DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT ("Agreement"), dated as of July 29, 2009, is
entered into by and between Competitive Technologies, Inc., a Delaware
corporation ("CTT"), having a place of business at:
Competitive Technologies, Inc.
777 Commerce Drive, Suite 100
Fairfield, CT 06825
and Innovative Medical Therapies, Inc., a Delaware corporation ("IMT" or
"Distributor"), with its principal place of business at:
Innovative Medical Therapies, Inc.
212A New London Turnpike
Glastonbury, CT 06033
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 independent exclusive
sales agent for the Pain Management Therapy Device (as defined in Schedule 1
hereto) within the Territory, and Distributor desires to serve as independent
exclusive sales agent, 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 resell solely within the Territory (as defined
hereinafter) for use within the Territory, the Pain Management Therapy
Device. Distributor agrees that, except as specifically permitted in
Section 1.5 herein, it will not purchase the Pain Management Therapy
Device from any person or entity other than CTT. "Territory" shall
mean the following territories: United States of America, Guam and
United States of America possessions, U.S. Virgin Islands, Bahamas,
Bermuda and Puerto Rico, but only for so long, and to the extent, that
the offer and/or sale of the Pain Management Therapy Device is legally
permissible in such territories. Notwithstanding the foregoing,
Distributor specifically agrees that CTT has
Page 1 of 24
CTT8K7300905
contracted with Native Energy and Economic Development, LLC for
exclusive distribution rights to the Department of Defense, Department
of Veterans Affairs and Indian Health Services and Distributor
acknowledges it shall have no rights to distribute the Pain Management
Therapy Device to any entity covered by said agreement between CTT and
Native Energy and Development, LLC.
1.2 In the event that CTT intends to distribute the Pain Management
Therapy Device in any of the First Refusal Territories, it will
provide written notice of such intent to Distributor. Distributor
shall have thirty (30) days from the date of such written notice to
present a proposal to CTT for Distributor to distribute the Pain
Management Therapy Device in such intended territory and to negotiate
the terms of any such distribution arrangement. If CTT and Distributor
fail to enter into a definitive agreement providing for such
distribution arrangement within such thirty (30) day period, then (i)
CTT shall have no further obligation to negotiate with Distributor,
(ii) CTT may distribute and/or sell the Products in the First Refusal
Territories, and (iii) CTT shall not have any legal or binding
obligation to Distributor of any kind whatsoever with respect to the
distribution of Products in any of the First Refusal Territories.
"First Refusal Territories" shall mean the following territories:
Canada, Mexico and Cuba, but only for so long, and to the extent, that
the offer and/or sale of the Products is legally permissible in such
territories.
1.3 In the event that CTT develops and intends to distribute a
different or upgraded version of the Pain Management Therapy Device
(an "Improved Device") anywhere within the Territory, CTT will provide
written notice of such intent to Distributor. CTT shall then, by
written notice (an "Offer Notice"), offer Distributor the right to
purchase from CTT during the Term (including any Renewal Term), and
the exclusive right to resell solely within the Territory during the
Term (including any Renewal Term) for use within the Territory, the
Improved Device(s); provided, however, that such right is conditioned
upon CTT obtaining FDA clearance of the Improved Device under Section
510(k). Distributor shall have sixty (60) days from the date of such
Offer Notice to accept such offer; provided, however, that Distributor
shall have no obligation to accept such offer; and provided further,
that such acceptance, once given, shall be irrevocable. Distributor
shall purchase the Improved Device(s) for resale from CTT at a
purchase price equal to the average worldwide pricing (excluding the
Territory) for said Improved Device (increasing as the average
worldwide pricing, excluding the Territory, increases). If Distributor
accepts such offer, Distributor's obligations to purchase the Improved
Device(s) from CTT for resale solely within the Territory for use
within the Territory shall not arise for a period of one year
following Section 510(k) clearance of the
Page 2 of 24
CTT8K7300906
Improved Device by the FDA. Distributor's financial obligations under
paragraphs 3.1, 3.2 and 3.3 shall include sales from the Improved
Device. In the event said Improved Device does not replace the current
Pain Management Therapy Device, CTT shall continue to honor all
requirements of this Agreement. If said Improved Device replaces the
current Pain Management Therapy Device, then, Distributor may still
exhaust Distributor's inventory of the current Pain Management Therapy
Devices and associated disposables and both parties agree to continue
to honor the existing terms of this Agreement. If Distributor accepts
such offer, then (i) CTT shall take all actions necessary to comply
with the requirements of the Section 510(k) clearance process and the
regulations thereunder with respect to the sale of the Improved
Device(s) in the United States of America, and (ii) Distributor shall
be responsible for any product registrations and other legally
required permits, authorizations and/or filings in order to import,
offer, distribute and sell the Improved Device(s) within the Territory
(other than obtaining Section 510(k) clearance in the United States of
America).
1.4 Distributor shall purchase the Pain Management Therapy Device(s)
for resale from CTT at the prices set forth on Schedule 2 hereto
(except to the extent set forth in Section 3.1). In the event that
Distributor elects to purchase Disposables Packages (as defined in
Schedule 1 hereto) from CTT, Distributor may purchase such Disposables
Packages (other than Re-engineered Cables, as defined in Schedule 1
hereto) from CTT at the prices set forth on Schedule 2 hereto;
provided, however, that Distributor shall have no obligation to
purchase Disposables Packages from CTT. In the event that Distributor
desires to purchase Re-engineered Cables from CTT, the parties shall
mutually agree upon the terms and prices of such purchases.
Distributor agrees that it shall not, directly or indirectly, offer or
sell pads for use with the Pain Management Therapy Device(s) that do
not satisfy specifications to be provided to Distributor in writing by
CTT (the "Pads Specifications").
1.5 GEOMC Co. Ltd. of Korea (formerly Daeyang E&C) in Seoul, South
Korea is the manufacturer ("Manufacturer"). All orders for Product(s)
(as defined in Schedule 1 hereto) by Distributor shall be Ex Works
Manufacturer. All risk of loss shall reside with Distributor upon the
Product(s) being made available to Distributor or being delivered to a
common carrier at the Manufacturer's place of business. In the event
that, in breach of this Agreement, CTT fails to sell the Pain
Management Therapy Devices to Distributor or fails to cause such
devices sold to Distributor to be made available to Distributor Ex
Works Manufacturer as provided in this Section 1.5, then Distributor
shall give CTT written notice of such breach, and CTT shall have
thirty (30) calendar days after receipt of such notice to cure
Page 3 of 24
CTT8K7300907
such breach. If CTT fails to cure such breach to the reasonable
satisfaction of Distributor during such thirty (30) calendar day
period, then Distributor may purchase Pain Management Therapy Devices
directly from Manufacturer at the same prices and on the same other
material terms as are set forth in this Agreement. CTT shall advise
Manufacturer of the immediately preceding sentence in writing. In the
event of delays in delivery of the Pain Management Therapy Devices
beyond the delivery period set forth in 3.1, the total payments due
from Distributor during said period shall be extended to the same
extent of the delays incurred.
1.6 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 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 in accordance with wire instructions
provided by CTT. Subject to Section 3.1 herein, the purchase price
shall be paid by Distributor in full within thirty (30) days from the
date of the order by Distributor provided however, said payment date
shall be extended should CTT fail to deliver the order to
Distributor's shipping company, FOB manufacturer within fifteen days
(15) of Distributor's order. Said extension shall be equal to the
number of days after the fifteenth day until delivery to Distributor's
shipping company, FOB Manufacturer.
1.7 All sales to Distributor are final. Any damaged or defective
Product(s) must be returned to the Manufacturer, with any such returns
being subject to the terms of the applicable product warranty provided
by Manufacturer. CTT guarantees performance by Manufacturer of its
obligation under its replacement warranty to repair or replace any
defective Pain Management Therapy Devices in accordance with the terms
and conditions of such replacement warranty.
1.8 CTT shall take all actions necessary to comply with the
requirements of the Section 510(k) clearance process and the
regulations thereunder with respect to the sale of the Pain Management
Therapy Device in the United States of America. Distributor agrees to
be responsible for any product registrations and other legally
required permits, authorizations and/or
Page 4 of 24
CTT8K7300908
filings in order to import, offer, distribute and sell the Products
within the Territory (other than obtaining Section 510(k) clearance in
the United States of America).
1.9 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. CTT agrees to refer all sales inquiries for sales
of Products within the Territory for use within the Territory to
Distributor.
1.10 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 trainers 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
necessary with the exception of manufacturer warranty claims, which
shall be handled by the Manufacturer.
1.11 CTT will provide Distributor initial training on the operation of
the Pain Management Therapy Device during the first twelve (12) months
following the effective date of this Agreement at mutually agreeable
times and locations, but CTT shall not be required to provide more
than twelve (12) training sessions per month. Any travel by the CTT
trainer shall be paid for by Distributor. During the Term, CTT shall
also maintain in its employ a staff person trained to operate and
teach users of the Pain Management Therapy Device, who shall be
available to provide consulting assistance to Distributor not to
exceed twenty (20) hours per month (Distributor shall pay for any
additional consulting at a rate of $250 per day or any part thereof,
plus travel and other expenses).
1.12 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
Page 5 of 24
CTT8K7300909
such materials and any use of such materials is at Distributor's own
risk. To the extent Distributor does use any such materials,
Distributor agrees that it will not use any outdated materials after
the date it receives revised marketing materials from CTT. Distributor
may also provide to its customers the Section 510(k) application and a
copy of any United States or foreign patents.
1.13 Distributor shall provide CTT a monthly written sales summary of
actual and forecasted sales, actual customers and potential customers
(each a "Monthly Report"). Each Monthly Report shall be provided to
CTT on or before the fifteenth (15th) calendar day of the next month.
In addition, Distributor shall promptly provide CTT with the results
of any clinical trials, which results CTT may make public; provided
said disclosure does not violate any publication agreement Distributor
may have with its research consultant, principal investigator, doctor
or clinical site, the intent being that Distributor shall have primary
publication rights which are prior to those of CTT.
1.14 The authority granted to Distributor is to resell those Pain
Management Therapy Device(s) it has purchased from CTT solely within
the Territory for use within the Territory. Moreover, without written
permission from CTT, Distributor shall not sell Pain Management
Therapy Device(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.
1.15 Distributor acknowledges and agrees that Distributor is an
independent contractor 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 a subsidiary or affiliate of CTT, and shall not represent
itself to be, nor permit itself 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 liability or obligation on behalf
of 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.
1.16 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
Page 6 of 24
CTT8K7300910
distribution of medical devices within the Territory. At no time shall
Distributor engage in any high-pressure or unethical sales techniques.
1.17 Distributor is authorized to represent or describe itself as an
"Authorized Distributor or Dealer" 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 commencing on the date
hereof and ending on the fifth (5th) anniversary of the Start Date
("Initial Term"). As used herein, "Start Date" shall mean the first
day of the first full calendar month following the Interim Agreement
Period. The period from the date hereof until the Start Date shall be
the "Interim Agreement Period". The Interim Agreement Period shall
commence on the full execution hereof and end on the last day of the
month in which the one hundred fifty (150) day payment period ends
under paragraph 3.1(k). Each consecutive twelve (12) month period
commencing on the Start Date and each anniversary thereof during the
Initial Term and any extension of the term shall be a "Contract Year".
The first twelve (12) month period commencing on the Start Date shall
be "Contract Year 1". Each consecutive twelve (12) month period
thereafter during the Initial Term and any extension shall be termed
"Contract Year 2", "Contract Year 3" and so on, as applicable. The
term of this Agreement (the "Term") shall initially mean the Initial
Term. Subject to the balance of this Section 2.1, the Term of this
Agreement shall automatically extend for two additional ten (10) year
periods (each such ten (10) year period, a "Renewal Term"), each
Renewal Term commencing on the day following expiration of the then
current Term. Distributor may cause this Agreement to terminate at the
end of the then current Term by giving CTT written notice of
non-renewal (a "Notice of Non-Renewal") at least one hundred eighty
(180) days prior to, but not more than three hundred sixty (360) days
prior to, the end of the then-current Term. Once given, a Notice of
Non-Renewal shall be irrevocable. Notwithstanding the foregoing, at
CTT's option, CTT may cause this Agreement to terminate at the end of
the then current Term (in which case this Agreement shall not
automatically extend for any applicable Renewal Term) if Distributor
is in breach or default under this Agreement immediately prior to
expiration of the then current Term and said default has not been
cured pursuant to any applicable cure period .
2.2 Either Distributor or CTT may terminate this Agreement at any
time if the other Party shall breach or violate its obligations
hereunder; provided, however, that (i) except in the case of a breach
or violation of Section
Page 7 of 24
CTT8K7300911
3.1(a) through (g) (time being of the essence with respect to the
payments required by Section 3.1(a) through (g)), Section 3.2 or
Section 3.3, 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; and (ii) in the case of a breach or violation of Section 3.2
or 3.3, the non-breaching Party shall give the breaching Party written
notice of such breach, and the breaching Party shall have ninety (90)
calendar days after receipt of such notice to cure such breach. If
such curable 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 curable breach is not cured
to the reasonable satisfaction of the non-breaching party during such
period, then the non-breaching party may terminate this Agreement upon
five (5) business days written notice to the breaching Party.
2.3 In the event that, under governmental order, decree, law, rule or
regulation, CTT ceases to have the right to sell the Pain Management
Therapy Device(s), Distributor's right to purchase Product(s) from CTT
shall immediately cease, and CTT shall have no liability whatsoever to
Distributor arising from such cessation of sales. Notwithstanding the
foregoing, CTT shall not have the right to terminate this agreement if
the governmental order, decree has a provision or term which if CTT
were to comply to, would permit CTT to continue to distribute the Pain
Management Therapy Devices.
2.4 Upon termination of this Agreement, Distributor shall immediately
return to CTT, in accordance with its instructions, all confidential
information belonging to CTT in possession or control of Distributor,
without retaining any copies thereof and shall promptly cease to
publicize its relationship to CTT hereunder or, except as necessary to
exercise its rights under Section 2.5, otherwise identify itself with
the Pain Management Therapy Device(s).
2.5 Following termination of this Agreement, Distributor shall have
the right to continue to service, including replacement as necessary,
any Pain Management Therapy Devices sold by Distributor prior to such
termination, including the continuing right to supply Disposables
Packages to its customer for use with such Pain Management Therapy
Devices. Further, Distributor shall have the right to either; sell
back the Pain Management Therapy Devices and Disposables Packages to
CTT for the full purchase price less ten percent (10%) restocking fee
or to continuing to sell the inventory of said Pain Therapy Devices
and Disposables Packages until the earlier of: CTT executes an
exclusive distribution
Page 8 of 24
CTT8K7300912
agreement (in which case the buy back provisions shall apply) or the
Distributor's inventory is fully depleted.
2.6 The terms and conditions of the following sections shall survive
any termination or expiration of this Agreement: Sections 1.5, 1.6,
1.7, 1.15, 1.16, 2.3, 2.4, 2.5, 2.6, 5.0, 8.0 and 9.0, as well as any
other provisions that may be necessary to interpret the same.
3.0 MINIMUM PAYMENTS AND PURCHASE OBLIGATIONS
3.1 Distributor agrees to make the following payments to CTT:
(a) Eighty-five Thousand Dollars ($85,000) within five business
days of the full execution of this Agreement.
(b) The sum of One Hundred Thousand Dollars ($100,000) within
thirty (30) days of the full execution of this Agreement.
(c) The sum of One Hundred Fifty Thousand Dollars ($150,000)
within sixty (60) days of the full execution of this Agreement.
(d) The sum of Two Hundred Thousand Dollars ($200,000) within
ninety (90) days of the full execution of this Agreement.
(e) The sum of Two Hundred Fifty Thousand Dollars ($250,000)
within one hundred twenty (120) days of the full execution of
this Agreement
(f) The sum of Three Hundred Thousand Dollars ($300,000) within
one hundred fifty days (150) of the full execution of this
Agreement.
In consideration for the payments as set forth in (a) through (f)
above, CTT shall deliver to Distributor (Ex Works Manufacturer),
fifteen days of CTT's receipt of such payment such Pain Therapy
Devices and associated supplies at the prices set forth in Schedule 2.
Notwithstanding any other provision in this section 3.1, or
elsewhere, in the event Distributor fails to make any payment set
forth in 3.1(a) through (f) above, CTT shall provide Distributor with
written notice of default and Distributor shall have ten (10) business
days to cure said default.
Page 9 of 24
CTT8K7300913
3.2 Thereafter, following the payments to CTT set forth in Section
3.1, Distributor agrees to make the following minimum monthly payments
to CTT:
(a) Months one (1) through twelve (12), three hundred fifty
thousand dollars ($350,000) per month (such minimum monthly
payments would aggregate $4,200,000 for the twelve (12) month
period).
(b) Months thirteen (13) through twenty four (24), four hundred
thousand dollars ($400,000) per month (such minimum monthly
payments would aggregate $4,800,000 for the twelve (12) month
period).
(c) Months twenty five (25) through thirty six (36), five
hundred thousand dollars ($500,000) per month (such minimum
monthly payments would aggregate $6,000,000 for the twelve (12)
month period).
(d) Months thirty seven (37) through the end of the Initial
Term, seven hundred fifty thousand dollars ($750,000) per month
(such minimum monthly payments would aggregate $9,000,000
annualized).
3.3 Thereafter, during the Renewal Term(s), if any, Distributor
agrees to make the following minimum monthly payments to CTT:
(a) One million dollars ($1,000,000) per month for each month
during Contract Year 5 ($12,000,000 in the aggregate for the
twelve (12) month period).
(b) One million two hundred fifty thousand dollars ($1,250,000)
per month for each month during Contract Year 6 (such minimum
monthly payments would aggregate $15,000,000 for the twelve (12)
month period).
(c) One million five hundred thousand dollars ($1,500,000) per
month for each month during Contract Year 7 (such minimum monthly
payments would aggregate $18,000,000 for the twelve (12) month
period.
(d) One million seven hundred fifty thousand dollars
($1,750,000) per month for each month during Contract Year 8 and
each Contract Year thereafter until the end of the Term (such
Page 10 of 24
CTT8K7300914
minimum monthly payments would aggregate $21,000,000 for the
twelve (12) month period.
3.4 For purposes of Sections 3.1, 3.2 and 3.3, if the Start Date
occurred on July 1, 2009, then (i) Start Date shall mean July 1, 2009,
(ii) Contract Year 1 shall mean July 1, 2009 through June 30, 2010,
(iii) the payment under Section 3.1(a) shall be due July 9, 2009 (5
business days from July 1, 2009), (iv) the total payments due to CTT
under Section 3.1(b) shall be due by July 31, 2009 (30 days from July
1, 2009), (v) the total payments under Section 3.1(c) shall be due by
August 30, 2009 (60) days from July 1, 2009), etc. and (vi) November
2010 shall be month one (1) for purposes of Section 3.2(a).
3.5 For purposes of Sections 3.1(a) through (f) above, in the event
Distributor elects to defer delivery of any Pain Management Therapy
Devices and/or Disposables Packages to a later date, Manufacturer
shall hold such Products until such time as Distributor requests
availability (ex works manufacturer) of the balance of the Products.
3.6 For purposes of Sections 3.2 and 3.3 above, such payments shall
be for the purchase of Products from CTT at the purchase prices set
forth on Schedule 2 hereto. Additionally, provided payment is made to
CTT for the purchase price set forth in Schedule 2, CTT shall credit
said payments to the benefit of Distributor for purposes of 3.1, 3.2
and 3.3 above in all instances where a lease agreement is entered into
which results in a sale to CTT as contemplated herein.
3.7 For purposes of Sections 3.2 and 3.3 above, Distributor may apply
each minimum monthly payment to the purchase of Pain Management
Therapy Devices and/or Disposables Packages in such proportion as
Distributor determines; provided that at least fifty percent (50%) of
each minimum monthly payment shall be applied to the purchase of Pain
Management Therapy Devices.
3.8 Time is of the essence with respect to all payments to be made
hereunder. In the event that Distributor fails to timely make any of
the payments to CTT required by Section 3.1 above within any
applicable cure periods set forth in Section 3.1 above, then CTT may
terminate this Agreement effective immediately by written notice to
Distributor and Distributor shall have no further rights hereunder. In
the event that Distributor fails to timely make any other payments to
CTT required by this Agreement (other than the payments required by
Section 3.1 above), then Section 2.2 above shall apply to such breach
or violation.
Page 11 of 24
CTT8K7300915
4.0 RESALES
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.
4.2 Distributor shall be responsible for any and all taxes,
assessments or other charges of any kind that may be imposed on CTT or
Distributor by any governmental taxing authority as a result of the
this Agreement or sale or use of any Product, other than taxes based
upon the income of CTT.
4.3 CTT agrees to transfer all right title and interest it may have
in any units it has already places in the Distribution Area (provided
CTT has not relinquished title to same, in which case, CTT shall
provide evidence of same within ten (10) days of signing of this
agreement) and CTT shall turn over such paperwork/information as
necessary so as to enable Distributor to service, manage and derive
revenue from said devices.
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 a Party hereto
or its clients, including, without limitation, any information
which, if kept secret, will provide such Party 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 the
disclosing Party to the receiving Party was already in the
possession of the receiving Party, as shown by written records
existing at such time; (ii) is independently made available to
the receiving Party on a non-confidential basis by an unrelated
and independent third party whose disclosure does not constitute
a
Page 12 of 24
CTT8K7300916
breach of any duty of confidentiality owed to the disclosing
Party or its clients; or (iii) is generally available to the
public in a readily-available document.
B. Except as required in considering a potential business
relationship with the disclosing Party or its clients, in
connection with an actual business relationship with the
disclosing Party or its clients, or with the prior written
authorization of the disclosing Party, the receiving Party shall
not directly or indirectly use, disclose, disseminate, publish or
otherwise reveal any Confidential Information of the disclosing
Party for the benefit of any party other than the disclosing
Party or its clients. In the event that the receiving Party is
required by legal process (court order, subpoena, etc.) to
disclose Confidential Information, the receiving Party shall
first (unless expressly prohibited by law) provide the disclosing
Party with notice and the opportunity to take appropriate action
to preserve the confidential nature of the information; provided,
that in the event the disclosing Party 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,
the receiving Party 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
the receiving Party's counsel.
C. Upon termination of the receiving Party's discussions with
the disclosing Party concerning a potential business relationship
or the termination of any actual business relationship, in either
case, for any reason, or upon the disclosing Party's earlier
request, the receiving Party shall return to the disclosing Party
or destroy all Confidential Information of the disclosing Party
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. This Section 5.1(c) shall not apply to
information required to be delivered by Distributor pursuant to
Section 1.13.
D. Notwithstanding anything to the contrary contained herein,
(i) CTT shall have no further obligations under this Section 5.1
from and after the expiration or termination of this Agreement,
and (ii) CTT may use and/or disclose Confidential Information of
Distributor to the extent reasonably appropriate or required for
CTT to comply with applicable securities laws, rules and
regulations or the requirements of any applicable stock exchange
or market.
Page 13 of 24
CTT8K7300917
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.
5.3 Non-Disparagement. CTT acknowledges that any disparaging comments
by CTT or its principals, employees or agent against Distributor 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 in
any way, which includes, CTT's agreement not to defame or publicly
criticize the services, business, integrity, veracity or reputation of
Distributor, 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.
Page 14 of 24
CTT8K7300918
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 Subject to Section 1.3, Distributor shall not sell or distribute
products in the Territory that are identical to the Pain Management
Therapy Device(s).
Subject to Section 1.3, CTT shall not sell or distribute products
in the Territory that are identical to the Pain Management Therapy
Device(s) during the period the Distributor has the exclusive right to
sell the Pain Management Therapy Device(s) within the Territory. If
Distributor no longer has exclusive rights, CTT will have the right to
distribute identical or substantially similar products in the
Territory.
7.0 ASSIGNMENT OR SUBCONTRACTING
7.1 This is a personal services agreement. Distributor may not assign
or transfer this Agreement, or any interest therein or claim
hereunder, or subcontract any rights hereunder, without the prior
written approval of CTT. 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. Notwithstanding the foregoing, Distributor
may assign certain rights under this Agreement to one or more entities
having common ownership with Distributor for purposes of business, tax
or other reasons in Distributor's sole discretion, provided that CTT
is given prior written notice of such assignment; and provided further
that no such assignment shall relieve Distributor of its liabilities
or 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) any breach of any representation or
warranty of Distributor contained herein; (b) any breach of any
covenant of Distributor contained herein, (c) the grossly negligent,
intentionally wrongful or illegal acts or omissions of Distributor; or
(d) any actions of Distributor beyond its authority granted
Page 15 of 24
CTT8K7300919
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 resulting from or arising out of
third party claims based upon, (a) any breach of any representation or
warranty of CTT contained herein; or (b) any breach of any covenant of
CTT contained herein.
8.2 EXCEPT 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 REPRESENTATIONS AND WARRANTIES; OTHER COVENANTS
9.1 CTT represents and warrants to Distributor as follows:
(a) CTT is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. CTT has
the corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. This
Agreement has been executed and delivered by CTT and is the valid
and binding obligation of CTT, enforceable against CTT in
accordance with its terms.
(b) At the time of delivery of Products to Distributor, CTT will
have good and marketable title to such Products. No Products
delivered to Distributor by CTT or Manufacturer hereunder will,
at the time of delivery, be subject to any liens, claims,
encumbrances, security interests or restraints on transfer.
Page 16 of 24
CTT8K7300920
(c) CTT has all necessary rights to grant to Distributor the
rights granted to Distributor in this Agreement.
(c) Except for the Section 510(k) clearance process and any
other legally required product registrations, applications,
permits, authorizations and/or filings in order to manufacture,
import, offer, distribute and/or sell the Products, (i) there is
no litigation, governmental proceeding or governmental
investigation pending, or to the knowledge of CTT, threatened,
which affects the Pain Management Therapy Device or may impair
CTT's ability to perform its obligations under this Agreement;
and (ii) there is no outstanding judgment, order, injunction or
decree of any court, government or governmental agency against
CTT relating to the Pain Management Therapy Device or affecting
the Pain Management Therapy Device.
9.2 Distributor represents and warrants to CTT that Distributor is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware; that Distributor has the
corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder; and that this Agreement has
been executed and delivered by Distributor and is the valid and
binding obligation of Distributor, enforceable against Distributor in
accordance with its terms.
10.0 MISCELLANEOUS
10.1 AMENDMENT AND WAIVER. Any provision of this Agreement may be
amended or waived only with the written and signed consent of both
Parties. The terms and conditions contained herein shall control in
all respects concerning the sale of Product(s) notwithstanding the
printed terms and conditions stated in any purchase order, sales
order, order acknowledgement, confirmation or other form submitted by
CTT or Distributor to the other in connection with the sale of the
Product(s). CTT and Distributor hereby object in advance to any
inconsistent printed terms and conditions set forth in any such sales
order, purchase order, order acknowledgement, confirmation or other
form. Failure by a Party to enforce any provision of this Agreement or
to assert a claim on account of breach of this Agreement shall not be
deemed a waiver of its right to enforce the same or any other
provision of this Agreement on the occasion of a subsequent breach.
10.2 SEVERABILITY. If any provision of this Agreement shall be held to
be illegal, invalid, or unenforceable, such provision will be enforced
to the maximum
Page 17 of 24
CTT8K7300921
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.
10.3 APPLICABLE LAW. This Agreement shall be governed by the laws of
the State of Connecticut, 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.
10.4 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 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:
Michael H. Clinton
President and CEO
Innovative Medical Therapies, Inc.
212A New London Turnpike
Glastonbury, CT 06033
Page 18 of 24
CTT8K7300922
10.5 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.
10.6 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" 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."
10.7 REMEDIES. The remedies provided in this Agreement are not and
shall not be deemed to be exclusive and shall be in addition to any
other remedies that any Party may have at law or in equity. Without
limiting the foregoing provisions of this Section 10.7, in the event
that any party breaches or threatens to breach any of the covenants
contained in Sections 5.0 or 6.0, the non-breaching party shall be
entitled to both (i) a preliminary and permanent injunction to prevent
the continuation of such harm, without the need of posting bond, and
(ii) money damages insofar as they can be determined.
10.8 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.
10.9 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 date first written above.
Page 19 of 24
CTT8K7300923
10.10 EXPENSES. Each party shall bear its own expenses, including the
fees of attorneys and accountants, arising in connection with this
Agreement or the transactions contemplated hereby.
10.11 ARBITRATION. Subject to disputes for which injunctive relief is
sought, any dispute between the parties relating to the subject matter
of this Agreement shall be subject to binding arbitration with the
American Arbitration Association. Any arbitration proceeding shall be
held in Bridgeport, Connecticut. The AAA commercial dispute
arbitration rules and procedures shall apply to any proceeding. The
arbitrator(s) determination shall be final and binding as to all
disputed matters. Judgment upon an award rendered by the arbitrator(s)
may be entered by a court having competent jurisdiction. The
prevailing party (as determined by the arbitrator(s)) shall be
entitled to an award of reasonable attorneys fees.
10.12 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.
10.13 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]
Page 20 of 24
CTT8K7300924
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
dates shown below.
COMPETITIVE TECHNOLOGIES, INC. INNOVATIVE MEDICAL THERAPIES, INC.
BY: \S\ JOHN B. NANO BY: \S\ MICHAEL H. CLINTON
- -------------------------------- ----------------------------------
NAME: JOHN B. NANO NAME: MICHAEL H. CLINTON
TITLE: CHAIRMAN, PRESIDENT & CEO TITLE: PRESIDENT AND CEO
DATE: JULY 29, 2009 DATE: JULY 29, 2009
Page 21 of 24
CTT8K7300925
SCHEDULE 1
PRODUCT(S)
1. PAIN MANAGEMENT THERAPY DEVICE. "Pain Management Therapy Device" shall
mean the Scrambler Therapy Model MC-5A multiprocessor device* for use in pain
management therapy, which is more commonly referred to the "Scrambler Therapy
MC-5A" device, plus one complete Cable Disposables Package.
2. CABLE DISPOSABLES PACKAGE. "Cable Disposables Package" shall mean a
package comprised of five (5) cables with two (2) electrodes each, but does not
include Re-engineered Cables (as defined in this Schedule 1).
3. PADS DISPOSABLES PACKAGE. "Pads Disposables Package" shall mean a
package comprised of ten (10) latex free pads per package, satisfying the Pads
Specifications.
Cable Disposables Packages and Pads Disposables Packages may collectively be
referred to herein as "Disposables Packages". As used herein, "Product(s)"
shall mean any or all of the Pain Management Therapy Device(s), the Cable
Disposables Package(s) and/or the Pads Disposables Package(s).
* The parties agree that Distributor may engineer new cables ("Re-engineered
Cables") for use on the Pain Management Therapy Device and CTT shall provide
manufacturer with new specifications for the connections required for the
cables. CTT shall cooperate with Distributor's engineering efforts in this
regard and shall provide sufficient engineering and specification information so
as to permit Distributor to design the connection ports on the Pain Management
Therapy Device. Upon Distributor's request, and provided that Distributor has
submitted properly engineered schematic drawings and specifications, CTT shall
obtain the changes from the manufacturer with six (6) months prior notice in
order to allow Manufacturer to make fabrication changes for production.
Page 22 of 24
CTT8K7300926
SCHEDULE 2
PRODUCT(S) PRICING
PER UNIT
PRODUCT PURCHASE PRICE
- ------------------ ------------------------------------------------------------
Pain Managment Contract Years 1, 2 and 3:
Therapy Device (and Interim Agreement Period)
[Confidential Pricing Information Omitted]
Contract Year 4 and Year 5:
[Confidential Pricing Information Omitted]
Contract Years 6 through 25 (if applicable):
[Confidential Pricing Information Omitted]
- ------------------ ------------------------------------------------------------
Cable Disposables Contract Years 1, 2 and 3:
Package (and Interim Agreement Period)
[Confidential Pricing Information Omitted]
Contract Year 4:
[Confidential Pricing Information Omitted]
Contract Year 5:
[Confidential Pricing Information Omitted]
Contract Years 6 through 25 (if applicable):
[Confidential Pricing Information Omitted]
- ------------------ ------------------------------------------------------------
Pads Disposables Contract Years 1, 2 and 3:
Package (and Interim Agreement Period)
[Confidential Pricing Information Omitted]
Contract Year 4:
[Confidential Pricing Information Omitted]
Contract Year 5:
[Confidential Pricing Information Omitted]
Confidential Treatment Requested by Competitive Technologies, Inc.
Page 23 of 24
CTT8K7300927
Contract Years 6 through 25 (if applicable):
[Confidential Pricing Information Omitted]
- ------------------ ------------------------------------------------------------
Note - [Confidential Pricing Information Omitted]
Confidential Treatment Requested by Competitive Technologies, Inc.
Page 24 of 24
CTT8K7300928