1
EXHIBIT 10.5
DISTRIBUTORSHIP AGREEMENT
between
HMT
High Medical Technologies GmbH
a company organised and existing under the laws of Germany and having its
principal place of business at
Xxxxxxxxxxxxxxx 00, 00000 Xxxx; Germany
validly represented by its Managing Director, Xx. Xxxxxxx Xxxx
-hereinafter referred to as "HMT" -
and
OssaTronics, Inc.
a company organised and existing under the laws of Georgia and having its
principal place of business at
0000 Xxxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxx 00000, XXX
validly represented by its President Xxxx Xxxxxxx
-hereinafter referred to as "distributor" -.
PREFACE
In recent years HMT has advanced the technology of Osteogenesis by application
of acoustical shock wave energy. The technology was proven by some operating
prototype instruments and is now in serial production. HMT will furnish the
distributor with clinical data, in order to prove efficacy and safety of the
contract products.
The distributor has decided that this product is suitable for the market, in
which the distributor is already actively doing business.
Both parties agree that there is still a strong effort required to make this
product a commercial success.
After HMT has invested significant funds into the technical development, the
distributor accepts that the development of the market will be in principle on
his expense.
OssaTronics agrees to immediately use its best efforts to obtain FDA approval to
market this device. At a minimum OssaTronics agrees to engage Device Assists,
Xxxxx Xxxxxxx on a full time basis (agreement attached) to pursue such approval.
HMT agrees to use their best efforts to support distributor and/or Device
Assist.
The parties agree as follows:
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ss.1
SUBJECT MATTER OF CONTRACT
(1) HMT confers to distributor for the territory as listed in EXHIBIT 1
(hereinafter referred to as "contract territory") a right of exclusive
distribution of the medical instruments listed in EXHIBIT 2 and an
exclusive franchise, including service parts and consumables, for such
instruments ("contract products").
(2) Improvements and advancements of these medical instruments developed and
launched by HMT and designed for the same kind of medical treatment as the
contract products shall be offered to the distributor and be distributed by
distributor pursuant to the terms of this contract.
(3) HMT reserves the right to discontinue certain item of the contract
products with 3 months notice prior to the discontinuation by registered
letter. Should there be dispute whether medical instruments of HMT are part
of the contract products, then HMT's position will be controlling.
If HMT discontinues the production of any contract products, it agrees to
supply and make deliveries of accessories, consumables, disposables and
service spare parts to distributor for a period of two years after the date
of its notice of discontinuation.
ss. 2
INDEPENDENT MERCHANT
(1) The distributor will purchase and sell the products in his own name and
for his own account. He will be acting as an independent merchant with
respect to HMT as well as with respect to his customers and third parties
and shall look after the interest of HMT with the care of a prudent
merchant.
ss.3
CUSTOMERS
(1) HMT will exclusively supply the distributor with the contract products
for the purpose of reselling same in and for the territory. HMT will not
commission any third party with the distribution or the representation of
the contract products in and for the territory and will pass on all orders
or inquiries of third parties out of the territory to distributor.
(2) Distributor will not solicit customers for the contract products outside
of the contract territory. Orders or inquiries which distributor will
receive from third parties outside of the territory, he will immediately
pass on the HMT. Distributor shall refrain from establishing any branch or
from maintaining any distribution depot outside of the territory.
(3) Distributor will advise HMT in writing as soon as he finds out or has
reasons to believe that a customer makes deliveries of the contract
products to areas outside of the territory.
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ss. 4
Prices, Terms of Payment and Delivery
(1) HMT will supply the contract products at prices as agreed with the
distributor on an annual basis as set forth in EXHIBIT 3.
(2) Prices are quoted ex works HMT.
All contract products are delivered against irrevocable letter of credit,
payable on delivery of the merchandise unless alternative financing
arrangements are agreed upon, in writing, in advance.
ss. 5
Purchase Commitment
After FDA approval the distributor agrees to purchase an amount equal to ten
(10) units per year in approximately equal monthly increments for the remainder
of the term of this agreement. As long as distributor has purchased an average
of 10 systems per year, this agreement shall remain in force. Should the
distributor fail to satisfy these purchase commitment, HMT may terminate this
agreement with 6 month notice. Such termination shall be the exclusive remedy
available to HMT. Any increase in quantity will be advised not later than four
month in advance.
ss. 6
Obligations of Distributor and HMT
(1) Distributor shall use the best efforts to promote the distribution of the
contract products in the territory. For this purpose, he shall keep
reasonable sales organisation within the territory at his expense and will
also keep a minimum stock of instruments of each type and the respective
spare parts in order to insure prompt supply of his customers.
(2) From time to time the parties will discuss together the sales situation, at
least in semiannual intervals, and will prepare sales projections as well as
discuss suitable steps to promote sales.
(3) Distributor shall make adequate expenditures in order to advertise the
contract products. HMT shall support the advertising by providing
appropriate advertising- and information-material. HMT is entitled to
advertise within the contract territory.
(4) Distributor shall be responsible to obtain the necessary approval for the
contract territories at his own expense.
Distributor will use the best efforts to get such approvals as soon as
possible.
(5) HMT will promote such efforts only to the extent that technical
specification of the contract products is concerned.
Any clinical trials have to be supported and paid for by the distributor.
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ss. 7
Reporting
(1) Distributor will report to HMT quarterly on
- the sales following the previous report
- the estimated supply quantities for the forthcoming quarter
- technical objection of customers, if any;
- advertising.
(2) Moreover, distributor will give HMT all current information which is in any
way significant for the sale of the products in the territory, e.g. the
competitive situation including names, prices and products of competitors
and a description for their competitive attitudes as well as - insofar as
possible violations of HMT's industrial property right by third parties.
HMT's right to make its own investigations and market researches in the
territory is not prejudiced by this.
(3) HMT on its part will assist distributor by appropriate information and other
assistance.
ss. 8
Industrial Property Rights
(1) HMT will supply the contract products to distributor ready for use by the
end-consumer. Distributor, after taking delivery, will not make any
alteration or any additions to the packaging as well as its design and
labelling; likewise he will not make any alterations or additions to the
contract products without written approval from HMT to do so.
(2) The distribution of the product shall be made under HMT's and the
distributor's trademarks. Distributor shall be authorised for the term of
this contract at the latest, the authority being revocable at any time, to
use HMT's trademarks in doing business when distributing the contract
products. The distributor may not use such marks as well as confusing marks
and designations as part of his firm name, nor may he register same for
himself. The distributor recognises the right of HMT and the companies
affiliated with HMT as to the name and trademarks.
(3) Should a third party assert a claim against distributor for violation of its
industrial property rights on account of the contract products, the
distributor must immediately advise HMT thereof in writing. Upon request,
distributor will provide every reasonable assistance to HMT in the defence
of the property rights. HMT can demand that the distributor ceases the
action (situation) which was subject to the objection, without distributor
being able to make any claims against HMT for that reason.
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(4) Existing patents in the United States
There is at least one (1) patent in the U.S. pertaining to the subject
products, that needs careful consideration between distributor and HMT
before acting in the U.S. market. This is the "Bulgarians Patent". HMT
agrees to use its best efforts to acquire the patent rights through a
license agreement or otherwise such that the distributor can sell the
subject products without violating the above patent.
Distributor and HMT agree to equally share the cost of the acquisition of
such license and/or patent rights.
ss. 9
Warranty
(1) All contract products are warranted against original defect in material
or workmanship. This warranty applies for 12 (twelve) months effective
from the date of sales by the distributor but no longer than 18 (eighteen)
months from the date of invoice from HMT to the distributor.
HMT will repair or replace on ex works basis all products which prove to
be defective during the warranty period provided they are returned to HMT.
Any other warranty - either expressed or implied - is excluded.
(2) HMT will supply at no charge a basic stock of spare parts that will
include at least one of each component used in the OssaTron instrument.
ss. 10
Duration and Termination of Agreement
(1) Unless otherwise provided herein this agreement is effective for an
indefinite period of time. After the first six (6) years it is subject to
twelve (12) months notice period to be given by either party by registered
letter.
(2) This agreement may be terminated at any time with immediate effect for
cause. Cause is deemed to exist in particular, if
- an application for the opening of bankruptcy or composition
proceedings over the assets of any one party is made;
- enforcement measures are brought against any one party unless such
matters have been settled within six weeks after they were brought;
- any one party defaults within its payment for more than eight weeks.
- the distributor fails to meet his purchase commitments (ss.5).
(3) After notice of termination has been given by the distributor, HMT shall
be entitled to distribute the contract products in the territory itself.
However, HMT will make deliveries of disposables and service spare parts
to distributor for a period of 2 (two) years after the effective day of
termination.
During the notice period the distributor shall have the right to continue
the sales of his inventory of contract products.
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(4) Upon termination of this agreement:
- Distributor will immediately remove all references to HMT and its
trademarks, firm names and design rights from all business stationery,
printed matters, advertising announcements, business premises etc. and
will refrain from any such further reference. Distributor will make his
efforts to return to HMT any advertising material, sales literature and
similar material which was made available by HMT.
- All the rights granted under this agreement to distributor will terminate.
Such rights return to HMT or have to be returned to HMT. Distributor
agrees to make in proper form all declarations which may be necessary in
order to transfer such rights to HMT.
- The FDA approval will be transferred from the distributor to HMT or HMT's
assignee. The distributor agrees to make in proper form all declarations
which may be necessary in order to transfer such rights to HMT. After
completion of such transfer the distributor will be entitled to a
compensation of all cost incurred for such FDA approval, limited however
to a maximum amount of US $500.000,--.
ss. 11
Confidentiality
Distributor will treat business and operational secrets with absolute
confidentiality and will not exploit same for himself - even after termination
of this agreement.
ss. 12
Competition
The distributor agrees that he will not produce and distribute - be it directly
or indirectly - any products identical with or similar to the contract products
or otherwise competing with the contract products or the distribution of such
contract products or otherwise - be it directly or indirectly - participate
therein. The distributor shall also otherwise sustain from any direct or
indirect competition vis a vis HMT with regard to the contract products.
In particular, he must not, inside and outside the territory, directly or
indirectly, act as dealer, commission agent or sales agent for any third party
producing or distributing identical or similar products. This shall also apply
if the sale of used goods is involved. Any exceptions require the prior written
consent of HMT.
The foregoing obligations of distributor apply during the duration of the
contract including a notice time.
The parties agree that the distributor may service, broker, sell or otherwise
distribute and market any extra corporal shock wave lithotripter unit. Such
units include but are not limited to Siemens Lithostar and Dornier HM3 and HM4
Lithotripters.
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ss. 13
OPTION
The Parties agree that there may be a mutual interest to have the contract
products manufactured under license by the distributor or its affiliates.
If and when the market for the contract products requires the manufacture of the
contract products inside the contract territory HMT will enter into a
Manufacturing Agreement with the distributor to ensure an optimum supply for the
market.
The terms and conditions of such Manufacturing Agreement will be agreed
separately.
ss. 14
MISCELLANEOUS
(1) The rights and obligations under this contract can be assigned only with
the written consent of the other party.
Both parties agree to the assignment of the rights and the obligations of
this contract by either party to the parent company, a wholly owned
subsidiary or newly formed company comprised of the sale majority
ownership as the distributor and which is established for the sole purpose
of distributing the HMT "OssaTron" as herein contemplated.
The parties acknowledge that it may be in the mutual interest to otherwise
transfer the distribution rights and obligations herein.
HMT reserves the right to subcontract the manufacture of the contract
products to any third party in any territory, however HMT shall inform the
distributor if this is planned.
(2) This agreement shall be executed in two counterparts, each of which shall
for all purposes be deemed an original. Amendments must be in writing and
signed by both parties. Notices of termination pursuant to the provisions
of this contract must be given by registered letter.
(3) Should any provision of this agreement be unenforceable or invalid, this
shall not affect the validity of the remaining provisions of this
agreement. The parties are obligated to substitute for the unenforceable
or invalid provision and enforceable or valid provision, which, from an
economical point of view, comes closest to the purpose pursued by the
unenforceable or invalid provision.
(4) The parties agree that the conditions of a compensation claim - also in
analogous application of the German Commercial Code - shall not be
fulfilled at the time of the termination of this agreement.
Distributor shall therefore not have any compensation claim or similar
claim on account of termination of this agreement.
(5) This agreement shall be governed by the laws of the State of Georgia.
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(6) This agreement replaces all previous oral and written agreements between
HMT and distributor.
(7) HMT agrees to adequately train a minimum of three (3) representatives of
the distributor. Such training shall include installation, operation and
maintenance of the contract products listed in exhibit 2 hereto as well as
any other areas necessary for the distributor to service and distribute
the products listed herein. Such training shall be at a location
designated by HMT. The distributor agrees to incur all cost associated
with such training.
(8) All controversies arising between the parties regarding performance under
this agreement shall resolve in arbitration. Such arbitration shall be
governed by the arbitration act.
(9) All notices pursuant to this agreement shall be in writing and shall be
sufficiently given if mailed, postage prepaid, by certified or registered
mail, to the following addresses:
For HMT: For the distributor:
High Medical Technologies GmbH OssaTronics, Inc.
Xxxxxxxxxxxxxxx 00 1608 Xxxxxxxxx Xx.
00000 Jena Xxxxxxxxx, Xxxxxxx 00000
Germany USA
HMT by Distributor by
/s/ Xxxxxxx Xxxx /s/ Xxxx Xxxxxxx
---------------- -----------------
(Xxxxxxx Xxxx) (Xxxx Xxxxxxx)
Date: 22. Nov. 1994 Date: Nov. 22nd 1994
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EXHIBIT 0
Xxxxxxxx Xxxxxxxxx
XXX
Xxxxxx
Mexico
EXHIBIT 2
Contract Products
(1) OssaTron OSA 120
(2) Accessories and Spare parts thereof
(3) Consumable and Disposables hereto
EXHIBIT 3
Prices
------
(1) The price for the OssaTron instrument shall be as follows:
(a) US$ 250.000 for each instrument purchased prior to FDA approval
provided that such instruments are used at an
Investigational Device Exemption site.
(b) US$ 300.000 per instrument purchased subsequent to FDA approval
(2) The prices above are subject to adjustment if the exchange rate of the US$
to the German Xxxx varies more than 10% from the basis of 0,60 US$ per 1,00 DM.
Beyond this limit both parties will share the cost or benefit of exchange rate
variations.
e.g. a gain of 12% of the dollar value will result in a 6% lower price.
a loss of 12% of the dollar value will result in a 6% higher price.
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DISTRIBUTORSHIP AGREEMENT
Between
High Medical Technologies Entwicklungs + Vertriebs AG, a company organized
and existing under the laws of Switzerland, and having its principal place
of business at:
Xxxxxxxxxxx 0
0000 Xxxxxxxxxxx
Xxxxxxxxxxx,
validly represented by its Directors, Xx. Xxxxxx Xxxxxxxx and Xxxxxxx
Xxxx, and hereinafter referred to as "HMT,"
and
HealthTronics, Inc., a company organized and existing under the laws of
Georgia, and having its principal place of business at:
00 Xxxx Xxxx Xxxxxx
Xxxxx X
Xxxxxxxx, Xxxxxxx 00000
U.S.A.,
validly represented by its President, Xxx X. Xxxxx, and hereinafter
referred to as "DISTRIBUTOR."
PREAMBLE
In recent years HMT has advanced the technology of extracorporeal shock wave
lithotripsy. The technology was proven by some operating prototype instruments,
and is now in serial production.
The DISTRIBUTOR has decided that the Contract Products, as described in
Exhibits 2 and 4, are suitable for the market, in which the DISTRIBUTOR is
already actively doing business.
HMT and the DISTRIBUTOR agree that there is still considerable effort required
to make the Contract Products a commercial success.
HMT has invested significant funds into the technical development of the
Contract Products; therefore, the DISTRIBUTOR accepts that the development of
the market will be at its expense.
HMT agrees to use their best efforts to support the DISTRIBUTOR for the PMA.
HMT will furnish the DISTRIBUTOR with certain clinical data from Europe in
order to assist in proving efficacy and safety of the Contract Products.
HMT and the DISTRIBUTOR agree as follows:
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PAGE 2 OF 19
ARTICLE 1
SUBJECT MATTER OF AGREEMENT
(1) HMT confers to DISTRIBUTOR for the territory as listed in Exhibit 1
(hereinafter referred to as "Contract Territory") the right of
exclusive distributorship of the medical instruments listed in Exhibit
2, including service parts and consumables for such instruments. HMT
and the DISTRIBUTOR hereby agree to amend Exhibit 2 by written
instrument from time-to-time as necessary to amend the list of medical
instruments to which this Agreement applies. The medical instruments
listed on such Exhibit 2 shall be referred to in this Agreement as the
"Contract Products."
(2) Improvements and advancements of the Contract Products developed and
launched by HMT, and designed for the same or similar kind of medical
treatment as the Contract Products, shall be offered to the
DISTRIBUTOR for distribution pursuant to the terms of this Agreement.
(3) HMT reserves the right to discontinue certain items of the Contract
Products by providing notice of it's intent via registered letter with
six (6) months notice.
If HMT discontinues the production of any Contract Products it agrees
to supply and make deliveries of accessories, consumables,
disposables, and service spare parts to the DISTRIBUTOR for a period
of two (2) years after the date of its notice of discontinuation.
Should HMT exercise its discontinuation rights under this article, HMT
will, upon written request, provide to DISTRIBUTOR all drawings,
technical descriptions, and other such know-how and rights that may be
necessary in order for the Distributor to continue production of the
discontinued items.
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PAGE 3 OF 19
ARTICLE 2
INDEPENDENT CONTRACTOR
HMT and the DISTRIBUTOR intend to act as independent contractors, and nothing
in this Agreement shall create, or be construed to create, any partnership or
joint venture among HMT and the DISTRIBUTOR. Further, the DISTRIBUTOR will
purchase and sell the Contract Products in its own name for its own account. As
such, it will be acting as an independent contractor with respect to HMT, as
well as with respect to its customers and third parties.
ARTICLE 3
CUSTOMERS
(1) The Contract Territory for the Contract Products is exclusive to the
DISTRIBUTOR. The Contract Territory defined in this Agreement is the
United States, Canada, and Mexico, as more exactly detailed under
Exhibit 1.
Any and all leads and inquiries for the Contract Products relative to
the Contract Territory received by HMT will be immediately forwarded
to the DISTRIBUTOR.
(2) Any and all leads and inquiries for the Contract Products received by
the DISTRIBUTOR for territories other than those defined under Exhibit
1 will be immediately forwarded to HMT. Any exceptions must be agreed
upon between HMT and the DISTRIBUTOR in writing.
ARTICLE 4
PRICES, TERMS OF PAYMENT, AND DELIVERY
(1) HMT and the DISTRIBUTOR agree to amend the pricing as detailed in
Exhibit 3 from time-to-time, as necessary, under consideration of
prevailing market conditions. The prices applied to each order of
Contract Products shall be those in effect at the time such order is
transmitted to HMT by the DISTRIBUTOR.
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PAGE 4 OF 19
(2) Payment by the DISTRIBUTOR to HMT for the Contract Products will be
made by an irrevocable letter of credit, payable upon delivery of the
Contract Products unless alternative financing arrangements have been
agreed upon, in writing, in advance.
(3) Delivery of the Contract Products by HMT will be made ex works HMT.
ARTICLE 5
INITIAL ORDER
(1) For the IDE sites within the U.S Food and Drug Administration (FDA)
pre-market approval, the DISTRIBUTOR will purchase four (4)
lithotripsy systems (items 1, 2, and 3 of Exhibit 2) within thirty
(30) days from the date that both the DISTRIBUTOR and HMT execute this
Agreement.
(2) The ex works price for each of the four (4) systems contemplated by
Article 5.1 shall be U.S. $360,000.
(3) HMT shall cause the initial Contract Products referenced in Article 5.1
above to be delivered within 120 days after HMT's receipt of the
Distributor's order.
(4) The payment terms for this initial order shall be as follows:
- 50% of the purchase price shall be paid within thirty (30) days
after date of order;
- 25% of the purchase price shall be paid upon delivery of each
system;
- 15% of the purchase price within twelve (12) months after date of
delivery;
- 10% of the purchase price shall be paid within thirty (30) days
after FDA approval.
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PAGE 5 OF 19
(5) Complete documentation, including operating manuals, troubleshooting
guide, service manuals, and other relevant instruction papers will be
provided in the English language by HMT to the DISTRIBUTOR within
forty-five (45) days after the execution of this Agreement.
ARTICLE 6
PURCHASE COMMITMENT
After receipt of pre-market approval from the FDA allowing the sale of the
Contract Products by the DISTRIBUTOR in the United States, the DISTRIBUTOR
agrees to purchase at least twelve (12) complete lithotripers (Exhibit 2, items
1, 2, and 3) per year for the remainder of the term of this agreement. The
DISTRIBUTOR shall use its best efforts to spread its purchase activities evenly
over the twelve (12) month period.
ARTICLE 7
OBLIGATIONS OF DISTRIBUTOR AND HMT
(1) The DISTRIBUTOR shall use its best efforts to promote the distribution
of the Contract Products in the Contract Territory. For this purpose
the DISTRIBUTOR shall undertake reasonable sales efforts within the
Contract Territory at its expense, and will also keep a minimum stock
of instruments of each type and the respective spare parts in order to
insure prompt supply to its customers.
(2) The DISTRIBUTOR shall make adequate expenditures in order to advertise
the Contract Products. HMT shall support the advertising by providing
appropriate advertising and information material as requested and
deemed appropriate by the DISTRIBUTOR. HMT may undertake its own
advertising in the Contract Territory only after receiving prior
written approval from the DISTRIBUTOR.
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PAGE 6 OF 19
(3) The DISTRIBUTOR, at its expense, shall prepare all applications for,
and conduct all clinical trials necessary to obtain, pre-market
approval or any other approval of the FDA that will permit the
DISTRIBUTOR to sell the Contract Products in the United States. The
DISTRIBUTOR shall use its best efforts to secure such FDA approval as
soon as possible.
HMT hereby agrees that it shall, at its expense, provide, in the
English language, all technical data, information, and support in
connection with the DISTRIBUTOR'S efforts to obtain FDA approval as is
reasonably requested by the DISTRIBUTOR.
Further, HMT shall modify the Contract Products as necessary to secure
and maintain the FDA approval. HMT shall, at its expense, take all
measures necessary to ensure compliance with GMP as called for by the
FDA, and ensure such compliance from its key subsuppliers. HMT further
agrees to appoint a Quality Assurance Director responsible for its GMP
issues and those of its key subsuppliers. The DISTRIBUTOR will provide
advice to support HMT on the GMP issue as defined from time to time by
the FDA.
(4) At all times during the term of this Agreement the DISTRIBUTOR shall
have the right to purchase, and HMT shall sell to the DISTRIBUTOR, all
spare parts and consumables for the Contract Products at prices to be
agreed upon.
ARTICLE 8
REPORTING
(1) The DISTRIBUTOR shall make appropriate personnel available to HMT to
discuss the DISTRIBUTOR'S sales situation from time-to-time, to
prepare sales projections, to discuss sales promotion techniques, and
to describe market information, such as the names, manufacturers, and
prices of competitive products, to the extent available and known by
the DISTRIBUTOR. The DISTRIBUTOR will also provide technical updates,
modification suggestions, and information as may be necessary and
applicable.
(2) HMT will provide from time-to-time such technical and marketing support
as may be necessary and available to assist the DISTRIBUTOR in the
performance of this Agreement.
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PAGE 7 OF 19
ARTICLE 9
INTELLECTUAL PROPERTY RIGHTS
(1) HMT will supply the Contract Products to the DISTRIBUTOR ready for use
by the end-consumer. The DISTRIBUTOR, after taking delivery, will not
make any alterations or additions to the packaging, as well as its
design and labelling; likewise, the DISTRIBUTOR will not make any
alterations or additions to the Contract Products without written
approval from HMT to do so; provided, however, that HMT shall take all
steps, make all modifications, and affix or provide all labels and
warnings requested by the FDA or required by the FDA to secure and
maintain the FDA approval secured by the DISTRIBUTOR persuant to
Article 7.3 of this agreement.
(2) The DISTRIBUTOR acknowledges that the Contract Products will be
labelled with the trademarks of HMT. HMT hereby represents and
warrants that all Contract Products bearing such trademarks shall
appropriately bear such trademarks and that nothing in any agreement
shall prohibit the sale or distribution of such Contract Products
pursuant to this Agreement. During the term of this Agreement, except
as otherwise designated by the holder of the trademark, HMT shall
secure the DISTRIBUTOR'S right to market and distribute the Contract
Products under the trademarks of HMT associated with such Contract
Products. The DISTRIBUTOR may not use such marks, as well as confusing
marks and designations, as part of its firm name, nor may it register
same for itself. The DISTRIBUTOR recognizes the right of HMT and the
companies affiliated with HMT as to the name and trademarks.
(3) In the event of third party claims against the DISTRIBUTOR for
violation of its intellectual property rights relating to the Contract
Products, the DISTRIBUTOR will notify HMT in writing describing such
claim. The DISTRIBUTOR shall provide reasonable assistance to HMT in
the event of such claims, including the cessation by the DISTRIBUTOR
of any practice that resulted in said claim; this provided said claim
is proven to be valid.
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PAGE 8 OF 19
ARTICLE 10
WARRANTY
(1) All Contract Products are warranted against original defect in material
and workmanship. This warranty applies for twelve (12) months,
effective from the date of installation by the DISTRIBUTOR, but no
longer then eighteen (18) months from the date of invoice from HMT to
the DISTRIBUTOR.
HMT will repair or replace on CIF Atlanta basis all Contract Products
which prove to be defective during the warranty period. Selection of
transport mode of the replacement parts is to be determined by HMT.
Should the DISTRIBUTOR require changes to the selected method of
transport chosen by HMT with respect to the replacement parts, the
transport costs will be borne by the DISTRIBUTOR. The DISTRIBUTOR will
return defective parts to HMT, at HMT's expense, if requested to do
so. Any other warranty, either expressed or implied, is excluded.
(2) HMT will supply at no charge a basic stock of spare parts that will
include at least one (1) of each component used in the shockhead of
the lithotripter. An exact list of such spare parts is to be agreed
upon by HMT and the DISTRIBUTOR.
ARTICLE 11
DURATION AND TERMINATION OF AGREEMENT
(1) Unless this Agreement is terminated for cause in accordance with
Article 11.3 based upon the provisions provided, or as otherwise
provided herein, this Agreement is effective for an indefinite period
of time. After the first five (5) years it is subject to twelve (12)
months notice, which can be given by HMT or the DISTRIBUTOR by
registered letter.
(2) This Agreement may be terminated by HMT without notice and with
immediate effect if the DISTRIBUTOR advises HMT in writing that it is
abandoning its efforts to secure FDA approval for the Contract
Products.
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PAGE 9 OF 19
(3) This Agreement may be terminated by HMT or the DISTRIBUTOR at any time,
with immediate effect for cause. Cause is deemed to exist in
particular if:
- HMT or the DISTRIBUTOR enters into receivership or bankruptcy
proceedings;
- HMT or the DISTRIBUTOR is delinquent in payments beyond a
reasonable time period;
- the DISTRIBUTOR fails to meet it's purchase commitments as provided
for in this Agreement;
- HMT does not support necessary efforts to obtain GAP.
(4) After notice of termination has been given by the DISTRIBUTOR to HMT,
HMT shall be entitled to distribute the Contract Products in the
Contract Territory. HMT will, however, continue to make deliveries of
disposables and service spare parts to the DISTRIBUTOR for a period of
two (2) years after the effective date of termination in accordance
with the conditions provided for in this Agreement.
During the notice period the DISTRIBUTOR shall have the right to
continue the sales of its inventory of Contract Products.
(5) Upon termination of this Agreement:
- The DISTRIBUTOR will immediately remove all references to HMT
trademarks, firm names, and design rights from all business
stationary, printed matters, advertising announcements, and
business premises. The DISTRIBUTOR will make its best efforts to
return to HMT any advertising material, sales literature, and
similar material which was made available by HMT.
- All the rights granted under this Agreement to the DISTRIBUTOR will
terminate, except as otherwise provided in Articles 1.2, 7.4, 9.1,
9.2, 9.3, and 10.1. Such rights return to HMT, or have to be
returned to HMT. The DISTRIBUTOR agrees to make in proper form all
declarations which may be necessary in order to transfer such
rights to HMT.
19
PAGE 10 OF 19
- The FDA approval will be transferred from the DISTRIBUTOR to HMT,
or HTM'S assignee. The DISTRIBUTOR agrees to make in proper form
all declarations which may be necessary in order to transfer FDA
approval to HMT. After completion of such transfer the DISTRIBUTOR
will be entitled to compensation of all costs incurred for such FDA
approval, limited to a maximum amount of U.S. $500,000.
ARTICLE 12
CONFIDENTIALITY
The DISTRIBUTOR will use its best efforts to treat as confidential all trade
secrets of HMT that are presented to the DISTRIBUTOR as "trade secrets" of HMT,
and will not exploit such trade secrets for itself. The provision of this
Article 12 shall not apply to information learned by the DISTRIBUTOR prior to
the execution of this Agreement, or learned by the DISTRIBUTOR from third
parties not under any duty of confidentiality.
ARTICLE 13
COMPETITION
During the Agreement period the DISTRIBUTOR will not produce or distribute,
either directly or indirectly, any products, new or used, which are identical
or similar to the Contract Products either in the Contract Territory or in any
other territory, beyond its current line of products which is as follows:
- Brokering, selling, distributing, and marketing of previously owned
extracorporeal shock wave lithotripters, including, but not
limited to Siemens Lithostar, Xxxxxxx Xxxxxx XX0, XX0, and MFL
5000, and the Medstone Model STS. Moreover, the DISTRIBUTOR
provides complete lithotripsy service, as well as refurbishing of
lithotripters and associated parts and consumables.
20
PAGE 11 OF 19
ARTICLE 14
MISCELLANEOUS
(1) The rights and obligations under this Agreement can be assigned only
with the prior written consent of either HMT or the DISTRIBUTOR.
Both HMT and the DISTRIBUTOR agree to the assignment of the rights and
the obligations of this Agreement by either HMT or the DISTRIBUTOR to
its respective parent company, a wholly owned subsidiary, or a newly
formed company comprised of the same majority ownership, provided such
entity is committed to the purpose of distributing the Contract
Products according to this Agreement.
HMT reserves the right to subcontract the manufacture of the Contract
Products to any third party in any territory; however, HMT shall
inform the DISTRIBUTOR if this is planned. Prior to any transfer HMT
will provide satisfactory proof of GMP qualifications for the third
party. Any costs related to obtaining GMP for the third party will be
borne exclusively by HMT or the third party. HMT will ensure that
there will be no delivery interruptions of the Contract Products to
the DISTRIBUTOR in the event of such transfer.
(2) This Agreement shall be executed in duplicate, each of which shall for
all purposes be deemed an original. Amendments must be in writing and
signed by both HMT and the DISTRIBUTOR. Notices of termination
pursuant to the provisions of this Agreement must be provided by
registered letter.
(3) Should any provision of this Agreement be unenforceable or invalid,
this shall not affect the validity of the remaining provisions of this
Agreement. HMT and the DISTRIBUTOR are obligated to substitute for the
unenforceable or invalid provision an enforceable or valid provision,
which, from an economical point-of-view, comes closest to the purpose
pursued by the unenforceable or invalid provision.
(4) This Agreement shall be governed by the laws of Switzerland.
21
PAGE 12 OF 19
(5) This Agreement represents the entire understanding of HMT and the
DISTRIBUTOR with respect to the subject matter of this Agreement.
Accordingly, all prior oral and written understandings, representations, and
agreements regarding the subject matter of this Agreement are hereby
superseded and replaced by the terms of this Agreement.
(6) HMT agrees to adequately train a minimum of three (3) representatives of the
DISTRIBUTOR. Such training shall include installation, operation, and
maintenance of the Contract Products listed in Exhibit 2 hereto, as well as
any other areas necessary for the DISTRIBUTOR, to obtain or support the
procurement or maintenance of the FDA approval, and to service and
distribute the Contract Products listed herein. Such training shall be at a
location designated by HMT. The Distributor agrees to bear all of its own
costs associated with such training.
(7) Disputes arising between EMT and the Distributor regarding performance under
this Agreement shall be resolved by arbitration utilizing the Swiss-American
Chamber of Commerce rules.
(8) All notices pursuant to this Agreement shall be in writing and shall be
sufficiently given if mailed, postage prepaid, by certified or registered
mail, to the following addresses:
For HMT: For the Distributor:
High Medical Technologies HealthTronics, Inc.
Entwicklungs + Vertriebs AG Attention: The President
Attention: The President 00 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxx 0 Xxxxx X
8280 Kreuzlingen Marietta, Georgia 30060
Switzerland U.S.A.
(9) HMT and the DISTRIBUTOR agree that the electrode associated with the
lithotripsy unit included in the Contract Products shall be included on
Exhibit 2. In the event that HMT and the DISTRIBUTOR agree that such
electrode is refurbishable at any time during the term of this Agreement,
the DISTRIBUTOR shall be allowed to refurbish all electrodes used in the
operation of the
22
PAGE 13 OF 19
lithotripsy units sold by the DISTRIBUTOR or operated in the Contract
Territory. In addition, HMT agrees to negotiate in good faith with the
DISTRIBUTOR any additional agreement whereby the DISTRIBUTOR WOULD be the
exclusive United States refurbisher and manufacturer of electrodes or
lithotripters in the event HMT desires to assemble or manufacture its
lithotripsy units or electrodes in the United States. HMT's obligation to
negotiate exclusively with the DISTRIBUTOR regarding such assembly or
manufacture of such products shall extend for a period of ninety (90) days
after HMT determines to pursue the assembly or manufacture of such products
in the United States.
IN WITNESS WHEREOF, HMT and the DISTRIBUTOR have caused this Agreement to be
executed by their duly authorized officers or representatives as of the dates
written below their signatures.
EMT by: DISTRIBUTOR by:
/s/ /s/
--------------------------------- -----------------------------
(X. Xxxx) (Xx. X. Xxxxxxxx) (Xxx X. Xxxxx) (Xxxx Xxxxxxx)
Date: 24 JAN. 1996 Date: 22 JAN. 1996
---------------------------- ------------------------
23
Page 14 of 19
EXHIBIT 0
XXXXXXXX XXXXXXXXX
Xxxxxx Xxxxxx, including Puerto Rico, The U.S. Virgin Islands, and
Guam
Canada
Mexico
24
PAGE 15 OF 19
EXHIBIT 2
CONTRACT PRODUCTS
Complete lithotripter, currently designated as the "LithoTron Lithotripter,"
which includes, but is not limited to, the following key components (items 1, 2,
and 3,) accessories, and consumables:
(1) Lithotripter Shockhead
(2) Control Unit, Attachment, Patient Stretcher, ECG-Trigger
(3) X-Ray C-Arm,
(4) Accessories and Spare Parts thereof
(5) Consumables and Disposables hereto
25
PAGE 16 OF 19
EXHIBIT 3
PRICES
(1) The ex works prices for the Contract Products (items 1, 2, and 3 of
Exhibit 2) shall be as follows:
a. U.S. $360,000 for each system purchased prior to FDA approval.
b. U.S. $330,000 for each system purchased subsequent to FDA approval,
provided that a minimum of twelve (12) systems per year
are purchased.
c. U.S. $300,000 for each system purchased subsequent to FDA approval,
provided that a minimum of twenty (20) systems per year
are purchased.
d. U.S. $280,000 for each system purchased subsequent to FDA approval,
provided that a minimum of thirty (30) systems per year
are purchased.
(2) When, and if, the lithotripter system is not delivered complete, the
components are priced with the following percentages of the relevant total
system price:
a. Lithotripter shockhead system...64%
b. Fluoroscopic system.............27%
c. Patient support system.......... 6%
d. ECG trigger unit................ 3%
(3) The above prices are subject to adjustment if the exchange rate of the U.S.
$ to the German Xxxx varies more than 10% from the basis of 0.70 U.S.$ per
1.00 DM.
Beyond this limit both parties will share the cost or benefit of exchange
rate variations, e.g.:
- a gain of 12% of the dollar value will result in a 6% lower price.
- a loss of 12% of the dollar value will result in a 6% higher price.
26
PAGE 17 OF 19
EXHIBIT 4
TECHNICAL SPECIFICATIONS
SAFETY STANDARDS
----------------
The following standards are fulfilled: IEC 601-1
CE
SHOCK WAVE SYSTEM
-----------------
Triggering modes: Fixed frequency, optional ECG
controlled single and double shocks,
up to two (2) shocks per second
Voltage: 14 to 28 kv for a wide range of
applications
Size of focal point: 8 X 38mm at 20 kv (at minus 6dB)
Rise time: < 10 ns
Penetration depth: 150mm
Pressure pulse duration: 300 ns at 20 kv
Patient Coupling: Dry type, up to a diameter of 200mm
Water change: Fully automatic, after an interval set
by the local service
27
PAGE 18 OF 19
FLUOROSCOPY SYSTEM
------------------
kv-Range: 40 - 105 kv
ma-Range for continuous operation: 0.1 - 3mA
BV 25: 7.4mA snapshot
Focal Spot: 0.6 - 1.5
Grid Ratio: 10
Size of Image Intensifier: 15cm (6")
PATIENT SUPPORT, WITH RADIO TRANSPARENT TABLE TOP
-------------------------------------------------
TYPE: Mobile, fitted with wheels
and brakes
Motorized longitudinal movement: +/- lOOmm
Motorized transversal movement: +/- lOOmm
Motorized height adjustment: from 750 to 1,OOOmm
DIMENSIONS:
Length: 2,400mm
Width: 780mm
Height: from 750 to 1,OOOmm
Weight: approximately 150kg
28
PAGE 19 OF 19
OTHER STANDARD FEATURES
- ECG trigger and monitoring unit:
TYPE: ECG Xxxxxxx XX 181 monitor,
with display during
treatment, and trigger unit
for the release of shock
waves
- Leg supports
- Arm rests
- Drain pan
- IV pole
INSTALLATION
Minimum room size for
basic version: 4 X 4 meter
Minimum room size for
multifunctional version: 5 X 5 meter
Power requirements one (1) fixed power
connection 220V, 16 A, and
minimum three (3)wall
sockets 220V, 16 A. 50 or
60 Hz
Water supply: Ordinary tap water,
purification is done by the
system
Installation time: Two engineers, two days
29
September 18, 1996
Mr. Xxxx Xxxx
HMT High Medical Technologies
Xxxxxxxxxxx 0
XX-0000 Xxxxxxxxxxx
Xxxxxxxxxxx
RE: Amendment to the Distributorship Agreement
Between HMT and HealthTronics
Dear Xxxx:
Many thanks for your letter dated August 29, 1996 concerning the reporting
amendment to the Distributorship Agreement. I have signed and dated both
documents. I have retained one copy for my records; your copy is enclosed.
Regards,
/s/
XXX X. XXXXX
RSB/km
Enclosure
30
HMT High Medical Technologies
Entwicklungs-und Vertriebs AG
Xxxxxxxxxxx 0 Healthtronics, Inc.
XX-0000 XxxxxxxxxxxXX 00 Xxxx Xxxx Xxxxxx
Xxxxx X
Zentrale Tel.: (0041) 071 - 000 00 00 Xxxxxxxx, XX 00000
Fax: 677 91 89 USA
Direkt Tel.: (O041) 071 - 677 91
Fax: 677 91
Kreuzlingen, 29. Aug. 1996
Dear Xxx,
Due to the legal requirements in many countries regarding the safety of medical
equipment HMT as manufacturer has to assure that any incident or customer
complaint is reported to the relevant authorities in the USA and in Europe even
if the incident occurs in a foreign country.
You are therefore asked to cooperate in this reporting system and we have
written an amendment to the existing Distributorship Agreements to formally
cover your reporting obligations.
May I kindly ask you to stamp and sign one copy of the amendment and return it
to HMT at your earliest convenience.
Kind personal regards
Xxxx Xxxx
HMT High Medical Technologies
Entwicklungs - und Vertriebs AG
31
AMENDMENT
to
DISTRIBUTORSHIP AGREEMENT
between
HMT High Medical Technologies
Entwicklungs- und Vertriebs AG
a company organized and existing under the laws of Switzerland and having
its principal place of business at Xxxxxxxxxxx 0, XX - 0000 Xxxxxxxxxxx
validly represented by its Marketing Director, Xx. Xxxxxxx Xxxx
- hereinafter referred to as HMT
and
HealthTronics Inc.
company organized and existing under the laws of Georgia, USA and having
its principal place of business at
00 Xxxx Xxxx Xxxxxx, Xxxxx X
Xxxxxxxx, Xxxxxxx 00000, XXX
validly represented by its President Xxx Xxxxx
- hereinafter referred to as "Distributor"
Due to the legal requirement in many countries regarding the safety of medical
equipment HMT and distributor agree that the following wording will be added to
the existing paragraph headed "Reporting" in the distributorship agreement.
(a) In accordance with the requirements of the Medical Devise Directive 93/42
EWG and the code of USA federal regulations 21, and ISO 9000 standards
distributor will permanently maintain a complete record of all contract
products sold and installed in the contract territory. These records will
list by serial numbers all hospitals with name and address, where contract
products are installed.
(b) Distributor will report by telefax to HMT within 3 days any customer
complaint involving death, injury and/or any other potential hazardous
event.
Any other provision of the Distributorship Agreement will remain unchanged.
Cont. page 2
32
Page 2
For HMT: FOR THE DISTRIBUTOR:
HMT High Medical Technologies HealthTronics, Inc.
Entwicklungs und Vertriebs AG 00 Xxxx Xxxx Xxxxxx, Xxxxx X
Xxxxxxxxxxx 0 Xxxxxxxx, XX 00000, XXX
XX - 0000 Xxxxxxxxxxx
Xxxxxxxxxxx
Date: AUG. 29, 1996 9/9/96
HMT by: Distributor by:
Xxxxxxx Xxxx Xxx X. Xxxxx
33
EXHIBIT 0
Xxxxxxxx Xxxxxxxxx
XXX
Xxxxxx
Mexico
EXHIBIT 2
Contract Products
(1) OssaTron OSA 120
(2) Accessories and Spare parts thereof
(3) Consumable and Disposables hereto
EXHIBIT 3
Prices
(1) The price for the OssaTron instrument shall be as follows:
(a) US$ 250.000 for each instrument purchased prior to FDA approval
provided that such instruments are used at an
Investigational Device Exemption site.
(b) US$ 300.000 per instrument purchased subsequent to FDA approval
(2) The prices above are subject to adjustment if the exchange rate of the US$
to the German Xxxx varies more than 10% from the basis of 0,60 US$ per
1,00 DM. Beyond this limit both parties will share the cost or benefit of
exchange rate variations.
e.g. a gain of 12% of the dollar value will result in a 6% lower price.
a loss of 12% of the dollar value will result in a 6% higher price.
34
[HEALTHTRONICS LETTERHEAD]
August 7, 1996
Mr. Xxxx Xxxx
High Medical Technologies
Xxxxxxxxxxx 0
XX-0000 Xxxxxxxxxxx
Xxxxxxxxxxx
RE: Amendments to Patent License Agreement -
LithoTron(TM) Distributorship Agreement and
OssaTron(TM) Distributorship Agreement
Dear Xxxx:
Enclosed please find two finalized copies of the above described Agreement.
Please sign both documents in the appropriate space, keep one document for your
records, and return one to me.
Thanks and regards,
/s/ XXX X. XXXXX
----------------
Xxx X. Xxxxx
RSB/km
Enclosure
00 Xxxx Xxxx Xxxxxx-Xxxxx X-Xxxxxxxx, XX 30060-(770) 419-0691-FAX (000) 000-0000
35
AMENDMENTS TO PATENT LICENSE AGREEMENT, LITHOTRON
DISTRIBUTORSHIP AGREEMENT AND OSSATRON DISTRIBUTORSHIP AGREEMENT
This agreement is made and entered into this 7th day of August 1996, by and
between HIGH MEDICAL TECHNOLOGICES ENTWICKLUNGS + VERTRIEBS AG, (hereinafter
referred to as "HMT") and, HEALTHTRONICS, INC.:
WITNESSETH:
WHEREAS, HMT and Ossatronics, Inc. have entered into a distributorship
dated November 22, 1994 (hereinafter referred to as the "OssaTron
Distributorship Agreement"); and
WHEREAS, HMT and Ossatronics, Inc. have entered into a Patent License
Agreement dated June 3, 1995 (hereinafter referred to as the "Patent License
Agreement"); and
WHEREAS, OssaTronics, Inc. has merged into HealthTronics, Inc., a Georgia
corporation and the Distributorship Agreement and Patent License Agreement have
been assigned to HealthTronics, Inc.; and
WHEREAS, HMT, Jena, has assigned its interest in the Distributorship
Agreement to HMT, Switzerland; and
WHEREAS, HMT and HealthTronics, Inc. have entered into a Distributorship
Agreement executed January 24, 1996 by HMT; and January 22, 1996 by
HealthTronics, Inc. (hereinafter referred to as the "LithoTron Distributorship
Agreement").
NOW, THEREFORE, in consideration of ten dollars ($10.00) and other good and
valuable consideration, the parties agree as follows:
I
The "Patent License Agreement" shall be amended and changed as follows:
(A) Article 1 of such Agreement is amended, changed and reworded as follows:
ARTICLE 1
Patent Rights Granted
HMT hereby grants to LICENSEE an exclusive license to make, use, lease or
sell shock wave equipment for medical treatment which would infringe any valid
claim of the licensed patents upon which royalties are to be paid under this
Agreement.
Licensee is hereby granted immunity from suit under the licensed patents
with regard to
Page 1
36
its customers which are relieved of any obligation to pay a royalty for
aforesaid patents.
(B) All remaining provisions in the Patent License Agreement shall remain as
originally set forth.
II
The "LithoTron Distributorship Agreement" shall be amended and changed as
follows:
(A) Article 11, paragraph 1 of such agreement is amended, changed an reworded
as follows:
ARTICLE 11
DURATION AND TERMINATION OF AGREEMENT
(1) Unless otherwise provided herein, this agreement is effective for a term
of five years beginning on the date P.M.A. is granted by the F.D.A. Upon the
expiration of the initial five year term, this agreement shall automatically
renew for subsequent five year terms provided that Healthtronics meets its sales
commitment of not less than an average of 20 LithoTrons per year as averaged
over the preceding five year term. If after any five year term, Healthtronics
does not meet such sales commitment, HMT may terminate this agreement by
providing notice of its intent to do so. Such notice shall be provided by
registered or certified mail to the principal place of business of
Healthtronics and shall be provided at least twelve months prior to the
expiration of a five year term then in effect.
III
The "OssaTron Distributorship Agreement" shall be amended and changed as
follows:
(A) ss10 paragraph 1 of such agreement shall be amended, changed and reworded
as follows:
ss10
DURATION AND TERMINATION OF AGREEMENT
(1) Unless otherwise provided herein, this agreement is effective for a term
of five years beginning on the date P.M.A. is granted by the F.D.A. Upon the
expiration of the initial five year term, this agreement shall automatically
renew for subsequent five year terms provided that Healthtronics meets its sales
commitment of not less than an average of 20 OssaTrons per year as averaged
over the preceding five year term. If after any five year term, Healthtronics
does not meet such sales commitment, HMT may terminate this agreement by
providing notice of
Page 2
37
its intent to do so. Such notice shall be provided by registered or certified
mail to the principal place of business of Healthtronics and shall be provided
at least twelve months prior to the expiration of a five year term then in
effect.
(B) ss 13 of such agreement shall be amended, changed and reworded as follows:
ss13
MANUFACTURING RIGHT
(1) HealthTronics shall have the exclusive right to manufacture the OssaTron
OSA 120 and other subsequent models related thereto, as well as accessories,
spare parts, consumables and disposables related thereto.
(2) HMT shall, within thirty days after receiving a written request, provide
HealthTronics, Inc. with all drawings, technical descriptions, suppliers and
all other matters requested by HealthTronics, Inc. related to manufacturing the
OssaTron OSA 120 so as to enable HealthTronics, Inc. to manufacture the
OssaTron OSA 120.
(3) HealthTronics, Inc. shall pay to HMT a one time fee of $1,000,000 for the
manufacturing know-how, technical drawings, descriptions and other paperwork
and associated documents described in section number III ss13 (2)herein.
(4) For each OssaTron device manufactured by HealthTronics, Inc. under this
agreement, HealthTronics, Inc. shall pay to HMT a licensing fee not to exceed
ten percent (10%) of the HealthTronics, Inc. net selling price.
HMT
BY:
-------------------------------------
Xxxx-Xxxxx Xxxxxx (Managing Director)
HEALTHTRONICS, INC.
BY: /s/ Xxx X. Xxxxx
-------------------------------------
Xxx X. Xxxxx (President)
Page 3
