THIS DISTRIBUTOR
AGREEMENT (this “Agreement”) is made effective as of
the 24th day of October, 2005 by and between (i) ReGen
Biologics , Inc., a Delaware corporation
(“MANUFACTURER”), having its principal place of
business located at 509 Commerce Street, East Wing, Franklin Lakes,
New Jersey 07417, U.S.A., and (ii) XMedica , a company
organized and existing under the laws of Italy, having its
principal place of business located at Via Francesco Olgiati, 26 ,
Milan 20143, Italy (“DISTRIBUTOR”).
A. MANUFACTURER
developed, designed, manufactures, markets, distributes, sells and
supplies a collagen meniscus implant and certain other products
listed on Schedule A attached hereto (collectively, the
“Products”).
B. DISTRIBUTOR
possesses expertise in the promotion, marketing, distribution, sale
and supply of products similar to the Products and is knowledgeable
of the market for the Products in the Territory (as hereinafter
defined).
C. DISTRIBUTOR
desires to promote, market, distribute, sell and supply the
Products in the Territory on an exclusive basis in accordance with
the terms and provisions of this Agreement.
D. MANUFACTURER
is willing to grant to DISTRIBUTOR the right to promote, market,
distribute, sell and supply the Products, and to use
MANUFACTURER’s trademarks, trade names and copyrights for
such purposes, in the Territory on an exclusive basis in accordance
with the terms in this Agreement.
E. The
parties hereto desire to set forth herein the terms and provisions
of their agreements and understandings.
NOW, THEREFORE, in
consideration of the foregoing, of the mutual promises herein set
forth and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto,
intending legally to be bound, hereby agree as follows:
1.1.
Agreed-Upon Marketing Expenses . The term “Agreed-Upon
Marketing Expenses” shall have the meaning given to such term
in Section 2.8 hereof.
1.2.
Confidential Information . The term “Confidential
Information” shall have the meaning given to such term in
Section 5.5 hereof.
1.3.
Copyrights . The term “Copyrights” shall mean
all MANUFACTURER designs, advertising materials and other
copyrightable works as may from time to time be specifically
designated by MANUFACTURER in writing as Copyrights to be licensed
to DISTRIBUTOR under this Agreement.
1.4.
Customer . The term “Customer” shall mean any
person or entity which purchases the Products for its own use and
not for resale to another person or entity, whether such purchase
for use is from the DISTRIBUTOR or any of its Dealers.
1.5. Dealer
. The term “Dealer” shall mean any person or entity
appointed by DISTRIBUTOR to promote, market, distribute, sell and
supply the Products in the Territory to Customers pursuant to a
dealer agreement consistent with the terms and provisions of this
Agreement.
1.6. Defect
. The term “Defect” shall mean any material failure of
the Product to conform to the applicable specifications for the
Product, as set forth on Schedule B , at the time of
its shipment by the MANUFACTURER.
1.7. Marks
. The term “Marks” shall mean the trademarks
“ReGen Biologics ,” “CMI,”
“Collagen Meniscus Implant,” “SharpShooter”
and all other names, marks and symbols as may from time to time be
specifically designated by MANUFACTURER in writing as Marks to be
licensed to DISTRIBUTOR under this Agreement.
1.8. Quota
. The term “Quota” shall have the meaning given to such
term in Section 2.4 hereof.
1.9. Term .
The term “Term” shall have the meaning given to such
term in Section 7.1 hereof.
1.10.
Territory . The term “Territory” shall mean the
countries and/or regions listed in Schedule C attached
hereto and made a part hereof.
(a) MANUFACTURER
hereby grants to DISTRIBUTOR the right, in accordance with the
provisions of this Agreement and further described on
Schedule A, to market, distribute, sell and supply the
Products to Customers and Dealers located in the Territory in
accordance with the terms and provisions of this Agreement.
MANUFACTURER reserves the right to appoint other distributors in
the Territory to market, distribute, sell and supply products other
than the Products during the Term of this Agreement.
(b) DISTRIBUTOR
agrees not to, directly or indirectly, export or otherwise make
available the Products to any Customer or Dealer for resale outside
of the Territory or under circumstances which reasonably indicate
that a Customer or Dealer will sell Products outside the
Territory.
(c) DISTRIBUTOR
agrees, at its expense, to obtain all approvals of any governmental
authority or “standards association” in the Territory
necessary for the importation, sale or distribution of the Products
in the Territory and to provide MANUFACTURER with evidence
thereof.
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(d) DISTRIBUTOR
shall display and use the Marks and the Copyrights, and shall
permit and authorize the same to be displayed or used, only as
expressly permitted under Article 5 hereof or otherwise with
the prior written consent of MANUFACTURER.
(e) DISTRIBUTOR
agrees to conduct its business as an independent contractor under
its own name only. DISTRIBUTOR acknowledges and agrees that it is
not an employee, co-venturer or agent of MANUFACTURER and has no
right or authority to make any representation to such effect.
Neither DISTRIBUTOR nor its employees, agents or dealers shall
assume, create or enter into any obligation, agreement or
commitment of any kind on behalf of MANUFACTURER.
(f) DISTRIBUTOR
shall not make any representations, warranties or covenants to any
third party with respect to the Products except in accordance with
the terms of this Agreement and such Product information as
MANUFACTURER provides to DISTRIBUTOR in writing from time to
time.
2.2.
Experience . DISTRIBUTOR represents and warrants to
MANUFACTURER that it is an experienced distributor of products
similar to the Products and that it is capable, as of the effective
date of this Agreement, and shall remain capable at all times
thereafter, of performing each of its obligations hereunder without
assistance from MANUFACTURER (except as specifically provided for
herein) or any third party other than its Dealers.
2.3. Duties of
DISTRIBUTOR . DISTRIBUTOR agrees to fulfill the following
responsibilities hereunder:
(a) Use
its best efforts to promote, market, distribute, sell and supply
the Products in the Territory in compliance with this
Agreement;
(b) Promote
the sale of the Products by engaging in advertising, promotional
and public relations activities intended to maximize consumer
awareness of, interest in and demand for the Products;
(c) Utilize
its best efforts to meet demand for Products by maintaining
inventory adequate to ship Products for sale within 24 hours after
receipt of an order therefor;
(d) Cooperate
with MANUFACTURER to provide MANUFACTURER with relevant and
appropriate information to prepare labels to be used in the
packaging of the Products to be delivered to
DISTRIBUTOR;
(e) Appoint
and support qualified Dealers in the territory;
(f) Keep
adequate records of Product sales by DISTRIBUTOR and its Dealers
with regard to traceability, making such records available for
inspection, and such other data as MANUFACTURER may reasonably
request from time to time;
(g) Provide
methods and means of handling, storing, and delivering product that
prevent damage or deterioration;
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(h) Employ
and maintain an adequate number of experienced sales and marketing
personnel;
(i) Train
Customers and surgeons using the Product, either through
MANUFACTURER or a trainer certified by MANUFACTURER, in accordance
with the standards and guidelines provided and updated from time to
time by MANUFACTURER in writing, as MANUFACTURER shall determine in
its sole discretion, as necessary to ensure expertise regarding the
Products;
(j) Require
all sales and marketing personnel, and Dealers and their respective
sales and marketing personnel, to participate in the training
programs conducted by MANUFACTURER pursuant to Section 2.8
hereof;
(k) Advise
MANUFACTURER immediately of any disputes between DISTRIBUTOR and
any Customer or Dealer, and any legal notices or actions relating
to the Products or this Agreement; and
(l) Advise
MANUFACTURER of all material laws, rules and regulations of the
Territory, including any new interpretations thereof, relating to
importing, promoting, marketing, distributing and selling the
Products in the Territory.
2.4. Standard
of Performance . As a material inducement for MANUFACTURER to
enter into this Agreement with DISTRIBUTOR, DISTRIBUTOR agrees to
meet or exceed the sales quota(s) (the “Quotas”)
described in Schedule D attached hereto, as such
Schedule D shall be revised from time to time, which
MANUFACTURER and DISTRIBUTOR agree are fair and reasonable.
Notwithstanding any provision of this Agreement, if DISTRIBUTOR
fails to attain any Quota, then MANUFACTURER shall have the right
to terminate this Agreement in accordance with the provisions of
Section 7.2 hereof.
2.5. Time
Restriction on Sales and Use . Notwithstanding any other
provision hereof, in no event shall DISTRIBUTOR sell or supply any
Product to any Dealer, Customer or other person on or after the
expiration date (“Expiration Date”) which shall not be
less than eighteen (18) months after the date of shipment of
such Product by MANUFACTURER, and DISTRIBUTOR agrees to require all
Dealers and Customers, and their respective agents and
representatives, not to sell or supply any Product to any Customer
or other person or use any Product on or after the Expiration
Date.
2.6. Reporting
Defects . DISTRIBUTOR agrees to promptly inspect all Products
for Defects and shall notify MANUFACTURER of any such Defects in
writing within ten (10) days of receipt thereof. Should
DISTRIBUTOR fail to give such notice of Defects that it becomes
aware of, or with due care should have become aware of, or fail to
obtain an extension from MANUFACTURER, the Products shall be deemed
to be accepted by the DISTRIBUTOR. DISTRIBUTOR shall also be
obligated to accept the return of any Product from any surgeon who
becomes aware of any Defect in such Product and DISTRIBUTOR shall
notify MANUFACTURER of any such Defects in writing within ten
(10) days of receipt thereof. In the event that DISTRIBUTOR
notifies MANUFACTURER in writing of any Defect pursuant hereto,
MANUFACTURER shall be obligated to replace such Product or refund
the purchase
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price in full
to the DISTRIBUTOR. MANUFACTURER reserves the right to investigate
any Defects or other warranty claims to determine whether such
claim is proper, including without limitation an inspection of the
Product in question, and DISTRIBUTOR shall cooperate with any such
investigation.
2.7. Annual,
Quarterly and Other Reports.
(a) On
or before November 30th of each calendar year during the Term
of this Agreement, DISTRIBUTOR agrees to prepare and to submit to
MANUFACTURER an annual report, setting forth in adequate detail for
the next calendar year (i) DISTRIBUTOR’s plans for
marketing, sales and other efforts and the number of its personnel
to be assigned during such calendar year to the performance of
DISTRIBUTOR’s duties under this Agreement (ii) a
forecast of projected sales for such calendar year and
(iii) the projected marketing and training expenses related to
the Product for such year presented on a monthly basis.
(b) No
later than fifteen (15) days after the end of each calendar
quarter during the Term of this Agreement, DISTRIBUTOR shall submit
to MANUFACTURER in writing a quarterly report in reasonable detail
showing (i) the aggregate sales of the Product for such
quarter in units, U.S. dollars and in EUR (ii) the number of
surgeries performed by each Hospital (Customer) and the date since
the last surgery for each Hospital (Customer) was performed,
(iii) the number and names of Customers and surgeons trained
by the DISTRIBUTOR, (iv) an attestation stating that all
surgeons performing the CMI procedure are in compliance with the
MANUFACTURER’S then current training standards in accordance
with section 2.3 (h) of this Agreement and (v) the
marketing and training expenses actually incurred by DISTRIBUTOR in
carrying out its obligations hereunder.
(c) DISTRIBUTOR
shall submit to MANUFACTURER copies of any market research reports
relating to Product sales and competition which the DISTRIBUTOR
commissions or otherwise obtains, except as prohibited by copyright
or similar laws (in which case DISTRIBUTOR will simply inform
MANUFACTURER of the existence of such information and where it may
be obtained). To the extent the foregoing information is contained
in plans or reports which contain information about other products
or markets, DISTRIBUTOR may submit to MANUFACTURER only those
excerpts from such plans or reports which relate to the Product
sales and competition.
2.8. Duties of
Manufacturer .
(a) MANUFACTURER
agrees to fulfill the following responsibilities hereunder:
(i) ship the Products to Distributor in accordance with the
terms and conditions hereof, (ii) fulfill the responsibilities
under the warranties made and delivered with the Products, and
(iii) provide training to DISTRIBUTOR, Customers and surgeons
in support of DISTRIBUTOR’s responsibilities set forth in
Section 2.3 hereof.
(b) MANUFACTURER
shall review each annual report provided by DISTRIBUTOR pursuant to
Section 2.7 and, by written notice delivered to DISTRIBUTOR within
90 days of the receipt of such annual report, shall approve in
its discretion all or such portion of the projected marketing and
training expenses related to the Product for such year
as
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MANUFACTURER
deems necessary or appropriate (such expenses approved by the
MANUFACTURER to be referred to herein as “Agreed-Upon
Marketing Expenses”).
(c) MANUFACTURER
shall make Dr. William Rodkey or other qualified personnel
designated by MANUFACTURER (collectively, “Trainers”)
available to provide training sessions to DISTRIBUTOR, its
employees, Customers, surgeons and Dealers, and their respective
employees and other agents, as applicable, during the Term of this
Agreement, as follows: (a) at least twice in calendar year
2005, (b) at least four times in calendar year 2006,
(c) at least four times in each successive year for the
remainder of the Term (or a prorated number of times if earlier
terminated). Each of the training sessions shall consist of an
in-person visit by a Trainer for at least [two (2) days or
(six (6) hours per day)]. The substance and format of such
sessions shall be determined the Trainer in his or her reasonable
discretion. DISTRIBUTOR shall pay for or reimburse MANUFACTURER for
all costs (including travel, meals and hotel) related to the
Trainer’s training sessions provided pursuant to this
Section 2.8, provided that if the Trainer is in or will be
traveling to Europe for purposes unrelated to such training
sessions, DISTRIBUTOR will pay only the incremental costs related
to such training sessions, such as the airfare from such point
within Europe and expenses for hotel, meals and local
transportation incurred in connection with such training sessions.
DISTRIBUTOR shall also supply, pay for or reimburse MANUFACTURER
for all supplies and materials required by the Trainer for such
training sessions.
3. PRICE AND
PAYMENT TERMS.
3.1. Price
. Subject to and in accordance with the terms and conditions
hereof, MANUFACTURER shall supply the Products to DISTRIBUTOR at
the prices specified in Schedule A attached hereto, as
amended by MANUFACTURER from time to time in accordance
therewith.
(a) DISTRIBUTOR
shall promptly pay to MANUFACTURER all amounts due to MANUFACTURER
under this Article 3 in accordance with Schedule A
attached hereto.
(b) All
amounts payable to MANUFACTURER shall be paid within thirty
(30) days of invoice at MANUFACTURER’s principal place
of business in U.S. Dollars or as the parties shall otherwise agree
in writing from time to time. Interest thereon shall accrue on
amounts due hereunder to MANUFACTURER at the rate of one and
one-half percent (1-1/2%) per month or the maximum rate otherwise
permitted by applicable law, whichever shall be lower, and be
payable from the due date thereof until paid in full. In the event
that there shall be imposed by the central bank or similar
governing body in the Territory any restrictions preventing payment
of funds due to MANUFACTURER hereunder, and DISTRIBUTOR shall not
otherwise remit amounts due to MANUFACTURER hereunder by a means
acceptable to MANUFACTURER, MANUFACTURER may, in its discretion,
terminate this Agreement pursuant to Section 7.2 hereof and
instruct DISTRIBUTOR to deposit such funds in a banking institution
located within the Territory in accordance with
MANUFACTURER’s instructions.
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(c) Notwithstanding
any provision of this Agreement, MANUFACTURER may terminate this
Agreement, immediately upon prior written notice, in the event that
DISTRIBUTOR fails to pay to MANUFACTURER all amounts due hereunder
within the time specified herein and in Schedule A
attached hereto.
4.1. General
Provisions .
(a) Each
purchase order for a Product shall be firm and, subject to the
terms and conditions hereof, MANUFACTURER shall use its best
efforts to fill such purchase order in accordance with its terms at
its principal place of business. DISTRIBUTOR shall place orders in
writing or, notwithstanding Section 9.2, by email, which shall
set forth, at a minimum, an identification of the Product ordered,
the quantity of such Product ordered, shipping instructions,
shipping address and the requested ship date. Notwithstanding the
foregoing, MANUFACTURER shall be permitted to ship the quantity of
the Product ordered at any time during the 90-day period after the
date of the order for the Product. In the event that MANUFACTURER
does not fill a firm purchase order by DISTRIBUTOR for any Product,
in whole or in part, the sole and exclusive remedy or consequence
of DISTRIBUTOR is as set forth on Schedule D
hereto.
(b) Purchase
orders for a Product may not be cancelled by
DISTRIBUTOR.
(c) In
the event that DISTRIBUTOR shall, at any time, be in arrears on
payments owing to MANUFACTURER or otherwise in material breach of
this Agreement, MANUFACTURER may, immediately upon written notice
to DISTRIBUTOR, decline to continue the performance of this
Agreement with DISTRIBUTOR, and such action by MANUFACTURER shall
not give rise to any cause or claim of breach of contract or other
liability against MANUFACTURER.
(d) All
shipments shall be made with shipping, insurance and handling
charges prepaid by MANUFACTURER, all of which shall be added to
MANUFACTURER’s invoice to DISTRIBUTOR. All risk of loss shall
pass to DISTRIBUTOR upon delivery to the shipper. Products shall be
packed and shipped by MANUFACTURER to DISTRIBUTOR in accordance
with MANUFACTURER’s standard procedures, unless DISTRIBUTOR
has expressly made a special request for shipping in which case
MANUFACTURER shall use commercially reasonable efforts to honor
such request. MANUFACTURER shall not bear any liability arising or
resulting from any delays in the delivery of the Products to
DISTRIBUTOR or to Dealer or Customer.
(e) MANUFACTURER
reserves the right at any time to make changes to the Product at
any time and from time to time in its sole discretion.
(f) Any
order submitted by DISTRIBUTOR which contains terms different from,
or in addition to, those contained in this Agreement shall be
deemed governed by the terms of this Agreement. Any such different
or additional terms shall be deemed to be deleted from
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such order
unless otherwise specifically approved in writing by an authorized
officer of MANUFACTURER.
4.2. Taxes and
Other Charges . DISTRIBUTOR agrees to pay, collect and remit on
the dates when they are due all import duties, value-added, sales,
and other taxes, tariffs, duties, fees and assessments imposed by
any governmental agency within the Territory in respect of the
Products (other than income or similar withholding taxes imposed
upon amounts remitted to MANUFACTURER). DISTRIBUTOR agrees to
indemnify and hold MANUFACTURER harmless against any such
liabilities.
4.3. Import
Requirements . Other than obtaining the governmental
authorizations and approvals set forth on Schedule E ,
all of which shall be MANUFACTURER’s sole responsibility
hereunder, DISTRIBUTOR agrees to obtain at its expense all
necessary customs, import and other governmental authorizations and
approvals in the Territory (including, without limitation, foreign
exchange) with respect to this Agreement and delivery of the
Products to DISTRIBUTOR. MANUFACTURER’s obligations under
this Agreement shall be expressly subject to the grant and
effectiveness of all such authorizations and approvals.
4.4. Export
Requirements . MANUFACTURER and DISTRIBUTOR agree to comply
fully with all applicable U.S. export laws, regulations and orders
and to adopt such policies and procedures as may be required
thereby. MANUFACTURER’s obligations under this Agreement
shall be expressly subject to the grant and effectiveness of all
necessary U.S. export authorizations and approvals.
4.5. Foreign
Corrupt Practices Act . DISTRIBUTOR hereby agrees that it shall
not, and shall refrain from any acts that would cause MANUFACTURER
to, violate the United States Foreign Corrupt Practices Act.
DISTRIBUTOR hereby agrees to indemnify and hold harmless
MANUFACTURER from any breach of this Section 4.5.
4.6.
Warranty . MANUFACTURER warrants that the Products shall be
free of Defects at the time of its shipment by the MANUFACTURER.
Such warranty shall survive until the Expiration Date. If any
Product is determined by MANUFACTURER to have any Defects, then
MANUFACTURER’s obligation under this warranty shall be to
replace as soon as practicable any such defective items at
MANUFACTURER’s expense, exclusive of delivery costs to and
from the MANUFACTURER, or, at MANUFACTURER’S option, provide
a refund with respect to any such defective Product. THE FOREGOING
WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WHETHER
IMPOSED BY CONTRACT, STATUTE, COURSE OF DEALING, CUSTOM OR USAGE OR
OTHERWISE. MANUFACTURER shall have no responsibility for any
Product that has been modified, repaired, or subjected to misuse or
neglect. Notwithstanding any provision of this Agreement,
MANUFACTURER shall not be
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