DISTRIBUTION AGREEMENT
PARTIES: Active Ankle Systems, Inc.
AOA Division, Xxxxxxxxx Medical Corporation
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TABLE OF CONTENTS
ARTICLE NO. DESCRIPTION
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1 .......... Reference
2 .......... Appointment
3 .......... Territory and Products
4 .......... Sales, Marketing and Development Activities
5 .......... Orders, Payments and Taxes
6 .......... Delivery
7 .......... Confidential Information
8 .......... Warranties
9 .......... Indemnification, Insurance
10 .......... Acceptance of the Products, Inspection and Return
11 .......... Changes
12 .......... Relationship between Parties
13 .......... Terms and Termination
14 .......... Force Majeure
15 .......... Waiver
16 .......... Notices
17 .......... Governing Law
18 .......... Arbitration
19 .......... Entire Agreement and Modifications
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EXHIBITS
A .......... International Territories
B .......... Products Designated for Territory
C .......... Prices
D .......... Active Ankle Systems Quality Manual
DISTRIBUTION AGREEMENT
THIS AGREEMENT, is made as of the 3 day of January , 1995 by and between
ACTIVE ANKLE SYSTEMS, INC., a Kentucky corporation ("Active Ankle"), and THE AOA
DIVISION OF XXXXXXXXX MEDICAL CORPORATION, a Delaware corporation ("AOA"). (AOA
and Active Ankle being hereinafter sometimes called the "Parties").
RECITALS:
WHEREAS, AOA desires to market in the Territory (as hereinafter defined)
products provided by Active Ankle; and
WHEREAS, Active Ankle desires to have its products marketed and sold by AOA
in said Territory;
NOW, THEREFORE, for the mutual promises and agreements contained herein and
for the other good and valuable consideration, it is agreed by and between the
Parties hereto as follows:
1. REFERENCE
The above recitals are hereby made a part of this Agreement.
2. APPOINTMENT
2.01 Active Ankle hereby appoints AOA as its non-exclusive distributor in
the Territory for the sale and promotion of certain Active Ankle
products to primarily medically-related markets. AOA accepts such
appointment and agrees that it shall at all times carry out to the
best of its ability a merchandising policy designed to promote and
maintain the excellence of quality and to preserve the goodwill
which is now associated with the name and reputation of Active Ankle
and its products.
2.02 AOA shall have the right to appoint subdistributors in the
Territory, provided that such subdistributors shall agree in writing
to be subject to all the terms of this Agreement. AOA hereby agrees
that it shall be responsible for all the acts and omissions of such
subdistributors as if such acts and omissions had been the acts and
omissions of AOA.
3. TERRITORY AND PRODUCTS
3.01 The term "Territory" shall mean the continental United States,
Alaska, Hawaii and all U.S. possessions. Additional international
territories may be added by mutual consent of the parties, such
consent shall not be unreasonably withheld.
International territories are listed in Exhibit A and may be added
from time to time by amendment of this Agreement.
The term "Product(s)" shall mean all products listed in Exhibit B
and those which may be added to Exhibit B by amendment to this
Agreement provided in 19.02 herein.
Active Ankle shall have the right to stop manufacturing, stocking
and selling, for any reason, any of the Products listed in Exhibit B
upon 60 days written notice, without incurring any obligation or
liability to AOA, unless ordered to do so by any court of competent
jurisdiction, any governmental unit or other authority outside the
control of Active Ankle, in which case Active Ankle shall be
entitled to cease immediately. Active Ankle agrees to license AOA
to manufacture and sell any discontinued Product, the terms of said
license to be mutually agreed upon by the Parties during the sixty
(60) day period prior to discontinuing the Product.
4. SALES, MARKETING AND DEVELOPMENT ACTIVITIES
4.01 AOA agrees:
A. To provide adequate sales coverage and distribution of the
Products in the Territory.
B. To bring promptly to Active Ankle's attention, any information
received by AOA which is likely to be of interest, use, or
benefit to Active Ankle in relation to the marketing of the
Products in the Territory.
C. To establish and implement any control procedures required to
conform to existing or anticipated laws or regulations covering
the Products.
D. To reimburse Active Ankle for extraordinary technical, marketing,
sales and training efforts. Such extraordinary efforts shall be
mutually agreed upon in advance and reimbursement shall be
dependent upon the timely presentation of written proof of said
expenditures.
4.02 Active Ankle agrees:
A. To provide reasonable technical, sales, marketing and sales
training support to AOA, such support to be mutually agreed upon
in advance.
B. To provide artwork and/or the actual printed promotional
materials required to promote sales of the Product in the
Territory.
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C. To provide AOA with a right of first refusal to new products,
such right to include consideration as the exclusive distributor
of such new products in the Territory.
D. To share in the costs associated with clinical studies involving
the Product, such costs to be mutually agreed upon in advance.
E. To share in the costs associated with:
1. Conversion of AOA's current stirrup ankle brace business;
2. Sampling of the current Active Ankle product line;
3. Sampling and introduction of Products developed and offered
for sale during the Term of this Agreement; and
4. Special promotional activities supporting the sale of all
Active Ankle products.
Prior to any commitments regarding the foregoing subparagraphs (A)
to (E), the parties shall mutually agree in writing to any cost
sharing in advance. Further, Active Ankle shall have the right to
approve in advance all advertising copy and material, said approval
not to be unreasonably withheld.
4.03 The parties for the products sold by Active Ankle to AOA are listed
on Exhibit C. AOA and Active Ankle agree the prices provided for
herein shall be subject to change with sixty (60) days notice.
Active Ankle agrees to sell to AOA at the best price and terms
offered to any other Distributor of the Product and in such
packaging, color, and product features as Active Ankle shall offer
to any Distributor.
Notwithstanding the foregoing, Active Ankle understands and agrees
that, from time to time, AOA may include Products listed in Exhibit
B in long-term product sales contracts and that such product sales
contracts may include provisions to guarantee pricing for the term
of the product sales contract. AOA agrees to submit product sales
contract related pricing to Active Ankle for approval prior to
submitting contract proposals. Active Ankle agrees that approval of
pricing for product sales contracts shall not be unreasonably
withheld, if commercially feasible, and that Active Ankle will not
increase its cost to AOA of Products necessary to complete the
obligations of the product sales contracts during the term of said
contracts.
5. ORDERS, PAYMENTS AND TAXES
5.01 PURCHASE ORDERS. All orders for the Products shall be subject to
the terms of this Agreement and made by AOA either orally or in
writing (facsimile is permissible) and shall set forth (i) the
identify and quantity ordered, (ii) the date of the
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required delivery and (iii) any other terms not inconsistent with
the terms of this Agreement. All orders are subject to acceptance
by Active Ankle. In the case of any oral orders made by AOA
hereunder, AOA shall promptly send written confirmation of such
orders to Active Ankle (facsimile is permissible). ALL SALES OF THE
PRODUCTS BY ACTIVE ANKLE TO AOA SHALL BE SUBJECT TO AND IN
ACCORDANCE WITH THE TERMS OF (i) THIS AGREEMENT, AS THE SAME MAY BE
AMENDED BY THE PARTIES FROM TIME TO TIME, (ii) TO THE EXTENT NOT
INCONSISTENT WITH THIS AGREEMENT, THE TERMS OF THE APPLICABLE AOA
ORDER EXECUTED UNDER THIS AGREEMENT AS ACCEPTED BY ACTIVE ANKLE, AND
(iii) TO THE EXTENT NOT INCONSISTENT WITH THIS AGREEMENT, THE
PROVISIONS OF THE UNIFORM COMMERCIAL CODE, AS ENACTED IN THE STATE
OF KENTUCKY.
5.02 PAYMENT. Terms are net 30 days.
5.03 EXTRA CHARGES. Other than late payment charges, no additional
charges of any kind, including charges for boxing, packing, or
cartage, taxes, import or export duties, excises, or other extras,
will be allowed unless specifically agreed to in writing in advance
by AOA.
5.04 TAXES. Active Ankle's prices shall EXclude any Federal, State, or
local sales, use or excise taxes levied upon, or measured by the
sale, the sales price or use of the Products. All such taxes,
lawfully applicable, shall be listed separately on Active Ankle's
invoice, and paid by AOA. If such applicable taxes are not
separately listed, Active Ankle assumes responsibility for the
payment of them, and shall indemnify and hold AOA, its successors
and assigns, harmless from any and all liability in connection with
such taxes. Tax exemption certificates or other evidence of
exemption furnished by AOA, reasonably acceptable to Active Ankle,
shall be accepted by Active Ankle in lieu of such taxes.
6. DELIVERY
6.01 Active Ankle shall at no time be obligated to make any shipment if
such action would constitute a violation of any federal, state or
local laws, regulations or policies.
6.02 Delivery shall be made F.O.B. to AOA's facility in Marlow, Oklahoma.
Active Ankle shall retain ownership and responsibility for the
product and any expenses until delivery to AOA's facility in Marlow,
Oklahoma.
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7. CONFIDENTIAL INFORMATION
7.01 From time to time, the parties will have access to certain
Confidential Information relating to the other's business, including
but not limited to the internal organization; the names and
responsibilities of management, supervisory and technical employees,
operating plans, research and development activities, plans for
acquisitions and mergers, manufacturing and/or sales activities,
technical information concerning products (except as contained in
marketing or promotional literature), trade secrets, customer lists,
and names of suppliers (the "Confidential Information"). The
Parties covenant that they will hold all Confidential Information as
fiduciaries, in strict confidence and trust for the other's benefit,
and will not at any time during the term of this Agreement or
thereafter disclose any Confidential Information of which it has
knowledge, in whole or in part, to any third party, or use same for
its own benefit or for the benefit of any third party without the
prior written consent of a duly authorized officer of the other.
During the term of this Agreement, the Parties will be permitted,
however, to disclose such part of the Confidential Information to
those of its employees and/or agents as is necessary to be known by
them to assist or enable the Parties to perform their respective
services and obligations under this Agreement. At either Party's
request, the other Party will furnish the names of the employees and
agents to whom Confidential Information has been disclosed, the
extent of such disclosure, and copies of any written agreements with
those employees and agents. Both Parties will make a good faith
attempt to administer and enforce all such written agreements with
its employees and agents.
A. EXCEPTIONS
The above restrictions on disclosure of Confidential Information
shall not apply:
1. To the extent that any information imparted was in the
possession of the disclosing party prior to disclosure.
2. To the extent that the idea or information disclosed is
already in the public domain or shall thereafter fall within
the public domain without fault on the part of the
disclosing party; or
3. If the right to use such information shall be validly
obtained through or disclosure from a third party not bound
by any confidential relationship.
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B. RETURN OF CONFIDENTIAL INFORMATION
Upon either Party's written demand or upon expiration or
termination of this Agreement, whether or not separate written
demand has been made, the other Party will return promptly all
Confidential Information to the other Party to the extent held in
written, graphic or other tangible form, and all copies,
summaries, notes and other write-ups thereof.
8. WARRANTIES
8.01 AOA shall have the right to all buyer's remedies and seller's
warranties to the fullest extent provided under the Uniform
Commercial Code as enacted in the State of Maryland, including, but
not limited to, warranties of merchantability and fitness for a
particular purpose. Notwithstanding the foregoing, in no event
shall Active Ankle be liable to AOA for special, incidental or
consequential damages.
9. INDEMNIFICATION, INSURANCE
9.01 Active Ankle shall indemnify AOA and the customers of AOA against
any liability arising from claims of patent, trademark or copyright
infringement on account of any composition, process, invention, or
article used or furnished by Active Ankle in the performance of this
Agreement, including, but not limited to, patents or processes for
the manufacturing, sale and delivery of the goods. Active Ankle
shall defend any action brought against AOA for any claim, shall
bear all costs, expenses and reasonable attorneys fees of AOA in the
defense of any such action, and Active Ankle shall pay any judgment
that may be awarded against AOA.
AOA shall cooperate with Active Ankle in every regard implied by the
foregoing including but not limited to making its executives and
employees available to Active Ankle as reasonably required for the
purposes of preparation for the defense of any claims and
participation at the disposition, at trial, etc. The foregoing to
be without cost to Active Ankle except for actual direct
out-of-pocket expenses incurred by AOA, and to the extent indicated
in paragraph one hereof, solely as it relates to such defense.
9.02 Active Ankle shall indemnify and hold AOA, its successors and
assigns, harmless against all loss on account of claims of injuries
to persons or damage to property based in whole or in part upon a
defect in the Products or from any act or omission of Active Ankle,
its agents, employees and subcontractors related to the Products.
Further, Active Ankle agrees to indemnify and hold harmless AOA, its
successors and assigns, against any and all claims, liabilities,
costs and expenses (including, but not limited to, court costs,
reasonable attorney's fees, inspectors' fees, or costs of testing if
the cost of such testing is approved by an
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officer of Active Ankle in advance) incurred by AOA in connection
with or related to any recall, inspection, tests, replacement or
correction of the Products or any and all parts or equipment in
which the Products are incorporated when such recall, inspection,
tests, replacement or correction result from or are related to, in
whole or in part, a defect or alleged defect in the Products.
9.03 The Parties shall each carry, maintain and keep in force during the
term of this Agreement, all such insurance, including product
liability coverage, as may be reasonably necessary to guarantee
performance by each party of its obligations to protect the other's
interest. The Parties will provide each other with proof of such
insurance.
10. ACCEPTANCE OF THE PRODUCTS, INSPECTION AND RETURN
10.01 Acceptance of the Products shall take place at the time when such
Products have been delivered to AOA and have passed AOA's
inspection and tests of the Products by AOA which may at AOA's
option be made at Active Ankle's plant and/or the point of
destination. The inspection criteria upon which acceptance shall
be based is contained in Exhibit D, Active Ankle Systems Quality
Manual. Acceptance of all or any part of any shipment of the
Products by AOA shall not relieve Active Ankle from any of its
obligations and warranties hereunder, nor will acceptance of any
part of any shipment bind AOA to accept future shipments or deprive
AOA of any right which it may have to return goods already
accepted. Acceptance of all or any part of any shipment shall not
be deemed a waiver of AOA's right either to cancel or to return all
or any portion of the Products because of failure to conform to the
order as accepted by Active Ankle or by reason of defects, latent
or patent, or other breach of warranty, or to make any claim for
damages, suffered by AOA as a result of any default of Active Ankle
hereunder.
If inspection discloses that any part of any shipment of the Products
received is not in accordance with AOA's order as accepted by Active Ankle
or if any of the Products fail to meet the warranties contained in
Paragraph 8 hereof, Active Ankle, upon notice thereof from AOA, shall
promptly correct or replace the same at Active Ankle's expense. If Active
Ankle shall fail to do so, AOA may cancel the order in question as to all
such Products. After notice to Active Ankle, all such Products will be
held at Active Ankle's risk. AOA may, and at Active Ankle's direction
shall, return such goods to Active Ankle at Active Ankle's risk, and all
transportation and handling charges, both to and from the original
destination, shall be paid by Active Ankle. Any payment for such Products
shall be refunded by Active Ankle unless Active Ankle promptly corrects or
replaces the same at its expense. Return of any nonconforming Products by
AOA shall not be deemed a waiver of any right or remedy which AOA may have
as a result of or in connection with the existence of such defect or
defects.
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If, during the term of this Agreement, AOA receives a defective Product
from Active Ankle, or sells and delivers to a third party a defective
Product from its inventory which is subsequently returned to AOA by such
third party for replacement, then AOA shall immediately notify Active
Ankle. AOA shall return the defective Product to Active Ankle, freight
collect. If Active Ankle shall determine that the Product forwarded to it
by AOA was, in fact, defective by reason of improper workmanship or
material, Active Ankle shall replace such Product or, at Active Ankle's
option, credit AOA's account in an amount equal to the purchase price paid
by AOA for such Product. Notwithstanding the foregoing, however, at no
time shall AOA accept or receive from any other third party any part taken
or removed from a Product for which a claim is being made under Active
Ankle's products warranty. In the event AOA encounters any attempt to
return such a part, AOA shall notify the returning party to contact Active
Ankle directly for such part's repair or replacement.
Notwithstanding the foregoing, AOA shall not return any Products for credit
without obtaining prior authorization from Active Ankle, said authorization
shall not be withheld in those instances where Products received are not in
accordance with AOA's order as accepted by Active Ankle or where Products
failed to meet warranties referenced in the preceding paragraph and more
fully described in Paragraph 8 hereof or in instances of customer
dissatisfaction after AOA has unsuccessfully made a good faith effort to
overcome the customer's objections.
11. CHANGES
11.01 AOA shall have the right by written notice to cancel or change any
order given to Active Ankle hereunder subject to Active Ankle's
acceptance.
11.02 In the event of cancellation of any particular order, which
cancellation has been accepted by Active Ankle, AOA shall be
responsible and liable only for the price of the Products accepted
prior to such notice plus the actual and reasonable costs incurred
by Active Ankle prior to notice of cancellation with respect to the
Products cancelled.
11.03 In the event of a modification of any particular order by AOA
(including, but not limited to, a change in the quantity of the
Products ordered), which modification has been accepted by Active
Ankle, AOA shall be responsible and liable only for the price of
the Products accepted plus the actual and reasonable costs incurred
by Active Ankle to accomplish such modification. Any increase in
the price of the Products resulting from modification of such order
is subject to the prior approval of AOA.
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12. RELATIONSHIP BETWEEN PARTIES
12.01 AOA agrees that in all matters relating to this Agreement, it shall
be acting as an independent contractor and shall bear all of its
expenses in connection with this Agreement. It shall not have any
authority to assume or create any obligation, express or implied on
behalf of Active Ankle. AOA shall not make quotations or
representations of any kind in the name of Active Ankle, but shall
in all cases use its own name.
13. TERMS AND TERMINATION
13.01 The basic term of this Agreement shall be for a period of three (3)
years from the effective date of this Agreement. Thereafter, this
Agreement shall be renewed automatically for a period of two (2)
years unless a party to this Agreement terminates this Agreement by
providing the other party with written notice of such election at
least 120 days in advance of such renewal date.
13.02 Notwithstanding the provisions of 13.01 hereof, either party may
terminate this Agreement by providing written notice (together with
thirty [30] days in which to cure) if the other party materially
breaches or fails to observe or perform any material term or
condition of this Agreement.
13.03 Notwithstanding the provisions of 13.01 or 13.02 hereof, this
Agreement shall terminate immediately upon written notice to the
other party in the event that such other party shall have (i) made
a general assignment for the benefit of creditors, or (ii) filed or
had filed against it a petition seeking the reorganization,
arrangement, composition, adjustment, liquidation, or dissolution
of such party, or seeking similar relief under any other statute,
law, or regulation, or seeking the appointment of a trustee,
receiver, assignee, liquidator or similar officer for a material
part of its properties. No exercise by either party of any right
of termination will constitute a waiver of any right of such party
for recovery of any money then due to it hereunder or any other
right or remedy such party may have by law or by this Agreement.
13.04 Termination of this Agreement in accordance with the foregoing
provisions will not affect the rights and obligations of the
Parties with respect to the right of either party to complete any
and all contracts for the sale of Products it may then have upon
its books or that it has become obligated for, and each such party
may work up and sell such uncompleted Products as it may have on
hand at such termination date; provided, however, that all such
contracts and such sales must be completed within one (1) year
after such termination or cancellation. Nothing contained in this
paragraph shall obligate Active Ankle to provide goods or services
of any kind whatsoever after the date of termination.
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13.05 Upon termination of this Agreement, AOA shall return to Active
Ankle any unused promotional materials supplied by Active Ankle.
14. FORCE MAJEURE
14.01 Neither party hereto shall be liable to the other hereunder because
of its failure to perform, or delay in the performance of, any of
its obligations hereunder if such a failure or delay is caused by
circumstances beyond its reasonable control, including but not
limited to, acts of God or the public enemy, strikes, lockouts, or
other labor trouble, fire, explosions, flood, war, insurrection,
riots, sabotage or failure of supply of fuel, electric power, raw
materials, or manufactured products or equipment.
15. WAIVER
15.01 The waiver by either party of a breach or default in any of the
provisions of this Agreement by the other party shall not be
construed as a waiver of any succeeding breach of the same or any
other provisions thereof, nor shall any delay or omission on the
part of either party in exercising or availing itself of any right,
power or privilege that it has or may have hereunder operate as a
waiver of any breach or default by the other party.
16. NOTICES
16.01 All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered
personally or sent by registered or certified mail, postage
prepaid, addressed as follows:
ACTIVE ANKLE SYSTEMS, INC.
Attn: Xxxx X. Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
AOA DIVISION
XXXXXXXXX MEDICAL CORPORATION
Attn: Xxxxxx X. Xxxx
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
17. GOVERNING LAW
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17.01 All questions arising in connection with this Agreement shall be
governed by and construed according to the laws of the State of
Kentucky, without giving affect to the conflict of law provisions
thereof.
18. ARBITRATION
18.01 Any dispute or controversy arising out of or relating to this
Agreement or any agreement related hereto shall be settled in
accordance with commercial arbitration rules of the American
Arbitration Association ("AAA"), then obtaining before a panel of
three arbiters. The proceeding shall take place in Indianapolis,
Indiana. The cost of administering the arbitration and the fees
and expenses of the AAA shall be borne equally by the Parties
hereto. Each party shall bear the cost of its own legal fees
incurred during the course of the arbitration. The award rendered
in said arbitration shall be final and binding upon the Parties and
judgment thereon may be entered in any court having jurisdiction
thereof.
19. ENTIRE AGREEMENT AND MODIFICATIONS
19.01 This Agreement constitutes the entire Agreement between the Parties
with respect to the subject matter hereof and supersedes all prior
agreements between the Parties, whether written or oral, relating
to the same subject matter.
19.02 No modification, variations, amendments or supplements to this
Agreement shall be effective for any purpose whatsoever unless
reduced to writing and signed by each party. Approvals or consent
hereunder of the party shall also be in writing.
19.03 Exhibits A, B, C and D form an integral part of this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized
officers of each of the Parties as of the day and year first above written.
ATTEST AOA DIVISION
XXXXXXXXX MEDICAL CORPORATION
BY:
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Xxxxxx X. Xxxx
ATTEST ACTIVE ANKLE SYSTEMS, INC.
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BY:
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Xxxx X. Xxxxxxxx
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EXHIBIT A
INTERNATIONAL TERRITORIES
Austria
Canada
China
Germany
Hong Kong
Italy
Mexico
Switzerland
Taiwan R.O.C.
EXHIBIT B
ACTIVE ANKLE PRODUCTS DESIGNATED
FOR DISTRIBUTION IN THE TERRITORY
CATALOG NO. DESCRIPTION
1750 Active Ankle Acute
1752 Active Ankle Trainer
1750-40 Bubbleflex Pads (Pair)
1752-40 Neoprene Pads (Pair)
1750-30 Acute Overhaul Kit
1752-30 Trainer Overhaul Kit
1755 Active Ankle CF Pro
EXHIBIT C
EXHIBIT D
ACTIVE ANKLE SYSTEMS
QUALITY MANUAL
