Exhibit 10.1
DISTRIBUTION AGREEMENT
BETWEEN
LIFESTREAM TECHNOLOGIES, INC.
AND
POLYMER TECHNOLOGY SYSTEMS, INC.
<PAGE>
NOTE: PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED UNDER A
CONFIDENTIAL TREATMENT
REQUEST FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THE
OMITTED PORTIONS,
WHICH ARE SHOWN IN THIS DOCUMENT AS [ * ], HAVE BEEN FILED WITH THE
COMMISSION
AS PART OF THE CONFIDENTIAL TREATMENT REQUEST.
TABLE OF CONTENTS
1.
TERMS..................................................................1
2.
SCOPE..................................................................1
3.
PRICING................................................................1
4. PAYMENT
TERMS..........................................................1
5. PURCHASE
ORDERS........................................................2
5.1
Purchase
Orders.................................................2
5.2
Forecasts and
Lead-times........................................2
6. DELIVERY
AND ACCEPTANCE................................................2
6.1
Delivery........................................................2
6.2
Acceptance......................................................2
7.
CHANGES................................................................3
8.
WARRANTY...............................................................3
8.1
POLYMER
Warranty................................................3
8.2 RGA
Procedure...................................................3
8.3
Exclusions From
Warranty........................................3
8.4
Remedy..........................................................3
9.
INDEMNIFICATION AND LIMITATION OF
LIABILITY............................4
9.1
POLYMER'S
Indemnification.......................................4
9.2
LIFESTREAM's
Indemnification....................................4
9.3
Procedure.......................................................4
9.4
Limitation of
Liability.........................................5
10.
TERMINATION............................................................5
10.1 Termination
for Cause...........................................5
10.2 Termination
For Convenience.....................................5
10.3 Termination
by Operation of Law.................................5
10.4
Consequences of
Termination.....................................5
11.
QUALITY................................................................6
11.1
Specifications..................................................6
11.2 Content of
Specifications.......................................6
11.3 Quality of
Material.............................................6
11.4 Quality
Specifications..........................................6
11.5 Inspection
of Facility..........................................6
12.
FORCE
MAJEURE..........................................................6
12.1 Force
Majeure Event.............................................6
12.2 Notice of
Force Majeure Event...................................7
12.3 Termination
of Force Majeure Event..............................7
12.4
Limitations.....................................................7
12.5 Termination
for Convenience.....................................7
13.
CONFIDENTIALITY........................................................7
13.1
Definitions.....................................................7
13.2
Nondisclosure/Non-Circumvent
Covenants..........................8
14.
INSURANCE..............................................................9
15.
INTELLECTUAL
PROPERTY..................................................9
16.
MISCELLANEOUS..........................................................9
16.1 Integration
Clause..............................................9
ii
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16.2
Regulatory.....................................................10
16.3 Expansion
of Agreement.........................................10
16.4 Order of
Precedence............................................10
16.5
Assignment.....................................................10
16.6
Notices........................................................10
16.7
Disputes/Arbitration/Choice of
Law.............................11
16.8
Import/Export..................................................11
16.9 Electronic
Data Interchange....................................11
EXHIBITS
EXHIBIT A,
PRICING............................................................13
EXHIBIT B,
SPECIFICATIONS.....................................................14
EXHIBIT C, SHIPPING
LABELING..................................................15
EXHIBIT D, THE QUALITY
PLAN...................................................16
iii
<PAGE>
DISTRIBUTION AGREEMENT
THIS AGREEMENT (the "Agreement") is effective as of December ____,
2005 (the
"Commencement Date"), by and between LIFESTREAM TECHNOLOGIES, INC.,
a Nevada
corporation, having its principal place of business at 570 S.
Clearwater Loop,
Bldg. 1000, Ste. D, Post Falls, ID 83854 ("LIFESTREAM" or
"Customer") and
POLYMER TECHNOLOGY SYSTEMS, INC., a corporation having its
principal place of
business at 7736 Zionsville Rd., Indianapolis, IN 46268
("POLYMER"), each
referred to herein as a Party or together as the Parties.
1.
TERMS
The initial term of this Agreement shall commence on the
Commencement
Date and shall continue through the third anniversary of the
Commencement Date
unless sooner terminated by mutual agreement or in accordance with
this
Agreement. Upon the expiration of the initial term, unless stated
otherwise in
writing by one of the Parties at least 180 days prior to
expiration, this
Agreement shall renew for an additional five (5) years.
Notwithstanding the
foregoing, the term of this Agreement shall automatically extend to
accommodate
any purchase order ("Order") accepted hereunder and outstanding
upon any
termination date, but POLYMER shall have no obligation to accept
new purchase
orders during such extension.
2.
SCOPE
This Agreement shall initially address the supply of test strips
for
Total Cholesterol and HDL Cholesterol by POLYMER to LIFESTREAM (the
"Products").
Such Products shall be in the same configuration as test strips
currently
manufactured by POLYMER. Subject to Polymer meeting specifications
and otherwise
performing pursuant to this Agreement, LIFESTREAM shall purchase
its
requirements for the Products solely from POLYMER. POLYMER shall
not sell ROM
keys or MEMo chip(TM)s that function with LIFESTREAM's meters, nor
shall
LIFESTREAM sell ROM keys or MEMo chips that function with POLYMER's
meters.
3.
PRICING
During the term, LIFESTREAM shall have the right to purchase
from
POLYMER the products specified in Exhibit A (the "Products") as
such Exhibit may
be amended from time to time, at the prices set forth in Exhibit A
(the
"Prices"). Prices (a) are in U.S. Dollars, (b) are based on (i)
the
configuration set forth in the specifications attached hereto as
Exhibit B (the
"Specifications") and (ii) the projected volumes, minimum run rates
and other
assumptions set forth in Exhibit A. The Prices shall remain fixed
for the term
of this Agreement, unless an increase is required due to causes
beyond the
control of POLYMER.
4.
PAYMENT TERMS
[ * ]
Lifestream _____
Polymer _____
1
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5.
PURCHASE ORDERS
5.1 PURCHASE
ORDERS
(a) LIFESTREAM will issue to POLYMER specific Orders for
Product covered by this Agreement. Each Order shall be in the form
of a
written or electronic communication and shall contain the
following
information: (i) a description of the Product by part number; (ii)
the
quantity of the Product; (iii) the estimated delivery date or
shipping
schedule; (iv) the location to which the Product is to be shipped;
and
(v) transportation instructions. Each Order shall provide an
order
number for billing purposes, and may include other instructions as
may
be appropriate under the circumstances.
(b) All Orders shall be confirmed by POLYMER within five (5)
business days of receipt. If POLYMER does not accept or reject
the
Order within the five-day period, the Order shall be deemed
accepted.
In the event POLYMER is unable to meet the delivery schedule set
forth
in a proposed Order, or finds the schedule to be unacceptable for
some
other reason, the parties shall negotiate in good faith to resolve
the
disputed matter(s). POLYMER shall not be deemed to have accepted
the
Order until such dispute is resolved and set forth in writing.
5.2 Forecasts
and Lead-times
Within thirty (30) days of the execution of this Agreement,
LIFESTREAM shall provide a non-binding forecast of monthly
purchases
for the following twelve months. This forecast shall be updated
at
least quarterly throughout the Term. POLYMER's standard lead-time
shall
be eight (8) weeks from acceptance of an Order, provided the order
is
in conformity with the previous forecast provided by
LIFESTREAM.
6.
DELIVERY AND ACCEPTANCE
6.1
DELIVERY
All Product shipments will be from POLYMER'S facility of
manufacture and freight collect. Title to and risk of loss or
damage to
the Product shall pass to LIFESTREAM upon POLYMER'S tender of
the
Product to LIFESTREAM's carrier. POLYMER shall use reasonable means
to
mark, pack, package, crate, transport, ship and store Product to
ensure
(a) delivery of the Product to its ultimate destination in a
safe
condition, (b) compliance with all requirements of the carrier
and
destination authorities, and (c) compliance with any reasonable
special
instructions of LIFESTREAM. POLYMER shall use reasonable efforts
to
deliver the Products on the agreed-upon delivery dates and shall
use
reasonable efforts to notify LIFESTREAM of any anticipated
delays;
provided, however, that POLYMER shall not be liable for any failure
to
meet LIFESTREAM delivery dates and/or any failure to give notice
of
anticipated delays.
6.2
ACCEPTANCE
Acceptance of the Product shall occur no later than fifteen
(15) days after the arrival of the shipment of Product and shall
be
based solely on whether the Product passes a mutually agreeable
Acceptance Test Procedure or Inspection designed to demonstrate
compliance with the Specifications, which may include a mutually
agreed
third party audit of the finished goods as part of the quality
plan
(Exhibit D). Product cannot be rejected based on criteria that
were
unknown to POLYMER or based on test procedures that POLYMER does
not
conduct. Product shall be deemed accepted if not rejected within
this
fifteen-day period. Once a Product is accepted, all Product
returns
shall be handled
in accordance with Article 8 (Warranty). Prior to
returning any rejected Product, LIFESTREAM shall obtain a
Returned
Goods Approval ("RGA") number from POLYMER, and shall return
such
Product in accordance with POLYMER'S instructions; LIFESTREAM
shall
specify the reason for such rejection in all RGA's. In the event
a
Product is rejected, POLYMER shall have a reasonable opportunity
to
cure any defect that led to such rejection.
Lifestream _____
Polymer _____
2
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7.
CHANGES
LIFESTREAM and POLYMER, upon mutual agreement, may make changes
within
the general scope of this Agreement. Such changes may include, but
are not
limited to, changes in (1) designs, procedures, Specifications,
test
specifications, (2) methods of packaging and shipment, (3)
quantities of Product
to be furnished, and/or (4) delivery schedule. If any such change
causes either
an increase or decrease in POLYMER'S cost or the time required for
performance
of any part of the work under this Agreement, the Prices and/or
delivery
schedules shall be adjusted by mutual agreement in a manner that
would
adequately compensate the parties for such change, and shall be set
forth in a
written amendment, executed by both parties.
8.
WARRANTY
8.1 POLYMER
WARRANTY
POLYMER'S warranty period is equal to the expiration dating of
the relevant chemistry, and is limited to correction of defects
in
POLYMER'S workmanship and performance. POLYMER shall, at its option
and
at its expense, replace or issue a credit for Product found
defective
during the warranty period.
8.2 RGA
PROCEDURE
POLYMER shall concur in advance on all Product to be returned
for replacement. LIFESTREAM will obtain a Returned Goods Approval
(RGA)
number from POLYMER prior to return shipment. All returns shall
state
the specific reason for such return, and will be processed in
accordance with POLYMER'S RGA Procedure, a copy of which is
available
from POLYMER upon request, and which includes a provision that
POLYMER
shall review and approve or deny any returns prior to shipment and
such
approval will not be unreasonably withheld. POLYMER shall pay
all
transportation costs for valid returns of Product to POLYMER and
for
the shipment of the repaired or replacement Products to LIFESTREAM,
and
shall bear all risk of loss or damage to such Products until tender
to
LIFESTREAM's carrier; LIFESTREAM shall pay these charges, plus
a
handling charge, for invalid or "no defect found" returns. Any
replaced
Product shall be warranted as set forth in this Article for a
period
equal to the remainder of the original warranty.
8.3 EXCLUSIONS
FROM WARRANTY
This warranty does not include Products that have defects or
failures resulting from (a) LIFESTREAM's handling or packaging
in
LIFESTREAM's environment; and (b) accident, disaster, neglect,
abuse,
misuse, improper handling, storage, shipping, or installation,
including improper handling.
8.4 REMEDY
THE SOLE REMEDY UNDER THIS WARRANTY SHALL BE REPLACEMENT OR
CREDIT FOR DEFECTIVE PARTS AS STATED ABOVE. THIS WARRANTY IS IN
LIEU OF
ANY OTHER WARRANTIES EITHER EXPRESS OR IMPLIED, INCLUDING
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Lifestream _____
Polymer
_____
3
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9.
INDEMNIFICATION AND LIMITATION OF LIABILITY
9.1 POLYMER'S
INDEMNIFICATION
POLYMER shall indemnify, defend, and hold LIFESTREAM and
LIFESTREAM affiliates, shareholders, directors, officers,
employees,
contractors, agents and other representatives (the
"LIFESTREAM-Indemnified Parties") harmless from all Claims (i)
based
upon personal injury or death or injury to property to the extent
any
of the foregoing is proximately caused either by a defective
Product,
by the reckless or willful acts or omissions of POLYMER or its
officers, employees, subcontractors or agents, and/or (ii) arising
from
or relating to any allegation that the Product has a design
defect(s),
and/or (iii) arising from any violation of regulations regarding
the
manufacture, distribution, marketing, or labeling of medical
devices,
and/or (iv) arising from or relating to any actual or alleged
infringement or misappropriation of any patent, trademark, mask
work,
copyright, trade secret or any actual or alleged violation of any
other
intellectual property rights arising from or in connection with
the
Product, except to the extent that such infringement exists as a
result
of use by POLYMER of LIFESTREAM specifications. POLYMER shall have
no
obligation to indemnify the LIFESTREAM-Indemnified Parties to
the
extent such Claim results from actions or events described in
Section
8.3, Exclusions from Warranty, or would not exist except for
compliance
with specifications particular to LIFESTREAM.
9.2
LIFESTREAM'S INDEMNIFICATION
LIFESTREAM shall indemnify, defend, and hold POLYMER and
POLYMER'S affiliates, shareholders, directors, officers,
employees,
contractors, agents and other representatives (the
"POLYMER-Indemnified
Parties") harmless from all Claims (i) based upon personal injury
or
death or injury to property to the extent any of the foregoing
is
proximately caused either by a defective Product, by the negligent
or
willful acts or omissions of LIFESTREAM or its officers,
employees,
subcontractors or agents, and/or (ii) arising from or relating to
any
allegation that the Product has a design defect(s), and/or
(iii)
arising from any violation of regulations regarding the
manufacture,
distribution, marketing, or labeling of medical devices, and/or
(iv)
arising from or relating to any actual or alleged infringement
or
misappropriation of any patent, trademark, mask work, copyright,
trade
secret or any actual or alleged violation of any other
intellectual
property rights arising from or in connection with the Product,
except
to the extent that such infringement exists as a result of use
by
LIFESTREAM of POLYMER'S manufacturing processes.
9.3
PROCEDURE
A Party entitled to indemnification pursuant to this Article
(the "Indemnitee") shall promptly notify the other Party (the
"Indemnitor") in writing of any Claims covered by this
indemnity.
Promptly after receipt of such notice, the Indemnitor shall assume
the
defense of such Claim with counsel reasonably satisfactory to
the
Indemnite
