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EXCLUSIVE DISTRIBUTION AND SUPPLY AGREEMENT
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This Exclusive Distribution and Supply Agreement (this "Agreement")
is
made and entered into as of May 4, 2005
(the "Effective Date"), by and between
Strategic Diagnostics Inc., a Delaware
corporation having its offices at 111
Pencader Drive, Newark, Delaware 19702-3322
(hereinafter referred to as "SDI" or
"Manufacturer") and the DuPont Qualicon
division of E.I. du Pont de Nemours and
Company, a Delaware corporation having its
offices at Experimental Station,
Building 400, P.O. Box 80400, Route 141 and
Henry Clay Road, Wilmington,
Delaware 19880-0400 (hereinafter referred
to as "DuPont Qualicon"). Each of SDI
and DuPont Qualicon is referred to herein
as a "Party" and SDI and DuPont
Qualicon are collectively referred to
herein as the "Parties."
WHEREAS, SDI manufactures immunoassay-based microorganism
detection
devices for use in food and environmental
testing under the trademark
RapidChek(R);
WHEREAS DuPont Qualicon wishes to purchase and sell DuPont
Qualicon-branded immunoassay-based
microorganism detection devices developed and
manufactured by SDI for sale in the
Territory through its established
distribution channels, and
WHEREAS, SDI wishes to grant, and DuPont Qualicon accepts, the
exclusive distribution right in the
Territory for DuPont Qualicon-branded
immunoassay-based microorganism detection
devices manufactured by SDI pursuant
to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the
Parties agree as follows:
AGREEMENT
1. DEFINITIONS
In addition to any other term defined elsewhere in this Agreement,
the
following terms shall have the meanings set
forth below.
a. "Affiliates"
shall mean all Persons controlled by, under common control
with
or controlling either Party to this Agreement, with control
being
interpreted broadly.
b. "Business Plan"
means a document supplied by DuPont Qualicon and agreed
to
by SDI concerning the goals, commitments (including forecasts)
for
commercialization and roll-out timing of Products in the
Territory.
c. "Contract Year"
means a calendar year commencing on January 1 and ending
on
December 31; provided, however, that the first Contract Year
shall
commence on the Effective Date and end on December 31, 2005.
d. "Global
Customer" means Person(s) that purchases Product(s) on behalf
of
Multinational Companies with substantial operations within the
Territory
and
the United States. For purposes of this Agreement, a
Multinational
Company with more than twenty-five (25%) percent of its Product
volume
outside the United States is a "Global Customer." If there is
any
disagreement between the parties as to whether a current or
prospective
customer is a Global Customer, then the parties will discuss in
good
faith.
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e. "Media" means
the any microorganism growth media sold by DuPont Qualicon
for
use with the Product(s).
f. "Person" shall
mean any natural person, corporation, partnership, limited
liability company, proprietorship, association, trust, or other
legal
entity.
g. "Product(s)"
means: (1) the SDI manufactured immunoassay-based
microorganism lateral flow detection devices or strips (which on
the
Effective Date are sold by SDI under the RapidChek(R) screening
system);
(2)
associated Media for use with a SDI manufactured
immunoassay-based
microorganism flow detection device or strips for use in testing
food and
environmental testing branded as DuPont Qualicon and (3) each of
which is
branded with the DuPont Qualicon brand, trademark and trade dress
and as
further identified on Exhibit A, as the Parties may amend from time
to
time. For avoidance of doubt, a lateral flow device that is used
to
detect material other than microorganisms, as for example, the
detection
of
toxins or specific proteins, is excluded from this definition.
h. "Product Order"
means the order form detailing the Product to be
provided, the applicable Specifications, delivery dates, and all
other
relevant details, executed by the Parties whenever DuPont Qualicon
wishes
to
place an order for a Product. Each Product Order shall be in the
form
attached hereto as Exhibit B.
i. "Specifications"
shall have the meaning set forth in Section 5.1.
j. "Territory"
shall mean the world, excluding the United States of America
(including its territories and protectorates).
2. APPOINTMENT AND SCOPE
2.1 Appointment. Subject to the terms and conditions of this
Agreement,
SDI hereby appoints DuPont Qualicon during
the Term as (a) its exclusive
(including as to SDI and its Affiliates)
distributor of the Products in the
Territory and (b) its nonexclusive
distributor of the Products to Global
Customer locations in the United States
(including its territories and
protectorates). SDI shall not appoint any
other distributor of the Products in
or for the Territory during the Term.
DuPont Qualicon is an operational division
of E.I. du Pont de Nemours and Company. The
other divisions of E.I. du Pont de
Nemours and Company and any and all
Affiliates of E.I. du Pont de Nemours and
Company are not parties to this Agreement,
shall have no obligations or duties
under this Agreement and shall be treated
as unrelated third parties for all
purposes. The Parties acknowledge that
Product distribution in the Territory
will be through the established
distribution channels of the DuPont Qualicon
business and that DuPont Qualicon shall not
be obligated to utilize other DuPont
Company or its Affiliate's businesses'
distribution channel(s); to add
distributors or to change its distribution
channel; or to cover all countries in
the Territory. Similarly, DuPont Qualicon
will not be obligated to require all
DuPont Qualicon distributors to offer the
Product(s) for sale in their
respective regions or countries.
2.2 Solicitation and Sales Outside Territory. Except with the
prior
written consent of SDI, DuPont Qualicon
shall not (i) solicit orders for sales
of Products to any existing or prospective
customer outside the Territory, (ii)
deliver or tender (or cause to be delivered
or tendered) any Product outside of
the Territory, or (iii) sell any Products
to, nor solicit any sales from, a
customer if DuPont Qualicon knows or has
reason to know that such customer
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intends to resell the Products outside of
the Territory. Notwithstanding the
foregoing, DuPont Qualicon may solicit
orders for sales of Products and deliver
or tender Products to Global Customers for
use by them, their subsidiaries and
their Affiliates, whether or not such
entities are located in the Territory.
2.3 Existing Customers in Territory. DuPont Qualicon acknowledges
that
SDI has existing, non-exclusive agreements
with certain other distributors for
the distribution of Products in the
Territory. SDI shall use commercially
reasonable efforts to promptly terminate
such existing agreements (as such
agreements pertain to the distribution of
Products) with such other distributors
and wind down its relationship with such
distributors. DuPont Qualicon
acknowledges that such other distributors
are entitled to sell their remaining
Product stock in the Territory, regardless
of the termination of their
agreements with SDI. To the extent SDI is
permitted to do so under its
agreements with such other distributors,
SDI shall use commercially reasonable
efforts to promptly transfer any customers
of such other distributors to DuPont
Qualicon at the time that DuPont Qualicon
assumes distribution responsibility
for such customer's region or country.
2.4 Independent Contractors. With respect to DuPont Qualicon's
activities as a distributor of the
Products, DuPont Qualicon is an independent
purchaser and reseller of the Products.
Neither Party is, nor will be deemed to
be, an agent, legal representative, joint
venturer, partner, or employee of the
other Party for any purpose and shall in
all respects act as an independent
contractor. Neither Party will be entitled
to (i) enter into any contracts in
the name of or on behalf of the other
Party, (ii) pledge the credit of the other
Party in any way or hold itself out as
having authority to do so, or (iii)
except for the transfer of Product
warranties, make commitments or incur any
charges or expenses for or in the name of
the other Party. Each Party shall be
solely responsible for payment of all
compensation owed to its personnel (and
all tax withholding with respect thereto),
including payment, if any, of
employment-related taxes and worker's
compensation insurance premiums.
3. MANAGEMENT OF RELATIONSHIP
3.1 Steering Committee. SDI and DuPont Qualicon shall establish
a
steering committee (the "Steering
Committee") to act as the primary means of
discussions between the Parties with
respect to the discussion and negotiation
of matters arising under this Agreement.
The Steering Committee shall meet from
time to time to discuss recent market
events, trends, modified or new Products
(whether in planning stage or ready for
commercial release), and new or
developing technologies relating to the
market for the Products (including such
technologies as may supplant the Products
on a prospective basis) in the
Territory. Each Party shall bear its
expenses, including travel and living
expenses, in connection with its
participation in the Quarterly Meetings.
3.2 Adverse Events. Each Party shall advise the other Party of
any
adverse events or occurrences that may
affect materially the performance of
either of the Parties under this Agreement,
the areas of such Party's
performance affected thereby, and the
efforts to be made by such Party to remedy
such effects.
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4. TERMS & CONDITIONS OF SALE
4.1 Obligation to Purchase and Sell.
4.1.0 During the Term, DuPont Qualicon agrees to purchase from
SDI, and SDI agrees to sell to DuPont
Qualicon, in accordance with the terms and
conditions set forth herein. DuPont
Qualicon shall not purchase or otherwise
obtain any Products from any person or
source other than SDI in the Territory.
4.1.1 DuPont Qualicon shall purchase from SDI Products
totaling at least the minimum dollar
volumes for each Contract Year set forth on
Exhibit C (the "Minimum Yearly Purchase
Amounts"). Purchases made prior to
execution of this Agreement from SDI or any
of its Affiliates are included in
the 2005 Minimum Yearly Purchase
Amount.
4.1.2 In the event that DuPont Qualicon fails to meet the
Minimum Yearly Purchase Amount requirement
for any Contract Year during the
Term, DuPont Qualicon shall have the option
(the "Make-Up Option") to make a
payment to SDI in the amount of 50% of the
difference between Products ordered
by DuPont Qualicon during such Contract
Year and the applicable Minimum Yearly
Purchase Amount. The Make-Up Option shall
be exercised by delivery by DuPont
Qualicon to SDI of notice of exercise and
by making the required payment within
30 days after the end of such Contract
Year. If DuPont Qualicon validly
exercises the Make-Up Option, DuPont
Qualicon shall be deemed to have met the
Minimum Yearly Purchase Amount requirement
for that Contract Year. If DuPont
Qualicon fails to validly exercise the
Make-Up Option, SDI shall have the right,
at its option and as its sole remedy with
respect to a failure by DuPont
Qualicon to meet the applicable Minimum
Yearly Purchase Amount requirement, to
(a) discontinue the exclusivity of this
Agreement with respect to the Territory.
In addition, if DuPont Qualicon has failed
to meet the Minimum Yearly Purchase
Amount requirement for any two (2)
consecutive Contract Years during the Term,
SDI shall have the right at its option and
as its sole remedy with respect to a
failure by DuPont Qualicon to meet the
applicable Minimum Yearly Purchase Amount
requirements to terminate this Agreement
immediately. The Parties acknowledge
that the Minimum Yearly Purchase Amount
requirement set forth in this Section
4.1.3 is an essential element of this
Agreement between the Parties and that the
Parties would not have entered into this
Agreement without such Minimum Yearly
Purchase Amount requirement.
4.1.3 [The confidential material contained herein has been
omitted and has been separately filed with
the Commission.]
4.1.4 Should SDI, its Affiliate(s) or their distributor(s)
sell or offer to sell to a third party in
the Territory a product comparable or
superior to the Product at lower price(s)
or at better terms than the price(s)
and terms set forth in this Agreement, SDI
shall first offer the Product to
DuPont Qualicon and if the Parties do not
agree to add the product as a Product,
SDI shall adjust the Product price to meet
the lower price(s) and better terms
for as long a time as the other product is
available to the third party (this
will not apply if DuPont has allowed the
contract to move to a non-exclusive
status as described in Section 4.1.3).
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4.2 Reports
4.2.0 Forecasts. Within seven business days of the Effective
Date and at the beginning of each quarter
of each Contract Year, DuPont Qualicon
shall provide to SDI a non-binding, rolling
forecast (each, a "Forecast") of its
expected orders of Products by model during
the succeeding 12 months. Each
Forecast shall include (i) a summary of
executed Product Orders under which any
activities remain to be completed and (ii)
a summary of any Product Orders
DuPont Qualicon expects to submit to SDI
during the period covered by the
Forecast. Each Forecast shall be in the
form attached hereto as Exhibit E. The
first ninety (90) days of each forecast
shall be binding.
4.3
Manufacture of Products. Upon agreement of the Parties on a
Product
Order, SDI shall promptly begin the
manufacture of the Products covered by the
applicable Product Order. SDI shall
manufacture the Products such that they
conform to their applicable Specifications.
SDI undertakes to use commercially
reasonable endeavors to meet DuPont
Qualicon's delivery schedule for all Product
purchase orders to the extent that the
orders do not exceed the forecast by 20%
for each Product type. SDI shall keep
DuPont Qualicon apprised of the status of
the manufacturing of ordered Products and
shall immediately notify DuPont
Qualicon in writing if for any reason SDI
reasonably believes it will be unable
to complete the manufacture of the Products
or will be unable to deliver the
Product(s) on the agreed upon date, however
such Products shall nevertheless be
counted towards the Yearly Minimum Purchase
Amount. A standard lead time of
fifteen (15) days will be assigned to
orders form the DuPont Qualicon that are
consistent with forecasted quantities
supplied by the DuPont Qualicon.
4.4 Inspection of Finished Products. SDI shall perform the
initial
inspection of completed Products before
shipment and based on the requirements
set forth in the applicable Product Order.
SDI shall not ship any Products
unless it believes that it conforms in all
respects with the requirements of the
applicable Product Order (including,
without limitation, the applicable
Specifications). Upon delivery of any
Product to DuPont Qualicon's Wilmington,
Delaware location, DuPont Qualicon shall
promptly and thoroughly inspect such
Products to determine whether the Products
conform to their corresponding
Specifications. If DuPont Qualicon believes
that any Product does not conform to
its corresponding Specifications, DuPont
Qualicon shall provide SDI with prompt
notice thereof. SDI shall, at its sole cost
and expense, promptly repair or
replace any non-conforming Product such
that it does conform to its applicable
Specifications.
4.5 Shipment of Products.
4.5.1 Ready Date, Expense, Delivery Date. All Products shall
be ready for shipment from SDI's Newark,
Delaware location on the "Ready Date"
as set forth in the applicable Product
Order. Unless otherwise agreed in the
applicable Product Order or as provided
herein, the Products shall be shipped at
DuPont Qualicon's expense so as to be
deliverable on the "Delivery Date" as set
forth in the applicable Product Order.
4.5.2 Method of Shipment. Unless otherwise agreed in the
applicable Product Order, DuPont Qualicon
shall either arrange for the shipping
or reimburse SDI its actual cost of Product
shipping to the DuPont Qualicon's
Wilmington, Delaware location. Shipment
from DuPont Qualicon's Wilmington,
Delaware location to DuPont Qualicon's
customers' locations shall be the
responsibility of DuPont Qualicon.
4.5.3 Packaging. Unless DuPont Qualicon requests otherwise,
all Products ordered by DuPont Qualicon
shall be packed for shipment and storage
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in accordance with reasonable commercial
practices to preserve Product
integrity. DuPont Qualicon shall notify SDI
of any special packaging
requirements.
4.5.4 Shipping; Risk of Loss; Title. All shipments of Products
by SDI to DuPont Qualicon under this
Agreement shall be F.O.B. SDI's facility,
Newark Delaware. Risk of loss, delay or
damage shall pass, along with title,
from SDI to DuPont Qualicon at the time of
delivery of each shipment of the
Products at the F.O.B. point.
4.5.5 SDI acknowledges that in the future DuPont Qualicon may
prefer that DuPont Qualicon global
Affiliates or its distributors order Products
directly from SDI. In such event the
Parties agree to review this Agreement and
make modifications reasonably required to
enable such sales
4.6 Product Pricing & Payment Terms.
4.6.0 Product Pricing. The pricing for each Product shall be
the pricing set forth in Exhibit A (the
"Product Pricing"). The Product Pricing
does not include shipping or other such
costs, including duties, incurred to
transport the Products from DuPont
Qualicon's Wilmington, Delaware location to
DuPont Qualicon's customers' locations, all
of which shall be the responsibility
of DuPont Qualicon. Product price is fixed
for the Initial Term. SDI shall pass
through any reductions in its cost of
manufacturing (attributable to DuPont
Qualicon improvements, buying power or
adopted innovations to reduce the Product
Price. Product price may be increased as a
direct pass through of the
proportionate increase in the cost of raw
materials price as supported by SDI
documentation. In the event DuPont Qualicon
reasonably considers such price
rises to be excessive in the circumstances,
DuPont Qualicon shall have the right
at its discretion to discontinue the
affected Product or to terminate the
Agreement on 60 days written notice to
SDI.
4.6.1 Payment Terms.
All payments are due sixty (60) days after
DuPont Qualicon receives an invoice
for the Products.
4.6.1.0 All amounts payable to SDI under this
Agreement shall be paid in U.S. Dollars by
wire transfer or by automatic deposit
of immediately available funds to a bank
designated by SDI, or by such other
means as the Parties may agree.
5. SPECIFICATIONS & NEW PRODUCTS
5.1 Initial Specifications. The initial set of Specifications for
the
Products as available as of the Effective
Date shall be provided by SDI and,
subject to approval thereof by DuPont
Qualicon such not to be unreasonably
withheld or delayed, attached to this
Agreement as Exhibit E no later than 30
days after the Effective Date (the
"Specifications," as the same may be modified
or supplemented in accordance with the
provisions of this Agreement). SDI may
only modify the Specifications upon 180
days' prior written notice to DuPont
Qualicon; provided, however, that SDI may
not modify the Specifications
applicable to any New Product (as defined
herein, below) without DuPont
Qualicon's prior written consent, provided
that SDI may substitute components of
equal or greater performance at same or
lower cost, and that SDI shall make no
changes which affect fit, form, function or
end use of Products.
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5.2 New Products. Either Party may from time to time propose that
SDI
modify certain Products or create new
Products (each, a "New Product"). Upon any
such request, the Steering Committee shall
convene to discuss (i) whether such
modification or creation is technically
feasible, (ii) whether there is a market
for the New Product sufficient to warrant
its development, manufacture, and
distribution, (iii) the time frame for the
development, manufacture, and
distribution of the New Product, and (iv)
how, if at all, the Parties will share
the costs related to the New Product. If
the Parties agree to proceed with the
development, manufacture, and distribution
of a new Product, the Parties shall
execute a written addendum to this
Agreement setting forth in appropriate detail
their plans with respect to the New
Product. It is understood and agreed that
SDI shall have no obligation to proceed
with any of development, manufacture or
distribution of a new Product, in its sole
discretion. Each New Product
designated in any such addendum shall be
deemed a "Product" hereunder.
6. ADDITIONAL OBLIGATIONS OF DUPONT
QUALICON
6.1 Sales Promotion.
6.1.0 Within thirty (30) days of the Effective Date, Qualicon
will provide SDI with a Business Plan
identifying roll-out dates and other
commercialization strategies for the
current Contract Year. Thereafter, prior to
the end of each Contract Year, DuPont
Qualicon shall provide SDI with a Business
Plan identifying roll-out dates and other
commercialization strategies for the
following Contract Year.
6.1.1 In promoting the Products and soliciting orders for them
from end users, DuPont Qualicon shall not,
unless permitted under this
Agreement, make or extend any promise,
representation, or warranty on behalf of
SDI to such end users regarding the
Products that is different from the
Manufacturer's Product warranty.
6.2 Import Licenses, Exchange Controls and Other Governmental
Approvals; Compliance. (a) Each Party shall
assist the other Party in obtaining
import licenses, export licenses, currency
exchange approvals, and other
governmental approvals in or outside of the
Territory that may be necessary to
permit the transactions contemplated
hereunder. DuPont Qualicon shall comply, at
its own expense, with any and all
governmental laws, regulations, and orders
which may be applicable to it by reason of
its execution and performance of this
Agreement, including any requirement to be
registered as SDI's DuPont Qualicon
with any governmental authority, and
including, without limitation, any and all
laws, regulations, or orders which govern
or affect the ordering, export,
shipment, import, sale (including
government procurement), delivery, and
redelivery of Products in the Territory.
SDI shall comply, at its own expense,
with any and all governmental laws,
regulations, and orders which may be
applicable to it by reason of its execution
and performance of this Agreement,
including, without limitation, any and all
laws, regulations, or orders which
govern or affect the ordering, export,
shipment, import, sale (including
government procurement), delivery, and
redelivery of Products in the Territory.
Each Party shall, upon request of the other
Party, furnish the other Party with
such documentation as may be necessary to
confirm compliance with this Section
6.3.
(b) SDI will at its cost and in a timely
manner provide DuPont Qualicon
certificate of origins; basic MSDS
information; compositional information (by
chemical name and CAS number) and other
information as reasonably requested by
DuPont Qualicon for registration with
government authorities or with
certification bodies (as for example only,
AOAC) or for Product distribution or
sale in the Territory. Information supplied
by SDI shall be the latest
information known to SDI. SDI certifies
that Product components (including
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substances which SDI does not make) are
correctly listed on the chemical
substances inventories of the countries in
the Territory (as for example, the
U.S. Toxic Substances Control Act, 15 USC
2601 et seq and regulations
thereunder), or else comply with an
exemption to inventory listing. SDI shall
inform DuPont Qualicon in advance of any
regulatory restrictions known to it
governing the use or disposal of the
Products. SDI agrees to provide DuPont
Qualicon all existing marketing and
confirmatory testing data (for example but
not limited to in-house and third party
validation studies and data) in support
of the Product claims, methods for use and
any government or third party Product
accreditations and to reimburse DuPont
Qualicon for any costs of Product
registration and third party certification
or accreditation (as for example
only, AOAC certification) where required by
law or where the Steering Committee
agrees, or on a fee for service basis where
such agreement is not made.
7. ADDITIONAL OBLIGATIONS OF SDI
7.1 Training. During the first Contract Year, and periodically
thereafter as requested by DuPont Qualicon,
SDI shall provide, at its expense,
technical sales support and training to
DuPont Qualicon for Products in the form
of "train the trainer" meetings and
eight-hour/day help desk functions at such
times and place as the Parties a
