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>
N. Use of
Products. Distributor
understands that this
product like other
similar platelet
gel therapy products are used for treating wounds at the
discretion of doctors and other providers under the general norms
of practice of
medicine, but do not
have specific
FDA approval or clearance for treating
chronic wounds. The individual components used in Cytomedix
platelet gel therapy
are currently
marketed medical products from several manufacturers who are
subject to
FDA regulations including those for product notification and
clearance and
good manufacturing practices (Quality System Regulation).
Distributor also
understands and acknowledges that each of the components
used
in the Products is marketed by other companies and that the
Products
constitute
therapies performed
under the physicians' practice of medicine. Distributor
acknowledges that
autologous
blood-derived
products for chronic
non-healing
cutaneous wounds, both platelet-derived growth factor in a
platelet-poor plasma,
and platelet-rich
plasma (PRP), have been determined noncovered nationally by
the Centers
for Medicare and Medicaid Services (CMS). Distributor also
understands and
acknowledges that the
rules and regulations
applicable to the
Products require,
in part, that no specific claims be made regarding the
Products and that the
Products only be used
on or provided to patients within
the parameters
of a legitimate doctor-patient relationship and only at the
doctor's direction.
Distributor is aware
of all other publicly disclosed facts
in the company's SEC filings, press releases, analyst calls and the sta
