EXHIBIT 10.4
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT entered into this 29th day of April, 2003 by and
between VET-SONOTRON SYSTEMS, INC., a New Jersey corporation, with an address
at 000-X Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx, 00000 (hereinafter referred
to as "VSSI") and THM Group, LLC, a limited liability company organized under
the laws of the State of New Jersey, with offices at 000 Xxxxx Xxxxxxxx
Xxxxxxxx, Xxxxx 000, Xxxxxx, Xxx Xxxxxx, 00000 (hereinafter referred to as
the "Distributor").
WITNESSETH
WHEREAS, VSSI is in the business of manufacturing and distributing various
medical devices for use in animal health; and
WHEREAS, Distributor is in the business of selling and distributing various
medical products, accessories and supplies for human and animal health, such
as the Products (as defined herein); and
WHEREAS, Distributor and VSSI have agreed to enter into an arrangement
whereby VSSI will appoint Distributor as its distributor in the Territory (as
defined herein), upon the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the mutual covenants and promises set
forth herein, Distributor and VSSI hereby agree as follows:
1. Definitions. As used herein:
a) "Affiliates" of a person or entity shall mean any other person or entity
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person or entity. For the
purposes of this definition, "control" means the power to direct the
management and policies of such person or entity, directly or indirectly,
whether through the ownership of voting securities, by contract, or
otherwise.
b) "Territory" shall mean the geographic area described in the attached
Schedule A.
c) "Products" (or "Product") shall mean the products listed in Schedule B
attached hereto.
d) "Product placements" are direct purchases by Distributor or brokered sales
of the Products.
e) "FOB" shall mean Free on Board, a term that is commonly used in the
freight transportation industry to denote, in conjunction with a specified
location, the point in time, whether at delivery or during transshipment
using common carriers, when title to the goods in question transfers from
seller to buyer.
2. Grant of Distributorship.
VSSI hereby grants Distributor an exclusive Distributorship to serve all
markets in the Territory with respect to the promotion and sale of the
Products, except as otherwise provided herein. Distributor accepts such
Distributorship and undertakes to expend its best efforts to promote the sale
of the Products as provided herein. Distributor understands that VSSI has
expended and will continue to expend substantial efforts and funds to secure
and retain public goodwill toward the Products and its trademarks, and
recognizes the vital interest to VSSI in the proper functioning of the
Products. It shall be a material condition of this Agreement that
Distributor will sell the Products only within the Territory, and that
Distributor shall not, under any circumstances directly or indirectly provide
any maintenance services with respect to the Products. Distributor shall not
directly or indirectly represent manufacturers of other products that compete
with the VSSI Products during the term of this Agreement.
3. Distributor's Responsibilities.
a) Distributor agrees to actively promote the sale of said Products in the
Territory, to the best of Distributor's ability in order to satisfy the
minimum product placement requirements set forth in Schedule B, and to
otherwise safeguard VSSI's interest wherever possible. To this end,
Distributor shall identify prospective final and intermediate customers,
including dealers, resellers, brokers, and other channel intermediaries
(collectively, "Intermediate Customers"), develop local promotions and
conduct all necessary sales calls and related communications with customers
related to the sale of the Products. Distributor will hire, train, and
provide monetary and other incentives to its qualified salespersons and sales
specialists to promote and sell the Products to current and prospective
customers in the Territory. All materials used by Distributor and its
Affiliates to promote and sell the Products, or which otherwise contain any
information about the Products, must be reviewed and approved by VSSI prior
to Distributor's use.
b) During the Initial Term, as defined herein, of this Agreement, Distributor
agrees to use its best efforts to arrange for the purchase of Products from
VSSI in the quantities or amounts set forth in Schedule B attached hereto and
made a part hereof. In the event the parties renew this Agreement for
subsequent terms, the parties shall establish new minimum product placement
requirements.
c) Distributor shall provide VSSI with the customer name, address, contact
person, product identity (e.g., model number), quantity shipped, date
shipped, and serial number for each Product purchased from Distributor
promptly after submission to Distributor of customer's purchase order. If
Distributor's customer is an Intermediate Customer, Distributor shall require
that Intermediate Customer provide VSSI with the final customer name,
address, contact person, product identity (e.g., model number), quantity
shipped, date shipped, and serial number for each Product purchased from
Intermediate Customer promptly after submission to Intermediate Customer of
the final customer's purchase order.
d) Distributor agrees to keep VSSI informed about competitive market
conditions, experiences with customers, customer problems, major
negotiations, and prospective sales possibilities.
e) Distributor will stock and maintain adequate inventories of Product
marketing literature and information provided by VSSI, to meet the demand of
customers in the Territory.
f) Distributor agrees to provide documentation of its handling of Products to
assure VSSI that Products in Distributor's possession comply with all orders,
rules, and regulations issued under VSSI's Quality Assurance Requirements.
See Schedule E for an outline of requirements.
g) Distributor shall provide all services excluding Product field service
activities on behalf of VSSI as have been negotiated, including, without
limitation, training of Distributor's own sales force, literature
distribution, applications training (including a specified number of hours as
customarily provided by VSSI, using a qualified applications specialist
approved by VSSI), and regulatory filings, all in the interest of
successfully promoting and selling the Products. Customer applications
training will be documented and maintained on file by Distributor.
h) Distributor agrees not to alter the Products in any way and not to remove
the VSSI name or brand from the Products.
i) Distributor shall, in the performance of its duties hereunder, maintain
adequate familiarity with VSSI's Products, their operation, specifications,
maintenance, and applications, by consistently reviewing Product information
and seeking out the regular assistance and counsel of VSSI.
j) Distributor shall provide monthly Product sales reports to VSSI reflecting
customer installed base (i.e., customer name, address, contact person,
product identity (e.g., model number), quantity shipped, date shipped, and
serial number), current market trends, customer reaction to product features,
competitive product descriptions and lost orders, and recommendations for
Product improvements or for additional marketing opportunities.
Representatives of Distributor shall meet not less than once in every
consecutive six-month period during the term of this Agreement with
representatives of VSSI to discuss market conditions and identify new
business opportunities.
k) Distributor shall provide a place of business with adequate communications
service to efficiently effect the business of Product sales.
l) Distributor will not make any representations, warranties or guarantees
with respect to the Products, which are different from those representations,
warranties, or guarantees provided by VSSI.
m) Distributor shall pay to VSSI the prices for the Products quoted in
Schedule C attached hereto and made a part hereof, and VSSI shall charge no
other fees connected with the purchase and subsequent resale of the Products
by Distributor or its Affiliates.
4. VSSI's Responsibilities.
a) VSSI will maintain an adequate amount of Products, spare parts, and
Product literature as may be required, in VSSI's reasonable business judgment
and in accordance with Distributor's periodic forecasts, for VSSI to fill
qualified and accepted orders from Distributor, pursuant to the terms and
conditions of sale attached hereto as Schedule D.
b) VSSI reserves the right to change any or all of the Products covered by
this Agreement. VSSI agrees to use its best efforts to give Distributor a
minimum of ninety (90) days notice of any change to a Product, and to
maintain an adequate supply of the Product to support the Distributor from
the date of such notice on sales made by the Distributor up to the notice
period.
c) VSSI will actively support Distributor's marketing and sales activities
by:
i. Providing ongoing advice.
ii. Designing, sponsoring/funding, and implementing targeted sales
interventions within the Territory, including media advertising and Product
promotions.
iii. Providing technical and sales Product literature and related materials.
VSSI will provide two (2) Products to Distributor (the "Demonstration Units")
to be used by Distributor, its affiliates, or Intermediate Customers, under
Distributor's supervision, for demonstration and promotional purposes.
Distributor shall only pay for costs to ship and take delivery of and deploy
Demonstration Units. Prior to the placement of twelve (12) Products by
Distributor, VSSI will provide two (2) Demonstration Units consisting of one
(1) Product and one (1) Sonotron (intended for human-use). After the
placement of twelve (12) Products by Distributor, VSSI will provide one (1)
additional Product and Distributor will return the human-use Sonotron?
Demonstration Unit.
iv. Paying for a proportion of the Distributor's total projected expenditures
for marketing and sales activities during the measurement periods after
Distributor's cumulative sales volume has exceeded 75 units, where "units" is
defined in Schedule B. At the time when Distributor's cumulative sales
volume has exceeded 75 units, VSSI and Distributor will jointly determine,
through good faith negotiations, the proportion and timing of VSSI's payments
on a line-item basis.
d) VSSI shall train Distributor's sales force to market and sell the
Products. VSSI shall convene periodic meetings and provide literature and
other information required to support proficiency among the Distributor's
sales force.
e) VSSI shall meet periodically with designated representatives of
Distributor to exchange information on Product planning and Product updates
or upgrades and to review methods for enhancing Distributor's sales
opportunities.
f) VSSI shall provide field service support, including Product repair and
maintenance services, to Distributor's customers pursuant to the terms of
VSSI's standard service agreement. A copy of VSSI's current service
agreement, provided for informational purposes only, is attached hereto as
Schedule F.
5. Terms and Conditions of Sales to Distributor.
a) Any future sales of the Products covered by this Agreement (excluding
installation) shall be made to Distributor upon the terms set forth in
Schedule C attached hereto and made a part hereof.
b) Distributor shall notify VSSI at the effective date of this Agreement of
the persons authorized to place orders with VSSI.
All purchase orders or Product requests shall contain as a minimum:
i. Purchase order number and date purchase order is submitted/sent to VSSI.
ii. Xxxx-to and ship-to name and address.
iii. Terms of payment.
iv. Equipment description and feature(s).
v. Unit and total prices.
vi. Requested ship date (which must be at least 90 days from VSSI's receipt
of the purchase order).
vii. Shipping method (air freight, for pick-up, etc.) and whether prepaid or
collect.
viii. Special instructions.
ix. Reference that this Agreement's terms and conditions solely govern the
purchase order.
Purchase orders or requests shall be addressed to:
Vet-Sonotron Systems, Inc.
000-X Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxx Xxxxxxxxx, Plant Manager
VSSI will acknowledge acceptance or rejection of purchase orders within five
(5) days after receipt of the order. VSSI may only reject a purchase order
that does not comply with the order information requirements set forth above
and/or which does not otherwise comply with the terms of this Agreement. If
VSSI proposes a delivery schedule different from the schedule requested by
Distributor, Distributor must notify VSSI of its rejection of such alternate
delivery schedule within five (5) days after mailing of such notification by
VSSI, or the VSSI acknowledged ship date shall be deemed to be accepted by
Distributor. Unless agreed to in writing by Distributor, in no event may
VSSI ship the Products to the address specified in the purchase order on a
date later than thirty (30) days after the requested ship date specified in
the purchase order.
c) In the event Distributor cancels a confirmed order more than fifteen (15)
days after an order is placed, Distributor agrees to pay VSSI a cancellation
charge in accordance with VSSI's standard published terms thereof. Orders
shipped by VSSI prior to cancellation by Distributor shall also be subject to
a standard cancellation charge.
d) Within five (5) business days after the commencement of the Initial Term
of this Agreement, and prior to the beginning of each calendar quarter
thereafter, Distributor shall provide VSSI with its good faith rolling
forecast of Distributor's requirements for the Products during each
subsequent one (1) year period, broken down by quarter.
e) Sales shall be FOB shipping point.
f) The terms of payment shall be net (gross amount due in cash) fifteen (15)
days of the actual ship date, with Distributor paying all shipping costs. A
written invoice issued by VSSI and sent to Distributor by same-day facsimile
and regular mail shall establish the ship date. Distributor shall pay all
taxes, in any way associated with the Products sold hereunder or otherwise
related to this transaction, other than taxes on or measured by the income of
VSSI. Should Distributor fail to do so, there shall be added to the charges
provided for in this Agreement amounts equal to any such charges, penalties,
interest, and taxes, paid or payable to VSSI.
All past due accounts are subject to a late charge of 1.250% per month. VSSI
shall have the right to transfer accounts receivable to third parties.
g) VSSI will warrant VSSI Products as detailed in VSSI's published Warranty
Terms for twelve (12) months from the date of delivery.
h) Distributor agrees to pay VSSI for additional services rendered by VSSI
according to VSSI's published terms and conditions for such services,
including charges for labor, should such services be required by either the
Distributor or one or more of its customers.
i) Except as otherwise noted herein, in all other respects, VSSI's published
General Terms and Conditions of Sale, attached hereto as Schedule D, shall
apply including, without limitation, other standard published terms with
respect to warranty disclaimers and the like. In the event of any
inconsistencies between the terms of this Agreement and the Terms and
Conditions of Sale, the terms of this Agreement shall prevail.
j) All guarantees required by Distributor's customers (bonds, security
deposits) shall be the sole responsibility of the Distributor.
6. Alterations.
Distributor agrees not to alter the Products sold hereunder in any way and
not to remove the VSSI name or brand or repaint such Products without the
prior express written permission of VSSI.
7. Insurance and Indemnification.
Distributor shall procure and maintain, in full force and effect during the
term of this Agreement, an insurance policy or policies, protecting
Distributor, its officers, directors, employees, and agents against any loss,
liability, or expense whatsoever, arising out of or in connection with
Distributor's obligations under this Agreement. In addition, Distributor
shall maintain insurance on all Products, spare parts, and manuals in its
possession with an insurer reasonably acceptable to VSSI and in an amount
agreed by the parties to be adequate to compensate VSSI for any loss or
damage to the inventory in Distributor's control.
Distributor agrees to indemnify, defend, and hold VSSI harmless for any
damages that might arise from Distributor's sales and product placement
transactions with its own customers.
VSSI will defend at its own expense any action brought against Distributor or
Distributor's customers, asserting that any Product infringes a patent,
trademark, copyright, trade secret, or other proprietary right of a third
party, and VSSI will pay all costs and monetary damages (including reasonable
attorney's fees) awarded against the Distributor or Distributor's customers
in any such court decision. Such defense and liability is conditioned on and
limited by VSSI: (a) being notified promptly in writing of any such action;
and (b) having sole control of the defense and all negotiations for
settlement of such action. Should such Products in VSSI's opinion be likely
to become the subject of a claim of infringement or the use thereof become
restricted by a final non-appealable Court-awarded injunction, the
Distributor shall permit VSSI, at VSSI's option and expense, either: (a) to
procure for the Distributor and/or its customers the right to continue using
such Product; (b) to replace or modify same so it is free from infringement
or injunction, such replacement or modified version to have substantially
similar functional specifications as the Products; or (c) to recover same
from the Distributor in which latter case, the only rights and liabilities
between VSSI and the Distributor are that: (i) the sale shall be void as to
the Product on the date of recovery; and (ii) VSSI shall reimburse a pro-
rated portion of the purchase price paid for the Product recovered based upon
a reasonable depreciation schedule. The indemnification obligations set
forth herein shall not apply to claims that arise as a result of the
modification, alteration, or repair of Products by persons other than those
authorized and/or approved by VSSI.
VSSI shall indemnify, defend, and hold harmless the Distributor and its
customers, agents, employees, officers, and directors from claims relating to
the use of the Products, product liability, warranty claims and all matters
relating to the Products that are not related to the improper use, handling,
or storage of the Products by any of the foregoing.
VSSI and Distributor shall each indemnify, defend, and hold harmless the
other party for any finder's fees for which that party is responsible.
8. Term.
This term of this Agreement shall commence as of the day and year first
written above and shall continue for a period of thirty-six (36) months
thereafter (the "Initial Term"), except as otherwise provided herein.
Thereafter, the Agreement may be renewed for additional three (3) year
periods if the parties agree in writing to a new minimum product placement
requirement. Acceptance of orders by VSSI after expiration of the Agreement
shall not constitute or effect a renewal of this Agreement, which may only be
effective if expressed in writing and signed by both parties.
9. Termination.
a) It shall constitute a default under the Agreement, with the corresponding
right of termination as stated below, if any of the following shall occur:
i. In the event Distributor fails to pay any amount owed hereunder and such
failure continues for a period of thirty (30) days or more, then the
Agreement may be immediately terminated by VSSI.
ii. In the event of a material violation by a party of any provision of this
Agreement, other than the non-payment of monies, which violation continues
uncured for a period of thirty (30) days after written notice to the other
party specifying such violation, then the Agreement may be immediately
terminated by the non-breaching party.
iii. In the event a party makes an assignment for the benefit of creditors,
files a voluntary petition in bankruptcy, is adjudicated insolvent or
bankrupt, a proceeding is filed against said party to declare said party
bankrupt and said proceeding is not dismissed within thirty (30) days, or
said party commences any proceeding under any reorganization, arrangement,
readjustment of debt, or similar law or statute of any jurisdiction, then
this Agreement may be terminated by the other party on five (5) days written
notice.
iv. If Distributor distributes the Products outside of the Territory, except
upon the prior written consent of VSSI, then VSSI may immediately terminate
this Agreement.
v. If Distributor fails to meet the minimum product placement requirements
for the Products for any single measurement period as set forth in Schedule
C, then VSSI may terminate this Agreement on sixty (60) days written notice.
b) Any termination of this Agreement shall not affect any obligations, which
accrued prior to the effective date of termination.
10. Undertakings Related to Termination.
Upon termination of this Agreement for whatever cause:
a) Distributor agrees to return to VSSI immediately after such termination
all documentation, such as price information, sales letters, technical data
sheets and instructions, and the like, Demonstration Units, and any other
materials forwarded by VSSI to Distributor hereunder. This also refers to
quotation records, customer installed base information as defined in Section
3(l) of this Agreement, and such other documentation as may be necessary for
VSSI to resume pending negotiations.
b) VSSI shall have the option to purchase from Distributor, exercisable in
its sole discretion, and Distributor agrees to sell to VSSI, at the then
current Distributor net price, any or all VSSI Products held as inventory for
resale by Distributor, to which Distributor has title upon said termination.
c) Distributor agrees that no obligation shall exist for VSSI to indemnify
Distributor for damages of any kind pertaining to Distributor's investment in
the promotion of VSSI Products, it being understood that the Distributor
price permits a sufficient return on investment.
11. Independent Contractor.
Each of the parties is an independent contractor. Neither party has any
authority, expressed or implied, to act for the other in dealings with third
parties, and neither shall purport to act as the agent or employee of the
other. Nothing in this Agreement should be construed to create a
partnership, joint venture, or employer-employee relationship. Each party
assumes sole and full responsibility for the acts of their employees,
personnel, and agents. Neither party nor its employees, personnel, and
agents have authority to make commitments, enter into contracts, bind or
otherwise obligate the other party in any manner.
Each party shall be solely responsible for compliance with all laws and
regulations governing its business, and will indemnify, defend, and hold the
other party harmless from all claims arising out of its failure to comply
with said laws and regulations. Each party shall be solely responsible for
all tax returns and payments required to be filed with or made to any
federal, state, or local tax authority with respect to its performance and
receipt of fees or compensation or other forms of consideration under this
Agreement.
No employee of either party shall be deemed in any manner whatsoever to be an
employee of the other, and as such shall not be entitled to, and is not
qualified under, any employee benefit plans provided by the other party for
its employees. The employees of either party shall not be entitled to
participate in any plans, arrangements, or distributions by the other party
pertaining to, or in connection with, any bonus, pension, health, insurance,
welfare, or similar benefit plan offered by it to its employees. Because
both parties are independent contractors, either party will not withhold or
make payments for social security; make unemployment insurance or disability
insurance contributions; or obtain worker's compensation insurance on behalf
of the employees, personnel, or agents of the other party. Each party shall
indemnify, defend, and hold the other party harmless from all claims arising
out of its failure to make payment of any such taxes or contributions,
including penalties and interest.
12. Waiver.
The waiver by either party of a default or breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any subsequent default or breach. No amendment or modification of this
Agreement, nor failure or delay in enforcing any term, exercising any option,
or requiring performance shall be binding or construed as a waiver unless
agreed to in writing by the parties.
13. Time Limitation for Claims.
Any claims for breach or threatened breach arising under or relating to this
Agreement, including, without limitation, claims for tort, antitrust or other
statutory claims, or any cause of action whatsoever arising under, or in any
way related to this Agreement, shall be waived and forfeited, unless asserted
by the claiming party by commencement of a legal proceedings with respect to
such breach or threatened breach within one (1) year after the claiming party
has become aware of the claim.
14. Choice of Law and Interpretation.
This Agreement shall be governed by, interpreted, and enforced under the
substantive laws of the State of New Jersey, without regard to its conflicts
of laws rules and principles. Both parties agree that the courts of the
State of New Jersey or the federal courts situated in the State of New Jersey
shall have sole and exclusive jurisdiction over all disputes arising out of
this Agreement. If any part of this Agreement is held invalid, illegal, or
unenforceable, the remaining provisions will be unimpaired. In addition, if
any one or more of the provisions contained in this Agreement shall for any
reason in any jurisdiction be held excessively broad as to time, duration,
geographical scope, activity, or subject, it shall be construed, by limiting
and reducing it, so as to be enforceable to the extent compatible with the
applicable law of such jurisdiction as it shall then appear.
15. Notices.
All notices required to be given by one party to the other shall be in
writing and shall be deemed given if sent by certified (registered) mail,
return receipt requested, or by overnight delivery service, addressed as
follows:
If to Distributor:
THM Group, LLC
000 Xxxxx Xxxxxxxx Xxxxxxxx, Xxxxx 000
Xxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx
Fax: 000-000-0000
If to VSSI:
Vet-Sonotron Systems, Inc.
000-X Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Andre' XxXxxx, President
Notices shall be deemed given on the date delivered to the recipient.
16. Non-Assignability.
This Agreement, nor any rights or obligations stipulated hereunder, may not
be assigned, conveyed, or transferred by either party, whether voluntarily,
involuntarily, or by operation of law, without the prior written consent of
the other party, which consent shall not be unreasonably withheld,
conditioned, or delayed.
17. Xxxx Fees.
In the event of a default by either party hereto, and the other party
initiates litigation or undertakes other legal proceedings to interpret or
enforce this Agreement, the prevailing party shall be entitled to recover all
expenses, costs, disbursements, and reasonable attorneys' fees incurred in
connection with said legal proceedings.
18. Force Majeure.
If a party's obligation to perform any duty hereunder is rendered impossible
of performance or observance due to any cause beyond such party's reasonable
control, including, but not limited to, an act of God, war, civil
disturbance, fire, or other casualty, strike or other labor dispute,
governmental rule, lack of availability of parts or other supplies, then said
party, for so long as such condition exists, shall be excused from such
performance or observance. Time of performance of the non-performing party's
obligations hereunder shall be extended by the time period reasonably
necessary to overcome the effect of such force majeure occurrences.
19. Trademarks and Trade Dress.
Distributor recognizes in the Territory the exclusive ownership of all
trademarks and trade dress affecting Products by VSSI or any subsidiary,
parent or affiliated company of VSSI. Distributor shall not, either while
this Agreement is in effect or at any time thereafter, register, use or
attempt to obtain any right in or to any such trademark or trade dress or in
and to any trademark or trade dress confusingly similar thereto. Except to
the extent required or permitted by this Agreement, Distributor shall not by
reason of this Agreement use, without the prior written consent of VSSI, the
words "Vet-Sonotron Systems" or any other trademark of VSSI in its
advertising, labels, signs, literature or commercial stationary, provided,
however, that while this Agreement remains in force, Distributor shall be
entitled to describe itself as VSSI's distributor of Products in the
Territory.
20. Limitation of Liability.
NEITHER VSSI NOR DISTRIBUTOR SHALL BE LIABLE TO THE OTHER PARTY OR ANY OF ITS
AFFILIATES AND ASSIGNS FOR ANY INDIRECT, INCIDENTAL, UNFORESEEN, SPECIAL,
EXEMPLARY, PUNITIVE, OR CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO
LOSS OF PROFITS OR REVENUE, WHICH ARISE OUT OF THE PERFORMANCE OR FAILURE TO
PERFORM ANY OBLIGATIONS SET FORTH IN THIS AGREEMENT OR OTHERWISE, REGARDLESS
OF THE FORM OF ACTION OR THE BASIS OF THE CLAIM OR WHETHER OR NOT SUCH PARTY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
IN NO EVENT SHALL EITHER PARTY'S AGGREGATE LIABILITY TO THE OTHER ARISING
FROM OR IN CONNECTION WITH THIS AGREEMENT EXCEED THE AMOUNTS ACTUALLY PAID BY
DISTRIBUTOR TO VSSI HEREUNDER IN RESPECT OF THE GOODS OR SERVICES GIVING RISE
TO THE CLAIM OR ACTION, REGARDLESS OF THE BASIS OF THE CLAIM OR FORM OF ANY
ACTION, AND NOTWITHSTANDING THE FAILURE OF ESSENTIAL PURPOSE OF ANY REMEDY
AVAILABLE TO EITHER PARTY; PROVIDED, HOWEVER, THAT THE FOREGOING LIMITATION
OF LIABILITY SHALL NOT APPLY TO DAMAGES ARISING OUT OF, IN CONNECTION WITH OR
OTHERWISE RESULTING FROM (I) THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF
SUCH PARTY; (II) INDEMNIFICATION OBLIGATIONS SPECIFIED HEREUNDER; AND/OR
(III) PERSONAL INJURY OR TANGIBLE PROPERTY DAMAGE CAUSED BY SUCH PARTY.
21. Headings.
The headings or titles of the various paragraphs or sections of this
Agreement are inserted merely for the purpose of convenience and do not
expressly or by implication or intention, limit, define, extend or affect the
meaning or interpretation of this Agreement or the specific terms or text of
the paragraph so designated.
22. Publicity.
Any news release, public announcement, advertisement, or publicity proposed
to be released by either party with respect to this Agreement shall be
subject to the reasonable opportunity to review same by the other party prior
to release.
23. Confidentiality.
Any proprietary information concerning VSSI and its Products, services, or
manufacturing processes which are in any way designated as proprietary
information by VSSI and disclosed to Distributor incident to the performance
of this Agreement shall remain the property of VSSI and are disclosed in
confidence, and Distributor will not publish or otherwise disclose it to
others without the express written consent of VSSI. The obligations set
forth in this Article 23 will survive the termination or expiration of this
Agreement for a period of two (2) years.
24. Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original and all of which, taken as a whole, shall
constitute one and the same document.
25. Non-Competition.
During the term of this Agreement, Distributor shall not directly or
indirectly represent manufacturers of products which compete with the VSSI
Products, including but not limited to promoting, distributing, selling,
leasing, renting, installing, maintaining, or servicing any such competing
products.
26. Government Obligations.
a) The rights, duties and performance of each party hereunder shall be
subject to all applicable federal, state and local laws, rules and
regulations. Both parties agree to comply with all applicable laws in the
performance of their respective obligations hereunder, including, but not
limited to, the U.S. Export Control Laws.
b) In the event of any governmental law, regulation, or action forbidding
performance of any obligations of VSSI or Distributor hereunder, or in the
event of inability of either to obtain any governmental action required for
the performance of its obligations hereunder, VSSI or Distributor shall be
excused from the performance of such obligations except for the obligation to
make payments and those obligations provided under Article 23,
Confidentiality.
27. Entire Agreement.
This Agreement, together with the Schedules and any attachments thereto,
constitutes the entire agreement between the parties hereto pertaining to the
subject matter hereof and supersedes all prior and contemporaneous
agreements, inconsistent agreements, understandings, negotiations and
discussions, oral or written, representations, and promises, oral or written,
with respect to the subject matter contained herein. There are no other
agreements between the parties in connection with the subject matter hereof
except as specifically set forth herein. No supplement to or modification,
waiver, or termination of this Agreement shall be binding unless executed in
writing by the party to be bound thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Distribution
Agreement as of the day and year first written above.
VET-SONOTRON SYSTEMS, INC. THM GROUP, LLC
By:/s/ Andre' Di Mino By:/s/Xxxxxxx Xxxxxxxxx
Title: President Title: Managing Member
Date: 4/29/03 Date: 4/29/03
EXHIBIT 10.5
FIFTH AVENUE VENTURE CAPITAL PARTNERS, INC.
Xx. XXXXXX XXXXXXXX
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Tel. (000) 000-0000
Fax (000) 000-0000
LETTER AGREEMENT
Xxxxx XxXxxx, President
ADM Tronics, Inc.
000-X Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X. 00000
Dear Xx. XxXxxx:
This letter is intended to summarize our discussions as of the date hereof.
It is intended to bind each of us. We have agreed as follows:
1. Fifth Avenue Venture Capital Partners, Inc. a New York corporation in
formation which may be formed under a different name but which shall have Xx.
Xxxxxx Xxxxxxxx as its principal general partner ("FAVCP"), and associates
will provide general business consulting, shareholder relations services, and
seek new products and customers for ADM Tronics, Inc. ("ADMT") for a period
of 2years from the date hereof at times and places which shall be mutually
agreed between the parties hereto, and ADMT will accept such services on the
terms and conditions set forth herein.
2. Participation to FAVCP shall consist of up to 5,000,000 shares (the
"Shares") of ADMT Common Stock, par value $.0005 per share (the "Common
Stock"), which FAVCP (or its designees, which will be twelve or fewer, each
of which having a pre-existing relationship with FAVCP) shall purchase at par
value for an aggregate purchase price of $2,500. The Shares shall be
"restricted securities" within the meaning of Rule 144 and each of FAVCP and
its designees shall sign an investment representation letter with respect
thereto.
3. The Shares shall be held in Escrow by Xx. Xxxxxx Xxxx pursuant to a
separate escrow agreement and shall be disbursed as follows:
At such time as the closing bid price of the Common Stock equals or exceeds
$.10 per share, 1,500,000 of the Shares shall be released from escrow by Xx.
Xxxx and delivered as directed by FAVCP;
At such tine as the closing bid price of the Common Stock equals or exceeds
$.20 per share; a second 1,500,000 of the Shares shall be released from
escrow by Xx. Xxxx and delivered as directed by FAVCP;
FAVCP will advise ADMT with respect to the structuring of a "best efforts"
private placement of three year convertible preferred stock to be initiated
after the market price of the Common Stock exceeds $.20 per share with
dividends to be determined at the time of the private placement. The
preferred stock, which may be converted by the holder at any time, shall have
a conversion price which shall be no less than $.20 per share. The preferred
stock shall be callable at the option of ADMT after one year on thirty days
written notice to the holders of record if the average of the closing bid and
ask prices for the Common Stock exceeds $.30 for five consecutive trading
days ending within ten days of the giving of the notice. The convertible
preferred stock shall also provide that all accrued dividends thereon may, at
ADMT's option, be paid in Common Stock at the then market price. FAVCP shall
not be paid any commissions or expenses in connection with the private
placement. However, if the services of an NASD member are utilized as
placement agent, selected dealer or underwriter, then such member(s) shall be
paid their customary commissions and other compensation for such services.
The private placement shall be for no less than such amount as will yield net
proceeds of $500,000 to ADMT. As an additional incentive, investors in the
private placement will receive shares of Common Stock at $.03. However, in
no event will the private placement plus such additional shares exceed a
total of 3,000,000 shares with the following exception. To the extent that
the aggregate number of shares of Common Stock issued to investors in the
private placement on sales of $500,000 assuming conversion of all preferred
stock and the shares of Common Stock at $.03 (the "PPM Number") exceeds
3,000,000 shares of Common Stock, such excess number of shares shall be
returned to ADMT from the final 2,000,000 Shares held in escrow and only the
balance shall be released from escrow and delivered to FAVCP. To the extent
that the PPM Number is less than 3,000,000 shares of Common Stock, then ADMT
shall allow FAVCP to purchase additional shares of Common Stock from ADMT at
$.0005 per share equal to 5% of the amount that the PPM Number is less than
3,000,000, such shares to be subject to the terms of this agreement;
Upon the proceeds in the private placement reaching $500,000 net to ADMT
(after payment of expenses which shall include: legal fees to counsel
designated by FAVCP, printing and duplication costs, postage, and filing
fees, all of which shall not be payable by ADMT if such proceeds are less
than $500,000); all remaining shares of Common Stock held in escrow shall be
released from escrow by Xx. Xxxx and delivered as directed by FAVCP;
Prior to each release from escrow, FAVCP may allocate the released Shares
among itself and its designees; and
On each delivery of shares from escrow to FAVCP, Xx. Xxxx shall be entitled
to retain 8% of the shares being delivered to FAVCP as his participation.
4. Xx. Xxxxxxxx, Xx. Xxxx and any of their assignees as contemplated
hereunder, shall all enter into a three year voting trust agreement
whereunder Andre' XxXxxx shall be the voting trustee. The Voting Trust
agreement shall not prohibit market sales of the Shares by the holders under
Rule 144 or otherwise and shall permit subsequent private transfers. The
transferee in any private transfer shall be bound by the terms and conditions
of the Voting Trust Agreement
5. Neither ADMT or FAVCP has taken or will take any action which would
obligate ADMT or FAVCP to pay any "finders fee" in connection with this
Agreement other than as set forth herein.
6. ADMT represents that, except for the transactions contemplated hereby, it
will not, unless it has first received FAVCP's written consent, negotiate
with any other persons, firm or corporation relating to a possible public or
private sale of securities of ADMT until six months from January 1, 2003. If
ADMT has not received the net proceeds of $500,000 from a private placement
as provided herein by June 30, 2003, despite its good faith cooperation
therein, then the shares remaining in escrow with Xx. Xxxx on such date shall
all be returned to ADMT.
7. Except as specifically set forth herein, each party will bear its own
expenses in connection with the transactions contemplated hereby.
Furthermore, ADMT shall be solely responsible for the costs of preparing all
financial data used in the private placement, but, except for its own
separate counsel other than that provided by FAVCP, shall not be responsible
for any costs of the preparation of the private placement.
Please return one copy of this letter, signed by you, to the undersigned.
This letter agreement may be executed in counterparts, each of which shall
constitute an original and all of which taken together shall constitute one
and the same letter agreement. The parties hereby consent to the
jurisdiction and venue of the Superior Court of New Jersey, Bergen County.
This letter agreement shall be interpreted in accordance with the laws of the
State of New Jersey as they are applied to contracts executed, delivered and
to be performed entirely within such state.
Very truly yours,
Fifth Avenue Venture Capital Partners, Inc.
By: /s/ Xxxxxx Xxxxxxxx - 1/17/03
Xxxxxx Xxxxxxxx, President & CEO
ACCEPTED AND AGREED TO:
This 26 day of December, 2002
ADM Tronics, Inc.
By: /s/ Xxxxx Xx Xxxx
Xxxxx XxXxxx, President and CEO
