DISTRIBUTION AGREEMENT
This Agreement is entered into this 18th day of January, 1999 by and between
Saliva Diagnostic Systems, Inc. ("SDS"), Vancouver, Washington, USA; and Cadila
Healthcare, Ltd. ("Cadila"), India.
RECITALS
SDS manufactures a series of diagnostic devices and tests using saliva and blood
to test for the presence of a number of substances. These include
Hema-Strip-TRADEMARK- HIV 1/2, Sero-Strip-TRADEMARK- HIV 1/2,
Saliva-Strip-TRADEMARK- HIV 1/2, which test for the presence of HIV and
Stat-Simple-TRADEMARK- PYLORI.
A. SDS wishes to sell these devices ("the Products") through a Cadila who can
demonstrate to SDS's satisfaction the capacity to sell the Products in
substantial volumes and in a manner that will preserve and enhance the
valuable reputation and goodwill associated with SDS and/or the Products.
B. Cadila wishes to be a distributor authorized to sell the Products in the
Territory (see 1.1).
AGREEMENT
In consideration of the mutual promises below, the parties agree as follows:
1. APPOINTMENT
1.1 TERRITORY. SDS appoints Cadila as it exclusive Distributor for
the sale of the Products in the country/countries listed below
(the "Territory"), provided certain performance standards are
met by the Cadila, and the Cadila accepts such appointment
subject to the terms and conditions set forth herein.
Territory: INDIA, NEPAL, BANGLADESH, AND SRI LANKA
1.2 "The Products" includes existing products that are rapid strip
tests in the format of Sero-Strip-TRADEMARK- HIV 1/2,
Hema-Strip-TRADEMARK- HIV 1/2, Saliva-Strip-TRADEMARK- HIV 1/2
and Stat-Simple-TRADEMARK- PYLORI manufactured by SDS. Future
products to be marketed or introduced in the territory by SDS
shall be first offered to the Distributor.
1.3 INDEPENDENT DISTRIBUTOR. Cadila is an independent business and
neither has, nor will have, any power, right or authority, nor
will Cadila represent that it has any power, right, or
authority, to bind SDS or to assume or to create any obligation
or responsibility, express or implied on behalf of SDS.
Nothing stated in this Agreement shall be construed as
constituting Cadila and SDS as partners, joint ventures or as
creating relationships of employer and
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employee, master and servant, or principal and agent between
the parties.
1.4 RIGHT TO DISTRIBUTE THE PRODUCTS. This Agreement gives Cadila
the right to purchase the Products from SDS and to resell them
to purchasers within the Territory in accordance with the terms
and conditions of this Agreement. Cadila's compensation, if
any, will come from the margin between the price it pays SDS
for the Products and the price at which it sells those
products. Cadila has no right to any compensation from SDS.
2. TERM.
This Agreement shall take effect on the date first written above and shall
be for a period of five (5) years, with a five (5) year renewal option to
be negotiated 180 days prior to expiration of the first five (5) year term.
2.1 INTENT. SDS intends that this Distribution Agreement would be
transferred in the case of any change in ownership of SDS, and that
the Cadila would continue to represent the products as approved in the
Territory.
3. CADILA OBLIGATIONS.
3.1 BEST EFFORTS. Cadila agrees to use its best efforts to sell
the Products and to encourage the purchase of the Products by Cadila's
customers in the Territory. Cadila agrees to sell no similar products
in the Territory that has been defined in Section 1.1 and to sell no
products that directly compete with SDS products.
CADILA AGREES TO:
3.2 Prominently display SDS products in technical exhibits, catalogs
and sales bulletins.
3.3 Submit to SDS Technical Support details of customer complaints.
3.4 Maintain a dialog with SDS regarding customer satisfaction,
market problems and opportunities, and competitive information.
3.5 For planning and inventory control purposes only, provide a
quarterly forecast of required products. Significant changes to the
proposed forecast should be reported to SDS as early as possible to
allow changes to SDS's manufacturing schedules.
3.6 Provide marketing plan and update review quarterly.
3.7 Provide SDS with competitive information which may influence
market conditions.
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3.8 Provide SDS with information on new legislation or other
regulatory requirements (importation rules, labeling issues, etc.)
likely to impact sales of the Products within the Territory.
3.9 In the event of termination by either party, the business that
is then in existence will be smoothly transferred to SDS or its
designate, including, but not limited to, all samples, customer lists,
literature and promotional materials then held by the Cadila.
3.10 SALES FORCE. Cadila agrees to employ and maintain its own
knowledgeable full-time sales force of sufficient size in relation to
its anticipated sales volume. Cadila's sales staff will possess and
maintain knowledge and expertise concerning the Products that is
reasonably satisfactory to SDS.
3.11 REGULATORY APPROVAL; VALIDATION STUDY. Cadila is responsible
for obtaining all Government regulatory approvals (if any) necessary
to market the Products in the Territory. As part of the approval
process, Cadila shall conduct validation studies of the Products in
the Territory if required by law in the Territory, and in accordance
with a protocol mutually agreed upon by Cadila and SDS. Cadila agrees
that the results of those validation studies shall be made available
to SDS, who at its sole discretion may choose to use the data in
support of other clinical trials, including, but not limited to, US
FDA trials.
3.12 FAILURE TO GAIN APPROVAL IN A TERRITORY. If for any reason and
for any product, any of the clinical trials fail in any of the
assigned territories, such failure will mutually void this Cadila
Agreement for that product in that specific country. The Agreement
for other products in the territory will still remain in full force
and effect for approved products.
3.13 INTERNET SALES. Cadila agrees that it will not embark upon
sales over the Internet without the express written permission of SDS.
Cadila and SDS will work together to produce a suitable Internet
strategy for marketing the products, if appropriate in the Territory,
which does not infringe any local or International rules or
guidelines.
4. SDS OBLIGATIONS.
4.1 SALES OF THE PRODUCTS. SDS agrees to sell the Products to
Cadila with at least three-fourths (3/4ths) shelf life available on
delivery to Cadila, pursuant to orders SDS receives from Cadila in
accordance with the terms of this Agreement. Cadila shall not sell,
market or otherwise transfer the products outside the territory, nor
shall it sell, market or otherwise transfer the products to any third
persons when it knows, or has reason to know, that said third persons
intend to sell, market or otherwise transfer the products outside the
territory.
4.2 TECHNICAL SUPPORT. SDS agrees to provide Cadila with
reasonable technical support and advice for marketing the Products, if
requested.
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4.3 TECHNICAL DATA AND ASSISTANCE. SDS agrees to provide Cadila
with all technical data and assistance reasonably required by the
Government in the Territory in order to receive regulatory approval to
market the Products, provided that SDS shall not be obligated to
disclose such information if it cannot be assured that (a) the
information will be treated confidentially in the manner described in
Section 14 and (b) the information shall not be publicly available.
All information provided to the Governments within the Territory or
their Cadila clients shall be considered confidential and subject to
the provisions of Section 13.
4.4 Provide technical training and support to the Cadila and will
make its facility in Vancouver, Washington, USA available to Cadila
representatives and/or customers.
5. PRICES/SHIPMENT.
5.1 SDS will sell Sero Strip for $0.80 USD/test FOB Vancouver,
Washington, USA. Cadila is required to have full value insurance in
place for all products shipped from SDS.
6. PAYMENT TERMS.
Cadila will pay the full purchase price, including the cost of shipping
incurred by SDS, if any, which SDS voluntarily incurs on Cadila's behalf, for
product "FOB site of Manufacture." Cadila will prepay the full purchase
price for 40,000 tests per month for the first two months following receipt of
Form 10, or in any event no later than 4 weeks following receipt of Form 9.
Payment for subsequent orders will be by Draft Against Documents ("DA"), with
funds to be wired 30 days following receipt of faxed shipping documents from SDS
by the Bank. Wire transfer will be initiated no later than on the 30th day
following receipt of faxed shipping documents, as above, from the Bank of
Baroda.
Funds shall be wired to:
First Independent Bank
Battle Ground Branch
Battle Ground, Washington USA
ABA ▇▇▇-▇▇▇-▇▇▇
SWIFT number: ▇▇▇▇▇▇▇▇
Account of: Saliva diagnostic Systems, Inc.
Account Number: 02-002093
Bank phone: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, Branch Manager
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or to whatever bank SDS subsequently identifies to Cadila. SDS shall
expeditiously send original shipping documents to Cadila's Bank.
7. MINIMUM PURCHASE QUOTAS.
7.1 FIRST TWO YEARS: SeroStrip: 40,000 per month and total of
400,000 tests in year-1 and 560,000 tests in year-2. HemaStrip HIV
and H. Pylori: quotas to be negotiated within three months of the
signing of this Agreement.
7.2 SUBSEQUENT YEAR. Cadila and SDS will establish a minimum
purchase quota for each of the subsequent years of this Agreement
within three months prior to the beginning of the third year.
8. PATENT AND TRADEMARK PROTECTION.
8.1 PATENT ASSISTANCE. SDS is pursuing the possibility of patent
or similar protection under the laws of the United States, and other
countries. Cadila will provide SDS with reasonable assistance in
obtaining patent rights in the Territory, and acknowledges the
validity of any such rights.
8.2 USE OF TRADEMARKS. Cadila acknowledges that the trademark
Sero-Strip-TRADEMARK- HIV 1/2, Hema-Strip-TRADEMARK- HIV 1/2,
Saliva-Strip-TRADEMARK- HIV 1/2 and Stat-Simple-TRADEMARK- PYLORI and
other trademarks and registrations and design marks used by SDS are
the sole property of SDS. Cadila shall not use SDS's trademarks and
registrations except in the normal course of advertising or selling
the Products and except in the manner approved by SDS. Upon
termination of this Agreement, Cadila shall cease completely all use
of SDS's trademarks. Cadila will immediately inform SDS by written
notice of any infringement of SDS's trademarks and registrations that
Cadila becomes aware of and, at SDS's request and expense, cooperate
with SDS as SDS deems it necessary to protect its trademarks and
registrations against such infringement.
9. WARRANTY AND DISCLAIMER.
9.1 PRODUCT DESCRIPTION AND SPECIFICATIONS. the Products are
warranted to Cadila to be consistent with the product description and
specifications supplied to Cadila. Units that do not conform will be
replaced by SDS without charge, or shall refund the Landed costs of
the units of the products that do not conform to specifications,
unless nonconformation is due to the actions of Cadila or a third
party.
9.2 LIMITED WARRANTY, INDEMNIFICATION, ETC.
a) SDS warrants that the products delivered to Cadila conform
to the specifications of the products as described in the
respective product protocols (package inserts) (i) at the time
of delivery and (ii) for at least twelve (12) months from the
date of manufacture provided that the products are stored under
proper conditions
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according to the specifications and other instructions provided
by SDS.
In the event that the products do not conform to such
specifications within the allotted time frame and such failure
does not result from the fault, negligence or willful
misconduct of the Cadila, SDS shall at its costs replace them
immediately upon written request by Cadila.
b) Cadila warrants that it will abide by all local rules and
regulations in each country in which it sells the products.
c) Cadila shall instruct its affiliates, subdistributors (if
appropriate) and customers to store and handle the products in
accordance with the specifications.
Cadila shall not grant any warranty to any third party which
exceeds the warranty granted herein without indemnifying SDS
for such warranty.
THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, REGARDING THE PRODUCT, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.
10. LIMITATION OF REMEDIES AND LIABILITY.
SDS shall not be liable to Cadila or any person for SDS's failure to fill
any orders, for error in filling orders, or for any delay in delivery.
SDS's liability to Cadila for defective products is limited to SDS's
obligations under Section 9 and its standard written warranty, if any. In
no event shall SDS be liable for cost of procurement, substitute goods,
loss of profits, or for any other special, consequential, or incidental
damages, however caused.
11. TERMINATION.
11.1 TERMINATION FOR CAUSE. Either party may terminate this
Agreement for just cause: (a) upon any breach of this Agreement by the
other party if the breach is not cured within ninety (90) days written
notice of the breach or (b) immediately upon either party's
insolvency, bankruptcy, suspension of business, assignment of assets
for the benefit of creditors, voluntary dissolution, or appointment of
a trustee for all or a substantial portion of the party's assets.
11.2 FAILURE TO MEET MINIMUM QUOTAS. SDS may terminate this
Agreement immediately upon Cadila's failure to make at least 80
percent of its yearly purchase requirements. Purchase requirements
shall be 400,000 tests during year 1 and 560,000 tests during year 2.
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11.3 SURVIVAL. Upon termination or expiration of the term of this
Agreement, the rights and obligations of the parties under this
Agreement shall end, and neither party shall have any claim, including
any claim for termination damages, against the other; provided,
however, that the following obligations shall survive termination of
the Agreement; (a) Cadila's payment obligations specified in
Section 6; (b) Cadila's trademark protection obligations specified in
Section 8; (c) SDS's warranty obligations specified in Section 9; (d)
Cadila's indemnity obligations specified in Section 14.4; and (e) the
mutual attorneys' fees obligation specified in Section 14.6.
12. TAXES, DUTIES, IMPORT PERMITS, APPROVALS.
Cadila shall have the sole responsibility to pay all import duties and
fees, taxes and other charges levied by Government authorities in the
Territory upon or in connection with any transaction covered by this
Agreement, including, without limitation, taxes on sales, use, transactions
or inventory, and value-added taxes. Cadila shall have the sole
responsibility to obtain all permits, licenses and approvals from
Government authorities necessary to import and sell the Products in the
Territory, or to return any of the Products to SDS. Cadila shall also have
the sole responsibility to comply with any requirement to file this
Agreement with any Government authority in the Territory or to obtain the
approval of any Government authority in the Territory for this Agreement.
If any Government authority in the Territory invalidates any portion of
this Agreement, SDS shall have the option to terminate this Agreement
immediately by written notice to Cadila.
13. CONFIDENTIAL INFORMATION.
13.1 ACCESS TO INFORMATION. Cadila acknowledges that during the
term of this Agreement, it may have access to proprietary information,
trade secrets, and other confidential information of SDS, that such
information is a valuable asset of SDS and that its disclosure or
unauthorized use will cause SDS substantial harm. As used in this
Agreement, the term "Confidential Information" means: (1) proprietary
information of SDS; (2) information marked or designated by SDS as
confidential; (3) information, whether or not in written form and
whether or not designated as confidential, which is known to Cadila as
being treated by SDS as confidential; and (4) information provided to
SDS by third parties which it is obligated to keep confidential.
13.2 NONDISCLOSURE AND NONUSE. Cadila agrees that it will not
disclose to others or use any Confidential Information, unless and
until, and then only to the extent that, such items become available
to the public, other than by its act or failure to prevent accidental
or negligent loss or release to any unauthorized person of the
Confidential Information.
13.3 REMEDIES. Notwithstanding the provisions of Section 14.8, in
the event of the breach by Cadila of the terms of this Section 13, SDS
shall be entitled to specific performance, including immediate
issuance of a
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temporary restraining order or preliminary injunction, and to any
other remedies provided by law.
13.4 DURATION. The obligations set forth in this Section 13 will
continue beyond the term of this Agreement and for so long as Cadila
possesses Confidential information.
14. GENERAL PROVISIONS.
14.1 NONASSIGNMENT. Cadila will not assign, transfer, or sell its
rights under this Agreement, or delegate its duties hereunder, without
prior written consent of SDS. A transfer of a controlling interest in
Cadila shall constitute an assignment. SDS will not assign, transfer,
or sell its rights to this Agreemnt or delegate its duties hereunder
without prior written consent of Cadila.
14.2 ENTIRE AGREEMENT/MODIFICATION. This Agreement contains the
entire Agreement between the parties, and unless otherwise provided in
this Agreement, no modification or waiver of any of the provisions, or
future representation, promise, or addition shall be binding upon the
parties unless made in writing and signed by both parties. The terms
and conditions of this Agreement will prevail over any inconsistent or
additional terms contained in Cadila's purchase order or any other
document.
14.3 WAIVER. SDS may waive in writing any obligation Cadila has
under this Agreement, but such a waiver will not affect SDS's right to
require strict compliance with the Agreement in the future.
14.4 INDEMNIFICATION/INSURANCE. Cadila and SDS shall indemnify and
hold SDS and Cadila, their respective officers, directors, agents, and
employees harmless from any claims, demands, loss, damage, liability,
or expense, including attorneys' fees at trial, on appeal, and on any
petition for review, arising out of the acts or omissions of Cadila or
SDS, their agents or employees.
14.5 NOTICES. Any notice or report shall be deemed given if
delivered personally or by confirmed telex or facsimile to:
SDS (Saliva Diagnostic Systems, Inc.)
▇▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇
Phone ▇▇▇-▇▇▇-▇▇▇▇
FAX ▇▇▇-▇▇▇-▇▇▇▇
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Cadila Healthcare Ltd
201-203, 'Saffron',
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ - ▇▇▇ ▇▇▇, ▇▇▇▇▇
Phone: ▇▇▇ ▇▇ ▇▇
FAX : ▇▇▇ ▇▇ ▇▇
14.6 ATTORNEYS' FEES. In the event of a default under this
Agreement, the defaulting party will be liable for all expenses in
connection with the default, including without limitation attorneys'
fees. Additionally, in the event any suit or action is brought to
enforce or interpret any of the terms of this Agreement, the
prevailing party shall be entitled to recover from the other party all
reasonable attorneys' fees incurred at trial, on appeal, and on any
petition for review, together with such other expenses, costs, and
disbursements as may be allowed by law. Reasonable Attorneys' fees
and costs payable under this Article shall be determined by the
Arbitrator along with the award on merit. The Arbitrator shall have
sole discretion to allow or not to allow fees and costs.
14.7 GOVERNING LAW. The rights of the parties under this Agreement
shall be governed by the laws of the United Kingdom, excluding choice
of law rules and excluding the United Nations Convention on the
International Sale of Goods.
14.8 ARBITRATION. Any dispute, controversy or claim arising out of
or in connection with this Agreement, or the breach, termination, or
validity thereof, shall be settled by final and binding arbitration
conducted in English in accordance with the United Nations
Commission on International Trade Law Arbitration Rules as then in
force. The appointing authority shall be the American Arbitration
Association ("AAA"), and the arbitration shall take place in
Vancouver, Washington, United States of America. The arbitration
shall be heard and determined payable in United States Dollars,
subject to any tax or any other deduction. The award shall include
interest from the date of any breach or other violation of this
Agreement. The arbitrators shall also fix an appropriate rate of
interest from the date of the breach or other violation to the
date when the award is paid in full. Th parties agree that the award
of the arbitral tribunal will be the sole and exclusive remedy between
them regarding any and all claims and counterclaims presented to the
tribunal. All notices to be given in connection with the arbitration
shall be given pursuant to Section 14.5 of this Agreement.
15. FORCE MAJEURE. Failure of any Party to perform its obligations under this
Agreement (except the obligation to make payments when properly due) shall not
subject such Party to any liability or place it in breach of any term or
condition of this Agreement to the other Party if such failure is caused by any
cause beyond the reasonable control of such non-performing Party, including
without limitation acts of God, fire, explosion, flood, drought, war, riot,
sabotage, embargo, strikes or other labor trouble, failure in whole or in part
of suppliers to deliver on schedule materials,
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equipment or machinery, interruption of or delay in transportation, a national
health emergency or compliance with any order or regulation of any Government
entity acting with color of right; provided however, that the Party affected
shall promptly notify the other Party for the condition constituting force
majeure as defined herein and shall exert reasonable efforts to eliminate, cure
and overcome any such causes and to resume performance of its obligations with
all possible speed. If a condition constituting force majeure as defined herein
exists for more than ninety (90) consecutive days, the Parties shall meet to
negotiate a mutually satisfactory solution to the problem, if applicable.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the day and
year first above written.
For Cadila Healthcare, Ltd., India
/s/ ▇.▇. ▇▇▇▇▇▇▇▇
---------------------------------------------------------
Date January 18, 1999
▇.▇. ▇▇▇▇▇▇▇▇
Senior Vice President, Corporate Affairs and Administration
/s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------------------
Date January 18, 1999
▇▇▇▇ ▇▇▇▇▇▇
Vice President, Legal
For Saliva Diagnostic Systems, Inc.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Date January 18, 1999
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
General Manager, SDS
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