EXHIBIT 10.13
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT (this
"Agreement") is made as of April 16, 2004;
BETWEEN: Possis Medical, Inc., a Minnesota
corporation, 9055 Evergreen Boulevard
NW, Minneapolis, Minnesota 55433
("Distributor" or "Possis");
AND: Angiometrx Inc., a corporation
incorporated under the Canada Business
Corporations Act and having its primary
business office at Unit 107, 1099 8th
Avenue West, in the City of Vancouver, in
the Province of British Columbia,
Canada; ("Manufacturer" or
"Angiometrx")
BACKGROUND
A. Angiometrx manufactures (or causes to be
manufactured) and markets certain
products and devices described in the
attached Exhibit A (such products and
devices are referred to as the
"Products");
B. Distributor possesses the facilities,
personnel, ability and capacity to
promote the sale and use of the Products in
the geographic area described in the
attached Exhibit B (such area is referred
to as the "Territory"); and
C. Angiometrx wishes to sell the Products
to Distributor, and Distributor wishes
to purchase the Products for resale in the
Territory.
AGREEMENT
In consideration of the foregoing and of
the mutual covenants contained herein,
and intending to be legally bound,
Angiometrx and Distributor agree as follows:
1.
DISTRIBUTION.
a.)
APPOINTMENT. Subject to the terms of this agreement, Angiometrx
hereby
appoints Distributor and Distributor hereby accepts appointment as
the
exclusive distributor of Products in the Territory.
b.) DURATION
AND TERMINATION.
(1) This
Agreement shall begin on the date written above and shall
continue in full force and effect for a three and one quarter
year term, expiring August 1, 2007. The Agreement can be
extended up to an additional twenty-four (24) months by
agreement in writing between Angiometrx and Distributor,
provided Angiometrx and Distributor can negotiate agreeable
sales volume commitments and contract duration for the
extended term. These negotiations may begin anytime and must
be concluded by the thirty third (33) month of the original
term.
(2) Each of
the following circumstances shall constitute an "Event
of Default" under this Agreement: i) Material breach of any
term or condition of this Agreement; ii) The repeated failure
of a party to perform one or more of its obligations whether
or not this repeated failure constitutes a material breach;
iii) The filing by or against the other party of any
insolvency or bankruptcy proceeding, or proceedings for
reorganization, receivership, dissolution or any arrangement
under bankruptcy law, iv) The existence of a condition of
force majeure for longer than six (6) months; v) Any change in
a party's ownership which shall impair its ability to perform
its obligations under this Agreement; or vi) The failure or
inability of
Distributor to meet sales objectives outlined in
Section 2(d)(2).
Upon the occurrence of an Event of Default by one of the parties,
the
other party may terminate this Agreement upon thirty (30) days
prior
written notice to the defaulting party; provided that the
defaulting
party shall not have cured the default within such thirty (30)
day
period. Therefore, if the Event of Default is not cured within
that
thirty (30) day period, this Agreement will be deemed terminated.
Not
withstanding the foregoing, no notice shall be required for an
Event of
Default as defined in Section 1(b)(2)(iii).
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(3) During the 30 day notice period described in subsection (2)
above,
the party giving notice may withhold its own performance (except
with
respect to payment of any amount then due and owed to the other
party)
unless the other party cures or acts with due diligence to cure
the
Event of Default within the notice period.
c.)
SUB-DISTRIBUTORS.
If at any time during the term of this Agreement Distributor
appoints
any sub-distributors for the Products, Distributor shall:
i)
Cause such sub-distributors to comply fully with all
obligations imposed hereunder upon Distributor applicable to
resale of the Products within the Territory;
ii) Obtain a
guarantee from any such sub-distributor that it will
not represent itself as an employee, agent or representative
of Angiometrx;
iii)
Indemnify Angiometrx and defend and hold Angiometrx harmless
from all claims, damages and liabilities which Angiometrx may
incur in connection with the appointment or termination of
such sub-distributor and the sale of Products by such
sub-distributor; iv) Submit to Angiometrx a list of the
sub-distributors including addresses, fax and phone numbers.
d.) CONFLICTS OF
LNTEREST.
In the absence of approval by the Manufacturer, such approval not
to be
unreasonably withheld, Distributor expressly agrees not to engage
in
any activity relating to a product that competes directly with
the
Products. These competing products are outlined in Exhibit E
e.) INDEPENDENT
CONTRACTOR.
Distributor is an independent contractor authorized only to
purchase
products from Angiometrx for resale within the Territory. Nothing
in
this Agreement creates a relationship of employer-employee,
principal-agent, franchiser-franchisee, joint venture or
partnership
between Distributor and Angiometrx. Distributor has no power or
authority to bind Angiometrx in any way for any purpose, nor to
give
any representation on Angiometrx's behalf, nor to create any
liability
against Angiometrx. Distributor agrees to indemnify and to hold
harmless Angiometrx from and against any and all claims, damages
or
liabilities arising from any act of Distributor outside of its
scope of
authority under this Agreement.
2. PRODUCTS.
a.) PRICE.
(1) The initial Price for the Products is set forth in the
attached
Exhibit C. Said prices shall be binding on Manufacturer for the
first
year of the term of this Agreement and shall be modified only with
the
express approval of Distributor, except as noted in section
2.a.(2).
(2) Prices may be modified by the Manufacturer for the second year
of
the Agreement upon 60 days notice to Distributor, provided that
AngioMetrx demonstrates that the price change is justified by
an
increase to Angiometrx of at least ten per cent (10%) in the
manufacturing costs for the Products ( inclusive of the impact
of
changes in the applicable currency exchange rate). Following such
a
price increase, the new price shall be fixed for the entire
year.
Prices may be modified by the Manufacturer for the third year of
the
Agreement upon the same terms and conditions as required for a
price
increase in the second year of the Agreement.
(3) Any modified price will not apply to orders received and
accepted
by Angiometrx prior to the effective date of such Distributor
price
changes.
(4) All prices
and shipments to Distributor shall be F.O.B.
Angiometrx's plant in Vancouver, Canada. To such prices shall be
added
all shipment costs, transit insurance costs, and applicable duties
or
taxes and other related costs and expenses relating to the sale
and
shipment of the Products to Distributor. The Manufacturer shall
ship
all Products to the Distributor's main facility located in
Minnesota,
or such other location as may be designated from time to time by
the
Distributor. The Distributor shall specify its carrier of choice
for
shipments in each purchase order to the Manufacturer. The
Manufacturer
will invoice the Distributor for any shipment costs incurred.
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b.) PURCHASE
ORDERS.
(1) Distributor agrees to purchase the Products from Angiometrx,
solely
from Angiometrx and not from any other source, and Distributor
agrees
that purchase of the Products is for resale on Distributor's
own
account.
(2) Distributor may issue only written purchase orders for the
Products
to Angiometrx. All purchase orders shall specify Product type,
quantity, desired shipping date, unit price (from the Price
List),
unique purchase order number, shipping destination and any
special
shipping instructions. All purchase orders shall be subject to
the
terms and conditions of this Agreement and in the event of a
conflict
or inconsistency between the terms of this Agreement and the terms
of
any purchase order or other document submitted by Distributor
to
Angiometrx, this Agreement shall control unless the parties
specifically otherwise agree in writing.
(3) Angiometrx may impose, as a prerequisite to its acceptance of
a
purchase order, the payment of outstanding delinquent invoices.
(4) Angiometrx will acknowledge the acceptance of a purchase order
by a
written order confirmation, shipment of the Products ordered, or
other
appropriate communication. Distributor acknowledges and
understands
that Angiometrx's obligation to sell any Products is subject to
availability of Products. No purchase order shall be binding
upon
Angiometrx until the same is accepted in writing by Angiometrx.
(5) Angiometrx shall make reasonable efforts to fill each
purchase
order that is accepted, but Angiometrx shall not be liable for
damages
caused by failure to ship or delay in shipment resulting from
conditions beyond the control of Angiometrx, including but not
limited
to the inability of its suppliers to obtain material and supplies
or to
produce sufficient components to meet Product sales demand. Any
failure
by Angiometrx to ship Product ordered by Distributor to meet
the
minimum purchase requirements as provided in Exhibit D herein
shall
reduce Distributor's purchase requirements provided in Exhibit D
herein
for that period and shall suspend the remedies provided in
Section
(d)(2) herein for Distributor's failure to meet purchase
requirements
during that period.
c.) PAYMENT.
(1) All amounts due to Angiometrx shall be for the net invoice
amount
paid in U.S. Dollars without discount or rebate. Payment terms
are
thirty (30) days, which shall be stated on each invoice. Angiometrx
may
at its sole
discretion require wire transfer prior to shipment or
irrevocable standby letter of credit payable by sight draft
from
Distributor. If Distributor is prohibited from making payment in
U.S.
Dollars because of any applicable law or regulation, Angiometrx
may
elect to designate a currency or mode of payment not so prohibited,
or
to terminate this Agreement upon ten (10) days written notice.
Termination does not discharge any obligation of Distributor to
promptly pay any unpaid invoices in full in any non-prohibited
currency
designated by Angiometrx.
(2) If Distributor is delinquent in remitting payments to
Angiometrx
under the terms of any invoice, Angiometrx may: i) decline to
accept
new purchase orders; ii) charge Distributor interest on past
due
amounts at a rate of 1.5 percent per calendar month; and/or
iii)
require advance payment, payment on delivery, or bank-guaranteed
method
of payment for further shipments. Distributor shall comply with
the
modified payment terms. The foregoing remedies of Angiometrx are
not
exclusive, but in addition to any and all remedies available to
Angiometrx under this Agreement and applicable law.
d.) SALES.
(1) Distributor shall restrict to the Territory its active
promotion
and marketing of the Products. Distributor shall not actively
pursue
sales of the Products outside the Territory.
(2) Minimum purchase requirements are as set out in Exhibit D.
Failure
of Distributor in any one-year period to purchase the annual
commitment
shall result in a ninety (90) day probationary period. During
this
period,
Distributor must increase purchases to levels specified by
Angiometrx. If Distributor fails to meet the probationary
purchase
requirements, Angiometrx may terminate this Agreement immediately
upon
written notice to Distributor.
(3) Distributor shall submit detailed sales and inventory reports
to
Angiometrx on a quarterly basis, together with a rolling good faith
but
non-binding sales forecast. The reports shall be in a form and
substance as reasonably required by Angiometrx.
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e.) SHIPMENT,
DELIVERY AND INVENTORY.
(1) All risk of loss or damage to the Products shipped will pass
from
Angiometrx to Distributor at the time the shipment is delivered to
the
carrier.
(2) Delivery schedules set forth in Angiometrx's order
confirmations
reflect Angiometrx's reasonable estimate of actual shipping
dates.
Angiometrx will use its reasonable best efforts to meet such
dates.
Partial shipments will constitute independent transactions for
which
payment is due according to the terms of this Agreement.
Distributor
shall be solely responsible for obtaining whatever licenses,
permits or
the like may be required to allow it to receive the Product.
(3) Distributor shall inspect the Products promptly upon their
arrival
at their shipping destination. All defects or other nonconformities
of
the Products to the terms of the purchase order discoverable
upon
receiving inspection, must be reported in writing to Angiometrx
within
thirty (30) days after the date of receipt of the Products, or
Distributor's rights for redress shall be forever waived. All
other
defects or nonconformities must be reported in writing within
thirty
(30) days after discovery or Distributor's rights for redress shall
be
forever waived.
(4) Distributor shall at all times maintain sufficient inventory
of
Products to meet customer demand and established sales objectives
for
the Territory.
(5) Shelf Life Conditions and Remedies:
i) NINE
MONTHS OR GREATER SHELF LIFE: For any product that is
provided to the Distributor with a minimum of nine (9) months
shelf life, the Distributor may not return inventory to
Angiometrx or transfer inventory to any other distributor
without Angiometrx's express written consent. Product can be
returned to Angiometrx only in the event of termination of
this distribution agreement subject to the following
limitations: Product with a minimum of six (6) months shelf
life remaining can be returned for a refund of the purchase
price; Product with less than six (6) months remaining shelf
life cannot be returned; Distributor will bear all risks of
loss or damage to returned Products occurring before receipt
of the Products by Angiometrx.
ii) LESS THAN
NINE MONTHS SHELF LIFE: For any Product that is
provided to the Distributor with less than nine (9) months
shelf life, the Distributor can return it to the Manufacturer
at any time for full refund or replacement. Distributor will
bear all risks of loss or damage to returned Products
occurring before receipt of the Products by Angiometrx.
(6) Notwithstanding the provisions of Section 2(e)(5) herein,
Manufacturer shall accept the return and issue full credit to
Di
