EXHIBIT 10.5
EXCLUSIVE DISTRIBUTORSHIP AGREEMENT
Between
Bontempi Medical Corp. Canada and Bontempi Medical Corp. USA
and
National Boston Medical, Inc.
Bontempi Medical Corp. Canada, a Canadian corporation and Bontempi Medical Corp.
USA, a Massachusetts corporation, (collectively "Bontempi"), and National Boston
Medical, Inc., a Delaware corporation, ("NBM" or "Distributor"), in
consideration of the promises made herein and intending to be legally bound,
agree as follows:
RECITALS
Legal Status of Bontempi
Bontempi Medical Corp. Canada is a corporation duly organized, validly
existing, and in good standing under the laws of Canada, with corporate power to
own property and carry on its business as it is now being conducted. Bontempi
Medical Corp. USA is a corporation duly organized, validly existing, and in good
standing under the laws of Massachusetts, with corporate power to own property
and carry on its business as it is now being conducted. Bontempi has its
principal office and place of business at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇,▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇.
Legal Status of Distributor
Distributor is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Nevada, with corporate power to own
property and carry on its business as contemplated by this Agreement.
Distributor has its principal office and place of business at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
Rights Granted by Bontempi Snc.
Bontempi entered into an agreement with Bontempi Snc., an Italian
corporation ("Bontempi Snc."), whereby Bontempi Snc. granted to Bontempi an
exclusive distributorship for and including the United States, Canada, Mexico
and the World Wide Web (worldwide) to distribute all of its approximately 10,500
medical, dental and veterinary instruments (the "Instruments") through and
including the year 2025.
Representations and Warranties of Bontempi
Bontempi represents and warrants that it has the sole and exclusive right
to sell all Bontempi Snc. instruments (currently estimated at 10,500) together
with any new Bontempi Snc. products in the United States, Mexico, Canada and the
World Wide Web (worldwide) and that such rights are fully assignable. Bontempi
hereby represents and warrants that it has not pledged, transferred nor assigned
any right granted it by Bontempi Snc. to any third party, nor has Bontempi
entered into any contractual relationship which would prohibit or limit any
right created in Distributor herein.
Facilities, Ability, and Desire to Be Distributor
(1) Distributor has the facilities and ability to promote the sale and use
of the instruments manufactured by Bontempi Snc. and sold to Bontempi and is
desirous of selling such instruments on an exclusive basis in the territory
hereinafter described.
(2) Bontempi is desirous of having Distributor sell the Instruments in said
territory on the terms and conditions set forth herein and as its exclusive
Distributor.
DISTRIBUTORSHIP
Appointment
Bontempi appoints Distributor the exclusive and sole distributor for the
sale of the Instruments within the territory described as follows: the United
States, Mexico and the World Wide Web (worldwide) (the "Territory"). Bontempi
shall attempt to secure additional territories for the benefit of NBM at the
request of NBM.
Term
This Agreement shall continue in full force and effect through and
including the year 2025. This term shall be automatically extended (but not
reduced) to coincide with any term of extension between Bontempi and Bontempi
Snc., which extension shall require no further action on the part of the
officers of either party to this Agreement.
OPERATIONS
Purchase Requirements
During the term of this Agreement, Bontempi shall sell to Distributor, and
Distributor shall purchase from Bontempi, the amount of Instruments as described
in Appendix A at a price equal to 15% above the actual cost (actual cost is
defined as the price Bontempi Snc. sells the Instruments to Bontempi) of the
Instruments, for distribution in the territory described. In the event
Distributor fails to purchase the amount of Instruments as described in Appendix
A in any twelve (12) month period, and after notice and opportunity to cure (as
defined herein), Distributor shall forfeit the right to be Bontempi's exclusive
Distributor and shall thereafter be a non-exclusive Distributor for Bontempi.
Volume Discount
Should Distributor order a volume of Instruments from Bontempi sufficient
to warrant a reduction in cost from Bontempi Snc. to Bontempi, Distributor shall
receive the full amount of such cost savings, which shall be passed down from
Bontempi to Distributor in the form of a discount.
Right to Cover
In the event Bontempi fails to sell to Distributor the amount of
Instruments as described in Appendix A in any twelve (12) month period,
Distributor shall have the right to "cover" for the deficiency by either
purchasing like Instruments from a different supplier/manufacturer or to produce
the Instruments itself.
In addition to the foregoing right to cover, should any default (as defined
herein) by Bontempi occur or should Bontempi fail to sell Distributor the amount
of Instruments as described in Appendix A for a period of three (3) successive
months (assuming the Instruments are available from Bontempi Snc.), NBM shall
have the right to contract directly with Bontempi Snc.
Sales Price of Equipment
The sales price of the Instruments in the Territory shall be determined in
the sole discretion of Distributor. NBM to consult with Bontempi to set retail
price points.
Costs
All manufacturing costs, including but not limited to the price of raw
materials, supplies and packaging shall be borne and paid for by Bontempi Snc.
All shipping costs between Italy and the United States shall be borne and paid
for by Distributor. Bontempi Snc. is also responsible for any Research and
Development and/or technical support reasonably necessary in connection with the
Instruments. Distributor's sole responsibility under this contract shall be the
sale and distribution of the product in the Territory.
Billing
Distributor shall maintain a $250,000 bank guarantee in favor of NBM,
Bontempi Snc. and Bontempi, which guarantee shall be increased as volume of
sales (and orders) requires. Upon expiration of the bank guarantee in November
1999, NBM shall provide a new guarantee which names only Bontempi as beneficiary
unless the expired guarantee is renewed by the same institution, in which case
the beneficiaries will remain the same.
Bontempi shall ▇▇▇▇ Distributor for all of the Instruments delivered
hereunder and Distributor shall pay for the Instruments purchased from Bontempi
within seventy-five (75) days from the date of Bontempi Snc. invoice. This
paragraph shall be subject to change in the event that Bontempi Snc. changes the
payment policy applicable to NBM.
Method of Payment
Although invoices may be submitted to NBM in the form of Italian Lira, NBM
shall make payment on all invoices submitted by Bontempi in the form of U.S.
dollars. The conversion rate between Italian Lira and U.S. dollars to be
adjusted on the first day of each month and immediately upon a 5% variance since
the last adjustment.
Shipping
Distributor shall bear all cost and expense associated with the shipping of
product from Bontempi Snc. to Distributor.
Referral of Direct Inquiries
Should Bontempi receive direct inquiries from potential customers in the
Territory, Bontempi shall promptly refer all such inquiries to Distributor.
Should NBM receive direct inquiries from potential customers in Canada, NBM
shall promptly refer such inquiries to Bontempi.
Sales by Bontempi in the Territory
NBM shall, in its sole discretion, from time to time allow (in its sole
discretion) direct sales by Bontempi in the Territory. Any such sale shall
result in an additional commission paid by Distributor to Bontempi in the amount
of 15% of the retail sales price from Bontempi Snc., said commission not to
exceed 25% of the gross margin on the product.
Unauthorized Sales by Bontempi in the Territory
In the event that any sale is made by Bontempi, its affiliates or assigns
without the prior express written consent of Distributor, Distributor shall have
the following rights, in addition to any and all other available remedies either
in law or equity:
1. To require Bontempi to forfeit 100% of the proceeds of the
unauthorized sale to Distributor in addition to a penalty
equivalent to ten (10) times the proceeds of such
unauthorized sale, or the maximum penalty allowed by law.
2. To immediately trigger the default provisions of this
Agreement, which shall allow Distributor to contract
directly with Bontempi Snc.
Existing Customer List
Bontempi has existing customers in the Territory. Sales by NBM to persons
listed in this paragraph shall result in an additional payment of 15% of the
Bontempi Snc. cost by NBM to Bontempi:
1. Bio Horizons Implant Systems Inc. Birmingham, Alabama
2. CK Dental Specialties Orange, California
3. Class 1 Orthodontics Lubbock, Texas
4. ▇▇▇▇▇▇▇▇ Dental Mfg. Missoula, Montana
5. Salvin Dental Specialties Charlotte, North Carolina
6. I.M.I. Tampa, Florida
7. Indiana University Indianapolis, Indiana
8. Fairfield Orthodontics Fairfield, Connecticut
9. Grobet ▇▇▇▇▇ Carlstadt, New Jersey
10. University of Alabama at Birmingham Birmingham, Alabama
11. University of Michigan Dental School Deerborn, Michigan
12. Pittsburgh University Dental School Pittsburgh, Pennsylvania
13. Boston University Boston, Massachusetts
Additional customers shall be added to this list with the prior written
consent of NBM to add such customer, which prior consent may be withheld by NBM
in its sole discretion. Should NBM approve such addition in writing, NBM and
Bontempi shall jointly pay the costs associated with training and/or selling to
such customer. Audit of Bontempi
NBM may from time to time require the semi-annual audit of the books and
records of Bontempi. Bontempi shall keep such books and records up to date and
in good order and accessible to NBM at the Bontempi corporate headquarters. NBM
shall bear the expense of any such audit.
Distributor's Efforts, Facilities, and Personnel
Distributor will use its best efforts to promote the application and sale
of Bontempi's Instruments and will maintain adequate facilities and sales
personnel for this purpose.
Promotion of Equipment of Another Company
It is mutually understood and agreed between the parties that Distributor
may promote the application or sale of products manufactured by any other
company similar to the Instruments. It is further understood that Distributor is
in the business of promoting several products, the promotion of some of which
may interfere or cause a conflict of interest to arise involving the promotion
of this product. Both parties understand and accept this fact and waive and do
hereby waive any right to contest such a conflict of interest or interference.
Right of First Refusal
Bontempi hereby grants Distributor the "Right of First Refusal" to become
an Exclusive Distributor in the same territory as described herein for all new
products produced, manufactured or developed by Bontempi Snc. Although the terms
of any subsequent Distributorship Agreement for any future product would need to
be negotiated between the parties based on the costs involved in manufacturing,
the demand for the product, etc., it is the intention of the parties at this
time to bind Bontempi to offer the Right of First Refusal to Distributor based
on terms which are reasonable and not less favorable than offered to a third
party at that time and for that product.
Additionally, should Bontempi wish to sell, assign or transfer to any third
party its right to distribute the Instruments in Canada, NBM shall have a right
of first refusal not less favorable than offered to a third party at that time.
Bontempi As a Trading Entity
Should Bontempi and/or any related entity, affiliate or subsidiary list its
stock for trading upon any exchange, whether automated or not, NBM shall
immediately receive 20% of the outstanding stock of that entity.
TERMINATION
Grounds
Either party, at its election, may treat this agreement as having been
breached and, without prejudice to any other of its rights, may forthwith
terminate this Agreement by written notice to the other party on occurrence of
any of the following events:
1. The other party shall file a petition in bankruptcy or shall be
adjudged a bankrupt.
2. The other party shall file a petition in reorganization under the
provisions of federal or state bankruptcy laws.
3. The other party shall become or be declared insolvent.
4. A receiver of all or substantially all of the property of the
other party shall be appointed and not removed with thirty (30)
days.
5. The other party shall make a general assignment for the benefits
of its creditors.
6. There shall be a substantial failure by the other party to
perform one or more of its obligations hereunder which shall not
have been cured within ninety (90) days after written notice
specifying the nature of such failure.
7. A failure by either party to comply with and/or meet the minimum
purchase requirements as set forth in Exhibit A.
Applicability of Terms After Termination
In the event of termination, this Agreement shall remain applicable to any
orders for Instruments previously ordered by Distributor or to any orders which
may be executed within ninety (90) days subsequent to the effective date of
termination.
INTERPRETATION AND ENFORCEMENT
Notices
Service of all notices under this Agreement shall be sufficient if given
personally, delivered by courier, or mailed, certified receipt, return receipt
requested to the party involved at its respective address set forth herein, or
at such address as such party may provide in writing from time to time in
accordance with this paragraph. Any such notice mailed to such address shall be
effective when delivered. At the time of execution of this Agreement, and until
further written notice is given by either party to the other, notices shall be
sent to:
NBM: National Boston Medical, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to: Mintmire & Associates
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Bontempi: Bontempi Medical Corp.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Assignment
(1) Except as limited by the provisions of subparagraph (2), this Agreement
shall be binding on and inure to the benefit of the respective successors
and assigns of the parties.
(2) Any assignment by Bontempi of its rights hereunder, without the prior
written consent of Distributor, shall be void.
Completeness of Instrument
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 much be in
writing.
Board Approval
This Agreement shall be subject to the review and approval by the NBM Board
of Directors, as well as the attorneys and accountants for NBM. Such approval
shall automatically be deemed given, if not expressly withheld thirty (30) days
from execution of this Agreement.
Cash Payments
All amounts due hereunder shall be convertible to the restricted common
stock of NBM or any successor entity with the joint consent and approval of both
NBM and the person to whom the money is owed. NBM shall execute promissory notes
in the following amounts to the following individuals as a part of this
Agreement:
1. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ $17,500
2. ▇▇▇▇ ▇▇▇▇▇▇ $17,500
3. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ $17,500
4. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ $17,500
These amounts shall be payable $500 (USD) per week beginning August 6, 1999
and shall accrue interest at a rate of 8% per annum.
NBM has paid the following amounts in connection with this Agreement:
1. Alessandro and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ $15,000
2. Marco and ▇▇▇▇▇▇▇▇ Mannii $3,333
3. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ $3,333
4. ▇▇▇▇▇ ▇▇▇▇▇▇ $3,333
5. Bontempi $25,000
NBM shall also pay Bontempi $188,000 in connection with this Agreement in the
following manner:
1. July 31, 1999 $15,714
2. August 7, 1999 $32,556
3. August 10, 1999 $3,093
4. August 17, 1999 $30,090
5. September 13, 1999 $18,047
6. As funds become available The remainder
Stock Issuances
NBM has issued the following shares as partial consideration for the
rights granted herein:
1. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 658,333
2. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 658,333
3. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 658,333
4. Alessandro and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 250,000
5. Marco and ▇▇▇▇▇▇▇▇ Mannii 50,000
6. ▇▇▇▇▇ ▇▇▇▇▇▇ 50,000
7. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 50,000
Controlling Law and Jurisdiction
The validity, interpretation, and performance of this Agreement shall be
controlled by and construed under the laws of the State of Florida, the state in
which this Agreement is being executed. Any claim or dispute arising out of this
Agreement shall be settled by a court of competent jurisdiction for which venue
will lie in Palm Beach County, Florida.
Cost of Enforcement
The cost of enforcement of the terms contained herein shall be bourne by
the non-prevailing party to any dispute arising hereunder.
Concurrent Remedies
No right or remedy herein conferred on or reserved to Bontempi or NBM is
exclusive of any other right or remedy herein or by the law or equity provided
or permitted; but each shall be commutative of every other right or remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise, and may be enforced concurrently therewith or from time to time.
Nonwaiver
No covenant or condition of this Agreement may be waived except by the
written consent of the parties. Forbearance or indulgence by either party in any
regard whatsoever shall not constitute a waiver of the covenant or condition to
be performed by the other party to which the same may apply, and, until complete
performance by the other party of any covenant or condition, the forbearing or
indulging party shall be entitled to invoke any remedy available to it under
this Agreement or by law or in equity despite said forbearance or indulgence.
Entire Agreement
This Agreement constitutes the entire agreement between Bontempi and NBM
and supersedes any prior understanding or written or oral agreements between the
parties respecting the within subject matter. It shall not be amended, altered,
or changed except by a written agreement signed by the parties hereto.
Gender; Number
Whenever the context of this Agreement requires, the masculine gender
includes the feminine or neuter, and the singular number includes the plural.
Whenever the word NBM or Bontempi is used herein, it shall include all
controlled, controlling or controlled by entities and individuals.
Parties Bound
This Agreement shall be binding on and inure to the benefit of the parties
hereto and their respective heirs, executors, administrators, legal
representatives, successors, and permitted assigns.
Legal Construction
If any or more of the provisions contained in this Agreement shall for any
reason be held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other provision
thereof, and this Agreement shall constructed as if such invalid, illegal, or
unenforceable provision had never been contained herein.
Executed this 17th day of July 1998.
BONTEMPI MEDICAL CORP. CANADA NATIONAL BOSTON MEDICAL, INC.
BONTEMPI MEDICAL CORP. USA
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------ -------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President ▇▇▇▇▇▇ ▇▇▇▇▇, President, CEO, Chairman
Appendix A
Minimum purchase requirements by Distributor from Bontempi shall be as follows:
Within one year from August 1, 1999, Distributor shall purchase from Bontempi
and Bontempi shall sell to Distributor a minimum of $500,000 (USD) in Instrument
orders.
This minimum shall increase 10% annually, but shall cease to increase when the
10% increase shall cause the minimum to exceed $3,000,000 (USD).
