Exclusive Distribution Agreement
This Distribution Agreement is entered into as of August 1, 2000, by and
between Desert Health Products Inc. ("DHPI") Xxxxxxxxxx, Xxxxxxx 00000 X.X.X.
and
Silmarc Pharma s.r.l., Xxx Xxxxxxxx, 000 - X. Xxxxx -00000 Xxxxx, Xxxxx
1. Definitions.
Products means dietary supplements and other products specified on attached
price list and their new formulation or extended indication.
Additional products means any new additional products incorporated into the
existing Agreement.
Territory means Italy, Republic of San Marino and Vatican State.
Additional territories means any new additional territories incorporated into
the Agreement according to the provisions set forth in Schedule 3A)
Affiliate means persons or entities that directly or indirectly through one
or more intermediaries control or are controlled by or are under common
control with a specified party. The term control (including the terms
controlled by and under common control with) means the possession directly or
indirectly of the power to direct of cause the direction of the management
and policies of an entity whether through the ownership of voting securities
by contract or otherwise.
Adverse events means any undesirable event (from any source including
consumers) reported to Silmarc Pharma, or of which Silmarc Pharma becomes
aware associated with the use of the Products in humans. This includes events
experienced in the course of use. DHPI accepts no liability beyond what
insurance is or may be in accordance with the product liability, as per
attached copy of the insurance.
Effective Date means the date on which this Agreement takes effect that, for
the purpose of this contract, is its signature.
Term shall commence on the Effective Date and, unless terminated sooner
pursuant to Article 9 hereof, continue through a period of five (5) years as
of the Effective Date.
2. Distribution.
DHPI agrees to grant Silmarc Pharma a 60 days first right of refusal to
distribute In Italy any other new products inserted into its product
portfolio on terms and conditions at least equal to the terms and
conditions promised by any third parties.
DHPI is entitled to sell any product refused by Silmarc Pharma in the
Territory under a non DHPI label with the exception of the provisions
outlined in paragraph 6 incorporated here-in.
3. Exclusivity.
DHPI hereby appoints Silmarc Pharma as of the Effective Date its exclusive
distributor for the Products in Addendum A in the Territory for the Term
thereof.
During the Term Silmarc Pharma shall not promote the sales of the Products
outside of the Territory, unless previously agreed with D1HPI. However,
Silmarc Pharma is entitled to sell the Products in the Territory using
third parties or directly through its sales force.
a) Within 3 months from Effective Date, Silmarc Pharma will provide a
list to DHPI of the additional territories Silmarc Pharma is currently
contemplating doing business in with the DHPI label. DHPI will notify
Silmarc Pharma within 60 days from receipt of the request whether or
not the requested territory is available to be added to the current
contract in effect. If the requested territory is added to the
existing contract, then the parties will convene to duly revise the
annual minimum order set forth in Article 7.
4. Orders and Payments.
Silmarc Pharma will Issue a valid purchase order at least 4 to 6 weeks
before the requested delivery date to Silmarc Pharma's warehouse or any
other location designated by Silmarc Pharma in the order.
Nevertheless Silmarc Pharma reserves the right to adjust the last order
within 20 days from the issuance date of the order and such deviation will
be in the range of +/-20%.
The products price list is attached to this agreement which is valid as of
the Effective Date of the Agreement.
The prices are in US $, FCA our warehouse in Scottsdale, A7- U.S.A.
Initial order must be placed within 90 days from the Date of obtainment
by Silmarc Pharma of all the necessary authorizations from the local
Health Authorities for the marketing of the products in the Territory.
The parties agree that total annual purchases are subject to discounts set
forth in the following table:
* up to US $ 300.000 no discount
*from US$ 300.000 to 1 .000-000 2% discount
*over US$ 1.000.000 4% discount
The discounts indicated above will be credited to Silmarc Pharma within the
month of January based upon the whole purchases made during the previous
calendar year.
DHPI agrees to give Silmarc Pharma a written notice about any price
increase from January 1 the following year, before September 30th.
With every order Silmarc Pharma shall pay 50% of the amount with the order,
and the balance, minus 1 % discount for the 50% up-front, to be paid
against documents.
5. Silmarc Pharma's Obligations.
Silmarc Pharma hereby agrees to use its reasonable efforts to market, sell
and distribute the Products in the Territory and to do all things
reasonably necessary or advisable to establish and maintain the Products as
high performing products in the markets in the Territory.
6. Desert Health Products Inc. Obligations.
DHP1 warrants that all of the Products sold and delivered to Silmarc Pharma
hereunder shall be manufactured according to the GMP rules and shall comply
with the Products specifications set forth in Addendum B (as evidenced by a
Certificate of Analysis or other comparable documents accompanying
shipments of Products from DHPI to Silmarc Pharma) and shall be packaged
and labeled in conformity with and shall meet or exceed all standards of
quality imposed by the applicable laws and rules and regulations
promulgated thereunder in effect in the Territory as the same shall be
notified from time to time by Silmarc Pharma to DHPL Marks, trade names and
logos of Silmarc Pharrna could appear on the packaging for or in connection
with the marketing of the Products as per agreement, and DHPI hereby grants
to Silmarc Pharma a royalty-free right to use for the Products the
trademarks registered in the Territory by DHPI
DHPI warrants that it will:
Supply the Product to Silmarc Pharma in accordance to the provisions
set forth in Article 4 and at the date indicated by Silmarc Pharma in
the Purchasing Order to the best of its ability
Grant Silmarc Pharma 5% discount for the first USD 250.000 in purchase
for advertisement support, based on prices listed in Addendum A
Give Silmarc Pharma 100 bottles free of charge for marketing purposes
when a new product is entering the market in the Territory.
7. Minimum orders.
Silmarc Pharma agrees to buy Products for at least
US $ 50.000 for the first year,
US $ 70.000 for the second year
US $ 100.000 for the third year
and minimum US $ 100.000 for each subsequent year this Agreement is in
effect based on the commercialization date.
This minimum order relates to the initial products listed in Addendum A.
If additional products are added and incorporated into this existing
contract, a new minimum order shall be negotiated in good faith by both
parties.
In the case Silmarc Pharma fails to meet the annual minimum requirements
set forth above, DHPI will notify Silmarc Pharma of this potential default
and Silmarc Pharma will have 90 days to correct default, otherwise DHPI
shall have the right, at Its sole discretion, to change this Agreement from
Exclusive to Semi-Exclusive. In Such case, the minimum amounts set forth
above shall no longer be effective.
Silmarc Pharma will supply DHPI with label artwork, and the label text in
Italian and DHPI will print the labels. DHPI will inform Silmarc Pharma
about label sizes. The label shall also include the following:
Fabbricato e Confezionato in Esclusiva per
SILMARC PHARMA s.r.I.
LUCCA - ITALIA
da DESERT HEALTH PRODUCTS, INC
SCOTTSDALE, ARIZONA
U.S.A
8. Term of the Agreement
This Agreement shall remain in effect for a period of five (5) years as of
the Effective Date and shall be renewed at three-year intervals unless
either party renders written notice to the other party of its intention not
to renew the contract. Such written notice will be given at least 6 month
before the expiration of the initial five (5) years period and at least six
month prior to the expiration W-7 any additional five (5) year renewal
period.
9. Termination.
If either party materially defaults in the performance of any material
agreement, condition or covenant of this Agreement and such default or
noncompliance shall not have been remedied, or steps initiated to remedy
the same to the other party's reasonable satisfaction, within 60 days after
receipt by the defaulting party of a notice thereof from the other party,
the party not in default may terminate this Agreement by notice in writing
to the other upon or at any time after the occurrence of the following
events:
- DHPI is no longer in the position to supply the Products for reasons
not failing within the definition of Force Mcleure according to the
governing law of this Agreement;
- Silmarc Pharma could not obtain from the Italian Health Authorities
the authorization to market the products.
- if the other party is unable to pay its debts, files for bankruptcy or
enters into liquidation, or takes or suffers any similar action in
consequence of a debt, or ceases for any reason to carry on business.
10. Governing Law.
This agreement shall be governed by and construed in accordance with the
laws of Switzerland. All disputes arising from this Agreement which DHPI
and Silmarc Pharma cannot settle amicably, shall be governed and decided
fully and finally in accordance with the Rules of Conciliation and
Arbitration of the International Chamber of Commerce by an arbitrate
tribunal, excluding recourse to ordinary courts. The tribunal shall consist
of three (3) arbitrators and shall sit in Zurich, Switzerland. One of them
shall be nominated by DHPI the second by Silmarc Pharma, and the third, to
act as president, shall be nominated jointly by the first two arbitrators.
If a party should fail to nominate an arbitrator within one (1) month after
it has been requested by the other party to do so, or if the two
arbitrators should fail to agree on the nomination of the last nominated
arbitrator, the president of the International Chamber of Commerce of
Zurich, or his duly authorized delegate, shall nominate the arbitrator or
arbitrators, respectively, upon request on one of the parties or the other
arbitrators. The arbitrators shall Interpret, construe and enforce this
Agreement according to laws of Switzerland.
11. Assignment
This Agreement may not be assigned or transferred except to an Affiliate
without the other party's prior written consent.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
duplicate as of the date first above written. (Efficacy Date)
DESERT HEALTH PRODUCTS INC.
By: /s/ Xxxxxx Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: Chairman, President & CEO
SILMARC PHARIVIA 9.0.
By: /s/ Xxxxxxxx Xxxxxxxx
Name: Xxxxxxxx Xxxxxxxx
Title: Chairman & Managing Director
ADDENDUM A
Product Count Price
Glucosamine Complex 30 capsules US$ 2.73
60 capsules US$ 4.17
Grape Seed Complex 30 capsules US$ 4.42
60 capsules US$ 5.56
Grape Seed Powder 240 grams US$ 4.79
OsteoDense Plus 30 capsules US$ 3.12
60 capsules US$ 3.29
Hawaiian Noni 30 capsules US$ 2.51
60 capsules US$ 3.89
Beepollen 500 mg 30 tablets US$ 1.88
Beepollen 500 mg 60 tablets US$ 2.09
Beepollen 500 mg 100 tablets US$ 2.61
All prices are FCA our warehouse in Scottsdale, Arizona Prices effective July
15, 2000
