AMENDMENT TO DISTRIBUTORSHIP AGREEMENT
EXHIBIT 10.1
CONFIDENTIAL TREATMENT
REQUESTED PURSUANT TO RULE 24B-2
*Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934. The omitted materials have been filed separately with the Securities and Exchange Commission.
AMENDMENT TO DISTRIBUTORSHIP AGREEMENT
This Amendment to Distributorship Agreement (the “Amendment”) is made and entered into as of May 5, 2010. Xxxxxxxxx Companies, Inc., having a business address of 0000 Xxxxxxx Xxxxxxx Xxxx, Xx. Xxxx, Xxxxxxxxx 00000 (“Xxxxxxxxx”), and Xxxxxx Technologies, Inc., having a business address of 00-00 00xx Xxxxxx, Xxxxx 000, Xxxx Xxxxxx Xxxx, Xxx Xxxx 00000 (“Xxxxxx”) (collectively, the “Parties”), hereby agree to further amend the Distributorship Agreement (as amended and supplemented, the “Agreement”) by and between the Parties dated as of the 6th day of April, 2000, as follows:
RECITALS
WHEREAS, the Parties originally entered into the Agreement as of April 6, 2000, entered into amendments to the Agreement dated as of July 1, 2005 and February 26, 2007 (together, the “Prior Amendments”) that amend and supplement the terms of the Agreement, and now wish to further amend and supplement the Agreement in certain respects and to otherwise affirm and ratify the terms of the Agreement; and
WHEREAS, the Parties desire that Xxxxxxxxx shall continue to distribute Xxxxxx-branded dental products (the “Products”) into the United States and Canadian markets (the “Territory”), in accordance with the terms and conditions of the Agreement, as amended herein;
NOW, THEREFORE, it is mutually agreed that the Agreement is hereby amended in the following respects:
1. Amendment of Section 2 (Term). The Agreement is hereby renewed and the term thereof extended for a period of three (3) years, commencing as of January 1, 2010 and ending on December 31, 2012 (the “initial renewal term”). Prior to the end of the second year of the initial renewal term, the Parties will meet for the purpose of considering a further extension of the term of the Agreement for an additional period of three (3) years. The provisions of this paragraph 1 supersede Section 2 of the Agreement.
2. Amendment of Section 15 (Termination). In addition to the other grounds for termination set forth in the Agreement, Xxxxxx shall have the right to terminate the Agreement and/or Xxxxxxxxx’x status as Xxxxxx’x exclusive distributor within the Territory, at Xxxxxx’x sole discretion, upon 45-days written notice to Xxxxxxxxx (the “Notice Period”) in the event that:
(i) Xxxxxxxxx fails to comply with the annual minimum purchase quotas set forth herein, and does not cure such failure within the Notice Period, or if Xxxxxx reasonably
determines, based on the volume of purchases made by Xxxxxxxxx during the year-to-date, that Xxxxxxxxx is not likely to meet its annual minimum purchase quota, and Xxxxxxxxx does not cure such shortfall within the Notice Period; or
(ii) Xxxxxxxxx designates one or more other dental product manufacturers (in addition to Xxxxxx) as a Xxxxxxxxx “Preferred Vendor 1” (or similar category regardless of the title by which such category may be labeled) for intra-oral sensors, and does not terminate such designation during the Notice Period.
The provisions of this paragraph 2 supersede paragraph 4 of the Prior Amendments.
3. Amendment of Section 18.1 (Annual Minimum Purchase Quota). An amended minimum purchase quota and related terms are set forth in Schedule II to this Amendment. It reflects the minimum required wholesale purchases that must be made each quarter and each year by Xxxxxxxxx during the term of this Agreement. (All amounts contained in Schedule II are denominated in U.S. Dollars.) The minimum purchase amounts set forth in Schedule II include equipment sales only; revenues generated from spare parts, accessories, consumables and Xxxxxxxxx’x “service-club” are not included in Xxxxxxxxx’x minimum quota.
The Parties will meet on a quarterly basis for the purpose of evaluating, in good faith, whether the volume of purchases made by Xxxxxxxxx hereunder, during the most recent quarter and year-to-date, is consistent with, and likely to result in the satisfaction of, Xxxxxxxxx’x annual and quarterly minimum purchase quota. In addition, on a monthly basis, Xxxxxxxxx will provide Xxxxxx with detailed information relating to its purchase of Products from Xxxxxx including, without limitation, the sales targets and results for each of Xxxxxxxxx’x branch offices for that month; a schedule of Xxxxxxxxx’x sales, for that month, for each product sold by Xxxxxxxxx that falls within any of Xxxxxx’x Product categories; and any other materials reasonably necessary for Xxxxxx to ascertain whether Xxxxxxxxx is “on target” to meet its annual and quarterly purchase quotas hereunder.
Xxxxxxxxx shall have a minimum quarterly Xxxxxx purchase requirement as set forth in Schedule II to this Amendment.
During any quarter, 95% of all intraoral sensors sold by Xxxxxxxxx must be Xxxxxx intraoral sensors. This includes sensors that are bundled together with other products.
If Xxxxxxxxx falls below the aforementioned 95% threshold, then Xxxxxxxxx’x Vice President of Sales shall provide to Xxxxxx a corrective action plan no later than 30 days after the end of quarter in which such shortfall occurred. Such corrective action plan must be satisfactory to Xxxxxx Senior Management, in its reasonable discretion.
The provisions of this paragraph 3 supersede paragraph 5 of the Prior Amendments.
4. Amendment of Schedule I (Products). An amended list of “Products” is set forth in Schedule I to this Amendment.
The provisions of this paragraph 4 supersede paragraph 6 of the Prior Amendments.
2
5. Inventory. Xxxxxxxxx agrees to purchase from Xxxxxx from time to time quantities of Products sufficient to maintain a running inventory of Products for not less than [*] weeks of anticipated sales to Xxxxxxxxx’x customers. Both parties mutually agree that such inventory levels are necessary to meet the requirements of the business.
6. Growth in Business. (i) For each full calendar quarter after the date of this Amendment, Xxxxxxxxx shall use commercially reasonable efforts to increase sales of Products by Xxxxxx to Xxxxxxxxx compared to sales of Products by Xxxxxx to Xxxxxxxxx for the preceding calendar quarter at a rate that is at least [*]% more than the market growth rate measured by the Dental Trade Association (the “Sales Growth Target”).
(ii) For each full calendar quarter after the date of this Amendment that Xxxxxxxxx fails to achieve the Sales Growth Target (a “Deficient Quarter”), Xxxxxxxxx shall, subject to Section 18.3 of the Agreement, purchase from Xxxxxx in the next succeeding quarter an additional amount of Products necessary to achieve the Sales Growth Target for the Deficient Quarter (assuming such additional Product purchases had been made during the Deficient Quarter).
7. Preferred Vendor Designation. In recognition of the significant investment made by Xxxxxx in the development of its products and in its strategic relationship with Patterson, Schick, together with all of the Products and Xxxxxx’x Product categories, shall be designated as a Xxxxxxxxx “Preferred Vendor 1.” During the term of the Agreement, and any extension thereof, Xxxxxxxxx shall not designate any other dental manufacturer (in addition to Xxxxxx) as a Xxxxxxxxx “Preferred Vendor 1” (or similar category regardless of the title by which such category may be labeled) for intra-oral sensors.
8. Resources; Additional Xxxxxxxxx Agreements. (a) Xxxxxxxxx agrees to apply commercially reasonable efforts in providing a level of resource commensurate with the level of business and activity. This includes providing sufficient Equipment Specialists, Technical Service Technicians and Technology Advisors to support the targeted volumes.
(b) Xxxxxxxxx shall employ within 60 days of the execution of this Amendment, a dedicated “high level” Executive, who shall devote his/her full business time to the development and expansion of the Xxxxxx business. This position shall be filled by a person with qualifications equivalent to a Xxxxxxxxx Branch or Regional Manager, including external candidates.
(c) Xxxxxxxxx shall purchase sufficient demonstration equipment to equip all of its branches.
(d) Xxxxxxxxx shall provide exclusive space in its booth for all Products at all industry trade shows in which it participates.
(e) Xxxxxxxxx shall include Xxxxxx advertising in all issues of “Xxxxxxxxx Today” free of charge.
* Confidential
3
(f) Xxxxxxxxx will add a significant Xxxxxx component to the annual bonus structure for all its Regional and Branch Managers.
(g) Xxxxxxxxx will award a Xxxxxx incentive trip to high performing Territory Representatives and Equipment Specialists.
(h) Each Xxxxxxxxx branch will create a business plan that will detail how it intends to develop the Xxxxxx business. Each plan will be created on an annual basis by the applicable Xxxxxxxxx Branch Manager in cooperation with the Xxxxxx Market Leader assigned to that branch. All such plans will be evaluated and approved by Xxxxxxxxx and Xxxxxx Senior Management. The initial business plans shall be completed, evaluated and approved for each Xxxxxxxxx branch within 60 days of the execution of this Amendment.
9. Promotions. For any joint Xxxxxx/Xxxxxxxxx product promotion, Xxxxxx may pay Xxxxxxxxx its share of the cost in Xxxxxx product when agreed upon by both Xxxxxxxxx and Xxxxxx. Whenever Xxxxxx pays its share of such cost in Xxxxxx product, such payment shall be included in the annual minimum purchase quota and quarterly purchase amount for the year and quarter such payment is made.
10. New Product Introductions. Xxxxxx shall notify Xxxxxxxxx Senior Management as to any new Xxxxxx Product introduction at least six months prior to such introduction.
11. Budget Meetings. There shall be semi-annual meetings of Xxxxxx and Xxxxxxxxx Senior Management prior to the determination of the annual budget for each company. Such meetings shall be held at such time and in such place as shall be reasonably acceptable to the Senior Management of each of Xxxxxxxxx and Xxxxxx.
12. Ratification. Except as expressly provided herein, the Agreement (including without limitation the Prior Amendments,) is ratified and affirmed in its entirety by the Parties; provided that it shall be understood that references to the word ‘Article’ in the Prior Amendments are references to ‘Sections’ in the Agreement.
IN WITNESS WHEREOF, the parties have caused this Amendment to be signed and executed, and made effective as of the day and year first above written.
XXXXXXXXX COMPANIES, INC. | ||
By | /s/ Xxxx X. Xxxxxxxxxxx | |
Its | VP Marketing – Equipment & Tech Service | |
Dated | May 5, 2010 | |
XXXXXX TECHNOLOGIES, INC. | ||
By | /s/ Xxxxxxx Xxxxx | |
Its | President | |
Dated | May 5, 2010 |
4
SCHEDULE I
Products
1. | Xxxxxx CDR® intra-oral x-ray system |
2. | Xxxxxx CDR wireless intra-oral x-ray system |
3. | Xxxxxx CDR Elite intra-oral x-ray system |
4. | Xxxxxx Pluswire intra-oral x-ray system |
5. | Xxxxxx CDR single user software |
6. | Xxxxxx CDR multi user software |
7. | Xxxxxx CDR iPan |
8. | Xxxxxx CDRPanX |
9. | Xxxxxx CDRPanX-C |
10. | Xxxxxx USBCam and USBCam2 |
11. | Related Xxxxxx Accessories |
SCHEDULE II
Minimum Purchase Quota
Time Period |
Minimum Required Wholesale Purchases (in U.S. $) | |||
Year I | Jan. 1, 2010- Dec. 31, 2010 | $[*] Q1 $[*] Q2 $[*] Q3 $[*] Q4 $[*] | ||
Year II | Jan. 1, 2011- Dec. 31, 2011 | $[*] Q1 $[*] Q2 $[*] Q3 $[*] Q4 $[*] | ||
Year III | Jan. 1, 2012- Dec. 31, 2012 | $[*] Q1 $[*] Q2 $[*] Q3 $[*] Q4 $[*] |
* Confidential