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Exhibit 10.23
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CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR
CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS ARE MARKED AS "[XXXX]"
ALONG WITH A
FOOTNOTE INDICATING THAT THE INFORMATION HAS BEEN OMITTED PURSUANT
TO A REQUEST
FOR CONFIDENTIAL TREATMENT. AN UNREDACTED COPY OF THIS EXHIBIT HAS
BEEN FILED
SEPARATELY WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT.
DISTRIBUTION AGREEMENT
BETWEEN: A-FEM
MEDICAL CORPORATION ("A-Fem"), a Nevada corporation;
AND:
SYNOVA HEALTHCARE, INC. ("Distributor"), a Delaware
corporation.
DATED:
Effective December 5, 2005 (the "Effective Date").
R E C I T A L S:
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A. A-Fem is in the business of developing, manufacturing and
selling
non-invasive medical diagnostics and healthcare-related products,
including the
product listed in Exhibit A (the "Licensed Product").
B. Distributor is in the business of marketing, distributing
and
selling non-invasive medical diagnostics and healthcare-related
products.
C. The parties desire that A-Fem deliver the Licensed Product
to
Distributor, which will market, distribute and sell it in
accordance with the
terms and conditions set forth in this Distribution Agreement
(this
"Agreement").
A G R E E M E N T:
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In consideration of the foregoing Recitals (which are incorporated
in
this Agreement by this reference) and the mutual covenants, terms
and conditions
set forth below, the parties agree as follows:
1. APPOINTMENT. A-Fem appoints Distributor as exclusive distributor
of
FSH-related rapid diagnostics for both retail and professional sale
of the
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Licensed Product(s) within the following countries (the
"Territory"), upon the
terms and conditions set forth in this Agreement:
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United States of America
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Canada
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Mexico
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All countries of Central America
Distributor may not sell the Licensed Product in any area outside
the Territory
(including sales within the Territory with knowledge that resales
of them
outside the Territory will be offered or made) without A-Fem's
prior written
consent in each instance.
2. ORDERS. Distributor shall purchase, and A-Fem shall supply, or
cause
to be supplied, to Distributor such quantities of the Licensed
Product as may be
ordered by Distributor from time to time, subject to the other
terms and
conditions of this Agreement. The parties agree that Distributor
will order at
least the following number of Licensed Products during each
12-month period of
this Agreement, commencing on the Effective Date (each, a
"Distribution Year"):
Quantity
Distribution Year
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100,000
First 12 Months
250,000
Second 12 Months
350,000
Third 12 Months
500,000
Fourth 12 Months
600,000
Fifth 12 Months
The foregoing schedules reflects the anticipated time required to
obtain 501(k)
registration from the United States Food and Drug Administration
(the "FDA") for
the Licensed Product by Distributor prior to offering the Licensed
Product for
sale in general commerce. Distributor is not required to place
orders until
receipt of the 501(k) registration.
3. TERM. This Agreement and the appointment of Distributor under
it
shall continue for a term of five years commencing on the Effective
Date of this
Agreement, but subject to earlier termination as provided in
Section 14 below
during such initial term (or during any renewal term). This
Agreement may be
renewed for consecutive renewals of two years each upon the
parties' written
agreement on pricing (subject to the limitations of Section 4.2
below) and
minimum order amounts at least 90 days prior to the end of the
initial and each
renewal term, as applicable, except that either party may terminate
this
Agreement for any reason or for no reason at the end of the initial
or any
renewal term by giving the other party not less than 90 days'
written notice of
termination prior to the end of the initial or any renewal
term.
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4. PURCHASE PRICE.
4.1 Purchase Price. A-Fem shall charge Distributor, and
Distributor shall pay for the quantities of Licensed Product
ordered by
Distributor pursuant to this Agreement, at the purchase prices set
forth in
Exhibit A (the "Purchase Price"). The Purchase Price is and shall
be FOB place
of shipment; Distributor shall be responsible for, or reimburse
A-Fem for if
invoiced, insurance, freight and applicable taxes.
4.2 Price Adjustment. Except as otherwise set forth in this
Section 4.2, no adjustment in the Purchase Price shall be permitted
during the
initial term of this Agreement. The Purchase Price for the Licensed
Product will
be firm for the first three Distribution Years (the "Fixed Price
Period"). After
this period, but not more than once any calendar year, A-Fem may
adjust the
Purchase Price upon at least 90 days' advance written notice to
Distributor.
Adjusted Purchase Prices shall apply to Licensed Product orders
placed by
Distributor during the period for which the Purchase Price is
adjusted. A-Fem
will adjust the Purchase Price only to the extent such adjustment
directly
correlates to price changes in raw materials utilized by or charged
to A-Fem in
the manufacturing of the Licensed Product; provided, however, in no
event shall
any increase in the Purchase Price exceed the previous Distribution
Year
Purchase Price by greater than [XXXX](1).
4.3 Payment. Distributor agrees to pay each invoice of A-Fem
within 60 days after Distributor's receipt of the Licensed Products
that are the
subject of the invoice. If Distributor reasonably disputes any
invoice for good
cause and in good faith, Distributor will notify A-Fem within 10
days of invoice
receipt, stating the specific reason(s) for the dispute.
4.4 Late Payment. Unpaid amounts will bear interest at 1.0%
per month (12% per annum) from the due date until paid in full,
calculated on a
non-compounding daily basis, in addition to A-Fem's other rights
and remedies
set forth in Sections 14 and 15 below. However, if any payment by
Distributor
would result in a payment of interest in excess of the maximum rate
of interest
legally permissible, then Distributor's obligation to make such
payment shall be
deemed automatically reduced to such maximum rate, so that in no
event will
Distributor be obligated to make any payment which would result in
the payment
of interest in excess of such maximum rate. Any such excess
payments shall be
applied as prepayments on orders made after those for which the
interest was
charged.
4.5 Title; Risk of Loss. Title to ordered Licensed Products
will pass to Distributor upon the later of tender of delivery or
payment. Risk
of loss will pass to Distributor upon tender of delivery.
5.
OPERATIONS.
5.1 Orders. Distributor will place orders for Licensed
Products under written purchase order forms, specifying quantities
ordered,
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(1) Omitted and filed separately with the Securities and Exchange
Commission
under an
application for confidential treatment.
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delivery dates, and delivery and shipping instructions. Any
conflict between the
provisions of this Agreement and any purchase order or any
acknowledgement,
acceptance or other document of A-Fem shall be resolved in favor of
this
Agreement.
5.2 Acceptance of Orders; Filling. All orders received by
A-Fem shall be subject to acceptance by A-Fem. A-Fem shall notify
Distributor in
writing within 45 days after receiving the order from Distributor
of the
quantities of Licensed Products that A-Fem will be able to supply.
A-Fem will
use its best efforts to fill accepted orders as promptly as
practicable, subject
to delays caused by government orders, actions or requirements,
transportation
conditions, inclement weather, labor or material shortage, strike,
riot,
terrorist act, fire, natural disaster or other cause beyond A-Fem's
control. In
all cases, A-Fem will use its best efforts to advise Distributor in
advance of
any inability to make full and timely delivery of Licensed Products
ordered by
Distributor. A-Fem may ship partial orders, and Distributor shall
make payment
therefor, provided the entire order is delivered as provided
above.
5.3 Distributor's Efforts, Facilities and Personnel.
Distributor agrees to use its best efforts to promote demand for
and sale of the
Licensed Product throughout the Territory. Distributor will at all
times
maintain sales, warehouse, distribution and other facilities and
properties as
are adequate and appropriate to perform Distributor's duties under
this
Agreement. Distributor will appoint, train and support such
sales
representatives and other marketing personnel as are adequate and
appropriate to
serve the Territory for the Licensed Product. A-Fem may, through
its employees
or authorized representatives and at A-Fem's sole expense, inspect
Distributor's
facilities and properties, wherever located, to determine and
assure
Distributor's compliance with the terms of this Agreement.
Distributor shall be
responsible for and pay all costs of promoting and advertising the
Licensed
Product within the Territory.
5.4 Prices
Charged by Distributor. Distributor may charge to
and collect from its purchasers such prices for the Licensed
Products as
Distributor may determine, provided that Distributor otherwise
complies with
applicable laws. Distributor may charge to and collect from its
purchasers
freight, taxes and related costs incurred by Distributor.
5.5 Common Carriers. Whenever A-Fem shall deliver or cause to
be delivered to a common carrier any Licensed Products ordered by
Distributor,
whether or not the particular carrier has been designated in the
shipping or
routing instructions of Distributor, A-Fem shall not be responsible
for any
delays or damages in shipment, and the common carrier is hereby
declared to be
the agent of Distributor.
6. MANUFACTURE, PACKAGING AND QUALITY ASSURANCE.
6.1 Specifications. A-Fem and Distributor shall reasonably
agree in writing on the product, labeling, packaging and
performance
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specifications (the "Specifications") to be established for the
Licensed Product
to the extent not established by the terms of this Agreement.
6.2 Manufacture. A-Fem shall manufacture or cause to be
manufactured the Licensed Products in accordance with all
applicable laws and
regulations, including without limitation the current and any
future quality
systems and good manufacturing practices regulations under 21 CFR
Part 820, as
amended, to the extent such regulations are applicable to the
Licensed Product.
6.3 Product Description and Packaging. A-Fem shall package and
supply the Licensed Products in the manner reasonably agreed upon
by the
parties. The agreed Purchase Price is based on four-color printing
of packaging.
Any additional colors will entitle A-Fem to increase the Purchase
Price. To the
extent that A-Fem is to use particular art work in connection with
the packaging
of the Licensed Products, then unless otherwise agreed upon by the
parties,
Distributor will specify and provide A-Fem with such art work.
Distributor shall
provide English translations for any art work/packaging in Spanish,
French or
other language.
6.4 Changes to Product. A-Fem shall notify Distributor in
writing at least 90 days prior to any proposed changes in its
manufacturing
procedures, materials, equipment or processes which affect Licensed
Product fit,
form or function. As and to the extent reasonably agreed upon in
writing by the
parties, A-Fem may change the Licensed Product and any
Specifications related to
it.
6.5 Rejected Goods/Shortages.
(a) Distributor shall notify A-Fem of any Licensed
Products shipped to Distributor that Distributor believes do not
conform to the
Specifications or are the subject of a manufacturing or other
defect, or of any
shortage in quantity of any Licensed Product shipment (each, a
"Rejection
Event"), within 90 days after Distributor's receipt of such
shipment.
(b) Upon A-Fem's confirmation of a Rejection Event, A-Fem
shall, in its discretion and at its sole expense, replace all such
Licensed
Product or make up the shortage within 30 days of receiving notice
of the
Rejection Event from Distributor. A-Fem shall make mutually
agreeable
arrangements with Distributor for the return or destruction of any
rejected
Licensed Product, with the actual reasonable cost thereof to be
paid or
reimbursed by A-Fem. Distributor shall have no claim against A-Fem
for any
Rejection Event except for defect or shortage attributable to A-Fem
and as
expressly provided in this Agreement.
6.6 Expiration Period. All Licensed Products supplied by A-Fem
to Distributor shall have an expiration date (assuming storage and
shipment
under normal environmental conditions) of not less than 22 months
after the date
of delivery of such Licensed Product to Distributor, unless advance
written
approval is obtained from Distributor by A-Fem to ship Licensed
Product with a
shorter expiration period.
6.7
Audit. Distributor reserves the right to audit A-Fem's
facilities, at Distributor's sole expense, as reasonably necessary
to verify
compliance by A-Fem with the terms and conditions of this
Agreement. Exercise by
Distributor of such right shall be subject to the following
conditions: (a)
without good cause shown (for example, A-Fem's failure to remedy
problems),
Distributor shall be entitled to conduct only one audit per
Distribution Year;
(b) Distributor audits shall be conducted only after at least 30
days' advance
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written notice of the audit is provided by Distributor to A-Fem;
and (c) all
information gathered and data reviewed during any such audit shall
be
"Confidential Information" subject to the provisions of Section 12
below. A-Fem
shall at all times maintain complete and accurate books and records
pertaining
to performance of its obligations set forth in this Agreement.
A-Fem shall
provide commercially reasonable cooperation to Distributor in the
performance of
audits by or on behalf of Distributor, including without
limitation, providing
reasonable access to documents relevant to the manufacture of
Licensed Products
sold to Distributor, subject to the provisions of Section 12.
7. CUSTOMER SUPPORT, COMPLAINTS AND RETURNS.
7.1 Customer Complaints. A-Fem shall respond in writing to any
inquiry, customer complaint, nonconformity or corrective or
preventative action
request with respect to the Licensed Products the subject of this
Agreement
within 10 days after written request therefor. A-Fem shall promptly
provide a
copy of all such writings to Distributor.
7.2 Returned Product. In the event any customer of Distributor
rejects or returns a Licensed Product to Distributor as a result of
performance
problems or other deficiencies, noncompliance of any Licensed
Product with its
Specifications, within two years after shipment of same to
Distributor, and such
deficiency is validated by A-Fem, A-Fem shall, at its sole expense,
promptly
replace such Licensed Product and ship the Licensed Product in
accordance with
Distributor's reasonable instructions therefor. A-Fem shall not be
responsible
for the cost of shipment to A-Fem of customer returns. A-Fem shall
not repackage
any returned Licensed Product for sale to Distributor.
Distributor's sole
remedies for defective Licensed Products are set forth in Sections
6.5 above and
this Section 7.2.
8. LIMITED LIABILITIES AND WARRANTIES OF A-FEM AND DISTRIBUTOR.
8.1 A-Fem represents and warrants to Distributor that: (a)
each lot of Licensed Product delivered pursuant to this Agreement
will continue,
until the applicable expiration date, to conform to the
Specifications, and
shall be free from defects in materials and workmanship; (b) A-Fem
has good and
marketable title to the Licensed Product, which shall be
transferred to
Distributor as set forth in this Agreement; and, (c) no Licensed
Product, and no
exercise by Distributor of any of the rights granted to it under
this Agreement,
misappropriates, infringes, violates, or interferes with any
patent, trademark,
copyright, trade secret, or other intellectual property or
proprietary right of
any person.
8.2 Neither party shall be liable to the other for any
indirect, special, consequential, incidental, punitive,
extra-contractual, or
exemplary damages of any kind arising from or connected with this
Agreement,
including, without limitation, lost profits, lost revenues, or loss
of business,
regardless of legal theory (including, without limitation, strict
liability or
negligence), whether or not foreseeable, even if either party has
been advised
of the possibility thereof and even if the remedies otherwise
provided by this
Agreement fail of their essential purpose.
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8.3 EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, EACH PARTY
DISCLAIMS ALL WARRANTIES WITH RESPECT TO THE LICENSED PRODUCT,
EXPRESS OR
IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY AND OF FITNESS FOR
A PARTICULAR
PURPOSE. Distributor agrees that it is not authorized to make any
warranty or
representation respecting A-Fem's products.
9. REGULATORY MATTERS.
9.1 510(k). Distributor shall be responsible for and bear the
cost of any 510(k) registrations, filings or updates necessary with
the FDA
and/or United States Center for Disease Control in order for
Distributor to
market the Licensed ProductS in the United States. Distributor
shall own all
such 501(k) registrations, updates and filings.
9.2 Regulatory Inquiry. Each party shall promptly and in any
event within 15 days after receipt of any notice of inquiry from
any local,
state, national or international regulatory agency or government
department,
inform the other in writing of such formal or informal inquiry
relating to any
Licensed Product.
9.3 Recall. If any Licensed Product defect or any final,
non-appealable governmental or court action or any voluntary action
by reason of
a Licensed Product defect results in: (a) the recall, destruction
or withholding
from market of any Licensed Product sold under this Agreement (a
"Recall"); or
(b) institution of a field correction of any Licensed Product sold
under this
Agreement (a "Field Correction"), A-Fem shall bear all costs and
expenses of and
shall be responsible for all corrective actions and agency
communications
associated with such Recall or Field Correction other than those by
reason of
Distributor's negligence or misconduct. Distributor shall provide
A-Fem with
reasonable access to those customers of Distributor affected by the
Recall or
Field Correction, to the extent practicable, and all information
received or
compiled by Distributor from such customers or otherwise with
respect to such
Recall or Field Correction, except as otherwise prohibited by law.
Upon
institution of a Recall or Field Correction, A-Fem shall within 15
days
communicate its intention to Distributor and provide Distributor
with data and
information relating to the Recall or Field Correction and a
reasonable
opportunity to evaluate and comment on its implementation.
9.4 Medical Device Reports. A-Fem shall notify Distributor in
writing within 30 days of any event or complaint that gives rise or
could give
rise to the need to file a Medical Device Report (an "MDR") within
the meaning
of the U.S. Federal Food, Drug and Cosmetic Act, as amended (the
"Act"), with
respect to the Licensed Product or the manufacture, distribution or
use thereof
in accordance with the MDR regulation, 21 CFR Part 803, as amended.
If, as a
result of any corrective action or any final, non-appealable or
non-appealed
governmental or court action, an MDR is required to be issued for
the Licensed
Products sold under this Agreement, A-Fem shall bear the costs and
expenses of
and shall be responsible for all corrective actions associated with
such MDR.
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9.5 MSDS. A-Fem shall promptly provide to Distributor upon
request all required Material Safety Data Sheets ("MSDS") for any
Licensed
Product containing hazardous che