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EXHIBIT 10.20
CONFIDENTIAL MATERIALS
OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND
EXCHANGE COMMISSSION. ASTERISKS
DENOTE
OMISSIONS.
DISTRIBUTOR
AGREEMENT
THIS AGREEMENT
("Agreement") is made
and entered into as of this __31__
day of October, 2005
(hereinafter, the "EFFECTIVE DATE")
by and between
Cytomedix, Inc. ("CYTOMEDIX"), 416 Hungerford Drive,
Suite 330, Rockville,
Maryland 20850, and
National Wound Therapies,
LLC
("DISTRIBUTOR"), 1771
International Parkway, Suite 121 Richardson, Texas 75081.
WHEREAS, Cytomedix is the owner of certain patent and
other intellectual
property rights in the Products; and
WHEREAS, due
to their unique
nature, the Products
require special
distribution services and post-sale support and service; and
WHEREAS, Cytomedix wishes to have
its Products distributed to the Selected
Facilities by means of a distributor
with the ability to promote,
sell, and
distribute the Products,
adequately train its
personnel and the Selected
Facilities in the use and
application of the Products, and provide post-sale
service and support of the Products; and
WHEREAS, the
Distributor is a distributor
of medical products with a
distribution network in place
sufficient to cover the Selected
Facilities;
Distributor has the ability, expertise, and
desire to promote, sell, distribute
the Products to the Selected Facilities,
adequately train its personnel and the
personnel of the Selected Facilities in the use and application of the
Products,
and provide post-sale
service and support of the Products; and
Distributor
wishes to serve as the distributor for
the Products to the Selected Facilities
listed in Exhibit "A"; and
WHEREAS, Cytomedix and the Distributor wish to enter into this Agreement
to provide a
full, written statement
of their respective
rights and
responsibilities under this arrangement.
NOW, THEREFORE,
in consideration of the
above recitals, the
mutual
promises contained herein,
and other good and valuable
consideration, the
receipt and sufficiency of which are hereby
acknowledged, the parties agree
as
follows:
<PAGE>
1. DEFINITIONS.
As used herein, the following terms shall have the meanings set forth below:
A. "Selected Facilities" shall
mean those nursing
homes, skilled
nursing, long-term acute care and inpatient
rehabilitation hospital
facilities identified in Exhibit "A" and those
facilities as may be
agreed upon by the parties
from time to time.
B. "MSRP" shall
mean Cytomedix's suggested
retail price of the
Products, as established and amended by Cytomedix from
time to time
which, in any event, shall be not less than twice the price
charged
to Distributor.
C.
"Products" or "Kit(s)" shall mean the AutoloGel(TM)
Supply Kit and
other disposables,
hardware and reagents as may be
developed and
improved by Cytomedix from
time to time.
D. "Term" shall mean the period described
in Section 13 hereof.
E. "Termination Date"
shall mean December
31, 2009, unless
this
Agreement shall be renewed in
accordance with Section 13B(ii).
F. "Minimum Order Quantity" shall
mean those quantities of Centrifuges
and Kits described in Exhibit
"C".
G. "Additional Products" shall mean any amount of
Products ordered by
Distributor in excess of the
Minimum Order Quantity.
H. "Other
Facilities" shall mean
nursing homes, skilled
nursing,
long-term acute
care, inpatient rehabilitation hospitals,
or
facilities in which a
physician or practitioner
from a Selected
Facility also provides services,
other than a Protected Facility.
Other Facilities are not
Selected Facilities but may become Selected
Facilities according to the
provisions of Section 2.
I. "Protected Facilities" shall mean any and all facilities in which
Cytomedix has granted or shall grant (prior
to the establishment of
a Selected Facility) to other
distributors or agents an exclusive or
otherwise protected right to
sell or distribute products. Protected
Facilities are set forth in
Exhibit E.
<PAGE>
J. "Affiliates" shall
mean any entity
that is owned by or is under
common ownership with
Distributor where "own" or
"ownership" means
possession of at least 50% of
outstanding voting securities.
2. APPOINTMENT.
A. Exclusive Distributor of Products to the Selected
Facilities. Subject
to the terms and conditions contained in this Agreement,
Cytomedix appoints
Distributor as its independent
and sole distributor for the Products to the
Selected Facilities with
exclusive rights to
purchase the Products
from
Cytomedix for resale to the Selected
Facilities for the Term of this Agreement,
and Distributor hereby accepts such
appointment to sell and market the Products
under Cytomedix's name, logotype, and trademark. Distributor's sole authority
shall be to solicit orders for the Products from the Selected Facilities and to
offer post-sale support and service to the Selected Facilities
in accordance
with the terms of this Agreement. Distributor
shall not have the authority to
make any commitments whatsoever on behalf of Cytomedix. The Selected Facilities
in Exhibit A are designated as Selected
Facilities for the first twelve
(12)
months of this Agreement. If at the end of the first year of this
Agreement,
Distributor has provided Cytomedix with
documented proof that Distributor has
made a demonstration of the
Cytomedix AutoloGel Product to at least Thirty
Percent (30%) of the chains (or their
successors in interest) listed on Exhibit
A, the Selected Facilities shall remain
designated Selected Facilities for an
additional twelve (12)
months. If at the end of the
second year of
this
Agreement, Distributor has provided Cytomedix
with documented proof that during
the first two
years of this
Agreement that the
Distributor has made a
demonstration of the Cytomedix AutoloGel Product to at least Sixty-Percent
(60%)
of the chains (or their
successors in interest) listed on
Exhibit A, the
Selected Facilities shall
remain designated Selected
Facilities for an
additional twelve (12)
months. If at the end of
the third year
of this
Agreement, Distributor has provided
Cytomedix with documented proof that during
the first three
years of this Agreement
that the Distributor
has made a
demonstration of the Cytomedix
AutoloGel Product to at
least Ninety-Percent
(90%) of the chains (or their successors
in interest) listed on Exhibit A, the
Selected Facilities shall
remain designated Selected
Facilities for the
remainder of this Agreement. In any
event, for every Chain (or their
successor
in interest) set forth on Exhibit A, for which Distributor has obtained
bonafide
sales of Cytomedix Product, such Chain (or their successor in interest) shall
remain a Selected Facility for the entire term of this Agreement.
Demonstrations
by Distributor, sales presentations by
Distributor and written documentation of
such shall be provided by Distributor in accordance with Section 4 and Exhibit
D
of this Agreement.
<PAGE>
B. Reserved Rights.
Distributor understands that its exclusive rights
provided in Section 2.A. above do not govern solicitation
of or sales of the
Product to facilities other than the Selected Facilities
including, but not
limited to, facilities in the same geographic area which may compete with one
or
more of the Selected Facilities.
Cytomedix may, in its sole discretion, appoint
or secure representation to
solicit any customers
that are not Selected
Facilities, sell the Products to those
customers, and provide post-sale service
and support to those customers without violating Distributor's exclusive rights
in the Selected Facilities. The Distributor is approved and authorized to
sell
the Product to other customers and/or provide
post-sale support and service to
customers beyond the Selected Facilities as provided herein.
C.
Distributor of Products to
Other Facilities. Cytomedix
agrees that
Distributor may accept orders
from and resell Products to Other
Facilities
provided that the sales to such
Other Facilities do not violate any
current or
future agreement (made
prior to the establishment of a
Selected Facility)
between Cytomedix and any third
party granting exclusive
rights to sell or
distribute Products. Other
Facilities shall become Selected
Facilities by
Cytomedix granting express consent; or upon Distributor obtaining the sale of
twelve (12) Kits within six (6) months to such Other Facility,
whereupon such
Other Facility will become an interim Selected Facility for a period of 180
days
from the date of the sale of the first Kit. That facility will remain a
Selected
Facility for as long as Distributor
continues to sell at least twelve (12) Kits
to such facility every 180 days. The provision of this Section 2.C. regarding
loss of status as a Selected
Facility for failure of Distributor
to meet the
minimum sales requirements
of twelve (12) Kits every six (6) months
shall be
applicable only to the Other Facilities that become Selected Facilities
pursuant
to this Section 2.C.
D.
Distributor and Affiliates Bound
to this Agreement. Distributor may
solicit sales through Affiliates
in which case such
Affiliates would become
subject to the terms of this Agreement,
(except the Minimum Ordering
Quantity,
it being the intent
that Distributor's Affiliates
shall be used to assist
Distributor in meeting the order requirements).
<PAGE>
3. SALE OF THE PRODUCTS.
A. Prices and Terms of Sale.
(i) For
the Term of
this Agreement, Cytomedix
shall sell to
Distributor the AutoloGel(TM)
Supply Kit and reagents for ***** per kit.
In the event Cytomedix
should lower the MSRP, Cytomedix
shall lower the
price at which it sells the
Products to the Distributor so that the
price
at which Cytomedix sells the
Products to Distributor remains ***** of
the
MSRP. In the event that the cost of
production of the AutoloGel(TM) Supply
Kit including reagents increases or decreases, said increase or decrease
will be
adequately documented and
passed on to Distributor
with a
concomitant increase
or decrease. In any event,
the price charged to
Distributor shall
be equal to
the lowest price
charged to other
Distributors servicing similar
markets.
(ii) Distributor shall pay
***** for each AutoloGel(TM) Processing
Unit (the
"Centrifuge"), and Distributor
shall be required to purchase
Centrifuges from Cytomedix for the Selected Facilities
where necessary.
This one-time payment gives
Distributor ownership of each Centrifuge.
(iii) In order to retain
exclusivity and non-exclusivity status with
respect to Selected Facilities and Other Facilities described in Section
2, Distributor shall purchase, on a semi-annual basis, from Cytomedix an
agreed upon Minimum
Order Quantity of Kits which is
outlined in Exhibit
"C", defined as the
Minimum Order Requirements of Distributor.
(iv) Cytomedix shall,
at Distributor's option,
ship directly to
Distributor or a purchasing customer at the shipping address provided by
Distributor. Cytomedix
shall provide Distributor
with its delivery
schedules and its standard terms and
conditions of sale, as
established
from time to time. Distributor
may elect to have Products shipped
via
ground or air
freight, but Distributor
shall be responsible for all
shipping, handling,
insurance, import duties, taxes, and clearance costs
relating to its orders of the Products.
Ownership of the Products shall
pass when invoiced Product is received by Distributor or its customer in
acceptable condition.
B. Initiationt 6 12 of Supply.
<PAGE>
(i) Upon execution
of this Agreement, Distributor
shall pay to
Cytomedix the 50% price of the
Minimum Order Quantity for the Products and
Centrifuges to be supplied during
the first three months hereunder. Within
fifteen (15)
days of receipt of
shipment, Distributor will
pay the
remaining balance. For all months
after the third month of this Agreement,
Distributor shall pay by the Fifteenth
(15th) day of each month for the
Products and Centrifuges following
shipment and receipt of an invoice from
Cytomedix. Should
Distributor require Products in
excess of the Minimum
Order Quantity, Distributor
shall order Additional Products
pursuant to
the provisions of this section.
(ii) Upon execution of
this Agreement, Cytomedix shall provide the
Minimum Order Quantity to
Distributor for the current month. Thereafter,
Cytomedix shall
supply the Minimum Order Quantity on a monthly basis.
Cytomedix shall
deliver Additional Products
ordered by Distributor
pursuant to the terms of this
section.
C. Orders. This Agreement shall be deemed an order for the Minimum
Order
Quantity as described
in Exhibit "C"
for the first
three months. The
commencement date for the Minimum Order
requirements shall be January 1,
2006.
Distributor shall place all other Minimum Order Quantities, including orders
for
any Additional Products via the Cytomedix order form two months in advance.
Each
order of the Products, including
Additional Products shall be
governed by
delivery schedules and terms and conditions in effect at the time the order is
accepted by Cytomedix, and all
quotations by Distributors
shall contain a
statement to that effect.
Cytomedix shall ship and invoice
the Products and
Additional Products on or near the first of the
month for which the order is
required. Distributor shall pay the invoice by the Fifteenth (15th) of the
month
for which the order is received by
Distributor. After the first year
of this
Agreement, Distributor shall pay the invoice
within thirty (30) days of receipt
of invoice.
D. Acceptance. All orders received from Distributor
shall be subject to
acceptance by Cytomedix at its principal
office provided that Cytomedix
agrees
to use commercially reasonable
best efforts to fulfill
reasonable orders of
Distributor.
E. Invoices. Cytomedix shall render all invoices on
shipped Products on a
monthly basis directly to Distributor.
Payments shall be made by
Distributor
directly to Cytomedix. Full responsibility for
collection from the Selected
Facilities rests with Distributor, and a
Customer's failure to pay Distributor
does not affect Distributor's obligation to pay Cytomedix. Payment shall be
made
to Cytomedix by Distributor within fifteen (15) days of the date of the
invoice.
After the first year of this Agreement, Distributor shall pay the invoice
within
thirty (30) days of receipt of invoice.
Distributor shall pay late charges on
all unpaid and overdue invoices of
twelve percent (12%) per annum or
otherwise
the maximum rate
permitted by applicable
law to be charged for unpaid and
overdue invoices.
<PAGE>
F.
Inquiries from Customers
other than the
Selected Facilities.
Distributor shall not solicit sales from Protected Facilities, without the
prior
written consent of Cytomedix.
G.
Support. Distributor shall
provide reasonable sales and
clinical
support to the Selected Facilities in order to maintain and develop
Customer
relationships and promote sales of the Products at its sole expense.
4. RESPONSIBILITIES OF DISTRIBUTOR.
A. Necessary Authorizations. Distributor
shall acquire and maintain all
licenses, permits, consents or
authorizations necessary to sell the Products to
any and all of the Selected
Facilities. Distributor shall
comply with all laws
and regulations affecting its business during the Term of this Agreement.
B. Expense of Doing Business. Distributor
shall bear the entire cost and
expense of conducting
its business in
accordance with the
terms of this
Agreement. All financial and other obligations
associated with Distributor's
business are the sole responsibility of Distributor.
C.
Facilities. Distributor shall
provide itself with,
and be solely
responsible for, (i) such facilities,
employees, and business organization, and
(ii) such permits, licenses, and other forms of clearance from
governmental or
regulatory agencies, if any, as are necessary for the conduct of
Distributor's
business operations in accordance with this Agreement.
D.
Promotional Materials. All
promotional materials utilized
by
Distributor relating to Cytomedix or the
Products shall have the prior approval
of Cytomedix which shall not be withheld unreasonably. Distributor shall not
use
any notice, circular, advertisement, letter or any oral or written
communication
regarding Cytomedix or the Products without the prior reasonable
approval of
Cytomedix. In no event shall Distributor
make any representation, guarantee or
warranty concerning the Products or Cytomedix except as expressly and
reasonably
authorized by Cytomedix. In no event shall Distributor engage in any
promotional
activities that violate any law, rule, or regulation applicable to Distributor,
Cytomedix or the Products, Including
without limitation the Federal Food,
Drug
and Cosmetic Act.
21 U.S.C. Sec. 321 et seq.,
and the Federal Healthcare
Anti-Kickback Law, 42 U.S.C. Sec. 1320a-7b.
<PAGE>
E. Training.
(i)
Distributor shall be
responsible for training
all of its
personnel who promote, sell,
support and service the Products so that they
are
knowledgeable about the Products
and can adequately promote, sell,
support and service the
Products as required
under this Agreement.
Distributor shall be responsible for training
appropriate personnel on
compliance with laws
applicable to the promotion
and marketing of the
products, including
without limitation the laws described in Section D
above.
(ii) Distributor
shall be responsible for
training the Selected
Facilities in the use and
application of the Products.
(iii) As provided in
Section 5.B., Cytomedix
shall cooperate and
assist reasonably in effecting the
training required by this Section 4.E.
F. Advising of Changes. Distributor,
to the best of its knowledge, shall
promptly advise Cytomedix
of (i) any
changes in Distributor's status,
organization, key personnel, and similar matters, (ii) any changes in the key
personnel, organization, and status of any of the Selected Facilities, (iii)
any
change in Distributor's ability to sell Products.
G. Advising of Changes. Cytomedix,
to the best of its
knowledge, shall
promptly advise Distributor
of (i) any
changes in Cytomedix's
status,
organization, key personnel
or similar matters,
and (ii) any changes
in
Cytomedix's ability to sell products.
H. Books and
Records. Distributor shall
participate with Cytomedix
regarding inquiries, transactions, sales and other proceedings relating to the
Products. Distributor shall maintain and make available to
Cytomedix accurate
books, records, and accounts relating to the sales and
revenues of Distributor
with respect to the Products provided to the Distributor. Distributor shall
also
maintain a record of any customer
complaints regarding either the Products or
Cytomedix and immediately forward to
Cytomedix the information regarding
those
complaints.
<PAGE>
I. Consulting. Distributor
shall participate with Cytomedix regarding
quality control and product performance
during the Term of the Agreement. This
participation shall generally include:
(i) Review of the sales practices of competitors with the identity
of
such competitors identified
and agreed upon
by Cytomedix and
Distributor;
(ii) Advice concerning:
(a) pricing and packaging
of advertising sales;
(b) sales
promotions;
(c) ongoing supervision
of the sales effort at the
Selected
Facilities.
(d) advice
concerning anything to
provide competitive
advantage.
J.
Availability. Distributor shall be available for telephone review of
any matters related to this Agreement at reasonable times.
K.
Recalls. In the
event Cytomedix recalls
any Products sold
by
Distributor, Distributor shall
reasonably assist Cytomedix with
such recall.
Cytomedix agrees to give
Distributor prompt notice in the
event that Cytomedix
recalls any Product, or ceases or suspends the sale of any Product due to any
problem which relates to such Product's
efficacy or patient safety. In order to
assist Cytomedix in the event of a recall, Distributor shall maintain a
complete
and current listing of the locations of all Products in Distributor's inventory,
and the names of the Selected
Facilities who have purchased
Products from
Distributor.
L.
Disparaging Comments. At all times during the Term of this
Agreement
and thereafter, the Distributor
shall not disparage the name or reputation of
Cytomedix or the Products,
and Cytomedix shall
not disparage the name or
reputation of the Distributor.
M. Competition. Distributor agrees not to sell, promote,
manufacture or
have manufactured any products or processes that are covered by any Cytomedix
patent unless Distributor is specifically
licensed to do such under agreement
with Cytomedix.
<PAGE>






