or Supplier to Distributor; that such information
shall be retained by either party in confidence; that the transmittal of such
information by Distributor to Supplier or Supplier to Distributor is upon the
expressed condition that the information is to be used solely for the purpose of
effectuating the Agreement; and that Supplier or Distributor shall not, either
during the term of the Agreement or for a period of two (2) years after its
termination, use, publish or disclose or cause anyone else to use, publish or
disclose any confidential information supplied by Supplier or Distributor,
whether purchased by either party or provided free of charge by either party.
Notwithstanding anything in the foregoing, the above restrictions on disclosure
and use shall not apply to any information which Supplier or Distributor can
show by written evidence was known to it at the time of receipt thereof from
Supplier or Distributor or which may subsequently be obtained from sources other
than Distributor or Supplier who are not bound by a confidentiality agreement
with Distributor or Supplier. The cutting, spreading and sewing methods and the
source and content of textiles and trims used by Supplier in the Products shall,
LYSONIX, INC.
DISTRIBUTION AGREEMENT
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without limitation, be considered confidential information hereunder and for a
period of two (2) years after its termination.
b. PAYMENT FOR CONFIDENTIAL INFORMATION
The parties shall mutually agree as to what information, if
any, will be provided to either party and what the cost, if any, will be to
either party for such information. The nonpayment by either party of financial
charges for confidential information is grounds for immediate termination of all
such information.
c. REMEDY
Supplier and Distributor recognize and acknowledge that either
party would not have any adequate remedy at law for the breach of any one or
more of the covenants contained in this paragraph and agree that, in the event
of such breach, Distributor or Supplier may, in addition to the other remedies
which may be available to it, arbitrate in equity to enjoin Supplier or
Distributor from the breach of any of the terms of the Agreement.
14. ADDITIONAL COVENANTS OF SUPPLIER AND DISTRIBUTOR
During the term of the Agreement and for a one year period
commencing on the date of termination or expiration of the Agreement (the
"Termination Date"), neither Supplier nor Distributor shall engage in or attempt
to engage, directly or indirectly, in any of the following acts: (i) Solicit,
recruit, hire or contract with any person who was employed by, served as an
employee, officer, agent, dealer, distributor or representative of the other
party hereto, as the case may be, at any time during one-year prior to the
Termination Date, without the expressed written consent of such party; (ii)
disclose, divulge, sell, give away or otherwise make known to any other person,
any confidential information or trade secrets of the other party hereto, as the
case may be; or (iii) acquire, without the express written consent of the other
party hereto, as the case may be, any equity ownership interest in any business
engaged in a substantially similar or identical business to that of the other,
as the case may be, on the Termination Date.
15. WARRANTIES AND REMEDIES
Products sold to Distributor are warranted only to the extent
set forth below:
a. Neither Distributor nor any other person is
authorized to make any other warranty and Distributor agrees that all of its
sales of the Products will be made in accordance with the warranty set forth
below.
b. Supplier warrants that the Product delivered by it
will for a period of ninety (90) days from the date of the delivery from the
Distributor to the customer, be free of defects in material and workmanship;
c. The sole and exclusive remedy under this warranty is
limited to, at the Supplier's option, repair or replacement of the Product for
defects in material and workmanship;
d. To qualify for this warranty, Distributor must (i)
promptly notify Supplier of any defects, in writing; and (ii) have met
Distributor's obligations under the Agreement;
LYSONIX, INC.
DISTRIBUTION AGREEMENT
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e. LIMITATION OF WARRANTY. THE WARRANTIES SET FORTH
HEREIN ARE EXPRESSLY IN LIEU OF ANY AND ALL OTHER WARRANTIES AND OBLIGATIONS
EXPRESS AND IMPLIED INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE;
f. Distributor expressly acknowledges that it is not
entitled to incidental or consequential damages from Supplier, except for
Supplier's intentional breach of the Agreement, and Supplier will not be liable
for same.
16. SECURITY AGREEMENT
Supplier retains a security interest in any Products sold by
Supplier to Distributor for inventory or warehousing, as well as in any
insurance proceeds thereof, until all outstanding accounts on Products that have
been delivered to Distributor have been paid to Supplier.
17. ASSIGNMENT
The Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, provided,
however, that neither party shall have the right to transfer or assign its
interest in the Agreement without the prior written authorization of the other
party, which consent shall not be unreasonably withheld; provided, however that,
either party may assign the Agreement to a person who or entity which has
acquired all or substantially all of the stock or assets of the assigning party,
upon written notification to the other party hereto.
18. ARBITRATION
Any controversy or claim arising out of or relating to the
Agreement, or its breach, shall be settled by arbitration, using one arbitrator,
in the city of the source of supply of Products in accordance with the governing
rules of the American Arbitration Association and applying Georgia law. Judgment
upon the award rendered by the arbitrator may be entered into any court of
competent jurisdiction.
19. MISCELLANEOUS
a. NOTICES
Any notice required by the Agreement shall be deemed
sufficient if sent by fax, overnight courier or certified mail, postage prepaid,
to the party to be notified at the address set forth in the initial paragraph of
the Agreement until written notice of a different address is supplied to the
other party.
b. ENTIRE AGREEMENT
The Agreement is the entire agreement between the parties
hereto, there being no prior written or oral promises or representations not
incorporated herein. No terms or conditions included in Distributor's purchase
orders or other documents submitted by Distributor shall be of any effect and
shall not be applicable to the ordering or supplying of Products, the terms and
conditions in this Agreement being the only ones applicable.
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DISTRIBUTION AGREEMENT
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c. APPLICABLE LAW
The Agreement shall be governed by the laws of the State of
Georgia.
d. AMENDMENTS
No amendments or modifications of the terms of the Agreement
shall be binding on either party unless reduced to writing and signed by an
authorized officer of both parties hereto.
e. EXISTING OBLIGATIONS
Distributor and Supplier represent and warrant that the terms
of the Agreement do not violate any existing obligations or contracts of either
party. Supplier and Distributor shall defend, indemnify and hold harmless
Supplier and Distributor from and against any and all claims, demands, actions
or causes of action which are hereafter made or brought against Distributor or
Supplier and which allege any such violation.
f. NO AGENT
Neither party by reason of the Agreement or otherwise shall be
an agent or legal representative of the other for any purpose whatsoever, and
neither has any authority, either express or implied, to obligate or act for the
other.
g. DESIGN AND DISCONTINUANCE
Supplier reserves the sole right and discretion to change the
design of or discontinue any Product and shall provide written notice to
Distributor any such changes or discontinuances.
20. COUNTERPARTS
For the convenience of the parties hereto, this Agreement may
be executed in one or more counterparts, each of which shall be deemed an
original for all purposes.
IN WITNESS WHEREOF, the parties have by their duly authorized officers,
executed the Agreement on the 24th day of September, 1997.
"DISTRIBUTOR"
LYSONIX, INC., a Nevada corporation
By: /s/ Xxxxxx X. XxXxxx
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Its: Chairman of the Board
"SUPPLIER"
THE XXXXXX GROUP, INC., a Georgia corporation
By: /s/ Xxxx Xxxxxxx
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Name: Xxxx Xxxxxxx
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Its: President
LYSONIX, INC.
DISTRIBUTION AGREEMENT
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EXHIBIT A TO DISTRIBUTION AGREEMENT
PRODUCTS AND PRICING
LYSONIX, INC.
DISTRIBUTION AGREEMENT
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EXHIBIT B TO DISTRIBUTION AGREEMENT
EXISTING TERRITORIES COVERED BY DISTRIBUTORS APPOINTED BY SUPPLIER
EXCLUSIVE DISTRIBUTORS ALREADY IN PLACE
NO SALES PERMITTED BY DISTRIBUTOR (LySONIX, INC.)
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ARGENTINA ECUADOR PANAMA
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BOLIVIA EL SALVADOR URUGUAY
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BRAZIL GUATEMALA PARAGUAY
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CHILE HONDURAS PERU
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COLUMBIA MEXICO PUERTO RICO
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COSTA RICA NICARAGUA VENEZUELA
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DOMINICAN REPUBLIC
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NON-EXCLUSIVE DISTRIBUTORS ALREADY IN PLACE
SALES PERMITTED BY DISTRIBUTOR (LySONIX, INC.) ON NON-EXCLUSIVE BASIS
GERMANY
ITALY
SERBIA
SWITZERLAND
ALL INTERNATIONAL TERRITORIES NOT LISTED BECOME EXCLUSIVE TO DISTRIBUTOR
(LYSONIX, INC.)
LYSONIX, INC.
DISTRIBUTION AGREEMENT
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EXHIBIT C TO DISTRIBUTION AGREEMENT
STANDARD PURCHASE ORDER
NOTHING ON REVERSE
LYSONIX, INC.
DISTRIBUTION AGREEMENT
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