Exhibit 10.4
DISTRIBUTORSHIP AGREEMENT
BETWEEN
NORLAND MEDICAL SYSTEMS, INC.
AND
NISSHO IWAI CORPORATION
AND
NISSHO IWAI AMERICAN CORPORATION
DISTRIBUTORSHIP AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into as of July 1, 1996 among
NORLAND MEDICAL SYSTEMS, INC., a Delaware corporation having its principal place
of business at 106 Corporate Park Drive, Suite 106, White Plains, New York
10604 ("COMPANY"), NISSHO IWAI CORPORATION, a Japanese corporation having its
principal place of business at 4-5, Akasaka 2-chome, Minato-ku, Tokyo 107, Japan
("DISTRIBUTOR"), and NISSHO IWAI AMERICAN CORPORATION, a New York corporation
having an office at 44 Montgomery Street, Suite 2150, San Francisco, California
94104 ("NIAC").
WHEREAS, Norland Corporation and Stratec Medizintechnik GmbH (collectively,
the "Manufacturers"), and COMPANY, formerly Ostech, Inc., entered into a
Distribution Agreement, dated April 1, 1995, as amended (the "Manufacturers'
Agreement") for the distribution of Products;
WHEREAS, COMPANY, DISTRIBUTOR and NIAC wish to enter into a distributorship
agreement which will supersede the previous agreement for the distribution of
the Products.
In consideration of the mutual covenants set forth herein, the parties
hereto agree as follows:
ARTICLE 1. DISTRIBUTORSHIP
1.01 COMPANY hereby appoints DISTRIBUTOR as its sole and exclusive
distributor of the products designated in EXHIBIT A attached hereto (the
"Products") in the territory specified in EXHIBIT B attached hereto (the
"Territory"). COMPANY represents and warrants that it has the right to grant
DISTRIBUTOR and NIAC the rights granted hereunder to them.
1.02 COMPANY shall not (and COMPANY shall cause manufacturers to not)
directly or indirectly offer, sell or export Products to customers in the
Territory through channels other than DISTRIBUTOR and shall (and COMPANY shall
cause manufacturers to) refer to DISTRIBUTOR all inquiries or orders for
Products which COMPANY or manufacturers may receive from any person or firm in
or for shipment into the Territory during the term of this Agreement.
1.03 DISTRIBUTOR agrees not to directly or indirectly resell COMPANY's
Products outside the Territory without the explicit written consent of COMPANY.
1.04 COMPANY shall not (and COMPANY shall cause manufacturers to not) sell
or gant any license to use its patents, trademarks, copyrights, or other
industrial property rights
concerning the manufacture or sale of the Products or their components to any
third party in the Territory.
1.05 During the term of this Agreement, DISTRIBUTOR and Subdistributor
shall not directly or indirectly sell or otherwise deal with any product
competitive with Products in the Territory.
1.06 DISTRIBUTOR is hereby granted the right to appoint subdistributors
within the Territory pursuant to terms determined by DISTRIBUTOR, subject to
COMPANY's approval, which shall not be unreasonably withheld; COMPANY hereby
confirms its approval of Nishimoto Sangyo Co., Ltd. as a subdistributor in the
Territory (collectively "Subdistributor").
1.07 Upon the request of DISTRIBUTOR, COMPANY shall provide to
DISTRIBUTOR, free of charge, a reasonable number of catalogs, brochures and
other promotional materials which may be useful to promote the sale of the
Products.
ARTICLE 2. GOVERNMENT LICENSES
DISTRIBUTOR shall pay for and make its reasonable efforts to obtain in its
name all import licenses and product approvals (the "Government Licenses")
required for the importation, sale and distribution of Products which have
reasonable prospects for sale in the Territory. COMPANY shall furnish
DISTRIBUTOR with a sufficient number of demonstration models of each Product for
which an application for Government License(s) is made hereunder ("Sample
Units") at a mutually agreed discount price. COMPANY shall furnish DISTRIBUTOR
at no charge with clinical test data, technical specifications of new Products
and other information which DISTRIBUTOR reasonably requires for the applications
for obtaining Government Licenses.
ARTICLE 3. INDIVIDUAL CONTRACT
Each individual contract under this Agreement shall be subject to this
Agreement, and in the event that any term in an individual contract is
inconsistent with the terms of this Agreement, the terms of this Agreement shall
prevail.
ARTICLE 4. PRICE
4.01 The prices for the Products shall be set forth in EXHIBIT A attached
hereto.
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4.02 All prices are F.O.B., place of manufacture in Germany or the United
States, as the case may be. All sales, excise or other taxes or duties imposed
in the Territory in connection with the sale of the Products, shall be borne by
DISTRIBUTOR.
ARTICLE 5. NIAC AS DISTRIBUTOR'S AGENT
The parties hereto agree that NIAC, DISTRIBUTOR's wholly-owned subsidiary,
shall act as DISTRIBUTOR's agent on behalf of DISTRIBUTOR:
(a) to submit the purchase orders of the Products in NIAC's form to
COMPANY and receive their confirmation from COMPANY;
(b) to take delivery of the Products from COMPANY pursuant to each
individual contract;
(c) to pay for the Products to COMPANY pursuant to each individual
contract; and
(d) to communicate with COMPANY in connection with the performance of this
Agreement and individual contracts related thereto, except technical
matters of the Products which shall be directly communicated between
COMPANY and DISTRIBUTOR with a copy to NIAC.
ARTICLE 6. INSPECTION
6.01 DISTRIBUTOR or its subdistributor shall inspect and/or test the
Products as to quality and conformity with the Specifications within ten (10)
days after delivery to the warehouse of DISTRIBUTOR ("Inspection"). The
Inspection period may be extended by mutual agreement.
6.02 In the event of any shortage, damage or other non-conformity of the
Products, DISTRIBUTOR may reject such Products and COMPANY shall, at its own
cost and risk, replace the defective Products with conforming Products or, in
the case of shortage, replenish the shortage.
ARTICLE 7. PAYMENT
All payments by DISTRIBUTOR for the Products shall be made in cash in U.S.
dollars by NIAC within net thirty (30) business days from date of the bill of
lading for the Products, subject to the Products passing the Inspection.
Neither payment nor inspection shall be deemed a waiver of DISTRIBUTOR's
warranty or other rights hereunder.
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ARTICLE 8. ORDERS/DELIVERY
8.01 NIAC shall place with COMPANY purchase orders for Products on behalf
of DISTRIBUTOR.
8.02 Delivery date of the Products shall be negotiated and agreed upon
between the parties for each individual purchase order. COMPANY reserves the
right to refuse an order which has a delivery date which is less than 90 days
from the date of the purchase order, PROVIDED however, that COMPANY shall
deliver spare parts as soon as possible when requested by DISTRIBUTOR.
8.03 COMPANY shall pack the Products to withstand international
transportation, exposure and handling.
ARTICLE 9. TITLE AND RISK OF LOSS
Title and risk of loss to the Products purchased by DISTRIBUTOR shall pass
to DISTRIBUTOR when such Products leave the Manufacturers' facility.
ARTICLE 10. REPRESENTATION
DISTRIBUTOR shall exert its reasonable best efforts to promote and sell the
Products within the Territory and shall establish sufficient and qualified sales
and service networks in the Territory.
ARTICLE 11. PURCHASE TARGETS
11.01 The parties agree that the following is their target for existing
Products:
Purchase Targets
Time Period For All Products
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5/1/96 - 3/31/97 $3,000,000
4/1/97 - 3/31/98 $3,300,000
4/1/98 - 3/31/99 $3,650,000
4/1/99 - 3/31/00 $4,000,000
4/1/00 - 3/31/01 $4,400,000
4/1/01 - 3/31/02 $4,900,000
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11.02 IF DISTRIBUTOR DOES NOT PURCHASE THE FOREGOING AMOUNT(S),
DISTRIBUTOR SHALL NOT BE PENALIZED IN ANY MANNER AND COMPANY SHALL NOT BE
ENTITLED TO TERMINATE THIS AGREEMENT OR MAKE ANY CLAIM AGAINST DISTRIBUTOR OR
NIAC FOR ANY LOSS, DAMAGES, LIABILITY, COSTS OR EXPENSES SUFFERED OR INCURRED BY
THE COMPANY ARISING THEREFROM OF OR IN CONNECTION THEREWITH.
ARTICLE 12. REPORTS
DISTRIBUTOR shall provide COMPANY with such information on sales of the
Products in Territory and its marketing efforts as COMPANY may from time to time
reasonably require, including but not limited to, customer names, mailing
address, installation and service reports, and quarterly sales reports.
ARTICLE 13. WARRANTY
13.01 COMPANY warrants that the Products shall be free from defects in
material, design and workmanship and that the Products shall meet the
specifications. COMPANY shall warrant the Products for twelve (12) months after
the date of their shipment by DISTRIBUTOR to the customer, but in no event shall
the warranty period continue after fourteen (14) months from the date of
shipment from Manufacturer's facility; PROVIDED, FURTHER, that if COMPANY or the
Manufacturers grant to any purchaser or user of a Product any warranty which
extends beyond the warranty contained in this Section 13.01 (other than extended
warranties sold by COMPANY for additional compensation), DISTRIBUTOR shall also
receive the benefits of such extended warranty.
13.02 EXCEPT AS SPECIFICALLY PROVIDED HEREIN, THERE ARE NO OTHER
WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING, BUT NOT LIMITED TO ANY IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. DEFECTIVE OR
DAMAGED PRODUCTS SHALL BE REPAIRED OR REPLACED AT THE EXPENSE OF COMPANY.
COMPANY SHALL BEAR ANY TRANSPORTATION AND HANDLING COSTS RELATING TO THE
DEFECTIVE OR DAMAGED PRODUCTS AND THEIR REPLACEMENTS. IN NO EVENT SHALL COMPANY
BE LIABLE FOR LOSS OF PROFITS, INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES
ARISING OUT OF THE USE OF ITS PRODUCTS. SOFTWARE AND HARDWARE DESIGNATED FOR
USE WITH A PRODUCT IS WARRANTED TO EXECUTE THE PROGRAM INSTRUCTIONS WHEN
INSTALLED IN THE PRODUCT. COMPANY DOES NOT WARRANT THAT THE OPERATION OF THE
SOFTWARE OR THE HARDWARE WILL BE UNINTERRUPTED OR ERROR FREE.
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13.03 The provisions of this Article 13 shall in no way limit
theindemnification obligations of COMPANY under Section 14.01 hereof.
ARTICLE 14. PRODUCT LIABILITY INDEMNITY; INSURANCE
14.01 COMPANY shall indemnity and hold DISTRIBUTOR, NIAC and
Subdistributor harmless from and against any and all damages, losses,
liabilities, costs and expenses, including reasonable attorneys' fees, arising
from any claim of a third party resulting from or in connection with any breach
of warranty or representation or any defect in materials, design or manufacture
or any Product; PROVIDED HOWEVER, that COMPANY shall not be responsible for any
such damage, loss, liability or expense resulting from the gross negligence or
willful misconduct of DISTRIBUTOR, NIAC or Subdistributor. COMPANY's
obligations hereunder shall survive the expiration or termination of this
Agreement.
14.02 COMPANY shall arrange that the insurance provided by each
Manufacturer shall also cover DISTRIBUTOR and NIAC and Subdistributor as
additional named insureds (with no liability for premium payments). Upon
request from DISTRIBUTOR and NIAC, COMPANY shall use its best efforts to cause
each Manufacturer to promptly submit certificates of insurance to DISTRIBUTOR
and NIAC evidencing such coverage, and to have such insurance policies provide
that they may not be cancelled or materially changed except on at least 30 days'
prior written notice to DISTRIBUTOR and NIAC.
ARTICLE 15. INTELLECTUAL PROPERTY INDEMNITY
COMPANY agrees to indemnify and hold DISTRIBUTOR, NIAC, and Subdistributor
harmless from and against any and all damages, losses, liabilities, costs and
expenses, including reasonable attorney's fees arising from any claim of a third
party of infringement of patent, know-how, trademark, copyright or intellectual
property right, in the use or sale of Products in the Territory. In case any
Product or component thereof is held by a court to constitute an infringement of
a patent, know-how, trademark, copyright or intellectual property right, COMPANY
shall at its own cost either procure for DISTRIBUTOR or its subdistributors or
customers the right to continue using such Product, or replace the same with a
comparable non-infringing product, or modify Product so that it becomes non-
infringing, or accept the return of such Products and refund the purchase price
plus transportation and handling costs and duties paid thereon. DISTRIBUTOR
shall assist COMPANY to the extent reasonably required for such defense at no
expense to COMPANY.
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ARTICLE 16. TRADEMARK
16.01 DISTRIBUTOR may use COMPANY's trademarks only in connection with the
distribution of Products in Territory under this Agreement.
16.02 As soon as practicable after execution of this Agreement, COMPANY
shall apply at its expense for the registration of its trademark under the
trademark laws in the Territory. DISTRIBUTOR will not contest the validity of
such trademarks of COMPANY duly registered in the Territory.
ARTICLE 17. INSTALLATION AND OTHER SERVICE
17.01 DISTRIBUTOR shall install and provide maintenance service excluding
warranty service for all Products sold by it to its customers in the Territory.
Such maintenance service shall be performed in a competent and workmanlike
manner, consistent with industry standards, and in accordance with COMPANY's
Service Manual.
17.02 After termination of this Agreement, the maintenance service for
Products sold by DISTRIBUTOR under this Agreement shall be rendered by the New
Distributor (as defined in Section 22.01)
17.03 DISTRIBUTOR shall maintain an inventory of parts of Products.
COMPANY guarantees that it will supply DISTRIBUTOR or the New Distributor with
parts of Products for a minimum period of seven (7) years after the last
shipment of Products.
ARTICLE 18. TECHNICAL ADVICE AND TRAINING
COMPANY shall provide, or cause Manufacturers to provide, DISTRIBUTOR
at no cost with such technical advice, information and support as may be
necessary for a full understanding and maintenance of Products, and DISTRIBUTOR
shall have the right from time to time, at times agreed with COMPANY to send up
to four (4) employees to Manufacturers' manufacturing facility for instruction
and training free of charge two (2) times per year. DISTRIBUTOR shall pay
travel, lodging and personal expenses incurred by its employees so dispatched.
ARTICLE 19. CONFIDENTIALITY
Each party agrees, during the term of this Agreement and for five (5)
years after its termination, not to divulge to any third party any trade or
business secrets
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confidentially disclosed to it by the other party, except that either party may
disclose such information to a subsidiary or affiliate as necessary for
performance under this Agreement, and also except that DISTRIBUTOR and NIAC may
disclose such information as is normally disclosed in the sale of Products to
Subdistributors or customers in its marketing efforts, PROVIDED such
Subdistributors or customers are bound by same.
ARTICLE 20. TERM
Unless this Agreement is earlier terminated in accordance with the
provisions of Article 21, the initial term of this Agreement shall commence upon
execution hereof and continue until March 31, 2002 and shall thereafter be
automatically renewed for successive terms of five (5) years each, unless not
less than one hundred and eighty (180) days prior to the expiration of the then
current term either party gives the other party written notice terminating this
Agreement upon the expiration of the then current term.
ARTICLE 21. TERMINATION
21.01 Either party may forthwith terminate this Agreement by giving a
written notice to the other party, if a petition is filed for:
(a) Bankruptcy or insolvency of the other party;
(b) Voluntary or involuntary liquidation of the other party
(except for liquidation following a transfer of all or
substantially all of the assets of the other party); or
(c) Voluntary or involuntary reorganization of the other party.
21.02 If either party defaults in any material respect in performing any
of the material provisions of this Agreement and does not cure such default
within ninety (90) days after receipt of the notice given by the other party
requesting such defaulting party to cure the default, the other party may
terminate this Agreement at any time after the said period by giving a written
notice to the defaulting party.
21.03 The parties expressly agree that any change in shareholders or
management of either party, or a transfer of all or substantially all of the
assets of either party, shall not constitute a cause of termination by any of
the parties hereto.
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ARTICLE 22. EFFECT OF TERMINATION
22.01 In the event that this Agreement is terminated for whatever reason,
COMPANY shall (i) without delay appoint a new distributor of its Products in the
Territory ("New Distributor") whose responsibility shall include providing
maintenance service for Products sold by DISTRIBUTOR under this Agreement and
(ii) cause the New Distributor to purchase any and all Products and spare parts
then in DISTRIBUTOR's inventory at the original purchase price plus
DISTRIBUTOR's cost of delivery and duties. In such case and subject to the
reimbursement by COMPANY of documented costs and expenses (including, but not
limited to, the cost of Sample Units, clinical tests, reports, applications,
etc.) which have been incurred by DISTRIBUTOR (and which are not otherwise fully
recouped by DISTRIBUTOR through respective sales of the respective Products) in
connection with the application for the Government Licenses and which shall be
mutually agreed, DISTRIBUTOR shall immediately take all steps necessary to
transfer the Government Licenses to COMPANY or the New Distributor, PROVIDED
that such reimbursement amount as to Products which as of the date hereof have
already received Government Licenses shall not exceed One Hundred Thousand
Dollars ($100,000) in the aggregate.
22.02 Termination of this Agreement for whatever reason shall not affect
any rights or obligations of either party which have accrued before the
effective date of termination, including but not limited to, the rights and
obligations of each party under Articles 14 and 15 herein.
22.03 Upon termination of this Agreement, DISTRIBUTOR shall immediately
cease to describe itself as a distributor of COMPANY's products.
ARTICLE 23. FORCE MAJEURE
No party shall be liable for any failure or delay in performing its
obligations hereunder which is caused by fire, strike, war, governmental
regulations or other causes beyond the reasonable control of such party,
provided that such party shall take diligent action to perform its obligation as
promptly as possible.
ARTICLE 24. RELATIONSHIP
The relationship between COMPANY and DISTRIBUTOR shall be that of
seller and buyer, and neither party shall have the authority to obligate the
other party to third parties.
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ARTICLE 25. ASSIGNMENT
This Agreement may not be assigned by either party, in whole or in
part, without the prior written approval of the other party, except that
DISTRIBUTOR may assign it to a subsidiary or an affiliate of such party,
provided that DISTRIBUTOR shall remain fully liable hereunder.
ARTICLE 26. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement among the parties
hereto and supersedes all negotiations, agreements and commitments in respect
thereto including the 1993 Agreement, and shall not be released, discharged, or
modified in any manner except by written instruments signed by duly authorized
representatives of each of the parties hereto.
ARTICLE 27. GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance with
the laws of New York, U.S.A.
ARTICLE 28. ARBITRATION
All disputes, controversies or differences between the parties which
may arise from, or relate to, this Agreement or a breach thereof, shall be
finally settled by arbitration held in Borough of Manhattan, New York City, New
York, U.S.A., according to the rules of the American Arbitration Association.
The decision rendered by arbitrator(s) shall be final and binding on all the
parties hereto. The prevailing party shall be entitled to reimbursement by the
other party of all of its costs incurred in connection with such arbitration,
including, but not limited to, attorney fees and expenses.
ARTICLE 29. LANGUAGE
This Agreement is in English only, and no translation into other
languages shall be taken into consideration in the interpretation of the
Agreement.
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ARTICLE 30. NOTICE
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given when mailed by registered or certified
airmail, postage prepaid, delivered personally (against receipt), delivered by
reputable international express air courier, or sent by facsimile, provided a
copy thereof is sent by any of the other modes above within 24 hours of such
facsimile transmission:
(a) If to COMPANY, to:
Norland Medical Systems, Inc.
106 Corporate Park Drive, Suite 106
White Plains, New York 10604
Fax: (914) 636-3549
Attention: President
(b) If to DISTRIBUTOR, to:
Nissho Iwai Corporation
4-5 Akasaka 2-chome,
Minato-ku, Tokyo 107
Japan
Fax: (81) -3-3588-3975
Attention: General Manager,
Medical & Electronic Systems Dept.
with a copy to:
Nissho Iwai American Corporation
44 Montgomery Street, Suite 2150
San Francisco, California 94104-4375
Fax: (415) 788-6959
Attention: General Manager, Machinery Dept.
and
Nissho Iwai American Corporation
1211 Avenue of the Americas
New York, New York 10036
Fax: (212) 840-2317
Attention: General Manager, Legal Dept.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives on the date and year first
above-written.
NORLAND MEDICAL SYSTEMS, INC. NISSHO IWAI CORPORATION
By: /s/ Reynald G. Bonmati By: /s/ Ryuichi Kumagai
------------------------- ----------------------
Name: Reynald G. Bonmati Name: Ryuichi Kumagai
Title: President Title: General Manager
Medical & Electronic
Systems Dept.
NISSHO IWAI AMERICAN CORPORATION
By: /s/ Saintaro Mirata
----------------------
Name: Saintaro Mirata
Title: Sup. & GM
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EXHIBIT A
PRODUCTS: The Products covered by this Agreement are (i) any and all existing
and future bone measuring equipment including bone densitometers manufactured by
COMPANY and/or Manufacturers and/or their present and future subsidiaries and
distributed by COMPANY and/or its subsidiaries (including, but not limited to,
the XCT-960, XCT-960A, XCT-960M, pDEXA, XCT-3000, XR-36 and XR-26S (Eclipse)),
(ii) all components, accessories and options related thereto, PROVIDED that if
COMPANY acquires another company or business which manufactures bone measuring
equipment (including bone densitometers) and which, at the time of such
acquisition, has a distribution agreement in place for the Territory with
someone other than DISTRIBUTOR, then such equipment shall not be covered by this
Agreement until such other distribution agreement is terminated, at which point
COMPANY and DISTRIBUTOR shall negotiate in good faith and shall mutually agree
on the terms of such distribution.
The parties may mutually agree to make reasonable substitution regarding
accessories and options related to the above Products lines due to availability.
COMPANY shall notify DISTRIBUTOR sufficiently in advance of any planned or
proposed modification in the design or specifications or any planned or proposed
new Products.
PRICES: Prices for the following Products during the period ending March 31,
1997 (the "Initial Period") shall be agreed upon by COMPANY and DISTRIBUTOR
prior to the effective date of this Agreement:
XCT-960
Standard XCT-960 with the latest version of software available at time of
each shipment with 486 computer, color monitor, deskjet printer, CPU table,
one operation guide and one set of instruction manual.
XCT-960A (animal use)
Standard XCT-960A with the latest version of software available at time of
each shipment with 486 computer, color monitor, deskjet printer, CPU table,
sample holder and tubes, one operation guide and one set of instruction
manual.
XCT-960M (animal use)
Standard XCT-960A with the latest version of software available at time of
each shipment with 486 computer, color monitor, deskjet printer, CPU table,
sample holder and tubes, one operation guide and one set of instruction
manual.
pDEXA
Standard pDEXA with the latest version of software available at time of
each shipment with 486 computer, color monitor, deskjet printer, CPU table,
one operation guide and one set of instruction manual.
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XCT-3000
XR-36
XR-26S (Eclipse)
For prices of the Products for the period beyond the Initial Period, during the
period of October 1 - November 15 of each year commencing in 1996, DISTRIBUTOR
and COMPANY shall negotiate in good faith and agree in good faith on prices for
the Products for the immediately following year (April 1 - March 31), based on
the past practice of the parties and trends in the industry.
The prices of the Products not specifically identified above shall be agreed
upon in good faith by DISTRIBUTOR and COMPANY on an annual basis as provided
above.
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EXHIBIT B
EXCLUSIVE TERRITORY: The country of JAPAN
In addition to the Exclusive Territory above, DISTRIBUTOR shall have the right
to enter into negotiations with the COMPANY in order to become a distributor in
such countries where COMPANY has not already appointed an exclusive distributor.
Such arrangements shall be mutually agreed.
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