Exhibit 10.1
DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT ("Agreement"), effective as of July 29, 2008
("Effective Date"), is entered into by and between Competitive Technologies,
Inc. ("CTT"), a Delaware corporation having a place of business at:
Competitive Technologies, Inc.
777 Commerce Drive, Suite 100
Fairfield, CT 06825
and Excel Life Sciences, Inc (hereinafter referred to as "ELS" or "Distributor",
which shall include its subsidiaries, successors and permitted assigns), a
Delaware corporation with its principal place of business at:
Excel Life Sciences, Inc.
875 North Michigan Avenue
31st Floor
Chicago, IL 60611
CTT and Distributor may each be referred to as a "Party" and collectively as the
"Parties".
Witnesseth
WHEREAS, CTT wishes to appoint Distributor as the exclusive sales agent for Pain
Management Therapy Device and Distributor desires to provide such services to
CTT, in each case, on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the mutual promises and covenants set forth
herein, the Parties agree as follows:
1.0 RIGHT TO DISTRIBUTE
1.1 CTT hereby grants Distributor the right to purchase from CTT, and
the exclusive right to distribute and sell solely within the Territory
(as defined hereinafter), the products identified on Schedule 1 hereto
(the "Product(s)"). "Territory" shall mean the country of India.
1.2 Distributor shall purchase the Product(s) for resale from CTT at
the price of [Confidential] USD as set forth on Schedule 1 hereto, as
such Schedule may be amended after two (2) years of the effective date
of this Agreement in accordance with the terms hereof. Subsequent
annual price increases will be capped at [Confidential] per annum.
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1.3 All orders for Product(s) by Distributor shall be Ex Works
Manufacturer. GEOMC Co. Ltd. of Korea (formerly Daeyang E&C)
("Manufacturer") in Seoul, South Korea is the Manufacturer. The
product supplied by GEOMC Co., Ltd of Korea is a CE approved medical
device.
1.4 All Product(s) sold by CTT to Distributor are sold on an "AS IS,
WHERE IS" basis, except that CTT warrants that upon payment in full by
Distributor, Distributor shall obtain merchantable title to the
Product(s), and except for any warranties that Manufacturer may
provide. Manufacturer's and CTT's replacement warranty for normal use
with no physical damage to the unit will be for a period of 12 months.
EXCEPT FOR THE FOREGOING, CTT MAKES NO REPRESENTATIONS OR WARRANTIES
WITH RESPECT TO ANY PRODUCTS, EXPRESS, IMPLIED OR STATUTORY, INCLUDING
WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, NON-INFRINGMENT OR
FITNESS FOR A PARTICULAR PURPOSE. All purchases of the Product(s) by
Distributor from CTT shall be paid in US Dollars by wire transfer of
immediately available funds due to CTT at Bank of America, with the
purchase price paid in full within 30 days from the date of the order
by the Distributor.
1.5 All sales to Distributor are final. Any damaged Product(s) with
the Manufacturer's defects must be returned to the Manufacturer, with
any such return being subject to the terms of the applicable product
warranty.
1.6 Distributor agrees to be responsible for the product registration
and other filings in India.
1.7 Distributor agrees to (i) actively and continually market and
promote the Product(s) to appropriate potential customers; (ii) use
best efforts to promote the sale of the maximum amount of Product(s);
and (iii) accurately advise potential customers of the selection, use
and functionality of the Product(s). Distributor will keep CTT
informed as to conditions that might affect the sale of the Product(s)
in the marketplace.
1.8 Distributor will refrain from taking actions that may tarnish or
cause people to hold in poor regard CTT or the Product(s). Distributor
shall establish and maintain a marketing program and a sales force,
customer training and technical service representatives, who are
properly trained in all aspects of the distributed Product. CTT shall
have the right to review and discuss with Distributor at reasonable
times and with reasonable frequency all aspects of the marketing and
service program. Distributor shall be solely responsible for
establishing the terms of sale (subject to any limitations set forth
herein) including, without limitation, the sale price of the
Product(s), consummating the sale of any Product(s), collecting the
sale price, and for providing any post-sale service that may be
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necessary with the exception of manufacturer warranty claims,
which shall be handled by the Manufacturer.
1.9 To assist Distributor in marketing the Product(s), CTT may
provide Distributor with such marketing materials as CTT may deem
appropriate. CTT shall have the right to revise such marketing
materials in its sole discretion at any time and to provide such
revised marketing materials to Distributor for all future use.
Distributor shall have no obligation to use such materials and any use
of such materials is at Distributor's own risk. Distributor will have
right to adapt the materials for the local market in the Territory.
Any modifications made by Distributor to the marketing and training
materials and any customer, market or other data collected by
Distributor pursuant to its distributorship and marketing in the
Territory will be Distributor's intellectual property. CTT warrants
that any scientific, medical and clinical information provided by CTT
to ELS regarding the pain management device is accurate. CTT will
provide ELS with at least two representatives (one business and one
medical/scientific person) at annual product launches and promotions
at least one time per Contract Year in India to support distribution
during the period of exclusivity. CTT or the manufacturer will provide
ELS training on servicing the units within the first six (6) months
following the effective date of this agreement.
1.10 Distributor shall provide a written sales summary of actual and
forecasted sales monthly to CTT (each a "Monthly Report"). Each
Monthly Report shall be provided to CTT on or before the fifteenth
(15th) calendar day of the next month.
1.11 The authority granted to Distributor is to distribute those
Product(s) it has purchased from CTT solely within the Territory.
Moreover, Distributor shall not sell Product(s) to purchasers outside
the Territory or to purchasers inside or outside the Territory that
Distributor believes or has reason to believe are primarily intended
for use or distribution outside the Territory without written
permission from CTT. Distributor shall not have, nor shall it hold
itself out as having, either express or implied authority to accept
orders for the Product(s) on behalf of CTT or to make contracts in the
name of CTT or any other party. Distributor and CTT will approach
sales outside of Territory on a case by case basis and Distributor
will have ability to sell outside of Territory, if written approval is
granted by CTT.
1.12 Distributor acknowledges and agrees that Distributor is an
independent agent under the laws and rules of the United States
Internal Revenue Service (as well as any foreign equivalent) and the
laws and procedural holdings of the State of Connecticut. Distributor
is not an employee of CTT or any subsidiary of CTT, and shall not
represent himself to be, nor permit himself to be represented as,
anything other than a Distributor of the Product(s). Distributor does
not and shall not have any power to, nor shall it represent that it
has any power to, bind CTT or create or assume any obligation on
behalf of CTT.
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1.13 Distributor shall not make any representations or warranties with
respect to the Product(s) beyond the product warranties given by the
Manufacturer of the Product(s). Distributor will comply, at all times,
with all foreign, federal, state and local laws and regulations
applicable to it, including without limitation, all applicable laws
relating to the marketing, sale and distribution of medical devices
within the Territory. At no time shall Distributor engage in any
high-pressure or unethical sales techniques.
1.14 The distributors are authorized to represent or describe
themselves as "Authorized Distributors or Dealers" of the Products for
CTT.
2.0 TERM OF AGREEMENT
2.1 Subject to the other provisions of this Agreement, the term of
this Agreement shall be for an initial period of four years and four
months (52 months) from the Effective Date ("Initial Term"), with
exclusive status in India for Distributor for first sixteen (16)
months. The first sixteen (16) months shall be Contract Year 1, with
the first 4 months of the same being the "ramp up period". Each 12
months period thereafter shall be termed as "Contract Year 2",
"Contract Year 3" and so on. Contract Years 2, 3 and 4 will be on
Exclusive basis if Distributor has purchased from CTT and not
returned, Product(s) equal to or in excess of the applicable Yearly
Product Minimums minus the tolerance factor, as set forth in Schedule
2 hereto. The term of this Agreement and Exclusivity shall be
automatically extended for additional one year periods (each a
"Renewal Term," ) so long as Distributor has purchased from CTT and
not returned, Product(s) equal to or in excess of the applicable
Yearly Product Minimums minus the tolerance factor, as set forth in
Schedule 2 hereto, for the last Contract Year of the Term preceding
the proposed Renewal Term. Notwithstanding the foregoing, Distributor
may prevent any auto-renewal of the Term by providing CTT with written
notice of its intent to terminate this Agreement at least ninety (90)
days prior to the end of the then-current Term.
2.2 Either Distributor or CTT may terminate this Agreement at any
time if the other Party shall breach its obligations hereunder;
provided, however, that the non-breaching Party shall give the
breaching Party written notice of such breach, and the breaching Party
shall have thirty (30) calendar days after receipt of such notice to
cure such breach. If such breach is cured to the reasonable
satisfaction of the non-breaching party during such period, then this
Agreement shall continue in full force and effect. If such breach is
not cured to the reasonable satisfaction of the non-breaching party
during such period, then this Agreement shall terminate effective upon
the close of business on the last day of such period.
2.3 In the event CTT ceases to have the right to sell any of the
Product(s), either in whole or in part, Distributor's right to sell
such Product(s) shall immediately
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cease, and CTT shall have no liability whatsoever to Distributor
arising from such cessation of sales. To the extent such cessation is
to less than all of the Product(s), this Agreement shall continue with
respect to the remaining Product(s) in accordance with its terms. To
the extent that CTT ceases to have the right to sell any of the
Products(s), either in whole or in part, and CTT's action directly
causes Distributor to be unable to sell its Product(s) inventory
within a one hundred fifty (150) days period, then CTT agrees to
purchase the unsold inventory at the original purchase cost of the
Product(s) in inventory.
2.4 CTT shall not be liable for any damages, compensation or
indemnification of any kind arising from the termination or expiration
of this Agreement, with or without cause, whether said damages,
compensation or indemnification are based on losses caused by previous
commitments of Distributor, loss of investments, loss of present or
prospective profits, insolvency, loss of goodwill or clients, or any
other loss arising from the termination or expiration of this
Agreement. If for any reason whatsoever CTT shall have breached this
Agreement, Distributor agrees that CTT shall not be liable to
Distributor for any incidental, special, consequential or indirect
damages, even if CTT has been informed of the possibility of such
damages.
2.5 The terms and conditions of the following sections shall survive
any termination or expiration of this Agreement: Sections 1.5, 5.0 and
9.0, as well as any other provisions that may be necessary to
interpret the same.
3.0 MINIMUM SALES OBLIGATIONS
3.1 Distributor shall be obligated to purchase from CTT that number
of Product(s) during each Contract Year as is set forth in Schedule 2
hereto (for each such Contract Year, the "Product Minimums"). The
Yearly Product Minimums for each Contract Year are set forth in
Schedule 2 hereto. The Yearly Product Minimums beyond Contract Year 2
shall be set by CTT at [Confidential] annual growth from Contract Year
2 as set forth in Schedule 2. The start of the first Contract Year is
defined in Section 3.2
3.2 The first Contract Year will start; (a) after this Agreement is
signed, (b) treatment protocols and training are provided to ELS by
CTT, and (c) at the expiration of a four month ramp up period
following the effective date of the Agreement. Following these events,
the "Selling Clock Starts Ticking" for the minimums required in the
Contract Years. Immediately after this Agreement is signed by both
parties and Indian regulatory approval has been received, CTT will
provide ELS one unit at [Confidential] and ELS will purchase one unit
from CTT at [Confidential] (USD). ELS will purchase 14 additional
units, sent to ELS in three or less shipments, at [Confidential] per
unit within [Confidential] days of when the "Selling Clock Starts
Ticking" or upon receiving Indian regulatory approval,
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whichever is earlier The 15 purchased units will be counted towards
the minimums required in the first Contract Year.
3.3 For continued exclusivity, the annual minimums will have a
tolerance factor of [Confidential] of the Contract Year minimum units.
For example; Contract Year 1 must be at least [Confidential] units to
maintain exclusivity, and Contract Year 2 must be at least
[Confidential] units to maintain exclusivity. In the event ELS is not
able to achieve the annual minimums; ELS will have the ability to sell
the product in India on a non-exclusive basis for a period of four (4)
years following the effective date of this Agreement.
3.4 This Agreement and Exclusive Distributor status shall be
automatically extended for additional twelve (12) month periods so
long as the Yearly Product Minimums as set forth in Schedule 2 are
achieved.
4.0 COMPENSATION
4.1 As between CTT and Distributor, subject only to CTT's right to
its purchase price from Distributor, Distributor shall be entitled to
retain one hundred percent (100%) of all amounts received from the
purchaser of a Product. All travel, promotional, entertainment, taxes
and other expenses incurred by Distributor in its efforts to market
and promote the Product(s) will be the sole obligation of Distributor,
and Distributor will not be entitled to reimbursement of any kind from
CTT.
5.0 CONFIDENTIALITY; NON-DISPARAGEMENT
5.1 Confidentiality.
a. As used herein, "Confidential Information" means private,
confidential, trade secret or other proprietary information
(whether or not embodied or contained in some tangible form)
relating to any actual or anticipated business of CTT or its
clients, including, without limitation, any information which, if
kept secret, will provide CTT or its clients with an actual or
potential economic advantage over others in the relevant trade or
industry, such as, but not limited to: business data (including
cost data), price lists, strategies and compensation.
Confidential Information shall not include information that: (i)
at the time of first disclosure by CTT to Distributor was already
in the possession of Distributor, as shown by written records
existing at such time; (ii) is independently made available to
Distributor on a non-confidential basis by an unrelated and
independent third party whose disclosure does not constitute a
breach of any duty of confidentiality owed to CTT or its clients;
or (iii) is generally available to the public in a
readily-available document.
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b. Except as required in considering a potential business
relationship with CTT or its clients, in connection with an
actual business relationship with CTT or its clients, or with the
prior written authorization of CTT, Distributor shall not
directly or indirectly use, disclose, disseminate, publish or
otherwise reveal any Confidential Information for the benefit of
any party other than CTT or its clients. In the event that
Distributor is required by legal process (court order, subpoena,
etc.) to disclose Confidential Information, Distributor shall
first (unless expressly prohibited by law) provide CTT with
notice and the opportunity to take appropriate action to preserve
the confidential nature of the information; provided, that in the
event CTT elects not to seek an order securing, or is
unsuccessful, in whole or in part, in securing, the
confidentiality of the information to be disclosed, Distributor
shall limit such disclosure to the minimum amount of Confidential
Information necessary to comply with the applicable legal process
as established by the written opinion of Distributor's counsel.
c. Upon termination of Distributor's discussions with CTT
concerning a potential business relationship or the termination
of any actual business relationship, in either case, for any
reason, or upon CTT's earlier request, Distributor shall return
to CTT or destroy all Confidential Information and any and all
copies or reproductions thereof, and any documents or materials
containing Confidential Information, in any case, whether
tangible or intangible, in Distributor's possession or control.
5.2 Non-Disparagement. Distributor acknowledges that any disparaging
comments by Distributor or its principals, employees or agent against
CTT or the Product(s) is likely to substantially harm the business
reputation of, and depreciate the value of, CTT. As such Distributor
agrees to act in good faith so as not to harm the business reputation
of CTT or the Product(s) in any way, which includes, Distributor's
agreement not to defame or publicly criticize the services, business,
integrity, veracity or reputation of the Product(s) or CTT, its
officers, directors, managers, members, employees, affiliates or
agents thereof, in either a professional or personal manner. The
provisions of this Section shall survive any termination or expiration
of this Agreement for a period of five (5) years.
CTT acknowledges that any disparaging comments by CTT or its
principals, employees or agent against Distributor or the Product(s)
is likely to substantially harm the business reputation of, and
depreciate the value of, Distributor. As such CTT agrees to act in
good faith so as not to harm the business reputation of Distributor or
the Product(s) in any way, which includes, CTT's agreement not to
defame or publicly criticize the services, business, integrity,
veracity or reputation of the Product(s) or Distributor, its officers,
directors, managers, members, employees, affiliates or agents thereof,
in either a professional or personal
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manner. The provisions of this Section shall survive any
termination or expiration of this Agreement for a period of five (5)
years.
6.0 CONFLICT OF INTEREST
6.1 Distributor shall not hire any officer or employee of CTT to
perform any service covered under this Agreement.
CTT shall not hire any officer or employee of Distributor to
perform any services covered under this Agreement.
6.2 Distributor shall not sell or distribute identical products in
the territories and listed in Schedule 1 under this Agreement.
CTT shall not sell or distribute identical products in the
territories and listed in Schedule 1 under this Agreement during the
period the Distributor has exclusivity. If non-exclusive, CTT will
have the right to distribute identical products in the territories.
7.0 ASSIGNMENT OR SUBCONTRACTING
7.1 Distributor may assign or transfer this Agreement, or any
interest therein or claim hereunder, or subcontract any rights
hereunder, with the prior written approval of CTT. Such approval will
not be unreasonably withheld. If CTT consents to such assignment or
transfer, the terms and conditions of this Agreement shall be binding
upon any assignee or transferee and shall not relieve Distributor of
its obligations hereunder.
8.0 INDEMNIFICATION; LIMITATION OF LIABILITY
8.1 Distributor will defend, indemnify, reimburse and hold CTT
harmless from and against any and all liabilities, losses, damages and
costs, including reasonable attorneys' fees (collectively, "Losses"),
resulting from or arising out of, or resulting from or arising out of
third party claims based upon, (a) the grossly negligent,
intentionally wrongful or illegal acts or omissions of Distributor; or
(b) any actions of Distributor beyond its authority granted hereby
including the making of any representations with respect to
Product(s).
CTT will defend, indemnify, reimburse and hold Distributor
harmless from and against any and all liabilities, losses, damages and
costs, including reasonable attorneys' fees (collectively, "Losses"),
resulting from or arising out of, or
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resulting from or arising out of third party claims based upon,
(a) the grossly negligent, intentionally wrongful or illegal acts or
omissions of CTT; or (b) any actions of CTT beyond its authority
granted hereby including the making of any representations with
respect to Product(s).
8.2 EXCEPT AS PROVIDED UNDER SECTION 8.1 OR WITH RESPECT TO BREACHES
OF THE CONFIDENTIALITY PROVISIONS OR SCOPE OF DISTRIBUTOR GRANT, IN NO
EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INCIDENTAL,
INDIRECT, PUNITIVE, CONSEQUENTIAL OR SPECIAL DAMAGES ARISING OUT OF OR
IN CONNECTION WITH THE AGREEMENT REGARDLESS OF WHETHER SUCH CLAIMS ARE
ASSERTED IN CONTRACT, TORT, WARRANTY, STRICT LIABILITY, NEGLIGENCE, OR
OTHERWISE, EVEN IF ADVISED OF THE POSSIBILITIES OF SUCH DAMAGES. IN NO
EVENT SHALL THE AGGREGATE LIABILITY OF CTT ARISING UNDER OR IN
CONNECTION WITH THIS AGREEMENT (OR ANY BREACH OR VIOLATION HEREOF)
EXCEED THE AMOUNT PAID BY DISTRIBUTOR TO CTT UNDER THIS AGREEMENT.
SUCH LIMITATION IS AN ESSENTIAL PROVISION OF THIS AGREEMENT AND WAS A
CONDITION UPON WHICH THE TERMS AND PRICING WERE BASED.
9.0 MISCELLANEOUS
9.1 Amendment and Waiver. Any provision of this Agreement may be
amended or waived only with the written and signed consent of both
Parties.
9.2 Severability. If any provision of this Agreement shall be held to
be illegal, invalid, or unenforceable, such provision will be enforced
to the maximum extent permissible so as to effect the intent of the
parties, and the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired
thereby.
9.3 Applicable Law. This Agreement shall be governed by the laws of
the State of Connecticut in the United States, without regard to its
principles of conflicts of laws. The Parties expressly reject the
applicability of the United Nations Convention on Contracts for the
International Sale of Goods and the Vienna Convention on the
International Sale of Goods.
9.4 Notice. Any payment, notice, or other communication required or
permitted to be made to either Party hereunder shall be sufficiently
made or given (i) on the second business day after mailing if sent to
such Party by internationally recognized overnight courier, (ii) in
the next business day after receipt of confirmation of successful
transmission if sent by facsimile, and (iii) upon receipt
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if sent by hand delivery, in each case, at its address given
below, or such other address as it shall hereafter designate to the
other Party in writing:
In the case of Competitive Technologies, Inc.:
John B. Nano
Chairman, President and CEO
Competitive Technologies, Inc.
777 Commerce Drive, Suite 100
Fairfield, CT 06825
203.368.6044
with a copy to (which shall not constitute notice):
Edwards, Angell, Palmer & Dodge, LLP
301 Tresser Blvd
Stamford, CT 06901
Attn: John A. Flaherty, Esq.
203.353.6800
In the case of Distributor:
Excel Life Sciences, Inc.
875 North Michigan Avenue
31st Floor
Chicago, IL 60611
9.5 Integration. This Agreement expresses the full contract between
the Parties, and all other prior or contemporaneous oral or written
representations with regard to the subject matter hereof shall be of
no effect.
9.6 Interpretation, Headings, Number and Gender. The Parties
acknowledge and agree that this Agreement has been freely negotiated
and shall be deemed to have been drafted by the Parties jointly.
Accordingly, no court should construe any provision for or against any
Party as a result of such Party being involved in the drafting of this
Agreement. The headings of the several sections are inserted for
convenience of reference only, and are not intended to be part of or
to affect the meaning or interpretation of this Agreement. In this
Agreement, where the context so permits, the singular shall include
the plural, and vice versa, and references to a particular gender
shall include the other genders. The words "include," "includes"
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and "including" are not limiting and shall be interpreted as if
followed by the phase "without limitation." Unless the context
indicates otherwise, the term "or" shall be deemed to include the term
"and."
9.7 Force Majeure. No Party hereto shall be liable in damages or have
the right to cancel this Agreement for any delay or default in
performing hereunder if such delay or default is caused by conditions
beyond its control, including but not limited to acts of God,
government restrictions, wars, or insurrections.
9.8 Execution. This Agreement will not be binding upon the Parties
until it has been duly executed by or on behalf of each Party, in
which event it shall be effective on the Effective Date.
9.9 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. Delivery
of an executed counterpart of this Agreement by facsimile shall be
equally effective as delivery of an original executed counterpart of
this Agreement.
9.10 Authorized Signatories. The undersigned individuals each
represent and warrant that they have the authority to execute this
Agreement on behalf of their respective companies or in their
individual capacities, as the case may be.
[Signature page follows]
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
dates shown below.
Competitive Technologies, Inc. Excel Life Sciences, Inc.
By: \s\ John B. Nano By: \s\ Mohit Mehrotra
---------------- ------------------
Name: John B. Nano Name: Mohit Mehrotra
Title: Chairman, President & CEO Title: Chief Operating Officer
Date: July 29, 2008 Date: July 29, 2008
------------- -------------
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SCHEDULE 1
Product(s)
PRODUCT PER UNIT
PURCHASE PRICE
---------------------------------- --------------
Pain Management Therapy Device [Confidential] USD*
* The price per unit will be [Confidential] USD for the first and second
Contract Years. Any price increases after the second Contract Year will be
capped at [Confidential] per annum.
Sales of units in excess of the annual Contract Year minimums on
Schedule 2 will be eligible for volume discounts shown below:
In excess of annual minimum by Discount will be
--------------------------------- ----------------
[Confidential] [Confidential]
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SCHEDULE 2
Product Minimums*
I. For Pain Management Therapy Device:
Contract Year Units per Contract Year
----------------- -----------------------
1 [Confidential]**
2 [Confidential]
3 and beyond [Confidential] annual growth
* Tolerance factor of [Confidential] for the Contract Year per Section 3.3 in
Agreement.
** Includes purchase of 15 units at [Confidential] per unit per Section 3.2 in
Agreement.
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