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EX-10.1
EXCLUSIVE LICENSE AND SUPPLY AGREEMENT
BY AND AMONG
SURGICOUNT MEDICAL, INC. A CALIFORNIA CORPORATION AND
A PLUS INTERNATIONAL, INC. A CALIFORNIA CORPORATION
DATED
JANUARY 26, 2007
This Exclusive License and Supply Agreement ("Agreement") is
entered
into this day by and between SurgiCount Medical, Inc., a California
corporation
with an office located at 27555 Ynez Road, Suite 330, Temecula,
California
92591, ("SurgiCount"), and A Plus International, Inc., a California
corporation
with an office located at 5138 Eucalyptus Avenue, Chino, California
91710
("A Plus").
WHEREAS SurgiCount is the Owner of all right title and interest
in
United States Patent No. 5,031,824 and European Patent 1032911
("Licensed
Patent");
WHEREAS SurgiCount plans to continue to market, distribute and
sell
gauze sponges, laparotomy sponges, O.R. towels, specialty sponges,
and gowns
which utilize machine-readable information to identify and account
for the item
("Product") to its customers world-wide;
WHEREAS SurgiCount does not have the capacity to manufacture
its
Product;
WHEREAS pursuant to the Supply Agreement dated August 10, 2005
("Supply
Agreement"), A Plus has previously been engaged in the business of
manufacturer
of the Product to be marketed, distributed, and sold world-wide by
SurgiCount;
WHEREAS A Plus desires to obtain exclusive license rights to
manufacture said Product; and
WHEREAS to induce A Plus to commit the resources, forego other
potential opportunities, and incur the expenses necessary to
properly
manufacture and distribute the Product, SurgiCount desires to grant
A Plus an
exclusive license to manufacture the Product.
NOW THEREFORE IT IS HEREBY AGREED AS FOLLOWS:
SECTION 1. GRANT OF LICENSE. Upon the terms and conditions set
forth
herein and under the Licensed Patent during the term of this
Agreement, and
absent a material breach of this Agreement by A Plus, SurgiCount
hereby grants
to A Plus the exclusive, world-wide License to manufacture and
import the
Product produced under the Licensed Patent. A Plus is further
granted the right
to sublicense the Licensed Patent to the extent necessary to carry
out this
grant.
SECTION 2. SUPPLY OF PRODUCT; EXCLUSIVITY AND SOLE SOURCE. During
the
term of this Agreement, SurgiCount shall purchase exclusively from
A Plus, and A
Plus shall use its best efforts to supply to SurgiCount, all of
SurgiCount's
requirements for the Product. A Plus shall not manufacture,
import
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Exclusive License and Supply Agreement
Page 1 of 6
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or otherwise provide the Product for any party other than
SurgiCount. If A Plus
fails to (i) provide SurgiCount with all its required supply of
Product ordered
pursuant to this Agreement or (ii) meet any mutually pre-determined
criteria for
pricing thresholds, quality standards or service levels, and such
failure
continues for more than thirty (30) days after written notice from
SurgiCount to
A Plus specifying the nature of the failure, then such failure
shall not be
considered a breach of this Agreement but will entitle SurgiCount
to purchase
Product from an alternative manufacturer. SurgiCount shall be
entitled to
purchase Product from an alternative manufacturer until such time
as A Plus is
able to cure the nature of the failure, to the reasonable
satisfaction of
SurgiCount.
SECTION 3. DEMAND PROJECTIONS / PRICE PROJECTIONS. Upon the
execution of,
and on each anniversary date of, this Agreement, SurgiCount shall
provide A Plus
with projections of the maximum/minimum levels of inventory of
Product required
by SurgiCount for the upcoming twelve (12) month period. Such
projections shall
be forecasted on a quarterly basis. SurgiCount shall be obligated
to purchase
the minimum level of inventory projected by SurgiCount on an annual
basis before
the end of such twelve-month period, and A Plus shall be obligated
to maintain
sufficient inventory of Product on hand at all times to satisfy at
least the
next sixty (60) days of SurgiCount's minimum Product projections.
The pricing
schedule of the Product for SurgiCount shall remain at its current
price for the
first three (3) years of this agreement, thereafter said price
schedule shall be
based upon the Cotlook Index and the RMB exchange rate, all as more
specifically
set forth in Exhibit A attached hereto.
SECTION 4. SHIPMENT OF GOODS; TITLE AND RISK OF LOSS; DEFECTIVE
PRODUCT.
A Plus shall ship the Product to SurgiCount on such schedules and
to such
destinations as requested by SurgiCount, at A Plus's sole cost and
expense, FOB
Chino, California. Legal title and risk of loss with respect to
Product
furnished by A Plus hereunder shall pass to SurgiCount upon
delivery of the
Product by A Plus to Chino, California.
SECTION 5. INVOICE. A Plus shall invoice SurgiCount for Product
upon
delivery of Product according to the purchase orders of SurgiCount.
Payment
terms for SurgiCount are net 30 days from delivery of Product to
SurgiCount or
its customer or date of the invoice to SurgiCount; whichever is
later. Payment
shall be in United States Dollars and made in immediately available
funds.
SECTION 6. TERM AND TERMINATION.
(a) The Term of this Agreement shall be eight (8) years
from the date it is executed by both parties (the "Term"). Either
party may
terminate this Agreement without cause at any time after expiration
of the Term
upon delivery of ninety (90) days prior written notice. If either
party shall,
at any time during the Term of this Agreement, materially breach
any obligation
hereunder and such breach shall not be cured within thirty (30)
days after
written notice from the non-breaching party specifying the nature
of the breach,
the non-breaching party may terminate this Agreement immediately
upon expiration
of such cure period.
(b) Should SurgiCount terminate this Agreement without
cause prior to the expiration of the Term, or if it materially
defaults upon any
obligation set forth herein and remains in default for thirty (30)
days after
written notice from A Plus, including but not limited to
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Exclusive License and Supply Agreement
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SurgiCount's failure to timely make any payments to A Plus required
herein, then
A Plus may, in addition to all other remedies it may have at either
law or
equity, take either of the following remedial actions, at the
election of A
Plus:
(1) Require SurgiCount to purchase all Product that is
(i) in A Plus's inventory or the inventory of an A
Plus supplier on the date of termination or default,
(ii) in transit to or from an A Plus facility on the
date of termination or default, (iii) work in process
at A Plus or an A Plus supplier on the date of
termination or default, or (iv) on order from an A
Plus supplier on the date of termination or default
(collectively, the "Current A Plus Inventory"); or
(2) A Plus may sell the A Plus Inventory directly to
SurgiCount's customers.
SECTION 7. NOTICES. Any notice required to be given hereunder shall
be in
writing (other than Purchase Orders or unless specifically provided
to the
contrary in this Agreement), addressed to each party at the last
known address
of its principal place of business, which at the time of execution
of this
Agreement is
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