DISTRIBUTION AGREEMENT
This Agreement is made as of the ____ of ___________, 1998, between
BIO-SYNTHESIS, INC., a ________________ corporation, with its principal place of
business at ____________________ Lewisville, Texas 75067 ("BSI"), and GEN TRAK,
INC., a ________________ corporation, with its principal place of business at
510 Campus Drive, Plymouth Meeting, Pennsylvania 19462 ("GEN TRAK").
The parties agree as follows:
1. APPOINTMENT
A. Subject to the provisions hereof and except as provided subparagraph
C of this paragraph, BSI hereby appoints GEN TRAK as BSI's exclusive distributor
in the Territory for the Term of this Agreement (defined below) with respect to
the DNA/SSP Class 2 and Class 1 product entries and related products (the
"products") manufactured by BSI as described in Exhibit "A" hereto (the
"Product"). GEN TRAK hereby accepts such appointment and undertakes to use its
best efforts to sell and promote the sale of Product in the market defined in
Exhibit B hereto (the "Territory").
B. Provided that GEN TRAK performs its obligations hereunder, during
the Term of this Agreement, BSI shall not appoint another distributor for the
Product in the Territory.
C. Notwithstanding anything herein to the contrary, and provided that
it is not in direct competition with GEN TRAK, BSI may market and sell it's HLA
products (as more particularly described in Exhibit "C" hereto) to (i) companies
that do not manufacture or market HLA product lines and (ii) individual end
users.
D. Without BSI's prior written consent, neither GEN TRAK, nor any of
its subsidiaries or affiliated companies, nor any director, officer,
stockholder, partner or entity having control of GEN TRAK or such subsidiary or
affiliated company, shall manufacture, sell, promote, or distribute in the
Territory any product that is competitive with the Product.
E. GEN TRAK shall purchase the Product only from BSI during the Term of
this Agreement.
F. The relationship between the parties is that of vendor and purchaser
(rather than principal and agent) and, accordingly, GEN TRAK shall not be
empowered by its appointment hereunder or otherwise to act for or to bind BSI,
or to make any express or implied representation or warranty on behalf of BSI.
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2. TERM OF AGREEMENT
A. The Term of this Agreement shall commence on the date of this
Agreement and, unless this Agreement is earlier terminated pursuant to the
provisions hereof or otherwise, shall continue for a period of three (3) years.
(Such period, as extended as provided in subparagraph B of this paragraph, is
referred to herein as the "Term")
B. Provided that it is not in default hereunder, GEN TRAK may extend
this Agreement for three (3) additional consecutive one (1) year periods upon
written notice to BSI delivered at least thirty (30) days prior to the
expiration of the then current Term.
3. ORDERS AND FORECASTS FOR THE PRODUCTS
A. On the date of the signing of this Agreement and on the last day of
each calendar quarter during the Term, GEN TRAK will provide to BSI a twelve
(12) month rolling forecast of anticipated Product needs.
B. GEN TRAK will maintain an inventory of Product at its Pennsylvania
facility sufficient to meet demand for the Product in the Territory for at least
thirty (30) days. GENTRAK will be responsible for delivery of the Product to
customers.
C. BSI will maintain an inventory of Product at its Texas facility
sufficient to meet projected demand for the Product as set forth in the rolling
forecast for at least sixty (60) days. BSI will be responsible for delivery of
the Product to GEN TRAK upon receipt of appropriate purchase orders from GEN
TRAK.
4. PRICE AND PAYMENT TERMS
A. BSI agrees to provide the product to GEN TRAK at a cost per unit of
75% of the lowest current prevailing list price set forth on __________________,
with adjustments, if any, as may be mutually agreed to reflect market
conditions. During the term of this agreement, this cost per unit may only be
changed by mutual agreement based on a demonstrable increase in the cost to
manufacture of BIOSYNTHESIS. GEN TRAK shall pay to BSI the cost per unit of the
Product set forth in Exhibit "D" hereto, (the "Purchase Price").
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B. GEN TRAK shall be responsible for and pay all value, excise, sales
and similar taxes that may be required to be paid by reason of GEN TRAK's
purchases of the Units. Risk of loss for the Product shall pass to the GEN TRAK
upon delivery to a carrier for shipment. GEN TRAK may use its standard purchase
order form to order products; provided, however, any such form shall reference
this Agreement and the terms and conditions of this Agreement will supersede any
different or additional terms on such order.
C. All payments will be sent by GEN TRAK to BSI Net 30, unless
otherwise mutually agreed upon. Any payment not made within said thirty (30) day
period will bear interest from the expiration of said thirty (30) day period at
the rate of one percent (1%) over the Prime Rate as reported by the Chase
Manhattan Bank of New York, or its successor.
5. MARKETING, REDISTRIBUTION
A. Promotion and Marketing.
(i) BSI acknowledges that GEN TRAK anticipates marketing the
Product under the GENSYS name and agrees that such brand name and all product
packaging and all marketing, advertising and promotion materials (collectively,
the "Brand Name") shall remain the exclusive property of GEN TRAK. BSI may not
use the Brand Name in any way without the express written consent of GEN TRAK.
(ii) GEN TRAK agrees to use its best efforts to promote and
sell the Product, at its own expense, in the Territory as soon as feasible after
the date of this Agreement. All promotional and marketing materials developed by
GEN TRAK shall identify BSI as the Manufacturer and utilize appropriate BSI
Trademarks (see Trademark) and be approved by BSI prior to use and shall contain
all notices required to protect BSI's proprietary rights in the Product. Any
promotional and other advertising material prepared by BSI for the Territory
will be provided to GEN TRAK upon its request without charge.
(iii) GEN TRAK will maintain an adequate sales force during
the term of this Agreement to effectively market and sell the Product and handle
all customer complaints in a professional and efficient manner.
(iv) BSI shall provide to GEN TRAK, free of charge, sufficient
Product samples to allow adequate marketing of the Product. GEN TRAK will
maintain an inventory of Product sufficient to meet demand for the Product in
the Territory for at least thirty (30) days.
(v) GEN TRAK will comply with all laws, regulations and
orders, including all health regulatory requirements, of any government within
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the Territory and with all other governmental requirements applicable to its
sales activities in the Territory with respect to the Product. GEN TRAK will
provide BSI with all information it shall reasonably request in connection with
GEN TRAK's compliance with this paragraph. BSI will furnish GEN TRAK with such
assistance and cooperation as may reasonably be requested in connection with
compliance with such governmental requirements, including without limitation
providing to GEN TRAK all available data for clinical trials performed by BSI in
connection with the Product.
(vi) All expenses incurred by GEN TRAK in connection with the
performance of its obligations hereunder will be borne solely by GEN TRAK
B. Trademarks. To the extent reasonably required by GEN TRAK to perform
its obligations pursuant to this Agreement, BSI grants to GEN TRAK a
non-transferable, royalty-free license, with no right to grant sublicenses, to
use during the term of this Agreement the Trademark within the Territory with
respect to the Product, alone or in conjunction with any one or more trademarks
of GEN TRAK, provided, however, that such license may only be used by GEN TRAK
in connection with the sale of the Product. BSI acknowledges the validity of the
Trademark and BSI's ownership thereof.
C. Customer Service. GEN TRAK shall be responsible for all "front line"
customer services for the Product in accordance with guidelines approved in
advance by BSI. BSI will assist with other customer services for the products as
necessary.
6. TERMINATION
A. If either party breaches a term or provision of this Agreement, in
addition to any other right or remedy it may have under this Agreement or
otherwise, the non-breaching party may terminate this Agreement by giving the
breaching party written notice of such breach, such termination to be effective
30 days after the giving of such notice unless within such 30-day period the
breaching party remedies such breach, in which event such notice of termination
shall be deemed withdrawn.
B. If during any Contract Year, GEN TRAK fails to make and pay for the
Minimum Purchases for any contract year as specified in Exhibit "E", BSI may
terminate this Agreement by giving written notice of such failure to GEN TRAK,
such termination to be effective upon the giving of such notice.
C. Neither party, by reason of the termination of this Agreement, will
be liable to the other because of damages, expenditures, loss of profits, or
prospective profits of any kind or nature, sustained or arising out of such
termination or for any investments related to the performance of this Agreement
or the goodwill created in the course of the performance under this Agreement.
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D. No termination of this Agreement will in any manner whatsoever
release, or be construed as releasing, any party from any liability to the other
arising out of or in connection with a party's breach of, or failure to perform
any covenant, agreement, duty or obligation contained in this Agreement. Neither
party will be relieved from any obligations vested prior to the date of
termination of this Agreement.
D. Upon the expiration or termination of this Agreement, GEN TRAK shall
have no right to order or purchase Product from BSI or to in any manner hold
itself out as BSI's distributor of the Product in the Territory, or to advertise
or promote the Product, and BSI may appoint, accept orders from, deliver and
sell Product to a new distributor or other person or entity in the Territory
determined by BSI in its sole discretion, who may begin soliciting orders for
and delivering Product to customers in the Territory any time after the
effective date of the termination of this Agreement. No allowance or indemnity
shall be payable hereunder to GEN TRAK as a result thereof. BSI shall have the
right to cancel all unshipped orders for the Product placed by GEN TRAK whether
or not previously accepted.
E. Upon termination of this Agreement, GEN TRAK will immediately
discontinue all use in the Territory of BSI's trade names and trademarks in
connection with the Product GEN TRAK will return to BSI all price lists,
catalogs, sales literature, operating and service manuals, advertising
literature, and other materials relating to the Product; provided, however, that
for materials produced by GEN TRAK, including, but not limited to the Brand
Name, shall remain the exclusive property of GEN TRAK. GEN TRAK expressly agrees
that upon termination such materials produced by GEN TRAK may not include the
BSI name or BSI's trade names or trademarks.
F. For a period of 60 days after the expiration or termination of this
Agreement, GEN TRAK may sell the inventory of Product GEN TRAK has on hand at
the time of such expiration or termination through its normal trade channels for
the Product; provided, however, that if within 10 days after such expiration or
termination BSI notifies GEN TRAK that it wishes to purchase all or part of such
inventory of Product, GEN TRAK shall sell to BSI all or part of such inventory
of Product, as desired by BSI, but in each case limited to those Units in good
and usable condition as per BSI's existing quality control standards, for an
amount equal to the cost of such inventory to BSI at the time of the purchase.
GEN TRAK shall return to BSI for credit against amounts payable by GEN TRAK to
BSI all Product, less reasonable customer samples and test samples, not sold and
paid for at the expiration of such 60 day period.
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7. PRODUCT WARRANTY
A. BSI warrants that the Product will meet the "Product Specifications"
set forth in Exhibit "F" hereto, as may be amended from time to time, for the
period of time up to and including the expiration date printed or stamped on the
product if used, stored and shipped in accordance with BSI's instructions. With
respect to any Product failing to meet the Product Specifications, BSI will, at
its option: (i) grant to GEN TRAK a credit for such defective Product equal to
the price paid therefor by GEN TRAK or (ii) provide replacement Product. In no
event will BSI be liable under this Agreement for any failure of any Product to
meet the Product Specifications due to improper use, storage or shipment by GEN
TRAK or anyone receiving the Product directly or indirectly from GEN TRAK.
B. BSI and GEN TRAK hereby agree to the Quality Control and Quality
Assurance standards including manufacturing processes set forth in Exhibit "G"
hereto, as may be amended from time to time. All products delivered to GEN TRAK
or to GEN TRAK's customers will be certified by BSI as having met minimum,
agreed upon performance standards. BSI will replace all products that fail to
perform to these minimum standards.
8. LIMITATIONS OF LIABILITY
EACH PARTY WILL ONLY BE LIABLE TO THE OTHER PARTY FOR DAMAGES THAT ARE DIRECTLY
ATTRIBUTABLE TO ITS MATERIAL BREACH OF THIS AGREEMENT OR ITS GROSSLY NEGLIGENT
OR INTENTIONAL ACT OR OMISSION. NOTWITHSTANDING THE FOREGOING, NEITHER PARTY
WILL BE LIABLE TO THE OTHER PARTY OR TO ANY THIRD PARTY OR PARTIES FOR INDIRECT
DAMAGES OF ANY KIND WHATSOEVER (INCLUDING WITHOUT LIMITATION LOST PROFITS OR
SPECIAL, CONSEQUENTIAL OR INCIDENTAL DAMAGES) ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY GOODS SOLD OR DELIVERED TO GEN TRAK. NOTHING IN THIS AGREEMENT
WILL CREATE ANY LIABILITY OF EITHER OR BOTH PARTIES TO ANY THIRD PARTY OR
PARTIES.
9. INDEMNITY
A. BSI agrees to and hereby does indemnify and hold GEN TRAK harmless
from and against all claims, damages, losses, costs and expenses, including
reasonable attorneys' fees, which GEN TRAK may incur by reason of any Product
sold or furnished by BSI which result in injury, illness or death of any person,
to the extent that such claims arise out of or result from (i) product design,
(ii) manufacturing, (iii) a breach of this Agreement or, (iii) failure to comply
with the Quality Control and Quality Assurance standards including manufacturing
processes set forth in Exhibit G attached hereto, except if such claims arise
from the gross negligence or willful misconduct of GEN TRAK.
B. GEN TRAK hereby agrees to and hereby does indemnify and hold BSI
harmless from and against all claims, damages, losses, costs and expenses,
including attorney's fees, which BSI may incur to the extent that such claims
arise out of or result from (i) the unlawful sale or other distribution of
Product by GEN TRAK or use by any purchasers, including any improper sales by
GEN TRAK to customers who are located in a territory outside the Territory, (ii)
the distribution, labeling or packaging of the Products or, (iii) failure to
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comply with the Quality Control and Quality Assurance standards including
manufacturing processes set forth in Exhibit G attached hereto, except for such
claims which arise out of or result from the gross negligence, or willful
misconduct of BSI.
10. PROPRIETARY RIGHTS
A. Ownership of BSI Proprietary Rights. BSI will retain all of its
rights, title and ownership in all copyrights, trademarks, trade secrets,
Patents, and all other intellectual property embodied in the Product. Except as
otherwise expressly provided in this Agreement, GEN TRAK will have no right,
title or interest in the intellectual property embodied in the Product.
B. Ownership of GEN TRAK Proprietary Rights. GEN TRAK will retain all
of its rights, title and ownership in all copyrights, trademarks, trade secrets,
Patents, and all other intellectual property embodied in the Brand Name. Except
as otherwise expressly provided in this Agreement, BSI will have no right, title
or interest in the intellectual property embodied in the Brand Name.
C. Confidential Information. Each party agrees that it will treat
accordingly all verbal and written communications from the other party which are
designated, or which should reasonably be regarded in the normal commercial
view, as constituting business secrets or propriety information ("Proprietary
Information"). Each party agrees to refrain from disclosing or making available
to any third party any of the other party's Proprietary Information without the
other party's written consent and to impose upon its employees and agents the
same obligations with respect to the other party's Proprietary Information as it
employs with respect to its own confidential information. No such obligations of
confidence will extend to information which (a) is publicly available; (b) is
independently developed by the receiving party; (c) is already in the receiving
party's possession; or (d) is rightfully received from a third party. The
provisions of this Section 12 will survive the termination of this Agreement and
for a period of five (5) years thereafter.
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11. GOVERNING LAW
This Agreement shall be deemed to have been made in the Commonwealth of
Pennsylvania, and shall be construed in accordance with and governed by the laws
of Pennsylvania applicable to contracts wholly executed and performed in
Pennsylvania. All disputes under this Agreement which cannot be resolved between
the parties shall be submitted to binding commercial arbitration in accordance
with the rules of the American Arbitration Association the appertaining. The
arbitration shall be held at a mutually agreed upon site. All fees and expenses
of the Arbitrator shall be borne equally by the parties.
12. ASSIGNMENT
A. Neither this Agreement, nor any rights or obligations of GEN TRAK
thereunder shall:
1. be assigned by GEN TRAK to any person or entity, or
2. be transferred, or pass to, any person or entity by merger or
consolidation, in bankruptcy or insolvency proceedings or by operation of law or
otherwise,
without the prior written consent of BSI, which may be withheld by BSI for any
reason or for no reason, in BSI's sole discretion. Any assignment in violation
of the foregoing shall be deemed null and void. BSI may assign or delegate any
or all of its rights or duties hereunder to any party. Notice thereof need not
be given to GEN TRAK in order to be effective; provided, however, BSI agrees to
notify GEN TRAK of any such assignment and provide information with respect
thereto to the extent necessary to enable GEN TRAK to perform its obligations
thereunder, including, without limitation, any change in the address for
placement of orders or payment of invoices for Products.
13. FORCE MAJEURE
In the event that either party is unable to carry out its obligations under this
Agreement due to Force Majeure beyond its control (including, without
limitation, acts of God; war, riot; fire; flood; explosion; labor disputes;
embargoes; or unavailability or shortages of raw material, bulk, equipment or
transport), the failure so to perform shall be excused and not constitute a
default hereunder during the continuation of the intervention of such Force
Majeure, provided, however that this provision shall not apply to the obligation
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of GEN TRAK to pay for the Product as provided in Paragraph 4 hereof. The party
affected by such Force Majeure shall resume performance as promptly as
practicable after such Force Majeure has been eliminated. Notwithstanding the
foregoing, in the event either party is unable to carry out its obligations
hereunder by reason of such Force Majeure for a period of forty-five (45) days
or more, then either party may at any time thereafter during the continuance of
such Force Majeure terminate this Agreement upon notice to the other party
setting forth the circumstances of such Force Majeure.
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14. MISCELLANEOUS.
A. No Agency, No Joint Venture - Independent Contractor. GEN TRAK will
act as independent contractor under the terms of this Agreement. GEN TRAK is
not, and will not be deemed to be, employee, agent, co-venturer or legal
representative of BSI for any purpose. GEN TRAK will not be entitled to enter
into any contracts in the name of, or on behalf of BSI, nor will GEN TRAK be
entitled to pledge the credit of BSI in any way or hold itself out as having
authority to do so.
B. Severability. Should any provision of this Agreement be determined
by a court having jurisdiction over the parties and the subject matter to be
illegal or unenforceable in such jurisdiction, the parties agree that such
determination shall not affect or impair the validity or enforceability of such
provision in any other jurisdiction or the validity or enforceability of any
other provision.
C. Entire Agreement; Amendment. This Agreement and the Schedules hereto
set forth and constitute the final, complete and entire agreement between the
parties hereto with respect to the subject matter hereof, supersede any and all
prior agreements, understandings, promises and representations made by either
party to the other concerning the subject matter hereof and the terms applicable
hereto and are intended as a complete and exclusive statement of the terms of
the agreement between the parties. This Agreement may not be released,
discharged, amended or modified in any manner except by an instrument in writing
signed by duly authorized officers of both parties.
D. Waiver. No waiver of any right under this Agreement will be deemed
effective unless contained in a writing signed by the party charged with such
waiver, and no waiver of any right arising from any breach or failure to perform
will be deemed to be a waiver of any future such right or of any other right
arising under this Agreement.
E. Headings. Section headings contained in this Agreement are included
for convenience only and form no part of the agreement between the parties.
F. Notices. Notice, consent, demand, approval, or other communication
required or permitted under this Agreement will be written and will be deemed to
have been given (i) when personally delivered, including confirmed delivery by
facsimile or telex, (ii) on the next day after delivery to a nationally
recognized over-night express delivery service; or (iii) on the third day after
it is mailed, postage prepaid, certified or registered mail, return receipt
requested, addressed to the following address or to such other address as the
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party to be notified shall have specified to the other party in accordance with
this paragraph:
If to BSI: with a copy to:
Bio-Synthesis Laboratories, Inc. Thad E. Finley, Esq.
HAMMERLE FINLEY
Lewisville, Texas 75067 2220 San Jacinto Blvd
Attn.-President Denton, Texas 76205
If to GEN TRAK: with a copy to:
Gen Trak, Inc. Henry A. Carpenter II, Esq.
510 Campus Drive 1513 Judith Place
Plymouth Meeting, PA 19462 Yardley, PA 19067
Attn: Arthur V. Boyce
G. Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be an original and all of which will constitute
together but one of the same document.
H. Authority to Enter Into and Execute Agreement. Each party represents
and warrants to the other they have the right and lawful authority to enter into
this Agreement for the purposes herein and that them are no other outstanding
agreements or obligations inconsistent with the terms and provisions hereof.
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
BIOSYNTHESIS, INC.
ATTEST:
BY: _____________________
Name: _____________________ Name: ___________________
Title: ____________________ Title: __________________
GEN TRAK, INC.
ATTEST:
BY: _____________________
Name: _____________________ Name: ___________________
Title: ____________________ Title: __________________
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EXHIBIT B
The "Territory"
Gen Trak has the exclusive right to sell, promote and market BSI products, as
outlined in Exhibit A, in the United States an Canada, without limitation or
restriction. Opportunities in other countries throughout the world will be
discussed and decided by mutual agreement on an individual basis.
EXHIBIT E
Minimum Purchases
From the date of this agreement, Gen Trak will be required to make minimum
purchases of BSI products by contract year as follows:
Year 1 $ 600,000
Year 2 $1,200,000
Year 3 $1,500,000
LIST OF EXHIBITS
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Exhibit Contents
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A Description of DNA/SSP Class 2 and Class 1 product entries
and related products manufactured by BSI (the "Products")
B Territory within which GEN TRAK may sell and market the
Product
C (I) Companies that do not manufacture or market HLA product
lines and (ii) individual end users to which BSI may sell and
market the Product
D Initial cost per unit of the Product (the "Purchase Price")
E Minimum Purchases for any contract year
F The "Product Specifications"
G Quality Control and Quality Assurance standards including
manufacturing processes