DISTRIBUTION AGREEMENT
Entered into on this, the 12 day of January, 2004, in Moledet, Israel, by and
between M.C.M. ENVIRONMENTAL TECHNOLOGIES LTD. Moledet, M X. Xxxxxx, Israel
19130 (hereinafter referred to as "MCM"); and LYSMED L.L.C., 000 Xxxx Xxxxx,
Xxxxxxx XX, XXX (hereinafter referred to as "Distributor")
WHEREAS MCM, has developed, manufactures and markets a disinfecting disposal
unit for the treatment of contaminated waste particular to the medical setting,
and marketed under the name: Steri M.C.M. Med, an Infectious Waste Disinfecting
Disposal Unit and its applicable Separator (hereinafter "the Equipment");
AND WHERAS Distributor represents that it is well established in the
distribution of products in the medical market and is interested in importing,
marketing and selling the Equipment in LATVIA (hereinafter "the Territory");
NOW THEREFORE in consideration of the foregoing promises, covenants and
agreements herein, the parties agree as follows:
1. Preamble:
The Preamble to this Agreement and the attachments hereto are an integral part
hereof,
2. Appointment:
Company hereby appoints the Distributor, and Distributor hereby accepts such
appointment, as its exclusive Distributor in the Territory in accordance with
the terms and conditions set forth in this Agreement,
3. Representations:
3.1. Each party hereto represents that it is legally able to enter into this
Agreement and that theft is no other contractual obligation or legal reason
which would prevent it from doing so.
3.2. Distributor represents and warrants to MCM that it is, and at all times
during the term of this Agreement shall be, in compliance with all laws in the
Territory, and that Distributor is qualified and legally authorized to purchase
and resell the Equipment and otherwise carry out its obligations hereunder.
3.3. Distributor shall take all necessary steps to obtain all regulatory and/or
government approvals necessary, if any, to import, sell and operate the
Equipment in the Territory. Distributor shall provide MCM with authenticated
copies of such approvals. Distributor shall ensure that MCM is the official
record owner of all such approvals.
3.4. As an integral part of its obligations hereunder, Distributor hereby
undertakes to service all Equipment sold in the Territory, in accordance with
Paragraph 10 below, for the entire duration of this Agreement and for an
additional one year after the termination of this Agreement for any reason
whatsoever. Notwithstanding the foregoing, MCM may, at its sole discretion,
relieve distributor of this obligation to service Equipment, in whole or in
part, by giving 60 days written notice.
4. Duration and Exclusivity
4.1. Subject to any other provision(s) herein, this Agreement shall commence on
the date of signature stated above (hereinafter the "Effective Date"), and be in
effect for a period of three (3) years (the "Period").
4.2. Subject to any other provisions(s) herein, during the Period MCM shall not
market or distribute the Equipment within the Territory except via the
Distributor. Any order or inquiries received directly by MCM regarding sale of
the Equipment within the Territory, including Private Label orders, will be
referred to the Distributor.
4.3. If Distributor shall meet all Minimum Purchase Obligations, then at the end
of the Period, the parties may enter into a discussion regarding an extension of
this Agreement. Nothing contained in this sub-paragraph shall be construed to be
an undertaking or obligation by either party to extend this Agreement.
4.4. Distributor may, with MCM prior written approval, seek customers located
outside of the Territory and the Non Exclusive Territory during the Term of this
Agreement.
5. Minimum Purchase Obligations:
Distributor hereby undertakes to purchase and take actual delivery of the
following minimum amounts, in each of the 3 years specified below, as its Annual
Purchases. The following are the Minimum Purchase Obligations by the
Distributor.
5.1. At least 5 (five) units in the first year following the effective date of
this Agreement, of which no less than 3 (three) units shall be ordered for
delivery within the first half of the said year.
5.2. At least 10 (ten) units in the second year following the effective date of
this Agreement, of which no less than 5 (five) units shall be ordered for
delivery within the first half of the said year.
5.3. At least 15 (fifteen) units in the third year following the effective date
of this Agreement, of which no less than 7 (seven) units shall be ordered for
delivery within the first half of said year.
5.4. With regard to the first year of this Agreement, Distributor shall place
its written order within 15 (fifteen) days from the beginning of the second
quarter following the Effective Date. With regard to all subsequent years, the
orders shall be received no later than the 60th day prior to the upcoming
quarter.
5.5. Distributor shall forward, together with each written order, an irrevocable
letter of credit in the amount of the order ("Letter of Credit").
5.6. It is explicitly agreed between the parties that, in the event Distributor
does not meet all or any one of its Minimum Purchase Obligations, it shall be a
material breach of this Agreement and MCM shall have the absolute right, at its
sole discretion, to terminate this Agreement by giving a thirty (30) days prior
written notice to Distributor. If the Agreement is so terminated, no sums or
other form of compensation shall be due to MCM from Distributor by reason of
Distributor failure to meet its Minimum Purchase Obligations, provided that such
failure to meet the Minimum Purchase Obligations by Distributor is not due to or
as a result of Distributor's gross negligence, omission, willful malfeasance or
fraud.
5.7. Distributor shall provide MCM, on a quarterly basis, and no later than the
seventh day of each quarter, with a detailed written report of all sales of
Equipment and installations made by the Distributor in the Territory. Such
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report shall include the following: (i) the name, address, and telephone number
of the purchaser of the Equipment; (ii) date of sale; (iii) exact location of
the Equipment in the purchaser's premises; (iv) names of the contact persons for
sales and technical support; and (v) the serial number of the Equipment. In
addition such report shall include information regarding repairs and spare
parts, all as set forth in Section 11.5 of this Agreement.
6. Right to Terminate
6.1. Either party shall have the right to terminate and cancel this Agreement in
accordance with any provision hereunder, or by giving 30 days written notice in
the event of any of the following occurring:
A. A significant breach of one or more of said party's obligations hereunder
(including without limitations, the Minimum Purchase Obligations), provided such
breach is not cured within the said 30 day notice period; or
B. Said party has voluntarily or involuntarily commenced bankruptcy, insolvency,
dissolution proceedings or a receiver has been appointed to administer its
affairs, and such development or appointment has not been reversed within the
said 30 day notice period; or
C. Said party has ceased to do business in the normal course for a period of at
least thirty (30) days prior to the giving of the notice of termination.
6.2. In the event of termination or expiration of this Agreement for any reason
whatsoever, no sums or other forms of compensation shall be due to Distributor
from MCM by reason of good will, loss of future profits, reimbursed investment,
severance, or any similar concept or form of termination indemnity.
7. Sales Promotions:
Distributor shall consistently use its best efforts to vigorously promote,
maintain and extend and increase the sale of the Equipment in the Territory, and
seek to develop new customers in the Territory. In furtherance of that
obligation Distributor shall at its own expense, undertake such advertising and
promotion as is necessary or appropriate to promote the purchase and use of the
Equipment in the Territory including but not limited to the following: (i) to
maintain an extensive sales network; (ii) to maintain sufficient inventory of
all the Equipment so as to ensure that all orders and repairs may be filled in a
timely and efficient Manner; (iii) to hire experienced sales personnel in such
numbers as may be reasonably required and to use only appropriate and reputable
means of promoting and selling the Equipment; (iv) to engage in proper follow-up
and to maintain contact with customers in order to ascertain and fill all their
supply requirements with regard to the Equipment, and to respond to all
inquiries and to fill all orders in a timely and efficient manner; (v) to
provide customers with sufficient printed material, in the local language, and
other support in order to promote sales; (vi) to provide all customers with an
accurately translated copy of all manuals and instructions. Master copies of all
such manuals and instructions shall be provided to Distributor by MCM in
English, (vii) to appoint retail dealers only under terms and conditions which
are approved in advance and in writing by MCM; and (viii) to participate at
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conventions, sales meetings and trade fairs in the Territory as agreed and in
cooperation with MCM.
8. Advertising and Marketing
8.1. Distributor undertakes to ensure that all advertising material will be in
accordance with the requirements of the relevant governmental and health
authorities, and that all advertising material will be forwarded to MCM for its
prior approval prior to publication.
8.2. No later than the seventh (7th) day of each month, Distributor will submit
to MCM a detailed report of all marketing activity for the previous month. Such
report shall contain a general summary of marketing efforts, as well as full
details of all purchases, including: customer name and address, item(s)
purchased and the name of the employee of Distributor who performed the
installation of the unit at the purchaser's premises.
8.3. MCM undertakes to provide to Distributor the results of any research or
tests performed on or using the Equipment insofar as MCM determines that the
same will aid Distributor's marketing activity.
9. Expenses
Any and all expenses related to the sales, distribution or advertising of the
Equipment in the Territory, including the preparation of any printed or recorded
matter, as well as any other expense related to the promotion of sales,
including but not limited to the obtaining of any licenses or permits and/or the
approval of any government office or authority, shall be borne exclusively by
Distributor.
10. Pricing and Terms of Purchase
10.1. The price of an Equipment shall be US$ 45,000. The recommended end user
price for an Equipment unit shall be US$ 75,000. The price for 1Kg. Ster-cid
shall be US$ 5.5. The recommended end user price for 1Kg. Ster-cid shall be US$
7.5 (the "Recommended Price").
10.2. It is expressly understood and agreed that the above price of the
Equipment and/or spare parts prices may be amended by MCM at any time, in its
sole discretion, and that such Amended price(s) shall become effective thirty
(30) days after written notice is sent to Distributor.
10.3. The price charged by Distributor to its customers for the Equipment, spare
parts or service, shall be fixed solely by Distributor, provided that such
prices shall not exceed the maximum Recommended Price by more than 25% of the
Recommended Price, nor shall any price charged by Distributor be under 75% of
the Recommended Price, unless approved by MCM in writing and in advance.
10.4. All orders and/or purchases by Distributor shall be according to the
following terms:
A. All orders shall be on an Ex Factory basis (i.e., at the manufacturing
facility in Israel) and accompanied by an irrevocable Letter of Credit, and
issued by a bank acceptable to MCM, for the entire invoice amount.
B. MCM shall have no obligation to fill any order not accompanied by such Letter
of Credit.
C. All orders placed as specified above shall be delivered Ex Factory (i.e., at
the manufacturing facility in Israel) within 60 days of the receipt of
Distributor's order and the acceptance of the Letter of Credit by MCM's bank,
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provided however that MCM shall not be liable for any delay in the execution of
the orders. In cases where Distributor places orders in excess of the quantities
of the Minimum Purchase Obligations for any given year, date of delivery shall
be by agreement between the parties.
D. All payments shall be made directly by Distributor to MCM. Payment by the
customer or end user shall only be acceptable in cases where MCM has approved
such form of payment in writing and in advance.
10.5. Upon the expiration of the warranty period, and if Distributor did not
fulfill its Minimum Purchase Obligation, then Distributor shall purchase the
spare parts package (as discussed bellow in Section 11.2) from MCM at its then
spare parts catalog price. If Distributor achieves its Minimum Purchase
Obligation, then the spare parts package shall remain its own, free of charge.
Payment for all spare parts to MCM after the expiration of the warranty period
shall be made within 45 days of billing by MCM. Any late payment shall be
considered a breach of this Agreement and, further, shall require payment of
interest by Distributor at the rate of Prime plus 5%.
11. Service and Spare Parts
As an integral part of its obligations hereunder, Distributor hereby undertakes
to provide complete maintenance and repair service to all Equipment sold by
Distributor during the term of this Agreement and for one (1) year after the
termination of this Agreement.
11.1. Distributor shall submit MCM a written proposal for establishing and
maintaining sufficient service outlets and staff within 30 days of the Effective
Date (the "Plan"). The Plan shall include an obligation by Distributor to
complete all repairs to any part of the Equipment within 24 (twenty-four) hours
of the receipt of a telephonic or written request for service from the customer
or user of the Equipment.
11.2. (a) In this Agreement the term "spare parts" shall mean any and all parts
listed in MCM's spare parts catalog (a copy of which has been marked Appendix
`A' and attached hereto as an integral part of this Agreement), including all
chemical products used in the Equipment for purposes of processing or
disinfecting waste products.
(b) MCM shall provide Distributor with a complete package of spare
parts, free of charge, upon the purchase and delivery of three fully paid
Equipment units.
(c) During the warranty period and subject to the warranty (as set
forth section 14 below) MCM shall provide, free of charge, any and all spare
parts required in order to repair the Equipment unit sold by the Distributor. If
any service or repair is given under warranty, MCM shall be responsible for such
expense, provided MCM receives from Distributor a detailed report and xxxx from
Distributor (including the Equipment unit serial number, and if any spare parts
were installed) and that such repair is approved by MCM's engineer. For the sake
of clarity the parties state that routine maintenance performed under warranty
shall be Distributor's expense. If any spare part from the package is used, MCM
shall provide Distributor with such new spare parts so that Distributor shall
have at all times during the warranty period a complete package of spare parts.
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(d) Upon the expiration of the warranty period of the first three (3)
purchased units, then Distributor shall purchase the spare parts package from
MCM at its then spare parts catalog price. If Distributor achieves its Minimum
Purchase Obligation, then the spare parts package shall remain its own, free of
charge. Payment for all spare parts to MCM after the expiration of the warranty
period shall be made in accordance with Section 10.5 above. Distributor
undertakes to maintain a sufficient supply of spare parts, at its own expense,
in order to adequately service all Equipment sold in the Territory.
11.3. As part of its Minimum Purchase Obligations in the first year of this
Agreement, Distributor shall purchase at least one "loaner" unit at a special
discount price to be determined by both parties (the "Loaner"). Distributor
shall place the order for the Loaner within 15 days of the execution of this
Agreement. In the event of any repair which will not be completed within 24
hours, or which cannot be reasonably completed at the customer's premises,
Distributor shall, at its expense, temporarily install the Loaner in place of
the Equipment to be repaired, until such time as the properly repaired original
Equipment is returned and installed.
11.4. MCM undertakes to make reasonably available to Distributor an experienced
engineer for purposes of technical support in all matters related to repair and
maintenance. Consultation with such engineer shall be without charge, however,
in the event that such support entails the travel of the said engineer outside
Israel, Distributor shall be required to pay all expenses for travel,
accommodations, etc.
11.5. No later than the seventh day from the end of each quarter Distributor
will forward to MCM a written report of all repair activity for the previous
quarter, including with respect to usage of spare parts from the spare parts
package and the serial number of each Equipment unit that has been repaired.
Such report shall include the name of the customer, a detailed description of
the problem and the service or repair done, as well as the time used in
accomplishing such service or repair.
12. Training of Staff
12.1. MCM hereby undertakes to train Distributor's service managers and
technicians in the repair and maintenance of the Equipment. Such training shall
take place at MCM in Israel. MCM shall provide such services at its own expense;
however all travel and accommodation expenses of Distributor's personnel shall
be at Distributor's expense. Further, MCM shall, at Distributors request, train
Distributor's customers and/or sales managers in the proper operation of the
Equipment. The content, scheduling and duration of all such training shall be
determined by MCM.
12.2. It is expressly agreed between the parties that all service, repair and
maintenance of the Equipment in the Territory shall be carried out only by
qualified service personnel who have completed training, either by MCM or by
Distributor's qualified instructor. Any deviation from this provision shall
result in the immediate voiding of the warranty covering the relevant Equipment
constitute a breach of this Agreement.
12.3. At Distributor's request, MCM shall certify one or more of Distributor's
staff as qualified instructors in matters of service, maintenance and repair of
the Equipment. At such point, Distributor shall be responsible for the training
provided for in this Section 12 and MCM's obligations under this Section 12
shall cease.
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13. Technology, Quality Control, and Insurance:
13.1. MCM represents that the Equipment is under Patent protections in the
United States, Israel, Canada and in Australia, and that applications for
patents are pending in various other countries, including Israel.
13.2. MCM hereby undertakes to hold Distributor harmless for any claims asserted
against Distributor and/or MCM arising out of a claim by any third-party for
patent infringement with regard to the proprietary technology which serves as
the basis for the Equipment.
13.3. MCM assures Distributor that the Equipment is manufactured under a strict
program of quality control. MCM hereby undertakes that each properly working
unit, if operated in strict accordance to manufacturer's then current printed
instruction manual, shall reduce the amount of live pathogens in the medical
waster at least to a level equal to that at which the Equipment performed in the
Efficiency Tests attached hereto as part of Appendix "B" (if not previously
supplied to Distributor), when checked under identical conditions by the same
testing method. MCM hereby reserves the right to alter the aforesaid standard at
any time, at its sole discretion, but undertakes that the said standard will at
no time fall below the specifications set forth in Appendix "B" attached hereto
(if not previously supplied to Distributor), i.e., the minimum requirements of
the health authority of the State of New York (effective 1/1/98).
13.4. MCM undertakes to pack the Equipment for marine shipping in an appropriate
and secure manner in accordance with the instructions or recommendations of
MCM's shipping agent.
13.5. From the time the first shipment of Equipment arrives in the Territory,
and throughout the duration of this Agreement, Distributor undertakes to carry
products liability insurance in an amount reasonable to products such as the
Equipment in the Territory, as well as any other coverage necessary to insure
against any and all claims of any party, including Distributors agents and
employees, for any reason. Such coverage shall name MCM as an additional insured
party and be applicable to the Equipment and spare parts sold in the Territory
and, further, shall contain a provision which specifically provides that no
right of subrogation shall exist against MCM for any claim made or paid by
Distributor's insurance carrier(s). Distributor shall submit copies of all
insurance policies for MCM. Further, Distributor hereby irrevocably waives any
right of subrogation against MCM which may arise at any time.
14. Warranty
14.1. MCM will provide Distributor with a written warranty for each Equipment
unit purchased. Such warranty shall be transferable to the purchaser of the unit
and shall guarantee parts and workmanship of the Equipment for one (1) year from
the date of purchase. The guarantee shall run between Distributor end the
purchaser of any unit, with no privity existing between MCM and such purchaser;
whereas the question of responsibility as between MCM and Distributor shall be
controlled by the provisions of this Agreement. Such warranty shall explicitly
exclude consequential damages (including, but not limited to, lost sales or
profits, or damage to goodwill).
14.2. The forgoing warranty is given subject to the condition that MCM shall not
be liable for any defect fault or failure of the Equipment which after delivery
is caused by: (i) improper storage, neglect, misuse or improper operation; (ii)
accident, fire, water, vandalism, or causes other than ordinary use of
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Equipment, or (iii) any alteration or tampering with any item of the Equipment
without MCM's prior written approval.
14.3. Withrespect to claims against the warranty, Distributor must notify MCM in
writing, providing all information within 30 days after (i) discovery of the
defect by Distributor; or (ii) the date Distributor received notice of the
claimed defect from its customer during the warranty period hereunder.
15. The Relationship Between the Parties; Indemnification;
15.1. No agency or any other relationship other than one as between principal
and independent distributor is created hereby. Distributor shall be conclusively
construed to be an independent contractor and not an employee, and Distributor
and shall not represent itself to be MCM's agent. Distributor is neither
authorized to act as agent for MCM, nor to represent, or have any authority to
bind MCM in any matter not specifically provided for in this Agreement.
15.2. Distributor shall be solely responsible for its activities. All sales made
by Distributor shall be it its own name, for its own account, and at its own
risk. Distributor shall hold MCM harmless and indemnify it to the fullest extent
permitted by law, for the consequences of any of its actions, errors and/or
omissions and, further, shall immediately reimburse MCM, at MCM's first demand,
for any costs or expenses, including legal judgments and legal costs, which MCM
may incur in defense of, or as a consequence of any of Distributor's commercial
activity.
15.3. Subject to the warranty as set forth in Section 14 above, Distributor
hereby undertakes to hold MCM harmless and indemnify it to the fullest extent
permitted by law, for any claims asserted against Distributor and/or MCM arising
out of any claim by any third-party with regard and in connection with the
Equipment, except there was real practice in the production of the Equipment by
MCM.
15.4. Distributor agrees to indemnify MCM from and against any claim or damages
and expenses caused by or arising out of Distributor's gross negligence or
willful wrongdoing or mishandling or repacking of the Equipment.
15.5. MCM shall hold Distributor harmless and indemnify him as set forth in
Section 13.2 above.
16. Prohibition of Assignment The Distributor shall not have the right to
transfer or delegate in whole or in part any of its rights or obligations
hereunder to any other party without the prior written consent of MCM.
Distributor shall notify MCM in advance of any change in control and or
management of Distributor. Any such change without MCM's prior written consent
shall constitute a breach of this Agreement by Distributor.
17. Non-Compete: The Distributor shall not distribute, manufacture, represent,
deal in, offer or promote in any other way, directly or indirectly, products or
spare parts which are similar to, or in any way likely to compete with, the
Equipment for the duration of this Agreement and for a period of two (2) years
thereafter, without the prior written consent of MCM.
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18. Confidentiality:
Distributor acknowledges that, in the context of its relationship with MCM, it
will be put into possession of certain confidential and/or proprietary
information which is the sole and exclusive property of MCM. Distributor, as
well as any of its employees or agents shall have an absolute obligation of
confidentiality to MCM with regard to all proprietary information, including but
not limited to technical material, research and marketing, pricing practices,
terms of sales, commercial information or strategy. This clause shall remain in
effect during the term of this Agreement, and for five (5) years following its
termination or expiry.
19. Trademarks, Proprietary Rights:
19.1. Distributor acknowledges and recognizes that all proprietary rights in the
Equipment, including without limitation, any patents, patent applications,
and/or design patents and/or trademarks and/or trade names and/or logos and/or
trade secrets are owned by, or have been licensed to MCM. Distributor affirms
that it has never had, does not have, will not claim, and will not make any
representations to third parties that it has any proprietary rights in the
Equipment or the accompanying materials, manuals or literature.
19.2. In connection with its performance hereunder, Distributor shall have the
right to use the trademarks and trade names of MCM. This Agreement shall not
constitute a license to use MCM's trademarks or trade names for any other
purpose, and upon any expiration or termination of this Agreement, the use by
Distributor of any such trademarks shall cease.
20. Governing Law; Settlement of Disputes:
20.1. This Agreement, and all matters relating to it, shall be governed and
construed in accordance with the substantive and procedural laws of the State of
Israel.
20.2. Any disputes arising out of, or in any way related to, this
Agreement shall be referred to the decision of a single arbitrator in Tel Aviv,
Israel. The arbitrator shall be agreed upon between the parties or, to be
appointed by the Chairman of the Israel Bar Association, and his decision shall
bind the parties.
21. Force Majeure Each of MCM and Distributor shall not be liable for any delay
or failure to perform its obligations due to any cause beyond its reasonable
control, including without limitations: fire, accident, war, riot, civil
disorder, embargo, strike, sabotage, labor disputes, act of god, government
order.
22. Miscellaneous
22.1. This Agreement is the only valid agreement between the parties and any
prior agreements; understandings, representations and/or negotiations between
the parties, whether oral or in writing, shall no longer be valid or binding
between them.
22.2. This Agreement represents the entire agreement between the parties and may
not be altered except in writing when signed by both parties hereto.
22.3. The headings contained in this Agreement are solely for the convenience of
the parties and shall not be construed as an actual part of this Agreement.
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22.4. In the event that one or more provisions contained in this Agreement
should for any reason be held to be unenforceable in any respect, the
unenforceability of such provision shall not in and of itself invalidate this
Agreement, but this Agreement shall be construed to the maximum extent
practicable as if such unenforceable provision had not been contained herein.
22.5. Any and all notices given in relation to this Agreement shall be in
writing and delivered to the parties hereto by registered mail to their
respective addresses as set forth in the Preamble to this Agreement.
IN WITNESS WHEREOF the parties have set their signatures and seals hereto on the
date first above written.
MCM ENVIRONMENTAL TECHNOLOGIES LTD. LYSMED L.L.C.
by: /s/ X. Xxxx by: /s/
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CEO
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