Exhibit 10.1

 

 

EXCLUSIVE DISTRIBUTION AND SUPPLY AGREEMENT

 

This Exclusive Distribution and Supply Agreement (this “Agreement”) is entered
into as of June 20, 2016 by and among Milestone Scientific, Inc. (“Milestone”,
but solely for the purposes of Section 1.1(b) and Section 13.2), Wand Dental,
Inc. (“Supplier”) and Henry Schein, Inc. (“HSI”).

 

1.

Appointment and Term.

 

1.1     (a) Subject to the terms and conditions of this Agreement, Supplier
hereby appoints HSI as its exclusive distributor of the products listed on
Exhibit A and any present or future products that are similar to or that compete
with such products and all modifications, variations, enhancements, improvements
and advances thereto and products or developments ancillary or related thereto,
other than CompuDent products (“Products”) in any and all segments of the dental
market (including, without limitation, dental practitioners, group dental
practices, academic institutions dental departments, local, state and federal
government, Indian Health, community health centers and correctional
institutions) in United States and Canada (the “Territory”), and HSI hereby
accepts such appointment. Subsidiaries of HSI may, at the direction of HSI,
exercise any of the rights, or assume any of the duties, of HSI hereunder,
provided that HSI shall be responsible for the performance of, and the adherence
to this Agreement by, any such subsidiaries. Supplier agrees not to sell or
otherwise distribute the Products in the Territory during the Term (as defined
below), either directly or through a subsidiary, affiliate or third party. The
exclusive distribution rights granted to HSI under this Section 1.1(a) are
hereafter referred to as the “Exclusivity Rights”).

 

(b)     During the Term (as defined below) and Post-Term Period (as defined
below), Milestone hereby agrees and covenants not to sell or otherwise
distribute, either directly or through a subsidiary, affiliate or third party,
any products that compete with the Products.

 

1.2     Subject to Section 1.3 below, the initial term of this Agreement shall
be 10 years from the date hereof (the “Initial Term”), which shall thereafter
automatically renew for successive one year terms (“Renewal Terms”) unless
either party gives written notice to the other of its intent not to renew this
Agreement at least 90 days prior to expiration of the Initial Term or a Renewal
Term, as applicable, or unless otherwise terminated in accordance with this
Agreement. The Initial Term and all Renewal Terms are collectively referred to
as the “Term”.

 

1.3     In the event that Supplier elects to terminate HSI's Exclusivity Rights
in accordance with the terms of this Agreement, the Term shall be amended and/or
extended as follows:

 

1.3.1     If the Exclusivity Termination Date for Purchase Targets (as defined
below) occurs, then HSI’s distribution rights will become non-exclusive as of
the Exclusivity Termination Date for Purchase Targets and the Term of this
Agreement shall end on the second anniversary of such Exclusivity Termination
Date for Purchase Targets.

 

 
 

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1.3.2     If the Exclusivity Termination Date for EPS Target occurs, then HSI's
distribution rights will become non-exclusive as of the Exclusivity Termination
Date for EPS Target and the Term of this Agreement shall end on the first
anniversary of the Exclusivity Termination Date for EPS Target.

 

2.             Minimum Annual Purchase Targets. Subject to the terms and
conditions of this Agreement, HSI shall purchase from Supplier the minimum
dollar amount of Products with respect to each calendar year set forth in
Exhibit B (the “Minimum Annual Purchase Targets”), it being understood that for
the period from the date hereof until December 31, 2017, there are no Minimum
Annual Purchase Targets. On or after November 1rst (but no earlier than November
1) of each calendar year, if Supplier has reasonable grounds (based on HSI's
purchasing history in such calendar year) to believe that HSI may fail to
purchase the Minimum Annual Purchase Targets in that calendar year, Supplier may
send HSI written notice of HSI’s potential failure to satisfy such year’s
Minimum Annual Purchase Targets. HSI shall have until the date that is the later
of (i) December 31rst of such calendar year and (ii) thirty (30) days after such
notice is received by HSI (the “Cure Date”) to cure by purchasing a dollar
amount of Product at least equal to the Shortfall. “Shortfall” shall mean, with
respect to each calendar year, the difference between the Minimum Annual
Purchase Target for the applicable calendar year and the dollar amount of
Products purchased by HSI as of December 31rst of the applicable calendar year.
In the event that HSI fails to purchase a dollar amount of Product at least
equal to the Shortfall by the applicable Cure Date, HSI shall lose the
Exclusivity Rights conferred upon it as of such Cure Date (the “Exclusivity
Termination Date for Purchase Targets”) under this Agreement in the Territory
and shall thereupon become a non-exclusive distributor of the Products in the
Territory with the Term governed by section 1.3. In the event there occurs any
supply disruptions or delays, legal or regulatory issues or delays with respect
to the Products, adverse publicity regarding the Products or other extraordinary
events affecting the supply or demand for the Products during any calendar year
during the Term, HSI and Supplier will negotiate in good faith a reasonable
adjustment to the Minimum Annual Purchase Targets with respect to the affected
calendar year. HSI’s loss of Exclusivity Rights shall be Supplier’s sole remedy
for HSI’s failure to meet the Minimum Annual Purchase Targets. HSI shall issue
Supplier standard monthly product sales reports in HSI's standard format on its
vendor portal.

 

3.

Pricing.

 

3.1     Supplier agrees to sell to HSI, and HSI agrees to purchase from
Supplier, the Products at the initial prices indicated on Exhibit A. All prices
are expressed in U.S. dollars and are exclusive of any sales or excise taxes.
Supplier may only increase any of the prices for the Products on at least 90
days’ prior written notice to HSI; provided that prices shall not be increased
during the first year of the Term. If an increase in the price for any of the
Products becomes effective after Supplier accepts an order for such Products,
but before Supplier has shipped the Products ordered, the price that HSI will
pay for the Products will be the price in effect when the Supplier accepted
HSI’s order for the Products. Supplier may decrease the prices for the Products
at any time and will promptly notify HSI of any price decrease. If the price for
Products is decreased after Supplier accepts an order for such Products, but
before Supplier has shipped the Products ordered, the price HSI will pay for the
Products will be the price in effect when Supplier ships the Products.

 

 
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3.2     Supplier shall at all times during the Term provide the Products to HSI
at the lowest Total Cost (as defined below) that such Products are offered by
Supplier to any third party in equal or smaller quantities in the Territory. In
the event Supplier offers a lower Total Cost for any Products (or other products
substantially the same as the Products, not including 220 Volt Instruments) to a
third party which are intended for distribution in the Territory, then Supplier
agrees to promptly offer such lower Total Cost to HSI. In the event that the
Supplier does not promptly offer such lower Total Cost to HSI, HSI can purchase
the Product from another third party and each such purchase shall count towards
Minimum Annual Purchase Target. “Total Cost” means the net cost to the buyer of
the applicable goods and services, taking into account, among other things,
factors such as price, financing terms, shipping costs, insurance, regulatory
fees, sales support spending, marketing materials, national and cooperative
advertising spending, end-user incentives, rebates and technical
support.     HSI shall notify Supplier promptly in writing if any Products are
offered to HSI at a lower cost by any third party.

 

3.3     At the written request of HSI, Supplier will provide HSI with up to 150
demo units of the Wand STA Instrument (the “Demo Units”) per calendar year for
HSI's dental centers at a 25% discount. Such Demo Units may include refurbished
units. The amount paid by HSI to Supplier for such Demo Units shall be included
in the computation of Minimum Annual Purchase Targets. Supplier will, at its
cost and expense, re-calibrate and re-certify each Demo Unit prior to the sale
of such Demo Unit to HSI. At the written request of HSI (which can be via
e-mail), Supplier will also, at its cost and expense, provide HSI with up to
four (4) boxes of STA Handpieces (box of 50) per EPS Representative (as defined
below) and per dental hygienist per quarter for training and use in the field,
it being agreed and understood that none of such handpieces shall be sold or
given away, directly or indirectly, by HSI or any HSI sales representative.

 

4.

Orders; Shipping and Payment Terms.

 

4.1     HSI shall order Products from Supplier by submitting a purchase order
indicating the desired quantity, shipment date (which shall be no earlier than
two (2) business days from the date of submission), and delivery location. The
submission of any purchase order with a firm shipment date in accordance with
this Agreement by HSI shall constitute a purchase by HSI for purposes of meeting
the Minimum Annual Purchase Targets set forth herein; provided that it is agreed
and understood that if HSI's shipment carrier does not pick up the Product by
December 15th of the calendar year in which the applicable purchase order was
placed, Supplier may arrange its own shipment carrier to ship the Product and
the applicable shipping charges shall be reimbursed by HSI. In order for a
purchase order to constitute a purchase by HSI for purposes of meeting the
applicable Minimum Annual Purchase Target for any calendar year, the ship date
specified on the purchase order must have a ship date no later than December 31
of such calendar year (otherwise it will count as a purchase by HSI for purposes
of meeting the Minimum Annual Purchase Target in the immediately subsequent
calendar year).

 

4.2     All shipments of Products (other than drop shipments directly from
Supplier to HSI’s customers which shall be shipped FOB Destination with risk of
loss and title to the Products to pass to HSI's customers at the time of
delivery to such HSI customer) shall be shipped EXW, Wand Dental Dock,
Abbotstown, PA, (Incoterms 2010) and risk of loss and title to the Products
shall pass to HSI upon shipment. Supplier shall endeavor to use HSI's designated
shipper. HSI and Supplier agree and acknowledge that while it is HSI's intent to
stock the Product and ship to HSI's customers from HSI's distribution centers,
from time to time, HSI may request that Product be drop shipped directly to one
or more of HSI's customers and Supplier will use commercially reasonable efforts
to fulfill such request.

 

 
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4.3     The amounts payable under purchase orders shall be due and payable
within thirty (30) days from the date of HSI’s receipt of such Supplier invoice.
All payments shall be made in U.S. dollars. No invoice may be issued prior to
Supplier’s shipment of the Products ordered.

 

4.4     Supplier agrees to deliver Products as soon as commercially practicable
after receipt of a purchase order from HSI; provided that all Products ordered
pursuant to a purchase order shall be delivered no later than 30 days after
Supplier’s receipt of such purchase order (unless a later shipment date has been
requested in such purchase order).

 

4.5     Each Product, upon delivery to HSI, shall have a shelf life of not less
than 18 months from the date of delivery.

 

5.           Return Policy. Supplier shall promptly credit in full any amounts
paid by HSI in respect of Products purchased, and returned by HSI. Supplier
shall be responsible for all reasonable shipping costs associated with the
return by HSI of Products due to a shipment in error (i.e. excess product
received, wrong product received, etc.) (an “Incorrect Order”), a factory defect
or if such Products were damaged prior to being shipped (each, a “Specified
Return”). Amounts credited to HSI by Supplier for HSI's returns shall be
deducted from the dollar amount of qualifying purchases included in the
calculation of the Minimum Annual Purchase Target in the calendar year in which
the credit is made; provided that, the parties agree and acknowledge that with
respect to (i) Products returned to HSI by a customer of HSI, (ii) Products
returned to Supplier under Section 7 and (iii) any Specified Returns, the
amounts credited to HSI by Supplier will not in any way be deducted from the
dollar amount of qualifying purchases included in any Minimum Annual Purchase
Target calculation. Products shipped in replacement of defective or damaged
Products which are returned to Supplier will not be included as a purchase in
the calculation of the Minimum Annual Purchase Target to the extent the initial
purchase is included in such calculation. For the avoidance of doubt, Products
comprising an Incorrect Order which are returned to Supplier will not be
included in the calculation of the Minimum Annual Purchase Target. Except for
(i) Products returned to HSI by a customer of HSI and any Specified Returns,
which shall be returned at any time, and (ii) Products returned to Supplier
under Section 7, which must be returned within the time specified in Section 7,
HSI will not submit other returns for Product to Supplier during the first
quarter of any calendar year.

 

6.           Purchase Cancellations/Rescheduling. HSI may cancel or reschedule
without charge, any Product to be delivered under any purchase order up to 2
business days prior to shipment by providing Supplier with notice of such
cancellation or rescheduling electronically, by facsimile or by mail. There
shall be no limit on the number of cancellations or rescheduled purchases.

 

7.            Product Discontinuance. Supplier agrees to notify HSI in writing
(the “Notice”) at least 90 days prior to the date that Supplier intends to (i)
introduce a new version of the Products, (ii) change the technology of the
Products in any material respect or (iii) discontinue the distribution or sale
of any Products. Notwithstanding anything to the contrary contained in this
Agreement, Supplier shall have the option of reducing the amount of discontinued
Products (which are the subject of the Notice) it sells to HSI, it being
understood that Supplier will use commercially reasonable efforts to accommodate
fulfillment of any purchase orders made for discontinued product at the request
of a HSI customer. Furthermore, HSI may continue to sell such older versions or
discontinued versions of the Products until its inventory is depleted. HSI may,
at its option, within 60 days after its receipt of the Notice, return all older
versions or discontinued versions of the Products remaining in its inventory for
full credit from Supplier. Such credit shall not be deducted from the dollar
amount of qualifying purchases included in the calculation of any Minimum Annual
Purchase Target. Supplier shall pay all reasonable shipping costs associated
with such return.

 

 
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8.             Supplier Responsibilities. Supplier, at its expense, shall:

 

8.1     Provide HSI with such technical support, product literature and training
on the Products as is reasonably necessary for HSI’s EPS Representatives (as
defined below) to effectively market and sell the Products.

 

8.2     Provide three qualified and dedicated support staff members to handle
virtual trainings, trade show support and technical support via phone and video
training or such other means as is commercially reasonable. At the written
request of HSI (which may be via e-mail), such support staff shall be promptly
expanded to meet the business and customer requirements during the Term of this
Agreement.

 

8.3     Be responsible for any actions or activities that are typically managed
by the manufacturer of a Product, which responsibilities shall include, at a
minimum, product management, product development, regulatory compliance,
forecasting, providing warranties, technical service and returns, developing,
providing and managing conventions and seminars, providing qualified presenters
for seminars and webinars, procuring and developing key opinion leaders,
developing and maintaining brand building, innovation and marketing materials
(including in-office marketing materials), and providing sufficient demo stock
and try-buy stock for a national program.

 

8.4     With respect to each calendar year during the Term, Supplier agrees to
spend at least one hundred thousand dollars ($100,000) in respect of its annual
trade journal and marketing expense budget, such budget to be reasonably
increased as sales of the Product increase.

 

8.5     It is agreed and acknowledged by the parties that Supplier has
previously provided HSI with Supplier’s existing customer list and information.

 

8.6     Use commercially reasonable efforts to ensure that Supplier’s customers
in jurisdictions outside the Territory do not resell the Products into the
Territory.

 

8.7     Require that any third party supplier or distributor appointed or
engaged by Supplier or its affiliates to sell or promote the Products outside
the Territory enter into a written agreement restricting such supplier or
distributor from promoting or selling the Products in the Territory.

 

 
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9.

HSI Responsibilities: HSI shall, at its cost and expense:

 

9.1     Provide a reasonable sales force, call centers and in-office training
for the Products. HSI will endeavor to utilize (i) an exclusive products sales
force of 14 representatives who are selling Supplier’s Products in the United
States (each, a “EPS Representative”) no later than July 1, 2016 and (ii) a
total of 25 EPS Representatives in the aggregate (which may include the 14 EPS
Representatives to be utilized pursuant to clause 9.1(i) above) no later than
July 1, 2017 (each of the targets listed in clause 9.1(i) and 9.1(ii) above, a
“EPS Target”). In the event HSI does not (A) satisfy either of the EPS Targets,
or (B) after satisfying both of the EPS Targets, HSI does not, for any nine
consecutive month period, during the Term maintain at least 20 EPS
Representatives (the “Ongoing EPS Target”), after written notice thereof from
Supplier and HSI’s failure during the 30 day period after such notice to cure
its failure to satisfy the applicable EPS Target or Ongoing EPS Target, as
applicable, (each, an “Exclusivity Termination Date for EPS Target”) HSI shall
lose the Exclusivity Rights conferred upon it under this Agreement in the
Territory and shall thereupon become a non-exclusive distributor of the Products
in the Territory for the Term set forth in Section 1.3. HSI’s loss of
Exclusivity Rights shall be Supplier’s sole remedy for HSI’s failure to meet the
EPS Targets or Ongoing EPS Target, as applicable.

 

9.2     Provided that HSI maintains its Exclusivity Rights under this Agreement,
HSI agrees to provide Supplier with (i) internal marketing efforts with a value
(based on HSI's standard rates and policies) of $250,000 per year to promote the
Products in HSI's standard communication vehicles based on the then current
media guide, (ii) a 50% discount on the standard Henry Schein National sales
meeting and the Henry Schein special markets national sales meeting supplier
fees relating to the display of Products (such discount shall not apply to per
diem charges for any Supplier attendees), (iii) a HSI exclusives marketing
manager assigned to the Product line and (iv) HSI's standard supplier’s report
on a monthly basis, to be accessed via HSI's vendor portal at no charge to
Supplier. In the event that HSI no longer maintains its Exclusivity Rights under
this Agreement, Supplier shall not be entitled to receive any discounts on
internal marketing vehicles or national sales meeting events or related
activities, including the ones set forth in this Section 9.2.

 

9.3     To the extent permitted by law and HSI's contractual agreements, HSI
shall inform Supplier promptly if it is contacted by any third parties offering
any Products for sale to HSI.

 

10.          Warranties and Repairs. Any repairs, whether under warranty or not,
shall be performed by Supplier designated repair facilities. HSI shall in each
instance contact Supplier with regards to any contemplated repair, whether under
warranty or not. Supplier shall only be responsible for bearing the cost of
repairs covered under Supplier’s two year warranty to the end user (provided the
Product has not been subject to abuse).

 

11.

Termination.

 

11.1     A party may terminate this Agreement, effective immediately upon
delivery to the other party of written notice to such effect, in any of the
following circumstances:

 

 
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(i) the other party dissolves, ceases doing business, or sells or transfers all
or substantially all of its assets;

 

(ii) the other party (A) makes an assignment for the benefit of its creditors,
(B) institutes a proceeding as a debtor under any law relating to insolvency or
bankruptcy, (C) fails to have discharged within 30 days any involuntary
proceedings brought against it under any insolvency or bankruptcy law, (D)
becomes insolvent or (E) generally does not pay its debts as they become due;

 

(iii) the other party (A) commits theft or embezzlement or obtains funds or
property under false pretenses, (B) commits a material act of malfeasance,
dishonesty, breach of trust or other similar act against that party or its
employees, customers or suppliers or (C) is convicted of a felony or serious
misdemeanor;

 

(iv) the other party fails to remedy any material breach or default in
performance of the terms of this Agreement within 30 days after its receipt of a
written notice of such material breach or default; or

 

(v) the other party is nationalized or temporarily requisitioned by any
government authority for whatever reason.

 

11.2     Supplier shall honor all orders for Product that HSI placed prior to
the effective date of termination. Termination shall not affect the rights or
obligations of either party accrued as of the effective date of such termination
or that may arise subsequently with respect to transactions initiated or
completed prior to the effective date of such termination. The confidentiality
and indemnification provisions of this Agreement shall survive the expiration or
termination of this Agreement.

 

11.3     Within 90 days of the termination or expiration of the Term of this
Agreement for any reason, HSI shall have the right to return all unused and
undamaged Product remaining in its inventory to Supplier for a full refund upon
issuance by HSI of a written notice of return specifying the quantity of Product
being returned and a description of the relevant Product being returned (the
period from the date of termination or expiration of the Term of this Agreement
until the 90th day after the termination or expiration of the Term of this
Agreement is referred to herein as the “Post Term Period”). From and after the
end of the Post Term Period, HSI shall not sell or otherwise distribute any
Products without the prior written consent of Supplier.

 

12.

Treatment of Confidential Information.

 

12.1     Neither party will use (except to undertake the activities contemplated
by this Agreement), publish or otherwise disclose any information related to the
other party that is acquired by such party in connection with the performance of
this Agreement unless required by law, regulation or legal process. During the
Term and for a period of two years thereafter, neither party will disclose,
reveal or use any Confidential Information concerning the other party or its
respective clients, affiliates or business partners without the prior written
consent of the disclosing party; provided, however, that the confidentiality
obligations hereunder shall survive indefinitely with respect to, if applicable,
customer lists and customer identifying data of Supplier and HSI.

 

 
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12.2      “Confidential Information” means all data and information of any type
or form (whether visual, written, oral, electronic, photographic or otherwise)
of a proprietary or confidential nature and not generally known to the public
that is disclosed (either intentionally or unintentionally) by a party hereto or
one of its affiliates or representatives to the other party hereto or one of its
affiliates or representatives, regardless of whether such information is marked
or indicated as being confidential. Confidential Information includes, but is
not limited to, all information of a financial, business, marketing,
organizational, legal or technological nature, including patents, copyrights,
proprietary software, computer algorithms, trade secrets, inventions and other
intellectual property, financial statements and other financial data, customer
and supplier lists, marketing plans, sales projections and forecasts, cost
information, product designs, engineering and technical data, models, prototypes
and other information relating to business practices, current and future
acquisitions, research and development, manufacturing, production, operations
and the like. Confidential Information also includes information of or relating
to third parties that is disclosed by the disclosing party to the receiving
party. Confidential Information shall not, however, include any information
that, as shown by competent proof, (i) is publicly known or generally available
in the public domain prior to the time of disclosure by the disclosing party to
the receiving party, (ii) becomes publicly known or generally available in the
public domain after disclosure by the disclosing party to the receiving party
through no action or inaction of the receiving party, (iii) is already in the
possession of the receiving party at the time of disclosure by the disclosing
party as shown by the receiving party’s written records existing immediately
prior to the time of such disclosure, (iv) is obtained by the receiving party
from a third party that may lawfully disclose such information without breaching
any obligation of confidentiality applicable to such third party or (v) is
independently developed by the receiving party without use of or reference to
the disclosing party’s Confidential Information, as shown by the receiving
party’s independent contemporaneous written records.

 

12.3     All Confidential Information provided hereunder will be and remain the
property of the disclosing party and will be promptly returned to the disclosing
party or destroyed upon the disclosing party’s written request.

 

13.

Other Matters.

 

13.1     Access. During the Term and Post-Term Period, Supplier agrees to make
all of its facilities and records related to its performance of this Agreement
available for inspection by HSI (or its duly appointed agents or
representatives), at HSI's cost and expense, during regular business hours upon
reasonable prior written notice; provided that there shall be no more than one
inspection per twelve month period during the Term or Post-Term Period.

 

13.2     Continuing Guaranty. Supplier is subject to, and Milestone hereby
guarantees Supplier’s performance of its obligations under, the terms of the
Continuing Guaranty and Indemnification dated April 7, 2015, which is attached
hereto for reference as Exhibit C (the “CG&I”), which CG&I shall survive
termination or expiration of this Agreement. In the event of a conflict between
the terms and conditions set forth in this Agreement and the terms and
conditions set forth in the CG&I, the terms and conditions set forth in the CG&I
shall control. Supplier agrees that HSI shall be permitted to pass through to
its customer all product warranties.

 

 
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13.3     Anti-Bribery Compliance. Each of the parties hereto shall comply fully
with the requirements of any applicable laws, regulations, and administrative
requirements prohibiting bribery and corruption (“Anti-Corruption Laws”). Each
of the parties hereto shall refrain from taking any action which would cause the
other party to be in violation of any law of any jurisdiction. No principal of
either party has been, is, or will become during the Term (i) an official or
employee of a governmental entity or political party, or (ii) a candidate for
political office. Neither of the parties hereto shall directly or indirectly
pay, offer, promise, give, or authorize to pay, offer, or give money or anything
of value to any employee or official of a government or department thereof,
political party or candidate for political office, to any employees or officials
of public international organizations, or to any employees of enterprises or
companies owned or controlled by a government, or to any other person while
being aware of or having a belief that such money or item of value will be
passed on to one of the above, to influence any act or decision by such person
or by any governmental body for the purpose of obtaining, retaining or directing
business to Supplier or HSI or to otherwise obtain an improper advantage for
Supplier or HSI. Neither party hereto will undertake any action that may cause
the other party to be in violation of the Anti-Corruption Laws. Each of the
parties hereto represents and certifies that it has not been convicted of or
pleaded guilty to a criminal offense, including one involving fraud, corruption,
or moral turpitude, that it is not now, to the best of its knowledge, the
subject of any government investigation for such offenses, and that it is not
now listed by any government agency as debarred, suspended, proposed for
suspension or debarment, or otherwise ineligible for government programs. Each
party hereto agrees to maintain all books and records pertaining to such party’s
business for a period of 24 months following the termination or expiration of
the Term of this Agreement.

 

13.4     Compliance with Law. Each of the parties hereto agrees that it and its
directors, officers, employees and agents shall comply with all applicable laws,
regulations, ordinances, decisions, and other assurances having the effect of
law in the Territory regarding the relationships and transactions contemplated
by this Agreement, including the importation, storage, warehousing, advertising,
marketing and other aspects of selling and distributing the Products. Further,
Supplier shall, as soon as possible following its notice thereof, advise HSI of
any change in manufacturing, sale, packaging, labeling or other legal
requirements with respect to the sale and distribution of the Products in the
Territory. Compliance with the law shall include without limitation the Foreign
Corrupt Practices Act (15 U.S.C. § 78dd-1, et seq.) , US Export Controls, and
the Physician's Payments Act (42 USC 1320 et. seq,). Each party hereto shall be
responsible for any reports filed or compliance activities due with regards to
its respective activities under this Agreement.

 

13.5     Quality Chart. HSI and Supplier agree to comply with the terms of the
Quality Chart set forth on Exhibit D, which among other things, defines the
parties’ respective responsibilities as to the quality aspects of manufacturing,
release and post-market surveillance of the Products. In the event of a conflict
between the terms and conditions set forth in this Agreement and the terms and
conditions set forth on Exhibit D, the terms and conditions set forth on Exhibit
D shall control

 

 
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13.6     LIMITATION OF LIABILITY. EXCEPT IN CONNECTION WITH A PARTY’S WILFUL
MISCONDUCT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR INDIRECT, INCIDENTAL,
PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES INCLUDING, BUT NOT LIMITED TO, LOST
PROFITS AND LOSS OF GOODWILL, ARISING FROM OR RELATING TO ANY BREACH OF THIS
AGREEMENT (OR ANY DUTY OF COMMON LAW, AND WHETHER OR NOT OCCASIONED BY THE
NEGLIGENCE OF A PARTY OR ITS AFFILIATES), REGARDLESS OF ANY NOTICE OF THE
POSSIBILITY OF SUCH DAMAGES; PROVIDED THAT NOTHING IN THIS SECTION IS INTENDED
TO, OR DOES, LIMIT (A) THE INDEMNIFICATION OR CONFIDENTIALITY RIGHTS OR
OBLIGATIONS OF EITHER PARTY SET FORTH HEREIN OR (B) EITHER PARTY’S RIGHT TO
CLAIM DIRECT DAMAGES FROM THE OTHER PARTY.

 

13.7     Notices. Except as otherwise provided, all notices given under this
Agreement shall be in writing and shall be deemed to have been duly given upon
receipt if delivered by hand or facsimile transmission with receipt confirmed,
three days after mailing by certified or registered mail, and one day after
sending by overnight courier, to the parties’ respective address indicated on
the signature page of this Agreement or such other address as a party specifies
in writing to the other party. All notices given to HSI under this Agreement
shall be sent with a copy to Henry Schein, Inc., 135 Duryea Road, Melville, New
York 11747, Attn: General Counsel, Fax (631) 843-5660 and all notices given to
Supplier under this Agreement shall be sent with a copy (which shall not
constitute notice) to Martin Siegel, Esq., 437 Madison Avenue, New York, NY
1002, Fax (212) 754-0330.

 

13.8     No Joint Venture. Nothing in this Agreement shall be construed to
create, constitute, give effect to or otherwise imply a joint venture,
partnership, agency or employment relationship of any kind between the parties.

 

13.9     Compliance with Government Contracting Requirements. Supplier and HSI
will work together in good faith to identify mutually beneficial opportunities
(as determined in HSI’s sole discretion) to utilize the services of
minority-owned businesses in connection with HSI’s pursuit of federal, state and
local government contracts.

 

Supplier shall comply with laws, regulations and orders related to government
contracting, including without limitation with respect to minority owned and
disadvantaged businesses (including pursuant to 48 CFR Sections 52.219-8 and
52.219-9), and equal employment opportunity and affirmative action. Supplier and
any Supplier representative performing this Agreement have not been debarred,
suspended or excluded, and are not subject to any proposed debarment, suspension
or exclusion, from participation in the Medicare or Medicaid programs or any
other government program, and have not been convicted of, or have charges
pending regarding, any offenses which may lead to such debarment, suspension or
exclusion.  Supplier shall promptly inform HSI if it becomes aware that the
provisions of this paragraph become inaccurate in a material way during the
term.

 

13.10     Affirmative Action and Nondiscriminatory Obligations by U.S. Federal
Contractors and Subcontractors. The following provisions are applicable to this
Agreement and must be included in any subcontracts awarded involving this
Agreement if products or services under this Agreement are sold to the U.S.
federal government.

 

 
10

--------------------------------------------------------------------------------

 

 

This contractor and subcontractor shall abide by the requirements of 41 CFR
Sections 60-1.4(a), 60-300.5(a) and 60-741.5(a). These regulations prohibit
discrimination against qualified individuals based on their status as protected
veterans or individuals with disabilities, and prohibit discrimination against
all individuals based on their race, color, religion, sex, or national origin.
Moreover, these regulations require that covered prime contractors and
subcontractors take affirmative action to employ and advance in employment
individuals without regard to race, color, religion, sex, national origin,
protected veteran status or disability.

 

Notice of Employee Rights Under Federal Labor Laws. The parties incorporate into
this Agreement, as applicable, the obligations regarding the notice of employee
rights under federal labor laws found at 29 CFR Part 471, Appendix A to Subpart
A, and will incorporate those obligations into all applicable subcontracts as
required by 29 CFR Part 471. For contracts of $100,000 or more, the contractor
and subcontractor must file VETS-100A reports by September 30 of each year, or
any applicable extension deadline that U.S. Department of Labor Veterans’
Employment and Training Service (VETS) announces. (41 CFR Part 61-300)

 

13.11     Trademarks. Solely in the Territory (it being understood that HSI is
permitted to use Supplier’s trademarks for purposes of promotion and marketing
in its catalog (both in print and online) and on its website) and during the
Term and Post-Term Period, Supplier grants to HSI a limited, non-exclusive,
non-assignable, non sublicensable right and license to use Supplier’s trademarks
relating to the Products in connection with HSI's marketing of the Products. All
use of Supplier's trademarks shall inure exclusively to the benefit of Supplier,
and HSI, by virtue of this Agreement and/or its activities shall acquire no
interest in or to any of Supplier’s trademarks, which as between HSI and
Supplier, are, and shall remain, the sole property of the Supplier.

 

13.12     Assignment. This Agreement may not be assigned by either party without
the other party’s prior written consent.

 

13.13     Governing Law. This Agreement shall be governed by the laws of the
State of New York, without reference to conflict of laws principles. Any
dispute, claim or controversy arising out of or relating to this Agreement or
the breach, termination, enforcement, interpretation or validity thereof,
including the determination of the scope or applicability of this Agreement to
arbitrate, shall be settled by arbitration administered by the American
Arbitration Association in accordance with the provision of tis Arbitration
Rules (the “Arbitration”). The Arbitration shall be held in New York County, New
York. The number of arbitrators shall be three. Each of HSI and Supplier shall
appoint one arbitrator, and the party-appointed arbitrators shall, in
consultation with HSI and Supplier, choose a third arbitrator to who shall serve
as the chairman. Judgment on any award resulting from the Arbitration may be
entered in any court having jurisdiction.

 

13.14     Remedies. Due to the fact that the disclosing party might not be
adequately compensated by money damages in the event of the receiving party’s
breach of any of the confidentiality provisions of this Agreement, the
disclosing party may, in addition to any other right or available remedy, see an
injunction or other equitable relief restraining such breach or any threatened
breach and to specific performance of this agreement.

 

 
11

--------------------------------------------------------------------------------

 

 

13.15     Entire Agreement; Amendments. This Agreement, including the exhibits
and schedules attached hereto, each of which is incorporated herein by reference
in its entirety, constitute the entire agreement between Supplier and HSI. All
prior or contemporaneous agreements, proposals, understandings and
communications between or involving Supplier and HSI, whether oral or written,
are superseded by this Agreement. The terms contained in this Agreement shall
supersede any conflicting terms contained in any purchase order, invoice or
other document used or submitted by either party in connection with the purchase
of Products covered by this Agreement. This Agreement may not be amended, nor
any obligation waived, except by a writing signed by both Supplier and HSI.

 

13.16     No Waiver. No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder.

 

13.17     Severability. If any term of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, then this Agreement,
including all of the remaining unaffected terms, shall remain in full force and
effect as if such invalid or unenforceable term had never been included.

 

13.18     No Publicity. Neither party shall originate any publicity, press
releases or other public announcement relating to any relationship between the
parties, this Agreement or the performance hereof without the other party’s
prior written consent; provided, however, that either party may, without such
consent, make any press release or other public announcement as required by law.

 

13.19     Section Headings. The headings contained in this Agreement are for
convenience of reference only and are not intended to have any substantive
significance in interpreting this Agreement.

 

13.20     Signatures. This Agreement may be executed in any number of
counterparts, each of which is deemed an original but all of which constitute
the same instrument. This Agreement may be executed by the exchange of faxed
executed copies, certified electronic signatures or copies delivered by
electronic mail in Adobe Portable Document Format or similar format, and any
signature transmitted by such means for the purpose of executing this Agreement
is deemed an original signature for purposes of this Agreement.

 

[remainder of page intentionally left blank;

signature page follows]

 

 
12

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Exclusive Distribution
and Supply Agreement to be executed as of the date first written above by their
respective duly authorized representatives.

 

 

Henry Schein, Inc.   Wand Dental, Inc.                                   By: /s/
John P. Boresi

 

By:

/s/ Joseph D’Agostino

 

  Name:

John P. Boresi

 

 

Name:

Joseph D’Agostino

 

  Title:

V.P. & G.M., N.A. Exclusives

 

 

Title:

Chief Financial Officer

 

 

 

 

Address for Notices:  

 

Address for Notices:  

 

135 Duryea Rd.  

 

  220 South Orange Avenue    

 

Melville, NY 11747  

 

 

Livingston, New Jersey 07039  

 

 

 

 

 

 

 

 

 

 

Fax:

631-843-5660

 

 

Fax:

973-535-2829

 

 

 

 

 

 

 

 

 

 

Attn:

General Counsel

 

 

Attn:

Chief Executive Officer

 

 

 

 

 

Milestone Scientific, Inc., solely for the purposes of

Section 1.1(b) and Section 13.2

 

 

 

 

 

 

 

 

 

By:

/s/ Joseph D’Agostino

 

 

Name:

Joseph D’Agostino

 

 

Title

Chief Financial Officer

 

 

Address for Notices:

220 South Orange Avenue

Livingston, New Jersey 07039

Fax Number: (973) 535-2829

Attention:   Chief Executive Officer  

 

 

--------------------------------------------------------------------------------

 

 

EXHIBIT A

 

 

 

[Intentionally omitted]

 

 

--------------------------------------------------------------------------------

 

 

EXHIBIT B

 

MINIMUM ANNUAL PURCHASE TARGET

 

 

Applicable Period

Minimum Annual Purchase Target*

January 1, 2016 – December 31, 2016 (“Year 1”)

NONE

January 1, 2017 – December 31, 2017 (“Year 2”)

NONE

January 1, 2018 – December 31, 2018 (“Year 3”)

$2,750,000

January 1, 2019 – December 31, 2019 (“Year 4”)

$2,850,000

January 1, 2020 – December 31, 2020 (“Year 5”)

$2,950,000

January 1, 2021 – December 31, 2021 (“Year 6”)

$3,050,000

January 1, 2022 – December 31, 2022 (“Year 7”)

$3,160,000

January 1, 2023 – December 31, 2023 (“Year 8”)

$3,270,000

January 1, 2024 – December 31, 2024 (“Year 9”)

$3,380,000

January 1, 2025 - December 31, 2025 (“Year 10”)

$3,500,000

Each calendar year after December 31, 2025

The product of (i) the prior year’s Minimum Annual Purchase Target multiplied by
(ii) 1.035

 

*Subject to adjustment as provided below.

 

 

Notwithstanding the foregoing, if in Year 3 or in any applicable calendar year
occurring thereafter during the Term, HSI sells to its end user customers a
dollar amount of STA Handpieces (such dollar amount value to be calculated based
on the purchase price HSI purchased the Product from Supplier and not the
purchase price paid to HSI by the end user customer) that is equal to or greater
than the dollar amount of the Minimum Annual Purchase Target for such applicable
calendar year, the Minimum Annual Purchase Target for the immediately following
subsequent calendar year (the “First Adjusted Year”) shall be increased by an
amount equal to $200,000 and the Minimum Annual Purchase Target for each
subsequent calendar year after the First Adjusted Year shall equal the sum of
(A) the product of (i) the prior year’s Minimum Annual Purchase Target (after
giving effect to any adjustments) multiplied by (ii) 1.035 plus (B) $200,000.

 

 

--------------------------------------------------------------------------------

 

 

EXHIBIT C

 

[exhibitc.jpg]

 

 

--------------------------------------------------------------------------------

 

 

Exhibit D

Quality Chart

 

 

1.

 Compliance Requirements / GMP

 

Supplier

HSI

Not

Applicable

 

Responsibility

1.1

☒

☒

☐

 

Implement procedures and/or documented training to meet obligations under this
Agreement.

1.2

☒

☒

☐

 

Follow applicable current Good Manufacturing Practices (cGMPs) for manufacturing
activities and Good Distribution Practices for any distribution activities.

1.3

☒

☐

☐

 

Manufacture, test, package, store, and ship the Product and materials in an
environment meeting the applicable GMP regulations and in adherence to
applicable regulatory submissions.

1.4

☒

☒

☐

 

Operate in compliance with applicable environmental, occupational health and
safety laws and regulations to state/federal level.

1.5

☒

☒

☐

 

Maintain a quality unit that is independent of production that fulfills both
quality assurance and quality control responsibilities.

1.6

☒

☒

☐

 

Notify the other party of name change, corporate reorganization, consolidation,
merger or acquisition or sale of the party’s company.

1.7

☒

☐

☐

 

Where applicable, provide Certificate of Compliance (CoC) / Certificate of
Analysis (CoA) or sterility confirmation documentation per batch/lot upon
request.

1.8

☒

☐

☐

 

Provide written notification to HSI, as soon as feasible in advance of
implementation, of any change to product packaging, label components,
composition, or manufacturing site or country of origin. Note: HSI requires
advance notice to assess impact of change to prevent interruption in
commercialization.

 

2.

 Quality Management System

 

Supplier

HSI

Not

Applicable

 

Responsibility

2.1

☒

☒

☐

 

Quality Management System which meets and is in adherence with applicable
regulatory requirements and industry practices for regions where the product is
produced and sold.

 

 
Exhibit D—Page 1

--------------------------------------------------------------------------------

 

 

3.

 Validation

 

Supplier

HSI

Not

Applicable

 

Responsibility

3.1

☒

☐

☐

 

Determine according to Product lifecycle and guidance documents when
qualifications/validations are required for cGMP compliance (examples but not
limited to cleaning, process, packaging and sterilization validations, ICH
stability studies, container closure studies).

 

4.

 Trade Compliance

 

Supplier

HSI

Not

Applicable

 

Responsibility

4.1

☒

☐

☐

 

Supplier will ensure that for trade compliance purposes, its facility licenses
and registrations and the specific product approvals, registrations and
information (e.g., in the U.S., NDA, ANDA, Medical Device number, FDA Product
Code and any applicable 510K number’s, as well as any FDA establishment
registration #’s and product listings) are valid and current with the respective
competent authorities.

4.2

☒

☐

☐

 

 

Responsible as the initial importer/importer of record.

 

 

5.

 Product Quality Complaints for all Henry Schein Labeled Products

 

Supplier

HSI

Not

Applicable

 

Responsibility

5.1

☐

☒

☐

 

HSI to maintain a complete record of customer product quality complaints which
are forwarded to Supplier for investigation. HSI to provide Supplier any
requested information and samples when applicable within 48 hours in case of an
adverse reaction and within one week for all other type of complaints.

5.2

☒

☐

☐

 

Supplier to complete a complaint investigation and to provide HSI a written
response within thirty (30) days of receipt of the initial complaint.
Supplemental information received that materially changes the initial complaint
investigation shall be forwarded to HSI within thirty (30) days of receipt of
the supplemental information.

5.3

☒

☒

☐

 

In case of adverse reaction or reportable incident, information will be provided
upon request within two (2) weeks of the receipt of the request.

 

 
Exhibit D—Page 2

--------------------------------------------------------------------------------

 

 

6.

 Adverse Reactions/Incidents for all Henry Schein / Supplier Labeled Products

 

Supplier

HSI

Not

Applicable

 

Responsibility

6.1

☐

☒

☐

 

HSI to maintain a complete record of customer adverse reactions which are
forwarded to the Supplier for investigation, and to provide to the Supplier any
requested information and samples when applicable within 48 hours.

6.2

☒

☐

☐

 

Supplier to complete an incident investigation and to provide the HSI a written
response within thirty (30) days of receipt of the initial
complaint. Supplemental information received that materially changes the initial
complaint investigation shall be forwarded to HSI within thirty (30) days of
receipt of the supplemental information.

6.3

☒

☒

☐

 

Applicable information will be provided upon request.

6.4

☒

☐

☐

 

Submit to applicable regulatory agencies documentation in case of adverse
reaction or reportable incident. 

  

7.  Recall

 

Supplier

HSI

Not

Applicable

Responsibility

7.1

☒

☐

☐

Supplier to inform HSI within one (1) business day of any matter which may
result in the need for a recall, stock recovery or market withdrawal.

7.2

☒

☐

☐

Supplier to confirm in writing to HSI within two (2) business days any matter
which may result in the need for a recall, stock recovery or market withdrawal
as well as provide an outlined strategy for the planned action.

7.3

☒

☒

☐

Parties will provide requested information which will assist in the processing
of the recall/stock recovery/market withdrawal or audits.

7.4

☒

☒

☐

Maintain distribution records that permit complete and rapid recall of the
product on the market.

7.5

☒

☐

☐

Development of the recall strategy that applies to the specific circumstances of
the particular recall, including health hazard evaluation and CAPA.

7.6

☒

☐

☐

Provide written recall communication to HSI within six business days of its
knowledge of the recall.

7.7

☐

☒

☐

Processing of recall communications as per applicable regulations and Supplier
instructions related to the product category and the market within ten days of
its knowledge of the recall.

7.8

☒

☒

☐

Recall effectiveness / reconciliation status reports to be provided upon
request.

7.9

☐

☒

☐

If applicable, in the EU, notifications and follow up to regulatory agencies as
required. 

7.10

☒

☐

☐

If applicable, outside the EU, notifications and follow up to regulatory
agencies as required.

7.11

☒

☒

☐

Inform the other when requirements for recall closure have been meet, to be
provided upon request.

 

 
Exhibit D—Page 3

--------------------------------------------------------------------------------

 

 

8.

 Licensure

 

Supplier

HSI

Not

Applicable

 

Responsibility

8.1

☒

☒

☐

 

Where applicable, to maintain valid product licenses for medical devices,
cosmetics, biocides, natural health products, radiation devices, human or animal
tissue, feed and drug products as per applicable regulations. Provide copy of
the regulatory agency’s approval/acceptance letter upon request.

8.2

☒

☐

☐

 

Where applicable, Supplier to maintain valid facility licenses as per medical
device, cosmetics, biocides, natural health products, radiation devices, human
or animal tissue, feed and drug products as per applicable regulations. To be
provided upon request.

 

9. Audit

 

Supplier

HSI

Not

Applicable

 

Responsibility

9.1

☐

☒

☐

 

HSI and its notified body has the right to audit Supplier’s facilities and
systems and review documents as they relate to the manufacture of Product. Such
inspections and document review shall be conducted at a reasonable time, date
and for a reasonable duration.

9.2

☒

☒

☐

 

Retains the right to conduct reasonable “for cause” audits. Specific goals/scope
of the audit, proposed dates and names of the auditors will be agreed upon
mutually by the HSI and the Supplier, which agreement shall not be unreasonably
withheld.

 

 
Exhibit D—Page 4

--------------------------------------------------------------------------------

 

 

10.

Regulatory Inspections and Exchanges

 

Supplier

HSI

Not

Applicable

 

Responsibility

10.1

☒

☐

☐

 

Notify HSI within ten (10) business days of the receipt of a regulatory
authority inspection report, deficiency letter or written regulatory compliance
observation, which contains any significant adverse findings that relate to the
Product or the facilities used to produce, test, warehouse or distribute the
Product sold to HSI. A significant adverse finding is herein defined as the
following: conditions, practices, or processes that adversely affect or may
potentially adversely affect product or service quality and/or the rights,
safety or well-being of subjects/patients and/or the quality and integrity of
data, documentation, or other materials or information addressed in the
inspection.

 

11.

Product Handling and Transportation

 

Supplier

HSI

Not

Applicable

 

Responsibility

11.1

☒

☒

☐

 

Where applicable, to ship product in a manner that does not risk overexposure to
temperatures outside of their recommended shipping condition and permitted
excursions. Transportation process and containers should prevent damage and must
maintain the product integrity and quality during shipping.

 

12.

Return Condition

 

Supplier

HSI

Not

Applicable

 

Responsibility

12.1

☒

☐

☐

 

Supplier to provide to HSI, its returns policy and any forms to be completed for
authorization number.

 

13.

Documentation and Records

 

Supplier

HSI

Not

Applicable

 

Responsibility

13.1

☒

☒

☐

 

Have a controlled system to initiate, review, revise, approve, obsolete and
archive all cGMP documentation. At a minimum, all production, control, and
distribution records should be retained for at least one (1) year after the
expiry date of the batch/lot, or for any longer applicable regulatory
requirement.

13.2

☒

☒

☐

 

Maintain a document control system for cGMP.

13.3

☒

☒

☐

 

Maintain distribution records as per regulatory requirements.

 

 

Exhibit D—Page 5