Exhibit 10.2
Form 10-KSB, 2001
Viral Genetics, Inc.
File No. 000-26875
DISTRIBUTOR AGREEMENT between Viral Genetics, Ltd. and Esigar Quirurgica,
S.A. de C.V.
Viral Genetics, Ltd., hereinafter referred to as the "Company" and Esigar
Quirurgica, S.A. de C.V., hereinafter referred to as "Distributor," in
consideration of the promises made herein and intending to be legally bound,
agree as follows:
ARTICLE 1. RECITALS
Legal Status of Company
Section 1.01. The Company is a corporation duly organized, validly existing, and
in good standing under the laws of the State of California, with corporate power
to own property and carry on its business as it is now being conducted. The
Company has its principal office and place of business at 000 Xxxxxxx Xxxxxx,
Xxxxxxxx Xxxxxxxxxx 00000.
Status of Distributor
Section 1.02. Distributor is a corporation duly organized, validly existing, and
in good standing under the laws of the Mexican United States, with corporate
power to own property and carry on its business as contemplated by this
Agreement. Distributor has its principal offices and place of business at Xxxxx
Xxxxxxxxxxxx Xx. 00, X.X., Xxxxxxx Xxxxxxx Xxxxxx, 11,000 Mexico, D.F.
Company Business
Section 1.03. The Company is engaged in the manufacture and sale of Medicine for
the treatment of Acquired Immune Deficiency "Aid" and other products from time
to time manufactured and sold under the trade name "VTI."
Facilities, Ability, and Desire to be Distributor
Section 1.04. (a) The Distributor represents that he possesses the technical
facilities and ability to promote the sale and use of products manufactured by
the Company and is desirous of developing demand for and selling such products
on all exclusive basis in the Territory hereinafter described.
(b) Company is desirous of having Distributor develop demand for and sell its
products in such Territory on the terms and conditions set forth herein.
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ARTICLE 2. DISTRIBUTORSHIP
Exclusive Appointment
Section 2.01. (a) The Company appoints the Distributor as the exclusive
distributor for the sale of its products at wholesale within the Territory of:
the Mexican United States and all the countries of Central and South America
(hereinafter "Territory). The Territory so described, and as may be subsequently
enlarged, reduced, or otherwise changed in area with the mutual consent of the
parties hereto, is hereinafter sometimes referred to a the "Territory."
(b) During the life of this Agreement, the Company must not sell the products
directly or indirectly and shall not appoint any other or different person,
firm, or corporation to sell the same products in the Territory. The parties
agree that within a term of thirty (30) calendar days starting from the date of
this Agreement, the Company must terminate any other Agreement executed prior to
this date for the distribution of its products within the Territory.
(c) Given the above-mentioned, the parties agree that any sale operation
verified in the Territory, shall be considered as a Distributor's sale, and
shall give the later the right to ask for the corresponding compensation in the
terms and conditions provided herein.
(d) Any new products that are development and marketed by Company, Distributor
will be given a forty-five (45) calendar days first right of refusal to
distribute within the Territory as agreed upon.
(e) Distributor warrants to Company that it does not currently represent or
promote any lines or products that compete with the products. During the term of
this Agreement, Distributor shall not, without Company's prior written consent,
represent, promote or otherwise try to sell within the Territory any lines or
products that, in Company's judgment, compete with the products covered by this
Agreement.
(f) The parties acknowledge and agree that the relationship of Company and
Distributor established by this Agreement is that of independent contractors,
not an agency relationship and nothing contained in this Agreement shall be
construed to (i) give either party the power to direct and control the
day-to-day activities of the other, (ii) constitute the parties as partners,
joint venturers, co-owners or otherwise as participants in a joint or common
undertaking, or (iii) allow Distributor to create or assume any obligation on
behalf of Company for any purpose whatsoever. All financial obligations
associated with Distributor's business are the sole responsibility of
Distributor.
All sales and other agreements between Distributor and its customers are
Distributor's exclusive responsibility and shall have no effect on Distributor's
obligations under this Agreement. Distributor shall be solely responsible for,
and shall indemnify and hold Company free and harmless from, any and all claims,
damages or lawsuits (including Company's attorneys' fees) arising out of the
acts of Distributor, and its Employees or its agents.
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(g) Distributor agrees that Company owns all right, title, and interest in the
product lines that include the products and in all of Company's patents,
trademarks, trade names, inventions, copyrights, know-how, and trade secrets
relating to the design, manufacture, operation or service of the products. The
use by Distributor of any of these property rights is authorized only for the
purposes herein set forth, and upon termination of this Agreement for any reason
such authorization shall cease.
The products are offered for sale and are sold by Company subject in every case
to the condition that such sale does not convey any license, expressly or by
implication, to manufacture, duplicate or otherwise copy or reproduce any of the
products. Distributor shall take appropriate steps with its customers, as
Company may request, to inform them of and assure compliance with the
restrictions contained in this paragraph.
Distributor acknowledges that by reason of its relationship to Company hereunder
it will have access to certain information and materials concerning Company's
business, plans, customers, technology, and products that are confidential and
of substantial value to Company, which value would be impaired if such
information were disclosed to third parties. Distributor agrees that it will not
use in any way for its own account or the account of any third party, nor
disclose to any third party, any such confidential information revealed to it by
Company. Distributor shall take every reasonable precaution to protect the
confidentiality of such information. Upon request by Distributor, Company shall
advise whether or not it considers any particular information or materials to be
confidential. Distributor shall not publish any technical description of the
products beyond the description published by Company (except to translate that
description to appropriate languages for the Territory). In the event of
termination of this Agreement, there shall be no use or disclosure by
Distributor of any confidential information of Company, and Distributor shall
not manufacture or have manufactured any devices, components or assemblies
utilizing any of the Company's confidential information. Company acknowledges
that by reason of its relationship to Distributor hereunder it will have access
to certain information and materials concerning Distributor's business, plans,
customers, technology, and products that are confidential and of substantial
value to Distributor, which value would be impaired if such information were
disclosed to third parties. Company agrees that it will not use in any way for
its own account or the account of any third party, nor disclose to any third
party, any such confidential information revealed to it by Distributor. Company
shall take every reasonable precaution to protect the confidentiality of such
information. Upon request by Company, Distributor shall advise whether or not it
considers any particular information or materials to be confidential.
(h) During the term of this Agreement, Distributor shall have the right to
indicate to the public that it is an authorized distributor of Company's
products and to advertise (within the Territory) such products under the
trademarks, marks, and trade names that Company may adopt from time to time
("Company's Trademarks"). Distributor shall not alter or remove any Company's
Trademarks applied to the products at the factory or product literature provided
by Company to the Distributor. Except as set forth in this paragraph, nothing
contained in this Agreement shall grant to Distributor any right, title or
interest in Company's trademarks. At no time during or after the term of this
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Agreement shall Distributor challenge or assist others to challenge Company's
Trademarks or the registration thereof or attempt to register any trademarks,
marks or trade names confusingly similar to those of Company.
All representations of Company's Trademarks that Distributor intends to use
shall first be submitted to Company for approval (which shall not be
unreasonably withheld) of design, color, and other details or shall be exact
copies of those used in conjunction with another trademark on or in relation to
the products, then Company's mark shall be presented equally legibly, equally
prominently, and of greater size than the other but nevertheless separated from
the other so that each appears to be a mark in its own right, distinct from the
other mark.
Section 2.02. Distributor accepts the appointment to develop demand for and to
sell Company products within the Territory and will make all sales hereunder in
accordance with this Agreement.
Term
Section 2.03. The initial term of this Agreement shall be seven (7) years from
the effective date of same.
Section 2.04. The Company and the Distributor may renew this Agreement for an
additional seven (7) years term, if both parties are satisfied with each other.
Renewal shall be automatic.
ARTICLE 3. OPERATIONS
Acceptance of Orders: Filling
Section 3.01. (a) All orders the Company receives for its products from the
Distributor are subject to acceptance by Company, which shall be resolved to
Distributor within a term of fifteen (15) calendar days, starting from the date
of the corresponding order.
(b) The Company shall be obligated to ship Distributor all accepted orders,
within forty-five (45) calendar days following the date of placement of the
corresponding order by Distributor, it being understood that neither Company nor
Distributor shall be responsible for delays caused by Government orders or
requirements, transportation conditions, labor or material shortages, strikes,
riots, fires, or any other cause beyond the control of both parties. In all
cases, expenses incurred in shipment of products, shall be paid by both parties,
as follows: the Company shall pay sixty percent (60%) and the Distributor shall
pay the remainder forty percent (40%).
In all cases, the Company will use its best efforts to advise the Distributor in
advance of any liability to make full and timely delivery of any products which
the Distributor has previously ordered.
(c) Notwithstanding the above-mentioned, the Company shall be responsible for
all penalties imposed to Distributor by its clients, as a consequence of delay
in the shipment of the products deriving from causes imputable to the Company.
In such cases, the Company shall make a deduction in the price of the products
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equivalent to the penalty imposed to Distributor, it being understood that
neither Company nor Distributor shall be responsible for delays caused by
Government orders or requirements, transportation conditions, labor or material
shortages, strikes, riots, fires, or any other cause beyond the control of both
parties.
Payment
Section 3.02. (a) The parties agree that Distributor shall sell the products
pursuant to this Agreement at such prices and on such terms and conditions as
the Company shall establish from time to time, it being understood that all
changes in the above-mentioned prices, terms and conditions, must be notified in
writing to Distributor at least ninety (90) days in advance to the date on which
such changes must be effective.
(b) The Company agrees to pay Distributor a fee for the sale of the products
within the Territory. The fee for a sale shall be at all times thirty percent
(30%) of the final sale price of the products to the customer in accordance with
the following formula:
A = Sale price to the customer.
B = Import taxes and duties paid.
C = Final sales price.
Formula: A - B = C
Distributor's fee: 30% of C
Example of application of formula in U.S. dollars:
Price to Distributor: $ 3,000.00
"A" = Sales Price: $ 10,000.00
"B" = Taxes and Duties (20%): IF APPLICABLE $ 600.00
"C" = Final Sales Price: $ 9,400.00
Distributor's Fee = 30% of "C": $ 2,820.00
Real Sales Price from Company: $ 6,580.00
Distributor is granted herein with the right to withhold the above-mentioned
fee, from the payment of the products received from the customer.
(c) Sale price increases of the products shall be at all times agreed by both
parties on a yearly basis and may never exceed ten percent (10%).
(d) Furthermore, the Company shall give ninety (90) day credit to clients of the
Distributor to pay for ordered merchandise.
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Distributor's Efforts, Facilities and Personnel
Section 3.03. The Distributor will use his best efforts to promote demand for
and sale of the Company's products and will maintain adequate facilities and
sales personnel for that purpose. The Company will provide training to personnel
from the Distributor, in order to increase sales and market penetration in each
country.
Place of Business, Display Room, and Service Department
Section 3.04. The Distributor shall maintain a place of business, display room,
and service department satisfactory to the Company at all times, and the Company
shall have the right at all reasonable times during business hours to inspect
the place of business, display room, and service department.
Appointment of Dealers, Salesmen, or other Representatives
Section 3.05. (a) The Distributor shall maintain a place of business, display
room, and service department satisfactory to the Company at all times, and the
Company shall have the right at all reasonable times during business hours to
inspect the place of business, display room, and service department.
Appointment of Dealers, Salesmen, or other Representatives
Section 3.05. (a) The Distributor shall work and develop the Territory to the
satisfaction of the Company, and in doing so shall appoint dealers, salesmen, or
other representatives to sell the Company's products.
(b) The Distributor shall file with the Company a copy of each Agreement entered
into with such dealers, salesmen, or other representatives defining the
Territory to be served, which agreements shall be on appropriate forms supplied
by the Company.
(c) Upon expiration or prior termination of any such Agreement for any cause,
the Distributor shall furnish the Company with notice thereof in order that the
Company's field personnel records will be up to date at all times.
Freight Charges
Section 3.06. (a) Unless the Company shall have authorized or permitted the
return of any products or parts, the Company shall not be obligated to accept
from the Distributor any products, nor to make any exchange thereof, nor to
credit the Distributor thereof.
(b) Except in case of damage or defect attributable to the Company, the
Distributor shall not make any claim against the Company for any damages or
defective product.
Common Carrier Agents of Distributor
Section 3.07. Whenever the Company shall deliver or cause to be delivered to a
common carrier any goods ordered by the Distributor, whether the particular
carrier shall have been designated in the shipping or routing instructions of
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the Distributor or not, the Company shall not be responsible for any delays or
damages in shipment and the common carrier, to which the Company shall deliver
goods shipped to the Distributor, is declared to be the agent of the
Distributor. Also, the Company will hire freight insurance which covers all
merchandise shipped to the Distributor. Such insurance shall be paid by both
parties, as follows: the Company shall pay sixty percent (60%) and the
Distributor shall pay the remainder forty percent (40%), once the order has been
delivered to Distributor at any of the addresses stated in article 1, section
1.02.
In case the merchandise is damaged or defective from the factory, the Company
shall accept merchandise to be returned within (30) thirty calendar days after
the detection of said damages or defect.
Report of Sales
Section 3.08. In order to enable the Company to have a complete record of all
products sold, the Distributor shall furnish the Company weekly, or at such
intervals as the Company and the Distributor shall otherwise agree a report of
all sales of the Company's products in the Territory.
Right to Use Name
Section 3.09. (a) Subject to the provisions of Subsection (b), the Distributor
may use the name: VT I Factor as applied to Company products in any design or
advertisement during the continuance of this Agreement. All promotion activities
must require the prior written approval of the Company.
(b) In case of termination of this Agreement, or upon request of the Company,
the Distributor shall discontinue use of such name in any sign or advertisement
and thereafter shall not use the name directly or indirectly in connection with
his business, nor use any other name, title, or expression so nearly resembling
it as would be likely to lead to confusion or uncertainty or to deceive the
public.
Audits of Books
Section 3.10. The Distributor shall have his books audited at least annually by
a competent accountant or auditor and shall furnish a certified copy of such
audit to the Company for its permanent record.
Advertising Policies
The Company will cooperate with Distributor and its dealers in providing for
continuous and effective advertising and promotion of Company's products
throughout the Territory, and Distributor agrees to participate in, actively
promote and faithfully comply with the terms and conditions of such cooperative
advertising and merchandising programs as the Company may establish and offer to
Distributor from time to time. Nothing herein shall prevent Distributor from
independently advertising and marketing the Company's products within the
Territory, provided the form and content of the advertising or marketing
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materials are approved by the Company in advance. All expenses derived from
advertising and promotion shall be paid by Distributor.
ARTICLE 4. TERMINATION
Section 4.01. Either party shall have the right to terminate this Agreement,
prior to its expiration, upon the occurrence of any of the following events:
(1) Breach or default by the other of any of the terms, obligations,
covenants, representations of warranties under this Agreement which is not
waived in writing by the non-defaulting party. In such case, the non-defaulting
party shall notify the other of such alleged breach or default and the other
party shall have a period of sixty (60) days to cure the same.
(2) The other party is declared insolvent or bankrupt or makes an
assignment for the benefit of creditors, or a receiver is appointed or any
proceeding is demanded by, for or against the other under any provision of the
Federal Bankruptcy Act or any amendment thereof.
(3) The failure of Distributor to register this product in Mexico within
twelve (12) months of the execution of this Agreement.
Promptly upon the termination date of this Agreement, Distributor shall
immediately and forever thereafter cease to solicit orders to represent in any
manner that he is associated with the Company. Upon the termination date, the
Distributor shall return or cause to be returned to the Company, after receipt
of Company's written request thereof and at Company's expense, all samples,
decals, advertising material, promotional items, sample contracts and other
materials not previously returned to the Company or previously expended in
solicitation activities which have been furnished by the Company in connection
with this Agreement and will not thereafter hold out to the public that
Distributor is a sales representative or otherwise connected with the Company.
Applicability of Terms after Termination
Section 4.02. In the event of termination, this Agreement shall remain
applicable to any orders for products that the Distributor has previously placed
and to any other orders, which may be executed within ninety (90) days
subsequent to the effective date of termination.
Repurchase of Products on Termination
Section 4.03. In the event of the termination of this Agreement by either party
for any reason, the Company may at its option repurchase from Distributor at the
net price paid by the Distributor to the Company, plus actual freight on the
shipment thereof to the Distributor, any Company products on hand in the
Distributor's place of business or in the possession of the Distributor. On
demand and the tender of the repurchase price, the Distributor shall be
obligated to deliver such goods to the Company forthwith.
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Subrogation on Termination
Section 4.04. In case this Agreement shall be terminated for any reason, the
Company shall thereupon at its option be subrogated immediately to any
agreements, rights, and relations of the Distributor with dealers, salesmen, or
other representatives appointed by the Distributor hereunder with regards to the
sale of Company products, and all such agreements shall contain a clause to make
this provision effective in favor of the Company when this Agreement shall be
terminated.
ARTICLE 5. WARRANTIES
Indemnification
Section 5.01. (a) The parties agree that the Company shall be at all times
responsible for all and any consequences that may arise in the health of
patients that may use the products, and shall hold harmless Distributor against
any suit, claim or proceeding deriving from the use of the products. In this
cases, Distributor shall only be obligated to provide the Company with full
information, cooperation and assistance as may be required to defend any such
suit, claim, or proceeding. The Company liability will arise only if the
products are used according with the instructions provided.
(b) Likewise, the Company agrees that it will indemnify and hold harmless
Distributor against any suit, claim or proceeding alleging that the Company
industrial property rights pursuant to this Agreement infringes any patent,
copyright, trademark or trade secret of any third party; provided, however, that
Distributor must (a) promptly notify the Company in writing by certified mail,
return receipt requested, of any such suit, claim, or proceeding, (b) allow the
Company, at its expense, to direct and control all defense and all settlement or
compromise negotiations, and (c) provide the Company with full information and
assistance as may be required to defend any such suit, claim, or proceeding. The
Company shall have no obligation or liability with respect to any claim or
infringement based upon any cause imputed to Distributor.
ARTICLE 6. INTERPRETATION AND ENFORCEMENT
Notices
Section 6.01. Any notice, request, demand, or other communication required or
permitted hereunder shall be deemed to be properly given when deposited in the
United States mail, postage prepaid, or when deposited with a public telegraph
company for transmittal, charges prepaid, addressed:
(a) In the case of the Company, to 000 Xxxxxxx Xxxxxx, Xxxxx Xxxxxxxx,
Xxxxxxxxxx 00000, or to such other person or address as the Distributor may from
time to time furnish to the Distributor.
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(b) In the case of the Distributor, to Xxxxx Xxxxxxxxxxxx Xx. 00,
X.X., Xxxxxxx Reforma Social, 11,000 Mexico, D.F., or to such other person or
address as the Distributor may from time to time furnish to the Company.
Distributor not Agent or Legal Representative
Section 6.02. This Agreement does not constitute the Distributor the agent or
legal representative of the Company for any purpose whatsoever. The Distributor
is not granted any right or authority to assume or to create any obligation or
responsibility, expressed or implied, on behalf of or in the name of the Company
or to bind the Company in any manner.
Completeness of Instrument
Section 6.03. This instrument contains all of the agreements, understandings,
representations, conditions, warranties, and covenants made between the parties
hereto. Unless set forth herein, neither party shall be liable for any
representations made, and all modifications and amendments hereto must be in
writing.
Assignment
Section 6.04. This Agreement constitutes a personal contract and the Distributor
shall not transfer or assign the Agreement or any part thereof without written
consent of the Company, except to a new Mexican Corporation wholly owned by
Messrs. Xxxxxxx Xxxx Xxxxxx and Xxxxxx Xxxxxxx Xxxxxxx.
Section 6.05. This Agreement shall inure to the benefit of and shall be binding
upon the Company's successors or assignees. Therefore, in the event the Company
assigns the Agreement or any part thereof to a third party for any reason
whatsoever, the assignee shall be at all times obligated to comply with all the
terms and conditions provided herein.
No Implied Waivers
Section 6.06. The failure of either party at any time to require performance by
the other party of any provision hereof shall not affect in any way the full
right to require such performance at any time thereafter. Nor shall the waiver
by either party of a breach of any provision hereof be taken or held to be a
waiver of the provision itself.
Force Majeure
Section 6.07. Nonperformance of either party shall be excused to the extent that
performance is rendered impossible by strike, fire, flood, governmental acts or
orders or restrictions including any actual or threatened actions by the U.S.
Food and Drug Administration, failure of suppliers, or any other reason where
failure to perform is beyond the reasonable control of and is not caused by the
negligence of the non-performing party. If performance is delayed due to such
circumstances for a period of 180 consecutive days, either party may elect to
terminate this Agreement.
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Controlling Law and Forum
Section 6.08. (a) This agreement shall be governed by and construed under the
laws of the State of California, U.S.A. The federal and state courts within the
State of California, U.S.A., shall have exclusive jurisdiction to adjudicate any
dispute arising out of this Agreement. Both parties hereby expressly consent to
the personal jurisdiction of the federal and state courts within California,
U.S.A.
Executed on July 14th, 1999, at Pasadena, California
COMPANY
Viral Genetics, Ltd.
By: /s/ XXXXXX XXXXXXXXXXX, Pharm. D. /s/ XXXX XXXXXXXXX
DISTRIBUTOR
Esigar Quirurgica, S.A. de C.V.
/s/ XXXXXXX XXXXXXX XXXXXXX /s/ XXXXXXX XXXX XXXXXX
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