DISTRIBUTION AGREEMENT
BETWEEN: ATHENA MEDICAL CORPORATION, a Nevada corporation ("AFEM");
AND: MEIX CORPORATION, dba CHINESE BUSINESS SERVICES, an Oregon
corporation ("Distributor").
DATED: December 30, 1995.
R E C I T A L S:
A. AFEM is engaged in the business of developing, manufacturing and
selling female healthcare and feminine hygiene products for domestic sale and
for export. AFEM's products include the Fresh 'n Fit-Registered Trademark-
interlabial Padette-TM- (the "Padette").
B. Distributor is engaged in the direct marketing and sale of consumer
products at retail in China. Distributor represents that it has the facilities
and ability to promote the sale of AFEM's Padette and other products in China.
C. The parties desire that XXXX xxxxx to Distributor the right to develop
a market for and sell the Padette and other products in the Territory described
below.
A G R E E M E N T:
In consideration of the foregoing Recitals, which are by this reference
incorporated in this Agreement, and in consideration of the mutual covenants,
terms and conditions set forth below, the parties agree as follows:
1. APPOINTMENT. AFEM appoints Distributor as the exclusive distributor for
direct sales of the Padette within the country of China, including all its
provinces (the "Territory"), upon the terms and conditions set forth in this
Agreement. For purposes of this Agreement, "direct sales" means sales to
consumers as end-users (such as door-to-door sales by representatives of
Distributor or its contractors), not sales to distributors, merchants or others
for resale. Distributor may not sell Padettes in any area outside the Territory
(including sales within the Territory with knowledge that resales of them
outside the Territory will be offered or made) without AFEM's prior written
consent in each instance.
The parties may agree to add or substitute other products of AFEM for
distribution and sale pursuant to this Agreement by written addendum attached to
this Agreement and signed by authorized representatives of AFEM and Distributor.
All terms and conditions of this Agreement shall apply to such additional or
substituted products except as expressly set forth in such addendum.
2. TERM. This Agreement and the appointment of Distributor under it shall
continue for a term of two years commencing on the date of this Agreement, but
subject to earlier termination as provided in Section 11 below during such term
(or during any renewal term). This Agreement shall be renewed automatically for
consecutive renewals of one year each, except that either party may terminate
this
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Agreement for any reason or for no reason at the end of the initial or any
renewal term by giving the other party not less than 60 days' notice of
termination prior to the end of the initial or any renewal term.
3. OPERATIONS.
3.1 ACCEPTANCE OF ORDERS; FILING. All orders received by AFEM for the
Padette (and for any other product of AFEM the subject of this Agreement) are
subject to acceptance by AFEM. Each order of Padettes shall be a minimum of
1,200,000. No more than 6,000,000 Padettes will be ordered in any 30-day period
without AFEM's prior written agreement. AFEM will use its best efforts to fill
accepted orders as promptly as practicable, subject to delays caused by
government orders, actions or requirements, transportation conditions, inclement
weather, labor or material shortages, strikes, riots, fire, natural disaster or
other cause beyond AFEM's control. In all cases, AFEM will use its best efforts
to advise Distributor in advance of any inability to make full and timely
delivery of products ordered by Distributor. AFEM may ship partial orders, and
Distributor shall make payment therefor, provided the entire order is delivered
as provided above.
3.2 DISTRIBUTOR'S EFFORTS, FACILITIES AND PERSONNEL. Distributor agrees
to use its best efforts to promote demand for and sale of Padettes (and any
other product of AFEM the subject of this Agreement) throughout the Territory.
Distributor will at all times maintain sales, warehouse, distribution and other
facilities and properties as are adequate and appropriate to perform
Distributor's duties under this Agreement. Distributor will appoint, train and
support such sales representatives and other marketing personnel as are adequate
and appropriate to serve the Territory for AFEM's products. AFEM may, through
its employees or authorized representatives, inspect Distributor's facilities
and properties, wherever located, to determine and assure Distributor's
compliance with the terms of this Agreement. Distributor shall be responsible
for and pay all costs of promoting and advertising AFEM's products within the
Territory, but AFEM shall have the right, upon its request, to approve and
disapprove all advertising, sales and promotional materials and procedures.
3.3 PRICES CHARGED BY DISTRIBUTOR. Distributor may charge to and collect
from its purchasers such prices for AFEM's products as Distributor may
determine, provided that Distributor does not sell for less than its actual
costs, and provided Distributor otherwise complies with applicable laws.
3.4 RETURN OF PRODUCTS. Unless AFEM has authorized in writing the return
of any products, AFEM shall not be obligated to accept from Distributor or any
other person any products, nor to make any exchange therefor, nor to credit
Distributor therefor. Distributor shall not make any claim against AFEM for any
damaged or defective products except for damage or defect attributable solely to
AFEM, as provided in Section 5 below.
3.5 COMMON CARRIERS. Whenever AFEM shall deliver or cause to be delivered
to a common carrier any products ordered by Distributor, whether or not the
particular carrier has been designated in the shipping or routing instructions
of Distributor, AFEM shall not be responsible for any delays or damages in
shipment, and the common carrier is hereby declared to be the agent of
Distributor.
3.6 CHANGE TO PRODUCTS BY AFEM. AFEM reserves the right to change the
design or appearance of any product sold pursuant to this Agreement, or of any
packaging therefor, without notice to Distributor. If any such change is made,
AFEM may (but is not obligated to) make the change to products or packaging
thereafter shipped on the orders of Distributor.
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3.7 CHANGE TO PRODUCTS BY DISTRIBUTOR. Distributor shall not have the
right to change the design, appearance or packaging of any product sold to
Distributor under this Agreement without AFEM's prior written consent. The
parties will cooperate to develop packaging that Distributor may recommend for
use in the Territory, subject to their mutual agreement as to the cost thereof.
3.8 RIGHT TO USE NAME. AFEM grants to Distributor the revocable, non-
exclusive, non-transferrable right to use the names "Athena", "Fresh 'n Fit" and
"Padette" in promotional materials and advertising employed by Distributor in
selling the Padette during the term of this Agreement. In using such names,
Distributor will endeavor to comply with all applicable laws relating to
trademarks and copyrights then in force, including compliance with marking
requirements. However, AFEM makes no representation as to its ownership of or
rights to any name or xxxx in the Territory. Upon termination of this
Agreement, or upon request by AFEM at any time, Distributor agrees to
discontinue use of any or all such names and marks directly or indirectly in
connection with Distributor's business, and further agrees not to use any other
name, xxxx, title or expression so nearly resembling any such name as would
likely lead to confusion or to deceive the public.
3.9 CONFIDENTIALITY. Each party agrees that the terms of this Agreement,
and all financial, trade secret and other proprietary business information of
the other party, shall remain strictly confidential. Neither party shall have
the right to copy, divulge, summarize or otherwise disclose the terms of this
Agreement, such information, or any part of it, without the other party's prior
written consent, unless required by valid court order or government regulation.
3.10 NONCOMPETITION. Distributor agrees not to manufacture, make,
assemble, market, sell, distribute or support, or cooperate with any other
person to manufacture, make, assemble, market, sell or distribute any product of
any competitor of AFEM within the Territory during the term of this Agreement or
for a period of two years after termination of it for any reason.
4. PAYMENT.
4.1 PRICES. Distributor agrees to pay to AFEM $0.045 for each individual
Padette ordered by Distributor. All prices are and shall be FOB port of entry
________, China (CIF, but without duty or other fee, tax or charge). AFEM may
change the described price at any time and from time to time after the initial
term of this Agreement, but will provide Distributor at least 30 days' prior
written notice of a change and its effective date.
4.2 TERMS. Distributor agrees to pay AFEM for products ordered by
irrevocable confirmed letter of credit drawn on Bank of America Oregon (or other
U.S. bank reasonably acceptable to AFEM) issued prior to shipment of such
products by AFEM from port of _______________, U.S.A., and payable on sight 60
days after such shipment.
4.3 LATE PAYMENT. Unpaid amounts will bear interest at 1.5% per month
(18% per annum) from the due date until paid in full, calculated on a daily
basis, in addition to AFEM's other rights and remedies set forth in Sections 12
and 16 below.
4.4 TITLE; RISK OF LOSS. Title to ordered products will pass to
Distributor upon the later of tender of delivery or payment. Risk of loss will
pass to Distributor upon tender of delivery.
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5. LIMITED WARRANTY OF AFEM. AFEM warrants to Distributor that the Padettes
and any other products it sells to Distributor under this Agreement will be free
from material defects in workmanship or materials. Any products proven to be so
defective within a period of 30 days after delivery of them to Distributor will
be replaced by AFEM upon their return (by common carrier) to AFEM within 30 days
of such timely discovery of defectiveness, without cost to Distributor. This is
Distributor's sole remedy for defective products. Except as expressly provided
above, AFEM shall not be liable for any damages, costs, expenses or claims, or
for breach of any warranty, express or implied, or for any other obligation or
liability on account of the products covered by this Agreement, including
consequential damages, even if advised thereof. Except as expressly provided
above, AFEM disclaims all warranties with respect to its products, express or
implied, including warranties of merchantability and of fitness for a particular
purpose. Distributor agrees that it is not authorized to make any warranty or
representation respecting AFEM's products.
6. RECORDS. Distributor shall maintain accurate and complete business records
with respect to its promotion, sales and followup efforts respecting the AFEM
products promoted, ordered, sold and paid for by it. Such records shall be kept
in such form as is customary in the consumer product direct sales business.
Distributor shall make the originals of such records available to AFEM's
employees or authorized representatives for inspection and copying during
Distributor's regular business hours. In addition, Distributor shall deliver to
AFEM, at Distributor's expense, certified copies and summaries of any such
records as AFEM may from time to time reasonably request, and whether or not a
default or breach has been declared by AFEM.
7. NO CONFLICTS. Distributor represents and warrants to AFEM that Distributor
is not a party to any agreement or covenant with any other person or authority,
and knows of no law, ordinance, regulation, rule, order or decree of
governmental authority, which prohibits or restricts it from entering into and
performing pursuant to this Agreement.
8. RELATIONSHIP BETWEEN PARTIES. Nothing in this Agreement shall be construed
as creating an agency or partnership relationship between AFEM and Distributor.
Distributor is an independent contractor. AFEM is interested only in the
results obtained by Distributor, which shall have sole control of the manner and
means of performing under this Agreement. Except as expressly set forth in this
Agreement, AFEM shall not have the right to require Distributor to collect
accounts, attend sales meetings, periodically report to AFEM, conform to any
fixed or minimum number of hours devoted to selling effort, follow prescribed
itineraries, make adjustments, bind AFEM, conform to particular promotional or
solicitation policies of AFEM, or do anything else which would jeopardize the
relationship of independent contractor between AFEM and Distributor. All
expenses and disbursements, including but not limited to those for travel and
maintenance, entertainment, office, clerical and general selling expenses, that
may be incurred by Distributor in connection with this Agreement shall be borne
wholly and completely by Distributor, and AFEM shall not be responsible or
liable therefor. Distributor does not have, nor shall it hold itself out as
having, any right, power or authority to create any contract or obligation,
either express or implied, on behalf of, in the name of, or binding upon AFEM,
or to pledge AFEM's credit, or to extend credit in AFEM's name. Distributor
shall have the right to appoint or otherwise designate suitable and desirable
employees, agents and sales representatives (collectively referred to as
"Distributor's Representatives"). Distributor shall be solely responsible for
Distributor's Representatives and their acts. Distributor's Representatives
shall be at Distributor's own risk, expense and supervision, and Distributor's
Representatives shall not have any claim against AFEM for salaries, commissions,
items of cost or other form of compensation or reimbursement. Distributor
represents,
Page 4 - DISTRIBUTION AGREEMENT
warrants and covenants that Distributor's Representatives shall be subordinate
to Distributor and subject to each and all of the terms, provisions and
conditions applicable to Distributor under this Agreement. AFEM shall be solely
responsible for and bear all expenses of supplying and producing, assembling and
packaging the products, and for all expenses of the operation of AFEM's offices,
plants, equipment and facilities, and its business activities as a whole. AFEM
shall have no right or authority to commit Distributor in any matter without the
prior written consent of Distributor, or to use Distributor's name in any way
not authorized by this Agreement.
9. NO SUBLICENSING OR ASSIGNMENT. Distributor agrees not to sublicense,
assign or transfer this Agreement or any rights or duties under it, voluntarily
or by operation of law, without the prior written consent of AFEM. Any
attempted sublicensing, assignment or transfer without such consent shall be
void and of no force or effect. A reorganization or merger with another
corporation or other person shall not itself constitute a prohibited assignment.
10. HOLD HARMLESS. Each party shall save the other harmless from and against
and shall indemnify the other for any liability, loss, costs, expenses or
damages caused by reason of any injury (whether to body, property, or personal
or business character or reputation) sustained by any person or to any person or
to property by reason of any act, neglect, default or omission of it or any of
its agents, employees or other representatives. If either party is sued in any
court for damages by reason of any act of the other party referred to in this
Section 10, such other party shall defend the action (or cause same to be
defended) at its own expense and shall pay and discharge any judgment that may
be rendered in such action. If such other party fails or neglects to so defend
the action, the party sued may defend the same and any expenses, including
reasonable attorneys' fees, which it may pay or incur in defending the action,
and the amount of any judgment which it may be required to pay, shall be
promptly reimbursed upon demand. Nothing in this Section 10 is intended to nor
shall it relieve either party from liability for its own act, omission or
negligence, nor shall it be construed to void AFEM's exclusion of warranties set
forth in Section 5 above.
11. TERMINATION. This Agreement will terminate on the occurrence of any of the
following events, whichever first occurs:
11.1 As provided in Section 2 above.
11.2 Ten days after notice to Distributor by AFEM of non-payment pursuant
to Section 4 above.
11.3 Thirty days after notice by one party to the other of material breach
of any other term, covenant or condition of this Agreement that is not cured or
fully performed within such period to the satisfaction of the notifying party.
11.4 By AFEM in its sole discretion if Distributor for any reason orders
and timely pays for fewer than the number Padettes described below during any
12-month period of the initial term or during a described renewal term of this
Agreement (or fewer than an agreed number of other products of AFEM which may
become the subject of this Agreement):
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Term Minimum Purchase of Padettes
---- ----------------------------
First year 6,000,000
Second year 15,000,000
Third year 18,000,000
Fourth year 21,600,000
Fifth year 25,920,000
Sixth and additional as agreed in writing at least 90 days
years prior to expiration of fifth year
11.5 Automatically, without prior notice, upon either party: filing a
voluntary petition under the bankruptcy laws of its own country or other
applicable jurisdiction; being the subject of an involuntary petition in
bankruptcy which is not dismissed within 60 days thereafter; or becoming
insolvent, making an assignment for the benefit of creditors, or having a
receiver or trustee appointed for it.
12. EFFECT OF TERMINATION. Upon termination of this Agreement pursuant to
Section 2 or Section 11:
12.1 All rights, licenses and privileges granted to Distributor under this
Agreement shall immediately cease and terminate. However, any such termination
will not affect the rights and obligations of the parties respecting remedies
for breach of this Agreement.
12.2 All obligations arising out of events prior to the effective
termination date, including without limitation orders previously accepted and
obligations to pay for ordered products, shall be performed in accordance with
the terms and conditions of this Agreement.
12.3 Distributor shall discontinue its use of all names, trademarks and
other proprietary information of AFEM.
12.4 AFEM may, but shall not be obligated to, purchase from Distributor,
and Distributor agrees to sell to AFEM, any or all products of AFEM then owned
by Distributor. The purchase price shall be equal to the price (if any) paid by
Distributor to AFEM, plus freight and insurance necessary to transport the same
to AFEM's designated office. AFEM may reject any products not in original
containers or not in first class condition.
13. COMPLIANCE WITH LAWS. Distributor shall assist AFEM in obtaining and
maintaining all governmental registration and certification of AFEM's products
to be sold in the Territory pursuant to this Agreement. Distributor shall also
at all times comply with all laws, ordinances, rules and regulations applicable
to the sale and distribution of AFEM's products and to the operation of its
business in the Territory, including without limitation national, provincial and
local consumer protection laws. Distributor shall procure all permits, licenses
and insurance (including without limitation workers' compensation or similar
coverage) necessary or required by any governmental authority to perform its
obligations under this Agreement. Distributor shall, upon request by AFEM,
promptly provide to AFEM written evidence of all such compliance.
Page 6 - DISTRIBUTION AGREEMENT
14. BONUS FEE. To defray Distributor's costs in promoting AFEM's products
pursuant to this Agreement and to promote the minimum sales goals by Distributor
of Padettes in the Territory, AFEM agrees to pay to Distributor a monthly fee of
$2,500.00. The first such monthly fee shall be payable 30 days after
commencement of this Agreement, and monthly fees shall be payable on the same
day of each succeeding month until the earlier of termination of this Agreement
by either party pursuant to Section 11 above or failure of Distributor to meet a
minimum Padette order requirement set forth in Section 11.4 for any annual
period for any reason (even if this Agreement is not terminated by AFEM by
reason thereof). Such monthly fee shall be noncumulative and shall not be
payable for any period after termination of this Agreement for any reason. No
liability of Distributor to AFEM (before or after termination) may be offset
against any monthly fees payable to Distributor by AFEM.
15. WARRANT. Contingent upon approval thereof by AFEM's Board of Directors
within 90 days of the date of this Agreement, AFEM agrees to issue to
Distributor a non-transferrable warrant to purchase up to 10,000 shares of the
common voting stock of AFEM at a price of $4.00 per share. Such warrant will be
in the standard form utilized by AFEM, will expire five years after the date of
this Agreement, and will contain restrictions on transferability absent
compliance with the registration requirements of U.S.A. and other applicable
securities laws. The warrant will be exercisable for up to 5,000 shares on the
first two anniversaries of the date of this Agreement, but decreased by 200% of
the percentage by which the minimum Padette order requirements set forth in
Section 11.4 above are not met for the annual period ending on the applicable
anniversary date, but not less than 0. By way of example, if Distributor orders
only 4,000,000 Padettes during the initial term, the number of shares which may
be exercised under the warrant will be reduced by 3,333 to 1,667 ((6,000,000 -
4,000,000) DIVIDED BY 6,000,000 x 2.00 x 5,000 = 3,333 reduction).
16. ENFORCEMENT.
16.1 INJUNCTION. Either party aggrieved by a breach or threatened breach
of this Agreement (other than for nonpayment) shall be entitled to bring an
action to prevent, stop or otherwise obtain redress, including specific
performance, injunctive relief or other available equitable remedy, without
having to post bond or other undertaking therefor, and without necessity of
providing 30 days' notice pursuant to Section 11.3. Each party waives any
defense it might have as a defendant in such action that the aggrieved party has
or had an adequate remedy at law, and agrees that monetary damages for any such
breach or threatened breach is and will be inadequate.
16.2 ATTORNEYS' FEES. If any action or other proceeding is instituted
relating to any term or condition of this Agreement or relating to any of the
rights, duties or obligations arising under it, the prevailing party shall be
entitled to recover from the other party, and the other party agrees to pay to
the prevailing party, whether or not the matter proceeds to final judgment or
decree, in addition to costs and disbursements allowed by law, such sum as the
trial and each appellate court may adjudge reasonable as attorneys' fees in such
action or other proceeding, and in any appeal of it.
16.3 REMEDIES NOT EXCLUSIVE. All rights and remedies afforded a party by
this Agreement are cumulative and shall be in addition to any other rights or
remedies allowed such party at law, in equity or otherwise.
16.4 APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws and decisions of the state of Oregon, United States of
America, without regard to the conflicts
Page 7 - DISTRIBUTION AGREEMENT
of law rules of such state. If litigation is instituted by a party to enforce
or interpret this Agreement, venue shall lie in Washington County or Multnomah
County, Oregon, U.S.A. Such venue is exclusive.
17. NOTICES. Any notice or consent required or permitted to be given under
this Agreement shall be in writing, in English, and shall be deemed to have been
given when personally delivered to an officer or other authorized representative
of a party or 48 hours after facsimile transmission (accompanied by deposit in
the U.S.A. mails, first class postage prepaid by certified or registered mail,
return receipt requested), or 48 hours after delivery to a recognized
international overnight carrier, with overnight shipping charges paid, and
addressed to such party as follows:
If to AFEM: AFEM Medical Corporation
Attn: President
00000 XX Xxxxxx Xxxxxx #X-0
Xxxxxxxx, XX 00000, X.X.X.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Distributor: Chinese Business Services
Attn: Xxxxxxx X. Xxxx, President
0000 Xxxxx Xxxxxx
Xxxxxx, XX 00000-0000, U.S.A.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or such other address as a party may specify by a notice in writing, given in
the same manner.
18. MISCELLANEOUS.
18.1 CURRENCY. All monetary amounts set forth in this Agreement, and all
payments required or permitted by this Agreement, are and shall be in U.S.
Dollars.
18.2 TAXES. Any and all taxes (including sales, value added, inventory and
use taxes), excises, assessments, levies, imports, duties, costs, charges and
penalties which may be assessed or imposed by any governmental agency in
connection with this Agreement shall be the sole obligation of Distributor,
except U.S. taxes on AFEM's income.
18.3 WAIVER OF BREACH. The waiver by either party of a breach of any term
or provision of this Agreement shall not be construed as a waiver of any
subsequent breach of the same or any other term or provision by either party.
18.4 SEVERABILITY. If any term or provision of this Agreement or the
application of it to any person or circumstance shall to any extent be invalid
or unenforceable, the remainder of this Agreement and the application of such
term or provision to persons or circumstances other than those to which it is
held invalid or unenforceable shall not be affected thereby, and each term or
provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
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18.5 TIME OF THE ESSENCE; DAYS. Time is of the essence of this Agreement
in all particulars. The term "days" means calendar days.
18.6 MODIFICATION. This Agreement may not be amended or modified except by
written Agreement executed by the parties. For example (but not in limitation
of the above), expansion of the described Territory, and any change or addition
to AFEM's products covered by this Agreement, shall require such a writing.
18.7 PRONOUNS. As the context may require in this Agreement, the use of
any gender (male, female or neuter) shall include any other gender, and the
singular shall include the plural and the plural the singular. The word
"person" includes individual, joint venture, partnership, limited liability
company, corporation, association, trust or any other entity or organization.
18.8 CAPTIONS. The captions heading the sections and subsections of this
Agreement are inserted for convenience of reference only, and are not to be used
to define, limit, construe or describe the scope or intent of any term,
provision, section or subsection of this Agreement.
18.9 COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed an original but all of which taken together shall
constitute one and the same instrument.
18.10 INTEGRATION. THIS AGREEMENT CONTAINS THE FINAL AND CONCLUSIVE
AGREEMENT AND UNDERSTANDING OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER OF
IT, AND SUPERSEDES ALL PRIOR AND CONTEMPORANEOUS AGREEMENTS, ORAL OR WRITTEN
(including without limitation the November 16, 1995 heads of agreement letter
between the parties). Except as set forth in this Agreement, there are no
promises, representations, agreements or understandings, oral or written, among
the parties relating to the subject matter of this Agreement. This Agreement
shall be interpreted in accordance with the plain English meaning of its terms.
EXECUTED by the parties through their duly authorized officers or
representatives as of the date first written above.
AFEM MEDICAL CORPORATION MEIX CORPORATION, dba
CHINESE BUSINESS SERVICES
By /s/ Xxxxxxx X. Xxxxxxx By /s/ Xxxxxxx X. Xxxx
------------------------------- -----------------------------
Xxxxxxx X. Xxxxxxx Xxxxxxx X. Xxxx
Its President Its President
AFEM DISTRIBUTOR
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