DISTRIBUTION AGREEMENT
This DISTRIBUTION
AGREEMENT ("Agreement"), dated as of July 29, 2009, is
entered into by and between
Competitive Technologies, Inc., a
Delaware
corporation ("CTT"), having a place
of business at:
Competitive Technologies, Inc.
777 Commerce Drive, Suite 100
Fairfield, CT 06825
and Innovative Medical Therapies, Inc., a Delaware corporation
("IMT" or
"Distributor"), with its principal place of business at:
Innovative Medical Therapies, Inc.
212A New London Turnpike
Glastonbury, CT 06033
CTT and Distributor may each be referred to as a "Party" and
collectively as the
"Parties".
WITNESSETH
WHEREAS, CTT wishes
to appoint Distributor as the independent exclusive
sales agent for the Pain Management Therapy
Device (as defined in Schedule 1
hereto) within the Territory, and Distributor
desires to serve as independent
exclusive sales agent, in each
case, on the terms and conditions set forth
herein.
NOW THEREFORE, in
consideration of the mutual promises and covenants set
forth herein, the Parties agree
as follows:
1.0 RIGHT TO DISTRIBUTE
1.1 CTT hereby grants
Distributor the right to purchase from CTT,
and
the
exclusive right to resell solely within the Territory (as
defined
hereinafter)
for use within the Territory, the Pain Management Therapy
Device. Distributor agrees that, except as specifically
permitted in
Section 1.5 herein, it will not purchase the Pain
Management Therapy
Device
from any person or entity other than CTT.
"Territory" shall
mean
the following territories: United States of
America, Guam and
United
States of America possessions, U.S. Virgin Islands,
Bahamas,
Bermuda and
Puerto Rico, but only for so long, and to the extent, that
the offer
and/or sale of the Pain Management Therapy Device is legally
permissible in such territories.
Notwithstanding the foregoing,
Distributor specifically agrees that
CTT has
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<PAGE>
contracted with Native Energy and
Economic Development, LLC for
exclusive
distribution rights to the Department of Defense, Department
of
Veterans Affairs and Indian Health
Services and Distributor
acknowledges
it shall have no rights to distribute the Pain Management
Therapy
Device to any entity covered by said agreement between CTT and
Native
Energy and Development, LLC.
1.2 In the event
that CTT intends to distribute the
Pain Management
Therapy Device in any of the
First Refusal Territories, it will
provide written notice
of such intent to Distributor. Distributor
shall
have thirty (30) days from the date of such written
notice to
present a proposal to CTT for
Distributor to distribute the Pain
Management Therapy Device in such intended territory and to
negotiate
the terms of
any such distribution arrangement. If CTT and Distributor
fail
to enter into a definitive
agreement providing for such
distribution arrangement within such thirty (30) day period,
then (i)
CTT
shall have no further obligation to negotiate with
Distributor,
(ii)
CTT may distribute and/or sell the Products in the First
Refusal
Territories, and (iii) CTT shall
not have any legal or binding
obligation to Distributor of any kind whatsoever with
respect to the
distribution of Products in any of
the First Refusal Territories.
"First
Refusal Territories" shall mean the
following territories:
Canada,
Mexico and Cuba, but only for so long, and to the extent, that
the
offer and/or sale of the Products is legally permissible in
such
territories.
1.3 In the event
that CTT develops and intends
to distribute a
different or upgraded version of the Pain
Management Therapy Device
(an
"Improved Device") anywhere within the Territory, CTT will
provide
written notice of such intent
to Distributor. CTT shall then, by
written notice (an "Offer Notice"), offer
Distributor the right to
purchase from CTT during the Term (including any
Renewal Term), and
the
exclusive right to resell solely within the Territory during
the
Term
(including any Renewal Term) for use within the
Territory, the
Improved Device(s); provided, however, that such right is
conditioned
upon
CTT obtaining FDA clearance of the Improved Device under
Section
510(k). Distributor shall have sixty (60) days
from the date of such
Offer Notice
to accept such offer; provided, however, that Distributor
shall
have no obligation to accept such offer; and provided
further,
that
such acceptance, once given, shall be irrevocable.
Distributor
shall
purchase the Improved Device(s) for
resale from CTT at a
purchase price equal to the average worldwide pricing
(excluding the
Territory) for said Improved Device
(increasing as the average
worldwide
pricing, excluding the Territory, increases). If Distributor
accepts such
offer, Distributor's obligations to purchase the Improved
Device(s) from CTT for resale solely
within the Territory for use
within
the Territory shall not arise
for a period of one year
following Section 510(k) clearance of
the
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<PAGE>
Improved Device by the FDA. Distributor's financial
obligations under
paragraphs 3.1, 3.2 and 3.3 shall
include sales from the Improved
Device. In
the event said Improved Device does not replace the current
Pain
Management Therapy Device, CTT shall
continue to honor all
requirements of this Agreement. If said Improved Device
replaces the
current Pain Management Therapy Device, then,
Distributor may still
exhaust
Distributor's inventory of the current Pain Management Therapy
Devices and associated disposables and both parties agree to
continue
to
honor the existing terms of this Agreement. If Distributor
accepts
such
offer, then (i) CTT shall take all actions necessary to
comply
with
the requirements of the Section 510(k) clearance process and
the
regulations thereunder with respect
to the sale of the Improved
Device(s) in
the United States of America, and (ii) Distributor shall
be
responsible for any product
registrations and other legally
required permits, authorizations and/or filings
in order to import,
offer,
distribute and sell the Improved Device(s) within the Territory
(other than
obtaining Section 510(k) clearance in the United States of
America).
1.4 Distributor shall
purchase the Pain Management Therapy
Device(s)
for
resale from CTT at the prices set
forth on Schedule 2 hereto
(except to the extent set forth in Section
3.1). In the event that
Distributor elects to purchase Disposables
Packages (as defined in
Schedule 1
hereto) from CTT, Distributor may purchase such Disposables
Packages (other than Re-engineered Cables, as
defined in Schedule 1
hereto) from CTT at the prices
set forth on Schedule 2 hereto;
provided, however, that Distributor
shall have no obligation to
purchase Disposables Packages from CTT. In the event that
Distributor
desires to purchase Re-engineered Cables from CTT, the
parties shall
mutually agree upon the terms
and prices of such purchases.
Distributor
agrees that it shall not, directly or indirectly, offer or
sell
pads for use with the Pain Management Therapy Device(s) that
do
not satisfy
specifications to be provided to Distributor in writing by
CTT
(the "Pads Specifications").
1.5 GEOMC Co. Ltd.
of Korea (formerly Daeyang E&C)
in Seoul, South
Korea
is the manufacturer ("Manufacturer"). All orders for Product(s)
(as
defined in Schedule 1 hereto) by Distributor
shall be Ex Works
Manufacturer. All risk of loss shall reside with Distributor
upon the
Product(s)
being made available to Distributor or being delivered to a
common
carrier at the Manufacturer's place of business. In the
event
that,
in breach of this Agreement,
CTT fails to sell the Pain
Management Therapy Devices to
Distributor or fails to cause such
devices sold to Distributor to be made
available to Distributor Ex
Works
Manufacturer as provided in this Section 1.5, then
Distributor
shall
give CTT written notice of such
breach, and CTT shall have
thirty
(30) calendar days after receipt
of such notice to cure
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<PAGE>
such
breach. If CTT fails to cure
such breach to the reasonable
satisfaction of Distributor during
such thirty (30) calendar day
period, then Distributor may purchase Pain Management Therapy
Devices
directly from Manufacturer at the same prices and
on the same other
material terms as are set forth in this
Agreement. CTT shall advise
Manufacturer of the immediately preceding sentence in
writing. In the
event
of delays in delivery of the Pain Management
Therapy Devices
beyond
the delivery period set forth in 3.1, the total
payments due
from
Distributor during said period shall be
extended to the same
extent
of the delays incurred.
1.6 All Product(s) sold
by CTT to Distributor are sold on an "AS
IS,
WHERE IS"
basis, except that CTT warrants that upon payment in full by
Distributor, Distributor shall obtain
merchantable title to the
Product(s), and except for any
warranties that Manufacturer may
provide. Manufacturer's replacement warranty for
normal use with no
physical damage to the unit will be for a period of 12
months. EXCEPT
FOR
THE FOREGOING, CTT MAKES NO REPRESENTATIONS OR
WARRANTIES WITH
RESPECT TO ANY PRODUCTS, EXPRESS,
IMPLIED OR STATUTORY, INCLUDING
WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY,
NON-INFRINGMENT OR
FITNESS FOR A PARTICULAR PURPOSE. All purchases of the
Product(s) by
Distributor from CTT shall be paid in US Dollars by
wire transfer of
immediately available funds in
accordance with wire instructions
provided by CTT. Subject to Section 3.1
herein, the purchase price
shall
be paid by Distributor in full within thirty (30) days from the
date
of the order by Distributor provided however, said payment
date
shall
be extended should CTT fail to
deliver the order to
Distributor's shipping company, FOB manufacturer within
fifteen days
(15)
of Distributor's order. Said extension
shall be equal to the
number of
days after the fifteenth day until delivery to Distributor's
shipping company, FOB Manufacturer.
1.7 All sales to
Distributor are final. Any damaged
or defective
Product(s)
must be returned to the Manufacturer, with any such returns
being
subject to the terms of the applicable product warranty
provided
by
Manufacturer. CTT guarantees performance by
Manufacturer of its
obligation under its replacement warranty
to repair or replace any
defective
Pain Management Therapy Devices in accordance with the terms
and
conditions of such replacement
warranty.
1.8 CTT shall take
all actions necessary to comply
with the
requirements of the Section 510(k)
clearance process and the
regulations
thereunder with respect to the sale of the Pain Management
Therapy Device in the United States of America. Distributor
agrees to
be
responsible for any product
registrations and other legally
required permits, authorizations and/or
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<PAGE>
filings in order to import, offer, distribute and
sell the Products
within the
Territory (other than obtaining Section 510(k) clearance in
the
United States of America).
1.9 Distributor agrees
to (i) actively and continually
market and
promote the Product(s) to appropriate potential
customers; (ii) use
best
efforts to promote the sale of the maximum amount of
Product(s);
and
(iii) accurately advise potential customers of the selection,
use
and
functionality of the Product(s).
Distributor will keep CTT
informed as
to conditions that might affect the sale of the Product(s)
in the
marketplace. CTT agrees to refer all sales inquiries for sales
of
Products within the Territory for use
within the Territory to
Distributor.
1.10 Distributor will
refrain from taking actions that may
tarnish or
cause people
to hold in poor regard CTT or the Product(s). Distributor
shall
establish and maintain a marketing program and a sales
force,
customer trainers and technical
service representatives, who are
properly trained in all aspects of the distributed Product.
CTT shall
have
the right to review and discuss with Distributor at
reasonable
times
and with reasonable frequency all aspects of the marketing
and
service program. Distributor shall be
solely responsible for
establishing the terms of sale (subject to any
limitations set forth
herein) including, without limitation,
the sale price of the
Product(s), consummating the sale of any
Product(s), collecting the
sale
price, and for providing any
post-sale service that may be
necessary with the exception of manufacturer
warranty claims, which
shall
be handled by the Manufacturer.
1.11 CTT will provide
Distributor initial training on the operation
of
the Pain
Management Therapy Device during the first twelve (12) months
following the effective date of this Agreement at
mutually agreeable
times
and locations, but CTT shall not be required to
provide more
than
twelve (12) training sessions per month. Any travel by
the CTT
trainer shall be paid for by Distributor. During the
Term, CTT shall
also
maintain in its employ a staff person
trained to operate and
teach
users of the Pain Management
Therapy Device, who shall be
available to provide consulting
assistance to Distributor not to
exceed
twenty (20) hours per month (Distributor
shall pay for any
additional consulting at a rate of $250 per day or any
part thereof,
plus
travel and other expenses).
1.12 To assist Distributor
in marketing the Product(s), CTT
may
provide Distributor with such
marketing materials as CTT may deem
appropriate. CTT shall have the
right to revise such marketing
materials in its sole discretion
at any time and to provide such
revised marketing materials to
Distributor for all future use.
Distributor shall have no obligation
to use
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<PAGE>
such
materials and any use of such materials is at Distributor's
own
risk.
To the extent Distributor does
use any such materials,
Distributor agrees that it will not use any outdated
materials after
the date it
receives revised marketing materials from CTT. Distributor
may also
provide to its customers the Section 510(k) application and a
copy
of any United States or foreign
patents.
1.13 Distributor shall
provide CTT a monthly written sales summary
of
actual
and forecasted sales, actual customers and potential customers
(each
a "Monthly Report"). Each Monthly Report shall be
provided to
CTT on
or before the fifteenth (15th) calendar day of the next month.
In
addition, Distributor shall promptly provide CTT with the
results
of
any clinical trials, which results CTT may make public;
provided
said
disclosure does not violate any publication agreement
Distributor
may
have with its research consultant, principal investigator,
doctor
or clinical
site, the intent being that Distributor shall have primary
publication rights which are prior
to those of CTT.
1.14 The authority granted
to Distributor is to resell
those Pain
Management Therapy Device(s) it has purchased from CTT
solely within
the
Territory for use within the Territory. Moreover, without
written
permission from CTT, Distributor
shall not sell Pain Management
Therapy
Device(s) to purchasers outside the Territory or to purchasers
inside
or outside the Territory that
Distributor believes or has
reason
to believe are primarily intended for
use or distribution
outside the Territory.
1.15 Distributor acknowledges
and agrees that Distributor is an
independent contractor under the laws and rules of the
United States
Internal Revenue Service (as well as any foreign
equivalent) and the
laws
and procedural holdings of the State of Connecticut.
Distributor
is
not a subsidiary or affiliate of CTT,
and shall not represent
itself
to be, nor permit itself to be represented as, anything
other
than
a distributor of the Product(s). Distributor does not and
shall
not
have any power to, nor shall it represent that it has
any power
to, bind CTT
or create or assume any liability or obligation on behalf
of
CTT. Distributor shall not have, nor shall it hold
itself out as
having, either express or implied authority to accept
orders for the
Product(s)
on behalf of CTT or to make contracts in the name of CTT or
any
other party.
1.16 Distributor shall
not make any representations or warranties
with
respect to the Product(s) beyond the product warranties
given by the
Manufacturer
of the Product(s). Distributor will comply, at all times,
with
all foreign, federal, state and
local laws and regulations
applicable to it, including without limitation,
all applicable laws
relating to the marketing, sale
and
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<PAGE>
distribution
of medical devices within the Territory. At no time shall
Distributor
engage in any high-pressure or unethical sales techniques.
1.17 Distributor is
authorized to represent or describe
itself as an
"Authorized Distributor or Dealer" of
the Products for CTT.
2.0 TERM OF AGREEMENT
2.1 Subject to the
other provisions of this Agreement,
the term of
this
Agreement shall be for an initial period commencing on the
date
hereof
and ending on the fifth (5th) anniversary of the
Start Date
("Initial Term"). As used herein, "Start Date"
shall mean the first
day
of the first full calendar month following the Interim
Agreement
Period. The period from the date hereof until the Start Date
shall be
the
"Interim Agreement Period". The Interim Agreement
Period shall
commence on the full execution hereof and end on the
last day of the
month
in which the one hundred fifty (150) day payment
period ends
under
paragraph 3.1(k). Each consecutive twelve
(12) month period
commencing on the Start Date
and each anniversary thereof during the
Initial Term
and any extension of the term shall be a "Contract Year".
The
first twelve (12) month period commencing on the Start Date
shall
be
"Contract Year 1". Each consecutive
twelve (12) month period
thereafter during the Initial Term and any extension
shall be termed
"Contract Year 2", "Contract Year 3" and so
on, as applicable. The
term
of this Agreement (the "Term") shall initially mean the
Initial
Term.
Subject to the balance of this Section 2.1, the
Term of this
Agreement shall automatically extend for two additional ten
(10) year
periods (each such ten (10)
year period, a "Renewal Term"), each
Renewal Term commencing on the day following
expiration of the then
current
Term. Distributor may cause this Agreement to terminate at the
end
of the then current Term by
giving CTT written notice of
non-renewal (a "Notice of Non-Renewal") at least
one hundred eighty
(180)
days prior to, but not more than three hundred sixty (360) days
prior
to, the end of the then-current Term. Once given, a
Notice of
Non-Renewal shall be irrevocable. Notwithstanding
the foregoing, at
CTT's
option, CTT may cause this Agreement to terminate at the end of
the
then current Term (in which
case this Agreement shall not
automatically
extend for any applicable Renewal Term) if Distributor
is
in breach or default under this Agreement
immediately prior to
expiration of the then current Term
and said default has not been
cured
pursuant to any applicable cure
period .
2.2 Either Distributor
or CTT may terminate this
Agreement at any
time
if the other Party shall breach
or violate its obligations
hereunder; provided, however, that (i) except in the case of
a breach
or
violation of Section
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<PAGE>
3.1(a)
through (g) (time being of the essence with
respect to the
payments required by Section 3.1(a)
through (g)), Section 3.2 or
Section 3.3, the non-breaching Party shall give
the breaching Party
written notice of such breach, and
the breaching Party shall have
thirty
(30) calendar days after receipt of such notice to cure
such
breach; and (ii) in the case of a breach or violation
of Section 3.2
or 3.3, the
non-breaching Party shall give the breaching Party written
notice
of such breach, and the breaching Party shall have ninety (90)
calendar days after receipt of such notice
to cure such breach. If
such
curable breach is cured to the reasonable
satisfaction of the
non-breaching party
during such period, then this Agreement shall
continue in
full force and effect. If such curable breach is not cured
to the
reasonable satisfaction of the non-breaching party during such
period, then
the non-breaching party may terminate this Agreement upon
five
(5) business days written notice
to the breaching Party.
2.3 In the event
that, under governmental order, decree, law, rule
or
regulation, CTT ceases to have the right to sell the
Pain Management
Therapy
Device(s), Distributor's right to purchase Product(s) from CTT
