EXCLUSIVE DISTRIBUTION AGREEMENT
made on this 8th day, July, 2004
By and among: Memorand
Management (1998) Ltd.
a company duly incorporated and existing
under the laws of the State of Israel
of 52 Betzalel St., Ramat Gan 52521, Israel
(hereinafter: "Distributor")
on one part;
and:
SALIVA DIAGNOSTIC SYSTEMS, INC..
a company duly incorporated and existing under the
laws of the State of Delaware
of 2294 Nostrand Avenue
Brooklyn, NY 11210
(hereinafter: "SDS")
on second part;
Whereas:
SDS warrants and represents that it has developed a device for
rapid test for HIV, known as "HemaStrip" and its accessories,
as more fully detailed in Appendix A hereto (the "Product"),
and has all the rights in and titles to the products and its
manufacturing, including all intellectual property rights;
and whereas: The
parties desire that SDS grant the Distributor the
exclusive right to act as the sole and exclusive distributor
for the marketing of the Product in the Territories, as
defined hereunder, at the terms and conditions set forth in
this Agreement;
In light of the foregoing, the parties have
declared, stipulated and agreed as
follows:
1. Recital, Appendices and Headings:
1.1.
The recital to the
present Agreement, and the Appendices hereto, are
integral parts thereof.
1.2.
The headings of the
Agreement have been included for purposes of
convenience only, and may not be used for interpretation of the
Agreement.
2. Exclusive Distribution Rights:
2.1.
SDS hereby appoints
the Distributor as its sole and exclusive
distributor for the marketing of the Product in the Territories,
as
defined in Clause 2.4 below, all at the terms set out hereunder.
The
Distributor shall have the exclusive rights to sell, market and
distribute the Product to any medical facility, governmental or
municipal authority, army, and/or any other entity or person in
the
Territories, at the Distributor's sole discretion, provided
such
distribution does not conflict with any applicable local laws.
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2
2.2.
SDS undertakes to sell
the Product in the Territories only to the
Distributor, and not to sell the Product in the Territories to
any
person other than the Distributor, without obtaining the
Distributor's prior written consent thereto. In addition, SDS
undertakes not to market, distribute or sell the Products to
any
third party which will sell or distribute the Products in the
Territories.
2.3.
It is hereby
explicitly agreed that the Distributor shall act
through its affiliates and use sub-distributors in each of the
Territories, with SDS' consent regarding the sub-distributors,
which
shall not be unreasonably withheld, for the implementation of
this
agreement.
2.4.
"The Territories"
shall mean, for the purposes of this Agreement,
the following territories: Russia, each of the CIS countries
(Commonwealth of Independent States), South Africa, Angola,
Namibia,
Botswana, Democratic Republic of Congo, Zambia, Tanzania,
Ethiopia
and Kenya (each individually a "Territory").
The Distributor shall be entitled to waive its exclusive rights
hereunder in respect of any of the African Territories, by a
written
notice delivered to SDS within 6 months from the date hereof.
2.5.
SDS hereby grants the
Distributor the right of first refusal to have
the exclusive marketing and distribution rights in the
Territories
for any future products utilizing the technology set forth on
Appendix A it may develop, directly and/or through any
affiliate,
and the terms of this Agreement shall apply to any such future
products.
3. Warranties and
Representation of SDS:
3.1.
Without prejudice to
anything in the recital to this Agreement, SDS
warrants and represents to the Distributor, acknowledging and
confirming that the Distributor is relying on such warranties
and
representations in entering into this Agreement, that:
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3
3.1.1. SDS is a corporation duly continued and validly existing
under the laws of the State of Delaware and is duly qualified
to execute, deliver and perform any of its obligations under
this Agreement.
3.1.2. SDS has all necessary licenses, permits, approvals,
consents,
certificates, registrations and authorizations, to manufacture
sell and distribute the Product outside the United States,
including a license from the USFDA ("Licenses"), and the
Licenses are validly existing and in good standing. None of
the Licenses contain any burdensome term, provision, condition
or limitation, which has or may have a materially adverse
effect on the implementation of this Agreement. SDS undertakes
to obtain extension of the term and validity of all Licenses,
for the full term of this Agreement.
3.1.3. SDS solely holds title to all rights and titles,
including
patent rights as described in Appendix D hereto, and all other
intellectual property rights in connection with the Product,
which rights are owned free and clear from any mortgage,
pledge, cession, lien or other encumbrance or security of any
kind or any other third party's right.
3.1.4. SDS is the owner of, and the holder of title to all the
rights in all the manufacturing equipment and technical
know-how relating to the manufacturing of the Products, which
rights are owned free and clear from any mortgage, pledge,
cession, lien or other encumbrance or security of any kind or
any other third party's right.
3.1.5. The execution, delivery and the performance by SDS of
its
obligations hereunder, and compliance with the terms,
conditions and provisions of this Agreement, will not conflict
with, or result in a breach of, any of the terms or conditions
of: (i) the constituting documents or by-laws of SDS, (ii) any
applicable law, statute, rule or regulation of any
governmental entity, (iii) any contractual restriction binding
on or affecting it or its assets and properties, or (iv) any
judgment, injunction, determination or award which is binding
on it.
3.1.6. The execution of this Agreement by SDS and the performance
of
its obligations hereunder, have been duly authorized by all
necessary corporate action.
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3.1.7. Except as explicitly provided herein, no authorization,
consent, approval, registration, qualification, designation,
declaration or filing with any governmental entity or other
person, is or was necessary in connection with the execution,
delivery and performance of any of the obligations of SDS
under this Agreement.
3.1.8. To the knowledge of SDS, no law, rule or regulation have
been
enacted, promulgated, applied or proposed, which may challenge
the validity or propriety of the transaction contemplated
hereunder, or which questions, or may question, the validity
of any action taken or to be taken by SDS pursuant to or in
connection with this Agreement.
4. Warranties and
Representations of the Distributor:
4.1.
The Distributor, as at
the date of this Agreement, warrants and
represents to SDS that it is a corporation duly continued and
validly existing under the laws of the State of Israel, and has
all
requisite corporate power and authority to execute, deliver and
perform any of its obligations under this Agreement.
5. Duties of the
Distributor:
5.1.
The Distributor shall,
under the terms of this Agreement in order to
assist SDS in its coordination of sales and delivery, provide
SDS
with quarterly forecasts with the Distributor's requirements for
the
Product, which forecasts shall not constitute a binding
purchase
order of the Distributor. Additionally, the Distributor shall:
5.1.1. Provide SDS with reports on a quarterly basis regarding
sales
activity, distribution partners and other arrangements that
the Distributor is making to promote the Product.
5.1.2. At the Distributor's sole expense, obtain all licenses,
permits, approvals and other governmental authorizations, and
make all filings, notifications and registrations
(collectively "Authorizations and Registrations") will all
governmental agencies necessary or appropriate for the
distribution and sale of the Product by the Distributor and
its
sub-distributors, and use by the Distributor and its
sub-distributors and their customers, of the Product in the
Territories.
5.1.3. Undertake all reasonable means, measures and efforts and
implement policies and procedures to ensure that the Products
sold to the Distributor by SDS are not sold for resale outside
the Territories by the Distributor, its agents, affiliates
and/or consultants.
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5
5.1.4. Subject to the laws and regulations applicable in each of
the
Territories, the Distributor shall obtain registration of the
Product in each of the Territories in the name of the
Distributor and/or its respective subsidiary in such
Territories. In the event that SDS shall request additional
registration of the Product (i) in its name, and/or (ii) in
the name of any other distributor in the event that the
Distributor does not meet the Minimum Purchases hereunder;
then SDS or such distributor ,as the case may be, shall solely
bear all the expenses associated with the registration of the
Product.
In the event that the Distributor does not meet the Minimum
Purchases for a certain Territory, it will not impede other
distributors appointed by SDS from registration of the Product
in their name in such Territory
5.1.5. In order to maintain the exclusive rights granted in
this
Agreement, meet the minimum annual purchases set forth in
Appendix B hereto ("Minimum Purchases"). In the event that the
Distributor does not meet such Minimum Purchases, SDS will be
allowed to appoint additional distributors in such Territory.
In such case, the right of the Distributor to continue as a
non-exclusive distributor shall be decided at the sole
discretion of SDS. This provision is subject to clause 7
below.
5.1.6. Refrain from entering into any contract or other
arrangement
with any other party for the sale, marketing, or distribution
of any products in the Territories that are competitive to the
Product during the term of this Agreement.
5.1.7. Not to divulge any information with respect to SDS
operations
except as may be necessary to carry out its activities under
this Agreement. This obligation shall survive the termination
or expiration of this Agreement.
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6
6. Assistance by SDS:
6.1.
SDS shall furnish the
Distributor, free of charge, all relevant
material related to the Product, such as data sheets,
brochures,
related scientific material and application instructions.
6.2.
Without prejudice to
the generality of clause 6.1 above, SDS
undertakes to provide at its own cost to the Distributor any and
all
information reasonably required in order to obtain the
Authorizations and Registration and all other necessary
licenses,
permits and approvals, including scientific, technical, legal
and
other information, and SDS shall use its best endeavors to
otherwise
assist the Distributor is obtaining the Authorizations and
Registration, as shall be requested by the Distributor.
6.3.
SDS shall, at all
reasonable times, at the request of the
Distributor, advise and consult the Distributor in all matters
concerning the application and eventual use of the Product, its
manufacturing, promotion and marketing. In the event such
consultation takes place outside the State of New York,
Distributor
shall bear the reasonable travel expenses of SDS or its
personnel.
7. Purchase Orders:
7.1.
The Distributor
undertakes that it shall place the first order of
Products
from SDS by the end of 6 months from the date of signature
hereof, and that during the following 12 months (the "First
Year")
the total orders shall meet the annual Minimum Purchases
according
to Appendix B hereto. Following the First Year, the total
orders
placed during each subsequent 6 month period, shall meet at
least
50% of the Minimum Purchases according to Appendix B hereto.
7.2.
Notwithstanding the
provision of clause 7.1 above, in the event the
Distributor does not place the first order for a certain
Territory
by the end of 6 months from the date hereof, however the
Distributor
notifying SDS in writin
