EXCLUSIVE DISTRIBUTION AGREEMENT
BETWEEN
SCANTEK MEDICAL, INC.
AND
NUGARD HEALTHCARE, LTD.
THIS AGREEMENT is made as of the 14th day of JULY, 1999 by and between Scantek
Medical, Inc. a Delaware corporation (the "Manufacturer") having its principal
place of business at 000 Xxxxxx Xxxx, Xxxxxxxx, Xxx Xxxxxx 00000, and Nugard
HealthCare, Ltd, a Limited Liability corporation (the "Distributor") having its
principal place of business in Dublin, Ireland.
WHEREAS, the Manufacturer is the owner of certain technology which is the object
of Letters Patent of the United States which is described on Exhibit "A", which
is annexed hereto and made a part hereof. Said technology includes, but is not
limited to, certain technical trade secrets and business know-how (hereinafter
referred to jointly and severally as the "Technology"). In addition to patents
granted in the United States, the Technology has been granted patents which are
owned by the Manufacturer in countries other than the United States; and
WHEREAS, the Manufacturer is the owner of the trademark "BreastCare" which is
registered in the United States Patent Office which it has continued to use and
in which it has retained common law rights (the "Trademarks") (a copy of the
registration is annexed hereto as Exhibit "B" and made a part hereof and which
is used in connection with the Letters Patent for the Products)
WHEREAS, the Distributor is desirous of obtaining, for itself, an
exclusive right to distribute, directly or through sub-distributors, in the
Territory, as defined below, certain devices made with the Technology, which are
further described on Exhibit "C" which is annexed hereto and made a part hereof
(the "Products"); and
WHEREAS, the Manufacturer is willing to grant such rights to the
Distributor upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged,
IT IS AGREED:
1. Recitals Adopted. The parties hereby adopt as part of this Agreement each of
the recitals which are contained above in the WHEREAS clauses, and agree that
such recitals shall be binding upon the parties hereto by way of contract and
not merely by way of recital or inducement; and such
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clauses are hereby confirmed and ratified as being accurate by each party as to
itself.
2. Certain Definitions
The following terms as used in this Agreement shall, unless clearly
indicated otherwise, have the following meanings:
A. "Contract Year" shall mean the twelve (12) month period commencing
upon the date which appears on page "1" of this Agreement. Each subsequent
Contract Year shall commence upon the anniversary date of this Agreement.
B. "Dollars" shall mean United States Dollars.
C. "Minimum Product Purchases" shall mean the minimum purchases of
Products specified on Exhibit "D" which is annexed hereto and made a part hereof
D. "Net Sales" shall mean the gross amount invoiced for the Products
less duties, taxes and other governmental charges.
E. "Products" shall mean the Breast Thermal Activity Indicator ("BTAI")
devices which are described on Exhibit "C", which is annexed hereto and made a
part hereof, which are also registered under the Trademarks "BreastCare", and
all improvements thereto to be marketed by the Distributor in the Territory
(hereinafter defined).
F. "Technical Information and Know-How" or "Intellectual Property" shall
mean all information belonging to the Manufacturer or in the Manufacturer's
possession which is necessary for the assembly, marketing and use of the
Products including, inter alia, written assembly directions, quality control
specifications and procedures used in connection therewith and information and
data with respect to the use of the Technology and the Products, and also
information utilized by the Manufacturer in obtaining governmental approvals for
the sale of the Products.
G. "Territory" shall mean the geographic area listed on Exhibit "E"
which is annexed hereto and made a part hereof If the Territory is decreased
pursuant to the provisions of Article "8". of this Agreement, then the Territory
shall mean such decreased geographic area.
H. "Wholesale Price" shall mean the price set forth in Paragraph "C" of
Article "9"of this Agreement.
3. Exclusive Agreement
A. Subject to the Distributor's compliance with the terms hereof, the
Manufacturer hereby grants to the Distributor during the term hereof, a
non-assignable, indivisible, non-transferrable exclusive right to distribute and
sell the Products within, and only within, the Territory. However, the
Distributor shall have right to retain and utilize subdistributors, subject to
the prior written consent of the Manufacturer which shall be given in its sole
and absolute discretion (hereinafter
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referred to as an "Acceptable Subdistributor"). The Manufacturer may reject any
subdistributor in its sole and absolute discretion.
B. The Distributor shall purchase the Products solely from the
Manufacturer. The Distributor shall purchase not less than the Minimum Product
Purchases.
C. All manufacturing of the Products shall be the responsibility and
under control of the Manufacturer. The Distributor shall not attempt, directly
or indirectly, to compete with the Manufacturer in manufacturing the Products.
D. This Agreement shall not be construed as a license by implication or
otherwise under any patent and trademark applications or patents owned by the
Manufacturer or under which the Manufacturer has or acquires the right to grant
licenses, except as otherwise specifically set forth.
4. Representations. Warranties and Covenants.
The Manufacturer represents, warrants, and covenants to the Distributor
that:
(i) The Manufacturer is a corporation duly authorized, validly existing and
in good standing under the laws of the State of Delaware with all the requisite
power and authority to carry on its businesses presently conducted in all
jurisdictions where presently conducted.
(ii) The Manufacturer has the full right, power and legal capacity to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution of this Agreement by the Manufacturer, and its delivery to the
Distributor, and the consummation by it of the transactions contemplated hereby
have been duly approved and authorized by all necessary action of the
Manufacturer's Board of Directors, and no further authorization shall be
necessary on the part of the Manufacturer for the performance and consummation
by the Manufacturer of the transactions contemplated hereby. A copy of the
minutes of said action of the Board of Directors is annexed hereto as Exhibit
"F"'.
(iii) The business and operations of the Manufacturer have been and are
being conducted in accordance with all applicable laws, rules, and regulations
of all authorities which affect the Manufacturer or its properties, assets,
businesses or prospects. The performance of this Agreement shall not result in
any breach of, or constitute a default under, or result in the imposition of any
lien or encumbrance upon any property of the Manufacturer or cause an
acceleration under any arrangement, agreement or other instrument to which the
Manufacturer is a party or by which any of its assets are bound. The
Manufacturer has performed all of its obligations which are required to be
performed by it pursuant to the terms of any such agreement, contract, or
commitment.
(iv) The Manufacturer does not know or have any reason to believe that any
Product or any of the Intellectual Property infringes on any trademark, trade
name, servicemark, copyright or patent or any trade secret or other proprietary
right of any other person. The
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Manufacturer is the sole and exclusive owner of the Intellectual Property and
has the sole and exclusive right to license the use thereof to the Distributor.
The Manufacturer does not know or have any reason to believe that there are any
claims of any third parties with respect to the use of any of the Intellectual
Property within the Territory.
(v) The Manufacturer has not granted and will not grant, directly or
indirectly, to any other person any right to use any right or license to use any
Intellectual Property within the Territory.
(vi) The Manufacturer has not granted and will not, during the term of this
Agreement, grant, directly or indirectly, to any person any right (whether
current, future, contingent or otherwise) to sell the Products in or into the
Territory.
(vii) No representation or warranty of the Manufacturer which is contained
in this Agreement or in a writing furnished or to be furnished pursuant to this
Agreement contains or shall contain any untrue statement of a material fact,
omits or shall omit to state any material fact which is required to make the
statements which are contained herein or therein, not misleading.
(viii) It shall not be a defense to a suit for damages for any
misrepresentation or breach of covenant or warranty that the Distributor knew or
had reason to know that any covenant, representation or warranty in this
Agreement or furnished or to be furnished to the Distributor contained untrue
statements.
B. The Distributor represents, warrants and covenants to Manufacturer as
follows:
(i) The Distributor is a corporation duly authorized, validly existing and
in good standing under the laws of Ireland with all the requisite power and
authority to carry on its businesses presently conducted in all jurisdictions
where presently conducted.
(ii) The Distributor has the full right, power and legal capacity to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution of this Agreement by the Distributor, and its delivery to the
Manufacturer, and the consummation by it of the transactions contemplated hereby
have been duly approved and authorized by all necessary action of the
Distributor's Board of Directors, and no further authorization shall be
necessary on the part of the Distributor for the performance and consummation by
the Distributor of the transactions contemplated hereby. A copy of the minutes
of said action by the Board of Directors is annexed hereto as Exhibit "G". The
execution, delivery and performance of this Agreement in accordance with its
terms does not and will not require approval, consent or authorization of any
governmental agency or authority including, but not limited to, any governmental
agency or authority of Ireland and/or the United Kingdom or any political
subdivision thereof
(iii) The business and operations of the Distributor have been and are
being
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conducted in accordance with all applicable laws, rules, and regulations of all
authorities which affect the Distributor or its properties, assets, businesses
or prospects. The performance of this Agreement shall not result in any breach
of, or constitute a default under, or result in the imposition of any lien or
encumbrance upon any property of the Distributor or cause an acceleration under
any arrangement, agreement or other instrument to which the Distributor is a
party or by which any of its assets are bound. The Distributor has performed all
of its obligations which are required to be performed by it pursuant to the
terms of any such agreement contract, or commitment.
(iv) No representation or warranty of the Distributor which is contained in
this Agreement or in a writing finished or to be furnished pursuant to this
Agreement contains or shall contain any untrue statement of a material fact,
omits or shall omit to state any material fact which is required to make the
statements which are contained herein or therein, not misleading.
(v) The Distributor will not grant, directly or indirectly, to any other
person other than an Acceptable Subdistributor any right to use any right or
license to use any Intellectual Property within the Territory.
(vi) The Distributor has the distributing capacity and the financial
resources to satisfy the Minimum Product Purchases requirements as specified on
Exhibit "D" on a timely basis.
(vii) It shall not be a defense to a suit for damages for any
misrepresentation or breach of covenant or warranty that the Manufacturer knew
or had reason to know that any covenant, representation or warranty in this
Agreement or furnished or to be furnished to the Manufacturer contained untrue
statements.
5. Stock Ownership, Initial Fee
A. In addition to any other fees specified in this Agreement, and solely as
consideration for the Manufacturer's entry into this Agreement, the Distributor
shall pay to the Manufacturer a non-refundable fee of fifteen (15%) percent of
the fully diluted, total issued and outstanding common shares of the Distributor
and Three Hundred Fifty Thousand (US $350,000) to be paid in installments as
follows:
1. Forty-Five Thousand (US $45,000) Dollars upon the execution of this
Agreement;
2. Two Thousand (US$2,000) Dollars per month for 12 months, which 12 month
term will commence one (1) month after the signing of the Agreement.
3. Sixty Nine Thousand (US$69,000) Dollars on the first anniversary of
signing.
4. The balance of Two Hundred Fifty Thousand (US$250,000) is to be paid
over 2 years and 2 months, as follows:
US$3,000 for next 6 months = $18,000
US$7,000 for next 6 months = $42,000
US$l0,000 for next 7 months = $70,000
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US$20,000 for next 7 months = $120,000
5. Fifteen (15%) percent of fully diluted, total issued and outstanding
common shares upon execution of this Agreement.
B. Fifteen (15%) percent of the equity of the Distributor which is owned by
the Manufacturer pursuant to this Agreement shall not be diluted for any reason
whatsoever. If there is any such dilution, the Manufacturer, in its sole and
absolute discretion, may terminate this Agreement. Such termination shall be in
addition to the Manufacturer's other remedies pursuant to this Agreement or
otherwise and shall not be construed to be a waiver of any other right or
remedies which the Manufacturer may have for damages or otherwise.
C. The Distributor agrees to limit membership on its Board of Directors to
five (5) members of which the Manufacturer shall have the right to designate up
to one (1) Director. The Distributor represents and warrants to the Manufacturer
that it has an agreement with its shareholders that they will vote for the one
(1) Director designated by the Manufacturer.
6. Record Keeping, Reports
A. Not later than thirty (30) days after the end of each quarter, the
Distributor shall furnish the Manufacturer with a detailed statement, certified
to be true and correct by both its president and treasurer, respectively, or
another executive officer, (provided, however that the president and the
treasurer or such other executive officer shall not be the same individual)
showing all sales of the Products made in the Territory during such quarter, any
trade discounts and allowances, and all credits for returned Products and other
similar adjustments together with copies of documents which support the detailed
statement.
B. The Distributor shall maintain true, complete, and correct books of
account and records of all transactions within the scope of this Agreement, in
accordance with generally accepted accounting principles, to enable the
Manufacturer to ascertain all amounts purchased pursuant to this Agreement. The
Manufacturer and/or its duly authorized representatives shall have the right,
during regular business hours, for the duration of this Agreement and for three
(3) years thereafter, to examine said books of account and records and all other
documents (including but not limited to sales invoices) and material in the
possession or under the control of the Distributor with respect to the subject
matter and the terms of this Agreement; and the Manufacturer shall have free and
full access thereto for said purposes and for the purpose of making extracts
therefrom. The Manufacturer will have the right at such inspection to examine
all information pertinent to this Agreement dating from its execution. All such
books and records shall be kept available by the Distributor for at least three
(3) years after the termination of this Agreement. If, upon audit, it is
revealed that there is due and owing by the
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Distributor an amount which exceeds the amount which was paid to the
Manufacturer with respect to any Contract Year by two (2) percent or more, the
cost of the audit shall be borne by the Distributor.
7. Advertising, Marketing and Sales
A. During each Contract Year, the Distributor shall have sufficient
quality personnel and capital resources to effect not less than the Minimum
Product Purchases of the Product. The Distributor shall provide the Manufacturer
with a complete list of the Distributor's personnel records for the Territory
for each calendar quarter.
B. The Distributor shall also provide to the Manufacturer a letter of
financial security prepared by a Certified Public Accountant that shall attest,
in writing, that the Distributor is a going concern and not the subject of any
proceeding that would jeopardize its financial stability.
C. The Distributor has the responsibility to provide for all marketing
materials to enable its sales personnel to function properly. The Manufacturer
shall have no obligation to incur any expense with respect to the Distributor's
advertising or marketing, except for the provision of generic marketing
materials and 100 samples of product.
D. The Distributor will spend $20,000 during each of the initial six (6)
months of this Agreement for advertising. Thereafter, the Distributor will spend
for advertising the Products during each calendar quarter a minimum of five (5%)
percent of the Net Sales, from Products sold in the Territory during the prior
calendar quarter during the Term (hereinafter defined).
8. Contract Term
Subject to the provisions of Article "12" of this Agreement, the term of
this Agreement shall be fourteen (14) years (the "Term").
9. Payment; Terms
A. The Distributor shall pay the Wholesale Price with respect to
Products delivered to the Distributor or, at the Distributor's request, to the
Distributor's customers, within thirty (30) days after the shipment of such
Products.
B. Unless otherwise agreed in writing, the Products shall be shipped
F.O.B. the Manufacturer's (or its subcontractors) place of business. The
Distributor shall be responsible for risk of loss, customs clearing, and
transportation. The Distributor acknowledges that it is responsible for the cost
of shipment and insurance of all units purchased once they are delivered to the
F.O.B. point. Title to all products shall pass to the Distributor upon shipping
F.O.B.
C. The Distributor shall pay to the Manufacturer the Wholesale Price
with respect to each Product purchased by the Distributor as hereinafter set
forth in this Paragraph "C" of this Article "9" of this Agreement. The initial
price per Product shall be equal to $10.00. The $10.00 selling price will be
adjusted increased on each successive January 1st, commencing January 1, 2000,
by
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an amount which is equal to the increase in the cost of living (hereinafter
referred to as the "COL Index") from the average for the year of January 1, 1998
through December 31, 1998 (hereinafter referred to as the "COL Year") to the
average for the twelve (12) month period immediately preceding the first day of
the year in which such Wholesale Price shall be payable (each such year is
hereinafter referred to as the "Determination Year"). In order to determine the
average for the COL Year or for the Determination Year, the cost of living for
each of the twelve months in the COL Year or in the Determination Year, as the
case may be, shall be added and the resultant figure shall be divided by 12. All
cost of living computations shall be based upon the Consumer Price Index for all
Urban Consumers for New York, Northeast New Jersey for "all items" of the Bureau
of Labor Statistics of the United States Department of Labor (hereinafter
referred to as the "Index"), or if, at the time a determination must be made,
the Index is no longer published or issued, such other index as is generally
recognized and accepted for similar determinations. The amount of the increase
shall be computed by multiplying ten ($10) dollars by a fraction, the numerator
of which is the average cost of living for the Determination Year and the
denominator of which is the average cost of living for the COL Year. By way of
illustration, assume the following: (i) the average cost of living for the COL
Year is One Hundred ($100) Dollars, (ii) the average cost of living for the
Determination Year of January 1, 2001 through December 31, 2001 is One Hundred
Ten ($110) Dollars, In this example, the price per Product which shall be
payable for the year of January 1, 2002 through December 31, 2002 shall be
Eleven ($11) Dollars, which is the amount arrived at by multiplying Ten ($ 10)
Dollars by One Hundred Ten (110%) (the increase in the average cost of living
from the COL Year, or One Hundred ($100) Dollars, to the Determination Year or
One Hundred Ten ($110) Dollars).
D. Notwithstanding the foregoing, the Manufacturer agrees that if the
Distributor enters into an agreement with a Government Agency concerning a
particular screening programme, the Manufacturer will allow a price break on the
cost of the Products sold to such Government Agency of up to 20%, subject to
minimum purchase orders of 2,500 products per month.
10. Warranty; Quality Control; Returns
A. All Products delivered to the Distributor pursuant to this Agreement
shall be of good and merchantable quality, free from defects in material and
workmanship and reasonably fit for their intended purpose.
B. THE MANUFACTURER HEREBY DISCLAIMS ANY REPRESENTATIONS, WARRANTIES AND
GUARANTIES WITH RESPECT TO THE PRODUCTS PURCHASED HEREUNDER, WHETHER WRITTEN,
ORAL, IMPLIED OR INFERRED BY TRADE, CUSTOM OR PRACTICE, INCLUDING, WITHOUT
LIMITATION, IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE, EXCEPT AS PROVIDED IN PARAGRAPH "A" IN THIS ARTICLE "10" OF THIS
AGREEMENT. THE MANUFACTURER SHALL NOT BE LIABLE UNDER ANY CIRCUMSTANCES FOR
DAMAGES OF ANY KIND, WHETHER DIRECT, CONSEQUENTIAL OR OTHERWISE RELATING TO THE
PERFORMANCE OF ANY PRODUCTS OR BY ANY FAILURE OF THE MANUFACTURER. IN NO EVENT
SHALL THE MANUFACTURER'S LIABILITY PURSUANT TO THIS AGREEMENT EXCEED THE
PURCHASE PRICE FOR THE PRODUCTS PURCHASED HEREUNDER.
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C. The Distributor shall inspect the Products within thirty (30) days after
receipt of the Products by either the Distributor or any of its subdistributors.
If the Distributor, prior to the expiration of such thirty (30) day period
rejects any of the Products which do not conform to any agreed upon
specifications, the Manufacturer may substitute a like quantity of conforming
Products. The Distributor may reject any shipment of non-conforming units of the
Product only within thirty (30) days after receipt by the Distributor or its
agents, by notice to Manufacturer, pursuant to Paragraph "C" of Article "22",
stating the reason for rejection with specificity. Failure to timely reject or
give proper notice of rejection shall be deemed to constitute acceptance of such
shipment. Properly rejected Products shall, in the Manufacturer's sole and
absolute discretion, to be exercised by written notice pursuant to Paragraph "C"
of Article "22" either (i) be returned to the Manufacture at the Manufacturer's
expense or (ii) be destroyed.
D. If any shipping date is specified, such date represents a good faith
estimate by the Manufacturer. In no event shall the Manufacturer be responsible
for a delay in shipment or for damages or losses attributable to any such delay.
E. If the Distributor does not pay the full amount of the Wholesale Price
and other amounts specified in this Agreement as and when due, then, in addition
to its other rights or remedies hereunder, and under applicable law, the
Manufacturer may, in its sole and absolute discretion, by written notice
pursuant to Paragraph "C" of Article "22" of this Agreement terminate this
Agreement, without liability to the Distributor by the Manufacturer, and without
discharge or mitigation of any of the Distributor's obligations pursuant to this
Agreement.
F. The Distributor may not cancel or assign any order given to the
Manufacturer without the prior written consent of the Manufacturer, which the
Manufacturer may withhold in its sole and absolute discretion.
G. Non delivery or default by the Manufacturer as to any shipment shall not
be deemed a breach of this Agreement except as to such installment. Such non
delivery or default shall not relieve the Distributor from its obligation to
accept and pay for any subsequent or prior installment, regardless of whether
such non delivery substantially impairs the value of this Agreement.
11. Force Majeure
The Manufacturer shall not be responsible for failure or delay in
performing any of its obligations under this Agreement due to causes beyond its
control, including, but not limited to, fire, storm, flood, earthquake,
explosion, accident, acts of a public enemy, war, rebellion, insurrection,
sabotage, terrorism, epidemic, quarantine restrictions, labor disputes or
controversies, labor shortages, transportation embargoes or failures or delays
in transportation, fuel or energy shortages, power interruptions or failures,
acts of God, acts, rules, regulations, orders or directives of any government or
any political subdivision, agency or instrumentality thereof, or the order of
any court or regulatory or arbitral body of competent jurisdiction, including,
but not limited to, any injunction entered against the Manufacturer or its
suppliers enjoining it or them from manufacturing, selling or distributing the
Products.
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12. Termination
A. Anything in this Agreement notwithstanding; the Manufacturer shall have
the right to terminate this Agreement upon if the Distributor shall at any time
default in the performance of any of its obligations under, or otherwise commit
any material breach of, this Agreement; including but not limited to; diluting
the Manufacturer's 15% interest in the Distributor, failing to pay the full
amount due to the Manufacturer pursuant to this Agreement or any attempted
assignment to transfer in violation of Paragraph "K" of Article "22" of this
Agreement, unless within ten (10) calendar days after receipt of written notice
of such default in accordance with Paragraph "C" of Article "22" of this
Agreement the Distributor cures such default or, if there is a default which
cannot, with due diligence, be cured within ten (10) calendar days, the
Distributor institutes within ten (10) calendar days steps reasonably necessary
to remedy the default and thereafter diligently prosecutes same to completion.
B. The Manufacturer shall have the right to terminate this Agreement
without prior notice to the Distributor if:
(i) If any representation or warranty of the Distributor contained in this
Agreement is determined to have been untrue when made.
(ii) the Distributor files a petition for protection as a debtor under the
bankruptcy laws;
(iii) the Distributor makes a general assignment for the benefit of its
creditors;
(iv) the Distributor consents to the appointment of, or possession by, a
custodian for the whole or any substantial part of its property; or
(v) the Distributor, on a petition by a third party to subject Distributor
as a debtor to the bankruptcy laws which is filed without its consent, fails to
have such petition dismissed within sixty (60) days from the date that such
petition is filed.
C. If the Distributor fails to achieve the Minimum Product Purchases set
forth on Exhibit "C", the Manufacturer may, in its sole and absolute discretion,
to be exercised by written notice pursuant to Paragraph "C" of Article "22" of
this Agreement to the Distributor, either terminate this Agreement or, upon
three (3) days prior written notice, decrease the Territory.
D. The exercise by the Manufacturer of any of its rights pursuant to this
Article "12" of this Agreement shall not be construed to be a waiver of any
other rights or remedies which the Manufacturer may have for damages or
otherwise and shall not prejudice the right of the Manufacturer to any monies
due hereunder.
13. Effect of Termination
The termination of this Agreement for any reason shall not release any
party from any liability, obligation or agreement that, pursuant to any
provision of this Agreement, is intended to survive or be performed after the
termination hereof. The right of the Manufacturer to terminate this Agreement
pursuant to Article "12" of this Agreement or otherwise shall be in addition to
and not exclusive of any other right or remedy that may exist at law, equity, or
otherwise, that the Manufacturer may possess under this Agreement, all of which
rights and remedies shall survive such termination.
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14. Necessary Documents
The Distributor shall furnish to the Manufacturer, or to its nominees and
patent attorneys, all information and documents regarding any inventions or
improvements developed by the Distributor, including the apparatus, processes,
and formulas with respect thereto, in order to enable the Manufacturer to
utilize such inventions or improvements and to enable the Manufacturer and its
attorneys and/or agents to prepare and prosecute Patent applications therefor,
with respect to any and all inventions and improvements developed by the
Distributor with the understanding that, if so requested by the Manufacturer,
the Distributor's patent attorneys shall collaborate with such Patent attorneys
as the Manufacturer may designate.
15. Ownership of Patents
All Patents shall be the exclusive property of the Manufacturer. No
additional patents covering any technology developed by Manufacturer or the
Distributor which uses the Manufacturer's technology as a starting point, shall
be applied for by the Distributor.
16. New Inventions / Test Results
If during the term of this Agreement the Distributor makes any improvements
in the Product, the Technical Information or Know-How or the Technology or the
mode using them, or becomes the owner of any such improvements either through
Patents or otherwise, then it shall and hereby does assign such improvements to
the Manufacturer (without cost to the Manufacturer) which shall give the
Manufacturer full information regarding the mode of using them. However, during
the Term of this Agreement, the Distributor shall be entitled to use the same
with all rights which are hereby granted to the Distributor in respect to the
Technology and the Technical Information. The Distributor shall also provide the
Manufacturer with any and all test results arising from tests of any Product as
soon as such results are available.
17. Uses of Intellectual Property, Technical Information and Know-How
A. PATENTS. The Distributor may, only with the express written consent of
the Manufacturer and at its own expense, apply for patents in any country on any
discovery or invention which Distributor or its employees shall have obtained
prior to the termination of this Agreement with respect to the Technology,
Technical Information, Intellectual Property or Products, notifying Manufacturer
of its intention, keeping Manufacturer currently informed of its activities with
respect thereto, and providing Manufacturer with copies of patent applications
and amendments thereto, patent office communications, and other relevant papers.
All such patent applications or issued patents shall be assigned to the
Manufacturer without cost to the Manufacturer.
B. TRADEMARKS. During the term hereof, the Manufacturer, through its
designated representative or representatives, grants to the Distributor the
right to affix, without charge to the Distributor, the Trademarks set forth on
Exhibit "B" (the "Trademarks") which is owned by the Manufacturer as marks of
certification to Products distributed in the Territory by the Distributor though
the operations, practices, agreements, and processes which are the subject of
this Agreement, provided:
(i) all labels, advertising, and packaging for the Products by the
Distributor must conform to the specifications of the Manufacturer.
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(ii) Whenever the Distributor uses the Trademarks in advertising or in any
other manner in connection with the sale and distribution of the Products, the
Distributor shall indicate clearly the Manufacturer's ownership of the
Trademarks. The Distributor agrees to affix to each Product and to the package
containing each Product and any papers inserted in the Package a notice stating
"Licensed under United States Patent No.___ ". The Distributor shall provide the
Manufacturer with samples of all literature, packages, labels, labeling and
advertising prepared by or for the Distributor and intended to be used by the
Distributor. When using the Trademarks, the Distributor undertakes to comply
with all trademark laws, including, but not limited to, compliance with marking
requirements.
(iii) If required, the Manufacturer shall make application to register the
Distributor as a Permitted User or Registered User of the Trademarks and if
necessary or if requested by the Manufacturer, the Distributor undertakes to
join in such application and to execute any such documents and to take such
action as may be necessary or requested by the Distributor to implement such
application or retain, enforce or defend the Trademarks.
(iv) The Distributor acknowledges the Manufacturer's exclusive right, title
and interest in and to the Trademarks and will not at any time do or cause to be
done any act or thing contesting or in any way impairing or tending to impair
any part of such right, title and interest. The Distributor shall not in any
manner represent that it has any ownership in the Trademarks or registration
thereof, and the Distributor acknowledges that use of the Trademarks shall not
create in the Distributor's favor any right, title or interest in or to the
Trademarks, but all uses of the Trademarks by the Distributor hereto shall inure
to the benefit of the Manufacturer.
C. The Distributor agrees to provide any improvements to the Technology,
Technical Information, Intellectual Property or Products which are developed by
Distributor during the Term to the Manufacturer, without cost.
D. The Manufacturer hereby grants in the Territory to Distributor a license
pursuant to the terms and conditions of this Agreement, during the Term, to use,
in connection with the sale, marketing, and distribution of the Products the
Intellectual Property, and all applications therefore now or hereafter owned by
Manufacturer including but not limited to, those trademarks, trade names,
service marks, copyrights and patents now owned or hereafter acquired by
Manufacturer. Distributor's rights hereunder include, but are not limited to,
the right to use the Intellectual Property and to make appropriate reference
thereto on or in connection with the Products and any and all packaging
materials, print advertisement, pamphlets, brochures, displays, letterhead or
other sales, marketing and distribution materials used in connection with the
Products. No right or license is granted to the Distributor to make,
manufacture, or assemble any of the Products or to use any Technology, Technical
Information and/or Intellectual Property in connection with any manufacturing
process, in either case whether within or outside the Territory. The Distributor
shall use the Trademark only with Products manufactured by the Manufacturer.
E. Nothing contained in this Agreement shall be construed as conferring
upon the Distributor or any of its subdistributors or customers, directly or by
implication, estoppel or otherwise, any license under any trade secrets or
know-how of the Manufacturer, and no such license or other rights shall arise
from this Agreement or from any acts, statements or dealings resulting in or
relating to this Agreement.
12
F. No representation or warranty has been or is made by the Manufacturer
that the Letter Patent or Trademark, or part or subdivisions thereof may be
manufactured, used, sold, or leased free of infringement of patent or trademark
or other proprietary rights of others
G. The Manufacturer assumes no liability to the Distributor or to third
parties with respect to the performance characteristics of any Products sold by
the Distributor or its subdistributors.
H. The Distributor acknowledges the Manufacturer's exclusive right, title
and interest in and to the Technology, Technical Information, Intellectual
Property and Trademark and will not at any time do or cause to be done any act
or thing contesting or in any way impairing or tending to impair any part of
such right, title and interest. The Distributor shall not in any manner
represent that it has any ownership in the Technology, Technical Information,
Intellectual Property, and Trademark or registration thereof, and the
Distributor acknowledges that use of the Technology, Technical Information,
Intellectual Property, and Trademark shall not create in the Distributor's favor
any right, title or interest in or to the Technology, Technical Information,
Intellectual Property and Trademark, but all uses of the Technology, Technical
Information, Intellectual Property or Trademark by the Distributor shall inure
to the benefit of the Manufacturer.
I. If the applicable Intellectual Property law requires, Manufacturer shall
make application to register the Distributor as a Permitted User or Registered
User of the Intellectual Property and if necessary, the Distributor undertakes
to join in such application and to execute any such documents and to take such
action as may be necessary to implement such application.
K. Whenever the Distributor utilizes the Intellectual Property in
advertising or in any manner in connection with the Products which it sells or
distributes, the Distributor shall indicate the Manufacturer's ownership of the
Intellectual Property. The Distributor shall provide the Manufacturer with
representative samples (the "Samples") of all literature, packages, labels
labeling and advertising prepared by or for the Distributor and intended to be
utilized by the Distributor. The Distributor shall only utilize such material if
approved in writing by the Manufacturer in advance. When utilizing the
Technology, Technical Information, Intellectual Property, and Trademark the
Distributor agrees to comply with all laws pertaining to any of the Technology,
Technical Information, Intellectual Property or Trademark in force at any time
in the Territory, including, but not limited to, compliance with marking
requirements.
L. The Distributor acknowledges that the use of the Intellectual Property
shall not create in the Distributor any right, title or interest in or to the
Intellectual Property other than as expressly provided in this Agreement.
M. Upon termination of this Agreement in any manner as provided in this
Agreement, the Distributor shall cease and desist from all use of the
Intellectual Property in any manner.
18. Nondisclosure
A. Confidential Information
(i) Distributor acknowledges that Manufacturer has made available to
Distributor relevant Technical Information and Know-How relating to the Products
in order to allow the
13
Distributor to effectively promote the Products. Nothing, contained in this
Agreement shall be construed to require Manufacturer to disclose to Distributor
any information which Manufacturer shall have acquired from others if the
disclosure thereof to Distributor would breach any of the then existing
obligations of Manufacturer.
(ii) As used in this Agreement, "Confidential Information" means
information which is presented to the Distributor by the Manufacturer or
developed, conceived or created by the Manufacturer, or disclosed to the
Distributor or known by or conceived or created by the Distributor during the
Term of this Agreement, with respect to the Manufacturer, its business or any of
its Products, processes, and other services relating thereto relating to the
past, present or future business of the Manufacturer or any plans therefore, or
relating to the past, present or future business of a third party or plans
therefore which are disclosed to the Distributor. Confidential Information
includes, but is not limited to, all documentation, hardware and software
relating thereto, and information and data in written, graphic and/or machine
readable form, Products, processes and services, whether or not patentable,
trademarkable or copyrightable or otherwise protestable, including, but not
limited to, information with respect to discoveries; know-how; ideas; computer
programs, source codes and object codes; designs; algorithms; processes and
structures; product information; marketing information; price list; cost
information; product contents and formulae; manufacturing and production
techniques and methods; research and development information; lists of clients
and vendors and other information relating thereto; financial data and
information; business plans and processes; documentation with respect to any of
the foregoing; and any other information of the Manufacturer that the
Manufacturer informs the Distributor or the Distributor should know, by virtue
of its position or the circumstances in which the Distributor learned such other
information, is to be kept confidential including, but not limited to, any
information required by the Distributor from any sources prior to the
commencement of the term of this Agreement. Confidential Information also
includes similar information obtained by the Distributor in confidence from its
vendors, licensors, licensees, customers and/or clients. Confidential
Information may or may not be labeled as confidential.
(iii) Except as required in the performance of the Distributor's duties
hereunder, the Distributor will not, during or after the term of this Agreement
directly or indirectly, use any Confidential Information or disseminate or
disclose any Confidential Information to any person, firm, corporation,
association or other entity. The Distributor shall take all reasonable measures
to protect Confidential Information from any accidental, unauthorized or
premature use, disclosure or destruction. The foregoing prohibition shall not
apply to any Confidential Information which: (a) becomes publicly available
through no act or omission of the Distributor, (b) is disclosed as reasonably
required in a proceeding to enforce the Distributor's rights under this
Agreement or (c) is disclosed as required by the order of a Court having
jurisdiction over the Distributor; provided, however, that if the Distributor
fails to give the Manufacturer immediate notice of any such court order, the
Distributor shall be deemed to have breached its obligations hereunder and shall
be liable to the Manufacturer for any all damages to the Manufacturer as a
result of any such disclosure pursuant to a court order.
(iv) Upon termination of this Agreement for any reason or at any time upon
request of the Manufacturer, the Distributor agrees to deliver to the
Manufacturer all materials of any nature which are in the Distributor's
possession or control and which are or contain Confidential
14
Information, Work Product or Work Products (hereinafter defined), or which are
otherwise the property of the Manufacturer or any vendor, licensor, licensee,
customer or client of the Manufacturer, including, but not limited to writings,
designs, documents, records, data, memoranda, tapes and disks containing
software, computer source code listings, routines, file layouts, record layouts,
system design information, models, manuals, documentation and notes.
(v) All ideas, inventions, discoveries, intellectual property, or
improvements, whether patentable or not, conceived by the Distributor (alone or
with others) during the term of this Agreement ("Work Products") shall be the
exclusive property of and assigned to the Manufacturer or as the Manufacturer
may direct without compensation to the Distributor. Any records with respect to
the foregoing shall be the sole and exclusive property of the Manufacturer and
the Distributor shall surrender possession of such records to the Manufacturer
upon the termination of this Agreement. Any Work Product shall be deemed
incorporated in the definition of Confidential Information for all purposes
hereunder.
(vi) The Distributor will not assert any rights with respect to the
Manufacturer, its business, or any of its Products, processes and other services
relating thereto, Work Product or any Confidential Information as having been
acquired or known by the Distributor prior to the commencement of this
Agreement.
(vii) All employees and agents of Distributor who shall be given
access to Confidential Information shall execute a Non-Disclosure and Assignment
Agreement in form acceptable to Manufacturer.
(viii) The obligation of confidentiality will not be understood as
non-compliance when a subdistributor is appointed and provided with the
corresponding information for the selling of the Products provided that such
subdistributor shall execute a Non-Disclosure and Assignment Agreement in form
acceptable to Manufacturer.
19. Protection of Intellectual Property; Indemnification; Defense; Products
Liability
A. If Distributor learns of any infringement of any Intellectual Property
or imitation or counterfeiting of any Product, Distributor shall promptly notify
Manufacturer of such information. Upon learning of such information the
Manufacturer shall take such action as it deems advisable in its sole and
absolute discretion for the protection of the Intellectual Property.
B. In order to induce the Manufacturer to enter into this Agreement,
Distributor agrees that neither the Distributor, nor any of its
sub-distributors, its shareholders, officers, directors or principals (with the
exception of the Manufacturer), will not during the term of this Agreement or,
for a period of five (5) years from the date of termination hereof, manufacture
Products or sell or market any competing product, or directly or indirectly own,
manage, operation of control of or be connected as an officer, director,
shareholder, partner, consultant, owner, employee, agent, lender, donor, vendor
or otherwise, or have any financial interest in or aid or assist anyone else in
the conduct of any competing entity which manufactures, distributes or offers
for sale goods similar to the Products to any competing entity. Distributor, and
its shareholders, officers, directors and principals further agree that they
will not for a period of five (5) years from the date of termination hereof. (i)
personally, or cause others to
15
personally induce or attempt to induce any employee to terminate their
employment with the Manufacturer; (ii) interfere with or disrupt the
Manufacturer's relationship with its suppliers, vendors, customers or employees;
or (iii) solicit or entice any person to leave their employ with the
Manufacturer. For the purposes herewith, the term "competing entity" shall mean
any business or enterprise of any and every kind whatsoever which is engaged in
the manufacture, distribution or sale of goods similar or having a similar
purpose to the Products, anywhere in the world; provided, however, that
ownership of one (1%) percent or less of any class of outstanding securities of
a company whose securities are fisted on a national securities exchange or which
has not fewer than 1,000 shareholders shall not be deemed to constitute
ownership or participation in the ownership of the business of such company.
C. The Distributor agrees that the duration, scope and geographic area for
which the provisions set forth in this Paragraph are to be effective are
reasonable. If any court of competent jurisdiction determines that any provision
of this Agreement is invalid or unenforceable by reason of such provision
extending the covenants and agreements contained herein for too great a period
of time or over too great a geographical area, or by reason of it being too
extensive in any other respect, such agreement or covenant shall be interpreted
to extend only over the maximum period of time and geographical area, and to the
maximum extent in all other respects, as to which it is valid and enforceable,
all as determined by such court in such action. Any determination that any
provision of this Agreement is invalid or unenforceable, in whole or in part,
shall have no effect on the validity or enforceability of any remaining
provision of this Agreement.
D. The provisions of Article " 19" of the Agreement shall survive the
termination of this Agreement.
20. Equitable Relief
In the event of any breach by the Distributor of the provisions hereof, the
Distributor acknowledges that the Manufacturer will not have an adequate remedy
at law and the Manufacturer will be entitled to institute and prosecute
proceedings in an appropriate Court of competent jurisdiction and to obtain an
injunction restraining the Distributor from violating the provisions of this
Agreement without posting a bond or other security.
21. No Agency
The Distributor is not and shall not be deemed to be the legal
representative or agent of the Manufacturer for any purpose whatsoever. Neither
party shall have the right or authority to act or bind the other in any way or
to sign the name of the other or to represent that the other is in any way
responsible for its acts or omissions. Neither of the parties hereto is or shall
be deemed to be a partner or joint venturer of the other.
22. Miscellaneous
A. Headings
Headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of the Agreement.
16
B. Enforceability
If any provision which is contained in this Agreement should, for any
reason, be held to be invalid or unenforceable in any respect under the laws of
any jurisdiction, such invalidity or unenforceability shall not affect any other
provision of this, Agreement. Instead, this Agreement shall be construed as if
such invalid or unenforceable provisions had not been contained herein.
C. Notices
Any notices or other communication required or permitted hereunder shall be
in writing and be given sufficiently if sent by (i) Certified Mail, Return
Receipt Requested, postage prepaid, (ii) overnight delivery with confirmation of
delivery, or (iii) facsimile transmission with an original mailed by first class
mail, postage prepaid, addressed as follows:
To the Manufacturer: Scantek Medical, Inc.
000 Xxxxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Att: Xx. Xxxxxxxx X. Xxxx, President
Fax No.: (000) 000-0000
Copy to: Xxxxx & Fraade, P.C.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Att: Xxxxxxxxx X. Xxxxx, Esq.
Fax No.: (000)000-0000
To the Distributor: Nugard Healthcare Limited
3rd Xxxxx 00/00 xxxxx Xxxxxxxx Xxxxxx
Xxxxxx 0
Xxx.: Xxxxxxx Xxxxx
Fax: 000 0 000 0000
Copy to: X.X. Xxxxxxxx & Co. Solicitors
00/00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxx 0
or in each case to such other address (or fax number) as shall have last been
furnished by like notice. If mailing by certified Mail is impossible due to an
absence of postal service, notice shall be in writing and personally delivered
to the aforesaid address. Each notice or communication shall be deemed to have
been given as of the date so mailed or delivered, as the case may be; provided,
however, that any notice sent by facsimile shall be deemed to have been given as
of the date sent by facsimile if a copy of such notice is also mailed by first
class mail on such date.
D. Governing Law; Disputes
This Agreement shall in all respects be construed, governed, applied and
enforced under the internal laws of the State of New Jersey without giving
effect to the principles of conflicts of law and be deemed to be an agreement
entered into in the State of New Jersey and made under the laws of the State of
New Jersey. The parties agree that they shall be deemed to have agreed to
binding arbitration
17
in Newark New Jersey for the entire subject matter of any and all disputes
relating to or arising under this Agreement. Any such arbitration shall be
conducted in Newark, New Jersey under the rules then obtaining of the American
Arbitration Association in Newark, New Jersey. In all arbitrations, judgment
upon the arbitration award may be entered in any court having jurisdiction. The
parties specifically designate the Courts in the State of New Jersey as properly
having venue for any proceeding to confirm and enter judgment upon any such
arbitration award. The parties hereby consent to and submit to personal
jurisdiction over each of them by the Courts of the State of New Jersey in any
action or proceeding, waive personal service of any and all process and
specifically consent that in any such action or proceeding, any service of
process may be effectuated upon any of them by first class or certified mail,
return receipt requested pursuant to Paragraph "C" of Article "14" of this
Agreement. The parties agree, further, that the prevailing party in any such
arbitration as determined by the arbitrators shall be entitled to such costs and
attorney's fees, if any, in connection with such arbitration as may be awarded
by the arbitrators; provided, however, that if a proceeding is commenced to
confirm and enter a judgment thereon by the Courts of the State of New Jersey
and such application is denied, no such costs or attorney's fees shall be paid.
In connection with the arbitrators' determination for this purpose of which
party, if any, is the prevailing party, they shall take into account all of the
factors and circumstances including, without limitation, the relief sought, and
by whom and the relief, if any, awarded, and to whom. In addition, and
notwithstanding the foregoing sentence, a party shall not be deemed to be the
prevailing party unless the amount of the arbitration award exceeds the amount
offered in writing by the other party by fifteen (15%) percent or more. For
example, if the party initiating the arbitration ("A") seeks an award of
$100,000 plus costs and expenses, the other party ("B") has offered A $50,000
prior to the commencement of the arbitration proceeding, and the arbitration
panel awards any amount less than $57,500 to A, the panel should determine that
B has "prevailed".
E. Entire Agreement
The parties have not made any representations, warranties, or covenants
about the subject matter hereof which is not set forth herein, and this
Agreement, together with any instruments executed simultaneously herewith,
constitutes the entire Agreement between them about the subject matter hereof.
All understandings and agreements heretofore had between the parties about the
subject matter hereof are merged in this Agreement and any such instrument which
alone fully and completely expresses their Agreement.
F. Modification
This Agreement may not be changed, modified, extended, terminated or
discharged orally, but only by an Agreement in writing, which is signed by all
of the parties to this Agreement.
G. Effect
The Parties agree to execute any and all such other and further instruments
and documents, and to take any and all such further actions which are reasonably
required to effectuate this Agreement and the intents and purposes hereof.
H. Non-waiver
Except as otherwise expressly provided herein, no waiver of any covenant,
condition, or
18
provision of this Agreement shall be deemed to have been made unless expressly
in writing and signed by both parties to this Agreement, and (i) the failure of
any party to insist in any one or more cases upon the performance of any of the
provisions, covenants, or conditions of this Agreement or to exercise any option
herein contained shall not be construed as a waiver or relinquishment for the
future of any such provisions, covenants, or conditions, (ii) the acceptance of
performance of anything required by this Agreement to be performed with
knowledge of the breach or failure of a covenant, condition, or provision
thereof shall not be deemed a waiver of such breach or failure, and (iii) no
waiver by any party of one breach by another party shall be construed as a
waiver of any other or subsequent breach.
I. Counterparts
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, and all of which together constitute one and the
same instrument.
K. No Assignment by Distributor
The rights granted pursuant to this Agreement shall not be transferable by
the Distributor, without the Manufacturer's prior written consent, provided,
however, that the Distributor shall have the right to use the Trademarks and to
sublicense its use to Acceptable Subdistributor in the Territory subject to the
terms and conditions of this Agreement. For purposes of this Paragraph "K" of
this Article "22" of this Agreement, any transfer of a controlling interest in
the Distributor shall be deemed to be a transfer by the distributor and if such
transfer of a controlling interest has been made without the Manufacturer's
prior written consent, the Manufacturer may in its sole and absolute discretion
terminate by written notice pursuant to Paragraph "C" of this Article "22".
L. Assignment by Manufacturer
This Agreement shall be transferable by the Manufacturer.
M. Product Obsolescence
In the event that the Product technology (as herein defined) becomes
obsolete, the Parties hereto agree that this Agreement shall terminate on 2
month written notice by either party, subject to arbitration in the event of
dispute.
IN WITNESS WHEREOF THE PARTIES HERETO HAVE SET THEIR HANDS ON THIS 14TH DAY
OF JULY 1999
NUGARD HEALTHCARE LIMITED SCANTEK MEDICAL, INC.
BY /s/ XXXXXX XXXXXXXX BY /s/ ZSIGMOND X. XXXX
-------------------- ----------------------
Xxxxxx Xxxxxxxx Zsigmond X. Xxxx
Title: Director Title: President
[GRAPHIC OMITTED]
19
Exhibits:
Exhibit A: Patenta
Exhibit B:
Exhibit C: Description of the Product
Exhibit D: Minimum Product Sales
Exhibit E: Territory
EXHIBIT A
PATENTS
U.S. PATENTS 4,624,264
4,190,058
4,651,749
CANADA 1,130,157
UNITED KINGDOM 2,023,288
GERMANY 2,920,785
FRANCE 7,913,059
NETHERLANDS 7,094,034
U.S. PATENT APPLICATIONS: App. No. 08/854144 Date: 5/14/97
" " 08/926790 " 9/10/97
" " 09/018765 " 2/05/98
EXHIBIT C
PRODUCTS KNOWN AS BTAI, BREASTCARE, AND BREASTALERT
Notwithstanding the following more specific description of the Product, the
Products shall include any temperature sensing product manufactured by the
Manufacturer using the patented technology set forth in the Patents listed in
Exhibit "A" or improvements thereto. The BTAI is an early diagnostic direct
reading, digital product to screen the breast for abnormalities, including
cancer.
The BTAI measures underlying breast tissue temperature and not skin surface
temperature by retaining the emitted heat when BTAI is placed against the breast
for 15 minutes. The averaged and recorded reading on the BTAI has taken into
consideration that the temperature patterns of a woman's breasts are closely
symmetrical. This method detects abnormalities by comparing the temperature
differences in the corresponding areas of a woman's breasts.
The BTAI product consists of a pair of non-woven pads made of spun-fiber
material, each of which has three wafer-thin, pliant, aluminum foil, and
temperature responsive segments attached to its inner surface. Each segment is
wedge-shaped and contains 18 columns or bars of thermal dots. These dots contain
chemical heat sensors that changes color when exposed to a specific temperature.
EXHIBIT D
MINIMUM UNIT SALES
The Minimum Product Purchases are set forth below:
Year Minimum Product Purchases-Monthly
---- ---------------------------------
1999 20,000 (commencing September 1, 1999)
2000 60,000
2001 to end of term 000,000
XXXXXXX X
XXXXXXXXX
Xxxxxxx
Xxxxxx Xxxxxxx (XX)
