EXCLUSIVE DISTRIBUTION AGREEMENT
made on this 8th day, July, 2004
By and among: Memorand Management (1998) Ltd.
a company duly incorporated and existing
under the laws of the State of Israel
of 00 Xxxxxxxx Xx., Xxxxx Xxx 00000, Israel
(hereinafter: "Distributor")
on one part;
and: SALIVA DIAGNOSTIC SYSTEMS, INC..
a company duly incorporated and existing under the
laws of the State of Delaware
of 0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
(hereinafter: "SDS")
on second part;
Whereas: SDS warrants and represents that it has developed a device for
rapid test for HIV, known as "HemaStrip" and its accessories,
as more fully detailed in Appendix A hereto (the "Product"),
and has all the rights in and titles to the products and its
manufacturing, including all intellectual property rights;
and whereas: The parties desire that SDS grant the Distributor the
exclusive right to act as the sole and exclusive distributor
for the marketing of the Product in the Territories, as
defined hereunder, at the terms and conditions set forth in
this Agreement;
In light of the foregoing, the parties have declared, stipulated and agreed as
follows:
1. Recital, Appendices and Headings:
1.1. The recital to the present Agreement, and the Appendices hereto, are
integral parts thereof.
1.2. The headings of the Agreement have been included for purposes of
convenience only, and may not be used for interpretation of the
Agreement.
2. Exclusive Distribution Rights:
2.1. SDS hereby appoints the Distributor as its sole and exclusive
distributor for the marketing of the Product in the Territories, as
defined in Clause 2.4 below, all at the terms set out hereunder. The
Distributor shall have the exclusive rights to sell, market and
distribute the Product to any medical facility, governmental or
municipal authority, army, and/or any other entity or person in the
Territories, at the Distributor's sole discretion, provided such
distribution does not conflict with any applicable local laws.
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2.2. SDS undertakes to sell the Product in the Territories only to the
Distributor, and not to sell the Product in the Territories to any
person other than the Distributor, without obtaining the
Distributor's prior written consent thereto. In addition, SDS
undertakes not to market, distribute or sell the Products to any
third party which will sell or distribute the Products in the
Territories.
2.3. It is hereby explicitly agreed that the Distributor shall act
through its affiliates and use sub-distributors in each of the
Territories, with SDS' consent regarding the sub-distributors, which
shall not be unreasonably withheld, for the implementation of this
agreement.
2.4. "The Territories" shall mean, for the purposes of this Agreement,
the following territories: Russia, each of the CIS countries
(Commonwealth of Independent States), South Africa, Angola, Namibia,
Botswana, Democratic Republic of Congo, Zambia, Tanzania, Ethiopia
and Kenya (each individually a "Territory").
The Distributor shall be entitled to waive its exclusive rights
hereunder in respect of any of the African Territories, by a written
notice delivered to SDS within 6 months from the date hereof.
2.5. SDS hereby grants the Distributor the right of first refusal to have
the exclusive marketing and distribution rights in the Territories
for any future products utilizing the technology set forth on
Appendix A it may develop, directly and/or through any affiliate,
and the terms of this Agreement shall apply to any such future
products.
3. Warranties and Representation of SDS:
3.1. Without prejudice to anything in the recital to this Agreement, SDS
warrants and represents to the Distributor, acknowledging and
confirming that the Distributor is relying on such warranties and
representations in entering into this Agreement, that:
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3.1.1. SDS is a corporation duly continued and validly existing
under the laws of the State of Delaware and is duly qualified
to execute, deliver and perform any of its obligations under
this Agreement.
3.1.2. SDS has all necessary licenses, permits, approvals, consents,
certificates, registrations and authorizations, to manufacture
sell and distribute the Product outside the United States,
including a license from the USFDA ("Licenses"), and the
Licenses are validly existing and in good standing. None of
the Licenses contain any burdensome term, provision, condition
or limitation, which has or may have a materially adverse
effect on the implementation of this Agreement. SDS undertakes
to obtain extension of the term and validity of all Licenses,
for the full term of this Agreement.
3.1.3. SDS solely holds title to all rights and titles, including
patent rights as described in Appendix D hereto, and all other
intellectual property rights in connection with the Product,
which rights are owned free and clear from any mortgage,
pledge, cession, lien or other encumbrance or security of any
kind or any other third party's right.
3.1.4. SDS is the owner of, and the holder of title to all the
rights in all the manufacturing equipment and technical
know-how relating to the manufacturing of the Products, which
rights are owned free and clear from any mortgage, pledge,
cession, lien or other encumbrance or security of any kind or
any other third party's right.
3.1.5. The execution, delivery and the performance by SDS of its
obligations hereunder, and compliance with the terms,
conditions and provisions of this Agreement, will not conflict
with, or result in a breach of, any of the terms or conditions
of: (i) the constituting documents or by-laws of SDS, (ii) any
applicable law, statute, rule or regulation of any
governmental entity, (iii) any contractual restriction binding
on or affecting it or its assets and properties, or (iv) any
judgment, injunction, determination or award which is binding
on it.
3.1.6. The execution of this Agreement by SDS and the performance of
its obligations hereunder, have been duly authorized by all
necessary corporate action.
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3.1.7. Except as explicitly provided herein, no authorization,
consent, approval, registration, qualification, designation,
declaration or filing with any governmental entity or other
person, is or was necessary in connection with the execution,
delivery and performance of any of the obligations of SDS
under this Agreement.
3.1.8. To the knowledge of SDS, no law, rule or regulation have been
enacted, promulgated, applied or proposed, which may challenge
the validity or propriety of the transaction contemplated
hereunder, or which questions, or may question, the validity
of any action taken or to be taken by SDS pursuant to or in
connection with this Agreement.
4. Warranties and Representations of the Distributor:
4.1. The Distributor, as at the date of this Agreement, warrants and
represents to SDS that it is a corporation duly continued and
validly existing under the laws of the State of Israel, and has all
requisite corporate power and authority to execute, deliver and
perform any of its obligations under this Agreement.
5. Duties of the Distributor:
5.1. The Distributor shall, under the terms of this Agreement in order to
assist SDS in its coordination of sales and delivery, provide SDS
with quarterly forecasts with the Distributor's requirements for the
Product, which forecasts shall not constitute a binding purchase
order of the Distributor. Additionally, the Distributor shall:
5.1.1. Provide SDS with reports on a quarterly basis regarding sales
activity, distribution partners and other arrangements that
the Distributor is making to promote the Product.
5.1.2. At the Distributor's sole expense, obtain all licenses,
permits, approvals and other governmental authorizations, and
make all filings, notifications and registrations
(collectively "Authorizations and Registrations") will all
governmental agencies necessary or appropriate for the
distribution and sale of the Product by the Distributor and
its sub-distributors, and use by the Distributor and its
sub-distributors and their customers, of the Product in the
Territories.
5.1.3. Undertake all reasonable means, measures and efforts and
implement policies and procedures to ensure that the Products
sold to the Distributor by SDS are not sold for resale outside
the Territories by the Distributor, its agents, affiliates
and/or consultants.
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5.1.4. Subject to the laws and regulations applicable in each of the
Territories, the Distributor shall obtain registration of the
Product in each of the Territories in the name of the
Distributor and/or its respective subsidiary in such
Territories. In the event that SDS shall request additional
registration of the Product (i) in its name, and/or (ii) in
the name of any other distributor in the event that the
Distributor does not meet the Minimum Purchases hereunder;
then SDS or such distributor ,as the case may be, shall solely
bear all the expenses associated with the registration of the
Product.
In the event that the Distributor does not meet the Minimum
Purchases for a certain Territory, it will not impede other
distributors appointed by SDS from registration of the Product
in their name in such Territory
5.1.5. In order to maintain the exclusive rights granted in this
Agreement, meet the minimum annual purchases set forth in
Appendix B hereto ("Minimum Purchases"). In the event that the
Distributor does not meet such Minimum Purchases, SDS will be
allowed to appoint additional distributors in such Territory.
In such case, the right of the Distributor to continue as a
non-exclusive distributor shall be decided at the sole
discretion of SDS. This provision is subject to clause 7
below.
5.1.6. Refrain from entering into any contract or other arrangement
with any other party for the sale, marketing, or distribution
of any products in the Territories that are competitive to the
Product during the term of this Agreement.
5.1.7. Not to divulge any information with respect to SDS operations
except as may be necessary to carry out its activities under
this Agreement. This obligation shall survive the termination
or expiration of this Agreement.
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6. Assistance by SDS:
6.1. SDS shall furnish the Distributor, free of charge, all relevant
material related to the Product, such as data sheets, brochures,
related scientific material and application instructions.
6.2. Without prejudice to the generality of clause 6.1 above, SDS
undertakes to provide at its own cost to the Distributor any and all
information reasonably required in order to obtain the
Authorizations and Registration and all other necessary licenses,
permits and approvals, including scientific, technical, legal and
other information, and SDS shall use its best endeavors to otherwise
assist the Distributor is obtaining the Authorizations and
Registration, as shall be requested by the Distributor.
6.3. SDS shall, at all reasonable times, at the request of the
Distributor, advise and consult the Distributor in all matters
concerning the application and eventual use of the Product, its
manufacturing, promotion and marketing. In the event such
consultation takes place outside the State of New York, Distributor
shall bear the reasonable travel expenses of SDS or its personnel.
7. Purchase Orders:
7.1. The Distributor undertakes that it shall place the first order of
Products from SDS by the end of 6 months from the date of signature
hereof, and that during the following 12 months (the "First Year")
the total orders shall meet the annual Minimum Purchases according
to Appendix B hereto. Following the First Year, the total orders
placed during each subsequent 6 month period, shall meet at least
50% of the Minimum Purchases according to Appendix B hereto.
7.2. Notwithstanding the provision of clause 7.1 above, in the event the
Distributor does not place the first order for a certain Territory
by the end of 6 months from the date hereof, however the Distributor
notifying SDS in writing that it is close to obtaining the
Authorization and Registration for such Territory, then the time
frame to place the first order shall be extended by 90 days (i.e.
the Distributor shall be obliged to place the first order within 9
months from the date hereof). For the purpose of this Article 7, an
order shall be deemed placed if delivery is to occur within 60 days
after the order is placed.
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8. Indemnity and Warranty:
8.1. SDS warrants that, to the best of the knowledge of its directors and
officers, in manufacturing and/or supplying the Product, it has not
infringed any third party's rights, including without limitation any
intellectual property rights, patent rights, copyrights, trade
marks, etc., and SDS undertakes to hold the Distributor harmless and
to indemnify it against any claim or demand submitted against it by
any third party in respect of an infringement of any such third
party's rights. SDS either owns or licenses all of the Patents
listed on Appendix D, and has the exclusive right to grant licenses
and sublicenses therefore without the consent or approval of any
Third Party. SDS shall be exclusively liable and responsible towards
the Distributor and its affiliates and sub-distributors in
connection with any claim, suit or demand brought against the
Distributor alleging that any of the Products infringes proprietary
rights or other intellectual property rights of any third party.
8.2. SDS makes no warranty of any kind, express or implied, except that
the goods sold hereunder are merchantable and fit for the purpose
set forth in the literature accompanying such Product when
transported, stored and utilized by Distributor under atmospheric,
transportation and storage conditions set forth in such literature.
The buyer assumes all risk and liability resulting from the use of
the material, whether used singly or in combination with other
products. SDS shall in no way be responsible for their proper use
and service.
SDS shall in no way be deemed or held to be obligated, liable or
accountable upon or under any guarantees or warranties, express or
implied, whether by operation of law or otherwise, in any manner or
form beyond the express agreements herein set forth and under no
circumstances shall SDS be liable for special, indirect or
consequential damages, unless such damages arise from a Defective
Product as defined in Section 9.1.
8.3. SDS undertakes to indemnify, defend and hold harmless the
Distributor from and against any and all damages, liabilities, costs
and expenses (including reasonable fees of counsel and other
professionals) incurred by the Distributor, in relation with the use
of and/or infringement by the Products distributed by the
Distributor, solely as specified in Clause 8.2 above, provided
however that: (i) the Distributor shall notify SDS in writing of any
such claim, proceeding or investigation, and (ii) the Distributor
shall cooperate in the handling of any such claim, proceeding or
investigation. SDS will reimburse the Distributor for all reasonable
out-of-pocket expenses incurred, at its request, in connection with
the above.
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8.4. SDS shall have the option, at its own expense, to carry out the sole
management and defense of such claims or suits, and will provide
attorneys acceptable to the Distributor, to defend against such
claim, proceeding or investigation. In such event, the Distributor
shall also have the right but not the obligation to be represented
with respect to any such claim by counsel of its own selection, at
its own expense.
8.5. SDS shall not settle any dispute with respect to the abovementioned
without the prior written consent of the Distributor, which shall
not be unreasonably withheld.
8.6. The Distributor warrants that it will abide by all local rules and
regulations in each Territory in which it sells the Product.
8.7. The Distributor shall instruct its affiliates, sub-distributors (if
appropriate) and customers to store and handle the Product in
accordance with the specifications of SDS.
8.8. The Distributor shall not grant any warranty to any third party
which exceeds the warranty granted herein, .This warranty is in lieu
of all other warranties, express or implied, regarding the Product,
including the implied warranties of merchantability and fitness for
a particular purpose.
8.9. The provisions of this clause 8 shall survive termination hereof.
9. Defective, Expired and Returned Products:
9.1. SDS guarantees that the Product will comply with the warranty set
forth in Section 8.2 hereof within USFDA manufacturing tolerances
for the Product, and will be liable towards the Distributors, its
affiliates, sub-distributors for losses or damages sustained by them
as a result of any Product not in compliance with said warranty and
not within USFDA manufacturing tolerances for the Product.(whether
such defects or vices are latent or not) (the "Defective Products").
9.2. In case of any Defective Product, the Distributor shall inform SDS
thereof following discovery of the said imperfection or defect.
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9.3. The Distributor will notify SDS, within fifteen (15) days from the
beginning of each calendar quarter of any Products sold by the
Distributor or the sub-distributors to customers in the Territories,
which have been returned to the Distributor or the sub-distributors
by their purchasers (the "Returned Products") during the precedent
calendar quarter, for any reason whatsoever.
9.4. The Distributor may choose to require from SDS to fully credit the
Distributor or the sub-distributors, as applicable, for the
Defective Products.
9.5. The Distributor shall act with regards to the Defective Products, in
accordance with the written instructions of SDS. In case SDS shall
instruct the Distributor to dispose of any or all of the Defective
Products, the Distributor shall perform the disposal thereof at the
cost of SDS, and according to SDS instructions, as well as any
government regulations or instructions of any competent authority,
if existing.
9.6. SDS shall maintain, throughout the term of this Agreement, and as
may be extended from time to time, customary professional and
product liability insurance for reasonable amounts, and shall
provide to the Distributor copy of such insurance policies and
evidence of premium payment for the same.
9.7. The provisions of this clause 9.1 will survive the termination
hereof.
10. Product Service and Recall:
10.1. The Distributor shall deliver to SDS, in writing, details of any
material complaint received and relating to the Products in the
Territories.
10.2. The Distributor hereby undertakes to fully cooperate with SDS,
and/or with any third party indicated by SDS, including government
agencies, in conducting any recall ordered by a government agency or
by SDS, of any of the Products (the "Recall").
10.3. SDS hereby undertakes to bear and pay all reasonable costs and
expenses incurred by the Distributor and by the sub-distributor with
regard to such recall.
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11. Consideration:
11.1. The consideration payable to SDS for the Products purchased by the
Distributor, shall be in accordance with the price list attached as
Appendix C hereto ("the Consideration").
11.2. The payment of the Consideration shall be effected by way of wire
transfer by the Distributor to SDS within 30 days after the Products
were delivered to the Distributor, in respect of any certain
purchase order.
11.3. The payment of the Consideration will be guaranteed by the parent
company of the Distributor, Memeorand Ltd., subject to SDS's consent
which shall not be unreasonably withheld. SDS shall give the
Distributor a credit line of USD 3,000,000.00. The Guarantee shall
be in the Form annexed hereto as Appendix E.
12. Delivery of the Product:
12.1. SDS undertakes to deliver the Products to the port in the
Territories as the Distributor shall instruct at the cost of SDS, by
proper means of marine transportation and at the appropriate
conditions which will allow their proper maintenance and storage for
a reasonable period of time.
12.2. SDS shall be liable for any and all damages to the Products until
delivery to the port in the Territories.
12.3. All costs and expenses in connection with the Product until the
Delivery of the Product to the port in the Territories shall be
borne by SDS, and thereafter shall be borne by the Distributor; it
being understood that any additional costs of transportation for
"rush' or other special shipments shall be at the expense of
Distributor.
12.4. Distributor shall bear all customs and import duties in respect of
the Product and shall arrange for customs clearance at port of
delivery.
12.5. It is being clarified that the packaging of the Product shall be
done in the United States by SDS, at its own cost, however it is
understood that the costs relating to translation of the inscription
of the packages and the accompanying material shall be borne by the
Distributor.
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13. Term:
13.1. This Agreement shall commence from the date of the signature hereof
by all the parties hereto, for a period of 5 (five) years.
13.2. Subject to the Distributor meeting the Minimum Purchases, as
required herein, the Distributor shall have the option to extend the
term of this Agreement by consecutive 1 year periods, to be
exercised by a written notice to SDS 60 (sixty) days prior to the
end of the term.
13.3. The Distributor shall have the right, at its sole discretion, to
terminate this Agreement at any time, by a 6 (six) months' prior
written notice to SDS.
13.4. The termination of the Agreement shall not effect the rights and
obligations of the parties, which have not been fulfilled as at the
termination of this Agreement, which shall remain in full force and
effect and survive the termination hereof.
14. Compensation:
14.1. Without prejudice to any other obligation of SDS hereunder, any the
remedies available to the Distributor under applicable laws and/or
this Agreement, in the event that in respect of any Territory SDS
either (i) denies from the Distributor the exclusivity granted
hereunder, (ii) unlawfully terminates this Agreement. (iii) grants
any other person any right to sell or distribute the product in such
Territory (save as explicitly agreed hereunder), or (iv) sell or
distributes the Product in the Territory itself, directly or
indirectly, then SDS shall pay to the Distributor, as agreed and
prevalued compensation, a sum equal to the price on Appendix C of
the Minimum Purchase for 2 years, in respect of such Territory.
14.2. The provisions of this clause 14 shall survive termination hereof.
15. Assignment:
15.1. Subject to Article 2.3 above, it is hereby agreed that the
Distributor shall not be entitled to assign any of its rights and
obligations hereunder, without the prior written consent of SDS,
save for assignment to the Distributor's Affiliates.
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15.2. SDS shall be entitled to transfer its rights and obligations
hereunder to a a Subsidiary or a third party, provided that such
third party undertakes to be bound by the terms of this Agreement.
16. Force Majeure:
16.1. It is agreed that neither party shall be liable for delay or failure
to perform its obligations hereunder due to intervention of a force
majeure event, and the dates set in this Agreement shall be
postponed for the period the force majeure circumstances apply. For
the purposes of this Agreement force majeure covers any contingency
beyond a Party's control, including but not limited to acts of God,
fires, floods, earthquakes, acts of war, acts of terror, sabotage,
civil riots or disputes, governmental laws, ordinances, rules or
regulations, limitations and decrees by state authorities, strikes
and other forms of workers protests,
16.2. The party failing to perform its obligations under this Agreement
due to a Force Majeure event shall promptly notify in writing the
other party upon occurrence of such Force Majeure Event and provide
supporting documentation/information. The party being notified such
Force Majeure Event shall have the right to terminate this Agreement
in case the Force Majeure Event notified to it by the other Party
lasts for more than 3 (three) months.
17. Confidentiality and Non-Competition:
17.1. Each of the parties undertakes to maintain in complete confidence,
without time limitation, any information which was and/or shall be
brought to their knowledge, in all matters connected, concerned
and/or pertaining to the parties and to this Agreement, including,
without limitation, any financial, commercial and technical
information, customer lists, trade secrets, and any other
information, whether in written form, electronic form or otherwise
(the "Confidential Information").
17.2. The aforesaid obligation shall not apply in respect of Confidential
Information and other documentation and/or information which: (i) at
the time of disclosure, is in the public domain; or (ii) after
disclosure becomes a part of the public domain through no act or
omission in breach of this Agreement by any of the parties and/or
anyone on his behalf; or (iii) was rightfully in the possession of
such party prior to disclosure by the other parties; or (iv) the
party is under a legal duty, by any law, to disclose it to third
parties.
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17.3. Notwithstanding the aforesaid in Clause 17.1 and 17.2, it is agreed
that the Distributor shall be entitled to disclose such Confidential
Information as shall be required to obtain all the import licenses,
permits and approval required for the implementation hereof and SDS
shall be entitled to disclose and file such information as is
required by applicable laws and regulations..
17.4. The provisions of this clause 17 shall survive termination hereof.
18. Law and Arbitration:
18.1. This Agreement shall be governed by and construed in accordance with
the laws of England, without giving effect to its conflicts of laws
provisions.
18.2. Any conflict, disagreement or dispute between the parties arising
out of or in connection with this Agreement, including any question
regarding its existence, validity or termination, shall be settled
amicably within 15 days from the date of first written approach of a
party to the other party, and if not settled amicably, shall be
referred to and finally resolved by arbitration before the London
Court of International Arbitration (LCIA), under its rules, which
rules are deemed to be incorporated by reference into this clause.
The number of arbiters shall be one. The seat, or legal place, of
the arbitration shall be London, UK, and the language to be used in
the arbitral proceedings shall be English.
The arbitration award shall be final and binding upon the parties.
19. Notices:
All notices, requests, demands or other communications to or upon the
parties shall be made to the parties by mail or by hand at the addresses
and facsimile numbers set forth above, or given in writing from time to
time by a party, and shall be deemed to have been given or made within 5
(five) days after being posted by express courier, unless delivered by
hand, in which case it shall be deemed to have been given or made at the
time of delivery, or if transmitted by facsimile or e-mail - at the second
business day following their transmission. A copy of any notice given
shall be simultaneously delivered ;
If to Distributor:
Xxxxxxx Xxxxx, Law Offices
Century Tower, 15th Floor
124 Ibn Xxxxxx Xx.
Xxx Xxxx
00000, Xxxxxx
Tel: 000-0-0000000
Fax: 000-0-0000000
E-mail: xxxx-xxx@xxxxx.xxx.xx
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If to SDS;
XXXXXX X. XXXXXXX, ESQ.
Xxxxxxx & Xxxxxx LLP
00 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Tel:(000)000-0000
Fax: (000) 000-0000
xxxxxxxx@xxxxxxxxx.xxx
20. Miscellaneous:
20.1. Any reputation gained as consequence of the distribution and
marketing of the Products by the Distributor, shall be proprietary
to the Distributor, save as otherwise mutually agreed by the
parties.
20.2. No Agency or Partnership - The parties hereby agree that no
partnership or agency between them is created by this Agreement or
shall arise pursuant to this Agreement.
20.3. Breach - If either party fails duly to perform or comply with any of
its obligations under this Agreement, and such failure is not
remedied within 14 days after the offended party has given the other
a written notice thereof, then the offended party may, without
prejudice to the rights it may have hereunder, or any other
applicable law, by written notice to the other, declare that the
Agreement is terminated by the offended party forthwith.
20.4. Costs - Each party shall bear its own costs in connection with the
preparation of this Agreement.
20.5. If any provision of this Agreement is held to be unenforceable, then
such provision shall be excluded from this Agreement and the
remainder of this Agreement shall be interpreted as if such
provision was so excluded and shall be enforceable in accordance
with its terms; Provided, however, that in such event this Agreement
shall be interpreted so as to give effect, to the greatest extent
consistent with and permitted by applicable law, to the meaning and
intention of the excluded provision.
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20.6. This Agreement may be executed in any number of counterparts, and
any single counterpart or set of counterparts signed, in either
case, by all the parties hereto shall be deemed to constitute a full
and original agreement for all purposes.
20.7. Any change, amendment, waiver, relief, extension or agreement in
connection with any instruction or provision of this Agreement shall
be invalid, unless made by a written instrument, signed by all the
parties.
In Witness Whereof, the parties have caused this Agreement to be signed,
by their duly authorized representatives:
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Memorand Management (1998) Ltd. Saliva Diagnostic Systems. Inc.
by: by:
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title: title:
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